SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box: |_| Confidential, for Use of the
|_| Preliminary Proxy Statement Commission Only (as permitted
|X| Definitive Proxy Statement by Rule 14a-6(e)(2))
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to |_| Rule 240.14a-11(c) or |_| Rule
240.14a-12
Innovex, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| $125 per Exchange Act Rule o-11(c)(1)(ii), 14a-6(i)(1) or Item 22(a)(2) of
Schedule 14A
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[INNOVEX, INC. LOGO HERE]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 19, 2000
Notice is hereby given that the Annual Meeting of Shareholders of
Innovex, Inc. will be held at the Lutheran Brotherhood Building, Minneapolis,
Minnesota on Wednesday, January 19, 2000 at 3:30 p.m., Central Time, for the
following purposes:
1. To elect eight directors to hold office until the next Annual
Meeting of Shareholders or until their successors are elected.
2. To approve a proposal to adopt an Employee Stock Purchase
Plan.
3. To approve the selection of the Company's independent auditors
for the current fiscal year.
4. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on December 8,
1999 as the record date for the determination of shareholders entitled to notice
of and to vote at the meeting.
By Order of the Board of Directors,
Thomas W. Haley, CHAIRMAN OF THE BOARD
Hopkins, Minnesota
December 15, 1999
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON.
SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON
IF THEY SO DESIRE. THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY.
<PAGE>
INNOVEX, INC.
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Innovex, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Shareholders to be
held on January 19, 2000. The cost of this solicitation will be borne by the
Company. In addition to the solicitation by mail, officers, directors and
employees of the Company may solicit proxies by telephone, telegraph or in
person. The Company may also request banks and brokers to solicit their
customers who have a beneficial interest in the Company's Common Stock
registered in the names of nominees and will reimburse such banks and brokers
for their reasonable out-of-pocket expenses.
Any proxy may be revoked at any time before it is voted by written
notice to the Secretary, by receipt of a proxy properly signed and dated
subsequent to an earlier proxy, or by revocation of a written proxy by request
in person at the Annual Meeting. If not so revoked, the shares represented by
such proxy will be voted.
The Company has outstanding only one class of stock, $.04 par value
Common Stock, of which 14,823,704 shares were issued and outstanding and
entitled to vote at the close of business of December 8, 1999. Each share of
Common Stock is entitled to one vote. Only shareholders of record at the close
of business on December 8, 1999 will be entitled to vote at the meeting. The
presence in person or by proxy of the holders of a majority of the shares of
stock entitled to vote at the Annual Meeting of Shareholders constitutes a
quorum for the transaction of business.
Under Minnesota law, each item of business properly presented at a
meeting of shareholders generally must be approved by the affirmative vote of
the holders of a majority of the voting power of the shares present, in person
or by proxy, and entitled to vote on that item of business. However, if the
shares present and entitled to vote on that item of business would not
constitute a quorum for the transaction of business at the meeting, then the
item must be approved by a majority of the voting power of the minimum number of
shares that would constitute a quorum. Votes cast by proxy or in person at the
Annual Meeting of Shareholders will determine whether or not a quorum is
present. Abstentions will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum but as unvoted for
purposes of determining the approval of the matter submitted to the shareholders
for a vote. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to that matter.
The Company's corporate offices are located at 530 Eleventh Avenue
South, Hopkins, Minnesota 55343, and its telephone number is (612) 938-4155. The
mailing of this Proxy Statement to shareholders of the Company commenced on or
about December 15, 1999.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table includes information as of December 8, 1999
concerning the beneficial ownership of Common Stock of the Company by (i) all
persons who are known to the Company to beneficially hold more than five percent
of the Common Stock of the Company; (ii) each of the directors and director
nominees of the Company; (iii) each executive officer named in the Summary
Compensation Table on page 5; and (iv) all directors and officers of the Company
as a group. Unless otherwise indicated, all shares represent sole voting and
investment power.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership(5) of Class
------------------- ----------------------- --------
Thomas W. Haley (1)(2)(3) 814,220 5.5%
2421 Crowne Hill Road
Minnetonka, MN 55305
Neumeier Investment Counsel LLC(4) 851,550 5.7%
26435 Carmel Rancho Blvd.
Carmel, CA 93923
Gerald M. Bestler (1) 11,454 *
Frank L. Farrar (1) 1,000 *
Elick Eugene Hawk(1) 1,000 *
William J. Miller (1) 1,000 *
William P. Murnane (1)(2) 92,200 *
Michael C. Slagle (1) 9,566 *
Bernt M. Tessem (1) 4,350 *
Allan J. Chan (2) 51,600 *
Timothy S. McIntee(2) 34,100 *
Venkatraman B. Rao, Ph.D.(2) 9,200 *
All Directors and Officers
as a Group (15 persons) 1,078,690 7.2%
- ---------------------
*Less than 1%
2
<PAGE>
(1) Serves as a director of the Company and, has been nominated for
election.
(2) Serves as an executive officer of the Company and appears in the
Summary Compensation Table on page 5 hereof.
(3) Includes 57,750 shares beneficially owned by Ms. Curtin, Mr. Haley's
spouse.
(4) Pursuant to a 13G/A filed with the Securities and Exchange Commission
on February 16, 1999.
(5) Includes the following number of shares which may be purchased pursuant
to the exercise of stock options within sixty days from the date
hereof: Mr. Haley, 13,000 shares; Mr. Bestler, 6,512 shares; Mr.
Farrar, 1,000 shares; Mr. Hawk, 1,000 shares; Mr. Miller, 1,000 shares;
Mr. Murnane, 91,000 shares; Mr. Slagle, 9,566 shares; Mr. Tessem, 3,000
shares; Mr. Chan, 51,000 shares; Mr. McIntee 15,600 shares; Dr. Rao,
5,000 shares; and all directors and officers as a group, 239,078
shares.
ELECTION OF DIRECTORS
(PROPOSAL 1)
Eight directors will be elected at the Annual Meeting to serve until
the next Annual Meeting of Shareholders or until their successors are elected.
The Board of Directors has nominated for election the eight persons named below.
All of the nominees are currently directors of the Company and all but Mr.
Miller, Mr. Hawk and Mr. Murnane were elected by the shareholders at the 1999
Annual Meeting of Shareholders. It is anticipated that the proxies will be voted
for such nominees, and the Board of Directors has no reason to believe any
nominee will not continue to be a candidate or will not be able to serve as a
director if elected. In the event that any nominee named below is unable to
serve as a director, the persons named in the proxies have advised that they
will vote for the election of such substitute nominee as the Board of Directors
may propose.
Principal Occupation and Director
Name and Age Other Directorships Since
------------ ------------------- -----
Thomas W. Haley (63) Chairman and Chief Executive Officer of 1972
the Company.
Michael C. Slagle (64) Retired; former owner of Minnesota 1972
Benefit Planners, an insurance brokerage
and consulting firm.
Bernt M. Tessem (69) Independent Sales Consultant since 1976
October 1992.
Gerald M. Bestler (70) Retired; formerly Executive Vice 1988
President of BMC Industries Inc., an
optical and electronic components
manufacturer, and President of the
Precision Etched Products Group of BMC
Industries Inc. Mr. Bestler is also a
Director of ANCOR Communications.
