ATS MEDICAL INC, DEF 14A, 2000-04-04

ATS MEDICAL INC
DEF 14A, 2000-04-04
ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.ss. 240.14a-11(c) or ss. 240.14a-12

ATS MEDICAL, INC.
(Name of Registrant as Specified in its Charter)

------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction: _____________________

5) Total fee paid: ______________________________________________________

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid: ______________________________________________

2) Form, Schedule or Registration Statement No.: ________________________

3) Filing Party: ________________________________________________________

4) Date Filed: __________________________________________________________

<PAGE>

[LOGO]
ATS MEDICAL, INC.

Dear Fellow Shareholder:

You are cordially invited to attend the 2000 Annual Meeting of
Shareholders of ATS Medical, Inc. (the "Company"), which will be held at the
Minneapolis Club, 729 Second Avenue South, Minneapolis, Minnesota (on the corner
of 8th Street and Second Avenue in downtown Minneapolis) beginning at 3:30 p.m.
on Thursday, May 4, 2000.

This booklet contains your official notice of the 2000 Annual Meeting
and a Proxy Statement that includes information about the matters to be acted
upon at the meeting. Officers and directors of the Company will be on hand to
review the Company's operations and to answer questions and discuss matters that
may properly arise.

I sincerely hope that you will be able to attend our Annual Meeting.
However, whether or not you plan to attend, please complete and return the
enclosed proxy in the accompanying envelope. If you attend the meeting, you may,
if you wish, withdraw any proxy previously given and vote your shares in person.

Sincerely,

/s/ Manuel A. Villafana

Manuel A. Villafana
Chairman of the Board of Directors
and Chief Executive Officer

2000 ANNUAL MEETING OF
SHAREHOLDERS

<PAGE>

NOTICE OF 2000 ANNUAL
MEETING OF SHAREHOLDERS

The 2000 Annual Meeting of Shareholders of ATS Medical, Inc. (the
"Company") will be held on Thursday, May 4, 2000 at 3:30 p.m. at the Minneapolis
Club, 729 Second Avenue South, Minneapolis, Minnesota 55402, for the following
purposes:

1. To elect five members to the Board of Directors to hold office
for the ensuing year and until their successors are elected
and qualified;

2. To vote on the proposed adoption of the ATS Medical, Inc. 2000
Stock Incentive Plan;

3. To ratify the selection of Ernst & Young LLP as independent
auditors of the Company for the year ending December 31, 2000;
and

4. To consider and act upon any other matters that may properly
come before the meeting or any adjournment thereof.

Only holders of record of the common stock of the Company at the close
of business on March 17, 2000 will be entitled to receive notice of and to vote
at the meeting.

Whether or not you plan to attend the meeting in person, you are
requested to complete and return the enclosed proxy in the accompanying
envelope. If you later decide to revoke your proxy, you may do so at any time
before it is exercised.

By Order of the Board of Directors,

/s/ Russell W. Felkey
-------------------------------------
Russell W. Felkey
Secretary

April 3, 2000

<PAGE>

ATS MEDICAL, INC.
PROXY STATEMENT

This proxy statement is furnished in connection with the solicitation
of the enclosed proxy by the Board of Directors of ATS Medical, Inc. (the
"Company") for use at the 2000 Annual Meeting of Shareholders to be held on
Thursday, May 4, 2000 at 3:30 p.m. at the Minneapolis Club, 729 Second Avenue
South, Minneapolis, Minnesota 55402, and at any adjournments thereof.
Shareholders who sign and return a proxy may revoke it at any time before it is
voted by giving written notice to the Secretary of the Company. This proxy
statement and the enclosed proxy card are being mailed to shareholders
commencing on or about April 3, 2000.

Proxies that are completed, signed and returned to the Company prior to
the Annual Meeting will be voted as specified. If no direction is given, the
proxy will be voted for the election of the nominees for director named in this
proxy statement and for the management proposals discussed herein and in
accordance with the judgment of the persons named in the proxy as to any other
matters that properly come before the meeting. If a shareholder abstains from
voting as to any matter (or indicates a "withhold vote for" as to directors),
then the shares held by such shareholder shall be deemed present at the Annual
Meeting for purposes of determining a quorum and for purposes of calculating the
vote with respect to such matter, but shall not be deemed to have been voted in
favor of such matter. If a broker returns a "non-vote" proxy, indicating a lack
of authority to vote on such matter, then the shares covered by such non-vote
shall be deemed present at the Annual Meeting for purposes of determining a
quorum but shall not be deemed to be represented at the Annual Meeting for
purposes of calculating the vote with respect to such matters.

PROPOSAL 1 - ELECTION OF DIRECTORS

Five directors have been nominated for election to the Company's Board
of Directors at the 2000 Annual Meeting of Shareholders to hold office for a
term of one year and until their successors are duly elected and qualified
(except in the case of earlier death, resignation or removal). The accompanying
proxy is intended to be voted for the election of nominees for director named
below, unless authority to vote for one or more nominees is withheld as
specified on the proxy card. The affirmative vote of a majority of the shares of
common stock of the Company (the "Common Stock") represented at the Annual
Meeting is required for the election of each director, and cumulative voting is
not permitted. In the event that any nominee becomes unable or unwilling to
serve as a director for any reason, the persons named in the enclosed proxy will
vote for a substitute nominee in accordance with their best judgment. The Board
of Directors has no reason to believe that any nominee will be unable or
unwilling to serve as a director if elected.

Each nominee has furnished to the Company the following information
with respect to his principal occupations or employment during the last five
years, his directorships of other companies subject to the reporting
requirements of the Securities Exchange Act of 1934 or the Investment Company
Act of 1940 and his direct and indirect beneficial ownership of shares of the
Company's Common Stock as of February 1, 2000. Except as otherwise noted below,
each nominee possesses sole voting and investment power with respect to any
shares of Common Stock owned by him, and all shares of Common Stock owned by him
represent less than 1% of the shares outstanding.

1
<PAGE>

MANUEL A. VILLAFANA, 59, is a founder of the Company and has served as
Chief Executive Officer, Chairman of the Board and a Director since the
Company's inception in 1987. From 1983 to 1987, Mr. Villafana served as Chairman
of GV Medical, Inc., a company co-founded by Mr. Villafana to develop,
manufacture and market the LASTAC System, a laser transluminal angioplasty
catheter system. From 1976 to 1982, Mr. Villafana served as President and
Chairman of St. Jude Medical, Inc., a company founded by Mr. Villafana to
develop, manufacture and market a pyrolytic carbon bileaflet mechanical heart
valve. From 1972 to 1976, he served as President and Chairman of Cardiac
Pacemakers, Inc., a company founded by Mr. Villafana to develop, manufacture and
market a new generation of lithium powered pacemakers. Mr. Villafana
beneficially owns 770,896 shares of Common Stock (4.3% of the outstanding),
including 103,250 shares issuable upon exercise of currently exercisable
options.

RICHARD W. KRAMP, 54, has served as President, Chief Operating Officer
and a Director of the Company since joining the Company in 1988. Prior to
joining the Company, Mr. Kramp was Vice President of Sales and Marketing for St.
Jude Medical, Inc., where he served in a variety of sales and marketing
capacities from 1978 to 1988. From 1972 to 1976, Mr. Kramp was the Senior Design
Engineer and then Supervisor of Electrical Design for Cardiac Pacemakers, Inc.,
where he designed the first lithium powered demand pacemaker for which he
received a U.S. patent. Mr. Kramp beneficially owns 472,615 shares of Common
Stock (2.6% of the outstanding), including 31,104 shares issuable upon exercise
of currently exercisable options. Mr. Kramp is also a Director of MedAmicus,
Inc., a company engaged in the design, development, manufacture and marketing of
medical products for the gynecology, urology and cardiology markets.

DAVID L. BOEHNEN, 53, is Executive Vice President of SUPERVALU INC.
("SUPERVALU"), a food distribution company and food retailer. Mr. Boehnen served
as Senior Vice President, Law and External Relations of SUPERVALU from April
1991 to June 1997. Mr. Boehnen was elected as a Director of the Company in
November of 1997. Mr. Boehnen beneficially owns 13,000 shares of Common Stock,
including 10,000 shares issuable upon exercise of currently exercisable options.

