<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
ABAXIS, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
3240 Whipple Road, Union City,
CA 94587
Phone 408 - 734 - 0200 Fax
408 - 734 - 2874
Abaxis Logo
September 13, 2000
Dear Shareholder:
This year's annual meeting of shareholders of Abaxis, Inc. (the "Company")
will be held on October 31, 2000, at 10:00 a.m. local time, at the Company's
principal offices, located at 3240 Whipple Road, Union City, California. You are
cordially invited to attend.
The Notice of Annual Meeting of Shareholders and a Proxy Statement, which
describe the formal business to be conducted at the meeting, follow this letter.
After reading the Proxy Statement, please promptly complete, sign, date and
return the enclosed proxy card in the prepaid envelope to assure that your
shares will be represented. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE. Regardless of the number of shares you own, your
careful consideration of, and vote on, the matters before our shareholders is
important.
A copy of the Company's Annual Report to Shareholders also is enclosed for
your information. At the annual meeting we will review the activities of the
Company over the past year and our plans for the future. We look forward to
seeing you at the annual meeting.
Very truly yours,
/s/ Clinton H. Severson
CLINTON H. SEVERSON
Chairman of the Board, President and
Chief Executive Officer
<PAGE> 3
ABAXIS LOGO
ABAXIS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 31, 2000
TO THE SHAREHOLDERS:
Please take notice that the annual meeting of the shareholders of Abaxis,
Inc., a California corporation (the "Company"), will be held on October 31,
2000, at 10:00 a.m. at the offices of the Company, located at 3240 Whipple Road,
Union City, CA 94587, for the following purposes:
1. To elect five directors to hold office for the ensuing year;
2. To consider and approve the adoption of an increase in the maximum
number of shares that may be issued under the Company's 1998 Stock
Option Plan by 500,000 shares, from 2,886,000 shares to 3,386,000
shares.
3. To consider and approve the adoption of an increase in the maximum
number of shares that may be issued under the Company's 1992 Outside
Directors' Stock Option Plan by 50,000 shares, from 200,000 shares to
250,000 shares.
4. To consider and vote upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the Company's independent public accountants
for the fiscal year ending March 31, 2001; and
5. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on September 7, 2000, are
entitled to notice of, and to vote at, this meeting and any adjournment or
postponement. For ten days prior to the meeting, a complete list of shareholders
entitled to vote at the meeting will be available for examination by any
shareholder, for any purpose relating to the meeting, during ordinary business
hours at the Company's principal offices located at 3240 Whipple Road, Union
City, CA 94587.
By order of the Board of Directors
/S/ Donald J. Stewart
DONALD J. STEWART
Secretary
Sunnyvale, California
September 13, 2000
IMPORTANT: PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD
IN THE
ACCOMPANYING POST-PAID ENVELOPE TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY CHOOSE TO VOTE IN PERSON EVEN IF
YOU HAVE PREVIOUSLY SENT IN YOUR PROXY CARD.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS.......... 1
GENERAL INFORMATION......................................... 1
INFORMATION ABOUT ABAXIS.................................... 2
Stock Ownership of Certain Beneficial Owners and
Management............................................. 2
Director Nominees......................................... 3
EXECUTIVE COMPENSATION AND OTHER MATTERS.................... 4
Executive Compensation.................................... 4
Stock Options Granted in Fiscal 2000...................... 5
Option Exercises And Fiscal 2000 Year-End Values.......... 6
Compensation of Directors................................. 6
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements......................... 6
1998 Stock Option Plan.................................... 6
1992 Outside Director's Stock Option Plan................. 6
Section 16(A) Beneficial Ownership Reporting Compliance... 7
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION.............................................. 7
COMPARISON OF SHAREHOLDER RETURN............................ 9
PROPOSAL NUMBER ONE......................................... 10
Election of Directors..................................... 10
PROPOSAL NUMBER TWO......................................... 10
PROPOSAL NUMBER THREE....................................... 14
PROPOSAL NUMBER FOUR........................................ 16
Ratification of Appointment of Independent Public
Accountants............................................ 16
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL
MEETING................................................... 16
TRANSACTION OF OTHER BUSINESS............................... 17
</TABLE>
i
<PAGE> 5
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
The accompanying proxy is solicited by the Board of Directors of Abaxis,
Inc., a California corporation ("Abaxis" or the "Company"), for use at its
Annual Meeting of Shareholders to be held on October 31, 2000 (the "Annual
Meeting"), or any adjournment or postponement thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders. The date of
this Proxy Statement is September 13, 2000, the approximate date on which this
Proxy Statement and the accompanying form of proxy were first sent or given to
shareholders.
GENERAL INFORMATION
Solicitation of Proxies. The cost of soliciting proxies will be borne by
the Company. In addition to soliciting shareholders by mail through its regular
employees, the Company will request banks and brokers, and other custodians,
nominees and fiduciaries, to solicit their customers who have stock of the
Company registered in the names of such persons and will reimburse them for
their reasonable, out-of-pocket costs. The Company may use the services of its
officers, directors and others to solicit proxies, personally or by telephone,
without additional compensation.
Voting Securities. On September 7, 2000, the Company had outstanding
15,857,039 shares of its Common Stock ("Common Stock") held by 250 shareholders
of record, all of which are entitled to vote with respect to all matters to be
acted upon at the Annual Meeting. The Company's Bylaws provide that a majority
of all of the shares of the stock entitled to vote, whether present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at the Annual Meeting. Each share of Common Stock is entitled to one vote,
except that in the election of directors each shareholder has cumulative voting
rights and may be entitled to as many votes as is equal to the number of shares
held multiplied by the number of directors to be elected (i.e., five), which
votes may be cast for a single candidate or distributed among any or all of the
candidates. No shareholder is entitled to cumulate votes with respect to a
candidate unless the candidate's name has been placed in nomination prior to the
voting and the shareholder or any other shareholder has given notice, at the
meeting and prior to the voting, of his or her intention to cumulate his or her
votes.
Voting of Proxies. The persons authorized to vote shares represented by
executed proxies (if authority to vote for the election of directors is not
withheld) will have full discretion and authority to vote cumulatively and to
allocate votes among any and all nominees as they may determine or, if authority
to vote for a specified candidate or candidates has been withheld, among those
candidates for whom authority to vote has not been withheld. If an executed
proxy is submitted without any instruction for the voting of such proxy, the
proxy will be voted in favor of the proposals described, but votes may be
cumulated for less than all of the nominees for director.
All valid proxies received before the meeting will be exercised. A
shareholder giving a proxy has the power to revoke his or her proxy at any time
before the time it is exercised by delivering to the Secretary of the Company a
written instrument revoking the proxy or a duly executed proxy with a later
date, or by attending the Annual Meeting and voting in person.
