<PAGE>
United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1997.
Commission file number 0-19352
-------
AGRIBIOTECH, INC.
(Exact name of registrant as specified in its charter)
Nevada 85-0325742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 Sunset Road, Suite C-25, Las Vegas, Nevada 89120
(Address of principal executive offices)
(702) 798-1969
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
---- ----.
As of February 2, 1998, the registrant had 31,192,638 shares of Common
Stock, par value $.001 per share, issued and outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AGRIBIOTECH, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
------------ ----------
<S> <C> <C>
Currents assets:
Cash and cash equivalents $ 8,235,871 2,553,634
Accounts receivable, less allowance for doubtful accounts
of $861,019 at December 31, 1997 and $729,352 at June 30, 1997 14,241,620 17,474,887
Inventories 34,167,138 23,328,961
Notes receivable from sale of common stock - 9,990,000
Other 774,289 646,508
------------ ----------
Total current assets 57,418,918 53,993,990
Property, plant and equipment, net 21,713,245 17,864,052
Intangible assets, net of accumulated amortization 26,018,264 22,544,539
Investment in associated entity 1,064,616 567,235
Other assets 139,498 143,209
------------ ----------
Total assets $106,354,541 95,113,025
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
AGRIBIOTECH, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
LIABILITES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
------------- ------------
<S> <C> <C>
Current liabilities:
Short-term debt $ - 24,203,431
Current installments of long-term obligations 1,565,952 1,056,770
Accounts payable 14,597,325 10,601,813
Accrued liabilites 1,701,685 3,277,051
Amount due in connection with acquisition 1,600,000 7,300,000
------------- ------------
Total current liabilities 19,464,962 46,439,065
Long-term obligations, excluding current installments 5,274,206 2,667,609
Deferred income taxes 1,018,369 1,018,369
------------- ------------
Total liabilities 25,757,537 50,125,043
------------- ------------
Stockholders' equity:
Preferred stock, $.001 par value; authorized 10,000,000 shares;
issued and outstanding 1,100 shares at December 31, 1997
(aggregate liquidation preference of $1,275,101) and 1,100 shares
at June 30, 1997 (aggregate liquidation preference of $1,221,666) 1 1
Common stock, $.001 par value; authorized 50,000,000
shares; issued and outstanding 28,821,729 shares at
December 31, 1997 and 23,743,385 shares at June 30, 1997 28,822 23,743
Capital in excess of par value 93,601,742 49,439,319
Common stock to be issued in acquisition - 7,950,000
Accumulated (deficit) (13,033,561) (12,425,081)
-------------- ------------
Total stockholders' equity 80,597,004 44,987,982
-------------- ------------
Commitments, contingencies and subsequent events (note B)
Total liabilities and stockholders' equity $ 106,354,541 95,113,025
============== ============
</TABLE>
See accompanying ntoes to consolidated financial statements.
3
<PAGE>
AGRIBIOTECH, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six-month period Three-month period
ended December 31, ended December 31,
------------------ ------------------
1997 1996 1997 1996
----------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Net sales $63,814,861 20,941,341 23,356,755 13,288,170
Cost of sales 51,586,043 16,174,516 18,662,102 10,561,936
----------- ------------ ---------- ----------
Gross profit 12,228,818 4,766,825 4,694,653 2,726,234
Operating expenses 12,678,943 6,832,788 6,208,078 3,533,398
----------- ------------ ---------- ----------
(Loss) from operations (450,125) (2,065,963) (1,513,425) (807,164)
----------- ------------ ---------- ----------
Other income (expense):
Interest expense (1,110,071) (621,126) (401,711) (361,308)
Interest income 150,675 173,910 76,713 83,926
Other 801,041 39,209 445,403 (94,753)
----------- ------------ ---------- ----------
Total other income (expense) (158,355) (408,007) 120,405 (372,135)
----------- ------------ ---------- ----------
Net (loss) (608,480) (2,473,970) (1,393,020) (1,179,299)
Discount and imputed dividends on preferred stock 53,436 2,977,686 26,718 2,270,835
----------- ------------ ---------- ----------
Net (loss) attributable to common stock $ (661,916) (5,451,656) (1,419,738) (3,450,134)
=========== ============ ========== ==========
Shares of common stock used in computing
(loss) per common share:
Basic 25,905,412 10,808,746 26,737,594 12,511,810
Diluted 25,905,412 10,808,746 26,737,594 12,511,810
=========== ============ ========== ==========
Net (loss) per common share:
Basic $ (0.03) (0.50) (0.05) (0.28)
Diluted (0.03) (0.50) (0.05) (0.28)
=========== ============ ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
AGRIBIOTECH, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Preferred stock Common stock Capital in Common stock
------------------------- ------------------------ excess of to be issued
Shares Amount Shares Amount par value in acquisition
--------- ----------- ---------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1997 1,100 $ 1 23,743,385 $ 23,743 49,439,319 7,950,000
Common stock issued for:
Cash - - 1,500,000 1,500 17,623,500 -
Exercise of options - - 412,834 413 1,320,741 -
Exercise of warrants - - 2,085,625 2,086 14,804,789 -
Acquisitions - - 1,017,385 1,017 9,948,983 (7,950,000)
Reduction of indebtedness - - 62,500 63 499,937 -
Expenses of stock issuances - - - - (35,527) -
Net earnings - - - - - -
--------- ---------- ----------- --------- ---------- ------------
Balance at December 31, 1997 1,100 $ 1 28,821,729 $ 28,822 93,601,742 -
========= ========== =========== ========= ========== ============
<CAPTION>
Accumulated
(deficit) Total
----------- -----------
<S> <C> <C>
Balance at June 30, 1997 (12,425,081) 44,987,982
Common stock issued for:
Cash - 17,625,000
Exercise of options - 1,321,154
Exercise of warrants - 14,806,875
Acquisitions - 2,000,000
Reduction of indebtedness - 500,000
Expenses of stock issuances - (35,527)
Net earnings (608,480) (608,480)
---------- ------------
Balance at December 31, 1997 (13,033,561) 80,597,004
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
AGRIBIOTECH, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six-month period
ended December 31,
--------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (608,480) (2,473,970)
Adjustments to reconcile net (loss) to net cash
flows from operating activities:
Amortization 644,127 83,534
Depreciation 649,598 371,103
Equity in earnings of associated entity (479,881) (58,071)
Common stock for services - 65,010
Changes in assets and liabilities, excluding
effects of acquisitions:
Accounts receivable 4,041,336 493,821
Inventories (9,427,155) (6,129,219)
Other assets 124,565 (70,829)
Payables 3,212,284 5,664,836
Accrued liabilities (1,894,918) (509,688)
------------ -----------
Net cash flows from operating activities (3,738,524) (2,563,473)
------------ -----------
Cash flows from investing activities:
Additions to property, plant and equipment (1,885,991) (587,521)
Additions to intangible assets - (4,302)
Advances to associated entity (17,500) -
Acquisitions (6,000,000) (15,997,034)
------------ -----------
Net cash flows from investing activities (7,903,491) (16,588,857)
------------ -----------
Cash flows from financing activities:
Net proceeds (repayments) of short-term debt (24,203,431) 7,405,830
Additions to long-term debt 5,000,000 845,982
Repayments of long-term debt (1,979,819) (190,392)
Payments on amount due in connection with acquisition (5,200,000) -
Sale of preferred stock - 10,000,000
Sale of common stock 17,625,000 -
Exercise of options 1,321,154 3,024,054
Exercise of warrants 14,806,875 -
Redemption of preferred stock - (1,244,357)
Expenses of stock issuance (35,527) (1,380,201)
Payments on notes receivable from sale of stock 9,990,000 -
------------ -----------
Net cash flows from financing activities 17,324,252 18,460,916
------------ -----------
Net increase (decrease) in cash and cash equivalents 5,682,237 (691,414)
Cash and cash equivalents at beginning of period 2,553,634 2,522,309
------------ -----------
Cash and cash equivalents at end of period $ 8,235,871 1,830,895
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
AGRIBIOTECH, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six-month period
ended December 31,
------------------
1997 1996
----------- ----------
<S> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 1,168,027 613,053
=========== ==========
Non cash investing and financing activities:
Accrued costs of acquisition $ 100,000 835,000
Common stock issued to reduce indebtedness 500,000 -
Common stock issued in acquisition 2,000,000 -
=========== ==========
Summary of assets and liabilities acquired through acquisitions:
Cash $ - -
Accounts receivable 808,069 1,991,765
Inventories 1,411,022 8,778,624
Property, plant and equipment 2,612,800 4,693,197
Intangible assets 4,117,852 1,807,910
Other assets 248,635 676,111
Accounts payable and accrued expenses (1,002,780) (762,401)
Long-term and short-term debt (95,598) (353,172)
----------- ----------
Net assets acquired $ 8,100,000 16,832,034
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
AGRIBIOTECH, INC., and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
(Unaudited)
================================================================================
(A) Presentation of Unaudited Financial Statements
----------------------------------------------
AgriBioTech, Inc. ("ABT" or the "Company") is a vertically integrated
agricultural seed company specializing in developing, processing, packaging and
distributing varieties of forage (hay crops) and cool season turfgrass seeds.
