ECOSCIENCE CORPORATION
10 Alvin Court
East Brunswick, New Jersey 08816
732-432-8200
---------------------
NOTICE OF A SPECIAL MEETING IN LIEU OF
THE 1997 ANNUAL MEETING
OF STOCKHOLDERS
November 25, 1997
To the Stockholders of
EcoScience Corporation:
Notice is hereby given that a Special Meeting in lieu of the 1997 Annual
Meeting of Stockholders of EcoScience Corporation (the "Company") will be held
on Tuesday, November 25, 1997 at 9:30 A.M. local time at the Brunswick Hilton
Hotel, Three Tower Center Boulevard, East Brunswick, New Jersey 08816, to
consider and act upon (1) the election of two Directors to the class of
Directors whose terms expire in 2000, (2) an amendment to the Company's 1991
Stock Option Plan, and (3) such other business as may properly come before the
meeting or any adjournment thereof.
Reference is hereby made to the accompanying Proxy Statement for more
complete information concerning the matters to be acted upon at the meeting.
Only stockholders of record of the Company's Common Stock at the close of
business on October 17, 1997 (the "Record Date") will be entitled to vote at the
Special Meeting in lieu of the 1997 Annual Meeting and any adjournment thereof.
All stockholders are invited to attend the meeting in person.
By Order of the Board of Directors
/s/ Harold A. Joannidi
Harold A. Joannidi
Secretary
East Brunswick, New Jersey
October 27, 1997
HOLDERS OF RECORD OF COMMON STOCK AS OF THE RECORD DATE ARE URGED TO VOTE, SIGN,
DATE AND RETURN THEIR PROXIES IN THE ENCLOSED ENVELOPE. NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES. HOLDERS OF RECORD OF THE COMMON STOCK AS
OF THE RECORD DATE WHO DO ATTEND THE MEETING AND WISH TO VOTE IN PERSON MAY
REVOKE THEIR PROXIES.
<PAGE>
ECOSCIENCE CORPORATION
10 Alvin Court
East Brunswick, New Jersey 08816
732-432-8200
PROXY STATEMENT FOR A SPECIAL MEETING
IN LIEU OF THE 1997 ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD
NOVEMBER 25, 1997
This Proxy Statement and the enclosed proxy card are being furnished to
stockholders of EcoScience Corporation ("EcoScience" or the "Company"), a
Delaware corporation, in connection with the solicitation by the Company's Board
of Directors (the "Board") of proxies to be voted at the Company's Special
Meeting in lieu of the 1997 Annual Meeting of Stockholders to be held on
Tuesday, November 25, 1997 at 9:30 A.M. local time at the Brunswick Hilton
Hotel, Three Tower Center Boulevard, East Brunswick, New Jersey 08816, and at
any adjournments thereof (the "Meeting").
This Proxy Statement and the enclosed proxy card are first being mailed or
otherwise furnished to stockholders of the Company on or about October 27, 1997.
Proxies may be solicited by Directors, officers and employees of the Company by
mail, by telephone, in person or otherwise. No such person will receive
additional compensation for such solicitation. In addition, the Company will
request banks, brokers, and other custodians, nominees, and fiduciaries to
forward proxy materials to the beneficial owners of Common Stock and obtain
voting instructions from such beneficial owners. The Company will reimburse
those firms for their reasonable expenses in forwarding proxy materials and
obtaining voting instructions. The Annual Report to Stockholders for fiscal year
Ended June 30, 1997 is being mailed to the stockholders with this Proxy
Statement, but does not constitute a part hereof.
When the proxy card of a stockholder is duly executed and returned, the
shares represented thereby will be voted in accordance with the voting
instructions given on the proxy by the stockholder. If no such voting
instructions are given on a proxy card with respect to one or more proposals,
the shares represented by that proxy card will be voted, (i) in the election of
Directors, FOR the nominees named herein, (ii) with respect to the amendment to
the Company's 1991 Stock Option Plan, FOR the amendment, and (iii) with respect
to other proposals, in accordance with the recommendations of the Board.
Stockholders may revoke their proxies at any time prior to any vote at the
Meeting by written notice to the Secretary of the Company at or before the
Meeting, by submission of a duly executed proxy card bearing a later date or by
voting in person by ballot at the Meeting.
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<PAGE>
VOTING SECURITIES
Holders of Common Stock of record on the books of the Company at the close
of business on October 17, (the "Record Date") are entitled to notice of and to
vote at the Meeting. At the Record Date, there were issued and outstanding
10,401,177 shares of Common Stock, each of which entitles the holder to one vote
on each matter submitted to a vote at the Meeting. A plurality of the votes cast
in person and represented by proxy at the Meeting is required for the election
of Directors. An affirmative vote of a majority of the votes cast in person or
represented by proxy is required for the approval of the amendment to the
Company's 1991 Stock Option Plan and for approval of all other items submitted
to the stockholders for their consideration. Shares owned by a stockholder
submitting a proxy card but abstaining from voting on any proposal are counted
in the number of shares present in person or represented by proxy for purposes
of determining whether that proposal has been approved. Shares held but not
voted by brokers are counted only for purposes of determining whether a quorum
is present at the Meeting.
