SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ] Preliminary Proxy Statement
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[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
ANGEION CORPORATION
(Name of Registrant as Specified In Its Charter)
ANGEION CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a6(i)(4) and 0-11.
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2 Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11:*
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its determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by registration
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ANGEION CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 20, 1995
The Annual Meeting of the Shareholders of Angeion Corporation, a Minnesota
corporation (the "Company"), will be held at the Minneapolis Marriott City
Center, 30 South Seventh Street, Minneapolis, MN 55402, beginning at 4:00 p.m.
on Wednesday, December 20, 1995, for the following purposes:
1. To elect six (6) persons to serve as directors of the Company until the
next Annual Meeting of the Shareholders or until their respective successors
shall be elected and qualified;
2. To consider and act upon a proposal to amend the Company's 1993 Stock
Incentive Plan to increase the number of shares reserved for issuance by
1,000,000 shares;
3. To approve the appointment of KPMG Peat Marwick LLP as independent
auditors for the year ending July 31, 1996; and
4. To transact such other business as may properly come before the meeting.
The record date for determination of the shareholders entitled to notice of
and to vote at the meeting and any adjournments thereof is the close of business
on October 23, 1995.
Whether or not you expect to attend the Annual Meeting in person, please
complete, sign, date and promptly return the enclosed proxy in the envelope
provided, which requires no postage if mailed in the United States.
By Order of the Board of Directors
/s/ David L. Christofferson
David L. Christofferson
Secretary
November 6, 1995
Minneapolis, Minnesota
ANGEION CORPORATION
3650 ANNAPOLIS LANE
SUITE 170
MINNEAPOLIS, MINNESOTA 55447-5434
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 20, 1995
INTRODUCTION
The Annual Meeting of Shareholders of Angeion Corporation (the "Company")
will be held on Wednesday, December 20, 1995, at 4:00 p.m., Central Standard
Time, at the Minneapolis Marriott City Center, 30 South Seventh Street,
Minneapolis, Minnesota 55402, or at any adjournments thereof (the "Annual
Meeting"), for the purposes set forth in the Notice of Meeting.
A Proxy card is enclosed for your use. You are solicited on behalf of the
Board of Directors to SIGN AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE. No postage is required if mailed within the United States. The cost of
soliciting proxies, including the preparation, assembly and mailing of proxies
and soliciting material, as well as the cost of forwarding such material to the
beneficial owners of the Company's Common Stock and Class A Convertible
Preferred Stock ("Preferred Stock"), will be borne by the Company. In addition,
directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit proxies by
telephone, telegraph or personal conversation. The Company may reimburse
brokerage firms and others for expenses in forwarding proxy materials to the
beneficial owners of Common Stock and Preferred Stock.
Any shareholder giving a proxy may revoke it at any time prior to its use
at the Annual Meeting either by giving written notice of such revocation to the
Secretary of the Company, by filing a duly executed proxy bearing a later date
with the Secretary of the Company, or by appearing at the Annual Meeting and
filing written notice of revocation with the Secretary of the Company prior to
use of the proxy. Proxies will be voted as specified by shareholders. Proxies
that are signed by shareholders but that lack any such specification will be
voted in favor of the proposals set forth in the Notice of Meeting and in favor
of the election as directors of the nominees for directors listed in this Proxy
Statement.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSALS SET FORTH IN THE NOTICE OF MEETING.
The Company expects that this proxy material will be mailed first to
shareholders on or about November 6, 1995.
VOTING OF SHARES
Only holders of Common Stock and Preferred Stock of record at the close of
business on October 23, 1995 will be entitled to vote at the Annual Meeting. On
October 23, 1995, the Company had 21,251,580 outstanding shares of Common Stock
and 875,000 outstanding shares of Preferred Stock (collectively, unless
otherwise specified, the Common Stock and the Preferred Stock of the Company
shall be referred to hereinafter as the "Common Stock"), each such share
entitling the holder thereof to one vote on each matter to be voted on at the
Annual Meeting. The holders of a majority of the shares entitled to vote and
represented in person or by proxy at the Annual Meeting will constitute a quorum
for the transaction of business at the Annual Meeting. In general, shares of
Common Stock represented by a properly signed and returned proxy card will be
counted as shares present and entitled to vote at the meeting for purposes of
determining a quorum, without regard to whether the card reflects abstentions
(or is left blank) or reflects a "broker non-vote" on a matter (i.e., a card
returned by a broker because voting instructions have not been received and the
broker has no discretionary authority to vote). Holders of shares of Common
Stock are not entitled to cumulate voting rights.
The election of a nominee for director and the approval of each of the
other proposals described in this Proxy Statement require the approval of a
majority of the shares present and entitled to vote in person or by proxy on
that matter (and at least a majority of the minimum number of votes necessary
for a quorum to transact business at the Annual Meeting). Shares represented by
a proxy card voted as abstaining on any of the proposals will be treated as
shares present and entitled to vote that were not cast in favor of a particular
matter, and thus will be counted as votes against the matter. Shares represented
by a proxy card including any broker non-vote on a matter will be treated as
shares not entitled to vote on that matter, and thus will not be counted in
determining whether that matter has been approved.
ELECTION OF DIRECTORS
NOMINATION
The Company's Bylaws provide that the Board of Directors (the "Board")
shall consist of the number of members last elected by a majority vote of the
shareholders or by the Board, which number shall be not less than two nor more
than nine. The Board has determined that there will be six directors elected at
the Annual Meeting, although the Board expects to name additional Board members
in fiscal 1996. Directors elected at the Annual Meeting will hold office until
the next regular meeting of shareholders or until their successors are duly
elected and qualified. Sally E. Howard, who has served as a director of the
Company since 1988, has chosen not to stand for re-election at the Annual
Meeting. The Board expresses its sincere appreciation for Ms. Howard's
commitment and diligence in guiding the Company throughout her tenure as a
director of the Company.
All of the nominees are currently members of the Board. Mr. Evans was
elected as a member of the Board to fulfill the obligation of the Company
pursuant to a Stock Purchase Agreement, dated September 13, 1990, between the
Company and Hanrow Financial Group, Ltd. ("Hanrow Financial") to use its
diligent efforts to elect to the Board a person designated by Hanrow Financial.
The election of each director requires the affirmative vote of a majority
of the shares of Common Stock represented in person or by proxy at the Annual
Meeting, provided that a quorum consisting of a majority of the voting power of
the Company's outstanding shares is represented either in person or by proxy at
the Annual Meeting. The Board recommends a vote FOR the election of each of the
nominees listed in this Proxy Statement. The Board intends to vote the proxies
solicited on its behalf for the election of each of the nominees as directors.
If prior to the Annual Meeting the Board should learn that any of the nominees
will be unable to serve by reason of death, incapacity or other unexpected
occurrence, the proxies will be cast for another nominee to be designated by the
Board to fill such vacancy, unless the shareholder indicates to the contrary on
the proxy. Alternatively, at the Board's discretion, the proxies may be voted
for such fewer nominees as results from such death, incapacity or other
unexpected occurrence. The Board has no reason to believe that any of the
nominees will be unable to serve.
INFORMATION ABOUT NOMINEES
The following table sets forth certain information as of October 10, 1995,
which has been furnished to the Company by the persons who have been nominated
by the Board to serve as directors for the ensuing year.
NOMINEES DIRECTOR
FOR ELECTION AGE PRINCIPAL OCCUPATION SINCE
Whitney A. McFarlin 55 President, Chief Executive Officer 1992
and Chairman of the Company
Arnold A. Angeloni 53 Senior Vice President of 1990
Deluxe Corporation
Dennis E. Evans 56 President and Chief Executive 1990
Officer of Hanrow Financial
Group, Ltd.
Lyle D. Joyce, M.D., Ph.D. 47 Cardiothoracic Surgeon at 1988
Minnesota Thoracic Group, P.A.
Joseph C. Kiser, M.D. 62 Former Cardiothoracic Surgeon at 1988
Minnesota Thoracic Group, P.A.
Glen Taylor 54 Chief Executive Officer and 1992
Chairman of Taylor Corporation
OTHER INFORMATION ABOUT NOMINEES
WHITNEY A. MCFARLIN has been President, Chief Executive Officer and
Chairman of the Board of the Company since September 15, 1993. From June 1990 to
September 1993, Mr. McFarlin was President, Chief Executive Officer, Chairman of
the Board and a founder of Clarus Medical Systems, Inc., a private medical
device company manufacturing products for the orthopedic surgical market
("Clarus"). Prior to founding Clarus, Mr. McFarlin was President and Chief
Executive Officer of Everest & Jennings International, Ltd., a manufacturer of
durable medical equipment from June 1985 to May 1990. From December 1977 to May
1985, Mr. McFarlin was an officer of Medtronic, a leading pacemaker
manufacturer, most recently as Executive Vice President where he was responsible
for the U.S. pacing business. He serves on the Board of Directors of several
corporations, including Clarus, Zero Corp. and PSICOR, Inc.
ARNOLD A. ANGELONI is employed by Deluxe Corporation, a provider of check
products and services to the financial payments industry, and has been so
employed in various administrative, marketing, and operations positions since
1961, most recently as Senior Vice President and President of the Business
Systems Division.
DENNIS E. EVANS has been President and Chief Executive Officer of Hanrow
Financial, a merchant banking partnership since February 1989. He serves on the
Board of Directors of Minnesota Power and Astrocom Corporation.
LYLE D. JOYCE, M.D., PH.D. has been a cardiothoracic surgeon with the
Minneapolis Heart Institute for more than five years, and is currently the
President of Minnesota Thoracic Group, P.A.
JOSEPH C. KISER, M.D. was a cardiothoracic surgeon and a founder of the
Minneapolis Heart Institute and the Minneapolis Heart Institute Foundation. Dr.
Kiser was also a founder of the Minnesota Thoracic Group, P.A. He practiced
cardiothoracic surgery at Abbott Northwestern Hospital as well as other Twin
Cities hospitals for more than 20 years prior to his retirement in January,
1995.
GLEN TAYLOR has been the Chief Executive Officer and Chairman of the Board
of Taylor Corporation for more than five years. Taylor Corporation employs more
than 6,800 individuals throughout 41 operating divisions in 11 states and three
Canadian provinces. Mr. Taylor also is the owner of Taylor Bancshares, which
includes five banks in Minnesota, and the Minnesota Timberwolves, a National
Basketball Association franchise. From 1980 to 1990, Mr. Taylor served as a
Minnesota State Senator.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The business and affairs of the Company are managed by the Board, which
held six meetings during the fiscal year ended July 31, 1995. Committees
established and maintained by the Board include the Audit Committee, the
Governance Committee and the Compensation Committee.
