<PAGE> 1
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 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
REHABILICARE INC.
1811 Old Highway 8
New Brighton, MN 55112-3493
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 12, 2000
To the Shareholders of
REHABILICARE INC.:
The Annual Meeting of Shareholders of Rehabilicare Inc. (the "Company")
will be held at 10:00 a.m. on Tuesday, December 12, 2000, at the Marquette
Hotel, 710 Marquette Avenue, Minneapolis, Minnesota for the following purposes:
1. To elect six directors to serve for the following year and until their
successors are elected;
2. Transact such other business as may properly come before the meeting
or any adjournment thereof.
Only holders of record of Rehabilicare common stock at the close of
business on October 20, 2000 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, 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
November 6, 2000
-----------------------------------------
IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY
In order that there may be a proper representation at the
meeting, you are urged, whether you own one share or many, to
promptly complete, sign and mail your proxy.
-----------------------------------------
<PAGE> 3
REHABILICARE INC.
1811 Old Highway 8
New Brighton, MN 55112-3493
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 12, 2000
The accompanying Proxy is solicited on behalf of the Board of Directors of
Rehabilicare Inc. (the "Company") for use at the Annual Meeting of Shareholders
to be held on December 12, 2000 at 10:00 a.m. at the Marquette Hotel, 710
Marquette Avenue, Minneapolis, Minnesota, and at any adjournment thereof. The
cost of solicitation, including the cost of preparing and mailing the Notice of
Annual Meeting of Shareholders and this Proxy Statement, will be paid by the
Company. Representatives of the Company may, without cost to the Company,
solicit proxies for the management of the Company by means of mail, telephone or
personal calls.
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. If no direction is made, the proxy will be voted for
the election of the nominees for director named in this Proxy Statement and any
other matters properly brought before the meeting. Shares voted as a "withhold
vote for" one or more directors will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a quorum at the
meeting and as unvoted, although present and entitled to vote, for purposes of
the election of the directors with respect to which the shareholder has
abstained. If a broker submits a proxy that indicates the broker does not have
discretionary authority to vote certain shares, 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 the matters voted on at the meeting.
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.
Only holders of record of Common Stock at the close of business on October
20, 2000 will be entitled to receive notice of and to vote at the meeting. On
October 20, 2000, the Company had 10,764,487 shares of Common Stock outstanding.
Each outstanding share is entitled to one vote on all matters presented at the
meeting.
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 any other matters properly come before the Annual
Meeting calling for a vote of 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 on Form 10-K for the year ended June
30, 2000 is being furnished to each shareholder with this Proxy Statement. This
Proxy Statement is being mailed to shareholders on or about November 6, 2000.
Page 2
<PAGE> 4
ELECTION OF DIRECTORS
Six persons have been nominated for election at the Annual Meeting. Each
nominee is currently a director of the Company. All nominees elected at the
Annual Meeting will serve until the next Annual Meeting or until their earlier
death, resignation, removal, or disqualification. The persons named in the
accompanying Proxy intend to vote the Proxies held by them in favor of the
nominees named below as directors, unless otherwise directed. The affirmative
vote of a majority of the voting shares represented at the meeting is required
for the election of each director. Should any nominee for director become
unavailable for any reason, the Proxies will be voted in accordance with the
best judgment of the persons named herein. The Board of Directors has no reason
to believe that any candidate will be unavailable.
The following information is furnished with respect to each nominee:
<TABLE>
<CAPTION>
Principal occupation and business
Name Age Director since experience for past five years
-------------------------- -------- ------------------- ----------------------------------------------------
<S> <C> <C> <C>
Frederick H. Ayers 61 1998 President of F.H. Ayers, Inc. (a private
investment company) since 1985; director of
Staodyn, Inc. from 1984 to 1998
W. Bayne Gibson 75 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 51 1997 President and Chief Executive Officer of Angeion
Corporation since January 2000 after its
acquisition of Medical Graphics Corporation;
President and Chief Executive Officer of Medical
Graphics Corporation (a manufacturer of non-
invasive medical diagnostic systems) from 1998 to
2000; President and Chief Operating Officer of
CNS, Inc. (a manufacturer of consumer products)
from 1993 to 1998
David B. Kaysen 51 1992 President and Chief Executive Officer of the
Company since March 1992
John H.P. Maley 65 1996 Chairman of Magister Corporation (a developer and
marketer of consumer healthcare products) since July 1995;
Chairman and Chief Executive Officer of Chattanooga
Group (a manufacturer of physical therapy products)
from 1976 to 1995
Robert C. Wingrove 68 1972 Chairman of the Board of the Company since 1984;
Chief Technical Officer of the Company from 1990
to 2000
</TABLE>
COMPENSATION OF DIRECTORS
Directors who are not also officers or employees of the Company receive
fees of $2,000 per quarter. The chair of each committee receives an additional
fee of $500 annually. In addition, each nonemployee director is granted an
option each July 1 to purchase 2,500 shares of the Company's common stock under
its 1998 Stock Incentive Plan. The exercise price of such options is the fair
market value of the common stock on the date of grant and the options vest over
a five year period from the date of grant.
