SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
ANGEION CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ANGEION CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $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 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
PRELIMINARY PROXY STATEMENT
ANGEION CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 11, 1996
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 11, 1996, for the following purposes:
1. To elect eight (8) 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 increase the number of
authorized shares of common stock of the Company from 35,000,000 to 50,000,000;
3. 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
1,500,000 shares;
4. To consider and act upon a proposal to amend the Company's 1994
Non-Employee Director Plan and to increase the number of shares reserved for
issuance by 100,000 shares;
5. To approve the appointment of KPMG Peat Marwick LLP as independent
auditors for the year ending July 31, 1997; and
6. 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 14, 1996.
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
David L. Christofferson
Secretary
October 30, 1996
Minneapolis, Minnesota
ANGEION CORPORATION
3650 ANNAPOLIS LANE
SUITE 170
MINNEAPOLIS, MINNESOTA 55447-5434
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
December 11, 1996
INTRODUCTION
The Annual Meeting of Shareholders of Angeion Corporation (the
"Company") will be held on Wednesday, December 11, 1996, 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 October 30, 1996.
VOTING OF SHARES
Only holders of Common Stock and Preferred Stock of record at the close
of business on October 14, 1996 will be entitled to vote at the Annual Meeting.
On October 14, 1996, the Company had 28,662,457 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 eight directors elected
at the Annual Meeting. 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.
All of the nominees, except for Dennis L. Sellke, 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 14,
1996, 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.
<TABLE>
<CAPTION>
NOMINEES FOR ELECTION AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------------- --- -------------------- --------------
<S> <C> <C> <C>
Whitney A. McFarlin 56 President, Chief Executive Officer and Chairman 1993
of the Company
Arnold A. Angeloni 54 President Gateway Alliance LLC 1990
Dennis E. Evans 57 President and Chief Executive Officer of Hanrow 1990
Financial Group, Ltd.
Lyle D. Joyce, M.D., Ph.D. 49 Cardiothoracic Surgeon and President of 1988
Minnesota Thoracic Group, P.A.
Joseph C. Kiser, M.D. 63 Retired Cardiothoracic Surgeon at Minnesota 1988
Thoracic Group, P.A.
Donald D. Maurer 59 Chairman of the Board and Chief Scientific 1996
Officer of Empi, Inc.
Dennis L. Sellke 50 Chief Executive Officer and Chairman of Clarus --
Medical Systems, Inc.
Glen Taylor 55 Chief Executive Officer and Chairman of Taylor 1992
Corporation
</TABLE>
OTHER INFORMATION ABOUT NOMINEES
WHITNEY A. McFARLIN has been President, Chief Executive Officer and
Chairman of the Board of the Company since September 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 that manufactures neuroendoscopy products ("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, Inc., a medical device 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 and Zero Corp.
ARNOLD A. ANGELONI has been President of Gateway Alliance LLC, a
financial consulting firm for start-up ventures and business consolidations,
since January 1996. From 1961 to 1995, Mr. Angeloni was employed by Deluxe
Corporation, a provider of check products and services to the financial payments
industry, in various administrative, marketing, and operations positions, 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 Group Ltd., a merchant banking partnership, since February
1989. He also serves on the Board of Directors of Minnesota Power & Light Co.
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. is a cardiothoracic surgeon (retired) and a
founder of The Minneapolis Heart Institute and The Minneapolis Heart Institute
Foundation. Dr. Kiser is also a founder of the Minnesota Thoracic Group, P.A. He
practiced cardiothoracic surgery at Abbott Northwestern Hospital as well as
other Minneapolis/St. Paul hospitals for more than 20 years prior to his
retirement in January 1995.
DONALD D. MAURER currently serves as Chairman of the Board and Chief
Scientific Officer of Empi, Inc., a manufacturer of noninvasive biomedical
devices and a public company. Mr. Maurer founded Empi in 1977, became Chairman
of the Board in 1978, and was named President and Chief Executive Officer in
1979. Mr. Maurer is also the Chairman of the Board of Medical Alley, a
Minneapolis professional organization representing the interests of the medical
industry.
DENNIS L. SELLKE currently serves as the Chief Executive Officer and
Chairman of the Board of Clarus. Mr. Sellke was appointed Chief Executive
Officer and Vice Chairman of the Board of Clarus in March 1995. In July 1996,
Mr. Sellke became the Chairman of the Board of Clarus. From 1978 to 1995, Mr.
Sellke was employed by Medtronic in a variety of positions, most recently as
Vice President and General Manager of its heart valve business.
GLEN TAYLOR has been the Chief Executive Officer and Chairman of the
Board of Taylor Corporation since 1975. Taylor Corporation's businesses include
printing, banking, direct mail marketing, office supplies and electrical
manufacturing. Mr. Taylor also is the owner of 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 fiscal 1996. 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, 1996. Messrs. Taylor, Evans and
Kiser served as members of the Audit Committee in fiscal 1996. Messrs.
Angeloni, Evans, Maurer and Kiser will serve as members of the Audit Committee
in fiscal 1997.
The function of the Governance Committee is to recommend a list of
potential director nominees to the Board of Directors, to develop guidelines for
corporate structuring and Board related issues and to act as an oversight
committee. While the Governance Committee will consider director 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 1996. Messrs. Angeloni, Evans, McFarlin and
Kiser served as members of the Governance Committee in fiscal 1996. Messrs.
Evans, McFarlin, Taylor and Joyce will serve as members of the Governance
Committee in fiscal 1997.
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 1993 Stock Incentive Plan (the "1993
Plan"). The Compensation Committee met one time during the fiscal 1996. Messrs.
Taylor and Joyce served as members of the Compensation Committee for all of
fiscal 1996. Sally E. Howard, a former director of the Company who did not stand
for re-election at the Company's Annual Meeting held in December 1995, served as
a member of the Compensation Committee until December 1995. Messrs. Angeloni,
Taylor and Kiser will serve as members of the Compensation Committee in fiscal
1997.
All of the directors of the Company 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.
STOCK-BASED COMPENSATION. In May 1992, the Board adopted the
Non-Employee Director Plan (the "1992 Director Plan"), which was approved by the
shareholders in December 1992. Pursuant to the 1992 Director Plan, as currently
in effect, non-employee directors of the Company automatically receive an annual
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 (a
"Stock Award"), upon their election or re-election, as the case may be, as a
non-employee director of the Company.
