<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
BIONUTRICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on 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:(1)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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> 2
BIONUTRICS, INC.
2425 E. CAMELBACK ROAD, SUITE 650
PHOENIX, ARIZONA 85016
-------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FOR THE YEAR ENDED OCTOBER 31, 1998
TO BE HELD ON MARCH 30, 1999
-------------------------------------------------------------
The Annual Meeting of Stockholders of Bionutrics, Inc., a Nevada
corporation (the "Company"), will be held at 2:00 p.m. (local time), on March
30, 1999, at the Ritz Carlton, 2401 E. Camelback Road, Phoenix, Arizona 85016,
for the following purposes:
1. To elect four directors for a three-year term expiring in 2002
and one director for a two-year term expiring in 2001.
2. To ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company for the fiscal year ending
October 31, 1999.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on February 12,
1999 are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
To assure your representation at the meeting, however, you are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she previously has returned a
proxy.
Sincerely,
/s/ George E. Duck, Jr.
George E. Duck, Jr.
Secretary
Phoenix, Arizona
February 25, 1999
<PAGE> 3
BIONUTRICS, INC.
2425 E. CAMELBACK ROAD, SUITE 650
PHOENIX, ARIZONA 85016
-------------------------------------------------------------
PROXY STATEMENT
-------------------------------------------------------------
VOTING AND OTHER MATTERS
GENERAL
The enclosed proxy is solicited on behalf of Bionutrics, Inc., a Nevada
corporation (the "Company"), by the Company's board of directors (the "Board of
Directors") for use at the Annual Meeting of Stockholders to be held at 2:00
p.m. (local time), on March 30, 1999 (the "Meeting"), or at any adjournment
thereof, for the purposes set forth in this Proxy Statement and in the
accompanying Notice of Annual Meeting of Stockholders. The Meeting will be held
at the Ritz Carlton, 2401 E. Camelback Road, Phoenix, Arizona 85016.
These proxy solicitation materials were first mailed on or about March
3, 1999, to all stockholders entitled to vote at the Meeting.
VOTING SECURITIES AND VOTING RIGHTS
Stockholders of record at the close of business on February 12, 1999
(the "Record Date"), are entitled to notice of and to vote at the Meeting. On
the Record Date, there were issued and outstanding 20,705,732 shares of the
Company's common stock, $.001 par value per share (the "Common Stock").
The presence, in person or by proxy, of the holders of a majority of
the total number of shares of Common Stock outstanding constitutes a quorum for
the transaction of business at the Meeting. Each stockholder voting at the
Meeting, either in person or by proxy, may cast one vote per share of Common
Stock held on all matters to be voted on at the Meeting. Assuming that a quorum
is present, the affirmative vote of a majority of the shares of Common Stock of
the Company present in person or represented by proxy at the Meeting and
entitled to vote is required: (i) to elect four directors for a three-year term
expiring in 2002 and one director for a two-year term expiring in 2001 and (ii)
to ratify the appointment of Deloitte & Touche LLP as the independent auditors
of the Company for the fiscal year ending October 31, 1999.
Votes cast by proxy or in person at the Meeting will be tabulated by
the election inspectors appointed for the Meeting and will determine whether a
quorum is present. The election inspectors will treat abstentions as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of any matter
submitted to the stockholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
VOTING OF PROXIES
When a proxy is properly executed and returned, the shares it
represents will be voted at the Meeting as directed. If no specification is
indicated, the shares will be voted: (i) "for" the election of the nominees set
forth in this Proxy Statement; and (ii) "for" the ratification of the
appointment of Deloitte & Touche LLP as the independent auditors of the Company
for the fiscal year ending October 31, 1999.
<PAGE> 4
REVOCABILITY OF PROXIES
Any person giving a proxy may revoke the proxy at any time before its
use by delivering to the Company written notice of revocation or a duly executed
proxy bearing a later date or by attending the Meeting and voting in person.
SOLICITATION
The cost of this solicitation will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for expenses incurred in forwarding
solicitation materials to such beneficial owners. Proxies also may be solicited
by certain of the Company's directors and officers, personally or by telephone
or telegram, without additional compensation.
ANNUAL REPORT AND OTHER MATTERS
The 1998 Annual Report to Stockholders, which was mailed to
stockholders with or preceding this Proxy Statement, contains financial and
other information about the activities of the Company but is not incorporated
into this Proxy Statement and is not to be considered a part of these proxy
soliciting materials. The information contained in the "Report of the
Compensation Committee of the Board of Directors" below and "Company Performance
Graph" below shall not be deemed "filed" with the Securities and Exchange
Commission (the "SEC") or subject to Regulations 14A or 14C or to the
liabilities of Section 18 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
The Company will provide, without charge to each stockholder of record
as of the Record Date, a copy of the Company's annual report on Form 10-K for
the year ended October 31, 1998, as filed with the SEC. Any exhibits listed in
the Form 10-K report also will be furnished upon request at the actual expense
incurred by the Company in furnishing such exhibit. Any such requests should be
directed to the Company's Secretary at the Company's executive offices set forth
in this Proxy Statement.
