<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
/X/ Definitive Proxy Statement Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Jones Medical Industries, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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pursuant to Exchange Act Rule 0-11: (Set forth the amount on which
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
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<PAGE> 2
JONES MEDICAL INDUSTRIES, INC.
1945 CRAIG ROAD
P. O. BOX 46903
ST. LOUIS, MISSOURI 63146
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Jones Medical Industries, Inc. ("Company"), a Delaware corporation,
will be held at the St. Louis Club, 7701 Forsyth, 16th Floor, Clayton,
Missouri, on Monday, May 15, 1995, at 3:30 P.M., local time, and at any
adjournment or postponement thereof, to consider and act upon the
following matters as more fully described in the Proxy Statement:
(1) The election of directors to serve for a term of one year;
(2) The approval of a proposal to adopt the Company's 1994
Incentive Stock Plan, pursuant to which the Company may grant
incentive stock awards to certain employees of the Company, or its
affiliates, designated from time-to-time by the Compensation
Committee of the Board of Directors;
(3) The approval of a proposal to adopt the Company's 1994 Formula
Stock Option Plan for Non-Management Directors pursuant to which the
Company will grant stock options to directors of the Company who are
not employees of the Company; and
(4) Such other matters as may properly come before the meeting or
any adjournment or postponement thereof.
Only holders of record of Common Stock, $.04 par value ("Common Stock")
or Convertible Preferred Stock, Series A, $.01 par value ("Preferred
Stock") at the close of business on April 14, 1995, are entitled to
vote at this meeting or any adjournment or postponement thereof. The
holders of Common Stock and Preferred Stock will vote together as a
single class with respect to the matters specified above.
The Board of Directors cordially invites you to attend this meeting.
If you cannot attend in person, PLEASE EXECUTE AND RETURN THE ENCLOSED
PROXY CARD AT ONCE. IF YOU ATTEND, YOU MAY VOTE IN PERSON, EVEN THOUGH
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
By order of the Board of Directors
JUDITH A. JONES, Secretary
April 21, 1995
St. Louis, Missouri
<PAGE> 3
JONES MEDICAL INDUSTRIES, INC.
1945 CRAIG ROAD
P. O. BOX 46903
ST. LOUIS, MISSOURI 63146
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 1995
PURPOSE OF THE MEETING
The Board of Directors of Jones Medical Industries, Inc. ("Company"),
a Delaware corporation, furnishes this Proxy Statement ("Proxy
Statement") in connection with the solicitation of proxies for use at
the Company's Annual Meeting of Shareholders to be held on May 15, 1995
at 3:30 P.M., local time, at the St. Louis Club, 7701 Forsyth, 16th
Floor, Clayton, Missouri and at any adjournment or postponement thereof
("Annual Meeting"), for the purposes set forth in the attached Notice
of Annual Meeting of Shareholders and as further described in this
Proxy Statement.
The Board of Directors of the Company ("Board") is soliciting proxies
in the form enclosed with respect to matters to be acted upon at the
Annual Meeting ("Proxy"). A shareholder of the Company may revoke a
Proxy at any time before it is exercised by filing a written revocation
or a duly executed Proxy bearing a later date with the Secretary of the
Company, either prior to or at the meeting. If a Proxy is properly
executed and returned, the shares represented by that Proxy will be
voted in accordance with the instructions specified on the Proxy, or if
no contrary instructions are specified, the shares will be voted in
favor of the election of all of the nominees for director and in favor
of all other matters described in this Proxy Statement. This Proxy
Statement and related form of Proxy are first being sent to
shareholders of the Company on or about April 21, 1995.
The Company anticipates that it will solicit Proxies primarily by
mail, although directors, officers and employees of the Company (who
will not receive any additional remuneration for such solicitation) may
solicit Proxies by letter, personal interview and telephone. The
Company will bear the total expense of the solicitation of Proxies and
requests that brokers, nominees, fiduciaries and other custodians
forward soliciting material to the beneficial owners of shares. The
Company will reimburse such parties for their reasonable expenses
incurred in forwarding such soliciting material.
As of the date of this Proxy Statement, the Board does not know of
any matters which may come before the Annual Meeting other than those
which are discussed in this Proxy Statement. If any other matters
properly come before the Annual Meeting, the Proxy holders will vote
the shares represented by those Proxies in accordance with their best
judgment on such matters.
SHAREHOLDERS ENTITLED TO VOTE,
RECORD DATE AND VOTE REQUIRED FOR APPROVAL
The Company is authorized to issue 30,000,000 shares of common stock,
$.04 par value ("Common Stock") and 1,000,000 shares of preferred
stock, $.01 par value issuable in series. In accordance with the
Company's Bylaws, the Board established April 14, 1995 as the record
date for the determination of the shareholders entitled to notice of,
and to vote at, the Annual Meeting ("Record Date"). As of the Record
Date, there were 9,234,212 shares of Common Stock and 99,919 shares of
Convertible Preferred Stock, Series A ("Preferred Stock") issued and
outstanding, together representing all of the shares entitled to notice
of and to vote at the Annual Meeting.
All of the outstanding shares of Preferred Stock were issued incident
to the Company's acquisition of GenTrac, Inc., a Wisconsin corporation
("GenTrac"). Ninety-Eight Thousand (98,000) shares of Preferred Stock
are being held in escrow by Mark Twain Bank ("Escrow Agent") subject to
the fulfillment of certain
1
<PAGE> 4
contingencies and to provide certain indemnity protection to GenTrac
and the Company. The Escrow Agent shall exercise all rights and
privileges of election, voting and consent with respect to the shares
of Preferred Stock held in escrow in accordance with the written
instructions, if any, received by the Escrow Agent from the former
GenTrac shareholders.
The holders of Common Stock and Preferred Stock will vote together as
a single class at the Annual Meeting with respect to the election of
directors and the approval of the remaining proposals.
The holders of a majority of the aggregate outstanding shares of
Common Stock and Preferred Stock, present either in person or by proxy,
will constitute a quorum for the transaction of business at the Annual
Meeting. Each shareholder is entitled to one vote for each share of
Common Stock or Preferred Stock held by that shareholder on the Record
Date. There is no cumulative voting with respect to the election of
directors. Therefore, a majority of the shares of Common Stock and
Preferred Stock, present either in person or by proxy, voting together,
will be required for the election of each director and the approval of
the remaining proposals.
BOARD OF DIRECTORS
The Company's Certificate of Incorporation, as amended, provides for
a Board constituted of not less than three nor more than nine
directors. The Company's Bylaws currently fix the number of directors
at nine. The directors elected at the Annual Meeting will serve a one-
year term and until their successors have been duly elected and shall
have qualified. Directors appointed by the Board to fill vacancies or
newly created directorships serve for the remainder of the term of the
directorship which is vacant or the newly created directorship. From
time to time, the Board determines the size of the Board within the
foregoing range.
The Board held four (4) meetings during the fiscal year ended
December 31, 1994. All of the directors attended all of the Board
meetings. Stanley Lopata, L. John Polite, Jr., Edward A. Chod and
Judith A. Jones were elected as members of the Company's audit
committee. The audit committee acts as a liaison between the Board and
the Company's independent auditors and reviews the results of the
audit, the Company's internal controls, the audit procedures, and the
independent auditor's recommendations to management. The audit
committee met one (1) time during the fiscal year ended December 31,
1994. Stanley Lopata, L. John Polite, Jr. and Edward A. Chod were
elected as members of the Company's compensation committee. The
compensation committee administers the Company's 1994 Incentive Stock
Plan and advises the Company's chief executive officer with respect to
executive compensation matters. The compensation committee met one (1)
time during the fiscal year ended December 31, 1994. The Company has no
standing nominating committee of the Board or committees performing
similar functions.
The following biographies and other information indicate the
principal occupation or employment for the past five years, the age,
and the year first elected as director with respect to each nominee to
become a director.
DENNIS M. JONES, 56, the founder of the Company, has been the
Company's Chairman of the Board, President and Chief Executive Officer
since its inception in March 1981. Mr. Jones has been involved
primarily in the pharmaceutical industry since 1964 in various
marketing, management and administrative positions. Mr. Jones has been
a director of Mark Twain Bank State, a subsidiary of Mark Twain
Bancshares, Inc., since 1987.
JUDITH A. JONES, 54, joined the Company in October 1981 and has been
in charge of the financial affairs and books of the Company since that
time. Mrs. Jones has been a director of the Company since December
1981, and the Secretary since April 1982. Mrs. Jones has been Vice
President-Finance and Treasurer of the Company since March 1985, and
currently serves as Executive Vice President, Secretary and Treasurer.
Mrs. Jones is the wife of Dennis M. Jones.
MICHAEL T. BRAMBLETT, 52, a director of the Company since 1987, has
served as Vice President of the Company since January 1991 and
currently serves as Executive Vice President. From May 1986 until June
1987 and from June 1987 until May 1988, Mr. Bramblett served as
Creative Vice President and Corporate Vice President, respectively, of
S & H Motivation Company and from May 1988 through December 1990, he
served as Marketing Director of Carlson Marketing Group.
2
<PAGE> 5
G. ANDREW FRANZ, 42, has been a director of the Company since 1994
and became Senior Vice President-Operations-Pharmaceuticals for the
Company in 1994. He served as the Vice President-Operations of the
Company's subsidiary, JMI-Canton Pharmaceuticals, Inc. ("JMI-Canton"),
the Company's FDA-registered pharmaceutical manufacturing facility,
since the facility was acquired by JMI-Canton from Bowman
Pharmaceuticals, Inc. in March 1984. Prior to March 1984, Mr. Franz
held various management positions for fourteen years within Bowman
Pharmaceuticals, Inc. including Chief Chemist and Vice President-
Operations. Mr. Franz is the son-in-law of Dennis and Judith Jones.
