<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or 14a-12
CARDIODYNAMICS INTERNATIONAL CORPORATION
(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>
CARDIODYNAMICS INTERNATIONAL CORPORATION
6175 Nancy Ridge Drive, Suite 300
San Diego, CA 92121
June 16, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
CardioDynamics International Corporation which will be held at the Del Mar
Country Club, 6001 Clubhouse Drive, Rancho Santa Fe, California on Thursday,
July 27, 2000 at 9:00 a.m. (PDT).
Additional details relating to the business to be conducted at the Annual
Meeting are given in the attached Notice of Annual Meeting of Shareholders and
Proxy Statement.
In order for us to have an efficient meeting, please promptly sign, date and
return the enclosed proxy in the accompanying reply envelope. If you are able to
attend the Annual Meeting and wish to change your proxy vote, you may do so
simply by voting in person at the Annual Meeting.
We look forward to seeing you at the Annual Meeting.
On behalf of the Board of Directors,
/s/ Michael K. Perry
------------------------------------
Michael K. Perry
Chief Executive Officer
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested to
complete, sign and date the enclosed proxy as promptly as possible and return it
in the enclosed envelope. No postage need be affixed if mailed in the United
States.
--------------------------------------------------------------------------------
<PAGE>
CARDIODYNAMICS INTERNATIONAL CORPORATION
6175 Nancy Ridge Drive, Suite 300
San Diego, CA 92121
Notice of Annual Meeting of Shareholders
To be held July 27, 2000
The Annual Meeting of Shareholders of CardioDynamics International Corporation,
a California corporation ("CardioDynamics"), will be held at the Del Mar Country
Club, 6001 Clubhouse Drive, Rancho Santa Fe, California 92067, on Thursday, July
27, 2000 at 9:00 a.m.(PDT), to consider and act upon the following matters:
1. To elect a Board of Directors for the following year. Management has
nominated the following persons for election at the meeting: Connie R.
Curran, Cam L. Garner, James C. Gilstrap, Richard O. Martin, Allen E.
Paulson and Michael K. Perry;
2. To approve an amendment to the Company's Restated Articles of Incorporation
to increase the number of authorized shares of Common Stock from 50,000,000
to 100,000,000;
3. To ratify the selection of KPMG LLP as our independent accountants for the
fiscal year ending November 30, 2000;
4. To transact any other business which may properly come before the meeting
or any postponement(s) or adjournment(s) thereof. We have no information of
any such other matters.
Shareholders of record at the close of business on June 16, 2000 will be
entitled to vote at the Annual Meeting. A list of shareholders entitled to vote
at the Annual Meeting is available for inspection at our offices. Whether or not
you plan to attend the meeting in person, please sign, date and return the
enclosed proxy in the reply envelope provided. If you attend the Annual Meeting
and vote by ballot, your proxy will be revoked automatically and only your vote
at the meeting will be counted. The prompt return of your proxy will assist us
in preparing for the Annual Meeting.
By Order of the Board of Directors,
/s/ Michael K. Perry
-----------------------------------
Dated: June 16, 2000 Michael K. Perry
Chief Executive Officer
<PAGE>
CARDIODYNAMICS INTERNATIONAL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held July 27, 2000
These proxy materials are being mailed in connection with the solicitation of
proxies by the Board of Directors of CardioDynamics International Corporation, a
California corporation ("CardioDynamics"), for the Annual Meeting of
Shareholders to be held at the Del Mar Country Club, 6001 Clubhouse Drive,
Rancho Santa Fe, California at 9:00 a.m. on July 27, 2000 and at any adjournment
or postponement of the Annual Meeting. These proxy materials were first mailed
to shareholders of record beginning on approximately June 23, 2000.
The address of our principal executive office is 6175 Nancy Ridge Drive, Suite
300, San Diego, California 92121.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual Meeting are
summarized in the accompanying Notice of Annual Meeting of Shareholders. Each
proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION
Any shareholder executing a proxy has the power to revoke it at any time before
it is voted by delivering written notice of such revocation to our Corporate
Secretary before the Annual Meeting or by properly executing and delivering a
proxy bearing a later date. You may also revoke your proxy at the Annual Meeting
by voting your shares in person. We will pay for the cost of soliciting proxies
and may reimburse brokerage firms and others for their expense in forwarding
solicitation material. Solicitation will be made primarily through the use of
the mail but regular employees of the Company may, without additional
compensation, solicit proxies personally by telephone.
The record date for determining those shareholders who are entitled to notice
of, and to vote at, the Annual Meeting is June 16, 2000. At the close of
business on the record date, we had 42,203,193 outstanding shares of common
stock (the "Common Stock"). Each share of Common Stock is entitled to one vote
on matters brought before the Annual Meeting. In voting for Directors, each
shareholder has the right to cumulate his or her votes and give one nominee a
number of votes equal to the number of Directors to be elected, multiplied by
the number of shares he or she holds, or to distribute his or her votes on the
same principle among the nominees to be elected in such manner as he or she may
see fit. For example, a shareholder owing 10 shares of Common Stock would have
60 votes (six Directors multiplied by 10 shares) to allocate among as few as
one, or as many as six candidates. A shareholder may cumulate his or her votes,
however, only if his or her candidate or candidates have been placed in
nomination prior to the voting and if any shareholder gives notice at the Annual
Meeting prior to the voting of that shareholder's intention to cumulate his or
her votes. The shares represented by the proxy will be voted at the Annual
Meeting by the proxy holder as specified by the person solicited. Discretionary
authority to cumulate votes is, however, being solicited by the Board of
Directors.