ELECTION OF DIRECTORS
The By-Laws of the Company provide for a Board consisting of such number of
Directors, not fewer than three, as shall be fixed from time to time by the
Board. The Board is divided into three classes, with each class to hold office
for a term of three years and the term of office of one class to expire each
year. The Board has fixed the number of Directors to constitute the full Board
for the ensuing year at six, two of whom are to be elected at this year's
Special Meeting in lieu of the Annual Meeting of Stockholders, one whose term
expires at the 1998 Annual Meeting and three whose terms expire at the 1999
Annual Meeting.
Michael A. DeGiglio and David J. Ryan represent the class of Directors
whose terms expire at this year's Special Meeting in lieu of the Annual Meeting
of Stockholders. The Board has nominated Messrs. DeGiglio and Ryan for election
to the class of Directors whose terms expire at the 2000 Annual Meeting.
Shares represented by proxies will be voted FOR the election as Director of
the foregoing nominees unless otherwise specified in the proxy. If any of the
nominees for election to the Board should, for any reason not now anticipated,
not be available to serve as such, proxies will be voted FOR such other
candidate as may be designated by the Board unless the Board reduces the number
of Directors. The Board has no reason to believe that any of the nominees will
be unable to serve if elected.
Set forth below is certain information with respect to the nominees for
election to the Board and those Directors whose terms of office will continue
after the Annual Meeting.
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<PAGE>
Nominees for Election for a Three Year Term Expiring at the 2000 Annual Meeting
MICHAEL A. DEGIGLIO
Mr. DeGiglio, age 43, has served as a Director of the Company since
November 1996, when he was elected to serve as a Director by the Board. Mr.
DeGiglio joined the Company upon its acquisition of Agro Dynamics, Inc. ("AGRO")
in November 1992, and has served as President of AGRO since that time. In July
1995, Mr. DeGiglio assumed the offices of President and Chief Executive Officer
of the Company. From 1984 until joining the Company, Mr. DeGiglio was employed
by AGRO, where he served as President. Prior to co-founding AGRO, Mr. DeGiglio
was Vice President of International Sales for NYPCO International Inc. Mr.
DeGiglio served on active duty in the United States Navy as an Officer and Jet
Aviator from July 1976 through December 1982, and the Naval Air Reserves from
1983 to present, currently holding the rank of Captain with the United States
Naval Reserve. Throughout his Naval career, he has held various department head
positions, completed a tour as Commanding Officer of a Jet Aviation Squadron,
performed multiple tours overseas, and has completed numerous Senior Advanced
Management courses. Mr. DeGiglio also serves as Chief Executive Officer and
Director of Agro Power Development, Inc. Mr. DeGiglio received a B.S. in
Aeronautical Science and Aviation Management from Embry Riddle Aeronautical
University.
DAVID J. RYAN (1)(2)(3)
Mr. Ryan, age 42, has served as a Director of the Company since 1988. Since
1983, Mr. Ryan has been a General Partner of Copley Venture Partners, an
affiliate of Copley Partners 2, L.P., a venture capital investor in EcoScience.
Mr. Ryan also is a Managing Partner of Mission Ventures, L.P. Prior to his
involvement in venture capital, Mr. Ryan spent five years with Medusa
Corporation, a midwest based manufacturer of industrial and building products,
in several financial and operating capacities. Mr. Ryan also serves as a
director of SSC Science Corporation and Mulberry Child Care Centers. Mr. Ryan
holds a B.S. from Northeastern University and an M.B.A. from Case Western
Reserve University.
Director Continuing in Office Until the 1998 Annual Meeting
LARRY M. NOUVEL(1)
Mr. Nouvel, age 54, has served as a Director of the Company since March
1993. Mr. Nouvel is currently President of Speer Products, a company that is
primarily engaged in the development, manufacturing and marketing of insecticide
products to the non-agricultural markets. From January 1986 to May 1992, he
served as President of Roussel BioCorporation, a company that manufactures and
markets insecticide products to the non-agricultural markets. Previously, Mr.
Nouvel held several senior marketing and sales positions, including Vice
President of Marketing and Sales, for Zoecon Industries, a manufacturer and
marketer of insecticide products to the professional pest control markets. Mr.
Nouvel holds a B.A. degree in Chemistry from the University of Texas at El Paso.