The Company knows of no arrangements or understandings between a
director or nominee and any other person pursuant to which he has been selected
as a director or nominee. There is no family relationship between any of the
nominees, directors or executive officers of the Company.
Page 3
<PAGE> 5
COMMITTEES AND MEETINGS
The Board of Directors has a Compensation Committee and an Audit Committee.
During fiscal 2000, the Board of Directors met five times, the Compensation
Committee met once and the Audit Committee met once. The Compensation Committee
reviews and makes recommendations to the Board of Directors regarding salaries,
compensation and benefits of executive officers of the Company. The Compensation
Committee also administers the Company's 1998 Stock Incentive Plan. The current
members of the Compensation Committee are Mr. Maley (chair), Mr. Ayers, Mr.
Gibson and Mr. Jahnke. The Audit Committee reviews the internal and external
financial reporting of the Company, arrangements with its independent public
accountants, the scope and results of its quarterly reviews and independent
audits and any transactions with executive officers of the Company. The members
of the Audit Committee are Mr. Jahnke (chair), Mr. Ayers, Mr. Gibson and Mr.
Maley. The Board of Directors does not have a nominating committee. Each nominee
for director attended at least 75% of the meetings of the Board and committees
on which he served during fiscal 2000.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
EACH NOMINEE FOR THE BOARD OF DIRECTORS.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Current executive officers of the Company who are not also directors are as
follows:
William J. Sweeney, 57, 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, 53, has been Vice President of Finance and Chief
Financial Officer since September 1993.
Wayne K. Chrystal, 50, 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 4
<PAGE> 6
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors approves the
compensation for executive officers of the Company and acts on such other
matters relating to their compensation as it deems appropriate. The Compensation
Committee consists of four non-employee directors and meets at least once per
year. The members of the Compensation Committee during fiscal year 2000 were
Messrs. Maley, Ayers, Gibson and Jahnke. The Compensation Committee also
administers, with respect to all eligible recipients, the Company's stock option
plans and determines the participants in such plans and the quantity, timing and
other terms and conditions of awards under such plans.
Compensation Philosophy and Objectives
The Compensation Committee is committed to the general principle that
overall executive compensation should be commensurate with performance by the
Company and the individual executive officers. The primary objectives of the
Company's executive compensation program are to:
- Reward the achievement of desired Company and individual performance
goals;
- Provide compensation that enables the Company to attract and retain
key executives; and
- Provide a total compensation package that is aligned with the
performance of the Company and the interests of its shareholders.
The Company's executive compensation program provides a level of
compensation that is competitive for companies in comparable industries and of
comparable complexity and size. In determining compensation levels, the
Compensation Committee considers a number of factors, including Company
performance, the individual performance of each executive officer, comparative
compensation surveys and historical compensation levels and stock option awards
at the Company. Compensation levels may be greater or less than competitive
levels in comparable companies based upon factors such as annual and long-term
Company performance and individual performance.
The Company's executive compensation program consists of base salary,
bonuses and long-term incentive compensation in the form of stock options. The
particular elements of the compensation program are discussed more fully below.
Base Salary
Base salary levels of executives, including the Chief Executive Officer,
are determined by the potential impact of the individual on the Company and the
Company's performance, the skills and experience required by the position, the
individual performance and potential of the executive, and market data for
comparable positions in companies in comparable industries and of comparable
complexity and size. Base salaries for executives are generally evaluated and
adjusted annually. In fiscal 2000, the Company engaged a compensation consultant
to assist with determining appropriate base salaries, bonus percentages and
stock option levels, giving due consideration to the characteristics of the
Company subsequent to several acquisitions. Significant adjustments were made in
recognition of the increased size, scope of business and complexity of the
Company.