The Company also distributes corn, soybean and other seeds as ancillary
products. Since January 1, 1995, the Company has followed a business strategy to
acquire established, regionally based seed companies with proprietary products
and established research, production and distribution channels in their
respective markets in order to consolidate and vertically integrate the forage
and turfgrass sectors of the seed industry.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The unaudited financial statements have been prepared in accordance with the
rules of the Securities and Exchange Commission and, therefore, do not include
all information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows, in conformity with generally
accepted accounting principles. The information furnished, in the opinion of
management reflects all adjustments (consisting primarily of normal recurring
accruals) necessary to present fairly the financial position, results of
operations and cash flows for the three-month and six-month periods ended
December 31, 1997 and 1996. The Company's business is subject to wide seasonal
fluctuations and, therefore, the results of operations for periods less than one
year are not necessarily indicative of results which may be expected for any
other interim period or for the year as a whole.
(B) Acquisitions
------------
The Company purchased substantially all of the assets of LaCrosse Seed
Corporation ("LaCrosse") effective July 1, 1997. The transaction was recorded
using the purchase method of accounting. The purchase includes cash, inventory,
accounts receivable, prepaid assets, fixed assets and intangible assets, less
accounts payable and certain assumed liabilities. The net purchase price was
paid through cash of $5 million paid at closing and 229,885 shares of ABT common
stock valued at $2 million. In addition, the Company paid each of the two
former principals $500,000 for covenants not to compete. Intangible assets
consist of covenants not to compete, trademark rights and goodwill.
During the year ended June 30, 1997, the Company consummated the acquisitions
described in note 1 of Notes to Consolidated Financial Statements in the
Company's Form 10-KSB for the year ended June 30, 1997. Since all consummated
acquisitions are included in the Company's consolidated results of operation for
the entire three-month and six-month periods ended December 31, 1997, pro forma
results of operations are the same as the actual amounts. Unaudited pro forma
results of operations assuming all acquisitions had occurred at the beginning of
the period presented, are as follows:
Six-month Three-month
period ended period ended
December 31, 1996 December 31, 1996
----------------- -----------------
Net sales $67,902,273 $27,592,110
Net (loss) (2,173,730) (2,279,656)
Net (loss) attributable to common stock (5,151,416) (4,550,491)
Net (loss) per common share - basic and
diluted (0.44) (0.34)
8
<PAGE>
AGRIBIOTECH, INC., and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
(Unaudited)
===============================================================================
On September 5, 1997, the Company signed a letter of intent to acquire through
merger all of the capital stock of Lofts Seed, Inc. and its affiliated
companies, Budd Seed, Inc. and Sunbelt Seeds, Inc. (collectively "Lofts").
Lofts is one of the premier turfgrass seed companies in the United States with
unaudited total assets at June 30, 1997 of approximately $23.4 million and, for
the twelve months ended June 30, 1997, net sales of approximately $74.7 million
and income before income taxes of approximately $4.0 million. The Company
completed this acquisition on January 6, 1998. The net purchase price was paid
through cash of approximately $16.7 million paid at closing and 2,000,000 shares
of ABT common stock valued at $17 million, based on the price when the terms of
the agreement were reached. The transaction will be recorded using the
purchase method of accounting.
On October 6, 1997, the Company signed a letter of intent to acquire all of the
ownership interests of Seed Corporation of America, Green SCA Corp. and Green
Seed Company Limited Partnership, which are companies with common ownership
("SeedCo/Green"). SeedCo/Green are major distributors of forage and turfgrass
seed in the eastern United States with unaudited total assets at June 30, 1997
of approximately $7.8 million and, for the twelve months ended June 30, 1997,
net sales of approximately $38.7 million and income before income taxes of
approximately $0.5 million. The Company completed this acquisition on January
9, 1998. The net purchase price was paid through cash of approximately $10
million. The transaction will be recorded using the purchase method of
accounting.
In November 1997, December 1997 and January 1998, the Company signed letters of
intent to acquire substantially all of the business assets and operations of
Discount Farm Center, Inc., Kinder Seed, Inc., Las Vegas Fertilizer Co., Inc.,
The Ohio Seed Company, Inc., VanDyke Seed Company, Inc., Willamette Seed Co. and
Zajac Performance Seeds, Inc. which are unaffiliated companies. These companies
are regional producers and distributors of forage and turfgrass seed in various
areas of the United States with unaudited total assets at December 31, 1997 of
approximately $56.7 million and, for the six month period ended December 31,
1997, had net sales of approximately $42.2 million and a loss before income
taxes of approximately $0.8 million. The Company anticipates completing these
transactions in March through May of 1998. The net purchase price will be paid
through cash of approximately $32 million and approximately 1.5 million shares
of ABT common stock valued at approximately $18 million based on the prices when
the terms of the agreements were reached. These acquisitions will be recorded
using the purchase method of accounting.
(C) Capital Stock
-------------
In December 1997, the Company issued 1,500,000 shares of its common stock to the
State of Wisconsin Investment Board for $11.75 per share aggregating
$17,625,000. Between July 1, 1997 and December 31, 1997, 1,900,000 of the
Company's Class C Warrants were exercised at their stated conversion price of
$7.50 and 185,625 other warrants were exercised at their stated conversion price
of $3.00 per share. In addition, options for 412,834 shares of the Company's
common stock were exercised at their stated exercise prices ranging from $1.81
to $6.94.
Between July 1, 1997 and December 31, 1997, the Company increased its
outstanding stock options through grants to new employees, options for all
employees (including former owners) of acquired entities who continued
employment with the Company, and options for the former owners of LaCrosse in
connection with their covenant not to compete. These grants aggregated xx
shares of the Company's common stock from the Company's Employee Stock Option
Plan and xx shares outside of this plan at prices ranging from $xx to $xx. The
exercise price of all options granted equaled or exceeded the quoted market
price at the date the options were granted.
When the Company issued its Series B Convertible Preferred Stock in April 1996
and its Series C Convertible Preferred Stock in September 1996 (collectively,
the "Preferred Stock"), the Company
9
<PAGE>
AGRIBIOTECH, INC., and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
(Unaudited)
================================================================================
determined the economic substance of the Preferred Stock was equivalent to
common stock. This conclusion was reached because the documents authorizing the
Preferred Stock provide that the holders of the Preferred Stock are not entitled
to receive dividends, the Company has no requirements to make any cash payments
with respect to the Preferred Stock, and the ultimate satisfaction of the
Preferred Stock would be through conversion to common stock, either by the
election of the holders or automatically at the future date provided by the
underlying documents. Accordingly, the Company did not reflect any accounting
consequences of the conversion features of the Preferred Stock or account for
dividends on the Preferred Stock. In March 1997, an announcement was made at a
meeting of the Financial Accounting Standards Board's ("FASB") Emerging Issues
Task Force (Topic No. D-60) setting forth the position of the staff of the
Securities and Exchange Commission (the "Staff") regarding securities containing
conversion features allowing for conversion into common stock at a discount from
future quoted market prices. The Staff stated that an allocation of the proceeds
from the issuance of the securities should be made to the conversion feature and
the resulting discount is analogous to a dividend that should be recognized as a
return to the holders of the securities over the period between issuance and
when the securities first become convertible. The Staff also stated that
affected financial statements should be restated. Although the Preferred Stock
will ultimately be converted into common stock, the Company has applied the
Staff's position for the three-month and six-month periods ended December 31,
1997 and has restated its financial statements for the three-month and six-month
periods ended December 31, 1996. The application of the Staff's position results
in discounts of none during the three-month and six-month periods ended December
31, 1997 and $2,030,910 and $2,577,913 during the three-month and six-month
periods ended December 31, 1996. In addition, imputed dividends of $26,718 and
$53,436 were recorded during the three-month and six-month periods ended
December 31, 1997 and $239,925 and $399,773 were recorded during the three-month
and six-month periods ended December 31, 1996. Such amounts are reflected in net
loss attributable to common stock (on which loss per share is computed). This
resulted in the net loss attributable to common stock being increased by $26,718
to $1,419,738 and $53,436 to $661,916 for the three-month and six-month periods
ended December 31, 1997 and by $2,270,835 to $3,450,134 and $2,977,686 to
$5,451,656 for the three-month and six-month periods ended December 31, 1996. It
also changed net loss per common share from $0.09 to $0.28 for the three-month
period ended December 31, 1996 and from $0.23 to $0.50 for the six-month period
ended December 31, 1996. The discounts and imputed dividends were attributed to
capital in excess of par value and, therefore, resulted in no change in
stockholders' equity. Applying the Staff's position and the restatement of 1996
periods had no impact on the Company's consolidated balance sheets, consolidated
statements of cash flow, or the net sales, costs, expenses, and net loss shown
on the Company's consolidated statements of operations.
(D) Earnings per Share
------------------
The FASB has issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share, which specifies a new accounting standard for the
computation, presentation, and disclosure requirements for earnings per share
and is required to be applied retroactively upon initial adoption its effective
date, which for the Company is in connection with the quarter ended December 31,
1997. Accordingly, the Company has applied SFAS No. 128 herein. The Company
is required to make a dual presentation on the face of the income statement of
"basic" earnings per share, based on the average number of common shares
outstanding during each period without any dilution, and "diluted" earnings per
share, reflecting all dilution from contingently issuable securities. Due to
losses in the periods presented, contingently issuable shares, consisting of
options, warrants, and convertible preferred stock, are anti-dilutive and have
been excluded. Therefore, the application of SFAS No. 128 did not have a
significant impact on the Company's computation of earnings per share for the
periods presented.
