PROXY
PENTECH INTERNATIONAL, INC.
[LOGO]
195 Carter Drive
Edison, New Jersey 08817
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned, revoking all previous proxies, hereby
appoints Norman Melnick, David Melnick and Richard S. Kalin, and
each of them, proxies with power of substitution to each, for and
in the name of the undersigned to vote all shares of Common Stock
of Pentech International, Inc. (the "Company") which the
undersigned would be entitled to vote if present at the Annual
Meeting of Shareholders of the Company to be held on April 30, 1996
at 10:00 A.M. in the Clarion Hotel, 2055 Lincoln Highway, Edison,
New Jersey 08817, and any adjournments thereof, upon the matters
set forth in the Notice of Annual Meeting.
The undersigned acknowledges receipt of the Notice of Annual
Meeting, Proxy Statement and the Company's 1995 Annual Report.
1. ELECTION OF DIRECTORS
FOR all nominees listed Withhold Authority to vote
below (except as marked for all nominees listed
to the contrary below) below
(Instruction: To withhold authority to vote for an individual
nominee strike a line through such nominee's name from the list
below.)
ROY L. BOE, JERRY DELLA FEMINA, JOHN W. LINSTER, RICHARD
S. KALIN, JOHN F. KUYPERS, DAVID MELNICK AND NORMAN
MELNICK.
2. IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
FOR AGAINST
PLEASE SIGN ON THE REVERSE SIDE AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
and when properly executed will be voted as directed herein. If no
direction is given, this Proxy will be voted FOR Proposals 1 and 2.
Date: , 1996
(Signature)
(Signature, if held jointly)
Where stock is registered in the names
of two or more persons ALL should sign.
Signature(s) should correspond exactly
with the name(s) as shown above. Please
sign, date and return promptly in the
enclosed envelope. No postage need be
affixed if mailed in the United States.
Requests for copies of proxy materials, the Company's Annual
Report for its fiscal year ended September 30, 1995 or the
Company's Annual Report for its fiscal year ended September 30,
1995 on Form 10-K should be addressed to Shareholder Relations,
Pentech International, Inc., 195 Carter Drive, Edison, New Jersey
08817. This material will be furnished without charge to any
shareholder requesting it.
<PAGE>
PENTECH INTERNATIONAL, INC.
(a Delaware corporation) [LOGO]
NOTICE OF 1996 ANNUAL
MEETING OF SHAREHOLDERS TO BE
HELD AT 10:00 A.M. ON APRIL 30, 1996
To the Shareholders of
PENTECH INTERNATIONAL, INC.:
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of
Shareholders (the "Meeting") of PENTECH INTERNATIONAL, INC. (the
"Company") will be held on April 30, 1996 at 10:00 A.M. in the
Clarion Hotel, 2055 Lincoln Highway, Edison, New Jersey, to
consider and vote on the following matters described under the
corresponding numbers in the attached Proxy Statement:
1. The election of seven directors; and
2. Such other matters as may properly come before the
Meeting.
The Board of Directors has fixed March 5, 1996 at the close of
business, as the record date for the determination of shareholders
entitled to vote at the Meeting, and only holders of shares of
Common Stock of the Company of record at the close of business on
that day will be entitled to vote. The stock transfer books of the
Company will not be closed.
A complete list of shareholders entitled to vote at the
Meeting shall be available for examination by any shareholder, for
any purpose germane to the Meeting, during ordinary business hours
from March 30, 1996 until the Meeting at the offices of the
Company. This list will also be available at the Meeting.
Whether or not you expect to be present at the Meeting, please
fill in, date, sign and return the enclosed Proxy, which is
solicited by management. The Proxy is revocable and will not
affect your right to vote in person in the event you attend the
Meeting.
By Order of the Board of Directors
Richard S. Kalin, Secretary
Date: March 11, 1996<PAGE>
PENTECH INTERNATIONAL, INC.