DAVID A. MCLAUGHLIN, 47, has been a director of the Company since
1994 and became Senior Vice President-Operations-Nutritionals in 1994.
He served as the Vice President-Operations of the Company's subsidiary,
American Vitamin Company, Inc. from June, 1988 until that company's
merger into JMI Phoenix Laboratories, Inc. ("JMI-Phoenix") in 1993.
From April 1986 to May 1988, Mr. McLaughlin was the Vice President-
Sales and Marketing of JMI-Phoenix. Prior to that time, Mr. McLaughlin
served as an independent consultant to a number of health food,
chemical and pharmaceutical companies including JMI-Phoenix. From May
1978 to January 1982 he was a supervisor of packaging and processing
for the Searle Consumer Products Division of G.D. Searle & Company.
STANLEY L. LOPATA, 80, a director since 1988, is the President of
Lopata Research and Development Corp. and has served in that capacity
since 1986. Prior to that, Mr. Lopata was the Chairman of the Board of
Directors and Chief Executive Officer of Carboline Corporation, a
manufacturer of specialty paint and coating products, from 1960 through
1985. Mr. Lopata has been a director of Boatmen's Trust Company, a
subsidiary of Boatmen's Bancshares, Inc., since 1983.
L. JOHN POLITE, JR., 73, a director since 1989, is Chairman of
Peridot (New Jersey) Chemicals, Inc., and has served in that capacity
since December 1989. He was the Chairman of the Board, President and
Chief Executive Officer of Essex Chemical Corporation ("Essex") from
April 1978 to October 1988 when Essex merged into Dow Chemical Company.
Mr. Polite also serves as a director of Witco Corporation, a
manufacturer and marketer of a wide range of specialty chemicals,
petroleum products and engineered materials.
EDWARD A. CHOD, 42, has been a director of the Company since 1991.
Mr. Chod is an officer and shareholder in the law firm of Greensfelder,
Hemker & Gale, P.C. which he joined in 1978 and which has served as
counsel to the Company since 1982.
THOMAS F. PATTON, PH.D., 46 (nominee), is the President of the St.
Louis College of Pharmacy and has served in that capacity since June 1,
1994. From April 1993 until January 1994 and from January 1994 until
May 1994, Dr. Patton served as Executive Director of Pharmaceutical
Research and Development and as Vice President of Pharmaceutical
Research and Development, respectively, at Dupont-Merck Pharmaceutical
Co. From March 1990 through March 1993, Dr. Patton served as Director
and Senior Director of Pharmaceutical Research and Development at Merck
and Co., Inc. In 1993, Dr. Patton was President of the American
Association of Pharmaceutical Scientists. Dr. Patton's 20 year career
also includes tenures as Professor of Pharmaceutical Chemistry and
Pharmacy Practice at the University of Kansas, Associate Director
Control Development at the Upjohn Co. and Vice President of Operations
at Oread Laboratories, Inc.
Dennis M. Jones and Judith A. Jones are husband and wife. G. Andrew
Franz is the son-in-law of Dennis and Judith A. Jones. There are no
other familial relationships between any directors, nominees, or
executive officers of the Company.
No employee who is a director receives a director's fee for services
rendered as a director. However, all non-employee directors receive
reimbursement for any expenses incurred in his capacity as a director
of the Company and $2,500 per meeting of the Board of Directors
attended by such non-employee director, subject to a minimum of $5,000
per year. In addition, non-employee directors who are members of the
Company's compensation committee receive $500 per meeting of the
compensation committee attended by such non-employee director. Finally,
the present non-employee directors of the Company have been granted
stock options pursuant to the Company's 1994 Formula Stock Option Plan
for Non-Management Directors (see "RATIFICATION OF THE ADOPTION OF THE
COMPANY'S 1994 FORMULA STOCK OPTION PLAN FOR NON-MANAGEMENT
DIRECTORS").
3
<PAGE> 6
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Dennis M. Jones, Judith A. Jones, Michael T. Bramblett, G. Andrew
Franz, David A. McLaughlin, Stanley Lopata, L. John Polite, Jr., Edward
A. Chod and Dr. Thomas F. Patton are nominees for election to
membership on the Board for one year terms. In each instance, the
directors are elected to serve until their successors shall have been
duly elected and shall have qualified.
Unless otherwise instructed, the Proxy holders will vote for the
election of the nine nominees. Although the Company does not
contemplate that any nominee will decline or be unable to serve as
director, in either such event, the Proxies will be voted for such
other person as may be designated by the Board.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES.
RATIFICATION OF THE ADOPTION OF THE COMPANY'S
1994 INCENTIVE STOCK PLAN
(PROPOSAL NO. 2)
Effective June 1, 1994, the Board of Directors adopted an Incentive
Stock Plan known as the Jones Medical Industries, Inc. 1994 Incentive
Stock Plan ("1994 ISP"). The purpose of the 1994 ISP is to encourage
employees, including officers and directors who are employees, to
contribute to the success of the Company and to provide additional
incentive to continue and advance in their employment. The Company has
reserved for issuance under the 1994 ISP 500,000 shares of the
Company's Common Stock. A copy of the 1994 ISP is attached as Appendix
A to this Proxy Statement.
Under the 1994 ISP, incentives in a variety of forms may be granted
to employees of the Company. Such incentives may consist of any one or
a combination of (i) incentive stock options (or other statutory stock
options); (ii) non-qualified stock options; (iii) performance share
awards; and/or (iv) restrictive stock grants (collectively,
"Incentives"). Regular full-time employees of the Company and its
subsidiaries, including officers, whether or not directors of the
Company, are eligible to participate in the 1994 ISP ("Eligible
Employees"). The Compensation Committee of the Board of Directors shall
administer the 1994 ISP and determine among other things, the
recipients of the Incentives, the form which such Incentives will take,
and the amount of each Incentive awarded. It is intended that Incentive
awards will be made principally to those employees who are key officers
or management employees of the Company or a subsidiary and who are in a
position to have significant impact on achievement of the Company's
long-term objectives. There are approximately 25 employees who are
eligible to participate in the 1994 ISP.
STOCK OPTION INCENTIVES. Incentives may be granted in the form of
options to purchase shares of the Company's Common Stock ("Options")
either qualifying as Incentive Stock Options under the Internal Revenue
Code of 1986, as amended (the "Code") ("ISOs"), other statutory stock
options under the Code, or non-qualified options.
The exercise price per share with respect to each Option shall not be
less than 90% of the fair market value of the Company's Common Stock as
of the date such Option is granted, as determined by the Compensation
Committee; however, the exercise price with respect to each ISO shall
not be less than 100% of such fair market value. Furthermore, the
exercise price per share with respect to any ISO granted to a person
deemed to own more than 10% of the outstanding Common Stock of the
Company ("10% Shareholder") shall not be less than 110% of the fair
market value of the Company's Common Stock as of the date such ISO is
granted.
The period of each Option shall be fixed by the Compensation
Committee, except that ISOs shall not be exercisable for more than ten
(10) years after their grant and no ISO granted to a 10% Shareholder
shall be exercisable after the fifth anniversary of the date of grant.
The exercise price of each Option granted under the 1994 ISP is
payable to the Company at the time such Option is exercised either in
the form of cash or, in the discretion of the Compensation Committee,
in whole or in part in the form of shares of Common Stock of the
Company already owned by the grantee. Such Common Stock shall be valued
at its fair market value as of the date of the exercise of the Option.
4
<PAGE> 7
Except as may otherwise be permitted by the Code, the Compensation
Committee shall not, in the aggregate, grant to an Eligible Employee
ISOs that are first exercisable during any one calendar year to the
extent that the Eligible Employee holds exercisable ISOs exercisable
into underlying Common Stock with a fair market value, at the time the
ISOs are granted, in excess of $100,000.
The federal income tax treatment of Options granted under the 1994
ISP depends on the form of the Option granted. With respect to ISOs, a
grantee recognizes capital gains income upon the disposition of the
stock acquired upon exercise of an ISO in an amount equal to the
difference between the sale price of the stock and the exercise price
of the ISO. The Company is not entitled to a tax deduction with respect
to the grant or exercise of an ISO nor with respect to any disposition
of the shares acquired by exercise of ISOs after certain holding
periods, as described in Section 422A(a)(1) of the Code. With respect
to options which are not ISOs, a grantee recognizes ordinary income
upon the exercise of such option in an amount equal to the difference
between the fair market value of the stock as of the date of exercise
and the exercise price of the option. At such time, the Company is
entitled to a corresponding compensation expense deduction.
PERFORMANCE SHARE AWARDS. The Compensation Committee may grant
Incentive awards under which payment may be made if the performance of
the Company or any subsidiary or division of the Company selected by
the Compensation Committee meets certain goals established by the
Compensation Committee during a time period designated by the
Compensation Committee. Such awards shall be subject to terms and
conditions set forth in the 1994 ISP and otherwise prescribed by the
Compensation Committee. Each Performance Share Award shall be expressed
in terms of shares of Common Stock and may be paid in shares of Common
Stock, cash or a combination thereof. Any cash payment shall be based
on the fair market value of the Common Stock on, or as soon as
practicable prior to, the date of payment.
RESTRICTED STOCK AWARDS. The Company may issue shares of restricted
Common Stock to Eligible Employees, subject to certain terms and
conditions set forth in the 1994 ISP, including, without limitation,
continued employment with the Company for a period of time designated
by the Compensation Committee ("Restriction Period"). Shares of Common
Stock issued in the form of Restricted Stock will not be transferable
by the grantee during the Restriction Period. The Compensation
Committee can provide that dividends on Restricted Stock awards either
be paid to the grantee or accumulated for the benefit of the grantee
and paid only after the end of the Restriction Period.