1
<PAGE>
California statutes and case law do not give specific instructions regarding the
treatment of abstentions and broker non-votes for corporations such as ours on
matters which require the affirmative vote of a majority of the shares
represented and voting at the Annual Meeting; however, we believe that
California law provides that if shares are represented and vote on any issue at
the Annual Meeting their failure to vote yes on any other issue (through either
abstention or a broker non-vote) has the same effect as a negative vote on that
other issue and we will treat such abstentions or broker non-votes accordingly.
On matters which require the affirmative vote of a majority of the outstanding
shares, abstentions and broker non-votes have the same effect as a negative
vote.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of six members. The six
individuals below have been nominated for election to our Board and will serve
until the next annual meeting or until their successors are elected and
qualified. Unless you specify otherwise, your proxy will be voted for the
election of the nominees of the Board of Directors who are listed below and
distributed among the nominees as the proxy holders see fit.
If, however, any of the nominees are unable to serve, or for good cause decline
to serve at the time of the Annual Meeting, the proxy holders will exercise
discretionary authority to vote for substitutes. The Board of Directors is not
aware of any circumstances that would render any nominee unavailable for
election. Discretionary authority to cumulate votes is being solicited by the
Board of Directors, and it is intended that the proxies received by the proxy
holders pursuant to the solicitation will be voted in a manner designed to cause
the election of the maximum number of the Board of Directors' nominees. The
following schedule sets forth certain information concerning the nominees for
election as Directors.
The Company's Board of Directors recommends a vote FOR the nominees listed
---
herein.
<TABLE>
<CAPTION>
First Year
Elected
Name Director Age
---------- ---
<S> <C> <C>
Connie R. Curran 2000 52
Cam L. Garner 1997 52
James C. Gilstrap 1995 64
Richard O. Martin, Ph.D. 1997 60
Allen E. Paulson 1995 78
Michael K. Perry 1998 39
----------------------------------------------------------
</TABLE>
2
<PAGE>
Connie R. Curran, Ed.D., RN became a director in February 2000. Dr. Curran has
been president and chief executive officer of CurranCare since 1995, has held a
variety of executive positions in academia and multi-system healthcare
operations and serves as vice president of the American Hospital Association,
national director of patient care for APM, Inc. and a director for Allegiance
Corporation and Finova Group. Dr. Curran holds a master's degree in medical-
surgical nursing from De Paul University and a doctorate in educational
psychology from Northern Illinois University.
Cam L. Garner has served as a director since July 1997 and provides us with
consulting services for $25,000 per year. Mr. Garner has been chairman,
president and chief executive officer of Dura Pharmaceuticals, Inc. since 1990
and prior to that was senior vice president of sales and marketing with
Hybritech, Inc., a division of Eli Lilly & Co. Mr. Garner serves as a director
for Trega Biosciences, Inc., Nanogen, Inc., Safeskin Corporation, Spiros
Development Corporation, DJ Pharma and Dura Pharmaceuticals. Mr. Garner earned a
bachelor's degree in biology from Virginia Wesleyan and a master's degree in
business administration from Baldwin-Wallace College.
James C. Gilstrap served as the chairman of our board of directors from May 1995
to June 1996 and has been co-chairman of the board since June 1996. Mr. Gilstrap
is retired from Jefferies & Company, where he served as senior executive vice
president, partner and a member of the executive committee. Mr. Gilstrap is past
president of the Dallas Securities Dealers, as well as a past member of the
board of governors of the National Association of Securities Dealers, Inc.
Richard O. Martin, Ph.D. has served as a director since July 1997. Dr. Martin is
president of Medtronic-Physio-Control Corporation, a medical device company that
designs, manufactures and sells external defibrillators and heart monitors.
Until Medtronic's acquisition in 1998 of Physio-Control Corporation, Dr. Martin
was chairman and chief executive officer. He was vice president of
cardiovascular business development with Sulzer Medica and has held management
positions at Intermedics, Inc. and Medtronic, Inc. Dr. Martin serves on the
boards of directors of Maxxim Medical, Inc. and Encore Medical. Dr. Martin
earned a bachelor's degree in electrical engineering from Christian Brothers
College, a master's degree in electrical engineering from Notre Dame University
and a doctorate in electrical/biomedical engineering from Duke University.
Allen E. Paulson has been co-chairman of our board of directors since June 1996
and a director since February 1995. Mr. Paulson owns numerous companies having
substantial investments in diverse industries, including aerospace, energy
exploration and real estate. Mr. Paulson is the founder and chairman emeritus of
Gulfstream Aerospace Corporation, a leading designer, manufacturer and marketer
of large corporate aircraft. He has earned numerous awards, including the
Horatio Alger Award for Distinguished Americans, as well as five honorary
doctorates.
Michael K. Perry has been our chief executive officer and a director since April
1998. From 1994 to 1997, Mr. Perry was vice president of operations at Pyxis
Corporation, a leading provider of healthcare automation, information management
services and pharmacy management services to hospitals and outpatient
facilities. Pyxis was sold to Cardinal Health, Inc. in 1996. Prior to joining
Pyxis, Mr. Perry served in management with the medical products group of Hewlett
Packard Company. Additionally, he was director of quality for a division of
Hewlett-Packard's deskjet printer group. Mr. Perry holds a bachelor's degree in
mechanical engineering from General Motors Institute and a master's degree in
business administration from Harvard University. Mr. Perry serves on the
advisory board of the University of California San Diego Cardiovascular Center.
