<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:
[ ] 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
NEOGEN
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
NEOGEN
- -------------------------------------------------------------------------------
(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)(4) 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:
- --------------------------------------------------------------------------------
[ ] 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
[NEOGEN LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Neogen
Corporation (the "Company"), a Michigan corporation, will be held on October 9,
1997 at 9:00 a.m., local time, at the University Club of Michigan State
University, 3435 Forest Road, Lansing, MI 48909, for the following purposes:
1. To elect nine directors to serve for the ensuing year and until their
successors are elected.
2. To consider and act upon a proposal to approve the Neogen Corporation
1997 Stock Option Plan, pursuant to which 400,000 shares of Common Stock
will be reserved for issuance.
3. To ratify the appointment of BDO Seidman, LLP as independent auditors of
the Company for the fiscal year ending May 31, 1998.
4. 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 shareholders of record at the close of business August 11, 1997 are
entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date, and return the enclosed proxy card as promptly as possible in the
postpaid envelope enclosed for that purpose. Any shareholder attending the
meeting may vote in person even if he or she returned a proxy.
Sincerely,
G. Bruce Papesh
Secretary
Lansing, Michigan
August 28, 1997
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED.
<PAGE> 3
PROXY STATEMENT
The enclosed Proxy is solicited on behalf of Neogen Corporation (the "Company")
for use at the Annual Meeting of Shareholders to be held October 9, 1997, at
9:00 a.m., or at any adjournment thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Shareholders. The Annual
Meeting will be held at the University Club of Michigan State University, 3435
Forest Road, Lansing, MI 48909. The Company's telephone number is (517)
372-9200.
These proxy solicitation materials were mailed on or about August 28, 1997,
together with the Company's 1997 Annual Report to Shareholders, to all
shareholders entitled to vote at the meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it any time before its use by delivering to the Company, before the
meeting, a written notice of revocation or a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Every shareholder voting at the annual meeting has one vote for each share on
all matters. The Company's By-Laws do not provide for cumulative voting in the
election of directors. Shares represented by valid, executed and dated proxies
in the enclosed form will be voted if received in time for the meeting in
accordance with the instructions thereon. Unless your proxy is otherwise
marked, it will be voted FOR management's nominees for the board of directors,
FOR approval of the Neogen Corporation 1997 Stock Option Plan, and FOR
ratification of the appointment of the Company's independent auditor.
A simple majority of the shares issued and outstanding as of August 11, 1997
(the "Record Date") must be present or represented at the Annual Meeting to
constitute a quorum. Approval for any item of business to be voted upon at the
Annual Meeting will require the affirmative vote of a majority of the votes
cast by the holders of common shares at the meeting and entitled to vote.
Abstentions, withheld votes and broker nonvotes will not be deemed votes cast
in determining approval of any proposal, but will be counted in determining the
number of common shares present or represented by proxy in determining whether
a quorum is present.
The cost of soliciting proxies will be borne by the Company. The Company has
retained the services of American Stock Transfer & Trust to aid in the
solicitation of proxies. The Company estimates that the cost of soliciting
proxies will be less than $2,000 including out-of-pocket expenses. The Company
may reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers, and regular employees, without additional compensation,
personally or by telephone, telegram, facsimile or letter.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Shareholders of record at the close of business on August 11, 1997 are entitled
to notice of and to vote at the meeting. At the Record Date, 6,118,008 shares
of the Company's Common Stock were issued and outstanding. At the Record Date,
the following were known by the Company to be the beneficial owners of more
than 5% of the Company's Common Stock.
