<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
REHABILICARE 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)(1)
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:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
REHABILICARE INC.
1811 OLD HIGHWAY 8
NEW BRIGHTON, MN 55112-3493
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 14, 1999
------------------------------
TO SHAREHOLDERS OF REHABILICARE INC.:
Notice is hereby given that the Annual Meeting of Shareholders of Rehabilicare
Inc. (the "Company") will be held on Tuesday, December 14, 1999 at the Marquette
Hotel, 710 Marquette Avenue, Minneapolis, Minnesota, 55402 at 10:00 a.m. CST for
the following purposes:
1. To elect a Board of six directors to serve for the following
year and until their successors are elected;
2. To approve an amendment to the 1998 Stock Incentive Plan to
increase the number of shares of the Company's common stock
available for issuance thereunder by 500,000 shares.
Only holders of record of Rehabilicare common stock at the close of business on
October 22, 1999 will be entitled to receive notice of and to vote at the
meeting or any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you plan to be
personally present at the meeting, however, please complete, date and sign the
enclosed proxy and return it promptly in the enclosed envelope. If you later
desire to revoke your proxy, you may do so at any time before it is exercised.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas Martin
SECRETARY
Dated: November 2, 1999
<PAGE>
REHABILICARE INC.
1811 OLD HIGHWAY 8
NEW BRIGHTON, MN 55112-3493
---------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 14, 1999
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by the Board of Directors of Rehabilicare Inc. (the "Company")
for use at the Annual Meeting of Shareholders to be held on December 14, 1999
at 10:00 a.m. CST at the Marquette Hotel, 710 Marquette Avenue, Minneapolis,
Minnesota, 55402, and at any adjournment thereof, for the purposes set forth
in the Notice of Annual Meeting of Shareholders. Shares of the Company's
common stock, $.10 par value (the "Common Stock"), represented by proxies in
the form solicited will be voted in the manner directed by shareholders and
for the other proposal discussed herein. If no direction is made, the proxy
will be voted for the election of the nominees for director named in this
Proxy Statement and for the other proposal discussed herein. Proxies may be
revoked at any time before being exercised by delivery to the Secretary of
the Company of a written notice of termination of the proxy's authority or a
duly executed proxy bearing a later date. This Proxy Statement and the form
of proxy enclosed are being mailed to shareholders commencing on or about
November 2, 1999.
Only the holders of the Company's Common Stock whose names appear of record on
the Company's books at the close of business on October 22, 1999 will be
entitled to vote at the Annual Meeting. At the close of business on October 22,
1999 a total of 10,528,391 shares of Common Stock were outstanding, each share
being entitled to one vote.
Shares voted as abstentions on any matter or a "withhold vote for" as to
directors will be counted as shares that are present and entitled to vote for
the purposes of determining the presence of a quorum at the meeting and as
unvoted, although present and entitled to vote, for purposes of determining the
approval of each matter as to which the shareholder has abstained. If a broker
submits a proxy that indicates the broker does not have discretionary authority
as to certain shares to vote on one or more matters, those shares will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the meeting but will not be considered
as present and entitled to vote with respect to such matters.
Expenses in connection with the solicitation of proxies will be paid by the
Company. Proxies are being solicited primarily by mail but, in addition,
officers and regular employees of the Company who will receive no extra
compensation for their services may solicit proxies by telephone, telecopy or in
person.
As far as the management of the Company is aware, no matters other than those
described in this Proxy Statement will be acted upon at the Annual Meeting. In
the event that other matters properly come before the Annual Meeting calling for
a vote of the shareholders, the persons named as proxies in the enclosed form of
proxy will vote in accordance with their best judgment on such other matters.
A copy of the Company's Annual Report for the year ending June 30, 1999 is being
furnished to each shareholder with this Proxy Statement.
