<PAGE>
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 (per Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-ll(c) or Rule 14a-12
AGRIBIOTECH, INC.
(Name of Registrant as Specified In Its Charter)
AGRIBIOTECH, INC.
(Name of Person(s) Filing Proxy Statement)
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-ll(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>
AGRIBIOTECH, INC.
2700 Sunset Rd., Suite C-25
Las Vegas, Nevada 89120
-------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 24, 1997
-------------------------------------
To the Stockholders of AgriBioTech, Inc.:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of AgriBioTech, Inc. (the "Company"), which will be held at
10:00 a.m. (local time) on February 24, 1997, at the Company's executive offices
at 2700 Sunset Rd., Suite C-25, Las Vegas, Nevada 89120, to consider and act
upon the following matters:
(1) The election of a Board of Directors consisting of five (5) persons to hold
office for a one-year term and until their successors are duly elected and
qualified.
(2) The ratification of amendments to the Company's 1994 Employee Stock Option
Plan (i) increasing the number of options authorized for grant under the
plan from 600,000 to 1,600,000 and (ii) increasing the maximum number of
options that may be awarded to any person under such plan during any two-
year period to 300,000.
(3) The adoption of an amendment to the Company's Articles of Incorporation
increasing the number of authorized shares of Common Stock of the Company
from 30,000,000 to 50,000,000.
(4) The ratification of the appointment of KPMG Peat Marwick LLP as the
Company's auditors for the year ending June 30, 1997.
(5) The transaction of such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only stockholders of record at the close of business on December 31, 1996
will be entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS, AND RETURN IT WITHOUT DELAY IN THE ENCLOSED
POSTAGE PREPAID ENVELOPE. YOUR PROXY IS REVOCABLE AND WILL NOT BE USED IF YOU
ARE PRESENT AND PREFER TO VOTE IN PERSON OR IF YOU REVOKE THE PROXY.
Date: January 13, 1997 By Order of the Board of Directors,
JOHN C. FRANCIS, SECRETARY
<PAGE>
AGRIBIOTECH, INC.
2700 Sunset Rd., Suite C-25
Las Vegas, Nevada 89120
-------------------------------------
PROXY STATEMENT
-------------------------------------
These proxy materials are being furnished to holders of common stock, $.001
par value ("Common Stock") of AgriBioTech, Inc., a Nevada corporation (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Stockholders of the
Company and for any adjournment or adjournments thereof (the "Annual Meeting"),
to be held at 10:00 a.m. (local time) on February 24, 1997, at the principal
executive offices of the Company, located at 2700 Sunset Rd., Suite C-25, Las
Vegas, Nevada 89120, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. A form of proxy (the "Proxy") for the Annual
Meeting, on which you may indicate your votes as to each of the proposals
described in this Proxy Statement, is enclosed.
All Proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will be
voted in accordance with the stockholder's instructions contained in such Proxy.
In the absence of contrary instructions, shares represented by such Proxy will
be voted FOR the election of the nominees for Director as set forth herein and
FOR the adoption of each of Proposals 2 through 4 herein, as applicable.
The affirmative vote by holders of a majority of the Common Stock
represented at the Annual Meeting is required for the adoption of each of
Proposals 2, 3 and 4.
The vote of the plurality of the votes cast at the Annual Meeting will
decide the election of directors. Shares represented by Proxies which are
marked "ABSTAIN" as to any Proposal, and Proxies which are marked to deny
authority on all other matters will not be included in the vote totals and
therefore will be counted in determining the existence of a quorum but will have
no effect on the voting. In addition, where brokers are prohibited from
exercising discretionary authority for beneficial owners who have not provided
voting instructions (commonly referred to as "broker non-votes"), those shares
will not be included in the vote totals, except that they will be voted "FOR"
election of the nominees and "FOR" the ratification of appointment of the
auditors.
On December 31, 1996 (the "Record Date"), there were 14,667,335 shares
of Common Stock outstanding. In addition, there were 1,650 shares of Series B
Convertible Preferred Stock outstanding and 7,120.5 shares of Series C
Convertible Preferred Stock outstanding. Only holders of Common Stock as of the
Record Date will be entitled to vote at the Annual Meeting.
The Board of Directors does not anticipate that the director nominees will
be unavailable for election and does not know of any other matters that may be
brought before the Annual Meeting. In the event that any other matter shall
come before the Annual Meeting or the nominees are not available for election,
the persons named in the enclosed Proxy will have discretionary authority to
vote all Proxies not specifying to the contrary with respect to such matter in
accordance with their best judgment.
A stockholder may revoke his Proxy at any time before it is exercised by
filing a notice of revocation with the Secretary of the Company at its principal
executive offices, by filing a duly executed Proxy bearing a later date, or by
appearing in person at the Annual Meeting and expressing a desire to vote his
shares in person.
A list of stockholders entitled to vote at the Annual Meeting will be open
to examination by any stockholder, for any purpose germane to the meeting, at
the executive offices of the Company, 2700 Sunset Rd., Suite C-25, Las
<PAGE>
Vegas, Nevada 89120, during ordinary business hours for ten days prior to the
Annual Meeting. Such list will also be available during the Annual Meeting.
This Proxy Statement, the accompanying Notice of Annual Meeting of
Stockholders, the Proxy, the 1996 Annual Report to Stockholders including
financial statements and the Quarterly Report on Form 10-QSB for September 30,
1996 are expected to be mailed commencing on or about January 13, 1997 to
stockholders of record on December 31, 1996.
VOTING SECURITIES
December 31, 1996 has been fixed as the record date for the determination
of stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournment or adjournments thereof. As of that date, the Company had 14,667,335
shares of Common Stock outstanding. Each share of Common Stock is entitled to
one vote with respect to each matter set forth in the Notice of Meeting.
The following table sets forth information as of December 31, 1996, based
on information obtained from the persons named below, with respect to the
beneficial ownership of shares of Common Stock by (i) each person known by the
Company to be the owner of more than 5% of the outstanding shares of Common
Stock, (ii) each Director, (iii) all Executive Officers named under the heading
"Executive Compensation" and (iv) all Executive Officers and Directors as a
group, the number of shares, warrants and options known to the Company to be
held by each as of the date of this Proxy Statement; and the percentage of
outstanding shares of Common Stock to be beneficially owned by each:
<TABLE>
<CAPTION>
No. of Shares Percentage of
of Common Stock Common
Name and Address Beneficially Owned(1) Stock (2)
- ---------------- --------------------- -------------
<S> <C> <C>
Johnny R. Thomas (3) 3,556,497 (4) 20.8%
Scott J. Loomis 1,803,060 (5) 11.1%
5840 N. Genematas
Tucson, AZ 85704
John C. Francis (3) 2,118,655 (6) 12.9%
Henry A. Ingalls (3) 1,250,000 (7) 7.9%
Kathleen L. Gillespie (3) 1,050,000 (8) 6.7%
Kent Schulze 10,000 (9) *
2621 Irving Avenue, South
Minneapolis, MN 55408
Byron D. Ford 45,000 (10) *
975 North 2nd Avenue
St. Charles, IL 60174
Liviakis Financial 762,500(11) 5.2%
Communications, Inc.
2118 P. Street, Suite C
Sacramento, CA 95816
All officers and directors 9,833,212 (12) 43.1%
as a group (7 persons)
</TABLE>
- ----------------------
* Less than 1% of the issued and outstanding Common Stock
2
<PAGE>
(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole investment power with respect to all shares of Common Stock
beneficially owned by them. A person is deemed to be the beneficial owner
of securities that can be acquired by such person with 60 days form the
date hereof upon the exercise of warrants or options. Each beneficial
owner's percentage ownership is determined by assuming that the warrants
and/or options that are held by such person (but not those held by any
other person) and which are exercisable within 60 days form the date
hereof, have been exercised.
