-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AtjLqjhvRCG9GMA3uNMBxdccp12V0a2PVm+Khv7OdW27rQfhffp2PbY57NSaEGK7 BAjzwrV6/3oEN6vB3hgbfQ== 0000950170-96-000436.txt : 19960708 0000950170-96-000436.hdr.sgml : 19960708 ACCESSION NUMBER: 0000950170-96-000436 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960809 FILED AS OF DATE: 19960705 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARGO NURSERY FARMS INC CENTRAL INDEX KEY: 0000808493 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 592142653 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-15336 FILM NUMBER: 96591527 BUSINESS ADDRESS: STREET 1: ROAD 690 KILOMETER 5 8 CITY: VEGA ALTA STATE: PR ZIP: 00692 BUSINESS PHONE: 8098832570 MAIL ADDRESS: STREET 2: ROAD 690 KILOMETER 5 8 CITY: VEGA ALTA STATE: PR ZIP: 00692 DEF 14A 1 SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the registrant [x] Filed by a party other than the registrant [ ] Check the appropriate box: [ ] Preliminary proxy statement [x] Definitive proxy statement [ ] Definitive additional materials [ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 MARGO NURSERY FARMS, INC. -------------------------------------------------- (Name of Registrant as Specified in Its Charter) MARGO NURSERY FARMS, INC. -------------------------------------------------- (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): [x] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2); [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3); [ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and 0-11; (1) Title of each class of securities to which transaction applies; (2) Aggregate number of securities to which transactions apply; (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11; (4) Proposed maximum aggregate value of transaction; [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: (2) Form, schedule or registration statement no.: (3) Filing party: (4) Date filed: NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To be held on Friday, August 9, 1996 Notice is hereby given that the Annual Meeting of Stockholders of MARGO NURSERY FARMS, INC., a Florida corporation (the "Company"), will be held at the offices of Pietrantoni Mndez & Alvarez, Suite 1901, Banco Popular Center, 209 Munoz Rivera Avenue, San Juan, Puerto Rico on Friday, August 9, 1996, at 10:00 a.m. (local time), to consider and vote upon the following proposals: (1) To elect five directors; (2) To ratify the appointment of Kaufman, Rossin & Company as auditors of the Company; and (3) To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. The Board of Directors has fixed the close of business on July 1, 1996, as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting. In order to assure that your vote will be counted, please complete, date, sign and promptly return the accompanying proxy card in the enclosed, postage paid envelope. By Order of the Board of Directors Margaret D. Spector, Secretary Vega Alta, Puerto Rico July 5, 1996 MARGO NURSERY FARMS, INC. Road 690 Kilometer 5.8 Vega Alta, Puerto Rico 00762 PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS to be held on August 9, 1996 This Proxy Statement is being furnished to the holders of the Common Stock, $.001 par value (the "Common Stock") of MARGO NURSERY FARMS, INC., a Florida corporation (the "Company"), in connection with the solicitation of proxies by the Board of Directors of the Company for the Annual Meeting of Stockholders (the "Annual Meeting") to be held at the place and time and for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement and accompanying form of proxy are first being sent to stockholders on or about July 5, 1996. Pursuant to the by-laws of the Company, the Board of Directors has ordered the Annual Meeting for 1996 to be held on Friday, August 9, 1996, and has fixed the close of business on July 1, 1996, as the record date (the "Record Date") for the determination of stockholders entitled to receive notice of, and to vote at, the Annual Meeting or at any adjournment or postponement thereof. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Common Stock of the Company is necessary to constitute a quorum at the meeting. In determining the presence of a quorum at the Annual Meeting, abstentions are counted and "broker non-votes" are not. A "broker non-vote" results when a broker or nominee has physically indicated on the proxy that it does not have discretionary authority to vote on a particular matter (even though those shares may be entitled to vote on other matters). The current Florida Business Corporation Act (the "Act") provides that directors are elected by a plurality of the votes cast and all other matters are approved if the votes cast in favor of the action exceed the votes cast against the action (unless the 2 matter is one for which the Act or the articles of incorporation require a greater vote). Therefore, under the Act, abstentions and broker non-votes have no legal effect on whether a matter is approved. However, the Company's By-laws, which were adopted prior to the current Act and remain in effect, provide that any matter, including the election of directors, is to be approved by the