10
<PAGE>
AGRIBIOTECH, INC., and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
(Unaudited)
================================================================================
(E) Short-term Debt
---------------
In conjunction with consummating the acquisitions of Lofts and SeedCo/Green
described above, the Company obtained a $10 million bridge loan from the Bank of
America ("BofA"). This loan bears interest at xx% above the prime rate and is
due on March 31, 1998. In addition, the Company assumed the existing credit
facilities of Lofts and SeedCo/Green. These include revolving lines of credit
aggregating approximately $33 million and term date aggregating approximately $9
million. These facilities expire in June 1998 and March 1999 and bear interest
at 1.25% to 1.5% above the prime rate. The Company is currently working with
BofA to refinance the Company's existing $25 million revolving line of credit
that expires March 31, 1998, its $5 million term loan, and the above bridge
loan, as well as the facilities assumed in the Lofts and SeedCo/Green
acquisitions. The Company anticipates obtaining a syndicated credit facility
that would be adequate for the Company's current revolving line of credit and
term credit needs, including those associated with the acquisitions not yet
consummated.
-------------------------
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The following discussion and analysis of financial condition and results of
operation should be read in conjunction with the consolidated financial
statements and notes thereto of the Company included elsewhere herein. The
Company is a vertically integrated agricultural seed company specializing in
developing, packaging, processing and distributing varieties of forage (hay
crops) and cool season turfgrass seeds. The Company also distributes corn,
soybean and other seeds as ancillary products. The Company commenced an
acquisition program (the "Acquisition Program") in January 1995 and has grown
significantly through its business strategy of acquiring reputable, regionally
based seed companies with proprietary products and established research,
production, processing and distribution channels in their respective markets.
These acquisitions, as well as start-up operations, are more fully discussed in
Note 1 of Notes to Consolidated Financial Statements in the June 30, 1997 Form
10-KSB and Note B of Notes to Consolidated Financial Statements herein. The
results of operations of the acquired companies are included in the Company's
consolidated results beginning with the effective date of the acquisition in
accordance with the purchase method of accounting. Completed acquisitions that
have effective dates subsequent to July 1, 1996 and therefore impact
comparability of the financial information presented herein are as follows:
<TABLE>
<CAPTION>
Effective
Name Date
---- ---------
<S> <C>
W-L Research, Inc. and Germain's Inc. September 1, 1996
E.F. Burlingham & Sons April 1, 1997
The Sexauer Company April 1, 1997
Olsen Fennell Seeds, Inc. June 1, 1997
LaCrosse Seed Corporation July 1, 1997
</TABLE>
In January 1998, the Company completed the acquisitions of Lofts Seed, Inc. and
its affiliated companies, Budd Seed, Inc. and Sunbelt Seeds, Inc. (collectively
"Lofts") and Seed Corporation of America, Green SCA Corp. and Green Seed Company
Limited Partnership, which are companies with common ownership ("SeedCo/Green").
The acquisitions of Lofts and SeedCo/Green are both effective January 1, 1998.
In addition, the Company has signed letters of intent to acquire seven other
companies. These acquisitions are expected to be completed in February through
April of 1998 and to be effective at various times during the quarter ending
March 31, 1998.
The acquisitions and other operations being included in the Company's
consolidated financial statements beginning with each of their effective or
start-up dates significantly affects the meaningfulness of comparisons drawn
between periods. Furthermore, the seed business is subject to wide seasonal
fluctuations and, therefore, the results of periods less than twelve months are
not necessarily indicative of results which may be expected for an entire year.
The Company's recent and pending acquisitions have sales that are more
concentrated in turfgrass seeds compared to earlier acquisitions that were more
concentrated in forage seeds. This change in product mix is expected to reduce
the variability associated with seasonality in that turfgrass seed operations
historically have large selling seasons in the spring and fall whereas the
selling season of forage operations is primarily in the spring. However,
quarterly operating results will continue to fluctuate depending on the timing
of future acquisitions and the relative magnitude of forage and turfgrass seed
sales.
The statements discussed herein include forward looking statements that involve
a number of risks and uncertainties. These include the Company's historical
lack of profitability, need to manage its growth, intense competition in the
seed industry, completion of pending acquisitions, seasonality of quarterly
results, and other risks detailed from time to time in the Company's filings
with the Securities and Exchange Commission.
The above factors may have significant impact on the following discussion and
analysis and should be considered as part of it.
12
<PAGE>
Liquidity and Capital Resources
The Company had working capital of $37,953,956 at December 31, 1997, as compared
to $7,554,925 at June 30, 1997. The December 31, 1997 financial information
reflects the acquisition of LaCrosse Seed Corporation, effective July 1, 1997.
To finance acquisitions and ongoing operations, the Company has raised
significant amounts of additional equity capital. During the six-months ended
December 31, 1997 (the "Fiscal 1998 Six-Month Period"), the Company received
$17,625,000 from the sale of 1,500,000 shares of its common stock to the State
of Wisconsin Investment Board and $16,128,029 from the exercise of options and
warrants to acquire the Company's common stock. The Company also received
$9,990,000 in payments on notes receivable at June 30, 1997, from the exercise
of options and warrants prior to June 30, 1997. In early January 1998, the
Company paid cash of approximately $27 million in consummating the acquisitions
of Lofts and SeedCo/Green.
At June 30, 1997, the Company had a $22 million line of credit with Bank of
America ("BofA"). Borrowings under this line of credit are limited to 70% of
eligible accounts receivable and 50% of eligible inventory. At June 30, 1997,
the Company also had a $4 million term note outstanding. The note was repayable
in July and August 1997 and was repaid when due. In August 1997, the revolving
line of credit was increased to $25 million and the Company received a $5
million term loan from BofA that bears interest at the bank's reference rate
plus 0.5% and is repayable over five years. At December 31, 1997, no amounts
were outstanding on the revolving line of credit and the term loan had been
fully advanced.
In conjunction with consummating the acquisitions of Lofts and SeedCo/Green, the
Company obtained a $10 million bridge loan from the BofA that is due on March
31, 1998. In addition, the Company assumed the existing credit facilities of
Lofts and SeedCo/Green. These include revolving lines of credit aggregating
approximately $33 million and term debt aggregating approximately $9 million
that expire in June 1998 and March 1999. The Company is currently working with
BofA to refinance the Company's existing $25 million revolving line of credit
that expires March 31, 1998, its $5 million term loan, and the above bridge
loan, as well as the facilities assumed in the Lofts and SeedCo/Green
acquisitions. The Company anticipates obtaining a syndicated credit facility
that would be adequate for the Company's current revolving line of credit and
term credit needs, including those associated with acquisitions not yet
consummated.
The seed business is subject to wide seasonal fluctuations which result in
significant increases in the level of inventory prior to heavier selling seasons
and related higher levels of accounts receivable following such sales. In
addition, industry practice dictates a significant amount of sales are made with
extended terms. The seed business can also be significantly impacted by the
weather, which can alter the timing of seed sales. Therefore, it is possible
that the Company may need to seek additional financial resources to finance
ongoing operations. The Company believes adequate financial resources will be
available to close its pending acquisitions. However, the Company expects that
it will need to obtain additional equity and/or debt financing in order to
continue its Acquisition Program beyond acquisitions that are currently pending.
During the Fiscal 1998 Six-Month Period, the Company had net negative cash flows
from operating activities of $3,738,524 compared to net negative cash flows from
operating activities of $2,563,473 during the six-month period ended December
31, 1996 (the "Fiscal 1997 Six-Month Period"). The Fiscal 1998 Six-Month Period
reflects the Company's net loss of $608,480, adjusted for non-cash operating
items and changes in operating assets and liabilities. During the Fiscal 1998
Six-Month Period, the Company had net negative cash flows from investing
activities of $7,903,491 compared to net negative cash flows from investing
activities of $16,588,857 in the Fiscal 1997 Six-Month Period, primarily from
acquisitions and additions to property, plant and equipment. During the Fiscal
1998 Six-Month Period, the Company had net cash flows from financing activities
of $17,324,252, primarily due to the financing sources stated above offset by a
net reduction of short-term debt of $24,203,431 and reductions in amounts due in
connection with acquisitions of $5,200,000. Cash flows from financing
activities of $18,460,916 during the Fiscal 1997 Six-Month Period resulted
primarily from the issuance of convertible preferred stock, net of redemptions,
proceeds from the exercise of options and increases in short-term debt. These
cash flows resulted in a increase in cash of $5,682,237 during the Fiscal 1998
Six-Month Period and a decrease in cash of $691,414 during the Fiscal 1997 Six-
Month Period.
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<PAGE>
As a result of the acquisitions completed to date, the Company currently has
several different data processing systems. These systems were implemented for
the individual operating units that were subsequently acquired by the Company.
