<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SYNBIOTICS CORPORATION
(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.
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] 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:
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>
SYNBIOTICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held July 30, 1998
The Annual Meeting of Shareholders of Synbiotics Corporation will be held at the
Radisson Suite Hotel (Rancho Bernardo), 11520 West Bernardo Court, San Diego,
California 92127, on July 30, 1998 at 10:00 a.m. for the following purposes:
1. To elect six directors;
2. To consider a proposal to amend Article Fourth of the Restated
Articles of Incorporation;
and to transact such other business as may properly come before the meeting
and any postponement or adjournment thereof.
The Board of Directors has fixed June 2, 1998, as the record date for
determining the shareholders entitled to notice of and to vote at the Annual
Meeting and any postponement or adjournment thereof.
WE WOULD BE GRATEFUL IF YOU WOULD PROMPTLY SIGN AND RETURN THE ENCLOSED PROXY
CARD.
Michael K. Green
Secretary
June 8, 1998
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Synbiotics Corporation, a California corporation (the
"Company"), 11011 Via Frontera, San Diego, California 92127, of proxies in the
accompanying form to be used at the Annual Meeting of Shareholders to be held at
the Radisson Suite Hotel (Rancho Bernardo), 11520 West Bernardo Court, San
Diego, California 92127, at 10:00 a.m. on July 30, 1998, and any postponement
or adjournment thereof.
A proxy may be revoked at any time before it is exercised. Any shareholder
giving a proxy may revoke it prior to its use at the Annual Meeting (1) by
delivering a written notice expressly revoking the proxy to the Company's
Secretary at the Company's offices, (2) by signing and delivering to the Company
at its offices, or to the place of the Annual Meeting, a later dated proxy or
(3) by attending the Annual Meeting and casting his or her votes personally. A
proxy is not revoked by the death or incapacity of the maker unless, before the
vote is counted, written notice of such death or incapacity is received by the
Company.
On the matters coming before the Annual Meeting as to which a choice has been
specified by the shareholder on the proxy, the shares will be voted accordingly.
If no choice is so specified, the shares will be voted FOR the election of the
six nominees for director listed in this Proxy Statement, FOR the approval of
proposal 2 described in the Notice of Meeting and this Proxy Statement, and in
the discretion of the proxyholders as to any other business which may properly
come before the Annual Meeting.
June 2, 1998, has been fixed as the record date for determining the shareholders
entitled to notice of and to vote at the Annual Meeting. As of the close of
business on such date, the Company had 8,783,003 shares of Common Stock
outstanding and entitled to vote. Outstanding shares of Common Stock are
entitled to one vote each on all matters. Under California law, shareholders
are permitted to cumulate votes for the election of directors whose names have
been placed in nomination. Therefore, in voting for directors, each outstanding
share of Common Stock would be entitled to six votes which may be cast for one
candidate or distributed in any manner among the nominees for director.
However, the right to cumulate votes in favor of one or more candidates may not
be exercised until the candidate or candidates have been nominated and any
shareholder has given notice at the Annual Meeting of the intention to cumulate
votes.
The proxyholders (if authority to vote for one or more nominees is not withheld)
will have full discretion and authority to vote cumulatively and to allocate
votes among any or all of the Board of Directors nominees as they may determine
or, if authority to vote for a specified candidate or candidates has been
withheld, among those candidates for whom authority to vote has not been
withheld.
The expense of printing and mailing proxy material will be borne by the Company.
The approximate date these proxy solicitation materials will be first sent to
shareholders is June 8, 1998.
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
Six directors are to be elected at the Annual Meeting to serve until the next
Annual Meeting and until their respective successors are elected or appointed.
Unless authority to vote for one or more nominees is withheld, it is intended
that the proxyholders will vote for the election of the nominees named below.
In the event any of them shall become unable or unwilling to accept nomination
or election, the shares represented by the enclosed proxy will be voted for the
election of such other person as the Board of Directors may recommend in his
place. Each of the nominees named is currently a member of the Board of
Directors of the Company.
-1-
<PAGE>
The following information is furnished regarding the nominees of the Company.