(2) Based on 14,667,335 shares of Common Stock issued and outstanding but
does not give effect to the exercise of outstanding warrants or options or
the conversion of outstanding Preferred Stock, except with regard to
individuals in accordance with note (1) above.
(3) This person's address is c/o the Company, 2700 Sunset Road, Suite C-25, Las
Vegas, Nevada 89120.
(4) Includes 1,000,000 shares underlying options currently exercisable (900,000
for cash only), 567,395 currently exercisable Class B Warrants, 300,000
currently exercisable Class C Warrants and 567,395 issuable Class C
Warrants (each Class B Warrant is exercisable for one share of Common Stock
and one Class C Warrant). Does not include 10,000 currently exercisable
Class B Warrants and 10,000 issuable Class C Warrants and 150,000 Stock
Options held by Manzano Limited Partnership, a family limited partnership
established for Dr. Thomas' estate planning purposes of which Dr. Thomas is
a partner, with respect to all of which securities he disclaims beneficial
ownership. In connection with the reduction in the exercise price of the
Company's Class B Warrants, Dr. Thomas has agreed to provide standby
purchasers with up to 567,395 Class B Warrants, and the Manzano Limited
Partnership has agreed to provide 10,000 Class B Warrants for nominal, if
any, consideration to Dr. Thomas prior to their expiration on January 17,
1997, although Dr. Thomas and this entity will retain their underlying
Class C Warrants.
(5) Includes 1,000,000 shares underlying options currently exercisable
(900,000 for cash only), and 281,020 currently exercisable Class B Warrants
and 281,020 issuable Class C Warrants. Also includes 2,500 shares held in
trust for Mr. Loomis' minor children. In connection with the reduction in
the exercise price of the Company's Class B Warrants, Mr. Loomis has agreed
to provide standby purchasers with up to 281,020 Class B Warrants, and Agri
Research and Development, Inc., an entity controlled by Mr. Loomis, has
agreed to provide 10,630 Class B Warrants for nominal, if any,
consideration prior to their expiration on January 17, 1997 while retaining
the underlying Class C Warrants.
(6) Includes 1,000,000 shares underlying options currently exercisable (900,000
for cash only), 314,420 currently exercisable Class B Warrants, 150,000
currently exercisable Class C Warrants and 314,420 issuable Class C
Warrants. Excludes shares and warrants held in trust for Mr. Francis' wife
and children over which shares Mr. Francis exercises no control and
disclaims beneficial ownership. In connection with the reduction in the
exercise price of the Company's Class B Warrants, Mr. Francis has agreed to
provide standby purchasers with up to 314,420 Class B Warrants for nominal,
if any, consideration prior to their expiration on January 17, 1997 while
retaining the underlying Class C Warrants.
(7) Includes 1,250,000 shares underlying options currently exercisable
(1,000,000 for cash only).
(8) Includes 1,050,000 shares underlying options currently exercisable (600,000
for cash only). Excludes 200,000 shares underlying options not currently
exercisable.
(9) Includes 10,000 shares underlying options currently exercisable. Excludes
10,000 shares underlying options not currently exercisable.
(10) Includes 45,000 shares underlying vested stock options. Excludes 225,000
shares underlying unvested stock options.
(11) Excludes 112,500 shares underlying options which are not currently
exercisable.
(12) Includes the shares underlying warrants and options included for Messrs.
Thomas, Loomis, Francis, Ingalls, Schulze and Ford and Ms. Gillespie listed
above.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The five (5) nominees of management for election as Directors of the Company
at the Annual Meeting are currently serving as Directors of the Company. If
elected, a Director of the Company will hold office until the next Annual
Meeting of Stockholders and until his successor is duly elected and qualified or
until his death, resignation or removal. It is intended that the accompanying
form of Proxy will be voted FOR the election as Directors of the nominees named
below, unless the Proxy contains contrary instructions.
3
<PAGE>
Management has no reason to believe that the nominees will not be
candidates or will be unable to serve. However, in the event that any nominee
should become unable or unwilling to serve as a Director, the Proxy will be
voted for the election of the remainder of those named, and for such substitute
person as shall be designated by the Directors.
The following table sets forth information concerning nominees for Director
of the Company:
<TABLE>
<CAPTION>
Name Age Positions
- ---- --- ---------
<S> <C> <C>
Johnny R. Thomas 55 President, Chief Executive
Officer and Director
Scott J. Loomis 48 Vice President and Director
John C. Francis 47 Vice President, Secretary
and Director
Kent Schulze 52 Director
Byron D. Ford 53 Vice President, Corporate Development &
Strategic Planning and Director
</TABLE>
BIOGRAPHICAL INFORMATION
Johnny R. Thomas has served as President of the Company since April 1,
1994, a director of the Company since September 30, 1993, and also the President
and a director of AgriBioTech, Inc., a Nevada corporation ("ABT"), from its
inception in 1983 until June 30, 1992. From October 1993 until June 1994, when
the Company merged with and into ABT (the "June 1994 Reorganization"), Dr.
Thomas was a director of ABT. He was President, Chairman of the Board and Chief
Executive Officer of FiberChem, Inc. ("FCI") from its inception in December 1986
until March 31, 1994. Dr. Thomas received his Ph.D. degree in genetics/plant
breeding from Oregon State University in 1966.
Scott J. Loomis has served as Vice President of the Company since April 1,
1994; was President, Secretary and a director of the Company from September 30,
1993 until March 31, 1994; a director of ABT since February 1988 and President
from June 1992, until the June 1994 Reorganization. He has served as Chairman
of the Board of FCI since August 1995, served as President from April 1994 until
August 1995 and has been a director of FCI since June 1989. He has been a
director of FCI Environmental, Inc. ("FCI Environmental") since January 1990.
Mr. Loomis has been a licensed attorney in the State of Arizona since 1974.
John C. Francis has served as Vice President, Secretary and a director of
the Company since April 1, 1994. From April 1, 1994 until April 1996, he also
served as Chief Financial Officer of the Company. He was Vice President,
Secretary/Treasurer and a director of ABT from 1983 to June 1992. Mr. Francis
served as Vice President, Chief Financial Officer and a Director of FCI from its
inception in December 1986 until March 31, 1994. Mr. Francis also served as a
Director of FCI Environmental from January 1990 until March 31, 1994 and from
September 1, 1993 to December 31, 1993 served as Director of Marketing of FCI
Environmental.
Kent Schulze was appointed as a director of the Company on May 8, 1996.
Mr. Schulze is the President of Access Technology, Inc., which he co-founded in
April 1996. From 1990 to April 1996, Mr. Schulze was President and Chief
Executive Officer of Northrup King Company, a subsidiary of Sandoz Corp., the
world's second largest seed company. From 1986 to 1990, Mr. Schulze was
President and Chief Operating Officer of DeKalb-Pfizer Genetics, where he was
responsible for that company's seed operations worldwide.
4
<PAGE>
Byron D. Ford becomes the Company's Vice President, Corporate Development &
Strategic Planning on January 15, 1997. He was appointed as a director of the
Company on May 8, 1996, and he will resign as a director as soon as the
Corporation engages a new independent director. Mr. Ford has been the Chairman
of the Board and Chief Executive Officer of Walsh & Associates Ltd., a
registered investment adviser, since August 1995. From 1990 to September 1994,
Mr. Ford was the Vice President, Marketing & Operations of DeKalb Genetics
Corp., where he was responsible for the North American seed business. Prior to
that, Mr. Ford was a Senior Operating Executive and Marketing Vice President for
EcoLab, Inc., an industrial services company, where he was responsible for the
consumer packaged goods division.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors held 4 meetings during Fiscal 1996 and conducted
other business by unanimous written consent. Each Director attended at least 75%
of the total number of Board meetings and at least 75% of the meetings of the
committees on which he served.
