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 (AMENDMENT NO. )
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
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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
[ ] 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 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 17, 2001
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 17, 2001 at 3:30 p.m., Central Time, for the
following purposes:
1. To elect seven directors to hold office until the next Annual
Meeting of Shareholders or until their successors are elected.
2. To approve the selection of the Company's independent auditors
for the current fiscal year.
3. 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 6,
2000 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
Maple Plain, Minnesota
December 15, 2000
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 17, 2001. 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 14,980,213 shares were issued and outstanding and
entitled to vote at the close of business of December 6, 2000. Each share of
Common Stock is entitled to one vote. Only shareholders of record at the close
of business on December 6, 2000 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 5540 Pioneer Creek
Drive, Maple Plain, Minnesota 55359, and its telephone number is (763) 479-5300.
The mailing of this Proxy Statement to shareholders of the Company commenced on
or about December 15, 2000.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table includes information as of December 6, 2000
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) 825,220 5.5%
2421 Crowne Hill Road
Minnetonka, MN 55305
Kennedy Capital Management, Inc.(3) 877,750 5.9%
10829 Olive Boulevard
St. Louis, MO 63141
Systematic Financial Management, L.P.(4) 874,285 5.8%
Glenpointe East, 7th Floor
300 Frank W. Burr Boulevard
Teaneck, NJ 07666
Gerald M. Bestler (1) 12,454 *
Frank L. Farrar (1) 2,000 *
Elick Eugene Hawk (1) 4,000 *
William J. Miller 2,000 *
William P. Murnane (1)(2) 118,200 *
Michael C. Slagle (1) 10,566 *
Bernt M. Tessem (1) 5,530 *
Allan J. Chan (2) 77,000 *
Timothy S. McIntee(2) 49,800 *
Venkatraman B. Rao, Ph.D.(2) 9,794 *
All Directors and Officers
as a Group (14 persons) 1,183,511 7.7%
3
<PAGE>
*Less than 1%
(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) Pursuant to a 13G/A filed with the Securities and Exchange Commission
on February 10, 2000
(4) Pursuant to a 13G filed with the Securities and Exchange Commission on
February 22, 2000.
(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, 24,000 shares; Mr. Bestler, 7,512 shares; Mr.
Farrar, 2,000 shares; Mr. Hawk, 2,000 shares; Mr. Miller, 2,000 shares;
Mr. Murnane, 117,000 shares; Mr. Slagle, 4,000 shares; Mr. Tessem,
4,000 shares; Mr. Chan, 73,400 shares; Mr. McIntee 31,300 shares; Dr.
Rao, 13,400 shares; and all directors and officers as a group, 327,512
shares.
ELECTION OF DIRECTORS
(PROPOSAL 1)
Seven 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 seven persons named below.
All of the nominees are currently directors of the Company and were elected by
the shareholders at the 2000 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 (64) Chairman of the Company. 1972
Michael C. Slagle (65) Retired; former owner of Minnesota Benefit 1972
Planners, an insurance brokerage and
consulting firm.
Bernt M. Tessem (70) Independent Sales Consultant since October 1976
1992.
Gerald M. Bestler (71) Retired; formerly Executive Vice President 1988
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.
4
<PAGE>
Frank L. Farrar (71) 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.
Elick Eugene Hawk (57) 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.
William P. Murnane (38) President and Chief Executive Officer of 1999
the Company since July 1998. From 1996 to
1998, he served as Vice President and
General Manager of the Company's flexible
circuit division after the Company acquired
Litchfield Precision Components, a
manufacturer of high technology flexible
circuits, and from 1995 to 1996 he served
as the Company's Vice President for
Corporate Development. From 1993-1995, Mr.
Murnane was Chief Operating Officer of
Boutwell, Owens & Co., a privately held
packaging manufacturer based in
Massachusetts. From 1992 to 1993, Mr.
Murnane was Director of Operations for
Uniform Printing & Supply, Inc. in
Massachusetts. Prior to that, he held
various operating and corporate planning
positions during a ten-year career at
United Parcel Service. Mr. Murnane holds a
BS in Engineering from New Jersey
Institute of Technology, an MS in
Operations Research from the University of
Maryland, and an MBA from the Harvard
Business School.
--------------------------
5
<PAGE>
OTHER INFORMATION REGARDING THE BOARD
MEETINGS. The Board of Directors met five times during fiscal year
2000. 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.
Farrar who attended 60% of the meetings.
BOARD COMMITTEES. The Company has an Audit Committee, a Compensation
Committee, a Stock Option Committee, and a Nominating 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, Hawk and Tessem, met one time during fiscal year 2000. 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. Farrar, Haley and Slagle, met one time during fiscal year
2000. 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, Miller
and Slagle, met one time during fiscal year 2000. The Stock Option Committee
makes recommendations to the Board with respect to awarding stock options to the
Company's key personnel. The Nominating Committee, which during the last fiscal
year consisted of Messrs. Haley, Slagle and Farrar, met one time in fiscal year
2000 to consider nominees for election to the Board of Directors.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending September 30, 2000,
1999 and 1998, 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 Chairman, and each of the four other most highly compensated executive
officers of the Company in office at the end of fiscal 2000 (together with Mr.
