ZEVEX INTERNATIONAL, INC.
4314 South ZEVEX Park Lane
Salt Lake City, Utah 84123
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON DECEMBER 18, 2000.
To the Shareholders:
The annual meeting of the shareholders (the "Annual Meeting") of ZEVEX
International, Inc., (the "Company") will be held on December 18, 2000, at the
Company's corporate offices, 4314 South ZEVEX Park Lane (670 West), Salt Lake
City, Utah 84123, at 2:00 p.m., Mountain Time, to consider and vote on the
following proposals:
1. To elect David J. McNally and Bradly A. Oldroyd, as directors of
the Company, to each serve a three-year term, or until his successor
is duly elected and qualified.
2. To ratify the appointment by the Board of Directors of Ernst & Young
LLP, certified public accountants, as independent auditors for the
year ended December 31, 2000.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items are more fully described in the Proxy Statement
accompanying this Notice.
ONLY SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON OCTOBER 31,
2000, ARE ENTITLED TO NOTICE OF AND TO VOTE AT THE ANNUAL MEETING AND ANY
ADJOURNMENT(S) THEREOF. YOUR ATTENDANCE AT THE ANNUAL MEETING IS IMPORTANT.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE URGED TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE. ANY SHAREHOLDER ATTENDING
THE MEETING MAY VOTE IN PERSON EVEN IF SUCH SHAREHOLDER HAS PREVIOUSLY RETURNED
A PROXY.
BY ORDER OF THE BOARD OF DIRECTORS
By /s/ Phillip L. McStotts
Phillip L. McStotts, Secretary
Dated: November 13, 2000
<PAGE>
ZEVEX INTERNATIONAL, INC.
4314 ZEVEX PARK LANE
SALT LAKE CITY, UTAH 84123
PROXY STATEMENT
This proxy statement and accompanying proxy is furnished to the shareholders of
ZEVEX International, Inc., a Delaware corporation (hereafter "ZEVEX," or the
"Company"), by the Company in connection with its annual meeting of shareholders
(the "Annual Meeting"). The Annual Meeting will be held on December 18, 2000, at
the Company's corporate offices, 4314 ZEVEX Park Lane (670 West) Salt Lake City,
Utah, 84123, at 2:00 p.m., Mountain Time, and at any adjournment(s) thereof.
This proxy statement and the notice of Annual Meeting are first being mailed to
shareholders on or about November 16, 2000.
At the Annual Meeting, the shareholders will consider and vote on the
following proposals:
1. To elect David J. McNally and Bradly A. Oldroyd as directors
of the Company, to each serve a three-year term, or until his
successor is duly elected and qualified.
2. To ratify the appointment by the Board of Directors of Ernst &
Young LLP, certified public accountants, as independent
auditors for the year ended December 31, 2000.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors recommends that shareholders vote FOR all nominees for
director listed in Proposal Number 1, and FOR Proposal Number 2.
INFORMATION CONCERNING
PROXY SOLICITATION AND VOTING
Voting Rights
Only holders of record of the 3,439,364 shares of the Company's Common
Stock outstanding as of November 1, 2000 (the "Record Date") are entitled to
vote at the Annual Meeting. Each shareholder has the right to one vote for each
share of the Company's Common Stock owned by the shareholder.
Voting and Revocation of Proxies
By completing and returning the accompanying proxy form, the
shareholder authorizes David J. McNally and Phillip L. McStotts, as designated
on the face of the proxy form (the "Proxy Holders"), to vote all shares for the
shareholder. All returned proxies that are properly signed and dated will be
voted by the Proxy Holders as the shareholder directs. If no direction is given,
valid proxies will be voted by the Proxy Holders FOR the election of the persons
nominated as directors, and FOR the appointment of Ernst & Young LLP as the
Company's independent auditors for the year ended 2000.
Additionally, the shares represented by a valid proxy will be voted by
the Proxy Holders, in their discretion, on any other matters that may properly
come before the Annual Meeting. The Board of Directors does not know of any
matters to be considered at the Annual Meeting other than the proposals
described above. In the event that any director nominee is unwilling or unable
to serve, the Proxies will be voted for a substitute nominee, if any, to be
designated by the Board of Directors. The Board of Directors currently has no
reason to believe that any nominee will be unavailable or unwilling to serve.
A proxy may be revoked at any time before its exercise by (i)
delivering a document to the Secretary of the Company stating that the proxy is
revoked, (ii) delivering to the Secretary of the Company or presenting at the
Annual Meeting a new proxy executed on a later date by or on behalf of the
person or entity executing the prior proxy, or (iii) voting in person at the
Annual Meeting. A revoked proxy will not be voted.