The Company has two standing committees of the Board of Directors, the
Compensation and Audit Committees, which each consist of Messrs. Kent Schulze
and Byron Ford. These committees were not formed until May 1996, upon Messrs.
Schultze and Ford joining the Board of Directors. Neither committee met during
Fiscal 1996, however, each committee conferred by telephone. In December 1996,
Mr. Ford agreed to become an employee of the Company, effective January 15,
1997, and assume the title of Vice President, Corporate Development & Strategic
Planning. The Company intends to engage a new independent director as soon as
possible, and Mr. Ford will then resign from the Board of Directors.
Among the duties of the Compensation Committee are the making of
recommendations to the Board of remuneration for officers and key employees of
the Company, the determination of the number and issuance of stock options and
the review of any compensation and incentive programs for executive officers,
consultants and others. There are no Compensation Committee or Board of
Directors interlock relationships with respect to the Company.
The duties of the Audit Committee include recommending the independent
public accountants to serve as the Company's auditors, reviewing and considering
the actions of management in matters relating to audit functions, reviewing with
such accountants the scope and results of their audit engagement, reviewing the
financial statements and information included in the Company's filings with the
Securities and Exchange Commission, reviewing the Company's system of internal
controls and procedures and reviewing the effectiveness of procedures intended
to prevent violations of laws and regulations.
EXECUTIVE OFFICERS
The names and business backgrounds of Executive Officers of the Company who
are not Directors of the Company are:
<TABLE>
<CAPTION>
Positions with Year First
Name Age the Company Became Officer
- ---- --- ----------- ---------------
<S> <C> <C> <C>
Henry A. Ingalls 50 Vice President, Chief 1996
Financial Officer and Treasurer
Kathleen L. Gillespie 43 Vice President, Seed 1994
Operations and Acquisitions
Byron D. Ford 53 Vice President, Corporate 1997*
Development & Strategic Planning
- -----------------
</TABLE>
5
<PAGE>
*Mr. Ford becomes an officer of the Company as of January 15, 1997, and he
will resign from the Board of Directors as soon as a new outside director is
engaged by the Company.
Henry A. Ingalls has served as Vice President, Treasurer and Chief
Financial Officer of the Company since April 3, 1996. Until April 1, 1996, Mr.
Ingalls worked for the Company's auditors, the accounting firm of KPMG Peat
Marwick LLP, beginning in 1969, and he was elected to the partnership in 1978.
Mr. Ingalls has extensive experience in public company auditing and public
offerings.
Kathleen L. Gillespie has served as Vice President of Seed Operations and
Acquisitions since November 29, 1994. Prior thereto, Ms. Gillespie gained 19
years of seed experience at all levels of production, marketing, procurement,
acquisitions, operations and management. From 1977, until joining the Company,
Ms. Gillespie was employed by Agway, where during her tenure as Director of the
Seed Division, sales increased from $20 million per year to $80 million prior to
a divestiture. Ms. Gillespie was instrumental in Agway's acquiring four wholly-
owned subsidiaries. She selected and introduced over 100 proprietary seed
varieties and hybrids during her last 12 years with Agway.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Securities Exchange Act of 1934, the
Company's executive officers, Directors and persons who own more than ten
percent of the Company's Common Stock, are required to file certain reports,
within specified time periods, indicating their holdings of and transactions in
the Common Stock and derivative securities. Based solely on a review of such
reports provided to the Company and written representations from certain
reporting persons that no Form 5's were required for those persons, the Company
is not aware of any failures to file reports or report transactions in a timely
manner during the fiscal year ended June 30, 1996, except that Kathleen
Gillespie filed one late report concerning one transaction, Johnny Thomas and
John Francis each filed one report late concerning one transaction and Mr.
Loomis filed two late reports, each of which concerned one transaction.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation awarded to, earned by, or
paid for all services rendered to the Company during the fiscal year ended June
30, 1996 ("Fiscal 1996"), the Nine-Month Period ended June 30, 1995 ("Fiscal
1995") and the fiscal year ended September 30, 1994 ("Fiscal 1994"), by those
persons who served as Chief Executive Officer during Fiscal 1996 and any Named
Executive Officers who received compensation in excess of $100,000 during such
years.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------ ----------------------
Other Annual
Name and Salary Bonus Compensation Shares Underlying
Principal Position Year ($) ($) ($)(1) Options (#)
- ------------------ ---- ---------- ------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
Johnny R. Thomas 1996 $84,000(2) -0- -0- 1,000,000(2)
President and CEO 1995 $63,000(2) -0- -0- -0-
1994 $42,000(2) -0- -0- -0-
</TABLE>
- ------------------
(1) The above compensation figures do not include the cost to the Company of
benefits, including premiums for life and health insurance and any other
personal benefits provided by the Company to such persons in connection
with the Company's business, which were in any event below reportable
thresholds.
6
<PAGE>
(2) Dr. Thomas became Chief Executive Officer of the Company on April 1, 1994.
He is being compensated at the rate of $84,000 per annum, as described
under "Employment Agreements" below. He also received options to purchase
up to 1,000,000 shares of Common Stock. Such options vest over a ten-year
period, except that they may be exercised immediately for cash. See
"Option Grants" table below.
DIRECTORS FEES
Officer-directors currently receive no compensation for serving on the
Board of Directors other than reimbursements of reasonable expenses incurred in
attending meetings. Outside directors receive $9,000 per year for attending
meetings on up to six different days, $1,500 for additional days and
reimbursement of expenses. Each outside director also received options to
purchase 20,000 shares of Common Stock upon joining the Board, 10,000 of which
vested immediately, and 10,000 of which vest after a year of service.
EMPLOYMENT AGREEMENTS
Scott J. Loomis was compensated by the Company as a consultant from July
1992 at the rate of $5,000 per month, which was increased to $7,000 per month on
February 1, 1994, when he entered into an employment agreement with the Company
as President. Mr. Loomis became Vice President on April 1, 1994. The
employment agreement is terminable by the Company without cause on ten days'
prior notice. During the term of his agreement, and for a period of two years
following termination of employment, Mr. Loomis is prohibited from engaging in
activities which are competitive with those of the Company and its affiliated
corporations within the United States and from disclosing confidential
information of the Company. Mr. Loomis has also received certain stock options.
See "Currently Outstanding Options" below.
On March 10, 1994, the Company entered into an employment agreement with
Johnny Thomas, as President, commencing on April 1, 1994. The agreement
contains substantially the same terms as Mr. Loomis' above-described agreement.
Dr. Thomas has also received certain stock options. See "Currently Outstanding
Options" below.
As of April 1, 1994, the Company entered into an employment agreement with
John C. Francis. The agreement contains substantially the same terms as Mr.
Loomis' above-described agreement. Mr. Francis has also received certain stock
options. See "Currently Outstanding Options" below.
On November 29, 1994, the Company entered into an employment agreement, as
amended, with Kathleen L. Gillespie. The agreement contains substantially the
same terms as Mr. Loomis' above described agreement. Ms. Gillespie has also
received certain stock options. See "Currently Outstanding Options" below.
On February 13, 1996, the Company entered into an employment agreement with
Henry A. Ingalls. The agreement's term runs from April 3, 1996 for four years.