In October 1994, the Board adopted the 1994 Non-Employee Director
Option Plan (the "1994 Director Plan"), which was approved by the shareholders
in December 1994. As currently in effect, the 1994 Director Plan provides that
non-employee directors automatically receive an option to purchase 2,500 shares
of Common Stock ("Options") upon their election or re-election, as the case may
be, as a non-employee director of the Company.
In September 1996, the Board amended the 1994 Director Plan, subject to
shareholder approval, (i) to provide for the grant of Stock Awards and Options
to directors who may be elected or appointed to fill vacancies or newly created
directorships following the date of an annual meeting but prior to the beginning
of the next fiscal year, (ii) for convenience and ease of administration, to
combine the 1992 Director Plan and the 1994 Director Plan, and (iii) to increase
the number of shares available for issuance under the combined plan from 100,000
to 200,000 shares to take into account the combination of the two plans as well
as future grants under the combined plan. See "Proposal to Amend the 1994
Director Plan -- Amendments" contained in this Proxy Statement.
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 14, 1996, 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.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)(2)
--------------------------
PERCENT OF
AMOUNT CLASS
------ ----------
<S> <C> <C>
Whitney A. McFarlin.................................... 528,110 (3) 1.8%
Arnold A. Angeloni..................................... 71,902 (4) *
Dennis E. Evans........................................ 744,935 (5) 2.6
Lyle D. Joyce, M.D., Ph.D.............................. 279,985 (6) *
Joseph C. Kiser, M.D................................... 394,836 (7) 1.4
Donald D. Maurer....................................... 0 --
Dennis L. Sellke....................................... 0 --
Glen Taylor............................................ 473,091 (8) 1.6%
T.V. Rao............................................... 25,000 (9) *
Gary L. Payment........................................ 53,530 (10) *
David L. Christofferson................................ 151,297 (11) *
William J. Rissman..................................... 26,250 (12) *
All current directors and executive officers as a
group (14 persons)................................... 2,769,686 (13) 9.2
*Less than 1%.
</TABLE>
(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) Includes 520,156 shares which may be acquired within 60 days upon
the exercise of stock options.
(4) Includes 45,000 shares which may be acquired within 60 days upon
the exercise of stock options.
(5) Includes 610,000 shares of Common Stock beneficially owned by
Hanrow Financial Group Ltd. ("Hanrow Financial"). Hanrow Financial is the
general partner of Hanrow Capital Fund and Hanrow Capital Fund III, which own
30,000 and 580,000 shares of Common Stock, respectively. Also includes 41,666
shares which may be acquired within 60 days upon the exercise of warrants
beneficially owned by Hanrow Financial, 41,667 shares which may be acquired
within 60 days upon the exercise of warrants owned by Hanrow Business Finance,
Inc., an affiliate of Hanrow Financial, and 21,000 shares which may be acquired
within 60 days upon the exercise of stock options owned by Mr. Evans. Mr. Evans,
a director of the Company, is the president and chief executive officer of
Hanrow Financial
(6) Includes 91,000 shares held by the MTA Retirement Plan and Trust
FBO Lyle D. Joyce, 7,500 shares which may be acquired within 60 days upon the
exercise of warrants held by the MTA Retirement Plan and Trust FBO Lyle D.
Joyce, 13,333 shares which may be acquired within 60 days upon the exercise of
warrants and 39,000 shares which may be acquired within 60 days upon the
exercise of stock options.
(7) Includes 43,567 shares held by the MTA Retirement Plan and Trust
FBO Joseph C. Kiser and 80,833 shares which may be acquired within 60 days upon
the exercise of stock options.
(8) Includes 200,000 shares which may be acquired within 60 days upon
the exercise of warrants and 5,000 shares which may be acquired within 60 days
upon the exercise of stock options.
(9) Includes 25,000 shares which may be acquired within 60 days upon
the exercise of stock options.
(10) Includes 50,000 shares which may be acquired within 60 days upon
the exercise of stock options.
(11) Includes 150,997 shares which may be acquired within 60 days upon
the exercise of stock options.
(12) Includes 26,250 shares which may be acquired within 60 days upon
the exercise of stock options.
(13) Includes 1,286,152 shares which may be acquired within 60 days
upon the exercise of warrants and stock options..
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, 1996. All of the options listed below, unless otherwise
noted, were granted under the 1993 Plan.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ----------------------
------------------- SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION (1) YEAR SALARY BONUS UNDERLYING OPTIONS(#) COMPENSATION
- ------------------------------- ---- -------- ------- ---------------------- ------------
<S> <C> <C> <C> <C> <C>
Whitney A. McFarlin 1996 $240,300 $0 0 $1,595 (2)
CHAIRMAN OF THE BOARD, CHIEF 1995 225,870 0 0 0
EXECUTIVE OFFICER AND PRESIDENT 1994 167,250 10,000 505,156 0
T.V. Rao 1996 122,604 0 6,000 10,000 (3)
VICE PRESIDENT OF SALES AND 1995 --- --- 50,000 (4) 0
MARKETING 1994 --- --- 0
Gary L. Payment 1996 105,785 0 12,000 0
VICE PRESIDENT OF OPERATIONS 1995 82,710 0 100,000 0
1994 --- --- --- 0
David L. Christofferson 1996 102,488 0 87,000 (5) 0
VICE PRESIDENT, CHIEF FINANCIAL 1995 101,183 0 25,000 0
OFFICER AND SECRETARY 1994 85,000 0 42,247 0
William J. Rissman 1996 100,837 0 12,000 0
VICE PRESIDENT OF ENGINEERING 1995 66,600 0 65,000 0
1994 --- --- --- 0
</TABLE>
(1) Mr. Rao commenced employment with the Company on July 31, 1995; Mr. Payment
commenced employment with the Company in September 1994; and Mr. Rissman
commenced employment with the Company in November 1994.
(2) This amount represents life insurance premiums paid by the Company on Mr.
McFarlin's behalf.
(3) This amount represents moving and relocation expenses for Mr. Rao that were
paid by the Company.
(4) All of such options were granted outside of the 1993 Plan.
(5) All of such options were granted under the 1993 Plan except for 75,000
options granted outside of the 1993 Plan.
