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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SYNBIOTICS CORPORATION
(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.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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:
SYNBIOTICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 24, 1997
The Annual Meeting of Shareholders of Synbiotics Corporation will be held at the
Radisson Suite Hotel (Rancho Bernardo), 11520 West Bernardo Court, San Diego,
California 92127, on July 24, 1997, at 10:30 a.m. for the following purposes:
1. To elect six directors;
2. To consider a proposal to amend the 1995 Stock Option/Stock Issuance
Plan;
and to transact such other business as may properly come before the meeting
and any postponement or adjournment thereof.
The Board of Directors has fixed May 27, 1997, as the record date for
determining the shareholders entitled to notice of and to vote at the Annual
Meeting and any postponement or adjournment thereof.
WE WOULD BE GRATEFUL IF YOU WOULD PROMPTLY SIGN AND RETURN THE ENCLOSED PROXY
CARD.
Michael K. Green
Secretary
June 4, 1997
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Synbiotics Corporation, a California corporation (the
"Company"), 11011 Via Frontera, San Diego, California 92127, of proxies in the
accompanying form to be used at the Annual Meeting of Shareholders to be held at
the Radisson Suite Hotel (Rancho Bernardo), 11520 West Bernardo Court, San
Diego, California 92127, at 10:30 a.m. on July 24, 1997, and any postponement
or adjournment thereof.
A proxy may be revoked at any time before it is exercised. Any shareholder
giving a proxy may revoke it prior to its use at the Annual Meeting (1) by
delivering a written notice expressly revoking the proxy to the Company's
Secretary at the Company's offices, (2) by signing and delivering to the Company
at its offices, or to the place of the Annual Meeting, a later dated proxy or
(3) by attending the Annual Meeting and casting his or her votes personally. A
proxy is not revoked by the death or incapacity of the maker unless, before the
vote is counted, written notice of such death or incapacity is received by the
Company.
On the matters coming before the Annual Meeting as to which a choice has been
specified by the shareholder on the proxy, the shares will be voted accordingly.
If no choice is so specified, the shares will be voted FOR the election of the
six nominees for director listed in this Proxy Statement, FOR the approval of
proposal 2 described in the Notice of Meeting and this Proxy Statement, and in
the discretion of the proxyholders as to any other business which may properly
come before the Annual Meeting.
May 27, 1997, has been fixed as the record date for determining the shareholders
entitled to notice of and to vote at the Annual Meeting. As of the close of
business on such date, the Company had 7,392,698 shares of Common Stock
outstanding and entitled to vote. Outstanding shares of Common Stock are
entitled to one vote each on all matters. Under California law, shareholders
are permitted to cumulate votes for the election of directors whose names have
been placed in nomination. Therefore, in voting for directors, each outstanding
share of Common Stock would be entitled to six votes which may be cast for one
candidate or distributed in any manner among the nominees for director.
However, the right to cumulate votes in favor of one or more candidates may not
be exercised until the candidate or candidates have been nominated and any
shareholder has given notice at the Annual Meeting of the intention to cumulate
votes.
The proxyholders (if authority to vote for one or more nominees is not withheld)
will have full discretion and authority to vote cumulatively and to allocate
votes among any or all of the Board of Directors 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.
The expense of printing and mailing proxy material will be borne by the Company.
The approximate date these proxy solicitation materials will be first sent to
shareholders is June 4, 1997.
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
Six directors are to be elected at the Annual Meeting to serve until the next
Annual Meeting and until their respective successors are elected or appointed.
Unless authority to vote for one or more nominees is withheld, it is intended
that the proxyholders will vote for the election of the nominees named below.
In the event any of them shall become unable or unwilling to accept nomination
or election, the shares represented by the enclosed proxy will be voted for the
election of such other person as the Board of Directors may recommend in his
place. Each of the nominees named is currently a member of the Board of
Directors of the Company.
1
The following information is furnished regarding the nominees of the Company.
NAME; POSITIONS; BUSINESS EXPERIENCE DURING THE DIRECTOR
PAST FIVE YEARS; DIRECTORSHIPS IN REPORTING COMPANIES SINCE AGE
- ------------------------------------------------------------------------------- -------- --------
Patrick Owen Burns................................................................. 1997 59
Vice President of R&D Funding Corp, an affiliate of Prudential Securities Inc.,
and Senior Vice President of Prudential Securities Inc. from 1986 to
January,1997; Director of Texas Biotechnology Corporation.
Kenneth M. Cohen................................................................... 1996 42
President and Chief Executive Officer of the Company since May 1996;
Executive Vice President and Chief Operating Officer of Canji, Inc. from
March 1995 to February 1996; Vice President of Argus Pharmaceuticals, Inc.
from May 1990 to March 1995.
James C. DeCesare.................................................................. 1993 66
President and Chief Operating Officer of Boehringer Ingelheim Animal Health
from 1986 to 1992 when he retired; currently a consultant to the animal health
and pharmaceutical industries.
Brenda D. Gavin, DVM............................................................... 1996 48
Vice President of S. R. One, Limited, a venture capital firm, since 1989.
M. Blake Ingle, Ph.D............................................................... 1994 55
President and Chief Executive Officer of Canji, Inc. March 1993 to February
1996; Acting President of Telios Pharmaceuticals, Inc. December 1994 to June
1995; President and Chief Executive Officer of IMCERA Group, Inc. (now
known as Mallinckrodt Group Inc.) from 1991 to 1993; Director of Corvas
International, Inc. and Vical, Inc.
Donald E. Phillips................................................................. 1987 64
Chairman of the Board of Directors of the Company since August 1994; Vice
Chairman of the Board of Directors of the Company from 1993 to August
1994; Director of Potash Corporation of Saskatchewan (Canada).
The Board of Directors of the Company held a total of nine meetings during the
fiscal year ended December 31, 1996. Each director attended more than seventy-
five percent (75%) of the meetings of the Board of Directors (and the Board
committees of which he or she was a member) held during the time he or she was a
member of the Board.