affirmative vote of a majority of the total number of shares represented at the meeting and entitled to vote on such matter (unless the matter is one for which the Act or some other law or regulation, or the Company's Articles of Incorporation, By-laws, or Board of Directors require a greater or different vote). Therefore, as to all matters to be voted on by shareholders at the Annual Meeting, abstentions have the same effect as a vote against a matter and broker non-votes have no legal effect. As of the Record Date, the Company had 1,895,322 outstanding shares of Common Stock. Holders of the Common Stock are entitled to one vote per share, exercisable in person or by proxy, at all meetings of stockholders. The Common Stock is the only class of the Company's securities which is entitled to vote on any matter submitted to a vote at the Annual Meeting. Proxies in the accompanying form, properly executed, duly returned to the Company and not revoked, will be voted in the manner specified. If no instructions are made, such shares will, except as provided in the second paragraph of this Proxy Statement, be voted (i) for the election of the nominees for directors named in this Proxy Statement and (ii) for the ratification of the selection of Kaufman, Rossi & Company as the independent accountants for the Company for the year ending December 31, 1996. Returning a signed proxy will not affect a stockholder's right to attend the Annual Meeting and to vote in person, since proxies are revocable. A proxy for the Annual Meeting may be revoked at any time prior to its use by submission of a later dated proxy, by delivery of written notice of revocation to the President of the Company, or by voting in person at the Annual Meeting. Presence at the Annual Meeting does not of itself revoke a proxy. The Company will pay the entire cost of soliciting proxies for the Annual Meeting. Solicitation of proxies may be made through personal visits or telephone calls to stockholders or their representatives by officers and other employees of the Company, who will receive no additional compensation therefor. 3 ELECTION OF DIRECTORS The Board of Directors has nominated five directors for election to serve until the 1996 Annual Meeting of Stockholders and until their successors are duly elected and qualified. The nominees for election to the Board of Directors by the holders of Common Stock are: Michael J. Spector Margaret D. Spector Blas R. Ferraiuoli Frederick D. Moss Michael A. Rubin The Board of Directors recommends that stockholders vote FOR the election of the five nominees listed above. Michael J. Spector and Margaret D. Spector (the "Spectors") jointly own a majority of the outstanding shares of Common Stock. As a result, the Spectors have sufficient votes to elect all of the nominees to the Company's Board of Directors. See "Security Ownership of Certain Beneficial Owners and Management." The Spectors have indicated that they intend to vote for each of the nominees listed above. Once a quorum is present, the directors must be elected by the affirmative vote of a majority of the shares of Common Stock entitled to vote and represented at the Annual Meeting, in person or by proxy. Abstentions and broker non-votes will not have an effect on the election of directors of the Company. In the absence of instructions to the contrary, the persons named in the accompanying proxy will vote the shares represented thereby in favor of such nominees. In addition, though management does not anticipate that any of the persons named above will be unable, or will decline, to serve, if any of the persons named above is unable to serve or declines to serve, the persons named in the accompanying proxy may vote for another person, or persons, in their discretion. INFORMATION CONCERNING NOMINEES FOR ELECTION The following table sets forth information with respect to each nominee for election to the Board of Directors. The business experience of each individual is set forth in the paragraphs following the table. 4 AGE AT POSITION DIRECTOR NOMINEE JUNE 21, 1996 WITH COMPANY SINCE ------- ------------- ------------ -------- Michael J. Spector 49 Chairman, President, Chief Executive Officer and Director 1981 Margaret D. Spector 44 Secretary and Director 1981 Blas R. Ferraiuoli 51 Director 1988 Frederick Moss 67 Director 1990 Michael A. Rubin 54 Director 1995 MR. SPECTOR currently serves as the Chairman of the Board, President, Chief Executive Officer and is a director of the Company. He has held these positions since the organization of the Company in 1981. His wife, Margaret D. Spector, is Secretary and a director of the Company. MRS. SPECTOR currently serves as the Secretary and a director of the Company. She has held these positions since the organization of the Company in 1981. Since July 1993, Mrs. Spector has been responsible for the Company's plastic and terracotta pottery business. MR. FERRAIUOLI was elected a director of the Company in 1988 and continues to hold that position. He has had his own law practice since June 1994. Mr. Ferraiuoli was a partner in the law firm of Axtmayer Adsuar Muniz & Goyco, San Juan, Puerto Rico from March 