OPTION GRANTS AND EXERCISES
The following tables summarize option grants and exercises,
respectively, during fiscal 1996 to or by the executive officers named in the
Summary Compensation Table and the potential realizable value of the options
held by such persons at July 31, 1996.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM (1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------------------
NAME GRANTED(#)(2) FISCAL YEAR $/SHARE DATE 0% 5% 10%
---- ------------- ----------- ----------- ---------- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Whitney A. McFarlin 0 0% -- -- -- -- --
T.V. Rao 6,000 0.57 $7.00 12/20/05 -- $26,413 $66,937
Gary L. Payment 12,000 1.15 7.00 12/20/05 -- 52,826 133,874
David L. Christofferson 75,000(3) 7.16 3.50 8/30/05 $314,062 165,083 418,356
12,000 1.15 7.00 12/20/05 -- 52,826 133,874
William J. Rissman 12,000 1.15 7.00 12/20/05 -- 52,826 133,874
</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 will not necessarily be achieved.
(2) Except for the grant of 75,000 non-plan options granted to David L.
Christofferson, 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 75,000 non-plan options granted to Mr. Christofferson vest in three
installments as follows: 37,500 shares on September 5, 1995; 18,750 shares on
May 1, 1996; and 18,750 shares on May 1, 1997. The 1993 Plan provides that in
the event of a "change in control" of the Company (as defined in the 1993 Plan),
the Compensation Committee may, among other things, accelerate the vesting of
all options granted under the 1993 Plan.
(3) These options were granted on August 30, 1995 when the closing price of the
Common Stock on such date was $7.6875. See "Compensation Committee Report on
Repricing of Options" contained in this Proxy Statement.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES VALUE OF UNEXERCISED
ACQUIRED ON VALUE NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
NAME EXERCISE (#) REALIZED ($) OPTIONS AT JULY 31, 1996(#) AT JULY 31, 1996($)(1)
---- ------------ ------------ ---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Whitney A. McFarlin 0 $0 355,156 150,000 $1,487,216 $628,125
T.V. Rao 0 0 25,000 31,000 71,875 71,875
Gary L. Payment 0 0 25,000 87,000 93,750 281,250
David L. Christofferson 0 0 144,747 59,500 385,656 166,041
William J. Rissman 0 0 16,250 60,750 56,796 170,389
</TABLE>
- ------------------
(1) Based on the July 31, 1996 closing price of the Common Stock of $6.375.
COMPENSATION COMMITTEE REPORT ON REPRICING OF OPTIONS
In August 1995, the Compensation Committee determined that David L.
Christofferson, the Company's Vice President, Chief Financial Officer and
Secretary, relative to the other executive officers of the Company, had been
undercompensated for his past efforts on behalf of the Company. In the belief
that it was in the best interests of the Company and its shareholders to ensure
that the intended incentives to Mr. Christofferson were maintained in accordance
with the compensation philosophy of the Compensation Committee, the Compensation
Committee canceled 75,000 options then held by Mr. Christofferson that he had
received under the Company's 1989 Omnibus Stock Option Plan and granted him
75,000 non-qualified options at an exercise price of $3.50 per share.
The following table sets forth certain additional information regarding
this repricing, which is the only repricing of options held by any executive
officer that has occurred in the last ten years.
<TABLE>
<CAPTION>
TEN-YEAR OPTION REPRICINGS
--------------------------
Length of
Securities Original
Underlying Market Price of Option Term
Number of Stock At Exercise Price Remaining
Options Time of At Time of At Date of
Repriced or Repricing or Repricing or New Exercise Repricing or
Name Date Amended (#) Amendment ($) Amendment($) Price ($) Amendment
---- ---- ----------- --------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David L. Christofferson 8/30/95 75,000 $7.6875 $8.5625 $3.50 64 months
</TABLE>
COMPENSATION COMMITTEE
Lyle D. Joyce, M.D., Ph.D.
Glen Taylor
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, effective as of September 15, 1996, 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 provides for an initial base salary of
$243,000 for the first year and a base salary of $255,150 for the second year.
Thereafter, Mr. McFarlin's base salary is to be determined by the Board, taking
into account individual and corporate performance.
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 1996, 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 one to four times per year. The members of the
Compensation Committee during fiscal 1996 were Messrs. Taylor and Joyce, who
served for all of fiscal 1996. Sally E. Howard, a former director of the
Company, served as a member until her retirement in December 1995. 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 Compensation Committee is
committed to the general principle that overall executive compensation should be
commensurate with performance, by the Company and the individual executive
officers, 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 in comparable
industries and 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
executives. 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, bonuses and long-term incentive
compensation in the form of stock options. The particular elements of the
compensation program are discussed more fully below.
BASE SALARY. Base 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 evaluated and adjusted on the employee's annual
review date. Base salaries for 1996 increased modestly from 1995 levels due to
the Company's continuing focus on development activities requiring the
conservation of cash. Mr. McFarlin's base salary level for fiscal 1996,
$240,300, was established by action of the Compensation Committee.
BONUSES. The Company also may pay bonuses to executive officers as part
of its executive compensation program. The purpose of the cash bonus component
of the executive compensation program is to provide a direct financial incentive
in the form of cash bonuses to executives who help the Company achieve
predetermined Company financial performance and operational milestones.
Historically, the bonuses paid by the Company have been minimal based, in part,
on the Company's continuing focus on development activities requiring the
conservation of cash. Cash bonuses were not paid to executive officers in fiscal
1996. The Compensation Committee has determined that potential bonuses in fiscal
1997 will range from 0% to 30% of base salary for all executive officers,
including the Chief Executive Officer.
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 and how such base salary level relates to those of other
companies in the Company's industry, the number of options previously granted
and individual and Company performance during the year. Pursuant to the terms of
Mr. McFarlin's original employment agreement with the Company, which was
replaced by his current 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.
CHIEF EXECUTIVE OFFICER COMPENSATION COMMITTEE
Whitney A. McFarlin Glen Taylor
Lyle D. Joyce, Ph.D., M.D.
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 National Market
(since October 19, 1995) and the Nasdaq SmallCap Market (prior to October 19,
1995) for the last five fiscal years with the monthly cumulative total return
over the same period of the Nasdaq Stock Market (US Companies) Index and of 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.
