<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO RULE 14a-11(C) OR RULE 14a-12
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
IVC 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[IVC LOGO]
IVC INDUSTRIES, INC.
500 HALLS MILL ROAD, FREEHOLD, NJ 07728 I PHONE: (732) 308-3000
November 28, 2000
Dear Shareholder:
On behalf of our Board of Directors, I cordially invite you to attend
the IVC Industries, Inc. Annual Meeting of Shareholders. The Annual Meeting will
be held at 10:00 a.m. on January 9, 2001 at the Sheraton Eatontown, 6 Industrial
Way, Eatontown, New Jersey 07724.
At the Annual Meeting, shareholders will be asked to vote on the two
matters itemized in the accompanying Notice of Annual Meeting of Shareholders.
Your vote is very important. Please ensure that your shares will be
represented at the meeting by filling in, dating, signing and returning your
proxy card in the envelope provided even if you plan to attend the Annual
Meeting. Sending us your proxy will not prevent you from voting in person at the
Annual Meeting should you wish to do so.
On behalf of your Board of Directors, thank you for your continued
support and interest in IVC.
Sincerely,
E. Joseph Edell
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
IVC INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that the Annual Meeting of Shareholders of IVC
Industries, Inc. ("IVC"), a Delaware corporation, will be held at 10:00 a.m. on
January 9, 2001 at the Sheraton Eatontown, 6 Industrial Way, Eatontown, New
Jersey 07724, for the following purposes:
(i) To elect seven directors of IVC to serve for one-year terms;
(ii) To ratify the appointment of auditors of IVC to serve until
the next Annual Meeting of shareholders; and
(iii) To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on November 27,
2000 as the record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting. A complete list of such shareholders will
be available during regular business hours at IVC's offices, 500 Halls Mill
Road, Freehold, New Jersey 07728, on and after December 29, 2000 for inspection
by any shareholder for any proper purpose.
Whether or not you plan to attend the Annual Meeting, please fill in,
date, sign and return the enclosed proxy card promptly. A return envelope is
enclosed for your convenience and requires no postage for mailing in the United
States. Any shareholder attending the Annual Meeting may vote in person even if
that shareholder has returned a proxy.
By Order of the Board of Directors,
Freehold, New Jersey Thomas Bocchino
November 28, 2000 Secretary
YOUR VOTE IS IMPORTANT
TO VOTE YOUR SHARES, PLEASE FILL IN, DATE AND SIGN THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE>
IVC INDUSTRIES, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of IVC Industries, Inc. ("IVC"
or the "Company") for use at the Annual Meeting of Shareholders of the Company
scheduled to be held at 10:00 a.m. on January 9, 2001 at the Sheraton Eatontown,
6 Industrial Way, Eatontown, New Jersey 07724, and at any adjournments or
postponements thereof. At the Annual Meeting, shareholders of record of the
Company's common stock, par value $.08 per share (the "Common Stock"), as of the
close of business on November 27, 2000 (the "Record Date") will be entitled to
consider and vote upon (i) the election of directors for the ensuing year and
(ii) the ratification of the appointment of auditors of the Company.
The principal executive offices of IVC are at 500 Halls Mill
Road, Freehold, New Jersey 07728. This Proxy Statement and the form of proxy are
being mailed to shareholders on or about November 28, 2000.
REVOCABILITY OF PROXIES AND VOTING PROXIES
A proxy given by a shareholder may be revoked at any time
before the Annual Meeting by giving another proxy bearing a later date, by
notifying the Secretary of the Company in writing of such revocation at any time
before the Annual Meeting, or by attending the Annual Meeting in person and
casting a ballot. The shares represented by the proxies solicited by the Board
of Directors of the Company will be voted in accordance with the directions
given therein. IVC shareholders vote at the meeting by casting ballots (in
person or by proxy) which are tabulated by a person who is appointed by the
Board of Directors before the meeting to serve as inspector of election at the
meeting and who has executed and verified an oath of office. Abstentions and
broker "non-votes" are included in the determination of the number of shares
present at the Annual Meeting for quorum purposes, but will have no effect on
the votes on the proposals. A broker "non-vote" occurs when a nominee holding
shares for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner.
If no instructions are indicated on a proxy, the proxy will be
voted FOR the election of the persons nominated by the Board of Directors to
serve as directors of IVC and FOR the ratification of the appointment of
auditors. The Board of Directors knows of no matters, other than those described
herein, that are to be presented at the Annual Meeting. If matters other than
those described herein properly come before the Annual Meeting, each proxy will
be voted in a manner that the persons appointed to vote the proxies, in their
judgment, consider to be in the best interest of IVC and its shareholders.