The function of the Audit Committee is to review the Company's financial
statements, oversee the financial reporting and disclosures prepared by
management, make recommendations regarding the Company's financial controls, and
confer with the Company's outside auditors. The Audit Committee held two
meetings during the fiscal year ended July 31, 1995. Messrs. Taylor, Evans, Dr.
Kiser and Ms. Howard served as members of the Audit Committee in the fiscal year
ended July 31, 1995, and Messrs. Taylor and Evans and Dr. Kiser will serve in
the fiscal year ended July 31, 1996.
The function of the Governance Committee is to recommend a list of
potential nominees to the Board of the Company, to develop guidelines for
corporate structuring and Board related issues and to act as an oversight
committee. While the Governance Committee will consider nominees recommended by
the Company's shareholders, it has neither actively solicited nominations nor
established any procedures for this purpose. The Governance Committee held one
meeting in fiscal 1995. Messrs. Angeloni, Evans, McFarlin and Dr. Kiser are
members of the Governance Committee.
The responsibilities of the Compensation Committee include setting the
compensation for those officers who are also directors and setting the terms of
and grants of awards under the Company's 1991 Stock Incentive Plan ("1991 Plan")
and 1993 Stock Incentive Plan (the "1993 Plan"). The Compensation Committee met
two times during the fiscal year ended July 31, 1995. Mr. Taylor, Dr. Joyce and
Ms. Howard served as members of the Compensation Committee in fiscal year ended
July 31, 1995, and Messrs. Taylor and Joyce will serve in the fiscal year ended
July 31, 1996.
All of the directors of the Company, other than Drs. Kiser and Joyce,
attended 75% or more of the aggregate meetings of the Board and all such
committees on which they served.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES. Directors of the Company receive no cash compensation for
their services as members of the Board of Directors, although their
out-of-pocket expenses incurred on behalf of the Company are reimbursed.
1992 NON-EMPLOYEE DIRECTOR PLAN. On May 4, 1992, the Board adopted the
Angeion Corporation Non-Employee Director Plan (the "1992 Director Plan") and on
December 3, 1992, the shareholders of the Company ratified the adoption of the
1992 Director Plan. Pursuant to the 1992 Director Plan, non-employee directors
of the Company automatically received, on the date of adoption of the 1992
Director Plan, an initial grant of such number of shares of Common Stock equal
to $16,000, as determined by the fair market value of one share of Common Stock
on the date of grant ("Stock Award"). The 1992 Director Plan, as amended by the
Board on October 6, 1993, and as ratified by the shareholders of the Company on
December 8, 1993, provides that an annual grant of Stock Awards (each valued at
$16,000) will be made upon the election or re-election, as the case may be, of
each non-employee director of the Company.
1994 NON-EMPLOYEE DIRECTOR OPTION PLAN. Effective as of October 5, 1994,
the Board adopted the Angeion Corporation 1994 Non-Employee Director Option Plan
(the "1994 Director Plan"). Pursuant to the 1994 Director Plan, each director
who is not an employee of the Company will be eligible to receive an annual
grant of an option to purchase 2,500 shares of the Common Stock upon the
election or re-election, as the case may be, of such non-employee director.
PRINCIPAL SHAREHOLDERS AND BENEFICIAL
OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of October 18, 1995, unless
otherwise noted, (a) by each shareholder who is known by the Company to own
beneficially more than 5% of the outstanding Common Stock, (b) by each director
of the Company, (c) by each executive officer named in the Summary Compensation
Table, and (d) by all executive officers and directors of the Company as a
group.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)(2)
PERCENT
NAME AMOUNT OF CLASS
Pacesetter, Inc. 1,125,000 (3) 5.0%
15900 Valley View Court
P.O. Box 9221
Sylmar, California 91392
Whitney A. McFarlin 208,110 (4) 1.0%
David L. Christofferson 110,047 (5) *
Mark W. Kroll, Ph.D. 67,156 (6) *
Theodore P. Adams 200,000 (7) *
Gregory G. Brucker 109,777 (8) *
Arnold A. Angeloni 67,096 (9) *
Dennis E. Evans 740,129 (10)(11) 3.5%
Sally E. Howard 48,796 (9) *
Lyle D. Joyce, M.D., Ph.D. 275,179 (12) 1.3%
Joseph C. Kiser, M.D. 390,030 (13) 1.8%
Glen Taylor 710,785 (14) 3.3%
All current directors and
executive officers
as a group (13 persons) 2,589,972 (15) 11.7%
* Less than 1%.
(1) Shares not outstanding but deemed beneficially owned by virtue of the right
of a person or member of a group to acquire them within 60 days are treated
as outstanding only when determining the amount and percent owned by such
person or group.
(2) Unless otherwise noted, all of the shares shown are held by individuals or
entities possessing sole voting and investment power with respect to such
shares.
(3) As set forth in a Schedule 13D filed with the Securities and Exchange
Commission on October 11, 1994, this amount includes (i) 875,000 shares of
Common Stock which may be acquired within 60 days upon the conversion of
Preferred Stock, and (ii) 250,000 shares of Common Stock which may be
acquired within 60 days upon the conversion of a $1,500,000 convertible
subordinated debenture.
(4) Includes 205,156 shares which may be acquired within 60 days upon the
exercise of stock options.
(5) Includes 109,747 shares which may be acquired within 60 days upon the
exercise of stock options.
(6) Includes 15,578 shares which may be acquired within 60 days upon the
exercise of stock options. Dr. Kroll resigned as an officer of the Company
effective as of October 27, 1995 to commence employment with Pacesetter,
Inc., the Company's corporate partner. See "Certain
Transactions--Pacesetter Transaction."
(7) Mr. Adams resigned as an officer of the Company effective as of June 30,
1995.
(8) Includes 104,077 shares which may be acquired within 60 days upon the
exercise of stock options. Dr. Brucker resigned as an officer of the
Company effective as of May 1, 1995.
(9) Includes 18,500 shares which may be acquired within 60 days upon the
exercise of stock options.
(10) Includes 30,000 shares owned by Hanrow Capital Fund and 580,000 shares
owned by Hanrow Capital Fund III. Hanrow Financial is the general partner
of Hanrow Capital Fund and Hanrow Capital Fund III, and Mr. Evans, a
director of the Company, is the president and chief executive officer of
Hanrow Financial.
(11) Includes 18,500 shares which may be acquired within 60 days upon the
exercise of stock options granted to Dennis E. Evans, a director of the
Company and the President and Chief Executive Officer of Hanrow Financial.
Also includes 83,333 shares which may be acquired within 60 days by Hanrow
Finance, Inc., an affiliate of Mr. Evans, upon the exercise of warrants.
(12) Includes 57,333 shares which may be acquired within 60 days upon the
exercise of warrants and stock options.
(13) Includes 78,333 shares which may be acquired within 60 days upon the
exercise of warrants and stock options.
(14) Includes 202,500 shares which may be acquired within 60 days upon the
exercise of warrants and stock options.
(15) Includes 826,902 shares which may be acquired within 60 days upon the
exercise of warrants and stock options. Excludes the shares beneficially
owned by Dr. Kroll, Dr. Brucker and Mr. Adams, none of whom are currently
executive officers of the Company.
EXECUTIVE COMPENSATION AND OTHER BENEFITS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company whose salary and bonus exceeded $100,000 in the fiscal
year ended July 31, 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
NAME AND ANNUAL COMPENSATION COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (1)
<S> <C> <C> <C> <C>
Whitney A. McFarlin 1995 $225,870 0 0
Chairman of the Board, 1994 $167,250 $10,000 505,156 (3)
Chief Executive Officer 1993 -- -- --
and President (2)
Theodore P. Adams, 1995 $109,941 0 25,000 (5)
Former President, Implantable 1994 $111,300 -- 2,943 (6)
Technologies Division (4) 1993 $107,000 -- --
Gregory G. Brucker, Ph.D. 1995 $108,675 0 20,000 (5)
Former President, Interventional 1994 $106,000 -- 22,803 (8)
Technologies Division (7) 1993 $102,000 -- --
David L. Christofferson, 1995 $101,183 0 25,000 (5)
Vice President, Chief 1994 $ 85,000 -- 42,247 (9)
Financial Officer and 1993 $ 76,250 -- 5,800 (10)
Secretary
Mark W. Kroll, Ph.D. 1995 $ 99,757 0 20,000 (5)
Vice President, Research 1994 -- -- --
and Product Planning (11) 1993 -- -- --
</TABLE>
(1) Does not include the following options to purchase shares of the Common
Stock issued to certain of the officers named in the Summary Compensation
Table pursuant to the antidilution provisions of the AngeLase, Inc. 1991
Stock Incentive Plan and the AngeMed, Inc. 1991 Stock Incentive Plan, in
connection with the merger of AngeLase, Inc. and AngeMed, Inc., greater
than 90% owned subsidiaries of the Company, with and into the Company:
Adams, options to purchase 192,000 shares; Brucker, options to purchase
34,800 shares.
(2) Effective on September 15, 1993, Mr. McFarlin became the Chairman, Chief
Executive Officer and President of the Company.
(3) Of this amount, (i) options to purchase 500,000 shares of Common Stock were
granted under the 1993 Plan in connection with his agreement to serve as
Chairman, Chief Executive Officer and President of the Company, and (ii)
options to purchase 5,156 shares of Common Stock represent options granted
under the 1993 Plan in connection with a mandatory salary deferral program
implemented by the Company in fiscal 1994 to conserve cash (the "Deferral
Program").
(4) Mr. Adams resigned as an officer of the Company effective as of June 30,
1995.
(5) Reflects the grant of options under the 1993 Plan.
(6) Reflects the issuance of options under the 1993 Plan in connection with the
Deferral Program.
(7) Dr. Brucker resigned as an officer of the Company effective as of May 1,
1995.
(8) Of this amount, options to purchase 2,803 shares of Common Stock represent
options granted under the 1993 Plan in connection with the Deferral Program
and the remaining options were granted under the 1991 Plan.
(9) All of such options were granted under the 1993 Plan. Of this amount,
options to purchase 2,247 shares of Common Stock represent options granted
in connection with the Deferral Program.
(10) Reflects the grant of options under the 1989 Plan.
(11) Dr. Kroll resigned as an officer of the Company effective as of October 27,
1995.