CHARLES F. CUDDIHY, JR., 73, was Executive Vice President-Corporate
Marketing of Medtronic, Inc., a medical products company, where he was employed
from 1967 through 1984. Mr. Cuddihy served as Managing Director of Trident
Medical International, an international trading company, from May 1991 to April
1992. From January 1989 to October 1990, Mr. Cuddihy was President and Chief
Executive Officer of Cherne Medical, Inc., a cardiovascular products company.
Mr. Cuddihy has served as a Director of the Company since 1991. Mr. Cuddihy
beneficially owns 49,500 shares of Common Stock, including 47,500 shares
issuable upon exercise of currently exercisable options.

A. JAY GRAF, 52, is a Group Chairman of Guidant Corporation, a medical
products company. From 1995 to 2000, Mr. Graf was the Vice President of Guidant
Corporation and President of its Cardiac Rhythm Management group, which includes
business activities of Cardiac Pacemakers ("CPI") and Heart Rhythm Technologies.
Since 1992, Mr. Graf has served as President of CPI. Prior thereto, he served as
CPI's Executive Vice President and Chief Operating Officer. Mr. Graf has served
as a Director of the Company since 1995. Mr. Graf beneficially owns 15,000
shares of Common Stock, all of which are issuable upon exercisable options.

COMMITTEES OF THE BOARD OF DIRECTORS AND ATTENDANCE

The Company has an Audit Committee whose functions are to review and
monitor accounting policies and control procedures of the Company, including
recommending the engagement of independent auditors and reviewing the scope of
the audit. The Audit Committee, on which Messrs. Cuddihy and Graf serve, held
one meeting during 1999. The Company also has a Compensation Committee which
reviews and establishes compensation levels for each of the Company's officers,
as well as jointly administers the Company's stock plans with the Board of
Directors. The Compensation Committee, on which Messrs. Cuddihy and Graf serve,
held one formal meeting during 1999 and also adopted one written action. The
Company does not have a standing nominating committee. The Board of Directors
held five meetings during 1999. Each Director attended at least 75% of the
meetings of the Board and all meetings of each committee of which he was a
member.

2
<PAGE>

COMPENSATION OF DIRECTORS

The Directors of the Company do not receive any cash compensation for
their services on the Board of Directors. Upon their initial election to the
Board of Directors, each outside Director receives an option to purchase 5,000
shares of Common Stock at the fair market value on the date of election under
the 1987 Stock Option and Stock Award Plan (the "Plan"). Upon each reelection,
each outside Director receives an option to purchase 2,500 shares of Common
Stock at the fair market value on the date of reelection under the Plan.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

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 other executive officers of the Company whose
salary and bonus earned in 1999 exceeded $100,000:

<TABLE>
<CAPTION>
Long-Term
---------
Annual Compensation Compensation Shares
Name and ------------------- ------------------- All Other
Principal Position Year Salary Bonus Underlying Options(1) Compensation(2)
- ------------------------- ---- ------ ----- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
Manuel A. Villafana 1999 $243,013 $25,516 15,000 $ 0
Chief Executive Officer 1998 231,441 76,607 0 0
1997 216,300 64,890 15,000 0

Richard W. Kramp 1999 $198,726 $20,866 15,000 $2,500
Chief Oper. Officer 1998 189,262 58,861 0 2,500
1997 180,250 54,075 15,000 2,375

Russell W. Felkey 1999 $176,400 $18,522 15,000 $2,500
Exec. Vice President 1998 168,000 53,928 0 2,500
1997 160,000 38,000 15,000 2,375

John H. Jungbauer 1999 $140,001 $14,700 140,000 $2,500
Chief Financial Officer 1998 129,938 40,411 0 2,500
1997 123,750 30,938 65,000 2,375

Frank R. Santiago 1999 $138,602 $12,474 15,000 $2,254
V.P., Sales and Marketing 1998 126,280 41,730 20,000 1,793
1997 0 0 0 0
</TABLE>

- ---------------------------

(1) All stock options were granted with an exercise price per share at least
equal to the fair market value of the Common Stock on the date of grant.
(2) Consists of matching contributions to the ATS Medical 401(k) Plan, which is
generally available to all employees.

3
<PAGE>

COMPENSATION AGREEMENTS

Mr. Villafana continues to serve as Chairman and Chief Executive
Officer of the Company on a full-time basis through December 31, 2000, pursuant
to an agreement dated January 26, 1995 and extended in March 1998. Under the
agreement, Mr. Villafana may engage in outside consulting activities, provided
he continues to devote substantially his full-time efforts to the Company. Mr.
Villafana's base salary under the agreement is determined by the Compensation
Committee. Mr. Villafana also is eligible to receive bonuses as and when
determined by the Compensation Committee. Mr. Villafana has agreed not to
compete with the Company during the term of the agreement and for a period of
two years following his termination of services to the Company. In exchange, the
Company has agreed to continue Mr. Villafana's monthly salary during the period
of non-competition restriction.

STOCK OPTION GRANTS IN LAST FISCAL YEAR

The following table summarizes option grants made by the Company to
each of its executive officers in 1999.

<TABLE>
<CAPTION>
Potential Realizable Value
Number of Percentage of At Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Exercise or for Option Term(2)
Options Employees in Base Price Expiration --------------------------
Name Granted(1) 1999 ($/Sh) Date 5%($) 10%($)
- ------------- ---------- ---- ------ ---- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Mr. Villafana 15,000 5% 7.250 1/21/09 68,392 173,319
Mr. Kramp 15,000 5% 7.250 1/21/09 68,392 173,319
Mr. Felkey 15,000 5% 7.250 1/21/09 68,392 173,319
Mr. Jungbauer 15,000 5% 7.250 1/21/09 68,392 173,319
125,000 38% 9.438 10/15/09 741,938 1,880,218
Mr. Santiago 15,000 5% 7.250 1/21/09 68,392 173,319
</TABLE>

- --------------------------

(1) All the options vest in annual cumulative 25% installments beginning one
year from the date of grant.
(2) These amounts represent certain assumed annual rates of appreciation only.
Potential realizable value is calculated assuming 5% and 10% appreciation
in the price of the Common Stock from the date of grant. ACTUAL GAINS, IF
ANY, ON STOCK OPTION EXERCISES ARE DEPENDENT ON THE FUTURE PERFORMANCE OF
THE COMMON STOCK, AND OVERALL STOCK MARKET CONDITIONS. THE AMOUNTS
REFLECTED IN THIS TABLE MAY NOT NECESSARILY BE ACHIEVED.

4
<PAGE>

STOCK OPTION EXERCISES IN LAST FISCAL YEAR

The following table summarizes stock options exercised during 1999 by
the Chief Executive Officer and the other executive officers named in the
Summary Compensation Table, and the estimated values of the options held by such
persons at December 31, 1999.

<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised In-The-Money Options
Shares Options at End of 1999 at End of 1999(1)
Acquired Value --------------------------- ---------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Villafana 0 $0 99,500 30,000 $ 995,331 $234,390

Mr. Kramp 0 0 27,354 29,375 195,798 231,304

Mr. Felkey 0 0 133,000 30,000 1,578,691 234,390

Mr. Jungbauer 0 0 243,000 55,000 1,788,996 414,090

Mr. Santiago 0 0 18,750 43,750 173,603 379,553
</TABLE>

- -------------------

(1) Value represents the difference between the last sale price of the Common
Stock on December 31, 1999, and the exercise price of the options.

