Abatix Corp.
8201 Eastpoint Drive, Suite 500
Dallas, Texas 75227
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE HOLDERS OF THE COMMON STOCK:
PLEASE TAKE NOTICE that the 2001 Annual Meeting of the Stockholders of Abatix
Corp., a Delaware corporation, will be held at the Holiday Inn, LBJ Northeast,
11350 LBJ Freeway, Dallas, Texas 75238 on Thursday, May 17, 2001 at 9:00 A.M.,
Central Time, or at any and all adjournments thereof, for the following
purposes:
1. To elect five directors to the Board of Directors;
2. To ratify of the appointment of independent auditors; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Proxy Statement dated April 30, 2001 is attached.
The Board of Directors has fixed the close of business on April 16, 2001 as the
record date for the determination of stockholders entitled to notice of, and to
vote, at the meeting.
Stockholders who do not expect to be present at the meeting are urged to
complete, date, sign and return the enclosed proxy. No postage is required if
the enclosed envelope is used and mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS,
Gary L. Cox, Secretary
Dallas, Texas
April 30, 2001
Abatix Corp.
8201 Eastpoint Drive, Suite 500
Dallas, Texas 75227
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
The Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Abatix Corp., a Delaware corporation (the "Company"), of
proxies for use at the 2001 Annual Meeting of Stockholders ("Annual Meeting") to
be held at the Holiday Inn, LBJ Northeast, 11350 LBJ Freeway, Dallas, Texas
75238 on Thursday, May 17, 2001 at 9:00 A.M., Central Time, or at any and all
adjournments thereof. The cost of this solicitation will be borne by the
Company. Directors, officers and employees of the Company may solicit proxies by
telephone, telegraph or personal interview. The Annual Report of the Company for
the fiscal year ended December 31, 2000 is being mailed together with this Proxy
Statement and form of Proxy. The approximate date of mailing of this Proxy
Statement and form of Proxy is April 30, 2001.
OUTSTANDING STOCK AND VOTING RIGHTS
In accordance with the By-Laws of the Company, the Board of Directors has fixed
the close of business on April 16, 2001 as the record date for determining the
stockholders entitled to notice of, and to vote at, the Annual Meeting. Only
stockholders of record on that date, through which the transfer books of the
Company remained open, will be entitled to vote. A stockholder who submits a
proxy on the accompanying form has the power to revoke it by notice of
revocation directed to the proxy holders of the Company at any time before it is
voted. Unless authority is withheld in writing, proxies that are properly
executed will be voted for the proposals thereon. Although a stockholder may
have given a proxy, such stockholder may nevertheless attend the meeting, revoke
the proxy and vote in person. The affirmative vote of a plurality of the shares
of Common Stock present or represented at the meeting is required to elect
Directors. The ratification of the appointment of the Company's auditors will
require the affirmative vote of a majority of the shares of the Company's Common
Stock voting at the Annual Meeting in person or by proxy.
As of April 16, 2001, the record date for determining the stockholders of the
Company entitled to vote at the Annual Meeting, approximately 1,711,148 shares
of the Common Stock of the Company, $.001 par value ("Common Stock"), were
issued and outstanding. Each share of Common Stock entitles the holder to one
vote on all matters brought before the Annual Meeting. The quorum necessary to
conduct business at the Annual Meeting consists of a majority of the outstanding
shares of Common Stock as of the record date.
Brokers who hold shares for the accounts of their clients may vote such shares
either as directed by their clients or in their own discretion if permitted by
the stock exchange or other organization of which they are members. Members of
the New York Stock Exchange are permitted to vote their client's proxies in
their own discretion as to the election of directors if the client has not
furnished voting instructions within ten days of the meeting. Certain proposals
other than the election of directors are "non-discretionary" and brokers who
have received no instructions from their clients do not have discretion to vote
on those items. When brokers vote proxies on some but not all of the proposals
at a meeting, the missing votes are referred to as "broker non-votes." If any
such proposals were on the agenda for this meeting, broker non-votes would be
included in determining the presence of a quorum at the meeting, but they would
not be considered "shares present" for voting purposes and would have no impact
on the outcome of such proposals.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth Common Stock ownership information as of March
31, 2001, with respect to (i) each person known to the Company to be the
beneficial owner of more than 5% of the Company's Common Stock, (ii) each
director and executive officer of the Company and (iii) all directors and
executive officers of the Company as a group. This information as to beneficial
ownership was furnished to the Company by or on behalf of the persons named.