The Company currently has Compensation and Audit Committees of the Board of
Directors. The Company does not have a Nominating Committee of the Board of
Directors. The current membership of each committee is as follows:
COMPENSATION COMMITTEE AUDIT COMMITTEE
James C. DeCesare Patrick Owen Burns
M. Blake Ingle, Ph.D., Chairman James C. DeCesare, Chairman
Donald E. Phillips Brenda D. Gavin, DVM
The function of the Compensation Committee is to review the Company's
compensation policies and advise as to executive compensation and stock option
matters. The Audit Committee oversees the Company's accounting and
2
financial reporting policies, reviews with the independent accountants the
accounting principles and practices followed, reviews the annual audit and
financial results and makes recommendations to the Board regarding any of the
preceding. The Audit Committee met once and the Compensation Committee met five
times during the fiscal year ended December 31, 1996.
Dr. Ingle became an executive officer of Telios Pharmaceuticals, Inc. in
December 1994, shortly after that company's primary product failed a clinical
trial. In January 1995, Telios filed a voluntary bankruptcy petition. Telios
subsequently emerged from bankruptcy via the sale of the company to Integra Life
Sciences. The Company believes these facts do not impugn Dr. Ingle's ability or
integrity in any way.
For their services as directors, each of the outside directors of the Company
received fees of $1,000, plus $500 for travel, for each Board of Directors
meeting attended, except for Mr. Burns. During 1996, fees payable to Mr. Burns
were paid instead to R&D Funding Corp. Outside directors do not receive any
fees for committee meetings attended as committee members. Employee directors
do not receive any fees for attendance at meetings of the Board of Directors or
committee meetings. In addition, Mr. Phillips was paid fees of $24,996 during
the fiscal year ended December 31, 1996 pursuant to a consulting agreement with
the Company. On October 24, 1996, pursuant to the Automatic Grant Program under
the 1995 Stock Option/Stock Issuance Plan (the "1995 Plan"), Mr. DeCesare, Dr.
Ingle and Mr. Phillips were each granted an option to purchase 7,000 shares of
Common Stock at $4.125 per share. The options, which expire on October 24,
2006, vest ratably over a one-year period following the grant date. Dr. Gavin
has declined the option that would have been granted to her under the 1995 Plan
as S. R. One, Limited does not allow its representatives to accept stock options
from the companies for which they serve as directors.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
NAME, AGE, AND BUSINESS EXPERIENCE
POSITION DURING THE PAST FIVE YEARS
- -------------------------------------- -----------------------------------
EXECUTIVE OFFICERS
President and Chief Executive Officer- Kenneth M. Cohen (42)
since May 1996 Formerly, Executive Vice President
and Chief Operating Officer of Canji,
Inc. March 1995 -February 1996; Vice
President of Argus Pharmaceuticals,
Inc. May 1990 - March 1995
Vice President - Finance, Chief Financial Officer Michael K. Green (41)
and Secretary - since May 1991
Vice President and General Manager, Paul A. Rosinack (50)
Animal Health - since October 1996 Formerly, President and Chief
Executive Officer of International
Canine Genetics, Inc., December 1992
- October 1996; Chief Operating
Officer of International Canine
Genetics, Inc., December 1991 -
December 1992
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Significant Employees
NAME, AGE, AND BUSINESS EXPERIENCE
POSITION DURING THE PAST FIVE YEARS
- -------------------------------------- -----------------------------------
Corporate Controller and Chief Keith A. Butler (35)
Accounting Officer -
since March 1991
Director of Research and Development - John A. Cutting (58)
since August 1995 Formerly, Senior Manager of Research
and Development for the Company
November 1993 -August 1995; Director
of Research of AVID Therapeutics,
Inc., 1992 - November 1993; Senior
Scientist, Virology of Solvay Animal
Health, 1985 - 1992
Director of Operations - Clifford Frank (47)
since September 1992 Formerly, Manager of Manufacturing
for the Company 1991 - 1992
Director of Marketing - Stephen T. Peterson, DVM (46)
since October 1996 Formerly, Director of Marketing of
International Canine Genetics, Inc.,
December 1993 - October 1996; Product
Manager of Ralston Purina Company,
1991 to December 1993
Manager - Business Development - Gregory A. Soulds (50)
since 1992 (with the Company since 1983) Formerly, Vice President - Marketing
and Sales for the Company 1989 - 1992
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's Common
Stock as of March 31, 1997, of each of the Company's directors, director
nominees, 5% shareholders and the Named Executive Officers, and of the directors
and executive officers of the Company as a group. Except as noted, each person
has sole investment and voting power over the shares shown. Percentages are
calculated in accordance with the method set forth in the Securities and
Exchange Commission's rules.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNER OF CLASS
- ------------------------------------------------------------------- ------------ -----------
Patrick Owen Burns/(1)/.................................................. 45,500 *
22 Sidney Place
Brooklyn, NY 11201
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AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNER OF CLASS
- ------------------------------------------------------------------- ------------ -----------
Kenneth M. Cohen/(1)/.................................................... 60,000 *
c/o Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
James C. DeCesare/(1)/................................................... 30,500 *
5260 S. Landings Drive, #200
Ft. Myers, FL 33919
Brenda D. Gavin, DVM/(3)/................................................ 1,178,902 15.4%
c/o S. R. One, Limited
Bay Colony Executive Park
565 Swedesford Road
Suite 315
Wayne, PA 19087
Michael K. Green/(1)/.................................................... 55,775 *
c/o Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
M. Blake Ingle, Ph.D./(1)/............................................... 23,500 *
Plaza Del Mar 300-6
12526 High Bluff Drive
San Diego, CA 92130
Donald E. Phillips/(1)/.................................................. 44,000 *
372 Fannin Landing Circle
Brandon, MS 39042
Paul A. Rosinack/(1)/.................................................... 27,223 *
c/o Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
Gregory A. Soulds/(1)//(5)/.............................................. 16,937 *
c/o Synbiotics Corporation
11011 Via Frontera
San Diego, CA 92127
Robert L. Widerkehr/(1)/................................................. 282,000 3.7%
17523 Corte Lomas Verdes
Poway, CA 92064
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AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNER OF CLASS
- ------------------------------------------------------------------- ------------ -----------
Gruber & McBaine Capital Management/(2)/................................. 582,100 7.6%
c/o John P. Broadhurst, Esq.
Shartsis, Friese & Ginsburg
One Maritime Plaza
18th Floor
San Francisco, CA 94111
International Canine Genetics, Inc....................................... 715,198 9.3%
271 Great Valley Parkway
Malvern, PA 19355
Edward T. Maggio, Ph.D./(4)/............................................. 461,999 6.0%
c/o Structural Bioinformatics, Inc.
