<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K/A
AMENDMENT NO. 1
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-21975
ECO SOIL SYSTEMS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEBRASKA 47-0709577
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10740 THORNMINT ROAD,
SAN DIEGO, CALIFORNIA 92127
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(858) 675-1660
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $ .005 PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
<PAGE>
As of March 15, 2000, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $65,023,097.
As of March 15, 2000, the number of shares outstanding of the Registrant's
common stock, $.005 par value, was 18,583,728.
2
<PAGE>
The following items of Eco Soil Systems, Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1999 are hereby amended. Each such
item is set forth in its entirety, as amended.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors, executive officers and key employees of Eco Soil and
their ages as of April 15, 2000 are as follows:
<TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
<S> <C> <C>
William B. Adams............... 53 Chairman of the Board and Chief Executive Officer
Max D. Gelwix.................. 49 President and Chief Operating Officer
Dennis Sentz................... 52 Vice President, Finance, Chief Financial Officer and Secretary
Fridolin Fackelmayer........... 57 Director
Douglas M. Gloff............... 53 Director
Robert W. O'Leary.............. 56 Director
S. Bartley Osborn.............. 58 Director
William S. Potter.............. 56 Director
Edward N. Steel................ 52 Director
KEY EMPLOYEES
John M. Doyle.................. 41 Vice President, Biological Product Management
Michael M. Iverson............. 58 Vice President, Operations
Dr. David A. Odelson........... 42 Vice President, Research and Development
Jonathan T. Small.............. 50 Vice President and General Manager, Turf Partners
Nicholas R. Spardy............. 35 Vice President, Turf Partners
</TABLE>
WILLIAM B. ADAMS has served as Chairman of the Board and Chief
Executive Officer of Eco Soil since March 1991. From 1985 to 1994, Mr. Adams was
Chairman of the Board of Chronimed, Inc., a publicly held medical products
company, and served as Chairman of the Board of Orphan Medical, Inc., a publicly
traded spin-off of Chronimed through December 1998. Prior to his involvement
with Eco Soil, Mr. Adams founded WBA Consultants, Ltd., a management consulting
firm, in 1980 and participated as chief executive officer in corporate
turnarounds. From August 1989 to February 1991, Mr. Adams was Executive Chairman
of Printrak, Inc., a publicly held developer of specialized identification
systems used by the law enforcement community. From April 1986 to April 1988,
Mr. Adams was President and Chief Executive Officer of Check Technology
Corporation, a manufacturer of electronic printing equipment. Mr. Adams received
his B.A. from Texas Tech University.
MAX D. GELWIX joined Eco Soil in September 1998 as Vice President and
was promoted to President and Chief Operating Officer in March 2000. From 1979
through June 1996 he served as Executive Vice President of Arthur J. Gallagher &
Co., a risk management and insurance brokerage agency, and was the President of
Maxell Enterprises, a risk management consulting firm, from June 1996 through
September 1997. Mr. Gelwix received his B.S. degree from Colorado State
University.
3
<PAGE>
DENNIS SENTZ joined Eco Soil in May 1999 as Vice President of
Accounting and Controller and was promoted to Chief Financial Officer in March
2000. From June 1997 to April 1999, Mr. Sentz served as Chief Financial Officer
of BE&K-BECHTEL International, an engineering and construction joint venture,
based in Singapore. From June 1993 to May 1997, Mr. Sentz worked for Foster
Wheeler Energy Corporation as Vice President and Chief Financial Officer of the
Power Generation business. Prior to that, Mr. Sentz spent nine years as
Controller and later Chief Financial Officer of Instrumentarium Imaging, Inc., a
high-tech medical equipment manufacturer and distributor. Mr. Sentz received his
B.B.A. in Accounting from the University of Wisconsin in 1970 and holds both the
CPA and CMA certifications.
FRIDOLIN FACKELMAYER has served as a director of Eco Soil since June
1998. He is currently the President of Lombard Odier, Inc., the New York office
of Lombard Odier & Cie, one of the oldest and largest Swiss private banks. Mr.