Page 2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 22, 1999, certain information with
respect to beneficial ownership of the Company's Common Stock as to (i) each
person or entity known by the Company to own beneficially more than 5% of the
Company's Common Stock; (ii) each director of the Company; (iii) each executive
officer of the Company named in the Summary Compensation Table; and (iv) all
executive officers and directors as a group. Except as indicated by footnote,
the persons named in the table below have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
NAME SHARES BENEFICIALLY OWNED (1) PERCENT OWNED
- ---- ----------------------------- -------------
<S> <C> <C>
Beverly Enterprises, Inc. 989,319 9.4%
5111 Rogers Avenue, Ste. 40A
Ft. Smith, Arkansas 72919
Robert C. Wingrove 205,503 1.9%
David B. Kaysen 134,708 1.3%
W. Bayne Gibson 104,836 1.0%
W. Glen Winchell 49,515 *
William J. Sweeney 45,259 *
Frederick H. Ayers 38,551 *
John H.P. Maley 24,375 *
Richard E. Jahnke 9,375 *
All Directors and Officers 616,122 5.8%
As a group (9 persons)
</TABLE>
- -----------------------------
* Less than 1%
(1) Includes for Mr. Wingrove, Mr. Kaysen, Mr. Gibson, Mr. Winchell, Mr.
Sweeney, Mr. Ayers, Mr. Maley, Mr. Jahnke and all directors and
officers as a group, 21,000 shares, 37,000 shares, 1,875 shares, 25,000
shares, 43,000 shares, 1,875 shares, 9,375 shares, 9,375 shares and
148,500, respectively, which can be purchased by exercise of options
which become exercisable within 60 days.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive officers
and directors and persons who beneficially own more than ten percent (10%) of
the Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than ten percent (10%) beneficial owners are
required by Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
The Company believes that its executive officers and directors complied with all
applicable Section 16(a) filing requirements during and with respect to the
fiscal year ended June 30, 1999 except that Mr. Chrystal failed to timely file
his initial report of beneficial ownership subsequent to joining the Company,
Mr. Kaysen filed late his report of exercising a stock option, Mr. Ayers filed
late his report of additional shares purchased and Mr. Winchell filed late his
report of additional stock options granted.
Page 3
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors has nominated six persons as directors for the following
year. Each director will be elected at the Annual Meeting for a term of one year
and until his successor is elected and qualified. The Board of Directors
recommends that the shareholders elect the nominees named below as directors of
the Company for the following year. It is intended that the persons named as
proxies in the enclosed form of proxy will vote the proxies received by them for
the election as directors of the nominees named below, unless otherwise
directed. Each nominee has indicated a willingness to serve, but in case any
nominee is not a candidate at the meeting, for reasons not known to the Company,
the proxies named in the enclosed form of proxy may vote for a substitute
nominee at their discretion. Information regarding the nominees is set for the
below:
<TABLE>
<CAPTION>
Principal occupation and business
Name Age Director since experience for past five years
- ------------------ --- -------------- --------------------------------------------------
<S> <C> <C> <C>
Frederick H. Ayers 60 March 1998 President of F.H. Ayers, Inc. (a private
investment company) since 1985; director of
Staodyn, Inc. from 1984 to 1998
W. Bayne Gibson 74 March 1998 Independent business consultant since 1997;
President, Chief Executive Officer and Chairman of
the Board of Staodyn, Inc. from 1984 to 1996
Richard E. Jahnke 50 January 1997 President and Chief Executive Officer of Medical
Graphics Corporation (a manufacturer of
non-invasive medical diagnostic systems) since
August 1998; President and Chief Operating Officer
of CNS, Inc. (a manufacturer of consumer products)
from 1993 to 1998
David B. Kaysen 50 March 1992 President and Chief Executive Officer of the
Company since March 1992
John H.P. Maley 64 December 1996 Chairman of Magister Corporation (a developer and
marketer of consumer healthcare products) since
July 1995; Chairman and CEO of Chattanooga Group
(a manufacturer of physical therapy products) from
1976 to 1995
Robert C. Wingrove 67 June 1972 Chairman of the Board of the Company since 1984;
Chief Technical Officer of the Company since 1990
</TABLE>
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK
REPRESENTED AT THE MEETING IS REQUIRED FOR THE ELECTION OF EACH DIRECTOR. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE.
