SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ] Preliminary Proxy Statement
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14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
ANGEION CORPORATION
(Name of Registrant as Specified In Its Charter)
ANGEION CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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computed pursuant to Exchange Act Rule 0-11 (Set forth the
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<PAGE>
ANGEION CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 10, 1997
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 10, 1997, for the following purposes:
1. To elect seven (7) persons to serve as Directors of the Company
until the next Annual Meeting of the Shareholders or until their respective
successors shall be elected and qualified;
2. To consider and act upon a proposal to amend the Company's 1994
Non-Employee Director Plan (i) to increase the fair market value of annual stock
grants to non-employee Directors of the Company as annual compensation from
$16,000 to $24,000, and (ii) to increase the annual option grant to non-employee
Directors of the Company from 2,500 shares to 3,000 shares;
3. To consider and act upon a proposal to adopt the Company's Employee
Stock Purchase Plan;
4. To approve the appointment of KPMG Peat Marwick LLP as independent
auditors for the year ending July 31, 1998; and
5. 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 17, 1997.
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
November 7, 1997
Minneapolis, Minnesota
<PAGE>
ANGEION CORPORATION
3650 ANNAPOLIS LANE
SUITE 170
MINNEAPOLIS, MINNESOTA 55447-5434
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
December 10, 1997
INTRODUCTION
The Annual Meeting of Shareholders of Angeion Corporation (the
"Company") will be held on Wednesday, December 10, 1997, 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, 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.
Any shareholder giving a proxy may revoke it at any time prior to its
use at the Annual Meeting either by giving written notice of such revocation to
the Secretary of the Company, by filing a duly executed proxy bearing a later
date with the Secretary of the Company, or by appearing at the Annual Meeting
and filing written notice of revocation with the Secretary of the Company prior
to use of the proxy. Proxies will be voted as specified by shareholders. Proxies
that are signed by shareholders but that lack any such specification will be
voted in favor of the proposals set forth in the Notice of Meeting and in favor
of the election as Directors of the nominees for Directors listed in this Proxy
Statement.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSALS SET FORTH IN THE NOTICE OF MEETING.
The Company expects that this proxy material will be mailed first to
shareholders on or about November 7, 1997.
<PAGE>
VOTING OF SHARES
Only holders of Common Stock of record at the close of business on
October 17, 1997 will be entitled to vote at the Annual Meeting. On October 17,
1997, the Company had 30,695,633 outstanding shares of 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 cumulative 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 seven 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 are currently members of the Board. Pursuant to an
Investment and Master Strategic Relationship Agreement, dated as of October 9,
1997 (the "Investment Agreement"), between the Company and Synthelabo, a French
pharmaceutical company, the Company and ELA Medical, Inc., a subsidiary of
Synthelabo, will form a U.S. joint venture marketing and sales organization.
Upon the closing of the initial transactions contemplated in the Investment
Agreement, which will occur upon the expiration or early termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, Dennis L. Sellke, a current member of the Board, will become Chief
Executive Officer of the U.S. joint venture and, accordingly, has decided not to
stand for re-election this year as a Director of the Company. See "Election of
Directors -- Compensation of Directors -- Sellke Consulting Agreement" contained
in this Proxy Statement. 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.
<PAGE>
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 17,
1997, 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 57 Chairman of the Board, President and Chief 1993
Executive Officer of the Company
Arnold A. Angeloni 55 President of Gateway Alliance LLC 1990
Dennis E. Evans 59 President and Chief Executive Officer of Hanrow 1990
Financial Group, Ltd.
Lyle D. Joyce, M.D., Ph.D. 50 Cardiothoracic Surgeon and President of 1988
Minnesota Thoracic Group, P.A.
Joseph C. Kiser, M.D. 65 Retired Cardiothoracic Surgeon at Minnesota 1988
Thoracic Group, P.A. and Co-founder of The
Minneapolis Heart Institute
Donald D. Maurer 61 Chairman of the Board of Empi, Inc. 1996
Glen Taylor 56 Chief Executive Officer and Chairman of Taylor 1992
Corporation
</TABLE>
<PAGE>
OTHER INFORMATION ABOUT NOMINEES
WHITNEY A. MCFARLIN has been Chairman of the Board, President and Chief
Executive Officer 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. ("Clarus"), a private
medical device company that manufactures neuroendoscopy products. 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 the 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 of Empi,
Inc., a public company that manufactures noninvasive biomedical devices. 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 Past
Chairman of the Board of Medical Alley, a Twin Cities professional organization
representing the interests of the medical industry.
GLEN TAYLOR is the Chief Executive Officer and Chairman of the Board of
Taylor Corporation, which he founded in 1975. Taylor Corporation's businesses
include printing, banking, direct mail marketing 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.
<PAGE>
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The business and affairs of the Company are managed by the Board, which
held six meetings during the Fiscal year ended July 31, 1997 ("Fiscal 1997").
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, 1997. Messrs. Angeloni, Evans,
Maurer and Kiser served as members of the Audit Committee in Fiscal 1997.
Messrs. Angeloni, Evans, Maurer and Kiser will serve as members of the Audit
Committee in the fiscal year ended July 31, 1998 ("Fiscal 1998").
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 two meetings in Fiscal 1997. Messrs. Evans, McFarlin, Taylor and
Joyce served as members of the Governance Committee in Fiscal 1997. Messrs.
Evans, McFarlin, Taylor and Joyce will serve as members of the Governance
Committee in Fiscal 1998.
The responsibilities of the Compensation Committee include setting the
compensation for those officers who are also Directors of the Company 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
Fiscal 1997. Messrs. Angeloni, Taylor and Kiser served as members of the
Compensation Committee for Fiscal 1997. Messrs. Angeloni, Taylor and Kiser will
serve as members of the Compensation Committee in Fiscal 1998.
All of the Directors of the Company, except Dr. Joyce, attended 75% or
more of the aggregate meetings of the Board and all such committees on which
they served during Fiscal 1997. Dr. Joyce attended 62.5% of the aggregate
meetings of the Board and all such committees on which he 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. Pursuant to the 1994 Non-Employee Director
Plan (the "Director Plan"), as currently in effect, non-employee Directors of
the Company automatically receive an annual grant 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 "Director Stock Award"), and an annual grant of an
option to purchase 2,500 shares of Common Stock (a "Director Option") upon their
election or re-election, as the case may be, as a non-employee Director of the
Company. In September 1997, the Board amended the Director Plan, subject to
shareholder approval, (i) to increase the fair market value of annual Director
Stock Awards from $16,000 to $24,000, and (ii) to increase the annual Director
Option from 2,500 shares
<PAGE>
to 3,000 shares of Common Stock. See "Proposal to Amend the 1994 Non-Employee
Director Plan" contained in this Proxy Statement.
On December 11, 1996, Messrs. Angeloni, Evans, Joyce, Kiser, Maurer,
Sellke and Taylor each received a Director Option to purchase 2,500 shares of
Common Stock and a Director Stock Award valued at $16,000 under the 1994
Director Plan. If the proposal to amend the 1994 Director Plan is approved by
the shareholders at the Annual Meeting, each of the current non-employee
Director nominees, assuming each is re-elected, will be granted a Director
Option for 3,000 shares and a Director Stock Award valued at $24,000 as of the
date of the Annual Meeting and as of the date of each Annual Meeting of
Shareholders thereafter.
SELLKE CONSULTING AGREEMENT. In August 1997, the Company and ELA
Medical, S.A., a subsidiary of Synthelabo ("ELA Medical"), entered into a
six-month consulting agreement with Dennis L. Sellke, a current Director of the
Company, pursuant to which Mr. Sellke agreed to render consulting services to
the Company and ELA Medical in connection with the organizational structure and
feasibility of the U.S. joint venture. Under the consulting agreement, the
Company and ELA Medical each agreed to pay Mr. Sellke $7,710 per month.