3
<PAGE>
Principal Occupation and Director
Name and Age Other Directorships Since
------------ ------------------- -----
Frank L. Farrar (70) Chairman of Performance Bankers, Inc., 1999
Chairman of Beresford Bancorporation,
Inc., a South Dakota thrift holding
company, Chairman of Capital
Bancorporation, Inc., a South Dakota
bank holding company, Chairman of Uptown
Bancorporation, Inc., an Illinois bank
holding company, and Chairman of Fulda
Bancorporation, a Minnesota bank holding
company. Mr. Farrar is also a Director
of Mercury Waste Solutions, Inc., a
publicly-held mercury processing
company.
William J. Miller (54) Formerly Chief Executive Officer, 1999
Director and Chairman of Avid
Technology, a computer systems firm from
1996 to 1999. Chairman and Chief
Executive Officer of Quantum Corporation
from 1993 until 1995. From 1992 until
1993, Mr. Miller served as Chief
Executive Officer of Quantum
Corporation. Prior to 1992, Mr. Miller
served in various executive capacities
for Control Data Corporation and its
Imprimis Technology, Inc. subsidiary
including Executive Vice President,
Control Data and President, Information
Services Group; Executive Vice President
and Chief Financial Officer; and
President and Chief Executive Officer,
Imprimis.
Elick Eugene Hawk (56) President and Chief Executive Officer of 1999
Performance Bankers, Inc., a South
Dakota management company, since 1983;
Chairman of First National Bank, Pierre,
South Dakota; Director of First National
Bank, Fulda, Minnesota; Director of
First Savings Bank, Beresford, South
Dakota; Director of First National Bank,
Moline, Illinois; Director/Owner of
Golden Ventures, Inc., an assisted
living center, Pierre, South Dakota.
4
<PAGE>
Principal Occupation and Director
Name and Age Other Directorships Since
------------ ------------------- -----
William Murnane (37) President and Chief Operations Officer 1999
of the Company since July 1998, and from
1995 to 1998 he served as Vice President
Corporate Development. From 1993 until
1995 Mr. Murnane was Chief Operating
Officer of Boutwell, Owens & Co., a
private manufacture of packaging.
- -----------------------
OTHER INFORMATION REGARDING THE BOARD
MEETINGS. The Board of Directors met eight times during fiscal year
1999. Each director attended more than 75% of the meetings of the Board of
Directors and any committee on which he or she served with the exception of Mr.
Miller who attended 60% of the meetings while he was a member of the Board of
Directors.
BOARD COMMITTEES. The Company has an Audit Committee, a Compensation
Committee, and a Stock Option Committee, all established by the Board of
Directors and each of which consists of members of the Board of Directors. The
Audit Committee, which during the last fiscal year consisted of Messrs. Bestler
and Tessem, met one time during fiscal year 1999. The Audit Committee recommends
the selection of independent accountants and reviews the activities and reports
of the independent accountants, as well as the internal controls of the Company.
The Compensation Committee, which is currently comprised of Messrs. Haley,
Slagle and Tessem, met one time during fiscal year 1999. The Compensation
Committee assists management in making recommendations to the Board with respect
to officers' and key employees' salaries and bonuses. The Stock Option
Committee, which is currently comprised of Messrs. Bestler and Slagle, met one
time during fiscal year 1999. The Stock Option Committee makes recommendations
to the Board with respect to awarding stock options to the Company's key
personnel.
On January 20, 1999, the Board appointed a Nominating Committee,
consisting of Messrs. Bestler, Farrar and Tessem, for the purpose of finding
qualified candidates to fill the Board seats vacated by the withdrawals of Ms.
Curtin's and Mr. Robert Miller's nominations. After these seats were filled, a
new Nominating Committee was appointed in April 1999, consisting of Messrs.
Haley, Slagle and Farrar. This committee met one time in fiscal 1999 to consider
nominees for election to the Board of Directors.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending September 30,
1999, 1998 and 1997, the cash compensation paid by the Company, as well as
certain other compensation paid or accrued for those years, to Thomas W. Haley,
the Company's Chief Executive Officer, and each of the four other most highly
compensated executive officers of the Company in office at the end of fiscal
1999 (together with Mr. Haley, the "Named Executives"), whose total cash
compensation exceeded $100,000 during fiscal year 1999 in all capacities in
which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
--------------------- ------------
Securities
Name and Principal Underlying All Other
Position Year Salary Bonus Options Compensation(1)
- ------------------ ---- ------ ----- ------- ---------------
<S> <C> <C> <C> <C> <C>
Thomas W. Haley 1999 $182,311 -- 45,000 $ 7,154
Chairman and Chief 1998 248,655 $ 75,000 10,000 5,146
Executive Officer 1997 209,520 150,000 -- 4,626
Allan J. Chan 1999 169,999 22,525 40,000 5,592
Senior Vice President 1998 165,961 70,000 10,000 4,955
Sales and Marketing 1997 149,520 110,000 30,000 4,203
Timothy S. McIntee 1999 169,998 28,832 35,000 5,180
Senior Vice President 1998 155,769 45,000 1,500 946
Corporate 1997 20,769 5,000 20,000 --
William P. Murnane 1999 174,990 37,100 45,000 5,555
President and Chief 1998 160,675 70,000 10,000 4,424
Operations Officer 1997 139,328 75,000 30,000 4,422
Venkatraman B. Rao Ph.D 1999 110,000 19,292 25,000 1,629
Vice President, Research 1998 -- -- -- --
and Development 1997 -- -- -- --
</TABLE>
(1) These amounts represent Company matching contributions to the
Company's 401(k) plan on behalf of such employees.
6
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's stock option plans to the Named Executives during
fiscal year 1999:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
Number % of Total Potential Realizable Value
of Options at Assumed Annual Rates
Securities Granted to Exercise of Stock Price Appreciation
Underlying Employees Price for Option Term(1)
Options in Fiscal Per Expiration
Name Granted Year Share Date 5% 10%
- ------------------------------------------------------------------------ ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas W. Haley 45,000 9.8 $11.50 10-23-08 $325,467 $824,798
Allan J. Chan 40,000 8.7 $11.50 10-23-08 $289,304 $733,153
Timothy S. McIntee 35,000 7.6 $11.50 10-23-08 $253,141 $641,509
William P. Murnane 45,000 9.8 $11.50 10-23-08 $325,467 $824,798
Venkatraman B. Rao 25,000 5.4 $15.59 12-14-08 $245,175 $621,320
</TABLE>
(1) Potential gains are reported net of the option exercise price, but
before taxes associated with exercise. These amounts represent certain
assumed rates of appreciation only. Actual gains, if any, on stock
option exercises are dependent on the future performance of the Common
Stock, overall stock market conditions, as well as the option holder's
continued employment through the vesting period. The amounts reflected
in this table may not necessarily be achieved.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executives concerning the exercise of options during fiscal year 1999 and the
unexercised options held as of September 30, 1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options Options
at FY-End at Fiscal Year-End(1)
--------------------------- ----------------------------
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas W. Haley -- -- 2,000 53,000 -- --
Allan J. Chan -- -- 35,000 72,000 $ 18,411 $ 752
Timothy S. McIntee -- -- 8,300 48,200 -- --
William P. Murnane -- -- 74,000 71,000 119,712 --
Venkatraman B. Rao -- -- -- 25,000 -- --
</TABLE>
(1) Based on a per share price of $9.00, which was the closing sale price
for the Company's Common Stock on September 30, 1999, the last trading
day of the Company's fiscal year.
7
<PAGE>
JOINT REPORT OF THE COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
The Compensation Committee of the Board of Directors consists of Mr.
Haley, the Chairman and Chief Executive Officer at the Company, and Messrs.