Unless otherwise indicated, the business address of each person listed is 8201
Eastpoint Drive, Suite 500, Dallas, Texas 75227.
Shares
Beneficially Percent of
Name Owned (1) Class (2)
- ---- ------------ -------------
Terry W. Shaver (3) 593,650 34.7%
Gary L. Cox (4) 349,484 20.4%
Frank J. Cinatl (5) 14,000 0.8%
Donald N. Black (6) 5,100 0.3%
Daniel M. Birnley (6) - 0.0%
All executive officers and directors
as a group (5 persons) 962,234 56.2%
[FN]
(1) Unless otherwise provided, amount represents shares for which the
beneficial owner has sole voting and investment power and includes
options currently exercisable or exercisable within sixty (60) days.
(2) The percentage of class is calculated assuming that the beneficial
owner has exercised any options or other rights to subscribe which are
currently exercisable within sixty (60) days and that no other options
or rights or warrants to subscribe have been exercised by anyone else.
(3) Mr. Shaver is President, Chief Executive Officer and a Director of the
Company.
2
(4) Mr. Cox is Executive Vice President, Chief Operating Officer, Secretary
and a Director of the Company.
(5) Mr. Cinatl is Vice President, Chief Financial Officer and a Director of
the Company.
(6) Mr. Black and Mr. Birnley are Directors of the Company.
</FN>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
All required reports were filed within the appropriate time limits.
ELECTION OF DIRECTORS
The Board of Directors is responsible for the overall affairs of the Company.
The names of the nominees, their principal occupations and the year in which
they became Directors, are set forth.
NOMINEES FOR ELECTION
Name and Principal Director
Occupation Age Since
- ------------------ -------- ------
Terry W. Shaver, President and 43 1988
Chief Executive Officer
Gary L. Cox, Executive Vice 47 1988
President, Chief Operating
Officer and Secretary
Frank J. Cinatl, IV, Vice 40 1999
President and Chief Financial Officer
Donald N. Black 49 1998
Retired President, Gena Laboratories, Inc.
Daniel M. Birnley, Retired President/Founder, 51 2000
North State Supply Co. of Phoenix
3
Each Director is elected for a period of one year at the Company's annual
meeting of stockholders. Executive officers are appointed annually and, except
to the extent governed by employment contracts, serve at the discretion of the
Board of Directors.
TERRY W. SHAVER has served as President, Chief Executive Officer and a Director
of the Company since its incorporation in December 1988 and of its predecessor,
T&T Supply Company, Inc., since its organization in May 1983. From February 1979
until May 1983, Mr. Shaver was a Sales Representative with Global Safety
Resources, Inc., Dallas, Texas, a distributor of industrial safety equipment and
supplies. From July 1978 to January 1979, Mr. Shaver was a Sales Representative
with Continental Industrial Supply Corp., Richardson, Texas, a distributor of
industrial equipment and supplies. Between January 1977 and July 1978, Mr.
Shaver was a Sales Representative with Briggs-Weaver, Inc., Dallas, Texas, a
distributor of industrial equipment and supplies.
GARY L. COX has been Executive Vice President, Chief Operating Officer and a
Director of the Company since its organization and Vice President and a Director
of its predecessor company, T&T Supply Company, Inc., since February 1985. From
April 1984 to December 1985, Mr. Cox also was Vice President of Diamond Built,
Inc., Dallas, Texas, a real estate investment and construction company. Between
January 1980 and March 1984, Mr. Cox was President of W.R. Cox Electric, Inc.,
Dallas, Texas, an electrical contracting firm and was with that company in
various capacities commencing in June 1974.