1994 to June 1994, and prior to March 1994, was a partner in the law firm of Goldman Antonetti Cordova & Axtmayer, San Juan, Puerto Rico since 1982. Mr. Ferraiuoli practices civil, corporate and administrative law and has provided legal services to the Company since 1987. MR. MOSS was elected a director of the Company in 1990 and continues to hold that position. Since 1986, he has been an independent financial consultant in New York City. He has also served as the Chairman of the Board of Trustees of the Cincinnati Stock Exchange since 1989. Mr. Moss is a director of Summit High Yield Fund (mutual fund). MR. RUBIN was elected a director of the Company in 1995. Mr. Rubin is an attorney engaged in private practice. He has been a partner in the law firm of Michael A. Rubin, P.A., Coral Gables, Florida, for more than the past five years. 5 COMPENSATION OF DIRECTORS The directors of the Company who are not employees of the Company are paid a quarterly retainer fee of $1,000 and an addi tional fee of $1,000 for each meeting of the board (or committee thereof) attended, plus any travel and out-of-pocket expenses incurred in connection with the performance of their duties. No separate fees are paid for committee meetings attended on the same day as a Board meeting. The directors of the Company who are employed by the Company do not receive additional compensation for serving as directors. The Company also provides directors liability insurance for its directors. DIRECTORS' MEETINGS, COMMITTEES AND FEES The Board of Directors held three meetings during 1995. Each of the members of the Board of Directors attended all of the Board meetings and meetings held by all Committees on which he or she served during such period. The Company has an audit committee which reviews the results of the Company's audits and selects the Company's accountants. This committee held one meeting during 1995. The current members of the audit committee are Messrs. Ferraiuoli, Moss and Spector. The Company also has a Compensation Committee which is responsible for the development and administration of the Company's compensation program. The Compensation Committee held three meetings during 1995. The members of the Compensation Committee are Messrs. Ferraiuoli, Moss and Spector. Presently, the Company's Board of Directors has no standing nominating committee. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee are Messrs. Spector, Ferraiuoli and Moss, who with the exception of Mr. Spector, are non-employee directors of the Company. During 1995, none of the executive officers of the Company served as a director, executive officer or compensation committee member of another entity which had an executive officer who served as compensation committee member or director of the Company. Mr. Ferraiuoli, who is a director of the Company, and has had his own law practice since June 1994, was engaged during 1995 for various legal services. Prior to June 1994, Mr. Ferraiuoli was a partner in the law firm of Goldman Antonetti Cordova & Axtmayer from January 1994 to March 6 1994 and a partner in the law firm of Axtmayer Adsuar Muiz & Goyco from March 1994 to June 1994, two of a number of firms engaged to render legal services to the Company. Also, see "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" for a description of certain transactions between the Company and Mr. Spector. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth as of June 21, 1996 the number of shares of Common Stock of the Company owned beneficially by the following persons and the percentage of all shares outstanding represented by such ownership: (a) each director, nominee for director and executive officer of the Company; (b) all executive officers and directors of the Company as a group; and (c) each person or entity known by the Company to be the beneficial owner of more than 5% of the outstanding Common Stock of the Company. Unless otherwise stated, all shares are held with sole investment and voting power. 7 AMOUNT AND NATURE NAME OF OF BENEFICIAL PERCENT BENEFICIAL OWNER OWNERSHIP OF CLASS ---------------- ----------------- -------- DIRECTORS, NOMINEES AND MANAGEMENT Michael J. Spector . . . . . . . . . . . . . . . . . 1,241,982(1) 64.8% Margaret D. Spector. . . . . . . . . . . . . . . . . 1,241,982(1) 64.8% Frederick D. Moss . . . . . . . . . . . . . . . . . 4,500(2) (3) Blas Ferraiuoli. . . . . . . . . . . . . . . . . . . 8,000(2) (3) Michael A. Rubin . . . . . . . . . . . . . . . . . . 1,000 (3) All directors, nominees and executive officers as a group, consisting of nine persons, including those named above. . . . . . . . . . . . 1,293,582(4) 66.9% OTHER PRINCIPAL HOLDERS J. Morton Davis. . . . . . . . . . . . . . . . . . . 