<PAGE>
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 20, 1997, 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
and nominee for 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
NAME AMOUNT CLASS (3)
- ------------------------------------------------------------------------- ------------ ----------
<S> <C> <C>
Whitney A. McFarlin............................................... 528,110 (4) 1.7%
Arnold A. Angeloni................................................ 73,421 (5) *
Dennis E. Evans................................................... 752,454 (6) 2.5%
Lyle D. Joyce, M.D., Ph.D......................................... 286,954 (7) *
Joseph C. Kiser, M.D.............................................. 385,355 (8) 1.3%
Donald D. Maurer.................................................. 10,680 (9) *
Glen Taylor....................................................... 480,610 (10) 1.6%
T.V. Rao.......................................................... 53,000 (11) *
Michael J. Kallok, Ph.D........................................... 31,371 (12) *
Gary L. Payment................................................... 87,800 (13) *
Jennifer M. Marrone............................................... 26,000 (14) *
All current Directors and executive officers as a
group (16 persons).............................................. 3,031,869 (15) 9.0%
- --------------
* 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) Based on 30,695,633 shares of Common Stock outstanding as of October 20,
1997.
(4) Includes 515,000 shares which may be acquired within 60 days upon the
exercise of stock options.
(5) Includes 39,500 shares which may be acquired within 60 days upon the
exercise of stock options.
<PAGE>
(6) Includes 693,333 shares of Common Stock beneficially owned by 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. Hanrow Financial is also an affiliate of Hanrow Business Finance,
Inc., which owns 41,667 shares of Common Stock. Also includes 7,500 shares of
Common Stock 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.
(7) Includes 98,500 shares held by the MTA Retirement Plan and Trust FBO Lyle D.
Joyce, and 41,500 shares which may be acquired within 60 days upon the exercise
of stock options.
(8) Includes 43,567 shares held by the MTA Retirement Plan and Trust FBO Joseph
C. Kiser and 54,500 shares which may be acquired within 60 days upon the
exercise of stock options.
(9) Includes 3,767 shares which may be acquired within 60 days upon the exercise
of stock options.
(10) Includes 75,000 shares which may be acquired within 60 days upon the
exercise of warrants and 7,500 shares which may be acquired within 60 days upon
the exercise of stock options.
(11) Includes 53,000 shares which may be acquired within 60 days upon the
exercise of stock options.
(12) Includes 31,371 shares which may be acquired within 60 days upon the
exercise of stock options.
(13) Includes 2,800 shares held by an individual retirement account in the name
of Mr. Payment and 81,800 shares which may be acquired within 60 days upon the
exercise of stock options.
(14) Includes 26,000 shares which may be acquired within 60 days upon the
exercise of stock options.
(15) Includes 1,211,972 shares which may be acquired within 60 days upon the
exercise of warrants and stock options. Also includes all shares beneficially
owned by affiliates of officers and Directors.
<PAGE>
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, 1997. All of the options listed below, unless otherwise
noted, were granted under the Company's 1993 Stock Incentive Plan (the "1993
Plan").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION (1) YEAR SALARY BONUS UNDERLYING OPTIONS (#) COMPENSATION
- ------------------------------- ---- ------ ----- ---------------------- ------------
<S> <C> <C> <C> <C> <C>
Whitney A. McFarlin 1997 $255,692 $35,000 30,000 (3) $1,800 (2)
CHAIRMAN OF THE BOARD, CHIEF 1996 240,300 0 0 1,595 (2)
EXECUTIVE OFFICER AND PRESIDENT 1995 225,870 0 0 0
T.V. Rao 1997 133,523 0 40,000 (4) 0
VICE PRESIDENT OF SALES AND 1996 122,604 0 6,000 (5) 10,000 (6)
MARKETING 1995 --- --- 50,000 ---
Michael J. Kallok, Ph.D. 1997 125,000 0 85,000 (4) 0
VICE PRESIDENT OF RESEARCH 1996 79,327 0 75,000 (5) 0
1995 --- --- --- ---
Gary L. Payment 1997 114,000 0 22,000 (4) 0
VICE PRESIDENT OF OPERATIONS 1996 105,785 0 12,000 (5) 0
1995 82,710 0 100,000 0
Jennifer M. Marrone 1997 109,427 0 82,000 (4) 0
VICE PRESIDENT OF REGULATORY AND 1996 100,100 22,950 12,000 (5) 0
CLINICAL AFFAIRS 1995 25,025 0 40,000 (5) 0
</TABLE>
(1) Dr. Kallok commenced employment with the Company on November 28, 1996. Mr.
Rao commenced employment with the Company on July 31, 1995.
(2) This amount represents life insurance premiums paid by the Company on Mr.
McFarlin's behalf.
(3) Mr. McFarlin was granted options to purchase an aggregate of 30,000 shares
of Common Stock during Fiscal 1997. Of this amount, 15,000 shares represented an
option originally granted in September 1996 that was canceled and reissued in
December 1996 during the employee repricing program. See "Board of Directors
Report on Repricing of Options" contained in this Proxy Statement.
(4) Included in these options are options that were previously granted during a
prior fiscal year and were canceled and reissued in December 1996. See "Board of
Directors Report on Repricing of Options" contained in this Proxy Statement.
<PAGE>
(5) All of these options were canceled and reissued in December 1996 during the
employee repricing program and are included in the Fiscal 1997 numbers as well.
See "Board of Directors Report on Repricing of Options" contained in this Proxy
Statement.
(6) This amount represents moving and relocation expenses for Mr. Rao that were
paid by the Company.
OPTION GRANTS AND EXERCISES
The following tables summarize option grants and exercises,
respectively, during Fiscal 1997 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, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
--------------------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT
SECURITIES TOTAL OPTIONS ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE OR STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION FOR OPTION
NAME GRANTED (#) FISCAL YEAR (2) ($/SHARE) DATE TERM (3)
---- ----------- --------------- ----------- ---- ------------------------
5% 10%
--- ---
<S> <C> <C> <C> <C> <C> <C>
Whitney A. McFarlin 15,000 (4) 0.71% $6.3750 09/16/06 $28,541 $73,769
15,000 (5) 0.71 3.1875 09/16/06 60,137 152,401
T.V. Rao 34,000 1.62 3.1562 12/26/06 65,758 168,274
6,000 (5) 0.29 3.1875 12/20/05 9,962 25,086
Michael J. Kallok, Ph.D. 10,000 0.48 3.1562 12/26/06 19,340 49,492
75,000 (5) 3.60 3.1875 11/28/05 124,529 313,581
Gary L. Payment 10,000 0.48 3.1562 12/26/06 19,340 49,492
12,000 (5) 0.57 3.1875 12/20/05 19,924 50,172
Jennifer M. Marrone 30,000 1.43 3.1562 12/26/06 58,022 48,476
40,000 (5) 1.90 3.1875 04/24/05 66,415 67,243
12,000 (5) 0.57 3.1875 12/20/05 19,924 50,172
</TABLE>
(1) All of the options granted to executives were granted under the Company's
1993 Plan. Except as described in Note (5) below, these foregoing options become
exercisable at the rate of 25% of the number of shares covered by such option on
each of the first four anniversary dates of the grant of such option, so long as
the executive remains employed by the Company or one of its subsidiaries. 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.
(2) An aggregate of 2,086,275 options to purchase shares of Common Stock of the
Company was granted to employees and consultants during the fiscal year ended
July 31, 1997. This number includes 1,231,375 options granted in exchange of a
like number of previously granted options that were repriced in connection with
the employee repricing program in December 1996.
<PAGE>
(3) 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.
(4) This option was granted on September 16, 1996 and was subsequently canceled
and reissued on December 18, 1996. See Note (5) below.
(5) This option was granted on December 18, 1996 during the employee repricing
program and replaced a like number of previously granted options. This option is
subject to a one-year holding period ending December 18, 1997, at which time the
option will become exercisable not only with respect to the number of shares
that had previously been exercisable under the repriced option but also with
respect to the number of shares that would have become exercisable during the
one-year holding period under the repriced option. See "Board of Directors
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 NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME EXERCISE (#)(2) REALIZED ($) OPTIONS AT JULY 31, 1997 (#) AT JULY 31, 1997 ($)(1)
---- --------------- ------------ ---------------------------- -----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Whitney A. McFarlin 5,156 $10,634 (3) 500,000 15,000 $1,391,249 $26,737
T.V. Rao 0 0 50,000 40,000 73,500 72,363
Michael J. Kallok, Ph.D. 0 0 0 85,000 0 151,824
Gary L. Payment 0 0 50,000 72,000 117,250 156,778
Jennifer M. Marrone 0 0 0 82,000 0 147,104
</TABLE>
(1) Value based on the difference between the fair market value of the Common
Stock on July 31, 1997 ($4.875) and the exercise price of the options.
