<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 23, 1998
----------------
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 23, 1998, at Club Madrid at the Sunset
Station Hotel & Casino, 1301 West Sunset Road, Henderson, Nevada, to consider
and act upon the following matters:
(1) The election of a Board of Directors consisting of six (6) persons to
hold office for a one-year term and until their successors are duly elected
and qualified.
(2) The ratification of an amendment to the Company's 1994 Employee Stock
Option Plan increasing the number of options authorized for grant under the
plan from 1,600,000 to 3,600,000.
(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 50,000,000 to 75,000,000.
(4) The ratification of the appointment of KPMG Peat Marwick LLP as the
Company's auditors for the year ending June 30, 1998.
(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, 1997
will be entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof.
By Order of the Board of Directors,
John C. Francis, Secretary
Date: January 20, 1998
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.
<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 23, 1998, at Club
Madrid at the Sunset Station Hotel & Casino, 1301 West Sunset Road, Henderson,
Nevada 89014, 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, 3 and 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 and 4. The affirmative vote by holders of a majority of the Common
Stock issued and outstanding on the Record Date (as defined below) is required
for the adoption of Proposal 3.
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 be counted in determining the existence of a quorum and will be voted
"FOR" election of the nominees, "FOR" the ratification of appointment of the
auditors and "FOR" the adoption of the charter amendment increasing the number
of authorized shares of Common Stock, but will not be included in the vote
totals for the amendment to the Company's Employee Stock Option Plan.
On December 31, 1997 (the "Record Date"), there were 28,821,729 shares of
Common Stock outstanding. In addition, there were 900 shares of Series B
Convertible Preferred Stock outstanding and 200 shares of Series C Convertible
Preferred Stock outstanding convertible into an aggregate of 301,517 shares of
Common Stock. 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.
<PAGE>
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 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 1997 Annual Report to Stockholders, including
financial statements, are expected to be mailed commencing on or about January
20, 1998 to stockholders of record on December 31, 1997.
VOTING SECURITIES
December 31, 1997 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
28,821,729 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, 1997, 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) each Executive Officer 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>
PERCENTAGE
AMOUNT AND NATURE OF OF COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) STOCK OWNED
------------------------------------ ----------------------- -----------
<S> <C> <C>
Johnny R. Thomas(2)..................... 2,025,207 7.0%
John C. Francis(2)...................... 1,014,815 3.5%
Henry A. Ingalls(2)..................... 1,302,378(3) 4.3%
Scott J. Loomis......................... 1,174,207 4.1%
Kathleen L. Gillespie(2)................ 900,000(4) 3.0%
Kent Schulze(2)......................... 105,000(5) *
Thomas B. Rice(2)....................... 100,000(6) *
James W. Hopkins........................ 25,000(7) *
Richard P. Budd......................... -0-(8) *
State of Wisconsin Investment Board..... 1,500,000 5.2%
121 E. Wilson Street
Madison, WI 53702
All executive officers and directors as
a group (9 persons).................... 6,643,607(8)(9) 21.3%
</TABLE>
- --------
* Represents less than 1%.
(1) Includes all securities that can be acquired by such person within 60 days
from the date hereof upon the exercise of warrants or options. The
percentage ownership is determined based on 28,821,729 shares outstanding
as of December 31, 1997.
(2) This person's address is c/o the Company, 2700 Sunset Road, Suite C-25,
Las Vegas, Nevada 89120.
(3) Includes 1,225,000 shares issuable upon exercise of currently exercisable
options (725,000 for cash only), and 13,000 shares held by Mr. Ingalls'
minor child for which Mr. Ingalls disclaims beneficial ownership.
(4) Includes 900,000 shares issuable upon exercise of currently exercisable
options (450,000 for cash only). Excludes 150,000 shares underlying
options not currently exercisable.
(5) Includes 105,000 shares issuable upon exercise of currently exercisable
options, but excludes 320,000 shares underlying options not currently
exercisable.
2
<PAGE>
(6) Includes 100,000 shares issuable upon exercise of currently exercisable
options, but excludes 400,000 shares underlying options not currently
exercisable.
