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
(Amendment No. )
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
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
MARGO NURSERY FARMS, INC.
(Name of Registrant as Specified in Its Charter)
MARGO NURSERY FARMS, INC.
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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>
MARGO NURSERY FARMS, INC.
ROAD 690
KILOMETER 5.8
VEGA ALTA, PUERTO RICO 00762
-------------------------------------------
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON
FRIDAY, MAY 29, 1998
-------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Margo
Nursery Farms, Inc. ("Margo"); will be held on Friday, May 29, 1998 at 10:00
a.m., local time, at the offices of Pietrantoni Mendez & Alvarez, Suite 1901,
Banco Popular Center, 209 Munoz Rivera Avenue, San Juan, Puerto Rico, to
consider and vote upon the following proposals:
(1) To elect five directors;
(2) To consider and act upon an Agreement and Plan of
Reorganization providing for a restructuring of the existing corporate
structure of Margo whereby: (i) Margo would transfer substantially all
of its assets and liabilities to Interim Margo, Inc. ("Newco"), a newly
formed Puerto Rico corporation in return for all the outstanding stock
of Newco; (ii) following the effective date of the reorganization,
Newco would conduct the nursery business previously conducted by Margo
as a wholly-owned subsidiary of Margo; and (iii) Margo would become a
holding company that would possess a 100% ownership interest in Newco
as well as the other existing subsidiaries of Margo.
(3) To amend the certificate of incorporation of Margo to
change its corporate name to "Margo Caribe, Inc.";
(4) To consider and approve Margo's 1998 Stock Option Plan;
(5) To ratify the appointment of Deloitte & Touche LLP as
independent accountants of Margo for the year ending December 31, 1998;
and
(6) To transact such other business as may properly be brought
before the meeting or any adjournment thereof.
The Board of Directors has designated the close of business on April
24, 1998 as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting and any and all adjournments thereof.
<PAGE>
2
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,
/S/ MARGARET D. SPECTOR
-----------------------------------
Margaret D. Spector
Secretary
Vega Alta, Puerto Rico
May 7, 1998
<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 May 29, 1998
This Proxy Statement is being furnished to the holders of the common
stock, $.001 par value ("Margo Common Stock") of MARGO NURSERY FARMS, INC., a
Puerto Rico corporation ("Margo"), in connection with the solicitation of
proxies by the Board of Directors of Margo 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 Shareholders.
This Proxy Statement and accompanying form of proxy are first being sent to
stockholders on or about May 7, 1998.
The Board of Directors has ordered the Annual Meeting to be held on
Friday, May 29, 1998, and has fixed the close of business on April 24, 1998, 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 Margo Common Stock 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 enticed to vote on other
matters). Under the Puerto Rico General Corporations Law of 1995, as currently
in effect (the "PRGCL") the proposed corporate restructuring and the proposed
amendment to the Certificate of Incorporation of Margo to change its corporate
name must be approved by the affirmative vote of a majority of the outstanding
shares entitled to be cast on the action. Therefore, under the PRGCL,
abstentions and broker non-votes shall have the same effect as a vote against
such proposals. The proposal to adopt the 1998 Stock Plan must be approved by a
majority of the votes present and entitled to vote. Therefore abstentions will
have the same effect as a vote against the adoption of the 1998 Stock Option
Plan and broker-non-votes will have no effect on such proposal.
3
<PAGE>
Abstentions and broker non-votes will have no effect on the election of
directors.
As of the Record Date, Margo had 1,875,322 outstanding shares of Margo
Common Stock. Holders of Margo Common Stock are entitled to one vote per share,
exercisable in person or by proxy, at all meetings of stockholders. The Margo
Common Stock is the only class of Margo'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
Margo 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; (ii) for the approval of the Agreement and Plan
of Reorganization and the restructuring of the corporate structure of Margo
pursuant to which Margo would adopt a holding company structure by transferring
substantially all of its assets and liabilities to Interim Margo, Inc.
("Newco"), a newly formed Puerto Rico corporation that, following the effective
date of the reorganization, would conduct the business previously conducted by
Margo as a wholly-owned subsidiary of Margo; (iii) to amend the certificate of
incorporation of Margo to change its corporate name to "Margo Caribe, Inc.";
(iv) to consider and approve Margo's 1998 Stock Option Plan; (v) to ratify the
appointment of Deloitte & Touche LLP as independent accountants of Margo; (vi)
in the proxyholders' discretion on any other matters that may properly come
before the Annual Meeting. 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 Margo, or by voting in person at the
Annual Meeting. Presence at the Annual Meeting does not of itself revoke a
proxy.
Margo 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 Margo, who will receive no additional compensation therefor.
ELECTION OF DIRECTORS
At the Annual Meeting, five directors comprising the entire Board of
Directors of Margo are to be elected. The Board of Directors has nominated the
following nominees to serve until the 1999 Annual Meeting of Stockholders and
until their successors are duly elected and qualified:
4
<PAGE>
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 more than a majority of the outstanding
shares of Margo Common Stock. As a result, the Spectors have sufficient votes to
elect all of the nominees to Margo'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 a majority
of the votes cast by the shares of Margo Common Stock entitled to vote at the
Annual Meeting. Abstentions and broker non-votes will not have an effect on the
election of directors of Margo. 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.
<TABLE>
<CAPTION>
AGE AT POSITION DIRECTOR
NOMINEE APRIL 24,1998 WITH COMPANY SINCE
------- ------------- ------------ -----
<S> <C> <C> <C>
Michael J. Spector 51 Chairman, President, 1981
Chief Executive
Officer and Director
Margaret D. Spector 46 Secretary and Director 1981
Blas R. Ferraiuoli 53 Director 1988
Frederick Moss 69 Director 1988
Michael A. Rubin 55 Director 1995
</TABLE>
MR. SPECTOR currently serves as the Chairman of the Board, President,
Chief Executive Officer and is a director of Margo. He has held these positions
since the organization of Margo in 1981. His wife, Margaret D.Spector, is
Secretary and a director of Margo.
5
<PAGE>
MRS. SPECTOR currently serves as the Secretary and a director of Margo.
She has held these positions since the organization of Margo in 1981. Since July
1993, Mrs. Spector supervises Margo's lawn and garden distribution business.
MR. FERRAIUOLI was elected a director of Margo 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. Prior to March 1994, he 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 Margo since 1987.
MR. MOSS was elected a director of Margo in 1988 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) and the Summit Energy Market Fund (mutual fund).
MR. RUBIN was elected a director of Margo 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.
COMPENSATION OF DIRECTORS
The directors of Margo who are not employees of Margo are paid a
quarterly retainer fee of $1,000 and an additional 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 Margo who are employed by Margo do not
receive additional compensation for serving as directors. Margo also provides
directors liability insurance for its directors.
DIRECTORS' MEETINGS, COMMITTEES AND FEES
The Board of Directors held five meetings during 1997. Each member of
the Board of Directors attended at least 75% all of the Board meetings and
meetings held by all Committees on which he or she served during such period.
Margo has an audit committee which reviews the results of Margo's audits and
selects Margo's accountants. This committee held one meeting during 1997. The
current members of the audit committee are Messrs. Ferraiuoli, Moss and Rubin.
Margo also has a Compensation Committee which is responsible for the development
and administration of Margo's compensation program. The Compensation Committee
held two meetings during 1997. The members of the Compensation Committee are
Messrs. Ferraiuoli, Moss and Rubin.
6
<PAGE>
Presently, Margo's Board of Directors has no standing nominating committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Ferraiuoli, Moss,
and Rubin, none of whom are employed by Margo. During 1997, none of the
executive officers of Margo 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 Margo. Messrs.
Ferraiuoli and Rubin, who are directors of Margo, and each have their own law
practice, were engaged by the Company during 1997 to render legal services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 24, 1998, the number of
shares of Margo Common Stock owned beneficially by the following persons and the
percentage of all shares outstanding represented by such ownership: (a) each
director and nominee for director of Margo; (b) all executive officers,
directors and nominees of Margo as a group; and (c) each person or entity known
by Margo to be the beneficial owner of more than five percent (5%) of the
outstanding Margo Common Stock. Unless otherwise stated, all shares are held
with sole investment and voting power.
7
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
OF
NAME OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP 1 OF CLASS 1
---------------- ----------- ----------
DIRECTORS AND MANAGEMENT
<S> <C> <C>
Michael J. Spector................................................ 1,274,182(2) 66.6%
Highway 690, Km. 5.8
Vega Alta, PR 00646
Margaret D. Spector............................................... 1,274,182(2) 66.6%
Highway 690, Km. 5.8
Vega Alta, PR 00646
Frederick D. Moss................................................. 13,000(3) 4
Blas Ferraiuoli................................................... 8,500(3) 4
Michael A. Rubin.................................................. 4,000(3) 4
All directors, nominees and executive officers
as a group, consisting of eight persons,
including those named above...................................... 1,320,822(5) 68.3%
OTHER PRINCIPAL HOLDERS
J. Morton Davis................................................... 190,249(6) 10.1%
D.H. Blair Holdings, Inc.
D.H. Blair Investment Banking Corp.
44 Wall Street
New York, New York 10005
</TABLE>
- ----------
(1) The percent of class held by each person includes the number of
shares of Margo Common Stock the named person(s) has the right to acquire upon
exercise of stock options that are exercisale within 60 days of April 24, 1998
(except in the case of Mr. and Mrs. Spector in which case all shares issuable
upon exercise of stock options are included whether or nor exercisable within 60
days of April 24, 1998). Shares owned by Mr. and Mrs. Spector include the amount
of ahsres owned by thier spouse and therefore, are shown more than once. See
footnote (2) below. Such shares are shown only once, however, in the total for
all directors and officers as a group.
(2) Includes 939,394 shares held directly by Mr. Spector and 297,288
shares held directly by Mrs. Spector. Also, includes stock options to acquire
30,000 and 7,500 shares held by Mr. Spector and Mrs. Spector, respectively. The
Spectors share voting and investment power over the shares owned by each other.
(3) Includes 4.500, 4,500 and 1,000 shares issuable upon exercise of
stock options exercisable on or whithin 60 days of April 24, 1998, in the case
of Mssrs. Moss, Ferraiuoli and Rubin, respectively.
(4) Represents less than 1%.
(5) Includes 37,500 shares issuable upon exercise of stock options to
Mr. and Mrs. Spector as described in footnote (1) above and 20,100 shares
issuable upon exercise of stock options to other executive officers and
directors that are exercisable on or within 60 days of April 24, 199.