(2) The exercise price must be paid entirely in cash, or, in the Compensation
Committee's discretion, by delivery of previously acquired shares (including
shares to be acquired upon exercise of an option) or a broker exercise notice
(i.e., irrevocable instructions to a brokerage firm to sell the shares
underlying the option and to remit to the Company, out of the sale proceeds, an
amount equal to the exercise price plus all applicable withholding taxes).
(3) Value based on the difference between the fair market value of the Common
Stock on the date of exercise ($4.25) and the exercise price of the options
($2.1875).
<PAGE>
BOARD OF DIRECTORS REPORT ON REPRICING OF OPTIONS
On December 18, 1996, the Board of Directors of the Company offered all
employees, including executive officers, the opportunity to exchange any
outstanding stock options with exercise prices in excess of $3.1875 per share,
the closing price per share of the Company's Common Stock on December 17, 1996
on the Nasdaq National Market, for new options with an exercise price of $3.1875
per share. The new options are identical to the old options that were
surrendered in exchange for the new options, except that the new options are
subject to a one-year holding period, ending December 18, 1997, at which time
the new option will become exercisable not only with respect to the number of
shares that had previously been exercisable under the old option but also with
respect to the number of shares that would have become exercisable during the
one-year holding period under the old option. In approving the option repricing,
the Board of Directors acknowledged that the retention of key employees and
consultants is critical to the Company's success and its ability to continue to
meet its performance objectives and that stock options constitute one of the
primary components of the Company's compensation structure and therefore serve
as a significant factor in the Company's ability to continue to attract and
retain the services of high-quality personnel.
The following table sets forth certain information regarding the
repricing of options held by the Company's executive officers during the last
ten fiscal years.
<PAGE>
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
SECURITIES ORIGINAL
UNDERLYING MARKET PRICE OF OPTION TERM
NUMBER OF STOCK AT EXERCISE PRICE REMAINING
OPTIONS TIME OF AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED (#) AMENDMENT ($) AMENDMENT ($) PRICE ($) AMENDMENT
---- ---- ----------- ------------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Whitney A. McFarlin 12/18/96 15,000 $3.1875 $6.3750 $3.1875 117 months
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER
AND PRESIDENT
T.V. Rao 12/18/96 6,000 3.1875 7.0000 3.1875 108 months
VICE PRESIDENT OF SALES
AND MARKETING
Michael J. Kallok, Ph.D. 12/18/96 75,000 3.1875 6.6250 3.1875 107 months
VICE PRESIDENT OF
RESEARCH
Gary L. Payment 12/18/96 12,000 3.1875 7.0000 3.1875 108 months
VICE PRESIDENT OF
OPERATIONS
Jennifer M. Marrone 12/18/96 40,000 3.1875 4.0625 3.1875 100 months
VICE PRESIDENT OF 12/18/96 12,000 3.1875 7.0000 3.1875 108 months
REGULATORY AFFAIRS AND
CLINICAL AFFAIRS
David L. Christofferson 08/30/95 75,000 7.685 8.5625 3.5000 64 months
VICE PRESIDENT, CHIEF 12/18/96 50,000 3.1875 5.0000 3.1875 61 months
FINANCIAL OFFICER AND 12/18/96 12,000 3.1875 7.0000 3.1875 108 months
SECRETARY
Robert S. Garin 12/18/96 12,000 3.1875 7.0000 3.1875 108 months
VICE PRESIDENT OF HUMAN
RESOURCES
William S. Rissmann 12/18/96 25,000 3.1875 3.4375 3.1875 100 months
VICE PRESIDENT OF 12/18/96 12,000 3.1875 7.0000 3.1875 108 months
ENGINEERING
</TABLE>
BOARD OF DIRECTORS
Whitney A. McFarlin Joseph C. Kiser, M.D.
Arnold A. Angeloni Donald D. Maurer
Dennis E. Evans Dennis L. Sellke
Lyle D. Joyce, M.D., Ph.D. Glen Taylor
<PAGE>
EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement with Whitney A.
McFarlin, Chairman of the Board, President and Chief Executive Officer of the
Company. The employment agreement, effective as of September 15, 1996, between
the Company and Mr. McFarlin (the "Agreement"), provides for an initial two-year
term of employment and thereafter will be renewable automatically for additional
one-year terms, unless either party gives written notice to the other party not
to renew such employment within 60 days before the expiration of the then
current term. 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. If the Agreement is voluntarily terminated
by McFarlin for "good reason" following a "change in control" of the Company or
if Mr. McFarlin is terminated by the Company without "cause" (as such terms are
defined in the Agreement), then Mr. McFarlin is entitled to his base salary for
the remainder of the then current 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 prohibits
disclosure of confidential information by Mr. McFarlin 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.
CHANGE IN CONTROL AGREEMENTS
In December 1996, the Company entered into a change in control
agreement (collectively, the "Change in Control Agreements") with each of the
following executive officers: Whitney A. McFarlin, David L. Christofferson,
Robert S. Garin, Michael J. Kallok, Ph.D., Jennifer M. Marrone, Gary Payment,
T.V. Rao and William J. Rissmann. In October 1997, the Company entered into a
Change in Control Agreement with Terrence W. Bunge. The Change in Control
Agreements provide for the payment of certain benefits to such executive
officers of the Company upon the occurrence of a "change in control" of the
Company. A "change in control" is defined by the Change in Control Agreements to
include, among other actions: (i) the sale, lease or other transfer of
substantially all of the assets of the Company; (ii) the approval by the
shareholders of the Company of any plan or proposal for the liquidation or
dissolution of the Company; (iii) any person becomes the beneficial owner of (A)
20% or more, but not 50% or more, of the combined voting power of the Company's
outstanding voting securities, unless the transaction resulting in such
ownership has been approved in advance by the "continuity Directors" or (B) 50%
or more of the combined voting power of the Company's outstanding voting
securities regardless of any approval by the continuity Directors; (iv) a merger
or consolidation to which the Company is a party if the shareholders of the
Company immediately prior to the effective date of such merger or consolidation
have beneficial ownership immediately following the effective date of such
merger or consolidation of securities of the surviving company representing (A)
more than 50%, but less than 80%, of the combined voting power of the surviving
corporation's then outstanding voting securities, unless such merger or
consolidation has been approved in advance by the continuity Directors, or (B)
50% or less of the combined voting power of the surviving corporation's then
outstanding voting securities regardless of any approval by the continuity
Directors; or (v) the continuity Directors cease for any reason to constitute at
least a majority of the Board. A "continuity Director" is any individual who is
a member of the Board on December 18, 1996, and any individual who subsequently
becomes a member of the Board whose election or nomination for election was
approved by a majority of the continuity Directors.
<PAGE>
Under the Change in Control Agreements, an executive officer who is
terminated by the Company for any reason other than death or "cause" or
terminates his or her employment with the Company for "good reason" (as such
terms are defined in the Change in Control Agreements) within 24 months
following a change in control or prior to a change in control if termination was
either a condition of the change in control or was at the request or insistence
of a person related to the change in control will be entitled to the following
benefits: (i) a lump-sum cash payment in an amount equal to two times the
executive's annual base salary; (ii) continued coverage under the Company's
group health plan(s) for a period not exceeding the last day of the 24th month
that begins after the executive's date of termination; (iii) additional cash
payments to compensate the executive for all taxes, including any excise taxes,
interest or penalties, imposed upon all payments received by the executive under
his or her Change in Control Agreement; and (iv) reimbursement of any out
placement assistance up to 5% of the executive's base pay. The Change in Control
Agreements will continue in effect until January 1, 1999; at which time such
agreements will be extended automatically for additional 12-months periods
thereafter, unless at least 90 days prior to any such January 1 the Company or
the executive has given notice that such agreement will not be extended.
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 1997, 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 1997 were Messrs. Angeloni, Kiser and
Taylor. 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 individual and corporate goals.
The primary objectives of the Company's executive compensation program are to:
o Reward the achievement of desired Company and individual
performance goals,
o Provide compensation that enables the Company to attract and
retain key executives, and
o 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
<PAGE>
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 experience 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 1997 increased modestly from 1996 levels due to
the Company's continuing focus on development activities requiring the
conservation of cash. Mr. McFarlin's base salary level for Fiscal 1997,
$255,692, was established by action of the Compensation Committee pursuant to
the terms and conditions of his employment agreement.