189,149(5) 9.9% D.H. Blair Holdings, Inc. D.H. Blair Investment Banking Corp. 44 Wall Street New York, New York 10005 -------------------- (1) Includes 272,800 shares owned directly by Mr. Spector, 659,694 shares owned jointly with Mrs. Spector and 280,688 shares owned directly by Mrs. Spector. Also, includes stock options to acquire 15,000 and 5,000 shares held by Mr. Spector and Mrs. Spector, respectively. The Spectors share voting and investment power over the shares owned by each other. (2) Includes 2,000 shares issuable upon exercise of stock options exercisable on or within 60 days of June 21, 1996. (3) Represents less than 1%. (4) Includes 37,800 shares issuable upon exercise of stock options exercisable on or within 60 days of June 21, 1996. (5) This amount consists of 189,149 shares held in the name of D.H. Blair Investment Banking Corp., a registered broker-dealer which is wholly-owned by D.H. Blair Holdings, Inc., which in turn is wholly-owned by J. Morton Davis. This amount is based upon a Schedule 13G dated February 9, 1995 filed with the Securities and Exchange Commission. According to the Schedule 13G, Mr. Davis shares the power to vote and dispose all 189,149 shares of Common Stock reported with the Boards of Directors of Blair Investment and Blair Holdings. 8 INFORMATION CONCERNING EXECUTIVE OFFICERS The following table sets forth certain information regarding the executive officers of the Company as of June 21, 1996. NAME (AGE) POSITIONS WITH THE COMPANY ---- ----- -------------------------- Michael J. Spector (49) Chairman, President, Chief Executive Officer and Director Margaret D. Spector (44) Secretary and Director Guillermo Fradera (45) Vice President and General Manager of Miami Operations Alfonso Ortega (42) Vice President, Treasurer and Chief Financial Officer Rene Llerandi (33) Vice President - Marketing Luis Torres (36) Vice President - Production Officers serve at the discretion of the Board of Directors. All of the executive officers of the Company except Margaret D. Spector devote their full time to the operations of the Company. BACKGROUND OF EXECUTIVE OFFICERS Set forth below is a summary of the background of each person who was an executive officer of the Company as of June 21, 1996, other than executive officers who also serve as directors. MR. FRADERA currently serves as the Vice President and General Manager of the Company's Miami operations. He has held these positions since December 1989. He joined the Company in 1984 and served as Vice President for Corporate Development from 1987 to 1989. MR. ORTEGA currently serves as the Vice President, Treasurer and Chief Financial Officer of the Company. He has held this position since January 1993. From 1989 to January 1993, Mr. Ortega was an audit manager for the accounting firm of Vila Del Corral & Company. 9 MR. LLERANDI currently serves as Vice President of Marketing. He has held this position since April 1, 1993. He joined the Company in 1988 as Sales Manager for Puerto Rico. MR. TORRES currently serves as Vice President of Production. He has held this position since April 1, 1993. He joined the Company in 1990 as Production Manager for Puerto Rico. EXECUTIVE COMPENSATION BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Company has a Compensation Committee which is principally responsible for the development and administration of the Company's compensation program. The Company's executive compensation program is designed to retain experienced management and to link corporate performance and returns to shareholders. To this end, the Company has developed a compensation strategy that ties a portion of executive compensation to the Company's performance and to appreciation in the Company's stock price. The overall objectives of this strategy are to attract and retain the best possible executive talent, to motivate these executives to achieve the goals inherent in the Company's business strategy and to link executive and shareholder interests through the use of stock options linked to stock performance. The key elements of the Company's executive compensation consist of base salary, an annual bonus and the grant of stock options. The Company's policies with respect to each of these elements, including the bases for the compensation awarded to Mr. Michael J. Spector, the Company's chief executive officer, are discussed below. In addition, while the elements of compensation described below are considered separately, the Compensation Committee will take into account the full compensation package afforded by the Company to the individual, including insurance and other benefits, as well as the programs described below. BASE SALARIES Base salaries for new executive officers are initially determined by evaluating the responsibilities of the position held 10 and the experience of the individual, and by reference to the competitive marketplace for executive talent, including a comparison to base salaries for comparable positions at other companies in similar industries and markets. Annual salary adjustments are determined by evaluating the performance of the Company and of each executive officer, and also take into account new responsibilities. Non-financial performance measures are also considered. These include increase in market share, efficiency gains, improvements in product quality and improvements in relations with customers, suppliers and employees. With respect to the base salary of Mr. Spector, the Compensation Committee has taken into account a comparison of base salaries of chief executive officers of similar companies, the performance