The Company has made a preliminary assessment of the impacts on these systems of
reaching the year 2000. While some of these systems will accommodate the year
2000, others will not. The Company currently believes, those systems not
currently compliant with the year 2000 could be modified or replaced with
compliant systems of similar capabilities, including compliant systems currently
owned by the Company, for less than $300,000. However, the Company does not
anticipate actually spending money to alter these systems, since the Company is
in the process of making an overall assessment of its data processing
capabilities with the anticipation that all existing data processing systems
will be replaced prior to the year 2000 with a common platform that will be
compliant with the year 2000. Until the Company completes its assessment, it is
not able to accurately estimate the cost of replacing its current data
processing systems, but the amount will likely be significant.
Results of Operation
Selected information concerning the results of operations is summarized as
follows:
<TABLE>
<CAPTION>
Six-Month Period Three-Month Period
Ended December 31, Ended December 31,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $63,814,861 20,941,341 23,356,755 13,288,170
Gross profit 12,228,818 4,766,825 4,694,653 2,726,234
Percentage of net sales 19.2% 22.8% 20.1% 20.5%
Operating expenses 12,678,943 6,832,788 6,208,078 3,533,398
Percentage of net sales 19.9% 32.6% 26.6% 26.6%
</TABLE>
The increases in the dollar amounts of the above items are primarily due to the
Company's Acquisition Program described above which results in certain
operations not being included for the entire time periods listed above.
Furthermore, companies acquired since July 1, 1996 have generally been larger
and more profitable than those acquired prior to that date.
[During the Fiscal 1998 Six-Month Period, the Company's net sales was adversely
impacted by the recent economic conditions in the Pacific rim countries. Both E.
F. Burlingham & Sons and Olsen Fennell Seeds, Inc. have significant sales to
customers in the Pacific rim. Sales to these customers were $xx in the Fiscal
1998 Six-Month Period compared to $xx in the Fiscal 1997 Six-Month Period. In
addition, weather conditions in the areas that grow a significant amount of
alfalfa seed that is sold for planting in very warm climates resulted in a
relatively small crop being harvested in 1997. This resulted in reduced amounts
of seed available for sale in the Fiscal 1998 Six-Month Period. Weather in the
United States has been significantly impacted by a "El Nino" weather pattern.
The Company's business has not been significantly impacted by this to date but
it is possible that sales could be impacted by adverse weather conditions in the
future that could influence planting patterns throughout the Company's service
areas.]
The increase in the amount of gross profit is due to the acquisitions as
described above. The decrease in the gross profit percentage is primarily due to
a significant change in the mix of products sold resulting from recent
acquisitions which have a higher percentage of turfgrass seed sales that have
historically commanded lower margins than forage seeds. Many turfgrass seed
companies use their suppliers, who are typically large farmers that grow seed,
to also clean, process, package, store, and finance the seed prior to purchase.
This results in lower margins being captured by the turfgrass seed companies.
The sales of the recently acquired E.F. Burlingham & Sons and Olsen Fennell
Seeds, Inc., aggregating approximately $26.7 million during the 1998 Six-Month
Period, were primarily turfgrass seeds at relatively low margins compared to
forage seed sales. The Company's goal is to raise gross margins over the next
several years by consolidation of the forage and
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<PAGE>
turfgrass sectors of the seed industry, vertically integrate its operations, and
shift its product lines from primarily public varieties (commodities) to
proprietary (value added) products.
To accomplish the Company's business strategy, it has been necessary to build
its operational infrastructure ahead of revenue growth. As revenue continues to
grow, operating expenses as a percentage of sales is expected to decrease due to
the spreading of the infrastructure costs over a larger sales base. This ratio
is expected to continue to decline as revenue growth continues to exceed growth
in expenses and operating synergies occur through integration of the acquired
companies into cohesive units.
The major components of operating expenses are personnel costs, occupancy
expense, vehicle and shipping expenses, outside services, travel and
advertising, all of which increased substantially in the current year compared
to the prior year. These increases are primarily due to the seed operations of
new acquisitions. After acquisition, the Company has been able to significantly
reduce expenses, as compared to historical operations prior to the effective
date of some acquisitions, as a result of operating efficiencies. For example,
the Company has combined what were historically six separate operations into
three operations. The major components of operating expenses were as follows:
<TABLE>
<CAPTION>
Six Month Period Three-Month Period
Ended December 31, Ended December 31,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Personnel costs $6,706,394 3,648,191 3,248,004 2,070,644
Occupancy expenses 2,005,506 1,384,257 935,955 743,744
Vehicle and shipping 661,291 288,179 325,965 152,937
Outside services 458,586 340,775 181,726 179,365
Travel 504,070 337,513 218,695 207,720
Advertising and promotion 506,999 272,916 236,796 75,497
</TABLE>
Research and development expenditures were $462,166 in the three-month period
ended December 31, 1997 (the "Fiscal 1998 Three-Month Period") and $919,497 in
the Fiscal 1998 Six-Month Period compared to $284,945 and $378,834 in the prior
year, substantially all of which were attributable to W-L Research, Inc., E.F.
Burlingham & Sons and Olsen Fennell Seeds, Inc., all of which have major
research and development programs. As the Company transforms its forage and
turfgrass seed businesses to proprietary products with increased gross margins,
the Company expects research and development expenses as a percentage of sales
will continue to increase and to eventually be similar to public companies in
the other proprietary seed sectors.
The Company's interest expense increased to $401,711 in the Fiscal 1998 Three-
Month Period and $1,110,071 in the Fiscal 1998 Six-Month Period compared to
$361,308 and $621,126 in the prior year. This was primarily due to increasing
the Company's line of credit plus additional borrowings to finance its growth.
Interest expense also includes imputed interest of $161,233 in the Fiscal 1998
Six-Month Period compared to $201,824 in the Fiscal 1997 Six-Month Period to
account for the period of time between the effective and closing dates of the
Company's acquisitions.
Net loss for the Company was $1,393,020 for the Fiscal 1998 Three-Month Period
and $608,480 for the Fiscal 1998 Six-Month Period compared to a net losses of
$1,179,299 and $2,473,970 in the prior year as a result of the items discussed
above. Average common shares outstanding used in computing loss per share were
26,737,594 during the Fiscal 1998 Three-Month Period and 25,905,412 for the
Fiscal 1998 Six-Month Period compared to 12,511,810 and 10,808,746 in the prior
year. The increase in average common shares outstanding reflects additional
shares issued, primarily for cash, acquisitions, options, warrants, and
conversions of preferred stock.
As discussed in note C of Notes to the Consolidated Financial Statements, the
Company recently became aware of a position taken by the staff of the Securities
and Exchange Commission regarding securities, such as the Company's convertible
preferred stock, containing conversion features allowing for conversion into
common stock at a discount from future quoted market prices. Application of
this position required the Company to restate its financial statements to
allocate an amount to the conversion feature and to account for it as a return
to the holders of the securities, as well as to impute dividends on the
convertible preferred stock. This resulted in the net loss attributable
15
<PAGE>
to common stock (on which loss per share is computed) being increased by $26,718
to $1,419,738 for the Fiscal 1998 Three-Month Period and by $53,436 to $661,916
for the Fiscal 1998 Six-Month Period compared to being increased by $2,270,835
to $3,450,134 in the three-month period ended December 31, 1996 (the "Fiscal
1997 Three-Month Period") and by $2,977,686 to $5,451,656 in the Fiscal 1997
Six-Month Period. In addition, net loss per common share changed from $0.09 to
$0.28 for the Fiscal 1997 Three-Month Period and from $0.23 to $0.50 for the
Fiscal 1997 Six-Month Period. Applying this position and the restatement of 1996
periods had no impact on the Company's consolidated balance sheets, consolidated
statements of cash flow; the net sales, costs, expenses, and net loss shown on
the Company's consolidated statements of operations.
Furthermore, as discussed in note D of Notes to Consolidated Financial
Statements, the Company has applied Statement of Financial Accounting Standards
No. 128 that required a retroactive change in the presentation of earnings per
share upon initial adoption. Such statement did not have a significant impact
on the Company's computation of earnings per share.
Inflation
Management does not consider that inflation has had a significant effect on the
Company's operations to date. The cost of seed products is largely affected by
seed yields and alternative crop prices, which have not generally been greatly
impacted by inflation. However, there has been some upward movement in the cost
of goods sold as a result of worldwide shortages of crops such as corn and
wheat. The costs which are normally impacted by inflation, such as wages,
transportation and energy, are a relatively small part of the Company's total
operations. However, the Company remains subject to possible significant
inflation in Mexico, Argentina and other foreign countries.
Impacts of Accounting Standards not yet Adopted
The impacts of recently adopted accounting standards is discussed in Note 2 of
Notes to Consolidated Financial Statements in the Company's Form 10-KSB for the
year ended June 30, 1997.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On February 9, 1996, Jonathan R. Curshen commenced a lawsuit in the United
States District Court, Middle District of Florida, against the Company, John C.
Francis and Johnny R. Thomas, officers of the Company, and Tammie Winfield (a
shareholder). The plaintiff sought unspecified compensatory and punitive
damages based upon an alleged repudiation of an agreement to sell plaintiff
shares of common stock of the Company. The Company and the other defendants
denied the allegations. In March 1997, the Company's motion to dismiss this
lawsuit was granted by the court. The case was closed on July 17, 1997.