<TABLE>
<CAPTION>
Name; Positions; Business Experience During the Director
Past Five Years; Directorships in Reporting Companies Since Age
- ----------------------------------------------------------------------------------- -------- ---
<S> <C> <C>
Patrick Owen Burns................................................................. 1997 60
Senior Consultant of Early Stage Enterprises, L.L.C. since October 1997; Vice
President of R&D Funding Corp, an affiliate of Prudential Securities Inc., and
Senior Vice President of Prudential Securities Inc. from 1986 to January,
1997.
Kenneth M. Cohen................................................................... 1996 43
President and Chief Executive Officer of the Company since May 1996;
Executive Vice President and Chief Operating Officer of Canji, Inc. from
March 1995 to February 1996; Vice President of Argus Pharmaceuticals, Inc.
from May 1990 to March 1995.
James C. DeCesare.................................................................. 1993 67
Consultant to the animal health and pharmaceutical industries since 1992.
Brenda D. Gavin, DVM............................................................... 1996 49
Vice President of S. R. One, Limited, a venture capital firm, since 1989.
M. Blake Ingle, Ph.D............................................................... 1994 56
President and Chief Executive Officer of Canji, Inc. March 1993 to February
1996; Acting President of Telios Pharmaceuticals, Inc. from December 1994
to June 1995; President and Chief Executive Officer of IMCERA Group, Inc.
(now known as Mallinckrodt Group Inc.) from 1991 to 1993; Director of
Corvas International, Inc. and Vical, Inc.
Donald E. Phillips................................................................. 1987 65
Chairman of the Board of Directors of the Company since August 1994; Vice
Chairman of the Board of Directors of the Company from 1993 to August
1994; Director of Great Lakes REIT, Inc. and Potash Corporation of
Saskatchewan (Canada).
</TABLE>
The Board of Directors of the Company held a total of eleven meetings during the
year ended December 31, 1997. Each director attended more than seventy-five
percent (75%) of the meetings of the Board of Directors (and the Board
committees of which he or she was a member) held during the time he or she was a
member of the Board.
The Company currently has Compensation and Audit Committees of the Board of
Directors. The Company does not have a Nominating Committee of the Board of
Directors. The current membership of each committee is as follows:
Compensation Committee Audit Committee
James C. DeCesare Patrick Owen Burns
M. Blake Ingle, Ph.D., Chairman James C. DeCesare, Chairman
Donald E. Phillips Donald E. Phillips
The function of the Compensation Committee is to review the Company's
compensation policies and advise as to executive compensation and stock option
matters. The Audit Committee oversees the Company's accounting and
-2-
<PAGE>
financial reporting policies, reviews with the independent accountants the
accounting principles and practices followed, reviews the annual audit and
financial results and makes recommendations to the Board regarding any of the
preceding. The Audit Committee met once and the Compensation Committee met four
times during the year ended December 31, 1997.
Dr. Ingle became an executive officer of Telios Pharmaceuticals, Inc. in
December 1994, shortly after that company's primary product failed a clinical
trial. In January 1995, Telios filed a voluntary bankruptcy petition. Telios
subsequently emerged from bankruptcy via the sale of the company to Integra Life
Sciences. The Company believes these facts do not impugn Dr. Ingle's ability or
integrity in any way.
For their services as directors, each of the outside directors of the Company
receive fees of $1,000, plus $500 for travel, for each Board of Directors
meeting attended, except for Dr. Gavin. Dr. Gavin does not receive a fee as S.
R. One, Limited does not allow its representatives to accept director fees from
the companies for which they serve as directors. Outside directors also receive
$500 for each telephonic Board of Directors meeting, and receive $500 for each
committee meeting they attend as committee members which are held on a different
day than a Board of Directors meeting. Employee directors do not receive any
fees for attendance at meetings of the Board of Directors or committee meetings.
In addition, Mr. Phillips was paid fees of $24,996 during the year ended
December 31, 1997 pursuant to a consulting agreement with the Company. On July
24, 1997, pursuant to the Automatic Grant Program under the 1995 Stock
Option/Stock Issuance Plan (the "1995 Plan"), Mr. Burns, Mr. DeCesare, Dr.
Gavin, Dr. Ingle and Mr. Phillips were each granted an option to purchase 7,000
shares of Common Stock at $3.688 per share. The options, which expire on July
24, 2007, vest ratably over a one-year period following the grant date.