Quorum and Voting Requirements
A quorum of the voting shares of the Company must be present at the
Annual Meeting for a vote to be taken. Under Delaware law and the Company's
Certificate of Incorporation and Bylaws, a quorum will be present if a majority
of the voting shares outstanding and entitled to vote at the meeting are present
in person or by proxy. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, abstentions and broker non-votes will be counted for
the purposes of determining whether a quorum is present at the Annual Meeting.
With regard to Proposal No. 1, directors are elected by a plurality of
the shares present in person or by proxy and voting at the Annual Meeting. With
regard to the election of directors, votes may be cast in favor or withheld;
votes that are withheld will be excluded entirely from the vote. The appointment
of independent auditors under Proposal No. 2 separately requires the affirmative
vote of a majority of the votes cast at the Annual Meeting. With regard to
Proposals No. 2, abstentions and broker non-votes are not counted for purposes
of determining whether a proposal has been approved.
Adjournment of Annual Meeting
In the event that Proxies representing sufficient votes to constitute a
quorum are not received by the date of the Annual Meeting, the officer presiding
over the meeting or the Proxy Holders may propose one or more adjournments of
the Annual Meeting to permit further solicitation of proxies. At such
adjournments the proxies will continue to be valid and, once a quorum is present
in person or by proxy, directors may be elected by plurality vote and other
proposals can be approved by the affirmative vote of the holders of a majority
of the Company's voting shares present in person or by proxy. The Proxy Holders
will vote in favor of any such proposed adjournments.
Solicitation
The solicitation of proxies pursuant to this Proxy Statement will be
made primarily by mail. In addition, officers, employees, and representatives of
the Company may solicit proxies by telephone, email, facsimile, or personal
interviews, and arrangements will be made with banks, brokerage firms, and
others to forward solicitation materials to the beneficial owners of shares held
of record by them. The total cost of all such solicitation efforts, including
reimbursement of the expenses of brokers and other nominees, will be borne by
the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock (par value $0.001) as of September 30,
2000, by (i) each person (or group of affiliated persons) who is known by the
Company to beneficially own more than 5% of the outstanding shares of the
Company's Common Stock, (ii) each director and executive officer of the Company,
and (iii) all executive officers and directors of the Company as a group. As of
such date, the Company had a total of 3,439,364 shares of Common Stock
outstanding. Unless indicated otherwise, the address for each officer, director
and 5% shareholder is c/o the Company, 4314 ZEVEX Park Lane, Salt Lake City,
Utah 84123.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Percent
Name Shares Owned Of Class(1)
---------------- ------------ -----------
Dean G. Constantine(2) 326,550 9.3%
David J. McNally(3) 308,848 8.8%
Kirk Blosch(4) 255,000 7.4%
Jeff Holmes(5) 250,000 7.4%
Phillip L. McStotts.(6) 218,050 6.2%
Leonard C. Smith(7) 19,200 *
Bradly A. Oldroyd(8) 15,000 *
Darla R. Gill(9) 12,480 *
Kathryn B. Hyer(10) 8,250 *
David B. Kaysen(11) 0 *
All Officers and Directors
as a Group (7 persons) 581,828 16.1%
*Less than 1%
</TABLE>
(1) For each shareholder, the calculation of percentage of beneficial ownership
is based on 3,439,364 shares of Common Stock outstanding as of September 30,
2000, and shares of Common Stock subject to options held by the shareholder that
are currently exercisable or exercisable within 60 days, which are deemed to be
outstanding and to be beneficially owned by the shareholder holding such
options. The percentage ownership of any shareholder is determined by assuming
that the shareholder has exercised all options and conversion rights to obtain
additional securities and that no other shareholder has exercised such rights.
Except as indicated otherwise below, the persons and entity named in the table
have sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to applicable community property
laws.
(2) Beneficial owner. Includes 258,000 shares of Common Stock held directly and
68,650 shares of Common Stock issuable upon exercise of options held by Mr.
Constantine that are currently exercisable or will become exercisable within 60
days. Mr. Constantine's address is 3175 E. Oldridge Circle, Salt Lake City,
Utah 84121.
(3) Chief Executive Officer, and current director and director nominee of the
Company. Includes 240,198 shares of Common Stock held directly and 68,650 shares
of Common Stock issuable upon exercise of options held by Mr. McNally that are
currently exercisable or will become exercisable within 60 days. Excludes 43,750
shares of Common Stock issuable upon exercise of options held by Mr. McNally
that are not currently exercisable and will not become exercisable within 60
days.
(4) Beneficial owner. Includes 250,000 shares of Common Stock held directly by
Mr. Blosch and 5,000 shares of Common Stock issuable upon exercise of options
held by Mr. Blosch that are currently exercisable or will become exercisable
within 60 days. Mr. Blosch's address is 2081 S. Lakeline Drive, Salt
Lake City, UT 84109.