Slagle and Tessem, who are outside Directors. The Compensation Committee meets
as required and is responsible for setting the salaries and levels of incentive
awards for the officers and key personnel of the Company. The Stock Option
Committee of the Board of Directors consists of Mr. Bestler and Slagle, who are
outside Directors. The Stock Option Committee meets as required and makes
recommendations to the Board with respect to awarding stock option based
compensation to the Company's key personnel.
COMPENSATION PHILOSOPHY. The Compensation and Stock Option Committees'
governing philosophy for determining compensation levels is designed to attract
and retain the highest quality personnel possible consistent with the Company's
resources and capabilities. Executive compensation is broken into the following
components:
1. BASE SALARIES. Base salaries for executive management and officers
of the Company are intended to be competitive with companies of similar
market capitalization and revenue levels. The base salaries are also
intended to recognize individual achievements and assist the Company in
attracting and retaining qualified executives.
2. BONUS PROGRAM. Cash bonuses are awarded annually as appropriate. The
bonus awards are based on both Company and divisional performance with
consideration given to the individual's contribution to the Company's
performance.
3. STOCK OPTIONS. Stock options encourage and reward effective
management that results in long-term corporate financial success, as
measured by stock price appreciation. Stock options only have value for
the executive officers if the price of the Company's stock appreciates
in value from the date the options are granted.
CHIEF EXECUTIVE OFFICER COMPENSATION. The salary and bonus of the Chief
Executive Officer is set by and subject to the discretion of the Compensation
Committee with Board of Director approval. The compensation for Thomas W. Haley,
the Chief Executive Officer, was determined by using a process and philosophy
similar to that used for all executives but Mr. Haley abstains from voting on
his own compensation.
SUBMITTED BY THE COMPENSATION AND STOCK OPTION COMMITTEES OF THE COMPANY'S BOARD
OF DIRECTORS:
Compensation Committee: Stock Option Committee:
Thomas W. Haley, Chairman Gerald M. Bestler
Michael C. Slagle Michael C. Slagle
Bernt M. Tessem
8
<PAGE>
The preceding report shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 (the "1933 Act") or the Securities
Exchange Act of 1934 (the "1934 Act"), except to the extent the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under the 1933 Act or the 1934 Act.
STOCK PERFORMANCE
The graph below sets forth a comparison of the cumulative shareholder
return of the Company's Common Stock over the last five fiscal years with the
cumulative total return over the same periods for the Nasdaq Stock Market (U.S.
and Foreign Companies) Index and the Nasdaq Non-Financial Index. The graph
compares the cumulative total return of the Company's Common Stock as of the end
of each of the Company's last five fiscal years on $100 invested as of September
30, 1994, assuming the reinvestment of all dividends and after giving effect to
a 3 for 2 stock split on May 31, 1995 and a 2 for 1 stock split on December 23,
1996:
[INSERT GRAPH HERE]
1994 1995 1996 1997 1998 1999
--------------------------------------------------------------
Innovex, Inc. $100 $322.71 $277.87 $966.52 $366.12 $274.54
- --------------------------------------------------------------------------------
Nasdaq Non-
Financial 100 139.32 162.64 218.31 219.53 372.39
- --------------------------------------------------------------------------------
Nasdaq Stock
Market 100 136.82 161.30 221.82 220.52 357.28
================================================================================
DIRECTOR COMPENSATION
Directors who are not employees of the Company (currently all directors
except Mr. Haley and Mr. Murnane) are paid an annual cash retainer fee of
$7,000, $1,000 for each board of directors meeting attended and $500 for each
board committee meeting attended. In addition, each non-employee director
receives an automatic grant of options to purchase 1,000 shares of Common Stock
at an exercise price equal to the fair market value of such Common Stock on the
date on which such director is elected or re-elected.
9
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Mr. Chan, Mr. McIntee and
Mr. Murnane and Dr. Rao. Those employment agreements provide, among other
things, for those individuals' employment to continue for a period of 90 days
following, and for a lump sum cash severance payment of from 3 to 12 months'
salary in the event of, involuntary termination other than for cause,
termination of the Company's operations due to bankruptcy or insolvency, total
disability of the employee, a change in control of the Company or constructive
termination of the employee. In general, a "change in control" would occur when
there has been any change in the controlling persons reported in the Company's
proxy statements, when 20% or more of the Company's outstanding voting stock is
acquired by any person, when current members of the Board of Directors or their
successors elected or nominated by such members cease to constitute a majority
of the Board of Directors, when the Company merges or consolidates with or sells
substantially all its assets to any person or entity, or when the Company's
stockholders vote to liquidate or dissolve the Company. However, a "change in
control" would not occur if any of these events are authorized, approved or
recommended by the Board of Directors. The employment agreement also prohibits
disclosure of confidential information concerning the Company and requires
disclosure of and assignment of inventions, discoveries and other works relating
to those individuals' employment. The employment agreement contains a covenant
not to compete with the Company at any time during employment with the Company
and for a period of 6 months after employment is terminated. If a change in
control had occurred as of the end of fiscal 1999, the following individuals
would have received the approximate payment indicated pursuant to the employment
agreements: Mr. Chan, $88,000; Mr. McIntee, $89,500; Mr. Murnane, $105,000; Dr.
Rao, $68,500; and all current executive officers as a, group $673,200.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
The insiders are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file, including
Forms 3, 4, and 5.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 1999, all
Section 16(a) filing requirements applicable to its insiders were complied with,
except Messrs. Farrar, Hawk and Miller who failed to file a Form 3 in a timely
manner.
10
<PAGE>
ADOPTION OF
INNOVEX, INC. EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL 2)
On October 21, 1999 the Board of Directors adopted the Innovex, Inc.
Employee Stock Purchase Plan (the "Plan") effective April 1, 2000, subject to
approval by the shareholders. The purpose of the Plan is to facilitate the
purchase by employees of shares of Common Stock in the Company in order to
provide a greater community of interest between the Company and its employees.
In general, the Plan permits employees to purchase shares of Common Stock of the
Company at a price equal to the lesser of 85% of the value of the Common Stock
on the commencement date of a period (the "Commencement Date") or 85% of the
value of a share of Common Stock on the date of termination of a period (the
"Termination Date"). Each year during the term of the Plan shall reflect two
periods, the first commencing on April 1 and terminating on September 30 and the
second period commencing on October 1 and terminating on March 31 of the
following year (each a "Period"). The effective date of the Plan is April 1,
2000 and it shall terminate on September 30, 2005.
There are 250,000 shares of the Company's Common Stock, $.04 par value,
reserved for issuance under the Plan and eligible employees will not pay any
consideration to the Company in order to receive the options.
TERM OF THE PLAN. The Plan shall terminate on September 30, 2005. No
Period may run concurrently, but a Period may commence immediately after the
termination of a preceding Period.
ELIGIBILITY. Any domestic employee of the Company (including any
domestic subsidiaries in effect or established during the term of the Plan) who
has completed at least six months of continuous service on or prior to the
Commencement Date of the applicable Period shall be eligible to participate in
the Plan. Notwithstanding anything to the contrary in the Plan, no employee may
be granted an option under the Plan to purchase shares of Common Stock if such
employee, immediately after the grant of the option, would own stock (including
shares subject to the option) possessing 5% or more of the total combined voting
power or value of all classes of issued and outstanding stock of the Company. In
addition, no Participant may be granted an option to purchase shares of Common
Stock that permit the Participant to purchase shares in any calendar year under
the Plan greater than the lesser of shares with an aggregate fair market value
in excess of $25,000 or 3,000 shares of Common Stock. By action of the
respective boards of directors, employees of any subsidiary of the Company also
may participate.