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<PAGE>
Directors Continuing in Office Until the 1999 Annual Meeting
KENNETH S. BOGER(3)
Mr. Boger, age 51, has served as a Director of the Company since July 1993.
Mr. Boger is currently a partner in the Boston law firm of Warner & Stackpole
LLP, the Company's general counsel, where he has practiced corporate law since
1976. Mr. Boger holds an A.B. from Duke University, an M.B.A. from the
University of Chicago and a J.D. from Boston College Law School.
E. ANDREWS GRINSTEAD, III(2)(3)
Mr. Grinstead, age 52, has served as a Director of the Company since May
1991. Mr. Grinstead is currently Chairman, Chief Executive Officer and President
of Hybridon, Inc., a pharmaceutical company, and serves as a director of Pharmos
Corporation and Survival Technologies, Inc. From October 1990 to June 1991, he
acted as a consultant and financial advisor to emerging growth companies in the
medical field, particularly bio-pharmaceutical companies. From February 1984
through September 1990, he was a Managing Director and head of PaineWebber
Incorporated's Healthcare/Life Sciences Group, Managing Director of the life
sciences group at Drexel Burnham Lambert Incorporated and a Vice President of
Kidder, Peabody & Co. Mr. Grinstead graduated from Harvard University, the
University of Virginia School of Law and Harvard Business School.
HEINZ K. WEHNER(1)
Mr. Wehner, age 66, has served as a Director of the Company since March
1993. From March 1976 to June 1992, Mr. Wehner served in several management
positions with Chemagro Corporation, a subsidiary of Bayer A.G. in Germany,
Mobay Corporation and, most recently, Miles, Inc., where he served as Executive
Vice President of the Agricultural, Animal Health and Consumer Products
Division. Previously, he held several management positions with Bayer Quimicas
Unidas S.A. in Peru, including Vice President of the Agricultural Chemicals and
Animal Health Division, and with Bayer de Mexico S.A., including Vice President
of the Crop Protection and Consumer Products Division. Mr. Wehner is an advisory
director for the Commerce Bank of Kansas City, N.A. in Kansas City, Missouri.
Mr. Wehner attended Escuelas Americanas in Peru where he studied business
administration.
- --------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Strategic Alternatives Committee.
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<PAGE>
Meetings and Committees of the Board of Directors
The Board held six meetings during the fiscal year ended June 30, 1997.
Each of the Directors attended at least 75% of the Board meetings and meetings
of committees of the Board of which he was a member.
The Audit Committee consists of Messrs. Grinstead and Ryan. During fiscal
1997, the full Board of Directors performed the functions of the Audit Committee
which included interactions with the Company's independent accountants to review
the scope of the annual audit, to discuss the adequacy of internal accounting
controls and procedures, and to perform general oversight with respect to the
accounting principles applied in the financial reporting of the Company.
The Compensation Committee's functions are to recommend to the full Board
the amount, character and method of payment of compensation to all executive
officers and certain other key employees of the Company and to administer the
Company's 1991 Stock Option Plan. The Compensation Committee consists of Messrs.
Nouvel, Ryan and Wehner. The Compensation Committee held three meetings during
fiscal 1997.
In fiscal 1995, the Company appointed Messrs. Boger, Grinstead and Ryan to
serve on a Strategic Alternatives Committee to investigate strategic
alternatives available to the Company, including mergers, acquisitions and
technology licensing opportunities. The Strategic Alternatives Committee held
one meeting during fiscal 1997.
Board Recommendation
The Board recommends that the stockholders VOTE FOR the election of the
nominees to the Board of Directors. A plurality of the votes cast in person or
represented by proxy at the Meeting is required to elect each nominee as
Director.
PROPOSAL TO RATIFY AND APPROVE AN AMENDMENT TO THE
COMPANY'S 1991 STOCK OPTION PLAN
In a Meeting of the Board of Directors of the Company dated November 7,
1996, the Board approved an amendment to the Company's 1991 Stock Option Plan.
The amendment provides that the number of shares of the Company's Common Stock
which may be granted under the 1991 Stock Option Plan shall be increased from
1,300,000 to 1,800,000 shares. The Board authorized this increase to ensure a
sufficient number of option shares would be available for future grants.
The Company believes granting such options is necessary to attract and
retain high quality employees, officers and consultants. For this reason, the
Board of Directors recommends the Stockholders VOTE FOR the proposal to ratify
and approve the amendment to the Company's 1991 Stock Option Plan. The
affirmative vote of a majority of
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<PAGE>
the votes cast in person or represented by proxy at the Meeting is required to
approve this proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding beneficial ownership
of the Company's Common Stock as of October 6, 1997 by (i) each person known to
the Company to be the beneficial owner of more than 5% of the Company's Common
Stock on that date, (ii) each Director, (iii) each executive officer listed in
the Summary Compensation Table below and (iv) all Directors and executive
officers as a group.
