SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] 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 Rule 14a-11(c) or Rule 14a-12
MEDAMICUS, 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
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)(2) of
Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
MEDAMICUS, INC.
15301 HIGHWAY 55 WEST
PLYMOUTH, MINNESOTA 55447
(612) 559-2613
NOTICE AND PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1997
NOTICE
To the Holders of Common Stock of MedAmicus, Inc.:
The Annual Meeting of Shareholders of MedAmicus, Inc. (the "Company") will be
held at the Crown Plaza Northstar Hotel, 618 2nd Avenue South, Minneapolis,
Minnesota 55402, on Thursday, April 24, 1997 at 3:30 p.m. Minneapolis time,
for the following purposes:
1. To set the number of directors at five and elect five directors for a
term of one year.
2. To adopt an amendment to the MedAmicus, Inc. Stock Option Incentive
Plan.
3. To ratify the appointment of independent auditors for the current
fiscal year.
4. To consider and act on such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Company's Board of Directors has fixed the close of business on March 12,
1997 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the meeting and any adjournment thereof.
By Order of the Board of Directors
James D. Hartman
SECRETARY
March 24, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
MEDAMICUS, INC.
15301 HIGHWAY 55 WEST
PLYMOUTH, MINNESOTA 55447
(612) 559-2613
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, APRIL 24, 1997
This Proxy Statement is furnished to shareholders of MedAmicus, Inc., a
Minnesota corporation ("MedAmicus" or the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
annual meeting of shareholders to be held on Thursday, April 24, 1997 at 3:30
p.m. Minneapolis time at the Crown Plaza Northstar Hotel, 618 2nd Avenue South,
Minneapolis, Minnesota 55402, and at any adjournment thereof, for the purposes
set forth in the accompanying Notice of Annual Meeting of Shareholders. This
Proxy Statement and the accompanying form of Proxy were first mailed to
shareholders of the Company on or about March 24, 1997.
SOLICITATION AND REVOCATION OF PROXIES
The costs and expenses of solicitation of proxies will be paid by the Company.
In addition to the use of the mails, proxies may be solicited by directors,
officers and regular employees of the Company personally or by telephone, but
such persons will not be specifically compensated for such services.
Proxies in the form enclosed are solicited on behalf of the Board of Directors.
Any shareholder giving a proxy in such form may revoke it at any time before it
is exercised. Such proxies, if received in time for voting and not revoked, will
be voted at the annual meeting in accordance with the specification indicated
thereon. If no specification is indicated on a proxy, such proxy will be voted
in favor of Proposals 1, 2 and 3 described herein.
VOTING SECURITIES AND RIGHTS
Only shareholders of record at the close of business on March 12, 1997 are
entitled to execute proxies or to vote at the annual meeting. As of said date
there were outstanding 4,066,774 shares of the Company's common stock, $.01 par
value per share (the "Common Shares"). Each holder of Common Shares is entitled
to one vote for each share held with respect to the matters mentioned in the
foregoing Notice of Annual Meeting of Shareholders and any other matters that
may properly come before the meeting. A majority of the outstanding shares
entitled to vote are required to constitute a quorum at the meeting. The
affirmative vote of a majority of the Common Shares present, in person or by
proxy, and entitled to vote at the annual meeting, is required to approve the
matters mentioned in the foregoing Notice of Annual Meeting. Proxies indicating
abstention from a vote and broker non-votes will be counted toward determining
whether a quorum is present at the meeting, but will not be counted toward
determining if a majority of the Common Shares present has voted affirmatively.