CHANGE IN CONTROL AGREEMENTS

The Company has entered into agreements with its officers providing for
the payment of certain benefits to the officers if their employment terminates
following a "change in control" of the Company. The Agreements provide for
benefits if an officer's employment is terminated within 24 months following a
change in control unless such termination was by the Company for cause, by the
officer other than for "good reason," or because of the officer's death. "Good
reason" is defined as the termination of employment as a result of either a
diminishment in the officer's responsibilities, a reduction in salary or
benefits, a relocation of the Company's office of more than 35 miles or any
reason during the sixth month following a change in control. A "change in
control" is generally defined as an acquisition of more than 20% of the
outstanding Common Stock by any person or group, the merger or sale of the
Company or the replacement of a majority of the Company's Board of Directors
with directors not recommended by the existing Board of Directors. The
Agreements provide for lump sum payments following termination in amounts equal
to three times the sum of the officer's base salary and any annual target bonus
potential, as limited by Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"). If there had been a change in control of the Company as of
the end of 1999 and the employment of the five executive officers named in the
Summary Compensation Table had been immediately terminated, then Messrs.
Villafana, Kramp, Felkey, Jungbauer and Santiago would have been entitled to
receive, pursuant to the terms of the Agreements, lump sum payments upon
termination of $765,269, $645,877, $558,683, $431,327 and $495,119,
respectively.

5
<PAGE>

REPORT OF THE COMPENSATION COMMITTEE
CONCERNING EXECUTIVE COMPENSATION

OVERVIEW

The Compensation Committee is responsible for setting the compensation
and benefits of the Company's executive officers, including the Chief Executive
Officer, on behalf of the Board of Directors and the shareholders. The
Compensation Committee also oversees the operation of the ATS Medical, Inc. 1987
Stock Option and Stock Award Plan (the "Stock Option Plan"), the 1998 Employee
Stock Purchase Plan (the "Purchase Plan") and, if adopted by the shareholders at
the 2000 Annual Meeting, the ATS Medical, Inc. 2000 Incentive Plan.

The Compensation Committee is composed entirely of outside directors of
the Company. During 1999, the Board elected Messrs. Cuddihy and Graf to serve on
the Compensation Committee. Mr. Cuddihy is Chairman of the Committee.

The basic objective of the Compensation Committee is to establish a
compensation package which is appropriate for each officer's scale of
responsibility and performance, commensurate with the marketplace compensation
for executives of companies of similar size as the Company, and to attract,
motivate and retain executives of the necessary caliber. The Committee intends
to achieve these objectives by giving executives the opportunity for equity
ownership in the Company through stock options and by awarding bonuses tied to
individual and Company performance as significant elements of the executive
compensation package.

COMPENSATION CRITERIA

In determining each executive compensation package, the Compensation
Committee reviews the compensation of each executive and the individual
achievements and performance of each such executive during the year. The
Committee considers objective criteria, such as salary survey data of companies
of similar size and technology as the Company, in determining executive
salaries. The financial performance and accomplishments of the Company during
the year are also factors in the Committee's determination of executive
compensation. In line with the Compensation Committee's goal of tying
compensation with performance, executives' salaries are generally increased only
to keep up with estimated cost-of-living expenses, while bonuses vary
substantially from year to year and have generally depended upon the performance
of the Company and the individual executive. The Committee generally makes a
determination as to salaries for the current calendar and reviews bonuses to be
awarded for the prior year at the end of the calendar year or at the beginning
of the following year.

In 1999, the Compensation Committee continued to place emphasis on the
performance-based component of the Company's bonus program to the Company's
executive employees by implementing the Management Incentive Compensation Plan
(the "MICP"). In particular, bonuses to be granted to executive employees
pursuant to the MICP were tied to a grid representing year-over-year increases
in sales and operating income. The Compensation Committee and each executive
officer also develop annual individual objectives which would allow for an
additional 1% of salary bonus for each objective completed, for up to a total of
5% salary bonus.

In addition, the Compensation Committee, in consultation with the Chief
Executive Officer, generally grants stock options to its executive officers on
an annual basis to maintain and increase the executives' incentive to continue
their long-term employment with the Company. The Compensation Committee may also
approve special grants to certain executives to reward their individual
performance. The overall compensation package may also be varied if the
Committee feels that it is necessary to maintain the Company's executive
compensation in line with companies similar in size and technology to the
Company.

6
<PAGE>

EXECUTIVE COMPENSATION PACKAGE

The primary components of the executive compensation package are
salary, bonuses and stock option grants. The Company also currently maintains a
variety of employee benefits in which its executive officers may participate,
including health benefits, automobile allowances, disability insurance, matching
contributions to the Company's 401(k) program and discounting the purchase of a
certain number of shares of the Company's Common Stock pursuant to the Stock
Purchase Plan.

The Compensation Committee took the following actions with respect to
executive compensation for 1999:

* Continued the Management Incentive Compensation Plan (MICP) with
specific goals for 1999.

* Each executive officer earned a bonus of 6% of 1999 salary plus
from 3 to 5% of 1999 salary bonus for completion of individual
objectives. When considering granting these bonuses, the Committee
looked primarily at the Company's revenue and operating income
increase in 1999 over 1998.

* At a meeting held October 15, 1999, the Company granted an option
to purchase 125,000 share of the Company's common stock at $9.438
per share (the fair market value on October 15, 1999) to Mr.
Jungbauer in recognition of his nine years of service with the
Company and in order to bring his option based compensation in line
with that of the other executive officers of the Company.

In 2000, the Committee intends to continue to emphasize objective
factors and performance in determining executive compensation, including
maintaining the compensation of the Company's officers at industry levels, as
reflected in surveys of compensation practices in corporations of comparable
size and technology. In addition, the Committee intends to use growth in the
Company's gross revenue and operating income during 2000 as the primary criteria
for determining the size of bonuses to be paid to executive officers for 2000.
The Committee will use stock options as part of executive compensation in 2000
to provide additional performance incentives.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

During 1999, the Compensation Committee reviewed the Company's and Mr.
Villafana's performance in order to establish Mr. Villafana's compensation. Mr.
Villafana received a salary increase in 1999 over 1998 of 5% and a salary
increase in 2000 over 1999 of 5%. In addition, Mr. Villafana received a bonus
consisting of 10.5% of his 1999 annual salary. The Committee's performance
review of Mr. Villafana addressed major areas of accomplishment for the Company.

SECTION 162(m) OF THE INTERNAL REVENUE CODE

Section 162(m) of the Code generally limits the corporate deduction for
compensation paid to executive officers to $1.0 million, unless the compensation
qualifies as a "performance-based compensation" under the Code. Compensation
resulting from stock options granted under the Stock Option Plan or the ATS
Medical, Inc. 2000 Incentive Plan, if adopted by the shareholders, will not be
counted toward the $1.0 million of deductible compensation under Section 162(m).
The Committee does not believe that the annual compensation for Section 162(m)
purposes of any of the Company's executive officers will exceed $1.0 million in
fiscal 2000.

Charles F. Cuddihy, Jr.
A. Jay Graf

7
<PAGE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 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 such Common Stock. Directors, executive officers and 10%
or more beneficial owners are also required to furnish the Company with copies
of all Section 16(a) reports they file. Based solely on a review of the copies
of such forms furnished to the Company, the Company believes that all Section
16(a) filing requirements applicable to its executive officers, directors and
10% shareholders were complied with.

COMPARATIVE STOCK PERFORMANCE GROWTH

The graph below compares the cumulative total shareholder return on the
Common Stock since December 31, 1994 with the cumulative return of the Standard
& Poor's 500 Stock Index and the NASDAQ Medical Devices, Instruments and
Supplies Index over the same period (assuming the investment of $100 in each
vehicle on December 31, 1994 and reinvestment of all dividends).

[PLOT POINTS CHART]

<TABLE>
<CAPTION>
NAME 1994 1995 1996 1997 1998 1999
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
ATS MED INC. $100.00 $224.24 $187.88 $125.77 $169.70 $362.13
Standard & Poors 500 100.00 137.59 169.48 226.14 291.80 353.74
NASDAQ Medical Dev/Ins/Sup 100.00 151.76 142.16 162.86 182.44 221.94
</TABLE>

8
<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth security ownership information
pertaining to persons known by the Company to beneficially own more than 5% of
the Company's Common Stock, the executive officers named in the Summary
Compensation Table and all directors and executive officers of the Company as a
group as of February 1, 2000.