Fackelmayer has 28 years of investment experience covering such financial
centers as Munich, Paris, London and New York. Prior to joining Lombard Odier,
where he has been employed since 1992, Mr. Fackelmayer spent twenty-two years
with Smith Barney, Salomon Brothers, Bear Stearns and Drexel Burnham.
DOUGLAS M. GLOFF has served as a director of Eco Soil since August
1995. In March 2000, Mr. Gloff announced his resignation as Eco Soil's President
and Chief Operating Officer, where he had worked since January 1994 in various
capacities culminating in the position of President and Chief Operating Officer
in April 1997. Prior to joining Eco Soil, Mr. Gloff acted as a consultant from
1992 until January 1994. From 1978 to 1992, he served in various capacities with
U.S. Surgical, Inc., a publicly held supplier of medical instruments used in
surgery, culminating in the position of Director of Sales for the western area.
Mr. Gloff received his B.A. and M.B.A. from Indiana University.
ROBERT W. O'LEARY has served as a director of Eco Soil since January
2000. Since January 1996, Mr. O'Leary has been the Chairman of Premier, Inc., a
privately held strategic healthcare alliance. From July 1991 to March 1995, Mr.
O'Leary served as Chairman and Chief Executive Officer of American Medical
International, a privately held health care management company. From September
1989 to July 1991, Mr. O'Leary served as Chief Executive Officer of Voluntary
Hospitals of America, a privately held national hospital alliance. Mr. O'Leary
also serves as a member of the Board of Directors of Thermo Electron Corporation
(NYSE: TMO).
S. BARTLEY OSBORN has served as a director of Eco Soil since November
1991. Mr. Osborn is currently Chairman of the Board of Directors of the Fairway
Foundation, a nonprofit foundation dedicated to teaching the game of golf to
inner-city children in Minneapolis and St. Paul, Minnesota. From 1965 through
1982 Mr. Osborn held various management positions at EcoLab, Inc., a Fortune 500
specialty chemical manufacturer based in St. Paul, Minnesota, culminating in the
position of Executive Vice President. Mr. Osborn is a trustee of the IC Koran
foundation, which assists employees of EcoLab through scholarships for its
children and through financial hardship assistance.
WILLIAM S. POTTER served as a director of Eco Soil since August 1992.
Since 1988, Mr. Potter has been President of Rugged Rigger, Inc., a personal
services corporation, which has created Pauma Valley Organics, a certified
organic produce farm. From 1970 to 1988, Mr. Potter worked in various capacities
for H.M. Stevens Incorporated, a national food service and catering company
specializing in sporting events, culminating in the positions of Operational
Vice President and Director.
EDWARD N. STEEL has served as a director of Eco Soil since July 1999.
Since February 1986, Mr. Steel has been the President of Boardroom Homebuilders,
Inc., a privately held construction company. From May 1975 to January 1986, Mr.
Steel worked in various capacities for IBM culminating in the position of
Manager of Strategic Planning.
4
<PAGE>
JOHN M. DOYLE joined Eco Soil in May 1994 as the Vice President of
Biological Product Management. Mr. Doyle is responsible for product and
technology acquisition, regulatory issues, production, marketing and
communication materials, product testing and sales support for Eco Soil's
BioJect system. Prior to joining Eco Soil, Mr. Doyle spent seven years in
various positions with Ringer Corporation, a supplier of natural turf
maintenance products based in Minneapolis, Minnesota, culminating in the
position of Vice President of Product Development. Mr. Doyle received his B.S.
and M.S. on Horticulture from the University of Nebraska.
MICHAEL M. IVERSON joined Eco Soil in March 1998 as Vice President
of Operations after serving as a consultant to Eco Soil on a part-time basis
from August 1997 to March 1998. From June 1996 to August 1997, Mr. Iverson
served as Vice President of Operations with a division of Scientific
Atlantic, an electronics manufacturing company. Mr. Iverson operated his own
management consulting firm from June 1994 to May 1996. From June 1990 to May
1994, Mr. Iverson served as Director of Manufacturing with a division of
General Dynamics, a defense contracting company. Mr. Iverson received his
B.S. in Mechanical Engineering from California State University, San Luis
Obispo, and his M.S. in Aeronautical Engineering from the Naval Postgraduate
School.