However, on July 25, 1997, the plaintiff filed a Motion for Reconsideration
requesting the court to re-open the case. On December 31, 1997, the court
denied the motion and reinstated the earlier dismissal.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Employment Agreement dated November 18, 1997 by and between
Thomas B. Rice and AgriBio Tech, Inc.
10.2 Employment Agreement dated November 19, 1997 by and between
Kent Schulze and AgriBio Tech, Inc.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company has filed reports on Form 8-K during the quarter for
which this Report is filed for October 22, 1997, reporting under
Item 2 the acquisition of LaCrosse Seed Corporation and for
December 1, 1997, reporting under Item 5 the signing of a
definitive agreement for the acquisition of Lofts Seed, Inc. and
its affiliates.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AGRIBIOTECH, INC.,
February 13, 1998 By: /s/ Henry A. Ingalls
- ----------------- -------------------------
Date Henry A. Ingalls,
Vice President/CEO
17
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT sets forth the agreement reached the 18th day of
November, 1997, but based on ongoing negotiations since September 9th when the
options were priced at market, by and between THOMAS B. RICE (hereinafter
referred to as "Employee") and AgriBioTech, Inc., a Nevada Corporation
(hereinafter referred to as "Corporation").
WITNESSETH
WHEREAS, the Corporation desires to employ the Employee; and
WHEREAS, the Employee desires to accept such employment with the
Corporation; and
WHEREAS, the Employee and the Corporation desire to set forth their
employment relationship in a written agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants herein
set forth, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follow:
ARTICLE 1.00 - EMPLOYMENT
1.01 EMPLOYMENT. The Corporation hereby offers to employ the Employee upon
the terms and conditions hereinafter set forth and the Employee accepts such
offer and agrees to abide by the terms and conditions hereof, and the terms and
conditions of the Corporation's and its affiliated corporations' Articles of
Incorporation, Bylaws and Employee Manual except as otherwise set forth herein.
The Employee shall be considered a Regular Employee from the effective date of
employment, i.e., not a Probationary Employee.
1.02 DUTIES. Employee's title shall be Vice President, Director of
Research. Employee shall report directly to the President of the Corporation.
Employee shall perform all services reasonably required by the Corporation in
furtherance of the Corporation's business purposes as determined, from time to
time, by the Board of Directors of the Corporation. The Employee will work only
for AgriBioTech, Inc. and its subsidiaries, as may be needed except as may be
mutually agreed by Employee and Corporation and not except for limited Access
Plant Technology responsibilities as a consultant. Employee may retain his
ownership in Access Plant Technology and said ownership shall not be considered
a conflict of interest. The Chief Executive Officer or an unaffiliated Board
member shall sign off on all agreements between Corporation and Access Plant
Technology in order to avoid potential conflicts, while enabling corporation to
use Access Plant Technology services where beneficial. In addition and as part
of his duties hereunder, the Employee shall, if elected to such position, serve
as a director of the Corporation.
ARTICLE 2.00 - TERM AND TERMINATION
2.01 TERM. The Corporation agrees to employ the Employee commencing on
January 1, 1998 and continuing for at least four years from the date of
employment unless terminated pursuant to 2.02 below. Duties of Employee shall
include direct responsibility for all research activities and research personnel
of Corporation, including traditional genetics and biotechnology. Employee
shall work with CEO on strategic decisions on biotechnology partners and types
of partnerships and agreements. Employee shall be responsible for leading the
team(s) which make germplasm decisions.
Notwithstanding anything included here, Employee, Corporation's Chief
Operating Officer and Chief Executive Officer agree, understand and acknowledge
that to effectively perform their individual
1
<PAGE>
responsibilities, they must work together as a team. As such, they agree to
discuss with each other significant business issues to help maximize
Corporation's progress toward its mission statement and objectives.
2.02 TERMINATION. The Corporation may, by giving zero (0) days notice to
the Employee, terminate this Agreement with cause. Notwithstanding the above,
this Agreement shall terminate immediately upon the death of the Employee, and
shall terminate upon ten (10) working days notice by the Corporation if, in the
opinion of the Corporation, Employee becomes unable to perform services required
pursuant to this Agreement because of illness or injury. Any decision to
terminate this Agreement by the Corporation shall not be voted upon by the
Employee in any capacity whatsoever. In no event shall termination of this
Agreement relieve the parties hereto of any rights or obligation which survives
the termination of this Agreement as set forth herein. In the event of
Employee's death, Employee's heirs may exercise vested options within one year
as specified in the option agreement.
Termination as a result of management change: It is understood and agreed
that current Chief Executive Officer, other senior management and founding
owners, i.e., Johnny R. Thomas, John C. Francis and Scott J. Loomis desire
Employee to become an integral part of the core management team. As such,
Employee is to diligently utilize his talents, experience and expertise to
achieve Corporation's mission statement and objectives. It is understood that
both the Corporation and Employee are making at least a four year commitment. In
the event there is a change in Chief Executive Officer of the Corporation and at
any time thereafter (i) the Employee is terminated or (ii) in the sole
determination of the Employee, there is a significant change in the duties,
responsibilities, or compensation of the Employee, then Employee shall
immediately be vested in full on all stock options referenced in Section 3.02
and shall be entitled to receive a payment equal to (a) his full Compensation as
set forth in Section 3.01 for two (2) years from the date of such termination or
determination, less $1, and (b) other employee benefits (excluding long term
disability and life insurance for two (2) years from the date of such
termination or determination. In addition to the foregoing, for a period of one
(1) year following any such change of the Chief Executive Officer, Employee
shall have the option of terminating this Agreement without justification and,
in such event, will be entitled to (i) immediately be vested in the stock
options referenced in Section 3.02 which would otherwise become vested on the
next anniversary of employment following such termination and (ii) receive his
full Compensation as set forth in Section 3.01 and other employee benefits for
one (1) year following such termination.
In the event Corporation desires to terminate this Agreement without cause,
Employee will be entitled to (i) immediately be vested in the stock options
referenced in Section 3.02 which would otherwise become vested on the next
anniversary of employment following such termination and (ii) receive his full
Compensation as set forth in Section 3.01 and other employee benefits (excluding
long term disability and life insurance) for one (1) year following such
termination.
In the event Employee, Chief Operating Officer and/or Corporation's Board
of Directors determine that the duties of Vice President, Director of Research,
cannot be performed satisfactorily from two geographic offices (Waterford, CT
and Las Vegas, NV), Employee shall agree to locate at one location selected by
the Board of Directors, or cooperate in selecting a successor and developing an
effective transition. Employee shall agree to give Corporation a minimum of nine
(9) months notice and to assist Corporation in all reasonable respects in
finding a successor to the Employee's duties and responsibilities and in the
transition process. In the event Employee decides not to move to one location,
then Employee shall not be entitled to cash compensation or to vest options
beyond the end of the transition period and shall not vest options not yet
vested on the date a transition is completed to a new Vice President, Director
of Research. The intent of this paragraph is for Employee to vest options during
the one year period of decision making and transition period.
ARTICLE 3.00 - COMPENSATION
2
<PAGE>
3.01 SALARY. The Corporation covenants and agrees to pay Employee, as
consideration for his services, Compensation consisting of an annualized salary
of ONE HUNDRED TWENTY THOUSAND ($120,000.00). Employee shall be entitled to an
increase in the above described Compensation annually beginning July 1, 1998.
Such increase will be determined by the Compensation committee. The salary will
be payable in equal bi-weekly installments, less payroll deductions for income
tax, FICA, withholding and any other deductions as authorized by the Employee.
All bonuses included on compensation, if applicable, will be paid, less
applicable payroll deductions, in July of each year.
3.02 STOCK OPTIONS. Employee shall be granted 500,000 options to purchase
the Corporation's common stock. Ownership in said options shall vest on the
following schedule; subject to Employee continuing employment with Corporation
on the vesting date:
A) 100,000 vest at signing of Agreement, exercisable at $8.50 per share
through June 30, 2003.
B) 100,000 vest on the first anniversary of employment, exercisable at
$8.50 per share through June 30, 2003,
C) 100,000 vest on the second anniversary of employment, exercisable at
$9.00 per share through June 30, 2003,
D) 100,000 vest on the third anniversary of employment, exercisable at
$9.50 per share through June 30, 2003,
E) 100,000 vest on the fourth anniversary of employment, exercisable at
$10.00 per share through June 30, 2003.
3.03 BONUS. For the purpose of causing Employee's compensation to equal the
reasonable value of his services to the Corporation and to reflect any
outstanding contribution to Corporation by Employee, the Corporation may pay
Employee, in addition to the compensation for services described in Section 3.01
above, a bonus in any amount determined by the Corporation in its sole
discretion. The bonus, if any, less payroll deductions for income taxes, FICA,
withholding and any other deductions authorized by the Employee, shall be paid
by the Corporation to the Employee at such time or times as the Corporation in
its sole discretion determines.
3.04 VACATION. During the term of this Agreement, the Employee shall be
entitled to a vacation pursuant to the Employee Manual, but not less than four
weeks per year during which time Employee's Compensation shall be paid in full.
Employee will be granted an accrual for two (2) weeks of vacation upon
commencement of employment and will be eligible to take any accrued vacation
upon commencement of employment.