Page 4
<PAGE>
MEETING OF THE BOARD AND CERTAIN COMMITTEES
The Board of Directors maintains an Audit Committee, comprised of Messrs.
Ayers, Gibson, Jahnke and Maley, and a Compensation Committee, comprised of
Messrs. Ayers, Gibson, Jahnke and Maley. The Audit Committee met once during
the year and the Compensation Committee met twice. The Audit Committee
reviews the Company's arrangements with its independent public accountants,
its internal accounting policies, the substance of its audits and any
transactions with management. The Compensation Committee considers and makes
recommendations with respect to compensation of officers of the Company
(including salaries and incentive compensation). There is no standing
nominating committee.
During the year ended June 30, 1999, the Board of Directors held seven meetings.
Each incumbent Director attended at least 75% of all meetings of the Board while
he was serving on the Board and all meetings of any committee of the Board on
which he served.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
NAME AGE POSITION
------------------- --- ----------------------------------
<S> <C> <C>
Robert C. Wingrove 67 Chief Technical Officer
David B. Kaysen 50 Chief Executive Officer
William J. Sweeney 56 Vice President Sales and Marketing
W. Glen Winchell 52 Vice President of Finance and Chief
Financial Officer
Wayne K. Chrystal 49 Vice President of Operations
</TABLE>
See the biographical information on Messrs. Wingrove and Kaysen under Directors.
William J. Sweeney started with the Company as Vice President of Sales and
Marketing in April 1996. From June 1993 to April 1996, he was employed by CIRCON
Corporation and Surgitek, Inc. (a company acquired by CIRCON Corporation), both
manufacturers of surgical products, most recently as Corporate Business
Development Manager.
W. Glen Winchell has been Vice President of Finance and Chief Financial Officer
since September 1993.
Wayne K. Chrystal joined the Company as Vice President of Operations in May
1999. From 1973 to 1998 he was employed by Deluxe Corporation, a supplier of
checks and electronic payment services, most recently as Vice President
responsible for operations and human resources in various business units.
Page 5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The table below shows the compensation
awarded or paid to, or earned by, Rehabilicare's chief executive officer and
each of its most highly compensated executive officers who received salary and
bonus of $100,000 or more during each of the years in the three-year period
ended June 30, 1999.
<TABLE>
<CAPTION> Annual Compensation
------------------------------------------------ Long-Term All Other
Name and Other Annual Compensation (1) Compensation
Principal Position Year Salary Bonus Compensation Options(2) (3)
- ----------------------- ---- -------- -------- ------------ ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
David B. Kaysen 1999 $220,212 $131,800 -- 25,000 $786
PRESIDENT AND CHIEF 1998 170,365 59,670 -- 15,000 768
EXECUTIVE OFFICER 1997 163,125 28,260 -- 15,000 750
Robert C. Wingrove 1999 $130,115 $ 13,260 7,000 $788
CHIEF TECHNICAL 1998 128,788 15,750 -- 6,000 768
OFFICER 1997 125,800 19,042 -- 10,000 753
W. Glen Winchell 1999 $142,250 $ 51,500 40,000 $804
VICE PRESIDENT OF 1998 104,291 26,875 -- 20,000 795
FINANCE AND CHIEF 1997 97,692 16,302 -- 5,000 759
FINANCIAL OFFICER
William J. Sweeney 1999 $127,115 $ 31,800 -- 10,000 $750
VICE PRESIDENT OF SALES 1998 97,007 18,800 -- 20,000 750
AND MARKETING (5) 1997 90,599 16,325 20,000(4) 10,000 763
</TABLE>
- ----------------------
(1) Rehabilicare did not award any restricted stock or make any long-term
incentive payments to executives.
(2) Represents the number of shares of Rehabilicare common stock that can
be purchased upon the exercise of stock options granted during the
year.
(3) Represents Rehabilicare's contributions to a 401(k) plan.
(4) Represents relocation expense allowance.
