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
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
PENTECH INTERNATIONAL INC.
(Name of Registrant as Specific in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box) :
[X] No fee required
<PAGE>
PENTECH INTERNATIONAL INC.
(a Delaware corporation) [LOGO]
NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS TO BE
HELD AT 10:00 A.M. ON APRIL 17, 2000
To the Shareholders of
PENTECH INTERNATIONAL INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the "Meeting") of PENTECH INTERNATIONAL INC. (the "Company") will
be held on April 17, 2000 at 10:00 A.M. in the Holiday Inn, 4701
Stelton Road, South Plainfield, Piscataway, NJ 07080 to consider
and vote on the following matters described under the corresponding
numbers in the attached Proxy Statement:
1. The election of six directors; and
2. Such other matters as may properly come before the
Meeting.
The Board of Directors has fixed February 21, 2000 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 20, 2000 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 20, 2000
<PAGE>
PENTECH INTERNATIONAL INC.
195 Carter Drive
Edison, NJ 08817
[Logo]
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AT 10:00 A.M. ON APRIL 17, 2000
The enclosed proxy is solicited by the management of PENTECH
INTERNATIONAL INC. (the "Company") in connection with the Annual
Meeting of Shareholders (the "Meeting") to be held on April 17,
2000 at 10:00 A.M. in the Holiday Inn, 4701 Stelton Road, South
Plainfield, Piscataway, NJ 07080 and any adjournment thereof. The
Board of Directors has set February 21, 2000 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 six 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, 1999 (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 12,571,258 shares
of Common Stock (the "Common Stock") outstanding at the close of
business on February 21, 2000 will be entitled to vote. Each share
of Common Stock is entitled to one vote. Shareholders are not
entitled to cumulate their votes. 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
20, 2000. The mailing address of the Company's principal executive
offices is 195 Carter Drive, Edison, NJ 08817.
1. ELECTION OF DIRECTORS
Six 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 Richard S. Kalin
o David Melnick
o Norman Melnick
o Robert K. Semel
o William Visone
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 current
directors and executive officers of the Company:
Position with Year became
Name Age the Company Officer or Director
Norman Melnick 68 Chairman 1984
David Melnick 41 Chief Executive 1984
Officer, President
and Director
Richard S. Kalin 45 Secretary and 1984
Director
Position with Year became
Name Age the Company Officer or Director
Roy L. Boe 69 Director 1994
Robert K. Semel 62 Director 1997
William Visone 36 Director, 1992
Executive Vice
President,
Strategic Planning,
Chief Financial Officer
Jerry Kuypers 32 Vice President, Sales 1999
Richard Ginelli 55 Vice President, 1997
Manufacturing
Linda Staffin El-Fakir 37 Vice President, 1997
Marketing
James J. San Filippo 36 Vice President, 1999
Finance
Norman Melnick. Mr. Norman Melnick, a founder of the Company,
has been Chairman of the Company since its inception in April 1984.
He was Chief Executive Officer until November 1995. Mr. Norman
Melnick is Mr. David Melnick's father.
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. In March 1998, Mr. Melnick was elected
President and Chief Executive Officer.
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. He has been engaged
in the private practice of law since 1978. Kalin & Associates,
P.C., a law firm of which Mr. Kalin is the controlling shareholder,
is general counsel to the Company.
Roy L. Boe. Mr. Boe has been President of the Worcester
Icecats, Inc. since its inception in 1994. The Worcester Icecats
are an American Hockey League ice hockey team located in Worcester,
MA. He is also a director of Micronetics Wireless, Inc.
Robert K. Semel. Mr. Semel, since January 1995, has been
President and Chief Operating Officer of Uniflex, Inc., a designer,
manufacturer and marketer of a broad line of customized plastic
packaging. In addition, Mr. Semel has been a Director of Uniflex,
Inc. since December 1990 and Secretary since April 1993.
William Visone. Mr. Visone has been employed by the Company
since January 1992, initially as Controller and presently as Chief
Financial Officer. In April 1992, Mr. Visone was elected Treasurer
and in December 1997, Mr. Visone was elected Vice President,
Finance and Administration. In October 1999, Mr. Visone was
promoted to Executive Vice President, Strategic Planning.
Jerry Kuypers. Mr. Kuypers has been employed in various sales
capacities by the Company for over six years. In January 1999, Mr.
Kuypers was promoted to Vice President-Sales.