BONUSES. The Company also may pay bonuses to executive officers as part
of its executive compensation program. 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. The Compensation
Committee determined that Mr. McFarlin would be paid a $35,000 cash bonus in
Fiscal 1997 for achieving certain performance objectives. Other than the cash
bonus paid to Mr. McFarlin, cash bonuses were not paid to any other executive
officers in Fiscal 1997.
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, 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 three anniversaries following the date of grant. On September 16, 1996,
Mr. McFarlin was granted an option to purchase 15,000 shares of Common Stock.
This option and other options held by employees of the Company, including
executive officers, were canceled and reissued in December 1996 during the
employee repricing program. See "Board of Directors Report on Repricing of
Options" contained in this Proxy Statement.
<PAGE>
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 Arnold A. Angeloni
Joseph C. Kiser, M.D.
Glen Taylor
<PAGE>
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 in 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>
Angeion Nasdaq Stock H&Q Healtheare Angeion Nasdaq Stock H&Q Healtheare
Corporation Market- U.S. Excl. Biotech Corporation Market- U.S. Excl. Biotech
Index Index Index Index
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Jul-92 100.00 100.00 100.00 Jan-95 142.86 132.00 81.81
Aug-92 90.48 96.94 95.09 Feb-95 123.81 138.98 83.71
Sep-92 119.05 100.55 88.30 Mar-95 128.57 143.10 89.84
Oct-92 109.52 104.51 91.46 Apr-95 157.14 147.60 88.70
Nov-92 114.29 112.82 96.82 May-95 138.10 151.41 89.12
Dec-92 171.43 116.98 101.07 Jun-95 190.48 153.68 92.29
Jan-93 152.38 120.31 95.93 Jul-95 257.14 175.71 100.19
Feb-93 152.38 115.82 78.95 Aug-95 295.24 179.27 106.29
Mar-93 171.43 119.17 75.29 Sep-95 285.71 183.40 115.45
Apr-93 147.62 114.09 64.72 Oct-95 290.48 182.35 117.48
May-93 142.86 120.90 69.91 Nov-95 252.38 186.63 120.11
Jun-93 119.05 121.46 67.96 Dec-9S 323.81 185.63 128.06
Jul-93 114.29 121.60 64.36 Jan-96 350.00 185.55 136.98
Aug-93 80.95 127.89 63.95 Feb-96 371.43 193.65 136.98
Sep-93 109.52 131.70 64.74 Mar-96 423.81 194.29 137.00
Oct-93 90.48 134.66 70.67 Apr-96 404.76 210.41 134.36
Nov-93 90.48 130.64 69.94 May-96 371.43 220.07 134.43
Dec-93 86.90 134.28 72.39 Jun-96 295.24 210.15 128.76
Jan-94 133.33 138.36 79.09 Jul-96 242.86 191.43 117.93
Feb-94 138.10 137.07 72.93 Aug-96 257.14 202.16 125.63
Mar-94 109.52 128.64 66.80 Sep-96 242.86 217.62 141.30
Apr-94 109.52 126.97 65.24 Oct-96 161.90 215.22 133.95
May-94 80.95 127.28 67.42 Nov-96 128.57 228.52 138.08
Jun-94 76.19 122.63 64.69 Dec-96 133.33 228.32 142.18
Jul-94 90.48 125.14 67.18 Jan-97 190.48 244.55 149.93
Aug-94 90.48 133.12 76.50 Feb 97 148.21 231.03 147.47
Sep-94 102.38 132.78 77.30 Mar-97 157.14 215.95 135.05
Oct-94 104.76 135.39 75.28 Apr-97 152.38 222.70 138.04
Nov-94 95.24 130.90 75.06 May-97 190.48 247.95 151.71
Dec-94 114.29 131.26 76.91 Jun-97 164.29 255.53 161.68
Jul-97 185.71 282.49 170.58
</TABLE>
<PAGE>
PROPOSAL TO AMEND THE
1994 NON-EMPLOYEE DIRECTOR PLAN
INTRODUCTION
The 1994 Director Plan, as currently in effect, provides for: (i) an
annual grant 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 "Director
Stock Award"), and (ii) an automatic annual grant of an option to purchase 2,500
shares of Common Stock (a "Director Option") to members of the Board who are not
also employees of the Company ("non-employee Directors"), upon the election or
re-election to the Board of Directors, as the case may be, of each non-employee
Director of the Company. 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.
AMENDMENT
In September 1997, the Board amended the 1994 Director Plan (i) to
increase the fair market value of Director Stock Awards from $16,000 to $24,000,
and (ii) to increase the Director Options from 2,500 shares to 3,000 shares of
Common Stock. This recent amendment to the 1994 Director Plan, and the grant of
increased Director Options and Director Stock Awards thereunder, are subject to
approval of such amendment by the shareholders of the Company at the 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
Director Options under the 1994 Director Plan, the number of shares issuable
upon the exercise of Director Options and the exercise price of Director Options
will be appropriately adjusted to prevent dilution or enlargement of rights of
participants. If any Director Option terminates, expires or is canceled without
having been exercised in full, then such unexercised shares subject to the
Director 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.
DIRECTOR OPTION GRANTS. Annual grants of Director Options to purchase
3,000 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
<PAGE>
Meeting but prior to the beginning of the next fiscal year, such non-employee
Directors will receive pro-rata grants of Director Options. The exercise price
per share of each Director Option granted under the 1994 Director Plan will be
100% of the fair market value of the underlying Common Stock on the date the
Director Option is granted. Payment for stock purchased upon the exercise of a
Director Option must be made in full in cash at the time of exercise. A Director
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 Director 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
Director Option). If a Director's service is terminated for any other reason,
all outstanding Director 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 Director Options were exercisable as of such
termination.
DIRECTOR STOCK AWARDS. Annual grants of such number of shares of Common
Stock equal to $24,000, 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 Director Stock
Awards.
ADMINISTRATION OF THE 1994 DIRECTOR PLAN. The 1994 Director Plan is
administered by the Compensation Committee. The Compensation Committee, however,
has 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
Director Options or Director Stock Awards granted under the 1994 Director Plan,
or the timing, pricing or other terms and conditions of such Director Options or
Director 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 National Market 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 DIRECTOR OPTIONS. No Director 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 a Director Option or Director Stock Award.
DIRECTOR OPTIONS. Director Options granted under the 1994 Director Plan
do not qualify as incentive stock options within the meaning of Section 422 of
the Code. Generally, neither the non-employee Director nor the Company incurs
any federal income tax consequences as a result of the grant
<PAGE>
of a Director Option. Upon exercise of a Director Option, the non-employee
Director will recognize ordinary compensation income 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. At the
time of a subsequent sale or disposition of any shares of Common Stock obtained
upon exercise of a Director Option, any gain or loss will be a capital gain or
loss. Whether the gain (or loss) constitutes long-term or short-term capital
gain (or loss) will depend upon the length of time the Participant held the
stock prior to its disposition. Participants should consult their tax advisors
to determine whether any specific gain (or loss) constitutes long-term or
short-term capital gain (or loss).
In general, the Company will be entitled to a compensation expense
deduction in connection with the exercise of a Director 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.
DIRECTOR STOCK AWARDS. A non-employee Director will recognize as
ordinary income in the year of grant of a Director Stock Award an amount equal
to the fair market value of a Director Stock Award on the date of grant
($24,000). 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
On December 11, 1996, Messrs. Angeloni, Evans, Joyce, Kiser, Maurer,
Sellke and Taylor each received a Director Option to purchase 2,500 shares of
Common Stock and a Director Stock Award valued at $16,000 under the 1994 Plan.
As of the date of this Proxy Statement, no awards have been made under the 1994
Director Plan, as amended by the Board in September 1997. If the proposal to
amend the 1994 Director Plan is approved by the shareholders at the Annual
Meeting, each of the current non-employee Director nominees, assuming each is
re-elected, will be granted a Director Option for 3,000 shares and a Director
Stock Award valued at $24,000 as of the date of the Annual Meeting and as of the
date of each Annual Meeting of Shareholders thereafter.
BOARD OF DIRECTORS RECOMMENDATIONS
The Board of Directors recommends that the shareholders vote FOR
approval and ratification of the foregoing amendments to 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
foregoing amendments to the 1994 Director Plan.