OPTION GRANTS AND EXERCISES
The following tables summarize option grants and exercises, respectively,
during fiscal 1995 to or by the executive officers named in the Summary
Compensation Table above and the potential realizable value of the options held
by such persons at July 31, 1995.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK PRICE
GRANTED TO EXERCISE APPRECIATION
EMPLOYEES OR BASE FOR OPTION TERM(1)
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED(2) YEAR ($/SH) DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
Theodore P. Adams 25,000 3.26% $2.5625 9/30/95 $3,203 $6,406
Gregory G. Brucker 20,000 2.61% 2.5625 11/28/04 $28,255 $69,594
David L. Christofferson 25,000 3.26% 2.5625 11/28/04 $35,319 $86,993
Mark W. Kroll 20,000 2.61% 2.5625 11/28/04 $28,255 $69,594
</TABLE>
(1) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent upon the future
performance of the Company's Common Stock, overall market conditions and
the executive's continued involvement with the Company. The amounts
represented in this table might not necessarily be achieved.
(2) Reflects the grant of options under the 1993 Plan, with 25% of such options
vesting on each of the first four anniversaries of the date of grant. The
1993 Plan provides that in the event of a "change in control" of the
Company (as defined in the 1993 Plan), then the Compensation Committee may,
among other things, accelerate the vesting of all options granted under the
1993 Plan.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-
NUMBER OF UNEXERCISED THE-MONEY OPTIONS AT
OPTIONS AT JULY 31, 1995 JULY 31, 1995
SHARES ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Whitney A. McFarlin 0 0 205,156 300,00 $948,845 $1,387,499
Theodore P. Adams 148,943 $526,332 25,000 0 0 0
Gregory G. Brucker 100,000 $283,874 124,077 30,000 $612,075 $133,425
David L. Christofferson 0 0 147,247 45,000 $191,067 $196,300
Mark W. Kroll 20,000 $71,224 15,578 21,332 $30,584 $94,030
</TABLE>
EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement with Whitney A.
McFarlin, Chairman of the Board, Chief Executive Officer and President of the
Company. The employment agreement, dated September 15, 1993, between the Company
and Mr. McFarlin (the "Agreement"), prohibits disclosure of confidential
information to anyone outside of the Company both during and after employment,
prohibits competition with the Company for three years after employment and
provides that any inventions or other works of authorship relating to or
resulting from Mr. McFarlin's work for the Company under such agreement will be
the exclusive property of the Company. The terms of the Agreement also provide
that if Mr. McFarlin is terminated by the Company without "cause," upon a
"change in control" of the Company or if the Agreement is voluntarily terminated
by McFarlin for "good reason" (as such terms are defined in the Agreement), then
Mr. McFarlin is entitled to his base salary for the remainder of the term of the
Agreement and for one year thereafter, including any bonus to which he would
have been entitled for the entire fiscal year in which he was terminated. The
Agreement provided for an initial base salary of $195,000 for the first year of
employment and a base salary of $225,000 for the second year of employment.
Thereafter, Mr. McFarlin's base salary is to be determined by the Board, taking
into account individual and corporate performance. The initial term of the
Agreement expires on September 15, 1995; provided, however, that such term is
automatically extended for consecutive one-year terms unless either party gives
written notice to the other not to renew within 60 days before the expiration of
the current term. No notice was given within the 60 day period preceding
September 15, 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes the
compensation for executive officers who are also directors of the Company and
acts on such other matters relating to their compensation as it deems
appropriate. During fiscal 1995, Mr. McFarlin, the Company's Chairman of the
Board, President and Chief Executive Officer, was the only executive officer who
was also a director of the Company. The Compensation Committee consists of three
non-employee directors and meets two to four times per year. The members of the
Compensation Committee during fiscal 1995 were Mr. Taylor, Dr. Joyce and Ms.
Howard. Mr. McFarlin, as the Company's President and Chief Executive Officer, in
turn establishes the compensation of all executive officers who are not also
directors of the Company. 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 amount, timing and other terms
and conditions of awards under such plans.
COMPENSATION PHILOSOPHY AND OBJECTIVES. The Committee is committed to the
general principle that overall executive compensation should be commensurate
with performance, by the Company and the individual executive officers, and the
attainment of predetermined corporate goals. 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.
* Provide compensation opportunities that are linked to the performance
of the Company and that directly link the interests of executives with
the interests of shareholders.
The Company's executive compensation program provides a level of
compensation opportunity that is competitive for companies of comparable
development, complexity and size. In determining compensation levels, the
Compensation Committee considers a number of factors, including Company
performance, both separately and in relation to other companies competing in the
Company's markets, the individual performance of each executive officer,
comparative compensation surveys concerning compensation levels and stock grants
at other companies, historical compensation levels and stock awards at the
Company, and the overall competitive environment for executives and the level of
compensation necessary to attract and retain key executive. 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.
EXECUTIVE COMPENSATION PROGRAM COMPONENTS. The Company's executive
compensation program consists of base salary 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 pay levels of executives are determined by the
potential impact of the individual on the Company and its performance, the
skills and experiences required by the position, the individual performance and
potential of the executive and the Company's overall performance. Other than
with respect to Mr. McFarlin, the President and Chief Executive Officer of the
Company who has entered into an employment agreement with the Company, base
salaries for executives are established prior to the beginning of each year.
Base salaries for 1995 increased modestly from 1994 levels due to the Company's
continuing focus on development activities requiring the conservation of cash.
Mr. McFarlin's base salary level for 1995, $225,000, was established pursuant to
an employment agreement entered into with such officer dated September 15, 1993.
Long-Term Incentive Compensation. Stock options are used to enable key
executives to participate in a meaningful way in the success of the Company and
to link their interests directly with those of the shareholders. The number of
stock options granted to executives is based upon a number of factors, including
base salary level, the number of options previously granted and individual and
Company performance during the year. Pursuant to the terms of Mr. McFarlin's
employment agreement, he was granted options to purchase an aggregate of 500,000
shares of the Company's common stock on September 15, 1993, with options to
purchase 50,000 shares vesting immediately and options to purchase an additional
150,000 shares vesting on each of the next three anniversaries of the date of
grant.
SECTION 162(M). The Omnibus Reconciliation Act of 1993 added Section
162(m) to the Internal Revenue Code of 1986, as amended (the "Code") limiting
corporate deductions to $1,000,000 for certain compensation paid to the chief
executive officer and each of the four other most highly compensated executives
of publicly held companies. The Company does not believe it will pay
"compensation" within the meaning of Section 162(m) to such executive officers
in excess of $1,000,000 in the foreseeable future. Therefore, the Company does
not have a policy at this time regarding qualifying compensation paid to its
executive officers for deductibility under Section 162(m), but will formulate a
policy if compensation levels ever approach $1,000,000.
Compensation Committee
Glen Taylor
Lyle D. Joyce, Ph.D., M.D.
Sally E. Howard
STOCK PERFORMANCE GRAPH
In accordance with the rules of the Securities and Exchange Commission, the
following performance graph compares the monthly cumulative total shareholder
return on the Company's Common Stock on the Nasdaq SmallCap Market for the last
five fiscal years with the monthly cumulative total return over the same period
to the Nasdaq Stock Market (US Companies) Index and to the Hambrecht & Quist
Health Care Without Biotechnology Subsector Index. The comparison assumes the
investment of $100 in Common Stock, the Nasdaq Stock Market (US Companies) Index
and the Hambrecht & Quist Health Care Without Biotechnology Subsector Index at
the beginning of the period and assumes reinvestment of all dividends.
TOTAL SHAREHOLDERS' RETURN
FOR ANGEION CORPORATION
H&O HEALTH CARE WITHOUT
WITHOUT
ANGEION NASDAQ STOCK BIOTECHNOLOGY
DATES CORPORATION MARKET - U.S. SUB-SECTOR
Jul-90 100 100 100
Aug-90 108.46 87.37 94.83
Sep-90 139.45 79.08 92.16
Oct-90 191.55 75.97 93.26
Nov-90 209.87 83.22 107.91
Dec-90 204.24 86.82 116.10
Jan-91 204.24 96.44 135.70
Feb-91 229.59 105.72 154.82
Mar-91 216.90 112.80 167.21
Apr-91 195.79 113.51 159.04
May-91 201.42 118.72 177.77
Jun-91 91.56 111.49 172.63
Jul-91 78.87 118.09 196.78
Aug-91 69.03 123.96 207.07
Sep-91 85.93 124.41 214.55
Oct-91 83.11 128.54 237.86
Nov-91 83.11 124.23 235.42
Dec-91 76.06 139.39 287.11
Jan-92 121.13 147.55 277.01
Feb-92 102.83 150.89 265.46
Mar-92 90.14 143.77 244.65
Apr-92 70.42 137.60 228.86
May-92 66.21 139.39 236.53
Jun-92 54.94 133.94 225.71
Jul-92 59.15 138.68 239.47
Aug-92 53.52 134.45 227.72
Sep-92 70.42 139.44 211.45
Oct-92 64.79 144.94 219.03
Nov-92 67.61 156.47 231.85
Dec-92 101.41 162.23 242.03
Jan-93 90.14 166.85 229.72
Feb-93 90.14 160.62 189.06
Mar-93 101.41 165.27 180.29
Apr-93 87.32 158.22 154.98
May-93 84.51 167.67 167.43
Jun-93 70.42 168.45 162.74
Jul-93 67.61 168.65 154.13
Aug-93 47.89 177.36 153.15
Sep-93 64.79 182.64 155.04
Oct-93 53.52 186.75 169.24
Nov-93 53.52 181.19 167.48
Dec-93 51.40 186.24 173.34
Jan-94 78.87 191.89 189.39
Feb-94 81.69 190.14 174.65
Mar-94 64.79 178.43 159.96
Apr-94 64.79 176.12 156.24
May-94 47.89 176.56 161.46
Jun-94 45.07 170.12 154.91
Jul-94 53.52 173.61 160.88
Aug-94 53.52 184.67 183.19
Sep-94 60.57 184.20 185.10
Oct-94 61.97 187.79 180.28
Nov-94 56.34 181.54 179.75
Dec-94 67.61 182.10 184.18
Jan-95 84.51 183.11 195.92
Feb-95 73.24 192.75 200.46
Mar-95 76.06 198.37 215.14
Apr-95 92.96 204.73 212.14
May-95 81.69 210.09 213.43
Jun-95 112.68 226.78 221.01
Jul-95 152.11 243.13 239.92
CERTAIN TRANSACTIONS
BRIDGE FINANCING
In connection with the bridge financing completed in July 1994, the following
directors received promissory notes and warrants to purchase shares in the
following amounts: Mr. Evans, through an affiliated entity ($333,333; 83,333
shares); Mr. Taylor ($500,000; 125,000 shares); Dr. Joyce ($83,333; 20,833
shares); and Dr. Kiser ($83,333; 20,833 shares). All of such notes have been
repaid and canceled, other than a note and interest accrued thereon in the
amount of $31,100 in the name of a trust affiliated with Dr. Joyce which note
plus accrued interest was converted into 15,550 shares of the Common Stock.