Haley, the "Named Executives"), whose total cash compensation exceeded $100,000
during fiscal year 2000 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 2000 $186,926 -- -- $5,008
Chairman 1999 182,311 -- 45,000 7,154
1998 248,655 $75,000 10,000 5,146
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
William P. Murnane 2000 216,727 -- 45,000 4,697
President and Chief 1999 174,990 37,100 45,000 5,555
Executive Officer 1998 160,675 70,000 10,000 4,424
Allan J. Chan 2000 182,548 -- 17,000 4,459
Senior Vice President 1999 169,999 22,525 40,000 5,592
Sales and Marketing 1998 165,961 70,000 10,000 4,955
Timothy S. McIntee 2000 185,543 -- 22,000 4,339
Senior Vice President 1999 169,998 28,832 35,000 5,180
Corporate 1998 155,769 45,000 1,500 946
Venkatraman B. Rao Ph.D. 2000 141,527 -- 17,000 5,025
Vice President, Research 1999 110,000 19,292 25,000 1,629
and Development 1998 -- -- -- --
</TABLE>
(1) These amounts represent Company matching contributions to the Company's
401(k) plan on behalf of such employees.
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 2000:
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 -- -- -- -- --
William P. Murnane 45,000 8.2% $7.81 10-21-09 $221,096 $560,300
Allan J. Chan 17,000 3.1% $7.81 10-21-09 83,525 211,669
Timothy S. McIntee 22,000 4.0% $7.81 10-21-09 108,091 273,924
Venkatraman B. Rao 17,000 3.1% $7.81 10-21-09 83,525 211,669
</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 2000 and the
unexercised options held as of September 30, 2000:
7
<PAGE>
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 -- -- 13,000 42,000 $19,121 $76,482
William P. Murnane -- -- 91,000 99,000 487,005 378,920
Allan J. Chan 3,000 $15,875 54,000 67,000 196,059 207,672
Timothy S. McIntee -- -- 19,600 58,900 14,872 187,361
Venkatraman B. Rao -- -- 5,000 37,000 -- 98,813
</TABLE>
(1) Based on a per share price of $13.625, which was the closing sale price for
the Company's Common Stock on September 29, 2000, the last trading day of the
Company's fiscal year.
JOINT REPORT OF THE COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
The Compensation Committee of the Board of Directors consists of Mr.
Haley, the Chairman of the Company, and Messrs. Slagle and Farrar, 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 Messrs. Miller, 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
8
<PAGE>
approval. The compensation for Thomas W. Haley, the Chairman, 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, Chairman
Michael C. Slagle William J. Miller
Frank L. Farrar Michael C. Slagle
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.
BOARD AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is responsible for
providing independent, objective oversight of the Company's financial reporting
system by overseeing and monitoring management's and the independent auditors'
participation in the financial reporting process. The Audit Committee is
comprised of independent directors, and acts under a written charter first
adopted and approved by the Board of Directors on May 30, 2000, a copy of which
is attached to this Proxy Statement as Appendix A. Each of the members of the
Audit Committee is independent as defined by the Nasdaq listing standards.
The Audit Committee held one meeting during fiscal year 2000. The
meetings were designed to facilitate and encourage private communication between
the Audit Committee and the Company's independent accountants, Grant Thornton
LLP.
Subsequent to the fiscal year end, the Audit Committee reviewed and
discussed the audited financial statements with management and Grant Thornton
LLP. Management represented to the Audit Committee that the Company's
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the consolidated financial statements with management and the
independent accountants. The discussions with Grant Thornton LLP also included
the matters required by Statement on Auditing Standards No. 61 (Communication
with Audit Committees).
Grant Thornton LLP provided to the Audit Committee the written
disclosures and the letter regarding its independence as required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). This information was discussed with Grant Thornton LLP.
Based on the discussions with management and Grant Thornton LLP., the
Audit Committee's review of the representations of management and the report of
Grant Thornton LLP., the Audit Committee recommended to the Board that the
audited consolidated financial statements be included in the Company's Annual
Report on Form 10-K for the year ended September 30, 2000 filed with the
Securities and Exchange Commission.
9
<PAGE>
SUBMITTED BY THE AUDIT COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
Elick Eugene Hawk, Chairman
Gerald M. Bestler
Bernt M. Tessem
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, 1995, assuming the reinvestment of all dividends and after giving effect to
a 2 for 1 stock split on December 23, 1996:
[INSERT GRAPH HERE (FROM DATA BELOW)]
----------------------------------------------------------
1995 1996 1997 1998 1999 2000
--------------------------------------------------------------------------------
Innovex, Inc. $100 $85.90 $298.78 $113.18 $84.87 $129.03
--------------------------------------------------------------------------------
Nasdaq Non-Financial 100 116.75 156.68 157.31 268.11 364.61
--------------------------------------------------------------------------------
Nasdaq Stock Market 100 117.91 162.11 160.95 262.00 350.71
================================================================================
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.