195 Carter Drive
Edison, New Jersey 08817
[Logo]
PROXY STATEMENT
1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AT 10:00 A.M. ON APRIL 30, 1996
The enclosed proxy is solicited by the management of PENTECH
INTERNATIONAL, INC. (the "Company") in connection with the 1996
Annual Meeting of Shareholders (the "Meeting") to be held on
April 30, 1996 at 10:00 A.M. in the Clarion Hotel, 2055 Lincoln
Highway, Edison, New Jersey 08817 and any adjournment thereof.
The Board of Directors has set March 5, 1996 at the close of
business as the record date for the determination of shareholders
entitled to vote at the Meeting. A shareholder executing and
returning a proxy has the power to revoke it at any time before
it is exercised by filing a later proxy with, or other
communication to, the Secretary of the Company or by attending
the Meeting and voting in person. The proxy will be voted in
accordance with your directions as to:
(1) The election of the seven persons listed herein as
directors of the Company; and
(2) Such other matters as may properly come before the
Meeting.
In the absence of direction, the proxy will be voted in
favor of these proposals.
The entire cost of soliciting proxies will be borne by the
Company. The cost of solicitation, which represents an amount
believed to be normally expended for a solicitation relating to
an uncontested election of directors, will include the cost of
supplying necessary additional copies of the solicitation
materials and the Company's Annual Report to Shareholders for its
fiscal year ended September 30, 1995 (the "Annual Report") to
beneficial owners of shares held of record by brokers, dealers,
banks, trustees, and their nominees, including the reasonable
expenses of such recordholders for completing the mailing of such
materials and Annual Report to such beneficial owners.
Only shareholders of record of the Company's 10,615,758
shares of Common Stock (the "Common Stock") outstanding at the
close of business on March 5, 1996 will be entitled to vote.
Each share of Common Stock is entitled to one vote. Holders of a
majority of the outstanding shares of Common Stock must be
represented in person or by proxy in order to achieve a quorum.
The proxy statement, the attached notice of meeting, the enclosed
form of proxy and the Annual Report are being mailed to
shareholders on or about March 10, 1996. The mailing address of
the Company's principal executive offices is 195 Carter Drive,
Edison, New Jersey 08817.
1. ELECTION OF DIRECTORS
Seven directors are to be elected by a majority of the votes
cast at the Meeting, each to hold office until the next Annual
Meeting of Shareholders and until his respective successor is
elected and qualified. The persons named in the accompanying
proxy have advised management that it is their intention to vote
for the election of the following nominees as directors unless
authority is withheld:
o Roy L. Boe
o Jerry Della Femina
o John W. Linster
o Richard S. Kalin
o John F. Kuypers
o David Melnick
o Norman Melnick
Management has no reason to believe that any nominee will be
unable to serve. In the event that any nominee becomes
unavailable, the proxies may be voted for the election of such
person or persons who may be designated by the Board of
Directors.
Information Regarding Officers, Directors and Nominees for
Election
The following is certain information regarding nominees,
current directors and executive officers of the Company:
Position with Year became
Name Age the Company Officer or Director
Norman Melnick 64 Chairman 1984
John W. Linster 51 President and Chief 1995
Executive Officer
David Melnick 37 Chief Operating 1984
Officer and Director
John F. Kuypers 37 Executive Vice
President-Marketing 1991
and Director
Richard S. Kalin 41 Secretary and Director 1984
William Visone 32 Treasurer, Chief 1992
Financial
Officer
Roy L. Boe 65 Director 1994
Jerry Della Femina 59 Director 1994
Norman Melnick. Mr. Norman Melnick, a founder of the
Company, has been Chairman of the Company since its inception in
April 1984. He was CEO until November 1995. Mr. Norman Melnick
is Mr. David Melnick's father.
John W. Linster. Mr. John Linster was elected President and
Chief Executive Officer of the Company in November 1995. Prior
to that, from July 1973 to March 1995, he was employed at Avery
Dennison Corp. in various positions including Vice President,
General Manager Mass Market. During his career at Avery
Dennison, he founded the Mass Market business and built it into a
profitable $110 million business.