<PAGE> 6
INFORMATION ABOUT ABAXIS
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of August 31, 2000 certain information
with respect to the beneficial ownership of Common Stock by (i) all persons
known by the Company to be the beneficial owners of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) the persons
named in the Summary Compensation Table on page 4, and (iv) all executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
PERCENT OF ABAXIS
NUMBER OF COMMON STOCK
NAME OF BENEFICIAL OWNER(1) SHARES OUTSTANDING
--------------------------- --------- -----------------
<S> <C> <C>
DIRECTORS
Clinton H. Severson(2)...................................... 502,500 3.05%
Richard Bastiani, Ph.D.(3).................................. 61,415 *
Brenton G. A. Hanlon(4)..................................... 21,667 *
Prithipal Singh, Ph.D.(5)................................... 41,750 *
Ernest S. Tucker, III, M.D.(6).............................. 64,545 *
OFFICERS
Robert Milder(7)............................................ 75,242 *
Vladimir E. Ostoich, Ph.D.(8)............................... 272,786 1.71%
Daniel Wong, Ph.D.(9)....................................... 0 --
Donald J. Stewart.(10)...................................... 120,000 *
HOLDER OF MORE THAN 5% OF COMMON STOCK
All current executive officers and directors as a group (10
persons)(11).............................................. 1,169,405 7.04%
</TABLE>
---------------
* Less than 1%
(1) Except as indicated in the footnotes to this table, to the Company's
knowledge, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable. Unless otherwise indicated, the business address of each of the
beneficial owners listed above is Abaxis, Inc., 3240 Whipple Road, Union
City, CA 94587.
(2) Includes 115,000 shares of stock held by Mr. Severson. Also includes
387,500 shares subject to options exercisable by Mr. Severson within sixty
days of August 31, 2000.
(3) Includes 35,415 shares of stock held by the Bastiani Family Trust. Also
includes 26,000 shares subject to options exercisable by Dr. Bastiani
within sixty days of August 31, 2000.
(4) Includes 21,667 shares subject to options exercisable by Mr. Hanlon within
sixty days of August 31, 2000.
(5) Includes 10,000 shares of stock held by the Singh Family Trust. Also
includes 31,750 shares subject to options exercisable by Dr. Singh within
sixty days of August 31, 2000.
(6) Includes 11,545 shares of stock held by Dr. Tucker. Also includes 53,000
shares subject to options exercisable by Dr. Tucker within sixty days of
August 31, 2000.
(7) Includes 42,200 shares of stock held by Mr. Milder. Also includes 33,042
shares subject to options exercisable by Mr. Milder within sixty days of
August 31, 2000.
(8) Includes an aggregate of 29,500 shares held by Dr. Ostoich's IRA, 27,500
shares held by Mrs. Ostoich's IRA and 89,328 shares held of record by The
Vladimir Ostoich and Liliana Ostoich Trust Fund, for the benefit of Dr.
Ostoich and his wife. Also includes 126,458 shares subject to stock options
exercisable by Dr. Ostoich within 60 days of August 31, 2000. Does not
include shares that are held by his adult children as to which Mr. Ostoich
disclaims beneficial ownership.
(9) Dr. Wong left employment by the Company in March, 2000.
2
<PAGE> 7
(10) Includes 70,000 shares of stock held by Mr. Stewart. Also includes 50,000
shares subject to options exercisable by Mr. Stewart within sixty days of
August 31, 2000.
(11) Includes 761,917 shares subject to options exercisable within sixty days of
August 31, 2000.
DIRECTOR NOMINEES
This section sets forth the names, ages, and backgrounds of the individuals
nominated to be elected to serve as directors of the Company at the Annual
Meeting.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITION WITH THE COMPANY AGE SINCE
---- ------------------------- --- --------
<S> <C> <C> <C>
Clinton H. Severson...................... Chairman of the Board of Directors, 52 1996
President, Chief Executive Officer and
Director
Richard Bastiani, Ph.D.(1)............... Director 57 1995
Brenton G. A. Hanlon(1).................. Director 54 1996
Prithipal Singh, Ph.D.(2)................ Director 61 1992
Ernest S. Tucker, III, M.D.(2)........... Director 67 1995
</TABLE>
---------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
There are no family relationships among any directors or executive officers
of the Company.
Mr. Severson has served as President, Chief Executive Officer and Director
of the Company since June 1996. He was appointed Chairman of the Board in May
1998. From February 1989 to May 1996, Mr. Severson served as President and Chief
Executive Officer of MAST Immunosystems, Inc., a medical diagnostic company.
From March 1984 to February 1989, Mr. Severson was employed by 3M Diagnostic
Systems, an in-vitro allergy test system manufacturer, last serving as General
Manager.
Dr. Bastiani joined the Company's Board of Directors in September 1995.
From September 1995 to September 1999, Dr. Bastiani was President of Dendreon, a
biotechnology company. Dr. Bastiani served as President of Syva, a medical
diagnostic testing company, from January 1991 until June 1995. Presently, Dr.
Bastiani serves as a director for I.D. Biomedical.
Mr. Hanlon joined the Company's Board of Directors in November 1996. Mr.
Hanlon serves as the President and Chief Operating Officer of Tri-Continent
Scientific, a subsidiary of Hitachi Chemical, and a manufacturer of
instrumentation for diagnostic applications. Mr. Hanlon served as Vice President
and General Manager of Tri-Continent Scientific from 1989 to 1996.
Dr. Singh joined the Company's Board of Directors in June 1992. Dr. Singh
is a founder of ChemTrak, Inc., a manufacturer of medical diagnostic equipment,
and served in various executive capacities with ChemTrak from August 1988 until
March 1998. Dr. Singh is a co-founder of LXN Corp., a diabetes management
company established in 1994. Dr. Singh has served as Chairman of Zygox Corp
since March 1998.
Dr. Tucker joined the Company's Board of Directors in September 1995.
Currently, Dr. Tucker is Chief Corporate Compliance Officer for Scripps Health
in San Diego. From 1992 to 1998, Dr. Tucker was Chairman of Pathology at Scripps
Clinic and Research Foundation.
Meetings of the Board of Directors. During the fiscal year ended March 31,
2000, the Board of Directors of the Company held 4 meetings, the Audit Committee
of the Board of Directors held 1 meeting, and the Compensation Committee of the
Board of Directors held 1 meeting. No director attended fewer than 75% of the
total number of meetings of the Board of Directors and meetings of the
Committees of the Board of Directors on which such director served during fiscal
2000.
3
<PAGE> 8
Audit Committee. The members of the Audit Committee during fiscal 2000 were
Dr. Tucker and Dr. Singh. The functions of the Audit Committee include making
recommendations to the Board of Directors regarding the retention of independent
public accountants, reviewing and approving the planned scope of the annual
audit, proposed fee arrangements and the results of the annual audit, reviewing
the adequacy of accounting and financial controls and reviewing the independence
of the Company's independent public accountants.
Compensation Committee; Interlocks and Insider Participation. The members
of the Company's Compensation Committee during fiscal 2000 were Dr. Bastiani and
Mr. Hanlon. The Compensation Committee reviews and determines compensation
criteria for executive officers. No interlocking relationship exists between the
Company's Board of Directors or Compensation Committee and the board of
directors or compensation committee of any other company. For additional
information about the Compensation Committee, see "EXECUTIVE COMPENSATION AND
OTHER MATTERS" and "REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION" below.