2
<PAGE> 5
SECURITY OWNERSHIP OF
PRINCIPAL STOCKHOLDERS, DIRECTORS
AND NAMED EXECUTIVE OFFICERS
The following table sets forth certain information with respect to
beneficial ownership of the Common Stock on February 23, 1999 by: (i) each
director and each nominee for director; (ii) the Named Executive Officers (as
defined herein) set forth in the Summary Compensation Table under the section
entitled "EXECUTIVE COMPENSATION;" (iii) all directors, nominees and executive
officers of the Company as a group; and (iv) each person known by the Company to
be the beneficial owner of more than five percent of the Common Stock.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1) (2) PERCENT
- -------------------------------------------------------------------------------------------------------------
DIRECTORS AND NAMED EXECUTIVE OFFICERS:
- ---------------------------------------
<S> <C> <C>
Ronald H. Lane, Ph.D.(3)........................................................ 4,138,586 19.5%
George E. Duck, Jr.(4).......................................................... 43,073 *
Stephen H. Friedman(5).......................................................... 101,446 *
John R. Palmer(6)............................................................... 274,708 1.3
J. Robert Horton(7)............................................................. 100,000 *
Richard M. Feldheim(8).......................................................... 940,849 4.5
Daniel S. Antonelli(9).......................................................... 4,000,000 17.6
Y. Steve Henig, Ph.D.(10)....................................................... 6,667 *
C. Everett Koop, M.D., Sc.D.(11)................................................ 26,667 *
William M. McCormick(12)........................................................ 1,080,834 5.0
Milton Okin(13)................................................................. 550,917 2.7
Frederick B. Rentschler(14)..................................................... 192,759 *
Winston A. Salser, Ph.D.(15).................................................... 903,694 4.4
Donald A. Winkler............................................................... 0 *
Robert B. Goergen(16)........................................................... 1,065,000 5.0
Executive officers and directors as a group
(15 persons)............................................................... 13,425,200 53.7%
OTHER 5% STOCKHOLDERS:
- ----------------------
Lipogenics, Inc.(17)............................................................ 1,202,886 5.8%
Bali Holdings LLC(18)........................................................... 1,400,000 6.8
AC Humko Corp.(19).............................................................. 4,000,000 17.6
</TABLE>
- ----------------------
*Denotes less than a 1% interest in the Company
(1) Except as indicated, and subject to community property laws when
applicable, the persons named in the table above have sole voting and
investment power and with respect to all shares of Common Stock shown
as beneficially owned by them.
(2) Includes shares of Common Stock issuable to the identified person
pursuant to stock options or warrants that may be exercised within 60
days after February 23, 1999. In calculating the percentage of
ownership, such shares are deemed to be outstanding for the purpose of
computing the percentage of shares of Common Stock owned by such
person, but are not deemed to be outstanding for the purpose of
computing the percentage of shares of Common Stock owned by any other
stockholders.
(3) Represents shares held of record by R.H. Lane Limited Partnership of
which Dr. Lane is a general partner. He shares voting power over these
shares with Richard M. Feldheim, a general partner. Dr. Lane disclaims
beneficial ownership of 686,000 shares held by such partnership for the
benefit of other partners and 900,000 shares held by the partnership
for the benefit of his wife. Includes 506,667 shares of Common Stock
issuable upon exercise of stock options.
(4) Includes 41,666 shares of Common Stock issuable upon exercise of stock
options.
3
<PAGE> 6
(5) Includes 50,000 shares of Common Stock issuable upon exercise of stock
options.
(6) Includes 180,000 shares held of record by Bali Holdings LLC, a company
of which Mr. Palmer is one of three members. Also includes 33,333
shares of Common Stock issuable upon exercise of stock options.
(7) Represents 100,000 shares of Common Stock issuable upon exercise of
stock options.
(8) Includes 133,280 shares held of record by Millrich Corporation, a
corporation controlled by Mr. Feldheim, 19,826 shares held of record by
Abby's, Inc., a corporation controlled by Mr. Feldheim, 395,076 shares
held of record by the R. M. Feldheim Limited Partnership of which Mr.
Feldheim is the general partner, and 386,000 shares held by R.H. Lane
Limited Partnership of which Mr. Feldheim is a general partner. Does
not include 3,245,919 shares held by R.H. Lane Limited Partnership for
the benefit of other partners. He shares voting power over the shares
held by Abby's, Inc. and R.H. Lane Limited Partnership. Includes 6,667
shares of Common Stock issuable upon exercise of stock options.
(9) Represents 2,000,000 shares of Common Stock and warrants for the
purchase of 2,000,000 shares held by AC Humko Corp. of which Mr.
Antonelli disclaims beneficial ownership. Mr. Antonelli is the
President and CEO of AC Humko Corp.
(10) Represents 6,667 shares of Common Stock issuable upon exercise of stock
options.
(11) Includes 6,667 shares of Common Stock issuable upon exercise of stock
options.
(12) Includes 700,000 shares issuable upon exercise of warrants. Also
includes 50,000 shares held by Mr. McCormick's wife and 25,000 shares
held by Mr. McCormick's minor children, of which shares he disclaims
beneficial ownership. Also includes 6,667 shares of Common Stock
issuable upon exercise of stock options.
(13) Includes 6,667 shares of Common Stock issuable upon exercise of stock
options.
(14) The shares are held of record by the Frederick B. Rentschler Trust.
Includes 6,667 shares of Common Stock issuable upon exercise of stock
options.
(15) Includes 114,300 shares held by the Salser Partnerships Nos. 1, 2, and
3. Mr. Salser shares voting power with respect to these shares with
other family members. Also includes 6,667 shares of Common Stock
issuable upon exercise of stock options.
(16) Includes 25,000 shares held by The Goergen Foundation, of which Mr.
Goergen is President, and 40,000 shares held by the Robert B. Goergen
Living Trust, Robert B. Goergen, Trustee. Also includes 250,000 shares
held by Ropart Investments, LLC, of which Mr. Goergen is managing
member, and as to which he disclaims beneficial ownership except to the
extent that his individual interest in such shares arises from his
interest in such entity. Also includes 750,000 shares issuable upon
exercise of warrants held by Ropart Investments, LLC.
(17) The address of Lipogenics is 2425 E. Camelback Road, Suite 650,
Phoenix, Arizona 85016. Lipogenics is a wholly owned subsidiary of the
Company, and as such for consolidation purposes these shares are
classified as treasury shares.
(18) The address of Bali Holdings LLC is 970 Douglas Road, Batavia, Illinois
60510. The members of the management committee are three U.S. citizens
residing in Illinois and Connecticut. A member of the limited liability
company includes John R. Palmer, an executive officer of the Company.
(19) The address of AC Humko Corp. is 7171 Goodlett Farms Parkway, Memphis,
Tennessee 38018.