<TABLE>
<CAPTION>
Common Stock Beneficially Owned
-------------------------------
Beneficial Owner Number of Shares Percent of Outstanding(1)
- ---------------- ---------------- -------------------------
<S> <C> <C>
Lord, Abett & Co. (2) 2,060,310 11.5%
90 Hudson Stret, 11th Floor
Jersey City, NJ 07302

ITOCHU Corporation (3) 1,568,940 8.7%
5-1, Kita-Aoyama 2-Chome
Minato, Tokyo 107-77, Japan

Manuel A. Villafana (4) 770,896 4.3%
Richard W. Kramp (4) 472,615 2.6%
Russell W. Felkey (4) 136,978 *
John H. Jungbauer (4) 264,688 1.5%
Frank R. Santiago (4) 25,900 *
All directors and executive officers as 1,748,577 9.8%
group (eight persons) (4)
</TABLE>

- ---------------------------------
* Less than 1%

(1) The ownership percentage for each person or entity is calculated based on
the number of shares outstanding as of February 1, 2000.

(2) The number of shares owned is based on a Schedule 13G filed by Lord, Abett
& Co. on January 24, 2000. The Schedule 13G indicates that Lord, Abett &
Co. has sole voting and dispositive power and direct ownership of 2,060,310
shares. Lord, Abett & Co. filed the Schedule 13G as an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940.

(3) The number of shares owned is based on an amended Schedule 13D filed by
ITOCHU Corporation ("ITOCHU") on November 28, 1997. The Schedule 13D
indicates that ITOCHU has sole voting and investment power over 784,470
shares and shared voting and investment power over another 784,470 shares.
ITOCHU owns the latter group of shares indirectly through its wholly owned
subsidiary Century Medical, Inc.

(4) Includes the following shares that may be acquired within 60 days through
the exercise of stock options: Mr. Villafana, 103,250; Mr. Kramp,31,104;
Mr. Felkey, 136,750; Mr. Jungbauer, 259,250; Mr. Santiago, 22,500; and all
executive officers and directors as a group, 625,354.

9
<PAGE>

PROPOSAL 2 -
PROPOSED ADOPTION OF 2000 STOCK INCENTIVE PLAN

The Board of Directors adopted the ATS Medical, Inc. 2000 Stock
Incentive Plan (the "Plan") to replace the current Stock Option Plan that is to
expire on December 31, 2000. The purpose of the Plan is to promote the interests
of the Company and its shareholders by aiding the Company in attracting and
retaining employees and directors capable of contributing to the growth and
success of, and providing strategic direction to, the Company, and by offering
such employees and directors an opportunity to acquire a proprietary interest in
the Company, thereby providing them with incentives to put forth maximum efforts
for the success of the Company's business and aligning the interests of such
employees and directors with those of the Company's shareholders.

The adoption of the Plan is expressly subject to the approval of
adoption by the Company's shareholders at the 2000 Annual Meeting. If the
shareholders do not ratify the Plan at the 2000 Annual Meeting, the Plan will
not go into effect. Should shareholders fail to ratify the adoption of the Plan,
the Company will likely be severely constrained in its ability to attract and
retain executives, other key employees and outside directors, and in motivating
and retaining skilled management personnel and outside directors necessary for
the Company's success.

SUMMARY OF THE PLAN

The Plan will permit the granting of (a) stock options, including
"incentive stock options" ("Incentive Stock Options") meeting the requirements
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and stock options that do not meet such requirements ("Non-Qualified Stock
Options"), (b) stock appreciation rights ("SARs"), (c) restricted stock and
restricted stock units, (d) performance awards, and (e) other awards value in
whole or in part by reference to or otherwise based upon the Company's Common
Stock ("Other Stock Grants") (all of these grants are referred to collectively
as "Awards"). The Plan provides for the grant of Awards to any full or part-time
employee, officer, consultant, independent contractor, or Director providing
services to the Company. Stock options granted under the Plan to full or
part-time employees may qualify as Incentive Stock Options under the Code or may
be Non-Qualified Stock Options. Options granted to persons who are not full or
part-time employees of the Company may not qualify as Incentive Stock Options
under the Code. The Plan is administered by the Committee, which is comprised of
non-employee directors selected by the Board. The Committee has the authority
to: (i) designate participants; (ii) determine the type or types of Awards to be
granted to each participant under the Plan; (iii) determine the number of shares
of the Company's common stock ("Shares") to be covered by (or with respect to
which payments, rights or other matters are to be calculated in connection with)
each Award; (iv) determine the terms and conditions of any Award or Award
agreement; (v) amend the terms and conditions of any Award or Award agreement
and accelerate the exercisability of stock options or the lapse of restrictions
relating to restricted stock, restricted stock units or other Awards; (vi)
determine whether, to what extent and under what circumstances Awards may be
exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited or suspended; (vii) determine whether, to what extent and
under what circumstances cash, Shares, promissory notes, other securities, other
Awards, other property and other amounts payable with respect to an Award under
the Plan may be deferred either automatically or at the election of the holder
thereof or the Committee; (viii) interpret and administer the Plan and any
instrument or agreement, including an Award agreement, relating to the Plan;
(ix) establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (x) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.

Under the Plan, the aggregate number of Shares that may be issued under
all Awards is 1,000,000. The market value of such 1,000,000 shares as of March
21, 2000 is approximately $10,000,000. The Plan provides that no employee may be
granted Awards under the Plan for more than 300,000 Shares of common stock or
other property as may become subject to Awards in the aggregate in any calendar
year. Determinations and interpretations with respect to the Plan are in the
sole discretion of the Committee, whose determinations and interpretations will
be final and conclusive. The Plan terminates on December 31, 2010, and no Awards
may be granted after such date.

Awards may be granted for no cash consideration or for such minimal
cash consideration as may be required by applicable law. Awards may provide that
upon grant or exercise thereof the holder will receive Shares, cash or any

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combination thereof, as the Committee shall determine. The exercise price of an
Incentive Stock Option granted under the Plan is determined by the Committee,
but may not be less than 100% of the fair market value of the underlying common
stock on the date of the grant. The exercise price of any Non-Qualified Stock
Option granted under the Plan is determined by the Committee, but may not be
less than 50% of the fair market value of the underlying common stock on the
date of grant. Determinations of fair market value under the Plan must be made
in accordance with the methods and procedures established by the Committee.
Notwithstanding the foregoing, unless otherwise determined by the Committee, the
fair market value of Shares on a given date shall be the closing price of the
shares as reported on the NASDAQ National Market System on such date ("Fair
Market Value").

The term of each option is determined by the Committee. Awards may, in
the discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award granted under any plan of the
Company. The Committee determines the time or times at which an option may be
exercised in whole or in part and the method or methods by which, and the form
or forms (including, without limitation, cash, Shares, promissory notes, other
securities, other awards, or other property, or any combination thereof, having
a Fair Market Value on the exercise date equal to the relevant exercise price)
in which, payment of the exercise price with respect thereto may be made or
deemed to have been made.

The Plan provides for automatic grants to non-employee directors of the
Company of (i) a Non-Qualified Stock Option to purchase 5,000 shares upon such
person's initial election to the Board of Directors, and (ii) of a Non-Qualified
Stock Option to purchase 2,500 shares upon such person's reelection to the
Board. Automatic grants to non-employee directors of the Company can be changed
or amended only by the Board of Directors, and such grants to non-employee
directors replaces similar grants under the 1987 Stock Option Plan, which will
expire on December 31, 2000.

The Plan provides that the Committee may grant reload options,
separately or together with another option. Pursuant to a reload option, the
optionee would be granted a new option to purchase the number of Shares or such
other securities or property as may become subject to Awards, not exceeding the
sum of (i) the number of Shares so provided as consideration upon the exercise
of the previously granted option to which such reload option relates and (ii)
the number of Shares, if any, tendered or withheld as payment of the amount to
be withheld under applicable tax laws in connection with the exercise of the
option to which such reload option relates pursuant to the relevant provisions
of the plan or agreement relating to such option. Reload options have a per
share exercise price equal to the Fair Market Value of one share as of the date
of grant of the new option.

The holder of an SAR will be entitled to receive the excess of (i) the
Fair Market Value of one Share, on the date of exercise (or, if the Committee
shall so determine, at any time during a specified period before or after the
date of exercise) over (ii) the grant price of the SAR as specified by the
Committee, which price shall not be less than 100% of the Fair Market Value of
one Share on the date of grant of the SAR.