<TABLE>
<CAPTION>
SCALED PRICES
DATE ANGEION CORPORATION NASDAQ STOCK MARKET - U.S. H&Q HEALTHCARE EXCL. - BIOTECH
---- ------------------- -------------------------- ------------------------------
<S> <C> <C> <C>
Jul-91 100.00 100.00 100.00
Aug-91 87.51 104.97 105.23
Sep-91 108.94 105.36 109.03
Oct-91 105.37 108.84 120.88
Nov-91 105.37 105.19 119.64
Dec-91 96.43 118.04 145.90
Jan-92 153.57 124.94 140.77
Feb-92 130.37 127.77 134.90
Mar-92 114.29 121.74 124.32
Apr-92 89.29 116.52 116.30
May-92 83.94 118.03 120.20
Jun-92 69.66 113.42 114.70
Jul-92 75.00 117.44 121.70
Aug-92 67.86 113.85 115.72
Sep-92 89.29 118.08 107.45
Oct-92 82.14 122.73 111.31
Nov-92 85.71 132.49 117.82
Dec-92 128.57 137.37 123.00
Jan-93 114.29 141.28 116.74
Feb-93 114.29 136.01 96.08
Mar-93 128.57 139.95 91.62
Apr-93 110.71 133.97 78.76
May-93 107.14 141.98 85.08
Jun-93 89.29 142.63 82.70
Jul-93 85.71 142.80 78.33
Aug-93 60.71 150.18 77.83
Sep-93 82.14 154.66 78.79
Oct-93 67.86 158.13 86.00
Nov-93 67.86 153.41 85.11
Dec-93 65.17 157.69 88.09
Jan-94 100.00 162.48 96.25
Feb-94 103.57 160.96 88.75
Mar-94 82.14 151.06 81.29
Apr-94 82.14 149.10 79.40
May-94 60.71 149.46 82.05
Jun-94 57.14 144.00 78.72
Jul-94 67.86 146.95 81.76
Aug-94 67.86 156.32 93.09
Sep-94 76.80 155.92 94.07
Oct-94 78.57 158.98 91.62
Nov-94 71.43 153.71 91.34
Dec-94 85.71 154.14 93.60
Jan-95 107.14 155.01 99.56
Feb-95 92.86 163.20 101.87
Mar-95 96.43 168.04 109.33
Apr-95 117.86 173.33 107.94
May-95 103.57 177.80 108.46
Jun-95 142.86 192.21 112.31
Jul-95 192.86 206.34 121.92
Aug-95 221.43 210.51 129.35
Sep-95 214.29 215.35 140.50
Oct-95 217.86 214.12 142.96
Nov-95 189.29 219.15 146.17
Dec-95 242.86 217.97 155.84
Jan-96 262.51 219.04 166.70
Feb-96 278.57 227.39 166.70
Mar-96 317.86 228.14 166.72
Apr-96 303.57 247.06 163.51
May-96 278.57 258.45 163.60
Jun-96 221.43 246.79 156.69
</TABLE>
PROPOSAL TO AMEND THE
COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED COMMON SHARES
INTRODUCTION
Currently, the Company's Articles of Incorporation authorize the
issuance of 35,000,000 shares of Common Stock. As of September 30, 1996,
28,662,457 shares of Common Stock were issued and outstanding, 3,689,366 shares
were reserved for issuance upon the exercise of outstanding options, warrants
and convertible debentures and 875,000 shares were reserved for issuance upon
conversion of the Preferred Stock. Accordingly, on September 30, 1996, if all
outstanding options, warrants, convertible debentures and Preferred Stock were
exercised or converted, there would only be 1,773,177 shares of Common Stock
available for issuance by the Company.
AMENDMENT
On September 30, 1996, the Board approved an increase in the authorized
number of shares of Common Stock from 35,000,000 to 50,000,000 shares, subject
to shareholder approval. If this amendment is approved by the Company's
shareholders, 21,337,543 shares of Common Stock will be authorized and available
for issuance or sale by the Company immediately after the Annual Meeting,
(16,773,177 shares after taking into account the exercise or conversion of
outstanding options, warrants, convertible debentures and the Preferred Stock,
as described above).
PURPOSE AND EFFECT OF PROPOSED AMENDMENT
The Board believes that it is necessary and desirable to increase the
number of shares of Common Stock that the Company is authorized to issue to give
the Board additional flexibility to raise equity capital, adopt additional
employee benefit plans or reserve additional shares for issuance under such
plans and make acquisitions through the use of stock. The Board has no immediate
plans, understandings, agreements or commitments to issue additional Common
Stock for any of these purposes, except as described above or as permitted or
required by the Company's existing employee benefit plans. The Board believes
that the proposed increase in the authorized shares would make it unnecessary to
hold a special shareholders' meeting in the future for the purpose of
authorizing an increase in the authorized Common Stock should the Company decide
to use its shares for one or more of such previously mentioned purposes. No
additional action or authorization by the Company's shareholders would be
necessary prior to the issuance of such additional shares, unless required by
applicable law or regulation.
Under the Company's Articles of Incorporation, the Company's
shareholders, other than Hanrow Financial and the holders of the Preferred
Stock, do not have preemptive rights with respect to the Common Stock. Thus,
should the Board elect to issue additional shares of Common Stock, existing
shareholders, other than Hanrow Financial and the holders of the Preferred
Stock, would not have any preferential rights to purchase such shares. In
addition, if the Board elects to issue additional shares of Common Stock, such
issuance could have a dilutive effect on the shareholdings of current
shareholders.
The proposed amendment to increase the authorized number of shares of
Common Stock could, under certain circumstances, have an anti-takeover effect,
although this is not the intention of this proposal. In the event of a hostile
attempt to take over the Company, it might be possible for the Company to try to
impede such an attempt by issuing shares of the Common Stock through a "private
placement" to a friendly party, thereby diluting the voting power of the other
outstanding shares and increasing the potential cost to acquire control of the
Company. The overall effect, therefore, could be to discourage unsolicited
takeover attempts. By potentially discouraging initiation of any such
unsolicited takeover attempt, the proposed amendment may limit the opportunity
for the Company's shareholders to dispose of their shares at the higher price
generally available in takeover attempts or that may be available under a merger
proposal. The proposed amendment may have the effect of permitting the Company's
current management, including the current Board, to retain its position and
place it in a better position to resist changes that shareholders may wish to
make if they are dissatisfied with the conduct of the Company's business.