(5) Beneficial owner. Includes 250,000 shares of Common Stock held directly by
Mr. Holmes. Mr. Holmes' address is 8555 E. Voltaire Ave., Scottsdale, AZ 85260.
(6) Chief Financial Officer, Secretary, Treasurer, and director of the Company.
Includes 149,400 shares of Common Stock held directly and 68,650 shares of
Common Stock issuable upon exercise of options held by Mr. McStotts that are
currently exercisable or will become exercisable within 60 days. Excludes 43,750
shares of Common Stock issuable upon exercise of options held by Mr. McStotts
that are not currently exercisable and will not become exercisable within 60
days.
(7) President and director of the Company. Includes 9,200 shares of Common Stock
held directly 10,000 shares of Common Stock issuable upon exercise of options
held by Mr. Smith that are currently exercisable or will become exercisable
within 60 days. by Mr. Smith. Excludes 30,000 shares of Common Stock issuable
upon exercise of options held by Mr. Smith that are not currently exercisable or
will not become exercisable within 60 days. Also excludes Common Stock that may
be issuable at $11 per share upon conversion of a debenture held by Mr. Smith in
the principal amount of $1,363,594 that is not convertible within 60 days.
(8) Current director and director nominee. Includes 15,000 shares of Common
Stock issuable upon exercise of options that are currently exercisable or will
become exercisable within 60 days. Excludes 14,500 shares of Common Stock
issuable upon exercise of options held by Mr. Oldroyd that are not currently
exercisable and will not become exercisable within 60 days.
(9) Director. Includes 480 shares of Common Stock held directly and 12,000
shares of Common Stock issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days. Excludes 13,500 shares of
Common Stock issuable upon exercise of options held by Ms. Gill that are not
currently exercisable and will not become exercisable within 60 days.
(10) Director. Includes 8,250 shares of Common Stock issuable upon exercise of
warrants that are currently exercisable or will become exercisable within 60
days. Excludes 10,000 shares of Common Stock issuable upon exercise of options
held by Ms. Hyer that are not currently exercisable and will not become
exercisable within 60 days.
(11) Director. Excludes 10,000 shares of Common Stock issuable upon exercise of
options held by Mr. Kaysen that are not currently exercisable and will not
become exercisable within 60 days.
SECTION 16(a) BENEFICIAL REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers, and 10%
shareholders to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of Common Stock. Based solely
on a review of the copies of such reports furnished to the Company and written
representations that no other reports were required, the Company believes that
all directors, executive officers, and 10% shareholders during 1999 complied on
a timely basis with all applicable filing requirements under Section 16(a) of
the Exchange Act, except as follows: Leonard Smith filed one late report on From
4, due October 1999, for one transaction regarding the purchase of common shares
of the Company in September 1999. Messrs. Constantine, McNally, and McStotts
each filed one late report on Form 4, for one transaction involving the grant of
Company options to purchase common stock.
------------------------------------------------------------------------------
PROPOSAL 1 - ELECTION OF DIRECTORS
------------------------------------------------------------------------------
Pursuant to the Company's Delaware Certificate of Incorporation and
Bylaws, the Company's Board of Directors has been divided into three classes,
with only a single class subject to re-election each year. These three classes
contain all seven of the Company's directorships. Class I and Class II each
contain two directorships expiring at the annual meetings of shareholders in
2001 and 2000, respectively. Class III contains three directorships expiring at
the Annual Meeting. At the Annual Meeting, shareholders are being asked to elect
two individuals to serve as Class II directors until the 2003 annual meeting of
shareholders and until their successors are duly elected and qualified.
Current Nominees for Director
The names of the two nominees for Class II director, their ages, the
number of years they have been directors of the Company, and their current
positions with the Company are provided below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years as
Name Age Position Director
---- --- -------- --------
David J. McNally(a) 39 Chief Executive Officer and Director 13
Bradly A. Oldroyd 42 Director 10
</TABLE>
(a) Mr. McNally was appointed Chief Executive Officer on August 24, 2000,
effective September 1, 2000. Previously Mr. McNally was the Executive Vice
President of the Company.
Certain biographical information with respect to each of the directors,
including the two nominees, is set forth below.
Class II Nominees:
David J. McNally is a founder of the Company and has served as the
Company's Chief Executive Officer and as a director since September 2000. Prior
to September 2000 Mr. McNally served as the Company's Executive Vice President,
and as a director since its inception in 1986. He also serves as a director of
the Company's three wholly-owned subsidiaries, ZEVEX, Inc. ("ZEVEX Inc."), JTech
Medical Industries, Inc. ("JTech"), and Aborn Electronics, Inc. ("Aborn"), and
as CEO of ZEVEX Inc., Aborn, and JTech. Prior to joining the Company, he was
employed by EDO Corporation in Salt Lake City, Utah as a marketing manager from
October 1985 to September 1987. From June 1984 to October 1985, Mr. McNally was
employed by Physical Acoustics Corporation, a Princeton, New Jersey based
manufacturer of acoustic testing systems, as its regional sales manager for the
Southeastern United States. From June 1983 to June 1984, he was employed by
Hercules, Inc., in Magna, Utah, as an advanced methods development engineer. Mr.