PARTICIPATION. Eligible employees elect to participate in the Plan by
completing payroll deduction authorization forms prior to the Commencement Date
of the applicable Period of the Plan. Payroll deductions are limited to 10% of a
Participant's base pay for the term of the Plan and the minimum authorization is
1% of a Participant's pay per pay period.
11
<PAGE>
TERMS AND CONDITIONS OF OPTIONS. As of the Commencement Date of the
applicable Period of the Plan, an eligible employee who elects to participate in
the Plan shall be granted an option for as many full shares as he or she will be
able to purchase pursuant to the payroll deduction procedure based on the fair
market value of the shares on the commencement date. The option price for
employees who participate on a particular Commencement Date shall be the lesser
of: (i) 85% of the fair market value of the shares on the Commencement Date, or
(ii) 85% of the fair market value of the shares on the Termination Date of the
applicable Period of the Plan.
EXERCISE AND WITHDRAWAL. Exercise of the option occurs automatically on
a particular Termination Date, unless a Participant gives written notice prior
to such date as to an election not to exercise. The Company may impose a
restriction on the resale of shares up to twelve months following an exercise of
an option. A Participant may, at any time during the term of the Plan, give
notice that he or she does not wish to continue to participate, and all amounts
withheld will be refunded without interest accrued thereon.
ADMINISTRATION AND AMENDMENT. The Plan shall be administered by a
Committee consisting of not less than two members who shall be appointed by the
Board of Directors. Each member of such Committee shall be either a director,
officer or an employee of the Company. The Board of Directors may at any time
amend the Plan, except that no amendment may make changes in options already
granted which would adversely affect the rights of any Participant.
INCOME TAX CONSEQUENCES AND REGISTRATION WITH SEC. The Company believes
that the Plan is a "qualified" plan under Section 423 of the Internal Revenue
Code of 1986, as amended. Under the Internal Revenue Code, no income will result
to a grantee of an option upon the granting or exercise of an option, and no
deduction will be allowed to the Company. The gain, if any, resulting from a
disposition of the shares received by a Participant will be reported according
to the provisions of Section 423 of the Internal Revenue Code and will be taxed
in part as ordinary income and in part as capital gain.
The Company will be filing with the SEC, pursuant to the Securities Act
of 1933, as amended, a registration statement covering the offering of shares
under the Plan, and a prospectus has been or will be delivered to each eligible
employee prior to the time when an election to participate must be made.
CERTAIN BENEFITS. Because the Plan has not yet commenced and employees
determine their own levels of participation, the Company cannot determine the
benefits or amounts that will be received by or allocated to eligible employees.
SHAREHOLDER APPROVAL. The affirmative vote of the holders of a majority
of the Common Stock of the Company, voting at the meeting in person or by proxy,
is required for the approval of the Employee Stock Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL AND
RATIFICATION OF THE INNOVEX, INC. EMPLOYEE STOCK PURCHASE PLAN.
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APPROVAL OF INDEPENDENT AUDITORS
(PROPOSAL 3)
Grant Thornton LLP has been reappointed by the Board of Directors as
the Company's auditors for the current year. Although shareholder approval is
not required, it is the policy of the Board of Directors to request shareholder
ratification of the appointment or reappointment of auditors.
A representative of Grant Thornton LLP will be present at the Annual
Meeting of Shareholders, will have an opportunity to make a statement and will
be available to respond to appropriate questions. The Board of Directors
recommends that the shareholders vote "for" the proposal to approve the
reappointment of Grant Thornton LLP, and the endorsed proxy will be so voted
unless a contrary vote is indicated. In the event the reappointment of Grant
Thornton LLP should not be approved by the shareholders, the Board of Directors
will make another appointment to be effective at the earliest possible time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" REAPPOINTMENT OF GRANT
THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
CERTAIN TRANSACTIONS
On January 19, 1999, the Company reached a settlement with Mary Curtin
under which the parties released one another from any and all claims and causes
of action which they held or may have held against one another arising out of or
relating to Ms. Curtin's relationships with the Company as an employee and
director. The Company disclosed Ms. Curtin's threatened claims in Item 3 of the
Company's September 30, 1998 Form 10-K. Ms. Curtin is a former executive vice
president and director of the Company and the spouse of Thomas Haley, the
Company's Chairman and Chief Executive Officer. In connection with the
settlement, the Company agreed to pay Ms. Curtin total cash consideration of
$750,000 upon the expiration of statutory rescission periods. On February 4,
1999, the Company paid $500,000 in cash to Ms. Curtin and Mr. Haley transferred
15,000 shares of Innovex common stock to Ms. Curtin. This cash payment and stock
transfer, together, completely satisfied the Company's financial obligations
under the settlement agreement. The Company has incurred legal and other
expenses of approximately $150,000 related to this settlement.
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal for action at the 2001
Annual Meeting of Shareholders and presentation in the Company's proxy statement
with respect to such meeting should arrange for such proposal to be delivered to
the Company's offices, 530 Eleventh Avenue South, Hopkins, Minnesota 55343,
addressed to Thomas W. Haley, no later than August 17, 2000 in order to be
considered for inclusion in the Company's proxy statement relating to the
meeting. Matters pertaining to such proposals, including the number and length
thereof, eligibility of persons entitled to have such proposals included and
other aspects are regulated by the Securities Exchange Act of 1934, Rules and
Regulations of the Securities and Exchange Commission and other laws and
regulations to which interested persons should refer.
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On May 21, 1998 the Securities and Exchange Commission adopted an
amendment to Rule 14a-4, as promulgated under the Securities and Exchange Act of
1934, as amended. The amendment to Rule 14a-4(c)(1) governs the Company's use of
its discretionary proxy voting authority with respect to a stockholder proposal
which is not addressed in the Company's proxy statement. The new amendment
provides that if a proponent of a proposal fails to notify the Company at least
45 days prior to the month and day of mailing of the prior year's proxy
statement, then the Company will be allowed to use its discretionary voting
authority when the proposal is raised at the meeting, without any discussion of
the matter in the proxy statement.
With respect to the Company's 2001 Annual Meeting of Shareholders, if
the Company is not provided notice of a shareholder proposal, which the
shareholder has not previously sought to include in the Company's proxy
statement, by November 1, 2000, the Company will be allowed to use its voting
authority as described above.
GENERAL
The Board of Directors of the Company knows of no matters other than
the foregoing to be brought before the meeting. However, the enclosed proxy
gives discretionary authority in the event that any additional matters should be
properly presented. The Annual Report of the Company for the past fiscal year is
enclosed herewith and contains the Company's financial statements for the fiscal
year ended September 30, 1999. A copy of Form 10-K, the annual report filed by
the Company with the Securities and Exchange Commission, will be furnished
without charge to any shareholder who requests it in writing from the Company at
the address noted on the first page of this Proxy Statement.
By Order of the Board of Directors,
Thomas W. Haley, CHAIRMAN OF THE BOARD
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Effective April 1, 2000
INNOVEX, INC. INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT OF PLAN. INNOVEX, INC. (hereinafter referred to as the
"Company") proposes to grant to certain employees of the Company the opportunity
to purchase common stock of the Company. Such common stock shall be purchased
pursuant to the plan herein set forth which shall be known as the "INNOVEX, INC.