Shares of restricted stock and restricted stock units are subject to
such restrictions as the Committee may impose (including any limitations on the
right to vote or the right to receive any dividends or other right or property
related to such restricted stock and restricted stock units), which restrictions
may lapse separately or in combination at such time or times, in such
installments or otherwise as the Committee may determine. Restricted stock
granted under the Plan will be evidenced by issuance of a stock certificate,
which certificate shall be registered in the name of the employee and held by
the Company. Any certificate that is no longer subject to restrictions shall be
delivered to the holder thereof promptly after the applicable restrictions lapse
or are waived. No certificates will be issued at the time restricted stock units
are granted. Upon termination of the holder's employment during the restriction
period, restricted stock and restricted stock units are forfeited and reacquired
by the Company or its affiliates, unless the Committee determines otherwise.
Upon the lapse or waiver of restrictions of restricted stock and restricted
stock units and lapse or waiver of the restricted period relating to the
restricted stock units, certificates evidencing the Shares underlying the
restricted stock or restricted stock units will be issued and delivered to their
holders.

No Award (other than Other Stock Grants) and no right under any such
Award shall be transferable by a participant otherwise than by will or by the
laws of descent and distribution; provided, however, that, if so determined by
the Committee, a participant may, in the manner established by the Committee,
transfer options (other than Incentive

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Stock Options) or designate a beneficiary or beneficiaries to exercise the
rights of the participant and receive any property distributable with respect to
any Award upon the death of the participant. Each Award or right under any Award
is exercisable during the participant's lifetime only by the participant or, if
permissible under applicable law, by the participant's guardian or legal
representative. No Award or right under any such Award may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company or any affiliate.

If any dividend or other distribution (whether in the form of cash,
Shares, other securities or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of Shares (or other securities or other property) that
thereafter may be made the subject of Awards, (ii) the number and type of Shares
(or other securities or other property) subject to outstanding Awards and (iii)
the purchase or exercise price with respect to any Award.

The Board may suspend or terminate the Plan or any portion thereof at
anytime. The Board may also amend the Plan at any time, but such action may not,
without the consent of the affected participants, adversely affect the rights or
obligations of the participants under outstanding stock options. The Board may
increase the number of shares of Common Stock that will be available for
issuance under the Plan, subject to shareholder approval. No amendment or
modification of the Plan, without approval of the shareholders of the Company,
will be effective if shareholder approval of the amendment is then required
pursuant to Rule 16b(3) under the Exchange Act or any successor rule, Section
422 of the Code, or the rules of the National Association of Securities Dealers,
Inc. Awards outstanding at the time the Plan is terminated will continue to be
exercisable in accordance with their respective terms.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the principal federal income tax
consequences generally applicable to Awards under the Plan. The grant of an
option or SAR is not expected to result in any taxable income for the recipient.
The holder of an Incentive Stock Option generally will have no taxable income
upon exercising the Incentive Stock Option (except that a liability may arise
pursuant to the alternative minimum tax), and the Company will not be entitled
to a tax deduction when an Incentive Stock Option is exercised. Upon exercising
a Non-Qualified Stock Option, the optionee must recognize ordinary income equal
to the excess of the Fair Market Value of the shares of Common Stock acquired on
the date of exercise over the exercise price, and the Company will be entitled
at that time to a tax deduction for the same amount. Upon exercising an SAR, the
amount of any cash received and the Fair Market Value on the exercise date of
any shares of Common Stock received are taxable to the recipient as ordinary
income and deductible by the Company. The tax consequence to an optionee upon a
disposition of shares acquired through the exercise of an option will depend on
how long the shares have been held and upon whether such shares were acquired by
exercising an Incentive Stock Option or by exercising a Non-Qualified Stock
Option or SAR. Generally, there will be no tax consequence to the Company in
connection with disposition of shares acquired under an option, except that the
Company may be entitled to a tax deduction in the case of a disposition of
shares acquired under an Incentive Stock Option before the applicable Incentive
Stock Option holding periods set forth in the Code have been satisfied.

With respect to other Awards granted under the Plan that are payable
either in cash or shares of Common Stock that are either transferable or not
subject to substantial risk of forfeiture, the holder of such an Award must
recognize ordinary income equal to the excess of (a) the cash or the Fair Market
Value of the shares of Common Stock received (determined as of the date of such
receipt) over (b) the amount (if any) paid for such shares of Common Stock by
the holder of the award, and the Company will be entitled at that time to a
deduction for the same amount. With respect to an award that is payable in
shares of Common Stock that are restricted as to transferability and subject to
substantial risk of forfeiture, unless a special election is made pursuant to
the Code, the holder of the award must recognize ordinary income equal to the
excess of (i) the Fair Market Value of the shares of Common Stock received
(determined as of the first time the shares become transferable or not subject
to substantial risk of

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forfeiture, whichever occurs earlier) over (ii) the amount (if any) paid for
such shares of Common Stock by the holder, and the Company will be entitled at
that time to a tax deduction for the same amount, if and to the extent such
amount is deductible.

Special rules may apply in the case of individuals subject to Section
16 of the Exchange Act. In particular, unless a special election is made
pursuant to the Code, shares received pursuant to the exercise of a stock option
or SAR may be treated as restricted as to transferability and subject to a
substantial risk of forfeiture for a period of up to six months after the date
of exercise. Accordingly, the amount of any ordinary income recognized, and the
amount of the Company's tax deduction, are determined as of the end of such
period.

Under the Plan, the Committee may permit participants receiving or
exercising awards, subject to the discretion of the Committee and upon such
terms and conditions as it may impose, to satisfy certain tax obligations by (i)
electing to have the Company withhold a portion of the Shares otherwise to be
delivered upon exercise or receipt of (or the lapse of restrictions relating to)
such Award with a Fair Market Value equal to the amount of such taxes or (ii)
delivering to the Company Shares other than Shares issuable upon exercise or
receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes. The election, if any, must be
made on or before the date that the amount of tax to be withheld is determined.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE ATS
MEDICAL, INC. 2000 STOCK INCENTIVE PLAN. The affirmative vote of a majority of
the outstanding shares of the Company's Common Stock entitled to vote and
present in person or by proxy at the Annual Meeting will be required to approve
the adoption of the Plan. Proxies will be voted in favor of adoption of the Plan
unless otherwise specified.

PROPOSAL 3 -
RATIFICATION OF APPOINTMENT OF AUDITORS

The Board of Directors, based upon the recommendation of its Audit
Committee, has appointed Ernst & Young LLP as independent auditors to examine
the financial statements of the Company for the current fiscal year ending
December 31, 2000 and to perform other appropriate accounting services. Ernst &
Young LLP has served as independent auditors of the Company since its inception
and has no relationship with the Company other than that arising from their
employment as independent auditors. Representatives of Ernst & Young LLP will be
present at the 2000 Annual Meeting of Shareholders, will have an opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions from shareholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS. The affirmative vote of
a majority of the outstanding shares of the Company's Common Stock entitled to
vote and present in person or by proxy at the Annual Meeting will be required to
ratify the appointment. Proxies will be voted in favor of the ratification of
the appointment unless otherwise specified.

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SHARES OUTSTANDING AND VOTING RIGHTS

On March 17, 2000, the Company had outstanding 17,926,371 shares of
Common Stock. Each holder of record of Common Stock as of the close of business
on March 17, 2000 will be entitled to one vote on all matters being presented at
the meeting for each share of Common Stock held on such date.

PROPOSALS FOR THE 2001 ANNUAL MEETING

Any proposal by a shareholder to be presented at the 2001 Annual
Meeting of Shareholders must be received at the Company's principal executive
officers, 3905 Annapolis Lane, Suite 105, Minneapolis, Minnesota 55447,
Attention: Corporate Secretary, no later than December 6, 2000. In addition, the
form of Proxy issued with this Proxy Statement will confer discretionary
authority to vote for or against any proposal made by a shareholder at the 1999
Annual Meeting of Shareholders and which is not included in this Proxy
Statement. However, under the rules of the Securities and Exchange Commission,
such discretionary authority may not be exercised if the shareholder proponent
has given the Secretary of the Company notice of such proposal prior to February
15, 2001, and certain other conditions provided for in the Commission's rules
have been satisfied.