1
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER PERCENT
NAME AND ADDRESS OF SHARES OF TOTAL
- --------------------------------------------------------------------
<S> <C> <C>
Kenneth B. Dart and Robert C. Dart
c/o Dart Management Limited
P.O. Box 31363-SMB
Mirco Commerce Center
Cayman Islands, B.W.I. 388,675 6.4%
Herbert D. Doan (1)
P.O. Box 169
Midland, MI 48640 304,890 5.0%
</TABLE>
(1) Includes 22,001 shares of Common Stock which Mr. Doan has the right to
acquire by exercise of options within 60 days of August 11, 1997.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders which are intended to be presented by such
shareholders at the Company's next Annual Meeting of Shareholders must be
received by the Company no later than April 29, 1998 in order that they may be
included in the proxy statement and form of proxy relating to that meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES
A board of nine directors is to be elected at the meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
Company's nine nominees named below, all of whom are presently directors of the
Company. In the event that any nominee of the Company is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be
voted for any nominee who shall be designated by the present Board of Directors
to fill the vacancy. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them for nominees listed below. Shareholders may only vote for nine directors.
The Company is not aware of any nominee who will be unable or will decline to
serve as a director. The term of office of each person elected as a director
will continue until the next Annual meeting of Shareholders or until his
successor has been elected and qualified.
The names of the nominees, and certain information about them, are set forth
below:
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE POSITION DIRECTOR SINCE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Herbert D. Doan (2) (3) 74 Chairman, Board of Directors 1982
James L. Herbert 57 President and Chief Executive Officer of the Company, 1982
Director
G. Bruce Papesh (1) 50 Secretary, Director 1993
Gordon E. Guyer, Ph.D. (1) 71 Director 1990
Robert M. Book (3) 67 Director 1990
Leonard E. Heller, Ph.D. (1) 52 Director 1992
Jack C. Parnell (2) 62 Director 1993
Thomas H. Reed (2)(3) 52 Director 1995
Lon M. Bohannon 44 Vice President and Chief Financial Officer of the 1996
Company, Director
</TABLE>
2
<PAGE> 5
(1) Member, Audit Committee
(2) Member, Compensation Committee
(3) Member, Stock Option Committee
Information concerning nominees for the Board of Directors follows:
Herbert D. Doan has been a director of the Company since September 1982 and the
Company's Chairman of the Board of Directors since October 1984. Mr. Doan has
served as President of the Herbert H. and Grace A. Dow Foundation since
February 1996 and is chairman of the Michigan Molecular Institute, a position
he has held since 1964. He was formerly President and Chief Executive Officer
of Dow Chemical Company. He has been active as an independent venture
capitalist for the past five years.
James L. Herbert has been President, Chief Executive Officer, and a director of
the Company since he joined Neogen in June 1982. He previously held the
position of Corporate Vice President of DeKalb Ag Research, a major
agricultural genetics and energy company. He has management experience in
animal biologics, specialized chemical research, medical instruments,
aquaculture, animal nutrition, and poultry and livestock breeding and
production.
Dr. Gordon E. Guyer joined the Board of Directors in January 1990. Dr. Guyer
retired in 1996 as director for the Michigan Department of Agriculture, a
position he held since 1993. Dr. Guyer served as interim President of Michigan
State University from 1991 to 1993 and was Vice President of Governmental
Affairs for the University from 1988 until 1991. From 1986 to 1988, he was
Director of the Department of Natural Resources for the State of Michigan.
Robert M. Book was elected to the Board of Directors in November 1990. Since
January 1993, Mr. Book has served as President of AgriVista, Inc., a company
that provides agricultural consulting and marketing services. He served as
President of the Indiana Institute of Agriculture, Food and Nutrition, from
1983 through 1992. He was formerly Group Vice President of Agriculture
Marketing for Elanco Products Company.
Dr. Leonard E. Heller was elected to the Board of Directors in October 1992.
He is currently a self-employed independent consultant in the area of medical,
biomedical, and pharmaceutical information systems. From 1992 to 1993, he was
Secretary, Cabinet for Human Resources for the Commonwealth of Kentucky. From
1986 to 1993 he was part owner of O. J. Packaging Inc., a retail packaging
company, and a general partner in Illinois Diversatech, a real estate
development partnership located in Manteno, Illinois.
G. Bruce Papesh was elected to the Board of Directors in October 1993 and was
elected Secretary in October 1994. Since 1987, Mr. Papesh has served as
President of Dart, Papesh & Co., an investment consulting and financial
services firm. Mr. Papesh provides investment services to Kenneth B. Dart and
Robert C. Dart, who together own 6.4% of the Company's Common Stock. Mr.