EMPLOYEE STOCK PURCHASE PLAN" (hereinafter referred to as the "Plan"). The
Company intends that the Plan shall qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended, and shall be
construed in a manner consistent with the requirements of said Section 423 and
the regulations thereunder.
2. PURPOSE. The Plan is intended to encourage stock ownership by
employees of the Company and any of its Subsidiaries to which the Company and
such respective Subsidiaries by action of their Boards of Directors shall make
this Plan applicable. The Plan is further intended as an incentive to them to
remain in employment, improve operations, increase profits, and contribute more
significantly to the Company's success, and to permit the Company to compete
with other corporations offering similar plans in obtaining and retaining the
services of competent employees.
3. ADMINISTRATION.
(a) The Plan shall be administered by a stock purchase
committee (hereinafter referred to as the "Committee"), consisting of
two or more directors or employees of the Company, as designated by the
Board of Directors of the Company (hereinafter referred to as the
"Board of Directors"). The Board of Directors shall fill all vacancies
in the Committee and may remove any member of the Committee at any
time, with or without cause.
(b) Unless the Board of Directors limits the authority
delegated to the Committee in its appointment, the Committee shall be
vested with full authority to make, administer, and interpret such
rules and regulations as it deems necessary to administer the Plan. For
all purposes of this Plan other than this Paragraph 3(b), references to
the Committee shall also refer to the Board of Directors.
(c) The Committee shall select its own chairman and hold its
meetings at such times and places as it may determine. All
determinations of the Committee shall be made by a majority of its
members. Any decision which is made in writing and signed by a majority
of the members of the Committee shall be effective as fully as though
made by a majority vote at a meeting duly called and held.
(d) The determinations of the Committee shall be made in
accordance with its judgment as to the best interests of the Company,
its employees and its shareholders and in accordance with the purposes
of the Plan; provided, however, that the provisions of the Plan shall
be construed in a manner consistent with the requirements of Section
423 of the Internal Revenue Code, as amended. Such determinations shall
be binding upon the Company and the participants in the Plan unless
otherwise determined by the Board of Directors.
(e) The Company shall pay all expenses of administering the
Plan. No member of the Board of Directors or the Committee shall be
liable for any action or determination made in good faith
<PAGE>
with respect to the Plan or any option granted under it. The Company
shall indemnify each member of the Committee against any and all
claims, loss, damages, expenses (including counsel fees approved by the
Committee), and liability (including any amounts paid in settlement
with the Committee's approval) arising from any loss or damage or
depreciation which may result in connection with the execution of his
or her duties or the exercise of his or her discretion, or from any
other action or failure to act hereunder, except when the same is
judicially determined to be due to gross negligence or willful
misconduct of such member.
4. DURATION AND PHASES OF THE PLAN.
(a) The Plan will commence on April 1, 2000 or such later date
specified by the Committee, and will terminate September 30, 2005,
except that any Phase commenced prior to such termination shall, if
necessary, be allowed to continue beyond such termination until
completion. Notwithstanding the foregoing, this Plan shall be
considered of no force or effect and any options granted shall be
considered null and void unless the holders of a majority of all of the
issued and outstanding shares of the common stock of the Company
approve the Plan within twelve (12) months after the date of its
adoption by the Board of Directors. The Plan year shall be the same as
the Company's fiscal year, ending each September 30.
(b) The Plan shall be carried out in one or more Phases, each
Phase being for a period of six months, or such shorter or longer
period of time (not to exceed 27 months) as may be determined by the
Committee prior to the commencement of a Phase. No Phase shall run
concurrently with any other Phase but a Phase may commence immediately
after the termination of the preceding Phase. The existence and date of
commencement of a Phase (the "Commencement Date") shall be determined
by the Committee and shall terminate on a date (the "Termination Date")
which is not more than 365 days from a Commencement Date, provided that
the commencement of the first Phase shall be within six months before
or twelve months after the date of approval of the Plan by the
shareholders of the Company. In the event all of the stock reserved for
grant of options hereunder is issued pursuant to the terms hereof prior
to the commencement of one or more Phases scheduled by the Committee or
the number of shares remaining is so small, in the opinion of the
Committee, as to render administration of any succeeding Phase
impracticable, such Phase or Phases shall be canceled. Phases shall be
numbered successively as Phase 1, Phase 2, Phase 3, etc.
(c) The Board of Directors may elect to accelerate the
Termination Date of any Phase effective on the date specified by the
Board of Directors in the event of (i) any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares would be converted into cash,
securities or other property, other than a merger of the Company in
which shareholders immediately prior to the merger have the same
proportionate ownership of stock in the surviving corporation
immediately after the merger; or (ii) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all of the assets of the Company. Subject to
any required action by the shareholders, if the Company shall be
involved in any merger or consolidation, in which it is not the
surviving corporation, and if the Board of Directors does not
accelerate the Termination Date of the Phase, each outstanding option
shall pertain to and apply to the securities or other rights to which a
holder of the number of shares subject to the option would have been
entitled.
(d) A dissolution or liquidation of the Company shall cause
each outstanding option to terminate, provided in such event that,
immediately prior to such dissolution or liquidation, each Participant
shall be repaid the payroll deductions credited to his account without
interest.
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<PAGE>
5. ELIGIBILITY. All Employees, as defined in Paragraph 18 hereof who
have completed six or more months of employment service for the Company prior to
the Commencement Date of a Phase shall be eligible to participate in such Phase.
Any Employee who is a member of the Board of Directors of the Company who
satisfies the above requirements shall be eligible to participate in the Plan.
6. PARTICIPATION. Participation in the Plan is voluntary. An eligible
Employee may elect to participate in the Plan, and thereby become a
"Participant" in the Plan, by completing the Enrollment Form provided by the
Company and delivering it to the Company or its designated representative at
least five days prior to an Enrollment Date and five days prior to the
Commencement Date of that Phase. The Enrollment Date shall be established by the
Committee, which shall be no less often than annual and shall coincide with one,
but need not coincide with each, Commencement Date. The first Commencement Date
shall be April 1, 2000. Payroll deductions for a Participant shall commence on
the first payday after the Commencement Date of the Phase and shall terminate on
the last payday immediately prior to or coinciding with the Termination Date of
that Phase unless sooner terminated by the Participant as provided in Paragraph
9 hereof. A Participant who ceases to be an eligible Employee, although still
employed by the Company, thereupon shall be deemed to discontinue his or her
participation in the Plan and shall have the rights provided in Section 9.
7. PAYROLL DEDUCTIONS.
(a) Upon enrollment, a Participant shall elect to make
contributions to the Plan by payroll deductions (in full dollar amounts
and in amounts calculated to be as uniform as practicable throughout
the period of the Phase), in the aggregate amount not in excess of 10%
of such Participant's Pay (as determined in accordance with Paragraph
18 hereof) for the term of the Phase or smaller percentage as may be
determined by the Committee prior to the commencement of a Phase). The
minimum authorization shall be 1% of a Participant's Pay per pay
period.
(b) In the event that the Participant's compensation for any
pay period is terminated or reduced from the compensation rate for such
a period as of the Commencement Date of the Phase for any reason so
that the amount actually withheld on behalf of the Participant as of
the Termination Date of the Phase is less than the amount anticipated
to be withheld over the Phase as determined on the Commencement Date of
the Phase, then the extent to which the Participant may exercise his
option shall be based on the amount actually withheld on his behalf. In
the event of a change in the pay period of any Participant, such as
from bi-weekly to monthly, an appropriate adjustment shall be made to
the deduction in each new pay period so as to ensure the deduction of
the proper amount authorized by the Participant.