VOTING RIGHTS
Only shareholders of record at the close of business on the
Record Date are entitled to notice of and to vote at the Annual Meeting. On the
Record Date there were 2,091,092 shares of IVC Common Stock outstanding and
entitled to vote at the Annual Meeting. Each shareholder entitled to vote shall
have one vote for each share of IVC Common Stock registered in such
shareholder's name on the books of IVC as of the Record Date.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding shares of
IVC Common Stock beneficially owned as of November 1, 2000 by (i) each person or
group, known to the Company, who beneficially owns more than 5% of the IVC
Common Stock, (ii) each of the Company's directors, (iii) each current executive
officer named in the summary compensation table on page 8 hereof, and (iv) all
officers and directors as a group.
<TABLE>
<CAPTION>
Name and Address of Number of Percentage
Title of Class Beneficial Owner Shares of Class
-------------- ---------------- ------ --------
<S> <C> <C> <C>
Common American Claims Evaluation Inc. 300,086 14.35%
One Jericho Plaza
Jericho, NY 11753
Common Thomas Bocchino 0 *
c/o IVC Industries Inc.
500 Halls Mill Road
Freehold, NJ 07728
Common Michael Durso (1) 21,458 *
c/o IVC Industries, Inc.
500 Halls Mill Road
Freehold, NJ 07728
Common Arthur S. Edell (2) 210,061 10.05%
Channel Towers
511 Channel Towers Drive
Monmouth Beach, NJ 07750
Common E. Joseph Edell (3) 669,805 32.03%
c/o IVC Industries, Inc.
500 Halls Mill Road
Freehold, NJ 07728
Common William Lederman (1) 12,500 *
c/o IVC Industries, Inc.
500 Halls Mill Road
Freehold, NJ 07728
Common Erwin Lehr (4) 6,125 *
156 Clarkin Drive
West Orange, NJ 07052
Common Andrew M. Pinkowski (5) 308,509 14.75%
5725 Southwest Menefee Drive
Portland, OR 97201
Common David Popofsky (6) 9,250 *
c/o Popofsky Advertising
60 Madison Avenue
New York, NY 10010
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Number of Percentage
Title of Class Beneficial Owner Shares of Class
-------------- ---------------- ------ --------
<S> <C> <C> <C>
Common Sam Potenza (7) 1,021 *
1733 Bay Boulevard
Pt. Pleasant, N.J. 08742
Common Michael G. Seaman 0 *
2509 Arlingdale Drive
Palatine, IL 60067
Common All Executive Officers and Directors
as a group (10 persons) (8) 1,238,729 59.24%
</TABLE>
* Less than 1%
(1) Represents shares issuable upon exercise of stock options that are
presently exercisable or exercisable within 60 days of the date of this
Proxy Statement.
(2) Includes 6,250 shares issuable upon exercise of stock options and
187,500 shares owned by the Edell Family Partnership.
(3) Includes 75,177 shares owned by Beverlee Edell, the wife of E. Joseph
Edell. Mr. Edell disclaims beneficial ownership of the shares owned by
his wife.
(4) Includes 500 shares owned directly by Mr. Lehr and 5,625 shares
issuable upon the exercise by Mr. Lehr of options that are presently
exercisable or exercisable within 60 days of the date of this Proxy
Statement.
(5) Includes 117,981 shares owned by Rita Pinkowski, the wife of Mr.
Pinkowski. Mr. Pinkowski disclaims beneficial ownership of the shares
owned by his wife.
(6) Includes 500 shares owned directly by Mr. Popofsky and 8,750 shares
issuable upon the exercise by Mr. Popofsky of options that are
presently exercisable or exercisable within 60 days of the date of this
Proxy Statement.
(7) Includes 500 shares owned directly by Mr. Potenza and 521 shares
issuable upon the exercise by Mr. Potenza of options that are presently
exercisable or exercisable within 60 days of the date of this Proxy
Statement.
(8) Includes 55,104 shares issuable upon the exercise of stock options held
by all executive officers and directors that are presently exercisable
or exercisable within 60 days of this Proxy Statement.
3
<PAGE>
PROPOSAL ONE - ELECTION OF DIRECTORS
At the Annual Meeting, IVC shareholders will elect seven
persons to serve on the Board of Directors until the 2002 Annual Meeting of
Shareholders or until their respective successors have been elected and shall
qualify.
The election of directors requires the affirmative vote of the
holders of a plurality of the shares of IVC Common Stock present in person or by
proxy at the Annual Meeting. At this time, the Board of Directors knows of no
reason why any nominee might be unable to serve. There are no arrangements or
understandings between any director or nominee and any other person pursuant to
which such person was selected as a director or nominee.
Each of the nominees for director was previously elected a
director of the Company by the shareholders, except for Sam Potenza, who was
elected by the directors in May, 2000, and Michael G. Seaman, who was elected by
the directors in November, 2000.