<PAGE>
PROPOSAL TO ADOPT
1997 EMPLOYEE STOCK PURCHASE PLAN
On October 22, 1997, the Board of Directors of the Company adopted the
1997 Employee Stock Purchase Plan (the "Purchase Plan"), subject to approval by
the shareholders at the Annual Meeting. The Purchase Plan provides for the
purchase of Common Stock by eligible employees of the Company and its
subsidiaries through payroll deductions. Under the Purchase Plan, the Company
conducts a series of continuous offerings of its Common Stock, each continuing
for six months (the "Offering Period") and each beginning on January 1 and July
1 of each year, as the case may be (the "Offering Commencement Date"), and
ending on the following June 30 and December 31, as the case may be (the
"Offering Termination Date"). On each Offering Commencement Date, each eligible
participating employee (the "Participant") in the Purchase Plan will be granted,
by operation of the Purchase Plan, an option (a "Purchase Plan Option") to
purchase as many full shares of Common Stock as can be purchased with payroll
deductions authorized by the Participant and credited to the Participant's
account during that Offering Period.
The purpose of the Purchase Plan is to advance the interests of the
Company and its shareholders by providing employees of the Company and its
subsidiaries with an opportunity to acquire an ownership interest in the Company
through the purchase of shares of Common Stock of the Company on favorable terms
through payroll deductions.
The major features of the Purchase Plan are summarized below, which
summary is qualified in its entirety by reference to the actual text of the
Purchase Plan, a copy of which may be obtained from the Company.
SUMMARY OF THE PURCHASE PLAN
GENERAL. Any employee of the Company or any subsidiary (other than an
employee whose customary employment is 20 hours or less per week or five months
or less per calendar year) who has been continuously employed by the Company or
a subsidiary for at least one month prior to the Offering Commencement Date for
the applicable Offering Period will be eligible to participate in that Offering
Period.
The maximum number of shares of Common Stock available for issuance
under the Purchase Plan is 500,000 shares. The number and type of shares of
Common Stock subject to outstanding Purchase Plan Options and the exercise price
of outstanding Purchase Plan Options will be appropriately adjusted in the event
such Purchase Plan Options are exercised after any Common Stock dividend,
split-up, recapitalization, merger, consolidation, combination or exchange of
Common Stock or the like. If the total number of shares that would otherwise be
subject to Purchase Plan Options granted on an Offering Date exceeds the number
of shares then available under the Purchase Plan (after deduction of all shares
for which Purchase Plan Options have been exercised or are then outstanding),
the Company will make a pro rata allocation of the shares remaining available
for Purchase Plan Option grants in as uniform and equitable a manner as is
practicable.
<PAGE>
The Purchase Plan will be administered by the Compensation Committee
(the "Committee") of the Board. Members of the Committee are appointed from time
to time by the Board, serve at the pleasure of the Board, and may resign at any
time upon written notice to the Board. The Committee has the authority to make,
administer and interpret such rules and regulations as it deems necessary to
administer the Purchase Plan.
PARTICIPATION. An eligible employee may become a Participant in the
Purchase Plan by completing a subscription agreement authorizing payroll
deductions on the form provided by the Company and filing it with the Company's
Human Resources Department not later than the 15th day of the month immediately
preceding the Offering Commencement Date of the first Offering Period in which
the Participant wishes to participate. Payroll deductions for a Participant will
begin with the first payroll following the applicable Offering Commencement Date
and will continue until the termination of the Purchase Plan, subject to
withdrawal by the Participant at any time, as described below. An otherwise
eligible employee will not be granted a Purchase Plan Option under the Purchase
Plan if, immediately after the grant, the Participant would own shares of Common
Stock and/or hold outstanding options to purchase shares of Common Stock
possessing 5% or more of the total combined voting power or value of all classes
of stock of the Company or of any subsidiary. As of October 8, 1997,
approximately 240 persons were eligible to participate in the Purchase Plan.
PAYROLL DEDUCTIONS. By completing and filing a participation form, a
Participant elects to have payroll deductions made from the Participant's total
compensation on each payday during the Offering Period at a rate equal to a
whole percentage from 2% to 10% (or up to 15% if permitted by the Committee) of
the total compensation that he or she would have received on the payday;
provided, however, that no Participant's payroll deductions may be less than
$10.00 per pay period. No increases or decreases in the amount of payroll
deductions for a Participant may be made during an Offering Period. A
Participant may increase or decrease the rate of the Participant's payroll
deductions under the Purchase Plan to a whole percentage from 2% to 10% for
subsequent Offering Periods by completing an amended participation form and
filing it no later than the 15th day of the month immediately preceding the
Offering Commencement Date of the Offering Period for which the increase or
decrease is to become effective. A Participant may discontinue participation in
the Purchase Plan at any time as described below.
The funds accumulated through a Participant's payroll deductions under
the Purchase Plan are credited to an account established under the Purchase Plan
for the Participant. These funds are held by the Company as part of its general
assets, usable for any corporate purpose, and the Company is not obligated to
keep these funds separate from its other corporate funds. Participants will not
receive any interest from the Company for the funds accumulated from their
payroll deductions under the Purchase Plan and may not make any separate cash
payment or contribution to such account.
PURCHASE OF SHARES. On each Offering Commencement Date, each
Participant is granted, by operation of the Purchase Plan, a Purchase Plan
Option to purchase as many shares of Common Stock that he or she will be able to
purchase with the payroll deductions credited to the Participant's account
during the Offering Period. Unless a Participant withdraws from the Purchase
Plan as described below, the Participant's Purchase Plan Option will be
exercised automatically on the Offering Termination Date for the purchase of the
number full of shares of Common Stock that the accumulated payroll deductions in
the Participant's account on the Offering Termination Date will purchase at the
applicable price, determined in the manner described below. The number of shares
of Common Stock that may be purchased under the Purchase Plan, however, will be
limited as follows: (i) no Participant may purchase more than 25,000 shares of
Common Stock under the Purchase Plan in any given Offering Period; and
<PAGE>
(ii) no Participant may be granted a Purchase Plan Option that permits such
Participant to purchase Common Stock under the Purchase Plan and any other
"employee stock purchase plans" of the Company and its subsidiaries to accrue at
a rate that exceeds $25,000 of the fair market value of such shares of Common
Stock (determined at the time such Purchase Plan Option is granted) for each
calendar year in which such Purchase Plan Option is outstanding at any time.
The per share purchase price of the shares offered in a given Offering
Period will be the lesser of 85% of the fair market value of one share of Common
Stock on the Offering Commencement Date or the Offering Termination Date. For
this purpose, the fair market value of the Common Stock will be the closing sale
price of the Common Stock as reported by the Nasdaq National Market on the
applicable date or, if no shares were traded on such day, as of the next
preceding day on which there was such a trade. Certificates representing shares
purchased in an Offering Period will be delivered to Participants as soon as
practicable after each Offering Termination Date. No Participant will have any
interest in any shares of Common Stock subject to a Purchase Plan Option under
the Purchase Plan until the Purchase Plan Option has been exercised.
NON-TRANSFERABILITY OF PURCHASE PLAN OPTIONS. Neither payroll
deductions credited to a Participant's account nor any rights with regard to the
exercise of a Purchase Plan Option or to receive shares of Common Stock under
the Purchase Plan may be assigned, transferred, pledged or otherwise disposed of
in any way (other than by will, the laws of descent and distribution, or by
designation of a beneficiary as provided in the Purchase Plan). Any such attempt
at assignment, transfer, pledge or other disposition will have no effect, except
that the Company may treat such act as an election to withdraw from the Purchase
Plan, in which case the provisions described below will apply.
WITHDRAWAL. A Participant may terminate participation in the Purchase
Plan and withdraw all, but not less than all, of the payroll deductions credited
to the Participant's account under the Purchase Plan prior to the Offering
Termination Date of an Offering Period, by giving written notice to the Company
no later than the 15th day of the last month of the Offering Period. The notice
must state the Participant's desire to terminate involvement in the Purchase
Plan, specify a termination date and request the withdrawal of all of the
Participant's payroll deductions held under the Purchase Plan. All of the
Participant's payroll deductions credited to the Participant's account will be
paid to such Participant as soon as practicable after the termination date
specified in the notice (or, if no date is specified, as soon as practicable
after receipt of the notice of termination and withdrawal), and the Purchase
Plan Option for the current Offering Period will automatically be canceled, and
no further payroll deductions for the purchase of shares of Common Stock will be
made during the Offering Period or for any subsequent Offering Period unless a
new participation form is filed. A Participant's withdrawal from an Offering
Period will not have any effect upon the Participant's eligibility to
participate in a succeeding Offering Period or in any similar plan that the
Company may adopt.