Mr. Kaysen received a base salary increase of $74,145 to $294,357 from the
year ended June 30, 1999 to the year ended June 30, 2000. The increase was based
on his increased responsibilities which occurred as a result of the acquisition
of Compex SA, a Swiss-based business which has subsequently accounted for about
25% of the Company's revenue.
Bonuses
The Company may also pay bonuses to executive officers as part of its
executive compensation program. The purpose of the cash bonus component of the
executive compensation program is to provide a direct financial incentive for
executives who help the Company achieve certain objectives. Mr. Kaysen received
Page 5
<PAGE> 7
no bonus for fiscal 2000 as a result of failing to achieve goals for increases
in net income due primarily to the costs associated with settlement of a
whistleblower lawsuit.
Stock Incentive Compensation
The Company provides long-term incentive to its executive officers
primarily through its 1998 Stock Incentive Plan. Under that Plan, the
Compensation Committee awards stock options to executive officers based on the
number of options and shares currently held by the executive and also on
performance factors similar to those used to determine salaries and annual cash
incentives. The Compensation Committee has not fixed or predetermined the amount
of shares to be available for option grants in any year. The Committee has,
however, reviewed industry statistics regarding the appropriate size of the
Option Plan in terms of outstanding shares and the appropriate size of grants to
executive officers and to employees as a whole.
Stock options are granted to encourage an executive to seek the same
objectives as shareholders, to retain executives through vesting and to lower
the overall cash cost of compensation. The Company's options generally vest over
a period of four years and expire after seven years. All options are granted
with an exercise price equal to fair market value on the date of grant. Mr.
Kaysen received an option to purchase 30,000 shares in fiscal 2000, primarily in
recognition of the successful acquisition of Compex SA. Options granted during
1998 to other executives were principally to provide additional incentive, with
reference to industry statistics on the appropriate size of the stock-based
incentive.
Summary
The Compensation Committee believes that the compensation program for
executive officers during fiscal 2000 achieved the principal objectives for
which it was designed.
John H.P. Maley
Frederick Ayers
W. Bayne Gibson
Richard Jahnke
SUMMARY COMPENSATION TABLE
The table below shows the cash and noncash compensation 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, 2000.
<TABLE>
<CAPTION>
Annual Compensation Long-Term
--------------------------------------- Compensation (1)
Name and ---------------- All Other
Principal Position Year Salary Bonus Other Options(2) Compensation (3)
------------------------- ---- ----------- ---------- ------------ ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
David B. Kaysen 2000 $ 300,357 $ -- -- 30,000 $9,496
President and Chief 1999 220,212 131,800 -- 25,000 786
Executive Officer 1998 170,365 59,670 -- 15,000 768
W. Glen Winchell 2000 $ 162,462 $ -- -- 20,000 $3,354
Vice President of 1999 142,250 51,500 -- 40,000 804
Finance and Chief 1998 104,291 26,875 -- 20,000 795
Financial Officer
William J. Sweeney 2000 $ 147,846 $ -- -- 15,000 $3,015
Vice President of Sales 1999 127,115 31,800 -- 10,000 750
And Marketing 1998 97,007 18,800 -- 20,000 750
Wayne K. Chrystal (4) 2000 $ 114,231 $ -- -- 10,000 $1,725
Vice President of 1999 16,154 4,290 -- 30,000 --
Operations
</TABLE>
----------
(1) Rehabilicare did not award any restricted stock or make any long-term
incentive payments to executives.
(2) Represents the number of shares of Rehabilicare common stock that can be
purchased upon the exercise of stock options granted during the year.
(3) Represents Company contributions to a 401(k) plan.
(4) Mr. Chrystal began employment with the Company in 1999.
Page 6
<PAGE> 8
STOCK OPTIONS
The following table provides information regarding options to purchase
Rehabilicare Common Stock granted to the named executive officers pursuant to
the 1998 Stock Incentive Plan during 2000.