3.05 BENEFITS. During the term of this Agreement, the Employee shall be
entitled to receive insurance and other benefits generally available to all
employees of the Corporation. In the event Employee elects not to be covered by
certain of the Corporation's benefits, the Corporation will contribute the cost
it would otherwise incur toward alternate benefits obtained by the Employee.
3.06 RELOCATION. The Corporation and Employee agree that for the Employee
to perform the services required by the Corporation, Employee shall initially
have two offices (Waterford, CT and Las Vegas, NV). Corporation shall pay $2,000
per month expense allowance for the Connecticut office, including equipment and
support expenses which Employee shall provide (amount to be reviewed
periodically). In the event, the Board of Directors subsequently determine that
a relocation to Las Vegas is needed to perform the duties, Employee shall elect
to relocate or implement an efficient, timely transition. The Corporation will
reimburse the Employee for the reasonable and necessary expenses of such
relocation. Such expenses will include moving of the Employee's household goods,
for the sale of the Employee's current residence, and expenses for travel,
lodging, meals, etc. for up to two house hunting trips to Las Vegas and the
actual relocation.
During the dual office time period of employment, Corporation shall provide
an apartment or other accommodations in Las Vegas, to be mutually determined by
Employee and Corporation.
3
<PAGE>
3.07 INDEMNIFICATION. The Corporation agrees to indemnify the Employee to
the full extent allowed by the Corporation's Articles of Incorporation and
Nevada law with respect to any claim, investigation, proceeding, or action
against or involving the Employee relating to this employment by the
Corporation. Such indemnification shall include advancement of attorney fees
during any such event and shall cover any adverse economic consequences to
Employee including judgments, settlements, and attorney fees. This Section 3.07
will survive termination of this Agreement irrespective of the reason for
termination.
ARTICLE 4.00 - SPECIFIC OBLIGATIONS OF THE PARTIES
4.01 CORPORATION'S OBLIGATIONS. The Corporation shall provide the employee
with and pay Employee's expenses for the following:
A. Such equipment, materials and supplies as the Employee requires for the
performance of his services.
B. Costs, including tuition, meals, lodging, and transportation incurred
by the Employee to fulfill his duties and responsibilities to the Corporation,
including professional dues, publications, and continuing professional
education.
4.02 EMPLOYEE'S OBLIGATIONS. The Employee agrees that during the term of
this Agreement, he shall:
A. Faithfully and to the best of his ability and skill serve the
Corporation and perform his duties pursuant to this Agreement;
B. Maintain records in the manner established by the Corporation; and
C. Keep current all records, reports, insurance records and clerical work
required by Corporation.
ARTICLE 5.00 - COVENANTS
5.01 COVENANT NOT TO COMPETE. The Corporation and Employee acknowledge and
confirm that Employee shall not compete with the Corporation while employed or
for a two to five year period after employment ceases. Corporation shall pay
Employee the larger of $120,000.00 or a sum equal to actual compensation for the
preceding 12 months per year for the Non-Compete period selected by Corporation
(2-5 years). "Compete" shall mean any relationship with any entity whose primary
business is based on turf grass, forage grass or alfalfa seed products.
5.02 COVENANT FOR PROTECTION OF PROPRIETARY INFORMATION. The parties hereto
recognize that the Corporation and its affiliated corporations and Employee are
desirous of exchanging information during the term of this Agreement and during
the period of the time Employee is affiliated with the Corporation and its
affiliated corporations relating to the research, development, and marketing of
seed, seed products, seed related products and technology for application in the
general field of farming and ranching and that during the above periods of time,
the Corporation and its affiliated corporations may disclose to the Employee
certain information pursuant to this Agreement which the Corporation and its
affiliated corporations deems proprietary (hereinafter referred to as
"Information").
In order to protect the Information, the parties hereto agree that during
the period of Employee's affiliation with the Corporation and its affiliated
corporations, and for a period of two (2-5) years from the termination date of
any affiliation with the Corporation and its affiliated corporations, Employee
shall not disclose Information it receives or has received from Corporation or
its affiliated corporations that is proprietary in nature, including, but not by
way of limitation, Information marked PROPRIETARY or CONFIDENTIAL or STRICTLY
PRIVATE or INTERNAL DATA, to any other person, firm or corporation, or use it
for its own benefit except as provided herein, and shall use no less stringent
degree of care to avoid disclosure or use of such Information than Employee
employs with respect to his own proprietary information which it does not wish
to be disseminated, published or disclosed.
4
<PAGE>
The parties hereto agree that Information shall not be deemed proprietary
and Employee shall have no obligation with respect to any such Information
which:
A. Is already known to Employee through lawful channels of communication;
B. Is or becomes publicly known through no wrongful act of Employee;
C. Is rightfully received from a third party without similar restriction
and without breach of this Agreement;
D. Is independently developed by Employee without breach of this
Agreement;
E. Is furnished to a third party by Corporation and its affiliated
corporations without a similar restriction on the third party's rights; or
F. Is approved for release by written authorization of Corporation or its
affiliated corporations. Either party may, without breach of this Agreement,
disclose Information to the government by reason of a governmental requirement
or to a court by reason of operation of law.
Employee shall not be liable for (1) inadvertent disclosure or use of
Information provided that (a) it used not less than the same degree of care in
safeguarding such Information as it used for its own Information of like
importance, and (b) upon discovery of such inadvertent disclosure or use of such
Information, it shall endeavor to prevent any further inadvertent disclosure or
use, or (2) unauthorized disclosure or use of Information by persons who are or
who have been in its employ, unless it fails to safeguard such Information with
not less than the same degree of care as it uses for its own proprietary
Information of like importance.
In the event Information should be lost, stolen or otherwise compromised,
the party formerly in possession of that Information shall promptly notify the
Corporation by phone, and follow up with a detailed report in writing within ten
(10) days. A coordinated effort shall then be made to recover such Information.
All copies of written data delivered by one party hereto to the other party
pursuant to this Section shall be and remain the property of such one party, and
all such written data, and any copies thereof, shall be promptly returned to
such one party upon written request, or destroyed at such one party's option.
Nothing contained in this Section shall be construed as granting or
conferring any rights by license or otherwise, expressly, implied, or otherwise
for any invention, discovery or improvement made, conceived, or acquired prior
to or after the term of this Agreement.
Employee and Corporation agree that the period set forth herein is
reasonable and further that the period set forth herein does not terminate at
the termination of this Agreement, but shall continue throughout any period of
affiliation, and for a two to five (2-5) year period thereafter. This covenant
may be enforced by specific performance or any available legal or equitable
remedy, including, but not by way of limitation, temporary restraining orders or
preliminary and permanent injunctions, and the Corporation and its affiliated
corporations shall be entitled to recover from Employee all court costs and
reasonable attorney's fees incurred in enforcing this covenant. The remedies
hereunder shall not be exclusive of each other, but shall be cumulative.
5.04 DEFINITION OF AFFILIATION. Affiliation, as used in this Article, shall
mean any proprietary, employment or fiduciary relationship of the Employee with
the Corporation and its affiliated corporations, including, but not limited to,
the position of Employee as director, officer, employee or consultant of the
Corporation or its affiliated corporations.
ARTICLE 6.00 - GENERAL MATTER.
5
<PAGE>
6.01 NEVADA LAW. This Agreement shall be governed by the laws of the State
of Nevada and shall be construed in accordance therewith.
6.02 NO WAIVER. No provision of this Agreement may be waived except by an
agreement in writing signed by the waiving party. A waiver of any term or
provision shall not be construed as waiver of any other term or provision.
6.03 BINDING EFFECT. This Agreement shall be binding upon the parties,
their heirs, executors, administrators, successors or assignees. The parties
agree to do any and all things necessary to effectuate the purpose of this
Agreement.
6.04 CONSTRUCTION. Throughout this Agreement, the singular shall include
the plural; the plural shall include the singular; and the masculine and neuter
shall include the feminine, wherever the context so requires.
6.05 TEXT TO CONTROL. The headings of articles and sections are included
solely for convenience of reference. If any conflict between any heading and the
text of this Agreement exists, the text shall control.
6.06 SEVERABILITY. If any provision of this Agreement is declared by an
court of competent jurisdiction to be invalid for any reason, such invalidity
shall not affect the remaining provisions. On the contrary, such remaining
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such invalid provisions never had been inserted in this
Agreement.
6.07 AMENDMENT. This Agreement may be amended, altered or revoked at any
time, in whole or in part, by filing with this Agreement a written instrument
setting forth such charges, signed by the Corporation and the Employee.
6.08 NOTICES. All notices required to be given by this Agreement shall be
made in writing either by:
A. Personal delivery to the party requiring notice and securing a written
receipt, or
B. Mailing notice in the U.S. mails to the last known address of the party
requiring notice, which shall be the address shown on the records of the
Corporation for the Employee, by certified mail, return receipt requested.
The effective date of the notice shall be the date of the written receipt
received upon delivery in Paragraph A above or four (4) days after the date the
notice was delivered to the U.S. mail as posted on the receipt in Paragraph B
above.
The parties hereby execute this Employment Agreement on the day and year
first written above.
AGRIBIOTECH, INC.
