NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
ARROW-MAGNOLIA INTERNATIONAL, INC.
2646 Rodney Lane
Dallas, Texas 75229
To be Held May 24, 2000
Notice is hereby given that the Annual Meeting of Shareholders of
Arrow-Magnolia International, Inc. will be held on Wednesday, May
24, 2000 at 10:00 a.m., Dallas, Texas time at 2646 Rodney Lane, Dallas,
Texas 75229, for the following purposes:
1. To elect a Board of Directors of five (5) persons as nominated in the
accompanying Proxy Statement, such Directors to hold office until the next
annual meeting of shareholders and until their successors are elected; and
2. To transact such procedural matters as may properly be brought before the
meeting or any adjournment or adjournments thereof.
Said meeting may be adjourned from time to time without other notice than by
announcement at said meeting, or at any adjournment thereof, and any and all
business for which said meeting is hereby noticed may be transacted at any
such adjournment.
The Board of Directors has fixed May 3, 2000 as the date for taking of a
record of the shareholders entitled to notice of and to vote at the meeting
and at any adjournment or adjournments thereof. The stock transfer books
will not be closed.
Enclosed is a form of Proxy solicited by the Board of Directors of the
Company. Shareholders who do not plan to attend the meeting in person are
requested to date, sign and return the enclosed Proxy in the enclosed
envelope, to which no postage need be affixed if mailed in the United States.
Your Proxy may be revoked at any time before it is exercised and will not be
used if you attend the meeting and prefer to vote in person.
BY ORDER OF THE BOARD OF
DIRECTORS
MORRIS SHWIFF
Chairman of the Board
Dallas, Texas
April 28, 2000
<PAGE>
ARROW-MAGNOLIA INTERNATIONAL, INC.
2646 Rodney Lane
Dallas, Texas 75229
PROXY STATEMENT
Solicitation by the Board of Directors
of Proxies from Shareholders for
the Annual Meeting of Shareholders
to be held on May 24, 2000
The Board of Directors of Arrow-Magnolia International, Inc. (hereinafter
called the "Company") solicits your proxy in the enclosed form, which you are
requested to fill out, sign as indicated and return to the Company in the
enclosed, self-addressed envelope, which requires no postage if mailed in the
United States. You are encouraged to return your completed proxy whether or
not you intend to attend the meeting in person.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised by filing a written revocation
or a duly executed proxy bearing a later date. Any written revocation may be
delivered in person or mailed to the Company at 2646 Rodney Lane, Dallas,
Texas 75229, Attn: President. A shareholder who attends the Annual Meeting in
person may revoke his proxy at the Annual Meeting and vote in person if he
so desires.
Proxies are being solicited by mail and all expenses of solicitation have
been or will be borne by the Company. The approximate day on which this Proxy
Statement and form of proxy will be sent to security holders is May 8, 2000.
May 3, 2000 has been fixed as the record date for the determination of
shareholders of the Company entitled to notice of and to vote at the Annual
Meeting or at any adjournments thereof. At the close of business on that
date, 3,248,566 shares of Common Stock, par value $0.10 per share, (the
"Common Stock"), were issued and outstanding, each share entitling the holder
thereof to one vote. Cumulative voting in the election of Directors is not
allowed.
Abstentions and broker non-votes will be counted as present for purposes of
determining the existence of a quorum at the Annual Meeting. Because
Directors are elected by a plurality of the votes cast by shareholders,
abstentions and broker non-votes are not counted and have no effect in
determining which candidates have received the highest number of votes and
are elected, except in affecting the total number of votes cast for a nominee.
With respect to any matter brought before the Annual Meeting requiring the
affirmative vote of a majority or other proportion of the outstanding shares,
an abstention or non-vote will have the same effect as a vote against the
matter being voted upon.
All shares of the Company represented by proxies relating to shares of the
Common Stock received in time and in proper form and condition and not
revoked will be voted as specified in the proxy, or in the absence of
specific direction, the proxy will be voted by the person designated therein:
1. FOR the election as Directors of the Company of the five (5)
nominees named below to hold office until the next annual meeting of
shareholders and until their respective successors shall be duly elected.
In the event any of such nominees should become unable to serve as
a Director, the proxies will be voted in accordance with the best
judgment of the person acting under it.
The management knows of no other matters to be submitted to the 2000 Annual
Meeting with respect to which the shareholders are entitled to vote, but if
other procedural matters do properly come before the meeting, the persons
named in the proxy will vote according to their best judgment.