OWNERSHIP OF VOTING SECURITIES BY PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth certain information as of March 12, 1997 with
respect to the Company's Common Shares beneficially owned by each director, by
each nominee for director, by each person known to the Company to beneficially
own more than five percent of the Company's Common Shares based solely upon
filings made by such persons under Section 13 of the Securities Exchange Act of
1934 (the "Exchange Act"), by each executive officer set forth in the
compensation table and by all executive officers and directors as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENTAGE OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1)(2) OUTSTANDING SHARES(2)
------------------- ----------------------------- ---------------------
<S> <C> <C>
Richard L. Little 387,400(3) 9.5%
1890 Shady Wood Road
Orono, MN 55391
Dennis S. Madison 138,000(4) 3.4%
15301 Highway 55 West
Plymouth, MN 55447
James D. Hartman 115,650(5) 2.8%
15301 Highway 55 West
Plymouth, MN 55447
Richard W. Kramp 2,250(6) *
575 Navajo Rd. W.
Medina, MN 55340
Richard F. Sauter 2,250(6) *
205 Kentucky Avenue North
Golden Valley, MN 55427
Ted K. Schwarzrock 2,500(6) *
5212 W. 56th St.
Edina, MN 55436
Perkins Capital Management, Inc. 592,200(7) 14.6%
730 East Lake Street
Wayzata, MN 55391-1769
Okabena Partnership K 235,000(7) 5.8%
5140 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
All Officers and Directors 648,050(8) 15.6%
as a Group (7 persons)
</TABLE>
- -----------------------
* Less than 1%
(1) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to such shares.
(2) Shares not outstanding but deemed beneficially owned by virtue of the right
of a person to acquire them within 60 days are treated as outstanding only
when determining the amount and percent owned by such person.
(3) Includes 1,000 shares that Mr. Little has the right to acquire within 60
days at $4.00 per share pursuant to outstanding options. Does not include
approximately 30,000 shares owned by Mr. Little's adult children, as to
which he disclaims beneficial ownership.
(4) Does not include 2,000 shares owned by Mr. Madison's adult children, as to
which he disclaims beneficial ownership.
(5) Includes (i) 80,000 shares that Mr. Hartman has the right to acquire within
60 days at $1.275 per share pursuant to outstanding options; (ii) 8,000
shares and 2,400 shares that Mr. Hartman has the right to acquire within 60
days at $3.625 and $3.25 per share, respectively, pursuant to outstanding
options; and (iii) 500 shares owned by Mr. Hartman's spouse and over which
she exercises sole voting and investment control. Does not include 500
shares owned by Mr. Hartman's adult child, as to which he disclaims
beneficial ownership.
(6) Consists of shares which such director has the right to acquire within 60
days pursuant to options granted under Non-Employee Director Stock Option
Plans.
(7) Based upon statements filed with the Securities and Exchange Commission
under Section 13(d) or 13(g) of the Securities Exchange Act of 1934.
(8) See footnotes 3 through 6 above.
PROPOSAL 1:
ELECTION OF BOARD OF DIRECTORS
The Board of Directors has set the number of directors at five. All five
directors are to be elected at the annual meeting to serve until the 1998 annual
meeting of shareholders. The Board of Directors has nominated the following
persons for election:
RICHARD L. LITTLE, JAMES D. HARTMAN, RICHARD W. KRAMP,
RICHARD F. SAUTER AND TED K. SCHWARZROCK.
All of the nominees for election as directors are presently directors of the
Company. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve as a director. It is the intention of the
individuals named as proxies to vote for the nominees. If any nominee should be
unable to serve as a director, it is the intention of the individuals named as
proxies to vote for the election of such person or persons as the Board of
Directors may, in its discretion, recommend.
The affirmative vote of a majority of the Common Shares present, in person or by
proxy, and entitled to vote at the annual meeting is required to elect each
director.
Information regarding the persons nominated for election as directors is as
follows:
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
DIRECTOR
NOMINEE AND PRINCIPAL OCCUPATION AGE SINCE
-------------------------------- --- -----
Richard L. Little 63 1981
Retired
James D. Hartman 51 1991
Chief Executive Officer, President,
Chief Financial Officer and Secretary
MedAmicus, Inc.
Richard W. Kramp 51 1991
President and Chief Operating Officer
ATS Medical, Inc.
Richard F. Sauter 55 1992
Assistant Professor of Marketing
University of St. Thomas
Ted K. Schwarzrock 47 1996
Vice President
Spine-Tech, Inc.