As of April 17, 1995, the market price of the Company's Common Stock
was $8.75 per share. As of the date of this Proxy Statement, no
Incentives have been granted under the 1994 ISP and the amount of
benefits which may be received under the 1994 ISP by the Named
Executives and the other employees of the Company are not determinable.
Ratification of the adoption of the 1994 ISP requires the affirmative
vote of a majority of the shares of Common Stock and Preferred Stock,
voting together. Unless otherwise instructed, the Proxyholders will
vote for the ratification of the adoption of the 1994 ISP.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
ADOPTION OF THE COMPANY'S 1994 INCENTIVE STOCK PLAN.
RATIFICATION OF THE ADOPTION OF THE COMPANY'S 1994
FORMULA STOCK OPTION PLAN FOR NON-MANAGEMENT DIRECTORS
(PROPOSAL NO. 3)
Effective May 25, 1994, the Board of Directors adopted the Jones
Medical Industries, Inc. 1994 Formula Stock Option Plan for Non-
Management Directors ("1994 Formula Option Plan"). The purpose of the
1994 Option Plan is to provide compensation to Non-Management Directors
of the Company and to encourage the highest level of performance of
Non-Management Directors by providing those directors with a
proprietary interest in the Company's success and progress by granting
them options to purchase shares of the Company's Common Stock. The
maximum number of shares of Common Stock which may be issued under the
1994 Formula Option Plan is 50,000 shares. A copy of the 1994 Formula
Option Plan is attached as Appendix B to this Proxy Statement.
5
<PAGE> 8
Under the 1994 Formula Option Plan, options to purchase the Common
Stock of the Company ("Options") are automatically granted to Non-
Management Directors of the Company upon their election to the Board of
Directors. Each Option granted shall entitle the recipient to purchase
5,000 shares of the Company's Common Stock at a price equal to the fair
market value of the Common Stock on the date of grant of the Option.
Options are exercisable in annual increments of 1,000 shares each, with
the first 1,000 shares exercisable eleven months from the date of the
grant of such Option ("Initial Exercise Date") and an additional twenty
percent (20%) of the Option becoming exercisable on each annual
anniversary of the Initial Exercise Date. Such Options must be
exercised, if at all, on or before the first to occur of (i) the
designated number of days as set forth in the 1994 Formula Option Plan
after the effective date of the termination of service of the Non-
Management Director (either as a result of death, resignation, removal,
expiration of term or such Director becoming an employee of the Company
or any affiliate), and (ii) the fifth anniversary of the Initial
Exercise Date. Pursuant to the 1994 Formula Option Plan, no Non-
Management Directors may receive a grant of a new Option until the
first day of the month following the day on which all previously
granted Options have become fully exercisable. In addition, every
Option granted pursuant to the 1994 Formula Option Plan must be granted
on or before May 31, 1999. An Option granted pursuant to the 1994
Formula Option Plan may not be transferred (other than by will or the
laws of descent and distribution) and shall be exercisable, during the
lifetime of such Director, only by such Director.
Upon exercise of an Option, the recipient of an Option must pay tax
on ordinary income in an amount equal to the difference between the
fair market value of the underlying stock as of the date of exercise
and the exercise price, and the Company is entitled to a corresponding
tax deduction in an amount equal to the income realized by such Option
holder.
As of April 17, 1995, the market price of the Company's Common Stock
was $8.75 per share.
The following table sets forth information with respect to Options
granted from May 25, 1994 (the date of the adoption of the 1994 Formula
Option Plan) through the date of this Proxy Statement:
<TABLE>
1994 FORMULA OPTION PLAN
<CAPTION>
NO. OF PER SHARE INITIAL
DATE OF OPTIONS EXERCISE EXERCISE EXPIRATION
NAME GRANT GRANTED PRICE DATE DATE
---- ------- ------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Stanley L. Lopata........................................ 6/1/94 5,000 $10.50 6/1/94<F1> 6/1/99
L. John Polite, Jr. ..................................... 6/1/94 5,000 $10.50 6/1/94<F1> 6/1/99
Edward A. Chod........................................... 6/1/94 5,000 $10.50 5/1/95 5/1/00
- - -----
<FN>
<F1> Pursuant to the terms of the 1994 Formula Option Plan, the Initial
Exercise Date for the Options granted to Messrs. Lopata and Polite
is June 1, 1994 (rather than May 1, 1995) in recognition of their
services rendered to the Company during the prior twelve (12) month
period.
</TABLE>
Any Options granted under the 1994 Formula Option Plan prior to
approval by the shareholders of the Company shall be contingent upon
such approval and shall be void if not so approved on or before May 25,
1995. In the event that any such Options are exercised and the
shareholders of the Company do not approve the 1994 Formula Option Plan
as set forth above, the Company shall redeem, and the applicable
participant shall sell, any such shares so purchased by such
participant at a price equal to 105% of the exercise price.
Ratification of the adoption of the 1994 Formula Option Plan requires
the affirmative vote of a majority of the shares of Common Stock and
Preferred Stock, voting together. Unless otherwise instructed, the
Proxyholders will vote for the ratification of the adoption of the 1994
Formula Option Plan.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
ADOPTION OF THE COMPANY'S 1994 FORMULA STOCK OPTION PLAN FOR NON-
MANAGEMENT DIRECTORS.
6
<PAGE> 9
SELECTION OF INDEPENDENT AUDITORS
The Board reappointed the accounting firm of Ernst & Young as
independent auditors for the Company for fiscal year 1995.
Ernst & Young has served as the Company's independent auditors since
December, 1985. Audit services performed by Ernst & Young during fiscal
year 1994 consisted of the examination of annual financial statements
of the Company and services related to filings with the Securities and
Exchange Commission.
A representative of Ernst & Young will be present at the Annual
Meeting and will be given an opportunity to make a statement if he so
desires and to respond to appropriate questions.
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
<TABLE>
COMMON STOCK
The following table sets forth information regarding the record and
beneficial ownership of the Common Stock of the Company on the
indicated date by (i) each director or nominee for director and Named
Executive (as such term is defined in "Executive Compensation-Summary
Compensation Table", below) of the Company, (ii) all directors or
nominees for director and executive officers of the Company as a group,
and (iii) each shareholder owning of record or beneficially five
percent (5%) or more of the outstanding Common Stock:
<CAPTION>
BENEFICIAL OWNERSHIP AS OF APRIL 1, 1995
----------------------------------------
SHARES OF
COMMON STOCK PERCENTAGE
NAME AND ADDRESS OF BENEFICIALLY OF CLASS
BENEFICIAL OWNER<F1> OWNED<F2> OWNED
-------------------- ------------ ----------
<S> <C> <C>
Dennis M. Jones............................................ 1,924,060<F3> 20.84%
Chairman of the Board of Directors and President
Judith A. Jones............................................ 513,750<F3> 5.56%
Executive Vice President, Secretary, Treasurer and Director
Michael T. Bramblett....................................... 88,384<F4> <F*>
Executive Vice President and Director
Stanley L. Lopata.......................................... 101,000<F5> 1.09%
Director
#1 Twin Springs Lane
St. Louis, MO 63124
L. John Polite, Jr......................................... 21,000<F6> <F*>
Director
211 Oldwoods Rd.
Franklin Lakes, NJ 07417
Edward A. Chod............................................. 11,500<F7> <F*>
Director
10 South Broadway, Ste. 1800
St. Louis, MO 63102
G. Andrew Franz............................................ 227,229<F8> 2.46%
Senior Vice President-Operations-Pharmaceuticals and
Director
David A. McLaughlin........................................ 64,000<F9> <F*>
Senior Vice President-Operations-Nutritionals and Director
7
<PAGE> 10
<CAPTION>
BENEFICIAL OWNERSHIP AS OF APRIL 1, 1995
----------------------------------------
SHARES OF
COMMON STOCK PERCENTAGE
NAME AND ADDRESS OF BENEFICIALLY OF CLASS
BENEFICIAL OWNER<F1> OWNED<F2> OWNED
-------------------- ------------ ----------
<S> <C> <C>
Thomas F. Patton, Ph.D. ................................... 0 <F*>
Nominee for Director
All Directors, Nominees and Executive Officers as a Group
(consisting of nine persons).............................. 2,890,923 30.89%
Kennedy Capital Management, Inc. .......................... 540,900 5.86%
425 N. New Ballas Rd., #181
St. Louis, MO 63141
<FN>
- - -----
<F*> Less than one percent.
<F1> Except as otherwise indicated, the officers and directors of the
Company named in the above table have sole voting and investment
power with respect to all shares of Common Stock shown as
beneficially owned by them and their respective addresses are 1945
Craig Road, St. Louis, Missouri 63146.
<F2> Includes shares deemed owned as a result of options to purchase
128,000 shares which are presently or will become exercisable prior
to June 20, 1995.
<F3> Includes 60,000 shares owned by the Company's 401(k) Plan (of which
Dennis and Judith Jones are co-trustees) and with respect to which
Dennis and Judith Jones disclaim beneficial ownership.
<F4> Includes 5,500 shares owned directly by Mr. Bramblett, 1,600 by his
IRA, 1,284 shares held by his spouse's IRA and with respect to
which he disclaims beneficial ownership, vested and unexercised
options to purchase 40,000 shares of Common Stock pursuant to the
Company's 1989 Incentive Stock Option Plan and vested and
unexercised options to purchase 40,000 shares of Common Stock
pursuant to a non-qualified stock option granted to Mr. Bramblett
when he became an employee of the Company.