McNally received a Bachelor of Science Degree in Mechanical Engineering from
LaFayette College in May 1983 and an Executive Master of Business Administration
Degree from the University of Utah in June 1992.
Bradly A. Oldroyd has been a director of the Company since October
1991. He is the founder and principal shareholder of Pinnacle Management Group,
a Salt Lake City-based personnel services firm, serving as its President since
1986. Mr. Oldroyd is also the founder and CEO of TeamONE Ford and Fuel Centers,
a Salt Lake City-based petroleum and convenience goods retailer. He is also a
member of the faculty of the University of Phoenix campus in Salt Lake City,
where he teaches management and marketing courses in undergraduate and graduate
programs. Mr. Oldroyd received a Bachelor of Science degree in Marketing from
Utah State University in 1981 and a Master of Business Administration Degree
from the University of Utah in 1982.
Class I Directors - Expiration of Term: 2001
Kathryn B. Hyer, 45, has been a director of the Company since November
2000, filing a vacancy on the board left by the resignation of Dean Constantine.
Ms. Hyer is the Chief Financial Officer of Quark Biotech, Inc., Chicago,
Illinois, in charge of Finance, Human Resources and Administration since April
2000. Prior to joining Quark, from 1996 to 2000, Ms. Hyer was a Managing
Director of Health Care Corporate Finance group for First Union Securities,
which acquired Everen Securities, Inc. in September 1999. In October 1996, Ms.
Hyer founded Everen Securities Health Care Group, where she defined strategy and
hired a banking team that focused on medical devices, biotechnology, specialty
pharmaceuticals, and healthcare information technology companies. From 1994 to
1996 Ms Hyer served as the Director of Finance for the City of Cleveland. Ms
Hyer also served as Senior Vice President in the Corporate Finance Department of
Kemper Securities, Inc. from 1984 to 1994. Ms. Hyer graduated with Bachelor of
Arts Degree in Political Science and Sociology from Aquinas College in Grand
Rapids, Michigan in 1977, and a Juris Doctorate from Cleveland Marshall College
of Law in Cleveland, Ohio in 1982.
Leonard C. Smith has served as President since September 2000, and as a
director since April 1999. Mr. Smith is a founder of JTech and has served as its
President since 1995. Prior to joining JTech, in 1994 he established "the
Charles Group", a medical marketing company specializing in diagnostic and
rehabilitation products. From 1993 to 1994, Mr. Smith was Vice President of Four
Corners, a large chain of health clubs based in the Southwest. From 1979 to
1993, Mr. Smith was a partner and Vice President of Sales and Marketing at
Hoggan Health Industries, a manufacturer of commercial fitness equipment. Mr.
Smith received a Bachelor of Science Degree in Business Management from the
University of Utah in June 1977.
Class III Directors: Expiration of Term: 2002
Phillip L. McStotts is a founder of the Company and has served as the
Company's CFO, Secretary, and Treasurer, and as a director since its inception.
He also serves as a director of the Company's three wholly-owned subsidiaries,
ZEVEX, Inc., JTech Medical Industries, Inc., and Aborn Electronics, Inc., as
CFO, Secretary and Treasurer of ZEVEX Inc., as Vice President and Secretary of
Aborn, and as CFO and Secretary of JTech. In addition to running his own
professional corporation, Phillip L. McStotts, CPA P.C., since October 1986,
Mr. McStotts was employed from May 1985 to September 1986 as an accountant with
the Salt Lake City firm of Chachas & Associates, where he was tax manager. He
has also worked in the tax departments of the regional accounting firms of
Pearson, Del Prete & Company, and Petersen, Sorensen & Brough. Mr. McStotts
received a Bachelor of Science Degree in Accounting from Westminster College in
May 1980, and received a Master of Business Administration Degree in Taxation
from Golden Gate University in May 1982.
Darla R. Gill, 47, has been a director of ZEVEX since May 1993.
She is a founder of Merit Medical Systems, Inc., in Salt Lake City, and served
until 1992 as Executive Vice President and Director. In 1999 she became Vice
President of International Sales and Marketing for Merit Medical Systems.
Ms. Gill is also the owner of DRG Enterprises, a consulting company specializing
in marketing, sales, and new product development. Ms. Gill was also the founder,
President and Chairman of Momentum Medical Corp., a Salt Lake City-based
manufacturer and distributor of home health care products from 1993 to 1998.