Richard Ginelli. Mr. Ginelli has been employed by the
Company since 1992 as Director of Operations. In December 1997,
Mr. Ginelli was promoted to Vice President, Manufacturing.
Linda Staffin El-Fakir. Ms. El-Fakir has been employed by the
Company since 1995 as Marketing Director. In December 1997, Ms.
El-Fakir was promoted to Vice President, Marketing.
James J. San Filippo. Mr. San Filippo has been employed by
the Company since January 1996 as Assistant Controller. In October
1999, Mr. San Filippo was promoted to Vice President, Finance.
During the fiscal year ended September 30, 1999 ("Fiscal
1999"), the Board of Directors met on four occasions. The Company
has an Audit Committee (the "Audit Committee") which currently
consists of Messrs. Norman Melnick, Kalin and Semel which is
authorized to review the financial statements of the Company. The
Company also has a Stock Option-Compensation Committee (the
"Compensation Committee") which consists of Messrs. Boe, Kalin and
Semel, which determines compensation for senior management and
awards stock options. The Audit Committee met one time during
Fiscal 1999.
Required Vote
The affirmative vote of the holders of a majority of the
shares of Common Stock voting in person or by proxy on the election
of each of the six persons listed herein is required to approve
such elections.
Executive Compensation
The following table sets forth for Fiscal 1999 and fiscal
years ended September 30, 1998 and 1997, information relating to
compensation received by the Company's Chief Executive officer and
by each of the Company's executive officers whose Fiscal 1999
compensation was more than $100,000 per year:
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Name and
Principal Fiscal Option
Position Year Salary($) Grants
Norman Melnick, 1999 150,000 -
Chairman 1998 162,500 -
1997 200,000 60,000
David Melnick, 1999 140,000 -
Chief Executive 1998 146,000 -
Officer 1997 157,500 30,000
William Visone, 1999 125,000 20,000
Treasurer and Chief 1998 125,000 10,000
Financial Officer 1997 112,000 40,000
The aggregate amount of other compensation for each of Messrs.
Norman Melnick, David Melnick and Visone did not, in any case,
exceed the lesser of $50,000 or ten percent of the total
compensation.
Profit Sharing Plan
During the fiscal year ended September 30, 1989, 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 on. The Company contributed $37,500 to the 401(k) Plan in
Fiscal 1999. The 401(k) Plan also includes certain death benefits
and disability benefits. Messrs. N. Melnick, D. Melnick and Visone
are fully vested under the 401(k) Plan.
Stock Option Plans
The Company currently has three stock option plans. 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"). No additional options may be
granted under 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 terminated on January 5, 1999. The 1993 Plan terminates on
January 4, 2003. The 1995 Plan terminates on January 4, 2005.
On November 17, 1996, the Board of Directors adopted an Option
Exchange Program pursuant to which certain employees and
consultants were given the one-time option to amend their options
so that, as amended, the revised options would have a new three
year vesting period, commencing one third November 17, 1997, and
additional one thirds each of the next two yearly anniversaries
thereof, for 60% of the previous number of shares covered by the
options, exercisable at $.75 per share, the market price on the
date the Option Exchange Program was approved. Messrs. Norman
Melnick, David Melnick, Kalin, Visone and Boe each were given the
right and did participate in the Option Exchange Program.
The following is cumulative information relating to
outstanding options owned by the Company's executive officers.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/
Options/SARs at FY-End SARs at FY-End($)
(#) Exercisable/ Exercisable/
Name Unexercisable(1) Unexercisable(1)
Norman Melnick 140,000/20,000 15,600/7,800
David Melnick 70,000/10,000 7,800/3,900
Richard S. Kalin 45,000/5,000 4,400/2,200
William Visone 35,000/35,000 8,800/10,700
(1) Represents options after effectiveness of Option Exchange
Program at fair market value of Common Stock at September 30,
1999 of $1.19 as reported by NASDAQ, less the exercise price.
Additional Information with Respect to Compensation
The compensation for each executive officer is determined by
the Compensation Committee. Members of the Compensation Committee
deliberated in determining compensation and unanimously agreed on
the compensation to be awarded each executive officer.
In reaching its determination, the Committee considers the
recommendations of the President and such 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 Committee also considers
stock price, cash flow, revenues, net income and other factors in
arriving at its compensation determinations. The Committee
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 Committee'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 Committee attempts to align the
financial interests of the Company's officers with those of its
shareholders. Based on these factors, the executive officers
received no increases during Fiscal 1999.