SUMMARY SECURITY OWNERSHIP TABLE
<TABLE>
<CAPTION>
Shares
Beneficially Percentage
Name and Address Owned(1) of Total Shares
- ---------------- -------- ---------------
<S> <C> <C>
Palo Alto Investors (2) ................................ 1,466,000 14.1%
431 Florence Street, Suite 200
Palo Alto, California 94301
Copley Partners 2, L.P (3) ............................. 822,932 7.9%
600 Atlantic Avenue
Boston, Massachusetts 02110
Ell & Company, FBO: .................................... 590,000 5.7%
AT&T Corporation
405 Park Avenue
New York, New York 10022
Kenneth S. Boger (4) ................................... 37,225 *
E. Andrews Grinstead, III (4) .......................... 86,113 *
Larry M. Nouvel (4) .................................... 37,225 *
David J. Ryan (5) ...................................... 860,157 8.2%
Heinz K. Wehner (4) .................................... 37,225 *
Michael A. DeGiglio (6) ................................ 292,658 2.8%
Richard A. Andrews (7) ................................. 85,006 *
David W. Miller (8) .................................... 111,359 1.1%
All Directors and executive officers as a group
(9 persons) (9) .................................. 1,606,968 14.4%
</TABLE>
*Less than 1%.
(1) Information with respect to beneficial ownership is based upon information
furnished to the Company by each stockholder included in this table. Except
as indicated in the notes to the table, each stockholder included in the
table has sole voting and investment power with respect to the shares shown
to be beneficially owned by him. Pursuant to the rules of the Securities
and Exchange Commission, shares of Common Stock which an individual or
member of a group has a right to acquire within 60 days of the date of this
table pursuant to the exercise of options or warrants are deemed to be
outstanding for the purpose of computing the percentage ownership of such
individual or group, but are not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person shown in the
table.
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<PAGE>
(2) According to a Schedule 13G/A dated February 14, 1997, filed by Palo Alto
Investors, consists solely of shares of Common Stock as to which such
entity has shared voting and investment power.
(3) Includes 66,666 shares of Common Stock issuable upon exercise of a warrant.
(4) Consists solely of shares of Common Stock issuable upon exercise of
warrants.
(5) Includes 37,225 shares of Common Stock issuable upon exercise of warrants,
and 756,266 and 66,666 shares of Common Stock held and issuable upon
exercise of a warrant, respectively, by Copley Partners 2, L.P., of which
Copley Venture Partners L.P., a limited partnership of which Mr. Ryan is a
general partner, is a general partner of Copley Partners 2, L.P.
(6) Includes 17,427 shares of Common Stock held by Mr. DeGiglio's wife, Susan
A. DeGiglio, as to which Mr. DeGiglio disclaims beneficial ownership, and
240,833 shares of Common Stock issuable upon exercise of stock options.
(7) Includes 83,778 shares of Common Stock issuable upon exercise of stock
options. As of August 29, 1997, Mr. Andrews resigned from the Company.
(8) Includes 87,500 shares of Common Stock issuable upon exercise of stock
options.
(9) Includes an aggregate of 773,790 shares of Common Stock issuable upon
exercise of stock options and warrants. Share amount includes 756,266 and
66,666 shares of Common Stock held and issuable upon exercise of a warrant,
respectively, by Copley Partners 2, L.P., of which Copley Venture Partners
L.P., a limited partnership of which Mr. Ryan is a general partner, is a
general partner of Copley Partners 2, L.P., for a total of 822,932 or 7.4%
of total shares.
The mailing address for each of the persons listed above whose address was
not supplied in the table is c/o EcoScience Corporation, 10 Alvin Court, East
Brunswick, N.J. 08816.
EXECUTIVE COMPENSATION
The following table provides certain summary information regarding
compensation paid by the Company during the fiscal years ended June 30, 1997,
1996 and 1995 to the Company's Chief Executive Officer and to each of the other
executive officers of the Company, whose annual compensation and bonus for the
fiscal year ended June 30, 1997 exceeded $100,000 (together with the Chief
Executive Officer, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
--------------------------------
Annual Compensation Number of
-------------------------------- Restricted Shares
Name and Stock Underlying
Principal Position Year Salary Bonus Awards Stock Options
------------------ ---- ------ ----- ------ -------------
<S> <C> <C> <C> <C> <C>
Michael A. DeGiglio (1) 1997 $140,000 $ 25,000 -- 100,000
President and Chief 1996 123,391 25,000 -- 200,000
Executive Officer 1995 110,250 -- -- --
Richard A. Andrews (2) 1997 113,542 -- -- 58,778
Vice President 1996 121,750 -- -- 50,000
1995 131,250 -- -- --
David W. Miller (3) 1997 106,167 -- -- 55,000
Vice President -Technology 1996 108,230 -- -- 50,000
1995 120,750 -- -- --
</TABLE>
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<PAGE>
(1) Mr. DeGiglio joined the Company in November 1992 as the President of Agro
Dynamics, Inc. and was appointed President and Chief Executive Officer of
the Company in July 1995.