4
<PAGE> 7
PROPOSAL TO ELECT DIRECTORS
NOMINEES
The Company's Restated Articles of Incorporation provide that the
number of directors shall be fixed from time to time by resolution of the Board
of Directors or stockholders. Presently, the number of directors is fixed at
eleven and that number of directors is divided into three classes, with one
class standing for election each year for three-year terms. The Board of
Directors has nominated Y. Steve Henig, Ph.D., Winston A. Salser, Ph.D., Donald
A. Winkler, and Robert B. Goergen for election as Class II directors for
three-year terms expiring in 2002 or until their respective successors are
elected and qualified. The terms of the initial Class II directors are to expire
in 1998 or until their successors are duly elected and qualified. In addition,
the Board of Directors has nominated Richard M. Feldheim as a Class I director
for a two-year term expiring in 2001 or until his successor is elected and
qualified, which represents the remainder of the Class I term for the current
vacant position on the Board of Directors. Any vacancies may be filled by a vote
of a majority of the directors then in office. The Annual Meeting for the
election of directors is held in the calendar year immediately following the
fiscal year end.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for each of the nominees named above. In the event that any of
the nominees is unable or declines to serve as a director at the time of the
Meeting, the proxies will be voted for a nominee, if any, designated by the
current Board of Directors to fill the vacancy. It is not expected that any of
the nominees will be unable or will decline to serve as a director.
The Board of Directors recommends a vote "For" the nominees named
herein.
The following table sets forth certain information regarding the
directors and nominees for directors of the Company:
<TABLE>
<CAPTION>
TERM
NAME AGE POSITION EXPIRES
---- --- -------- -------
<S> <C> <C> <C>
Ronald H. Lane, Ph.D.(2) 54 Chairman of the Board, 2001
Chief Executive Officer
and President
Daniel S. Antonelli 46 Director 2001
Richard M. Feldheim(3) 58 Director 1998
Robert B. Goergen(1)* 60 Nominee
Y. Steve Henig, Ph.D.(1) 56 Director 1998
C. Everett Koop, M.D., Sc.D. 82 Director 1999
William M. McCormick(2) 58 Director 2001
Milton Okin(2) 83 Director 1999
Frederick B. Rentschler(1) 59 Director 1999
Winston A. Salser, Ph.D. 59 Director 1998
Donald Winkler(3)* 50 Nominee
</TABLE>
- ------------------------
* To be appointed upon election
(1) Member of the Compensation Committee.
(2) Member of the Executive Committee.
(3) Member of the Audit Committee.
5
<PAGE> 8
RONALD HOWARD LANE, PH.D. has served as Chairman of the Board, Chief
Executive Officer and President of the Company since December 1994 and its
predecessor, NutraGenics (Delaware) since April 1994 and served as President and
Chief Executive Officer of LipoGenics from July 1992 to October 1997. Dr. Lane
received a Ph.D. and post-doctorate NIH fellowship from the University of
Wisconsin (Madison) in Neurophysiology and is responsible for directing
Bionutrics' corporate development and growth. Dr. Lane spearheaded the
development of the technology at LipoGenics and has been employed previously
with Norcap Financial Corporation, The National Western Group, Inc. (an
investment company), and Taylor Pierson Corporation.
DANIEL S. ANTONELLI has been a member of the Board of Directors since
September 1998. He has served as President and Chief Executive Officer of AC
Humko Corp. since August 1995. From 1974 to 1995 he held a number of senior
positions in finance, operations and general management at Kraft, Inc. He
received a Bachelor of Business at the University of Michigan, an MBA from
DePaul University Graduate School of Business, and attended the PMD (General
Management) program at Harvard.
RICHARD M. FELDHEIM has been a director of the Company since October
1995. He served as a director, Secretary and Chief Financial Officer of
LipoGenics from July 1992 until October 1996. Mr. Feldheim has served as
Chairman and Co-Chief Executive Officer of Abby's, a restaurant chain in Oregon
since 1991. He was in private practice as a lawyer prior thereto, has previously
been employed with Goldman Sachs & Co.; Donaldson, Lufkin & Jenrette; J. Aron
Company; and Price Waterhouse, and was President of Norcap Financial
Corporation. Mr. Feldheim received a B.S., B.A., a Master's Degree in
Accounting, and a J.D. from the University of Arizona, as well as an LL.M. in
Taxation from New York University. He is a Certified Public Accountant.
ROBERT B. GOERGEN has been the Chairman since 1977 and the Chief
Executive Officer since 1978, of Blyth Industries, Inc., a public company that
manufactures and imports candles, home decorating accessories and home fragrance
products. Mr. Goergen has served as President of Blyth Industries, Inc. since
1994. From 1990 to the present, Mr. Goergen has served as Chairman of XTRA
Corporation, a public company in the trailer leasing industry. From 1979 to the
present, he has been Chairman of The Ropart Group, a private company, whose
business is investing in securities for its own account. Mr. Goergen currently
serves as the Chairman of Blyth Industries, Inc., and as a director of XTRA
Corporation and Leading Edge Packaging, Inc., and serves on the compensation
committee of XTRA Corporation. Mr. Goergen received a B.A. from the University
of Rochester and an M.B.A. from the Wharton Graduate School at the University of
Pennsylvania.
Y. STEVE HENIG, PH.D. has been a member of the Board of Directors since
October 1995 and served as a director of LipoGenics from August 1992 until
October 1996. He has served as Senior Vice President of Technology and
Innovation for Ocean Spray Cranberries, Inc. since January 1999. He served as
Senior Vice President of Technology and Marketing Services for Hunt-Wesson, Inc.
from 1992 until December 1998. He joined Hunt-Wesson in 1983 as Vice President
of Research and Development. His previous position was Vice President of
Corporate Research & Development and Corporate Engineering for Land O'Lakes,
Inc. in Minneapolis, Minnesota. Prior to that he held positions with Pillsbury
Company and General Foods Corporation. Dr. Henig received his Bachelor of
Science Degree in Chemical Engineering and a Master of Science Degree in Food
and Biotechnology from the Technion-Israel Institute of Technology. He earned
his Ph.D. Degree in Food Science from Rutgers University, New Brunswick, New
Jersey.