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
during the fiscal years ended March 31, 2000, March 31, 1999 and March 31, 1998
of the Chief Executive Officer of the Company during fiscal 2000 and the four
other most highly compensated executive officers of the Company whose total
salary and bonus for fiscal 2000 exceeded $100,000, for services in all
capacities to the Company, during fiscal 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION($) ------------
---------------------- OPTIONS
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS(1) (SHARES)
--------------------------- ----------- --------- --------- ------------
<S> <C> <C> <C> <C>
Clinton H. Severson.......................... 2000 $200,000 $112,500 -0-
Chairman of the Board of Directors, 1999 200,000 60,450 200,000
President and Chief Executive 1998 193,254 73,950 50,000
Officer
Robert Milder................................ 2000 $130,000 $ 67,500 75,000
Chief Operations Officer 1999 93,000 20,400 65,000
1998 -0- -0- -0-
Vladimir E. Ostoich.......................... 2000 $144,740 $ 90,000 75,000
Vice President of Engineering 1999 144,740 47,630 25,000
1998 139,173 60,550 -0-
Donald J. Stewart............................ 2000 $110,000 $ 90,000 25,000
Vice President of Finance and 1999 63,537 18,675 75,000
Administration and CFO and Secretary 1998 -0- 18,785 -0-
Daniel Wong.................................. 2000 $181,016 $ 67,500 10,000
Former Vice President of Development 1999 135,000 47,630 -0-
1998 129,808 60,505 -0-
</TABLE>
---------------
(1) Bonuses were based on Company performance. See "REPORT OF THE COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION."
4
<PAGE> 9
STOCK OPTIONS GRANTED IN FISCAL 2000
The following table provides the specified information concerning grants of
options to purchase Common Stock made during the fiscal year ended March 31,
2000 to the persons named in the Summary Compensation Table.
OPTION GRANTS IN FISCAL 2000
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------ POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANT TO EXERCISE OPTION TERM(3)
GRANTED EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME (#)(1) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
---- ------- ------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert Milder............. 25,000 3.7% $2.25 4/27/09 $ 35,375 $ 89,648
50,000 7.3% $8.13 1/25/10 $255,646 $647,856
Vladimir E. Ostoich....... 25,000 3.7% $2.25 4/27/09 $ 35,375 $ 89,648
50,000 7.3% $8.13 1/25/10 $255,646 $647,856
Donald J. Stewart......... 25,000 3.7% $2.25 4/27/09 $ 35,375 $ 89,648
Daniel Wong............... 10,000 1.5% $2.25 4/27/09 $ 14,150 $ 35,859
</TABLE>
---------------
(1) All options granted in fiscal 2000 were granted pursuant to the Company's
1998 Stock Option Plan (the "1998 Plan"). These options vest and become
exercisable at the rate of one-fourth on the first anniversary of the date
of grant and 1/48 per month thereafter for each full month of the optionee's
continuous employment by the Company. Under the 1998 Plan, the Board retains
discretion to modify the terms, including the price, of outstanding options.
For additional information regarding options, see "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements."
(2) All options in this table have exercise prices equal to the fair market
value on the date of grant.
(3) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on the Securities and Exchange Commission rules. Actual gains,
if any, on stock option exercises are dependent on the future performance of
the Common Stock, overall market conditions and the option holder's
continued employment through the vesting period. The amounts reflected in
this table may not necessarily be achieved.
5
<PAGE> 10
OPTION EXERCISES AND FISCAL 2000 YEAR-END VALUES
The following table provides the specified information concerning exercises
of options to purchase Common Stock in the fiscal year ended March 31, 2000, and
unexercised options held as of March 31, 2000, by the persons named in the
Summary Compensation Table.
OPTION EXERCISES AND FISCAL 2000 YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES VALUE OPTIONS AT 3/31/00 3/31/00($)(2)
ACQUIRED ON REALIZED ------------------------------ ------------------------------
SHARES EXERCISE ($) EXERCISABLE(1) UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE
------ ----------- -------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clinton H. Severson........ -0- -0- 342,708 157,292 $1,421,612 $1,015,888
Robert Milder.............. -0- -0- 27,187 112,813 $ 168,117 $ 401,248
Vladimir E. Ostoich........ -0- -0- 111,667 93,958 $ 493,584 $ 286,120
Donald J. Stewart.......... -0- -0- 29,687 70,313 $ 159,112 $ 400,263
Daniel Wong................ 10,000 $21,880 72,188 -- $ 254,455 --
</TABLE>
---------------
(1) Company stock options generally vest one-fourth on the first anniversary of
the date of grant and 1/48 per month thereafter for each full month of the
optionee's continuous employment by the Company. All options are exercisable
only to the extent vested.
(2) The value of the unexercised in-the-money options is based on the closing
price of the Common Stock ($8.3750) per share as reported on the Nasdaq
National Market on March 31, 2000 and is net of the exercise price of such
options.
COMPENSATION OF DIRECTORS
In fiscal 2000, all non-employee directors of the Company received
compensation in the amount of $1,200, $1,600, $1,800, and $2,258, for the first,
second, third and fourth quarter, respectively, per meeting of the Board of
Directors they attended, plus reimbursement of reasonable travel expenses
incurred. In addition, Dr. Tucker serves as a scientific consultant to the
Company and receives monthly compensation of $1,000 plus reimbursement of
expenses for attending meeting at or on behalf of the Company. Each of the
Company's non-employee directors also receives an automatic annual grant of
options to purchase 4,000 shares of Common Stock under the Company's 1992
Outside Directors Stock Option Plan. In addition, Dr. Tucker receives an
additional annual grant of options to purchase 5,000 shares for serving as a
consultant. Clinton H. Severson, a director of the Company who is also an
employee of the Company, does not receive any compensation for his services as a
member of the Board of Directors of the Company.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In March 1997, the Company entered into an employment agreement with
Clinton H. Severson. The agreement provides that Mr. Severson will serve as
President and Chief Executive Officer of Abaxis and that he will be entitled to
six months of continued salary and benefits if his employment with the Company
is terminated without cause. In April 1998, the Company entered into an
amendment to Mr. Severson's employment agreement which provides (i) severance
payments consisting of salary and benefits for one year in the event of
termination of employment without cause and (ii) severance payments consisting
of salary and benefits for two years in the event of termination of employment
following a change of control transaction.
The 1998 Stock Option Plan and the Outside Directors Stock Option Plan (the
"Option Plans") provide that, in the event of a transfer of control of the
Company ("Transfer of Control"), the surviving, continuing, successor or
purchasing corporation or a parent corporation thereof, as the case may be (the
"Acquiring Corporation"), shall either assume the Company's rights and
obligations under stock option agreements outstanding under the Option Plans
(the "Options") or substitute options for the Acquiring Corporation's stock for
such Options. In the event the Acquiring Corporation elects not to assume or
substitute for such outstanding Options in connection with a merger constituting
a Transfer of Control, the Company's Board of
6
<PAGE> 11
Directors shall provide that any unexercisable and/or unvested portion of the
Options shall be immediately exercisable and vested as of a date prior to the
Transfer of Control, as the Company's Board of Directors so determines. Any
Options which are neither assumed by the Acquiring Corporation, nor exercised as
of the date of the Transfer of Control, shall terminate effective as of the date
of the Transfer of Control. Options which are assumed by the Acquiring
Corporation shall become exercisable and vested as provided under the relevant
stock option agreements under the Option Plans. If the option holder's service
is terminated after the Transfer of Control by the Company (other than for
cause) or the option holder resigns for "good reason" following the Transfer of
Control, the holder's Options shall become immediately exercisable and vested as
of the date of termination.