Papesh asserts that he has no investment power over the Company's common stock
owned by Kenneth B. Dart or Robert C. Dart. Mr. Papesh also serves on the
Board of Directors of Immucor, Inc., a publicly traded immunodiagnostics
company that manufactures and markets products for the human clinical blood
bank industry.
Jack C. Parnell was elected to the Board of Directors in October 1993. Since
1991, he has held the position of Governmental Relations Advisor with the law
firm of Kahn, Soares and Conway. In 1989, Mr. Parnell was appointed by
President Bush to serve as Deputy Secretary for the U.S. Department of
Agriculture. From 1983 to 1989, he served in three different senior
governmental positions for the State of California, including Secretary for the
California Department of Food and Agriculture from 1987 to 1989. Prior to
1987, Mr. Parnell was a private entrepreneur who owned and operated various
businesses including diversified cattle and farming operations. The firm of
Kahn, Soares and Conway currently act as the Company's government relations
advisor.
Thomas H. Reed was elected to the Board of Directors in October 1995. He
currently serves as President and Chief Executive Officer for the Michigan
Livestock Exchange, where he has worked since 1977. Mr. Reed is a member of
the Board of Directors of City Bank, St. Johns, Michigan and is a former
chairman of the Michigan State
3
<PAGE> 6
University Board of Trustees. He has served as an officer or director of
numerous trade organizations and financial institutions.
Lon M. Bohannon was elected to the Board of Directors in October 1996. Mr.
Bohannon joined Neogen in October 1985 as Vice President of Finance and was
promoted to Vice President - Administration and Chief Financial Officer in
November 1994. He is responsible for all areas of accounting, finance, human
resources and investor relations. A CPA, Mr. Bohannon served as Administrative
Controller for Federal Forge, Inc., a metal forging and stamping firm, from
March 1980 until October 1985, and worked at the Public Accounting Firm of
Ernst & Young from June 1975 to March 1980.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES HEREIN.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of the
Company as of August 11, 1997 for each current director, nominee and for all
current directors and executive officers as a group:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENT OF TOTAL
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Herbert D. Doan (1) 304,890 5.0%
James L. Herbert (1) 295,477 4.8%
Gordon E. Guyer, Ph.D. (1) 20,001 *
Robert M. Book (1) 18,001 *
Leonard E. Heller, Ph.D. (1) 58,768 1.0%
G. Bruce Papesh (1) 14,001 *
Jack C. Parnell (1) 14,001 *
Thomas H. Reed (1) 4,601 *
Lon M. Bohannon (1) 91,437 1.5%
All current directors and executive officers as a group (fifteen persons) (1) 964,312 15.2%
</TABLE>
* Less than 1%
(1) Includes the following shares of Common Stock which current directors and
executive officers have the right to acquire by exercise of options within 60
days of August 11, 1997: Mr. Doan - 22,001 shares; Mr. Herbert - 52,467
shares; Dr. Guyer - 20,001 shares; Mr. Book - 18,001 shares; Dr. Heller -
16,001 shares; Mr. Papesh - 14,001 shares; Mr. Parnell - 14,001 shares; Mr.
Bohannon - 16,400 shares; all current directors and executive officers as a
group - 238,874 shares.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held eight meetings during the fiscal
year ended May 31, 1997. Each of the incumbent directors attended at least 75%
of the aggregate of all meetings of the Board and Committees of which he was a
member held during the period he served on the Board or Committee.
The standing committees of the Board of Directors are the Audit Committee, the
Compensation Committee and the Stock Option Committee. The Audit Committee,
which met one time in 1997, has responsibility for recommending to the Board of
Directors the firm of independent auditors to be retained by the Company;
reviewing with the Company's independent auditors the scope and results of
their audits; reviewing with the independent auditors and management the
Company's accounting and reporting principles, policies and practices; and
reviewing with the Company's independent auditors the adequacy of the Company's
accounting, financial and operating controls. The Compensation Committee,
which met twice during 1997, has responsibility for reviewing and approving the
Company's executive compensation policies and makes recommendations concerning
the Company's employee
4
<PAGE> 7
benefit programs. The Stock Option Committee administers the Company's Stock
Option Plan. This committee held four meetings during 1997 primarily to review
and approve stock options granted pursuant to the Plan.