(7) Includes 25,000 shares issuable upon exercise of currently exercisable
options.
(8) Excludes 701,368 shares issued on January 6, 1998 in connection with the
Company's acquisition of Lofts Seed, Inc. and related entities. Mr. Budd
disclaims beneficial ownership of 1,298,632 shares owned by other former
shareholders, including the Richard P. Budd Irrevocable Living Trust, of
the acquired entities. Also excludes 20,000 shares issuable upon exercise
of options granted January 6, 1998 when Mr. Budd became a Director of the
Company including 10,000 that became exercisable upon grant. If the Lofts
Seed, Inc. acquisition had occurred December 31, 1997, Mr. Budd's
beneficial ownership would have been 711,368 or 2.3% of the 30,831,729
shares of Common Stock deemed to be outstanding pursuant to Rule 13d-
3(d)(1) under the Securities Exchange Act of 1934 and all executive
officers and directors as a group would have been 7,354,975 or 22.2%.
(9) Includes the shares underlying options included for Messrs. Ingalls,
Loomis, Schulze, Rice, Hopkins and Ms. Gillespie, respectively, in notes
(3)-(7) above.
3
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
The six (6) 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.
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......... 56 Chief Executive Officer and Director
Kent Schulze............. 53 President, Chief Operating Officer and Director
John C. Francis.......... 48 Vice President, Secretary and Director
Scott J. Loomis.......... 49 Vice President and Director
James W. Hopkins......... 62 Director(1)
Richard P. Budd.......... 56 Director(1)
</TABLE>
- --------
(1) Member of the Audit, Compensation and Stock Option Committees.
Johnny R. Thomas has served as Chief Executive Officer of the Company since
April 1, 1994, a director of the Company since September 30, 1993, and was
President of the Company from April 1, 1994 until December 31, 1997. He was
also President and a director of the Company's predecessor from its inception
in 1983 until June 30, 1992. 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.
Kent Schulze became President and Chief Operating Officer of the Company on
January 1, 1998. He has served as a director of the Company since May 8, 1996
and also as a consultant to the Company from June 1997 until December 31,
1997. Mr. Schulze is the President and co-founder of Access Plant Technology,
Inc., a technology transfer firm which he founded in April 1996. From April
1990 to March 1996, Mr. Schulze was President and Chief Executive Officer of
Northrup King Company, a seed developer and marketing 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 worldwide seed operations.
John C. Francis has served as Vice President, Secretary and a director of
the Company since April 1, 1994. He was the Chief Financial Officer of the
Company from April 1994 until April 1996. He was Vice President, Secretary,
Treasurer and a director of the Company's predecessor 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, Inc., a wholly-owned
subsidiary of FCI ("FCI Environmental") from January 1990 until March 31, 1994
and served as Director of Marketing of FCI Environmental from September 1,
1993 to December 31, 1993.
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; and a director of the Company's predecessor
from February 1988 and President from June 1992 until June 1994. He has served
as a director of
4
<PAGE>
FCI since June 1989 and as Chairman of the Board of FCI from August 1995 until
November 1997. He served as FCI's President from April 1994 until August 1995.
He has been a director of FCI Environmental since January 1990. Mr. Loomis has
been a licensed attorney in the State of Arizona since 1974.
James W. Hopkins has served as a director of the Company since January 1997
and also as a consultant to the Company since June 1997. Since July 1996, he
has served as a consultant to Agricultural Technology, an agricultural
consulting firm. Prior thereto, from December 1993, he served as Vice
President of Mycogen Corporation and General Manager of Mycogen Seeds. For
Mycogen Corporation, Mr. Hopkins worked on strategic alliances, joint
ventures, acquisitions and mergers and was responsible for all global seed
activities. For Mycogen Seeds he was responsible for the consolidation of four
autonomous operating companies. Between 1963 and 1992, Mr. Hopkins had a
variety of responsibilities with four different seed companies. He has
extensive experience in summer annual forage crops.