DR. DAVID A. ODELSON joined Eco Soil in November 1996 as Eco Soil's
Director of Research and Development and was promoted to Vice President of
Research and Development in March 1999. From May 1995 to April 1996, he was a
Visiting Scientist at Pharmacia & Upjohn Co., a pharmaceutical company. From
September 1989 to April 1995, he worked as a Co-Investigator at NSF Science and
Technology Center for Microbial Ecology and as an Assistant Professor at Central
Michigan University. Dr. Odelson received his B.S. in Microbiology from the
University of Illinois and his Ph.D. in Microbiology from Michigan State
University.
JONATHAN T. SMALL joined Eco Soil in July 1999 as Vice President and
General Manager of Agricultural Supply. From October 1997 to July 1999, Mr.
Small served as Vice President of Sales and Marketing at Bion Technologies, Inc.
From 1993 through October 1997, Mr. Small served as Vice President, Worldwide
Sales and Marketing, at T-Systems International. Mr. Small received his B.S.
from Missouri Valley College.
NICHOLAS R. SPARDY joined Eco Soil in January 1997 as Vice President of
Western Region, Turf Partners. From May 1991 to January 1997, Mr. Spardy was
Manager of Wilber-Ellis Company, a distributor of seed and soil amendments to
the turf industry. Prior to that, Mr. Spardy spent four years as a Turf
Specialist at Medalist Seed Company. Mr. Spardy received his B.S. in Ornamental
Horticulture from Cal Poly Pomona in 1987 and has been a Turfgrass Instructor at
Cuyamaca College since 1990.
COMPENSATION OF DIRECTORS
Eco Soil has not paid any cash compensation to a director in his
capacity solely as a director and has no present plan to pay directors' fees. It
is Eco Soil's current policy to award non-employee directors an option to
purchase 10,000 shares of Eco Soil's common stock at the then-current market
price, vesting over three years, upon becoming a director and options to
purchase 3,000 shares of common stock at the then-current market price, vesting
after six months, on the date of each annual meeting of shareholders if the
director has served since the previous annual meeting of shareholders and has
been elected to an additional term, if applicable. All directors are reimbursed
for travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
5
<PAGE>
Under Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act"), as amended, directors, officers and beneficial owners of 10
percent or more of Eco Soil's common stock ("Reporting Persons") are required to
report to the Securities and Exchange Commission (the "Commission") on a timely
basis the initiation of their status as a Reporting Person and any changes with
respect to their beneficial ownership of Eco Soil's common stock. Based solely
on its review of such forms received by it and the written representations of
its Reporting Persons, to Eco Soil's knowledge, except that Mr. Gelwix did
not timely file an Initial Statement of Beneficial Ownership of Securities on
Form 3.
ITEM 11. EXECUTIVE COMPENSATION
The following table shows for each of the last three full fiscal years,
compensation awarded, paid to, or earned by Eco Soil's Chief Executive Officer
and the three most highly compensated executive officers other than the Chief
Executive Officer who were serving as executive officers at the end of the last
completed fiscal year and who made more than $100,000 during such fiscal year
(the "Named Executive Officers"). No other executive officers at the end of the
last completed fiscal year made more than $100,000 during such fiscal year.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------------------------- ---------------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION(S) YEAR SALARY BONUS COMPENSATION OPTIONS (#)
------------------------------ ------ -------------- ----------- ------------- ---------------------
<S> <C> <C> <C> <C> <C>
WILLIAM B. ADAMS.............................. 1999 $300,000(4) $ 0 $13,440(6) 450,000
Chairman of the Board and Chief Executive 1998 150,000 0 0 0
Officer 1997 142,188 0 0 50,000
MAX D. GELWIX (1)............................. 1999 $106,666 $7,500 $ 0 9,375
President and Chief Operating Officer 1998 87,500 0 0 15,000
1997 26,442 0 0 72,000
DOUGLAS M. GLOFF (2).......................... 1999 $230,000(5) $40,500(5) $12,000(6) 450,000
Former President and Chief Operating Officer 1998 150,000 0 0 0
1997 142,188 0 0 20,000
MARK D. BUCKNER (3)........................... 1999 $133,270 $65,000 $ 0 400,000
Former Chief Financial Officer and Secretary
</TABLE>
- -----------------------
(1) Mr. Gelwix joined Eco Soil in September 1998 as Vice President and was
promoted to President and Chief Operating Officer in March 2000. The amount
shown in the salary column in 1997 reflects the amount actually paid to Mr.