Upon termination of a Participant's employment prior to the Offering
Termination Date of an Offering Period for any reason, including retirement,
death or disability, the payroll deductions credited to such Participant's
account will be returned as soon as practicable after such termination to such
Participant or, in the case of the Participant's death, to the person or persons
entitled to such funds in accordance with the provisions described above under
the section "Non-Transferability of Purchase Plan Options," and the
Participant's Purchase Plan Option will automatically be canceled. A transfer of
employment between the Company and a subsidiary or between subsidiaries and
absences or leaves approved by the Company are not considered termination of
employment under the Purchase Plan.
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING GENERAL DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES IS
BASED UPON CURRENT STATUTES, REGULATIONS AND INTERPRETATIONS. THIS DESCRIPTION
IS NOT INTENDED TO ADDRESS SPECIFIC TAX CONSEQUENCES APPLICABLE TO AN INDIVIDUAL
PARTICIPANT WHO RECEIVES A PURCHASE PLAN OPTION.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Code. If the Purchase Plan so qualifies, the
amount withheld from a Participant's compensation under the Purchase Plan will
constitute ordinary income for federal income tax purposes in the year in which
such amounts would otherwise have been paid to the Participant. However, a
Participant will generally not recognize any income for federal income tax
purposes either on the grant of a Purchase Plan Option or upon the issuance of
any shares of Common Stock under the Purchase Plan.
The federal income tax consequences incurred upon disposition of shares
of Common Stock acquired under the Purchase Plan depend upon how long a
Participant holds the shares. If a Participant disposes of shares acquired under
the Purchase Plan (other than a transfer by reason of death) within a period of
two years from the Offering Commencement Date of the Offering Period in which
the shares were acquired, an amount equal to the difference between the purchase
price and the fair market value of the shares on the last day of the Offering
Period will be treated as ordinary income for federal income tax purposes in the
taxable year in which the disposition takes place. Such amount may be subject to
wage withholding. The difference between the amount realized upon such
disposition of the shares and their fair market value on the last day of the
Offering Period will constitute capital gain or loss. Whether the gain (or loss)
constitutes long-term or short-term capital gain (or loss) will depend upon the
length of time the Participant held the stock prior to its disposition.
Participants should consult their tax advisors to determine whether any specific
gain (or loss) constitutes long-term or short-term capital gain (or loss).
If a Participant disposes of any shares acquired under the Purchase
Plan more than two years after the Offering Commencement Date of the Offering
Period in which such shares were acquired (or if no disposition has occurred by
the time of Participant's death) an amount equal to the lesser of (a) the excess
of the fair market value of the shares at the time of disposition (or death)
over the purchase price, or (b) the excess of the fair market value of the
shares on the Offering Commencement Date of the Offering Period in which the
shares were acquired over the purchase price will be recognized as ordinary
income and may be subject to wage withholding. With respect to a disposition of
such shares, any remaining gain on such disposition will be taxed as long-term
capital gain. With respect to a transfer of such shares upon death, any
remaining gain or loss will not be recognized. However, a subsequent sale or
exchange of such shares by a Participant's estate or the person receiving such
shares by reason of the Participant's death may result in capital gain or loss.
No income tax deduction ordinarily is allowed to the Company with
respect to the grant of any Purchase Plan Option, the issuance of any shares of
Common Stock under the Purchase Plan or the disposition of any shares acquired
under the Purchase Plan and held for two years. However, if a Participant
disposes of shares purchased under the Purchase Plan within two years after the
Offering Commencement Date of the Offering Period in which the shares were
acquired, the Company will receive an income tax deduction in the year of such
disposition in an amount equal to the amount constituting ordinary income to the
Participant, provided that the Company complies with the applicable wage
withholding requirements.
<PAGE>
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors recommends that the shareholders vote FOR
approval of the 1997 Employee Stock Purchase Plan. The affirmative vote of the
holders of a majority of the shares of Common Stock present and entitled to vote
in person or by proxy on this matter at the Annual Meeting, and at least a
majority of the minimum number of votes necessary for a quorum, is necessary for
approval. Unless a contrary choice is specified, proxies solicited by the Board
of Directors will be voted FOR approval of the 1997 Employee Stock Purchase
Plan.
<PAGE>
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, 1998. 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) 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 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 fiscal year ended July 31, 1997, the Company
believes that, during its fiscal year ending July 31, 1997, its executive
officers and Directors and all persons who beneficially own more than 10% of the
outstanding shares of the Company's Common Stock complied with all filing
requirements under Section 16(a), except that: (i) Mr. Christofferson failed to
file timely reports under Section 16(a) reporting stock option grants Mr.
Christofferson received in November 1994 and in August 1995; and (ii) Dr. Kallok
failed to file a timely report under Section 16(a) reporting his appointment as
an executive officer of the Company. All such required reports have subsequently
been filed.
SHAREHOLDER PROPOSALS FOR 1998 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, 1998.
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.
<PAGE>
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, 1997, TO
EACH PERSON WHO WAS A SHAREHOLDER OF THE COMPANY AS OF OCTOBER 17, 1997, 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. AFTER
MARCH 1, 1998, SUCH REQUEST SHOULD BE SENT TO: ANGEION CORPORATION, 7601
NORTHLAND DRIVE, BROOKLYN PARK, MN 55428 ATTN: SHAREHOLDER INFORMATION.
By Order of the Board of Directors
Whitney A. McFarlin
Chairman of the Board,
President and Chief Executive Officer
November 7, 1997
Minneapolis, Minnesota
<PAGE>
ANGEION CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.
The purpose of this 1997 Employee Stock Purchase Plan (the "Plan") is
to advance the interests of Angeion Corporation ("the Company") and its
shareholders by providing eligible employees of the Company and its
Participating Subsidiaries with an opportunity to acquire an ownership interest
in the Company through the purchase of Common Stock of the Company on favorable
terms through payroll deductions. The Company intends that the Plan qualify as
an "employee stock purchase plan" under Section 423 of the Code. Accordingly,
provisions of the Plan will be construed so as to extend and limit participation
in a manner consistent with the requirements of Section 423 of the Code.
2. Definitions.
2.1 "Board" means the Board of Directors of the Company.
2.2 "Change in Control" means an event described in Section 9.1 of the
Plan.
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, par value $.01 per share, of
the Company, 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 "Compensation" means all gross cash compensation (including wage,
salary, incentive, bonus and overtime earnings) paid by the Company or any
Participating Subsidiary to a Participant, including amounts that would have
constituted compensation but for a Participant's election to defer or reduce
compensation pursuant to any deferred compensation, cafeteria, capital
accumulation or any other similar plan of the Company; provided, however, that
the Committee, in its sole discretion, may expand or limit the amounts that will
be deemed compensation for purposes of the Plan in such manner as it deems
appropriate.
2.7 "Eligible Employee" means any employee of the Company or a
Participating Subsidiary (other than an employee whose customary employment with
the Company or a Participating Subsidiary is for 20 hours or less per week or
five months or less per calendar year) who, with respect to any Offering Period,
has been continuously employed by the Company or a Participating Subsidiary for
at least one month prior to the Offering Commencement Date for such Offering
Period. With respect to a Subsidiary that has been acquired by the Company and
designated as a Participating Subsidiary or a Subsidiary that is otherwise
subsequently designated by the Committee as a Participating Subsidiary, the
period of employment of employees of such Participating Subsidiary occurring
prior to the time of such acquisition or designation will be included for
purposes of determining whether an employee has been employed for the requisite
period of time under the Plan.
2.8 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE>
2.9 "Fair Market Value" means, with respect to the Common Stock, as of
any date (or, if no shares were traded or quoted on such date, as of the next
preceding date on which there was such a trade or quote) (a) the mean between
the reported high and low sale prices of the Common Stock if the Common Stock is
listed, admitted to unlisted trading privileges or reported on any foreign or
national securities exchange or on the Nasdaq National Market or an equivalent
foreign market on which sale prices are reported; (b) if the Common Stock is not
so listed, admitted to unlisted trading privileges or reported, the closing bid
price as reported by the Nasdaq SmallCap Market, OTC Bulletin Board, National
Quotation Bureau, Inc. or other comparable service; or (c) if the Common Stock
is not so listed or reported, such price as the Committee determines in good
faith in the exercise of its reasonable discretion.