Richard P. Budd was elected a director of the Company on January 6, 1998
upon the Company's acquisition by merger of Lofts Seed, Inc. He served as the
Chief Executive Officer of Budd Seed, Inc. from 1985 and of Lofts Seed, Inc.
from June 1996 until both companies were acquired by the Company in January
1998. Mr. Budd has also been the Chief Executive Officer of Budd Services,
Inc. since 1964. Budd Services is a service company engaged in primarily
janitorial, landscape, security guard, and administrative support services,
and has entered into a management services agreement with the Company
effective January 1998. Mr. Budd is President of Syvco Aviation, Inc. and the
Vice Chairman of High Point University.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors held two meetings during Fiscal 1997 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 three standing committees of the Board of Directors, Audit,
Stock Option and Compensation Committees, which each consisted of Messrs. Kent
Schulze and James W. Hopkins in 1997. In January 1998, Richard P. Budd
replaced Kent Schulze on each committee. The Audit Committee met two times
during Fiscal 1997 and the Stock Option and Compensation Committee each met
once. Each of these Committees also conferred by telephone during Fiscal 1997.
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 interlocking 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.
The Stock Option Committee is charged with the administration of the
Company's grant of stock options.
5
<PAGE>
EXECUTIVE OFFICERS
The names and business backgrounds of Executive Officers of the Company who
are not Directors of the Company are:
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITIONS WITH THE COMPANY BECAME OFFICER
---- --- -------------------------- --------------
<S> <C> <C> <C>
Kathleen L. Gillespie... 44 Vice President, Seed Operations and Acquisitions 1994
Henry A. Ingalls........ 51 Vice President, Chief Financial Officer and Treasurer 1996
Thomas R. Rice.......... 51 Vice President, Director of Research 1998
</TABLE>
Kathleen L. Gillespie has served as Vice President of Seed Operations and
Acquisitions of the Company since November 29, 1994. Ms. Gillespie has 20
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, Inc. where, 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 the last 12 years.
Henry A. Ingalls has served as Vice President, Treasurer and Chief Financial
Officer of the Company since April 3, 1996. Mr. Ingalls worked for the
accounting firm of KPMG Peat Marwick LLP between 1969 and April 1, 1996, and
he was elected to the partnership in 1978. Mr. Ingalls has extensive
experience in public company auditing and public offerings.
Thomas R. Rice was elected Vice President, Director of Research of the
Company on January 1, 1998. Mr. Rice has over 20 years of experience in the
seed industry in both research and management. From 1976 to 1985, Mr. Rice
worked for Pfizer, Inc. where he served as senior research scientist, project
leader and manager. From 1985 to 1990, he served as Vice President, Director
of Research and Executive Vice President of DEKALB-Pfizer Genetics. From 1990
to 1993, Mr. Rice was the President and Chief Operating Officer of DEKALB
Plant Genetics and from 1993-1995 he served as the Senior Vice President,
Research of DEKALB Genetics Corp.
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, 1997, except that Messrs. Thomas,
Francis and Loomis each filed one late report concerning one transaction each.
6
<PAGE>
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, 1997 ("Fiscal 1997"), the fiscal year ended June 30, 1996 ("Fiscal
1996"), and the Nine-Month Period ended June 30, 1995 ("Fiscal 1995") by those
persons who served as Chief Executive Officer during Fiscal 1996 and any Named
Executive Officers who received compensation in excess of $100,000 during such
years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
----------------------------------- COMPENSATION
OTHER ------------
ANNUAL SHARES
NAME AND PRINCIPAL COMPENSATION UNDERLYING
POSITION YEAR SALARY ($) BONUS ($) ($)(1) OPTIONS (#)
- ------------------ ---- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Johnny R. Thomas....... 1997 $ 84,000 -0- $131,906(2) -0-
President and CEO 1996 $ 84,000 -0- -0- 1,000,000
1995 $ 63,000 -0- -0- -0-
Henry A. Ingalls....... 1997 $150,000 $30,000 $ 26,250(2) -0-
Vice President, CFO, 1996 $ 37,500(3) $ 7,500 $ 5,000 1,250,000
and Treasurer 1995 -0- -0- -0- -0-
Scott J. Loomis........ 1997 $ 84,000 -0- $165,000(2) -0-
Vice President 1996 $ 84,000 -0- -0- 1,000,000
1995 $ 63,000 -0- -0- -0-
John C. Francis........ 1997 $ 84,000 -0- $107,813(2) -0-
Vice President 1996 $ 84,000 -0- -0- 1,000,000
1995 $ 63,000 -0- -0- -0-
Kathleen L. Gillespie.. 1997 $ 84,000 -0- $200,000(4) -0-
Vice President 1996 $ 84,000 -0- -0- 1,250,000
1995 $ 49,000(5) -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.