(6) 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
and of 1,100 shares owned by Rosalind Davidowitz, the spouse of Mr. Davis. This
amount is based upon a Schedule 13G dated February 9, 1995, as subsequently
amended, fled with the Securities and Exchange Commission.
8
<PAGE>
INFORMATION CONCERNING EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth certain information regarding the
executive officers of Margo as of April 24, 1998 who do not serve on Margo's
Board of Directors.
NAME (AGE) POSITIONS WITH MARGO
---------- --------------------
Guillermo Fradera (48) Vice President - Production
Alfonso Ortega (44) Vice President, Treasurer and
Chief Financial Officer
Rene Llerandi (38) Vice President - Marketing
Officers serve at the discretion of the Board of Directors. All of the
executive officers of Margo except Margaret D. Spector devote their full time to
the operations of Margo.
BACKGROUND OF EXECUTIVE OFFICERS
Set forth below is a summary of the background of each person who was
an executive officer of Margo as of April 24, 1998, other than executive
officers who also serve as directors.
MR. FRADERA has served as the Vice President of Production since
October 1, 1997. Prior to October 1, 1997, he served as Vice President and
General Manager of Margo's South Florida operation. He joined Margo in 1984 and
served as Vice President of Corporate Development from 1987 to 1989.
MR. ORTEGA currently serves as the Vice President, Treasurer and Chief
Financial Officer of Margo. 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, San Juan, Puerto Rico.
MR. LLERANDI currently serves as Vice President of Marketing. He has
held this position since April 1, 1993. He joined Margo in 1988 as Sales Manager
for Puerto Rico.
EXECUTIVE COMPENSATION
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Margo has a Compensation Committee which is principally responsible for
the development and administration of Margo's compensation program.
9
<PAGE>
Margo's executive compensation program is designed to retain
experienced management and to link corporate performance and returns to
shareholders. To this end, Margo has developed a compensation strategy that ties
a portion of executive compensation to Margo's performance and to appreciation
in Margo'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 Margo's business strategy and to link executive
and shareholder interests through the use of stock options linked to stock
performance.
The key elements of Margo's executive compensation consist of base
salary, an annual bonus and the grant of stock options. Margo's policies with
respect to each of these elements, including the basis for the compensation
awarded to Mr. Michael J. Spector, Margo'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 Margo 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 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 Margo 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 Margo'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 Margo and its belief that Mr. Spector is an excellent representative of Margo
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.
10
<PAGE>
ANNUAL BONUS
Margo's executive officers are eligible for an annual bonus based on
Margo'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 1997, as for prior years, bonuses for all executives, including
Mr. Spector, have been determined principally on a general evaluation of the
performance of Margo 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 1997 was 8%. Based on the Company's
financial results for 1997, Mr. Spector requested that he not be considered for
a bonus for 1997.
STOCK OPTIONS
Under Margo's 1988 Stock Benefits Plan, which was approved by
shareholders, stock options are granted to Margo'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. The Committee
may decide not to grant options in the event of poor corporate performance. The
existing 1988 Stock Benefits Plan is scheduled to terminate in June 1998.
Accordingly, at the Annual Meeting, shareholders are being asked to approve a
new stock Option Plan. See "Proposal to Approve the 1998 Stock Option Plan."
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Blas R. Ferraiuoli
Frederick D. Moss
Michael A. Rubin
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 Margo
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
11
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation paid
by Margo to the Chief Executive Officer for services rendered in all capacities
during the fiscal years ended December 31, 1997, 1996 and 1995. No other
executive officer of Margo received total annual salary and bonus exceeding
$100,000 during 1997.
<TABLE>
<CAPTION>
NAME AND
PRINCIPAL POSITION ANNUAL COMPENSATION OTHER ANNUAL
------------------ ----------------------------------------
YEAR SALARY BONUS COMPENSATION
---- ------ ----- ------------
<S> <C> <C> <C> <C>
Michael J. Spector 1997 $160,000 $ - $0
Chairman, President, 1996 160,000 13,600 0
Chief Executive 1995 160,000 13,600 0
Officer and Director
</TABLE>
GRANT OF STOCK OPTIONS
No stock options were granted during the year ended December 31, 1997.
OPTIONS EXERCISED DURING 1997 AND OPTION VALUES AT DECEMBER 31, 1997
The following table sets information on outstanding options held by
Margo's chief executive officer and their value at December 31, 1997. There were
no exercises of options during 1997. Value is calculated as the difference
between the last sales price of the Common Stock and the exercise price as of
December 29, 1997, the last day the Common Stock was traded during 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
AT 12/31/97 12/31/97(1)(2)
SHARES -------------------- --------------------
ACQUIRED VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME ON EXERCISE REALIZED ----------- ------------- ----------- -------------
---- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Spector(1) - - 19,500 18,500 $ -- $ --
</TABLE>
- ------------------
(1) Includes 7,500 options held by to Margaret D. Spector, the wife of
Michael J. Spector.
(2) Based on the last sales price of $1 3/4per share on December 29, 1997
and an exercise price of $3.16 and $3.44 for 16,000 and 3,500
exercisable options and an exercise price of $3.16 and $3.44 for 4,000
and 14,000 of unexercisable options, respectively, all options listed
in the above table were out-of-the-money as of December 31, 1997.
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
12
<PAGE>
the Securities Exchange Act of 1934, except to the extent that Margo
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 Margo'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 (i) that $100 was
invested on December 31, 1992 in the case of each of the CRSP Index for NASDAQ
Stock Market (U.S. Companies) and the Peer Group Index and on March 18, 1993 in
the case of Margo's Common Stock; and (ii) the reinvestment of all dividends.
Prior to August 23, 1991, Margo'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 Margo's failure
to meet the 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 Margo's Common Stock was not quoted on NASDAQ, the Performance
Graph does not take into account a special $4.00 per share dividend paid in
February 1993 to the holders of Margo's Common Stock.
13
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
Performance Graph for
Margo Nursery Farms, Inc.
[GRAPH]
LEGEND
<TABLE>
<CAPTION>
SYMBOL CRS TOTAL RETURNS INDEX FOR: 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- -------- ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
______ Margo Nursery Farms, Inc. 100.0 128.6 73.2 117.9 92.0 53.6
...--. Nasdaq Stock Market (US Companies) 100.0 114.8 112.2 158.7 195.2 239.6
- ------ Self-Determined Peer Group 100.0 69.9 45.4 42.4 29.4 54.8
Companies in the Self-Determined Peer Group
CALLOWAYS NURSERY INC GENERAL HOST CORP
SUNBELT NURSERY GROUP INC.
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/92.
E. No trading activity was recorded for Margo Nursery Farms, Inc. from
12/31/92 to 03/18/93.
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AMOUNT DUE FROM/TO PRINCIPAL SHAREHOLDER
In connection with the settlement of Margo's litigation with First
Union National Bank of Florida ("First Union") on May 29, 1996, Margo advanced
$340,158 on behalf of Michael J. Spector, which was the portion of the
settlement that corresponded to claims made by First Union against Mr. Spector
in his individual capacity. This amount was reduced by $66,506 that was due to
the shareholder in connection with the purchase of the residence described below
under "Purchase of Residence." During 1997, Margo charged Mr. Spector for
certain expenses paid on his behalf. Accordingly, at December 31, 1997 and 1996,
Mr. Spector owed Margo $291,481 and $273,652, respectively. During March 1998,
this receivable was converted into a non-interest bearing note due on March
2001.
LEASE AND OPTION TO PURCHASE PUERTO RICO NURSERY FARM
Effective January 1, 1993, Margo and the Spectors entered into a lease
agreement with respect to the 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 Margo. During the initial term of the lease, rent was set at
$19,000 per month. During the renewal term, the rent increases to the greater of
(x) $24,000 per month or (y) the original $19,000 per month adjusted on the
basis of the increase in the Wholesale Price Index ("WPI") published by the
United States Department of Labor, Bureau of Labor Statistics, from the WPI
which was in effect on January 1, 1993 to the WPI in effect on January 1, 1998.
Additionally, Margo must pay all taxes on the property, maintain certain
insurance coverages and otherwise maintain the property. The lease also contains
an option which permits Margo to purchase the property at its appraised value at
any time during the term of the lease. In consideration of the option Margo must
pay the Spectors $1,000 per month. On January 1, 1998, Margo exercised its
renewal option at a monthly rental of $24,000.
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 $1,750 per month. The lease terms for this additional tract do not include
renewal or purchase options. Effective January 1, 1998, Margo and the Spectors
entered into an amendment to the lease agreement which grants the Company the
right to continue to lease the 27-acre parcel on a month to month basis. Either
party may terminate this portion of the lease upon 30 days prior written notice.
In connection with this amendment, the Spectors also agreed to reimburse to
Margo, by no later than March 1, 2001, the unamortized value of the leasehold
improvements applicable to said parcel as of the date of termination.
15
<PAGE>
PURCHASE OF RESIDENCE
In August 1990, Margo agreed to lease a residence located in Puerto
Rico from a partnership whose partners include Michael J. Spector and Margaret
D. Spector. The lease had an initial term of five years and provided 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. Margo also paid utilities, taxes,
insurance, maintenance and repairs on the residence. Margo utilizes the
residence to house employees, as well as off island customers.
In January 1996, Margo purchased the residence from the partnership.
The purchase price, based on an independent appraisal prepared by a certified
appraiser, amounted to $220,800, including the assumption of the mortgage
referred to below. The property was subject to a 10% commercial loan with a
balance of approximately $88,000, which was assumed by Margo. Margo believes
that the purchase price for the residence was comparable to that which Margo
would have obtained in an arm's length transaction with unaffiliated parties.
CERTAIN OTHER RELATIONSHIPS
During 1997 Margo engaged Blas Ferraiuoli and Michael A. Rubin, each a
director of Margo, to render legal services on behalf of Margo.
PROPOSED CORPORATE RESTRUCTURING
TO CREATE HOLDING COMPANY STRUCTURE
GENERAL
For the reasons set forth below under "Purpose," the Board of Directors
and management of Margo believe that it is expedient and in the best interests
of Margo and its shareholders to adopt a new corporate structure. The proposed
corporation restructuring will be accomplished under an Agreement and Plan of
Reorganization, dated as of April 1, 1998 (the "Plan of Reorganization")
pursuant to which Margo would transfer substantially all of its assets to
Interim Margo, Inc. ("Newco"), a newly formed Puerto Rico corporation, in
exchange for a 100% ownership interest in Newco and the assumption by Newco of
substantially all of Margo's existing liabilities. Margo's nursery business as
currently conducted will continue to be conducted by Newco as a wholly-owned
subsidiary of Margo, which would become a holding company with full ownership of
Newco as well as Margo's other existing subsidiaries. Shareholder's equity
interest in Margo will not be affected by the proposed corporate restructuring.