<F5> Includes 73,000 shares owned directly by Mr. Lopata, 27,000 shares
owned by Mr. Lopata through his spouse's revocable trust and with
respect to which he disclaims beneficial ownership, and vested and
unexercised options to purchase 1,000 shares of Common Stock
pursuant to the Company's 1994 Formula Stock Option Plan for Non-
Management Directors.
<F6> Includes 19,000 shares owned directly by Mr. Polite and vested and
unexercised options to purchase 2,000 shares of Common Stock
pursuant to the Company's 1994 Formula Stock Option Plan for Non-
Management Directors.
<F7> Includes 10,500 shares owned directly by Mr. Chod and vested and
unexercised options to purchase 1,000 shares of Common Stock
pursuant to the Company's 1994 Formula Stock Option Plan for Non-
Management Directors.
<F8> Includes 87,445 shares owned directly by Mr. Franz, 102,740 shares
owned by his spouse and with respect to which he disclaims
beneficial ownership, 23,040 shares held by his spouse as custodian
for his children and with respect to which he disclaims beneficial
ownership, 10,004 shares held by his spouse as trustee for his
children and with respect to which he disclaims beneficial
ownership and vested and unexercised options to purchase 4,000
shares of common stock pursuant to the Company's 1989 Incentive
Stock Option Plan.
<F9> Includes 24,000 shares owned directly by Mr. McLaughlin and vested
and unexercised options to purchase 40,000 shares of Common Stock
pursuant to the Company's 1989 Incentive Stock Option Plan.
</TABLE>
8
<PAGE> 11
<TABLE>
PREFERRED STOCK
The following table sets forth information regarding the record and
beneficial ownership of the Preferred Stock of the Company on the
indicated date of each shareholder owning of record or beneficially
five percent (5%) or more of the Outstanding Preferred Stock:
<CAPTION>
BENEFICIAL OWNERSHIP AS OF APRIL 1, 1995<F1>
--------------------------------------------
SHARES OF
PREFERRED STOCK PERCENTAGE
NAME AND ADDRESS OF BENEFICIALLY OF CLASS
BENEFICIAL OWNER OWNED OWNED
------------------- --------------- ----------
<S> <C> <C>
J. Foster Irwin............................................ 15,324<F2> 15.34%
7118 Valleyview Rd.
Verona, Wisconsin 53593
D. Scott Paul.............................................. 15,318<F2> 15.33%
7537 Midtown Road
Verona, Wisconsin 53593
Jon H. Townley............................................. 15,313<F2> 15.33%
6500 Aspen Court
Waunakee, Wisconsin 53597
<FN>
- - -----
<F1> None of the directors, nominees or Executive Officers of the
Company beneficially own shares of Preferred Stock.
<F2> Includes shares, rounded to the nearest whole share, held in escrow
pursuant to the Company's acquisition of GenTrac, Inc. Based upon
the conversion rate presently in effect, upon conversion of
Preferred Stock into Common Stock each of the individuals would
hold less than 1% of the outstanding Common Stock of the Company.
</TABLE>
9
<PAGE> 12
EXECUTIVE COMPENSATION
<TABLE>
SUMMARY COMPENSATION TABLE
The table below sets forth all compensation received in each of the
three fiscal years ended December 31, 1992, 1993 and 1994 for services
rendered in all capacities to the Company and its subsidiaries by the
Chief Executive Officer and the other four (4) highest-compensated
Executive Officers of the Company during the fiscal year ended December
31, 1994 (the "Named Executives").
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- ------------
AWARDS
------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION<F1> OPTIONS (#) COMPENSATION
--------------------------- ---- ------ ----- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dennis M. Jones, 1994 $250,000 $50,000 0 0 $16,755<F2>
Chairman of the Board, 1993 200,000 50,000 0 0 15,204<F2>
Director and President 1992 180,000 20,000 0 0 13,949<F2>
and Chief Executive Officer
Judith A. Jones, 1994 $125,000 $25,000 0 0 $10,711<F3>
Director, Executive Vice 1993 100,000 25,000 0 0 10,293<F3>
President, Secretary and 1992 90,000 10,000 0 0 8,771<F3>
Treasurer
Michael T. Bramblett, 1994 $125,000 $25,000 0 0 $ 5,990<F4>
Director and Executive 1993 100,000 25,000 0 0 5,750<F4>
Vice President 1992 90,000 10,000 0 0 4,500<F4>
G. Andrew Franz, 1994 $ 90,000 $10,000 0 25,000 $ 4,813<F4>
Director and Senior Vice 1993 72,000 8,000 0 0 3,066<F4>
President-Operations- 1992 68,000 5,000 0 0 2,832<F4>
Pharmaceuticals
David A. McLaughlin, 1994 $ 90,000 $10,000 0 25,000 $ 4,813<F4>
Director and Senior Vice 1993 80,000 10,000 0 0 4,500<F4>
President-Operations- 1992 72,000 8,000 0 0 2,857<F4>
Nutritionals
<FN>
- - -----
<F1> None of the Named Executives received Other Annual Compensation
which is required to be reported in this column.
<F2> Consists of a Company contribution to a 401(k) plan ($6,280 in
1994, $8,004 in 1993 and $7,067 in 1992) and the dollar value of
premiums paid by the Company for a split-dollar life insurance
policy on Mr. Jones, of which $10,475, $7,200 and $6,882
constituted his entire economic benefit in the years 1994, 1993 and
1992, respectively.
<F3> Consists of a Company contribution to a 401(k) plan ($7,239 in
1994, $7,533 in 1993 and $4,641 in 1992) and the dollar value of
premiums paid by the Company for a split-dollar life insurance
policy on Mrs. Jones, of which $3,472, $2,760 and $4,130
constituted her entire economic benefit in the years 1994, 1993 and
1992, respectively.
<F4> Consists of a Company contribution to a 401(k) plan.
</TABLE>
10
<PAGE> 13
STOCK OPTION/SAR GRANTS
The table below sets forth all stock options granted by the Company
to the Named Executives during the fiscal year ended December 31, 1994.
The Company granted no stock appreciation rights ("SARs") to the Named
Executives during the fiscal year ended December 31, 1994.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- - ---------------------------------------------------------------------------------------------- -----------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE
UNDERLYING TO EMPLOYEES IN PRICE
NAME OPTIONS GRANTED FISCAL YEAR ($/SHARE) 5% 10%
---- --------------- ---------------- --------- -- ---
<S> <C> <C> <C> <C> <C>
Dennis M. Jones............................. 0 N.A. N.A. N.A. N.A.
Judith A. Jones............................. 0 N.A. N.A. N.A. N.A.
Michael T. Bramblett........................ 0 N.A. N.A. N.A. N.A.
G. Andrew Franz............................. 25,000<F1> 34.48% $8.00 $68,019 $154,312
David A. McLaughlin......................... 25,000<F1> 34.48% $8.00 $68,019 $154,312
<FN>
- - -----
<F1> Options were granted on September 1, 1994. These options vest in
annual increments of 5,000 shares on each anniversary date of their
grant, with the first 5,000 shares exercisable on September 1,
1995, and expire on September 1, 2000.
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION
VALUES
The following table provides information with respect to the stock
options exercised during the fiscal year ended December 31, 1994 and
the value as of December 31, 1994 of unexercised in-the-money options
held by the Named Executives. The value realized on the exercise of
options is calculated using the difference between the option exercise
price and the fair market value of the Company's stock on the date of
the exercise. The value of unexercised in-the-money options at fiscal
year end is calculated using the difference between the option exercise
price and the fair market value of the Company's stock at fiscal year
end, December 31, 1994. The Named Executives exercised no SARs during
the fiscal year ended December 31, 1994 and held no SARs as of December
31, 1994.
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS MONEY OPTIONS AT
SHARES AT FY-END FY-END
ACQUIRED VALUE (#) ($)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------------- -------------------
<S> <C> <C> <C> <C>
Dennis M. Jones.................................... 0 0 0/0 N.A.
Judith A. Jones.................................... 0 0 0/0 N.A.
Michael T. Bramblett............................... 4,000 $ 51,000 80,000/20,000 $270,000/$67,500
G. Andrew Franz.................................... 16,000 $118,000 4,000/25,000 $13,500/N.A.
David A. McLaughlin................................ 0 0 40,000/25,000 $135,000/N.A.
</TABLE>
REPORT ON REPRICING OF OPTIONS
As of September 1, 1994, the Company cancelled two options to
purchase 25,000 shares each of the Company's Common Stock at $13.00 per
share which had previously been granted to G. Andrew Franz and David A.
McLaughlin pursuant to the Company's 1989 Incentive Stock Option Plan
(the "Cancelled Options") and replaced such Cancelled Options with
options to purchase 25,000 shares of the Company's Common Stock at
$8.00 per share (the "Replacement Options"). The Replacement Options
were granted in place of the Cancelled Options to reward such
individuals for their efforts in the consolidation of the Company's
corporate offices in St. Louis, Missouri and their promotion to
executive officer status. The exercise price of the
11
<PAGE> 14
Replacement Options reflects the decline in the market price of the
Company's Common Stock between the date of the grant of the Cancelled
Options and the date of the grant of the Replacement Options. The
Replacement Options are exercisable in increments of 5,000 shares, with
the first 5,000 shares exercisable September 1, 1995, and expire as to
all unexercised options on September 1, 2000.