3
<PAGE>
Board Meetings and Committees
The Company's Board of Directors held five meetings during the fiscal year ended
November 30, 1999. Each incumbent Director attended at least 75% of the
aggregate of the total meetings of the Board and of all his Board committees
held during the period in which he served as a Director, except Cam Garner who
participated in 40% of the meetings of the Board.
The Board of Directors has established a standing Compensation Committee
currently composed of Messrs. Garner, Martin and Gilstrap. The Compensation
Committee reviews and acts on matters relating to compensation levels and
benefit plans for executive officers and key employees of the Company. The
Committee held three meetings during the fiscal year ended November 30, 1999.
The Board of Directors has established a standing Audit Committee currently
composed of Messrs. Gilstrap, Garner and Dr. Curran. The Audit Committee reviews
all matters relating to oversight of the Company's internal control structure,
selection of the independent auditors and oversight of the Company's financial
reporting. The committee held two meetings during the fiscal year ended November
30, 1999. In June of 2000, the Board of Directors adopted a written charter for
the Audit Committee. A copy of the Audit Committee Charter is attached as
Exhibit A to this Proxy Statement.
The Board of Directors has also established a standing Nominating Committee
currently composed of Messrs. Gilstrap, Garner and Perry. The Nominating
Committee reviews matters pertaining to Board Composition and screens and
recommends to the Board potential candidates for election as a Director.
Directors' Fees
Each Director who has not been an employee of CardioDynamics in the preceding
two years receives 1,000 automatic monthly stock options granted at fair market
value (or, in the case of 10% shareholders, at 110% of fair market value) on the
last day of the month for each full month of service as a Director of the
Company, pursuant to the 1995 Stock Option/Stock Issuance Plan. Mr. Paulson was
a 10% shareholder for the entire period, and Mr. Gilstrap was a 10% shareholder
until January 31, 2000. On August 1, 1997, Cam L. Garner, a Director of the
Company, entered into a consulting agreement with us whereby Mr. Garner is paid
a monthly fee of $2,083.33 and received a one-time grant of 5,000 stock options
to purchase our Common Stock in exchange for consulting services. Total fees
paid to Mr. Garner in fiscal 1999 were $25,000. Mr. Martin received a one-time
grant of 10,000 stock options to purchase our Common Stock. The options vest in
equal thirds on August 20, 1998, 1999 and 2000.
4
<PAGE>
PROPOSAL 2
AMENDMENT OF RESTATED ARTICLES OF INCORPORATION
(Common Stock)
The Company's Board of Directors has approved and recommends that at the annual
meeting shareholders approve an amendment (the "Amendment") to the Company's
Restated Articles of Incorporation, as heretofore amended, to increase the
number of authorized shares of Common Stock of the Company from 50,000,000 to
100,000,000 shares. No change is being proposed to the authorized number of
shares of Preferred Stock. After such amendment, the Company's authorized
capital stock would consist of 100,000,000 shares of Common Stock and 18,000,000
shares of Preferred Stock.
INFORMATION ABOUT OUTSTANDING AND RESERVED SHARES
The authorized capital stock of the Company currently consists of 50,000,000
shares of Common Stock, no par value, of which 42,203,193 where issued and
outstanding as of June 16, 2000. In addition approximately 7,375,923 shares are
reserved for issuance under outstanding stock options and warrants. There are
currently 18,000,000 shares of Preferred Stock, no par value authorized,
although no shares are issued or outstanding as of June 16, 2000. Accordingly,
as of June 16, 2000, the Company has available for issuance approximately
420,884 shares of Common Stock and 18,000,000 shares of Preferred Stock.
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION
Under the proposal, Article Three of the Restated Articles of Incorporation
would be amended to read:
"ARTICLE THREE: The corporation is authorized to issue two classes of
stock, to be designated, respectively, "Common Stock" and "Preferred
Stock". The total number of shares which the corporation is authorized to
issue is 118,000,000 shares. 100,000,000 shares shall be Common Stock and
18,000,000 shares shall be Preferred Stock.
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, rights
and terms of redemption (including sinking fund provisions), redemption
price or prices, and the liquidation preferences of any wholly unissued
series of Preferred Stock, and the number of shares constituting any such
series and the designation thereof, or any of them; and to increase or
decrease the number of shares of any series subsequent to the issuance of
shares of that series, but not below the number of shares of such series
then outstanding. In case the number of shares of any series shall be so
decreased, the shares constituting such decrease shall resume the status
that they had prior to the adoption of the resolution originally fixing the
number of shares of such series."
5
<PAGE>
PLANS FOR ADDITIONAL SHARES
The Board of Directors believe that the proposed increase in the number of
shares authorized but unissued is desirable to enhance the Company's flexibility
to issue Common Stock for proper corporate purposes which may be identified in
the future such as to raise equity capital, to make acquisitions through use of
stock, or to establish strategic relationships with other companies. Having the
additional shares authorized and available for issuance will allow the Company
to consider potential future actions without the possible expenses or delay of a
special meeting of the shareholders, unless required by applicable law or the
rules of any stock exchange or national securities association trading system on
which the Common Stock is then listed or quoted. The Board of Directors will
determine whether, when and on what terms the issuance of additional shares of
common stock may be appropriate in connection with any foregoing purposes and to
be in the best interest of the Company and its shareholders. The Company
currently has no plans, agreements or understandings for the issuance or use of
the additional shares of common stock proposed by the amendment to the Articles
of Incorporation.