The consolidated capitalization, assets and liabilities of the Margo's following
the proposed corporate restructuring will be the same as Margo's immediately
prior to the restructuring, except for any expenses incurred in connection with
the transaction. Neither Margo nor its shareholders will recognize of gain or
loss for federal or Commonwealth
16
<PAGE>
of Puerto Rico income tax purposes as a result of the proposed corporate
restructuring.
The proposed restructuring will be accomplished as follows:
1. Margo has formed Newco, as a corporate entity incorporated under the
laws of Puerto Rico.
2. Newco will acquire all the assets (including leasehold interests)
currently owned by Margo, except for approximately $500,000 of certificates of
deposit, in exchange for a 100% ownership interest in Newco. Additionally, Newco
will assume substantially all the liabilities currently affecting Margo. After
the reorganization, the only asset, other than the certificates of deposit
retained by Margo as described above, owned by Margo will be Newco's shares and
shares of Margo's other existing subsidiaries, and Margo will exist solely for
the purpose of being a holding company.
3. Upon consummation of the proposed corporate restructuring, Newco
will change its name to Margo Nursery Farms, Inc. and will conduct the nursery
business presently conducted by Margo. Margo, as the new holding company, will
change its name to Margo Caribe, Inc.
4. The corporate restructuring will not affect the equity interest of
Margo's shareholders in the corporation nor Margo's outstanding capital stock.
Other than the proposed change in name, Margo's Certificate of Incorporation
would not be affected by the proposed corporate restructuring.
PURPOSE
The Board of Directors and management of Margo believe that the
adoption by Margo of a holding company structure may facilitate future expansion
or diversification of its business activities and thereby contribute to the
future long range financial strength of the present enterprise. A holding
company structure may afford greater flexibility and additional financial and
operational flexibility. It will also reflect the fact that Margo and certain of
its subsidiaries are in different businesses or industry segments with different
regulatory and business requirements.
The Agricultural Tax Incentives Act of the Commonwealth of Puerto Rico
(Act No. 225 of December 1, 1995, as amended) provides Margo with a 90% tax
exemption for incomes derived from "bona fide" agricultural activities within
Puerto Rico, including sales within and outside Puerto Rico, as well as a 100%
exemption from property, municipal and excise taxes. The Act defines "bona fide
agricultural activity" to include the nursery business. The Act became effective
for taxable years commencing on or after December 1, 1995.
17
<PAGE>
To qualify for the above beneficial tax treatment, Margo must derive
not less than 50% of its income from "bona fide agricultural activities."
Accordingly, a holding company structure will allow Margo to continue to expand
its non-tax exempt businesses as well as diversify into new businesses such as
real estate development, without affecting the tax exempt status of its existing
nursery business.
The new holding company structure will also allow Margo to take
advantage of investment tax credits available under the Agricultural Tax
Incentives Act. The Act provides, under certain circumstances and subject to
various limitations, investment tax credits for equity investors in agricultural
enterprises. The Act permits the sale of such tax credits to third parties. The
sale by Margo of any such investment tax credits resulting from investments in
Newco would reduce the net cost to Margo of new investments in its nursery
business.
The proposed restructuring would also facilitate the approval and
completion of mergers and acquisitions since Margo as the sole shareholder of
Newco and Margo's other wholly-owned subsidiaries, would be able to approve
mergers and acquisitions involving Newco and such other subsidiaries without a
vote of Margo's shareholders.
Although the proposed corporate restructuring will enable Margo's
shareholders to share in the rewards of the increased operating flexibility,
shareholders should also consider that they also bear the risk that the
transactions that are facilitated by the increased operating flexibility may not
ultimately prove to be advantageous to Margo and its shareholders. The Board of
Directors and management of Margo believe that the proposed restructuring will
not have an adverse effect on Margo or its shareholders.
PLAN OF REORGANIZATION
The proposed corporate restructuring will be accomplished pursuant to
the Plan of Reorganization, a copy of which is attached to this Proxy Statement
as Exhibit A. The Plan of Reorganization has been unanimously approved by the
Board of Directors of both Margo and Newco. The Plan of Reorganization has been
executed but, pursuant to Puerto Rico law, the transactions contemplated thereby
cannot be consummated without the approval by the holders of the majority of the
outstanding shares of Margo Common Stock.
CONDITIONS OF RESTRUCTURING
Under the Plan of Reorganization, consummation of the proposed
corporate restructuring is subject to fulfillment, on or before the effective
date of the restructuring, of the following conditions: (1) approval by the
holders of a majority of the outstanding shares of Margo Common Stock; (2)
receipt of an opinion from Pietrantoni Mendez & Alvarez, satisfactory in form
and substance to Margo, to the effect that the restructuring constitutes a
tax-free reorganization
18
<PAGE>
under the Puerto Rico Internal Revenue Code of 1994, as amended (the "PR Code"),
and under the United States Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"); (3) receipt of any required consents from lenders and
other creditors; and (4) compliance with the requirements of the Puerto Rico
Bulk Sales Act.
TERMINATION
At any time prior to the consummation of the proposed corporate
restructuring, the Plan of Reorganization may be terminated and the
restructuring abandoned by the Board of Directors of Margo. The Board of
Directors presently knows of no reason why the restructuring may be abandoned.
CAPITAL STOCK AND RIGHTS OF SHAREHOLDERS
The proposed corporate restructuring will not affect shareholders
equity interest in Margo nor Margo's authorized or outstanding capital stock.
Similarly, existing shareholders other rights as shareholders will not be
affected by the proposed corporate restructuring.
APPRAISAL RIGHTS
The holders of Margo Common Stock will not be entitled to any appraisal
or dissenter's rights in connection with the proposed corporate restructuring.
CHANGE OF NAME
In connection with the proposed corporate restructuring and creation of
a holding company structure, Margo's shareholders are being asked to consider
and approve an amendment to Margo's Certificate of Incorporation to change its
name to Margo Caribe, Inc. See "Amendment to the Certificate of Incorporation to
Change the Name of the Corporation."
NO EXCHANGE OF CERTIFICATES REQUIRED
Neither the proposed corporate restructuring nor the proposed change of
name will require shareholders to exchange their present certificates
representing shares of Margo Common Stock. When currently outstanding
certificates of Margo Common Stock are presented for transfer after the
restructuring and change of name, new certificates bearing the name of Margo
Caribe, Inc. will be issued.
DIRECTORS AND OFFICERS
The proposed corporate restructuring will not affect the composition of
the Board of Directors of Margo. The existing executive officers of Margo will
continue to serve as officers of both Margo and Newco. Margo and its
subsidiaries may from time to time render
19
<PAGE>
services, including management services to each other, as well as make available
to each other the use of certain facilities and equipment. The corporation
receiving such services or using such facilities or equipment may be required to
reimburse the other corporation for the costs thereof.
DIVIDEND POLICY
The payment of dividends on Margo's Common Stock following the
restructuring will depend upon its earnings, financial condition and capital
requirements and is subject to the discretion of the Board of Directors. At
least initially following the restructuring, Margo's earnings will depend almost
entirely on any dividends received from its subsidiaries, including Newco. Margo
has not paid a dividend since February, 1993.
FINANCIAL INFORMATION
After the reorganization the consolidated financial statements of Margo
and Holding Company will be substantially the same as Margo's financial
statements had the reorganization and related transactions not occurred.
EFFECTIVENESS OF RESTRUCTURING
The restructuring will become effective as soon as practicable
following approval of the Plan of Reorganization by Margo's shareholders and
compliance with the other conditions contained in the Plan of Reorganization.
FEDERAL AND PUERTO RICO INCOME TAX CONSEQUENCES
Consummation of the restructuring and the related transactions
described herein, are subject to the receipt by Margo, of an opinion of counsel,
to the effect among other things, that for purposes of the Internal Revenue Code
and the PR Code, (i) holders of Margo Common Stock will not recognize any gain
or loss in connection with the proposed corporate restructuring, (ii) a
shareholder's tax basis in, and holding period for, shares of Margo Common Stock
will not be affected by the proposed corporate restructuring, and (iii) neither
Margo nor Newco will recognize any gain or loss as a result of the
restructuring.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding shares of Margo
is required to approve the proposed corporate restructuring and the Plan of
Reorganization. Therefore, abstentions and broker-non-votes will have the same
effect as a vote against the proposal. THE BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED AND RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS PROPOSAL. Michael J.
Spector and
20
<PAGE>
Margaret D. Spector (the "Spectors") jointly own more than a majority of the
outstanding shares of Margo Common Stock. As a result, the Spectors have
sufficient votes to approve the Plan of Reorganization and corporate
restructuring contemplated thereby. See "Security Ownership of Certain
Beneficial Owners and Management." The Spectors have indicated that they intend
to vote FOR the Plan of Reorganization.
AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO CHANGE THE NAME OF THE CORPORATION
As part of the adoption by Margo of a holding company structure, the
Board of Directors of Margo has declared advisable and directed that there be
submitted to the stockholders at the Annual Meeting a proposed amendment to
Article First of the Certificate of Incorporation of Margo to change the name of
Margo to "Margo Caribe, Inc."
PURPOSE AND EFFECT OF THE PROPOSED AMENDMENT
The Board of Directors believes that the change of Margo's corporate
name is advisable in connection with the proposed creation of a holding company
structure. Since following the corporate restructuring, Newco will continue to
conduct the nursery business presently conducted by Margo, the Board of
Directors believes it advisable that Newco change its name to "Margo Nursery
Farms, Inc.," to underline the continuity of Margo's core nursery business. The
holding company's name would continue to contain the name "Margo" in order to
capitalize on the tradition of the entity but would not contain the word
"nursery", thereby, implying a more diversified entity. The word "Caribe" would
be added to emphasize that Margo's principal place of business is located in
Puerto Rico.
The name change will not affect in any way the validity of currently
outstanding stock certificates of Margo. Shareholders will not be required to
surrender or exchange any certificates currently held by them. When currently
outstanding certificates of Margo Common Stock are presented for transfer after
the effective date of the change of name, new certificates bearing the name of
Margo Caribe, Inc. will be issued.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the outstanding shares of Margo
Common Stock is necessary for the adoption of the proposed amendment to change
the corporate name of Margo to Margo Caribe, Inc. Therefore, abstentions and
broker non-votes will have the same effect as a vote against the proposal.