RICHARD L. LITTLE is the founder of the Company and has been a director since
its incorporation in August 1981. Mr. Little was the Chief Executive Officer and
President of the Company from inception until his retirement on February 9,
1995. The Company commenced operations in 1985. In 1983, Mr. Little co-founded
Arden Medical Systems, Inc., a Company based in St. Paul, Minnesota which
developed a clinical chemistry analyzer, and from March 1983 to March 1985
served as its Vice President of Operations.
JAMES D. HARTMAN was elected Chief Executive Officer in February 1996 and
President of the Company in February 1995, has been Chief Financial Officer of
the Company since January 1991 and has been Secretary and a director of the
Company since March 1991. Mr. Hartman also served as Executive Vice President of
the Company from April 1993 until February 1995. From May 1989 to August 1990,
Mr. Hartman served as Vice President-Finance for Viking Electric Supply, Inc., a
distributor of electrical supplies and tools based in the Minneapolis, Minnesota
area.
RICHARD W. KRAMP became a director of the Company in October 1991. Mr. Kramp is
currently the President, Chief Operating Officer and a director of ATS Medical,
Inc. (formerly Helix Biocore, Inc.), a medical device manufacturer, and has
served in those positions since March 1988. From May 1981 to March 1988, he
served as Vice President of Sales and Marketing for St. Jude Medical, Inc., a
medical device manufacturer.
RICHARD F. SAUTER became a director of the Company in March 1992. Mr. Sauter is
currently an Assistant Professor of Marketing at the University of St. Thomas,
St. Paul, Minnesota and has been since September 1990. From April 1974 until
March 1990, he served in various positions at Medtronic, Inc., a medical device
manufacturer in Minneapolis, Minnesota, most recently as Corporate Vice
President-New Ventures.
TED K. SCHWARZROCK became a director of the Company in January 1996. Mr.
Schwarzrock is currently Vice President of Sales and Marketing for Spine-Tech,
Inc., a medical device manufacturer, and has served in that position since
November 1993. From June 1991 to October 1993, he served as Vice President of
Ergodyne, Inc., a distributor of injury prevention products.
BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 1996, the Board of Directors held
seven meetings. Each of the directors attended at least 75% of all of the
meetings of the Board of Directors and applicable committees held while each was
a director during such fiscal year.
The Company has a Compensation Committee, presently consisting of Messrs. Kramp,
Little and Schwarzrock, which met once during the fiscal year ended December 31,
1996. The Compensation Committee may grant options pursuant to the Company's
Stock Option Incentive Plan and its 1991 Non-Statutory Stock Option Plan. The
Compensation Committee may also make recommendations with respect to officer
compensation.
The Company has an Audit Committee consisting of Messrs. Kramp, Schwarzrock, and
Sauter. The primary responsibilities of the audit committee are to oversee the
Company's internal control structure and financial reporting activities and to
review the annual audit plan. The Audit Committee met twice with the Company's
outside auditors during the fiscal year ended December 31, 1996.
The Company does not have a nominating committee of the Board of Directors.
REMUNERATION OF MEMBERS OF THE BOARD OF DIRECTORS
Members of the Board of Directors receive $250 each quarter for their service as
directors. Each of Messrs. Kramp, Sauter and Schwarzrock have received options
to purchase 5,000 Common Shares under the Company's 1992 Non-Employee Director
Stock Option Plan (the "1992 Plan"). The options granted to Messrs. Kramp and
Sauter expired in February and March 1997, respectively, without being
exercised. On April 25, 1996, the 1992 Plan was terminated and the shareholders
approved the 1996 Non-Employee Director and Medical Advisory Board Stock Option
Plan (the "1996 Plan"). Under the 1996 Plan, Messrs. Kramp and Sauter each
received options to purchase 5,000 Common Shares, effective January 25, 1996. In
addition, each of Messrs. Kramp, Sauter and Little received options to purchase
1,000 Common Shares on the date of the 1996 Annual Meeting of Shareholders and
if each, including Mr. Schwarzrock, is reelected to the Board of Directors at
this meeting, they will each receive an option to purchase an additional 1,000
shares. The exercise price of options under the 1996 Plan is 100% of the fair
market value of the Common Shares on the date of grant and the term of options
is ten years. The options are subject to vesting schedules and may become fully
vested under certain circumstances constituting a change in control of the
Company.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are elected to serve until their
respective successors are elected or until their earlier death, resignation or
removal. The present executive officers of the Company are:
NAME AGE POSITION
---- --- --------
James D. Hartman 51 President, Chief Executive Officer,
Chief Financial Officer
and Secretary
Dennis S. Madison 53 Vice President - Administration
and Regulatory Affairs
Judy J. Eastman 47 Vice President - Sales and
Marketing
DENNIS S. MADISON has been Vice President-Administration and Regulatory Affairs
since May 1995 and prior to that time served as Vice President-Research and
Development of the Company from March 1988 and as a director of the Company from
June 1987 to October 1991. From November 1983 until joining the Company, Mr.