<PAGE>
SECURITIES OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the Company's Common
Stock owned at May 3, 2000, by (i) each shareholder known to the Company to
own beneficially more than 5% of the Company's Common Stock, (ii) each of
the Company's Directors or nominees for Director, and (iii) all officers,
Directors and nominees as a group. All of the officers, Directors and
nominees of the Company, who as a group own beneficially 61.2% of the
Company's Common Stock and 54.2% of the Company's outstanding Common Stock,
have indicated their intention to vote for each of the nominees to be
presented to the shareholders at the Annual Meeting. These votes, when cast,
will be sufficient to assure election of each of the nominees regardless of
whether other shareholders vote for or against or do not vote with respect
to the nominees.
<TABLE>
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Class
<S> <C> <C>
Morris Shwiff
2646 Rodney Lane
Dallas, Texas 75229 1,066,608 (1) 30.9%
Mark I. Kenner
2646 Rodney Lane
Dallas, Texas 75229 751,066 (2) 21.8%
Fred Kenner
2646 Rodney Lane
Dallas, Texas 75229 464,615 (3) 13.5%
Shoreline Micro-Cap Fund I
c/o William Blair & Co.
222 West Adams
Chicago, Illinois 60606 199,700 6.1%
Robert D. DeRosier 54,970 1.7%
Clifton R. Duke 9,925 *
All Officers,
Directors and
Nominees as a Group(Five Persons) 2,347,184 (4) 61.2%
</TABLE>
*Less than 1%
(1) Includes 204,974 shares which may be acquired upon exercise of an option.
(2) Includes 193,261 shares which may be acquired upon exercise of an option.
(3) Includes 187,404 shares which may be acquired upon exercise of an option.
(4) Includes 585,639 shares which may be acquired upon exercise of options.
<PAGE>
ELECTION OF DIRECTORS AND INFORMATION
AS TO DIRECTORS AND NOMINEES
At the 2000 Annual Meeting, the shareholders of the Company will elect five
(5) Directors, in each case to hold office until the next annual meeting and
until their respective successors shall be duly elected. There will be
submitted by the Board of Directors of the 2000 Annual Meeting for election
as Directors the following five (5) nominees:
Morris Shwiff
Mark I. Kenner
Fred Kenner
Robert D. DeRosier
Clifton R. Duke
The Directors, nominees and executive officers of the Company
are as follows:
Name Age Position With Registrant
Morris Shwiff 78 Chairman of the Board and Director
Mark I. Kenner 68 Director, Vice Chairman and Chief
Executive Officer
Fred Kenner 47 Director, President and Chief Operating
Officer
Robert D. DeRosier 73 Director
Clifton R. Duke 65 Director
Each of the nominees was elected a Director of the Company on
May 27, 1999 and will hold his position until his successor is elected.
Each of the above named officers was elected to his respective office with
the Company by the Board of Directors of the Company on May 27, 1999,
and serves as an officer of the Company at the discretion of the Board
of Directors. Mr. Mark I. Kenner is the father of Mr. Fred Kenner, but
there is no other family relationship between any of the executive
officers or Directors of the Company.
The principal occupation and employment during the past five years of the
Directors and each of the executive officers of the Company are as follows:
Morris Shwiff has served as Chairman of the Board of Directors of the
Company since December 1985. Until February 17, 1999, Mr. Shwiff
also served as President. For more than five years prior to December 1985,
Mr. Shwiff was a Director, President and principal stockholder of Arrow
Chemical Corporation, which corporation was acquired by the Company in
December, 1985.
Mark I. Kenner has served as Director, Vice Chairman and Chief Executive
Officer since February 17, 1999. Prior to that time, he had served
as Executive Vice President of the Company ssince December 1985. For more
than five years prior to December 1985, Mr. Kenner was a Director, Vice
President and stockholder of Arrow Chemical Corporation.
<PAGE>
Fred Kenner has served as Director and President of the Company since
February 17, 1999. Prior to that time, he had served as Vice President,
Secretary and Treasurer of the Company since December 1985. For more than
five years prior to December 1985, Mr. Kenner was a Director, Secretary and
Treasurer and stockholder of Arrow Chemical Corporation.
Robert D. DeRosier is the retired Chairman of the Board of AmRep, Inc.,
a manufacturer of specialty chemicals, where he served until 1991. He
received a Bachelor of Science in Chemical Engineering from Northwestern
University.
Clifton R. Duke is Chairman Emeritus of the Board of Directors of
Container Supply, Inc., the principal business of which is the distribution
and sale of rigid packaging products. He served as President and
Chief Executive Officer of Chemscope Corporation, the principal business
of which is the manufacture and sale of aerosol and liquid cleaning
compounds. Mr. Duke is also General Partner of D&D Investments, the principal
business of which is real estate development and leasing.