FRANK J. CINATL, IV has been Vice President and Chief Financial Officer of the
Company since 1994 and was appointed to the Board of Directors in February 1999.
From 1989 to 1994, Mr. Cinatl was Manager of External Financial Reporting for
The LTV Corporation, Dallas, Texas, a steel, aerospace/defense and energy
company. Between 1983 and 1989, Mr. Cinatl was an auditor for an international
public accounting firm.
DONALD N. BLACK was appointed a Director of the Company in February 1998, and
was elected a Director at the 1998 annual meeting. Between 1979 and 1996, Mr.
Black was employed by and owned Gena Laboratories Inc. ("Gena"), a manufacturer
and distributor of professional beauty products. Mr. Black originally joined
Gena in December 1979 as General Manager, became Vice President in 1985, then
served as President from 1989 until November 1996, when Styling Technology
Corporation acquired Gena. Prior to Gena, Mr. Black was a regional manager for
Professional Beauty Supply from 1977 to 1979 and a regional manager for Milo
Beauty Co., from 1974 to 1977, both Salon Product Distribution Companies.
DANIEL M. BIRNLEY was appointed a Director of the Company in March 2000 to fill
a vacancy. From 1977 to 1999, Mr. Birnley was employed by and owned North State
Supply. Mr. Birnley originally joined North State Supply Co. of Pennsylvania in
1977 as an outside salesperson, became General Manager in 1978, then became the
owner in 1988. He moved to Phoenix, Arizona in 1990 and founded North State
Supply Co. of Phoenix where he served as President and Chief Executive Officer
until June 1999.
4
Messrs. Cox, Black and Birnley comprise the Company's audit committee. Its
duties include the selection and recommendation of independent auditors subject
to the approval of the stockholders, review of the scope and results of the
annual audit, and review of the adequacy and effectiveness of the Company's
internal control structure. The audit committee met once during 2000.
The Company has not established a standing nominating or compensation committee
of the Board of Directors at the present time. During 2000, the Board of
Directors held five meetings that were attended by all of the Directors.
All Directors who are not otherwise employed by the Company receive an annual
fee of $5,000. Directors will also be reimbursed for reasonable expenses
incurred in connection with their attendance at meetings. There are no family
relationships among the Company's Executive Officers and Directors.
Section 145 of the General Corporation Law of Delaware permits the
indemnification of directors, officers, employees and agents of Delaware
corporations. The Company's Certificate of Incorporation and By-Laws provide
that the Company shall indemnify its Directors and Officers to the full extent
permitted by the General Corporation Law of the State of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF
NOMINEES FOR DIRECTORS SET FORTH ABOVE.
EXECUTIVE COMPENSATION
BOARD COMPENSATION REPORT ON EXECUTIVE COMPENSATION
The compensation program for Abatix is administered in a manner that promotes
the attainment of reasonable profits on a consistent basis in order to preserve
job protection and job security; that promotes and rewards productivity and
dedication to the success of Abatix; that accomplishes internal equity among its
people; and that responds to the influence of external market forces.
The above principles are applied to all employees, including executive officers.
The Board of Directors reviews the compensation of Abatix's executive officers
on an annual basis. The Board considers the total compensation (both salary and
incentives), as well as the recommendation of the Company's President, in
establishing each element of compensation.
At current cash compensation levels, the Board does not expect Internal Revenue
Service regulations regarding maximum deductibility of executive compensation to
have any application to the Company.
5
The principal elements of compensation for Abatix's executive officers are the
following:
Base Salary. As a rule, base salary for the executive officers of Abatix is
comparable to the salaries for comparable positions in comparably sized
companies. The Board bases this determination on information obtained for
similarly situated businesses; its impression of the prevailing business
climate; and the advice of the Company's President. Annual salary increases, if
any, for executive officers as a group are not more, on a percentage basis, than
those received by other employees.