She continues to serve as a Director for Momentum Medical. She was also
previously employed by Utah Medical Products, Inc., a company where she served
as Vice President of Marketing and Sales. Ms. Gill also currently serves as a
Director of the Board of NYB Corporation located in Salt Lake City. Ms. Gill
graduated from the University of Phoenix with a Bachelors Degree in Business
Administration in 1988.
David B. Kaysen, 50, has been a director of the Company since November
2000, filing a vacancy on the board left by the resignation of Kirk Blosch.
Mr. Kaysen has served since 1992 as Chief Executive Officer, President, and
director of Rehabilicare Inc., a publicly traded (NASDAQ: REHB) manufacturer
and marketer of electromedical rehabilitation and pain management products for
clinician, home and industrial use. From 1989 to 1992 Mr. Kaysen served as
Executive Vice President for Emeritus, a company that developed and marketed
clinical assessment software for the nursing home industry. Mr. Kaysen also
served as President and CEO of Surgidyne, Inc., which markets specialty medical
and surgical products from 1988 to 1989. From 1986 to 1988 Mr. Kaysen was Vice
President of Marketing for Red Line/XVIIIB Medimart, a medical product
distributor. Mr. Kaysen also served in various general management positions
with the V. Mueller Division of American Hospital Supply Corporation from 1974
to 1986. Mr. Kaysen graduated with a Bachelor of Science Degree in Business
Administration from the University of Minnesota in 1972.
Executive Officers
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Name Age Position
---- --- --------
David J. McNally(a) 39 Chief Executive Officer and Director
Leonard C. Smith(b) 51 President and Director
Phillip L. McStotts 42 Chief Financial Officer and Secretary/Treasurer
</TABLE>
(a) Mr. McNally was appointed Chief Executive Officer on August 24, 2000,
effective September 1, 2000. Previously
Mr. McNally was the Executive Vice President of the Company.
(b) Mr. Smith was appointed President on August 24, 2000, effective
September 1, 2000. Previously Mr. Smith was the Vice President of
Sales and Marketing of the Company and President of JTech.
For the biographies of Messrs. McNally, Smith, and McStotts, see "NOMINEES FOR
DIRECTOR." Executive officers serve at the pleasure of the Board of Directors.
Committees of the Board of Directors
The Board of Directors has two committees, the Audit Committee and the
Compensation Committee. The Audit Committee is composed of Ms. Darla R. Gill
and Mr. Bradly A. Oldroyd. The Compensation Committee is also composed of Ms.
Gill and Mr. Oldroyd. The Audit Committee is authorized to review proposals of
the Company's auditors regarding annual audits, recommend the engagement or
discharge of the Company's auditors, review recommendations of such auditors
concerning accounting principles and the adequacy of internal controls and
accounting procedures and practices, review the scope of the annual audit,
approve or disprove each professional service or type of service other than
standard auditing services to be provided by the auditors, and review and
discuss the audited financial statements with the auditors. The Compensation
Committee makes recommendations to the Board of Directors regarding remuneration
of the executive officers and directors of the Company and oversees the
administration of the Company's stock option plan.
Meetings of the Board of Directors
The Board of Directors held six meetings during the last fiscal year.
The Audit Committee held one meeting during the last fiscal year. The
Compensation Committee held two meetings during the last fiscal year.
Compensation of Directors and Executive Officers
Compensation of Directors
The Company pays each director who is not an employee of the Company or
its subsidiaries a director's fee of $625 per Board of Directors meeting
attended, $250 for any annual meeting attended, and $125 per hour for any
special meeting attended. Additionally, the Company has issued stock options to
the non-employee directors in the past and may do so in the future. Although the
Company may also issue stock options to directors who are employees for their
service as directors, these employee directors currently receive no additional
compensation for serving as directors or attending meetings of directors or
shareholders.
Compensation of Executive Officers
Except for Leonard Smith, see "EMPLOYMENT AGREEMENTS," none of the
executive officers have an employment agreement with the Company. The following
table sets forth the compensation paid by the Company to each of the Company's
executive officers during the three-year period ended December 31, 1999.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by ZEVEX to each of ZEVEX'
executive officers during the three-year period ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted All
Name and Annual Stock LTIP Other
Principal Position Year Salary Bonus Comp. Awards Options Payouts Comp.