The Board of Directors serves as a committee of the whole for purposes of
recommending candidates for election to the Board of Directors. In this
capacity, the Board held one meeting in fiscal year 1997. The Board will
consider nominees recommended by shareholders provided such recommendations are
in writing and received by the Company no later than April 29, 1998.
Recommendations should be addressed to: Corporate Secretary, Neogen
Corporation, 620 Lesher Place, Lansing, Michigan 48912.
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid or
accrued by the Company during the last three years for the Company's chief
executive officer, the only executive officer of the Company receiving annual
cash compensation in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
FISCAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS AWARDED COMPENSATION (2)(3)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James L. Herbert, President, 1997 $148,092 $20,000 25,000 $2,229
Chief Executive Officer 1996 $137,989 $10,000 30,000 $1,846
1995 $130,368 $10,000 25,000 $1,436
</TABLE>
(1) Includes amounts contributed to the Company's 401(k) Retirement Savings
Plan by the named executive officer.
(2) Matching contributions paid to the Company's 401(k) Retirement Savings
Plan on behalf of the named executive officer.
(3) Under terms of a deferred compensation agreement, the current value of an
annuity owned by the Company is payable to the named executive officer upon
death, retirement or termination of employment.
The following table contains information concerning the grant of options under
the Company's Stock Option Plan to the named executive officer of the Company
during the year ended May 31, 1997. No stock appreciation rights (SARS) were
granted during such period.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF TOTAL
OPTIONS GRANTED
TO EMPLOYEES EXERCISE PRICE EXPIRATION
NAME GRANTED IN FISCAL YEAR PER SHARE DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James L. Herbert 6,500 (1) 6.436% $7.50 8/1/01
18,500 (2) 18.317% $7.50 8/1/06
</TABLE>
(1) Options were granted at fair market value and vest over five years in
equal annual installments commencing with the first anniversary of the grant
date.
(2) Options were granted at fair market value and vest over three years in
equal annual installments commencing with the first anniversary of the grant
date.
5
<PAGE> 8
The following table sets forth information for the named executive officer with
respect to the value of options exercised during the year ended May 31, 1997
and the value of outstanding and unexercised options held as of May 31, 1997,
based upon the market value of the Company's Common Stock of $7.000 per share
on that date. There were no SARS outstanding or exercised as of or for the
year ended May 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
SHARES AT MAY 31, 1997 AT MAY 31, 1997 (2)
ACQUIRED VALUE ---------------------------- --------------------------
NAME ON EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James L. Herbert 19,000 $118,250 28,000 73,000 $57,540 $52,860
</TABLE>
(1) Represents the difference between the market price of the Common Stock and
the exercise price of the options on the date of exercise multiplied by the
number of shares acquired upon exercise.
(2) Represents the difference between the closing market price of the Common
Stock at May 31, 1997 of $7.000 per share and the exercise price per share of
in-the-money options multiplied by the number of shares which could be acquired
at May 31, 1997 upon the exercise of all in-the-money options.
COMPENSATION OF DIRECTORS
The Company does not pay director's fees to any director for attendance at
meetings of the Board or Standing Committees. All non-employee directors
receive automatic, non-qualified options to purchase 5,000 shares of Common
Stock of the Company when first elected to the Board of Directors and
non-qualified options to purchase 2,000 shares of Common Stock of the Company
upon subsequent annual election to the Board of Directors, subject to
shareholder approval (see Proposal 2). The options expire ten years after the
date of grant and vest over three years in equal annual installments commencing
with the first anniversary of the date of grant. All directors are eligible to
receive reimbursement for all ordinary travel expenses related to attendance at
Board or committee meetings.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were
complied with during the two fiscal years ended May 31, 1997 and May 31, 1996.