STOCK BASED COMPENSATION. The following table provides information
regarding options to purchase Rehabilicare Common Stock granted to the named
executive officers pursuant to the 1998 Stock Incentive Plan during 1999.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE ($/SHARE) DATE
- ------------ ---------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
Mr. Kaysen 25,000 14.2% $2.25 9/14/05
Mr. Wingrove 7,000 4.0% $2.25 9/14/05
Mr. Winchell 10,000 5.7% $2.25 9/14/05
30,000 17.0% $3.25 2/08/06
Mr. Sweeney 10,000 5.7% $2.25 9/14/05
</TABLE>
Page 6
<PAGE>
The following table summarizes the value of options held at the end of
fiscal 1999 by the named executive officers.
<TABLE>
<CAPTION>
OPTION EXERCISES IN FISCAL 1999 AND FISCAL YEAR-END OPTION VALUES
Number of Unexercised Value of Unexercised
Shares Options In-the-Money Options
Acquired At End of Fiscal 1999 At End of Fiscal 1999 (2)
On Value ----------------------------- -----------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- -------------- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Kaysen 6,000 $ 4,875 33,000 46,000 $17,438 $32,470
Mr. Wingrove -- -- 30,250 16,750 $24,375 $ 9,000
Mr. Winchell -- -- 37,500 57,500 $32,125 $ 5,375
Mr. Sweeney -- -- 36,500 33,500 $ 875 $12,875
</TABLE>
- -------------------------
(1) Represents the difference between fair market value at date of exercise
and the exercise price.
(2) Represents the difference between $3.3125 (the last sales price at June
30, 1999) and the exercise price multiplied by the number of shares.
COMPENSATION OF DIRECTORS
Directors who are not also officers or employees of the Company receive fees of
$2,000 per quarter; an annual option to purchase 2,500 shares of the Company's
common stock under its 1998 Stock Incentive Plan; and are reimbursed for their
expenses in attending board meetings.
LONG-TERM INCENTIVE PLAN AWARDS
Other than its 1998 Stock Incentive Plan and 1993 Employee Stock Purchase Plan,
the Company does not maintain any long-term incentive plan.
PROPOSAL TO APPROVE AMENDMENT TO 1998 STOCK INCENTIVE PLAN
On September 14, 1999, the Company's Board of Directors approved, subject to
shareholder approval, an amendment to the Company's 1998 Stock Incentive Plan
(the "Plan") that will increase the number of shares reserved for issuance
pursuant to options granted thereunder by 500,000 shares.
The Plan was adopted by directors and shareholders in February 1998. It reserved
400,000 shares of Common Stock for issuance upon exercise of options granted
thereunder. The Plan is administered by the Compensation Committee of the
Rehabilicare Board of Directors, excluding any officers or employees of the
Company.
The Plan permits the granting of a variety of types of awards including:
incentive stock options; non-qualified stock options; stock appreciation rights
(SARs); restricted stock; performance awards; dividend equivalents; and other
awards valued in whole or in part by reference to Rehabilicare Common Stock.
Awards may be granted alone, in addition to, in tandem with or in substitution
for any other award granted under the 1998 Plan or any other plan. Awards may be
granted for no cash consideration or for such minimal cash consideration as may
be required by applicable law. Awards may provide that upon the grant or
exercise thereof the holder will receive cash, shares of Rehabilicare Common
Stock or other securities, awards or property, or any combination thereof, as
the Committee shall determine. The exercise price per share under any incentive
stock option, the grant price of any SAR and the purchase price of any security
which may be purchased under
Page 7
<PAGE>
any other stock-based award may not be less than 100% of the fair market
value of Rehabilicare Common Stock on the date of the grant of such option,
SAR or right.
Under current provisions of the Internal Revenue Code of 1986, as amended, upon
the granting of either incentive or non-qualified stock options, no income will
be realized by the optionee and no deduction will be allowable to the Company.