Gelwix by Eco Soil in 1997.
(2) Mr. Gloff resigned as President and Chief Operating Officer in March 2000.
(3) Mr. Buckner joined Eco Soil in April 1999 as Chief Financial Officer and
resigned in March 2000. The amount shown in the salary column in 1999
reflects the amount actually paid to Mr. Buckner by Eco Soil in 1999.
(4) Mr. Adams agreed to defer $125,000 of his 1999 salary.
(5) Mr. Gloff agreed to defer $55,000 of his 1999 salary and his 1999 bonus.
Pursuant to his separation agreement, Mr. Gloff will receive this $90,500
over a 13 month period beginning in April 2000. See "Item 13. Certain
Relationships and Related Transactions."
(6) Reflects auto allowances paid to Messrs. Adams and Gloff.
6
<PAGE>
OPTION GRANTS DURING FISCAL YEAR 1999
The following table provides information concerning the grant of stock
options to the Named Executive Officers of Eco Soil during fiscal 1999. Eco Soil
does not have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE VALUE
AT ASSUMED RATES OF
STOCK PRICE APPRECIATION
FOR OPTION TERM (1)
-------------------------------------------------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES PRICE EXPIRATION ---------------------------------
OPTIONS GRANTED IN FISCAL YEAR PER SHARE DATE 5% 10%
--------------- -------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
William B. Adams 450,000 18.1% $4.44 05/27/04 $ 553,500 $1,219,500
Max D. Gelwix 9,375 * 5.75 03/09/04 14,906 33,000
Douglas M. Gloff 450,000 18.1% 4.44 05/27/04 553,500 1,219,500
Mark D. Buckner 100,000 4.0% 5.25 03/22/04 145,000 322,000
300,000 12.1% 5.25 07/06/04 435,000 966,000
</TABLE>
- -----------------------
* Less than 1%
(1) The assigned rates of growth were selected by the Securities and Exchange
Commission for illustrative purposes only and are not intended to predict
or forecast future stock prices.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information with respect to the Named Executive
Officers, concerning the exercise of stock options during fiscal 1999 and
unexercised options held as of the end of fiscal 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END (#) AT FY-END ($)(1)
ACQUIRED ON VALUE --------------------- ----------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William B. Adams 110,000 $440,000 356,661 466,667 $613,459 $0
Max D. Gelwix 0 N/A 70,041 34,334 2,912 667
Douglas M. Gloff 55,500 346,875 378,889 456,667 289,578 0
Mark D. Buckner 0 N/A 20,000 380,000 0 0
</TABLE>
- -----------------------
(1) Based on the closing sale price of Eco Soil's common stock on December 31,
1999 ($4.312), as reported by the Nasdaq National Market, less the option
exercise price.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Eco Soil does not currently have employment agreements with any of
its executive officers.
7
<PAGE>
Eco Soil entered into a separation agreement with Mark D. Buckner
in March 2000. Pursuant to this separation agreement, Eco Soil accelerated
the vesting of options to purchase an aggregate of 80,000 shares of common
stock at an exercise price of $5.25 per share. Pursuant to the separation
agreement, Mr. Buckner agreed to provide consulting services to Eco Soil
through December 31, 2001. Eco Soil has agreed to pay Mr. Buckner $150 per
hour for these consulting services (or $80 per hour for time spent in
connection with the investigation, analysis or defense of any pending or
future claims against or litigation involving Eco Soil) and to vest options
to purchase 50 shares of common stock for each consulting hour worked by Mr.