(c) A Participant may discontinue his participation in the
Phase and terminate his payroll deduction authorized at such times as
determined by the Committee and shall have the rights provided in
Section 9. No change can be made during a Phase of the Plan which would
either change the time or increase or decrease the rate of his payroll
deductions.
(d) All payroll deductions made for Participants shall be
credited to their respective accounts under the Plan. A Participant may
not make any separate cash payments into such account.
3
<PAGE>
8. OPTIONS.
(a) GRANT OF OPTION.
(i) A Participant who is employed by the Company as
of the Commencement Date of a Phase shall be granted an option
as of such date to purchase a number of full and fractional
shares of Company common stock to be determined by dividing
the total amount to be credited to that Participant's account
under Paragraph 7 hereof by the option price set forth in
Paragraph 8(a)(ii)(A) hereof, subject to the limitations of
Paragraph 10 hereof.
(ii) The option price for such shares of common stock
shall be the lower of:
A. Eighty-five percent (85%) of the Fair
Market Value of such shares of common stock on the
Commencement Date of the Phase; or
B. Eighty-five percent (85%) of the Fair
Market Value of such shares of common stock on the
Termination Date of the Phase.
(iii) Stock options granted pursuant to the Plan may
be evidenced by agreements in such form as the Committee shall
approve, provided that all Employees shall have the same
rights and privileges and provided further that such options
shall comply with and be subject to the terms and conditions
set forth herein. The Committee may conclude that agreements
are not necessary.
(iv) Anything herein to the contrary notwithstanding,
no Employee shall be granted an option hereunder:
A. Which permits his rights to purchase
stock under all employee stock purchase plans of the
Company, its Subsidiaries or its parent, if any, to
accrue at a rate which exceeds the lesser of
Twenty-Five Thousand Dollars ($25,000) of the Fair
Market Value of such stock (determined at the time
such option is granted) for each calendar year in
which such option is outstanding at any time or 3,000
shares per calendar year; or
B. If immediately after the grant such
Employee would own and/or hold outstanding options to
purchase stock possessing five percent (5%) or more
of the total combined voting power or value of all
classes of stock of the Company, its parent, if any,
or of any subsidiary of the Company. For purposes of
determining stock ownership under this Paragraph, the
rules of Section 424(d) of the Internal Revenue Code,
as amended, shall apply.
(v) The grant of an option pursuant to this Plan
shall not affect in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or to
consolidate or to dissolve, liquidate or sell, or transfer all
or any part of its business or assets.
4
<PAGE>
(b) EXERCISE OF OPTION.
(i) Unless a Participant gives written notice to the
Company pursuant to Paragraph 9 prior to the Termination Date
of a Phase, his option for the purchase of shares will be
exercised automatically for him as of such Termination Date
for the purchase of the number of full and fractional shares
of Company common stock which the accumulated payroll
deductions in his account at that time will purchase at the
applicable option price, but in no event shall the number of
full and fractional shares be greater than the number of full
and fractional shares to which a Participant would have been
eligible to purchase under Section 8(a)(i), and subject to the
limitations set forth in Paragraph 10 hereof.
(ii) The Company shall, in addition, return to the
Participant a cash payment equal to the balance, if any, in
his account which was not used for the purchase of common
stock, without interest, as promptly as practicable after the
Termination Date of any Phase.
(iii) The Committee may appoint a registered broker
dealer to act as agent for the Company in holding and
performing ministerial duties in connection with the Plan,
excluding, but not limited to, maintaining records of stock
ownership by Participants and holding stock in its own name
for the benefit of the Participants. No trust or escrow
arrangement shall be express or implied by the exercise of
such duties by the agent. A Participant may, at any time,
request of the agent that any shares allocated to the
Participant be registered in the name of the Participant or in
joint tenancy with the Participant, in which event the agent
shall issue a certificate for the whole number of shares in
the name of the Participant (and his joint tenant, if any) and
shall deliver to the Participant any cash for fractional
shares, based on the then Fair Market Value of the shares on
the date of issuance.
(c) DIVIDEND REINVESTMENT. Unless the Committee designates
otherwise, and except as provided in this section, dividends on a
Participant's shares will automatically be reinvested in additional
shares of stock of the Company. If a Participant desires to receive
dividends in the form of cash, he must request that a certificate for
such shares be issued in the name of the Participant by filing an
appropriate form with the Company. Any shares purchased through the
reinvestment of dividends may be issued from the shares authorized
under this Plan or purchased on the open market, as directed by the
Committee. If the shares are purchased directly from the Company, the
purchase price shall be the Fair Market Value of a share or the date
such dividends are paid. Otherwise, the purchase price may be an
average of shares purchased on the open market with the aggregate
amount of dividends.
(d) DISPOSITION OF OPTION SHARES. For a period of up to 12
months beginning on the date of exercise of options granted pursuant to
the Plan, each share of stock issued may not, without the consent of
the Committee, which consent shall be provided in a uniform and
nondiscriminatory manner for similarly situated Participants, be sold,
transferred, pledged or encumbered (including payment of the price upon
subsequent exercise of options, or pay income tax on such exercise).
The Committee may waive such restrictions with respect to stock
acquired upon the exercise of options granted or to be granted during
any Phase of the Plan, either prior to or at any time subsequent to the
Commencement Date of the Phase and may establish uniform rules for the
transfer of such stock during such. During the period such shares are
subject to the restrictions of this subsection (d), such shares shall
be held by the transfer agent or the Company, or an appropriate legend
describing the restriction and referencing the Plan shall be placed on
the certificate evidencing such stock.
5
<PAGE>
9. WITHDRAWAL OR TERMINATION OF PARTICIPATION.
(a) A Participant may, at any time prior to the Termination
Date of a Phase, withdraw all payroll deductions then credited to his
account by giving written notice to the Company. Promptly upon receipt
of such notice of withdrawal, all payroll deductions credited to the
Participant's account will be paid to him without interest accrued
thereon and no further payroll deductions will be made during the
Phase. In such event, the option granted the Participant under that
Phase of the Plan shall lapse immediately. Partial withdrawals of
payroll deductions hereunder may not be made.
(b) Notwithstanding the provisions of Section 8(a) above, if a
Participant files reports pursuant to Section 16 of the Securities
Exchange Act of 1934 (at the Commencement Date of a Phase or becomes
obligated to file such reports during a Phase) then such a Participant
shall not have the right to withdraw all or a portion of the
accumulated payroll deductions except in accordance with Sections 8(c)
and (d) below.
(c) In the event of the death of a Participant, the person or
persons specified in Paragraph 14 may give notice to the Company within
sixty (60) days of the death of the Participant electing to purchase
the number of full shares which the accumulated payroll deductions in
the account of such deceased Participant will purchase at the option
price specified in Paragraph 8(a)(ii) and have the balance in the
account distributed in cash without interest accrued thereon to the
person or persons specified in Paragraph 14. If no such notice is
received by the Company within said sixty (60) days, the accumulated
payroll deductions will be distributed in full in cash without interest
accrued thereon to the person or persons specified in Paragraph 14.
(d) Upon termination of Participant's employment for any
reason other than death of the Participant, the payroll deductions
credited to his account, without interest, shall be returned to him.