C. EVERETT KOOP, M.D., SC.D. is the former Surgeon General of the
United States and has been a member of the Board of Directors since October
1995. Dr. Koop's past and present committee and board of director elections
include the World Health Organization, Pan American Health Organization,
American College of Surgeons, National Library of Medicine, Association of
Military Surgeons of the United States, and the Carnegie Council. He is
currently a director of Superior Consultant Holdings Corp., a public company.
Faculty appointments include Professor of Pediatrics at University of
Pennsylvania School of Medicine, Elizabeth DeCamp McInery Professor, Dartmouth,
Senior Scholar of C. Everett Koop Institute at Dartmouth, and Distinguished
Scholar at Carnegie Foundation for the Advancement of Teaching. Dr. Koop's
hospital and administrative appointments include President of the Children's
Hospital of Philadelphia and Pediatric Surgical Consultant of the U.S. Naval
Hospital of Philadelphia. Dr. Koop received an M.D. at Cornell University
Medical College and a Sc.D. from the University of Pennsylvania (Medicine).
6
<PAGE> 9
WILLIAM M. MCCORMICK has been a member of the Board of Directors since
May 1996. Mr. McCormick was President and Chief Executive Officer of PennCorp
Financial Group, Inc., a NYSE company, from 1990 to 1995 and was a director from
1990 until 1997. Prior thereto, Mr. McCormick was employed by the American
Express Company. His titles ranged from Senior Vice President Finance, Systems &
Operations of the American Express International Banking Corporation to
President of American Express' Travel Related Services Company. Mr. McCormick
then spent five years as Chairman and CEO of Fireman's Fund Insurance. After
graduating from Yale, Mr. McCormick spent his early years in investment banking
and management consulting with Donaldson, Lufkin & Jenrette and McKinsey &
Company, Inc., respectively.
MILTON OKIN has been a member of the Board of Directors since October
1995. Mr. Okin has many years of diet and health food development experience,
having created Weight Watchers low calorie foods that he subsequently sold to
Weight Watchers International. Mr. Okin developed a unique all natural Vitamin C
from acerola berry grown in plantations in Puerto Rico and Florida. The acerola
operation was sold to Booker McConnell Ltd. of England in 1978. Mr. Okin has
owned and operated a chain of health food related retail stores including
outlets in Sears Roebuck and Company, and presently owns a mail order vitamin
and health products business in Hastings, N.Y. Mr. Okin is a biochemist graduate
of New York City College with graduate research at Mount Sinai Hospital in
lipids, cholesterol and vitamins.
FREDERICK B. RENTSCHLER has been a member of the Board of Directors
since October 1995 and served as a director of LipoGenics from January 1993
until October 1996. He is Chairman of the Board of the Salk Institute in La
Jolla, California. He serves on the board of directors and compensation
committee of International Game Technology, a NYSE company, and is a director of
Sibia Neurosciences, Inc., a public company. He served as President and Chief
Executive Officer of Beatrice Companies from 1987 to 1990, having completed a
leveraged buyout of Beatrice Companies in 1986 with the firm of Kohlberg,
Kravis, Roberts & Company. Prior to Beatrice, Mr. Rentschler was employed as
President/Chief Executive Officer of Armour-Dial and subsequently had the same
responsibility at Hunt-Wesson. Following his retirement from Beatrice, he served
as President/Chief Executive Officer of Northwest Airlines and remains on their
Board of Directors. Mr. Rentschler's current affiliations in addition to the
Salk Institute include: ESCAgenetics Corporation, Woods Hole Oceanographic
Institution (Massachusetts), and Hamilton Foundry and Machine Company. In
addition, he is President of the Heard Museum National Advisory Board (Arizona),
and a member of the Alumni Board of Vanderbilt University and Advisory Board of
Canned Foods, Inc. (California). Mr. Rentschler received his B.A. in Economics
and History from Vanderbilt University and MBA from Harvard Business School.
WINSTON A. SALSER, PH.D. has served as a member of the Board of
Directors since October 1995, served as a director of LipoGenics from August
1992 until October 1996 and is Chairman of Bionutrics' Scientific Advisory
Board. Dr. Salser has been a Professor of Molecular Biology at the University of
California, Los Angeles since 1968. Dr. Salser was the founding President of
Amgen, Inc. and formed its Scientific Advisory Board. He received a B.S. from
the University of Chicago in physics, a Ph.D. from the Massachusetts Institute
of Technology in molecular biology, and was a Helen Hay Whitney Foundation
Postdoctoral Fellow.
DONALD A. WINKLER has been the Chairman and Chief Executive Officer of
Finance One Corporation since 1993. Finance One Corporation is a $41 billion
non-bank finance subsidiary of Bank One Corporation with a national line of
business encompassing consumer, indirect and commercial finance. Prior to this,
Mr. Winkler spent 1976 through 1993 with Citibank in various positions which
included managing consumer business in Southern Europe, the Middle East and
Africa. Mr. Winkler is a graduate of Northrop University and attended the
Wharton School, University of Pennsylvania, Executive MBA program.
7
<PAGE> 10
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's bylaws authorize the Board of Directors to appoint among
its members one or more committees composed of one or more directors. As of
February 12, 1999, the Board of Directors had appointed the following standing
committees: a Compensation Committee, an Executive Committee, and an Audit
Committee.
Compensation Committee. The Compensation Committee reviews and acts on
matters relating to compensation levels and benefit plans for key executives of
the Company. The Compensation Committee also reviews the succession planning for
key executive personnel, monitors employee relations issues and oversees senior
management structure. The Compensation Committee also administers the Company's
1996 Stock Option Plan. The Committee held four meetings during the fiscal year
ended October 31, 1998.
Executive Committee. The Company's Executive Committee held four
meetings during the fiscal year ended October 31, 1998. The Executive Committee
acts as a liaison between management and the Board of Directors. At times the
Board of Directors empowers the Executive Committee to take certain actions on
behalf of the Board of Directors between regularly scheduled meetings.