Buckner. In addition, Mr. Buckner will receive a facilitation fee of 1% of
any financing in which Mr. Buckner participates or introduces to Eco Soil
(other than any currently pending financing transactions).
Eco Soil entered into a separation agreement with Douglas M. Gloff
in March 2000. Pursuant to this separation agreement, Eco Soil has agreed to
make severance payments to Mr. Gloff in the amount of $115,000. This
severance, together with amounts owed Mr. Gloff for unpaid salary and
bonuses, will be paid over a 13 month period beginning in April 2000. In
addition, Eco Soil accelerated the vesting of options to purchase 200,000
share of common stock at an exercise price of $4.44 per share. These options
expire on May 1, 2003. Further, Eco Soil agreed that all of Mr. Gloff's other
vested options would remain exercisable until July 30, 2001.
COMPENSATION PLANS
1992 STOCK OPTION PLAN. In February 1992, Eco Soil adopted a Stock
Option Plan (the "1992 Plan"), under which 125,000 shares of Eco Soil's common
stock were initially reserved for issuance upon exercise of options granted to
officers, employees and directors of, and advisors and consultants to, Eco Soil.
The 1992 Plan provides for the grant of both stock options intended to qualify
as incentive stock options as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), and nonqualified stock options. The 1992 Plan will
terminate on February 4, 2002, unless sooner terminated by the Board of
Directors. Eco Soil's shareholders approved an increase in the number of shares
reserved for issuance under the Option Plan to 250,000 shares in August 1993, to
350,000 shares in April 1995, to 450,000 shares in May 1996, to 900,000 shares
in November 1996 and to 1,100,000 shares in June 1997. The principal purposes of
the 1992 Plan are to provide incentives for officers, employees and consultants
of Eco Soil and its subsidiaries through the granting of options, thereby
stimulating their personal and active interest in Eco Soil's development and
financial success, and inducing them to remain in Eco Soil's employ.
The 1992 Plan provides for option grants covering up to 1,100,000
shares of Eco Soil's common stock. As of April 17, 2000, options to purchase an
aggregate of 487,723 shares of Eco Soil's common stock at prices ranging from
$3.00 to $5.63 were outstanding under the 1992 Plan. No additional shares
remain available for grant under the 1992 Plan.
1996 DIRECTORS' OPTION PLAN. The 1996 Directors' Stock Option Plan (the
"Directors' Plan") provided for the automatic grant of nonstatutory stock
options to nonemployee directors. Eco Soil initially reserved a total of 60,000
shares of Eco Soil's common stock for issuance under the Directors' Plan. As of
April 17, 2000, no additional shares were available for the grant of options
under the Directors' Plan.
1998 STOCK OPTION PLAN. In February 1998, Eco Soil adopted the 1998
Stock Option Plan of Eco Soil Systems, Inc. (the "1998 Plan"), under which
1,000,000 shares of Eco Soil's common stock were initially reserved for issuance
upon exercise of options granted to officers, employees and directors of, and
consultants to, Eco Soil. Eco Soil's shareholders approved the adoption of the
1998 Plan on June 19, 1998. The 1998 Plan provides for the grant of both stock
options intended to qualify as incentive stock options as defined in the Code
and nonqualified stock options. The 1998 Plan will terminate on February 3,
2008, unless sooner terminated by the Board of Directors. The Board of Directors
approved an increase in the number of shares reserved for issuance under the
1998 Plan to 1,400,000 shares in December 1998 and to 1,600,000 shares in April
1999. Eco Soil's shareholders approved these increases in the number of shares
available for issuance under the 1998 Plan in June 1999. The principal purposes
of the 1998 Plan are to provide incentives for officers, employees and
consultants of Eco Soil and its subsidiaries through the granting of options,
thereby stimulating their personal and active interest in Eco Soil's development
and financial success, and inducing them to remain in Eco Soil's employ.