------------------ ---- ------ ----- ----- ------ ------- ------- -----
Dean G. Constantine(a) 1999 $114,070 $0 0 0 0 0 $4,605(d)
CEO and President 1998 $107,755 $50,000 0 0 0 0 $5,000(d)
1997 $105,000 $11,125 0 0 0 0 $4,207(d)
David J. McNally(b) 1999 $114,070 $0 0 0 0 0 $4,605(d)
Chief Executive Officer 1998 $107,755 $50,000 0 0 0 0 $5,000(d)
Chairman 1997 $105,000 $11,125 0 0 0 0 $4,207(d)
Phillip L. McStotts 1999 $114,070 $0 0 0 0 0 $4,605(d)
Secretary/Treasurer 1998 $107,755 $50,000 0 0 0 0 $5,000(d)
1997 $105,000 $11,125 0 0 0 0 $4,207(d)
Leonard C. Smith(c) 1999 $100,000 $0 0 0 0 0 $4,000(d)
President 1998 N/A N/A N/A N/A N/A N/A N/A
1997 N/A N/A N/A N/A N/A N/A N/A
</TABLE>
(a) Mr. Constantine resigned as CEO and President of the Company effective
September 1, 2000.
(b) Mr. McNally was appointed Chief Executive Officer on August 24, 2000,
effective September 1, 2000. Previously Mr. McNally was the Executive Vice
President of the Company.
(c) Mr. Smith was appointed President on August 24, 2000, effective September
1, 2000. Previously Mr. Smith was the Vice President of Sales and Marketing of
the Company and President of JTech.
(d) Represents the amount paid by ZEVEX as a contribution to ZEVEX' 401(k)
Pension and Profit Sharing Plan on the officer's behalf.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Individual Grants
Percent Of
Number of Total Potential Realizable Value At
Securities Options/ Assumed Annual Rates Of Stock
Underlying SAR's Price Appreciation For
Options/ SARs Granted To Exercise or Option Term
Granted Employees In Base Price Expiration -----------
Fiscal
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
---- --- ---- ------ ---- ------ -------
(a) (b) (c) (d) (e) (f) (g)
--- --- --- --- --- --- ---
Dean G. Constantine 30,000 6.8% $5.00 1/7/08 $94,334 $239,061
David J. McNally 30,000 6.8% $5.00 1/7/08 $94,334 $239,061
Phillip L. McStotts 30,000 6.8% $5.00 1/7/08 $94,334 $239,061
Leonard C. Smith 40,000 9.1% $4.88 1/4/04 $53,875 $119,049
</TABLE>
Effective January 1, 1999, the Compensation Committee approved the grant of
Common Stock purchase options for 30,000 shares each to Messrs. Constantine,
McNally, and McStotts. The options vest over a period from one to six years,
with accelerated vesting based upon the Company meeting certain financial goals,
but with full vesting after six years. The options are exercisable at $5.00 per
share. Effective January 1, 1999, the Compensation Committee approved the grant
of Common Stock purchase options for 40,000 shares to Mr. Smith as part of the
acquisition of JTech. The options vest over a period from one to four years and
are exercisable at $4.875 per share. Mr. Constantine resigned his position as
CEO and President of the Company effective September 1, 2000, forfeiting 26,250
of the above mentioned options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth the options exercised during the year ended
December 31, 1999, by each executive officer of ZEVEX and the value of options
held by such persons at such year-end.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End FY-End
Shares
Name and Acquired Value Exercisable/ Exercisable/
Principal Position or Exercised Realized Unexercisable Unexercisable
Dean G. Constantine
CEO, President 0 0 51,150/61,250 $14,444/7,656
David J. McNally
Chief Executive Officer 0 0 51,150/61,250 $14,444/7,656
Phillip L. McStotts
Secretary/Treasurer 0 0 51,150/61,250 $14,444/7,656
Leonard C. Smith
President 0 0 0/40,000 $0/10,000
</TABLE>
Of the unexercised options listed above for each of Messrs. Constantine,
McNally, and McStotts, 5,400 were granted on December 17, 1992, and expire on
December 16, 2001. The exercise price on such options is $5.00. Of the
unexercised options listed above for each of Messrs. Constantine, McNally, and
McStotts, 7,000 were granted on February 13, 1997, and expire on February 12,
2002. The exercise price on such options is $3.85. Of the unexercised options
listed above for each of Messrs. Constantine, McNally, and McStotts, 70,000 were
granted on September 30, 1997 and expire on September 29, 2002. The exercise
price on such options is $5.00. Mr. Constantine resigned his position as CEO and
President of the Company effective September 1, 2000, forfeiting 17,500 of the
above mentioned 70,000 options. Of the unexercised options listed above for each
of Messrs. Constantine, McNally, and McStotts, 30,000 were granted effective on
January 1, 1999 and expire on January 7, 2005. The exercise price on such
options is $5.00. Mr. Constantine resigned his position as CEO and President of
the Company effective September 1, 2000, forfeiting 26,250 of the above
mentioned 30,000 options. Of the unexercised options listed above for Mr. Smith,
40,000 were granted on January 5, 1999 and expire on January 4, 2004. The
exercise price on such options is $4.875. The value of the unexercised options
was determined by reference to the closing sales price for ZEVEX' Common Stock
on the NASDAQ Stock Market as of the end of 1999, which was $5.13.