Audit Committee. The Company's Audit Committee held one meeting during
the fiscal year ended October 31, 1998. The Audit Committee reviews the annual
financial statements and significant accounting issues and the scope of the
audit with the Company's independent auditors and is available to discuss with
the auditors any other audit related matters that may arise during the year.
The Board of Directors of the Company held a total of nine meetings
during the fiscal year ended October 31, 1998. Dr. C. Everett Koop and Dr.
Winston Salser attended fewer than 75% of the aggregate of (i) the total number
of meetings of the Board of Directors, and (ii) the total number of meetings
held by all committees of the Board on which he was a member.
DIRECTOR COMPENSATION AND OTHER INFORMATION
The Company pays all of its Board members a fee of $1,000 plus
reimbursement for expenses for each Board meeting attended. No options were
granted to existing members of the Board of Directors for the fiscal year ended
October 31, 1998. Mr. Antonelli was granted options to purchase 10,000 shares of
Common Stock at $5.00 per share on becoming a director.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth the total compensation received for
services rendered in all capacities to the Company for the fiscal years ended
October 31, 1996, 1997, and 1998 by the Company's Chief Executive Officer, and
its four most highly compensated executive officers whose aggregate cash
compensation exceeded $100,000 (together the "Named Executive Officers").
8
<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS
------------------------------------------------- ----------------------
RESTRICTED
OTHER ANNUAL STOCK SECURITIES ALL OTHER
NAME AND COMPENSATION AWARD(S) UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) ($) OPTIONS(#) ($)
- ------------------ ---- --------- -------- ------------ --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald H. Lane, Ph.D. 1998 $202,947 --- --- --- --- $ 6,942(2)
Chief Executive Officer and 1997 $202,296 $100,000(3) --- --- --- $ 4,000(4)
President................ 1996 $211,756 $250,000 $167,884(5) --- 760,000 ---
George E. Duck, Jr.(6) 1998 $153,846 --- --- --- --- $ 7,728(7)
Vice President of Finance, 1997 $125,962 $ 31,490(8) --- --- 25,000(9) $39,329(10)
Secretary and Treasurer.. 1996 $5,208 $ 20,000 --- --- 50,000(9) ---
Stephen H. Friedman
Executive Vice President, 1998 $206,000 --- --- --- --- $ 8,981(7)
Bionutrics Health Products, 1997 $199,903 $ 46,610(11) --- --- --- $23,500(10)
Inc...................... 1996 $ 74,100(12) $ 22,917 --- --- 150,000(9) ---
J. Robert Horton(13) 1998 $191,538 --- --- --- --- $ 7,334(7)
Vice President and General 1997 $ 93,077 --- --- --- 150,000(9) ---
Counsel.................. 1996 --- --- --- --- --- ---
John R. Palmer(14) 1998 $196,924 --- --- --- 100,000(9) $ 4,984(7)
Chief Executive Officer and 1997 --- --- --- --- --- ---
President of InCon 1996 --- --- --- --- --- ---
Technologies Inc.........
</TABLE>
- ------------------
(1) Other annual compensation did not exceed the lesser of $50,000 or 10%
of the total salary and bonus for any of the Named Executive Officers
except as noted.
(2) Represents directors' fees and contributions to a 401K plan.
(3) Represents accrued but not yet paid bonus, which was reduced in 1998
from $250,000.
(4) Represents directors' fees.
(5) Reflects a promissory note in the amount of $147,000 and accrued
interest owed to the Company by Dr. Lane that was converted to
compensation.
(6) Mr. Duck joined the Company in October 1996.
(7) Represents contributions to a 401K plan.
(8) Of this amount, $9,495 has been paid through the issuance in 1998 of
1,407 shares of Common Stock. The remaining $21,995 was accrued and
paid in 1998.
(9) Such options to acquire Common Stock were cancelled and reissued in
September 1998. See "Executive Compensation - Option Repricings."
(10) Represents moving expenses.
(11) This amount was reduced in 1998 from $54,979. Of this amount, $9,763
was paid through the issuance in 1998 of 1,446 shares of Common Stock
and $9,763 was accrued and paid in 1998.
(12) Includes consulting fees for services performed prior to joining the
Company.
(13) Mr. Horton joined the Company in June 1997.
(14) Mr. Palmer joined the Company in November 1997.
9
<PAGE> 12
OPTION GRANTS
The following table represents the options granted to the Named
Executive Officers in the last fiscal year and the value of such options.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM(1)
OPTIONS IN FISCAL BASE PRICE EXPIRATION ------------------------
GRANTED(#) YEAR ($/SH) DATE 5% ($) 10% ($)
---------- ----------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
John R. Palmer................ 100,000(2) 7.90% $7.75 11/1/2002 $214,118 $473,145
100,000(3) 7.90% $4.00 11/1/2002 0 0
George E. Duck, Jr............ 50,000(3) 3.95% $4.00 10/31/2001 0 0
25,000(3) 1.97% $4.00 9/12/2002 0 0
Stephen H. Friedman........... 150,000(3)(4) 11.84% $4.00 10/31/2001 0 0
J. Robert Horton.............. 150,000(3)(4) 11.84% $4.00 6/13/2002 0 0
</TABLE>
- -------------------
(1) The amounts represent only certain assumed rates of appreciation.
Actual gains, if any, on stock option exercises and Common Stock
holdings cannot be predicted, and there can be no assurance that the
gains set forth on the table will be achieved.
(2) This grant was cancelled in connection with the regrant of the same
number of shares in September 1998.
(3) The options granted represent regrants of options previously granted
that were cancelled. The closing sales price of the Common Stock as
quoted on the Nasdaq SmallCap Market was $1.75 on the date of the
regrants. The options vest ratably over three years, commencing on the
first anniversary of the original grant date.
(4) An aggregate of 50,000 of repriced options were not vested and
automatically terminated on the date employment ceased.