The Board of Directors recommends that stockholders vote FOR the
adoption of the proposed amendment to the Certificate of
21
<PAGE>
Incorporation of Margo to change its corporate name to "Margo Caribe, Inc." The
Spectors jointly own more than a majority of the outstanding shares of Margo
Common Stock. As a result, the Spectors have sufficient votes to approve the
merger contemplated herein. See "Security Ownership of Certain Beneficial Owners
and Management." The Spectors have indicated that they intend to vote FOR the
merger.
PROPOSAL TO APPROVE THE 1998 STOCK OPTION PLAN
INTRODUCTION
Effective April 23, 1998, the Board of Directors adopted, subject to
shareholder approval, the 1998 Stock Option Plan (the "1998 Option Plan"). If
the 1998 Option Plan is approved, the 1998 Option Plan will replace the 1988
Stock Benefits Plan (the "1988 Benefits Plan"), which otherwise would terminate
automatically in June 1998. As of April 24, 1998, options to acquire 28,750
shares of Margo Common Stock had been granted and are outstanding under the 1988
Benefits Plan. As of such date, there were also issued and outstanding options
to acquire 55,500 shares of Margo Common Stock that had been issued to
non-employee directors under separate authority. The adoption of the 1998 Option
Plan will not affect the validity of outstanding options.
The principal features of the 1998 Option Plan are summarized below.
The summary is qualified by the complete text of the 1998 Option Plan, a copy of
which is attached as Exhibit B to this Proxy Statement.
PURPOSE
The 1998 Option Plan is intended to provide Margo and its subsidiaries
with an effective means to attract and retain highly qualified personnel as well
as to provide additional incentive to employees and directors who provide
services to Margo and its subsidiaries.
ADMINISTRATION OF PLAN
The 1998 Option Plan provides that it will be administered by a
committee (the "Committee") consisting of at least two directors appointed by
the Board, each of whom is a "Non-Employee Director" within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934. The Committee has
general authority to administer the plan, including the authority to determine
the form of the option agreements to be used under the plan, and the terms and
conditions to be included in such option agreements, subject to the ratification
of the Board of Directors if such limitation is imposed by the Board of
Directors.
22
<PAGE>
NUMBER OF AUTHORIZED SHARES
Under the 1998 Option Plan, 200,000 shares of Common Stock, subject to
adjustment for stock splits, recapitalizations and similar events, will be
available for use. The shares are to be made available from authorized but
unissued shares of Common Stock or treasury stock. Based upon the closing sale
price of Margo's Common Stock on April 17, 1998 of $2.00 per share, the
aggregate market value of the 200,000 shares to be reserved under the 1998
Option Plan is $400,000.
ELIGIBILITY
Any employee or director of Margo, or of any of its subsidiaries, is
eligible to participate in the 1998 Option Plan. The selection of individuals
eligible to participate is within the discretion of the Committee. As of
December 31, 1997, the approximate number of directors and employees of Margo
and its subsidiaries that are eligible to participate in the 1998 Option Plan is
120. Since the selection of participants and awards granted will be within the
discretion of the Committee, it is not possible to state the number of directors
and employees that will participate in the 1998 Option Plan or the amount and
value of awards to be granted to such persons under the 1998 Option Plan.
AWARDS UNDER PLAN
The 1998 Option Plan provides for the grant of stock options that are
intended to qualify as "qualified stock options" ("QSOs") under Section 1046 of
the Puerto Rico Internal Revenue Code of 1994, as amended (the "Puerto Rico
Code"), as "incentive stock options" ("ISOs") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") or "non-statutory stock options"
("NSOs").
The exercise price with respect to options to be granted under the 1998
Option Plan will be determined by the Committee at the time of grant. Under the
1998 Option Plan, the option exercise price may not be less than 100% of the
fair market value of the Common Stock on the date of grant. Fair market value is
defined as the closing price of the Common Stock on the date of grant as
reported on the NASDAQ Small Capital market or, if no price is reported on such
day, then on the next preceding day on which such price was reported. Payments
for shares upon exercise of stock options may be made either in cash or, with
the consent of the Committee, by exchanging shares of Common Stock at their fair
market value, or a combination of both.
No person may receive an ISO if, at the time of grant, such person (a
"10% Holder") owns directly or indirectly more than 10% of the total combined
voting power of all classes of stock of Margo unless the option price is at
least 110% of the fair market value of the Common Stock and such option is not
exercisable more than five years after its date of grant. There is also a
$100,000 limit on the value of stock determined at the time of grant of a QSO or
an ISO that may become exercisable for the first time in any calendar year.
23
<PAGE>
The maximum option term is ten years from the date of grant, except for
10% Holders in the case of ISOs, in which case the maximum term is five years.
Unless an option agreement provides otherwise, all options granted are 20%
exercisable after the first year and an additional 20% is exercisable after each
subsequent year. No option may be granted more than 10 years after the effective
date of the 1998 Option Plan, which shall be April 23, 1998.
The 1998 Option Plan permits the granting of stock appreciation rights
("SARs") in tandem with the granting of stock options. Such SARs entitle the
holder to receive in cash upon exercise the difference between the option
exercise price and the fair market value of the Common Stock in lieu of
exercising the related option.
If an optionee's employment or service as a director with Margo or a
subsidiary terminates by reason of death or disability, his or her stock options
and SARs, whether or not then exercisable, may be exercised by the employee or
director or by the estate, heir or legatee of the employee or director within
one year after such termination of employment or service (but not later than the
date the options or SARs would otherwise expire). If the optionee's employment
or service as a director terminates for any reason other than disability or
death, stock options and SARs held by such optionee terminate three months after
the date of such termination (but not later than the date the option would
otherwise expire).
Option and SARs are not transferrable, except by will or applicable
laws of descent and distribution.
OPTION GRANTS FOR NON-EMPLOYEE DIRECTORS
The 1998 Option Plan provides for an automatic grant of stock options
to acquire 2,500 shares of Common Stock to nonemployee directors of Margo each
year on the first business day following Margo's annual meeting of shareholders.
The exercise price of such options is equal to the fair market value of the
Common Stock on the date of the grant, and such options have a term of ten
years.
CHANGE IN CONTROL
Under the 1998 Option Plan, upon the occurrence of certain "change of
control" transactions involving Margo, all options then outstanding under the
1998 Option Plan become immediately exercisable.
AMENDMENTS AND TERMINATION
Margo's Board of Directors may suspend, amend, modify or terminate the
1998 Option Plan, without shareholder approval except to the extent required by
the Puerto Rico Code or the Code to permit the granting of QSOs or ISOs under
the 1998 Option Plan or by the rules of any securities exchanges or automated
quotation system on which the shares
24
<PAGE>
of Common Stock of Margo trade. If the Board of Directors voluntarily submits a
proposed amendment, supplement, modification or termination for stockholder
approval, such submission will not require any further amendments, supplements
or terminations (whether or not relating to the same provision or subject
matter) to be similarly submitted for stockholder approval.
Unless previously terminated, the 1998 Option Plan will terminate on
April 23, 2008, the tenth anniversary of the effective date of the 1998 Option
Plan. Options may not be granted under the 1998 Option Plan after such date.
Awards granted prior to termination of the 1998 Option Plan shall continue in
accordance with their terms following such termination. No amendment,
suspension, modification or termination of the 1998 Option Plan shall adversely
affect the rights of an employee in awards previously granted without such
employee's consent.
TAX WITHHOLDING AND TAX OFFSET PAYMENTS
The Committee may require payment, or withhold payments made by the
1998 Option Plan, in order to satisfy applicable withholding tax requirements.
The Committee may make tax offset payments to assist employees or directors in
paying income taxes incurred as a result of their participation in the 1998
Option Plan. The amount of the tax offset payments shall be determined by
multiplying a percentage (established by the Committee) by all or a portion of
the taxable income recognized by an employee upon: (i) the exercise of a NSO or
a SAR; or (ii) the disposition of shares received upon exercise of a QSO or an
ISO.
TAX CONSEQUENCES
PUERTO RICO CODE. A recipient of a QSO does not recognize income at the
time of the grant of an option. In addition, no income is recognized at the time
a QSO is exercised. On a subsequent sale or exchange of the shares acquired
pursuant to the exercise of a QSO, the optionee may have taxable long-term or
short-term capital gain or loss, depending on whether the shares were held for
more than six months, measured by the difference between the amount realized on
the disposition of such shares and his or her tax basis in such shares. Tax
basis will, in general, be the amount paid for the shares. Margo will not be
entitled to a business expense deduction in respect of the grant of the option,
the exercise thereof or the disposition of the shares.
With respect to a NSO, a recipient of a NSO does not recognize income
at the time of grant of the NSO. The difference between the fair market value of
the shares of stock on the date of exercise and the stock option exercise price
generally will be treated as compensation income upon exercise, and Margo will
be entitled to a deduction in the amount of income so recognized by the
optionee. Upon a subsequent disposition of the shares, the difference between
the
25
<PAGE>
amount received by the optionee and the fair market value of the shares of stock
on the option exercise date will be treated as long or short-term capital gain
or loss, depending on whether the shares were held for more than six months.
SARs will not result in taxable income to the recipient or a tax
deduction for Margo at time of grant. The exercise of SARs will generally result
in compensation in the amount of the cash payment taxable as ordinary income to
the employee. Margo may generally claim a tax deduction in the amount of any
cash paid.
FEDERAL TAX CONSEQUENCES. Margo is organized under the laws of the
Commonwealth of Puerto Rico and, at the present time, it is not engaged in any
trade or business in the United States. Accordingly, it is subject generally to
a flat 30% federal income tax on its fixed or determinable, annual or periodic
income, if any, from sources within the United States. Margo would only be
entitled to claim deductions in computing its U.S. income tax liability to the
extent such deductions were directly related to any income effectively connected
with the conduct of a trade or business in the United States. For purposes of
the discussion below, some of the QSOs granted under the 1998 Option Plan may
also be treated as ISOs for purposes of Sections 421 and 422 of the Code.
RESIDENTS OF PUERTO RICO. Recipients of stock options or SARs who are
residents of Puerto Rico during the entire taxable year and perform services for
Margo or its subsidiaries in Puerto Rico, will not have any gross income for
federal income tax purposes either in respect of (i) the grant or the exercise
of stock options or (ii) the grant of, or the receipt of cash payments upon
exercise of, SARs.