IMPACT OF THE "AMENDMENT"
The proposed additional 50,000,000 common shares will be part of the current
class of common shares and will have the same rights as the common shares that
are currently issued and outstanding. Shareholders have no preemptive right to
purchase additional shares from us. This means shareholders have no right to
purchase additional shares to maintain their proportionate ownership in our
company. The issuance of additional shares of common stock may, among other
things have a dilutive effect on earnings per share, voting power and share
holdings of current stockholders. The issuance of additional shares, or the
perception that additional shares may be issued may also adversely affect the
market price of the common stock.
The availability for issuance of additional shares of common stock could also
under certain circumstances have an anti-takeover effect. For example, the
issuance of additional shares of common stock in a public or private sale,
merger or other similar transaction would increase the number of shares
outstanding, thereby diluting the voting power of the outstanding shares and
potentially increasing the cost to acquire control of the Company.
EFFECTIVE DATE
Approval of this Proposal 2 requires the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
Meeting. If approved by the shareholders, the amendment to the Restated Articles
of Incorporation will become effective upon filing with the Secretary of the
State of California, a Certificate of Amendment to the Company's Restated
Articles of Incorporation, which filing is expected to take place shortly after
the Meeting.
The Board of Directors recommends a vote FOR the amendment to the Company's
----
Restated Articles of Incorporation to increase the number of authorized shares
of Common Stock from 50,000,000 to 100,000,000.
6
<PAGE>
PROPOSAL 3
RATIFICATION OF
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors selected KPMG LLP, independent auditors, to audit our
financial statements for the fiscal year ending November 30, 2000 and recommends
that the shareholders vote for ratification of the Company's selection. Not
withstanding the selection, the Board of Directors, in its discretion, may
direct the appointment of new independent auditors at any time during the year
if the Board feels that such a change is in the best interest of the Company and
its shareholders.
KPMG LLP have been our auditors since 1997 providing both auditing, and services
related to filings with the Securities and Exchange Commission. Our audited
financial statements for the fiscal years ended November 30, 1996 through 1999
did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
In the event that a majority of the shares voted at the Annual Meeting do not
vote for ratification of the selection of KPMG LLP, the Board of Directors will
reconsider such selection.
A representative of KPMG LLP is expected to be present at the Annual Meeting and
will have an opportunity to make a statement if he or she desires to do so, and
is expected to be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the selection
----
of KPMG LLP as our independent accountants for fiscal 2000.
7
<PAGE>
PRINCIPAL SHAREHOLDERS
The following are the only persons known by us to own beneficially, as of May
31, 2000 five percent (5%) or more of the outstanding shares of our common
stock. Except as indicated in the footnotes to this table, we believe that the
persons named in the table have sole voting and investment power with respect to
all the shares of common stock shown as beneficially owned by them, subject to
community property laws, where applicable. Share ownership in each case includes
shares issuable upon exercise of options exercisable within 60 days after May
31, 2000. The percentage ownership is calculated pursuant to Rule 13d-3(d)(1)
promulgated by the SEC under the Securities Act of 1933.
<TABLE>
<CAPTION>
Name and Address of Shares Beneficially Owned
-------------------------
Beneficial Owner Number (1) Percentage (2)
---------------- ----------- --------------
<S> <C> <C>
Allen E. Paulson (1) 10,568,907 25.0%
P.O. Box 9660
Rancho Santa Fe, CA 92067
Domain Partners LP 4,350,000 10.3%
One Palmer Square
Princeton, NJ 08542
James C. Gilstrap (2) 3,363,418 8.0%
5067 Shore Drive
Carlsbad, CA 92008
Societe Generale Veritas 3,000,000 7.1%
4 New York Plaza
New York, NY 10004
Edge Financial Group, Inc. (3) 2,214,059 5.1%
16225 Park Ten Place, Suite 380
Houston, TX 77084
Joe C. Richardson, Jr. (4) 2,194,538 5.1%
P.O. Box 8246
Amarillo, TX 79114
</TABLE>
____________________
1) Includes 103,764 shares of common stock beneficially owned by CDH, of which
Mr. Paulson is a member with a majority interest, and over which CDH
exercises sole voting and investment power. Mr. Paulson disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest in CDH. Includes 9,088,734 shares held in the Allen E Paulson
Living Trust dated December 23, 1986 and shares that may be acquired
pursuant to stock options exercisable currently or within 60 days from May
31, 2000. Excludes 3,000,000 shares of common stock owned by Mr. Paulson's
sons; Mr. Paulson disclaims beneficial ownership of such shares.
8
<PAGE>
2) Includes 103,764 shares of common stock beneficially owned by CDH, of which
Mr. Gilstrap is a member with a minority interest and over which CDH
exercises sole voting and investment power. Mr. Gilstrap disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest in CDH. Includes 3,195,654 shares held in the Jim and Sue Gilstrap
Family Limited Partnership. Mr. Gilstrap disclaims beneficial ownership of
these shares except to the extent of his and his wife's ownership interest
in the Jim and Sue Gilstrap Family Limited Partnership. Also includes
shares that may be acquired pursuant to stock options exercisable currently
or within 60 days from May 31, 2000.