Executive Officers and Significant Employees
<TABLE>
<CAPTION>
Name, Age, and Other Business Experience
Position During the Past Five Years
- ----------------------------------- ----------------------------------------
Executive Officers
<S> <C>
President and Chief Executive Kenneth M. Cohen (43)
Officer - since May 1996 Formerly, Executive Vice President
and Chief Operating Officer of Canji,
Inc. March 1995 -February 1996; Vice
President of Argus Pharmaceuticals,
Inc. May 1990 - March 1995
Vice President - Finance, Chief Michael K. Green (42)
Financial Officer and
Secretary - since May 1991
Vice President - since February 1998; Francois Guillemin (47)
President and Director General of Formerly, Director of the Diagnostics
Synbiotics Europe, SAS - since Division of Rhone-Merieux, S.A., 1991
July 1997 - June 1997
Vice President and General Manager, Paul A. Rosinack (51)
Animal Health - since October 1996 Formerly, President and Chief
Executive Officer of International
Canine Genetics, Inc., December 1992
- October 1996
</TABLE>
-3-
<PAGE>
Significant Employees
<TABLE>
<CAPTION>
Name, Age, and Other Business Experience
Position During the Past Five Years
- -------------------------------- ----------------------------------------
<S> <C>
Corporate Controller and Chief Keith A. Butler (36)
Accounting Officer -
since March 1991
Director of Science and Technology - John A. Cutting (59)
since August 1997 Formerly, Director of Research and
Development for the Company, August
1995 - August 1997; Senior Manager of
Research and Development for the
Company, November 1993 - August 1995;
Director of Research of AVID
Therapeutics, Inc., 1992 - November
1993
Director of Operations - Clifford Frank (48)
since September 1992
Director of Product Development - Serge Leterme (38)
since August 1997 Formerly, Director, Research and
Development of the Diagnostics
Division of Rhone-Merieux, S.A., 1993
- June 1997
Director of Marketing - Stephen T. Peterson, DVM (47)
since October 1996 Formerly, Director of Marketing of
International Canine Genetics, Inc.,
December 1993 - October 1996; Product
Manager of Ralston Purina Company,
1991 to December 1993
Director of Business Development - Gregory A. Soulds (51)
since 1992 (with the Company since
1983)
</TABLE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's Common
Stock as of March 31, 1998, of each of the Company's directors, director
nominees, 5% shareholders and the Named Executive Officers, and of the directors
and executive officers of the Company as a group. Except as noted, each person
has sole investment and voting power over the shares shown. Percentages are
calculated in accordance with the method set forth in the Securities and
Exchange Commission's rules.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Owner of Class
- -------------------------------------- ----------- --------
<S> <C> <C>
Patrick Owen Burns/(1)/.............. 50,750 *
22 Sidney Place
Brooklyn, NY 11201
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Owner of Class
- -------------------------------------- ----------- --------
<S> <C> <C>
Kenneth M. Cohen/(1)/................. 121,189 1.3%
c/o Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
James C. DeCesare/(1)/................ 39,250 *
5260 S. Landings Drive, #200
Ft. Myers, FL 33919
Brenda D. Gavin, DVM/(3)/............. 967,410 10.7%
c/o S. R. One, Limited
Bay Colony Executive Park
565 Swedesford Road
Suite 315
Wayne, PA 19087
Michael K. Green/(1)/................. 74,084 *
c/o Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
Francois Guillemin/(1)/............... 9,375 *
c/o Synbiotics Europe, SAS
299 Avenue Jean Jaures
69007 Lyons, France
M. Blake Ingle, Ph.D./(1)/............ 32,250 *
Plaza Del Mar 300-6
12526 High Bluff Drive
San Diego, CA 92130
Donald E. Phillips/(1)/............... 52,750 *
372 Fannin Landing Circle
Brandon, MS 39042
Paul A. Rosinack/(1)/................. 49,762 *
c/o Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
Gregory A. Soulds/(1)//(5)/........... 28,544 *
c/o Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Owner of Class
- ------------------------------------------------------ ----------- --------
<S> <C> <C>
Gruber & McBaine Capital Management/(2)/.............. 1,012,100 11.2%
c/o John P. Broadhurst, Esq.
Shartsis, Friese & Ginsburg
One Maritime Plaza
18th Floor
San Francisco, CA 94111
Edward T. Maggio, Ph.D./(4)/.......................... 461,999 5.1%
c/o Structural Bioinformatics, Inc.