(2) Includes the difference between the exercise price and the fair market
value of options (the "spread") on the date of exercise of in-the-money
options, but excludes the spread for options not in-the-money when
exercised.
(3) Mr. Ingalls became Vice President, Chief Financial Officer, and Treasurer
of the Company on April 3, 1996.
(4) Represents the sale of 200,000 options by Ms. Gillespie at $1.00 per
option.
(5) Ms. Gillespie became Vice President of Seed Operations and Acquisitions on
November 25, 1995.
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
On February 1, 1994, Scott Loomis entered into an employment agreement with
the Company and became Vice President on April 1, 1994. Mr. Loomis was
compensated at the rate of $7,000 per month until July 1,
7
<PAGE>
1997 when he agreed to reduce his salary to $55,000 per year. 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 will be 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. See "Certain Relationships and
Related Transactions."
On March 10, 1994, the Company entered into an employment agreement with
Johnny Thomas, commencing on April 1, 1994. The agreement contains
substantially the same terms as Mr. Loomis' above-described agreement. On July
1, 1997, Dr. Thomas agreed to reduce his salary to $60,000 per year.
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. On July 1, 1997, Mr. Francis agreed to
reduce his salary to $48,000 per year.
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 received
options to purchase 1,250,000 shares of Common Stock, exercisable at $2.00 per
share, which vest over six years, except that all such options are immediately
exercisable for cash. See "Stock 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' aggregate compensation 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 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 also received options to
purchase up to 1,250,000 shares of Common Stock, exercisable at $2.12 per
share vesting over five years, but immediately exercisable for cash. See
"Stock Options" below.
On November 18, 1997, the Company entered into an employment agreement with
Thomas B. Rice. The agreement's term runs from January 1, 1998 for four years.
Mr. Rice's salary begins at $120,000 and is subject to annual increases as
determined by the Compensation Committee. Mr. Rice also received options to
purchase up to 500,000 shares of Common Stock at prices ranging from $8.50 to
$10.00 per share vesting over four years.
On November 19, 1997, the Company entered into an employment agreement with
Kent Schulze. The agreement's term runs from January 1, 1998 for four years.
Mr. Schulze's salary begins at $187,500 and is subject to annual increases as
determined by the Compensation Committee. Mr. Schulze also received options to
purchase up to 400,000 shares of Common Stock at prices ranging from $9.25 to
$13.25 per share vesting over four years.
8
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The table below includes information regarding the value realized on option
exercises and the market value of unexercised options held by the executive
officers named in the Summary Compensation Table during the year ended June
30, 1997.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT FY IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE END (#) FY-END ($)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Johnny R. Thomas........ 1,000,000 $131,906(1) -0- -0-
Henry A. Ingalls........ 25,000 $ 6,250 1,225,000/0(2) $5,901,438/0
Scott J. Loomis......... 1,000,000 $165,000(1) -0- -0-
John C. Francis......... 1,000,000 $107,813(1) -0- -0-
Kathleen L. Gillespie... -0- $200,000(3) 900,000/150,000(4) $4,443,750/740,625
</TABLE>
- --------
(1) Includes the difference between the exercise price and the fair market
value of options (the "spread") on the date of exercise of in-the-money
options, but excludes the spread for options not in-the-money when
exercised.
(2) Of these options, 725,000 are currently exercisable only for cash.
(3) Represents the sale of 200,000 options by Ms. Gillespie at $1.00 per
option.
(4) Of these options, 450,000 are currently exercisable only for cash.