3) Includes 1,209,049 shares of common stock beneficially owned by Medical
Assets, LLC, of which Edge Financial Group, Inc. is a member. Edge
Financial Group, Inc. disclaims beneficial ownership of these shares except
to the extent of its pecuniary interest in Medical Assets, LLC. See
footnote (4).
4) Includes 1,209,049 shares of common stock beneficially owned by Medical
Assets, LLC, of which Mr. Richardson is a member. Mr. Richardson disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest in Medical Assets, LLC. Also includes 25,109 shares held by Vital
Energy, Inc of which Mr. Richardson is chief executive officer and majority
shareholder. See footnote (3).
9
<PAGE>
SECURITY OWNERSHIP MANAGEMENT
The following table sets forth the beneficial ownership of common stock of
CardioDynamics as of May 31, 2000 by each Director and each officer of
CardioDynamics named in the Summary Compensation Table, and by all Directors and
executive officers of our Company as a group. Each such person has a business
address, care of CardioDynamics. Except as indicated in the footnotes to this
table, we believe that the persons named in the table have sole voting and
investment power with respect to all the shares of common stock shown as
beneficially owned by them, subject to community property laws, where
applicable. Share ownership in each case includes shares issuable upon exercise
of options exercisable within 60 days after May 31, 2000. The percentage
ownership is calculated pursuant to Rule 13d-3(d)(1) promulgated by the SEC
under the Securities Act of 1933.
<TABLE>
<CAPTION>
Name and Address of Shares Beneficially Owned
-------------------------
Beneficial Owner Number (1) Percent (2)
---------------- ----------- ----------
<S> <C> <C>
Russell H. Bergen (1) 44,373 *
Connie R. Curran, Ed.D., RN(1) 6,000 *
Cam L. Garner (1) 102,000 *
James C. Gilstrap (2) 3,363,418 8.0%
Stephen P. Loomis (1) 41,248 *
Richard O. Martin, Ph.D. (1) 90,667 *
Allen E. Paulson (3) 10,568,907 25.0%
Michael K. Perry (1) 250,623 *
Rhonda F. Rhyne (1) 301,873 *
Richard E. Trayler (1) 155,788 *
All Directors and executive
officers as a group - (10 persons) (1) 14,893,633 34.6%
</TABLE>
____________________
*Less than 1%
(1) Includes shares that may be acquired pursuant to stock options exercisable
currently or within 60 days after May 31, 2000.
(2) Includes 103,764 shares of common stock beneficially owned by CDH, of which
Mr. Paulson is a member with a majority interest, and over which CDH
exercises sole voting and investment power. Mr. Paulson disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest in CDH. Includes 9,088,734 shares held in the Allen E Paulson
Living Trust dated December 23, 1986 and shares that may be acquired
pursuant to stock options exercisable currently or within 60 days from May
31, 2000. Excludes 3,000,000 shares of common stock owned by Mr. Paulson's
sons; Mr. Paulson disclaims beneficial ownership of such shares.
(3) Includes 103,764 shares of common stock beneficially owned by CDH, of which
Mr. Gilstrap is a member with a minority interest and over which CDH
exercises sole voting and investment power. Mr. Gilstrap disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest in CDH. Includes 3,195,654 shares held in the Jim and Sue Gilstrap
Family Limited Partnership. Mr. Gilstrap disclaims beneficial ownership
of these shares except to the extent of his and his wife's ownership
interest in the Jim and Sue Gilstrap Family Limited Partnership. Also
includes shares that may be acquired pursuant to stock options exercisable
currently or within 60 days from May 31, 2000.
10
<PAGE>
EXECUTIVE OFFICERS
The Company's executive officers and their ages as of May 31, 2000 are as
follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Allen E. Paulson 78 Co-Chairman of the Board of Directors
James C. Gilstrap 64 Co-Chairman of the Board of Directors
Michael K. Perry 39 Chief Executive Officer
Rhonda F. Rhyne 39 President
Stephen P. Loomis 40 Chief Financial Officer
Richard E. Trayler 50 Chief Operating Officer
Dennis G. Hepp 51 Chief Technology Officer
Russell H. Bergen 53 Vice President of Operations
</TABLE>
Business Experience of Executive Officers
Allen E. Paulson. See description under "Election of Directors."
James C. Gilstrap. See description under "Election of Directors."
Michael K. Perry. See description under "Election of Directors."
Rhonda F. Rhyne has been our president since June 1997, previously serving as
chief operating officer from 1996 to 1997 and as vice president of operations
from 1995 to 1996. From 1992 until 1995, Ms. Rhyne was president, chief
executive officer and vice president of sales and marketing of Culture
Technology, Inc. Ms. Rhyne has also held positions at GE Medical Systems and
Quinton Instrument Company, both medical device subsidiaries of publicly held
companies. Ms. Rhyne holds a bachelor's degree in pharmacy from Washington State
University and a master's degree in business administration, executive program,
from University of California Los Angeles, Anderson School of Business.
Stephen P. Loomis joined us in September 1996 as vice president of finance and
has held the positions of chief financial officer and corporate secretary since
April 1997. From 1993 until 1996, he served as director of financial reporting
at Kinko's Inc. From 1988 to 1993, Mr. Loomis was chief financial officer for
Terminal Data Corporation, a publicly traded company. He earned his bachelor's
degree in business administration from California State University at
Northridge. Mr. Loomis is a certified public accountant.
Richard E. Trayler has served as our chief operating officer since July 1997.