Directors are elected annually and serve until their successors are
duly elected and qualified. Officers serve at the discretion of the Board.
The Company's Board of Directors has an Audit Committee composed of
non-employee Directors Duke and DeRosier and the Company's Chairman, Morris
Shwiff. The Company has no standing nominating or compensation committee.
During the fiscal year ended December 31, 1999, the Audit Committee held a
total of three meetings and the Board of Directors held a total of four
meetings (or their equivalent), and each incumbent Director then serving
participated in all of such meetings (or their equivalent).
Audit Committee Report
The Audit Committee currently consists of two Directors, Messrs. Duke
and DeRosier, who are independent and one Director, Mr. Shwiff, who would
not be deemed independent as defined by NASDAQ listing standards. Mr.
Shwiff is active as the Chairman and an employee of the Company.
The Audit Committee has been appointed to review the Company's financial
statements and its relationship with independent auditors. The Board has not
adopted a written charter for the Audit Committee and is currently studying
proposals for the adoption of a formal written charter, which the Board
intends to adopt on or before June 14, 2000, the date required by NASDAQ
listing requirements.
As of the date of this proxy statement, the Audit Committee has not
reviewed and discussed the audited financial statements for the year ended
December 31, 1999 with management or discussed with the independent
auditors the matters required to be discussed by Statement on Auditing
Standards No. 61. Nor has the Audit Committee received the written disclosures
and the letter required by Independence Standards Board Standard No. 1 or
discussed with the Company's auditors the auditors' independence. The Board
intends to implement such procedures as part of the charter adoption process.
The Audit Committee has therefore not been in a position to make any
recommendation to the Board of Directors concerning the inclusion of the
audited financial statements in the Company's Annual Report on Form 10-KSB.
Compliance With Section 16(a) of the Exchange Act.
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company,
none of the Directors, executive officers or beneficial owners of more than
10 percent of the Company's Common Stock during fiscal 1999 failed to file
any report under Section 16(a) of the Exchange Act with respect to the
Company's most recent fiscal year.
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the monetary and non-monetary compensation
paid by the Company during the three fiscal years ended December 31, 1999 to
the Company's chief executive officer and to the Company's other executive
officers.
<TABLE>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation Awards
-------------------
Name and Annual Number of Shares
Principal Compensation Subject to
Position Year Salary Bonus Options Granted
- -------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Morris Shwiff, 1999 $161,200 $40,300 0
Chairman of 1998 $161,200 $40,300 0
the Board 1997 $150,400 $37,700 0
Mark I. Kenner, 1999 $154,700 $38,675 0
Director, Vice 1998 $154,700 $38,675 0
Chairman and 1997 $144,300 $36,075 0
Chief Executive
Officer
Fred Kenner, 1999 $148,200 $37,050 0
Director, President 1998 $148,200 $37,050 0
and Chief Operating 1997 $137,800 $34,450 0
Officer
Option Exercises and Fiscal Year End Option Values
The following table reflects option exercises during the fiscal year ended
December 31, 1999, the number of shares underlying both exercisable and
unexercisable options as of the fiscal year end and the value of unexercised
"in the money" options as of the fiscal year end:
</TABLE>
<TABLE>
Number
of Shares Number of Shares Value of Unexercised
Acquired Underlying Unexercised In the Money Options
on Value Options at Fiscal Year End at Fiscal Year End (1)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Morris
Shwiff 0 0 204,974 - $384,326 -
Mark I.
Kenner 0 0 193,261 - $362,364 -
Fred
Kenner 0 0 187,404 - $351,384 -
(1) For purpose of calculating this value, the Company has utilized the
closing price for the Company's common stock as of December 31, 1999 as
reported by the Nasdaq SmallCap Market.
<PAGE>
Employment Agreements
The Company has entered into employment agreements with the Chairman, Vice
Chairman and President of the Company. The agreements provide a term of
three years for the Chairman and five years each for the Vice Chairman and
President, with evergreen provisions extending the term an additional year at
the end of each year of service unless either party gives notice of intent
not to renew at least six months prior to the end of each year of service.
These agreements also provide for a lump sum payment of the lesser of the
compensation payable during the balance of the term or the amount $1.00 less
than a "parachute" payment under the Internal Revenue Code if certain terms
of the executives' employment are altered and the executive elects to
terminate after a change of control of the Company. All such agreements
contain provisions assigning all discoveries by the employee to the Company
and restricting use or disclosure of confidential information.