6
<PAGE> 9
PROPOSAL 2
APPROVAL OF NEOGEN CORPORATION 1997 STOCK OPTION PLAN
At the meeting, shareholders will be asked to consider and act upon a proposal
to approve the Neogen Corporation 1997 Stock Option Plan (the "Plan").
Pursuant to the Plan, 400,000 shares of the Company's Common Stock are reserved
for issuance. The Plan is intended to serve as the successor to the Neogen
Corporation Stock Option Plan II which expired on July 30, 1997.
The Board of Directors believes that it is in the Company's and its
shareholders' best interests to approve the Plan to allow the Company to
continue to grant stock options to secure for the Company the benefits of the
additional incentive inherent in the ownership of its Common Stock by
directors, Scientific Review Council ("SRC") members, and key employees
(including officers), to help the Company attract, secure and retain the
services of these persons and to provide these persons with an opportunity to
acquire or enlarge their stock ownership so they might have a direct interest
in the Company's success. Non-employee directors and SRC members do not
receive any other compensation for their services as directors, committee
members or SRC members of the Company.
The Company will furnish a full copy of the proposed Plan without charge to
each person who forwards a written request including representation that he or
she was a shareholder on August 11, 1997 to: Corporate Secretary, Neogen
Corporation, 620 Lesher Place, Lansing, Michigan 48912. The Company's Board
of Directors has approved the Plan, subject to shareholder approval. The major
features of the Plan are summarized below, but this is only a summary and is
qualified in its entirety by reference to the actual text. Capitalized terms
not otherwise defined in this Proxy Statement have the meanings given them in
the Plan. As of the Record Date, the closing sale price of the Company's
Common Stock was $8.000.
APPROVAL OF THE PLAN
The approval by a majority of the votes cast by the holders of Common Shares at
the meeting and entitled to vote on the action is necessary for shareholder
approval of the Plan. Abstentions, withheld votes and broker nonvotes will not
be deemed votes cast in determining approval of this proposal, but will be
counted in determining the number of Common Shares present or represented by
proxy in determining whether a quorum is present.
GENERAL
Options granted under the Plan may be "Incentive Stock Options" (options
meeting the requirements set forth in the Plan and which are also intended to
be and qualify as incentive stock options within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended, and the applicable rules and
regulations thereunder [the "Code"]), Nonqualified options (options which meet
the requirements set forth in the Plan but are not intended to be, or do not
qualify as, an incentive stock option within the meaning of Section 422) or
both. The Plan contains various provisions to ensure that Incentive Stock
Options comply with Section 422.
The purpose of the Plan is to provide key employees (including officers),
directors and SRC members of the Company and its Subsidiaries with an increased
incentive to make significant and extraordinary contributions to the long-term
performance and growth of the Company and its Subsidiaries, to join the
interests of key employees, directors and SRC members with the interests of the
shareholders of the Company, and to facilitate attracting and retaining key
employees, directors and SRC members of exceptional ability.
ADMINISTRATION
The Plan shall be administered by a Committee appointed by the Board of
Directors. Subject to the provisions of the Plan, the Committee shall
determine, from those eligible to be Participants under the Plan, the persons
to be granted stock options, the amount of stock to be optioned to each such
person, the time such options shall be granted and the terms and conditions of
any stock options.
7
<PAGE> 10
Subject to the provisions of the Plan, the Committee is authorized to interpret
the Plan, to promulgate, amend and rescind rules and regulations relating to
the Plan and to make all other determinations necessary or advisable for its
administration. Interpretation and construction of any provision of the Plan
by the Committee shall, unless otherwise determined by the Board of Directors
of the Company, be final and conclusive.
PLAN PARTICIPANTS
Subject to the granting of automatic stock options, the Committee shall
determine and designate from time to time, those key employees (including
officers), directors and SRC members of the Company or any subsidiary to whom
options are to be granted and who thereby become participants under the Plan;
provided, however, that (a) Incentive Options shall be granted only to
employees (as defined in the Code) of the Company or a corporate subsidiary, to
the extent required by Section 422 of the Code, or any successor provision, and
(b) no participant may be granted stock options to purchase more than 100,000
Common Shares in the aggregate in any fiscal year of the Company.