10959 Technology Place
San Diego, CA 92127
Mallinckrodt Inc......................................................... 510,639 6.7%
7733 Forsyth Boulevard
St. Louis, MO 63105
S. R. One, Limited/(3)/.................................................. 1,178,902 15.4%
Bay Colony Executive Park
565 Swedesford Road
Suite 315
Wayne, PA 19087
All executive officers and directors as a group/(1)//(3)//(5)/ (8 persons) 1,482,337 19.3%
/*/ Less than one percent.
(1) Includes options to purchase shares of Common Stock, which are exercisable
on or before May 30, 1997, as follows: Mr. Burns - 45,500 shares; Mr. Cohen
- 45,000 share; Mr. DeCesare - 26,250 shares; Mr. Green - 56,562 shares;
Dr. Ingle - 17,250 shares; Mr. Phillips - 45,750 shares; Mr. Rosinack -
29,093 shares; Mr. Soulds - 16,937 shares; Mr. Widerkehr - 280,000 shares.
(2) Owned by a group of six persons who granted their respective powers of
attorney to Gruber & McBaine Capital Management ("GMCM"), a California
corporation, to handle any and all necessary filings in connection with
these securities. The direct ownership of these shares is as follows:
GMCM - 29,500 shares; Jon D. Gruber ("Gruber") - 68,000 shares; J.
Patterson McBaine ("McBaine") - 51,200 shares; Lagunitas Partners
("Lagunitas") - 235,800; GMJ Investments, LP ("GMJ") - 6,500 shares;
Proactive Partners, a California Limited Partnership ("Proactive") -
191,100 shares. Gruber and McBaine are the sole directors and sole
executive officers of GMCM. GMCM, Gruber and McBaine are the general
partners of Lagunitas and GMJ. Gruber and McBaine are general partners in
the entity which is the general partner of Proactive. Gruber and McBaine
disclaim beneficial ownership of the shares held by GMCM, Lagunitas, GMJ
and Proactive except to the extent of their respective pecuniary interests.
GMCM disclaims beneficial
6
ownership of the shares held by Gruber, McBaine, Lagunitas and GMJ except
to the extent of its pecuniary interest.
(3) Includes 463,704 shares owned by S. R. One, Limited, of which Dr. Gavin is
a Vice President, and 715,198 shares owned by International Canine
Genetics, Inc., of which S. R. One, Limited is the majority shareholder.
Dr. Gavin disclaims any beneficial ownership of these shares.
(4) Includes options to purchase 6,999 shares of Common Stock, which are
exercisable on or before May 30, 1997, held by Dr. Maggio.
(5) Includes Gregory A. Soulds as an executive officer because he is one of the
Named Executive Officers.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table provides certain summary information concerning the
compensation earned by the Company's President and Chief Executive Officer, its
former President and Chief Executive Officer, the only other executive officer
whose total 1996 salary and bonus exceeded $100,000 and the only other person,
although not an executive officer, whose total 1996 salary and bonus exceeded
$100,000 (the "Named Executive Officers") for services rendered in all
capacities to the Company for the fiscal years ended December 31, 1996 and 1995
and the nine month fiscal year ended December 31, 1994:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Annual Compensation Awards
----------------------------------------------------- -----------
Other Securities
Name and Annual Underlying All Other
Principal Fiscal Compen- Options/ Compensa-
Position Year Salary ($)/(1)/ Bonus ($) sation ($) SARS (#) tion ($)/(2)/
- --------------------- ------- ---------------- ---------- ------------ ------------- ---------------
Kenneth M. Cohen 1996 $141,490 - $38,750/(3)/ 225,000 -
President and Chief
Executive Officer
Robert L.Widerkehr 1996 $132,708 - - - $2,144
President and Chief 1995 $179,375 - $ 2,188/(4)/ 30,000 $3,587
Executive Officer 1994/(5)/ $131,250 - $ 8,750/(4)/ 22,000 $2,625
Michael K. Green 1996 $115,326 - - 30,000 $2,768
Vice President 1995 $101,853 - - 25,000 $2,213
1994/(5)/ $ 73,805 - - 15,000 $1,476
Gregory A. Soulds 1996 $104,389 - - 5,000 $2,505
Manager - Business 1995 $104,389 - - - $2,244
Development 1994/(5)/ $ 78,292 - - 15,000 $1,566
(1) Includes amounts deferred under the 401(k) Compensation Deferral Savings
Plan pursuant to Section 401(k) of the Internal Revenue Code of 1986, as
amended.
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(2) Consists of matching contributions made by the Company to Mr. Widerkehr's
401(k) account, Mr. Green's 401(k) account and Mr. Sould's 401(k) account.
(3) Consists of a direct grant of 10,000 shares of Synbiotics common stock with
a fair market value of $3.875 per share.
(4) Forgiveness of a loan made to Mr. Widerkehr to defray relocation expenses.
The loan was fully forgiven as of December 31, 1995.
(5) Information is for the nine month fiscal year ended December 31, 1994.
The following table contains information concerning the grant of stock options
to the Named Executive Officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
- ----------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise
Name Granted (#)/(1)/ Fiscal Year Price ($/Sh) Expiration Date
- ------------------- ----------------- -------------- ------------- ---------------
Kenneth M. Cohen 225,000 49.45% $3.88 05/06/06
Michael K. Green 30,000 6.59% $2.75 04/25/06
Gregory A. Soulds 5,000 1.10% $4.25 06/27/06
(1) Mr. Cohen's option becomes exercisable ratably over a five-year period
following the date of grant, which was May 6, 1996. Mr. Green's and Mr.
Sould's options become exercisable ratably over a four-year period
following the date of grant, which was April 25, 1996 and June 27, 1996,
respectively. Each option has a maximum term of 10 years, subject to
earlier termination in the event of the optionee's cessation of service
with the Company.
The following table provides information, with respect to the Named Executive
Officers, concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year. No shares were
acquired on exercise of options by the Named Executive Officers during the
fiscal year ended December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options/SARs Options/SARs
at December 31, 1996 (#) at December 31, 1996/(1)/
----------------------------------- --------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------ ---------------- ----------------- --------------- ---------------
Kenneth M. Cohen - 225,000 $ - $ -
Robert L. Widerkehr 280,000 - $16,890 $ -
Michael K. Green 41,875 38,125 $13,267 $15,017
Gregory A. Soulds 15,199 8,751 $ 1,595 $ -
- ----------
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(1) Value is defined as market price of the Company's Common Stock at fiscal
year end less exercise price. The closing sale price of the Company's
Common Stock at December 31, 1996 was $3.19.