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected Philip
Vogel & Co. PC as the Company's independent auditors for fiscal 2000.
Representatives of Philip Vogel & Co. PC are expected to be present at the
Annual Meeting of Shareholders on May 24, 2000 to make any statement if they
desire to do so and to respond to any appropriate questions of the
shareholders.
KPMG LLP ("KPMG") was previously the principal accountant for the
Company. During 1998, the Company and KPMG engaged in discussions concerning
fees for performing such work in the future, but were unable to reach
agreement. Effective November 18, 1998, KPMG resigned.
The former accountants' audit reports on financial statements of the
Company as of December 31, 1997 and for the fiscal year ended December 31,
1997 did not contain any adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with the audit of the fiscal year ended December
31, 1997, there were no disagreements with KPMG on any matter of accounting
principles or practices, financial statement disclosure or auditing scope
procedures which, if not resolved to their satisfaction, would have caused
them to make reference in connection with their opinion to the subject matter
of the disagreement.
The resignation of KPMG and the selection of Philip Vogel & Co.,
P.C. have been approved by the Audit Committee and the Board of Directors of
the Company.
SHAREHOLDERS' PROPOSALS
The day by which proposals of shareholders intended to be presented at
the 2001 annual meeting of shareholders must be received by the Company for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting is December 29, 2000. It is important that proxies be returned
promptly. Shareholders are requested to date, sign and return the enclosed
proxy in the enclosed envelope, to which no postage need be affixed if mailed
in the United States. If you attend the 2000 Annual Meeting, you may revoke
your proxy and vote in person if you so desire, otherwise your proxy will be
voted for you.
BY ORDER OF THE BOARD OF DIRECTORS
Morris Shwiff, Chairman of the Board
Dallas, Texas
April 28, 2000
<PAGE>
NOTICE: Upon written request from a shareholder of record at May
3, 2000 (or from any beneficial owner representing that he is or was entitled
to vote at the meeting), the Company will furnish without charge a copy of
its Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999,
as filed with the Securities and Exchange Commission, including financial
statement and schedules thereto and a list of exhibits not contained
therein. The Company will furnish copies of the full text of any such exhibits,
if requested, upon payment in advance of the fee prescribed therefor as
specified in the list of exhibits accompanying the Annual Report on Form
10-KSB. Such fee will reflect the Company's reasonable expenses incurred in
providing copies of the exhibits. Requests should be directed to:
Morris Shwiff
Arrow-Magnolia International, Inc.
2646 Rodney Lane
Dallas, Texas 75229
<PAGE>
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF
ARROW-MAGNOLIA INTERNATIONAL, INC.
The undersigned shareholder of Arrow-Magnolia International, Inc. (the
"Company"), revoking all prior proxies, does by these presents name,
constitute and appoint Morris Shwiff and Fred Kenner and each of them, the
true and lawful proxy and attorney-in-fact of the undersigned, with full
power of substitution, to vote all shares of the Common Stock, par value
$0.10 per share, of the Company standing in the name of the undersigned on
the books of the Company at the close of business on May 3, 2000 or in
respect of which the undersigned is entitled to vote at the Company's
Annual Meeting of Shareholders, to be held on May 24, 2000 at 2646 Rodney
Lane, Dallas, Texas 75229, and at any and all adjournments thereof, on the
following matters:
1. Election of Directors
FOR all nominees WITHHOLD
listed below (except AUTHORITY to vote
as marked to the for all nominees
contrary below) listed below
Morris Shwiff, Mark Kenner, Fred Kenner, Robert D. DeRosier
and Clifton R. Duke.
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
2. In their discretion, upon such other procedural matters
as may properly come before the meeting.
Please complete, sign and mail this proxy promptly in the enclosed
self-addressed envelope, which requires no postage if mailed in the United
States. IF NO SPECIFIC DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR"
MATTER NO. 1.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and the Proxy Statement each dated April 28, 2000.
Dated , 2000
Shareholder's Signature
Shareholder's Signature
NOTE: Please sign exactly as your name is
shown on the left. If stock stands in two
or more names, please have all sign. If
this Proxy is executed by a corporation,
it should be signed in the name of the
corporation by an officer thereunto duly
authorized. If this Proxy is to be
signed as attorney, executor,
administrator, trustee, guardian, or in
any representative capacity, the title of
the person signing should be given in
full and any necessary documentary
evidence of authority to sign this Proxy
should be presented.
</TABLE>