The 1998 Plan provides for option grants covering up to 1,600,000
shares of Eco Soil's common stock. As of April 17, 2000, options had been
granted (net of those canceled) to purchase an aggregate of 1,255,761 shares
of Eco Soil's common stock at prices ranging from $3.00 to $9.63 under the
1998 Plan. 308,645 additional shares remain available for grant under the 1998
Plan.
8
<PAGE>
1999 EQUITY PARTICIPATION PLAN. In April 1999, Eco Soil adopted the
1999 Equity Participation Plan of Eco Soil Systems, Inc. (the "1999 Plan"),
under which 1,600,000 shares of Eco Soil's common stock were initially
reserved for issuance upon exercise of options granted to Eco Soil's senior
management. Eco Soil's shareholders approved the adoption of the 1999 Plan in
June 1999. The 1999 Plan provides for the grant of both stock options
intended to qualify as incentive stock options as defined in the Code and
nonqualified stock options. The 1999 Plan will terminate on April 19, 2009,
unless sooner terminated by the Board of Directors. The principal purposes of
the 1999 Plan are to provide incentives for members of Eco Soil's senior
management through granting of options and stock purchase rights, thereby
stimulating their personal and active interest in Eco Soil's development and
financial success, and inducing them to remain in Eco Soil's employ. The 1999
Plan provides for option grants covering up to 1,600,000 shares of Eco Soil's
common stock. As of April 17, 2000, options had been granted (net of those
canceled) to purchase an aggregate of 1,060,000 shares of Eco Soil's common
stock at prices ranging from $4.44 to $5.25 under the 1999 Plan. 540,000
additional shares remain available for grant under the 1999 Plan.
1999 NEW HIRE STOCK OPTION PLAN. In June 1999, Eco Soil adopted the
1999 New Hire Stock Option Plan of Eco Soil Systems, Inc. (the "New Hire
Plan"), under which 1,000,000 shares of Eco Soil's common stock were
initially reserved for issuance upon exercise of options granted to Eco
Soil's employees. The New Hire Plan provides for the grant of non-qualified
stock options. The principal purposes of the New Hire Plan are (i) to provide
additional incentives for employees of Eco Soil to further the growth,
development and financial success of Eco Soil by personally benefiting
through the ownership of Eco Soil common stock which recognizes such growth,
development and financial success and (ii) to enable Eco Soil to obtain and
maintain the services of employees considered essential to the long range
success of Eco Soil. The New Hire Plan provides for option grants covering up
to 1,000,000 shares of Eco Soil's common stock. As of April 17, 2000, options
had been granted (net of those canceled) to purchase an aggregate of 169,500
shares of Eco Soil's common stock at prices ranging from $3.00 to $5.25 under
the New Hire Plan. 830,500 additional shares remain available for grant under
the New Hire Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, the Compensation Committee was comprised of Messrs.
Osborn, Potter and Adams. Mr. Adams is the Chief Executive Officer of Eco Soil.
See "Item 13. Certain Relationships and Related Transactions" for a description
of a $111,000 payment made by Eco Soil to Mr. Adams in 1999 in connection with
the lease of Eco Soil's new headquarters facility.
No interlocking relationship exists between any member of the
Compensation Committee and any member of any other company's board of directors
or compensation committee.
9
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 17, 2000, the number and
percentage ownership of Eco Soil's common stock by: (i) each director of Eco
Soil, (ii) each Named Executive Officer (as defined above) of Eco Soil, (iii)
each person or entity known by Eco Soil to own beneficially more than five
percent of Eco Soil's common stock and (iv) all directors and executive officers
of Eco Soil as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS (1) BENEFICIAL OWNERSHIP OUTSTANDING SHARES
-------------------- -------------------- ------------------
<S> <C> <C>
William B. Adams (2) .......................... 1,805,290 9.6%
Max D. Gelwix (3) ............................. 145,708 *
Douglas M. Gloff (4) .......................... 1,122,833 6.0%
Mark D. Buckner (5) ........................... 120,000 *
William S. Potter (6) ......................... 430,132 2.3%
P.O. Box 8173
Rancho Santa Fe, CA 92067
S. Bartley Osborn (7) ......................... 112,833 *
360 Orono Orchard Road
Wayzata, MN 55391
Fridolin Fackelmayer (8) ...................... 31,300 *
Lombard Odier, Inc.