GENERAL

The Board of Directors of the Company does not know of any other
business to come before the 2000 Annual Meeting of Shareholders. If any other
matters are properly brought before the meeting, however, the persons named in
the accompanying proxy will vote in accordance with their best judgment.

Expenses in connection with this solicitation of proxies will be paid
by the Company. Proxies are being solicited primarily by mail, but, in addition,
officers and employees of the Company, who will receive no extra compensation
for their services, may solicit proxies by telephone or personal calls. The
Company also will request that brokers or other nominees who hold shares of
Common Stock in their names for the benefit of others forward proxy materials
to, and obtain voting instructions from, the beneficial owners of such stock at
the Company's expense.

Your cooperation in giving this matter your immediate attention and in
returning your proxy promptly will be appreciated.

By Order of the Board of Directors,

/s/ Russell W. Felkey
-------------------------------------
Russell W. Felkey
Secretary

April 3, 2000

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APPENDIX A

ATS MEDICAL, INC.
2000 STOCK INCENTIVE PLAN

Section 1. Purpose.

The purpose of the Plan is to promote the interests of the Company and
its shareholders by aiding the Company in attracting and retaining employees,
officers, consultants, independent contractors and non-employee directors
capable of assuring the future success of the Company, to offer such persons
incentives to put forth maximum efforts for the success of the Company's
business and to afford such persons an opportunity to acquire a proprietary
interest in the Company.

Section 2. Definitions.

As used in the Plan, the following terms shall have the meanings set
forth below:

(a) "Affiliate" shall mean (i) any entity that, directly or
indirectly through one or more intermediaries, is controlled by the Company and
(ii) any entity in which the Company has a significant equity interest, in each
case as determined by the Committee.

(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award, Other Stock Grant or
Other Stock-Based Award granted under the Plan.

(c) "Award Agreement" shall mean any written agreement,
contract or other instrument or document evidencing any Award granted under the
Plan.

(d) "Board" shall mean the Board of Directors of the Company.

(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any regulations promulgated thereunder.

(f) "Committee" shall mean a committee of Directors designated
by the Board to administer the Plan. The Committee shall be comprised of not
less than such number of Directors as shall be required to permit Awards granted
under the Plan to qualify under Rule 16b-3, and each member of the Committee
shall be a "Non-Employee Director" within the meaning of Rule 16b-3 and an
"outside director" within the meaning of Section 162(m) of the Code. The Company
expects to have the Plan administered in accordance with the requirements for
the award of "qualified performance-based compensation" within the meaning of
Section 162(m) of the Code.

(g) "Company" shall mean ATS Medical, Inc., a Minnesota
corporation, and any successor corporation.

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(h) "Director" shall mean a member of the Board.

(i) "Eligible Person" shall mean any employee, officer,
consultant, independent contractor or Director providing services to the Company
or any Affiliate whom the Committee determines to be an Eligible Person.

(j) "Fair Market Value" shall mean, with respect to any
property (including, without limitation, any Shares or other securities), the
fair market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee. Notwithstanding the
foregoing, unless otherwise determined by the Committee, the Fair Market Value
of Shares as of a given date shall be, if the Shares are then quoted on the
NASDAQ National Market System, the closing price as reported on the NASDAQ
National Market System on such date or, if the NASDAQ National Market System is
not open for trading on such date, on the most recent preceding date when it is
open for trading.

(k) "Incentive Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code or any successor provision.

(l) "Non-Qualified Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.

(m) "Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option, and shall include Reload Options.

(n) "Other Stock Grant" shall mean any right granted under
Section 6(e) of the Plan.

(o) "Other Stock-Based Award" shall mean any right granted
under Section 6(f) of the Plan.

(p) "Participant" shall mean an Eligible Person designated to
be granted an Award under the Plan.

(q) "Performance Award" shall mean any right granted under
Section 6(d) of the Plan.

(r) "Person" shall mean any individual, corporation,
partnership, association or trust.

(s) "Plan" shall mean the ATS Medical, Inc. 2000 Stock
Incentive Plan, as amended from time to time, the provisions of which are set
forth herein.

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(t) "Reload Option" shall mean any Option granted under
Section 6(a)(iv) of the Plan.

(u) "Restricted Stock" shall mean any Shares granted under
Section 6(c) of the Plan.

(v) "Restricted Stock Unit" shall mean any unit granted under
Section 6(c) of the Plan evidencing the right to receive a Share (or a cash
payment equal to the Fair Market Value of a Share) at some future date.

(w) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, or any successor rule or regulation.

(x) "Shares" shall mean shares of Common Stock, $.01 par value
per share, of the Company or such other securities or property as may become
subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan.

(y) "Stock Appreciation Right" shall mean any right granted
under Section 6(b) of the Plan.

Section 3. Administration.

(a) Power and Authority of the Committee. The Plan shall be
administered by the Committee. Subject to the express provisions of the Plan and
to applicable law, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be granted
to each Participant under the Plan; (iii) determine the number of Shares to be
covered by (or with respect to which payments, rights or other matters are to be
calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock, Restricted Stock Units
or other Awards; (vi) determine whether, to what extent and under what
circumstances Awards may be exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited or suspended; (vii) determine
whether, to what extent and under what circumstances cash, Shares, promissory
notes, other securities, other Awards, other property and other amounts payable
with respect to an Award under the Plan shall be deferred either automatically
or at the election of the holder thereof or the Committee; (viii) interpret and
administer the Plan and any instrument or agreement, including an Award
Agreement, relating to the Plan; (ix) establish, amend, suspend or waive such
rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; and (x) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee,

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may be made at any time and shall be final, conclusive and binding upon any
Participant, any holder or beneficiary of any Award and any employee of the
Company or any Affiliate.

(b) Delegation. The Committee may delegate its powers and
duties under the Plan to one or more Directors or a committee of Directors,
subject to such terms, conditions and limitations as the Committee may establish
in its sole discretion.

(c) Power and Authority of the Board of Directors.
Notwithstanding anything to the contrary contained herein, the Board may, at any
time and from time to time, without any further action of the Committee,
exercise the powers and duties of the Committee under the Plan.

Section 4. Shares Available for Awards.

(a) Shares Available. Subject to adjustment as provided in
Section 4(c) of the Plan, the aggregate number of Shares that may be issued
under all Awards under the Plan shall be 1,000,000. Shares to be issued under
the Plan may be either authorized but unissued Shares or Shares acquired in the
open market or otherwise. Any Shares that are used by a Participant as full or
partial payment to the Company of the purchase price relating to an Award, or in
connection with the satisfaction of tax obligations relating to an Award, shall
again be available for granting Awards (other than Incentive Stock Options)
under the Plan. In addition, if any Shares covered by an Award or to which an
Award relates are not purchased or are forfeited, or if an Award otherwise
terminates without delivery of any Shares, then the number of Shares counted
against the aggregate number of Shares available under the Plan with respect to
such Award, to the extent of any such forfeiture or termination, shall again be
available for granting Awards under the Plan. Notwithstanding the foregoing, the
number of Shares available for granting Incentive Stock Options under the Plan
shall not exceed 1,000,000, subject to adjustment as provided in the Plan and
subject to the provisions of Section 422 or 424 of the Code or any successor
provision.

(b) Accounting for Awards. For purposes of this Section 4, if
an Award entitles the holder thereof to receive or purchase Shares, the number
of Shares covered by such Award or to which such Award relates shall be counted
on the date of grant of such Award against the aggregate number of Shares
available for granting Awards under the Plan.

(c) Adjustments. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
Shares, other securities or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of Shares (or other securities or other property) that
thereafter may be made the subject of Awards, (ii) the number and type of Shares

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(or other securities or other property) subject to outstanding Awards and (iii)
the purchase or exercise price with respect to any Award; provided, however,
that the number of Shares covered by any Award or to which such Award relates
shall always be a whole number.