/s/ Johnny R. Thomas
-------------------------------
Johnny R. Thomas, President/CEO
EMPLOYEE:
/s/ Thomas B. Rice
- --------------------------
Thomas B. Rice
6
<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT sets forth the agreement reached the 19th day of
November, 1997, by and between KENT SCHULZE (hereinafter referred to as
"Employee") and AgriBioTech, Inc., a Nevada Corporation (hereinafter referred to
as "Corporation").
WITNESSETH
WHEREAS, the Corporation desires to employ the Employee; and
WHEREAS, the Employee desires to accept such employment with the
Corporation; and
WHEREAS, the Employee and the Corporation desire to set forth their
employment relationship in a written agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants herein
set forth, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follow:
ARTICLE 1.00 - EMPLOYMENT
1.01 EMPLOYMENT. The Corporation hereby offers to employ the Employee upon
the terms and conditions hereinafter set forth and the Employee accepts such
offer and agrees to abide by the terms and conditions hereof, and the terms and
conditions of the Corporation's and its affiliated corporations' Articles of
Incorporation, Bylaws and Employee Manual except as otherwise set forth herein.
The Employee shall be considered a Regular Employee from the effective date of
employment, i.e., not a Probationary Employee.
1.02 DUTIES. Employee's title shall be President, Chief Operating Officer.
Employee shall report directly to the Chief Executive Officer of the
Corporation. The Employee shall continue to serve as a director of the
Corporation. Employee shall perform all services reasonably required by the
Corporation in furtherance of the Corporation's business purposes as determined,
from time to time, by the Board of Directors of the Corporation. The Employee
will work only for AgriBioTech, Inc. and its subsidiaries, as may be needed
except as may be mutually agreed by Employee and Corporation for limited Access
Technology responsibilities as a consultant. Employee may retain his ownership
in Access Technology and said ownership shall not be considered a conflict of
interest. The Chief Executive Officer or a Board member shall sign off on all
agreements between Corporation and Access Technology in order to avoid potential
conflicts, while enabling corporation to use Access Technology services where
beneficial. President, Chief Operating Officer duties shall include
responsibility for all Corporation operation activities. Duties and
responsibilities retained by Corporation's CEO and former President, COO which
are excluded from Employees duties shall be:
(a) Mergers and Acquisitions
(b) Capital structure, capital formation, equity/debt fundings, investment
banking activities, investor/shareholder relations.
(c) Strategic decisions on biotechnology partners and types of partnerships and
agreements.
All other categories of Corporation operations shall be under the direct
responsibility of Employee. Said duties shall be performed consistent with
Corporation's mission statement and objectives.
Notwithstanding anything included here, Employee and Corporation's Chief
Executive Officer agree, understand and acknowledge that to effectively perform
their individual responsibilities, they must work together as a team. As such,
they agree to discuss with each other significant business issues to help
maximize Corporation's progress toward its mission statement and objectives.
1
<PAGE>
ARTICLE 2.00 - TERM AND TERMINATION
2.01 TERM. The Corporation agrees to employ the Employee commencing on
January 1, 1998 and continuing for at least four years from the date of
employment unless terminated pursuant to 2.02 below.
2.02 TERMINATION. The Corporation may, by giving zero (0) days notice to
the Employee, terminate this Agreement with cause. Notwithstanding the above,
this Agreement shall terminate immediately upon the death of the Employee, and
shall terminate upon ten (10) working days notice by the Corporation if, in the
opinion of the Corporation, Employee becomes unable to perform services required
pursuant to this Agreement because of illness or injury. Any decision to
terminate this Agreement by the Corporation shall not be voted upon by the
Employee in any capacity whatsoever. In no event shall termination of this
Agreement relieve the parties hereto of any rights or obligation which survives
the termination of this Agreement as set forth herein. In the event of
Employee's death, Employee's heirs may exercise vested options within one year
as specified in the option agreement.
Termination as a result of management change: It is understood and agreed
that current Chief Executive Officer, other senior management and founding
owners, i.e., Johnny R. Thomas, John C. Francis and Scott J. Loomis desire
Employee to become an integral part of the core management team. As such,
Employee is to diligently utilize his talents, experience and expertise to
achieve Corporation's mission statement and objectives. It is understood that
both the Corporation and Employee are making at least a four year commitment. In
the event there is a change in Chief Executive Officer of the Corporation and at
any time thereafter (i) the Employee is terminated or (ii) in the sole
determination of the Employee, there is a significant change in the duties,
responsibilities, or compensation of the Employee, then Employee shall
immediately be vested in full on all stock options referenced in Section 3.02
and shall be entitled to receive a payment equal to (a) his full Compensation as
set forth in Section 3.01 for two (2) years from the date of such termination or
determination, less $1, and (b) other employee benefits (excluding long term
disability and life insurance for two (2) years from the date of such
termination or determination. In addition to the foregoing, for a period of one
(1) year following any such change of the Chief Executive Officer, Employee
shall have the option of terminating this Agreement without justification and,
in such event, will be entitled to (i) immediately be vested in the stock
options referenced in Section 3.02 which would otherwise become vested on the
next anniversary of employment following such termination and (ii) receive his
full Compensation as set forth in Section 3.01 and other employee benefits for
one (1) year following such termination.
In the event Corporation desires to terminate this Agreement without cause,
Employee will be entitled to (i) immediately be vested in the stock options
referenced in Section 3.02 which would otherwise become vested on the next
anniversary of employment following such termination and (ii) receive his full
Compensation as set forth in Section 3.01 and other employee benefits (excluding
long term disability and life insurance) for one (1) year following such
termination.
In the event Employee and/or Corporation's Board of Directors determine
that the duties of President, Chief Operating Officer, cannot be performed
satisfactorily from two geographic offices (Minneapolis and Las Vegas), Employee
shall agree to locate at one location selected by the Board of Directors, or
cooperate in selecting a successor and developing an effective transition.
Employee shall agree to give Corporation a minimum of nine (9) months notice and
to assist Corporation in all reasonable respects in finding a successor to the
Employee's duties and responsibilities and in the transition process. In the
event Employee decides not to move to one location, then Employee shall not be
entitled to cash compensation or to vest options beyond the end of the
transition period and shall not vest options not yet vested on the date a
transition is completed to a new President, Chief Operating Officer. The intent
of this paragraph is for Employee to vest options during the one year period of
decision making and transition period.
ARTICLE 3.00 - COMPENSATION
2
<PAGE>
3.01 SALARY. The Corporation covenants and agrees to pay Employee, as
consideration for his services, Compensation consisting of an annualized salary
of ONE HUNDRED EIGHTY-SEVEN THOUSAND FIVE HUNDRED DOLLARS ($187,500.00).
Employee shall be entitled to an increase in the above described Compensation
annually beginning July 1, 1999. Such increase will be determined by the
Compensation Committee of the Board of Directors. The Compensation will be
payable in equal bi-weekly installments, less payroll deductions for income tax,
FICA, withholding and any other deductions as authorized by the Employee.
3.02 STOCK OPTIONS. Employee shall be granted options to purchase 400,000
shares of the Corporation's common stock. Ownership in said options shall vest
on the following schedule, subject to Employee remaining employed by Corporation
at the vesting date specified:
A) 80,000 vest at signing of Agreement, exercise price = $ 9.25 per
share, exercisable through June 30, 2003.
B) 80,000 vest on 01/01/99, exercise price = $ 10.25 per share,
exercisable through June 30, 2003.
C) 80,000 vest on 01/01/00, exercise price = $ 11.25 per share,
exercisable through June 30, 2003.
D) 80,000 vest on 01/01/01, exercise price = $ 12.25 per share,
exercisable through June 30, 2003.
E) 80,000 vest on 01/01/02, exercise price = $ 13.25 per share,
exercisable through June 30, 2003
Said options shall be non-qualified and shall be registered on the next
appropriate registration statement filed by Corporation. Employee shall retain
the Director and consulting options, which have been previously granted.
3.03 BONUS. For the purpose of causing Employee's compensation to equal the
reasonable value of this services to the Corporation and to reflect any
outstanding contribution to Corporation by Employee, the Corporation may pay
Employee, in addition to the compensation for services described in Section 3.01
above, a bonus in any amount determined by the Corporation in its sole
discretion. The bonus, if any, less payroll deductions for income taxes, FICA,
withholding and any other deductions authorized by the Employee, shall be paid
by the Corporation to the Employee at such time or times as the Corporation in
its sole discretion determines.
3.04 VACATION. During the term of this Agreement, the Employee shall be
entitled to a vacation pursuant to the Employee Manual, but not less than three
weeks per year during which time Employee's Compensation shall be paid in full.
3.05 BENEFITS. During the term of this Agreement, the Employee shall be
entitled to receive insurance and other benefits generally available to all
employees of the Corporation.
3.06 RELOCATION. The Corporation and Employee agree that for the Employee
to perform the services required by the Corporation, Employee shall initially
have two offices (Minneapolis, MN and Las Vegas, NV). Corporation shall pay
$1,000 per month expense allowance for the Minnesota office. Corporation shall
provide a fax, copier and notebook computer for Employee's use. In the event,
the Board of Directors subsequently determine that a relocation to Las Vegas is
needed to perform the duties, Employee shall elect to relocate or implement an
efficient, timely transition. The Corporation will reimburse the Employee for
the reasonable and necessary expenses of such relocation. Such expenses will
include moving of the Employee's household goods, for the sale of the Employee's
current residence, and expenses for travel, lodging, meals, etc. for up to two
house hunting trips to Las Vegas and the actual relocation.