12 East 492 Street
New York, NY 10017
Edward N. Steel (9) ........................... 3,300 *
41 Ravine Lake Road
Bernardsville, NJ 07924
Robert W. O'Leary (10) ........................ 0 0%
P.O. Box 7274
Rancho Santa Fe, CA 92067
All executive officers and directors as a group
(9 persons) (11) .............................. 3,669,646 20.0%
</TABLE>
- -----------------
*Less than 1%.
(1) Except as indicated by footnote, each person or group identified has sole
voting and investment power with respect to all shares of Eco Soil's
common stock shown as beneficially owned by them. Except as otherwise
indicated, the address of each of the above persons is c/o Eco Soil
Systems, Inc., 10740 Thornmint Road, San Diego, California 92127.
(2) Includes 559,605 shares of Common Stock subject to currently exercisable
options and warrants.
10
<PAGE>
(3) Includes 76,608 shares of Common Stock subject to currently exercisable
options and warrants.
(4) Includes 718,333 shares of Common Stock subject to currently exercisable
options and warrants.
(5) Includes 100,000 shares of Common Stock subject to currently exercisable
options.
(6) Includes 97,000 shares of Common Stock subject to currently exercisable
options and warrants owned by Rugged Rigger, Inc., a California corporation
that is wholly owned by Mr. Potter. Also includes 333,132 shares of Common
Stock owned by Rugged Rigger.
(7) Includes 56,000 shares of Common Stock subject to currently exercisable
options and warrants.
(8) Includes 31,300 shares of Common Stock subject to currently exercisable
options.
(9) Includes 3,300 shares of Common Stock subject to currently exercisable
options.
(10) See notes 1-4 and 6-9 above. Also includes 18,250 shares of Common Stock
subject to currently exercisable options held by Dennis N. Sentz.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN TRANSACTIONS
In January 1999, Eco Soil paid $111,000 to Mr. Adams, $111,000 to Mr.
Gloff and $60,000 to Mr. Gelwix to satisfy a contingent payment obligation
agreed to by Eco Soil in December 1997 relating to Eco Soil's new headquarters
facility. In the fall of 1997, the Board of Directors determined that Eco Soil
needed a new headquarters facility but that Eco Soil should not make a long term
commitment of its financial resources to ownership of the new facility. With
this understanding, Messrs. Adams, Gloff and Gelwix sought out and found a new
facility that would meet Eco Soil's needs. They then entered into an agreement
to purchase the facility with the intent of leasing space to Eco Soil. Eco Soil,
however, elected not to move forward on this basis. Instead, Eco Soil elected to
acquire the rights of Messrs. Adams, Gloff and Gelwix to purchase the facility
and then seek an unrelated third party with whom Eco Soil could enter into a
sale-leaseback transaction. The transfer to Eco Soil of the purchase rights
occurred in December 1997, and as consideration for the transfer Eco Soil agreed
to pay Messrs. Adams, Gloff and Gelwix the amount, if any, by which Eco Soil's
ultimate profit on a sale to a third-party purchaser exceeded $420,000. Eco Soil
closed the purchase, sale and leaseback of the facility in December 1998, and
the payments described above were made shortly thereafter in satisfaction of the
contingent payment obligation related to such sale.
Management of Eco Soil believes that the terms of the transactions
described above were no less favorable to Eco Soil than would have been obtained
from an unaffiliated third party. Any future material transactions and loans
with officers, directors or 5% beneficial shareholders of Eco Soil's common
stock, or affiliates of such persons, will be on terms no less favorable to Eco
Soil than could be obtained from unaffiliated third parties and will be approved
by a majority of the outside members of Eco Soil's Board of Directors who do not
have an interest in the transactions.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ECO SOIL SYSTEMS, INC.
May 1, 2000
By: /s/ William B. Adams
--------------------------------------
William B. Adams,
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