2.10 "Offering Commencement Date" means the first day of an Offering
Period.
2.11 "Offering Period" means any of the offerings to Participants of
Options under the Plan, each continuing for six months, as described in Section
6 of the Plan.
2.12 "Offering Termination Date" means the last day of an Offering
Period.
2.13 "Option" means a right to purchase shares of Common Stock granted
to a Participant in connection with an Offering Period pursuant to Section 7 of
the Plan
2.14 "Option Price" means, with respect to any Offering Period, the
lower of (a) 85% of the Fair Market Value of one share of Common Stock on the
Offering Commencement Date, or (b) 85% of the Fair Market Value of one share of
Common Stock on the Offering Termination Date.
2.15 "Participant" means an Eligible Employee who elects to participate
in the Plan pursuant to Section 5 of the Plan.
2.16 "Participating Subsidiary" means a Subsidiary that has been
designated by the Committee from time to time, in its sole discretion, as a
corporation whose Eligible Employees may participate in the Plan.
2.17 "Securities Act" means the Securities Act of 1933, as amended.
2.18 "Subsidiary" means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.
2.19 "Termination of Employment" means a Participant's complete
termination of employment with the Company and all Participating Subsidiaries
for any reason, including death, disability or retirement. In the event that a
Participant is in the employ of a Participating Subsidiary and the Participating
Subsidiary ceases to be a Participating Subsidiary of the Company for any
reason, such event will be deemed a termination of employment unless the
Participant continues in the employ of the Company or another Participating
Subsidiary.
3. Administration.
The Plan will be administered by the Board or by a committee of the
Board. So long as the Company has a class of its equity securities registered
under Section 12 of the Exchange Act, any committee administering the Plan will
consist solely of two or more members of the Board who are "non-employee
directors" within the meaning of Rule 16b-3 under the Exchange Act. Such a
committee,
<PAGE>
if established, will act by majority approval of the members (but may also take
action with the written consent of a majority of the members of such committee),
and a majority of the members of such a committee will constitute a quorum. As
used in the Plan, "Committee" will refer to the Board or to such a committee, if
established. 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 Participants who are subject to
Section 16 of the Exchange Act. The Committee may exercise its duties, power and
authority under the Plan in its sole discretion without the consent of any
Participant or other party, unless the Plan specifically provides otherwise.
Each determination, interpretation or other action made or taken by the
Committee pursuant to the provisions of the Plan will 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 Committee will be liable for any action
or determination made in good faith with respect to the Plan or any Option
granted under the Plan.
4. Shares Available for Issuance; Adjustments for Certain Events.
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 500,000 shares
of Common Stock. If the total number of shares of Common Stock that would
otherwise be issuable upon the exercise of Options granted pursuant to Section 7
of the Plan on any Offering Termination Date exceeds the number of shares then
available for issuance under the Plan, the Committee will make a pro rata
allocation of the shares of Common Stock remaining available for issuance under
the Plan in as uniform and equitable a manner as it deems appropriate.
4.2 Accounting for Options. Shares of Common Stock that are issued
under the Plan or that are subject to outstanding Options 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 is terminated unexercised will automatically again become available
for issuance under the Plan.
4.3 Adjustments to Shares and Options. 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 or other property (including cash) available for issuance or payment
under the Plan and, in order to prevent dilution or enlargement of the rights of
Participants, the number and kind of securities or other property (including
cash) subject to, and the exercise price of, outstanding Options.
5. Participation; Payroll Deductions.
5.1 Participation. Participation in the Plan is voluntary and is not a
condition of employment. Eligible Employees may elect to participate in the
Plan, beginning with the first Offering Period to commence after such person
becomes an Eligible Employee, by properly completing a subscription agreement
authorizing payroll deductions on the form provided by the Company and filing
the participation form with the Company's Human Resources Department not later
than the 15th day of
<PAGE>
the month immediately preceding the Offering Commencement Date of the first
Offering Period in which the Participant wishes to participate. An Eligible who
elects to participate with respect to an Offering Period will be deemed to have
elected to participate in each subsequent Offering Period, unless such
Participant properly completes and files a notice of withdrawal form in the
manner described in Section 8.1 of the Plan.
5.2 Limitation on Participation. Notwithstanding any provisions of the
Plan to the contrary, an Eligible Employee may not participate in the Plan and
will not be granted an Option under the Plan if, immediately after the grant of
such Option, such Eligible Employee (or any other person whose stock ownership
would be attributed to such Eligible Employee pursuant to Section 424(d) of the
Code) would own stock or options possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company or of its "parent"
or "subsidiary" corporations (within the meaning of Section 424 of the Code).
5.3 Payroll Deductions.
(a) By completing and filing a participation form, a
Participant will elect to have payroll deductions made from such
Participant's total Compensation (in whole percentages from a minimum
of 2% to a maximum of 10%, or such other minimum or maximum percentages
as the Committee may from time to time establish, but not to exceed
15%) on each payday during the time he or she is a Participant in the
Plan in such amount as such Participant designates on the participation
form; provided, however, that no Participant's payroll deductions may
be less than $10.00 per pay period.
(b) All payroll deductions authorized by a Participant will be
credited as of each payday to an account established under the Plan for
the Participant. Such account will be solely for bookkeeping purposes,
no separate fund, trust or other segregation of such amounts will be
established or made and the amounts represented by such account will be
held as part of the Company's general assets, usable for any corporate
purpose. A Participant may not make any separate cash payment or
contribution to such Participant's account. No interest will accrue on
amounts held in such accounts under the Plan.
(c) No increases or decreases in the amount of payroll
deductions for a Participant may be made during an Offering Period. A
Participant may increase or decrease the amount of his or her payroll
deductions under the Plan for subsequent Offering Periods by properly
completing an amended participation form and filing it with the
Company's Human Resources Department not less than the 15th day of the
month immediately preceding the Offering Commencement Date of the
Offering Period for which such change in payroll deductions is to be
effective.
(d) A Participant may withdraw from participation in the Plan
at any time as provided in Section 8.1 of the Plan.
6. Offering Periods.
Options to purchase shares of Common Stock will be offered to
Participants under the Plan through a continuous series of Offering Periods,
each continuing for six months, and each of which will commence on January 1 and
July 1 of each year, as the case may be, and will terminate on June 30 and
December 31 of such year, as the case may be.
<PAGE>
7. Options.
7.1 Grant of Options. With respect to any Offering Period, each
Participant participating in such Offering Period will be granted, by operation
of the Plan on the Offering Commencement Date for such Offering Period, an
Option to purchase (at the Option Price) as many full shares of Common Stock as
such Participant will be able to purchase with the accumulated payroll
deductions credited to such Participant's account during such Offering Period
plus the balance (if any) carried forward from the Participant's payroll
deduction account from the preceding Offering Period.
7.2 Limitations on Purchase. Notwithstanding Section 7.1 or any other
provision of the Plan to the contrary, the number of shares of Common Stock that
may be purchased under the Plan will be limited as follows:
(a) No Participant may purchase more than 25,000 shares of
Common Stock under the Plan in any given Offering Period.
(b) No Participant may be granted an Option that permits such
Participant to purchase Common Stock under the Plan and any other
"employee stock purchase plans" (within the meaning of Section 423 of
the Code) of the Company and its Subsidiaries to accrue (i.e., become
exercisable) at a rate that exceeds $25,000 of the Fair Market Value of
such shares of Common Stock (determined at the time such Option is
granted) for each calendar year in which such Option is outstanding at
any time.
7.3 Exercise of Options.
(a) Unless a Participant withdraws from the Plan as provided
in Section 8.1 of the Plan, the Participant's Option for the purchase
of shares of Common Stock granted with respect to an Offering Period
will be exercised automatically at the Offering Termination Date of
such Offering Period for the purchase of the number of full shares of
Common Stock that the accumulated payroll deductions in such
Participant's account as of such Offering Termination Date will
purchase at the applicable Option Price.
(b) A Participant may only purchase one or more full shares in
connection with the automatic exercise of an Option granted for any
Offering Period. The portion of any balance remaining in a
Participant's payroll deduction account at the close of business on the
Offering Termination Date of any Offering Period that is less than the
purchase price of one full share of Common Stock will be carried
forward into the Participant's payroll deduction account for the
following Offering Period. In no event, however, will the balance
carried forward be equal to or greater than the purchase price of one
full share of Common Stock on the Offering Termination Date of an
Offering Period.