At the time of exercise of an incentive stock option for cash, no income will be
recognized by the optionee although the spread between the option price and the
fair market value of the shares on the date of exercise will be a tax preference
item used in the calculation of an optionee's alternative minimum tax. At the
time of exercise of a non-qualified stock option for cash, the excess of the
fair market value of the shares acquired on the date of exercise over the
exercise price paid will be ordinary income to the optionee and deductible by
the Company (subject to the usual rules on ordinary and reasonable compensation
deductions).
The Company has a total of 415,000 shares of common stock reserved for
issuance under its 1988 Stock Option Plan, all of which were subject to
outstanding options at October 22, 1999. The Company reversed a total of
400,000 shares of common stock for issuance under its 1998 Stock Incentive
Plan when it was created in 1998. There remained 161,840 shares available for
future grants under the Plan at October 22, 1999. The Board believes that the
Plan has been and will continue to be a valuable tool in both providing
incentive to employees to put forth their maximum efforts for the advancement
of the Company and in attracting new employees. The Board does not believe
the remaining shares reserved for issuance under the Plan provide the Company
with flexibility necessary to accomplish these objectives.
The Board of Directors recommends that the shareholders approve the proposal
to amend the 1998 Plan. The persons named in the accompanying proxy intend to
vote the proxies held by them in favor of such proposal, unless otherwise
directed. If no instruction is given, the accompanying proxy will be voted in
favor of the proposal. An affirmative vote of the holders of a majority of
the shares of Common Stock present and represented at a meeting at which a
quorum is present is required for the approval of the proposal.
CERTAIN TRANSACTIONS
The Company loaned Mr. Kaysen $162,500 in March 1997 for the acquisition of
100,000 shares of the Company's common stock, pursuant to his exercise of stock
options. The loan was evidenced by a promissory note secured by 85,729 shares of
Company common stock owned by Mr. Kaysen and bearing interest at the prime rate.
In March 1998, the Company loaned Mr. Kaysen an additional $75,000 in connection
with his income tax obligation resulting from the stock option exercise. That
loan is secured by the same collateral and subject to the same terms. Mr. Kaysen
is making quarterly payments on the loans.
Page 8
<PAGE>
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company has selected PricewaterhouseCoopers LLP as its independent public
accountants for the year ending June 30, 2000. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting,
will have an opportunity to make a statement if they desire to do so and will be
available to respond to questions from shareholders.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a shareholder to be presented at the next Annual Meeting must be
received at the Company's principal executive offices, 1811 Old Highway 8, New
Brighton, MN 55112-3493, no later than July 8, 2000.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas Martin
SECRETARY
Dated: November 2, 1999
Page 9
<PAGE>
REHABILICARE INC.
Proxy for the December 14, 1999 Annual Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David B. Kaysen and W. Glen
Winchell, and each of them, with power to appoint a substitute, to vote all
shares the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Rehabilicare Inc., to be held on December 14, 1999, and at
all adjournments thereof, as specified below on the matters referred to, and,
in their discretion, upon any other matters which may be brought before the
meeting:
<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF DIRECTORS: / / FOR all nominees (EXCEPT / / WITHHOLD AUTHORITY
AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES
</TABLE>
TO WITHHOLD AUTHORITY FOR A SPECIFIC NOMINEE, PLACE A LINE THROUGH HIS
NAME BELOW:
Frederick H. Ayers, W. Bayne Gibson, Richard E. Jahnke, David B. Kaysen,
John H.P. Maley, Robert C. Wingrove.
2. TO APPROVE AN AMENDMENT TO THE 1998 STOCK INCENTIVE PLAN TO INCREASE
THE NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK AVAILABLE FOR
ISSUANCE THEREUNDER BY 500,000 SHARES.
3. TO VOTE WITH DISCRETIONARY AUTHORITY ON ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE MEETING.
(THIS PROXY MUST BE DATED AND SIGNED ON THE REVERSE SIDE.)
<PAGE>
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made, this
Proxy will be voted for all directors named in Item 1 and for the proposal
described in Item 2.
When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name
by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated: ____________________________, 1999
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY PROMPTLY.