1998 STOCK OPTION PLAN
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the 1998 Stock Option Plan (the "Option Plan") to increase the
maximum number of shares that may be issued under the Option Plan by 500,000
shares, from 2,886,000 shares to 3,386,000 shares. See "Approval of Amendment to
the 1998 Stock Option Plan." As of September 13, 2000, no options had been
granted to any employee conditioned on stockholders approval of an increase in
the share reserve under the Option Plan. Grants under the Option Plan are made
at the discretion of the Board of Directors. Accordingly, future grants under
the Option Plan are not yet determinable.
1992 OUTSIDE DIRECTOR'S STOCK OPTION PLAN
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the 1992 Outside Director's Stock Option Plan (the "Director Plan")
to increase the maximum number of shares that may be issued under the Option
Plan by 50,000 shares, from 200,000 shares to 250,000 shares. See "Approval of
Amendment to the 1992 Outside Director's Stock Option Plan." As of September 13,
no options had been granted to any outside director conditioned on stockholders
approval of an increase in the share reserve under the Director Plan. Each of
the Company's non-employee directors receives an automatic annual grant of
options to purchase 4,000 shares of Common Stock under the Directors Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
more than 10% of the Common Stock to file initial reports of ownership and
reports of changes in ownership with the "SEC". Such persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms filed
by such persons.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that all filing requirements applicable to the Company's executive officers,
directors and persons who beneficially own more than 10% of the Common Stock
were complied with during the fiscal year ended March 31, 2000.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised of Dr.
Richard Bastiani and Brenton G. A. Hanlon. Dr. Prithipal Singh served as a
member of the Compensation Committee until Mr. Hanlon became a member on
September 9, 1998. Each of these individuals is a non-employee member of the
Company's Board of Directors. The Compensation Committee is responsible for
approving all compensation recommended by the President for the Company's
executive officers and provides recommendations to the Board of Directors for
approval of all compensation for the President and Chief Executive Officer of
the Company. The goal of the Company's compensation policy for the executive
officers is to attract, retain and reward executive officers who contribute to
the Company's success and to motivate these executives to achieve the Company's
business objectives. The Company uses salary, stock option grants and bonus
compensation to meet these goals.
7
<PAGE> 12
Compensation Policies. Salaries are initially set for each executive
officer according to the Company's determination of what reflects typical
salaries for similar positions in comparable companies in the Company's industry
and geographic area. Salaries are generally set to reflect the applicable range
for each position, and are adjusted for historical and expected contributions of
each officer to the Company. Salaries are reviewed annually based on
individually past performance, and financial results of the Company. Adjustments
are made, if necessary, to maintain competitiveness within the industry.
Compensation Components. The Compensation Committee strongly believes that
executive compensation should be based in part on the Company's performance and
has used stock option grants and bonus compensation to accomplish this goal. In
April 2000, the Compensation Committee approved an executive bonus plan with
target bonus levels set at 20% to 80% of annual salaries for accomplishing
certain Company objectives associated with financial performance in fiscal 2001.
The Company strongly believes that equity ownership by executive officers
provides incentives to build shareholder value and aligns the interests of
executive officers with those of the shareholders. The size of an initial option
grant to an executive officer generally has been determined with reference to
comparable companies in the Company's industry and geographical area, the
responsibilities and future contributions of the executive officer, as well as
recruitment and retention considerations. Additional option grants to an
executive officer are generally based on Company performance and individual
performance. In fiscal 2000, the Compensation Committee approved stock option
grants to certain of the executive officers. See "OPTION GRANTS IN FISCAL 2000."
Chief Executive Officer Compensation. The Compensation Committee annually
reviews the performance and compensation of Clinton H. Severson, the President
and Chief Executive Officer of the Company. During fiscal 1999, Mr. Severson's
compensation consisted of salary, an incentive stock option grant and
performance-based bonus compensation. During the annual review in April 1999
(and again in April 2000), the Compensation Committee found Mr. Severson's
salary to be appropriate as compared with comparable companies within the
Company's industry and geographic area. During fiscal 2000, Mr. Severson's
compensation consisted of a base salary of $200,000, and bonus compensation of
$112,000. Mr. Severson received no option grant in fiscal 2000. Mr. Severson's
bonus compensation was based on the Company achieving certain financial
objectives established by the Board of Directors in April 1999. In April 2000,
the Board of Directors approved a bonus plan for the Company's President and
Chief Executive Officer of 56% of his annual salary for accomplishing certain
Company objectives associated with financial performance in fiscal 2001.
In April 1998, Mr. Severson's employment agreement with the Company was
amended to provide (i) severance payments consisting of salary and benefits for
one year in the event of termination of employment without cause and (ii)
severance payments consisting of salary and benefits for two years in the event
of termination of employment following a change of control transaction. Such
agreement was entered into following arms-length negotiations and approval by
the Board of Directors.
Deductibility of Executive Compensation. The Company has considered the
provisions of Section 162(m) of the Internal Revenue Code and related Treasury
Department regulations which restrict deductibility of executive compensation
paid to the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers holding office at the end of any year to
the extent such compensation exceeds $1,000,000 for any of such officers in any
year and does not qualify for an exception under the statute. Income from
options granted under the 1998 Plan should qualify for an exemption from these
restrictions. The Compensation Committee does not believe that in general other
components of the Company's compensation will be likely to exceed $1,000,000 for
any executive officer in the foreseeable future and therefore concluded that no
further action with respect to qualifying such compensation for deductibility
was necessary at this time. In the future, the Compensation Committee will
continue to evaluate the advisability of qualifying its executive compensation
for deductibility under applicable tax laws as applicable.
COMPENSATION COMMITTEE
Richard Bastiani, Ph.D.
Brenton G. A. Hanlon
8
<PAGE> 13
COMPARISON OF SHAREHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Company's Common Stock with the cumulative
total return of the Russell 2000 Index ("Russell 2000") and the Hambrecht &
Quist Health Care (Excluding Biotech) Index ("H&Q Index") for the period
commencing on March 31, 1995 and ending on March 31, 2000.(1)
COMPARISON OF CUMULATIVE TOTAL RETURN FROM
MARCH 31, 1995 THROUGH MARCH 31, 2000:(2)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
3/95 3/96 3/97 3/98 3/99 3/00
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Abaxis, Inc. 101 104 58 34 34 149
Russell 2000 100 127 148 211 165 187
Hambrecht & Quist
Healthcare--
Excluding
Biotechnology 100 152 150 214 218 212
--------------------------------------------------------------------------------
</TABLE>
(1) The Company's 2000 fiscal year ended on March 31, 2000.