Mr. Ingalls' compensation rate begins at $170,000 per annum plus a minimum bonus
of $30,000 per year. The compensation is subject to annual escalations at the
greater of 5% or the general inflation rate. The Agreement contains a covenant
by Mr. Ingalls not to compete against the Company, effective during the term and
for a two-year period thereafter. Upon termination without cause, Mr. Ingalls
would be entitled to two years' compensation. After a change of control of the
Company, in certain circumstances, Mr. Ingalls would be entitled to three years'
compensation. Mr. Ingalls has also received certain stock options. See
"Currently Outstanding Options" below.
On December 9, 1996, the Company entered into an employment agreement with
Byron D. Ford. The agreement's term runs from January 15, 1997 for four years.
Mr. Ford's annualized compensation rate is $90,000 through June 30, 1997,
$170,000 from July 1, 1997 through June 30, 1998 plus a minimum of $30,000 in
bonus and/or perquisites and, for periods after June 30, 1998, as determined by
the Compensation Committee. The Agreement contains a covenant by Mr. Ford not to
compete against the Company, effective during the term and for a two-year period
thereafter. Upon termination without cause, Mr. Ford would be entitled to one
year's compensation. After a
7
<PAGE>
change of control of the Company, in certain circumstances, Mr. Ford would be
entitled to two years' compensation. Mr. Ford has also received certain stock
options. See "Currently Outstanding Options" below.
OPTION GRANTS IN LAST FISCAL YEAR
The table below includes the number of stock options granted to the
executive officers named in the Summary Compensation Table during Fiscal 1996
and exercise information.
<TABLE>
<CAPTION>
Individual Grants
-----------------
Number of Percent of Total
Securities Options Granted
Name of Underlying to Employees Exercise Price Expiration
Individual Options Granted in Fiscal Year ($/Share) Date
- ---------- --------------- ----------------- --------------- ----------
<S> <C> <C> <C> <C>
Johnny R. Thomas 1,000,000 17.5% $3.00 3/10/2006
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The table below includes information regarding the value realized on option
exercises and the market value of unexercised options held by the executive
officers named in the Summary Compensation Table during Fiscal 1996.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-The-Money Options
Shares Acquired Options at FY-End (#) at FY-End ($)
Name on Exercise (#) Value Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ---------------- ------------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Johnny R. Thomas -- -- 1,000,000/0* $1,062,500/0*(1)
</TABLE>
____________________
*900,000 of these options are currently exercisable only for cash.
(1) Based on the closing bid price of the Company's Common Stock on June 30,
1996 of $4.06. Based on the closing bid price on December 31, 1996 of
$2.125, the unexercised options would have had no value.
STOCK BONUS PLAN
The Company adopted an Employee Stock Bonus Plan (the "Bonus Plan")
effective May 24, 1994 providing for the issuance of up to 40,000 shares of
Common Stock per year to any employee, consultant, officer or director, up to an
aggregate of 400,000 shares for the entire Bonus Plan. Pursuant to the Bonus
Plan, employees of the Company are eligible to receive a stock bonus at the
discretion of the managing committee based on length of service and contribution
or potential value to the Company. As of the date hereof, no bonus shares have
been issued to employees of the Company.
RETIREMENT PLAN
The Company has a defined contribution plan the "401(k) Plan" which covers
all employees. Eligible employees may contribute up to 30 percent of their
annual compensation, not to exceed the statutory maximum. The Company may make
discretionary contributions. Participants are immediately vested in their
contribution and vest 20 percent per year in the Company's contributions for
each year of service after the first year. The Company made no contributions to
the 401(k) Plan in Fiscal 1996 or 1995.
8
<PAGE>
CURRENTLY OUTSTANDING OPTIONS
In addition to the 526,900 options previously granted under the Company's
1994 Employee Stock Option Plan (the "1994 Option Plan") and 365,900 additional
options granted under the 1994 Option Plan to non-officer employees subject to
stockholder ratification of the increase in the size of the 1994 Option Plan, as
of December 31, 1996, officers of the Company held options to purchase an
aggregate of 5,200,000 shares of Common Stock outside of the 1994 Option Plan,
exercisable for up to ten years ending in 2006, at prices ranging from $2.00 to
$3.50 per share. Such executives' options vest over five to ten-year periods,
but all are immediately exercisable for cash. Of these options, Messrs. Thomas,
Francis and Loomis have each been granted ten-year options to purchase up to
1,000,000 shares of Common Stock at $3.00 per share, Ms. Gillespie has been
granted ten-year options to purchase up to an aggregate of 950,000 shares of
Common Stock at $2.00 per share, and Mr. Ingalls has been granted ten-year
options to purchase up to 1,250,000 shares of Common Stock at $2.12 per share.
In addition, Mr. Ford has been granted five-year options to purchase up to
250,000 shares of Common Stock at prices ranging from $2.25 to $3.50. If
Proposal 2 is approved by the stockholders, Mr. Ford's options will be granted
under the 1994 Option Plan. If it is not approved, they will be deemed granted
outside of the 1994 Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 17, 1992 FiberChem, Inc. ("FCI") signed an agreement to sell ABT to
Johnny R. Thomas, then FCI's President and ABT's Vice President (25% interest);
John C. Francis, then FCI's Vice President and now the Company's Vice President
and Secretary (25% interest); Scott J. Loomis, then a Director of FCI and ABT's
President (25% interest); and Reesor G. Woodling, then a Director of ABT (25%
interest) (the "Purchasers"). The Purchasers agreed to purchase all of the
issued and outstanding shares of Common Stock of ABT, which were all owned by
FCI. The net purchase price of $425,559 was payable in four equal installments
of principal plus interest at a rate of 8% per annum, commencing July 1, 1993
and annually thereafter until paid in full. On July 1, 1992, the Purchasers and
ABT entered into an agreement whereby ABT agreed to assume the Purchasers'
obligation to FCI with respect to the note payable. However, the Purchasers
remained primarily liable for this debt until it was fully paid in July 1996.
During Fiscal 1995 and 1996, the Company paid FCI $106,390 plus interest in each
year.
In connection with the Company's December 1993 Private Placement, Dr.
Thomas purchased 75,000 Units for cash consideration of $150,000; Mr. Loomis
purchased 30,333 Units for cash consideration of $20,000 and $40,666 of accrued
compensation and disbursements, and Agri Research and Development, Inc., an
entity controlled by Mr. Loomis, purchased 10,630 Units in exchange for $21,260
of accrued obligations of the Company; Dr. Thomas and Messrs. Francis, Loomis
and Reesor Woodling, then a director of ABT, subscribed for 11,250, 11,250,
10,000 and 10,000 Units, respectively, in exchange for promissory notes for
$22,500, $22,500, $20,000 and $20,000 which Dr. Thomas, Mr. Francis and Mr.
Loomis, respectively, agreed to allow the Company to deduct through monthly
payments from salary and/or directors' compensation. As part of the foregoing
private placement, as of March 31, 1994, Dr. Thomas and Messrs. Loomis, Francis
and Woodling, as standby purchasers, irrevocably subscribed for 106,509,
106,509, 107,760, and 107,759 additional Units, respectively, in exchange for
negotiable promissory notes in the amounts of $213,018, $213,018, $215,520 and
$215,518, respectively, all of which notes were paid for with cash during Fiscal
1995.
On March 14, 1995, Dr. Thomas and Mr. Francis guaranteed payment of certain
promissory notes to the Company in the amounts of $2,561,193 and $413,307,
respectively, for the exercise of Class A Warrants by unaffiliated third
parties. The notes were subsequently satisfied in full, and neither Dr. Thomas
nor Mr. Francis received any benefit or suffered any loss with respect to this
transaction.