(c) No Participant (or any person claiming through such
Participant) will have any interest in any Common Stock subject to an
Option under the Plan until such Option has been exercised, at which
point such interest will be limited to the interest of a purchaser of
the Common Stock purchased upon such exercise pending the delivery of
such Common Stock.
(d) As promptly as practicable after the Offering Termination
Date of each Offering Period, the Company will issue the shares of
Common Stock purchased upon exercise of such Participant's Option
granted for such Offering Period, registered in the name of the
Participant or, if the Participant so directs on his or her
Participation Form, in the names of the Participant
<PAGE>
and his or her spouse. The Committee may determine, in its sole
discretion, the manner of delivery of shares of Common Stock purchased
under the Plan, which may be by electronic account entry into new or
existing brokerage or other accounts, delivery of physical stock
certificates or such other means as the Committee deems appropriate.
8. Withdrawal From Plan.
8.1 Voluntary Withdrawal. A Participant may, at any time on or before
5:00 p.m., Minneapolis, Minnesota time on the 15th day of the last month of an
Offering Period, terminate his or her participation in the Plan and withdraw
all, but not less than all, of the payroll deductions credited to such
Participant's account under the Plan by giving written notice to the Company's
Human Resources Department. Such notice must state that the Participant wishes
to terminate his or her participation in the Plan and request the withdrawal of
all of the Participant's payroll deductions held under the Plan. All of the
Participant's payroll deductions credited to his or her account will be paid to
such Participant as soon as practicable after receipt of the notice of
withdrawal, such Participant's Option for such Offering Period will
automatically be canceled and will no longer be exercisable, and no further
payroll deductions for the purchase of shares of Common Stock under the Plan
will be made.
8.2 Termination of Employment.
(a) Upon the Termination of Employment of a Participant at any
time, the payroll deductions credited to such Participant's account
will be paid to such Participant as soon as practicable after the
effective date of such Termination of Employment (or, in the case of
death, to the person or persons entitled thereto under Sections 10 and
11.3 of the Plan), such Participant's Option for the current Offering
Period will automatically be canceled and will no longer be
exercisable, and no further payroll deductions for the purchase of
shares of Common Stock under the Plan will be made.
(b) Unless the Committee otherwise determines in its sole
discretion, a Participant's employment 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 Participating Subsidiary for which
the Participant provides employment, as determined by the Committee in
its sole discretion based upon such records.
8.3 Effect of Withdrawal. A Participant's withdrawal pursuant to
Section 8.1 of the Plan will not have any effect upon such Participant's
eligibility to participate in a subsequent Offering Period (so long as such
Participant completes and files a new Participation Form pursuant to Section 5
of the Plan) or in any similar plan that may hereafter be adopted by the
Company.
9. Change in Control.
9.1 Change in Control. For purposes of this Section 9, 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;
<PAGE>
(c) 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 more than 50% of the combined voting
power of the Company's outstanding securities ordinarily having the
right to vote at elections of directors; or
(d) 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 less than 50% of the combined voting
power of the surviving corporation's then outstanding securities
ordinarily having the right to vote at elections of directors.
9.2 Adjustment of Offering Period. Without limiting the authority of
the Committee under Sections 3, 4.3 and 13 of the Plan, if a Change in Control
of the Company occurs, the Committee, in its sole discretion, may (a) accelerate
the Offering Termination Date of the then current Offering Period and provide
for the exercise of Options thereunder by Participants in accordance with
Section 7.3 of the Plan, or (b) accelerate the Offering Termination Date of the
then current Offering Period and provide that all payroll deductions credited to
the accounts of Participants will be paid to Participants as soon as practicable
after such Offering Termination Date and that all Options for such Offering
Period will automatically be canceled and will no longer be exercisable.
10. Designation of Beneficiary.
A Participant may file with the Company's Human Resources Department a
written designation of a beneficiary who is to receive shares of Common Stock
and cash, if any, under the Plan in the event of such Participant's death prior
to delivery of such shares or cash to such Participant. Such designation of
beneficiary may be changed by the Participant at any time by written notice the
Company's Human Resources Department. In the event of the death of a Participant
in the absence of a valid designation of a beneficiary who is living at the time
of such Participant's death, (a) the Company will deliver such shares of Common
Stock and cash to the executor or administrator of the estate of the
Participant, or (b) if to the Company's knowledge no such executor or
administrator has been appointed, the Company, in its sole discretion, may
deliver such shares of Common Stock and cash to the spouse or to any one or more
dependents or relatives of the Participant or, if no spouse, dependent or
relative is known to the Company, to such other person as the Company may
designate.
11. Rights of Eligible Employees and Participants; Transferability.
11.1 No Right to Employment. Nothing in the Plan will interfere with or
limit in any way the right of the Company or any Participating Subsidiary to
terminate the employment of any Eligible Employee or Participant at any time,
nor confer upon any Eligible Employee or Participant any right to continue in
the employ of the Company or any Participating Subsidiary.
11.2 Rights as a Shareholder. As a holder of an Option under the Plan,
a Participant will have no rights as a shareholder unless and until such Option
is exercised and the Participant becomes the holder of record of shares of
Common Stock. Except as otherwise provided in the Plan, no adjustment will be
made for dividends or distributions with respect to Options 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 sole discretion.
<PAGE>
11.3 Restrictions on Transfer. Neither payroll deductions credited to a
Participant's account nor any rights with regard to the exercise of an Option or
to receive shares of Common Stock under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution, or as provided in Section 10 of the Plan) by the
Participant. Any such attempt at assignment, transfer, pledge or other
disposition will be without effect, except that the Company may treat such act
as an election to withdraw from the Plan in accordance with Section 8.1 of the
Plan. During his or her lifetime, a Participant's Option to purchase shares of
Common Stock under the Plan is exercisable only by such Participant.
12. 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 the Plan, and a Participant may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Options 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 or foreign securities laws or an exemption from such registration under
the Securities Act and applicable state or foreign securities laws, and (b)
there has been obtained any other consent, approval or permit from any other
regulatory body that 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.
13. Amendment or 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 Options 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 shareholders of
the Company if shareholder approval of the amendment is then required pursuant
to Section 423 of the Code or the rules of any stock exchange or Nasdaq or
similar regulatory body. Upon termination of the Plan, the Committee, in its
sole discretion, may take any of the actions described in Section 9.2 of the
Plan.
14. Effective Date of Plan.
The Plan will be effective as of September 29, 1997, the date it was
adopted by the Board. The Plan will terminate at midnight on September 28, 2007
and may be terminated prior to such time by Board action, and no Option will be
granted after such termination. The Plan has been adopted by the Board subject
to shareholder approval, and, prior to shareholder approval, shares of Common
Stock may be issued under the Plan subject to such approval.
15. Miscellaneous.
15.1 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 the conflicts of laws
principles of any jurisdictions.
<PAGE>
15.2 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.
<PAGE>
ANGEION CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints WHITNEY A. McFARLIN and DAVID L. CHRISTOFFERSON,
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 of Angeion Corporation held of record by the undersigned on October 17,
1997, at the Annual Meeting of Shareholders to be held on December 10, 1997, or
any adjournment thereof.
1. ELECTION OF DIRECTORS.
[ ] FOR all nominees listed below [ ] AGAINST all nominees listed below
(EXCEPT AS MARKED TO THE CONTRARY BELOW)
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME.)
WHITNEY A. MCFARLIN ARNOLD A. ANGELONI DENNIS E. EVANS
LYLE D. JOYCE, M.D., PH.D. JOSEPH C. KISER, M.D. DONALD D. MAURER
GLEN TAYLOR
2. PROPOSAL TO AMEND THE COMPANY'S 1994 NON-EMPLOYEE DIRECTOR PLAN (A) TO
INCREASE THE FAIR MARKET VALUE OF ANNUAL STOCK GRANTS TO NON-EMPLOYEE
DIRECTORS OF THE COMPANY FROM $16,000 TO $24,000, AND (B) TO INCREASE THE
ANNUAL OPTION GRANT TO NON-EMPLOYEE DIRECTORS OF THE COMPANY FROM 2,500
SHARES TO 3,000 SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO ADOPT THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO RATIFY THE SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT
ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR ENDING JULY 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
5. 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 GIVEN, THIS PROXY WILL BE
VOTED FOR PROPOSALS 2, 3 AND 4 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: ____________________, 1997
_________________________________
Signature
_________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