Madison served as Director of Quality Assurance of Arden Medical Systems, Inc.
JUDY J. EASTMAN has been Vice President - Sales and Marketing since July 1996.
From 1993 to June 1996, Ms. Eastman served as a Marketing Director in the Brady
Leads Division of Medtronic, Inc., a medical device manufacturer. From 1989 to
1993 she served as Marketing Director of American Medical Systems, a division of
Pfizer, Inc.
EXECUTIVE COMPENSATION
The following information is given with respect to remuneration of James D.
Hartman who was elected President of the Company in February 1995 and Chief
Executive Officer in January 1996. Other than Mr. Hartman, none of the executive
officers of the Company received total annual salary and bonus in excess of
$100,000 for the fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- ---------------------
OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY($) COMPENSATION($)(1) UNDERLYING OPTIONS(#)
- --------------------------- ---- --------- ------------------ ---------------------
<S> <C> <C> <C> <C>
James D. Hartman, 1996 $119,278 $596 12,000
Chief Executive Officer 1995 96,382 471 --
and President 1994 87,676 414 --
</TABLE>
- ---------------------
(1) Consists of a matching contribution made by the Company to its 401(k) plan.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS DURING FISCAL YEAR
PERCENT OF
NUMBER OF SECURITIES TOTAL OPTIONS/SARS EXERCISE
UNDERLYING OPTIONS/SARS GRANTED TO EMPLOYEES OR EXPIRATION
NAME GRANTED(#) IN FISCAL YEAR BASE PRICE DATE
---- ----------------------- -------------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
James D. Hartman 12,000 10.4% $3.25 02/07/02
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following indicates the exercise of stock options or stock appreciation
rights during the last completed fiscal year by executive officers named in the
Summary Compensation Table. As of December 31, 1996, Mr. Hartman's stock options
which remain unexercised had the following value, based on the difference
between the option exercise price and the average bid and asked price of the
Company's common stock on December 31, 1996, as quoted in the National
Association of Securities Dealers Automated Quotation System:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED IN-THE
SHARES UNEXERCISED OPTIONS MONEY OPTIONS AT
ACQUIRED ON VALUE AT FISCAL YEAR-END(#) FISCAL YEAR-END($)
EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
James D. Hartman - - 86,000/16,000 $78,000/-
</TABLE>
EMPLOYMENT AGREEMENT
James D. Hartman has an employment agreement with the Company with an initial
term through December 31, 1996. After December 31, 1996, the agreement continues
on a month-to-month basis and may be terminated by either the Company or the
employee upon thirty days written notice. The annual base salary of Mr. Hartman
as set forth in the agreement is $120,000. In addition, the Company may
terminate Mr. Hartman's employment for cause and upon his death or incapacity.
The agreement contains non-competition, confidentiality and assignment of
invention provisions benefiting the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and executive
officers, and persons who own more than ten percent of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
("SEC") initial reports of ownership and changes in ownership of Common Shares
and other equity securities of the Company. Officers, directors and greater than
ten percent shareholders are required by SEC regulation to furnish the Company
with all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to officers,
directors and greater than ten percent shareholders in 1996 were satisfied
except that Richard L. Little reported a sale of Common Shares on Form 4 which
constituted a late filing.