On March 20, 1995, Dr. Thomas and Mr. Francis guaranteed payment of certain
promissory notes to the Company in the amounts of $900,000 each, for the
exercise of Class B Warrants by unaffiliated third parties. The notes were
subsequently satisfied in full, and neither Dr. Thomas nor Mr. Francis received
any benefit or suffered any loss with respect to this transaction.
9
<PAGE>
On November 21, 1995, Mr. Francis exercised 151,250 Class A warrants as a
standby purchaser and gave a promissory note to the Company for the exercise
price of $468,875 or $3.10 per share. The promissory notes were subsequently
satisfied through Mr. Francis' transfer of an aggregate of 172,055 shares in
connection with the Company's purchase of two companies during Fiscal 1996.
Because of the change in market price between the date of exercise of the
warrants and the dates of transfer of the Common Stock, Mr. Francis transferred
20,805 shares more than he received upon exercise and sustained a loss of
approximately $40,000, based on the market price of the Common Stock on the date
of the last transfer.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" ALL THE NOMINEES LISTED IN THE FOREGOING PROPOSAL 1
PROPOSAL 2 - AMENDMENTS TO 1994 EMPLOYEE STOCK OPTION PLAN
In April 1994, the Company adopted and in 1994 the Company's stockholders
ratified the adoption of the 1994 Option Plan. At the Annual Meeting,
Stockholders will be asked to ratify amendments to the Company's 1994 Option
Plan (i) to increase the number of shares available to be granted thereunder
from 600,000 to 1,600,000 and (ii) to increase the maximum number of options
that may be awarded to any person under the 1994 Option Plan during any two-year
period to 300,000.
The 1994 Option Plan provides for the grant of options to qualified
employees (including officers) and directors of the Company, employees of
Company subsidiaries, independent contractors, consultants and other
individuals. The Company currently employs approximately 220 persons and has 2
outside directors. The closing price of the Common Stock on December 31, 1996
was $2.125.
INCREASE IN SIZE OF 1994 OPTION PLAN
The 1994 Option Plan initially provided for the issuance of options to
purchase an aggregate of 600,000 shares of Common Stock, which the Board of
Directors increased to 1,600,000 options subject to stockholder approval. Since
the 1994 Option Plan's adoption, options have been granted under such plan to
nearly all of the Company's employees at prices ranging from $2.00 to $4.06 per
share, including 300,000 options to Mr. Gillespie and 270,000 options to Mr.
Ford, each a Vice President of the Company, and 20,000 to Mr. Schulze, an
independent director of the Company. The Board of Directors approved the
proposed increase in the 1994 Option Plan in order to make the necessary
options, as described above in "Currently Outstanding Options," available for
grant. The fast-paced growth of the Company has been accompanied by substantial
increases in the number of employees of the Company and its subsidiaries, and
therefore the Company needs amend the 1994 Option Plan to have additional
options available as a broad-based compensation strategy to induce employees,
directors and consultants with incentives to exert their best efforts on the
Company's behalf and to provide them an identification with stockholders'
interests. The Board of Directors believes that options granted under the 1994
Option Plan will maintain and strengthen the desire of employees, directors and
consultants to remain with the Company and its subsidiaries and also will help
attract other qualified personnel to become employed by or otherwise become
associated with the Company.
Options granted under the 1994 Option Plan to purchase shares of Common
Stock in excess of the 600,000 already approved, prior to the approval of the
amendment by the Company's stockholders, are conditioned upon approval of the
1994 Option Plan by such stockholders on or before June 17, 1997. If such
approval is not obtained by such date, such additional Options shall be deemed
to have been granted outside the 1994 Option Plan.
NEW PLAN BENEFITS
The following table sets forth certain information, as of December 31,
1996, concerning outstanding options granted pursuant to the 1994 Option Plan to
(i) each executive officer named in the Summary Compensation Table (see
10
<PAGE>
"Executive Compensation"); (ii) all current executive officers as a group; (iii)
all other employees, including all current officers who are not executive
officers, as a group; and (iv) all non-employee Directors, as a group.
<TABLE>
<CAPTION>
Name and Position Dollar Value Shares (#)
- ----------------- ------------ --------------
<S> <C> <C>
Johnny R. Thomas $0 -0-
President, Chief Executive Officer
and Director
All executive officers as a group $37,500 570,000(1)
All Non-officer Directors as a group $0(2) 20,000(3)
All other employees as a group $0(2) 552,800(4)
</TABLE>
- ---------------
(1) Includes 300,000 incentive stock options, to the extent permitted under the
Internal Revenue Code of 1986, as amended and 270,000 non-qualified stock
options.
(2) These options are out-of-the-money.
(3) Non-qualified stock options.
(4) 352,800 of these are incentive stock options and 200,000 are non-qualified
stock options.
INCREASE IN SHARE LIMITATION
Pursuant to the 1994 Option Plan, the maximum number of shares that may be
granted to any person in any two-year period was 200,000. However, the Company
granted 300,000 Options under the 1994 Option Plan to Ms. Gillespie in December
1995, which Options vest over a five-year period. On December 9, 1996, the
Board of Directors realized this discrepancy and voted, subject to stockholder
approval, to amend the 1994 Option Plan, retroactive to December 20, 1995, to
permit the grant of not more than 300,000 Options to a person in any two-year
period. In addition, on December 9, 1996, the Company entered into an
employment agreement with Mr. Ford, as described above, pursuant to which he
receives 250,000 Options (in addition to his previously-granted 20,000), vesting
over a five-year period. Pursuant to certain tax provisions, described below,
it could be advantageous to the Company, in the case of executive officers named
in the Summary Compensation Table, to limit the number of Options granted to
such persons to performance-based compensation. There is no assurance that the
300,000 Option limit would be deemed to qualify for such favorable tax treatment
in the event that such an executive officer received compensation exceeding the
$1,000,000 threshold in a tax year, as calculated pursuant to such tax
provisions. In the event that the stockholders do not approve this Proposal 2,
100,000 of Ms. Gillespie's Options (in addition to her other options outside of
such plan) will be deemed to have been granted outside of the 1994 Option Plan,
and Mr. Ford's 250,000 new Options shall be deemed to have been granted outside
of the 1994 Option Plan.
ADDITIONAL AMENDMENT
The Board of Directors has also amended the 1994 Option Plan to take
advantage of recent changes in the law that permit the transferability of NQSOs
and SARs granted in tandem with NQSO's at the discretion of the Committee.
Stockholder approval is not required, however, with respect to this amendment.
11
<PAGE>
SUMMARY OF 1994 OPTION PLAN
The following discussion, which summarizes certain provisions of the 1994
Option Plan, is qualified in its entirety by reference to the text of the 1994
Option Plan. Copies of the 1994 Option Plan are available for examination at
the Securities and Exchange Commission and at the principal executive offices of
the Company at 2700 Sunset Road, Suite C-25, Las Vegas, Nevada 89120.
Eligibility for Participation
- -----------------------------
Under the 1994 Option Plan, incentive stock options ("ISOs'") as defined in
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code"), or
ISOs in tandem with Stock Appreciation Rights ("SARs") which are subject to the
requirements set forth in Temp. Reg. Section 14a.422A-1, A-39 (a)-(e), may be
granted, from time to time, to officers and other employees of the Company and
its subsidiaries. Non-Qualified Stock Options ("NQSOs"), not intended to
qualify under Section 422(b) of the Code, may also be granted under the 1994
Option Plan to employees, officers and directors of the Company and its
subsidiaries, as well as independent contractors, consultants and other
individuals who are not employees of, but are involved in the continuing
development of the Company's business ("Participants").