of the Company's common stock and an assessment of Mr. Spector's individual performance. Other factors that have and will be taken into account are the longevity of Mr. Spector's service to the Company and its belief that Mr. Spector is an excellent representative of the Company to the public by virtue of his stature in the community and the industry. Mr. Spector has not received an increase in his base salary since 1990. ANNUAL BONUS The Company's executive officers are eligible for an annual bonus based on the Company's profitability and performance as a whole. All executive bonuses are recommended by the Compensation Committee and must be approved by the full Board of Directors. During 1995, as for prior years, bonuses for all executives, including Mr. Spector, have been determined principally on a general evaluation of the performance of the Company as a whole. Based on the results of this evaluation, the executive officers are paid an annual bonus based on a percentage of their annual salary. The percentage used for 1995 was 8.5%. The Committee intends to evolve the Company's bonus system to one where more specific performance measures are established at the beginning of the year and bonuses would be tied to meeting these goals. 11 STOCK OPTIONS Under the Company's 1998 Stock Benefits Plan, which was approved by shareholders, stock options are granted to the Company's executive officers. Stock options are designed to align the interests of executives with those of the shareholders. Stock options are granted with an exercise price equal to the market price of the common stock on the date of grant and vest over five years. This approach is designed to incentivize the creation of shareholder value over the long term since the full benefit of the compensation package cannot be realized unless stock price appreciation occurs over a number of years. Grants of options are made by the Compensation Committee based on guidelines tied to the Company's performance. The Committee may decide not to grant options in the event of poor corporate perfor mance. CONCLUSION Through the programs described above, a portion of the Company's executive compensation is linked directly to individual and corporate performance and stock price appreciation. COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS Blas R. Ferraiuoli Frederick D. Moss Michael J. Spector The Board Compensation Committee Report on Executive Compensation shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. 12 EMPLOYMENT CONTRACTS The Company does not have any employment contracts with its executive officers. However, the Company has entered into a consulting agreement with Douglas Pennock, who acts as the general manager of the Company's Puerto Rico landscaping division. Under his consulting agreement, Mr. Pennock receives a weekly fee of $1,481 plus health insurance and automobile expenses. SUMMARY COMPENSATION TABLE The following table sets forth information regarding compensation paid by the Company to the Chief Executive Officer for services rendered in all capacities during the fiscal years ended December 31, 1995, 1994 and 1993. No other executive officer of the Company received total annual salary and bonus exceeding $100,000 during 1995. ANNUAL COMPENSATION NAME AND ----------------------------------- OTHER ANNUAL PRINCIPAL POSITION SALARY BONUS COMPENSATION ------------------ ------ ----- ------------ Michael J. Spector 1995: $160,000 $13,600 $0 Chairman, President, 1994: 160,000 13,600 0 Chief Executive Officer 1993: 160,000 13,600 0 and Director GRANT OF STOCK OPTIONS No stock options were granted during the year ended December 31, 1995. OPTIONS EXERCISED DURING 1995 AND OPTION VALUES AT DECEMBER 31, 1995 The following table sets forth information on stock option exercised during the year ended December 31, 1995 and outstanding options held by the Company's chief executive officer and their value at December 31, 1995. Value is calculated as the difference between the bid price of the Common Stock and the exercise price at the exercise date or at the end of the year. 13
VALUE OF NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY SHARES OPTIONS AT OPTIONS AT ACQUIRED ON VALUE 12/31/95 12/31/95(2) NAME EXERCISE REALIZED -------------------------- -------------------------- ---- ----------- -------- EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ----------- ------------- ----------- ------------- Michael J. Spector(1) -- -- 8,000 12,000 $4,720 $7,080 - -------------------- (1) Includes 5,000 options held by to Margaret D. Spector, the wife of Michael J. Spector. (2) Based on a bid price of $3.75 per share at December 29, 1995 and the exercise price of $3.16 for all unexercised options.