OPTION GRANTS IN FISCAL 2000
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Number of Percent of Rates of Stock Price
Securities Total Options Appreciation for Option
Underlying Granted To Term (1)
Options Employees in Exercise Expiration ------------------------
Name Granted Fiscal 2000 Price ($/Share) Date 5% ($) 10% ($)
-------------- ---------- ------------- --------------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Mr. Kaysen 30,000 24.5% $3.50 8/24/06 $29,010 $64,104
Mr. Winchell 20,000 16.3% $3.50 8/24/06 19,340 42,736
Mr. Sweeney 15,000 12.2% $3.50 8/24/06 14,505 32,052
Mr. Chrystal 10,000 8.2% $3.50 8/24/06 9,670 21,368
</TABLE>
(1) These amounts represent the realizable value of the subject options from
the date of grant until termination, without discounting to present value,
assuming appreciation in the market value of the Common Stock from the
market price on the date of grant at the rates indicated. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the Common Stock and overall stock market conditions. The amounts reflected
in this table may not necessarily be achieved.
Page 7
<PAGE> 9
The following table provides information with respect to stock options
exercised during the year and held at the end of fiscal 2000 by the named
executive officers.
OPTION EXERCISES IN FISCAL 2000 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options In-the-Money Options
Acquired At End of Fiscal 2000 At End of Fiscal 2000 (2)
On Value ---------------------------- ----------------------------
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---------------- -------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Kaysen 9,000 $14,625 40,750 59,250 $ 3,516 $ 10,547
Mr. Winchell -- -- 35,000 60,000 1,406 4,219
Mr. Sweeney -- -- 51,500 33,500 1,406 4,219
Mr. Chrystal -- -- 7,500 32,500 -- --
</TABLE>
-------------------------
(1) Represents the difference between fair market value at date of exercise and
the exercise price.
(2) Represents the difference between $2.8125 (the last sales price at June 30,
2000) and the exercise price multiplied by the number of shares.
SEVERANCE AGREEMENTS
The Company has entered into Severance Pay Agreements with Mr. Kaysen, Mr.
Winchell, Mr. Sweeney and Mr. Chrystal which provide for certain payments in the
event of a change in control of the Company and the subsequent termination of
the executive by the Company without cause or voluntarily by the executive for
good reason, all as defined in the agreements. The terms of the agreement are
two years and are renewed automatically at the end of the terms. The payments to
be made in such event would be (i) the base salary earned and unpaid through the
date of termination; (ii) any earned and unpaid bonus with respect to the fiscal
year preceding the termination; (iii) a pro rata portion of any bonus that would
have been earned in the current fiscal year based on annualizing the Company's
financial and business performance through the date of termination; (iv) any
accrued vacation not taken; and (v) an amount equal to two times Mr. Kaysen's,
one and one-half times Mr. Winchell's and one times Mr. Sweeney's and Mr.
Chrystal's average annualized cash compensation for the most recent five taxable
years ending before the date of change in control, or such portion of such
period during which such executive performed services for the Company. The
agreements provide that no amounts be paid which would constitute "excess
parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986 as amended, or any successor provision or regulations promulgated
thereunder.
Effective July 1, 1999, Mr. Robert C. Wingrove resigned his full-time
employment as Chief Technical Officer and entered into a part-time consulting
agreement effective through June 30, 2001. His compensation pursuant to that
agreement was $85,000 for the fiscal year ended June 30, 2000, plus full
employee benefits. Compensation for the remaining term is $68,000.
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.
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 is evidenced by a promissory note secured by 83,067 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 $83,067 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. The
remaining principal balance of $210,417 is payable in installments of $21,000
each on December 31, 2000 and 2001 and the balance, including accrued interest,
on December 31, 2002.
Page 8
<PAGE> 10
PERFORMANCE GRAPH
The Company's common stock is quoted on The Nasdaq National Market. The
following graph shows changes during the period from June 30, 1996 to June 30,
2000 in the value of $100 invested in: (1) the Nasdaq National Market Index
(US); (2) Nasdaq Healthcare Stocks Index and (3) the Company's common stock. The
values of each investment as of the dates indicated are based on share prices
plus any dividends paid in cash, with the dividends reinvested on the date they
were paid. The calculations exclude trading commissions and taxes.
REHABILICARE
STOCK PERFORMANCE CHART DATA
<TABLE>
<CAPTION>
Nasdaq Healthcare Rehabilicare
Date Nasdaq NMS Stocks Inc.