During the dual office time period of employment, Corporation shall provide
an apartment or other accommodations in Las Vegas, to be mutually determined by
Employee and Corporation.
3
<PAGE>
3.07 INDEMNIFICATION. The Corporation agrees to indemnify the Employee to
the full extent allowed by the Corporation's Articles of Incorporation and
Nevada law with respect to any claim, investigation, proceeding, or action
against or involving the Employee relating to this employment by the
Corporation. Such indemnification shall include advancement of attorney fees
during any such event and shall cover any adverse economic consequences to
Employee including judgments, settlements, and attorney fees. This Section 3.07
will survive termination of this Agreement irrespective of the reason for
termination.
ARTICLE 4.00 - SPECIFIC OBLIGATIONS OF THE PARTIES
4.01 CORPORATION'S OBLIGATIONS. The Corporation shall provide the employee
with and pay Employee's expenses for the following:
A. Such equipment, materials and supplies as the Employee requires for the
performance of his services.
B. Costs, including tuition, meals, lodging, and transportation incurred
by the Employee to fulfill his duties and responsibilities to the Corporation,
including professional dues, publications, and continuing professional education
and travel expenses including travel between Minneapolis and Las Vegas. Said
travel is not considered additional travel by Corporation due to proximity of
Minneapolis to mid-western U.S. operations of corporation.
4.02 EMPLOYEE'S OBLIGATIONS. The Employee agrees that during the term of
this Agreement, he shall:
A. Faithfully and to the best of his ability and skill serve the
Corporation and perform his duties pursuant to this Agreement;
B. Maintain records in the manner established by the Corporation; and
C. Keep current all records, reports, insurance records and clerical work
required by Corporation.
ARTICLE 5.00 - COVENANTS
5.01 COVENANT NOT TO COMPETE. The Corporation and Employee acknowledge and
confirm that Employee shall not compete with the Corporation while employed or
for a two year period (one year, if Employee is terminated without cause) after
employment ceases.
5.02 COVENANT FOR PROTECTION OF PROPRIETARY INFORMATION. The parties hereto
recognize that the Corporation and its affiliated corporations and Employee are
desirous of exchanging information during the term of this Agreement and during
the period of the time Employee is affiliated with the Corporation and its
affiliated corporations relating to the research, development, and marketing of
seed, seed products, seed related products and technology for application in the
general field of farming and ranching and that during the above periods of time,
the Corporation and its affiliated corporations may disclose to the Employee
certain information pursuant to this Agreement which the Corporation and its
affiliated corporations deems proprietary (hereinafter referred to as
"Information").
In order to protect the Information, the parties hereto agree that during
the period of Employee's affiliation with the Corporation and its affiliated
corporations, and for a period of two (2) years from the termination date (one
year, if Employee is terminated without cause) of any affiliation with the
Corporation and its affiliated corporations, Employee shall not disclose
Information it receives or has received from Corporation or its affiliated
corporations that is proprietary in nature, including, but not by way of
limitation, Information marked PROPRIETARY or CONFIDENTIAL or STRICTLY PRIVATE
or INTERNAL DATA, to any other person, firm or corporation, or use it for its
own benefit except as provided herein, and shall use no less stringent degree of
care to void disclosure or use of such Information than Employee employs with
respect to his own proprietary information which it does not wish to be
disseminated, published or disclosed.
The parties hereto agree that Information shall not be deemed proprietary
and Employee shall have no obligation with respect to any such Information
which:
4
<PAGE>
A. Is already known to Employee through lawful channels of communication;
B. Is or becomes publicly known through no wrongful act of Employee;
C. Is rightfully received from a third party without similar restriction
and without breach of this Agreement;
D. Is independently developed by Employee without breach of this
Agreement;
E. Is furnished to a third party by Corporation and its affiliated
corporations without a similar restriction on the third party's rights; or
F. Is approved for release by written authorization of Corporation or its
affiliated corporations. Either party may, without breach of this Agreement,
disclose Information to the government by reason of a governmental requirement
or to a court by reason of operation of law.
Employee shall not be liable for (1) inadvertent disclosure or use of
Information provided that (a) it used not less than the same degree of care in
safeguarding such Information as it used for its own Information of like
importance, and (b) upon discovery of such inadvertent disclosure or use of such
Information, it shall endeavor to prevent any further inadvertent disclosure or
use, or (2) unauthorized disclosure or use of Information by persons who are or
who have been in its employ, unless it fails to safeguard such Information with
not less than the same degree of care as it uses for its own proprietary
Information of like importance.
In the event Information should be lost, stolen or otherwise compromised,
the party formerly in possession of that Information shall promptly notify the
Corporation by phone, and follow up with a detailed report in writing within ten
(10) days. A coordinated effort shall then be made to recover such Information.
All copies of written data delivered by one party hereto to the other party
pursuant to this Section shall be and remain the property of such one party, and
all such written data, and any copies thereof, shall be promptly returned to
such one party upon written request, or destroyed at such one party's option.
Nothing contained in this Section shall be construed as granting or
conferring any rights by license or otherwise, expressly, implied, or otherwise
for any invention, discovery or improvement made, conceived, or acquired prior
to or after the date of this Agreement.
Employee and Corporation agree that the period set forth herein is
reasonable and further that the period set forth herein does not terminate at
the termination of this Agreement, but shall continue throughout any period of
affiliation, and for a two (2) year period thereafter, except that said period
shall be one (1) year if Employee is terminated without cause. This covenant
may be enforced by specific performance or any available legal or equitable
remedy, including, but not by way of limitation, temporary restraining orders or
preliminary and permanent injunctions, and the Corporation and its affiliated
corporations shall be entitled to recover from Employee all court costs and
reasonable attorney's fees incurred in enforcing this covenant. The remedies
hereunder shall not be exclusive of each other, but shall be cumulative.
5.04 DEFINITION OF AFFILIATION. Affiliation, as used in this Article, shall
mean any proprietary, employment or fiduciary relationship of the Employee with
the Corporation and its affiliated corporations, including, but not limited to,
the position of Employee as director, officer, employee or consultant of the
Corporation or its affiliated corporations.
ARTICLE 6.00 - GENERAL MATTER.
6.01 NEVADA LAW. This Agreement shall be governed by the laws of the State
of Nevada and shall be construed in accordance therewith.
5
<PAGE>
6.02 NO WAIVER. No provision of this Agreement may be waived except by an
agreement in writing signed by the waiving party. A waiver of any term or
provision shall not be construed as waiver of any other term or provision.
6.03 BINDING EFFECT. This Agreement shall be binding upon the parties,
their heirs, executors, administrators, successors or assignees. The parties
agree to do any and all things necessary to effectuate the purpose of this
Agreement.
6.04 CONSTRUCTION. Throughout this Agreement, the singular shall include
the plural; the plural shall include the singular; and the masculine and neuter
shall include the feminine, wherever the context so requires.
6.05 TEXT TO CONTROL. The headings of articles and sections are included
solely for convenience of reference. If any conflict between any heading and
the text of this Agreement exists, the text shall control.
6.06 SEVERABILITY. If any provision of this Agreement is declared by a
court of competent jurisdiction to be invalid for any reason, such invalidity
shall not affect the remaining provisions. On the contrary, such remaining
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such invalid provisions never had been inserted in this
Agreement.
6.07 AMENDMENT. This Agreement may be amended, altered or revoked at any
time, in whole or in part, by filing with this Agreement a written instrument
setting forth such charges, signed by the Corporation and the Employee.
6.08 NOTICES. All notices required to be given by this Agreement shall be
made in writing either by:
A. Personal delivery to the party requiring notice and securing a written
receipt, or
B. Mailing notice in the U.S. mails to the last known address of the party
requiring notice, which shall be the address shown on the records of the
Corporation for the Employee, by certified mail, return receipt requested.
The effective date of the notice shall be the date of the written receipt
received upon delivery in Paragraph A above or four (4) days after the date the
notice was delivered to the U.S. mail as posted on the receipt in Paragraph B
above.
The parties hereby execute this Employment Agreement on the day and year
first written above.
AGRIBIOTECH, INC.
/s/ Johnny R. Thomas
-------------------------------
Johnny R. Thomas, CEO
EMPLOYEE:
/s/ Kent Schulze
- ----------------------------
Kent Schulze
6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 8,235,871
<SECURITIES> 0
<RECEIVABLES> 15,102,639
<ALLOWANCES> 861,019
<INVENTORY> 34,167,138
<CURRENT-ASSETS> 57,418,918
<PP&E> 21,713,245
<DEPRECIATION> 0
<TOTAL-ASSETS> 106,354,541
<CURRENT-LIABILITIES> 19,464,962
<BONDS> 5,274,206
0
1
<COMMON> 28,822
<OTHER-SE> 80,568,181
<TOTAL-LIABILITY-AND-EQUITY> 106,354,541
<SALES> 63,814,861
<TOTAL-REVENUES> 63,814,861
<CGS> 51,586,043
<TOTAL-COSTS> 51,586,043
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,110,071
<INCOME-PRETAX> (608,480)
<INCOME-TAX> 0
<INCOME-CONTINUING> (608,480)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (608,480)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