(e) The Committee shall be entitled to make such rules,
regulations and determination as it deems appropriate under the Plan in
respect of any leave of absence taken by or disability of any
Participant. Without limiting the generality of the foregoing, the
Committee shall be entitled to determine:
(i) whether or not any such leave of absence shall
constitute a termination of employment for purposes of the
Plan; and
(ii) the impact, of any, of any such leave of absence
on options under the Plan theretofore granted to any
Participant who takes such leave of absence.
(f) A Participant who discontinues his participation during a
Phase shall not be permitted to recommence participation until the next
Enrollment Date. A Participant's withdrawal will not have any effect
upon his eligibility to participate in any succeeding Phase of the Plan
that commences after the next Enrollment Date or in any similar plan
which may hereafter be adopted by the Company.
10. STOCK RESERVED FOR OPTIONS.
(a) The maximum number of shares of the Company's common stock
to be issued upon the exercise of options to be granted under the Plan
shall be Two Hundred Fifty Thousand (250,000). Such shares may, at the
election of the Board of Directors, be either treasury shares, shares
6
<PAGE>
authorized but not issued or shares acquired in the open market by the
Company. Shares subject to the unexercised portion of any lapsed or
expired option may again be subject to option under the Plan.
(b) If the total number of shares of the Company common stock
for which options are to be granted for a given Phase as specified in
Paragraph 8 exceeds the number of shares then remaining available under
the Plan (after deduction of all shares for which options have been
exercised or are then outstanding) and if the Committee does not elect
to cancel such Phase pursuant to Paragraph 4, the Committee shall make
a pro rata allocation of the shares remaining available in as uniform
and equitable a manner as it shall consider practicable. In such event,
the options to be granted and the payroll deductions to be made
pursuant to the Plan which would otherwise be effected may, in the
discretion of the Committee, be reduced accordingly. The Committee
shall give written notice of such reduction to each Participant
affected.
(c) The Participant (or a joint tenant named pursuant to
Paragraph 10(d) hereof) shall have no rights as a shareholder with
respect to any shares subject to the Participant's option until the
date of the issuance of a stock certificate evidencing such shares. No
adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other
rights for which the record date is prior to the date such stock
certificate is actually issued, except as otherwise provided in
Paragraph 12 hereof.
(d) The shares of the Company common stock to be delivered to
a Participant pursuant to the exercise of an option under the Plan will
be registered in the name of the Participant or, if the Participant so
directs by written notice to the Committee prior to the Termination
Date of that Phase of the Plan, in the names of the Participant and one
other person the Participant may designate as his joint tenant with
rights of survivorship, to the extent permitted by law.
11. ACCOUNTING AND USE OF FUNDS. Payroll deductions for each
Participant shall be credited to an account established for him under the Plan.
Such account shall be solely for bookkeeping purposes and no separate fund or
trust shall be established hereunder and the Company shall not be obligated to
segregate such funds. All funds from payroll deductions received or held by the
Company under the Plan may be used, without limitation, for any corporate
purpose by the Company.
12. ADJUSTMENT PROVISION.
(a) Subject to any required action by the shareholders of the
Company, the number of shares covered by each outstanding option, and
the price per share thereof in each such option, shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of the Company common stock resulting from a subdivision
or consolidation of shares or the payment of a share dividend (but only
on the shares) or any other increase or decrease in the number of such
shares effected without receipt of consideration by the Company.
(b) In the event of a change in the shares of the Company as
presently constituted, which is limited to a change of all its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any
such change shall be deemed to be the shares within the meaning of this
Plan.
7
<PAGE>
(c) To the extent that the foregoing adjustments relate to
shares or securities of the Company, such adjustments shall be made by
the Committee, and its determination in that respect shall be final,
binding and conclusive, provided that each option granted pursuant to
this Plan shall not be adjusted in a manner that causes the option to
fail to continue to qualify as an option issued pursuant to an
"employee stock purchase plan" within the meaning of Section 423 of the
Code.
(d) Except as hereinbefore expressly provided in this
Paragraph 12, the optionee shall have no right by reason of any
subdivision or consolidation of shares of any class or the payment of
any stock dividend or any other increase or decrease in the number of
shares of any class or by reason of any dissolution, liquidation,
merger, or consolidation or spin-off of assets or stock of another
corporation, and any issue by the Company of shares of any class, or
securities convertible into shares of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the
number or price of shares subject to the option.
13. NON-TRANSFERABILITY OF OPTIONS.
(a) Options granted under any Phase of the Plan shall not be
transferable except under the laws of descent and distribution and
shall be exercisable only by the Participant during his lifetime and
after his death only by his beneficiary of the representative of his
estate as provided in Paragraph 9(b) hereof.
(b) Neither payroll deductions credited to a Participant's
account, nor any rights with regard to the exercise of an option or to
receive common stock under any Phase of the Plan may be assigned,
transferred, pledged or otherwise disposed of in any way by the
Participant. Any such attempted assignment, transfer, pledge or other
disposition shall be null and void and without effect, except that the
Company may, at its option, treat such act as an election to withdraw
funds in accordance with Paragraph 9.
14. DESIGNATION OF BENEFICIARY. A Participant may file a written
designation of a beneficiary who is to receive any cash to the Participant's
credit without interest thereon under any Phase of the Plan in the event of such
Participant's death prior to exercise of his option pursuant to Paragraph 9(b)
hereof, or to exercise his option and become entitled to any stock and/or cash
upon such exercise in the event of the Participant's death prior to exercise of
the option pursuant to Paragraph 9(b) hereof. The beneficiary designation may be
changed by the Participant at any time upon receipt of a written notice by the
Company.
Upon the death of a Participant and upon receipt by the Company of
proof deemed adequate by it of the identity and existence at the Participant's
death of a beneficiary validly designated under the Plan, the Company shall in
the event of the Participant's death under the circumstances described in
Paragraph 9(b) hereof, allow such beneficiary to exercise the Participant's
option pursuant to Paragraph 9(b) if such beneficiary is living on the
Termination Date of the Phase and deliver to such beneficiary the appropriate
stock and/or cash after exercise of the option. In the event there is not
validly designated beneficiary under the Plan who is living at the time of the
Participant's death under the circumstances described in Paragraph 9(b) or in
the event the option lapses, the Company shall deliver the cash credited to the
account of the Participant without interest to the executor or administrator of
the estate of the Participant, or if no such executor or administrator has been
appointed to the knowledge of the Company, it may, in its discretion, deliver
such cash to the spouse (or, if no surviving spouse, to any one or more children
of the Participant), or if no spouse or child is known to the Company, then to
such relatives of the Participant known to the Company as would be entitled to
such amounts, under the laws of intestacy in the deceased Participant's domicile
as though named as the designated beneficiary hereunder. The Company will not be
responsible for or be required to give effect to the disposition of any cash or
stock or the exercise of any option in accordance with any will or other
testamentary disposition made by such Participant or in accordance with the
provision of any law concerning intestacy, or otherwise. No designated
beneficiary shall, prior to the death of a Participant by whom he has been
designated, acquire any interest in any stock or in any option or in the cash
credited to the Participant under any Phase of the Plan.
8
<PAGE>
15. AMENDMENT AND TERMINATION. The Plan may be terminated at any time
by the Board of Directors provided that, except as permitted in Paragraph 4(c)
with respect to an acceleration of the Termination Date of any Phase, no such
termination will take effect with respect to any options then outstanding. Also,
the Board may, from time to time, amend the Plan as it may deem proper and in
the best interests of the Company or as may be necessary to comply with Section
423 of the Internal Revenue Code of 1986, as amended, or other applicable laws
or regulations; provided, however, that no such amendment shall, without prior
approval of the shareholders of the Company (1) increase the total number of
shares for which options may be granted under the Plan (except as provided in
Paragraph 12 herein), (2) permit aggregate payroll deductions in excess of ten
percent (10%) of a Participant's compensation as of the Commencement Date of a
Phase, or (3) impair any outstanding option.