NON-RESIDENTS OF PUERTO RICO AND RESIDENTS OF PUERTO RICO WHO PERFORM
SERVICES OUTSIDE OF PUERTO RICO. In general, an optionee, who is a non-resident
of Puerto Rico or a resident of Puerto Rico who performs services outside Puerto
Rico, will not recognize taxable income upon grant or exercise of an ISO and
Margo and its subsidiaries will not be entitled to any business expense
deduction with respect to the grant or exercise of an ISO. However, upon the
exercise of an ISO, the excess of the fair market value on the date of exercise
of the shares received over the exercise price of the shares will be treated as
an adjustment to alternative minimum taxable income. In order for the exercise
of an ISO to qualify for the foregoing tax treatment, the optionee generally
must be an employee or director of Margo or its subsidiaries (within the meaning
of Section 422 of the Code) from the date the ISO is granted through the date
three months before the date of exercise.
If the optionee has held the shares acquired upon exercise of an ISO
for at least two years after the date of grant and for at least one year after
the date of exercise, upon disposition of the shares by the optionee, the
difference, if any, between the sales price of
26
<PAGE>
the shares and the exercise price of the option will be treated as long-term
capital gain or loss. If the optionee does not satisfy these holding period
requirements, the optionee will recognize ordinary income at the time of the
disposition of the shares, generally in an amount equal to excess of the fair
market value of the shares at the time the option was exercised over the
exercise price of the option. The balance of the gain realized, if any, will be
long-term or short-term capital gain, depending upon whether or not the shares
were sold more than one year after the option was exercised. If the optionee
sells the shares prior to the satisfaction of the holding period requirements
but at a price below the fair market value of the shares at the time the option
was exercised, the amount of ordinary income will be limited to the amount
realized on the sale over the exercise price of the option. Subject to any
limitations imposed by Section 162(m) of the Code for federal income tax
purposes, the optionee including such compensation in income and certain
reporting requirements, Margo and its subsidiaries will be allowed a business
expense deduction to the extent the optionee recognized ordinary income. Upon
any subsequent sale of the shares, the optionee will have taxable gain or loss,
measured by the difference between the amount realized on the disposition and
the tax basis of the shares (generally, the amount paid for the shares plus the
amount treated as ordinary income at the time the option was exercised).
In general, an optionee, who is a non-resident of Puerto Rico or a
resident of Puerto Rico who performs services outside of Puerto Rico, to whom an
NSO is granted will recognize no income at the time of the grant of the option.
Upon exercise of an NSO, an optionee will recognize ordinary income in an amount
equal to the excess of the fair market value of the shares on the date of
exercise over the exercise price of the option (or, if the optionee is subject
to restrictions imposed by Section 16(b) of the Securities Exchange Act of 1934,
upon the lapse of those restrictions, unless the optionee makes a special
election within 30 days after exercise to have income determined without regard
to the restrictions). Subject to any limitations imposed Section 162(m) of the
Code for federal income tax purpose, the director or employee including such
compensation in income and certain reporting requirements, Margo will be
entitled to a tax deduction in the same amount. Upon a subsequent sale of the
shares, the optionee will have taxable gain or loss, measured by the difference
between the amount realized on the disposition and the tax basis of the shares
(generally, the amount paid for the shares plus the amount treated as ordinary
income at the time the option was exercised).
Upon exercise of a SAR, an optionee who is a non-resident of Puerto
Rico or a resident of Puerto Rico who performs services outside Puerto Rico will
recognize ordinary income in an amount equal to the cash received on the
exercise date. If it complies with applicable withholding requirements, Margo
and its subsidiaries will be entitled to a business expense deduction in the
same amount and at the same time as the optionee recognizes ordinary income.
27
<PAGE>
Under the 1998 Option Plan, upon the occurrence of certain "change in
control" transactions involving Margo, all options then outstanding under the
1998 Option Plan become immediately exercisable. Under certain circumstances,
compensation payments attributable to such options may be treated as "parachute
payments" under the Code, in which case a portion of such payments may be
nondeductible to Margo for federal income tax purposes and the recipient, if a
non-resident of Puerto Rico or a resident of Puerto Rico who performs services
outside of Puerto Rico, may be subject to a 20% excise tax under the Code.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of the majority of the votes present in person or
by proxy by stockholders entitled to vote at the Annual Meeting is required to
approve the 1998 Option Plan. Therefore, abstentions shall have the effect of a
vote against the proposal. Broker-non-votes will have no effect on the proposal.
The Board of Directors recommends that stockholders vote FOR the
approval of the 1998 Option Plan. The Spectors jointly own more than a majority
of the outstanding shares of Margo Common Stock. As a result, the Spectors have
sufficient votes to approve the 1998 Option Plan. See "Security Ownership of
Certain Beneficial Owners and Management." The Spectors have indicated that they
intend to vote FOR the 1998 Stock Option Plan.
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of Deloitte & Touche LLP
to act as Margo's independent accountants for the year ending December 31, 1998
subject to ratification by Margo's shareholders. Deloitte & Touche LLP has
served as Margo's independent public accountants since July 2, 1997. The firm of
Kaufman, Rossin & Co. had previously served as Margo's independent public
accountants from 1991 to 1996.
Deloitte & Touche LLP 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.
Ratification of the appointment of Deloitte & Touche LLP as the
independent accountants of Margo requires the affirmative vote of a majority of
the votes cast by the holders of the Common Stock at the Annual Meeting. The
Board of Directors recommends that the stockholders ratify the appointment of
Deloitte & Touche LLP as Margo's independent accountants for the year ending
December 31, 1998.
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended, requires
Margo's directors and executive officers to report their ownership of and
transactions in Margo's Common Stock to the Securities and Exchange Commission
(the "SEC") and the National Association of
28
<PAGE>
Securities Dealers. Copies of these reports are also required to be supplied to
Margo . Specific dates for filing these reports have been established by the
SEC, and Margo is required to report in the annual report 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, 1997. Based solely on its
review of the copies of the report received by it, Margo believes that all such
filing requirements were satisfied, except that Michael J. Spector and Margaret
D. Spector filed two late reports relating to one transaction, Frederick D. Moss
filed three late reports related to two separate transactions and J. Morton
Davis filed two late reports related to his becoming a 10% holder.
STOCKHOLDER PROPOSALS
Any proposal that a stockholder wishes to present for consideration at
the 1999 Annual Meeting of Stockholders must be received by Margo at its
principal executive office no later than January 7, 1999. Proposals should be
directed to the attention of the Secretary of Margo.
ANNUAL REPORT
A copy of Margo's Annual Report to Shareholders containing the
consolidated financial statements of Margo for the fiscal year ended December
31, 1997 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
/S/ MARGARET D. SPECTOR
---------------------------
Margaret D. Spector
Secretary
Vega Alta, Puerto Rico
May 7, 1998
29
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made and entered into as of
the ___ day of April, 1998, by and among Margo Nursery Farms, Inc., a Puerto
Rico Corporation ("Margo Nursery") and Interim Margo, Inc. ("Newco"), a Puerto
Rico corporation (Margo Nursery and Newco are hereinafter collectively referred
to as the "Corporations").
W I T N E S S E T H:
WHEREAS, Margo Nursery is a Puerto Rico corporation that is engaged in
the production and distribution of tropical and flowering plants, garden
products as well as landscaping design and installation services;
WHEREAS, Newco is a newly formed Puerto Rico corporation that was
created to accomplish a restructuring of the corporate structure of Margo
Nursery to create a holding company structure;
WHEREAS, the Corporations recognize that the corporate restructuring of
Margo as a holding company will facilitate the future expansion or
diversification of its business activities and thereby contribute to the future
long range financial strength of Margo Nursery;
WHEREAS, the Corporations recognize that the proposal corporate
restructuring will be effected through the transfer to Newco of substantially
all of Margo's assets in exchange for all the outstanding capital stock of Newco
in accordance with Article 9.01 of the Puerto Rico General Corporation Law of
1995,
<PAGE>
and the assumption of substantially all the liabilities of Margo by Newco;
WHEREAS, Newco will change its name to "Margo Nursery Farms, Inc." and
conduct the business presently conducted by Margo Nursery and Margo Nursery will
change its name to "Margo Caribe, Inc.";
WHEREAS, to accomplish the foregoing purposes, the Corporations have
agreed to this Agreement and Plan of Reorganization whereby Margo Nursery will
transfer substantially all of its assets and certain of its liabilities to Newco
so that following the effective date of the reorganization, the business
previously conducted by Margo Nursery will hereforth be conducted by Newco as a
wholly-owned subsidiary of Margo Nursery which will operate as a holding company
under the corporate name of "Margo Caribe, Inc."
NOW THEREFORE, in consideration of the premises and mutual covenants
herein set forth the Corporations adopt the Plan of Reorganization and agree as
follows:
1. Recitals. All of the recitals set forth are true and correct.
2. Transfer of Assets and Assumption of Liabilities. The Corporations
hereby adopt this Agreement and Plan of Reorganization which is intended to be
effected as a tax-free reorganization pursuant to Section 1112(g) of the Puerto
Rico Internal Revenue Code of 1994 as amended. Pursuant to this Agreement and
Plan of Reorganization, all the assets of Margo Nursery, except those identified
in Annex A hereto will be transferred to Newco as of the Effective Date (as
hereinafter defined), and Newco will assume substantially
2
<PAGE>
all the liabilities of Margo Nursery. In exchange from such transfer of assets,
Newco agrees to issue to Margo Nursery 1000 shares of its Common Stock, $0.01
par value, representing 100% of Newco's outstanding Capital Stock. Upon issuance
in accordance with the terms of the Agreement, such shares will fully paid and
non-assessable shares of Newco.
3. Effective Date. The the transfer of the assets and assumption of
related liabilities will become effective on the date (the "Effective Date"), a
Bill of Sale and Assumption of Liabilities, in form and substance acceptable to
the parties and their counsel is executed, following compliance with the
conditions of this Agreement.
4. Change of Name. As part of the corporate restructuring contemplated
hereby, Margo Nursery agrees to take such action as may be required to change
its corporate name to "Margo Caribe, Inc." and Newco agree to take such action
as may be required to change its corporate name to "Margo Nursery Farms, Inc."
5. Further Actions. All necessary action shall be taken to transfer
information, contracts, assets, or any other real or personal property so that
this Agreement Plan of Reorganization be effected pursuant to the provisions
herewith.
6. Conditions of Restructuring. Consummation of the corporate
restructuring contemplated herein is subject to fulfillment, on or before the
Effective Date, of the following conditions: (i) the Corporations shall
cooperate and take all such actions or furnish all such information to enable
Newco to comply with the applicable bulk sales statutes under Puerto Rico law;
3
<PAGE>
(ii) receipt of an opinion from Pietrantoni, Mendez & Alvarez satisfactory in
form and substance to Margo Nursery, to the effect that the reorganization
constitutes a tax-free reorganization under the Puerto Rico Internal Revenue
Code of 1994, as amended, and the United States Internal Revenue Code of 1986,
as amended, and (iii) Margo Nursery shall have received the consent to the
reorganization contemplated hereby of Puerto Rico Farm Credit ACA ("P.R. Farm
Credit") under that certain financing agreement dated December 15, 1994, between
Margo Nursery and P.R. Farm Credit and of Banco Santander Puerto Rico
("Santander") under that certain financing agreement dated September 27, 1994
between Margo and Santander, and any other consents that may be required under
existing agreements all such consents shall be in form and substance reasonably
satisfactory to Margo Nursery and its counsel.
