DEF 14A 1 0001.txt ZEVEX INTERNATIONAL, INC. PROXY 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 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.
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%
(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.
Years as Name Age Position Director ---- --- -------- -------- David J. McNally(a) 39 Chief Executive Officer and Director 13 Bradly A. Oldroyd 42 Director 10
(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:
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
(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
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 $4,000(d) President 1998 N/A N/A N/A N/A N/A N/A N/A 1997 N/A N/A N/A N/A N/A N/A N/A
(a) Mr. Constantine resigned as CEO and President of the Company effective September 1, 2000. (b) Mr. McNally was appointed Chief Executive Officer on August 24, 2000, effective September 1, 2000. Previously Mr. McNally was the Executive Vice President of the Company. (c) Mr. Smith was appointed President on August 24, 2000, effective September 1, 2000. Previously Mr. Smith was the Vice President of Sales and Marketing of the Company and President of JTech. (d) Represents the amount paid by ZEVEX as a contribution to ZEVEX' 401(k) Pension and Profit Sharing Plan on the officer's behalf. OPTIONS GRANTS IN LAST FISCAL YEAR
Individual Grants Percent Of Number of Total Potential Realizable Value At Securities Options/ Assumed Annual Rates Of Stock Underlying SAR's Price Appreciation For Options/ SARs Granted To Exercise or Option Term Granted Employees In Base Price Expiration ----------- Fiscal Name (#) Year ($/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
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.
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
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 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]
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
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 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