PERFORMANCE GRAPH The following performance graph shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. The Performance Graph compares the yearly percentage change in the Company's cumulative total stockholder return on its Common Stock to that of the Center for Research in Securities Prices ("CRSP") Index for NASDAQ Stock Market (US Companies) and a Peer Group Index. The Peer Group Index consists of corporations engaged in the nursery business (Calloways Nursery Inc., Sunbelt Nursery Group and General Host Corp.). The Performance Graph assumes that $100 was invested on December 29, 1989 in each of the Company's Common Stock, the CRSP Index for NASDAQ Stock Market (U.S. Compa nies) and the Peer Group Index and also assumes reinvestment of all dividends. Prior to August 23, 1991, the Company's Common Stock was quoted on the NASDAQ National Market System under the Symbol MRGO. On August 23, 1991, the Common Stock was deleted from the NASDAQ National Market System due to the Company's failure to meet the 14 reporting requirements of the Securities Exchange Act of 1934. On March 18, 1993, the Common Stock resumed trading on the NASDAQ Small Capital market under the symbol MRGO. Since the Performance Graph does not cover periods during which the Company's Common Stock was not quoted on NASDAQ, the Performance Graph does not take into account a special $4.00 per share divided paid in February 1993 to the holders of the Company's Common Stock. 15
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS 12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 -------- -------- -------- -------- -------- -------- Margo Nursery Farms, Inc. 100.0 96.2 96.2 123.6 70.4 113.3 Nasdaq Stock Market (US Companies) 100.0 160.5 186.9 214.4 209.7 296.6 Self-Determined Peer Group 100.0 141.3 163.6 114.3 74.2 69.4
16 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AMOUNT DUE TO PRINCIPAL SHAREHOLDER As of May 31, 1996, the Company owed its principal shareholder, Michael J. Spector, approximately $118,000 arising principally from lease payments for the Puerto Rico nursery farm. The Company expects to pay this balance during 1996. LEASE AND OPTION TO PURCHASE PUERTO RICO NURSERY FARM Effective January 1, 1993, the Company and the Spectors entered into a lease agreement with respect to the Company's Puerto Rico nursery farm. The lease has an initial term of five years and may be renewed for one additional term of five years at the option of the Company. During the initial term of the lease, rent was set at $19,000 per month. During the renewal term, the rent increases to $24,000 per month. Additionally, the Company must pay all taxes on the property, maintain certain insurance coverages and otherwise maintain the property. The lease also contains an option which permits the Company to purchase the property at its appraised value at any time during the term of the lease. In consideration of the option, the Company must pay $1,000 per month. Effective January 1, 1994, the lease agreement was amended to include an additional 27-acre tract of land adjacent to the existing nursery facility for a five-year period. The rent for this additional tract is $1,750 per month. The lease for this additional tract does not include renewal or purchase options. During the year ended December 31, 1995, total rent expense related to the Puerto Rico nursery farm amounted to $249,000. The Company also paid $12,000 during 1995 for the option to purchase the Puerto Rico nursery facility. PURCHASE OF RESIDENCE In August 1990, the Company agreed to lease a residence located in Puerto Rico from a partnership whose partners included Michael J. Spector and Margaret D. Spector. The lease has an initial term of five years and provides for payments of $2,000 per month for the first year of the lease and $2,500 per month for each of the remaining four years. The Company also pays utilities, 17 taxes, insurance, maintenance and repairs on the residence. The lease may be renewed at a rent to be negotiated. During 1995, the Company paid $30,000 in rent and approximately $10,000 in expenses under the lease. The Company utilizes the residence to house employees, including employees traveling from Miami, as well as off-island customers. In February 1996, the Company purchased the residence from the partnership. The property was subject to a 10% commercial loan with a balance of approximately $88,000, which was assumed by the Company. The purchase price, based on the appraised value of the property, amounted to $220,800, including the assumption of the mortgage referred to above. LOAN GUARANTEES In December 1988, the Company guaranteed $400,000 in loans made by the Company's principal bank to Michael J. Spector. In March 1990, Mr. Spector agreed to personally guarantee up to $500,000 of principal due to the Company's principal bank. These loans were the subject of litigation that was settled in May 1996. In connection with the settlement, Mr. Spector agreed to pay approximately $340,000 to the Company s principal bank, which amount was advanced by the Company on behalf of Mr. Spector and was outstanding as of June 21, 1996. CERTAIN OTHER RELATIONSHIPS Blas Ferraiuoli and Michael A. Rubin, directors of the Company, have their respective private law practice. The Company engaged both firms to perform legal services during 1995. RATIFICATION OF INDEPENDENT ACCOUNTANTS The Board of Directors has selected the accounting firm of Kaufman, Rossin & Company to audit the Company's financial state ments for, and otherwise act as the Company's independent certified public accountants with respect