<TABLE>
The following table summarizes all repricings of options held by any
executive officers of the Company during the last ten (10) completed
fiscal years:
TEN-YEAR OPTION REPRICING
<CAPTION>
NUMBER MARKET
OF PRICE OF LENGTH OF
SECURITIES STOCK AT EXERCISE NEW ORIGINAL OPTION
UNDERLYING TIME OF PRICE AT TIME EXERCISE TERM REMAINING
OPTIONS REPRICING OF REPRICING PRICE AT DATE
NAME DATE REPRICED ($) ($) ($) OF REPRICING
---- ---- ---------- --------- ------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
G. Andrew Franz.............................. 9/1/94 25,000 $8.00/sh. $13.00/sh. $8.00/sh. 5 years
David A. McLaughlin.......................... 9/1/94 25,000 $8.00/sh. $13.00/sh. $8.00/sh. 5 years
</TABLE>
BOARD OF DIRECTORS
Dennis M. Jones Stanley Lopata G. Andrew Franz
Judith A. Jones L. John Polite, Jr. David A. McLaughlin
Michael T. Bramblett Edward A. Chod
CASH OR DEFERRED PROFIT-SHARING PLAN AND TRUST
Effective as of January 1, 1987, the Company adopted a Cash or
Deferred Profit-Sharing Plan and Trust known as the Employee Retirement
401(k) Plan ("401(k) Plan"). The 401(k) Plan provides employees with a
convenient way to save on a regular and long-term basis and encourages
employees to make and continue careers with the Company. During 1994,
the Company made aggregate matching contributions to the 401(k) Plan in
the amount of approximately $183,900, including matching contributions
of $29,118 to the Named Executives.
<TABLE>
To become eligible to participate in the 401(k) Plan, an employee
must have completed six months of service and have reached his or her
eighteenth birthday ("Eligible Employee"). As of January 1, 1995, the
Company had approximately 217 Eligible Employees, including the
directors who are also Named Executives (Dennis M. Jones, Judith A.
Jones, Michael T. Bramblett, G. Andrew Franz and David A. McLaughlin).
Pursuant to the 401(k) Plan, an Eligible Employee who participates
("Participant") may direct that between three percent and fifteen
percent of his or her compensation be contributed to the 401(k) Plan
("Elective Contributions"). The Company will contribute a matching
amount equal to one hundred percent of the Participant's contributions
to the 401(k) Plan up to a maximum amount (five percent in each of
1992, 1993 and 1994) of the Participant's compensation ("Company
Contributions"). The Participants are not allowed to make any voluntary
contributions to the 401(k) Plan, other than their Elective
Contributions. The Company Contributions are subject to a vesting
schedule described below and may not be withdrawn from the 401(k) Plan
until retirement, termination of employment, or other condition
specified in the 401(k) Plan. Participants may withdraw their Elective
Contributions to the 401(k) Plan at any time after they are made.
However, since the 401(k) Plan is designed to promote long-term
savings, there are limitations and restrictions on such withdrawals of
Elective Contributions. Company Contributions become vested according
to the following schedule:
<CAPTION>
YEARS OF PERCENTAGE
SERVICE VESTED
-------- ----------
<S> <C>
2............................................................... 20%
3............................................................... 40%
4............................................................... 60%
5............................................................... 80%
6............................................................... 100%
</TABLE>
Forfeitures of Company Contributions will be allocated to the accounts
of other Participants.
12
<PAGE> 15
Participants may direct that up to twenty-five percent of their
Elective Contributions be invested in life insurance contracts. The
401(k) Plan Trustee shall invest the balance in annuity contracts (with
the authority to designate the percentage of contributions to be
applied on a fixed or variable basis) or in an investment account with
Aetna Life Insurance Company. Participants may not obtain loans from
their accounts under any circumstances. Company Contributions have, at
times, been invested in shares of the Company's Common Stock acquired
in the open market. On March 1, 1995, the 401(k) Plan held 60,000
shares of Common Stock.
The Company is the 401(k) Plan Administrator and currently pays all
expenses of the 401(k) Plan other than audit fees, which are paid by
the 401(k) Plan. The Company has appointed Dennis M. Jones and Judith
A. Jones as Trustees of the 401(k) Plan. The 401(k) Plan may be
modified by the Board at any time, provided that no modification shall
adversely affect the rights of the Participants or divert any of the
trust fund to purposes other than the benefit of the Participants.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company has established a compensation committee of the Board
which serves in an advisory capacity to Dennis M. Jones, the President
and Chief Executive Officer of the Company, with respect to
compensation decisions concerning the Company's executive officers. The
compensation committee also administers the Company' 1994 Incentive
Stock Plan.
COMPENSATION POLICIES
The guiding principle of the Company is to establish a compensation
program which aligns executive compensation with Company objectives and
business strategies as well as financial and operational performance.
In keeping with this principle, the Company seeks to:
(1) Attract and retain qualified executives who will play a
significant role in, and be committed to, the achievement of the
Company's long-term goals.
(2) Reward executives for strategic management and the long-term
maximization of shareholder value.
(3) Create a performance-oriented environment that rewards
performance with respect to the financial and operational goals
of the Company.
An executive officer's performance is reviewed in such areas as
quality and quantity of work, job and professional knowledge, decision
making and business judgment, initiative, analytical skills,
communication skills, interpersonal skills, organizational skills,
commercial skills, profit and loss sensitivity, creativity and
leadership.
Executive compensation consists of both cash and equity-based
compensation. Cash compensation is comprised of base salary and bonus.
Base salary is determined with reference to market norms. Bonus
compensation is tied to the Company's success in achieving financial
and non-financial performance goals and an executive's success in
attaining personal performance goals. Equity-based compensation is
comprised primarily of stock option grants. In establishing equity-
based compensation, the Company places particular emphasis on the
achievement of the Company's long-term performance goals. The Company
believes that equity-based compensation closely aligns the economic
interest of the Company's executive officers with the economic
interests of the Company's shareholders.
CHIEF EXECUTIVE OFFICER
In establishing Mr. Jones' compensation, the factors described above
are taken into account, as well as the shareholder value which Mr.
Jones has played an instrumental role in creating since the founding of
the Company. Mr. Jones has spearheaded the Company's growth strategy
and has been the driving force behind the Company's success. The
Company believes that Mr. Jones' base salary and bonus are well within
industry norms and reflect his commitment to the Company's long-term
success.
COMPENSATION COMMITTEE
Stanley Lopata
L. John Polite, Jr.
Edward A. Chod
13
<PAGE> 16
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
The Securities and Exchange Commission ("SEC") requires that the
Company include in this Proxy Statement a line-graph presentation
comparing cumulative, five-year shareholder returns on an indexed basis
with a broad-based market index and either a nationally recognized
industry standard or an index of peer companies selected by the
Company. The Company has selected the S & P Midcap 400 Index and the S
& P Health Care Drugs Index for the purposes of this performance
comparison which appears below. A list of the companies included in the
S & P Health Care Drugs Index follows the graph below:
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN<F*>
AMONG JONES MEDICAL INDUSTRIES, INC., THE S&P MIDCAP 400 INDEX
AND THE S & P HEALTH CARE DRUGS INDEX
<CAPTION>
Measurement Period Jones Medical S&P Midcap 400 S&P Health
(Fiscal Year Covered) Industries, Inc. Care Drugs
<S> <C> <C> <C>
Measurement Pt-12/31/89 $100 $100 $100
FYE 12/31/90 126 95 114
FYE 12/31/91 145 142 188
FYE 12/31/92 139 159 151
FYE 12/31/93 266 182 138
FYE 12/31/94 132 175 161
<FN>
<F*>$100 INVESTED ON 12/31/89 IN STOCK OR INDEX, Source: STAR Services, Inc.
INCLUDING REINVESTMENT OF DIVIDENDS. FISCAL
YEAR ENDING DECEMBER 31.
</TABLE>
The companies included in the S & P Health Care Drugs Index are: Eli
Lilly & Co., Merck & Co., Inc., Pfizer, Inc., Schering Plough Corp.,
Syntex Corp. and Upjohn Company. The returns of each company have been
weighted according to their respective stock market capitalizations.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to
file with the SEC initial reports of ownership and reports of changes
in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten-percent shareholders
are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms they file.
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 December
31, 1994 all Section 16(a) filing requirements applicable to the
Company's officers, directors and greater than ten-percent beneficial
owners were complied with.
SHAREHOLDER PROPOSALS
The Company must receive at its principal executive offices, directed
to the attention of the Secretary, any proposal to be presented at next
year's annual meeting of shareholders not later than December 23, 1995
for consideration for inclusion in the Company's Proxy Statement and
form of proxy relating to the annual
14
<PAGE> 17
meeting of shareholders to be held in 1996. Any such proposal must
comply in all respects with the rules and regulations of the United
States Securities and Exchange Commission.
OTHER MATTERS
The Board knows of no other matters which may come before the
meeting. If any matters other than those referred to above should
properly come before the meeting, the persons designated by the Board
to serve as proxies intend to vote such proxies in accordance with
their best judgment.
UPON RECEIPT OF A WRITTEN REQUEST, WITHOUT CHARGE, THE COMPANY WILL
PROVIDE ANY BENEFICIAL OWNER OF THE COMMON STOCK (AS OF THE RECORD
DATE) WITH A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (WITHOUT
EXHIBITS) FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE
COMPANY'S MOST RECENT FISCAL YEAR. A BENEFICIAL OWNER WHO IS NOT A
RECORD OWNER AS OF THE RECORD DATE SHOULD INCLUDE IN SUCH A REQUEST A
REPRESENTATION THAT THE INDIVIDUAL OR ENTITY WAS A BENEFICIAL OWNER AS
OF THE RECORD DATE. PLEASE DIRECT ALL REQUESTS TO:
Judith A. Jones, Secretary
Jones Medical Industries, Inc.
1945 Craig Road
St. Louis, Missouri 63146
By Order of the Board of Directors of
Jones Medical Industries, Inc.
JUDITH A. JONES
Secretary
April 21, 1995
15
<PAGE> 18
JONES MEDICAL INDUSTRIES, INC.