10959 Technology Place
San Diego, CA 92127
Merial SAS............................................ 759,018 8.4%
29 Avenue Tony Garnier
69007 Lyons
France
S. R. One, Limited/(3)/............................... 962,160 10.6%
Bay Colony Executive Park
565 Swedesford Road
Suite 315
Wayne, PA 19087
All executive officers and directors as
a group/(1)//(3)//(5)/ (10 persons).................. 1,425,364 15.7%
</TABLE>
- --------------
/*/ Less than one percent.
(1) Includes options to purchase shares of Common Stock, which are exercisable
on or before May 30, 1998, as follows: Mr. Burns - 50,750 shares; Mr. Cohen
- 94,687 shares; Mr. DeCesare - 33,250 shares; Dr. Gavin - 5,250 shares;
Mr. Green - 69,687 shares; Mr. Guillemin - 9,375; Dr. Ingle - 24,250
shares; Mr. Phillips - 52,750 shares; Mr. Rosinack - 45,479 shares; Mr.
Soulds - 26,687 shares.
(2) Owned by a group of six persons who granted their respective powers of
attorney to Gruber & McBaine Capital Management LLC ("GMCM"), a California
corporation, to handle any and all necessary filings in connection with
these securities. The direct ownership of these shares is as follows:
GMCM - 190,200 shares; Jon D. Gruber ("Gruber") - 88,500 shares; J.
Patterson McBaine ("McBaine") - 91,000 shares; Lagunitas Partners
("Lagunitas") - 444,800 shares; GMJ Investments, LP ("GMJ") - 6,500 shares;
Proactive Partners, a California Limited Partnership ("Proactive") -
191,100 shares. Gruber and McBaine are the sole directors and sole
executive officers of GMCM. GMCM, Gruber and McBaine are the general
partners of Lagunitas and GMJ. Gruber and McBaine are general partners in
the entity which is the general partner of Proactive. Gruber and McBaine
disclaim beneficial ownership of the shares held by GMCM, Lagunitas, GMJ
and Proactive except to the extent of their respective pecuniary interests.
GMCM disclaims beneficial ownership of the shares held by Gruber, McBaine,
Lagunitas and GMJ except to the extent of its pecuniary interest.
-6-
<PAGE>
(3) Includes 962,160 shares owned by S. R. One, Limited, of which Dr. Gavin is
a Vice President. Dr. Gavin disclaims any beneficial ownership of these
shares.
(4) Includes options to purchase 6,999 shares of Common Stock, which are
exercisable on or before May 30, 1998, held by Dr. Maggio.
(5) Includes Gregory A. Soulds because he is one of the Named Executive
Officers.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table provides certain summary information concerning the
compensation earned by the Company's President and Chief Executive Officer, the
only other executive officers whose total 1997 salary and bonus exceeded
$100,000 and the only other person, although not an executive officer, whose
total 1997 salary and bonus exceeded $100,000 (the "Named Executive Officers")
for services rendered in all capacities to the Company for the fiscal years
ended December 31, 1997, 1996 and 1995:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------------------- -----------
Other Securities
Name and Annual Underlying All Other
Principal Fiscal Compen- Options/ Compensa-
Position Year Salary ($)/(1)/ Bonus ($) sation ($) SARS (#) tion ($)/(2)/
- ------------------- ------ -------------- ----------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth M. Cohen 1997 $230,625 $14,175/(3)/ - 25,000 $3,165
President and Chief 1996 $141,490 $42,188/(4)/ $38,750/(5)/ 225,000 -
Executive Officer
Michael K. Green 1997 $130,000 $ 8,400/(3)/ - 25,000 $3,120
Vice President 1996 $115,326 $24,000/(4)/ - 30,000 $2,768
1995 $101,853 - - 25,000 $2,213
Paul A. Rosinack 1997 $162,129 $ 9,856/(3)/ $12,504/(6)/ 50,000 -
Vice President 1996 $ 29,743 - $ 2,084/(6)/ 25,000 -
Gregory A. Soulds 1997 $106,999 $ 6,576/(3)/ - - $2,568
Director - Business 1996 $104,389 - - 5,000 $2,505
Development 1995 $104,389 - - - $2,244
</TABLE>
- --------------
(1) Includes amounts deferred under the 401(k) Compensation Deferral Savings
Plan pursuant to Section 401(k) of the Internal Revenue Code of 1986, as
amended.