OPTION HOLDINGS
The following table represents certain information respecting the
options held by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
ON VALUE ------------------------------ ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald H. Lane, Ph.D...... --- --- 506,667 253,333 $0 $0
George E. Duck, Jr........ --- --- 41,666 33,334 0 0
Stephen H. Friedman....... --- --- 100,000 50,000 0 0
J. Robert Horton.......... --- --- 50,000 100,000 0 0
John R. Palmer............ --- --- 0 100,000 0 0
</TABLE>
- -----------------
(1) There are no in-the-money options calculated based on $1.50, which was
the closing sales price of the Common Stock as quoted on the Nasdaq
SmallCap Market on October 31, 1998.
10
<PAGE> 13
OPTION REPRICINGS
The following table sets forth certain information with respect to the
cancellation of outstanding stock option held by and the grant of replacement
options to any of the Company's Named Executive Officers during fiscal 1998. The
Company has not repriced any options held by any of its other executive officers
since the date on which the Company's Common Stock became registered under
Section 12 of the Exchange Act. See "Report of the Compensation Committee of the
Board of Directors - Stock Option Grants."
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE EXERCISE ORIGINAL
UNDERLYING OF STOCK AT PRICE AT OPTION TERM
OPTIONS TIME OF TIME OF REMAINING AT
REPRICED OR REPRICING OR REPRICING NEW DATE OF
AMENDED AMENDMENT OR AMENDMENT EXERCISE REPRICING OR
NAME DATE (#) ($) ($) PRICE ($) AMENDMENT
---- ---- ----------- ------------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Stephen H. Friedman............ 9/17/98 150,000 $1.75 $5.00 $4.00 37 Months
J. Robert Horton............... 9/17/98 150,000 $1.75 $9.125 $4.00 45 Months
George E. Duck, Jr............. 9/17/98 50,000 $1.75 $5.00 $4.00 37 Months
9/17/98 25,000 $1.75 $8.75 $4.00 48 Months
John R. Palmer................. 9/17/98 100,000 $1.75 $7.75 $4.00 50 Months
</TABLE>
EMPLOYMENT AGREEMENTS
As of January 6, 1997, the Company entered into an Employment Agreement
(the "Friedman Agreement") with Mr. Stephen Friedman. Subject to annual review
by the Board of Directors, the Friedman Agreement provides for a base salary of
$200,000 and entitles Mr. Friedman to participate in the 1996 Stock Option Plan
and other generally available benefit programs. Subject to approval of the
Board, Mr. Friedman will receive an annual bonus of up to 25% of his base
salary. The Friedman Agreement contains certain restrictive covenants pursuant
to which Mr. Friedman has agreed not to compete with the Company or to solicit
any clients or employees of the Company for a period of one year after his
employment ceases. In the event that the Company terminates Mr. Friedman's
agreement without cause, as defined, Mr. Friedman shall be entitled to a
severance payment in the amount of $50,000. In the event that the agreement is
terminated for cause, Mr. Friedman shall not be entitled to any severance or
continued benefits under the Agreement. Mr. Friedman's Employment Agreement also
contains a "change of control" provision that provides that in the event his
services are terminated as a result of a "change of control," any unvested
options to acquire the Company's Common Stock will immediately vest and become
exercisable notwithstanding the provisions of the options.
As of October 31, 1998, the Company entered into an Employment
Agreement (the "Palmer Agreement") with Mr. John R. Palmer. The Palmer Agreement
will expire on October 30, 2000. Subject to annual review by the Board of
Directors, the Palmer Agreement provides for a base salary of $200,000, grants
to Mr. Palmer options to acquire 100,000 shares of the Company's Common Stock,
and entitles Mr. Palmer to participate in the 1996 Stock Option Plan and other
generally available benefit programs. Mr. Palmer will also receive incentive
compensation based on the profitability of InCon.
The Palmer Agreement contains certain restrictive covenants pursuant to
which Mr. Palmer has agreed not to compete with the Company or to solicit any
clients or employees of the Company for a period of two years after his
employment ceases. In the event that the Company terminates Mr. Palmer's
agreement without cause, as such term is defined in the Palmer Agreement, Mr.
Palmer shall be entitled to a severance payment in an amount equal to his base
salary, payable monthly for a period of 24 months. In the event that the
agreement is terminated for cause, Mr. Palmer shall not be entitled to any
severance or continued benefits under the Agreement.
11
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended October 31, 1998, the Company's
Compensation Committee consisted of Messrs. Frederick B. Rentschler and Y. Steve
Henig. Mr. Henig served until December 1998 as an executive officer of
Hunt-Wesson, a shareholder of the Company that holds an option granted in 1992
to purchase 110,144 shares of the Company's Common Stock for an aggregate of
$150,000.
COMPLIANCE WITH SECTION 16 OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than 10% stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on the Company's review of the copies of such forms
received by it during the fiscal year ended October 31, 1997, and written
representations that no other reports were required, the Company believes that
each person who, at any time during such fiscal year, was a director, officer or
beneficial owner of more than 10% of the Company's Common Stock complied with
all Section 16(a) filing requirements during such fiscal year or prior fiscal
years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with a forward triangular merger of a subsidiary of
Nutrition Technology with InCon on October 31, 1997, the Company issued a total
of 1,400,000 shares of restricted Common Stock to the sole shareholder of InCon,
a limited liability company one of whose members is John R. Palmer, an executive
officer of the Company. Mr. Palmer has a beneficial interest in 180,000 of such
shares and pursuant to his employment agreement is entitled to incentive
compensation keyed to excess profits of InCon. Also in connection with the
merger the Company acquired certain business opportunities and by license
agreement certain technology of entities related to InCon. Under such license
agreement, an affiliate of Mr. Palmer is entitled to royalties for the greater
of five years or four years after the start of commercial production of the
initial product. Mr. Palmer has a controlling interest in a partnership from
whom the Company leases its Batavia, Illinois facility.
Payments under the lease were $145,652 for fiscal 1998.
In December 1997, the Company sold an aggregate of 83,050 shares of
Common Stock at $8.00 per share to three directors, Messrs. Okin, Salser and
McCormick.