(2) As of August 29, 1997, Mr. Andrews resigned from the Company. In January
1997, the Company repriced an option to Mr. Andrews to purchase up to
58,778 shares of common stock at an exercise price of $1.00 per share with
a new expiration date of January 7, 2007.
(3) During fiscal year 1997, the Company repriced options to Dr. Miller to
purchase up to 35,000 and 20,000 shares of common stock at exercise prices
of $1.50 and $1.00 per share with new expiration dates of August 12, 2006
and January 7, 2007, respectively.
The following table provides certain information with respect to options
granted under the Company's 1991 Stock Option Plan to each of the Named
Executive Officers during the fiscal year ended June 30, 1997.
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
------------------------------------------------------ Value at Assumed
Number of Percent of Total Rates of Stock Price
Shares Options Appreciation for
Underlying Granted to Option Term (1)
Options Employees in Exercise Expiration ---------------------
Name Granted Fiscal Year Price Date 5% 10%
---- ------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Michael A. DeGiglio (2) 100,000 29.4% $1.00 01/07/02 $27,628 $ 61,051
Richard A. Andrews (3) 58,778 17.3% 1.00 01/07/07 1,225
2,449
David W. Miller (4) 35,000 10.3% 1.50 08/12/06 $33,017 $ 83,671
20,000 5.9% 1.00 01/07/07 12,578 31,875
------- ---- ------- --------
55,000 16.2% $45,595 $115,546
======= ==== ======= ========
</TABLE>
(1) As required by the rules of the Securities and Exchange Commission,
potential values stated are on the prescribed assumption that the Company's
Common Stock will appreciate in value from the date of grant to the end of
the option term at annualized rates of 5% and 10%. The actual value, if
any, an executive officer may realize will depend on the excess of the
market price of the Company's Common Stock over the exercise price on the
date the option is exercised; however, there is no assurance that the value
realized by an executive officer will be near the value show in the table.
(2) The option vests 25% on the date of grant and the balance vests in equal
monthly installments of 3,125 shares beginning February 1, 1997 and ending
January 1, 1999.
(3) In January 1997, the Company repriced an option to Mr. Andrews to purchase
up to 58,778 shares of Common Stock at an exercise price of $1.00 per share
with a new expiration date of January 7, 2007. This option vested in full
on the reissuance date. The potential realizable values reflected above
represent appreciation values limited to three months after Mr. Andrews'
resignation from the Company, the exercise period limit as provided in the
Plan.
(4) During fiscal year 1997, the Company repriced options to Dr. Miller to
purchase up to 35,000 and 20,000 shares of Common Stock at exercise prices
of $1.50 and $1.00 per share with new expiration dates of August 12, 2006
and January 7, 2007, respectively. The 35,000 share option vests in two
equal annual installments beginning one year from the date of grant. The
20,000 share option vested in full on the date of grant.
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<PAGE>
The following table provides certain information with respect to options
to purchase Common Stock held by the Named Executive Officers at June 30, 1997.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 1997
AND
1997 FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised In the Money Options
Options at Fiscal Year End at Fiscal Year End
------------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael A. DeGiglio 164,792 155,208 $28,906 $33,594
Richard A. Andrews 83,778 25,000 24,070 9,375
David W. Miller 45,000 60,000 14,375 9,375
</TABLE>
No options were exercised by the Named Executive Officers in fiscal year
1997.
The following table provides certain information with respect to option
repricings under the Company's 1991 Stock Option Plan and Stock Appreciation
Rights ("SARs") repricings for each of the executive officers of the Company for
the last ten fiscal years in the period ended June 30, 1997.