Administration
- --------------
The 1994 Option Plan is to be administered by the Board of Directors or by
the Compensation Committee of the Board of Directors (referred to below as the
"Committee"), which may not contain fewer than two non-employee directors (as
defined in Rule 16b-3 promulgated under Section 16 of the Exchange Act) and
currently consists of Kent Schulze and Byron Ford. The Committee has the
authority, in its discretion, to determine the persons to whom options shall be
granted, the character of such options, the manner of exercising and making
payment for shares of Common Stock and the number of shares of Common Stock to
be subject to each option. It is the intention of the Company that the 1994
Option Plan shall comply in all respects with Rule 16b-3. Compliance with Rule
16b-3 generally allows a Section 16(b) Participant to avoid the effect of the
"short-swing" profit rules of Section 16(b) with respect to the exercise and
sale of the shares underlying the Options.
Terms of Options
- ----------------
The terms of Options granted are to be determined by the Committee.
Options must be granted within ten years from the date the 1994 Option Plan was
adopted. Each Option is to be evidenced by a stock option agreement between the
Company and the Participant, and is subject to the following additional terms
and conditions:
(a) Exercise of the Option. The Committee shall determine the time periods
----------------------
during which Options may be exercised. Options will be exercisable in whole or
in part at any time prior to expiration, but may not expire later than ten years
from the date of grant. If an ISO or an SAR granted in tandem with an ISO is
granted to an individual who, immediately before the grant owns directly, or
through attribution, more than 10% of the total combined voting power of all
classes of capital stock of the Company or a subsidiary or parent of the
Company, such ISO or SAR granted in tandem with an ISO shall not be exercisable
after the expiration of five years from the date of grant. An Option is
exercised by the Participant's giving written notice of exercise to the Company
specifying the number of full shares of Common Stock to be purchased and
tendering payment of the purchase price to the Company in cash or certified
check, or, at the discretion of the Committee, by delivery of shares of Common
Stock having a fair market value equal to the option price or the delivery of a
promissory note or by a combination of the above forms of payment. The ability
to pay the option exercise price in shares of Common Stock may enable a
Participant to engage in a series of successive stock-for-stock exercises of an
Option and thereby fully exercise an Option with little or no cash investment.
(b) Option Price. The option price of an NQSO or an SAR in tandem with an
------------
NQSO granted pursuant to the 1994 Option Plan is determined by the Committee in
its sole discretion. In no event may the option price of an ISO
12
<PAGE>
be less than the fair market value on the date of grant. The fair market value
of an ISO shall be determined by the Committee and, if the shares of Common
Stock are listed on a national securities exchange or traded in the over-the-
counter market, the fair market value shall be the closing price on such
exchange, or the mean of the reported bid and asked prices of the Common Stock
in the over-the-counter market as reported by NASDAQ, the OTC Bulletin Board or
the National Quotation Bureau, Incorporated, as the case may be, on such date.
ISOs or SARs granted in tandem with ISOs to holders of more than 10% of the
Company's Common Stock are subject to the additional restriction that the option
price must be at least 110% of the fair market value of the Company's Common
Stock on the date of grant.
(c) Vesting. The Committee will determine the time or times the Options
-------
become exercisable. The 1994 Option Plan provides, however, that with respect
to holders of more than 10% of the Common Stock, such Options must become fully
exercisable initially not later than five years from the date of grant, and no
less than 20% of the shares subject to an Option must become exercisable in each
of the first five years of the Option until fully exercisable.
(d) Termination of Employment, Death, Disability. Except as provided in
--------------------------------------------
the 1994 Option Plan, upon termination of employment with the Company for any
reason, a Participant may exercise its ISOs at any time within three months
after the date of such termination. Other Options are not extinguished by
termination without cause. Any Options granted under the 1994 Option Plan shall
immediately terminate in the event the Participant is terminated for cause by
the Company or any of its subsidiaries.
If the holder of an Option dies while employed by the Company or a
subsidiary or parent corporation of the Company or within three (3) months after
the termination of such holder's employment, such Option may be exercised by a
legatee or legatees of such holder under such individual's last will or by such
individual's personal representatives within one year after death, in the case
of ISOs, or through the end of the term otherwise.
If the holder of an Option becomes disabled within the definition of
Section 22(e)(3) of the Code while employed by the Company or a subsidiary or
parent corporation of the Company, such Option may be exercised at any time
within one year after termination of such holder's employment due to the
disability.
No Option may in any event be exercised after the original expiration date
of the Option.
(e) Nontransferability of ISOs. ISOs and SARS granted in tandem with ISOs
--------------------------
shall be nontransferable and non-assignable except by will or the laws of
intestacy, and any ISO or SAR in tandem with an ISO is exercisable during the
lifetime of the Participant only by the Participant, or in the event of his or
her death, by a person who acquires the right to exercise the Option by bequest
or inheritance or by reason of the death of the Participant; and other Options
shall be transferable at the discretion of the Committee.
(f) Maximum Number of ISOs or SARs in Tandem with ISOs Which May Be
---------------------------------------------------------------
Issued. A maximum aggregate fair market value of $100,000, determined as of the
- ------
time any ISO or SAR in tandem with an ISO is granted and in the manner provided
in the 1994 Option Plan, may not be exceeded for any Participant as the maximum
aggregate value of (A) the Common Stock with respect to which ISOs and/or SARs
in tandem with ISOs granted under the 1994 Option Plan are exercisable for the
first time during any calendar year, together with (B) the Common Stock with
respect to which ISOs and/or SARs in tandem with ISOs granted under ISOs
qualifying as such in accordance with Section 422 of the Code were granted under
any other incentive stock option plan maintained by the Company or its parent or
subsidiary corporations. Any options granted in excess of this limit shall be
deemed to be NQSO's under the 1994 Option Plan.
An option agreement issued under the 1994 Option Plan may contain such
other terms, provisions and conditions not inconsistent therewith as may be
determined by the Committee.
TERMINATION, MODIFICATION AND AMENDMENT
13
<PAGE>
The 1994 Option Plan shall terminate ten years from the date of its
adoption by the Board of Directors. No Options will be granted after
termination of the 1994 Option Plan.
The Board of Directors of the Company may terminate the 1994 Option Plan at
any time prior to its expiration date or make such modifications or amendments
thereto from time to time as the Committee may deem advisable. The Committee
may not, however, without the approval of a majority of the then outstanding
shares of the Company entitled to vote thereon, except under conditions
described under "Adjustments Upon Changes in Capitalization," increase the
maximum number of shares as to which Options may be granted under the 1994
Option Plan or materially change the standards of eligibility thereunder.
No termination, modification or amendment to the 1994 Option Plan may
adversely affect the terms of any outstanding Options without the consent of the
holders thereof.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the number of outstanding shares of Common Stock is
changed by reason of recapitalization, reclassification, stock split, stock
dividend, combination, exchange of shares, or the like, the Committee will make
an appropriate adjustment in the aggregate number of shares of Common Stock
available and reserved for issuance upon the exercise of then outstanding
Options and in the exercise prices of such Options. Any adjustment in the
number of shares will apply proportionately only to the unexercised portion of
Options granted under the 1994 Option Plan. Fractions of shares resulting from
any such adjustment shall be further adjusted to the next higher whole number of
shares.
In the event of the dissolution or liquidation of substantially all of the
assets of the Company, all outstanding Options will automatically terminate,
unless otherwise provided by the Committee.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is only a summary of the principal Federal income
tax consequences of the grant and exercise of Options and is based on existing
Federal law, which is subject to change, in some cases retroactively. This
discussion is also qualified by the particular circumstances of each Participant
which may substantially alter or modify the Federal income tax consequences
herein discussed.