(2) Assumes that $100,000 was invested on March 31, 1995 in the Common Stock, at
the closing sales price, and in each index and that all dividends were
reinvested. No cash dividends have been declared on the Common Stock.
Shareholder returns over the indicated period should not be considered
indicative of future shareholder returns.
9
<PAGE> 14
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
The charter documents of the Company authorize a Board of Directors
consisting of six (6) directors. Five (5) directors of the Company are to be
elected for the ensuing year and until their successors are elected and
qualified. Proxies cannot be voted for a greater number of persons than the
number of nominees named. Please see "INFORMATION ABOUT ABAXIS -- Director
Nominees" above for information concerning the nominees. Following the Annual
Meeting, there will be one vacancy on the Board of Directors.
If elected, each nominee will hold office until the next annual meeting of
shareholders or until his successor is elected and qualified unless he shall
resign or his office becomes vacant by death, removal, or other cause in
accordance with the Bylaws of the Company.
The persons named in the accompanying form of proxy will vote the shares
represented thereby for the following nominees, but may cumulate the votes for
less than all of the nominees, as permitted by the laws of the State of
California, unless otherwise instructed. Management knows of no reason why any
of these nominees should be unable or unwilling to serve. However, if any
nominee(s) should for any reason be unable or unwilling to serve, the proxies
will be voted for the election of such other person(s) for the office of
director as the Board of Directors may recommend in the place of such
nominee(s).
The nominees for election to the Board of Directors at the Annual Meeting
are Clinton H. Severson, Richard Bastiani, Ph.D., Brenton G.A. Hanlon, Prithipal
Singh, Ph.D. and Ernest S. Tucker, III, M.D. If elected, the nominees will serve
as directors until the Company's Annual Meeting of Shareholders in 2001, and
until their successors are elected and qualified. If a quorum is present and
voting, the five (5) nominees receiving the highest number of votes will be
elected. Abstentions will have no effect on the vote. If the nominees decline to
serve or become unavailable for any reason, or if a vacancy occurs before the
election (although management knows of no reason to anticipate that this will
occur), the proxies may be voted for substitute nominees as the Board of
Directors may designate.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES
NAMED ABOVE.
PROPOSAL NUMBER TWO
APPROVAL OF AMENDMENT TO THE COMPANY 1998 STOCK OPTION PLAN
The Company's 1989 Stock Option Plan (the "1989 Plan") was adopted by the
Board of Directors in May 1989 and was approved by the shareholders of the
Company in 1990. The Board of Directors and shareholders have approved from time
to time increases in the number of shares issuable under the 1989 Plan. In July
1998, the Board of Directors amended the 1989 Plan, and obtained shareholder
approval in October 1998, to increase by 1,000,000 shares to 2,886,000 the
maximum aggregate number of shares of Common Stock issuable under the plan. In
addition, the Board of Directors approved the amendment and restatement of the
1989 Plan as the 1998 Stock Option Plan (the "Option Plan"), and obtained
shareholder approval of such amendment and restatement.
The shareholders are now being asked to approve the amendment of the Option
Plan to increase by 500,000, from 2,886,000 to 3,386,000, the maximum aggregate
number of shares of Common Stock issuable under the plan. The Board of Directors
believes that the availability of an adequate stock option program is an
important factor in attracting and retaining qualified officers, employees,
directors and consultants essential to the success of the Company and in
aligning their long-term interests with those of the shareholders.
SUMMARY OF THE OPTION PLAN
The following summary of the Option Plan is qualified in its entirety by
the specific language of the Option Plan, a copy of which is available to any
shareholder upon request.
General. The purpose of the Option Plan is to advance the interests of the
Company and its shareholders by providing an incentive to attract, retain and
reward the Company's employees, directors and consultants
10
<PAGE> 15
and by motivating such persons to contribute to the Company's growth and
profitability. The Option Plan provides for the grant to employees of incentive
stock options within the meaning of section 422 of the Internal Revenue Code of
1986, as amended (the "Code") and the grant to employees, directors and
consultants of nonstatutory stock options.
Shares Subject to Plan. The shareholders have previously authorized the
reservation of an aggregate of 2,886,000 shares of the Company's authorized but
unissued shares of Common Stock for issuance upon the exercise of options
granted under the Option Plan. The Option Plan permits the issuance of
reacquired shares as well as previously unissued shares. As of August 31, 2000,
options to purchase 677,892 shares of common stock granted pursuant to the
Option Plan had been exercised, and there were 268,957 shares of common stock
available for future grants under the Option Plan, without taking the proposed
increase into account. Appropriate adjustments will be made to the shares
subject to the Option Plan and to outstanding options upon any stock dividend,
stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company. To
the extent that any outstanding option under the Option Plan expires or
terminates prior to exercise in full or if shares issued upon exercise of an
option are repurchased by the Company, the shares of Common Stock for which such
option is not exercised or the repurchased shares are returned to the Option
Plan and become available for future grant.
Administration. The Option Plan will be administered by the Board of
Directors or a duly appointed committee of the Board (hereinafter referred to
collectively as the "Board"). Subject to the provisions of the Option Plan, the
Board determines the persons to whom options are to be granted, the number of
shares to be covered by each option, whether an option is to be an incentive
stock option or a nonstatutory stock option, the timing and terms of
exercisability and vesting of each option, the purchase price and the type of
consideration to be paid to the Company upon the exercise of each option, the
time of expiration of each option, and all other terms and conditions of the
options. The Board may amend, modify, extend, cancel, renew, or grant a new
option in substitution for, any option, waive any restrictions or conditions
applicable to any option, and accelerate, continue, extend or defer the
exercisability or vesting of any option, including with respect to the period
following an optionee's termination of service with the Company. The Option Plan
provides, subject to certain limitations, for indemnification by the Company of
any director, officer or employee against all reasonable expenses, including
attorneys' fees, incurred in connection with any legal action arising from such
person's action or failure to act in administering the plan. The Board will
interpret the Option Plan and options granted thereunder, and all determinations
of the Board will be final and binding on all persons having an interest in the
Option Plan or any option.
Eligibility. Options may be granted under the Option Plan to employees,
consultants and directors of the Company or of any present or future parent or
subsidiary corporations of the Company. Prospective employees, prospective
consultants and prospective directors may also receive grants under the Option
Plan in connection with written offers of employment or engagement, provided
that such options may not become exercisable prior to the individual's
commencement of service. While any person eligible under the Option Plan may be
granted a nonstatutory option, only employees may be granted incentive stock
options. As of August 31, 2000, the Company had approximately 113 employees,
including 6 executive officers, 5 directors and 2 consultants who would be
eligible to receive a grant under the Option Plan.