EMPLOYMENT CONTRACTS
Synbiotics entered into an Employment Agreement dated May 7, 1996 with Kenneth
M. Cohen, its Chief Executive Officer and President. The Employment Agreement
provides for salary at an initial rate of $225,000 per annum, options to
purchase 225,000 shares of Synbiotics common stock (at $3.875 per share) and a
direct grant of 10,000 shares of unregistered Synbiotics common stock. In
addition, he will be eligible for a cash bonus of up to 30% of his annual
salary. If Mr. Cohen is terminated without cause, he will receive six months'
salary at his then base salary rate (provided, however, that if termination
without cause occurs before May 15, 1997, he will also receive salary at
$225,000 per annum through May 14, 1997).
In connection with the retirement of Robert L. Widerkehr, Synbiotics entered
into a General Release and Severance Agreement dated July 31, 1996 with Mr.
Widerkehr. Mr Widerkehr was Synbiotics' Chief Executive Officer until May 1996
and its President until July 31, 1996. Under the Severance Agreement and
General Release, Mr. Widerkehr gave Synbiotics general release and in return (i)
vesting of all his stock options was accelerated, (ii) his stock options will
remain exercisable until July 31, 1999, (iii) he will receive, under Synbiotics'
1996 management cash bonus program, $42,875 time the percentage of their maximum
bonus which Synbiotics' other managers receive under such plan for 1996, (iv) he
will receive and additional $30,000 and (v) he will receive $5,104.17 each month
for 36 months beginning August 1996.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF ALL SIX NOMINEES, SET FORTH IN
ITEM 1 ON THE PROXY CARD. The six persons receiving the highest number of votes
will be elected as directors. Abstentions and broker non-votes will have no
influence in the election of directors.
AMENDMENT OF 1995 STOCK OPTION/STOCK ISSUANCE PLAN
(ITEM 2 ON THE PROXY CARD)
On April 27, 1995, the Board of Directors adopted the Company's 1995 Stock
Option/Stock Issuance Plan (the "1995 Plan"). The 1995 Plan is intended to
unify the Company's stock option program; upon shareholder approval of the 1995
Plan all outstanding options under the Company's 1983, 1984, 1986, 1987, 1988,
1991 and 1994 Stock Option Plans (the "Prior Plans") were incorporated into the
1995 Plan and the Prior Plans were terminated as to any future grants. (The
1983, 1984, and 1986 Stock Option Plans have already expired by their own
terms.) The 1,300,000 shares of Company common stock authorized for issuance
under the 1995 Plan were 282,055 more than the sum of the 711,862 shares
currently the subject of options outstanding as of April 27, 1995 under the
Prior Plans and 306,083 shares reserved and available for issuance under, but
not as of April 27, 1995 the subject of any grants under, the Prior Plans.
The 1995 Plan also differs from the Prior Plans in that it (a) allows the grant
of both incentive stock options and non-qualified stock options, (b) provides
for automatic stock option grants to Directors, (c) allows direct stock
issuances, and (d) provides for acceleration of vesting upon a hostile takeover
of the Company. The 1995 Plan also differs from one or more of the Prior Plans
in several other ways, many of which involve providing flexibility to the
Company in areas where the Prior Plans did not allow flexibility.
On April 25, 1997, the Board of Directors approved amendments (the "Amendments")
to the Plan to incorporate the 1996 Stock Option Plan into the Plan, add an
additional 450,000 shares to the maximum authorized for issuance under the Plan
(making a total, together with the previous authorization and the 250,000 shares
authorized under the 1996 Stock Option Plan, of 2,000,000 shares), provide for
additional flexibility as permitted under recent changes to Rule 16b-3 under the
Securities Exchange Act of 1934, and make certain non-material changes in other
areas.
9
The 1996 Stock Option Plan authorizes only the grant of nonstatutory options,
and only to persons who are not directors or officers. Otherwise, the 1996
Stock Option Plan is essentially similar to the Plan's Discretionary Grant
Program. Options to purchase 40,000 shares have been granted under the 1996
Stock Option Plan; none have been exercised, and all are still outstanding.
Under the Plan, the Amendments require shareholder approval to become effective.
Within the Amendments is a provision that further amendments of the Plan would
not require shareholder approval unless required by law or regulation or, in a
particular instance, by a Board of Directors decision that shareholder approval
should be required.
PLAN STRUCTURE
The 1995 Plan is divided into three separate parts:
. The "Discretionary Grant Program" under which employees and consultants
(other than nonemployee Board members) may, at the discretion of the Plan
Administrator, be granted options to purchase shares of the Common Stock at
an exercise price not less than 85% of the fair market value of each such
share on the grant date. The granted options may be either incentive stock
options which are designed to meet the requirements of Section 422 of the
Internal Revenue Code or nonstatutory options not intended to satisfy such
requirements.
. The Amendments would allow nonemployee Board members to participate in the
Discretionary Grant Program, and would allow nonstatutory options to have
an exercise price below 85% of fair market value if the optionee makes a
payment to the Company (including payment made by means of a salary
reduction agreement) of no less than the excess (above 15%) of the discount
from fair market value exercise price.
. The "Stock Issuance Program" under which eligible individuals will be
allowed to effect immediate purchases of Common Stock at the fair market
value of each such share, or at discounts of up to 15% from the fair market
value of any such share, including shares which may be issued in
consideration for past services without any cash payment required of the
participant.
The Amendments would allow discounts over 15%, under certain conditions.
. The "Automatic Grant Program," under which an option grant will be made to
each individual upon first joining the Board of Directors as a nonemployee
member and subsequent annual automatic option grants will be made to each
individual who is re-elected as a nonemployee director of Synbiotics.
As of March 31, 1997, approximately 69 officers and employees were eligible to
participate in the Discretionary Grant Program and the Stock Issuance Program.
There are currently five nonemployee directors standing for re-election who will
be eligible to receive automatic grants under the Automatic Grant Program.