Annual Incentive Bonus. The Board of Directors determines the amount of each
bonus for executive officers at the end of each year.
In fixing the salary and bonus amounts for 2000, the Board considered the
performance of each individual, his or her level of responsibility within the
Company, the Company's profitability, the longevity in office of each officer,
and each officer's performance as a team member. However, no mathematical
weighing formulae were applied with respect to any of these factors. In
evaluating an individual's performance, the Board relied on the recommendation
of the President, whose recommendation is based on his own perception of such
officer's performance.
The Company does not use defined performance targets in establishing
compensation, nor does it employ minimum, targeted or maximum amounts of bonuses
or total compensation levels for the executive officers and the final
determination of compensation is subjective.
Automobiles. Each of the three executive officers of the Company is supplied
with vehicles owned and maintained by the Company.
Stock Options. In an effort to provide a long-term incentive for future
performance that aligns officers' interests with shareholders in general, the
Company has granted stock options to executive officers and other key employees
in the past or may in the future. Currently, there are no options outstanding,
nor are there any options available for grant.
Executive officers, including the President, participate in the Abatix 401(K)
Profit Sharing Plan, which are available to all Abatix employees on the same
basis. Abatix makes little use of perquisites for executive officers.
BOARD OF DIRECTORS
Terry W. Shaver
Gary L. Cox
Frank J. Cinatl, IV
Daniel M. Birnley
Donald N. Black
6
All of the Company's Executive Officers are full-time employees. Total cash
compensation paid to all Executive Officers as a group for services provided to
the Company in all capacities during the fiscal year ended in December 31, 2000
aggregated to $543,000. Set forth below is a summary compensation table in the
tabular format specified in the applicable rules of the Securities and Exchange
Commission with respect to all Executive Officers of the Company or any of its
subsidiaries who received total salary and bonus that exceeded $100,000 during
the periods reflected.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------------------------------------- -------------------------------------
Securities
Name and Restricted underlying
principal Other annual stock Options/ LTIP All other
position Year Salary Bonus compensation award(s) SARs (#) payouts compensation
- --------------- ------- ------------ ----------- ---------------- ------------ ------------ --------- ----------------
Terry W. 2000 $185,000 $20,000 $12,000 a - - - -
Shaver, 1999 $170,000 $15,000 $12,000 a - - - -
President 1998 $156,000 $40,000 $12,000 a - - - -
and CEO
Gary L. 2000 $185,000 $15,000c $12,000 a - - - -
Cox, 1999 $170,000 $40,000c $12,000 a - - - -
Exec. V.P. 1998 $156,000 $10,000c $12,000 a - - - -
and COO
Frank J. 2000 $100,000 $ 7,500 $13,140 a - - - -
Cinatl, 1999 $ 92,000 $ 5,000 $ 3,140 - - - -
V.P. 1998 $ 84,000 $25,000 $ 1,140 - - - -
and CFO
Brian G. 2000 $ 26,250 d - $ 3,349 b - - - -
Mendelsohn, 1999 $130,637 $ 3,276 $12,000 b - - - -
V.P. Sales
[FN]
a - Amounts represent the estimated annual value of vehicles and related
maintenance benefits provided to such Executive Officers in all years
presented.
b - Amount represents monthly auto allowance paid to named executive officer.
c - Mr. Cox elected to defer $10,000 of his 1997 bonus until January 1998,
his entire $40,000 bonus for 1998 until January 1999, his entire $15,000
bonus for 1999 until January 2000, and his entire $20,000 bonus for 2000
until January 2001.
d - Mr. Mendelsohn was employed with the Company as an officer from February
1999 through March 15, 2000.
</FN>
There are currently no stock option, stock appreciation rights or long-term
compensation plans for any employees, including the executives, of the Company.