7. Authorization. The appropriate officers of the Corporations are
authorized for and on behalf of and in the name of Corporations to take or cause
to be taken all such actions and to execute or cause to be executed such
certificates and other private or public documents as may be deemed necessary or
desirable by them in order to effectuate this Plan of Reorganization.
8. Notices. All notices to be given under this Agreement shall be sent
to the Corporations at the following address:
Michael J. Spector
Chief Executive Officer
PO Box 706
Dorado, PR 00766
9. Miscellaneous. This Agreement Plan of Reorganization constitutes the
entire Agreement and understanding between the parties and supersedes all prior
agreements and understandings
4
<PAGE>
related hereto. This Plan shall be governed by the laws of the Commonwealth of
Puerto Rico.
10. Benefits. This Agreement shall be binding upon and inure to benefit
the parties, their personal representatives, estates, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written:
MARGO NURSERY FARMS, INC.,
a Puerto Rico corporation
By: /S/ MICHAEL J. SPECTOR
-----------------------------
Michael J. Spector, President
By: /S/ ALFONSO ORTEGA
-----------------------------
Alfonso Ortega
Assistant Secretary
INTERIM MARGO, INC.
A Puerto Rico Corporation
By: /S/ MICHAEL J. SPECTOR
-----------------------------
Michael J. Spector, President
By: ALFONSO ORTEGA
-----------------------------
Alfonso Ortega
Assistant Secretary
5
<PAGE>
ANNEX A
1. Certificate of Deposit (identification number 5003584838) issued by
Banco Santander Puerto Rico in the principal amount of $500,000 at an interest
rate of 5.40%.
<PAGE>
EXHIBIT B
MARGO NURSERY FARMS, INC.
1998 STOCK OPTION PLAN
Effective April 23, 1998
SECTION 1. INTRODUCTION
1.1 PURPOSE
The purposes of the Margo Nursery Farms, Inc. 1998 Stock Option Plan
(the "Plan") is to provide Margo Nursery Farms, Inc. (the "Corporation") and its
subsidiaries with an effective means to attract and retain highly qualified
personnel as well as to provide additional incentive to employees and directors
who provide services to the Corporation and its subsidiaries. The Plan is
expected to contribute to the attainment of these objectives by offering
selected employees and directors the opportunity to acquire stock ownership
interests in the Corporation.
1.2 CONSIDERATION TO CORPORATION FOR ISSUANCE OF OPTIONS AND STOCK
APPRECIATION RIGHTS: AGREEMENTS BY EMPLOYEES.
Each Employee by signing and accepting an Option Contract will, if the
Committee so requires, agree to remain employed by the Corporation or a
Subsidiary for a specified period of time, and the consideration to the
Corporation for the issuance of Options or Stock Appreciation Rights will be any
such employment agreements as well as the benefits to the Corporation from the
added incentive to the Employee of increased proprietorship in the Corporation.
Nothing in the Plan or in any Option Contract shall confer on any individual any
right to continue employed by the Corporation or any of its Subsidiaries or
limit the right of the Corporation or any of its Subsidiaries to terminate
Employment of an Employee at any time, with or without cause.
1.3 PLAN SUBJECT TO RATIFICATION BY SHAREHOLDERS.
The Plan shall become effective upon adoption by the Board of
Directors, provided that the Plan is approved, within one year following its
adoption by the Board of Directors, by a vote of the holders of a majority of
the shares of Common Stock entitled to vote and present in person or by proxy at
a duly held shareholders' meeting. No Option or Stock Appreciation Right under
the Plan may be granted more than 10 years after the earlier of the date the
Plan is adopted or the date the Plan is approved by the shareholders of the
Corporation, without further approval by the shareholders of the Corporation.
<PAGE>
2
1.4 LIMITATIONS ON NUMBER OF SHARES ISSUABLE UNDER THE PLAN.
Subject to the following provisions of this Section 1.4, the aggregate
number of shares of Common Stock which may be issued under the Plan shall be
limited to 200,000. The shares of Common Stock for which Options and Stock
Appreciation Rights may be granted may consist of either authorized but unissued
shares of Common Stock or shares of Common Stock which have been issued and
which shall have been heretofore or hereafter reacquired by the Corporation. The
total number of shares subject to Options and Stock Appreciation Rights
authorized under the Plan shall be subject to increase or decrease in order to
give effect to the adjustment provisions of Section 3.2 hereof or any amendment
adopted as provided in Section 4.2 hereof. If any Option or Stock Appreciation
Right granted under the Plan shall expire, terminate or be cancelled for any
reason without having been exercised in full, the corresponding number of
unpurchased shares shall again be available for purposes of the Plan. The number
of shares of Common Stock for which Options and Stock Appreciation Rights may be
granted under this Plan shall be reduced by the number of shares subject to an
Option for which an Employee or a Nonemployee Director has exercised a related
Stock Appreciation Right in accordance with Section 2.4, Subsection (d), hereof.
1.5 DEFINITIONS.
The following terms shall have the meanings set forth below:
(a) APPRECIATION DATE. The date designated by a grantee of a
Stock Appreciation Right for measurement of the appreciation in the value of the
Common Stock subject to the Stock Appreciation Right, which date shall not be
earlier than the date notice of such designation is received by the Secretary of
the Corporation.
(b) BOARD OR BOARD OF DIRECTORS. The Board of Directors of the
Corporation.
(c) COMMITTEE. The compensation committee or such other
committee or committees as shall be appointed by the Board of Directors to
administer the Plan pursuant to the provisions of Section 4.1 hereof.
(d) COMMON STOCK. The Corporation's presently authorized common stock,
par value $.001 per share, except as this definition may be modified pursuant to
the provisions of Section 3.2 hereof.
<PAGE>
3
(e) DIRECTOR OPTION. An Option granted to a Nonemployee Director
pursuant to Section 2.1(b).
(f) DISABILITY. Complete and permanent inability by reason of illness
or accident to perform the duties of the occupation of the Employee or
Nonemployee Director when such disability commenced.
(g) EMPLOYEE. Any salaried officer or common law employee of the
Corporation or any Subsidiary, or both, including any salaried officer or
employee who is a member of the Board of Directors of the Corporation.
(h) EMPLOYMENT. The rendering of services by an Employee for the
Corporation, or for any Subsidiary, or both. Whether military, government or
public service shall constitute termination of employment for purposes of this
Plan or any Option or Stock Appreciation Right granted hereunder shall be
determined in each case by the Committee in its sole discretion.
(i) FAIR MARKET VALUE. The closing price of the Common Stock reported
on the NASDAQ Small Capital market on the date as of which such value is being
determined or, if no price is reported on such day, then on the next preceding
day on which such price was reported, or, if at any time the Common Stock shall
not be reported on the NASDAQ Small Capital market, the Committee shall
determine the fair market value on the basis of available prices for such Common
Stock or in such manner as may be authorized by applicable regulations under the
PRC and the IRC.
(j) INCENTIVE STOCK OPTION. An option to purchase Common Stock granted
by the Corporation under the Plan which satisfies the requirements of Section
422 of the IRC.
(k) IRC. The Internal Revenue Code of 1986, as amended.
(l) NONEMPLOYEE DIRECTOR. Any director of the Corporation who is not an
Employee of the Corporation or any Subsidiary.
(m) NONSTATUTORY STOCK OPTION. An option to purchase Common Stock
granted by the Corporation under the Plan which does not satisfy the
requirements of Section 1046 of the PRC or Section 422 of the IRC.
(n) OPTION. A Qualified Stock Option, an Incentive Stock Option or a
Nonstatutory Stock Option.
<PAGE>
4
(o) OPTIONEE. A person to whom an Option has been granted under the
Plan.
(p) OPTION EXPIRATION DATE. The date on which an Option becomes
unexercisable by reason of the lapse of time or when a Nonstatutory Stock Option
otherwise becomes unexercisable.
(q) PRC. The Puerto Rico Internal Revenue Code of 1994, as amended.
(r) QUALIFIED STOCK OPTION. An option to purchase Common Stock granted
by the Corporation under the Plan which satisfies the requirements of Section
1046 of the PRC.
(s) STOCK APPRECIATION RIGHT. A right to earn additional compensation
for the performance of future services, based on appreciation in the Fair Market
Value of the Common Stock pursuant to the formula set forth in Section 2.4,
Subsection (c), hereof.
(t) STOCK APPRECIATION RIGHT EXPIRATION DATE. The date on which a Stock
Appreciation Right becomes unexercisable by reason of the lapse of time or,
except in the case of a Stock Appreciation Right attached to a Qualified Stock
Option, or Incentive Stock Option, otherwise becomes unexercisable.
(u) SUBSIDIARY. Any corporation in an unbroken chain of corporations
beginning with the Corporation if, at the time an Option is granted, each of the
corporations other than the Corporation owns stock possessing 50% or more of the
total combined voting power of all classes of stock of one of the other
corporations in such chain.
(v) The use of the singular shall also include within its meaning the
plural or vice versa.
SECTION 2. STOCK OPTIONS
2.1 GRANT AND EXERCISE OF OPTIONS.
(a) GRANT OF OPTIONS TO EMPLOYEES. The Committee on behalf of the
Corporation may grant Options to purchase Common Stock to Employees selected by
it in its discretion.
(b) AUTOMATIC GRANT OF OPTIONS TO NONEMPLOYEE DIRECTORS. Any person who
is a Nonemployee Director of the Corporation on the first business day following
any annual meeting of shareholders of
<PAGE>
5
the Corporation shall automatically receive on such date an Option to acquire
2,500 shares of Common Stock, as adjusted in accordance with Section 3.2.
Nonemployee Directors shall have the right, if they so wish, to decline receipt
of any Options to be granted under this Section 2.1(b).
(c) OPTION CONTRACTS. Options and any Stock Appreciation Rights
attached thereto shall be evidenced by agreements ("Option Contracts") in such
form as the Committee shall approve (or the Board of Directors in the case of
Director Options) containing such terms and conditions, including the period of
their exercise, whether in installments or otherwise, as shall be contained
therein, which need not be the same for all Options.