PLAN ADMINISTRATION
Option grants under the Discretionary Grant Program and stock issuances under
the Stock Issuance Program are to be made by the Board or by a committee of two
or more nonemployee Board members (the "Plan Administrator") appointed by the
Board. Members of the committee are ineligible to participate in the 1995 Plan
or in any stock option, stock issuance or other stock plan of Synbiotics, except
to the extent such individuals become entitled to a special option grant under
the Automatic Grant Program. The selected committee members serve for such
period of time as the Board may determine and will be subject to removal by the
Board at any time.
The Plan Administrator has the sole and exclusive authority, subject to the
provisions of the 1995 Plan, to determine the eligible individuals who are to
receive options under the Discretionary Grant Program or the Stock Issuance
Program, the number of shares to be covered by each granted option or issuance,
the date or dates on which the
10
option is to become exercisable and the maximum term for which the option is to
remain outstanding. The Plan Administrator has the authority to determine
whether the granted option is to be an incentive stock option ("Incentive
Option") under the Federal tax laws and to establish rules and regulations for
proper plan administration. Options grants under the Automatic Grant Program
are made in strict compliance with the express provisions of that program, and
the Plan Administrator does not have any discretionary authority with respect to
those option grants.
The Amendments would also allow the Plan Administrator, as to discretionary
option grants to any person other than directors, officers or 10% stockholders,
to be a committee of any two or more directors.
EFFECT ON PRIOR PLANS
The 1995 Plan replaced and serves as the successor to the Prior Plans. No
further option grants will be made under the Prior Plans after April 27, 1995
and all options outstanding under the Prior Plans as of such date have been
incorporated into the 1995 Plan and treated as outstanding options under the
1995 Plan. However, each outstanding option so incorporated shall continue to
be governed solely by the terms of the documents evidencing such option. No
provision of the 1995 Plan adversely affects or diminishes the rights or
obligations of the optionees of the incorporated options. Subject to the rights
of the optionee under the incorporated option documents, the Plan
Administrator's discretion under the 1995 Plan may be exercised with respect to
incorporated options to the same extent as it is exercisable with respect to
options originally granted under the 1995 Plan.
The Amendments would make the 1996 Stock Option Plan a Prior Plan.
ISSUABLE SHARES
The maximum number of shares of Common Stock reserved for issuance over the 10
year term of the 1995 Plan, measured from the Effective Date of the 1995 Plan
can not exceed 1,300,000 shares. The Amendments would increase that maximum
number to 2,000,000. Such authorized share reserve is comprised of (i) the
number of shares that remained available for issuance under the Prior Plans,
including the shares subject to the outstanding options incorporated into the
1995 Plan and any other shares that would have been available for future option
grant or share issuance under the Prior Plans, and (ii) an additional 282,055
shares (which would become a total of 732,055 shares in addition to all prior
Plan shares -- including 1996 Stock Option Plan shares -- if the Amendments are
approved). The share reserve available for issuance under the 1995 Plan will be
subject to periodic adjustment for changes in Synbiotics' Common Stock
occasioned by stock splits, stock dividends, recapitalizations, conversions or
other changes affecting the outstanding Common Stock as a class without
Synbiotics' receipt of consideration. To the extent any of the incorporated
options are subsequently exercised, the number of shares issued under those
options will reduce, on a share-for-share basis, the number of shares available
for issuance under the 1995 Plan.
Should an option expire or terminate for any reason prior to exercise in full
(including options canceled in accordance with the cancellation-regrant
provisions described below), the shares subject to the portion of the option not
so exercised will be available for subsequent option grants or share issuances
under the 1995 Plan. All shares issued under the 1995 Plan, whether or not such
shares are subsequently reacquired by Synbiotics pursuant to its repurchase
rights under the 1995 Plan, will reduce on a share-for-share basis the number of
shares of Common Stock available for subsequent grants.
No more than 800,000 shares may be granted to any one optionee over the lifetime
of the 1995 Plan.
TERMS OF DISCRETIONARY GRANT PROGRAM
Option Price and Term. No option will have a term in excess of 10 years
measured from the grant date. The option price per share for incentive stock
options will not be less than 100% of the fair market value of each share of
Synbiotics Common Stock issuable under the option on the grant date of such
option. The option price per share for nonstatutory stock options may not be
less than 85% of the fair market value per share of each share of
11
Synbiotics Common Stock issuable under the option on the grant date of such
option. The Amendments wold allow nonstatutory options to have an exercise
price below 85% of fair market value if the optionee makes a payment to the
Company (including payment made by means of a salary reduction agreement) of no
less than the excess (above 15%) of the discount from fair market value exercise
price.
Valuation. For purposes of establishing the option exercise price for
Synbiotics Common Stock, the "Fair Market Value' per share of the stock on any
relevant date will be the closing selling price per share on such date, as
quoted on the Nasdaq National Market. If there is no reported selling price for
such date, then the closing selling price for the last previous date for which
such quotation exists will be determinative of Fair Market Value.
Vesting of Options. The vesting schedule for each granted option will be
determined by the Plan Administrator and will be set forth in the instrument
evidencing such grant. The granted option may be (i) immediately exercisable
for vested shares, (ii) immediately exercisable for unvested shares subject to
Synbiotics' repurchase rights or (iii) exercisable in installments for vested
shares over the optionee's period of service.
Payment. Upon exercise of the option, the option price for the purchased shares
will become immediately payable in cash or in shares of common stock valued at
fair market value on the date of exercise. The option my also be exercised
through a cashless exercise procedure pursuant to which the optionee provides
irrevocable written instructions to a designated brokerage firm to effect the
immediate sale of the purchased shares and remit to Synbiotics, out of the said
proceeds, an amount equal to the aggregate option price payable for the
purchased shares plus all applicable withholding taxes. The Plan Administrator
may assist any optionee (including a director or an officer) in the exercise of
one or more outstanding options under the 1995 Plan by (i) authorizing a loan
from Synbiotics or (ii) permitting the optionee to pay the option price in
installments over a period of years. The term and conditions of any such loan
or installment payment will be established by the Plan Administrator in its sole
discretion, but in no event will the maximum credit extended to the optionee
exceed the aggregate option price for the purchased shares plus any Federal or
State tax liability incurred in connection with the option exercise.