<TABLE>
TEN YEAR OPTION AND STOCK APPRECIATION RIGHTS REPRICINGS
<CAPTION>
Number of
Shares of Length of
Securities Original Original
Underlying Market Price Number Exercise Option/SARs Term
Options/ of Stock at of Shares Price at Remaining
SARs Time of New Underlying Time of at Date of
Repriced or Repricing or Exercise Cancelled or Repricing or Repricing or
Name Date Amended Amendment Price Amended Option Amendment Amendment
---- ---- ------- --------- ----- -------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard 01/08/97(1) 58,778 $1.00 $1.00 23,333 $ 0.450 Expired
A. 10,000 0.375 Expired
Andrews 15,000 9.500 6 years, 7 months
Vice 15,000 5.750 5 years, 8 months
President 10,000 11.375 5 years, 1 month
David W. 08/12/96 35,000 1.125 1.50 10,000 11.375 5 years, 6 months
Miller 25,000 9.500 7 years
Vice
President- 01/08/97(2) 20,000 1.00 1.00 10,000 0.375 Expired
Technology 20,000 5.750 5 years, 8 months
</TABLE>
(1) The reissuance share amount to Mr. Andrews was based on a calculation
intended to preserve a certain potential realizable value from Mr. Andrews'
options dated September 1, 1990 and April 22, 1991 which were issued under
the Company's 1988 Stock Option Plan in the amounts of 23,333 and 10,000
shares, respectively, ("the 1988 Andrews Options") based on a certain
market reference price of $1.75 per share. The 1988 Andrews Options were
inadvertently allowed to expire due to confusion over their expiration
dates. The potential realizable value to Mr. Andrews was determined based
on the $1.75 reference price
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<PAGE>
for the 1988 Andrews Options and the equivalent number of shares at the
reissuance exercise price of $1.00 per share was then determined so as to
preserve Mr. Andrews' original potential realizable value, such reissuance
share amount was determined to be 58,778. In addition, Mr. Andrews
surrendered three other options to purchase up to an aggregate of 40,000
shares, as reflected in the above table, as additional consideration for
the repricing.
(2) The reissuance share amount to Dr. Miller was primarily based on a
calculation intended to preserve a certain potential realizable value from
Dr. Miller's option dated April 22, 1991, which was issued under the
Company's 1988 Stock Option Plan in the amount of 10,000 shares ("the 1988
Miller Option") based on a certain market reference price of $1.75 per
share. The 1988 Miller Option was inadvertently allowed to expire due to
confusion over its expiration date. The potential realizable value to Dr.
Miller was determined based on the $1.75 reference price for the 1988
Miller Option and the equivalent number of shares at the reissuance
exercise price of $1.00 per share was then determined so as to preserve Dr.
Miller's original potential realizable values, such reissuance share amount
was determined to be 18,334 shares. Due to Dr. Miller's additional
surrender of an option dated September 24, 1992, issued under the 1991
Stock Option Plan for 20,000 shares, the reissued share amount was
increased to 20,000 shares.
Compensation of Directors
Each Director who is not an employee of the Company receives an annual
retainer of $5,000 for Board service, plus $750 for each Board meeting attended,
$375 for each telephone Board meeting which lasts more than one hour and $500
for each Committee meeting attended, plus expenses. Those Directors who are
employees of the Company do not receive any compensation for their services as
Directors.
Each non-employee Director when first elected or appointed to the Board
receives a warrant to purchase 20,000 shares of Common Stock at an exercise
price equal to the fair market value on the grant date. These warrants vest at
the rate of 20 percent on the grant date and on the first anniversary of the
grant date and 30 percent on the second and third anniversaries of the grant
date. Warrants granted to Directors of the Company expire five years after date
of grant.
In February 1997, the Company reissued a warrant to Copley Partners 2,
L.P. to purchase up to 66,666 shares of Common Stock at an exercise price of
$3.75 per share with a new expiration date of May 1, 2001. The Company also
reissued a warrant to Mr. Grinstead to purchase up to 48,888 shares of Common
Stock at an exercise price of $1.00 per share with a new expiration date of May
1, 2001 and a warrant to purchase up to 10,000 shares of Common Stock at an
exercise price of $3.75 per share with a new expiration date of May 1, 2001. The
Company also extended the expiration date to May 1, 2001 on warrants held by the
Directors to purchase collectively up to 90,000 shares of Common Stock at
exercise prices between $6.875 and $9.75 per share.
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<PAGE>
Certain Transactions
Kenneth S. Boger, a Director of the Company, is a partner in the law firm
of Warner & Stackpole LLP, which performed legal services for the Company during
fiscal 1997 and is expected to perform such services in the current fiscal year.
The Company sold product to an affiliated group of companies
("Affiliates") in the amount of $2,893,000 or 14% of product sales in 1997 and
$556,000 or 4% of product sales in 1996. Mr. DeGiglio serves as Chief Executive
Officer and Director of the Affiliates. Net amount due from the Affiliates was
$348,000 and $89,000 at June 30, 1997 and 1996, respectively. The Affiliates
also paid a monthly fee to the Company for facilities and other costs amounting
to $39,000 and $55,000 for 1997 and 1996, respectively.
REPORT OF THE COMPENSATION COMMITTEE
The Board of Directors delegated to its Compensation Committee (the
"Committee") the responsibility and authority to administer executive
compensation policies for all executive officers of the Company, including the
Chief Executive Officer. The Committee's recommendations as to compensation for
executive officers of the Company are subject to approval by the full Board of
Directors of the Company. The Committee is currently composed of three
independent Directors, Larry M. Nouvel, David J. Ryan and Heinz K. Wehner.