1994 INCENTIVE STOCK PLAN
The 1994 Incentive Stock Plan ("ISP") of Jones Medical Industries,
Inc. (the "Company") is established to encourage eligible employees of
the Company, and its subsidiaries to acquire Common Stock in the
Company. It is believed that the ISP will (i) stimulate employees'
efforts on the Company's behalf, (ii) tend to maintain and strengthen
their desire to remain with the Company, (iii) be in the interest of
the Company and its Stockholders, and (iv) encourage such employees to
have a greater personal financial investment in the Company through
ownership of its Common Stock.
1. ADMINISTRATION
The ISP shall be administered by the Compensation Committee of the
Board of Directors of the Company (the "Committee"); provided, however,
that for purposes of the ISP there shall be excluded from such
Committee any member who is not a "disinterested person" under Rule
16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Committee is authorized, subject to the provisions of the
ISP, to establish such rules and regulations as it deems necessary for
the proper administration of the ISP, and to make such determinations
and to take such action in connection therewith or in relation to the
ISP as it deems necessary or advisable, consistent with the ISP. The
Committee may delegate some or all of its power and authority hereunder
to the Chief Executive Officer or other senior member of management as
the Committee deems appropriate; provided however, that the Committee
may not delegate its authority with regard to any matter or action
affecting an officer subject to Section 16 of the Exchange Act.
For the purpose of this section and all subsequent sections, the ISP
shall be deemed to include this plan and any comparable sub-plans
established by subsidiaries which, in the aggregate, shall constitute
one plan governed by the terms set forth herein.
2. ELIGIBILITY
Regular full-time employees of the Company and its subsidiaries,
including officers, whether or not directors of the Company, shall be
eligible to participate in the ISP ("Eligible Employees") if designated
by the Committee or its delegate. Those directors who are not regular
employees are not eligible. It is intended that awards will be made
principally to those employees who are key officers or management
employees of the Company or a subsidiary, including employees subject
to Section 16 of the Exchange Act, and who are in a position to have
significant impact or achievement of the Company's long term
objectives.
3. INCENTIVES
Incentives under the ISP may be granted in any one or a combination
of (i) Incentive Stock Options (or other statutory stock options); (ii)
Nonqualified Stock Options; (iii) Performance Share Awards; and (iv)
Restricted Stock Grants (collectively "Incentives"). All Incentives
shall be subject to the terms and conditions set forth herein and to
such other terms and conditions as may be established by the Committee.
Determinations by the Committee under the ISP including without
limitation, determinations of the Eligible Employees, the form, amount
and timing of Incentives, the terms and provisions of Incentives, and
the agreements evidencing Incentives, need not be uniform and may be
made selectively among Eligible Employees who receive, or are eligible
to receive, Incentives hereunder, whether or not such Eligible
Employees are similarly situated.
4. SHARES AVAILABLE FOR INCENTIVES
(a) SHARES SUBJECT TO ISSUANCE OR TRANSFER. There is hereby reserved
for issuance under the ISP an aggregate of 500,000 shares of the
Company's Common Stock ("Common Stock").
In the event of a lapse, expiration, termination or cancellation of
any Incentive granted under the ISP without the issuance of shares or
payment of cash, or if shares are issued under a Restricted Stock Grant
16
<PAGE> 19
hereunder and are reacquired by the Company pursuant to rights reserved
upon the issuance thereof, the shares subject to or reserved for such
Incentive may again be used for new Incentives hereunder; provided that
in no event may the number of shares issued hereunder exceed the total
number of shares reserved for issuance.
(b) LIMITATIONS ON INDIVIDUAL AWARDS. In any given year, no eligible
employee may be granted Incentives covering more than two and one-half
percent (2.5%) of the number of fully-diluted shares of the Company's
Common Stock outstanding as of the first business day of the Company's
fiscal year.
(c) RECAPITALIZATION ADJUSTMENT. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares,
merger, consolidation, rights offering, or any other change in the
corporate structure or shares of the Company, the Committee shall make
such adjustment, if any, as it may deem appropriate in the number and
kind of shares authorized by the ISP, in the number and kind of shares
covered by Incentives granted, and, in the case of Stock Options, in
the option price.
5. STOCK OPTIONS
The Committee may grant options qualifying as Incentive Stock Options
under the Internal Revenue Code of 1986, as amended or any successor
code thereto (the "Code"), other statutory options under the Code, and
Nonqualified Options (collectively "Stock Options"), and such Stock
Options shall be subject to the following terms and conditions and such
other terms and conditions as the Committee may prescribe:
(a) OPTION PRICE. The option price per share with respect to each
Stock Option shall be determined by the Committee, but shall not be
less than 90% of the fair market value of the Common Stock on the date
the Stock Option is granted, as determined by the Committee; provided,
however, that the option price per share with respect to each Incentive
Stock Option shall not be less than 100% of the fair market value of
the Common Stock on the date the Incentive Stock Option is granted, as
determined by the Committee; and provided further that the option price
per share with respect to any Incentive Stock Option granted to a
person deemed to own more than ten percent (10%) of the Company's
outstanding Common Stock shall not be less than 110% of the fair market
value of the Common Stock on the date the Option is granted. During any
period in which the Common Stock is listed for trading on a registered
national securities exchange or on the NASDAQ National Market System,
the fair market value shall be based on the average or closing price
(or bid and asked prices, as appropriate) on the date of grant.
(b) PERIOD OF OPTION. The period of each Stock Option shall be fixed
by the Committee, except that (i) every Incentive Stock Option granted
shall be exercisable not more than ten (10) years after the date so
granted, and (ii) no Incentive Stock Option granted to a person deemed
to own more than ten percent (10%) of the Company's outstanding Common
Stock shall be exercisable after the fifth anniversary of the date of
grant of such Incentive Stock Option.
(c) PAYMENT. The option price shall be payable at the time the Stock
Option is exercised in cash or, at the discretion of the Committee, in
whole or in part in the form of shares of Common Stock already owned by
the grantee (based on the fair market value of the Common Stock on the
date the option is exercised as determined by the Committee). No shares
shall be issued until full payment therefor has been made. A grantee of
a Stock Option shall have none of the rights of a stockholder until the
shares are issued.
(d) EXERCISE OF OPTION. The shares covered by a Stock Option may be
purchased in such installments and on such exercise dates as the
Committee may determine. Any shares not purchased on the applicable
exercise date may be purchased thereafter at any time prior to the
final expiration of the Stock Option. In no event (including those
specified in paragraphs (e), (f) and (g) of this section below) shall
any Stock Option be exercisable after its specified expiration period.
(e) TERMINATION OF EMPLOYMENT. Upon the termination of a Stock Option
grantee's employment (for any reason other than retirement, death or
termination for deliberate, willful or gross misconduct), Stock Option
privileges shall be limited to the shares which were immediately
exercisable at the date of such termination. The Committee, however, in
its discretion may provide that any Stock Options outstanding but not
yet exercisable upon the termination of a Stock Option grantee may
become exercisable in accordance with a schedule to be determined by
the Committee. Such Stock Option privileges shall expire unless
exercised
17
<PAGE> 20
within such period of time after the date of such termination as may be
established by the Committee. If a Stock Option grantee's employment is
terminated for deliberate, willful or gross misconduct, as determined
by the Company, all rights under the Stock Option shall expire upon
receipt of the notice of such termination.
(f) RETIREMENT. Upon retirement of the Stock Option grantee, Stock
Option privileges shall apply to those shares immediately exercisable
at the date of retirement. The Committee, however, in its discretion,
may provide that any Stock Options outstanding but not yet exercisable
upon the retirement of the Stock Option grantee may become exercisable
in accordance with a schedule to be determined by the Committee. Stock
Option privileges shall expire unless exercised within such period of
time as may be established by the Committee.
(g) DEATH. Upon the death of a Stock Option grantee, Stock Option
privileges shall apply to those shares which were immediately
exercisable at the time of death. The Committee, however, in its
discretion, may provide that any Stock Options outstanding but not yet
exercisable upon the death of a Stock Option grantee may become
exercisable in accordance with a schedule to be determined by the
Committee. Such privileges shall expire unless exercised by legal
representatives within a period of time as determined by the Committee
but in no event later than the date of the expiration of the Stock
Option.
(h) LIMITS ON INCENTIVE STOCK OPTIONS. Except as may otherwise be
permitted by the Code, the Committee shall not, in the aggregate, grant
an Eligible Employee, Incentive Stock Options that are first
exercisable during any one calendar year to the extent that the
aggregate fair market value of the Common Stock, at the time the
Incentive Stock Options are granted, exceeds $100,000.
6. PERFORMANCE SHARE AWARDS
The Committee may grant awards under which payment may be made in
shares of Common Stock, cash or any combination of shares and cash if
the performance of the Company or any subsidiary or division of the
Company selected by the Committee during the Award Period meets certain
goals established by the Committee ("Performance Share Awards"). Such
Performance Share Awards shall be subject to the following terms and
conditions and such other terms and conditions as the Committee may
prescribe:
(a) AWARD PERIOD AND PERFORMANCE GOALS. The Committee shall determine
and include in a Performance Share Award grant the period of time for
which a Performance Share Award is made ("Award Period"). The Committee
shall also establish performance objectives ("Performance Goals") to be
met by the Company, subsidiary or division during the Award Period as a
condition to payment of the Performance Share Award. The Performance
Goals may include earnings per share, return on stockholder equity,
return on assets, net income, or any other financial or other
measurement established by the Committee. The Performance Goals may
include minimum and optimum objectives or a single set of objectives.