The Company also has certain other mechanisms in place that may have an
anti-takeover effect. The Company's Restated Articles of Incorporation (i)
authorize the Board of Directors, without any action by the shareholders, to
establish the rights and preferences of up to 3,000,000 shares of undesignated
preferred stock (of which 1,225,000 shares remain undesignated as of the date of
this Proxy Statement) and (ii) provide that the affirmative vote of at least
two-thirds of the voting power of the shares entitled to vote is necessary in
connection with a merger, consolidation or transfer of substantially all of the
Company's assets. Moreover, in April 1996 the Board of Directors adopted a
Shareholder Rights Plan (the "Rights Plan") designed to protect the Company and
its shareholders from unsolicited attempts or inequitable offers to acquire the
Company. Pursuant to the Rights Plan, each share of Common Stock now outstanding
has, and each share of Common Stock to be issued in the future prior to the
occurrence of certain events will have, attached to it one preferred stock
purchase right. As previously stated, however, the only intended purpose of the
proposed amendment is to increase the number of available shares of Common Stock
in order to give the Board more flexibility in conducting normal business
operations, and the proposal is not being presented as, nor is it part of, a
plan to adopt a series of anti-takeover measures.
PROPOSED RESOLUTION
A resolution in substantially the following form will be submitted to
the shareholders at the Annual Meeting:
"RESOLVED, that the Company's authorized shares of Common Stock be
increased from 35,000,000 shares to 50,000,000 shares.
RESOLVED FURTHER, that appropriate officers of the Company be, and the
same are, hereby resolved, empowered and directed in the name on behalf
of the Company to take such action and execute such documents as may be
deemed necessary or desirable to carry out the intent and purpose of
the foregoing resolution."
RECOMMENDATION OF THE BOARD
The Board recommends a vote FOR approval of such increase. The
affirmative vote of the holders of a majority of shares of Common Stock 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 will be voted FOR approval of such increase.
PROPOSAL TO AMEND THE 1993 STOCK INCENTIVE PLAN
INTRODUCTION
In October 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 in December 1993. The 1993 Plan replaced the 1988 Plan and the 1989
Plan, which were approved by the shareholders and implemented by the Company in
1988 and 1989, respectively. In September 1996, the Board of Directors again
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 1,750,000 shares to 3,250,000 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 full text of the 1993 Plan, a copy of which
may be obtained from the Company.
AMENDMENT
In addition to the 1,750,000 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 canceled (which includes an aggregate of 209,334 shares), will become
shares available for issuance under the 1993 Plan. As of October 1, 1996,
options were outstanding under the 1993 Plan to purchase an aggregate of
1,901,181 shares. The increase in the number of shares reserved for issuance
under the 1993 Plan is necessary 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, 1,878,599 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). 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.
The 1993 Plan has also been amended to add a provision that will allow
the Company a tax deduction for options granted under the 1993 Plan. Under
Section 162(m) of the Code, the amount of the Company's tax deduction is limited
to $1,000,000 per year for certain compensation paid to each of the Company's
covered executives. This limitation, however, does not apply to
"performance-based compensation." Options may qualify as performance-based
compensation if shareholders approve a maximum limit on the number of shares
underlying such awards that may be granted to any participant over a specified
period. The 1993 Plan has been amended to provide such a limit, as described
below.
SUMMARY OF THE 1993 PLAN
GENERAL. The 1993 Plan provides for 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, 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 Compensation Committee will
use the average of the high and low sale prices of the Common Stock as reported
by the Nasdaq System as of the date of grant.
Notwithstanding any other provisions of the 1993 Plan to the contrary,
no participant in the 1993 Plan may be granted any Options with a value based
solely on an increase in the value of the Common Stock after the date of grant,
relating to more than 50,000 shares of Common Stock in the aggregate in any
fiscal year of the Company (subject to adjustment as provided in the 1993 Plan);
provided, however, that a participant who is first appointed or elected as an
officer, hired as an employee or retained as a consultant by the Company or who
receives a promotion that results in an increase in responsibilities or duties
may be granted, during the fiscal year of such appointment, election, hiring,
retention or promotion, Options relating to up to 100,000 shares of Common Stock
(subject to adjustment as provided in the 1993 Plan).
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 Compensation Committee to
reject a participant's election to pay the option exercise price with such
previously acquired shares. 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 Compensation Committee. Options will have a
maximum term fixed by the Compensation Committee, not to exceed 10 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 Compensation 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 service 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 in which case Options will terminate
immediately), 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 will remain exercisable for the remainder of their terms, and all
restrictions with respect to Restricted Stock Awards will lapse and the stock
will become fully vested. If a Change in Control occurs, the Compensation
Committee, in its sole discretion may determine that some or all 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 Change in
Control over the exercise price per share of such Options.
For purposes of the 1993 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 1993 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 (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 date of exercise in an amount
equal to the difference between (i) the fair market value of the shares
purchased, determined on the date of exercise, and (ii) the consideration paid
for the shares. 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 date of
exercise and short-term capital gain or loss if the sale or disposition occurs
one year or less after the date of exercise.
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 transfer 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 transferred to include as ordinary income in the year of
transfer an amount equal to the fair market value of the shares received on the
date of transfer (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 transfer 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
not approved any awards under the 1993 Plan in excess of the number of shares
currently available for issuance under the 1993 Plan. 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 RECOMMENDATION
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.
PROPOSAL TO AMEND THE
1994 NON-EMPLOYEE DIRECTOR OPTION PLAN
INTRODUCTION
In October 1994, the Board adopted the 1994 Director Plan, which the
shareholders approved in December 1994. As currently in effect, the 1994
Director Plan provides for the automatic award of 2,500 non-qualified options to
purchase shares of the Common Stock ("Options") to members of the Board who are
not also employees of the Company ("non-employee directors"). The Board believes
that the 1994 Director Plan advances the interests of the Company and its
shareholders by (i) increasing the proprietary interests of non-employee
directors in the Company's long-term success and more closely aligning the
interests of such directors with the interests of the Company's shareholders,
and (ii) providing an additional means by which the Company can attract and
retain experienced and knowledgeable people to serve as directors. The Company
also operates the 1992 Director Plan, which, as currently in effect, provides
for an annual 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 (the "Stock Award"), upon the election or re-election to the Board of
Directors, as the case may be, of each non-employee director of the Company.