(d) Award Limitations Under the Plan. No Eligible Person may
be granted any Award or Awards under the Plan, the value of which Award or
Awards is based solely on an increase in the value of the Shares after the date
of grant of such Award or Awards, for more than 300,000 Shares (subject to
adjustment as provided for in Section 4(c) of the Plan), in the aggregate in any
calendar year. The foregoing annual limitation specifically includes the grant
of any Award or Awards representing "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code.

Section 5. Eligibility.

Any Eligible Person shall be eligible to be designated a Participant.
In determining which Eligible Persons shall receive an Award and the terms of
any Award, the Committee may take into account the nature of the services
rendered by the respective Eligible Persons, their present and potential
contributions to the success of the Company or such other factors as the
Committee, in its discretion, shall deem relevant. Notwithstanding the
foregoing, an Incentive Stock Option may only be granted to full or part-time
employees (which term as used herein includes, without limitation, officers and
Directors who are also employees), and an Incentive Stock Option shall not be
granted to an employee of an Affiliate unless such Affiliate is also a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code or any successor provision.

Section 6. Awards.

(a) Options. The Committee is hereby authorized to grant
Options to Participants with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:

(i) Exercise Price. The purchase price per Share for all
Incentive Stock Options granted under the Plan shall be determined by the
Committee; provided, however, that such purchase price shall not be less than
100% of the Fair Market Value of the Shares on the date of grant of such Option.
The purchase price per share for Options granted under the Plan that do not
qualify as Incentive Stock Options shall also be determined by the Committee;
provided, however, that such purchase price shall not be less than 50% of the
Fair Market Value of a Share on the date of grant of such Option.

(ii) Option Term. The term of each Option shall be fixed
by the Committee.

(iii) Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in whole or in
part and the method or methods by

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<PAGE>

which, and the form or forms (including, without limitation, cash, Shares,
promissory notes, other securities, other Awards or other property, or any
combination thereof, having a Fair Market Value on the exercise date equal to
the relevant exercise price) in which, payment of the exercise price with
respect thereto may be made or deemed to have been made.

(iv) Reload Options. The Committee may grant Reload
Options, separately or together with another Option, pursuant to which, subject
to the terms and conditions established by the Committee, the Participant would
be granted a new Option when the payment of the exercise price of a previously
granted option is made by the delivery of Shares owned by the Participant
pursuant to Section 6(a)(iii) of the Plan or the relevant provisions of another
plan of the Company, and/or when Shares are tendered or withheld as payment of
the amount to be withheld under applicable income tax laws in connection with
the exercise of an Option, which new Option would be an Option to purchase the
number of Shares not exceeding the sum of (A) the number of Shares so provided
as consideration upon the exercise of the previously granted option to which
such Reload Option relates and (B) the number of Shares, if any, tendered or
withheld as payment of the amount to be withheld under applicable tax laws in
connection with the exercise of the option to which such Reload Option relates
pursuant to the relevant provisions of the plan or agreement relating to such
option. Reload Options may be granted with respect to Options previously granted
under the Plan or any other stock option plan of the Company or may be granted
in connection with any Option granted under the Plan or any other stock option
plan of the Company at the time of such grant. Such Reload Options shall have a
per share exercise price equal to the Fair Market Value of one Share as of the
date of grant of the new Option. Any Reload Option shall be subject to
availability of sufficient Shares for grant under the Plan.

(b) Stock Appreciation Rights. The Committee is hereby
authorized to grant Stock Appreciation Rights to Participants subject to the
terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right
granted under the Plan shall confer on the holder thereof a right to receive
upon exercise thereof the excess of (i) the Fair Market Value of one Share on
the date of exercise (or, if the Committee shall so determine, at any time
during a specified period before or after the date of exercise) over (ii) the
grant price of the Stock Appreciation Right as specified by the Committee, which
price shall not be less than 100% of the Fair Market Value of one Share on the
date of grant of the Stock Appreciation Right. Subject to the terms of the Plan
and any applicable Award Agreement, the grant price, term, methods of exercise,
dates of exercise, methods of settlement and any other terms and conditions of
any Stock Appreciation Right shall be as determined by the Committee. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it may deem appropriate.

(c) Restricted Stock and Restricted Stock Units. The Committee
is hereby authorized to grant Restricted Stock and Restricted Stock Units to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:

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<PAGE>

(i) Restrictions. Shares of Restricted Stock and
Restricted Stock Units shall be subject to such restrictions as the Committee
may impose (including, without limitation, a waiver by the Participant of the
right to vote or to receive any dividend or other right or property with respect
thereto), which restrictions may lapse separately or in combination at such time
or times, in such installments or otherwise as the Committee may deem
appropriate.

(ii) Stock Certificates. Any Restricted Stock granted
under the Plan shall be registered in the name of the Participant and shall bear
an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock. In the case of Restricted Stock Units, no
Shares shall be issued at the time such Awards are granted.

(iii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment (as determined under criteria
established by the Committee) during the applicable restriction period, all
Shares of Restricted Stock and all Restricted Stock Units at such time subject
to restriction shall be forfeited and reacquired by the Company; provided,
however, that the Committee may, when it finds that a waiver would be in the
best interest of the Company, waive in whole or in part any or all remaining
restrictions with respect to Shares of Restricted Stock or Restricted Stock
Units. Upon the lapse or waiver of restrictions and the restricted period
relating to Restricted Stock Units evidencing the right to receive Shares, such
Shares shall be issued and delivered to the holders of the Restricted Stock
Units.

(d) Performance Awards. The Committee is hereby authorized to
grant Performance Awards to Participants subject to the terms of the Plan and
any applicable Award Agreement. A Performance Award granted under the Plan (i)
may be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock and Restricted Stock Units), other securities, other Awards or
other property and (ii) shall confer on the holder thereof the right to receive
payments, in whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish. Subject to the
terms of the Plan and any applicable Award Agreement, the performance goals to
be achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the amount of any payment or
transfer to be made pursuant to any Performance Award and any other terms and
conditions of any Performance Award shall be determined by the Committee.

(e) Other Stock Grants. The Committee is hereby authorized,
subject to the terms of the Plan and any applicable Award Agreement, to grant to
Participants Shares without restrictions thereon as are deemed by the Committee
to be consistent with the purpose of the Plan.

(f) Other Stock-Based Awards. The Committee is hereby
authorized to grant to Participants subject to the terms of the Plan and any
applicable Award Agreement, such other Awards that are denominated or payable
in, valued in whole or in part by reference to, or otherwise based on or related
to, Shares (including, without limitation, securities convertible into Shares),
as are deemed by the Committee to be consistent with the purpose of the Plan.
Shares or other securities delivered pursuant to a purchase right granted under
this Section 6(f) shall be purchased for such

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<PAGE>

consideration, which may be paid by such method or methods and in such form or
forms (including, without limitation, cash, Shares, promissory notes, other
securities, other Awards or other property or any combination thereof), as the
Committee shall determine, the value of which consideration, as established by
the Committee, shall not be less than 100% of the Fair Market Value of such
Shares or other securities as of the date such purchase right is granted.

(g) General.

(i) No Cash Consideration for Awards. Awards shall be
granted for no cash consideration or for such minimal cash consideration as may
be required by applicable law.

(ii) Awards May Be Granted Separately or Together. Awards
may, in the discretion of the Committee, be granted either alone or in addition
to, in tandem with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate other than the Plan. Awards
granted in addition to or in tandem with other Awards or in addition to or in
tandem with awards granted under any such other plan of the Company or any
Affiliate may be granted either at the same time as or at a different time from
the grant of such other Awards or awards.

(iii) Forms of Payment under Awards. Subject to the terms
of the Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment of an
Award may be made in such form or forms as the Committee shall determine
(including, without limitation, cash, Shares, promissory notes, other
securities, other Awards or other property or any combination thereof), and may
be made in a single payment or transfer, in installments or on a deferred basis,
in each case in accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without limitation, provisions
for the payment or crediting of reasonable interest on installment or deferred
payments or the grant or crediting of dividend equivalents with respect to
installment or deferred payments.