SHARES SUBJECT TO GRANT
The maximum number of Common Shares with respect to which stock options may be
granted under the Plan is 400,000 Common Shares, which may consist in whole or
in part of authorized and unissued or reacquired Common Shares. Unless the
Plan has terminated, shares covered by the unexercised portion of canceled,
expired or otherwise terminated options under the Plan are again available for
option and sale.
The number and type of shares subject to each outstanding stock option, the
option price with respect to outstanding stock options, the aggregate number
and type of shares remaining available under the Plan, and the maximum number
and type of shares that may be granted to any participant in any fiscal year
are subject to such adjustment as the Committee deems appropriate to reflect
such events such as stock dividends, stock splits, recapitalizations, mergers,
statutory share exchanges or reorganizations or by the Company.
STOCK OPTIONS
Grant of Stock Options
Both Incentive Options and Nonqualified Options may be granted under the Plan.
An Incentive Option is intended to be, and qualifies as, an incentive stock
option within the meaning of Section 422 of the Code. Any Option granted under
the Plan must have an exercise price not less than 100% of the fair market
value of the shares on the date on which such option is granted. With respect
to an Incentive Option granted to a participant who owns more than 10% of the
total combined voting shares of the Company or of any parent or subsidiary of
the Company, the exercise price of such option must not be less than 110% of
the fair market value of the shares subject to such option on the date such
option is granted.
At the time of the exercise of any option granted pursuant to the Plan, the
participant must pay the full option price for all shares purchased (a) in cash
or, (b) with the consent of the Committee, (i) in Common Shares, (ii) by a
promissory note payable to the order of the Company which is acceptable to the
Committee, (iii) by a cash down payment and a promissory note for the unpaid
balance, (iv) subject to such conditions as may be established by the
Committee, by the Company retaining from the shares to be delivered upon
exercise of the stock option that number of shares having a fair market value
on the date of exercise equal to the option price of the number of shares with
respect to which the participant exercises the option, (v) by delivery to the
Company of written notice of the exercise in such form as the Committee may
prescribe, accompanied by irrevocable instructions to a stock broker to
promptly deliver to the Company full payment for the shares with respect to
which the option is exercised from the proceeds of stockbroker's sale of, or
loan against, the shares, or (vi) in such other manner as the Committee
determines is appropriate. The aggregate fair market value (determined as of
the date the option is granted) of the underlying stock with respect to which
Incentive Options are first exercisable for the first time by such individual
during any calendar year (under all of such plans of the Company and its parent
and subsidiary corporations) cannot exceed $100,000.
8
<PAGE> 11
Automatic Stock Options
Each outside director of the Corporation shall automatically be granted a
Nonqualified Stock Option to purchase 5,000 shares of Common Stock as of the
date he or she is first elected or appointed to the Board of Directors. Each
outside director of the Corporation who is re-elected to the Board of Directors
shall automatically be granted a Nonqualified Stock Option to purchase 2,000
shares of Common Stock as of the date of each re-election.
Each person who is elected or appointed to serve as an SRC member shall
automatically be granted a Nonqualified Stock Option to purchase 2,500 shares
of Common Stock as of the date of his or her election or appointment. Each SRC
members who is re-elected to the Scientific Review Council shall automatically
be granted a Nonqualified Stock Option to purchase 1,000 shares of Common Stock
as of the date of each re-election.
All automatic stock options granted shall be exercisable in one-third
cumulative annual installments beginning one year after the date of grant,
shall expire ten years after the date of grant and shall have an option price
equal to 100% of the fair market value of the Company's Common Stock on the
date of grant.