NAME AGE DIRECTOR SINCE
---- --- --------------
Arthur S. Edell 67 1989
E. Joseph Edell 73 1993
Erwin Lehr 72 1999
Andrew M. Pinkowski 66 1996
David Popofsky 66 1996
Sam Potenza 65 2000
Michael G. Seaman 63 2000
Arthur S. Edell was President of the Company from 1989 to
1998. The brother of E. Joseph Edell, he has over 40 years of experience in the
vitamin, pharmaceutical and health food industries in all facets of production,
distribution and marketing. Since 1979, Mr. Edell has owned Healthfair Vitamin
Centers, Inc., a company which operates two health food stores in New Jersey.
Mr. Edell was a 50% owner of Hitex Investments, Inc., a vitamin manufacturing
company, from 1974 to 1979, and was a 50% owner of American Vitamin from 1955 to
1975.
E. Joseph Edell has been Chairman of the Board of Directors
and Chief Executive Officer of IVC since the Company's merger with American
Vitamin in 1995. Prior to that merger, Mr. Edell had been president of American
Vitamin since 1955. In 1999, he was also appointed President of the Corporation.
Mr. Edell is the brother of Arthur S. Edell.
Erwin Lehr was President, Chief Executive Officer and a
director of Valley Fair Corp., a chain of discount drug stores in New Jersey,
and L.F. Widman, Inc., a chain of health, beauty-aid and drug stores in
Pennsylvania, from 1978 to 1998. He also was Chairman and a director of the
Associated Chain Drug Stores.
4
<PAGE>
Andrew M. Pinkowski served as the Vice Chairman of the Board
of Directors of IVC from the merger with Hall Laboratories in 1996 until May
1999 and since that date has served as a consultant to IVC. He had previously
been president and Chief Executive Officer of Hall Laboratories since 1970. He
joined Hall Laboratories in 1969 as manager of marketing. Prior to joining Hall
Laboratories, he held various marketing positions with Boise Cascade, Sterling
Drug and Universal Oil Products.
David Popofsky is President of Popofsky Advertising in New
York City. He has been the creative/marketing strategist responsible for the
consumer launch of various leading over-the-counter products. Mr. Popofsky is
also the founder of The Retail Drug Institute at Arnold Marie College of
Pharmacy, served as visiting professor for ten years in their graduate school
and on the Board of Overseers for many years. In addition, he served on the
Graduate School faculty of Columbia University Pharmacy School.
Sam Potenza was a consultant for Wakefern Food Corporation, an
operator of Shop Rite Supermarkets, from 1998 to February, 2000 when he retired.
From 1980 to 1990 he was Vice President, General Merchandise Division of
Wakefern Food Corporation.
Michael G. Seaman has been retired since 1996. From 1991 to
1996, he was a Vice President and General Manager at Motorola Inc. in the
Customer Response Center. Prior to 1991, Mr. Seaman served in a variety of
capacities at Motorola Inc. dating back to 1968.
Directors hold their offices until each Annual Meeting of
Shareholders and thereafter until their successors have been duly elected and
qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
EACH OF THE NOMINEES FOR DIRECTOR AND IT IS INTENDED THAT PROXIES NOT VOTED TO
THE CONTRARY WILL BE SO VOTED.
COMMITTEES, MEETINGS AND COMPENSATION OF THE BOARD OF DIRECTORS
The Board of Directors held seven meetings during the last
fiscal year. Each of the directors attended at least 75% of the meetings of the
Board of Directors and committees of the Board on which they served.
The Board of Directors has a standing Audit Committee
currently comprised of Erwin Lehr and David Popofsky (chairman). A third member
will be appointed to the Audit Committee subsequent to the Annual Meeting. All
members of the Audit Committee are independent, in accordance with Section
4310(c)(26)(B)(ii) or 4460(d)(2)(B) of the National Association of Securities
Dealers' listing standards. The Board of Directors has adopted a charter for the
Audit Committee effective May 5, 2000. A copy of the charter is included in this
Proxy Statement as Appendix A. The Audit Committee reviews and evaluates the
Company's internal accounting and auditing procedures; recommends to the Board
of Directors the firm to be appointed as independent accountants to audit the
Company's operations and financial statements; reviews with management and the
independent accountants the Company's year-end operating results; reviews the
scope and results of the annual financial and operational audits with the
independent accountants; reviews with management the Company's interim operating
results; and reviews any non-audit services to be performed by the independent
accountants and considers the effect of any such performance on the accountant's
independence. The Audit committee met one time in the fiscal year ended July 31,
2000.
In August, the Board of Directors of the Company created a
Nominating Committee which is currently comprised of Erwin Lehr. The two
vacancies on the Nominating Committee will be
5
<PAGE>
filled and a chairman will be named subsequent to the Annual Meeting. The
Nominating Committee is charged with recommending qualified nominees for any
vacant position on the company's Board of Directors. The Nominating Committee
will consider for election to the Board of Directors a nominee recommended by a
shareholder if the recommendation is made in writing and includes (i) the
qualifications of the proposed nominee to serve on the Board of Directors, (ii)
the principal occupation and employment of the proposed nominee during the past
five years, (iii) each directorship currently held by the proposed nominee and
(iv) a statement that the proposed nominee has consented to the nomination. The
recommendation should be addressed to the Secretary of the Company.