(2) Consists of matching contributions made by the Company to Mr. Cohen's
401(k) account, Mr. Green's 401(k) account and Mr. Soulds' 401(k) account.
-7-
<PAGE>
(3) Includes grants of restricted Synbiotics common stock with a fair market
value of $3.19 per share as follows: Mr. Cohen - 4,002 shares; Mr. Green -
2,372 shares; Mr. Rosinack - 2,783 shares; Mr. Soulds -1,857 shares.
(4) Bonus was earned for the year ended December 31, 1996 and was not disclosed
in the proxy statement for the July 24, 1997 annual meeting as the amount
of the bonus was not calculable as of the date the proxy statement was
prepared.
(5) Consists of a direct grant of 10,000 shares of Synbiotics common stock with
a fair market value of $3.875 per share.
(6) Forgiveness of a loan made to Mr. Rosinack to defray relocation expenses at
the rate of $12,504 per year. As of December 31, 1997, the balance due was
$34,375.
The following table contains information concerning the grant of stock options
to the Named Executive Officers:
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
- ---------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise
Name Granted (#)/(1)/ Fiscal Year Price ($/Sh) Expiration Date
- ------------------- ---------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Kenneth M. Cohen 25,000 8.50% $3.69 7/24/07
Michael K. Green 25,000 8.50% $3.69 7/24/07
Paul A. Rosinack 50,000 17.00% $3.69 7/24/07
</TABLE>
- --------------
(1) The options become exercisable ratably over a four-year period following
the date of grant, which was July 24, 1997. Each option has a maximum term
of 10 years, subject to earlier termination in the event of the optionee's
cessation of service with the Company.
The following table provides information, with respect to the Named Executive
Officers, concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year. No shares were
acquired on exercise of options by the Named Executive Officers during the
fiscal year ended December 31, 1997.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options/SARs Options/SARs
at December 31, 1997 (#) at December 31, 1997/(1)/
------------------------------ ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
Kenneth M. Cohen 46,562 203,438 $ - $ -
Michael K. Green 60,937 44,063 $17,156 $7,031
Paul A. Rosinack 34,727 70,100 $ - $ -
Gregory A. Soulds 19,750 5,000 $ 1,450 $ -
</TABLE>
-8-
<PAGE>
- --------------
(1) Value is defined as market price of the Company's Common Stock at fiscal
year end less exercise price. The closing sale price of the Company's
Common Stock at December 31, 1997 was $3.19.
Employment Contracts and Change-in-Control Arrangements
Synbiotics entered into an Employment Agreement dated May 7, 1996 with Kenneth
M. Cohen, its Chief Executive Officer and President. The Employment Agreement
provides for salary at an initial rate of $225,000 per annum, options to
purchase 225,000 shares of Synbiotics common stock (at $3.875 per share) and a
direct grant of 10,000 shares of unregistered Synbiotics common stock. In
addition, he will be eligible for a cash bonus of up to 30% of his annual
salary. If Mr. Cohen is terminated without cause, he will receive six months'
salary at his then base salary rate. If Mr. Cohen is terminated in connection
with an acquisition of the Company, he will receive an additional six months'
salary and all unvested stock options will immediately vest.
Synbiotics entered into an Employment Agreement dated June 23, 1997 with Michael
K. Green, its Chief Financial Officer and Vice President - Finance. The
Employment Agreement provides for salary at an initial rate of $140,000. If Mr.
Green is terminated without cause, he will receive six months' salary at his
then base salary rate. If Mr. Green is terminated in connection with an
acquisition of the Company, he will receive an additional six months' salary and
all unvested stock options will immediately vest.
Synbiotics entered into an Employment Agreement dated October 25, 1996 with Paul
A. Rosinack, its Vice President. The Employment Agreement provides for salary
at an initial rate of $160,000 per annum and options to purchase 25,000 shares
of Synbiotics common stock (at $4.125 per share). If Mr. Rosinack is terminated
without cause, he will receive six months' salary at his then base salary rate.
If Mr. Rosinack is terminated in connection with an acquisition of the Company,
he will receive an additional six months' salary and all unvested stock options
will immediately vest.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF ALL SIX NOMINEES, SET FORTH IN
ITEM 1 ON THE PROXY CARD. The six persons receiving the highest number of votes
will be elected as directors. Abstentions and broker non-votes will have no
influence in the election of directors.