PACESETTER TRANSACTION
On February 4, 1993, the Company and Siemens Pacesetter, Inc. ("Pacesetter")
entered into a purchase agreement (the "Purchase Agreement"), a license
agreement (the "License Agreement") and an OEM marketing and manufacturing
agreement (the "OEM Agreement"). Pursuant to the Purchase Agreement, Pacesetter
purchased 875,000 shares of Preferred Stock at a purchase price of $4.00 per
share and a $1,500,000 convertible subordinated debenture (the "Debenture"),
which bears interest at 7.16% per annum and has a 10-year term with principal
repaid over the last five years. Each share of Preferred Stock is convertible at
any time into one share of Common Stock (subject to anti-dilution adjustments),
and the Debenture is convertible at any time into Common Stock at a conversion
price of $6.00 per share. Pursuant to the Purchase Agreement, Pacesetter also
has (a) until one year after PMA approval of the Company's first ICD (other than
the Sentinel 2000), a right of first refusal with respect to certain offers to
purchase the Company or a substantial portion of its assets, (b) a preemptive
right to purchase additional shares of capital stock on the same terms as the
Company might offer such shares to other investors, (c) a negative pledge on
certain assets of the Company, and (d) a right to attend as a visitor all
meetings of the Company's Board of Directors. Pacesetter also received certain
demand and "piggyback" registration rights.
Pursuant to the OEM Agreement and the License Agreement, the Company granted
Pacesetter certain marketing, distribution and licensing rights.
On September 30, 1994, St. Jude Medical, Inc. acquired the worldwide cardiac
rhythm management business of Siemens AG, including Pacesetter.
HANROW TRANSACTION
In October 1990, the Company sold to Hanrow Financial, of which Dennis E. Evans,
a director of the Company, is president and chief executive officer, 500,000
shares of Common Stock at a purchase price of $3.35 per share, pursuant to a
Stock Purchase Agreement dated as of September 13, 1990 (the "Hanrow
Agreement"). Under the terms of the Hanrow Agreement, the Company agreed, among
other things, that (a) so long as Hanrow Financial owned at least 100,000 shares
of Common Stock, the Company would consult with Hanrow Financial regarding
certain future financings and use its best efforts to cause a designee of Hanrow
Financial to be elected to the Board of Directors of the Company (Mr. Evans
serves as such nominee); and (b) Hanrow Financial would, under certain
circumstances, have the right to purchase additional shares of capital stock on
the same terms as the Company might offer such shares to other investors in the
future.
Under the Hanrow Agreement, Hanrow Financial also agreed to be bound by certain
"standstill" provisions. Pursuant to these provisions, Hanrow Financial agreed
that neither it nor any of its affiliates would (i) purchase additional shares
of Common Stock so that their aggregate holdings would exceed 15% of the
Company's outstanding Common Stock without the approval of the Company's Board
of Directors; (ii) become a "participant" in a proxy contest in opposition to
current management of the Company; or (iii) sell their shares of Common Stock
without offering the Company a right of first refusal, subject to certain
exception. These standstill provisions terminated on September 20, 1993.
PROPOSAL TO AMEND THE
1993 STOCK INCENTIVE PLAN
INTRODUCTION
On October 6, 1993, the Board of Directors of the Company adopted the 1993
Stock Incentive Plan (the "1993 Plan"), which was approved by the Company's
shareholders on December 8, 1993. The 1993 Plan replaced the 1988 Plan and the
1989 Plan, which were approved by the shareholders and implemented by the
Company on June 29, 1988 and December 14, 1989, respectively. On September 25,
1995, the Board of Directors amended the 1993 Plan, subject to shareholder
approval, to increase the number of shares of Common Stock directly reserved for
issuance under the 1993 Plan from 750,000 shares to 1,750,000 shares.
The purpose of the 1993 Plan is to promote the long-term interests of the
Company by providing a means for attracting and retaining key employees
including officers and directors who are also employees of the Company. The
major features of the 1993 Plan are summarized below, which summary is qualified
in its entirety by reference to the actual text of the 1993 Plan, a copy of
which may be obtained from the Company.
AMENDMENT
In addition to the 750,000 shares of Common Stock directly reserved for
issuance under the 1993 Plan, the 1993 Plan also provides that any shares of
Common Stock available for issuance under either the 1988 Plan or the 1989 Plan
which have not either been issued (which includes an aggregate of 493,448
shares) or have been issued under such plans but are subsequently forfeited or
otherwise cancelled (which includes an aggregate of 84,334 shares), will become
shares available for issuance under the 1993 Plan. Accordingly, as of October 6,
1994, 1,287,502 shares were reserved for issuance under the 1993 Plan (which
amount reflects the exercise of options granted under the 1993 Plan to purchase
an aggregate of 40,280 shares). As of October 6, 1995, options were outstanding
under the 1993 Plan to purchase an aggregate of 1,332,794 shares, representing
45,292 shares in excess of the shares reserved for issuance under the 1993 Plan.
The option agreements reflecting the 45,292 share oversubscription state that
the grant of such options is conditioned upon an increase in the number of
shares reserved for issuance under the 1993 Plan. The increase in the number of
shares reserved for issuance under the 1993 Plan is therefore necessary both to
offset such oversubscriptions and to permit the Company to continue the
operation of the 1993 Plan for the benefit of new participants and to allow
additional awards to current participants. If this amendment is approved,
954,708 shares of Common Stock will be available for future grants (in addition
to any other shares which are contributed to the 1993 Plan from the 1988 Plan
and the 1989 Plan and less the number of any additional conditional option
grants made after October 6, 1995). The Company anticipates that it will issue
additional options in the future to the extent that a sufficient number of
shares are reserved for issuance under the 1993 Plan.
SUMMARY OF THE PLAN
GENERAL. The 1993 Plan provides for awards ("Awards") to key employees,
including officers and directors who are also employees of the Company, of: (i)
options to purchase Common Stock that qualify as "incentive stock options"
within the meaning of Section 422 of the Code ("Incentive Options"); (ii)
options to purchase Common Stock that do not qualify as such Incentive Options
("Non-Qualified Options") (Incentive Options and Non-Qualified Options are
collectively referred to as "Options"); (iii) restricted stock awards
("Restricted Stock Awards"); and (iv) performance units ("Performance
Units")(Options, Restricted Stock Awards and performance Units are collectively
referred to as "Awards").
The 1993 Plan is administered by the Compensation Committee (the
"Committee"), which selects the participants to be granted Awards under the 1993
Plan, determines the amount of the grants to the participants, and prescribes
discretionary terms and conditions of each grant not otherwise fixed under the
1993 Plan. Eligible employees under the 1993 Plan include full-time or part-time
employees including officers and directors who are also employees of the Company
or its subsidiaries who are performing vital services in the management,
operations, and development of the Company or a subsidiary and significantly
contribute to the achievement of long-term corporate economic objectives.
The 1993 Plan will terminate on October 6, 2003, unless sooner terminated
by action of the Board of Directors. No Award will be granted after termination
of the 1993 Plan. In the event of any reorganization, merger, recapitalization,
stock dividend, stock split or similar change in the corporate structure or
shares of the Company, appropriate adjustments will be made to the number and
kind of shares reserved under the 1993 Plan and under outstanding Awards and to
the exercise price of outstanding Options. The Board of Directors may amend the
1993 Plan in any respect without shareholder approval, unless shareholder
approval is then required by federal securities or tax laws or the rules of the
NASDAQ System. No right or interest in any Award may be assigned or transferred
by a participant, except by will or the laws of descent and distribution, or
subjected to any lien or otherwise encumbered.
OPTIONS. The exercise price for Non-Qualified Options must be not less than
85% of the fair market value of the Common Stock on the day the Non-Qualified
Options are granted. Incentive Options must be granted with an exercise price
equal to the fair market value of the Common Stock on the date the Incentive
Options are granted, except that Incentive Options granted to persons owning
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any subsidiary may not be granted at less than 110%
of the fair market value on the date of grant. In determining the fair market
value of the Company's Common Stock, the Committee will use the average of the
closing bid and asked prices of the Common Stock as reported by the NASDAQ
System as of the date of grant.
Payment of an option exercise price may be made either in cash or by
transfer from the participant to the Company of previously acquired shares of
Common Stock having an aggregate fair market value on the date of exercise equal
to the payment required, subject to the right of the Committee to reject a
participant's election to pay the option exercise price with such previously
acquired shares. The Committee may, in its sole discretion, determine, either at
the time of grant or exercise of an Option, to make a short-term, interest-free
loan to a participant of the funds necessary to pay the option exercise price
and any withholding obligations due upon such exercise. Any such loan would be
secured by a pledge of Common Stock of the Company having a fair market value at
least equal to 100% of the principal amount of the loan. Options may not be
transferred other than by will or the laws of descent and distribution, and
during the lifetime of an optionee may be exercised only by the optionee.
Options may be exercised in whole or in installments, as determined by the
Committee, except that unless otherwise permitted under the Stock Incentive
Plan, Options may not be exercised during the first year after grant. Incentive
Options will have a maximum term fixed by the Committee, not to exceed 10 years
from the date of grant or, in the case of Incentive Options granted to persons
owning stock representing more than 10% of the total combined voting power of
all classes of stock of the Company or any subsidiary, five years from the date
of grant. For Incentive Options, the aggregate fair market value (determined as
of the time the Incentive Option is granted) of shares of Common Stock with
respect to which Incentive Options become exercisable for the first time by the
participant under the Stock Incentive Plan during any calendar year may not
exceed $100,000. Non-Qualified Options have a maximum term fixed by the
Committee, not to exceed 15 years from the date of grant.
RESTRICTED STOCK AWARDS. Restricted Stock Awards are grants to participants
of shares of Common Stock that are subject to restrictions and the possibility
of forfeiture for a period of time set by the Committee during which the
participant must remain continuously employed by the Company. If, before the
expiration of this period, the participant ceases to be an employee for any
reason other than death, retirement or disability, or due to a change in control
of the Company, then the shares received pursuant to the Restricted Stock Award
will be forfeited to the Company.
PERFORMANCE UNITS. Performance Units may be awarded on such terms and
conditions as the Compensation Committee may specify. Such conditions may
include payment or vesting restrictions which involve continued employment with
the Company and satisfaction by the Company or a specified business unit or
subsidiary of predetermined performance goals approved by the Compensation
Committee at the time the Performance Units are awarded. Upon satisfaction of
applicable terms and conditions, Performance Units will be payable in cash,
shares of Common Stock or some combination thereof in the Compensation
Committee's sole discretion.