Termination of Service. Should the optionee cease to remain in Synbiotics'
service while holding one or more options under the 1995 Plan, then those
options will not remain exercisable beyond the limited post-service period
designated by the Plan Administrator at the time of the option grant (subject to
certain minimum post-service periods). Under no circumstances, however, may any
option be exercised after the specified expiration date of the option term.
Each such option will, during the period it remains exercisable, be exercisable
for the number of shares for which the option was exercisable on the date of the
optionee's cessation of service.
Should the optionee die while holding one or more outstanding options, then the
personal representative of the optionee's estate or the person or persons to
whom each such option is transferred pursuant to the optionee's will or in
accordance with the laws of inheritance will have the right to exercise such
option for any or all of the shares for which the option is exercisable on the
date of the optionee's cessation of service, less any option shares subsequently
purchased by the optionee prior to death. Such right will lapse, and the option
will terminate, upon the earlier of (i) the end of the limited post-service
period designated by the Plan Administrator at the time of the option grant or
(ii) the specified expiration date of the option term.
The Plan Administrator will have complete discretion to extend the period
following the optionee's termination of service during which his or her
outstanding options may be exercised and/or to accelerate the exercisability of
such options in whole or in part. Such discretion may be exercised at any time
while the options remain outstanding, whether before or after the optionee's
actual cessation of service.
Corporate Transaction. Except to the extent otherwise provided in the option
documents, each option share will become fully vested in the event of certain
Corporate Transactions unless the option is assumed or is replaced with a cash
incentive program which preserves the material benefits of the options. Upon
consummation of the Corporate Transaction all options which are not assumed will
be canceled and cease to exist. The options or cash incentive
12
programs which replace any options which do not accelerate will provide for full
vesting in the event of involuntary termination of employment within 18 months
following the Corporate Transaction.
For purposes of the above, a Corporate Transaction includes (i) a merger or
consolidation in which Synbiotics is not the surviving entity (except for a
transaction the principal purpose of which is to change the State of
incorporation), (ii) the sale, transfer or other disposition of all or
substantially all of the assets of Synbiotics, or (iii) any reverse merger in
which Synbiotics is the surviving entity but in which securities possessing more
than fifty percent (50%) of the total combined voting power of Synbiotics are
transferred to holders different from those who held Synbiotics' securities
immediately prior to such merger.
Stockholder Rights and Option Assignability. No optionee is to have any
stockholder rights with respect to the option shares until such optionee has
exercised the option, paid the option price for the purchased shares and been
issued a stock certificate for such shares. Options are not assignable or
transferable other than by will or by the laws of inheritance following the
optionee's death, and the option may, during the optionee's lifetime, be
exercised only by the optionee.
Cancellation/Regrant. The Plan Administrator has the authority to effect, on
one or more separate occasions, the cancellation of outstanding options under
the Discretionary Grant Program which have exercise prices in excess of the then
current market price of the Common Stock and to issue replacement options with
an exercise price based on the lower market price of the Common Stock at the
time of grant.
TERMS OF STOCK ISSUANCE PROGRAM
Issue Price. The purchase price per share will not be less than 85% of the fair
market value of a share of Synbiotics Common Stock on the date the Plan
Administrator authorizes the issuance.
Vesting of shares. The vesting schedule for each share issued will be
determined by the Plan Administrator and set forth in the issuance agreement.
The shares may be fully and immediately vested upon issuance or may vest in one
or more installments, subject to Synbiotics' repurchase right, over the
participant's period of service.
Stockholder Rights. The recipient of the share issuance will have full
stockholder rights, including voting and dividend rights, with respect to the
issued shares, whether or not the shares are vested. However, the recipient may
not sell, transfer or assign any unvested shares issued under the 1995 Plan
except for certain limited family transfers.
Repurchase Rights. Should the recipient of unvested shares cease to remain in
Synbiotics' service before vesting in such shares, then those unvested shares
are to be immediately surrendered to Synbiotics for cancellation, and the
recipient will have no further stockholder rights with respect to those shares.
To the extent the surrendered shares were previously issued to the recipient for
consideration paid in cash or promissory note, Synbiotics will refund the cash
consideration paid for the surrendered shares and cancel the principal balance
of the note to the extent attributable to such surrendered shares.
Payment. Upon issuance of the shares, the issue price for the purchased shares
will become immediately payable in cash or (upon Plan Administrator approval) by
promissory note payable to Synbiotics' order. The promissory note may, at the
discretion of the Plan Administrator, be subject to cancellation over the
participant's period of service. Shares may also be issued for past services,
without any cash or other payment required of the participant.
Corporate Transaction. Except to the extent otherwise provided in the stock
issuance documents, all repurchase rights will terminate and each share will
become fully vested in the event of a Corporate Transaction (as defined above)
unless the repurchase rights are assigned to the successor corporation.
Following consummation of the Corporate Transaction, all repurchase rights which
are not assigned to the successor will terminate and cease to exist. The
assigned purchase rights will terminate and cease to exist in the event of
involuntary termination of employment within 18 months following the Corporate
Transaction.
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TERMS OF AUTOMATIC GRANT PROGRAM
Each individual who first becomes a nonemployee Board member, whether through
election by the stockholders or appointment by the Synbiotics Board, and who was
not otherwise in the prior employ of Synbiotics is automatically granted, at the
time of such initial election or appointment, a non-statutory stock option to
purchase 7,000 shares of Synbiotics Common Stock. Further, at each annual
Stockholders Meeting, each individual who is at that time reelected as a
nonemployee Board member is automatically granted a nonstatutory stock option
under the Automatic Grant Program to purchase an additional 7,000 shares of
Synbiotics Common Stock. There is no limit on the number of such 7,000-share
option grants the nonemployee Synbiotics Board member may receive over his or
her period of Board service.
Each such option grant is subject to the following terms and conditions:
(i) The option price per share is equal to 100% of the Fair Market Value per
share of Common Stock on the grant date.
(ii) Each option has a term of 10 years measured from the grant date.
(iii) Each automatic grant is immediately exercisable in full, provided that
any shares issued upon the exercise of an automatic option grant shall be
subject to repurchase at the option exercise price if the Board member
ceases to be in service prior to the vesting of such shares.
(iv) The shares vest in four equal quarterly installments over the optionee's
period of service following the automatic option grant.