7
EMPLOYMENT AGREEMENTS
Messrs. Shaver and Cox are parties to employment agreements with the Company
expiring December 31, 2002. These agreements provide for minimum annual
compensation of $195,000 each. Such employment agreements preclude each
individual from competing with the Company for a period of twelve months
following termination of his employment for cause or by reason of his
voluntarily leaving the employ of the Company. The employment agreements also
require them to maintain the confidentiality of proprietary data relating to the
Company and its activities and services. The employment agreements also provide
for certain executive benefits such as the use of an automobile, reimbursement
of business expenses, health insurance and related benefits.
PERFORMANCE GRAPH
The following graph compares total stockholder returns for the Company over the
last five years to the CRSP Total Return Index for The Nasdaq Stock Market and
for Nasdaq Non-Financial Stocks assuming a $100 investment made on December 31,
1995. The stock performance shown on the graph below is not necessarily
indicative of future price performance. The closing price is used to compute the
return for Abatix Corp.
1995 1996 1997 1998 1999 2000
--------- ---------- ---------- ---------- --------- ----------
Abatix Corp. 100.0 92.0 84.0 116.0 63.0 44.0
NASDAQ Total Return Index 100.0 123.0 150.7 212.5 394.9 237.7
NASDAQ Non-Financial Stocks Index 100.0 121.5 142.2 208.8 408.7 238.5
RETIREMENT PLANS
The Company has a 401(K) Plan, pursuant to which the Company contributed
$46,346, $42,366 and $38,154 during 2000, 1999, and 1998, respectively. At this
time, Terry W. Shaver, Gary L. Cox, Frank J. Cinatl and 84 other employees are
eligible to participate in the 401(K) Plan, which requires all employees to have
performed services to the Company for at least one year. Contributions by an
employee in any one year may not exceed the lesser of 15% of their respective
salary or the Internal Revenue Service specified limits. The Company currently
matches 20% of the employees' contributions on an ongoing basis, but the Board
of Directors may approve an increase or a decrease in the matching portion at
any time in the future.
8
APPOINTMENT OF THE COMPANY'S AUDITORS
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors, the
Audit Committee of the Board assists the Board in fulfilling its responsibility
for oversight of the quality and integrity of the accounting, auditing and
financial reporting practices of the Company.
In discharging its oversight responsibility for the audit process, the Audit
Committee discussed with the independent auditors all relationships between the
auditors and the Company that might bear on the auditors' independence
consistent with Independence Standards Board Standard No. 1, "Independence
Discussions with Audit Committees," discussed with the independent auditors any
other relationships that may impact their objectivity and independence and
satisfied itself as to the auditors' independence. The Audit Committee also
discussed with management and the independent auditors, the quality and adequacy
of the Company's internal controls. The Audit Committee reviewed with the
independent auditors their audit plans, audit scope and identification of audit
risks.
The Audit Committee discussed and reviewed with the independent auditors all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements.
The Audit Committee reviewed the audited financial statements of the Company as
of and for the fiscal year ending December 31, 2000, with management and the
independent auditors. Management has the responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for the examination of those statements.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-K for the fiscal year ending December 31, 2000, for filing with the
Securities and Exchange Commission. The Audit Committee also recommended the
reappointment, subject to shareholder approval, of the independent auditors and
the Board concurred in such recommendation.
Currently, the Audit Committee consists of three directors, one of which, Gary
L. Cox, is not independent as defined by the listing standards of the National
Association of Securities Dealers. The Company has until June 2001 to comply
with these listing standards and replace Gary L. Cox on the Audit Committee. The
Company's Board of Directors is currently interviewing several interested
candidates for a Board position. Each of the candidates is independent and comes
from a financial background.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Donald N.Black, Chairman
Gary L. Cox
Daniel M. Birnley
9
PRINCIPAL ACCOUNTING FIRM FEES
Aggregate fees billed to the Company for the fiscal year ending December 31,
2000, by the Company's principal accounting firm, KPMG LLP, were as follows:
Audit Fees $50,000
Financial Information Systems Design and Implementation Fees $ -
All Other Fees $13,650 (a) (b)
(a) The Audit Committee has considered whether the provision of these
services by KPMG LLP is compatible with maintaining the principal
accountant's independence.