EFFECT OF TERMINATION OF EMPLOYMENT. If a participant's employment or other
service with the Company is terminated by reason of death, disability or
retirement, each Option and Restricted Stock Award immediately becomes fully
exercisable and remains exercisable for one year (three months in the case of
retirement) after such termination. Treatment of Performance Units upon
termination of employment or other services with the Company due to death,
disability or retirement will be as provided in the applicable award agreement.
If a participant's employment terminates for any other reason, Options that are
then exercisable will continue to be exercisable for 90 days after termination
(unless termination is for cause), but shares of restricted stock not yet vested
are forfeited. Treatment of Performance Units will be as provided in the
applicable award agreement.
CHANGE IN CONTROL OF THE COMPANY. In the case of a "Change in Control" of
the Company, all outstanding Options will become immediately exercisable in full
and all restrictions with respect to Restricted Stock Awards will lapse and the
stock will become fully vested; provided, however, that in connection with any
business combination in which the Company is not the surviving corporation, the
Committee, in its sole discretion, may determine, with respect to Options which
have been outstanding for more than one year, that either (a) all such
outstanding Options may be exercised in full during the 30 days preceding the
effective date of such business combination and, upon such effective date will
terminate and be cancelled, or (b) participants holding such outstanding Options
will receive for each share of Common Stock subject to such Options cash in an
amount equal to the excess of the fair market value of such shares immediately
prior to the effective date of such business combination over the exercise price
per share of such Options.
For purposes of the Stock Incentive Plan, a "Change in Control" of the
Company will be deemed to have occurred, among other things, upon (i) the sale
or other disposition of substantially all of the assets of the Company, (ii) the
approval by the Company's shareholders of a plan or proposal for the liquidation
or dissolution of the Company, (iii) a merger or consolidation to which the
Company is a party if the Company's shareholders immediately prior to the merger
or consolidation beneficially own, immediately after the merger or
consolidation, securities of the surviving corporation representing (a) more
than 50%, but not more than 80%, of the combined voting power of the surviving
corporation's then outstanding securities, unless the transaction was approved
in advance by the directors as of the effective date of the Plan or by any
persons who subsequently become directors and whose election or nomination was
approved by the directors comprising the Board as of the effective date of the
Plan (the "Incumbent Directors"), or (b) 50% or less of the combined voting
power of the surviving corporation's then outstanding securities (regardless of
any approval by the Incumbent Directors, (iv) any person becoming, after the
effective date of the Plan, the beneficial owner of (a) 20% or more, but not 50%
or more, of the combined voting power of the Company's Common Stock, unless the
transaction resulting in such ownership was approved in advance by the Incumbent
Directors, or (b) 50% or more of the combined voting power of the Company's
outstanding securities (regardless of any approval by the Incumbent Directors),
or (v) the Incumbent Directors cease for any reason to constitute at least a
majority of the Board; or (vi) a change in control of the Company of a nature
that would be required to be reported pursuant to Section 13 or 15(d) of the
Exchange Act.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on
current statutes, regulations and interpretations. The description does not
include state or local income tax consequences. In addition, the description is
not intended to address specific tax consequences applicable to an individual
participant who receives an Award.
INCENTIVE OPTIONS. There will not be any federal income tax consequences to
either the participant or the Company as a result of the grant to an employee of
an Incentive Option under the Stock Incentive Plan. The exercise by a
participant of an Incentive Option also will not result in any federal income
tax consequences to the Company or the participant, except that (i) an amount
equal to the excess of the fair market value of the shares acquired upon
exercise of the Incentive Option, determined at the time of exercise, over the
amount paid for the shares by the participant will be includable in the
participant's alternative minimum taxable income for purposes of the alternative
minimum tax, and (ii) the participant may be subject to an additional excise tax
if any amounts are treated as excess parachute payments (see explanation below).
Special rules will apply if previously acquired shares of Common Stock are
permitted to be tendered in payment of an Option exercise price.
If the participant disposes of the Incentive Option shares acquired upon
exercise of the Incentive Option, the federal income tax consequences will
depend upon how long the participant has held the shares. If the participant
does not dispose of the shares within two years after the Incentive Option was
granted, nor within one year after the participant exercised the Incentive
Option and the shares were transferred to the participant, then the participant
will recognize a long-term capital gain or loss. The amount of the long-term
capital gain or loss will be equal to the difference between (i) the amount the
participant realized on disposition of the shares, and (ii) the option price at
which the participant acquired the shares. The Company is not entitled to any
compensation expense deduction under these circumstances.
If the participant does not satisfy both of the above holding period
requirements (a "disqualifying disposition"), then the participant will be
required to report as ordinary income, in the year the participant disposes of
the shares, the amount by which the lesser of (i) the fair market value of the
shares at the time of exercise of the Incentive Option (or, for directors,
officers or greater than 10 percent shareholders of the Company, generally the
fair market value of the shares six months after the date of exercise, unless
such persons file an election under Section 83(b) of the Code within 30 days of
exercise), or (ii) the amount realized on the disposition of the shares, exceeds
the option price for the shares. The Company will be entitled to a compensation
expense deduction in an amount equal to the ordinary income includable in the
taxable income of the participant. This compensation income may be subject to
withholding. The remainder of the gain recognized on the disposition, if any, or
any loss recognized on the disposition, will be treated as long-term or
short-term capital gain or loss, depending on the holding period.
NON-QUALIFIED OPTIONS. Neither the participant nor the Company incurs any
federal income tax consequences as a result of the grant of a Non-Qualified
Option. Upon exercise of a Non-Qualified Option, a participant will recognize
ordinary income, subject to withholding, on the "Includability Date" in an
amount equal to the difference between (i) the fair market value of the shares
purchased, determined on the Includability Date, and (ii) the consideration paid
for the shares. The Includability Date generally will be the date of exercise of
the Non-Qualified Option. However, the Includability Date for participants who
are officers, directors or greater-than-10 percent shareholders of the Company
will generally occur six months later, unless such persons file an election
under Section 83(b) of the Code within 30 days of the date of exercise to
include as ordinary income the amount realized upon exercise of the
Non-Qualified Option. The participant may be subject to an additional excise tax
if any amounts are treated as excess parachute payments (see explanation below).
Special rules will apply if previously acquired shares of Common Stock are
permitted to be tendered in payment of an Option exercise price.
At the time of a subsequent sale or disposition of any shares of Common
Stock obtained upon exercise of a Non-Qualified Option, any gain or loss will be
a capital gain or loss. Such capital gain or loss will be long-term capital gain
or loss if the sale or disposition occurs more than one year after the
Includability Date and short-term capital gain or loss if the sale or
disposition occurs one year or less after the Includability Date.
In general, the Company will be entitled to a compensation expense
deduction in connection with the exercise of a Non-Qualified Option for any
amounts includable in the taxable income of the participant as ordinary income,
provided the Company complies with any applicable withholding requirements.
RESTRICTED STOCK AWARDS. With respect to shares issued pursuant to a
Restricted Stock Award that are not subject to a substantial risk of forfeiture,
a participant will include as ordinary income in the year of receipt an amount
equal to the fair market value of the shares received on the date of receipt.
With respect to shares that are subject to a substantial risk of forfeiture, a
participant may file an election under Section 83(b) of the Code within 30 days
after the shares are received to include as ordinary income in the year of
receipt an amount equal to the fair market value of the shares received on the
date of receipt (determined as if the shares were not subject to any risk of
forfeiture). The Company will receive a corresponding tax deduction, provided
that proper withholding is made. If a Section 83(b) election is made, the
participant will not recognize any additional income when the restrictions on
the shares issued in connection with the stock award lapse. At the time any such
shares are sold or disposed of, any gain or loss will be treated as long-term or
short-term capital gain or loss, depending on the holding period from the date
of receipt of the Restricted Stock Award.
A participant who does not make a Section 83(b) election within 30 days of
the receipt of a Restricted Stock Award that is subject to a substantial risk of
forfeiture will recognize ordinary income at the time of the lapse of the
restrictions in an amount equal to the then fair market value of the shares. The
Company will receive a corresponding tax deduction, provided that proper
withholding is made. At the time of a subsequent sale or disposition of any
shares of Common Stock issued in connection with a Restricted Stock Award as to
which the restrictions have lapsed, any gain or loss will be treated as
long-term or short-term capital gain or loss, depending on the holding period
from the date the restrictions lapse.
PERFORMANCE UNITS. A participant who receives a Performance Unit will not
recognize any taxable income at the time of the grant. Upon settlement of the
Performance Unit, the participant will realize ordinary income in an amount
equal to the cash and the fair market value of any shares of Common Stock
received by the participant. Provided that proper withholding is made, the
Company would be entitled to a compensation expense deduction for any amounts
includable by the participants as ordinary income.
EXCISE TAX ON PARACHUTE PAYMENTS. The Code also imposes a 20% excise tax on
the recipient of "excess parachute payments," as defined in the Code and denies
tax deductibility to the Company on excess parachute payments. Generally,
parachute payments are payments in the nature of compensation to employees of a
company who are officers, shareholders, or highly compensated individuals, which
payments are contingent upon a change in ownership or effective control of the
company, or in the ownership of a substantial portion of the assets of the
company. For example, acceleration of the exercisability of Options, or the
vesting of Restricted Stock Awards, upon a change in control of the Company may
constitute parachute payments, and in certain cases, "excess parachute
payments."
AWARDS UNDER THE 1993 PLAN
As of the date of this Proxy Statement, the Compensation Committee has
approved awards under the 1993 Plan as summarized in the table below, which
awards are conditioned upon shareholder approval of an increase in the number of
shares available for issuance under the 1993 Plan.
NEW PLAN BENEFITS
1993 STOCK INCENTIVE PLAN
NAME AND POSITION DOLLAR VALUE ($)(1) NUMBER OF SHARES
UNDERLYING
OPTIONS
Non-Executive Officer
Employee Group 0 45,292
(1) None of the options conditionally granted to the individuals in the
Non-Executive Officer Employee Group were vested as of November 6, 1995.
All such conditional option grants have an exercise price equal to the fair
market value of one share of the Company's common stock on the date of
grant.
Neither the number nor types of future 1993 Plan awards to be received by or
allocated to particular participants or groups of participants is presently
determinable.
BOARD OF DIRECTORS RECOMMENDATIONS
The Board of Directors recommends that the shareholders vote FOR approval
of the proposed amendment to the 1993 Plan. The affirmative vote of the holders
of a majority of shares of Common Stock of the Company present in person or by
proxy at the Annual Meeting, assuming a quorum is present, is necessary for
approval. Unless a contrary choice is specified, proxies solicited by the Board
of Directors will be voted FOR approval of the proposed amendment to the 1993
Plan.