EMPLOYMENT AGREEMENTS
Except for Leonard Smith, the Company has no employment agreements with its
executive officers. Mr. Smith's employment agreement is for a term of three
years beginning December 31, 1998. Under the agreement Mr. Smith is paid a base
salary of at least $100,000 and cash bonuses at the end of each year as
determined by the Company's Compensation Committee. Termination without "cause"
or termination for "good reason" by Mr. Smith will result in certain severance
payments to Mr. Smith. Termination for "cause" by the Company or termination
without good reason by Mr. Smith will reduce certain of the Company's further
payment obligations to Mr. Smith under the JTech Purchase Agreement between the
Company and Mr. Smith.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors reviews and
approves salaries, bonuses, and other benefits payable to the Company's
officers. The Compensation Committee is composed of Ms. Darla R. Gill and
Mr. Bradly A. Oldroyd, both independent non-employee directors.
The goals of the Compensation Committee in establishing compensation
for executive officers are to align executive compensation with business
objectives and performance and to enable the Company to attract, retain and
reward executive officers who contribute to the long-term success of the
Company. The compensation policies and programs utilized by the Compensation
Committee and endorsed by the Board of Directors generally consist of the
following:
i. Recommending executive officer total compensation in relation to
Company performance;
ii. Providing a competitive compensation program in order to attract,
motivate and retain qualified personnel;
iii. Providing a management tool for focusing and directing the energies of
the Company's three executives toward achieving individual and
corporate objectives; and
iv. Providing long-term incentive compensation in the form of annual
stock option awards and performance-based stock option awards to
link individual success to that of the Company.
The Company's executive compensation consists of three components: base
salary, annual incentive compensation in the form of cash bonuses and stock
options, each of which is intended to complement the others, and together to
satisfy the Company's compensation objectives. The Compensation Committee's
policies with respect to each of the three components are discussed below:
Base Salary. The Compensation Committee considers several factors in
determining base salaries for the Company's three executive officers, including
industry averages for comparative positions, responsibilities of the executive
officers, length of service with the Company, and corporate and individual
performance.
Cash Bonuses. Cash bonuses paid to the Company's three executive
officers are discretionary and are based on the relative success of the Company
in attaining certain financial objectives and the three officers' contribution
to the achievement of those financial objectives.
Stock Options. Stock options provide additional incentives to the
Company's three executive officers to maximize long-term shareholder value. The
options that have been granted vest over a defined period to encourage these
officers to continue their employment with the Company. The Company also grants
stock options to all employees, commensurate with their potential contributions
to the Company.
Chief Executive Officer Compensation
Dean G. Constantine was President and Chief Executive Officer of the
Company since its incorporation in 1986. For fiscal year 1999, Mr. Constantine
received compensation consisting of a salary of $114,070, and the grant of
Common Stock purchase options for 30,000. The options vest over a period from
one year to six years, with accelerated vesting based upon the Company meeting
certain financial goals, but with full vesting after six years. The options are
exercisable at $5.00 per share. Mr. Constantine resigned his position as CEO and
President of the Company effective September 1, 2000, forfeiting 26,250 of the
above mentioned options.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Darla R. Gill
Bradly A. Oldroyd
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The following graph shows a comparison of the cumulative total
shareholder return on the Company's Common Stock over the past five fiscal years
with the cumulative total return of the Russell 2000 Stock Index and the
Company's Peer Group, consisting of Novametrix Medical, Applied Biometrics,
Inc., Candela Laser Corporation, Invivo Corporation, Lectec Corporation and
Medstone International. The graph assumes $100 is invested in the Company's
Common Stock and in each of the two indices at the closing market quotation on
December 31, 1994 and that dividends are reinvested.
The stock price performance graph depicted below 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 or under
the Securities Exchange Act of 1934. The stock price performance on the graph is
not necessarily an indicator of future price performance.
[OBJECT OMITTED]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998 1999
--------- ---------- --------- ---------- ---------- ---------
Russell 2000 100 125 146 168 167 200
Peer Group 100 163 157 126 140 135
ZEVEX 100 107 88 243 127 137
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE TO ELECT THE TWO
NOMINEES NAMED ABOVE TO SERVE IN CLASS II OF THE BOARD OF DIRECTORS UNTIL THE
ANNUAL MEETING OF SHAREHOLDERS IN 2003 AND UNTIL THEIR SUCCESSORS ARE DULY
ELECTED AND QUALIFIED.