This report sets forth the policies used by the Committee in determining
the compensation paid by the Company for fiscal 1997 to its executive officers,
including the Named Executive Officers.
Summary Philosophy and Overall Objectives of Executive Compensation
EcoScience seeks to encourage and reward executives' efforts for the
achievement of corporate objectives and performance goals by blending base
salary, bonuses and long-term incentive compensation in the form of stock
options. EcoScience's executive compensation program seeks to accomplish several
major goals:
o Recruit and retain highly qualified executive officers.
o Motivate executive officers to achieve specified individual
performance objectives and Company wide goals, and to reward them when
these objectives and goals are achieved.
o Align the financial interests of executive officers with the long-term
interests of the Company's stockholders.
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Base Salary
The Committee set base salaries for the executive officers during fiscal
1997. Base salaries for the executive officers were increased between 12% and
20% in fiscal 1997 to reflect their contributions to the Company's operational
and financial advancements during fiscal 1997 and 1996, and to bring their base
salaries more in line with those salaries paid by companies with whom EcoScience
competes for recruitment and retention of such executive officers.
Bonuses
In fiscal 1993, the Company established an executive officer incentive
bonus program (the "Bonus Program"), payable in cash and in Common Stock of the
Company, to reward executive officers when the Company achieves certain
objectives and when an executive officer's area of responsibility meets its
predetermined goals. All executive officers, including the Chief Executive
Officer, are eligible to receive bonuses under the Bonus Program. No bonuses
were awarded under the Bonus Program in fiscal 1997.
Long-Term Incentive Compensation
The Company's 1991 Stock Option Plan (the "Plan") was established to
provide all employees of the Company with an opportunity to share in the growth
of the Company along with its stockholders, and to encourage employees to remain
with the Company and work toward its long-term success. Incentive stock options
granted under the Plan are priced at not less than the fair market value of the
Company's Common Stock on the date of grant, usually vest over a four year
period and expire after ten years.
Stock option grants are typically made to all employees upon commencement
of employment and, when appropriate, following a promotion or to recognize
superior job performance. Senior executives of the Company, including the Named
Executive Officers, will be considered for eligibility to receive stock option
grants in the future, subject to individual performance and the performance of
the Company as a whole.
In fiscal 1997, the Compensation Committee repriced options to purchase up
to 58,778 and 55,000 shares of Common Stock to Richard A. Andrews and David W.
Miller, respectively, as further discussed in the Ten Year Option and Stock
Appreciation Rights Repricings table, and granted an option to purchase up to
50,000 shares of Common Stock to Harold A. Joannidi, the Company's Treasurer and
Secretary, in recognition of their loyalty and contributions to the Company. The
Committee believes these option repricings and grant will also act as incentives
for those executives to remain with the Company and continue to devote their
best efforts to its progress.
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Chief Executive Officer Compensation
Mr. DeGiglio's annualized base salary for fiscal 1997 of $150,000
represents an increase of 15% over his 1996 salary. The Committee believes this
increase reflects Mr. DeGiglio's contributions to the Company's operational and
financial advancements during fiscal 1997 and 1996, and brings his base salary
more in line with those salaries paid by companies with whom EcoScience competes
for recruitment and retention of chief executive officers. The Committee also
granted Mr. DeGiglio options to purchase up to 100,000 shares of Common Stock.
The Committee felt it was necessary to increase Mr. DeGiglio's option position
with the Company in order to encourage him to remain with the Company, and in
recognition of his leadership of the Company. The Committee awarded Mr. DeGiglio
a $25,000 cash merit bonus in recognition of his efforts in improving the
operating performance of the Company during fiscal 1996 and the first six months
of fiscal 1997.
Internal Revenue Code Limitation on Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation in excess of
$1,000,000 paid during any fiscal year to the company's chief executive officer
or four other most highly compensated executive officers. Qualified performance
based compensation is not included in the $1,000,000 limit. The Committee
believes that the Company's 1991 Stock Option Plan would qualify as a
performance based compensation plan.
Submitted by the
Compensation Committee
Larry M. Nouvel
David J. Ryan
Heinz K. Wehner
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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
AMONG ECOSCIENCE CORPORATION, THE NEW PEER GROUP, THE OLD PEER GROUP AND THE NASDAQ STOCK MARKET (U.S.) INDEX
EcoScience New Peer Old Peer NASDAQ Stock
Date Corporation Group (1) Group (2) Market (U.S.) Index
- -------------------- --------------- --------- --------- --------------------
<S> <C> <C> <C> <C>
June 1992 100 100 100 100
June 1993 146 92 92 126
June 1994 71 81 81 127
June 1995 21 49 47 169
June 1996 21 69 69 218
June 1997 18 84 86 265
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* $100 invested on June 30, 1992 in stock or index including reinvestment of
dividends for fiscal years ended June 30.