David Melnick. Mr. David Melnick, a founder of the Company,
has been a Director of the Company since its inception in April
1984. He was President until November 1995 when he was elected
Chief Operating Officer.
John F. Kuypers. Mr. Kuypers has been employed by the
Company since September 1991 as Executive Vice President -
Marketing. Prior to his employment with the Company in September
1991, Mr. Kuypers was Executive Vice President of Marketing for
W.T. Rogers, a manufacturer and marketer of office products, a
position he had held for more than five years prior to his
employment with the Company.
Richard S. Kalin. Mr. Kalin has been Secretary and Director
of the Company since its inception in April 1984. He is
Chairman, Secretary and Director of Micronetics Wireless, Inc., a
manufacturer of wireless network components and Secretary and
Director of Wanderlust Interactive, Inc., a CD ROM developer. He
has been engaged in the private practice of law since November
1983 and currently is a founding partner of Kalin & Banner, a New
York law firm.
William Visone. Mr. Visone has been employed by the Company
since January 1992 initially as Controller and presently as Chief
Financial Officer. Prior to his employment with the Company, Mr.
Visone served as a certified public accountant for more than six
years with Coopers & Lybrand. In April 1992, Mr. Visone was
elected Treasurer.
<PAGE>
Roy L. Boe. Mr. Boe has been President of the Worcester
Icecats, Inc. since its inception in 1994. The Worcester Icecats
are a semi-professional ice hockey team located in Worcester,
Massachusetts. He has also been President of the North American
Sports Group (the "Group") since its inception in December 1987.
The Group advises universities and city governments on matters
relating to the acquisition, promotion and development of
athletic facilities, teams and franchises within the United
States. He is also a director of Micronetics Wireless, Inc.
Jerry Della Femina. Mr. Della Femina is an owner and the
chief executive officer of Jerry & Ketcham Inc., an advertising
organization founded in December 1992. He also operates several
restaurants and a food market. From 1967 to June 1992, Mr. Della
Femina was an owner and chief executive officer of Della Femina
Travisano & Partners (which became Della Femina McNamee) which he
sold in 1986.
During the fiscal year ended September 30, 1995 ("Fiscal
1995"), the Board of Directors met on three occasions. Mr. Della
Femina did not attend two of the meetings. In addition, the
Board of Directors acted once by unanimous consent. The Company
has an Executive Committee (the "Executive Committee") which is
authorized to make major decisions affecting the Company and an
Audit Committee (the "Audit Committee") and a Stock Option
Compensation Committee (the "Compensation Committee") which
determines compensation and awards stock options. Messrs. Norman
and David Melnick and Kalin serve on the Audit Committee which
was established in November 1993 and met once during Fiscal 1995.
Messrs. Boe, Della Femina and Kalin serve on the Compensation
Committee which, during Fiscal 1995, acted once by unanimous
consent.
<PAGE>
Executive Compensation
The following table sets forth for Fiscal 1995, 1994 and
1993, information relating to compensation received by the
Company's CEO and by each of the Company's executive officers
whose Fiscal 1995 compensation was more than $100,000 per year:
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Name and
Principal Fiscal
Position Year Salary ($) Option Grants
Norman Melnick 1995 247,500 -
Chairman 1994 275,000 -
1993 275,000 100,000
John W. 1995(1) - -
Linster
President and
Chief Execu-
tive Officer
David Melnick 1995 157,500 -
Chief Operating 1994 175,000 -
Officer 1993 175,000 50,000
John F. Kuypers 1995 250,000 -
Executive Vice 1994 250,000 160,000(2)
President - 1993 165,211 50,000
Marketing
(1) Hired in November 1995.
(2) Exchanged options for 200,000 shares for these options at a
reduced option exercise price.
The aggregate amount of other compensation for each of
Messrs. Norman Melnick, Linster, David Melnick and Kuypers did
not, in any case, exceed the lesser of $50,000 or ten percent of
the total compensation.