(b) PAYMENT OF PERFORMANCE SHARE AWARDS. The Committee shall
establish the method of calculating the amount of payment to be made
under a Performance Share Award if the Performance Goals are met,
including the fixing of a maximum payment. The Performance Share Award
shall be expressed in terms of shares of Common Stock and referred to
as "Performance Shares". After the completion of an Award Period, the
performance of the Company, subsidiary or division shall be measured
against the Performance Goals, and the Committee shall determine
whether all, none or any portion of a Performance Share Award shall be
paid. The Committee, in its discretion, may elect to make payment in
shares of Common Stock, cash or a combination of shares and cash. Any
cash payment shall be based on the fair market value of Performance
Shares on, or as soon as practicable prior to, the date of payment.
(c) REVISION OF PERFORMANCE GOALS. At any time prior to the end of an
Award Period, the Committee may revise the Performance Goals and the
computation of payment if unforeseen events occur which have a
substantial effect on the performance of the Company, subsidiary or
division and which in the judgment of the Committee make the
application of the Performance Goals unfair unless a revision is made.
(d) REQUIREMENT OF EMPLOYMENT. A grantee of a Performance Share Award
must remain in the employment of the Company until the completion of
the Award Period in order to be entitled to payment under the
Performance Share Award; provided that the Committee may, in its sole
discretion, provide for a partial payment where such an exception is
deemed equitable.
18
<PAGE> 21
(e) DIVIDENDS. The Committee may, in its discretion, at the time of
the granting of a Performance Share Award, provide that any dividends
declared on the Common Stock during the Award Period, and which would
have been paid with respect to Performance Shares had they been owned
by a grantee, be (i) paid to the grantee, or (ii) accumulated for the
benefit of the grantee and used to increase the number of Performance
Shares of the grantee
7. RESTRICTED STOCK GRANTS
The Committee may issue shares of Common Stock to a grantee which
shares shall be subject to the following terms and conditions and such
other terms and conditions as the Committee may prescribe ("Restricted
Stock Grant"):
(a) REQUIREMENT OF EMPLOYMENT. A grantee of a Restricted Stock Grant
must remain in the employment of the Company during a period designated
by the Committee ("Restriction Period"). If the grantee leaves the
employment of the Company prior to the end of the Restriction Period,
the Restricted Stock Grant shall terminate and the shares of Common
Stock shall be returned immediately to the Company, provided that the
Committee may, at the time of the grant, provide for the employment
restriction to lapse with respect to a portion or portions of the
Restricted Stock Grant at different times during the Restriction
Period. The Committee may, in its discretion, also provide for such
complete or partial exceptions to the employment restriction as it
deems equitable.
(b) RESTRICTIONS ON TRANSFER AND LEGEND ON STOCK CERTIFICATES. During
the Restriction Period, the grantee may not sell, assign, transfer,
pledge, or otherwise dispose of the shares of Common Stock except to a
successor under Section 9 hereof. Each certificate for shares of Common
Stock issued hereunder shall contain a legend giving appropriate notice
of the restrictions in the grant.
(c) ESCROW AGREEMENT. The Committee may require the grantee to enter
into an escrow agreement providing that the certificates representing
the Restricted Stock Grant will remain in the physical custody of an
escrow holder until all restrictions are removed or expire.
(d) LAPSE OF RESTRICTIONS. All restrictions imposed under the
Restricted Stock Grant shall lapse upon the expiration of the
Restriction Period if the conditions as to employment set forth above
have been met. The grantee shall then be entitled to have the legend
removed from the certificates.
(e) DIVIDENDS. The Committee shall, in its discretion, at the time of
the Restricted Stock Grant, provide that any dividends declared on the
Common Stock during the Restriction Period shall either be (i) paid to
the grantee, or (ii) accumulated for the benefit of the grantee and
paid to the grantee only after the expiration of the Restriction
Period.
8. DISCONTINUANCE OR AMENDMENT OF THE PLAN.
The Board of Directors may discontinue the ISP at any time and may
from time to time amend or revise the terms of the ISP as permitted by
applicable statutes, except that it may not revoke or alter, in a
manner unfavorable to the grantees of any Incentives hereunder, any
Incentives then outstanding, nor may the Board amend the ISP without
stockholder approval, where the absence of such approval would cause
the Plan to fail to comply with Rule 16b-3 under the Exchange Act, or
any other requirement of applicable law or regulation. No Incentive
shall be granted under the ISP after May 31, 1999 but Incentives
granted theretofore may extend beyond that date.
9. NONTRANSFERABILITY
Each Incentive granted under the ISP shall not be transferable other
than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined under the Code, and with
respect to Stock Options, shall be exercisable, during the grantee's
lifetime, only by the grantee or the grantee's guardian or legal
representative.
19
<PAGE> 22
10. NO RIGHT OF EMPLOYMENT
ISP and the Incentives granted hereunder shall not confer upon any
Eligible Employee the right to continued employment with the Company or
affect in any way the right of the Company to terminate the employment
of an Eligible Employee at any time and for any or no reason.
11. TAXES
The Company shall be entitled to withhold the amount of any tax
attributable to any amount payable or shares deliverable under the ISP
after giving the person entitled to receive such amount or shares
notice as far in advance as practicable and may condition delivery of
certificates evidencing shares awarded or purchased under the ISP upon
receipt of funds to effect such withholding.
12. LISTING AND REGISTRATION OF THE SHARES
Each option issued hereunder shall be subject to the requirement that
if at any time the Committee shall determine, in its discretion, that
the listing, registration or qualification of the shares subject to the
option upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the
granting of such option or the issue or purchase of shares thereunder,
such option may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to
the Committee.
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
-------------------------------------------------------------------
OF 1933 AS AMENDED OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT
------------------------------------------------------------------
BE TRANSFERRED WITHOUT AN OPINION OF COUNSEL SATISFACTORY IN FORM
-----------------------------------------------------------------
AND SUBSTANCE TO THE COMPANY THAT SUCH TRANSFER MAY BE LAWFULLY
---------------------------------------------------------------
EFFECTED IN THE ABSENCE OF SUCH REGISTRATION."
----------------------------------------------
13. EFFECTIVE DATE
The Plan shall be effective as of June 1, 1994, provided, however,
that any Incentives awarded prior to approval by stockholders of the
Company as contemplated by Rule 16b-3 under the Exchange Act shall be
contingent upon such approval and shall be void if not so approved on
or before May 31, 1995.
20
<PAGE> 23
JONES MEDICAL INDUSTRIES, INC.
1994 FORMULA STOCK OPTION PLAN FOR
NON-MANAGEMENT DIRECTORS
1. PURPOSE. The purpose of this 1994 Formula Stock Option Plan is to
provide certain compensation to eligible directors of the Company and
to encourage the highest level of performance of non-management
directors by providing those directors with a proprietary interest in
the Company's success and progress by granting them options to purchase
shares of the Company's Common Stock in accordance with the terms and
conditions set forth below.
2. DEFINITIONS. Whenever used herein, the following shall have the
meanings set forth below:
(a) "Affiliate" refers to any corporation or other entity which
directly, or through one or more intermediaries, controls, is
controlled by, or is under common control with the Company.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Common Stock" shall mean the common stock of the Company.
(d) "Company" shall mean Jones Medical Industries, Inc.
(e) "Eligible Director" shall mean an individual who is a member of
the Board and who is not at the time of the grant, an employee of the
Company or any subsidiary of the Company.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(g) "FSO Plan" shall mean the 1994 Formula Stock Option Plan for non-
management directors of Jones Medical Industries, Inc.
(h) "Formula Stock Option" shall mean an option granted to Eligible
Directors pursuant to this FSO Plan.
(i) "Initial Exercise Date" shall mean the date which is eleven (11)
months following the date on which an Eligible Director becomes a
Participant in the FSO Plan.
(j) "Option Period" shall mean the period of time during which a
Participant may exercise his Formula Stock Option as more specifically
set forth in paragraph (d) of Section 6 of this FSO Plan.
(k) "Option Price" shall mean the price per share of Common Stock at
which a Participant may purchase Common Stock as hereinafter set forth
in paragraph (b) of Section 6 of this FSO Plan.
(l) "Option Shares" shall mean the shares of Common Stock which are
subject to the Formula Stock Option as hereinafter set forth in
paragraph (c) of Section 6 of this FSO Plan.
(m) "Participant" shall mean an Eligible Director to whom a Formula
Stock Option has been granted pursuant to the FSO Plan.
(n) "Termination of Service" is the date as of which (i) the service
of a director as a member of the Board is discontinued because of the
death, removal, resignation or expiration of term without re-election,
or (ii) a director becomes an employee of the Company or any Affiliate
of the Company, whichever is the first to occur.
(o) "Year of Service" means each continuous twelve (12) month period
following the Initial Exercise Date during which a Participant serves
as a director of the Company.
3. ADMINISTRATION. The FSO Plan shall, to the extent necessary, be
administered by the President of the Company, or such other person or
persons as may be appointed by the President (the "Administrator"), and
said Administrator shall take such action necessary so as to comply
with the provisions of this FSO Plan. The grant of a Formula Stock
Option shall be evidenced by the execution of a Formula Stock Option
Agreement in the form of Exhibit A attached hereto executed by each
Participant.
21
<PAGE> 24
4. SHARES AVAILABLE FOR FORMULA STOCK OPTIONS.
(a) There is hereby reserved for issuance under this FSO Plan an
aggregate of 50,000 shares of Common Stock, subject to adjustment as
provided in paragraph (c) of this Section 4.
(b) In the event of a lapse, expiration, termination or cancellation
of any Formula Stock Options granted under this FSO Plan without the
issuance of shares or payments of cash, the shares subject to or
reserved for such Formula Stock Options may again be used for new
Formula Stock Options hereunder; provided that in no event may the
number of shares issued hereunder exceed the total number of shares
reserved for issuance.