PROPOSAL 2:
AMENDMENT TO THE MEDAMICUS, INC. STOCK OPTION INCENTIVE PLAN
The Board of Directors of the Company recommends the adoption of an amendment
(the "Amendment") to the Company's Stock Option Incentive Plan (the "Incentive
Plan"). The Amendment, as adopted by the Board of Directors on August 1, 1996,
will increase the number of shares issuable pursuant to options under the
Incentive Plan from 200,000 to 400,000 Common Shares.
The Board of Directors and shareholders of the Company initially adopted the
Incentive Plan on August 2, 1989. The purpose of the Incentive Plan, as amended
in May 1991, December 1991 and January 1994, is to further the growth and
general prosperity of the Company by enabling employees of the Company to
acquire Common Shares, increasing their personal involvement in the Company and
thereby enabling the Company to attract and retain those employees.
The Incentive Plan currently provides for the granting of options to purchase up
to an aggregate of 200,000 Common Shares to certain key employees of the
Company. The Amendment increases the maximum number of Common Shares available
to 400,000. In the event of a change in corporate structure or capitalization
affecting the Company's Common Shares, the maximum number of shares available
under the Incentive Plan and subject to outstanding options will be adjusted
accordingly. Any unsold shares subject to an option under the Incentive Plan
which for any reason expires or otherwise terminates may again be subject to
option under the Incentive Plan. Options that are granted under the Incentive
Plan may be either options that qualify as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended
("Incentive Options"), or those that do not qualify as such incentive stock
options ("Non-Incentive Options").
The Incentive Plan has the following additional features:
ADMINISTRATION.
It must be administered by a committee appointed by the Board of Directors
consisting solely of at least two directors who are disinterested administrators
within the meaning of Section 16 of the Securities Exchange Act of 1934. The
Incentive Plan is currently administered by the Compensation Committee of the
Board of Directors, which is composed of two disinterested administrators.
The Compensation Committee, subject to the terms of the Incentive Plan, has the
authority to select employees to whom options will be granted, and to determine
the terms of the options, including the number of shares subject to each option,
the option exercise price, the option duration, the manner in which the option
becomes exercisable and whether the option is an Incentive Option or
Non-Incentive Option.
ELIGIBLE EMPLOYEES.
Employees eligible to receive options under the Incentive Plan are key
personnel, including officers of the Company and directors who are also
employees of the Company. As of March 12, 1997, approximately 31 persons were
eligible to receive options under the Incentive Plan. While the Compensation
Committee has established no formal policy, currently all salaried employees of
the Company, upon reaching 90 days of service, have been granted options to
purchase 2,500 to 4,500 Common Shares depending upon levels of responsibility.
OPTION PRICE AND VESTING.
Incentive Options may not be granted at a purchase price less than the fair
market value of the Common Shares on the date of the grant (or, for an option
granted to a person holding more than 10% of the Company's voting stock, at less
than 110% of fair market value) and Non-Incentive Options may not be granted at
a purchase price less than 85% of fair market value on the date of grant.
Options vest and become exercisable in accordance with a schedule to be fixed by
the Compensation Committee. The options become immediately exercisable in full
if the Company merges or consolidates with another corporation and is not the
surviving corporation or if the Company transfers all or substantially all of
its business or assets to another person.
DURATION OF OPTIONS.
The term of each option, which is fixed at the date of grant, may not exceed six
years from the date the option is granted (except that an Incentive Option
granted to a person holding more than 10% of the Company's voting stock may be
exercisable only for five years). Options may be made exercisable in whole or in
installments, as determined by the Compensation Committee. Options which have
been granted to employees who terminate employment due to death of disability
may be exercised for a period of one year after the employee's termination by
the optionee or the person(s) to whom the rights under such option shall have
passed, as the case may be. An optionee who leaves the Company for reasons other
than death, disability or termination for cause has three month after
termination in which to exercise his or her options.
TRANSFER.
Options may not be transferred other than by will, the laws of descent and
distribution, or, if applicable, pursuant to a qualified domestic relations
order. During the lifetime of an optionee, options may be exercised only by the
optionee.
AMENDMENT.
The Board of Directors may amend the Incentive Plan as it deems advisable. The
Board of Directors may terminate the Incentive Plan at any time, provided that
outstanding options are not affected.