The Board of Directors has a standing Compensation Committee
currently comprised of Sam Potenza and David Popofsky. A third member will be
appointed to the Compensation Committee subsequent to the Annual Meeting. The
Compensation Committee is responsible for establishing salaries, bonuses and
other compensation for the Company's executive officers. The Compensation
Committee also administers the Company's 1995 Stock Option Plan (the "1995
Plan"). Pursuant to the 1995 Plan, the Compensation Committee has the authority
to determine the persons to whom and the times at which options are to be
granted, the number of option shares to be granted and the price and other terms
of options and to designate whether options granted are intended to qualify as
incentive stock options or are to be non-qualified stock options. The
Compensation Committee has acted twice by unanimous written consent during the
fiscal year ended July 31, 2000.
The Company's Non-Employee Directors' Stock Option Plan
provides for the grant as of September 1 of each year of an option to purchase
2,000 shares of IVC Common Stock to each of IVC's non-employee directors. The
exercise price of each option is the fair market value of IVC Common Stock at
the time the option is granted. In addition, each non-employee director receives
$5,000 in IVC Common Stock paid on a quarterly basis based on attendance at
regular meetings of the Board of Directors.
EXECUTIVE OFFICERS
In addition to E. Joseph Edell, the Chairman, Chief Executive
Officer and President of the Company, the following individuals also serve as
executive officers of the Company.
Name Age Position Executive Officer Since
---- --- -------- -----------------------
Thomas Bocchino 41 Chief Financial Officer August 2000
William Lederman 53 Chief Operating Officer October 1999
Michael Durso 42 Senior Vice President of Sales October 1999
and Marketing
Thomas Bocchino has been Chief Financial Officer since August,
2000. Mr. Bocchino was the Company's Corporate Controller from 1990 to 1997.
From 1997 to 2000, he was Chief Financial Officer of Jazz Photo Corp., an
international distributor of cameras.
William Lederman has been Chief Operating Officer of the
Company since December 1998. From 1996 to 1998, Mr. Lederman was the Chief
Operating Officer of Solgar Vitamin & Herb Company, Inc., a leading manufacturer
of vitamins and nutritional products. From 1995 to 1996, he was the Vice
President of Operations of Solgar. From 1991 to 1995, he was Vice President of
Operations at Pharmline, Inc., a leading vitamin raw material supplier.
6
<PAGE>
Michael A. Durso has been Senior Vice President of Sales and
Marketing of the Company since September, 1998. From 1997 to 1998, he was
Director of Sales at Pharmaceutical Formulations, Inc., a manufacturer and
distributor of private label, over the counter products. From 1995 to 1997, he
was Director of Sales and Merchandising at Pathmark Stores, Inc. From 1993 to
1995, he was Director of Category Management at Pathmark Stores, Inc.
Executive officers are elected by the Board of Directors on an
annual basis and serve at the discretion of the Board or pursuant to employment
agreements. See "Employment Agreements."
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's executive officers and directors to file reports of ownership with
the Securities and Exchange Commission ("SEC"). The Company believes that during
the fiscal year ended July 31, 2000, its executive officers and directors
complied with all applicable Section 16(a) filing requirements. This conclusion
is based solely on a review of such forms furnished to the Company in accordance
with SEC regulations and on representations from its executive officers and
directors.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid or
distributed during the years ended July 31, 2000, 1999 and 1998 by the Company
for services rendered by (i) the Chief Executive Officer of IVC, (ii) the three
executive officers of the Company (who are the only other executive officers)
who were serving as executive officers at the end of the last fiscal year and
(iii) Dominic N. Golato, a former executive of IVC, who would have been one of
IVC's four most highly compensated executive officers but for the fact that he
was not serving as an executive officer at the end of IVC's last fiscal year
(the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------ --------------
Securities All
Underlying Other
Name and Salary Bonus Options Compensation
Principal Position Year ($) ($) (Shares) ($) (1)
---------------------------- ---------- ------------- ------------- -------------- ----------
<S> <C> <C> <C> <C> <C>
E. Joseph Edell 2000 342,428 - - -
Chairman, Chief Executive Officer 1999 295,432 - - -
And President 1998 442,307 - - -
Michael Durso 2000 162,057 - - 500
Senior Vice President 1999 130,411 - 25,625 500
of Sales and Marketing
William Lederman 2000 155,903 - - 500
Chief Operating Officer 1999 87,019 25,000 12,500 360
Jesus Febus 2000 150,394 - - -
Former 1999 119,885 - 18,875 -
Officer 1998 91,730 - 250 -
Domenic N. Golato 2000 141,067 - - 500
Former 1999 132,596 - 23,750 500
Officer 1998 16,153 - - -
-----------------------------
</TABLE>
(1) Unless otherwise noted, represents the value of shares granted as
contributions under the IVC Industries, Inc. Savings Plan.