Mr. Linster's employment agreement with the Company
commenced in November 1995 and terminates in November 2003. His
agreement provides for an annual compensation of $250,000 plus
increases based on increases in the Consumer Price Index. It also
provides for a Company-supplied automobile, a life insurance
policy in the amount of $500,000, and an option to purchase an
aggregate of 200,000 shares of Common Stock of the Company,
exercisable 25,000 shares per year. Mr. Kuypers' employment
agreement with the Company commenced in September 1991 and
terminates in September 1999. His agreement provides for an
annual compensation at a present rate of $250,000. Both
agreements contain a one year restrictive covenant to not compete
upon termination of employment and provides for the payment of
benefits similar to those paid executives of similarly situated
companies.
Profit Sharing Plan
During the fiscal year ended September 30, 1987, the Company
established a non-contributory profit sharing plan and trust (the
"Profit Sharing Plan") which covers all eligible employees,
including officers of the Company, who are at least twenty and
one-half years of age and have completed one year of service with
the Company. In April 1993 the Profit Sharing Plan was converted
into a contributory plan (hereinafter the "401(k) Plan") which is
qualified under Section 401(k) of the Internal Revenue Code of
1986, as amended (the "Code"). All money in the Profit Sharing
Plan was rolled over into the 401(k) Plan. Each participant's
interest for contributions made by the Company vests at the rate
of 20% after two years of service, 40% after three years of
service, 60% after four years of service, 80% after five years of
service, and 100% after six years of service. The retirement age
under the Plan is 65 or after the sixth year of credited service,
whichever is later. The Company did not contribute to the 401(k)
Plan in Fiscal 1995. The 401(k) Plan also includes certain death
benefits and disability benefits. Messrs. Norman Melnick and
David Melnick each are fully vested under the 401(k) Plan and Mr.
Kuypers has four years of service and is 60% vested.
Stock Options Plans
The Company currently has three active stock option plans.
The 1984 Incentive Stock Option Plan terminated during Fiscal
1994 (the "1984 Plan"). The 1989 Stock Option Plan was adopted
by the Board of Directors on January 5, 1989 and was approved by
the shareholders of the Company on April 6, 1989 (the "1989
Plan"). The 1993 Stock Option Plan was adopted by the Board of
Directors on January 5, 1993 and was approved by the shareholders
of the Company on April 12, 1993 (the "1993 Plan"). The 1995
Stock Option Plan was adopted by the Board of Directors on March
15, 1995 and approved by the shareholders of the Company on May
9, 1995 (the "1995 Plan") (the 1989 Plan, the 1993 Plan and the
1995 Plan are collectively referred to as the "Plans"). Stock
options granted under the Plans are intended to qualify as
"incentive stock options" within the meaning of Section 422A of
the Code ("Incentive Options"). The Plans also allow the
granting of non-qualified stock options ("Non-Qualified Options")
(Incentive Options and Non-Qualified Options are collectively
referred to as "Options"). The 1989 Plan additionally allows the
granting of limited stock appreciation rights. Under the 1989
Plan, Incentive Options may be granted to the Company's officers
and employees. Under the 1993 Plan and the 1995 Plan, Incentive
Options may be granted to the Company's employees, consultants,
advisors to the Board of Directors and qualified directors.
The Plans are administered by the Compensation Committee,
which has the authority to determine the person to whom Options
may be granted, the number of shares of Common Stock to be
covered by each Option, the time or times at which the Options
may be granted or exercised and for the most part, the terms and
provisions of the Options. The exercise price of Options granted
under the Plans may not be less than the fair market value of the
shares of Common Stock on the date of grant (110% of the fair
market value if granted to a person owning in excess of ten
percent of the Company's securities). Options granted under the
1989 Plan may not be exercised more than ten years from the date
of grant (five years if granted to a person owning in excess of
ten percent of the Company's securities). Options granted under
the 1993 Plan may not be exercised more than five years from the
date of grant. The 1989 Plan terminates on January 5, 1999. The
1993 Plan terminates on January 4, 2003. The 1995 Plan
terminates on January 4, 2005.