TERMS OF OUTSTANDING INCENTIVE OPTIONS.
As of December 31, 1996, the Company had outstanding options to purchase an
aggregate of 177,625 Common Shares under the Incentive Plan. The aggregate
market value, as of March 12, 1997, of the securities underlying such options
was $422,000 or $2.375 per share and the aggregate exercise price of such
options was $543,000 or an average of $3.07 per share. Twenty-two employees have
options outstanding under the Plan at exercise prices ranging from $2.25 to
$4.00 and which vest at the rate of 20% per year over a five year period
beginning one year after date of grant. These options were granted as Incentive
Options. The exercise price of these Incentive Options is 100% of the fair
market value of the Common Shares on the date of grant, based on the average of
the bid and asked price for the Common Shares on that date.
On February 9, 1995, the exercise price of all options outstanding as of such
date, excluding those granted to Mr. Hartman, was adjusted to $2.44, the fair
market value on such date. In addition, the vesting schedule and the expiration
date of these options was extended one year.
The following table sets forth information as to options outstanding under the
Incentive Plan as of December 31, 1996. As of that date, Richard L. Little,
former President and CEO and a current Board Member, had exercised an option for
8,000 shares in 1995 and Dennis S. Madison had exercised an option for 6,000
shares in 1996.
<TABLE>
<CAPTION>
NUMBER OPTION EXERCISE AGGREGATE
NAME OF SHARES PRICE RANGE DOLLAR BENEFIT(1)
---- --------- --------------- -----------------
<S> <C> <C> <C>
James D. Hartman 2,500(2) $3.625 $0
All Executive Officers as a Group 52,500 $3.50-3.625 $0
Employees as a Group, excluding
Executive Officers (20 Persons) 125,125 $2.25-$4.00 $0
</TABLE>
- --------------------------
(1) Aggregate dollar benefits represent the difference between the aggregate
market value of the Common Shares subject to options under the Incentive
Plan and the aggregate exercise price of such options. As of December 31,
1996, the exercise price of the options exceeded the fair market value of
the underlying shares based on the average bid and asked prices for a
Common Share as quoted by the National Association of Securities Dealers
Automated Quotation System.
(2) Mr. Hartman has been granted options to purchase 99,500 shares of the
Company's Common Stock under the 1991 Non-Statutory Stock Option Plan.
EFFECT OF FEDERAL INCOME TAXATION.
Counsel for the Company has advised that the federal income tax attributes of
options granted under the Incentive Plan are as described in the following
paragraphs:
Under the Internal Revenue Code of 1986, as amended (the "Code"), the recipient
of an option that qualifies as an incentive stock option within the meaning of
Section 422 of the Code ("Incentive Option") receives a tax benefit of income
deferral if the recipient meets the holding period requirements of Section 422.
Neither the grant nor the exercise of an Incentive Option results in taxable
income to the optionee or a deduction of the issuer; however, the amount by
which the fair market value of the Common Shares on the date of exercise exceeds
the exercise price is an item of adjustment under the Internal Revenue Code, as
amended, and may therefore subject the optionee to alternative minimum tax.
Assuming the holding period requirements are met, upon the ultimate sale of the
Common Shares acquired upon the exercise of an Incentive Option, the amount by
which the sale price exceeds the exercise price will be treated as a long-term
capital gain. There is no limitation on the value of Common Shares subject to
the Incentive Option; however, the aggregate fair market value of the Common
Shares (determined as of the date of grant) that may become first exercisable
with respect to any recipient in any calendar year under the Incentive Plan may
not exceed $100,000.
Generally, with respect to options that do not qualify as Incentive Options
("Non-Incentive Options"), the acquisition of Common Shares through the exercise
of Non-Incentive Options will result in compensation income to the optionee,
subject to withholding, as of the date of exercise in an amount by which the
fair market value of the Common Shares at such date exceeds the exercise price.
Upon exercise, the Company will generally be entitled to a deduction in an
identical amount. When an optionee disposes of such Common Shares, any
difference between the amount received and the fair market value of the Common
Shares on the date of exercise will be treated as a long-or short-term capital
gain, as the case may be, depending on the period of time the optionee has held
the Common Shares.