Generally, under current law, when an Option qualifies as an ISO under
Section 422 of the Code, (i) an employee will not realize taxable income either
upon the grant or the exercise of the Option, (ii) the amount by which the fair
market value of the shares acquired upon exercise of the Option at the time of
exercise exceeds the option price is included in determining a Participant's
alternative minimum tax, (iii) any gain or loss (the difference between the net
proceeds received upon the disposition of the shares and the Option Price paid
therefor), upon a qualifying disposition of the shares acquired by exercise of
an Option will be treated as a capital gain or loss if the shares qualify as a
capital asset in the hands of the Participant, and (iv) no deduction will be
allowed to the Company for Federal income tax purposes in connection with the
grant or exercise of an ISO or a qualifying disposition of shares. A
disposition by an employee of shares acquired upon exercise of an ISO will
constitute a qualifying disposition if the disposition occurs more than two
years after the grant of the Option and more than one year after the issuance of
the shares to the employee. If such shares are disposed of by the employee
before the expiration of those time limits, the transfer would be a
"disqualifying disposition" and the employee will typically recognize ordinary
income (and the Company will receive an equivalent deduction) equal to the
lesser of (i) the aggregate fair market value of the shares as of the date of
exercise less the Option Price, and (ii) the amount realized on the
disqualifying disposition less the Option Price. Ordinary income from a
disqualifying disposition will also constitute compensation for which
withholding may be required under Federal and state law. The maximum Federal
tax rate on ordinary income is greater than the Federal tax rate for long-term
capital gains. Proposals have been made to decrease the marginal tax rate
further on certain types of capital gains. No assurance can be given as to
when, if ever, new Federal tax legislation will be enacted into law, or as to
the effective date of any such legislation.
14
<PAGE>
In the case of an NQSO granted under the 1994 Option Plan, generally no
income is recognized by the Participant at the time of the grant of the Option
assuming such NQSO does not have a readily ascertainable fair market value. The
Participant generally will recognize ordinary income upon exercise of an NQSO
equal to the aggregate fair market value of the shares acquired less the Option
Price. Withholding may be required, and the Company will receive an equivalent
deduction, subject to the provisions of Section 162(m) of the Code relating to
excessive employee remuneration. Section 162(m) disallows a deduction for an
employer with respect to remuneration paid in any taxable year to an executive
officer named in the Summary Compensation Table in excess of $1,000,000. For
purposes of determining remuneration paid, the excess of the fair market value
of the Common Stock received upon exercise of an NQSO over the exercise price is
considered remuneration paid in the year of exercise unless the income is
considered performance-based compensation as defined in (S)162(m) and the tax
regulations.
Shares acquired upon exercise of an NQSO will have a tax basis equal to
their fair market value on the exercise date or other relevant date on which
ordinary income is recognized and the holding period for the shares generally
will begin on the date of exercise or such other relevant date. Upon subsequent
disposition of the shares, a Participant will recognize capital gain or loss if
the shares constitute a capital asset in the Participant's hands. Provided the
shares are held by the Participant for more than one year prior to disposition,
such gain or loss will be recognized as long-term capital gain or loss. As set
forth above, the maximum federal tax rate on ordinary income is currently
greater than the maximum federal tax rate on long-term capital gains. To the
extent a Participant recognizes a capital loss, such loss generally may offset
capital gains and up to $3,000 of ordinary income. Any excess capital loss may
be carried forward indefinitely.
The grant of an SAR is generally not a taxable event for an optionee. Upon
the exercise of an SAR, however, the Optionee will recognize ordinary income in
an amount equal to the amount of cash and the fair market value of any Common
Stock received upon such exercise, and the Company will be entitled to a
deduction equal in amount.
The foregoing discussion is only a brief summary of the applicable Federal
income tax laws as in effect on this date and should not be relied upon as being
a complete treatment thereof. The Federal tax laws are complex, and they are
subject to legislative changes and new or revised judicial and administrative
interpretations at any time. In addition to the Federal income tax consequences
described herein, a Participant may also be subject to state and/or local income
tax consequences in the jurisdiction in which the Participant works and/or
resides.
The Board of Directors deems it to be in the best interests of the Company
that the amendments be approved in order to give the Committee greater
flexibility in awarding Participants Options affording them a stock interest
with the opportunity to grow with the Company. The Board recommends a vote in
favor of approval of the amendments to the 1994 Option Plan.
The affirmative vote of the majority of shares represented and entitled to
vote at the Annual Meeting is required to ratify the amendments to the 1994
Option Plan, except as described above.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION OF
THE AMENDMENTS TO THE 1994 OPTION PLAN - PROPOSAL 2.
PROPOSAL 3 -- RATIFICATION OF AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION THEREBY INCREASING
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 30,000,000 TO 50,000,000.
At the Annual Meeting, Stockholders will be asked to ratify an amendment to
the Company's Articles of Incorporation (the "Articles") proposed by resolution
of the Board of Directors which would increase the number of authorized shares
of Common Stock from 30,000,000 to 50,000,000.
15
<PAGE>
The Company's authorized capital stock currently consists of 30,000,000
shares of Common Stock and 10,000,000 shares of Preferred Stock. As of the
Record Date, 14,667,335 shares of Common Stock were outstanding, 600,000
shares were issuable under the 1994 Option Plan, an additional 1,000,000 shares
will be issuable under the 1994 Option Plan, assuming the approval of
Proposal 2, 5,503,626 shares were issuable upon exercise of options granted
outside of the Option Plan, 1,616,000 shares were issuable upon exercise of
Class B Warrants, 2,500,000 shares were issuable upon exercise of Class C
Warrants (including 1,616,000 Class C Warrants issuable upon exercise of Class B
Warrants), 185,625 shares were issuable upon the exercise of other warrants,
1,058,847 shares were issuable upon exercise of Series B Convertible Preferred
Stock, 4,357,742 shares were issuable upon exercise of Series C Convertible
Preferred Stock and 400,000 shares were issuable under the Company's Employee
Stock Bonus Plan. The number of shares of Common Stock issuable upon conversion
of the Series B and Series C Preferred Stock is variable based on the market
price of the Common Stock at the date of conversion. The conversion rights,
redemption provisions and other terms of the Preferred Stock are stated in the
Certificate of Designation for each series, which can be obtained from the
Company or as described below. See "Available Information." Accordingly, as of
the Record Date, if all outstanding options and warrants were exercised and
Preferred Stock were converted, 31,889,175 shares of Common Stock would be
outstanding. The Common Stock has no preemptive or other subscription
rights.
The additional shares of Common Stock proposed to be authorized would be
available and provide to the Board of Directors flexibility to meet future
capital requirements, including but not limited to, providing for the full
exercise of Series B and Series C Convertible Preferred Stock which is
convertible at a discount to the market price of Common Stock, to take advantage
of propitious market conditions, for issuance in connection with financing and
acquisition opportunities and for stock dividends or splits should the Board
decide that it would be desirable, in light of market conditions then
prevailing, to broaden the public ownership of, and to enhance the market for,
the Common Stock. Additional shares would also be available for issuance for
these and other purposes, which include employee benefit programs, at the
discretion of the Board of Directors of the Company, without the delays and
expenses ordinarily attendant upon obtaining further stockholder approval. To
the extent required by Nevada law, stockholder approval will be solicited in the
event shares of stock are to be issued in connection with a merger, but, in
general, the additional authorized shares may be issued by the Board of
Directors without stockholder approval. The issuance of such shares would
dilute the voting power and, in many cases, the liquidation value of the
outstanding shares. The Board of Directors has no present plans to authorize a
stock split or to enter into any acquisition agreement or any other transaction
involving the issuance of Common Stock.