No executive officers were granted stock options under the
Plans during Fiscal 1995. The following is cumulative
information relating to outstanding options owned by the
Company's executive officers.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of Unexercised
Unexercised In-the-Money
Options/ Options/SARs
at FY-End (#) at FY-End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable(1)
Norman Melnick 17,800/82,200 0/0
David Melnick 17,000/37,000 0/0
Richard S. Kalin 25,000/0 0/0
John F. Kuypers 132,000/101,000 0/0
William Visone 28,000/22,000 0/0
(1) Represents fair market value of Common Stock at January 10,
1996
of $2.00 as reported by NASDAQ, less the exercise price.
Additional Information with Respect to Compensation
The compensation for each executive officer is determined by
the Board of Directors. Members of the Board of Directors,
consisting of Messrs. Norman Melnick, David Melnick, Kalin and
Kuypers, Boe and Della Femina deliberated in determining
compensation and unanimously agreed on the compensation to be
awarded each executive officer.
In reaching its determination, the Board considers factors
such as performance of the individual and performance of the
Company, as a whole, as well as comparable compensation paid to
executives at other similarly situated companies. The Board also
considers stock price, cash flow, revenues, net income and other
factors in arriving at its compensation determinations. The
Board believes that compensation should be structured so as to
provide incentives to the Company's officers to enhance the long-
term profitability of the Company. It is the Board's view that
increases in revenues, net income, cash flow and market share
improve shareholder market value. As a result, in making its
compensation determinations, the Board attempts to align the
financial interests of the Company's officers with those of its
shareholders. Based on these factors, during Fiscal 1995, no
executive officer received any increase in his salary. Norman
Melnick and David Melnick reduced their salaries ten percent as
of June 30, 1995, and no executive officer received a bonus.
Options to purchase Common Stock are a key element in the
Company's compensation program. Since the Company's Stock Option
Plans provide for at least a one-year waiting period before
options may be exercised and an exercise price of the Company's
Common Stock at fair market value as of the date of grant,
officers benefit from options only when the share price
increases. As a result, options help to motivate executives by
providing incentives tied to shareholder goals. No new options
were granted to any executive officer during Fiscal 1995.
<PAGE>
Performance Graph
Description: The performance graph was prepared by the Center
for Research in Security Prices. This line graph
illustrates a comparison of five year-cumulative
total returns for Pentech International, Inc.,
NASDAQ Stock Market (U.S. Companies) and NASDAQ
Stocks (SIC 5000 - 5099 U.S. and Foreign)
wholesale trade-durable goods from September 28,
1990 to September 29, 1995.
<PAGE>
Stock Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of
Common Stock beneficially owned, directly or indirectly, as of
the date hereof, by each of the directors of the Company, by all
persons known by the Company to be beneficial owners of more than
five (5%) percent of the outstanding shares of Common Stock, and
by all officers and directors as a group:
Name and Address Shares (1) Percent
Norman Melnick 1,451,828(2)(3) 13.5%
195 Carter Drive
Edison, New Jersey 08817
John W. Linster - (4) (5)
195 Carter Drive
Edison, New Jersey 08817
David Melnick 1,737,098(3)(6) 16.3%
195 Carter Drive
Edison, New Jersey 08817
Richard S. Kalin 481,089(3)(7) 4.5%
John F. Kuypers 154,500(3) 1.4%
Roy L. Boe 5,000(8) (5)
Jerry Della Femina 5,000(8) (5)
David L. Babson & Co., Inc. 1,087,300(9) 10.2%
One Memorial Drive
Cambridge, MA 02142-1300
All officers and 3,809,100(2)(3)(4)(6) 34.7%
directors as a group (7)(8)
(seven persons)
(1) All shares of Common Stock are owned directly, unless
otherwise noted.
(2) Includes 664,200 shares owned by his wife, Libby Melnick,
and 12,100 shares owned by his minor child, as to which he
disclaims beneficial ownership.