AMENDMENT OF ARTICLE FOURTH OF THE
RESTATED ARTICLES OF INCORPORATION
(Item 2 on the Proxy Card)
The Board of Directors of the Company has adopted a resolution unanimously
approving and recommending to the Company's shareholders for their approval an
amendment to the Company's Restated Articles of Incorporation to provide therein
for the creation of 25,000,000 shares of Preferred Stock in one or more series
with voting rights and other rights, preferences, privileges and restrictions
determined by the Board of Directors.
The authorized capital stock of the Company currently consists of 24,800,000
shares of Common Stock, no par value, of which 8,643,147 were issued and
outstanding as of March 31, 1998 and approximately 2,697,718 were reserved for
issuance under the Company's stock option plans and various other outstanding
stock options and warrants. Accordingly, as of March 31, 1998, the Company had
available for issuance approximately 13,459,135 shares of Common Stock.
The Board of Directors believes the authorization of the creation of the
Preferred Stock is desirable to enhance the Company's flexibility in connection
with possible future actions, such as public or private offerings of shares for
cash, dividends payable in stock of the Company whether in connection with the
possible implementation of a
-9-
<PAGE>
shareholder rights plan or otherwise, corporate mergers and acquisitions, and
implementation and continuation of employee benefit plans. Having such
authorized shares for issuance in the future would allow shares of Preferred
Stock to be issued without the expense and delay of a special meeting of
shareholders. The designations, preferences, conversion rights, cumulative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof (collectively, the "Rights,
Limitations and Restrictions") will be determined by the Board of Directors.
Thus, the Board of Directors will, in the event of the approval of this proposal
by the Company's shareholders, be entitled to authorize the creation and
issuance of 25,000,000 shares of Preferred Stock in one or more series with such
Rights, Limitations and Restrictions as may be determined in the Board's sole
discretion, with no further authorization by security holders required for the
creation and issuance thereof.
In the event of the approval of this proposal by the Company's shareholders, the
Board of Directors will be required to make any determination to designate,
reserve for issuance or issue shares of Preferred Stock based on its judgment as
to the best interests of the shareholders and the Company. The Board of
Directors currently anticipates that it may designate, reserve for issuance and
issue shares of Preferred Stock in connection with the adoption of a shareholder
rights plan, although the terms of any such series of Preferred Stock and form
of any such shareholder rights plan are not known at this time. The issuance of
shares of Preferred Stock could, depending on the terms of such series, make
more difficult or discourage an attempt to obtain control of the Company by
means of a merger, tender offer, proxy contest or other means. Such shares
could be used to create voting or other impediments or to discourage persons
seeking to gain control of the company and could also be privately placed with
purchasers favorable to the Board of Directors in opposing such action. In
addition, the Board of Directors could authorize holders of a series of
Preferred Stock to vote either separately as a class, or with the holders of the
Company's currently outstanding Common Stock, on any merger, sale or exchange of
assets by the Company or any other extraordinary corporate transaction. The
mere existence of the additional authorized shares could have the effect of
discouraging unsolicited takeover attempts. The issuance of new shares also
could have a dilutive effect on the voting power of existing holders of Common
Stock and on earnings per share and could be used to dilute the stock ownership
of a person or entity seeking to obtain control of the Company should the Board
of Directors consider the action of such entity or person not to be in the best
interest of the shareholders and the Company.
The Company proposes to amend Article Fourth to read in full as follows:
"FOURTH: The corporation is authorized to issue two classes of stock, to
be designated, respectively, "Common Stock" and "Preferred Stock". The
total number of shares which the corporation is authorized to issue is
49,800,000 shares. 24,800,000 shares shall be Common Stock and 25,000,000
shares shall be Preferred Stock.
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is hereby authorized to fix or alter the dividend
rights, dividend rate, conversion rights, voting rights, rights and terms
of redemption (including sinking fund provisions), redemption price or
prices, and the liquidation preferences of any wholly unissued series of
Preferred Stock, and the number of shares constituting any such series and
the designation thereof, or any of them; and to increase or decrease the
number of shares of any series subsequent to the issuance of shares of that
series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be so decreased, the
shares constituting such decrease shall resume the status that they had
prior to the adoption of the resolution originally fixing the number of
shares of such series."