(d) OPTION PRICE. The purchase price per share of Common Stock under
each Option granted to an Employee shall be not less than 100 percent of the
Fair Market Value per share of such Common Stock on the date the Option is
granted, as determined by the Committee. The purchase price per share of Common
Stock under each Option granted to Nonemployee Directors shall be equal to the
Fair Market Value per share of such Common Stock on the date of the grant. The
purchase price may be subject to adjustment in accordance with the provisions of
Section 3.2 hereof.
(e) TERM OF OPTION. The term during which each Option granted to an
Employee under the Plan may be exercised shall not exceed a period of ten years
from the date of its grant. Options granted to Nonemployee Directors shall be
for a term of ten years.
(f) EXERCISE OF OPTIONS. Unless an Option Contract provides otherwise,
each Option shall become exercisable, on a cumulative basis, with respect to 20%
of the shares of Common Stock covered thereby on the first anniversary of the
date of its grant and with respect to an additional 20% of the shares covered
thereby on each subsequent anniversary. Any part of an Option that has become
exercisable shall remain exercisable until it has been exercised in full or it
terminates or expires pursuant to the terms of the Plan or the applicable Option
Contract.
(g) OPTIONS NONTRANSFERABLE. Options granted under the Plan shall by
their terms be nontransferable otherwise than by will or the laws of descent and
distribution, and, during the lifetime of the Optionee, shall be exercisable
only by the Optionee. No transfer of an Option by an Optionee by will or by the
laws of descent and distribution shall be effective to bind the Corporation
unless the Corporation shall have been furnished with written notice thereof and
a copy of the will and/or such other evidence as the Committee may determine
necessary to establish the validity of the transfer.
<PAGE>
6
(h) PAYMENT. Each Option shall be exercised by delivery of a written
notice to the Corporation stating the number of whole shares of Common Stock as
to which the Option is being exercised and accompanied by payment therefor. No
shares shall be issued on the exercise of an Option unless paid for in full at
the time of purchase. Payment for shares purchased upon the exercise of an
Option shall be made in cash or, with the approval of the Committee, in Common
Stock valued at the then Fair Market Value thereof as determined by the
Committee, or by a combination of cash and Common Stock. Neither the Corporation
nor any Subsidiary may directly or indirectly lend money to any individual for
the purpose of assisting such individual to acquire or to carry shares issued
upon the exercise of Options granted under the Plan. No Optionee shall have any
rights as a shareholder with respect to any share of Common Stock covered by an
Option unless and until such individual shall have become the holder of record
of such share, and except as otherwise permitted by Section 3.2 hereof, no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property or distributions or other rights) in respect
of such share for which the record date is prior to the date on which such
individual shall have become the holder of record thereof.
(i) INVESTMENT PURPOSE. At the time of any exercise of any Option, the
Corporation may, if it shall deem it necessary or desirable for any reason,
require the holder of the Option to represent in writing to the Corporation that
it is the intention of such holder to acquire the shares of Common Stock being
acquired for investment only and not with a view to the distribution thereof. In
such event no shares of Common Stock shall be issued to such holder unless and
until the Corporation is satisfied with the correctness of such representation.
2.2 QUALIFIED STOCK OPTIONS AND INCENTIVE STOCK OPTIONS.
In addition to meeting the requirements of Section 2.1, each Qualified
Stock Option shall be subject to the requirements of (a) and each Incentive
Stock Option shall be subject to the requirements of (a), (b) and (c) of this
Section 2.2.
(a) ANNUAL LIMITATION OF OPTIONS WHICH MAY BE CONSIDERED QUALIFIED
STOCK OPTIONS AND/OR INCENTIVE STOCK OPTIONS. Anything else in the Plan
notwithstanding, if and to the extent that the provisions of Section 1046 of the
PRC and/or Section 422 of the IRC shall so require, the aggregate Fair Market
Value (determined as of the time the Option is granted) of the shares with
respect to which Qualified Stock Options and/or Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar
<PAGE>
7
year (under the Plan and any other plans of the Corporation and its
Subsidiaries) shall not exceed $100,000.
(b) INCENTIVE STOCK OPTIONS GRANTED TO TEN PERCENT SHAREHOLDERS.
Notwithstanding anything to the contrary contained in this Plan, an Incentive
Stock Option may not be granted to an Optionee who owns, directly or indirectly,
stock possessing more than 10 percent of the total combined voting power of all
classes of stock of the Corporation or any Subsidiary unless, at the time such
Incentive Stock Option is granted, the exercise price of such Incentive Stock
Option is at least 110 percent of the Fair Market Value of the Common Stock
subject to the Incentive Stock Option, and such Incentive Stock Option, by its
terms, is not exercisable after the expiration of five (5) years from the date
of grant of such Incentive Stock Option.
(c) NOTICE. An Optionee shall give prompt notice to the Corporation of
any disposition of shares acquired upon exercise of an Incentive Stock Option if
such disposition occurs within either two years after grant or one year after
the receipt of such shares by the Optionee.
2.3 VOLUNTARY SURRENDER AND CANCELLATION OF NONSTATUTORY STOCK OPTIONS.
The Committee may grant to one or more holders of Nonstatutory Stock
Options, in exchange for the voluntary surrender and cancellation of such
Nonstatutory Stock Options and any corresponding Stock Appreciation Rights, new
Options having different Option prices than the Nonstatutory Stock Option prices
provided in the Nonstatutory Stock Options so surrendered and cancelled and
containing such other terms and conditions as the Committee may deem
appropriate.
2.4 STOCK APPRECIATION RIGHTS ATTACHED TO OPTIONS.
(a) GRANT. The Committee may grant a Stock Appreciation Right with
respect to any shares of Common Stock covered by any Option granted under the
Plan and such Stock Appreciation Right shall be granted only at the time of
grant of the related Option.
(b) TERMS AND CONDITIONS. Each Stock Appreciation Right shall be
subject to the same terms and conditions as the related Option with respect to
date of expiration, exercisability, transferability, and eligibility to
exercise. When a Stock Appreciation Right is granted with respect to shares of
Common Stock covered by a Qualified Stock Option, such Stock Appreciation Right
may be exercised only when the Fair Market Value of the
<PAGE>
8
shares of Common Stock subject to the Option exceeds the exercise price of such
Option. Any amount payable upon the exercise of a Stock Appreciation Right shall
be payable in the form of cash only.
(c) AMOUNT OF COMPENSATION. The amount of compensation which shall be
payable to an Optionee pursuant to the exercise of a Stock Appreciation Right
accompanying an Option is equal to the excess of the Fair Market Value of one
share of Common Stock on the Appreciation Date over the Fair Market Value of
such share on the date the Stock Appreciation Right was granted multiplied by
the number of Option shares with respect to which the Stock Appreciation Right
is exercised (the "spread"). The amount of compensation which shall be payable
pursuant to the exercise of a Stock Appreciation Right shall not exceed 100
percent of the spread. The cash paid upon exercise of a Stock Appreciation Right
shall be reduced by such amount as the Corporation is required to withhold for
tax purposes.
(d) TERMINATION OF OPTIONS. Upon the exercise of a Stock Appreciation
Right, the related Option shall cease to be exercisable as to the shares with
respect to which such Stock Appreciation Right was exercised, and the related
Option shall be considered to have been exercised to that extent. Upon the
exercise in full of the related Option, the Stock Appreciation Right granted
with respect thereto shall terminate.
(e) AUTOMATIC EXERCISE UPON EXPIRATION. Upon the Option Expiration Date
of an Option, an attached Stock Appreciation Right shall automatically be deemed
to be exercised in full by the Optionee and cash shall be paid to such Optionee
for 100% of the spread. There shall be no automatic exercise of an attached
Stock Appreciation Right if the exercise price exceeds the Fair Market Value of
the Corporation's Common Stock on the Option Expiration Date.
SECTION 3. PROVISIONS RELATING TO PLAN PARTICIPATION
3.1 TERMINATION OF EMPLOYMENT AND DEATH.
(a) OPTIONS AND STOCK APPRECIATION RIGHTS EXERCISABLE WITHIN THREE
MONTHS FOLLOWING TERMINATION OF EMPLOYMENT, DISCHARGE OR RETIREMENT. Unless
earlier terminated in accordance with its terms, an Option or Stock Appreciation
Right shall terminate ninety days after any of the following:
(i) voluntary termination of Employment by the Employee, or
service as a director by the Nonemployee Director, with or without the consent
of the Corporation, or
<PAGE>
9
(ii) termination of Employment or service as a director by the
Corporation or any of its Subsidiaries, with or without cause, or
(iii) termination of Employment or service as a director
because of retirement, or because the employing subsidiary ceased to be a
Subsidiary of the Corporation and the Employee or director does not, prior
thereto or contemporaneously therewith, become an Employee or director of the
Corporation or of another Subsidiary;
provided, that with regard to terminations of Employment or service as a
director pursuant to clause (ii), the Option or Stock Appreciation Right shall
terminate as of the date of such discharge if prior to such termination the
Committee in its discretion shall determine that it is not in the best interests
of the Corporation that the Option or Stock Appreciation Right should continue
for said ninety-day period.
(b) OPTIONS AND STOCK APPRECIATIONS RIGHTS EXERCISABLE WITHIN
ONE YEAR AFTER DEATH OR DISABILITY. If the holder of an Option or Stock
Appreciation Right shall die or terminate his Employment or service as a
director due to Disability during the term of an Option or Stock Appreciation
Right, the holder or the legal representatives shall be entitled to exercise the
Option or Stock Appreciation in whole or in part, to the extent then
unexercised, at any time within one year following the death or termination of
Employment or service of the Optionee, but in no event after the Option
Expiration Date or the Stock Appreciation Right Expiration Date, and only to the
extent that the Optionee was entitled to exercise the Option or Stock
Appreciation Right on the date of his death or termination of Employment or
service.
3.2 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CHANGE OF CONTROL;
DISSOLUTION.
(a) Subject to any required action by the shareholders of the
Corporation, each of (i) the number of shares of Common Stock covered by each
outstanding Option, (ii) the number of shares Common Stock which have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, (iii) the price per share of Common Stock covered by each such
outstanding Option, and (iv) the maximum number of shares with respect to which
Options may be granted to any Optionee, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split or the payment of a stock dividend with respect to
the Common Stock or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Corporation;
<PAGE>
10
provided, however, that (a) each such adjustment with respect to an Incentive
Stock Option or Qualified Stock Option shall comply with the rules of Section
424(a) of the IRC (or any successor provision) and any applicable provision of
the PRC and (b) in no event shall any adjustment be made which would render any
Qualified Stock Option granted hereunder other than a "qualified option" under
Section 1046 of the PRC or any Incentive Stock Options other than an "incentive
stock option" as defined in Section 422 of the IRC; and provided further,
however, that conversion of any convertible securities of the Corporation shall
not be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Committee, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.