AMENDMENTS
In September 1996, the Board amended the 1994 Director Plan, subject to
shareholder approval, (i) to provide for Stock Awards and Options to directors
who may be elected or appointed to fill vacancies or newly created directorships
following the date of an annual meeting but prior to the beginning of the next
fiscal year, (ii) for convenience and ease of administration, to combine the
1992 Director Plan and the 1994 Director Plan, and (iii) to increase the number
of shares available for issuance under the combined plan from 100,000 to 200,000
shares to take into account the combination of the two plans as well as future
grants under the combined plan.
The 1992 Director Plan will be terminated effective as of the date that
the 1994 Director Plan, as amended, is approved by the shareholders of the
Company. No further grants of Stock Awards will be made under the 1992 Director
Plan unless the shareholders fail to approve the amendments to the 1994 Director
Plan. The amendments to the 1994 Director Plan, and accordingly, any pro-rata
grants of Options and Stock Awards thereunder, are subject to approval of such
amendments by the shareholders of the Company at the 1996 Annual Meeting of
Shareholders.
The addition of a provision providing for pro-rata grants of Stock
Awards and Options to non-employee directors appointed between annual meetings
was made in order for the 1994 Director Plan to remain consistent with the
Company's fiscal year compensation philosophy. Non-employee directors appointed
during the period after an annual meeting but prior to the beginning of the next
fiscal year will receive partial grants based on the proportion that this period
represents of the entire fiscal year. Non-employee directors appointed on or
after the beginning of the next fiscal year will not receive partial grants
because they will be compensated for this period in connection with the grants
to be received at the next annual meeting.
SUMMARY OF THE 1994 DIRECTOR PLAN
The following summary of the principal features of the 1994 Director
Plan, as amended, is qualified in its entirety by reference to the full text of
the 1994 Director Plan, a copy of which may be obtained from the Company.
SHARES AVAILABLE UNDER THE 1994 DIRECTOR PLAN. The shares of Common
Stock issuable under the 1994 Director Plan will be authorized but unissued
shares. If there is any change in the corporate structure or shares of the
Common Stock of the Company such as in connection with a merger,
recapitalization, stock split, stock dividend, or other extraordinary dividend
(including a spin-off), the aggregate number and kind of securities subject to
Options under the 1994 Director Plan, the number of shares issuable upon the
exercise of Options and the exercise price of Options will be appropriately
adjusted to prevent dilution or enlargement of rights of participants. If any
Option terminates, expires or is canceled without having been exercised in full,
then such unexercised shares subject to the Option will automatically again
become available for issuance under the 1994 Director Plan.
ELIGIBILITY. All directors of the Company who are not employees of the
Company or its subsidiaries are eligible to participate in the 1994 Director
Plan.
OPTION GRANTS. Annual grants of Options to purchase 2,500 shares of
Common Stock will be made automatically to each non-employee director on the
date the director is elected or re-elected to the Board by the shareholders of
the Company. For non-employee directors who are elected or appointed to fill
vacancies or newly created directorships following the date of an annual meeting
but prior to the beginning of the next fiscal year, such non-employee directors
will receive pro-rata grants of Options. The exercise price per share of each
Option granted under the 1994 Director Plan will be 100% of the fair market
value of the underlying Common Stock on the date the Option is granted. Payment
for stock purchased upon the exercise of an Option must be made in full in cash
at the time of exercise. An Option granted under the 1994 Director Plan will
become exercisable in full six months after its date of grant, and will expire
10 years from its date of grant. If an eligible director's service as a director
is terminated due to death or disability, all outstanding Options then held by
the director will become exercisable in full and will remain exercisable for a
period of one year after such death or disability (but in no event after the
expiration date of the Option). If a director's service is terminated for any
other reason, all outstanding Options then held by the director will remain
exercisable for a period of three months after termination of service as a
director to the extent such Options were exercisable as of such termination.
STOCK AWARDS. Annual grants 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, will be made automatically to each non-employee
director on the date the director is elected or re-elected to the Board by the
shareholders of the Company. For non-employee directors who are elected or
appointed to fill vacancies or newly created directorships following the date of
an annual meeting but prior to the beginning of the next fiscal year, such
non-employee directors will receive pro-rata grants of Stock Awards.
ADMINISTRATION OF THE 1994 DIRECTOR PLAN. The 1994 Director Plan will
be administered by the Compensation Committee. The Compensation Committee,
however, will have no authority or discretion to determine eligibility for
participation in the 1994 Director Plan, the number of shares of Common Stock to
be subject to Options or Stock Awards granted under the 1994 Director Plan, or
the timing, pricing or other terms and conditions of such Options or Stock
Awards.
AMENDMENT AND TERMINATION OF THE 1994 DIRECTOR PLAN. The Board may
amend the 1994 Director Plan in any respect as it deems advisable. No such
amendment, however, will be effective without the approval of the Company's
shareholders if shareholder approval of the amendment is required by federal
securities laws or the rules of the Nasdaq System. The 1994 Director Plan will
terminate on October 7, 1999, but may be terminated prior to this date by Board
action.
NON-TRANSFERABILITY OF OPTIONS. No Option granted under the 1994
Director Plan may be transferred by a participant for any reason or by any
means, except by will or by the laws of descent and distribution.
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 Option or Stock Award.
OPTIONS. Options granted under the 1994 Director Plan do not qualify as
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986. Generally, neither the non-employee director nor the
Company incurs any federal income tax consequences as a result of the grant of
an Option. Upon exercise of an Option, the non-employee director will recognize
ordinary compensation income, subject to withholding and employment-related
taxes, in an amount equal to the difference between (i) the fair market value of
the shares purchased, determined on the day of exercise, and (ii) the
consideration paid for the shares. The non-employee director may be subject to
an additional excise tax if any amounts are treated as excess parachute
payments.
At the time of a subsequent sale or disposition of any shares of Common
Stock obtained upon exercise of an Option, any gain or loss will be a capital
gain or loss. Such gain or loss will be a long-term capital gain or loss if the
sale or disposition occurs more than one year after the date of exercise and
short-term capital gain or loss if the sale or disposition occurs one year or
less after the date of exercise.
In general, the Company will be entitled to a compensation expense
deduction in connection with the exercise of an Option for any amounts
includable in the taxable income of a non-employee director as ordinary
compensation income, provided the Company complies with any applicable
withholding requirements. The Company will be entitled to a deduction in the
Company's tax year in which the non-employee director is taxed.