From 1982 to 1997, Mr. Trayler held the positions of regional and divisional
sales manager at Quinton Instrument Company. He has also held positions at the
Heart Institute for CARE, the University of Washington and the Boeing Company.
Mr. Trayler earned a bachelor's degree from Texas A&M University and a master's
degree from the University of Washington.
11
<PAGE>
Dennis G. Hepp has been our chief technology officer since June 1997 and has
served as a consultant to us since July 1995. From 1974 to 1986, Mr. Hepp held
engineering and management positions at Medtronic, Inc. In 1989, Mr. Hepp
founded, and remains a key employee and managing director of, Rivertek Medical
Systems, Inc., an engineering consulting firm to medical device manufacturers.
Mr. Hepp holds a bachelor's degree in electrical engineering from the University
of Detroit.
Russell H. Bergen has served as our vice president of operations since September
1998. From 1971 to 1998, Mr. Bergen held management positions in the instrument
group, peripheral products group and inkjet business unit of Hewlett Packard
Company. Previously, Mr. Bergen was employed at Honeywell, Inc. as a procurement
engineer. Mr. Bergen earned a bachelor's degree in aerospace engineering and
manpower management from the University of Colorado at Boulder.
12
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table provides information regarding the annual and long-term
compensation earned for services rendered in all capacities to CardioDynamics
for the fiscal years ended November 30, 1997, 1998 and 1999 of those persons who
were, at November 30, 1999 (i) the Chief Executive Officer and (ii) the other
executive officers of CardioDynamics whose aggregate direct remuneration from
CardioDynamics during the fiscal year ended November 30, 1999 exceeded $100,000
(collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Awards
------
Annual Compensation/(1)/ Securities
------------------------
Other Underlying
Name and Annual Options/
Principal Position Year Salary($) Bonus($) Compensation($) SARs (#)
------------------ ---- --------- -------- --------------- --------
<S> <C> <C> <C> <C> <C>
Michael K. Perry 1999 $ 91,450 $216,170/(3)/ $ -0- 45,000
Chief Executive 1998 1/(4)/ 750 4,000/(2)/ 1,295,000
Officer 1997 n/a n/a n/a n/a
Rhonda F. Rhyne 1999 148,020 11,045 17,000/(5)/ 40,000
President 1998 127,833 751 18,000/(5)/ 250,000
1997 111,308 17,228 15,000/(5)/ 75,000
Stephen P. Loomis 1999 137,543 8,520 -0- 30,000
Chief Financial 1998 116,583 1,663 -0- 120,000/(6)/
Officer (7) 1997 103,416 22,849 -0- 70,000/(7)/
Richard E. Trayler 1999 129,584 8,745 -0- 35,000
Chief Operating 1998 123,750 1,502 -0- 80,000/(6)/
Officer 1997 60,000/(8)/ -0- -0- 100,000/(7)/
Russell H. Bergen 1999 120,000 5,800 -0- -0-
Vice President of 1998 25,923/(9)/ -0- -0- 75,000
Operations 1997 n/a n/a n/a n/a
</TABLE>
__________________
(1) Employee benefits provided to each of the Named Officers under various
Company programs do not exceed the disclosure thresholds established under
the SEC rules and are therefore not included.
(2) Amount represents Company paid allowance for automobile expenses.
(3) Bonus amount paid in 1999 includes $205,000 pursuant to Mr. Perry's
employment agreement dated March 23, 1998, under which Mr. Perry was paid a
salary of $1.00 for the initial 14 months of his employment. In exchange,
he was eligible to receive a performance bonus based on achieving a 100%
increase in sales during the 12-month period ending May 31, 1999, over the
previous 12-month period.
13
<PAGE>
(3) Represents compensation earned by Mr. Perry from his employment with our
Company commencing April of 1998.
(4) Amounts represent Company paid lodging of $12,000 in 1997, $12,000 in 1998
and $11,000 in 1999. The balance in each year is for automobile expenses.
(5) Amounts represent options granted under Company Stock Option
Cancellation/Regrant program.
(6) In conjunction with our Stock Option Cancellation/Regrant program in 1998,
these options were cancelled.
(7) Represents compensation earned by Mr. Trayler from his employment with our
Company commencing July of 1997.
(8) Represents compensation earned by Mr. Bergen from his employment with our
Company commencing September of 1998.
The following table provides information regarding option exercises during the
fiscal year ended November 30, 1999, as well as information with respect to
unexercised options to purchase our common stock granted to the Named Officers
in fiscal 1999. None of the Named Officers exercised any stock options during
fiscal 1999. CardioDynamics has not granted any stock appreciation rights.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options Granted
Options to Employees Exercise Expiration
Name Granted in Fiscal 1999 Price($/Sh) (1) Date
------------------------------ --------- ---------------- --------------- ----------
<S> <C> <C> <C> <C>
Michael K. Perry 45,000 7% $2.25 01/00/2009
Rhonda F. Rhyne 40,000 6% $2.25 01/00/2009
Stephen P. Loomis 30,000 5% $2.25 01/00/2009
Richard E. Trayler 35,000 5% $2.25 01/00/2009
Russell H. Bergen -0- n/a n/a n/a
</TABLE>
________________________________________
(1) All options were granted at fair market value (closing sale
price for our common stock on the NASDAQ/AMEX Stock Market on the date
of grant).