No other annual compensation, stock appreciation rights,
long-term restricted stock awards, or long-term incentive plan payouts were
awarded to, earned by, or paid to the Named Executive Officers during any of the
Company's last three fiscal years. There were no option grants in the last
fiscal year.
8
<PAGE>
FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the
number of shares of IVC Common Stock underlying unexercised stock options held
by the Named Executive Officers at July 31, 2000. The fair market value of the
IVC Common Stock on July 31, 2000 ($2.81 per share) was less than the exercise
prices of said options. No stock options were exercised in fiscal 2000.
Number of Securities
Underlying Unexercised
Options At Fiscal Year-End
--------------------------------
Name Exercisable Unexercisable
---- ----------- -------------
E. Joseph Edell 0 0
Michael Durso 17,292 8,333
William Lederman 6,250 6,250
Domenic N. Golato 13,750 0
Jesus Febus 19,125 0
EMPLOYMENT AGREEMENTS
E. Joseph Edell is employed as the Chairman, Chief Executive
Officer and President of IVC pursuant to an employment agreement dated as of
April 28, 1996 and amended as of February 1, 1998. Mr. Edell's employment
agreement provides for a base salary of $342,428. The employment agreement also
provides that on each January 31 during Mr. Edell's term of employment, he shall
be entitled to performance-based bonus compensation in an amount equal to the
sum of (i) Mr. Edell's base salary on such January 31 multiplied by (ii) the
percentage increase, if any, in the income before income taxes of the Company
for the 12-month period ended on such January 31 over the income before income
taxes of the Company for the 12-month period ended the prior January 31. No
bonus compensation was paid to Mr. Edell for the 12-month period ended January
31, 2000. The employment agreement also provides that the Company may, in its
discretion, grant Mr. Edell options to purchase shares of IVC Common Stock
pursuant to the 1995 Plan. Mr. Edell was not awarded stock options during the
year ended July 31, 2000. The term of his employment agreement was extended to
January 31, 2001 and is automatically extended for successive one-year periods
unless the Company or Mr. Edell gives three months' notice that they elect that
the term of employment shall not be further extended. In the event notice is
given in accordance with the terms of the agreement, Mr. Edell shall receive a
severance payment equal to his base annual salary, provided that no severance
payment shall be required in the event that Mr. Edell retires. The Board of
Directors, at its discretion, may increase Mr. Edell's base annual salary if the
term is extended. In the event the Company terminates the employment of Mr.
Edell without cause, he shall receive a severance payment equal to the remaining
salary due under the unexpired term of his agreement, plus one year's base
salary. The agreement contains confidentiality and non-disclosure provisions.
Michael A. Durso is employed as Senior Vice President of Sales
and Marketing of IVC pursuant to an employment agreement dated as of April 12,
2000. Mr. Durso's employment agreement provides for a base salary of $165,000.
This amount may be adjusted annually and such adjustment is at the sole
discretion of the Chief Executive Officer and Compensation Committee. The term
of his
9
<PAGE>
employment agreement ends on April 12, 2003. In the event the Company terminates
the employment of Mr. Durso without cause, he shall receive a severance payment
equal to the base salary for the period of time remaining under the term of
employment as of the effective date of termination. The agreement contains
confidentiality and non-disclosure provisions.
William Lederman is employed as Chief Operating Officer of IVC
pursuant to an employment agreement dated as of April 12, 2000. Mr. Lederman's
employment agreement provides for a base salary of $175,000. This amount may be
adjusted annually and such adjustment is at the sole discretion of the Chief
Executive Officer and Compensation Committee. The term of his employment
agreement ends on April 12, 2003. In the event the Company terminates the
employment of Mr. Lederman without cause, he shall receive a severance payment
equal to the base salary for the period of time remaining under the term of
employment as of the effective date of termination. The agreement contains
confidentiality and non-disclosure provisions.
Thomas Bocchino is employed as Chief Financial Officer of IVC
pursuant to an employment agreement dated as of August 1, 2000. Mr. Bocchino's
employment agreement provides for a base salary of $165,000. This amount may be
adjusted annually and such adjustment is at the sole discretion of the Chief
Executive Officer and Compensation Committee. The term of his employment
agreement ends on August 1, 2003. In the event the Company terminates the
employment of Mr. Bocchino without cause, he shall receive a severance payment
equal to the base salary for the period of time remaining under the term of
employment as of the effective date of termination. The agreement contains
confidentiality and non-disclosure provisions.
Under the terms of the employment agreement between the
Company and Andrew M. Pinkowski dated April 30, 1996, as amended as of February
1, 1998, Mr. Pinkowski's employment with the Company ended April 30, 1999. The
agreement provides that following the expiration of the term of employment, Mr.