STOCK AWARDS. A non-employee Director may include as ordinary income in
the year of grant of a Stock Award an amount equal to the fair market value of a
Stock Award on the date of grant ($16,000). In such circumstances, the Company
will receive a corresponding tax deduction for any amounts includable in the
taxable income of a non-employee Director as ordinary income.
AWARDS UNDER THE 1994 DIRECTOR PLAN
As of the date of this Proxy Statement, no awards have been made under
the 1994 Director Plan, as amended. If the 1994 Director Plan is approved by the
shareholders at the Annual Meeting, each of the six current non-employee
nominees, assuming each is re-elected at the Annual Meeting, will be granted an
Option for 2,500 shares as of the date of the Annual Meeting and a Stock Award
valued at $16,000, and at each annual meeting of the shareholders of the Company
thereafter at which he or she is again re-elected to the Board. Moreover, Donald
D. Maurer, who was appointed to the Board in January 1996, will receive pro-rata
Options to purchase 1,267 shares and a Stock Award of 894 shares.
BOARD OF DIRECTORS RECOMMENDATIONS
The Board of Directors recommends that the shareholders vote FOR
approval and ratification of the 1994 Director Plan. The affirmative vote of the
holders of a majority of shares of the Common Stock 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 1994 Director 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, 1997. 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.
SECTION 16(a) OF THE EXCHANGE ACT
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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. 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, 1996, 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 1997 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 July 2, 1997.
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, 1996, TO
EACH PERSON WHO WAS A SHAREHOLDER OF THE COMPANY AS OF OCTOBER 14, 1996, 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
Whitney A. McFarlin
Chairman of the Board,
President and Chief Executive Officer
Dated: October 30, 1996
Minneapolis, Minnesota
Appendix A
ANGEION CORPORATION
1993 STOCK INCENTIVE PLAN, AS AMENDED SEPTEMBER 30, 1996
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 3,250,000
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. Notwithstanding any other
provisions of the Plan to the contrary, no Participant in the Plan may be
granted any Options with a value based solely on an increase in the value of the
Common Stock after the date of grant, relating to more than 50,000 shares of
Common Stock in the aggregate in any fiscal year of the Company (subject to
adjustment as provided in the Section 4.3 of the Plan); provided, however, that
a Participant who is first appointed or elected as an officer, hired as an
employee or retained as a consultant by the Company or who receives a promotion
that results in an increase in responsibilities or duties may be granted, during
the fiscal year of such appointment, election, hiring, retention or promotion,
Options relating to up to 100,000 shares of Common Stock (subject to adjustment
as provided in Section 4.3 of the Plan).
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.
Appendix B
ANGEION CORPORATION
1994 NON-EMPLOYEE DIRECTOR PLAN
1. Purpose of Plan.
The purpose of the Angeion Corporation 1994 Non-Employee Director Plan
(the "Plan") is to advance the interests of Angeion Corporation (the "Company")
and its shareholders by enabling the Company to attract and retain the services
of experienced and knowledgeable non-employee directors and to increase the
proprietary interests of such non-employee directors in the Company's long-term
success and progress and their identification with the interests of the
Company's shareholders.
2. Definitions.
The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:
2.1 "Adjustment Ratio" means a fraction, (i) the numerator of which is
the number of days between the date of grant of the Pro-Rata Option and Pro-Rata
Stock Award and the beginning of the fiscal year of the Company that first
follows such date of grant, and (ii) the denominator of which is 365.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the group of individuals administering the Plan,
as provided in Section 3 of the Plan.
2.5 "Common Stock" means the common stock of the Company, par value
$0.01 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.
2.6 "Disability" means the disability of an Eligible Director such as
would entitle the Eligible Director to receive disability income benefits
pursuant to the long-term disability plan of the Company then covering the
Eligible Director or, if no such plan exists or is applicable to the Eligible
Director, the permanent and total disability of the Eligible Director within the
meaning of Section 22(e)(3) of the Code.
2.7 "Eligible Directors" means all directors of the Company who are not
employees of the Company or any subsidiary of the Company.
2.8 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.9 "Fair Market Value" means, with respect to the Common Stock, as of
any date (or, if no shares were traded on such date, as of the next preceding
date on which there was such a trade), the average of the reported high and low
sales prices of the Common Stock as reported by the Nasdaq National Market.
2.10 "Full Option" means a right to purchase 2,500 shares of Common
Stock (subject to adjustment as provided in Section 4.3 of the Plan) that is
granted to an Eligible Director pursuant to Section 5 of the Plan, which option
will not qualify as an "incentive stock option" within the meaning of Section
422 of the Code.
2.11 "Full Stock Award" means shares of Common Stock granted to an
Eligible Director pursuant to Section 5 of the Plan in an amount (rounded to the
nearest whole share) equal to $16,000 divided by the Fair Market Value of one
share of Common Stock on the date of grant.
2.12 "Incentive Awards" means Options and Stock Awards.
2.13 "Options" means Full Options and Pro-Rata Options.
2.14 "Pro-Rata Option" means a right to purchase the number of shares
of Common Stock (rounded to the nearest whole share) determined by multiplying
the number of shares subject to a Full Option by the Adjustment Ratio, which
option will not qualify as an "incentive stock option" within the meaning of
Section 422 of the Code.
2.15 "Pro-Rata Stock Award" means shares of Common Stock granted to an
Eligible Director in an amount (rounded to the nearest whole share) equal to the
number of shares subject to a Full Stock Award multiplied by the Adjustment
Ratio.
2.16 "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 any
subsidiary of the Company then covering the Participant.
2.17 "Securities Act" means the Securities Act of 1933, as amended.
2.18 "Stock Awards" means Full Stock Awards and Pro-Rata Stock Awards.
3. Plan Administration.
The Plan will be administered by a committee (the "Committee")
consisting solely of two or more members of the Board. All questions of
interpretation of the Plan will be determined by the Committee, 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. The Committee, however, will have no
power to determine the eligibility for participation in the Plan, the number of
shares of Common Stock to be subject to Incentive Awards, or the timing, pricing
or other terms and conditions of Incentive Awards.
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 200,000 shares.
The shares available for issuance under the Plan shall be authorized but
unissued shares.