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 1997, 1996 or 1995. Beginning in January 1998,
the Company will match employee contributions to the 401(k) Plan up to 50% of
the first 4% of the employees compensation for employees whose base
compensation is $60,000 or less. For other employees, the Company's matching
will be limited to 50% of the first 2% of amounts contributed by the employee.
No matching contributions will be made for executive officers of the Company.
Currently Outstanding Options
The Company has established the AgriBioTech, Inc. 1994 Employee Stock Option
Plan (the "Plan"). The Plan is intended to provide the employees, directors,
independent contractors and consultants of the Company with an added incentive
to continue their services to the Company and to induce them to exert their
maximum efforts toward the Company's success. The Plan provides for the grant
of options to qualified directors, employees (including officers), independent
contractors and consultants of the Company to purchase an aggregate of
1,600,000 shares of Common Stock, but no more than 300,000 options may be
granted to any one person in
9
<PAGE>
any two-year period. Upon stockholder approval of Proposal 2 herein the number
of shares of Common Stock issuable upon exercise of options shall be increased
to 3,600,000 shares. The Plan is currently administered by the Stock Option
Committee of the Board of Directors. The Committee determines, among other
things, the persons to be granted options under the Plan, the number of shares
subject to each option and the option price.
The Plan allows the Company to grant incentive stock options ("ISOs"), as
defined in Section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code"), Non-Qualified Stock Options ("NQSOs") not intended to qualify
under Section 422(b) of the Code and Stock Appreciation Rights ("SARs";
collectively, "Options") at any time within 10 years from the date the Plan
was adopted. The exercise price of ISOs may not be less than the fair market
value of the Common Stock on the date of grant, provided that the exercise
price of ISOs granted to an optionee owning more than 10% of the outstanding
Common Stock may not be less than 110% of the fair market value of the Common
Stock on the date of grant. In addition, the aggregate fair market value of
stock with respect to which ISO's are exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000. Options shall
have a term of no more than ten years, except that ISOs granted to an optionee
owning more than 10% of the outstanding Common Stock shall have a term of no
more than five years and must be granted to and exercised by employees of the
Company (including officers). Options are not transferable, except upon the
death of the optionee.
At December 31, 1997, an aggregate of 1,098,750 options were outstanding
under the Plan, at prices ranging from $2.00 to $17.06 including 300,000
options to Kathleen L. Gillespie, a Vice President of the Company, 25,000
options to Kent Schulze, the President, Chief Operating Officer and a Director
of the Company and 25,000 options to an independent director of the Company.
An aggregate of 424,250 shares of Common Stock are issuable upon exercise of
options available for future grants under the Plan.
In addition, as of January 1, 1998, officers, key employees and consultants
of the Company held options to purchase an aggregate of 4,869,166 shares of
Common Stock outside of the Plan, exercisable for up to ten years ending in
2006, at prices ranging from $2.00 to $13.25 per share. Ms. Gillespie held
ten-year options outside of the Plan to purchase up to an aggregate of 750,000
shares of Common Stock outside of the Plan at $2.00 per share; Mr. Ingalls
held ten-year options outside of the Plan to purchase up to 1,225,000 shares
of Common Stock at $2.12 per share; Mr. Schulze held options outside of the
Plan to purchase up to an aggregate of 400,000 shares of Common Stock at
prices ranging from $9.25 to $13.25 per share; and Mr. Rice held options
outside of the Plan to purchase up to an aggregate of 500,000 shares of Common
Stock at prices ranging from $8.50 to $10.00 per share. Such options vest over
three to six-year periods, and Ms. Gillespie's and Mr. Ingalls' options are
immediately exercisable for cash. See "Certain Relationships and Related
Transactions" for information concerning the grant and exercise of 1,000,000
options to each of Messrs. Thomas, Francis and Loomis.