SELECTION OF AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP, independent
certified public accountants, as auditors of the Company for the fiscal year
ending July 31, 1996. Such firm, or its predecessors, has acted as independent
auditors of the Company since the fiscal year ended July 31, 1988. If the
shareholders do not ratify the appointment of KPMG Peat Marwick LLP, another
firm of independent auditors will be selected by the Board of Directors.
Representatives of KPMG Peat Marwick LLP will be present at the Annual Meeting.
Such representatives will have an opportunity to make a statement if they so
desire and will be available to respond to questions.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and all persons who beneficially
own more than 10% of the outstanding shares of the Company's Common Stock to
file with the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in ownership of the Company's Common Stock.
Executive officers, directors and greater than 10% beneficial owners are also
required to furnish the Company with copies of all Section 16(a) forms they
file. Other than with respect to two reports on Form 4 (reporting changes in
beneficial ownership) related to the Company's July 1994 bridge financing which
the Company failed to prepare in a timely manner for each of Messrs. Evans and
Taylor and Drs. Kiser and Joyce (which Form 4s each reported a single
transaction and were filed late with the SEC), to the Company's knowledge, based
upon a review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the year ended July
31, 1995, none of the directors, officers and beneficial owners of greater than
10% of the Company's Common Stock failed to file on a timely basis the forms
required by Section 16 of the Exchange Act.
SHAREHOLDER PROPOSALS FOR 1994 ANNUAL MEETING
Proposals of shareholders intended to be presented in the proxy materials
relating to the next Annual Meeting must be received by the Company at its
principal executive offices on or about August 15, 1996.
OTHER BUSINESS
The Company knows of no business that will be presented for consideration
at the Annual Meeting other than that described in this Proxy Statement. As to
other business, if any, that may properly come before the Annual Meeting, it is
intended that proxies solicited by the Board will be voted in accordance with
the judgment of the person or persons voting the proxies.
MISCELLANEOUS
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED JULY 31, 1995, TO
EACH PERSON WHO WAS A SHAREHOLDER OF THE COMPANY AS OF OCTOBER 23, 1995, UPON
RECEIPT FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN ANNUAL REPORT.
SUCH REQUEST SHOULD BE SENT TO: ANGEION CORPORATION, 3650 ANNAPOLIS LANE, SUITE
170, MINNEAPOLIS, MINNESOTA 55447-5434; ATTN: SHAREHOLDER INFORMATION.
By Order of the Board of Directors
/s/ Whitney A. McFarlin
Whitney A. McFarlin
Chairman of the Board,
President and Chief Executive Officer
Dated: November 6, 1995
Minneapolis, Minnesota
Appendix A
ANGEION CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints WHITNEY A. MCFARLIN and DAVID L.
CHRISTOFFERSON, and each of them, as Proxies, each with full power of
substitution, and hereby authorizes each of them to represent and to vote, as
designated below, all the shares of Common Stock or Preferred Stock of Angeion
Corporation held of record by the undersigned on October 23, 1995, at the Annual
Meeting of Shareholders to be held on December 20, 1995, or any adjournment,
thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] AGAINST all nominees listed below
(except as marked to the
contrary below)
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME)
WHITNEY A. MCFARLIN LYLE D. JOYCE, M.D., Ph.D.
ARNOLD A. ANGELONI JOSEPH C. KISER, M.D.
DENNIS E. EVANS GLEN TAYLOR
2. PROPOSAL TO AMEND THE COMPANY'S 1993 STOCK INCENTIVE PLAN TO INCREASE THE
NUMBER OF SHARES RESERVED FOR ISSUANCE BY 1,000,000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT
ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING JULY 31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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 PROPOSALS 2 AND 3 AND FOR ALL NOMINEES NAMED IN PROPOSAL 1 ABOVE.
Please sign exactly as name appears below. 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: __________________, 1994
_______________________________
Signature
_______________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
Appendix B
ANGEION CORPORATION
1993 STOCK INCENTIVE PLAN
1. Purpose of Plan.
The purpose of the Angeion Corporation 1993 Stock Incentive Plan (the
"Plan") is to advance the interests of Angeion Corporation (the "Company") and
its shareholders by enabling the Company and its Subsidiaries to attract and
retain persons of ability to perform services for the Company and its
Subsidiaries by providing an incentive to such individuals through equity
participation in the Company and by rewarding such individuals who contribute to
the achievement by the Company of its economic objectives.
2. Definitions.
The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Broker Exercise Notice" means a written notice pursuant to which a
Participant, upon exercise of an Option, irrevocably instructs a broker or
dealer to sell a sufficient number of shares or loan a sufficient amount of
money to pay all or a portion of the exercise price of the Option and/or any
related withholding tax obligations and remit such sums to the Company and
directs the Company to deliver stock certificates to be issued upon such
exercise directly to such broker or dealer.
2.3 "Change in Control" means an event described in Section 11.1 of the
Plan.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means the group of individuals administering the Plan, as
provided in Section 3 of the Plan.
2.6 "Common Stock" means the common stock of the Company, par value $.01
per share, or the number and kind of shares of stock or other securities into
which such Common Stock may be changed in accordance with Section 4.3 of the
Plan.
2.7 "Disability" means the disability of the Participant such as would
entitle the Participant to receive disability income benefits pursuant to the
long-term disability plan of the Company or Subsidiary then covering the
Participant or, if no such plan exists or is applicable to the Participant, the
permanent and total disability of the Participant within the meaning of Section
22(e)(3) of the Code.
2.8 "Eligible Recipients" means all employees (including, without
limitation, officers and directors who are also employees) of the Company or any
Subsidiary and any non-employee consultants and independent contractors of the
Company or any Subsidiary.
2.9 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.10 "Fair Market Value" means, with respect to the Common Stock, the
following:
(a) If the Common Stock is listed or admitted to unlisted trading
privileges on any national securities exchange or is not so listed or
admitted but transactions in the Common Stock are reported on the NASDAQ
National Market System, the mean between the reported high and low sale
prices of the Common Stock on such exchange or by the NASDAQ National
Market System as of such date (or, if no shares were traded on such day, as
of the next preceding day on which there was such a trade).
(b) If the Common Stock is not so listed or admitted to unlisted
trading privileges or reported on the NASDAQ National Market System, and
bid and asked prices therefor in the over-the-counter market are reported
by the NASDAQ System or the National Quotation Bureau, Inc. (or any
comparable reporting service), the mean of the closing bid and asked prices
as of such date, as so reported by the NASDAQ System, or, if not so
reported thereon, as reported by the National Quotation Bureau, Inc. (or
such comparable reporting service).
(c) If the Common Stock is not so listed or admitted to unlisted
trading privileges, or reported on the NASDAQ National Market System, and
such bid and asked prices are not so reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion. The
Committee shall not be required to obtain an appraisal within six months of
the adoption of the Plan. The Committee's determination as to the current
value of the Common Stock shall be final, conclusive and binding for all
purposes and on all persons, including, without limitation, the Company,
the shareholders of the Company, the Participants and their respective
successors-in-interest. No member of the Board of the Committee shall be
liable for any determination regarding current value of the Common Stock
that is made in good faith.
2.11 "Incentive Award" means an Option, Restricted Stock Award or
Performance Unit granted to an Eligible Recipient pursuant to the Plan.
2.12 "Incentive Stock Option" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of Section 422 of
the Code.
2.13 "Non-Statutory Stock Option" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that does not
qualify as an Incentive Stock Option.
2.14 "Option" means an Incentive Stock Option or a Non-Statutory Stock
Option.
2.15 "Participant" means an Eligible Recipient who receives one or more
Incentive Awards under the Plan.
2.16 "Performance Unit" means a right granted to an Eligible Recipient
pursuant to Section 8 of the Plan to receive a payment from the Company, in the
form of stock, cash or a combination of both, upon the achievement of
established performance goals.
2.17 "Previously Acquired Shares" means shares of Common Stock that are
already owned by the Participant or, with respect to any Incentive Award, that
are to be issued upon the grant, exercise or vesting of such Incentive Award.
2.18 "Restricted Stock Award" means an award of Common Stock granted to an
Eligible Recipient pursuant to Section 7 of the Plan that is subject to the
restrictions on transferability and the risk of forfeiture imposed by the
provisions of such Section 7.
2.19 "Retirement" means termination of employment or service pursuant to
and in accordance with the regular (or, if approved by the Board for purposes of
the Plan, early) retirement/pension plan or practice of the Company or
Subsidiary then covering the Participant, provided that if the Participant is
not covered by any such plan or practice, the Participant will be deemed to be
covered by the Company's plan or practice for purposes of this determination.
2.20 "Securities Act" means the Securities Act of 1933, as amended.
2.21 "Subsidiary" means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a significant
equity interest, as determined by the Committee.
2.22 "Tax Date" means the date any withholding tax obligation arises under
the Code for a Participant with respect to an Incentive Award.
3. Plan Administration.
3.1 The Committee. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, the Plan will be
administered by a committee (the "Committee") consisting solely of not less than
two members of the Board who are "disinterested persons" within the meaning of
Rule 16b-3 under the Exchange Act. To the extent consistent with corporate law,
the Committee may delegate to any officers of the Company the duties, power and
authority of the Committee under the Plan pursuant to such conditions or
limitations as the Committee may establish; provided, however, that only the
Committee may exercise such duties, power and authority with respect to Eligible
Recipients who are subject to Section 16 of the Exchange Act. Each
determination, interpretation or other action made or taken by the Committee
pursuant to the provisions of the Plan will be conclusive and binding for all
purposes and on all persons, and no member of the Committee will be liable for
any action or determination made in good faith with respect to the Plan or any
Incentive Award granted under the Plan.
3.2 Authority of the Committee.
(a) In accordance with and subject to the provisions of the Plan, the
Committee will have the authority to determine all provisions of Incentive
Awards as the Committee may deem necessary or desirable and as consistent
with the terms of the Plan, including, without limitation, the following:
(i) the Eligible Recipients to be selected as Participants; (ii) the nature
and extent of the Incentive Awards to be made to each Participant
(including the number of shares of Common Stock to be subject to each
Incentive Award, any exercise price, the manner in which Incentive Awards
will vest or become exercisable and whether Incentive Awards will be
granted in tandem with other Incentive Awards) and the form of written
agreement, if any, evidencing such Incentive Award; (iii) the time or times
when Incentive Awards will be granted; (iv) the duration of each Incentive
Award; and (v) the restrictions and other conditions to which the payment
or vesting of Incentive Awards may be subject. In addition, the Committee
will have the authority under the Plan in its sole discretion to pay the
economic value of any Incentive Award in the form of cash, Common Stock or
any combination of both.