----------------- ----------------- ------------------- -----------------
<S> <C> <C> <C>
6/30/96 $100.00 $100.00 $100.00
6/30/97 $121.62 $92.41 $87.50
6/30/98 $160.12 $90.02 $67.20
6/30/99 $230.56 $85.51 $82.83
6/30/00 $340.60 $66.60 $70.33
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 20, 2000, 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 five
percent 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 9.2%
5111 Rogers Avenue, Suite 40A
Ft. Smith, Arkansas 72919
Robert C. Wingrove 200,503 1.9%
David B. Kaysen 125,711 1.2%
W. Bayne Gibson 67,336 *
William J. Sweeney 64,615 *
W. Glen Winchell 55,577 *
Frederick H. Ayers 41,051 *
John H.P. Maley 29,375 *
Wayne K. Chrystal 18,423 *
Richard E. Jahnke 14,375 *
All Directors and Officers 616,966 5.6%
as a group (9 persons)
</TABLE>
---------------
* Less than 1%
Page 9
<PAGE> 11
(1) Includes shares which could be purchased within 60 days upon exercise of
the following options: Mr. Wingrove, 16,000 shares; Mr. Kaysen, 42,500
shares; Mr. Gibson, 4,375 shares; Mr. Sweeney, 61,750 shares; Mr. Winchell,
35,500 shares; Mr. Ayers, 4,375 shares; Mr. Maley, 14,375 shares; Mr.
Chrystal, 10,000 shares; Mr. Jahnke, 14,375 shares; and all directors and
officers as a group, 203,250 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under federal securities laws, the Company's directors and officers, and
any beneficial owner of more than 10% of a class of equity securities of the
Company, are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Securities and Exchange
Commission (the "Commission") and the securities exchange on which the equity
securities are registered. Specific due dates for these reports have been
established by the Commission and the Company is required to disclose in this
Proxy Statement any delinquent filing of such reports and any failure to file
such reports during the fiscal year ended June 30, 2000.
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, 2000 except that Mr. Chrystal failed to timely
file his report of additional shares purchased and Mr. Kaysen filed late his
report of exercising a stock option.
SHAREHOLDERS PROPOSALS FOR 2001 ANNUAL MEETING
Any shareholder wishing to include a proposal in the Company's proxy
solicitation materials for its next annual meeting of shareholders must submit
such proposal for consideration in writing to the Secretary of the Company at
its principal executive offices, 1811 Old Highway 8, New Brighton, Minnesota
55112, no later than June 30, 2001.
Pursuant to the Company's Bylaws, in order for business to be properly
brought before the next annual meeting by a shareholder, or in order for a
nominee for director to be considered at such annual meeting, the shareholder
must give written notice of such shareholder's intent to bring a matter before
the annual meeting, or nominate the director, no later than July 9, 2001. Each
such notice must set forth certain information with respect to the shareholder
who intends to bring such matter before the meeting and the business desired to
be conducted, as set forth in greater detail in the Company's Bylaws.
Management will use discretionary authority to vote against any shareholder
proposal, or director nominee not made by management, presented at the next
annual meeting if: (i) such proposal or nominee has been properly omitted from
the Company's proxy materials under federal securities laws; (ii) notice of such
proposal or nominee was not submitted to the Secretary of the Company at the
address listed above by July 9, 2001; or (iii) the proponent has not solicited
proxies in compliance with federal securities laws from the holders of at least
the percentage of the Company's voting shares required to carry the proposal or
elect the nominee.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
On March 16, 2000 PricewaterhouseCoopers LLP resigned as the Company's
independent public accountant and, effective April 19, 2000, the Company engaged
Ernst & Young LLP as its new independent public accountants. There were no
disagreements with the former accountants on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure in
connection with the audits of the Company's two most recent fiscal years or any
subsequent interim period preceding the resignation of PricewaterhouseCoopers
LLP, which disagreements, if not resolved to the satisfaction of the former
accountants, would have caused them to make reference to the subject matter of
the disagreements in connection with their reports on the financial statements
for such years. None of the principal accountants' reports on the financial
statements for the two years preceding such dismissal contained an adverse
opinion or a disclaimer of opinion or were qualified or modified as to
uncertainty, audit scope or accounting principles.
Page 10
<PAGE> 12
The Company has selected Ernst & Young LLP as its independent public
accountants for the year ending June 30, 2001. Representatives of Ernst & Young
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.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas Martin
Secretary
Dated: November 6, 2000
Page 11
<PAGE> 13
REHABILICARE INC.
Proxy for the December 12, 2000 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 12, 2000, 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:
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1. ELECTION OF DIRECTORS: [ ] FOR all nominees (except [ ] WITHHOLD AUTHORITY
as marked to the contrary below) to vote for all nominees
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 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.)
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.
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: , 2000
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Signature
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY.
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