------------------------------------------------------------------------------
PROPOSAL 2 - APPOINTMENT OF INDEPENDENT ACCOUNTANTS
------------------------------------------------------------------------------
The Board of Directors has selected Ernst & Young LLP as independent
certified public accountants for the Company to examine the Company's financial
statements for the year ended December 31, 2000. During 1999, Ernst & Young LLP
examined the accounts of ZEVEX and its subsidiaries and also provided other
audit services to ZEVEX in connection with Securities and Exchange Commission
filings. We do not anticipate that Ernst and Young will be present at the
meeting.
THE BOARD OF DIERECTORS BELIEVES SUCH SELECTION IS IN THE BEST INTEREST OF THE
COMPANY, AND RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL.
------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
------------------------------------------------------------------------------
The Company anticipates that the 2001 Annual Meeting of Shareholders
(2001 Annual Meeting") will be held in June 2001. In order for a shareholder's
proposal to be considered for inclusion in the Company's proxy materials for the
2001 Annual Meeting, the proposal must be received by the Company's Secretary,
Phillip L. McStotts, 4314 ZEVEX Park Lane, Salt Lake City, Utah 84123, no later
than March 1, 2001, and must otherwise comply with the requirements of Rule
14a-8 of the Exchange Act.
Proposals of shareholders submitted for consideration at the Company's
2001 Annual Meeting (other than those submitted for inclusion in the Company's
proxy material pursuant to Rule 14a-8) must be delivered to the Company's
Secretary no earlier than April 1, but no later than May 1, 2001. If such timely
notice of a shareholder's proposal is not given, the Company's Proxy Holders may
exercise discretionary voting authority to vote on the proposal when and if it
is raised at the 2001 annual Meeting.
------------------------------------------------------------------------------
ADDITIONAL INFORMATION
------------------------------------------------------------------------------
A copy of the Company's Annual Report (in the form of the Company's
Form 10-K) accompanies this proxy statement. The Company will provide copies of
the exhibits to the Form 10-K for a nominal fee upon request. The Company is
subject to the informational requirements of Section 15(d) of the Securities
Exchange Act of 1934, Commission File No. 33-19583, and in accordance therewith
files reports on Forms 10-Q, 10-K, and 8-K with the Securities and Exchange
Commission. Such reports and other information can be inspected, and copies can
be obtained at the public reference facilities of the Commission at Room 1024,
450 Fifth Street, NW, Washington, D.C. 20549, at prescribed rates. Copies can
also be obtained by searching the "EDGAR Archives" for the Company's name on the
Commission's web page at http://www.sec.gov.
By order of the Board of Directors,
David J. McNally
Chief Executive Officer
<PAGE>
PROXY
ZEVEX INTERNATIONAL, INC.
4314 ZEVEX Park Lane, Salt Lake City, Utah 84123
Annual Meeting of Shareholders, December 18, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned shareholder of ZEVEX International, Inc., a Delaware
corporation (the "Company"), hereby appoints David J. McNally and Phillip L.
McStotts as Proxies, each with the power to appoint his substitute, and hereby
authorizes them, or either of them, to represent and to vote, as designated
below, all the shares of common stock of the Company held of record by the
undersigned on November 1, 2000 (the record date), at the Annual Meeting of
Shareholders to be held on December 18, 2000 or at any continuation(s) or
adjournment(s) thereof. The proposals listed below are made by the Board of
Directors.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
(To withhold authority to vote for any individual nominee, strike a line through
the nominee's name in the list below.)
David J. McNally Bradly A. Oldroyd
2. APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE YEAR
ENDING DECEMBER 31, 2000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, proxy holders are authorized to vote upon such
other business as may properly come before the Annual Meeting, provided
the Company did not have notice of such other business a reasonable
time before the mailing of the Proxy Statement that accompanies this
Proxy.
This Proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is given, then this
Proxy will be voted FOR all nominees for director listed in Proposal 1, and FOR
Proposal 2.
Please sign exactly as your name appears on the records of the
Company's transfer agent. When shares are held by joint tenants, both should
sign. When signing as attorney, or as executor, administrator, trustee, or
guardian, please give your full title as such. If a corporation, please sign in
the full corporate name by the President or other authorized officer. If a
partnership, please sign in the partnership name by an authorized person.
Please mark, sign, date, and return this Proxy promptly. By signing below, the
undersigned also acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated November 13, 2000, accompanying
this Proxy.
Dated: _____________________________________________
--------------------- --------------------------
No. of Shares Held No. of Shares Held at Brokerage
of Record or Clearing House
--------------------- ------------------------------
Signature (if held by Name of Brokerage or Clearing
an individual) House
--------------------- ------------------------------
Print Name Name of Entity Shareholder (if
not held by an individual)
--------------------- ------------------------------
Signature (if held Signature of Authorized Signer
jointly) of Entity
--------------------- ------------------------------
Print Name Title of Authorized Signer
RETURN PROXY TO: ZEVEX International, Inc., 4314 ZEVEX Park Lane,
Salt Lake City, Utah 84123