PERFORMANCE GRAPH
The following graph compares on a cumulative basis the yearly change,
assuming dividend reinvestment, from May 24, 1995, the date the Company's
Common Stock first began trading on the Nasdaq Small-Cap Market, through
December 31, 1997 in (a) the total shareholder return on the Company's Common
Stock with (b) the total return on the Russell 2000 Index and (c) the total
return on a selected peer group index (the "Peer Group"). The Russell 2000 has
been selected as the required broad entity market index. The Peer Group is an
index weighted by the relative market capitalization of the following four
companies: DEKALB Genetics Corp., Delta & Pine Land Co., Mycogen Corp., and
Pioneer Hi-Bred International Inc. The four companies comprising the Peer
Group were identified by the Company as those public companies whose
operations are concentrated in the seed industry.
10
<PAGE>
The graph below assumes that $100 had been invested in each of the Company,
the Russell 2000 Index, and the Peer Group.
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period PEER BROAD
(Fiscal Year Covered) AGRIBIOTECH GROUP MARKET
- --------------------- ----------- ------- --------
<S> <C> <C> <C>
Measurement Pt- May 24, 1995 $100 $100 $100
June 30, 1995 $126.67 $112.53 $105.19
June 30, 1996 $108.33 $161.57 $130.44
June 30, 1997 $185 $251.56 $151.74
December 31, 1997 $455 $319.49 $168.45
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 17, 1992, FiberChem, Inc. ("FCI") signed an agreement to sell all of
the capital stock of AgriBioTech, Inc., a Nevada corporation ("AgriBioTech"),
in four equal amounts to Johnny R. Thomas, then FCI's President; John C.
Francis, then FCI's Vice President; Scott J. Loomis, then a Director of FCI;
and Reesor G. Woodling, then a Director of AgriBioTech (the "Purchasers"). 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
AgriBioTech entered into an agreement whereby AgriBioTech 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, 1996 and 1997, the Company paid FCI $106,390
plus interest in each year.
In May, 1997, Dr. Thomas and Mr. Francis exercised 200,000 and 100,000 Class
C Warrants, respectively, at an exercise price of $7.50 per share. They each
gave a promissory note to the Company for the exercise price of $1,500,000 and
$750,000, respectively. The notes were paid by Dr. Thomas and Mr. Francis
subsequent to the end of Fiscal 1997.
In March 1996, Dr. Thomas, and Messrs. Francis and Loomis, officers of the
Company, were each granted options outside of the Plan to each purchase
1,000,000 shares of Common Stock at $3.00 per share. In May 1997, the
unexercised 2,680,000 options were exercised by these officers signing
promissory notes to the Company for an aggregate of $8,040,000. Payments on
these notes amounted to $1,800,000 received by the Company through June 30,
1997 and the balance was paid subsequent to June 30, 1997.
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" ALL THE
NOMINEES LISTED IN THE FOREGOING PROPOSAL 1.
PROPOSAL 2--AMENDMENT 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 and in February 1997 the
Company's stockholders ratified amendments to the 1994 Option Plan. At the
Annual Meeting, Stockholders will be asked to ratify an amendment to the
Company's 1994 Option Plan to increase the number of shares available to be
granted thereunder from 1,600,000 to 3,600,000. This increase will allow the
Company to continue to grant options to all new employees from new hires and
acquisitions.
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 570 persons and has 2
outside directors. The closing price of the Common Stock on December 31, 1997
was $17.06.
INCREASE IN SIZE OF 1994 OPTION PLAN
The 1994 Option Plan provides for the issuance of options to purchase an
aggregate of 1,600,000 shares of Common Stock. 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 $17.06 per share. 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
to 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 increase in
the number of shares available for grant under the 1994 Option Plan is
necessary to accommodate the number of employees added due to the Company's
recent acquisitions, as well as future acquisitions. The Company believes the
increased number will be sufficient to make grants to all employees that will
be added through the future acquisitions necessary for the Company to reach
its stated goal of having annualized revenues of approximately $500 million.
The Board of Directors believes that options granted under the 1994 Option
Plan, as well as outside 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. The
Company does not anticipate granting options under the 1994 Option Plan to
current or future executive officers. However, the Company intends to continue
to grant non-qualified stock options outside of the 1994 Option Plan to newly
hired employees, which grants are exempt from any limitation imposed by
Nasdaq.