(b) Includes fees for tax preparation and consulting services.
The appointment of KPMG LLP as independent auditors of the Company for the
fiscal year ended December 31, 2001 will be ratified.
Although the Board of Directors of the Company is submitting the appointment of
KPMG LLP for stockholder approval, it reserves the right to change the selection
of KPMG LLP as auditors, at any time during the fiscal year, if it deems such
change to be in the best interest of the Company, even after stockholder
approval.
Representatives of KPMG LLP are expected to be present at the Annual Meeting
with the opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPOINTMENT
OF THE COMPANY'S AUDITORS.
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
The Company is not aware of any substantial interest, direct or indirect, by
securities holdings or otherwise of any officer, director or associate of the
foregoing persons in any matter to be acted on, as described herein, other than
elections to offices.
10
OTHER MATTERS
Management is not aware of any other business that may come before the meeting.
However, if additional matters properly come before the meeting, proxies will be
voted at the discretion of the proxy holders.
STOCKHOLDER'S PROPOSALS TO BE PRESENTED AT
THE COMPANY'S NEXT ANNUAL MEETING OF
STOCKHOLDERS
Stockholder proposals intended to be presented at the 2002 Annual Meeting of
Stockholders of the Company must be received by the Company, at its principal
executive offices no later than December 31, 2001, for inclusion in the Proxy
Statement and Proxy relating to the 2002 Annual Meeting of Stockholders.
AVAILABILITY OF FORM 10-K ANNUAL REPORT
Copies of the Company's Annual Report on Form 10-K for the year ended December
31, 2000, as filed with the Securities and Exchange Commission, are available
without charge to stockholders upon request to Mr. Frank J. Cinatl, Vice
President, Abatix Corp., 8201 Eastpoint Drive, Suite 500, Dallas, Texas 75227.
BY ORDER OF THE BOARD OF DIRECTORS
Gary L. Cox, Secretary
Dallas, Texas
April 30, 2001
11
APPENDIX A
Audit Committee Charter
Abatix Corp.
Purpose:
The Audit Committee is a committee of the Board of Directors. Its primary
function is to assist the Board in fulfilling its oversight responsibilities by
reviewing the financial information which will be provided to the shareholders
and others, the systems of internal controls which management has established
and the audit process.
Organization:
The Audit Committee shall be named by the Board of Directors and shall be
comprised of two or more directors. The majority of the Audit Committee members
must be outside directors independent of management. The Board of Directors
shall name a chairperson from among the outside directors.
Responsibilities:
The Audit Committee responsibilities are primarily oversight and monitoring and
in discharging these responsibilities will act in reliance on senior financial
management and outside auditors. In meeting these responsibilities, the Audit
Committee is expected to:
1. Review with management and the independent auditors at the completion of the
annual audit:
a. The Company's annual financial statements
b. The independent auditor's audit
of these statements and their report thereon
c. Any significant changes in the independent auditor's audit plan
d. Any difficulties or disputes with management encountered during the audit
2. Review and consider with the independent auditor, the chief financial officer
and other management as appropriate:
a. The adequacy of the Company's internal controls including
computerized systems and security
b. Any related significant findings and recommendations of the
independent auditor together with management's response thereto
3. Recommend to the Board of Directors the independent auditors to be nominated,
approve their compensation and review and approve their termination if
and/or when appropriate.
4. Review filings with the SEC and other published documents to consider
whether the information contained in these documents is consistent with
financial statements.
5. Inquire of management or the independent auditor about significant risks or
exposures and steps management has taken to address these risks.
6. Maintain and provide to the Board of Directors minutes of Audit Committee
proceedings.
Additionally, the Audit Committee may conduct or instigate studies or
investigations into any matter within their scope of responsibilities.
July 23, 1999