14
<PAGE>
The following table provides further information regarding the Named Officers'
outstanding stock options as of November 30, 1999. No stock appreciation rights
were granted or exercised, and no stock options were exercised during fiscal
1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
--------------------------- Securities
Underlying Value(1) of
Unexercised Unexercised
Options/SARs In-the-Money
at FY-End (#) Options/SARs at FY-
Shares Acquired Value Exercisable/ End ($) Exercisable/
Name On Exercise (#) Realized ($) Unexercisable Unexercisable(2)
---- --------------- ------------ ------------- ----------------
<S> <C> <C> <C> <C>
Michael K. Perry - 0 - - 0 - 323,750 / 1,016,250 445,156 / 1,369,219
Rhonda F. Rhyne - 0 - - 0 - 175,000 / 340,000 93,750 / 423,750
Stephen P. Loomis - 0 - - 0 - 43,333 / 106,667 59,583 / 127,917
Richard E. Trayler - 0 - - 0 - 28,886 / 86,114 39,718 / 96,559
Russell H. Bergen - 0 - - 0 - 21,874 / 53,026 39,592 / 95,977
</TABLE>
___________________________________________
(1) Represents the difference between the closing sale price of our common
stock on the NASDAQ/AMEX Stock Market of $3.00 on November 30, 1999 and
the exercise price of the options.
(2) The respective Named Officers as of November 30, 1999 could not exercise
these options and future exercisability is subject to certain vesting
provisions including specific stock price thresholds and/or remaining in
the employ of the Company for up to three additional years.
Employment Agreement
On March 23, 1998, we entered into an employment agreement with Michael K.
Perry when he became Chief Executive Officer. Under the terms of the
agreement, Mr. Perry was granted 1,500,000 non-transferable stock options
(outside the Option Plan) at an exercise price of $2.55 per share, subject
to vesting requirements. At May 31, 2000, 323,750 of the options have
vested. The options expire on October 15, 2008.
Long Term Incentive Plans
We do not have any long-term incentive plans (as defined in the Securities
and Exchange Commission regulations).
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1996, CardioDynamics Holdings, LLC ("CDH") and its members engaged
in several significant transactions with us, substantially all resulting in the
issuance of unregistered Common Stock or notes convertible (and later converted)
into Common Stock. As of May 31, 2000, CDH owns 103,764 shares of our Common
Stock. Members of CDH beneficially own 14,618,409 shares of CardioDynamics
Common Stock (aside from CDH's own holdings); of the members' shares, Allen E.
Paulson beneficially owns 10,465,143 and James C. Gilstrap beneficially owns
3,259,654. At May 31, 2000, CDH and its members together are the beneficial
owners of 34.1% of our Common Stock.
In March 1998, we entered into an 18 month unsecured private line of credit
agreement with Allen E. Paulson and James C. Gilstrap. Under the terms of the
agreement we can borrow up to $3,000,000 on an as-needed basis with monthly
interest-only payments at an annual interest rate of 10.0%. In February 1999,
the term was extended one year, to September 2000.
Before and after becoming an executive officer of CardioDynamics in June 1997,
Dennis G. Hepp has served as a consultant and vendor to our Company since July
1995 through the company he founded in 1989, Rivertek Medical Systems, Inc.,
located in Minneapolis, Minnesota. Rivertek, which is 100% owned by Mr. Hepp and
his wife, provides engineering consulting to medical device manufacturers, and
continues to be one of our largest vendors. We made payments to Rivertek of
$454,801 and $391,293 during fiscal 1998 and 1999, respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that each person who, at any time during the fiscal year
ended November 30, 1999, was a Director, officer, or beneficial owner of more
than 10% of a class of registered equity securities of the Company filed on a
timely basis all reports required by Section 16(a) of the Securities Exchange
Act.
SHAREHOLDER PROPOSALS FOR 2001 PROXY STATEMENT
The deadline for shareholders to submit proposals to be considered for inclusion
in the Company's Proxy Statement for the next year's Annual Meeting of
Shareholders is February 14, 2001. Such proposals may be included in the next
year's Proxy Statement if they comply with certain rules and regulations
promulgated by the Securities and Exchange Commission.
If a shareholder wishes to have a proposal considered at the 2001 Annual Meeting
but does not seek to have the proposal included in the Company's Proxy Statement
and form of Proxy for that meeting, and if the shareholder does not notify
CardioDynamics of the proposal by April 30, 2001, then the persons appointed as
proxies by management may use their discretionary voting authority to vote on
the proposal when the proposal is considered at the 2001 Annual Meeting, even
though there is no discussion of the proposal in the Proxy Statement for that
meeting. It is recommended that shareholders submitting proposals or notices of
proposal direct them to the Secretary of the Company and utilize Certified Mail-
Return Receipt Requested. Shareholders' proposals should be submitted to
CardioDynamics International Corporation, 6175 Nancy Ridge Drive, Suite 300, San
Diego, California 92121.
16
<PAGE>
FORM 10-KSB
The company will mail without charge, upon written request, to any shareholder
of the company a copy of the annual report on form 10-KSB, including the
financial statements, schedules and list of exhibits. Requests should be sent to
CardioDynamics International Corporation, 6175 Nancy Ridge Drive, Suite 300, San
Diego, California 92121, Attention: Shareholder Relations.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for action at
the Annual Meeting other than the matters set forth in this Proxy Statement.
Should any other matter requiring a vote of the shareholders arise, the persons
named as proxy holders on the enclosed proxy card will vote the shares
represented thereby in accordance with their best judgment in the interest of
the Company. Discretionary authority with respect to such other matters is
granted by the execution of the enclosed proxy card.