Pinkowski shall serve as a consultant to the Company for a term of five years at
$80,000 per annum. The agreement further provides that the Company may, in its
discretion, grant Mr. Pinkowski options to purchase shares of IVC Common Stock
pursuant to the 1995 Plan. Mr. Pinkowski was not awarded stock options during
the year ended July 31, 2000. The agreement contains confidentiality and
non-disclosure provisions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended July 31, 2000, Dr. Mark S. Gold,
Sam Potenza, David Popofsky and Dennis Groat served as members of the
Compensation Committee. Currently, the Compensation Committee is comprised of
Sam Potenza and David Popofsky. A third member and chairman will be appointed to
the Compensation Committee subsequent to the Annual Meeting. There were no
interlocks or insider participation as defined in the SEC's Regulation S-K.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The responsibilities of the Compensation Committee include
administering the 1995 Plan and fixing the compensation, including salaries and
bonuses, of all officers of the Company.
Overall Policy
The Compensation Committee believes that the Company's
officers are largely responsible for the Company's success. Based on this
belief, IVC's compensation program provides for bonus compensation based on the
Company's performance and for the granting of stock options in order to link a
portion of executive compensation to appreciation of the Company's stock price.
The objectives of this strategy are to attract and retain effective and highly
qualified executives, to motivate executives to
10
<PAGE>
achieve the goals inherent in the Company's business strategy and to link
executive and shareholder interest through stock options.
Base Salaries and Bonus
Initially, annual base salaries are determined by evaluating
the responsibilities of the position held and the experience of the individual
with reference to the competitive marketplace for executive talent. Thereafter,
annual base salaries for the officers are determined by evaluating the
performance of the individual and their contributions to the performance of the
Company and are based on the recommendation of E. Joseph Edell as Chief
Executive Officer. The Compensation Committee also has the authority to grant
year-end cash bonuses to motivate the executive officers to achieve annual
financial and other goals. No cash bonuses were awarded to the any executive of
the Company during the fiscal year ended July 31, 2000.
The compensation paid to the Company's Chief Executive
Officer, E. Joseph Edell, for the year ended July 31, 2000 consisted solely of
base salary and was established pursuant to his employment agreement with the
Company. The terms of the agreement are described on page 9 of this Proxy
Statement.
Long-Term Incentives
Under the 1995 Plan, stock options may be granted to
executives of the Company. Stock options are designed to focus the executives'
attention on stock values and to align the interests of executives with those of
the shareholders. Stock options are generally granted at prices equal to the
fair market value at the date of grant, or 110% of such value with respect to
grants to executives who own more than 10% of the IVC Common Stock, and are not
exercisable until six months after the date of the grant. The options generally
remain exercisable during employment until the tenth anniversary of the date of
the grant, or five years with respect to grants to executives who own more than
10% of the IVC Common Stock. This approach provides an incentive to executives
to increase shareholder value over the long term since the full benefit of the
options cannot be realized unless stock price appreciation occurs over a number
of years. No stock options were awarded to any executive of the Company during
the fiscal year ended July 31, 2000.
COMPENSATION COMMITTEE
David Popofsky
Sam Potenza
11
<PAGE>
PERFORMANCE GRAPH
The following performance graph is a line graph comparing the
yearly change in the cumulative total shareholder return on the Company's Common
Stock against the cumulative return of the Nasdaq Composite Index and the S&P
Health Care - Drugs Index for each of the fiscal years ended July 31, 1996
through 2000.
Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Jul-00
IVC Industries, Inc. 100 108 75 73 22 13
NASDAQ Composite Index 100 108 159 187 264 376
S&P Health Care-Drugs Index 100 131 218 310 314 364
12
<PAGE>
REPORT OF AUDIT COMMITTEE
During the fiscal year ended July 31, 2000, David Popofsky, Dr. Mark S.
Gold, Marc Edell, Dennis Groat and Erwin Lehr served as members of the Audit
Committee. Currently, the Audit Committee is comprised of David Popofsky and
Erwin Lehr. The Audit Committee has adopted a charter to set forth its
responsibilities. A copy of the charter is attached as Appendix A to this Proxy
Statement.
As required by the charter, the Audit Committee reviewed the
Corporation's audited financial statements and met with management, as well as
with Amper, Politziner & Mattia P.A., the Company's independent auditors, to
discuss the financial statements.
The Audit Committee received from Amper, Politziner & Mattia P.A. the
required disclosures regarding their independence and the report regarding the
results of their audit. In connection with its review of the financial
statements and the auditors' disclosures and report, the members of the Audit
Committee discussed with a representative of Amper, Politziner & Mattia P.A.,
their independence, as well as the following:
o the auditors' responsibilities in accordance with generally
accepted accounting standards;
o the initial selection of, and whether there were any changes
in, significant accounting policies or their application;
o management's judgments and accounting estimates;
o whether there were any significant audit adjustments;
o whether there were any disagreements with management;
o whether there was any consultation with other accountants;
o whether there were any major issues discussed with management
prior to the auditors' retention;
o whether the auditors encountered any difficulties in
performing the audit; and
o the auditor's judgments about the quality of the Company's
accounting policies.