(v) The options remain exercisable during the remainder of their tenn
following the optionee's cessation of Synbiotics Board membership for any
reason, provided that the option shall be exercisable following the
termination of service only with respect to the shares which were vested
as of such termination of service date. Should the optionee die while any
option is still exercisable, then such option may be exercised by the
personal representative of the optionee's estate or the person to whom
the grant is transferred by the optionee's will or the laws of
inheritance.
(vi) The remaining terms and conditions of the option in general conform to
the terms described above for option grants made under the Discretionary
Grant Program and are incorporated into the option agreement evidencing
the automatic grant.
(vii) The tenus and provisions of the Automatic Grant Program and the
outstanding options thereunder may not be amended or modified at
intervals more frequently than once every six months, except as otherwise
required to comply with applicable Federal tax laws and regulations. The
Amendments would allow the Automatic Grant Program to be amended at any
time.
Each option share will become fully vested in the event of a Corporate
Transaction (as defined above). Upon consummation of the Corporate Transaction,
all options will be canceled and cease to exist.
CHANGES IN CAPITALIZATION
In the event any change is made to the Common Stock issuable under the 1995 Plan
by reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares, or other change in corporate structure effected
without Synbiotics' receipt of consideration, appropriate adjustments will be
made to (i) the maximum number and/or class of securities issuable under the
1995 Plan, (ii) the number and/or class of securities and price per share in
effect under each outstanding option (including all discretionary and automatic
option grants under the 1995 Plan and all option grants incorporated from the
Prior Plans), and (iii) the number and/or class of
14
securities per nonemployee member of the Board for which option grants will
subsequently be made under the Automatic Grant Program.
Each outstanding option which is assumed or is otherwise to continue in effect
after a Corporate Transaction win be appropriately adjusted to apply and pertain
to the number and class of securities which would have been issuable, in
connection with such Corporate Transaction, to an actual holder of the same
number of shares of Synbiotics Common Stock as are subject to such option
immediately prior to such Corporate Transaction. Appropriate adjustments will
also be made to the option price payable per share and to the number and class
of securities available for issuance under the 1995 Plan.
Option grants under the 1995 Plan will not affect the right of Synbiotics to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
SPECIAL TAX WITHHOLDING ELECTION
The Plan Administrator may provide one or more participants in the 1995 Plan
with the election to have Synbiotics withhold, from the shares of Common Stock
otherwise issuable upon the exercise of non-qualified options or the vesting of
unvested shares, a portion of those shares in satisfaction of the tax liability
incurred in connection with their acquisition or vesting. Any election so made
will be subject to the approval of the Plan Administrator, and no shares will be
accepted in satisfaction of such tax liability except to the extent the Plan
Administrator approves the election. Alternatively, one or more participants
may be granted the right, subject to Plan Administrator approval, to deliver
existing shares of Common Stock in satisfaction of such tax liability. The
withheld or delivered shares will be valued at their then current fair market
value.
AMENDMENT AND TERMINATION
The Board of Directors may amend or modify the 1995 Plan in any or all respects
whatsoever, subject, however, to the limitation on plan amendments to the
Automatic Grant Program (which limitation would be removed by the Amendments).
However, no such amendment may adversely affect the rights of existing optionees
without their consent and unless otherwise necessary to comply with applicable
tax laws and regulations. In addition, the Board may not (i) materially
increase the maximum number of shares issuable under the 1995 Plan or the number
of shares for which automatic grants may be made to nonemployee Board members,
except in the event of certain changes to Synbiotics' capital structure as
indicated above, (ii) materially modify the eligibility requirements for option
grants or (iii) otherwise materially increase the benefits accruing to
participants under the 1995 Plan without the approval of Synbiotics'
stockholders. If the Amendments are approved, however, further amendments of
the Plan would not require shareholder approval unless required by law or
regulation or, in a particular instance, by a Board of Directors decision that
shareholder approval should be required.
The Board may terminate the 1995 Plan at any time, and the 1995 Plan will in all
events terminate on April 25, 2005. Each stock option outstanding at the time
of such termination will remain in force in accordance with the provisions of
the instruments evidencing such grant.
FEDERAL TAX CONSEQUENCES
Options granted under the 1995 Plan may be either incentive stock options which
satisfy the requirements of Section 422 of the Internal Revenue Code or non-
qualified options which are not intended to meet such requirements. The Federal
income tax treatment for the two types of options differs as described below:
Incentive Options. No taxable income is recognized by the optionee at the time
of the option grant, and no taxable income is generally recognized at the time
the option is exercised. The optionee will, however, recognize income
15
for alternative minimum tax purposes in the year the option is exercised and
regular taxable income in the year in which the purchased shares are sold or
otherwise made the subject of disposition.
For Federal tax purposes, dispositions are divided into two categories: (i)
qualifying and (ii) disqualifying. The optionee will make a qualifying
disposition of the purchased shares if the sale or other disposition of such
shares is made after the optionee has held the shares for more than two years
after the grant date of the option and more than one year after the exercise
date. If the optionee fails to satisfy either of these two holding periods
prior to the sale or other disposition of the purchased shares, then a
disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee will recognize long-
term capital gain in an amount equal to the excess of (i) the amount realized
upon the sale or other disposition of the purchased shares over (ii) the
exercise price paid for such shares. If there is a disqualifying disposition of
the shares, then the excess of (i) the fair market value of those shares on the
date the option was exercised over (ii) the exercise price paid for the shares
will be taxable as ordinary income. Any additional gain recognized upon the
disposition will be a capital gain.
If the optionee makes a disqualifying disposition of the purchased shares, then
Synbiotics will be entitled to an income tax deduction, for the taxable year in
which such disposition occurs, equal to the excess of (i) the fair market value
of such shares on the date the option was exercised over (ii) the exercise price
paid for the shares. In no other instance will Synbiotics be allowed a
deduction with respect to the optionee's disposition of the purchased shares.
Non-qualified Options. No taxable income is recognized by an optionee upon the
grant of a non-qualified option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the date of exercise
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
Special provisions of the Internal Revenue Code apply to the acquisition of
Common Stock under a non-qualified option, if the purchased shares are subject
to repurchase by Synbiotics. These special provisions may be summarized as
follows:
A. If the shares acquired upon exercise of the non-qualified option are
subject to repurchase by Synbiotics at the original exercise price in the
event of the optionee's termination of service prior to vesting in such
shares, the optionee will not recognize any taxable income at the time of
exercise but will have to report as ordinary income, as and when
Synbiotics' repurchase right lapses, an amount equal to the excess of (i)
the fair market value of the shares on the date Synbiotics' repurchase
right lapses with respect to such shares over (ii) the exercise price paid
for the shares.