The affirmative vote of the majority of shares represented and entitled to
vote at the Annual Meeting is required to ratify the amendment to the Articles,
except as described on page 1 above.
The proposed Amendment to the Articles is as follows:
"FOURTH: (a) The Corporation is authorized to issue sixty million
(60,000,000) shares, consisting of fifty million (50,000,000) shares of common
stock, $.001 par value ("Common Stock"), and ten million (10,000,000) shares of
preferred stock, $.001 par value ("Preferred Stock")...."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ADOPTION OF THE
AMENDMENT TO THE ARTICLES INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK - PROPOSAL 3.
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PROPOSAL 4 -- RATIFICATION OF THE APPOINTMENT OF
KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected by the Company's Board of Directors
as the Company's independent auditors for the year ending June 30, 1997. KPMG
Peat Marwick LLP has been the Company's independent auditors since 1986. It is
expected that a representative of KPMG Peat Marwick LLP will attend the Annual
Meeting. The representative will have an opportunity to make a statement if he
or she so desires to do so and will be available to respond to appropriate
questions. Proxies are being solicited by management in favor of ratifying the
appointment of KPMG Peat Marwick LLP.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFYING
THE APPOINTMENT OF KPMG PEAT MARWICK LLP - PROPOSAL 4
OTHER MATTERS
The Board of Directors is not aware of any business to be presented at the
Annual Meeting except the matters set forth in the Notice and described in this
Proxy Statement. Unless otherwise directed, all shares represented by Board of
Directors' Proxies will be voted in favor of the proposals of the Board of
Directors described in this Proxy Statement. If any other matters come before
the Annual Meeting, the persons named in the accompanying Proxy will vote on
those matters according to their best judgment.
EXPENSES
The entire cost of preparing, assembling, printing and mailing this Proxy
Statement, the enclosed Proxy and other materials, and the cost of soliciting
Proxies with respect to the Annual Meeting, will be borne by the Company. The
Company will request banks and brokers to solicit their customers who
beneficially own shares listed of record in names of nominees, and will
reimburse those banks and brokers for the reasonable out-of-pocket expenses of
such solicitations. The original solicitation of Proxies by mail may be
supplemented by telephone and facsimile by officers and other regular employees
of the Company, but no additional compensation will be paid to such individuals.
STOCKHOLDER PROPOSALS
No person who intends to present a proposal for action at a forthcoming
stockholders' meeting of the Company may seek to have the proposal included in
the proxy statement or form of proxy for such meeting unless that person (a) is
a record beneficial owner of at least $1,000 in market value of shares of Common
Stock, has held such shares
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for at least one year at the time the proposal is submitted, and such person
shall continue to own such shares through the date on which the meeting is held,
(b) provides the Company in writing with his name, address, the number of shares
held by him and the dates upon which he acquired such shares with documentary
support for a claim of beneficial ownership, (c) notifies the Company of his
intention to appear personally at the meeting or by a qualified representative
under Nevada law to present his proposal for action and (d) submits his proposal
timely. A proposal to be included in the proxy statement or proxy for the
Company's next annual meeting of stockholders, will be submitted timely only if
the proposal has been received at the Company's principal executive office no
later than September 15, 1997. If the date of such meeting is changed by more
than 30 calendar days from the date such meeting is scheduled to be held under
the Company's By-Laws, or if the proposal is to be presented at any meeting
other than the next annual meeting of stockholders, the proposal must be
received at the Company's principal executive office at a reasonable time before
the solicitation of proxies for such meeting is made.
Even if the foregoing requirements are satisfied, a person may submit only
one proposal with a supporting statement of not more than 500 words, if the
latter is requested by the proponent for inclusion in the proxy materials, and
under certain circumstances enumerated in the Securities and Exchange
Commission's rules relating to the solicitation of proxies, the Company may be
entitled to omit the proposal and any statement in support thereof from its
proxy statement and form of proxy.
AVAILABLE INFORMATION
Copies of the Company's Annual Report on Form 10-KSB for the year ended June
30, 1996, and each Quarterly Report, as filed with the Securities and Exchange
Commission, including the financial statements, can be obtained without charge
by stockholders (including beneficial owners of the Company's Common Stock), and
exhibits may be obtained at a reasonable charge, upon written request to John C.
Francis, the Company's Secretary, at 2700 Sunset Rd., Suite C-25, Las Vegas,
Nevada 89120. The Company's EDGAR filings, including exhibits, can be obtained
from the Commission's World Wide Web site: www.sec.gov.
BY ORDER OF THE BOARD OF DIRECTORS
LAS VEGAS, NEVADA JOHN C. FRANCIS
JANUARY 13, 1997. SECRETARY
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PROXY
AGRIBIOTECH, INC.
The undersigned, a holder of Common Stock of AgriBioTech, Inc., a Nevada
corporation (the "Company"), hereby appoints JOHNNY R. THOMAS and JOHN C.
FRANCIS, and each of them, the proxies of the undersigned, each with full power
to appoint their substitutes, and hereby authorizes them to attend, represent
and vote for the undersigned, all of the shares of the Company held of record by
the undersigned on December 31, 1996, at the Annual Meeting of Stockholders of
the Company to be held at the Company's executive offices at 2700 Sunset Rd.,
Suite C-25, Las Vegas, Nevada 89120, at 10:00 a.m. (Local Time), on February 24,
1997 and any adjournment(s) thereof, as follows:
1. ELECTION OF DIRECTORS, as provided in the Company's Proxy Statement:
[_] FOR all nominees listed below
[_] WITHHOLD AUTHORITY to vote for all the nominees listed below
(Instructions: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH OR OTHERWISE STRIKE OUT THE NOMINEE'S NAME BELOW)
Johnny R. Thomas/Scott J. Loomis/John C. Francis/Kent Schulze/Byron D. Ford
2. The ratification of the amendment to the Company's 1994 Employee Stock
Option Plan to (i) to increase the number of shares available to be granted
thereunder from 600,000 to 1,600,000 and (ii) to increase the maximum number
of options that may be awarded to any person under the 1994 Option Plan
during any two-year period to 300,000.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Amending the Company's Articles of Incorporation to authorize an increase in
the number of authorized shares of the Company's common stock to 50,000,000.
[_] FOR [_] AGAINST [_] ABSTAIN
<PAGE>
4. The ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending June 30, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS INDICATED HEREON. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE DIRECTORS NAMED IN PROPOSAL 1, FOR THE ADOPTION OF
--- ---
PROPOSALS 2, 3, AND 4 AND AS SUCH PROXIES SHALL DEEM ADVISABLE ON SUCH OTHER
BUSINESS AS MAY COME BEFORE THE MEETING. EACH MATTER ABOVE WAS PROPOSED BY THE
BOARD OF DIRECTORS.
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated January 13, 1997 relating to the
Annual Meeting, and the 1996 Annual Report to Stockholders and Quarterly Report
on Form 10-QSB for the quarter ended September 30, 1996.
-------------------------------
-------------------------------
Signature(s) of Stockholder(s)
The signature(s) hereon should correspond exactly with the name(s) of the
Stockholder(s) appearing on the Stock Certificate. If stock is jointly held,
all joint owners should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If signer
is a corporation, please sign the full corporate name, and give title of signing
officer.
Date:_____________________, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
AGRIBIOTECH, INC.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE. IT IS IMPORTANT THAT YOU VOTE.
(ii)