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
10
<PAGE>
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 2000, 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 $584,280.
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, 2000, all
Section 16(a) filing requirements applicable to its insiders were complied with.
APPROVAL OF INDEPENDENT AUDITORS
(PROPOSAL 2)
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.
11
<PAGE>
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal for action at the 2002
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, 5540 Pioneer Creek Drive, Maple Plain, MN 55359,
addressed to Thomas W. Haley, no later than August 17, 2001 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.
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 2002 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 8, 2001, 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, 2000. 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
12
<PAGE>
Appendix A
INNOVEX, INC.
AUDIT COMMITTEE CHARTER
Responsibilities and Authority
The Audit Committee reports to the Board of Directors. Its primary
focus is to assist the Board in fulfilling its responsibilities to shareholders
related to financial accounting and reporting, the system of internal controls
established by management and the adequacy of auditing relative to these
activities. The Committee is granted the authority to investigate any activity
of the Company and it is empowered to retain persons having special competence
as necessary to assist the Committee in fulfilling its responsibilities. In
addition, the Committee will perform such other functions as assigned by law,
the Company's Bylaws or the Board of Directors.
Membership
The Committee shall be composed of not less than three members,
appointed annually by the Board. The Committee shall be composed of directors
who are independent of the management of the Company and are free of any
relationship that, in the opinion of the Board of Directors, would interfere
with their exercise of independent judgment as a Committee member.
Meetings
The Committee shall meet at least four times a year. The agenda of each
meeting will generally be prepared by the Chief Financial Officer or equivalent
("Finance Officer"), with input from the Committee Chairman and Committee
members, and circulated to each member of the Committee prior to the meeting
date. The Committee may ask members of management or others to attend meetings
and provide pertinent information as necessary.
Specific Duties
Relationship with Independent Accountant
The outside auditor is accountable to the Board of Directors. The Audit
Committee shall provide for an open avenue of communications between the
independent accountant and the Board and, at least once annually, meet with the
independent accountants in private session.
As shareholder representatives, the Board of Directors shall exercise
the ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the independent accountant upon the recommendation of the
Audit Committee. In connection with this duty, the Committee shall receive on an
annual basis a written statement from the independent accountant detailing all
relationships between the independent accountant and the Company, consistent
with requirements of the Independence Standards Board. The Committee shall
review services performed by the independent accountants, including the type and
extent of non-audit services performed and the impact that these services may
have on the public accountant's independence.
Review with the independent accountants (1) the proposed scope of their
examination with emphasis on accounting and financial areas where the Committee,
the accountants or management believe special attention should be directed; (2)
results of their audit, including their opinion on the financial statements and
the independent accountant's judgment on the quality, not just the
acceptability, of the Company's accounting principles as applied in the
financial statements; (3) their evaluation of the adequacy of the system of
internal controls; (4) significant disputes, if any, with management; and (5)
cooperation received from management in the conduct of the audit.
Relationship with the Accounting Department
13
<PAGE>
The Finance Officer is accountable to the Chairman of the Committee.
The Audit Committee shall provide for an open avenue of communication between
the Accounting Department and the Board and, at least once annually, meet with
the Finance Officer in private session.
Review and concur in the appointment, replacement, reassignment or
dismissal of the Finance Officer and review his/her independence from
management.
Review the Accounting Department's mission, objectives and resources
and its annual plan, including its coordination with the independent
accountants.
Review the results of Internal Audit activities and its evaluation of
the system of internal controls and discuss with the Finance Officer any
difficulties encountered in the course of audits, including any restrictions on
the scope of work or access to required information.
Relationship with Management
Before publication, review the quarterly and annual financial
statements and related footnotes with both management and the independent
accountant.
Review any significant changes in accounting principles.
Review significant accounting, reporting, regulatory or industry
developments affecting the Company.
Discuss with management, the independent accountant and the Finance
Officer any issues regarding significant risks or exposures and assess the steps
management has taken to minimize such risk.
14
<PAGE>
INNOVEX, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 17, 2001
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 16, 2000, at the Annual Meeting of Shareholders to be
held in Minneapolis, Minnesota on January 17, 2001, or at any adjournment or
adjournments thereof, hereby revoking all former proxies.
1. ELECTION OF DIRECTORS: [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary). nominees listed
below.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Gerald M. Bestler, Frank L. Farrar, Thomas W. Haley, Elick Eugene Hawk,
William P. Murnane, Michael C. Slagle, and Bernt M. Tessem
2. PROPOSAL TO RATIFY APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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.
Dated: _______________________________, 20____
(Signature)
(Signature)
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.
15