Terms and Conditions of Options. Each option granted under the Option Plan
is evidenced by a written agreement between the Company and the optionee
specifying the number of shares subject to the option and the other terms and
conditions of the option, consistent with the requirements of the plan. The
exercise price of each incentive stock option may not be less than the fair
market value of a share of the Common Stock on the date of grant and the
exercise price of a nonstatutory stock option may not be less than 85% of such
fair market value. The Option Plan provides that any incentive stock option
granted to a person who at the time of grant owns stock possessing more than 10%
of the total combined voting power (or combined value) of all classes of stock
of the Company or any parent or subsidiary corporation of the Company (a "Ten
Percent Shareholder") must have an exercise price equal to at least 110% of the
fair market value of a share of Common Stock on the date of grant as required
under Section 422 of the Code. As of August 31, 2000, the closing price of the
Company's Common Stock, as reported on the Nasdaq National Market, was $5.875
per share.
11
<PAGE> 16
Under the Option Plan, the option exercise price may be paid in cash, by
check, or in cash equivalent, by tender of shares of Common Stock owned by the
optionee having a fair market value not less than the exercise price, by the
assignment of the proceeds of a sale with respect to some or all of the shares
of Common Stock being acquired upon the exercise of the option, by means of an
assignment of the proceeds of a loan with respect to some or all of the shares
acquired upon the exercise of the option, by payment with a promissory note, and
by payment of the exercise price with any other lawful consideration approved by
the Board, or by any combination of these. Nevertheless, the Board may restrict
the forms of payment permitted in connection with any option grant. No option
may be exercised until the optionee has made adequate provision for federal,
state, local and foreign taxes, if any, relating to the exercise of the option.
Options will become vested and exercisable at such times or upon such
events and subject to such terms, conditions, performance criteria or
restrictions as specified by the Board. Generally, options granted under the
Option Plan become exercisable in installments over a period of time specified
by the Board at the time of grant, subject to the optionee's continued service
with the Company. The Option Plan provides that the maximum term of an incentive
stock option is ten years unless granted to a Ten Percent Shareholder, in which
case the maximum term is five years. The Option Plan does not limit the term of
a nonstatutory stock option. An option generally will remain exercisable for
three months following the optionee's termination of service, provided that if
termination results from the optionee's death or disability, the option
generally will remain exercisable for 12 months following the optionee's
termination of service. In any event the option must be exercised no later than
its expiration date. The Board, in its discretion, may provide for longer or
shorter post-service exercise periods in particular instances.
Options are nontransferable by the optionee other than by will or by the
laws of descent and distribution, and are exercisable during the optionee's
lifetime only by the optionee. A nonstatutory stock option may be assignable or
transferable to the extent permitted by the Board and set forth in the option
agreement.
Change in Control. The Option Plan provides that in the event of a "Change
in Control" (as defined below), the surviving, continuing, successor or
purchasing corporation or parent corporation thereof (the "Acquiring
Corporation") may either assume the Company's rights and obligations under the
outstanding options or substitute substantially equivalent options for such
corporation's stock. If the Acquiring Corporation elects not to assume or
substitute for options outstanding under the Option Plan, any unvested or
unexercisable portion of the outstanding options will become immediately
exercisable and vested in full prior to such Change in Control. To the extent
that the outstanding options are not assumed, replaced or exercised prior to the
Change in Control, they will terminate. In addition, if the Acquiring
Corporation assumes or substitutes for outstanding options, an option will
become fully exercisable and vested if the optionee's service is terminated
after the Change in Control by the Company (other than for cause) or the
optionee resigns for "good reason" following the Change in Control.
For purposes of the Option Plan, a "Change in Control" means (i) a sale or
exchange by the shareholders in a single or series of related transactions of
more than 50% of the Company's voting stock, (ii) a merger or consolidation in
which the Company is a party, (iii) the sale, exchange or transfer of all or
substantially all of the assets of the Company, or (iv) a liquidation or
dissolution of the Company wherein, upon any such event, the shareholders of the
Company immediately before such event do not retain immediately after such event
direct or indirect beneficial ownership of more than 50% of the total combined
voting power of the voting stock of the Company, its successor, or the
corporation to which the assets of the Company were transferred.
Termination or Amendment. The Option Plan will continue in effect until the
earlier of its termination by the Board or the date on which all shares
available for issuance under the Option Plan have been issued and all
restrictions on such shares under the terms of the Plan and the option
agreements have lapsed, provided that all options must be granted within ten
years of July 21, 1998, the date on which the Board approved the restatement of
the Option Plan. The Board may terminate or amend the Option Plan at any time.
However, without shareholder approval, the Board may not amend the Option Plan
to increase the total number of shares of Common Stock issuable thereunder,
change the class of persons eligible to receive incentive stock options, or
effect any other change that would require shareholder approval under any
applicable law, regulation or rule. No termination or amendment may adversely
affect an outstanding option without the
12
<PAGE> 17
consent of the optionee, unless the amendment is required to preserve an
option's status as an incentive stock option or is necessary to comply with any
applicable law, regulation or rule.
SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary is intended only as a general guide as to the United
States federal income tax consequences under current law of participation in the
Option Plan and does not attempt to describe all possible federal or other tax
consequences of such participation or tax consequences based on particular
circumstances.
Incentive Stock Options. An optionee recognizes no taxable income for
regular income tax purposes as the result of the grant or exercise of an
incentive stock option qualifying under section 422 of the Code. Optionees who
do not dispose of their shares for two years following the date the option was
granted nor within one year following the exercise of the option will normally
recognize a long-term capital gain or loss equal to the difference, if any,
between the sale price and the purchase price of the shares. If an optionee
satisfies such holding periods upon a sale of the shares, the Company will not
be entitled to any deduction for federal income tax purposes. If an optionee
disposes of shares within two years after the date of grant or within one year
from the date of exercise (a "disqualifying disposition"), the difference
between the fair market value of the shares on the exercise date and the option
exercise price (not to exceed the gain realized on the sale if the disposition
is a transaction with respect to which a loss, if sustained, would be
recognized) will be taxed as ordinary income at the time of disposition. Any
gain in excess of that amount will be a capital gain. If a loss is recognized,
there will be no ordinary income, and such loss will be a capital loss. A
capital gain or loss will be long-term if the optionee's holding period is more
than 12 months. Any ordinary income recognized by the optionee upon the
disqualifying disposition of the shares generally should be deductible by the
Company for federal income tax purposes, except to the extent such deduction is
limited by applicable provisions of the Code or the regulations thereunder.
The difference between the option exercise price and the fair market value
of the shares on the exercise date of an incentive stock option is an adjustment
in computing the optionee's alternative minimum taxable income and may be
subject to an alternative minimum tax which is paid if such tax exceeds the
regular tax for the year. Special rules may apply with respect to certain
subsequent sales of the shares in a disqualifying disposition, certain basis
adjustments for purposes of computing the alternative minimum taxable income on
a subsequent sale of the shares and certain tax credits which may arise with
respect to optionees subject to the alternative minimum tax.