On August 14, 1998, the Company closed on the sale to AC Humko Corp. of
(a) $4 million of the Company's common stock at $2 per share (2 million shares)
and (b) $2 million of rice bran processing technology for AC Humko's restricted
use in North America. AC Humko was issued two-year warrants for the purchase of
2,000,000 shares of Common Stock exercisable at $2.00 per share. On October 6,
1998, the Company received $2.5 million in cash for the sale of certain rice
bran oil processing and related assets held by the Company's subsidiary,
Nutrition Technology Corporation of West Monroe, Louisiana. This represented the
final payment pursuant to the transaction with AC Humko. The company acquired a
perpetual profit-sharing interest in AC Humko's rice bran business. AC Humko
received from the Company the exclusive right to use and practice the Company's
proprietary rice bran processing technology in North America, with the Company
retaining the right to use and practice the technology worldwide other than in
North America. As part of the transaction, AC Humko will function as the
exclusive supplier to registrant of certain rice bran products. In connection
with the transaction, Daniel Antonelli, CEO of AC Humko, joined the registrant's
board on September 17, 1998.
On February 3, 1998, Mr. Frederick B. Rentschler, a director, extended
an unsecured loan for $100,000 to the Company, with interest of "prime plus one"
percent, payable within 120 days. To date, the Company has not repaid this loan.
On April 24, June 18, and July 29, 1998, Mr. Milt Okin, a director,
loaned $225,000, $1,000,000, and $400,000 to the Company, for a total of
$1,625,000, with interest at 9.5% per annum, repayable on demand. He received
$1,000,000 from the Company in payment of interest accrued and as part repayment
of principal on
12
<PAGE> 15
October 7, 1998. The outstanding balance on Mr. Okin's loan as of January 31,
1999, was $690,718 including accrued interest. The loan is documented by a
promissory note secured by a pledge of the stock of the Company's subsidiary
InCon Technologies Inc.
On August 7, 1998, in connection with a prior purchase of the Company's
Common Stock, Mr. William M. McCormick, a director, acquired warrants to
purchase 100,000 shares of the Company's Common Stock at $4.00. These warrants
expire August 6, 2003. Also on August 7, 1998, in connection with a prior
purchase of the Company's Common Stock, Mr. McCormick acquired warrants to
purchase 600,000 shares of the Company's Common Stock at $3.25 per share. These
warrants expire August 6, 2008. On October 7, 1998, Mr. McCormick cancelled an
aggregate of 600,000 warrants to acquire the Company's Common Stock that were
issued to Mr. McCormick in 1996.
During fiscal 1998, Bogart Delafield Ferrier, of which Ian Ferrier, a
former director, is a principal, received payments of $119,670 for consulting
services.
All future transactions, including any loans from the Company to its
officers or directors, will be approved by a majority of the Board of Directors,
including a majority of the disinterested members of the Board of Directors, and
will be on terms no less favorable to the Company than can be obtained from
unaffiliated third parties.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OVERVIEW AND PHILOSOPHY
The Company's Board of Directors has appointed a Compensation Committee
(the "Committee") consisting entirely of non-management directors, which made
decisions on compensation of the Company's executives during fiscal 1998. The
Compensation Committee makes every effort to ensure that the compensation plan
is consistent with the Company's values and is aligned with the Company's
business strategy and goals.
The Company's compensation program for executive officers consists
primarily of base salary, bonus, and long-term incentives in the form of stock
options. Executives also participate in various other benefit plans, including
medical and retirement plans, which generally are available to all employees of
the Company.
The Company's philosophy is to pay base salaries to executives at
levels that enable the Company to attract, motivate, and retain highly qualified
executives. The bonus program is designed to reward individuals for performance
based on the Company's financial results as well as the achievement of personal
and corporate objectives that contribute to the long-term success of the Company
in building stockholder value. Stock option grants are intended to result in
minimal or no rewards if stock price does not appreciate, but may provide
substantial rewards to executives as stockholders benefit from stock price
appreciation.
The Company follows a subjective and flexible approach rather than an
objective or formulaic approach to compensation. Various factors (as discussed
herein) receive consideration without any particular weighting or emphasis on
any one factor. In establishing compensation for the year ended October 31,
1998, the Committee took into account, among other things, the financial results
of the Company, the achievement of corporate and product development goals,
compensation paid in prior years, and compensation of executive officers
employed by companies of similar size in similar industries.
BASE SALARY AND ANNUAL INCENTIVES
Base salaries for executive positions are established relative to the
Company's corporate and financial performance and comparable positions in
similarly sized companies. From time to time, the Company may use competitive
surveys and outside consultants to help determine the relative competitive pay
levels. The Company targets base pay at the level required to attract and retain
highly qualified executives. In determining salaries, the Committee also will
take into account individual experience and performance, salary levels relative
to other positions with the Company, and specific needs particular to the
Company. The Committee's evaluation of the above factors is subjective and the
Committee does not assign a particular weight to any one factor.
13
<PAGE> 16
Annual incentive awards are based on the Company's financial
performance and the efforts of its executives. Performance is measured based on
the successful achievement of corporate and product development goals and on the
achievement of personal goals. The Company did not award any bonuses to its
officers in fiscal 1998 and bonuses accrued for 1997 were reduced in 1998 as set
forth under "Executive Compensation."
STOCK OPTION GRANTS
The Company strongly believes in tying executive rewards directly to
the long-term success of the Company and increases in stockholder value through
grants of executive stock options. Stock option grants also will enable
executives to develop and maintain a significant stock ownership position in the
Company's Common Stock. The amount of options granted takes into account options
previously granted to an individual. The Company granted options to acquire
100,000 shares of Common Stock to John R. Palmer during the year ended October
31, 1998.