(1) The Company selected New Peer Group consists of Consep Inc., Ecogen Inc.,
Mycogen Corporation and Ringer Corporation.
(2) In addition to Ecogen, Inc., Mycogen Corporation and Ringer Corporation,
the companies comprising part of the New Peer Group, the Old Peer Group
included Biosys Inc., Calgene Inc. and DNA Plant Technology Corporation,
all of whom ceased listing on the NASDAQ Stock Market during fiscal 1997.
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INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, the independent public accountants for the Company,
will have representatives at the Meeting who will be available to respond to
appropriate questions and who will be given the opportunity to make a statement
should they desire to do so.
STOCKHOLDER PROPOSALS FOR
THE 1998 ANNUAL MEETING
In order to be considered for inclusion in the Proxy Statement for the
Company's 1998 Annual Meeting of Stockholders, stockholder proposals must be
received by the Company no later than June 1, 1998. Proposals should be sent to
the attention of the Secretary at the Company's principal offices at 10 Alvin
Court, East Brunswick, New Jersey 08816.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and persons who are beneficial owners of more than
ten percent of the Company's Common Stock to file with the Securities and
Exchange Commission (the "Commission") reports of their ownership of the
Company's securities and of changes in that ownership. To the Company's
knowledge, based on a review of copies of reports filed with the Commission and
written representations by certain reporting persons that no reports on Form 5
were required from those persons, all reports that were required to be filed
under Section 16(a) were timely filed, except that Messrs. Andrews, DeGiglio,
Grinstead, Joannidi, Miller and Ryan, did not file timely reports on Form 4 to
reflect their changes in beneficial ownership of the Company's Common Stock.
OTHER MATTERS
The Special Meeting in lieu of the 1997 Annual Meeting of Stockholders is
called for the purposes set forth in the notice. The Board of Directors does not
know of any matter for action by the stockholders at the Meeting other than the
matters described in the notice. However, the enclosed proxy confers
discretionary authority on the persons named therein with respect to matters
which are not known to the Directors at the date of printing hereof and which
may properly come before the Meeting. The intention of the persons named in the
proxy is to vote in accordance with their best judgment on any such matter.
By order of the Board of Directors
/s/ Harold A. Joannidi
Harold A. Joannidi
Secretary
East Brunswick, New Jersey
October 27, 1997
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PROXY CARD
ECOSCIENCE CORPORATION
SPECIAL MEETING IN LIEU OF THE 1997
ANNUAL MEETING OF STOCKHOLDERS - NOVEMBER 25, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby constitute and appoint Michael A. DeGiglio and
Harold A. Joannidi, or either of them, the attorney(s) of the undersigned, with
full power of substitution, with all the powers which the undersigned would
possess if personally present, to vote all stock of EcoScience Corporation (the
"Company") which the undersigned is entitled to vote at the Company's Special
Meeting in lieu of the 1997 Annual Meeting of Stockholders to be held at the
Brunswick Hilton Hotel, Three Tower Center Boulevard, East Brunswick, New Jersey
08816 on Tuesday, November 25, 1997 at 9:30 A.M. local time and at any
adjournment thereof, hereby acknowledging receipt of the Proxy Statement for
such meeting and revoking all previous proxies.
This Proxy, when properly executed, will be voted as directed. If no
direction is made, this Proxy will be voted FOR the election as Director for the
nominees named on the reverse side, FOR the proposal to ratify and approve an
amendment to the Company's 1991 Stock Option Plan and, in the case of other
matters that legally come before the meeting, as said attorney(s) may deem
advisable.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
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/X/ Please mark votes as in this example.
Please vote, sign, date and return the proxy card promptly using the enclosed
envelope.
1. Election of Directors whose terms expire in 2000.
Nominees: Michael A. DeGiglio and David J. Ryan
Withhold Authority
For Both Nominees To Vote For Both Nominees
/ / / /
- --------------------------------------------------------------------------------
/ / Mark here to vote for both nominees except the following (print name on line
above):
2. Proposal to ratify and approve an amendment to the Company's 1991 Stock
Option Plan.
/ / For / / Against / / Abstain
MARK HERE FOR MARK HERE IF
ADDRESS CHANGE / / YOU PLAN TO / /
AND NOTE AT LEFT ATTEND THE
MEETING
Please sign name exactly as name appears on ownership record. When signing in a
fiduciary capacity, please give full title. Cofiduciaries and joint owners
should each sign.
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<S> <C> <C> <C>
Signature: ............................ Date: ......... Signature: ............................. Date: ........
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