Based on its discussions with management and the Company's independent
auditors, the Audit Committee did not become aware of any material
misstatements or omissions in the audited financial statements. Accordingly,
the Audit Committee recommended to the Board of Directors that the audited
financial statements be included in the Annual Report on Form 10-K for the
period ended July 31, 2000 for filing with the SEC.
AUDIT COMMITTEE
David Popofsky
Erwin Lehr
13
<PAGE>
PROPOSAL TWO - SELECTION OF AUDITORS
The Audit Committee recommended to the Board of Directors, and
the Board of Directors selected, Amper, Politziner & Mattia P.A., independent
auditors, as auditors of the Company for the fiscal year ending July 31, 2001.
Although shareholder ratification of the Board of Directors' action in this
respect is not required, the Board considers it desirable for shareholders to
pass upon the selection of auditors and, if the shareholders disapprove of the
selection, intends to reconsider the selection of auditors for the fiscal year
ending July 31, 2002, since it would be impractical to replace the Company's
auditors so late into the Company's current fiscal year.
It is expected that representatives of Amper, Politziner &
Mattia P.A. will be present at the Annual Meeting, will have an opportunity to
make a statement if they so desire and will be available to respond to
appropriate questions from IVC shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF
THE APPOINTMENT OF THE AUDITORS AND IT IS INTENDED THAT PROXIES NOT VOTED TO THE
CONTRARY WILL BE SO VOTED.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LOANS, GUARANTEES AND ADVANCES
From time to time the Company has made advances to E. Joseph
Edell and I. Alan Hirschfeld. Such advances bear interest at 5% per annum. At
July 31, 2000, the aggregate net advances to E. Joseph Edell and I. Alan
Hirschfeld were $381,119 and $147,552, respectively. The balance due the Company
by E. Joseph Edell is payable by July 31, 2005 and the balance due the Company
by I. Alan Hirschfeld is payable in three successive annual installments
commencing March 1, 2003.
OTHER MATTERS
The Company routinely sells its products on arm's-length terms
to Healthfair Vitamin Centers, Inc., a company wholly owned by Arthur S. Edell
and his wife Ethel Edell. The Company's sales to Healthfair Vitamin Centers for
the year ended July 31, 2000 were $39,000.
The Company paid approximately $309,000 during the year ended
July 31, 2000 for legal services provided to the Company by Edell & Associates.
Marc Z. Edell, a former director of the Company and the son of Joseph Edell, is
a principal of Edell & Associates.
The Company held a contract receivable from Agora Holding
Company ("Agora"), a partnership consisting of Andrew M. Pinkowski and certain
previous shareholders of Hall Laboratories. The amount due form Agora was
$813,000 at July 31, 1999 which was paid in full in October 1999. Interest
income earned by the Company on this contract was $18,000 for the year ended
July 31, 2000. The Company leased its manufacturing and administration facility
in Portland, Oregon from Agora until October 1999. Rent expense incurred by the
Company for this property was $44,000 for the year ended July 31, 2000.
14
<PAGE>
MISCELLANEOUS
Any proposal of an eligible shareholder intended to be
presented at the next Annual Meeting of shareholders must be received by the
Company for inclusion in its Proxy Statement and form of proxy relating to that
meeting no later than July 31, 2001. The proxy or proxies designated by the
Company will have discretionary authority to vote on any matter properly
presented by a shareholder for consideration at the next Annual Meeting of
shareholders but not submitted for inclusion in the proxy materials for such
Meeting unless notice of the matter is received by the Company not later than
October 14, 2001 and certain other conditions of the applicable rules of the SEC
are satisfied.
The Board of Directors of the Company does not intend to
present, and does not have any reason to believe that others intend to present,
any matter of business at the meeting other than those set forth in the
accompanying Notice of Annual Meeting of Shareholders. However, if other matters
properly come before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote any proxies in accordance with their
judgment.
The Company will bear the cost of preparing, assembling and
mailing the enclosed form of proxy, this Proxy Statement and other material
which may be sent to shareholders in connection with this solicitation.
Solicitation may be made by mail, telephone, telegraph and personal interview.
The Company may reimburse persons holding shares in their names or in the names
of nominees for their expense in sending proxies and proxy material to their
principals.
Copies of the 2000 Annual Report to Shareholders, which is the
Company's Annual Report to the SEC Form 10-K, are being mailed simultaneously
with this Proxy Statement.
