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:
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
<TABLE>
<CAPTION>
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
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael J.
Spector(1) -- -- 8,000 12,000 $4,720 $7,080
<FN>
- --------------------
(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.
</FN>
</TABLE>
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
<PAGE>
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
<PAGE>
<TABLE>
<CAPTION>
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
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
16
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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)
<PAGE>
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.