(iv) Limits on Transfer of Awards. No Award (other than
Other Stock Grants) and no right under any such Award shall be transferable by a
Participant otherwise than by will or by the laws of descent and distribution;
provided, however, that, if so determined by the Committee, a Participant may,
in the manner established by the Committee, transfer Options (other than
Incentive Stock Options) or designate a beneficiary or beneficiaries to exercise
the rights of the Participant and receive any property distributable with
respect to any Award upon the death of the Participant. Each Award or right
under any Award shall be exercisable during the Participant's lifetime only by
the Participant or, if permissible under applicable law, by the Participant's
guardian or legal representative. No Award or right under any such Award may be
pledged, alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company or any Affiliate.

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<PAGE>

(v) Term of Awards. The term of each Award shall be for
such period as may be determined by the Committee.

(vi) Restrictions; Securities Exchange Listing. All Shares
or other securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such restrictions as the Committee may deem
advisable under the Plan, applicable federal or state securities laws and
regulatory requirements, and the Committee may cause appropriate entries to be
made or legends to be affixed to reflect such restrictions. If any securities of
the Company are traded on a securities exchange, the Company shall not be
required to deliver any Shares or other securities covered by an Award unless
and until such Shares or other securities have been admitted for trading on such
securities exchange.

Section 7. Automatic Grants to Non-Employee Directors

Upon such person's initial election to the Board, each director who is
not an employee or consultant to the Company shall receive a Non-Qualified Stock
Option to purchase 5,000 Shares. Thereafter, upon each re-election to the Board,
such director shall receive a Non-Qualified Stock Option to purchase 2,500
Shares. The Option shall have an exercise price equal to the Fair Market Value
of the Shares on the day of election. The Options shall have a ten year term and
shall vest in full six months following the date of grant. This Section 7 may
not be amended more than once every six months, other than to comport with
changes in the Code or the rules thereunder.

Section 8. Amendment and Termination; Adjustments.

(a) Amendments to the Plan. The Board may amend, alter,
suspend, discontinue or terminate the Plan at any time; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval:

(i) would violate the rules or regulations of the NASDAQ
National Market System or any securities exchange that are applicable to the
Company; or

(ii) would cause the Company to be unable, under the Code,
to grant Incentive Stock Options under the Plan.

(b) Amendments to Awards. Except for Awards granted pursuant
to Section 7, the Committee may waive any conditions of or rights of the Company
under any outstanding Award, prospectively or retroactively. Except as otherwise
provided herein or in the Award Agreement, the Committee may not amend, alter,
suspend, discontinue or terminate any outstanding Award, prospectively or
retroactively, if such action would adversely affect the rights of the holder of
such Award, without the consent of the Participant or holder or beneficiary
thereof.

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<PAGE>

(c) Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.

Section 9. Income Tax Withholding; Tax Bonuses.

(a) Withholding. In order to comply with all applicable
federal or state income tax laws or regulations, the Company may take such
action as it deems appropriate to ensure that all applicable federal or state
payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of the
federal and state taxes to be withheld or collected upon exercise or receipt of
(or the lapse of restrictions relating to) an Award, the Committee, in its
discretion and subject to such additional terms and conditions as it may adopt,
may permit the Participant to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the Shares otherwise to be delivered upon
exercise or receipt of (or the lapse of restrictions relating to) such Award
with a Fair Market Value equal to the amount of such taxes or (ii) delivering to
the Company Shares other than Shares issuable upon exercise or receipt of (or
the lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount of such taxes. The election, if any, must be made on or before the
date that the amount of tax to be withheld is determined.

(b) Tax Bonuses. The Committee, in its discretion, shall have
the authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to) Awards
in order to provide funds to pay all or a portion of federal and state taxes due
as a result of such exercise or receipt (or the lapse of such restrictions). The
Committee shall have full authority in its discretion to determine the amount of
any such tax bonus.

Section 10. General Provisions.

(a) No Rights to Awards. No Eligible Person, Participant or
other Person shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Eligible Persons,
Participants or holders or beneficiaries of Awards under the Plan. The terms and
conditions of Awards need not be the same with respect to any Participant or
with respect to different Participants.

(b) Award Agreements. No Participant will have rights under an
Award granted to such Participant unless and until an Award Agreement shall have
been duly executed on behalf of the Company and, if requested by the Company,
signed by the Participant.

(c) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.

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<PAGE>

(d) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate, nor will it affect in any way the right of the Company
or an Affiliate to terminate such employment at any time, with or without cause.
In addition, the Company or an Affiliate may at any time dismiss a Participant
from employment free from any liability or any claim under the Plan or any
Award, unless otherwise expressly provided in the Plan or in any Award
Agreement.

(e) Governing Law. The validity, construction and effect of
the Plan or any Award, and any rules and regulations relating to the Plan or any
Award, shall be determined in accordance with the laws of the State of
Minnesota.

(f) Severability. If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to applicable laws, or if it cannot be so construed or deemed amended
without, in the determination of the Committee, materially altering the purpose
or intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction or Award, and the remainder of the Plan or any such Award shall
remain in full force and effect.

(g) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.

(h) No Fractional Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash shall be paid in lieu of any fractional Shares or whether
such fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.

(i) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.

Section 11. Effective Date of the Plan.

The Plan shall be effective when first approved by the shareholders of
the Company.

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<PAGE>

Section 12. Term of the Plan.

No Award shall be granted under the Plan after December 31, 2010 or any
earlier date of discontinuation or termination established pursuant to Section
8(a) of the Plan. However, unless otherwise expressly provided in the Plan or in
an applicable Award Agreement, any Award theretofore granted may extend beyond
such date.

-12-

<PAGE>

[GRAPHIC]

ATS MEDICAL, INC.

ANNUAL MEETING OF SHAREHOLDERS

THURSDAY, MAY 4, 2000
3:30 P.M.

MINNEAPOLIS CLUB
729 SECOND AVE SOUTH
MINNEAPOLIS, MINNESOTA

[GRAPHIC] ATS MEDICAL, INC.
3905 ANNAPOLIS LANE
MINNEAPOLIS, MINNESOTA 55447 PROXY
- --------------------------------------------------------------------------------

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, having duly received the Notice of Annual Meeting and Proxy
Statement dated April 3, 2000, appoints John H. Jungbauer and Russell W. Felkey
proxies (each with the power to act alone and with the power of substitution and
revocation) to represent the undersigned and to vote, as designated below, all
shares of common stock of ATS Medical, Inc. which the undersigned is entitled to
vote at the 2000 Annual Meeting of Shareholders of ATS Medical, Inc., to be held
on Thursday, May 4, 2000 at the Minneapolis Club, 729 Second Avenue South,
Minneapolis, Minnesota at 3:30 p.m. and any adjournment thereof.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE

SEE REVERSE FOR VOTING INSTRUCTIONS.

<PAGE>

[GRAPHIC]

[ARROW] PLEASE DETACH HERE [ARROW]

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
<TABLE>
<S> <C>
1. Election of directors: 01 Manuel A. Villafana 04 A. Jay Graf [ ] Vote FOR [ ] Vote WITHHELD
02 Richard W. Kramp 05 David L. Boehnen all nominees from all nominees
03 Charles F. Cuddihy, Jr. (except as marked)

_________________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, | |
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |_________________________________________|

2. Vote on the proposed adoption of the ATS Medical, Inc. 2000 Stock
Incentive Plan. [ ] For [ ] Against [ ] Abstain

3. Ratification of Ernst & Young LLP as independent auditors for the
fiscal year ending December 31, 2000. [ ] For [ ] Against [ ] Abstain

4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the
meeting and any adjournment thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS AND IN THE DISCRETION OF THE NAMED PROXIES ON ALL OTHER
MATTERS.

Address Change? Mark Box [ ] Indicate changes below:
Date ______________________________

_________________________________________
| |
| |
|_________________________________________|

Signature(s) in Box
Please sign exactly as your name appears
hereon. Jointly owned shares will be voted as
directed if one owner signs unless another
owner instructs to the contrary, in which case
the shares will not be voted. If signing in a
representative capacity, please indicate title
and authority.
</TABLE>