to the fiscal year ending December 31, 1996. Kaufman, Rossin & Company has served as the Company's independent public accountants since 1991. The Board's selection for the current fiscal year is being presented to stockholders for ratification at the Annual Meeting. The affirma- 18 tive vote of a majority of the shares of Common Stock represented, in person or by proxy, at the Annual Meeting will constitute such ratification. The Board of Directors recommends that stockholders vote for such ratification. Kaufman, Rossin & Company is expected to have a representative present at the Annual Meeting. The representative is expected to be available to answer appropriate questions and will be given an opportunity, if he so desires, to make a statement. SECTION 16 DISCLOSURE Section 16 of the Securities Exchange Act of 1934, as amended, requires the Company's directors and executive officers to report their ownership of and transactions in the Company's Common Stock to the Securities and Exchange Commission (the "SEC") and the National Association of Securities Dealers. Copies of these reports are also required to be supplied to the Company. Specific dates for filing these reports have been established by the SEC, and the Company is required to report in this proxy statement any failure of its directors and executive officers to file by the relevant due date any of these reports during the fiscal year ended December 31, 1995. Based solely on its review of the copies of the reports received by it, the Company believes that all such filing requirements were satisfied, except for any failures to file reported in the Company's proxy statement mailed to shareholders in connection with the 1995 Annual Meeting of Stockholders. STOCKHOLDER PROPOSALS Any proposal that a stockholder wishes to present for consider ation at the 1996 Annual Meeting of Stockholders must be received by the Company at its principal executive office no later than March 6, 1997. Proposals should be directed to the attention of the Secretary of the Company. At the present time, the Company contemplates that its next annual meeting will occur in July 1997. 19 ANNUAL REPORT A copy of the Company's Annual Report to Shareholders containing the consolidated financial statements of the Company for the fiscal year ended December 31, 1995 is being mailed to each stockholder together with this Proxy Statement. Such Annual Report is not part of the proxy solicitation materials. OTHER MATTERS Management is not aware of any other matters to be presented for action at the Annual Meeting other than those described in the accompanying notice of meeting and routine matters incidental to the conduct of the meeting. However, if any other matter properly comes before the Annual Meeting, the persons named as proxies will vote in accordance with their best judgment on such matter. By Order of the Board of Directors Margaret D. Spector Secretary Vega Alta, Puerto Rico July 5, 1996 20 MARGO NURSERY FARMS, INC. PROXY-ANNUAL MEETING OF STOCKHOLDERS The undersigned hereby appoints Michael J. Spector and Alfonso Ortega, and each of them severally, as proxies, with full power of substitution, to vote on behalf of the undersigned all of the shares of the Common stock of MARGO NURSERY FARMS, INC., a Florida corporation (the "Company"), which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company to be held at the offices of Pletrantoni Mendez & Alvarez, Suite 1901, Banco Popular Center, 209 Munoz Rivera Avenue, San Juan, Puerto Rico on Friday, August 9, 1996 at 10:00 a.m. (local time), and at any adjournment or postponement thereof, upon the following matters: (1) To elect five directors; (2) To ratify the appointment of the Company's independent auditors; and (3) To transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER ON THE OTHER SIDE HEREOF. IF NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED "FOR" EACH OF THE ABOVE PROPOSALS. (CONTINUED AND TO BE SIGNED ON OTHER SIDE) THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. PLEASE MARK YOUR VOTE AS INDICATED ON [X] THIS SAMPLE PROPOSAL (1) Election of Directors. THE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS ARE: FOR WITHHOLD ALL NOMINEES AUTHORITY NOMINEES: BLAS R. FERRAIUOLI, FREDERICK LISTED FOR ALL NOMINEES D. MOSS, MICHAEL A. RUBIN, MARGARET D. [ ] [ ] SPECTOR, MICHAEL J. SPECTOR INSTRUCTION: To withhold authority to vote for any nominee, write that nominee's name on the line immediately below. ________________________________________ PROPOSAL (2) Ratification of appointment PROPOSAL (3) In the discretion of such of Kaufman, Rossin & Co. as independent proxies, upon such other matters as auditors of the Company. may properly come before the annual meeting or any adjournment or FOR AGAINST ABSTAIN postponement thereof. [ ] [ ] [ ] Dated: _______________________________ ______________________________________ Signature of Stockholder ______________________________________ Signature of Stockholder WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. JOINT OWNERS SHOULD BOTH SIGN. PLEASE BE SURE TO DATE THE PROXY AND RETURN THE SAME PROMPTLY. -----END PRIVACY-ENHANCED MESSAGE-----