NEW PLAN BENEFITS
The proposed amendment to the 1994 Option Plan confers no new benefits to
the executive officers named in the Summary Compensation Table (See "Executive
Compensation") or to any current Director. New benefits have not yet been
allocated to employees of the Company who are not officers or Directors.
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.
12
<PAGE>
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 James W. Hopkins and Richard P. Budd. 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 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 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.
13
<PAGE>
(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 other
than by reason of death, disability, for cause, or voluntary termination, a
Participant may exercise its ISOs at any time within three months after the
date of such termination. 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 or if the Participant
leaves employment voluntarily.
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
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.
14
<PAGE>
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. Each Participant is encouraged to consult with
his/her own tax advisors.
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. The Federal tax rate for long-
term capital gains is 20% for capital assets held longer than 18 months and
28% for capital assets held between 12 months and 18 months.
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.
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<PAGE>
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. 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 amendment 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 amendment to the 1994
Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION OF
THE AMENDMENT 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 50,000,000 TO 75,000,000.
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 50,000,000 to 75,000,000.
The Company's authorized capital stock currently consists of 50,000,000
shares of Common Stock and 10,000,000 shares of Preferred Stock. As of the
December 31, 1997 Record Date, 28,821,729 shares of Common Stock were
outstanding, 1,521,000 shares were issuable under the 1994 Option Plan, an
additional 2,000,000 shares will be issuable under the 1994 Option Plan,
assuming the approval of Proposal 2, 4,869,166 shares were issuable upon
exercise of options granted outside of the Option Plan, 100,000 shares were
issuable upon exercise of Class C Warrants, 237,713 shares were issuable upon
exercise of Series B Convertible Preferred Stock, 63,804 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 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 options and warrants were exercised and Preferred
Stock were converted, 38,013,412 shares of Common Stock would be outstanding.
In addition, 2,000,000 shares of the Company's Common Stock were issued on
January 6, 1998 in connection with the completion of the acquisition
16
<PAGE>
of Lofts Seed, Inc. and related entities. Furthermore, the Company has signed
letters of intent to acquire five separate companies under which the Company's
Common Stock would be issued as part of the purchase price. If all of these
acquisitions are consummated, up to approximately 1,350,000 shares of Common
Stock could be issued. 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 shares that could be utilized in connection
with the growth of the Company through acquisitions, to take advantage of
propitious market conditions, in connection with financing 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 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. To achieve its stated objectives, the Company anticipates
continuing its growth through acquisitions. Substantial amounts of Common
Stock are likely to be issued in connection with future acquisitions.
The affirmative vote of the majority of shares of Common Stock issued and
outstanding on the Record Date 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 eighty five million
(85,000,000) shares, consisting of seventy five million (75,000,000) 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.
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, 1998. 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.
17
<PAGE>
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 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 22, 1998. 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.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Quarterly Report on Form 10-Q for September 30, 1997.
AVAILABLE INFORMATION
Copies of the Company's Annual Report on Form 10-KSB for the year ended June
30, 1997, 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
John C. Francis
Secretary
Las Vegas, Nevada
January 20, 1998
18
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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, 1997, at the Annual Meeting of Stockholders
of the Company to be held at the Club Madrid at the Sunset Station Hotel &
Casino, 1301 West Sunset Road, Henderson, Nevada, at 10:00 a.m. (Local Time),
on February 23, 1998 and any adjournment(s) thereof, as follows:
1. Election of Directors, as provided in the Company's Proxy Statement:
FOR all nominees listed WITHHOLD AUTHORITY
below. [_] 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 [_] James W. Hopkins [_] Richard P. Budd
2. The ratification of the amendment to the Company's 1994 Employee Stock
Option Plan to increase the number of shares available to be granted thereunder
from 1,600,000 to 3,600,000.
[_] 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 from
50,000,000 to 75,000,000.
[_] FOR [_] AGAINST [_] ABSTAIN
4. The ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending June 30, 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
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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 20, 1998 relating to the
Annual Meeting and the 1997 Annual Report to Stockholders.
----------------------
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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: __________, 1998
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.
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