(3) Includes 117,800, 67,000, 50,000, 132,100, and 376,900
shares for Messrs. Norman Melnick, David Melnick, Kalin,
Kuypers and all officers and directors as a group,
respectively, that are issuable upon exercise of options
exercisable at prices ranging from $3.125 to $6.625 per
share. Does not include 82,200, 175,000, 37,000, 101,000,
22,000 and 417,200 shares issuable upon exercise of options
for Messrs. Norman Melnick, Linster, David Melnick, Kuypers
and for all officers and directors as a group, which are not
exercisable within 60 days.
(4) Does not include options to purchase 200,000 shares not
exercisable within 60 days.
(5) Less than one percent.
(6) Includes 719,228 shares owned by his wife, Dana Melnick, and
52,550 shares owned by his minor children, as to which he
disclaims beneficial ownership.
(7) Includes 375,064 shares owned by his wife, Noelle Makenzie,
and 6,000 shares owned by his minor child, as to which he
disclaims beneficial ownership.
(8) Includes options to purchase 5,000 shares; does not include
5,000 shares, which are not exercisable within 60 days.
(9) Based on information furnished to the Company on Form 13G,
dated January 11, 1995. David L. Babson & Co., Inc.
("Babson") has shared voting and dispositive power with
respect to 317,000 of these shares. Babson is an Investment
Advisor registered under Section 203 of the Investment
Advisors Act.
The Company is unaware of any arrangement, the operation of
which, at a subsequent date, may result in a change in control of
the Company.
Compliance with Section 16(a) of the Exchange Act
Effective May 1, 1991, the Securities and Exchange
Commission promulgated new rules under Section 16 of the
Securities Exchange Act of 1934. The Company believes that
during the preceding fiscal year its executive officers and
directors have complied with all Section 16 filing requirements.
Certain Transactions
During Fiscal 1995, the Company paid legal fees to, and
reimbursed disbursements of, Mr. Kalin, a Secretary and Director
of the Company, in the aggregate amount of approximately
$242,740. Directors not otherwise employed or engaged by the
Company receive a one-time option grant of 10,000 shares of
Common Stock, an annual stipend of $5,000, and $750 per meeting
they attend in person.
In March 1990, the Company verbally agreed with Mrs. Libby
Melnick, the wife of Norman Melnick, Chairman and a Director of
the Company, to loan Mrs. Melnick money to purchase a life
insurance policy (the "Policy"). The Company is a named insured
on the Policy to the extent of premiums paid on the Policy. The
proceeds of the Policy to be paid to the Company will be used to
repay the loan. Through September 30, 1995 the Company has lent
Mrs. Melnick an aggregate of $109,511 toward payment of the
premiums on the Policy. The loan bears interest at the rate of
eight percent per annum. The loan was approved by the Board of
Directors of the Company.
2. OTHER MATTERS
The Board of Directors has no knowledge of any other matters
which may come before the Meeting and does not intend to present
any other matters. However, if any other matters shall properly
come before the Meeting or any adjournment thereof, the persons
named as proxies will have discretionary authority to vote the
shares of Common Stock represented by the accompanying proxy in
accordance with their best judgment.
Selection of Auditors
The Board of Directors has selected Ernst & Young, L.L.P.
("E&Y") as its independent certified public accountants to audit
the financial statements of the Company for its current fiscal
year ending September 30, 1995. Mr. Bernard Leone, a member of
E&Y, is expected to be present at the Meeting and will be given
the opportunity to make a statement and to answer questions any
shareholder may have with respect to the financial statements of
the Company for Fiscal 1995.
Shareholder's Proposals
Any shareholder of the Company who wishes to present a
proposal to be considered at the next Annual Meeting of
Shareholders of the Company and who wishes to have such proposal
presented in the Company's proxy statement for such Meeting must
deliver such proposal in writing to the Company at 195 Carter
Drive, Edison, New Jersey 08817 on or before November 10, 1997.
In order to curtail controversy as to the date on which the
proposal was received by the Company, it is suggested that
proponents submit their proposals by certified mail-return
receipt requested.
By Order of the Board of Directors,
Richard S. Kalin, Secretary
Dated: March 11, 1996
PTK\Pxy97