During fiscal 1998, the Board of Directors authorized the cancellation
of certain stock options held by employee non-directors, and the grant of new
options with a lower exercise price. Stock options granted to employees under
the Company's stock option plans are intended to provide incentives to the
employees to work to achieve long-term success for the Company. The decline in
the market price of the Company's Common Stock since the date the options were
granted frustrated the purpose of the options, and the Board of Directors deemed
it in the best interest of the Company to reduce the exercise price at the time
of repricing. With respect to the repriced options, the vesting period of those
options remains the same as those they replaced as well as the dates of
expiration.
OTHER BENEFITS
Executive officers are eligible to participate in benefit programs
designed for all full-time employees of the Company. These programs include
medical insurance, a qualified retirement program allowed under Section 401(k)
of the Internal Revenue Code, and life insurance coverage.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee evaluates the various factors described above in
evaluating the base salary and other compensation of Ronald Lane, the Company's
President and Chief Executive Officer. The Committee's evaluation of Dr. Lane's
base salary is subjective, with no particular weight assigned to any one factor.
The Committee believes that Dr. Lane's base salary is competitive with the base
salary paid to chief executive officers of comparable companies. The bonus
accrued for 1997 was reduced in 1998 and has not yet been paid.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993 and
effective in 1994, generally disallows a tax deduction to public companies for
compensation in excess of $1 million paid to each of the corporation's chief
executive officer and four other most highly compensated executive officers.
Qualifying performance-based compensation is not subject to the deduction limit
if certain requirements are met.
The Company currently intends to structure the performance-based
portion of the compensation of its executive officers in a manner that complies
with Section 162(m).
Compensation Committee
----------------------
Frederick B. Rentschler
Y. Steve Henig
14
<PAGE> 17
COMPANY PERFORMANCE GRAPH
The following line graph compares cumulative total stockholder return,
assuming reinvestment of dividends, for: (i) the Common Stock; (ii) the Nasdaq
Combined Composite Index (the "Index"); and (iii) the Nasdaq Pharmaceutical
Index (the "Pharmaceutical Index").
The graph assumes an investment of $100 in each of the Company's Common
Stock, the Index, and the Pharmaceutical Index on October 31, 1995. The
Company's shares were traded on the Nasdaq Bulletin Board from October 1995
until November 1997. The Company became a reporting company under Section 12 of
the Exchange Act in March 1997 and began trading on the Nasdaq SmallCap market
on November 19, 1997. The graph covers the period from October 31, 1995 through
October 31, 1998. Trading prior to October 31, 1995 was limited and reliable
information is not available.
The calculation of cumulative stockholder return on the Company's
Common Stock does not include reinvestment of dividends because the Company did
not pay dividends during the measurement period. The performance shown is not
necessarily indicative of future performance.
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON 10/31/95)
[GRAPH]
<TABLE>
<CAPTION>
TOTAL RETURN ANALYSIS
---------------------
10/31/95 10/31/96 10/31/97 10/30/98
-------- -------- -------- --------
<S> <C> <C> <C> <C>
BIONUTRICS $100 $419 $388 $ 75
NASDAQ COMPOSITE (US) $100 $118 $155 $174
NASDAQ PHARMACEUTICAL $100 $120 $133 $129
</TABLE>
Source: Carl Thompson Associates www.ctaonline.com (800) 959-9677. Data from
Bloomberg Financial Markets
15
<PAGE> 18
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP, independent
public accountants, to audit the consolidated financial statements of the
Company for the fiscal year ending October 31, 1999 and recommends that
stockholders vote in favor of the ratification of such appointment. In the event
of a negative vote on such ratification, the Board of Directors will reconsider
its selection. The Board of Directors anticipates that representatives of
Deloitte & Touche LLP will be present at the Meeting, will have the opportunity
to make a statement if they desire, and will be available to respond to
appropriate questions.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals that are intended to be presented by stockholders
at the annual meeting of stockholders of the Company for the fiscal year ending
October 31, 1999, to be included in the proxy statement and form of proxy
relating to such meeting, must be received by the Company no later than October
27, 1999.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Meeting.
If any other matters properly come before the Meeting, it is the intention of
the persons named in the enclosed proxy card to vote the shares they represent
as the Board of Directors may recommend.
Dated: February 25, 1999
16
<PAGE> 19
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
BIONUTRICS, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
stockholder of BIONUTRICS, INC., a Nevada corporation (the "Company"), hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement of the Company, each dated February 25, 1999, and hereby appoints
Ronald H. Lane and George H. Duck, Jr., and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1999 Annual Meeting
of Stockholders of the Company, to be held on March 30, 1999, at 2:00 p.m.,
local time, at the Ritz Carlton, 2401 E. Camelback, Road, Phoenix, Arizona
85016, and at any adjournment or adjournments thereof, and to vote all shares of
Common Stock that the undersigned would be entitled to vote if then and there
personally present, on the matters set forth below.
1. ELECTION OF DIRECTORS:
<TABLE>
<S> <C>
[ ] FOR the five nominees listed below, except as indicated [ ] WITHHOLD AUTHORITY to vote for the five nominees listed
below
</TABLE>
If you wish to withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the list below:
Y. Steve Henig, Ph.D., Winston A. Salser, Ph.D., Donald A. Winkler, Robert B.
Goergen, and Richard M. Feldheim
2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING OCTOBER 31,
1999.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
and upon such other matters that may properly come before the meeting or any
adjournment or adjournments thereof.
(Continued on reverse side)
<PAGE> 20
(Continued from reverse side)
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, FOR THE ELECTION OF DIRECTORS; FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY;
AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE
MEETING.
A majority of such attorneys or
substitutes as shall be present and
shall act at said meeting or an
adjournment or adjournments thereof
(or if only one shall be present and
act, then that one) shall have and
may exercise all of the powers of
said attorneys-in-fact hereunder.
Dated:
--------------------------------, 1999
-------------------------------------
SIGNATURE
-------------------------------------
SIGNATURE
(This Proxy should be dated, signed
by the stockholder(s) exactly as his
or her name appears hereon, and
returned promptly in the enclosed
envelope. Persons signing in a
fiduciary capacity should so
indicate. If shares are held by joint
tenants or as community property,
both stockholders should sign.)