B. The optionee may, however, elect under Section 83 (b) of the Internal
Revenue Code to include as ordinary income in the year of exercise of the
non-qualified option an amount equal to the excess of (i) the fair market
value of the purchased shares on the date of exercise (determined as if the
shares were not subject to Synbiotics' repurchase right) over (ii) the
exercise price paid for such shares. If the Section 83(b) election is
made, the optionee will not recognize any additional income as and when the
Synbiotics' repurchase right lapses.
Synbiotics will be entitled to a business expense deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised non-
qualified option. The deduction will in general be allowed for the taxable year
of Synbiotics in which such ordinary income is recognized by the optionee.
Direct Stock Issuances. The tax consequences of individuals who receive direct
stock issuances under the 1995 Plan will be substantially the same as the
treatment described above for the exercise of non-qualified stock options.
16
ACCOUNTING TREATMENT
Option grants with exercise prices less than the fair market value of the option
shares on the grant date and direct stock issuances at purchase prices less than
the fair market value of the issued shares will result in a compensation expense
to Synbiotics' earnings equal to the difference between such exercise or
purchase prices and the fair market value of the shares on the option grant date
or (for direct stock issuances) the fair market value on the issue date. Such
expense will be accrued by Synbiotics over the period the optionee or share
recipient vests in the option shares or directly-issued shares. Option grants
and direct stock issuances at 100% of fair market value will not result in any
charge to Synbiotics' earnings. Whether or not granted at a discount, the
number of outstanding options may be a factor in determining Synbiotics'
earnings per share.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE AMENDMENTS TO THE 1995 STOCK
OPTION/STOCK ISSUANCE PLAN (ITEM 2 ON THE PROXY CARD). Approval will require
the affirmative vote of a majority of those shares which are present or
represented at the Meeting. Abstentions will have the same effect as votes
against approval of the Amendments of the 1995 Plan. Broker non-votes will,
assuming the shares are represented at the Meeting for any purpose, have the
same effect as votes against approval of the Amendments of the 1995 Plan; but if
the shares are entirely not represented at the Meeting the broker non-votes will
have no effect on the proposal to approve the Amendments of the 1995 Plan.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership of the Company's equity securities with the Securities and Exchange
Commission. Officers, directors and greater than 10% shareholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms furnished to the Company,
or written representations that no Forms 5 were required, the Company believes
that during the fiscal year ended December 31, 1996, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with, with the following exception:
On July 9, 1996 Dr. Ingle purchased 5,000 shares of Synbiotics common
stock. However, Dr. Ingle did not inform the Company of the transaction
until after the deadline for filing of the Form 4 for the month of July
1996. The transaction was reported on a Form 4 dated September 3, 1996.
SHAREHOLDER PROPOSALS
To be included in the Company's proxy materials for the Annual Meeting of
Shareholders to be held in 1998, a shareholder proposal must be received at the
offices of the Company, 11011 Via Frontera, San Diego, CA 92127, not later than
April 28, 1998.
OTHER MATTERS
Price Waterhouse LLP has served as the independent accountants of the Company
for a number of years. Although management anticipates that this relationship
will continue to be maintained during fiscal 1997, it is not proposed that any
formal action be taken at the Annual Meeting with respect to the continued
employment of Price Waterhouse
17
LLP. Representatives of Price Waterhouse LLP are expected to be present at the
Company's Annual Meeting with the opportunity to make a statement if they desire
to do so and they are expected to be available to respond to appropriate
questions.
The Board of Directors, at this time, knows of no other business which will be
presented to the meeting. If any other business is properly brought before the
meeting, it is intended that the proxies in the enclosed form will be voted in
respect thereof in accordance with the judgment of the persons voting the
proxies.
The Company's Annual Report, including the Company's audited financial
statements for the fiscal year ended December 31, 1996, is being mailed herewith
to all shareholders of record. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY
BENEFICIAL OWNER OF COMMON STOCK ON MAY 27, 1997, UPON THE WRITTEN REQUEST OF
ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1996 FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. SUCH REQUESTS SHOULD BE DIRECTED TO MICHAEL K. GREEN, VICE
PRESIDENT - FINANCE OF THE COMPANY, AT 11011 VIA FRONTERA, SAN DIEGO, CA 92127.
Whether you intend to be present at this meeting or not, you are urged to return
your proxy promptly.
By order of the Board of Directors
Michael K. Green
Secretary
18
COMMON STOCK PROXY SYNBIOTICS CORPORATION COMMON STOCK PROXY
11011 VIA FRONTERA, SAN DIEGO, CALIFORNIA 92127
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Kenneth M. Cohen and Michael K. Green, jointly
and severally, as proxyholders, each with full power to appoint his substitute,
and hereby authorizes them to vote as designated below, all the shares of Common
Stock of Synbiotics Corporation held of record by the undersigned on May 27,
1997, at the Annual Meeting of Shareholders to be held on July 24, 1997, or any
postponement or adjournment thereof, and to vote in their discretion on such
other business as may come before the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS.
[_] FOR all nominees listed below (except as marked to the contrary below)
[_] WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
CHECK THE BOX "FOR" AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST
BELOW.)
Nominees: Patrick Owen Burns, Kenneth M. Cohen, James C. DeCesare, Brenda
D. Gavin, M. Blake Ingle, Donald E. Phillips
2. APPROVAL OF THE AMENDMENTS TO THE 1995 STOCK OPTION/STOCK ISSUANCE PLAN.
[_] FOR [_] AGAINST [_]ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER AND WILL BE VOTED BY THE PROXYHOLDERS AT THEIR
DISCRETION AS TO ANY OTHER MATTERS PROPERLY TRANSACTED AT THE ANNUAL MEETING.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Dated: , 1997
- -------------------------
(Shareholder's Signature)
- -------------------------
(Shareholder's Signature)
Please sign exactly as your name appears on this Proxy. If signing for trusts,
estates, partnerships, or corporations, title or capacity should be stated. If
shares are held jointly, each holder should sign.
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING [_]