(b) The Committee will have the authority under the Plan to amend or
modify the terms of any outstanding Incentive Award in any manner,
including, without limitation, the authority to modify the number of shares
or other terms and conditions of an Incentive Award, extend the term of an
Incentive Award, accelerate the exercisability or vesting or otherwise
terminate any restrictions relating to an Incentive Award, accept the
surrender of any outstanding Incentive Award or, to the extent not
previously exercised or vested, authorize the grant of new Incentive Awards
in substitution for surrendered Incentive Awards; provided, however that
the amended or modified terms are permitted by the Plan as then in effect
and that any Participant adversely affected by such amended or modified
terms has consented to such amendment or modification. No amendment or
modification to an Incentive Award, however, whether pursuant to this
Section 3.2 or any other provisions of the Plan, will be deemed to be a
regrant of such Incentive Award for purposes of this Plan.
(c) In the event of (i) any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock
split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off) or any other change in corporate
structure or shares, (ii) any purchase, acquisition, sale or disposition of
a significant amount of assets or a significant business, (iii) any change
in accounting principles or practices, or (iv) any other similar change, in
each case with respect to the Company or any other entity whose performance
is relevant to the grant or vesting of an Incentive Award, the Committee
(or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) may,
without the consent of any affected Participant, amend or modify the
vesting criteria of any outstanding Incentive Award that is based in whole
or in part on the financial performance of the Company (or any Subsidiary
or division thereof) or such other entity so as equitably to reflect such
event, with the desired result that the criteria for evaluating such
financial performance of the Company or such other entity will be
substantially the same (in the sole discretion of the Committee or the
board of directors of the surviving corporation) following such event as
prior to such event; provided, however, that the amended or modified terms
are permitted by the Plan as then in effect.
4. Shares Available for Issuance.
4.1 Maximum Number of Shares Available. Subject to adjustment as provided
in Section 4.3 of the Plan, the maximum number of shares of Common Stock that
will be available for issuance under the Plan will be 1,750,000 shares of Common
Stock in addition to any shares of Common Stock which, as of the date the Plan
is approved by the shareholders of the Company, are reserved for issuance under
either the Company's 1988 Stock Option Plan or 1989 Omnibus Stock Option Plan
and which are not thereafter issued.
4.2 Accounting for Incentive Awards. Shares of Common Stock that are issued
under the Plan or that are subject to outstanding Incentive Awards will be
applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan. Any shares of Common Stock that are
subject to an Incentive Award that lapses, expires, is forfeited or for any
reason is terminated unexercised or unvested and any shares of Common Stock that
are subject to an Incentive Award that is settled or paid in cash or any form
other than shares of Common Stock will automatically again become available for
issuance under the Plan. Any shares of Common Stock that constitute the
forfeited portion of a Restricted Stock Award, however, will not become
available for further issuance under the Plan.
4.3 Adjustments to Shares and Incentive Awards. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) will make appropriate
adjustment (which determination will be conclusive) as to the number and kind of
securities available for issuance under the Plan and, in order to prevent
dilution or enlargement of the rights of Participants, the number, kind and,
where applicable, exercise price of securities subject to outstanding Incentive
Awards.
5. Participation.
Participants in the Plan will be those Eligible Recipients who, in the
judgment of the Committee, have contributed, are contributing or are expected to
contribute to the achievement of economic objectives of the Company or its
Subsidiaries. Eligible Recipients may be granted from time to time one or more
Incentive Awards, singly or in combination or in tandem with other Incentive
Awards, as may be determined by the Committee in its sole discretion. Incentive
Awards will be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date will be the date of any related
agreement with the Participant.
6. Options.
6.1 Grant. An Eligible Recipient may be granted one or more Options under
the Plan, and such Options will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The Committee may designate whether an Option
is to be considered an Incentive Stock Option or a Non-Statutory Stock Option.
6.2 Exercise Price. The per share price to be paid by a Participant upon
exercise of an Option will be determined by the Committee in its discretion at
the time of the Option grant, provided that (a) such price will not be less than
100% of the Fair Market Value of one share of Common Stock on the date of grant
with respect to an Incentive Stock Option (110% of the Fair Market Value if, at
the time the Incentive Stock Option is granted, the Participant owns, directly
or indirectly, more than 10% of the total combined voting power of all classes
of stock of the Company or any parent or subsidiary corporation of the Company),
and (b) such price will not be less than 85% of the Fair Market Value of one
share of Common Stock on the date of grant with respect to a Non-Statutory Stock
Option (100% of the Fair Market Value if, at the time the Non-Statutory Stock
Option is granted, the Participant is subject to Section 16 of the Exchange
Act).
6.3 Exercisability and Duration. An Option will become exercisable at such
times and in such installments as may be determined by the Committee in its sole
discretion at the time of grant; provided, however, that no Option may be
exercisable after 10 years from its date of grant.
6.4 Payment of Exercise Price. The total purchase price of the shares to be
purchased upon exercise of an Option will be paid entirely in cash (including
check, bank draft or money order); provided, however, that the Committee, in its
sole discretion and upon terms and conditions established by the Committee, may
allow such payments to be made, in whole or in part, by tender of a Broker
Exercise Notice, Previously Acquired Shares or by a combination of such methods.
6.5 Manner of Exercise. An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions contained in the
Plan and in the agreement evidencing such Option, by delivery in person, by
facsimile or electronic transmission or through the mail of written notice of
exercise to the Company (Attention: Secretary) at its principal executive office
in St. Paul, Minnesota and by paying in full the total exercise price for the
shares of Common Stock to be purchased in accordance with Section 6.4 of the
Plan.
7. Restricted Stock Awards.
7.1 Grant. An Eligible Recipient may be granted one or more Restricted
Stock Awards under the Plan, and such Restricted Stock Awards will be subject to
such terms and conditions, consistent with the other provisions of the Plan, as
may be determined by the Committee in its sole discretion. The Committee may
impose such restrictions or conditions, not inconsistent with the provisions of
the Plan, to the vesting of such Restricted Stock Awards as it deems
appropriate, including, without limitation, that the Participant remain in the
continuous employ or service of the Company or a Subsidiary for a certain period
or that the Participant or the Company (or any Subsidiary or division thereof)
satisfy certain performance goals or criteria.
7.2 Rights as a Shareholder; Transferability. Except as provided in
Sections 7.1, 7.3 and 12.3 of the Plan, a Participant will have all voting,
dividend, liquidation and other rights with respect to shares of Common Stock
issued to the Participant as a Restricted Stock Award under this Section 7 upon
the Participant becoming the holder of record of such shares as if such
Participant were a holder of record of shares of unrestricted Common Stock.
7.3 Dividends and Distributions. Unless the Committee determines otherwise
in its sole discretion (either in the agreement evidencing the Restricted Stock
Award at the time of grant or at any time after the grant of the Restricted
Stock Award), any dividends or distributions (including regular quarterly cash
dividends) paid with respect to shares of Common Stock subject to the unvested
portion of a Restricted Stock Award will be subject to the same restrictions as
the shares to which such dividends or distributions relate. In the event the
Committee determines not to pay such dividends or distributions currently, the
Committee will determine in its sole discretion whether any interest will be
paid on such dividends or distributions. In addition, the Committee in its sole
discretion may require such dividends and distributions to be reinvested (and in
such case the Participants consent to such reinvestment) in shares of Common
Stock that will be subject to the same restrictions as the shares to which such
dividends or distributions relate.
7.4 Enforcement of Restrictions. To enforce the restrictions referred to in
this Section 7, the Committee may place a legend on the stock certificates
referring to such restrictions and may require the Participant, until the
restrictions have lapsed, to keep the stock certificates, together with duly
endorsed stock powers, in the custody of the Company or its transfer agent or to
maintain evidence of stock ownership, together with duly endorsed stock powers,
in a certificateless book-entry stock account with the Company's transfer agent.
8. Performance Units.
An Eligible Recipient may be granted one or more Performance Units under
the Plan, and such Performance Units will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion. The Committee may impose
such restrictions or conditions, not inconsistent with the provisions of the
Plan, to the vesting of such Performance Units as it deems appropriate,
including, without limitation, that the Participant remain in the continuous
employ or service of the Company or any Subsidiary for a certain period or that
the Participant or the Company (or any Subsidiary or division thereof) satisfy
certain performance goals or criteria. The Committee will have the sole
discretion either to determine the form in which payment of the economic value
of vested Performance Units will be made to the Participant (i.e., cash, Common
Stock or any combination thereof) or to consent to or disapprove the election by
the Participant of the form of such payment.
9. Effect of Termination of Employment or Other Service.
9.1 Termination Due to Death, Disability or Retirement. In the event a
Participant's employment or other service with the Company and all Subsidiaries
is terminated by reason of death, Disability or Retirement:
(a) All outstanding Options then held by the Participant will become
immediately exercisable in full and will remain exercisable for a period of
one year (three months in the case of Retirement) after such termination
(but in no event after the expiration date of any such Option);
(b) All Restricted Stock Awards then held by the Participant will
become fully vested; and
(c) All Performance Units then held by the Participant will vest
and/or continue to vest in the manner determined by the Committee and set
forth in the agreement evidencing such Performance Units.
9.2 Termination for Reasons Other than Death, Disability or Retirement.
(a) In the event a Participant's employment or other service is
terminated with the Company and all Subsidiaries for any reason other than
death, Disability or Retirement, or a Participant is in the employ or
service of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the
Company (unless the Participant continues in the employ or service of the
Company or another Subsidiary), all rights of the Participant under the
Plan and any agreements evidencing an Incentive Award will immediately
terminate without notice of any kind, and no Options then held by the
Participant will thereafter be exercisable, all Restricted Stock Awards
then held by the Participant that have not vested will be terminated and
forfeited, and all Performance Units then held by the Participant will vest
and/or continue to vest in the manner determined by the Committee and set
forth in the agreement evidencing such Performance Units; provided,
however, that if such termination is due to any reason other than
termination by the Company or any Subsidiary for "cause," all outstanding
Options then held by such Participant will remain exercisable to the extent
exercisable as of such termination for a period of three months after such
termination (but in no event after the expiration date of any such Option).
(b) For purposes of this Section 9.2, "cause" (as determined by the
Committee) will be as defined in any employment or other agreement or
policy applicable to the Participant or, if no such agreement or policy
exists, will mean (i) dishonesty, fraud, misrepresentation, embezzlement or
deliberate injury or attempted injury, in each case related to the Company
or any Subsidiary, (ii) any unlawful or criminal activity of a serious
nature, (iii) any intentional and deliberate breach of a duty or duties
that, individually or in the aggregate, are material in relation to the
Participant's overall duties, or (iv) any material breach of any
employment, service, confidentiality or noncompete agreement entered into
with the Company or any Subsidiary.