Nonstatutory Stock Options. Options not designated or qualifying as
incentive stock options will be nonstatutory stock options. Nonstatutory stock
options have no special tax status. An optionee generally recognizes no taxable
income as the result of the grant of such an option. Upon exercise of a
nonstatutory stock option, the optionee normally recognizes ordinary income in
the amount of the difference between the option exercise price and the fair
market value of the shares on the exercise date. If the optionee is an employee,
such ordinary income generally is subject to withholding of income and
employment taxes. Upon the sale of stock acquired by the exercise of a
nonstatutory stock option, any gain or loss, based on the difference between the
sale price and the fair market value on the exercise date, will be taxed as
capital gain or loss. A capital gain or loss will be long-term if the optionee's
holding period is more than 12 months. No tax deduction is available to the
Company with respect to the grant of a nonstatutory stock option or the sale of
the stock acquired pursuant to such grant. The Company generally should be
entitled to a deduction equal to the amount of ordinary income recognized by the
optionee as a result of the exercise of a nonstatutory stock option, except to
the extent such deduction is limited by applicable provisions of the Code or the
regulations thereunder.
THE BOARD BELIEVES THAT THE PROPOSED AMENDMENT OF THE OPTION PLAN IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS FOR THE REASONS STATED ABOVE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THIS
PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY
RESERVED FOR ISSUANCE UNDER THE OPTION PLAN BY 500,000 SHARES, FROM 2,886,000
SHARES TO 3,386,000 SHARES.
13
<PAGE> 18
PROPOSAL NUMBER THREE
APPROVAL OF AMENDMENT TO THE COMPANY'S 1992 OUTSIDE DIRECTORS STOCK OPTION PLAN
OUTSIDE DIRECTORS STOCK OPTION PLAN
The Company's Outside Directors Stock Option Plan (the "Original Directors
Plan") was adopted by the Board of Directors in 1992 and approved by the
shareholders in September 1992, with a total reserve of 200,000 shares of Common
Stock. The Original Directors Plan was amended and restated in September 1997
(the "Directors Plan"). The shareholders are now being asked to approve the
amendment of the Directors Plan to increase by 50,000 shares, from 200,000 to
250,000, the maximum aggregate number of Common Stock issuable under the
Directors Plan.
The Directors Plan was created in order to assist the Company in the
recruitment, retention and motivation of outside directors who are highly
qualified and in a position to make material contributions to the Company's
success. The Directors Plan is intended to offer these individuals a significant
incentive by enabling them to acquire options to purchase Common Stock at a
price equal to its market value on the date the option is granted.
In addition to their service as members of the Board of Directors, the
Company frequently has need to call upon certain outside directors to provide
consulting services in areas of the Company's business in which they have
special expertise. To provide appropriate incentives to attract and encourage
outside directors able to provide extraordinary levels of service, the Directors
Plan authorizes stock option grants to outside directors who are also serving as
consultants to the Company. The Directors Plan provides for the automatic annual
grant of an option to purchase 5,000 shares of Common Stock to each outside
director who is serving as a consultant to the Company pursuant to a written
consulting agreement and who is expected to continue such service (a "Consultant
Option"). Consultant Options are granted under the Directors Plan in addition to
options automatically granted to each outside director in connection with Board
of Directors service.
SUMMARY OF THE OUTSIDE DIRECTORS STOCK OPTION PLAN
The following summary of the Directors Plan is qualified in its entirety by
the specific language of the Directors Plan, a copy of which is available to any
shareholder upon request.
General. Options granted under the Directors Plan are nonstatutory stock
options. Only directors of the Company who are not employees of the Company (the
"Outside Directors") are eligible to participate in the Directors Plan. As of
the date hereof, there were four Outside Directors eligible to participate in
the Directors Plan and there were outstanding and unexercised options to
purchase 200,000 shares pursuant to the Directors Plan. All options must be
granted, if at all, within 10 years from June 30, 1992, the date the Directors
Plan was initially adopted by the Board.
Shares Subject to Plan. The shareholders have previously authorized the
reservation of an aggregate of 200,000 shares of the Company's authorized but
unissued shares of Common Stock for issuance upon the exercise of options
granted under the Directors Plan. As of August 11, 2000, options to purchase
33,250 shares of common stock granted pursuant to the Directors Plan had been
exercised, and there were 28,750 shares of common stock available for future
grants under the Directors Plan, without taking the proposed increase into
account.
Administration. The Directors Plan is administered by the Board. The Board
shall have no authority, discretion, or power to select the non-employee
directors of the Company who will receive options under the Directors Plan, to
set the exercise price of the options granted under the Directors Plan, to
determine the number of shares of common stock to be granted or the time at
which such options are to be granted, to establish the duration of option
grants, or alter any other terms or conditions specified in the Directors Plan,
except in the sense of administering the Directors Plan subject to the
provisions of the same. All questions of interpretation of the Directors Plan or
of any options granted under the Directors Plan shall be determined by the
Board, and such determinations shall be final and binding upon all persons
having an interest in the
14
<PAGE> 19
Directors Plan and/or any option. Any officer of the Company shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, or election which is the responsibility of or which is allocated to
the Company herein, provided the officer has apparent authority with respect to
such matter, right, obligation, or election.
Eligibility. Each person who becomes an Outside Director in the future will
automatically be granted an option to purchase 10,000 shares of Common Stock on
the date such Outside Director commences service on the Board. Further, each
Outside Director will automatically be granted an option to purchase 4,000
shares of Common Stock each anniversary date of the initial grant to the
director under the Directors Plan (or with respect to the persons who first
became Outside Directors of the Company prior to June 30, 1993). In addition,
upon election as Chairman of the Board of Directors, an Outside Director will
automatically be granted an option to purchase 30,000 shares of Common Stock.
The Directors Plan also provides for the automatic grant of a consultant
option ("Consultant Option") to each newly elected Outside Director who is then
also serving the Company as a consultant. Each outside director who continues to
provide consulting services to the Company will automatically be granted an
additional Consultant Option on each anniversary of his or her initial grant, if
he or she is still serving as a consultant to the Company on such date.
An Outside Director can elect not to receive an option granted under the
Directors Plan by giving written notice of such election to the Company.
Terms and Conditions of Options. Options granted under the Directors Plan
generally are exercisable for a period of five years, however, an Option granted
on or after September 10, 1997, shall be exercisable for a term of ten years.
Options granted under the Directors Plan after November 26, 1996, became
exercisable in twelve monthly installments following the date of grant.
The exercise price of any option granted under the Directors Plan will be
the fair market value of the Common Stock of the Company on the date of grant,
as determined pursuant to the terms of the Directors Plan. Shares subject to an
option granted under the Directors Plan may be purchased for cash, by check, by
the assignment of the proceeds of a sale of some or all of the shares being
acquired upon the exercise of an option, or by any combination of these.