(c) In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights
offering, or any other change in the corporate structure or shares of
the Company, an equitable adjustment shall be made in the number and
kind of shares authorized by the FSO Plan, in the number and kind of
shares covered by the Formula Stock Options granted, and, in the Option
Price so that the relative position of each Participant after such
transaction will be equivalent to his relative position prior to such
transaction.
5. ELIGIBILITY. The individuals who are eligible to receive Formula
Stock Options hereunder shall be limited to members of the Board who
are not, at the time of the grant, employees of the Company or any
subsidiary of the Company. An Eligible Director of the Company shall
become a Participant in the FSO Plan on the first day of the month
following the date (subsequent to the effective date of this FSO Plan)
on which said Eligible Director is elected or appointed to the Board
(whether elected by shareholders of the Company or appointed by the
Board itself to fill a vacancy on the Board).
6. GRANT OF FORMULA STOCK OPTIONS.
(a) GRANT TO PARTICIPANTS. Each Eligible Director shall be granted a
Formula Stock Option on the day that said Eligible Director becomes a
Participant, provided, however, that if said Participant had previously
been granted, and currently has outstanding, Formula Stock Options
pursuant to this FSO Plan, then said Participant shall not receive a
grant of a new Formula Stock Option until the first day of the month
following the date on which said previously granted Formula Stock
Option has become fully exercisable pursuant to the provisions of
Section 7 of this FSO Plan.
(b) OPTION PRICE. The Option Price per share of Common Stock with
respect to each Formula Stock Option shall be equal to the fair market
value of the Common Stock on the date that the Formula Stock Option is
granted. During any period in which the Common Stock is listed for
trading on a registered national securities exchange or on the NASDAQ
National Market System, the fair market value shall be equal to the
lower of (i) the closing price, and (ii) the average of the high and
low prices (or the average of the low bid and high asked prices, as
appropriate), on the date of grant.
(c) OPTION SHARES. The number of Option Shares subject to each
Formula Stock Option granted to a Participant shall be Five Thousand
(5,000) shares of Common Stock subject to adjustment pursuant to the
provisions of paragraph (c) of Section 4.
(d) OPTION PERIOD. Each Formula Stock Option must be exercised, if at
all, on or before the first to occur of (i) the date that is thirty
(30) days after the effective date of the Termination of Service of a
Participant (or if the Termination of Service is a result of the death
of a Participant, then ninety (90) days after the date of death, and if
the Termination of Service is a result of a director becoming an
employee of the Company or any Affiliate, then two hundred twenty-five
(225) days after the date that said director becomes an employee of the
Company or any Affiliate), and (ii) the fifth anniversary of the
Initial Exercise Date, at which time the entire Formula Stock Option
granted to such Participant (or such portion thereof that has not been
exercised) shall lapse, terminate and be of no further force and
effect.
(e) PAYMENT. The Option Price shall be payable in cash by the
Participant at the time the Formula Stock Option is exercised. No
shares shall be issued until full payment therefore has been made. A
grantee of a Formula Stock Option shall have none of the rights of a
shareholder of the Company until the shares are issued.
22
<PAGE> 25
7. EXERCISE OF FORMULA STOCK OPTIONS.
(a) During the Option Period, the Formula Stock Option may be
exercised at the times and in the amounts as follows: (i) twenty
percent (20%) of the Option Shares may be purchased by the Participant
at any time during the period commencing with the Initial Exercise Date
and ending on the last day of the Option Period; and (ii) an additional
twenty percent (20%) of the Option Shares may be purchased by the
Participant for each Year of Service of said Participant following the
Initial Exercise Date during the Option Period.
(b) Notwithstanding the provisions of paragraph (h) of Section 2, the
Initial Exercise Date for each of Stanley L. Lopata and L. John Polite,
Jr. shall be June 1, 1994, thereby recognizing their services rendered
to the Company during the prior twelve (12) month period. In addition,
and notwithstanding the provisions of item (ii) of paragraph (a) of
this Section 7, Years of Service for each of Stanley L. Lopata and L.
John Polite, Jr. shall be measured from May 1, 1994 rather than the
Initial Exercise Date for purposes of determining their respective
exercise rights with respect to the remaining eighty percent (80%) of
their Option Shares.
8. THE DISCONTINUANCE OR AMENDMENT OF PLAN. The Board may discontinue
the FSO Plan at any time and may from time to time amend or revise the
terms of the Plan as permitted by applicable statutes, except that it
may not revoke or alter, in any manner unfavorable to the grantees of
any Formula Stock Options hereunder, any Formula Stock Options
outstanding, nor may the Board amend the FSO Plan without shareholder
approval, where the absence of such approval would cause the FSO Plan
to fail to comply with Rule 16b-3 under the Exchange Act, or any other
requirement of applicable law or regulation. Furthermore, the
provisions of this FSO Plan shall not be amended more than once every
six months, other than to comport with changes in the Internal Revenue
Code of 1986, as amended (the "Code"), the Employee Retirement Income
Security Act, or the rules thereunder.
No Formula Stock Option shall be granted under the FSO Plan after May
31, 1999, but Options granted theretofore may extend beyond that date.
9. NON-TRANSFERABILITY. Each Formula Stock Option granted under the
FSO Plan shall not be transferable other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations
order as defined under the Code, and shall be exercisable, during the
grantee's lifetime, only by the grantee or the grantee's guardian or
legal representative.
10. NO RIGHT OF DIRECTORSHIP. Nothing in this FSO Plan shall be
deemed to create any obligation on the part of the Board to nominate
any director for re-election as a director by the shareholders of the
Company nor to create any right to continue as a director of the
Company.
11. RESTRICTIONS ON RESALE OF STOCK. Each Formula Stock Option issued
hereunder shall be subject to the requirement that if at any time the
Administrator shall determine, in his discretion, that the listing,
registration or qualification of the shares subject to the Formula
Stock Option upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the
granting of such option or the issue or purchase of shares thereunder,
such Formula Stock Option may not be exercised in whole or in part
unless and until such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions
not acceptable to the Administrator. Certificates representing shares
of stock issued pursuant to this FSO Plan shall bear the following
legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
-------------------------------------------------------------------
OF 1933 AS AMENDED OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT
------------------------------------------------------------------
BE TRANSFERRED WITHOUT AN OPINION OF COUNSEL SATISFACTORY IN FORM
-----------------------------------------------------------------
AND SUBSTANCE TO THE COMPANY THAT SUCH TRANSFER MAY BE LAWFULLY
---------------------------------------------------------------
EFFECTED IN THE ABSENCE OF SUCH REGISTRATION."
----------------------------------------------
23
<PAGE> 26
12. EFFECTIVE DATE. The FSO Plan shall be effective as of May 25,
1994, provided, however, that any Formula Stock Options granted prior
to approval by shareholders of the Company as contemplated by Rule
16b-3 under the Exchange Act shall be contingent upon such approval and
shall be void if not so approved on or before May 24, 1995. In the
event that any Formula Stock Options are exercised and the shareholders
of the Company do not approve the FSO Plan as hereinbefore set forth,
then the Company shall redeem, and the applicable Participant shall
sell, any such Option Shares so purchased by the Participant at a price
equal to 105% of the Option Price so paid.
13. EXPENSES OF PLAN. The expenses of the FSO Plan shall be borne by
the Company.
24
<PAGE> 27
PROXY
JONES MEDICAL INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS-MAY 15, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints JUDITH A. JONES and DENNIS M. JONES,
and each of them, proxy, with full power of substitution, to vote all
the shares the undersigned is entitled to vote at the Annual Meeting of
Shareholders of JONES MEDICAL INDUSTRIES, INC. to be held at the
St. Louis Club, 7701 Forsyth, Clayton, Missouri 63105 on May 15, 1995
at 3:30 p.m., and at any adjournment or postponement thereof, and to
take action on the proposals listed hereon and any other business that
may lawfully come before the meeting, hereby revoking all proxies as to
said shares heretofore given by the undersigned and ratifying and
confirming all that said proxy may lawfully do by virtue hereof.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED
"FOR" ALL PROPOSALS LISTED BELOW; IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
In his/her discretion, each proxy is authorized to vote upon such
other business as may properly come before the meeting or any
adjournment or postponement thereof.
PROPOSAL 1-Election of Directors
/ / FOR all nominees listed below. / / WITHHOLD AUTHORITY for all
nominees.
To withhold authority to vote for any individual nominee or nominees,
line through or strike out the nominee's or nominees' name or names below:
Michael T. Bramblett, Edward A. Chod, G. Andrew Franz, Dennis M. Jones,
Judith A. Jones, Stanley L. Lopata, David A. McLaughlin,
L. John Polite, Jr., Thomas F. Patton
The Board of Directors Recommends a Vote FOR all nominees listed.
PROPOSAL 2-Approval of adoption of the Jones Medical Industries, Inc.
1994 Incentive Stock Plan
/ / FOR / / AGAINST
The Board of Directors Recommends a vote FOR Proposal 2.
PROPOSAL 3-Approval of adoption of the Jones Medical Industries, Inc.
1994 Formula Stock Option Plan for Non-Management Directors
/ / FOR / / AGAINST
The Board of Directors Recommends a vote FOR Proposal 3.
The shares represented by this proxy will be voted as directed by the
Shareholder. If no direction is given when the duly executed proxy is
returned, such shares will be voted FOR all proposals listed.
Date ..................., 1995
..............................
Signature
..............................
Signature if held jointly
Please date and sign as your
name appears above and return
in the enclosed envelope. If
acting as attorney, executor,
administrator, trustee or
guardian, you should so
indicate when signing. If the
signor is a corporation,
please sign the full corporate
name, by duly authorized
officer. If shares are held
jointly, each shareholder
named should sign.