(b) If: (1) Any person (as defined for purposes of Section 13(d) and
14(d) of the Exchange Act, but excluding the Corporation and any of its
wholly-owned subsidiaries) acquires direct or indirect ownership of 50% or more
of the combined voting power of the then outstanding securities of the
Corporation as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise; or (2) the shareholders of the
Corporation approve (A) any consolidation or merger of the Corporation in which
the Corporation is not the surviving corporation (other than a merger of the
Corporation in which the holders of Common Stock immediately prior to the merger
have the same or substantially the same proportionate ownership of the surviving
corporation immediately after the merger), or (B) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Corporation to an entity which is not
a wholly-owned subsidiary of the Corporation, then the exercisability of each
Option outstanding under the Plan shall be automatically accelerated so that
each Option shall, immediately prior to the specified effective date of any of
the foregoing transactions, become fully exercisable with respect to the total
number of shares subject to such Option and may be exercisable for all or any
portion of such Shares. Upon the consummation of any of such transactions, all
outstanding Options under the Plan shall, to the extent not previously
exercised, terminate and cease to be outstanding.
(c) In the event of the proposed dissolution or liquidation of the
Corporation, all outstanding Options will terminate
<PAGE>
11
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Committee.
SECTION 4. ADMINISTRATION
4.1 INDEPENDENT COMMITTEE TO ADMINISTER THE PLAN.
(a) COMPOSITION AND FUNCTIONS OF COMMITTEE. A Committee
consisting of at least two directors (who shall be "Nonemployee Directors" as
defined in Rule 16b-3 of the Securities and Exchange Commission) shall be
appointed by the Board of Directors and will have, subject to the express
provisions of the Plan, general authority to administer the Plan, to grant
Options and Stock Appreciation Rights thereunder, subject to the ratification of
the Board of Directors if such limitation is imposed by the Board of Directors,
and to perform such other functions as may be assigned to it by the Board of
Directors in connection with the Plan, including, among other things,
determining the form of Option Contracts to be issued under the Plan and the
terms and conditions to be included in such Option Contracts and adopting from
time to time such rules and regulations as it may deem appropriate for the
proper administration of the Plan. The Committee may also make such
determinations under, and such interpretations of, and take such steps in
connection with, the Plan, the rules and regulations or Options and Stock
Appreciation Rights granted thereunder as it may deem necessary or advisable.
The Committee may, in its discretion or in accordance with a direction from the
Board of Directors, waive any provisions of any Option Contract, provided such
waiver is not inconsistent with the terms of the Plan as then in effect.
(b) AUTHORIZATION OF ACTIONS TAKEN BY THE COMMITTEE AND BOARD
OF DIRECTORS. Vacancies in the Committee shall be filled by the Board of
Directors. The Committee may act by a majority of its members either at a
meeting or in writing without a meeting. All questions arising under the Plan or
under the rules and regulations or under the Option Contracts, whether such
questions involve interpretation thereof or otherwise, shall be determined by
the Committee and its determination, unless disapproved by the Board of
Directors, shall be conclusive and binding in all cases. To the extent that any
such action would not adversely affect the status of Qualified Stock Options and
Incentive Stock Options under the PRC and IRC, respectively, all matters
provided in the Plan, in the Option Contracts, or in such rules and regulations
to be determined or performed by the Committee may be determined or performed by
the entire Board of Directors. No member of the Board of Directors or of the
Committee shall be liable for any action taken or any
<PAGE>
12
determination made in good faith with respect to the Plan or any Option
Contract.
(c) Findings of the Board of Directors and Committee Are
Conclusive. Each determination, interpretation, or other action made or taken
pursuant to the provisions of this Plan by the Board of Directors or the
Committee shall be final and shall be binding and conclusive for all purposes
and upon all persons, including, without limitation thereto, the Corporation,
the shareholders, the Committee and each of the members thereof, and all
Optionees, and their respective successors in interest.
4.2 AMENDMENT AND DISCONTINUANCE OF THE PLAN.
The Board of Directors may at any time amend, modify, suspend
or terminate the Plan, without shareholder approval, except to the extent
required by the PRC or the IRC to permit the granting of Qualified Stock Options
or Incentive Stock Options, or by the rules of any securities exchange or
automated quotation system on which the shares of Common Stock of the
Corporation trade at such time, provided, that no change shall be made which
will have a material adverse effect upon any Option or Stock Appreciation Right
previously granted unless the consent of the affected Optionee is obtained.
4.3 COMPLIANCE WITH LAW AND OTHER CONDITIONS.
(a) OPTIONS AND STOCK APPRECIATION RIGHTS. Any exercise by an
Optionee of an Option or Stock Appreciation Right shall be made only in
compliance with any applicable rule or regulation of the Securities and Exchange
Commission exempting such exercise from the operation of Section 16(b) of the
Securities Exchange Act of 1934 and any other applicable law, rule, regulation
or other provision that may hereafter relate to the exercise and cash settlement
rights of Options or Stock Appreciation Rights under the Federal securities
laws.
(b) GENERALLY. No shares of Common Stock shall be issued
pursuant to the exercise of any Option or Stock Appreciation Right granted under
the Plan prior to the compliance by the Corporation to the satisfaction of its
counsel with any applicable laws and with any applicable regulations of any
securities exchange on which such shares are listed.
4.4 WITHHOLDING TAXES.
Whenever shares of Common Stock are to be issued pursuant to
the Plan, the Corporation shall have the right to require that
<PAGE>
13
there be remitted to the Corporation an amount sufficient to satisfy all
applicable federal, state, commonwealth and local withholding tax requirements
prior to the delivery of any certificate or certificates for such shares. The
Corporation reserves the right to satisfy the applicable federal, state,
commonwealth and local withholding tax requirements through the retention of
shares of Common Stock otherwise transferable upon exercise of an Option. Such
withheld amounts shall meet the Federal securities laws requirements set forth
in Section 4.3, Subsection (a), hereof. Whenever payments are to be made in
cash, such payments shall be net of an amount sufficient to satisfy federal,
state and local withholding tax requirements and authorized deductions.
4.5 TAX OFFSET PAYMENTS.
The Committee shall have the authority at the time of any
award under this Plan or anytime thereafter to make Tax Offset Payments to
assist Optionees in paying income taxes incurred as a result of their
participation in this Plan. The Tax Offset Payments shall be determined by
multiplying a percentage established by the Committee by all or a portion (as
the Committee shall determine) of the taxable income recognized by an Optionee
upon (i) the exercise of a Nonstatutory Stock Option or a Stock Appreciation
Right, or (ii) the disposition of shares received upon exercise of a Qualified
Stock Option or Incentive Stock Option. The percentage shall be established,
from time to time, by the Committee at that rate which the Committee, in its
sole discretion, determines to be appropriate and in the best interests of the
Corporation to assist Optionees in paying income taxes incurred as a result of
the events described in the preceding sentence. Tax Offset Payments shall be
subject to the restrictions on transferability applicable to Options set forth
in Section 2.1(g).
4.6 USE OF PROCEEDS AND FUNDING.
(a) USE OF PROCEEDS. The proceeds from the sale of Common
Stock pursuant to Options granted under the Plan shall constitute general funds
of the Corporation and may be used for its corporate purposes as the Corporation
may determine.
(b) FUNDING. No provision of the Plan shall require or permit
the Corporation, for the purpose of satisfying any obligations under the Plan,
to purchase assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets, nor shall the
Corporation maintain separate bank accounts, books, records or other evidence of
the existence of a segregated or separately maintained or
<PAGE>
14
administered fund for such purposes. Employees shall have no rights under the
Plan other than as unsecured general creditors of the Corporation, except that
insofar as they may have become entitled to payment of additional compensation
by performance of services, they shall have the same rights as other employees
under general law. This Subsection shall not prevent the Corporation from
purchasing its Common Stock for the purpose of meeting its requirements to issue
Common Stock pursuant to the Plan.
4.7 OTHER.
To the extent applicable, this Plan is intended to permit the
issuance of Qualified Stock Options in accordance with the provisions of Section
1046 of the PRC and Incentive Stock Options in accordance with Section 422 of
the IRC. This Plan may be modified or amended at any time, both prospectively
and retroactively, and in such manner as to affect Qualified Stock Options or
Incentive Stock Options previously granted, if such amendment or modification is
necessary for this Plan and the Qualified Stock Options or Incentive Stock
Options granted hereunder to qualify under said provisions of the PRC and the
IRC.
<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 Puerto Rico 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 Pietrantoni Mendez & Alvarez, Suite 1901, Banco Popular
Center, 209 Munoz Rivera Avenue, San Juan, Puerto Rico on Friday, May 29, 1998
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 consider and act upon an Agreement and Plan of Reorganization
providing for a restructuring of the existing corporate structure of the Company
whereby the Company would transfer substantially all of its assets to a newly
formed subsidiary and become a holding company;
(3) To amend the certificate of incorporation of the Company to change
its corporate name to "Margo Caribe, Inc.";
(4) To consider and approve the Company's 1998 Stock Option Plan;
(5) To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors; and
(6) 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)
FOLD AND DETACH HERE
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
PLEASE MARK X
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
<TABLE>
<S> <C>
PROPOSAL (1) Election of Directors THE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS ARE:
NOMINEES: Blas R. Ferraiuoli, Frederick D. Moss, Michael A. Rubin, Margaret D. Spector,
FOR WITHHOLD Michael J. Spector
all nominees AUTHORITY
listed for all nominees INSTRUCTION: To withhold authority to vote for any nominee, write that nominee's name on the
line immediately below.
[ ] [ ]
--------------------------------------------------------------------------------------------
PROPOSAL (2) To consider and act
upon an Agreement and Plan of
Reorganization providing for a
restructuring of the existing
corporate structure of the Company
whereby the Company would transfer
substantially all of its assets to
a newly formed subsidiary and become
a holding company;
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL (3) To amend the certificate
of incorporation of the Company to
change its corporate name to
"Margo Caribe, Inc."
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL (4) To consider and approve
the Company's 1998 Stock Option Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL (5) Ratification of appointment PROPOSAL (6) In the discretion of such proxies,
of Deloitte & Touche LLP as Independent upon such other matters as may properly come before
accountants of the Company. the annual meeting or any adjournment or
postponement thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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 AND RETURN THE SAME
PROMPTLY.
FOLD AND DETACH HERE
</TABLE>