Termination of Service. If an optionee ceases to be a director of the
Company for any reason, except death or disability, the optionee may exercise
his or her Director Option (to the extent unexercised and exercisable on the
date the optionee ceased to be a director) within three months after the date of
termination of service as a director, but in any event not later than the
expiration of the option term. If an optionee ceases to be a consultant of the
Company for any reason, except death or disability, the optionee may exercise
his or her Consultant Option (to the extent unexercised and exercisable on the
date the optionee ceased to be a consultant) within three months after the date
of termination of service as a consultant, but in any event not later than the
expiration of the option term. If an optionee ceases to be a director of the
Company due to death or disability, the optionee (or his or her legal
representative) may exercise his or her Director Option (to the extent
unexercised and exercisable on the date the optionee ceased to be a director)
within 12 months after the date of termination of service as a director, but in
any event not later than the expiration of the option term. If an optionee
ceases to be a consultant of the Company due to death or disability, the
optionee (or his or her legal representative) may exercise his or her Consultant
Option (to the extent unexercised and exercisable on the date the optionee
ceased to be a consultant) within 12 months after the date of termination of
service as a consultant, but in any event not later than the expiration of the
option term. The period for exercise of an option upon termination of service as
a director or consultant will be extended under certain circumstances if
exercise of the option would be a violation of applicable federal or state
securities laws, or if exercise would subject the optionee to suit under Section
16(b) of the Exchange Act.
During the lifetime of the optionee, an option may be exercised only by the
optionee. An option may not be transferred or assigned, except by will or the
laws of descent and distribution.
Transfer of Control. Generally, in the event of the sale, dissolution, or
liquidation of the Company, or a merger or consolidation in which the Company is
not the surviving or resulting corporation, and if the
15
<PAGE> 20
acquiring corporation does not assume, or substitute its outstanding options
for, the outstanding options, the Board will provide that any unexercisable
and/or unvested portion of the outstanding options shall be immediately
exercisable and vested. Any options which are neither assumed nor substituted
for by the acquiring corporation nor exercised as of the date of the Transfer of
Control shall terminate effective as of the date of the Transfer of Control.
Termination or Amendment. The Board may terminate or amend the Directors
Plan at any time; provided, however, that shareholder approval will be required
for any increase in the total number of shares reserved for issuance pursuant to
the Directors Plan, any expansion in the class of persons eligible to receive
options or as otherwise deemed necessary to comply with the requirements of Rule
16b-3 under the Exchange Act.
SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
For a description of the United States federal income tax consequences
under current law of nonstatutory stock options in the Directors Plan, please
see the discussion above under "APPROVAL OF AMENDMENT OF 1998 STOCK OPTION
PLAN -- Summary of United States Federal Income Tax Consequences."
THE BOARD BELIEVES THAT THE PROPOSED AMENDMENT OF THE DIRECTOR PLAN IS IN
THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS FOR THE REASONS STATED
ABOVE. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF
THIS PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY
RESERVED FOR ISSUANCE UNDER THE DIRECTOR PLAN BY 50,000 SHARES, FROM 200,000
SHARES TO 250,000 SHARES.
PROPOSAL NUMBER FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Deloitte & Touche LLP
("Deloitte & Touche") as independent public accountants to audit the financial
statements of the Company for the fiscal year ending March 31, 2001. A
representative of Deloitte & Touche is expected to be present at the Annual
Meeting with the opportunity to make a statement if the representative desires
to do so, and is expected to be available to respond to appropriate questions.
The affirmative vote of a majority of the votes cast at the Annual Meeting
at which a quorum representing a majority of all outstanding shares of Common
Stock is present and voting, either in person or by proxy, is required for
approval of this proposal. Votes against, abstentions and "broker non-votes"
will each be counted as present for purposes of determining the presence of a
quorum.
NEITHER ABSTENTIONS NOR "BROKER NON-VOTES" WILL BE COUNTED AS HAVING BEEN
CAST AFFIRMATIVELY OR NEGATIVELY ON THE PROPOSAL. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL TO APPOINT
DELOITTE & TOUCHE AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL
YEAR ENDING MARCH 31, 2001.
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of shareholders intended to be presented at the next annual
meeting of the shareholders of the Company must be received by the Company at
its offices at 3240 Whipple Road, Union City, CA 94587 94089, no later than May
28, 2001, and satisfy the conditions established by the Securities and Exchange
Commission for shareholder proposals to be included in the Company's proxy
statement for that meeting.
16
<PAGE> 21
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the Board of Directors knows of no
other business that will be conducted at the Annual Meeting other than as
described in this Proxy Statement. If any other matter or matters are properly
brought before the Annual Meeting, or any adjournment or postponement thereof,
it is the intention of the persons named in the accompanying form of proxy to
vote the proxy on such matters in accordance with their best judgment.
By order of the Board of Directors
/S/ Donald J. Stewart
DONALD J. STEWART
Secretary
17
<PAGE> 22
DETACH HERE
PROXY
ABAXIS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 31, 2000
The undersigned hereby appoints Clinton H. Severson and Donald J. Stewart,
and each of them, with full power of substitution, to represent the undersigned
and to vote all of the shares of stock in Abaxis, Inc., a California corporation
(the "Company"), which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of the Company to be held on October 31, 2000 at 10:00 a.m.,
local time, at the offices of the Company, located at 1320 Chesapeake Terrace,
Sunnyvale, California, and at any adjournment or postponement thereof (i) as
hereinafter specified upon the proposals listed on the reverse side and as more
particularly described in the Proxy Statement of the Company dated September 7,
2000 (the "Proxy Statement"), receipt of which is hereby acknowledged, and (ii)
in their discretion upon such other matters as may properly come before the
meeting. The undersigned hereby acknowledges receipt of the Company's 2000
Annual Report to Stockholders.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
----------- -----------
<PAGE> 23
Please mark
[X] votes as in
this example.
A VOTE FOR THE FOLLOWING PROPOSALS IS RECOMMENDED BY THE BOARD OF DIRECTORS:
1. Proposal to elect the following individuals to the Board of Directors.
NOMINEES: (01) Clinton H. Severson, (02) Richard Bastiani, Ph.D.,
(03) Brenton G.A. Hanion, (04) Prithipal Singh, Ph.D.,
(05) Ernest S. Tucker, III, M.D.
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ] ______________________________________________________
(INSTRUCTION: To vote against any individual nominee,
write that nominee's name in the space above.)
FOR AGAINST ABSTAIN
2. To increase the share reserve under the [ ] [ ] [ ]
1998 Stock Option Plan by 500,000 shares.
3. To increase the share reserve under the [ ] [ ] [ ]
1992 Outside Directors' Stock Option Plan
by 50,000 shares.
4. To ratify the appointment of Deloitte & [ ] [ ] [ ]
Touche L.L.P. as independent accountants
of the Company for the fiscal year ending
March 31, 2001.
MARK HERE MARK HERE
FOR ADDRESS [ ] IF YOU PLAN [ ]
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
The undersigned hereby expressly revokes any and all proxies heretofore given
or executed by the undersigned with respect to the shares of stock represented
by this ballot.
Please sign here. Sign exactly as your name(s) appear(s) on your stock
certificate. If shares of stock are held of record in the names of two or more
persons or in the name of husband and wife, whether as joint tenants or
otherwise, both or all of such persons should sign the Proxy. If shares of stock
are held of record by a corporation, the Proxy should be executed by the
President or Vice President and the Secretary or Assistant Secretary. Executors
or administrators or other fiduciaries who execute the Proxy for a deceased
shareholder should give their full title. Please date the Proxy.
Signature:_________________ Date:______ Signature:_________________ Date:______