Options to purchase Common Stock are also a key element in the
Company's compensation program. Since options granted under the
Plans generally 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. A new option to
purchase 20,000 shares of Common Stock at an exercise price of
$.875 per share was granted to Mr. Visone during Fiscal 1999.
<PAGE>
Performance Graph
Description: The performance graph was prepared by Research Data
Group, Inc. 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 30, 1999 to September 30, 1999.
<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, nominee directors
of the Company, each of the named executive officers of the Company
and 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 1,250,028(2)(3) 9.8%
195 Carter Drive
Edison, NJ 08817
David Melnick 2,022,998(3)(5) 15.99%
195 Carter Drive
Edison, NJ 08817
Richard S. Kalin 756,639(3)(6) 5.99%
One Penn Plaza, Suite 1425
New York, NY 10119
Robert K. Semel 15,000 (4)
William Visone 109,166(3) (4)
Roy L. Boe 108,500(3)(7) (4)
All officers and 4,350,330(2)(3)(5) 33.40%
directors as a group (6)(7)
(eight persons)
(1) All shares of Common Stock are owned directly, unless
otherwise noted.
(2) Includes 363,300 shares of Common Stock owned by his wife,
Libby Melnick, as to which he disclaims beneficial ownership.
(3) Includes 160,000, 80,000, 50,000, 10,000, 54,166, 16,000 and
446,581 shares of Common Stock for Messrs. N. Melnick, D.
Melnick, Kalin, Semel, Visone, Boe and all officers and
directors as a group, respectively, that are issuable upon
exercise of options. Does not include 15,834 and 125,419
shares issuable upon exercise of options for Mr. Visone and
for all officers and directors as a group, which are not
exercisable within 60 days.
(4) Less than one percent.
(5) Includes 843,228 shares of Common Stock owned by his wife,
Dana Melnick, and 251,450 shares of Common Stock owned by his
minor children, as to which he disclaims beneficial ownership.
(6) Includes 319,064 shares of Common Stock owned by his wife,
Noelle Makenzie, and 61,000 shares of Common Stock owned by
his minor child, as to which he disclaims beneficial
ownership. Includes 136,000 shares of Common Stock held in
his retirement account.
(7) Includes 80,000 shares of Common Stock owned by his wife,
Betty Boe, as to which he disclaims beneficial ownership.
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
Section 16(a) of Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Based solely on its
review of the copies of such forms received by it, the Company
believes that during Fiscal 1999 all executive officers, directors
and 10% owners of the Company complied with all applicable filing
requirements.
Certain Relationships and Related Transactions
During Fiscal 1999, the Company paid legal fees to, and
reimbursed disbursements of, Kalin & Associates, P.C., a law firm
of which Mr. Kalin, a Secretary and Director of the Company, is the
controlling shareholder, in the aggregate amount of approximately
$226,000.
During Fiscal 1999, the Company paid service fees to El-Fakir
Associates, Inc., an MIS consulting firm, of which Ms. El-Fakir is
Secretary and Treasurer, in the aggregate amount of approximately
$114,000.
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, 1999, the Company has lent Mrs.
Melnick an aggregate of $173,512 toward payment of the premiums on
the Policy. The loan bears interest at the rate of eight percent
(8%) 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, 2000. 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 1999.
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, NJ 08817 on or before November 10, 2000. 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 20, 2000
PROXY
PENTECH INTERNATIONAL INC.
[LOGO]
195 Carter Drive
Edison, NJ 08817
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned, revoking all previous proxies, hereby
appoints 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 17, 2000 at 10:00 A.M. in the
Holiday Inn, 4701 Stelton Road, South Plainfield, Piscataway, NJ
07080, 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 1999 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, RICHARD S. KALIN, DAVID MELNICK, NORMAN
MELNICK, ROBERT K. SEMEL AND WILLIAM VISONE
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 the Nominees
listed herein.
Date: , 2000
(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 or the Company's Annual
Report for its fiscal year ended September 30, 1999 on Form 10-K
should be addressed to Shareholder Relations, Pentech International
Inc., 195 Carter Drive, Edison, NJ 08817. This material will be
furnished without charge to any shareholder requesting it.
N:\RSKLAW\PTK\PROXY.00