16. NOTICES. All notices or other communications in connection with the
Plan or any Phase thereof shall be in the form specified by the Committee and
shall be deemed to have been duly given when received by the Participant or his
designated personal representative or beneficiary or by the Company or its
designated representative, as the case may be.
17. PARTICIPATION OF SUBSIDIARIES. The Employees of any Subsidiary of
the Company shall be entitled to participate in the Plan on the same basis as
Employees of the Company, unless the Board of Directors determines otherwise.
Effective as of the date of coverage of any Subsidiary, any references herein to
the "Company" shall be interpreted as referring to such Subsidiary as well as to
INNOVEX, INC.
In the event that any Subsidiary which is covered under the Plan ceases
to be a Subsidiary of INNOVEX, INC. the employees of such Subsidiary shall be
considered to have terminated their employment for purposes of Paragraph 9
hereof as of the date such Subsidiary ceases to be such a Subsidiary.
18. DEFINITIONS.
(a) "Subsidiary" shall include any domestic corporation
defined as a subsidiary of the Company in Section 424(f) of the
Internal Revenue Code of 1986, as amended.
(b) "Employee" shall mean any employee, including an officer,
of the Company who as of the day immediately preceding the Commencement
Date of a Phase is customarily employed by the Company for more than
twenty (20) hours per week and more than five (5) months in a calendar
year.
(c) "Fair Market Value" shall mean, if the common stock of the
Company is registered, the Fair Market Value of the shares shall be the
closing price of the stock on the applicable date or the nearest prior
business day on which trading occurred on the NASDAQ National Market.
If the common stock is not registered, the Fair Market Value of shares
of common stock of the Company shall be determined by the Committee for
each valuation date in a manner acceptable under Section 423 of the
Internal Revenue Code of 1986.
(d) "Pay" is, for a salaried employee, the regular pay for
employment for each employee as annualized for a twelve (12) month
period, including salary reduction contributions by the Participant
under any plan of the Employer pursuant to Code ss.ss. 401(k) or 125,
but exclusive of overtime, commissions, bonuses, disability payments,
shift differentials, incentives and other similar
9
<PAGE>
payments, determined as of the Commencement Date of each Phase. Pay is,
for an hourly employee, all pay or wages for employment paid to the
employee, including salary reduction contributions by the Participant
under any plan of the Employer pursuant to Code ss.ss. 401(k) or 125,
and anticipated overtime, but excluding bonuses, incentives, special
remuneration, or other similar payments, determined from time to time.
19. MISCELLANEOUS.
(a) No Employment Rights. The Plan shall not, directly or
indirectly, create any right for the benefit of any Employee or class
of Employees to purchase any shares under the Plan, or create in any
Employee or class of Employees any right with respect to continuation
of employment by the Company, and it shall not be deemed to interfere
in any way with the Company's right to terminate, or otherwise modify,
an Employee's employment at any time.
(b) Effect of Plan. The provisions of the Plan shall, in
accordance with its terms, be binding upon, and inure to the benefit
of, all successors of each Employee participating in the Plan,
including, without limitation, such Employee's estate and the
executors, administrators or trustees thereof, heirs and legatees, and
any receiver, trustee in bankruptcy, or representative of creditors of
such Employee.
(c) Governing Law. The law of the State of Minnesota will
govern all matters relating to this Plan except to the extent it is
superseded by the laws of the United States.
(d) Registration and Qualification of Shares. The offering of
the shares hereunder shall be subject to the effecting by the Company
of any registration or qualification of the shares under any federal or
state law or the obtaining of the consent or approval of any
governmental regulatory body which the Company shall determine, in its
sole discretion, is necessary or desirable as a condition to or in
connection with, the offering or the issue or purchase of the shares
covered thereby. The Company shall make every reasonable effort to
effect such registration or qualification or to obtain such consent or
approval.
(e) Plan Preconditions. The Plan is expressly made subject to
(i) the approval by shareholders of the Company, and (ii) at its
election, the receipt by the Company from the Internal Revenue Service
of a determination letter or ruling, in scope and content satisfactory
to counsel, respecting the qualification of the Plan within the meaning
of Section 423 of the Code. If the Plan is not so approved by the
shareholders and if, at the election of the Company, the aforesaid
determination letter or ruling from the Internal Revenue Service is not
received on or before one year after this Plan's adoption by the Board
of Directors, this Plan shall not come into effect. In such case, the
accumulated payroll deductions credited to the account of each
Participant shall forthwith be repaid to him without interest.
Approved by Board of Directors: October 21, 1999
Approved by Stockholders: _____________________, 2000
10
<PAGE>
[LOGO] INNOVEX
ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, JANUARY 19, 2000
3:30 P.M., CENTRAL TIME
LUTHERAN BROTHERHOOD BUILDING
625 FOURTH AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55415
[LOGO] INNOVEX, INC.
INNOVEX 530 ELEVENTH AVENUE SOUTH, HOPKINS, MINNESOTA 55343 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
OF SHAREHOLDERS ON JANUARY 19, 2000.
The undersigned hereby appoints Thomas W. Haley and William P. Murnane, or
either of them, as proxies with full power of substitution to vote all shares of
stock of Innovex, Inc. of record in the name of the undersigned at the close of
business on December 8, 1999, at the Annual Meeting of Shareholders to be held
in Minneapolis, Minnesota on January 19, 2000, or at any adjournment or
adjournments thereof, hereby revoking all former proxies.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
----------------------
COMPANY #
CONTROL #
----------------------
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY
CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
* Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
* Follow the simple instructions the Voice provides you.
VOTE BY INTERNET -- http://www.eproxy.com/company symbol/ -- QUICK *** EASY ***
IMMEDIATE
* Use the Internet to vote your proxy 24 hours a day, 7 days a week.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Innovex, Inc., c/o Shareowner Services-, P.O.
Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
[ARROW] PLEASE DETACH HERE [ARROW]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
<TABLE>
<S> <C>
1. Election of directors: 01 Gerald M. Bestler 05 William J. Miller [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
02 Frank L. Farrar 06 William P. Murnane listed below (except nominees
03 Thomas W. Haley 07 Michael C. Slagle as marked to the to vote for all
04 Elick Eugene Hawk 08 Bernt M. Tessem contrary) listed below.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, ______________________________________
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) | |
|______________________________________|
2. PROPOSAL TO APPROVE THE ADOPTION OF THE EMPLOYEE STOCK
PURCHASE PLAN. [ ] For [ ] Against [ ] Abstain
3. PROPOSAL TO RATIFY APPOINTMENT OF GRANT THORNTON LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS. [ ] For [ ] Against [ ] Abstain
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER MATTERS COMING BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS (1), (2) AND (3) IN ACCORDANCE WITH THE SPECIFICATIONS
MADE AND "FOR" SUCH PROPOSAL IF THERE IS NO SPECIFICATION.
Address Change? Mark Box [ ] Indicate changes below: Date ________________________ 19
______________________________________
| |
| |
|______________________________________|
Signature(s) in Box
Please sign name(s) exactly as shown at
left. When signing as executor,
administrator, trustee or guardian, give
full title as such; when shares have been
issued in names of two or more persons, all
should sign.
</TABLE>