Continuation of Employment
Options granted under the Plan may be exercised only while the participant is
an employee, director or SRC member of the Company or a subsidiary, except as
described under "Extraordinary Transactions" and except that the Committee may
permit the exercise of all or any portion of the options granted to such
participant (i) for a period not to exceed three months following termination
of employment with respect to Incentive Options that are intended to remain
Incentive Options if such termination is not due to death or permanent
disability of the participant, (ii) for a period not to exceed one year
following termination of employment with respect to Incentive Options that are
Intended to remain Incentive Options if termination of employment is due to the
death or permanent disability of the participant, and (iii) for a period not to
extend beyond the expiration date with respect to Nonqualified Options or
Incentive Options that are not intended to remain Incentive Options, all
subject to any restrictions, terms and conditions fixed by the Committee.
Term of Stock Options
If not sooner terminated, each stock option granted under the Plan will expire
not more than ten years from the date of grant; provided that, with respect to
an Incentive Option, such option must expire not more than five years after the
date of the grant.
SHAREHOLDER RIGHTS
No participant in the Plan has any of the rights of a shareholder of the
Company under any option granted under the Plan until the actual issuance of
shares to the participant, and before such issuance no adjustment will be made
for dividends, distributions or other rights in respect of such shares, except
as described under the caption "Shares Subject to Grant".
EXTRAORDINARY TRANSACTIONS
If the Company engages in specified consolidations, mergers, transfers of
substantially all of its properties and assets, dissolutions, liquidations,
reorganizations or reclassifications in such a way that holders of Common
Shares are entitled to receive stock, securities, cash or other assets with
respect to, or in exchange for, the Common Shares (each a "Transaction"), then
each participant holding a stock option granted under the Plan upon the
exercise of such option after consummation of a Transaction will be entitled to
receive (for the same aggregate exercise price) the stock and other securities,
cash and assets the participant would have received upon consummation of the
Transaction if he or she had exercised the option in full immediately before
consummation of the Transaction.
9
<PAGE> 12
In addition, in connection with a Transaction, the Committee, may (i) permit
stock options outstanding under the Plan to be exercised in full for a limited
period of time, after which all unexercised stock options and all rights of
participants under such options would terminate, (ii) permit stock options
outstanding under the Plan to be exercised in full for their then remaining
terms, or (iii) require all stock options outstanding under the Plan to be
surrendered to the Company for cancellation and payment to each participant in
cash of the excess of the fair market value of the underlying Common Shares as
of the date such Transaction is effective over the exercise price, less any
applicable withholding taxes.
FEDERAL INCOME TAX CONSEQUENCES
The rules governing the tax treatment of options and shares acquired upon the
exercise of options are quite technical. Therefore, the description of federal
income tax consequences set forth below is necessarily general in nature and
does not purport to be complete. Moreover, statutory provisions are subject to
change, as are their interpretations, and their application may vary in
individual circumstances. Finally, the tax consequences under applicable state
and local income tax laws may not be the same as under the federal income tax
laws.
Incentive Options
If the participant makes no disposition of the shares acquired pursuant to
exercise of an Incentive Option within one year after the transfer of shares to
such participant and within two years from grant of the option, such
participant will realize no taxable income as a result of the grant or exercise
of such option, and any gain or loss that is subsequently realized may be
treated as long-term capital gain or loss, as the case may be. Under these
circumstances, the Company will not be entitled to a deduction for federal
income tax purposes with respect to either the issuance of such Incentive
Options or the transfer of shares upon their exercise.
If shares acquired upon exercise of Incentive Options are disposed of prior to
the expiration of the above time periods, the participant will recognize
ordinary income in the year in which the disqualifying disposition occurs, the
amount of which will generally be the lesser of (i) the excess of the market
value of the shares on the date of exercise over the option price, or (ii) the
gain recognized on such disposition. Such amount will ordinarily be deductible
by the Company for federal income tax purposes in the same year, provided that
the amount constitutes reasonable compensation and that the Company satisfies
certain federal income tax withholding requirements.
Nonqualified Options
A participant who acquires shares by exercise of a Nonqualified Option
generally realizes as taxable ordinary income, at the time of exercise, the
difference between the exercise price and the fair market value of the shares
on the date of exercise. Such amount will ordinarily be deductible by the
Company in the same year, provided that the amount constitutes reasonable
compensation and that the Company satisfies certain federal income tax
withholding requirements.
AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors may terminate or amend the Plan, or amend any stock
option agreement under the Plan, at any time; provided that no such amendment
or revision may increase the maximum number of shares in the aggregate that are
subject to the Plan without the approval or ratification of the shareholders of
the Company, and no such amendment or revision may change the option price or
alter or impair any stock option previously granted under the Plan, in a manner
adverse to a participant, without the consent of such participant, all except
as described under the caption "Shares Subject to Grant".
Unless sooner terminated by the Board of Directors, the Plan will terminate on
August 14, 2007, which is ten years after its original adoption by the Board of
Directors, and no stock options may be granted under the Plan after that date.
The termination of the Plan will not affect the validity of any option
outstanding on the date of termination.
10
<PAGE> 13
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
PROPOSAL 3
APPOINTMENT OF INDEPENDENT AUDITORS
It is proposed that the shareholders ratify the appointment of BDO Seidman, LLP
as independent auditors of the Company for the year ending May 31, 1998. BDO
Seidman, LLP served as the Company's independent auditors for the fiscal year
ended May 31, 1997. Representatives of BDO Seidman, LLP are expected to be
present at the meeting with the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF BDO SEIDMAN, LLP AS INDEPENDENT AUDITORS.
NEOGEN CORPORATION WILL FURNISH A COPY OF ITS ANNUAL REPORT ON FORM 10-KSB FOR
THE YEAR ENDED MAY 31, 1997, WITHOUT EXHIBITS, WITHOUT CHARGE TO EACH PERSON
WHO FORWARDS A WRITTEN REQUEST INCLUDING REPRESENTATION THAT HE/SHE WAS A
SHAREHOLDER ON AUGUST 11, 1997 TO: CORPORATE SECRETARY, NEOGEN CORPORATION,
620 LESHER PLACE, LANSING, MICHIGAN 48912.
By Order of the Board of Directors
G. Bruce Papesh
G. Bruce Papesh
Secretary
Dated: August 26, 1997
11
<PAGE> 14
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<S><C>
NOMINEES: Herbert D. Doan, James L. Herbert,
FOR WITHHELD G. Bruce Papesh, Gordon E. Guyer, FOR AGAINST ABSTAIN
1. ELECTION OF [ ] [ ] Robert M. Book, Leonard E. Heller, 2. To approve the Neogen [ ] [ ] [ ]
DIRECTORS Jack C. Parnell, Thomas H. Reed, Corporation 1997 Stock
and Lon M. Bohannon Option Plan, pursuant
to which 400,000 shares
of common stock will be
To withhold authority to vote for any individual nominee(s) write his reserved for issuance.
or their names in the following space:
- -----------------------------------------------------------------------
3. To ratify the appoint- [ ] [ ] [ ]
ment of BDO Seidman,
LLP as independent
auditors of the company
for the fiscal year
ending May 31, 1998.
SIGNATURE(S) DATE
-------------------------------------------------- ---------------,1997
</TABLE>
NOTE: Please sign exactly as your name appears on this proxy. If signed for
estates, trusts, or corporations, title or capacity should be stated. If shares
are held jointly, each holder should sign.
<PAGE> 15
PROXY - NEOGEN CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - OCTOBER 9, 1997
The undersigned hereby appoints G. Bruce Papesh and James L. Herbert, and each
of them with full power to appoint his substitute, attorneys and proxies to
represent the shareholder and to vote and act with respect to all shares that
the shareholder would be entitled to vote on all matters which come before the
annual meeting of shareholders of Neogen Corporation referred to above and at
any adjournment of that meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IF THIS PROXY IS
PROPERLY EXECUTED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATIONS ARE MADE, THE SHARES WILL BE VOTED FOR EACH OF
THE PROPOSALS ON THIS PROXY. THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED IN THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTER, INCLUDING
SUBSTITUTION OF DIRECTOR NOMINEES, WHICH MAY COME BEFORE THE MEETING.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
[SEE REVERSE
SIDE]