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE AMENDMENT TO THE RESTATED
ARTICLES OF INCORPORATION (ITEM 2 ON THE PROXY CARD). Approval of this proposal
requires the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the meeting. If approved by the
shareholders, the amendment to the Restated Articles of Incorporation will
become
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effective upon filing with the Secretary of State of the State of California a
Certificate of Amendment to the Company's Restated Articles of Incorporation,
which filing is expected to take place shortly after the meeting.
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
officers and directors, 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 of the Company's equity securities with the Securities and Exchange
Commission. Officers, directors and greater than 10% shareholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms furnished to the Company,
or written representations that no Forms 5 were required, the Company believes
that during the fiscal year ended December 31, 1997, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
SHAREHOLDER PROPOSALS
To be included in the Company's proxy materials for the Annual Meeting of
Shareholders to be held in 1999, a shareholder proposal must be received at the
offices of the Company, 11011 Via Frontera, San Diego, CA 92127, not later than
April 28, 1999.
OTHER MATTERS
Price Waterhouse LLP has served as the independent accountants of the Company
for a number of years. Although management anticipates that this relationship
will continue to be maintained during fiscal 1998, as in previous years, it is
not proposed that any formal action be taken at the Annual Meeting with respect
to the continued employment of Price Waterhouse LLP. Representatives of Price
Waterhouse LLP are expected to be present at the Company's Annual Meeting with
the opportunity to make a statement if they desire to do so and they are
expected to be available to respond to appropriate questions.
The Board of Directors, at this time, knows of no other business which will be
presented to the meeting. If any other business is properly brought before the
meeting, it is intended that the proxies in the enclosed form will be voted in
respect thereof in accordance with the judgment of the persons voting the
proxies.
The Company's Annual Report, including the Company's audited financial
statements for the fiscal year ended December 31, 1997, is being mailed herewith
to all shareholders of record. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY
BENEFICIAL OWNER OF COMMON STOCK ON JUNE 2, 1998, UPON THE WRITTEN REQUEST OF
ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1997 FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. SUCH REQUESTS SHOULD BE DIRECTED TO MICHAEL K. GREEN, VICE
PRESIDENT - FINANCE OF THE COMPANY, AT 11011 VIA FRONTERA, SAN DIEGO, CA 92127.
Whether you intend to be present at this meeting or not, you are urged to return
your proxy promptly.
By order of the Board of Directors
Michael K. Green
Secretary
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COMMON STOCK PROXY SYNBIOTICS CORPORATION COMMON STOCK PROXY
11011 Via Frontera, San Diego, California 92127
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Kenneth M. Cohen and Michael K. Green, jointly
and severally, as proxyholders, each with full power to appoint his substitute,
and hereby authorizes them to vote as designated below, all the shares of Common
Stock of Synbiotics Corporation held of record by the undersigned on June 2,
1998, at the Annual Meeting of Shareholders to be held on July 30, 1998, or any
postponement or adjournment thereof, and to vote in their discretion on such
other business as may come before the Annual Meeting.
The Board of Directors recommends a vote FOR proposals 1 and 2.
1. ELECTION OF DIRECTORS.
[_] FOR all nominees listed below (except as marked to the contrary below)
[_] WITHHOLD AUTHORITY to vote for all nominees listed below
(Instruction: To withhold authority to vote for any individual nominee,
check the box "FOR" and strike a line through the nominee's name in the
list below.)
Nominees: Patrick Owen Burns, Kenneth M. Cohen, James C. DeCesare, Brenda
D. Gavin, M. Blake Ingle, Donald E. Phillips
2. APPROVAL OF THE AMENDMENT OF ARTICLE FOURTH OF THE RESTATED ARTICLES OF
INCORPORATION.
[_] FOR [_] AGAINST [_] ABSTAIN
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder and will be voted by the proxyholders at their
discretion as to any other matters properly transacted at the Annual Meeting.
If no direction is made, this Proxy will be voted FOR Proposals 1 and 2.
Dated: ______________________, 1998
___________________________________
(Shareholder's Signature)
___________________________________
(Shareholder's Signature)
Please sign exactly as your name appears on this Proxy. If signing for trusts,
estates, partnerships, or corporations, title or capacity should be stated. If
shares are held jointly, each holder should sign.
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING. [_]