9.3 Modification of Rights Upon Termination. Notwithstanding the other
provisions of this Section 9, upon a Participant's termination of employment or
other service with the Company and all Subsidiaries, the Committee may, in its
sole discretion (which may be exercised at any time on or after the date of
grant, including following such termination), cause Options (or any part
thereof) then held by such Participant to become or continue to become
exercisable and/or remain exercisable following such termination of employment
or service and Restricted Stock Awards and Performance Units then held by such
Participant to vest and/or continue to vest or become free of transfer
restrictions, as the case may be, following such termination of employment or
service, in each case in the manner determined by the Committee; provided,
however, that no Option may remain exercisable beyond its expiration date.
9.4 Breach of Confidentiality or Noncompete Agreements. Notwithstanding
anything in the Plan to the contrary, in the event that a Participant materially
breaches the terms of any confidentiality or noncompete agreement entered into
with the Company or any Subsidiary, whether such breach occurs before or after
termination of such Participant's employment or other service with the Company
or any Subsidiary, the Committee in its sole discretion may immediately
terminate all rights of the Participant under the Plan and any agreements
evidencing an Incentive Award then held by the Participant without notice of any
kind.
9.5 Date of Termination of Employment or Other Service. Unless the
Committee otherwise determines in its sole discretion, a Participant's
employment or other service will, for purposes of the Plan, be deemed to have
terminated on the date recorded on the personnel or other records of the Company
or the Subsidiary for which the Participant provides employment or other
service, as determined by the Committee in its sole discretion based upon such
records.
10. Payment of Withholding Taxes.
10.1 General Rules. The Company is entitled to (a) withhold and deduct from
future wages of the Participant (or from other amounts that may be due and owing
to the Participant from the Company or a Subsidiary), or make other arrangements
for the collection of, all legally required amounts necessary to satisfy any and
all federal, state and local withholding and employment-related tax requirements
attributable to an Incentive Award, including, without limitation, the grant,
exercise or vesting of, or payment of dividends with respect to, an Incentive
Award or a disqualifying disposition of stock received upon exercise of an
Incentive Stock Option, or (b) require the Participant promptly to remit the
amount of such withholding to the Company before taking any action, including
issuing any shares of Common Stock, with respect to an Incentive Award.
10.2 Special Rules. The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 10.1 of the Plan by
electing to tender Previously Acquired Shares or a Broker Exercise Notice, or by
a combination of such methods.
11. Change in Control.
11.1 Change in Control. For purposes of this Section 11.1, a "Change in
Control" of the Company will mean the following:
(a) the sale, lease, exchange or other transfer, directly or
indirectly, of substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a person or entity
that is not controlled by the Company,
(b) the approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company;
(c) a merger or consolidation to which the Company is a party if the
shareholders of the Company immediately prior to effective date of such
merger or consolidation have "beneficial ownership" (as defined in Rule
13d-3 under the Exchange Act), immediately following the effective date of
such merger or consolidation, of securities of the surviving corporation
representing (i) more than 50%, but not more than 80%, of the combined
voting power of the surviving corporation's then outstanding securities
ordinarily having the right to vote at elections of directors, unless such
merger or consolidation has been approved in advance by the Incumbent
Directors (as defined in Section 11.2 below), or (ii) 50% or less of the
combined voting power of the surviving corporation's then outstanding
securities ordinarily having the right to vote at elections of directors
(regardless of any approval by the Incumbent Directors);
(d) any person becomes after the effective date of the Plan the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of (A) 20% or more, but not 50% or more, of the
combined voting power of the Company's outstanding securities ordinarily
having the right to vote at elections of directors, unless the transaction
resulting in such ownership has been approved in advance by the Incumbent
Directors, or (B) 50% or more of the combined voting power of the Company's
outstanding securities ordinarily having the right to vote at elections of
directors (regardless of any approval by the Incumbent Directors);
(e) the Incumbent Directors cease for any reason to constitute at
least a majority of the Board; or
(f) a change in control of the Company of a nature that would be
required to be reported pursuant to Section 13 or 15(d) of the Exchange
Act, whether or not the Company is then subject to such reporting
requirements.
11.2 Incumbent Directors. For purposes of this Section 11, "Incumbent
Directors" of the Company will mean any individuals who are members of the Board
on the effective date of the Plan and any individual who subsequently becomes a
member of the Board whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
comprising the Board on the effective date of the Plan (either by specific vote
or by approval of the Company's proxy statement in which such individual is
named as a nominee for director without objection to such nomination).
11.3 Acceleration of Vesting. Without limiting the authority of the
Committee under Section 3.2 of the Plan, if a Change in Control of the Company
occurs, then, if approved by the Committee in its sole discretion either in an
agreement evidencing an Incentive Award at the time of grant or at any time
after the grant of an Incentive Award, (a) all Options will become immediately
exercisable in full and will remain exercisable for the remainder of their
terms, regardless of whether the Participants to whom such Options have been
granted remain in the employ or service of the Company or any Subsidiary; (b)
all outstanding Restricted Stock Awards will become immediately fully vested;
and (c) all Performance Units then held by the Participant will vest and/or
continue to vest in the manner determined by the Committee and set forth in the
agreement evidencing such Performance Units.
11.4 Cash Payment for Options. If a Change in Control of the Company
occurs, then the Committee, if approved by the Committee in its sole discretion
either in an agreement evidencing an Incentive Award at the time of grant or at
any time after the grant of an Incentive Award, and without the consent of any
Participant effected thereby, may determine that some or all Participants
holding outstanding Options will receive, with respect to some or all of the
shares of Common Stock subject to such Options, as of the effective date of any
such Change in Control of the Company, cash in an amount equal to the excess of
the Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of such
Options.
11.5 Limitation on Change in Control Payments. Notwithstanding anything in
Section 11.3 or 11.4 of the Plan to the contrary, if, with respect to a
Participant, the acceleration of the vesting of an Incentive Award as provided
in Section 11.3 or the payment of cash in exchange for all or part of an
Incentive Award as provided in Section 11.4 (which acceleration or payment could
be deemed a "payment" within the meaning of Section 280G(b)(2) of the Code),
together with any other payments which such Participant has the right to receive
from the Company or any corporation that is a member of an "affiliated group"
(as defined in Section 1504(a) of the Code without regard to Section 1504(b) of
the Code) of which the Company is a member, would constitute a "parachute
payment" (as defined in Section 280G(b)(2) of the Code), then the payments to
such Participant pursuant to Section 11.3 or 11.4 will be reduced to the largest
amount as will result in no portion of such payments being subject to the excise
tax imposed by Section 4999 of the Code; provided, however, that if such
Participant is subject to a separate agreement with the Company or a Subsidiary
which specifically provides that payments attributable to one or more forms of
employee stock incentives or to payments made in lieu of employee stock
incentives will not reduce any other payments under such agreement, even if it
would constitute an excess parachute payment, then the limitations of this
Section 11.5 will, to that extent, not apply.
12. Rights of Eligible Recipients and Participants; Transferability.
12.1 Employment or Service. Nothing in the Plan will interfere with or
limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of any Eligible Recipient or Participant at any time, nor
confer upon any Eligible Recipient or Participant any right to continue in the
employ or service of the Company or any Subsidiary.
12.2 Rights as a Shareholder. As a holder of Incentive Awards (other than
Restricted Stock Awards), a Participant will have no rights as a shareholder
unless and until such Incentive Awards are exercised for, or paid in the form
of, shares of Common Stock and the Participant becomes the holder of record of
such shares. Except as otherwise provided in the Plan, no adjustment will be
made for dividends or distributions with respect to such Incentive Awards as to
which there is a record date preceding the date the Participant becomes the
holder of record of such shares, except as the Committee may determine in its
discretion.
12.3 Restrictions on Transfer. Except pursuant to testamentary will or the
laws of descent and distribution or as otherwise expressly permitted by the
Plan, no right or interest of any Participant in an Incentive Award prior to the
exercise or vesting of such Incentive Award will be assignable or transferable,
or subjected to any lien, during the lifetime of the Participant, either
voluntarily or involuntarily, directly or indirectly, by operation of law or
otherwise. A Participant will, however, be entitled to designate a beneficiary
to receive an Incentive Award upon such Participant's death, and in the event of
a Participant's death, payment of any amounts due under the Plan will be made
to, and exercise of any Options (to the extent permitted pursuant to Section 9
of the Plan) may be made by, the Participant's legal representatives, heirs and
legatees.
12.4 Non-Exclusivity of the Plan. Nothing contained in the Plan is intended
to modify or rescind any previously approved compensation plans or programs of
the Company or create any limitations on the power or authority of the Board to
adopt such additional or other compensation arrangements as the Board may deem
necessary or desirable.
13. Securities Law and Other Restrictions.
Notwithstanding any other provision of the Plan or any agreements entered
into pursuant to the Plan, the Company will not be required to issue any shares
of Common Stock under this Plan, and a Participant may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Incentive Awards granted under the Plan, unless (a) there is in effect with
respect to such shares a registration statement under the Securities Act and any
applicable state securities laws or an exemption from such registration under
the Securities Act and applicable state securities laws, and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
which the Committee, in its sole discretion, deems necessary or advisable. The
Company may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing shares of Common Stock, as may be
deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.
14. Plan Amendment, Modification and Termination
The Board may suspend or terminate the Plan or any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board may
deem advisable in order that Incentive Awards under the Plan will conform to any
change in applicable laws or regulations or in any other respect the Board may
deem to be in the best interests of the Company; provided, however, that no
amendments to the Plan will be effective without approval of the stockholders of
the Company if stockholder approval of the amendment is then required pursuant
to Rule 16b-3 under the Exchange Act, Section 422 of the Code or the rules of
the National Association of Securities Dealers, Inc. No termination, suspension
or amendment of the Plan may adversely affect any outstanding Incentive Award
without the consent of the affected Participant; provided, however, that this
sentence will not impair the right of the Committee to take whatever action it
deems appropriate under Sections 4.3 and 11 of the Plan.
15. Effective Date and Duration of the Plan
The Plan is effective as of October 6, 1993, the date it was adopted by the
Board. The Plan will terminate at midnight on October 6, 2003, and may be
terminated prior to such time to by Board action, and no Incentive Award will be
granted after such termination. Incentive Awards outstanding upon termination of
the Plan may continue to be exercised, or become free of restrictions, in
accordance with their terms.
16. Miscellaneous
16.1 Governing Law. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of Minnesota.
16.2 Successors and Assigns. The Plan will be binding upon and inure to the
benefit of the successors and permitted assigns of the Company and the
Participants.