By order of the Board of Directors,
Thomas Bocchino
Secretary
Freehold, New Jersey
November 28, 2000
15
<PAGE>
APPENDIX A
IVC INDUSTRIES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The Audit Committee is a committee of the Board of Directors. It shall provide
assistance to the Board in fulfilling the Board's statutory responsibilities
relating to the quality and integrity of the Company's financial reports,
monitor the Company's financial reporting process and internal control system,
and perform such other activities consistent with this Charter and the Company's
By-laws as the Committee or the Board deems appropriate.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors, none of whom
shall be an employee of the Company and each of whom shall be free from any
relationship to the Company that, in the opinion of the Board, would interfere
with the exercise of his or her independence from management and the Company.
All members of the Committee shall be financially literate, and at least one
member shall have accounting or related financial management expertise.
The members of the Audit Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until the next annual
organizational meeting or until their respective successors shall be duly
elected and qualified.
The Committee shall have the power to retain outside counsel and other
professionals if, in its judgment, that is appropriate.
III. MEETINGS
The Audit Committee shall meet at least three times annually, once to review the
audit plan of the outside auditors, once to review the Company's annual
financial reports prior to their issuance, and once to review the post-audit
findings of the outside auditors. The Committee shall confer with the outside
auditors and management to review the Company's interim financial reports prior
to their issuance.
The Committee shall report to the Board at least annually as to its activities.
IV. RELATIONSHIP WITH OUTSIDE AUDITORS
The outside auditors are ultimately accountable to the Board and the Audit
Committee, as representatives of the Company's shareholders, and the Board and
the Audit Committee have the ultimate authority and
<PAGE>
responsibility to select, evaluate, propose the outside auditors for shareholder
ratification and, where appropriate, replace the outside auditors.
V. DUTIES AND RESPONSIBILITIES
The Audit Committee's primary duties and responsibilities are to:
Documents/Reports Review
1. Review and assess the adequacy of this Charter at
least annually.
2. Review all public announcements of financial results
and quarterly and annual financial statements and
reports prior to any filing with the Securities and
Exchange Commission or any release to the public or
investors.
Outside Auditors
3. Recommend to the Board the selection of outside
auditors and approve the fees and other compensation
to be paid to the outside auditors.
4. Review all significant relationships the outside
auditors have with the Company to determine their
independence. The outside auditors shall annually
provide the Audit Committee a written statement
delineating all such relationships.
5. Review and evaluate the performance of the outside
auditors.
6. Replace the outside auditors when necessary.
Financial Reporting Processes
7. Consult with the outside auditors concerning the
completeness and accuracy of the Company's financial
statements.
8. Consult with the outside auditors concerning the
quality of the Company's accounting principles as
applied in its financial reporting.
9. Review any significant judgments made in management's
preparation of the financial statements and the view
of the outside auditors as to the appropriateness of
such judgments.
10. Review any significant difficulties encountered
during the course of the audit, including any
restrictions on the scope of the outside auditor's
work or access to reviewed information.
11. Review any significant disagreements among management
and the outside auditors in connection with any
public announcements of financial results and
quarterly and annual financial statements and
reports.
12. Review major changes to the Company's accounting
principles as recommended by the outside auditors or
management.
<PAGE>
13. Review the adequacy of the Company's system of
internal controls, including computerized information
system controls and security, and any related
significant findings and recommendations of the
outside auditors, together with management's
responses thereto.
14. Review periodically with the Company's outside
counsel, legal and regulatory matters that could have
a significant impact on the Company's financial
statements.
Other
15. Investigate any other matter brought to its attention
within the scope of its duties which it deems
appropriate for investigation.
<PAGE>
IVC INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
JANUARY 9, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints E. JOSEPH EDELL and EDWARD H. COHEN, or
either of them, attorneys and proxies, with power of substitution and
revocation, to vote, as designated below, all shares of IVC Common Stock which
the undersigned is entitled to vote, with all powers which the undersigned would
possess if personally present, at the Annual Meeting of Shareholders (including
all adjournments thereof) of IVC INDUSTRIES, INC. to be held on Tuesday, January
9, 2001 at 10:00 A.M. at the Sheraton Eatontown, 6 Industrial Way, Eatontown,
New Jersey 07724. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND
2.
1. ELECTION of Directors.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY to vote for all nominees
Arthur S. Edell, E. Joseph Edell, Erwin Lehr, Andrew M. Pinkowski,
David Popofsky, Sam Potenza, Michael G. Seaman.
Shareholders may withhold authority to vote for any nominee(s) by
writing the name of that nominee in the space provided below.
2. RATIFICATION of the appointment of Amper, Politziner & Mattia, P.A., as
independent auditors for the fiscal year ending July 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The proxy is authorized to transact such other business as may properly come
before the meeting.
<PAGE>
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is given, this
proxy will be voted FOR proposals 1 and 2 and in the discretion of said proxy on
any other matter which may come before the meeting or any adjournments thereof.
Dated: ______________ , ________
-----------------------------------------
Signature
-----------------------------------------
Signature, if held jointly
NOTE: When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, custodian, guardian or corporate
officer, please give your full title as such. If a corporation, please sign full
corporate name by authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE FILL IN, DATE, SIGN AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