By Order of the Board of Directors
/s/ Michael K. Perry
----------------------------------
Dated: June 16, 2000 Michael K. Perry
Chief Executive Officer
17
<PAGE>
EXHIBIT A
CARDIODYNAMICS INTERNATIONAL CORPORATION
CHARTER
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
June 1, 2000
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's system of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the Corporation's policies, procedures and practices
at all levels. The Audit Committee's primary duties and responsibilities are to:
Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
Review and appraise the audit efforts of the Corporation's independent
accountants and internal auditing department.
Provide an open avenue of communication among the independent accountants,
financial and senior management, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
<PAGE>
II. COMPOSITION
The Audit Committee shall consist of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. All
members of the Committee shall have a working familiarity with basic finance and
accounting practices.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until their successors shall
be duly elected and qualified. Unless a chair is elected by the full Board, the
members of the Committee may designate a chair by majority vote of the full
Committee membership.
III. MEETINGS
The Committee shall meet at least annually, or more frequently as
circumstances dictate. The Committee may meet with management and the
independent accountants in separate executive sessions, as necessary or
appropriate, to discuss any matters that the Committee or any of these groups
believe should be discussed privately. The Committee may ask members of
management or others to attend the meetings and provide pertinent information as
necessary.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and update this Charter periodically, as conditions dictate.
2. Review the Corporation's annual financial statements and any reports or
other financial information submitted to the public, including any
certification, report, opinion, or review rendered by the independent
accountants.
3. Maintain minutes or other records of meetings and activities of the
Committee.
-2-
<PAGE>
Independent Accountants
4. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants. On
an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Corporation to determine the accountants' independence.
5. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
6. Periodically consult with the independent accountants out of the presence
of management about internal controls and the fullness and accuracy
Corporation's financial statements.
Financial Reporting Processes
7. In consultation with the independent accountants review the integrity of
the Corporation's financial reporting processes.
8. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting.
9. Consider and approve, if appropriate, major changes to the Corporation's
accounting principles and practices as suggested by the independent
accountants or management.
-3-
<PAGE>
Process Improvement
10. Following completion of the annual audit, review with management and the
independent accountants any significant difficulties encountered during the
course of the audit, including any restrictions on the scope of work or
access to required information.
11. Review any significant disagreement among management and the independent
accountants in connection with the preparation of the financial statements.
12. Review with the independent accountants and management the extent to which
changes or improvements in financial or accounting practices, as approved
by the Audit Committee, have been implemented.
Ethical and Legal Compliance
13. Review, with the Corporation's counsel, legal compliance matters including
corporate securities trading
policies.
14. Review, with the Corporation's counsel, any legal matter that could have
significant impact on the Corporation's financial statements.
15. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
While the Committee has the responsibility and powers set for in this Charter,
it is not the duty of the Committee to plan or conduct audits or to determine
that the Company's financial statements are complete and accurate and are in
compliance with generally accepted accounting principles. This is the
responsibility of management and the independent accountants. Also, it is not
the duty of the Committee to conduct investigations, to resolve disagreements,
if any, between management and the independent accountants or to assure
compliance with laws and regulations or the Company's corporate policies.
-4-
<PAGE>
CARDIODYNAMICS INTERNATIONAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James C. Gilstrap and Michael K. Perry, jointly
and severally, as proxies, with full power of substitution, to vote all shares
of stock which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of CardioDynamics International Corporation to be held on Thursday,
July 27, 2000 or at any postponements or adjournments thereof, as specified
below, and to vote in their discretion on such other business as may properly
come before the Annual Meeting and any postponements or adjournments thereof.
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3. To vote in
accordance with the Board of Directors recommendations just sign below, no boxes
need to be checked.
--------------------------------------------------------------------------------
1. Election of Directors:
Nominees:
Connie R. Curran Cam L. Garner James C. Gilstrap
Richard O. Martin Allen E. Paulson Michael K. Perry
[ ] Vote FOR all nominees above [ ] Vote WITHHELD from all
(except as withheld in the nominees
space below)
Instruction: To withhold authority to vote for any individual nominee, check
the box "Vote FOR" and write the nominee's name for whom you wish to
withhold your vote on the line below.
--------------------------------------------------------------------------------
2. To approve an amendment to the Company's Restated Articles of Incorporation
to increase the number of authorized shares of Common Stock from 50,000,000
to 100,000,000.
[ ] Vote FOR [ ] Vote AGAINST [ ] ABSTAIN
--------------------------------------------------------------------------------
3. To ratify the selection of KPMG LLP as our independent accountants for the
fiscal year ending November 30, 2000.
[ ] Vote FOR [ ] Vote AGAINST [ ] ABSTAIN
--------------------------------------------------------------------------------
Unless otherwise specified by the undersigned, this proxy will be voted FOR
Proposals 1, 2 and 3 and will be voted by the proxy holders at their discretion
as to any other matters properly transacted at the Annual Meeting or any
postponements or adjournments thereof. To vote in accordance with the Board of
Directors recommendations just sign below, no boxes need to be checked.
Dated: ____________________, 2000
__________________________________
Signature of Shareholder
__________________________________
Printed Name of Shareholder
__________________________________
Title (if appropriate)
Please sign exactly as name appears hereon.
If signing as attorney, executor, administrator,
trustee or guardian, please give full title as
such, and, if signing for a corporation, give
your title. When shares are in the names of more
than one person, each should sign.
CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING ______