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 Option that lapses, expires, or for any reason is terminated
unexercised will automatically again become available for 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 Eligible Directors, the number, kind
and, where applicable, exercise price of securities subject to outstanding
Incentive Awards.
5. Incentive Awards.
5.1 Grant. Each Eligible Director who is elected or re-elected at an
annual meeting of shareholders of the Company, and each Eligible Director, if
any, whose class is not up for re-election at such annual meeting of
shareholders and who therefore continues to serve as an Eligible Director
following such annual meeting of shareholders, will be granted, effective as of
the date of each such annual meeting of shareholders of the Company, a Full
Option and a Full Stock Award. In the event that Eligible Directors are elected
or appointed to the Board of Directors to fill new directorships or to fill
vacancies during the period following an annual meeting of shareholders but
prior to the beginning of the next succeeding fiscal year, such Eligible
Directors will be granted, effective as of the date of such election or
appointment, a Pro-Rata Option and a Pro-Rata Stock Award.
5.2 Exercise Price of Options. The per share price to be paid by an
Eligible Director upon exercise of an Option will be 100% of the Fair Market
Value of one share of Common Stock on the date of grant. 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).
5.3 Exercisability and Duration of Options. Each Option will become
exercisable in full six months following its date of grant and will expire and
will no longer be exercisable 10 years from its date of grant.
5.4 Manner of Exercise of Options. An Option may be exercised by an
Eligible Director 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 at its principal executive office
in Plymouth, Minnesota and by paying in full the total exercise price for the
shares of Common Stock to be purchased in accordance with Section 5.2 of the
Plan.
6. Effect of Termination of Service as Director.
6.1 Termination Due to Death, Disability or Retirement. In the event an
Eligible Director's service as a director of the Company is terminated by reason
of death, Disability or Retirement, all outstanding Options then held by the
Eligible Director will become immediately exercisable in full and will remain
exercisable for a period of one year after such death, Disability or Retirement
(but in no event after the expiration date of any such Options).
6.2 Termination for Reasons Other than Death, Disability or Retirement.
In the event an Eligible Director's service as a director of the Company is
terminated for any reason other than death, Disability or Retirement, all
outstanding Options then held by the Eligible Director 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
Options).
6.3 Date of Termination. An Eligible Director's service as a director
of the Company will, for purposes of the Plan, be deemed to have terminated on
the date recorded on the personnel or other records of the Company, as
determined by the Committee based upon such records.
7. Rights of Eligible Directors; Transferability of Interests.
7.1 Service as a Director. Nothing in the Plan will interfere with or
limit in any way the right of the Company to terminate any Eligible Director at
any time, and neither the Plan, nor the granting of an Incentive Award nor any
other action taken pursuant to the Plan, will constitute or be evidence of any
agreement or understanding, express or implied, that the Company will retain an
Eligible Director for any period of time or at any particular rate of
compensation.
7.2 Rights as a Shareholder. An Eligible Director will have no rights
as a shareholder unless and until a Stock Award is issued or an Option is
exercised and the Eligible Director 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 Incentive Awards as to which there is
a record date preceding the date the Eligible Director becomes the holder of
record of such shares.
7.3 Restrictions on Transfer of Interests. 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 Eligible Director
in an Option prior to the exercise of such Option will be assignable or
transferable, or subjected to any lien, during the lifetime of the Eligible
Director, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise. An Eligible Director will, however, be entitled
to designate a beneficiary to receive an Option upon such Eligible Director's
death, and in the event of an Eligible Director'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 6 of the Plan) may be made by, the Eligible
Director's legal representatives, heirs and legatees.
7.4 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.
8. 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 an Eligible Director may not sell,
assign, transfer or otherwise dispose of shares of Common Stock issued in
connection with an Incentive Award 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.
9. 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 granted 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 (a) no amendments to the Plan will be effective without approval
of the shareholders of the Company if shareholder approval of the amendment is
then required pursuant to Rule 16b-3 under the Exchange Act or the rules of the
National Association of Securities Dealers, Inc., and (b) to the extent
prohibited by Rule 16b-3 of the Exchange Act, the Plan may not be amended more
than once every six months. No termination, suspension or amendment of the Plan
may adversely affect any outstanding Incentive Award without the consent of the
affected Eligible Director; provided, however, that this sentence will not
impair the right of the Committee to take whatever action it deems appropriate
under Section 4.3 of the Plan.
10. Effective Date and Duration of the Plan
The Plan, as amended, is effective as of September 30, 1996, the date
it was adopted by the Board. To the extent, however, that any Eligible Director
has been elected or appointed to the Board of Directors to fill new
directorships or to fill vacancies during the period following the 1995 Annual
Meeting of Shareholders but prior to August 1, 1996, such Eligible Director will
be entitled to receive, as of the effective date of this Plan, as amended, such
Pro-Rata Option and Pro-Rata Stock Award as the Eligible Director would have
been entitled to receive had this Plan, as amended, been in effect as of the
date of such election or appointment. The Plan will terminate at midnight on
October 7, 1999, but may be terminated prior thereto by Board action. No
Incentive Awards may be granted after such termination, but Options outstanding
upon termination of the Plan may continue to be exercised in accordance with
their terms.
11. Miscellaneous
11.1 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, notwithstanding any conflicts of law
principles.
11.2 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
Eligible Directors.
APPENDIX C
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 14, 1996, at the Annual Meeting of Shareholders to
be held on December 11, 1996, or any adjournment, thereof.
1. ELECTION OF DIRECTORS.
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] AGAINST all nominees listed below
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME.)
WHITNEY A. MCFARLIN, PH.D. JOSEPH C. KISER, M.D.
ARNOLD A. ANGELONI DONALD D. MAURER
DENNIS E. EVANS DENNIS L. SELLKE
LYLE D. JOYCE, M.D. GLEN TAYLOR
2. PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 35,000,000 TO 50,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO AMEND THE 1993 STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF
SHARES RESERVED FOR ISSUANCE BY 1,500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO AMEND THE 1994 NON-EMPLOYEE DIRECTOR PLAN AND TO INCREASE THE
NUMBER OF SHARES RESERVED FOR ISSUANCE BY 100,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
(continued from other side)
5. PROPOSAL TO RATIFY THE SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT
ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING JULY 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. 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, 3, 4 AND 5 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: _______________, 1996
____________________________________
Signature
____________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