The foregoing summary of the effect of federal income taxation upon participants
in the Incentive Plan with respect to the receipt of an option or Common Shares
received upon the exercise of any option does not purport to be complete.
Reference is made to the applicable provisions of the Code.
The foregoing summary of the Incentive Plan does not purport to be complete and
is qualified in its entirety by reference to the Incentive Plan itself. The full
text of the Incentive Plan will be provided to any shareholder who desires a
copy, upon written request to the Company, Attention: Secretary, 15301 Highway
55 West, Plymouth, Minnesota 55447.
The affirmative vote of a majority of the Common Shares present, in person or by
proxy, and entitled to vote at the annual meeting is required to approve
Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE AMENDMENT TO THE MEDAMICUS,
INC. STOCK OPTION INCENTIVE PLAN.
PROPOSAL 3:
ENGAGEMENT OF AUDITORS
At the annual meeting, a resolution will be presented to ratify the appointment
by the Company's Board of Directors of McGladrey & Pullen, LLP, as independent
auditors, to audit the financial statements of the Company for the current
fiscal year and to perform other appropriate accounting services. McGladrey &
Pullen, LLP has audited the financial statements of the Company as of and for
the years ended December 31, 1995 and 1996.
McGladrey & Pullen, LLP has advised the Company that it has no direct financial
interest or material indirect financial interest in the Company.
Representatives of McGladrey & Pullen, LLP are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement, if they so
desire, and will be available to respond to questions of the shareholders.
The affirmative vote of a majority of the Common Shares present, in person or by
proxy, and entitled to vote at the Annual Meeting is required to approve
Proposal 3.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THE APPROVAL OF MCGLADREY &
PULLEN, LLP AS INDEPENDENT AUDITORS TO AUDIT THE FINANCIAL STATEMENTS OF THE
COMPANY FOR THE CURRENT FISCAL YEAR.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the Company's next annual
meeting of shareholders must be received by the Secretary of MedAmicus, Inc., at
the Company's executive offices in Plymouth, Minnesota, no later than November
24, 1997 for inclusion in the Company's proxy statement and proxy relating to
that meeting. Upon receipt of any such proposal, the Company will determine
whether or not to include such proposal in its proxy statement and proxy in
accordance with regulations governing the solicitation of proxies.
MISCELLANEOUS
The Board of Directors is not aware that any matter other than those described
in the Notice of Annual Meeting of Shareholders to which this Proxy Statement is
appended will be presented for action at the meeting. If, however, other matters
do properly come before the meeting, it is the intention of the persons named in
the proxy to vote the proxied shares in accordance with their best judgment on
said matters.
It is important that proxies be returned promptly with instructions as to
voting. Shareholders who do not expect to attend the meeting in person are urged
to mark, sign, date and send in the proxies by return mail.
By Order of the Board of Directors
March 24, 1997
MEDAMICUS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS, APRIL 24, 1997
The undersigned hereby appoints Richard L. Little and James D. Hartman, or
either of them, the attorneys and proxies of the undersigned, with full power of
substitution, to attend the annual meeting of shareholders of MedAmicus, Inc., a
Minnesota corporation (hereinafter called the "Company"), to be held on
Thursday, April 24, 1997 at 3:30 p.m., local time, and any adjournment thereof,
and thereat to vote the undersigned's shares in the Company.
1. ELECTION OF DIRECTORS: To elect the management slate of Directors.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY TO VOTE FOR ALL NOMINEES LISTED
BELOW): BELOW:
RICHARD L. LITTLE, JAMES D. HARTMAN, RICHARD W. KRAMP,
RICHARD F. SAUTER, TED K. SCHWARZROCK
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name in the space provided below.)
___________________________________________________________________________
2. PROPOSAL TO ADOPT an amendment to MedAmicus Stock Option Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE the engagement of McGladrey & Pullen, LLP as the
independent certified public accountants to audit the financial statements
of the Company for the fiscal year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE)
(CONTINUED FROM OTHER SIDE)
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
The undersigned hereby acknowledges receipt of Notice of said Annual
Meeting and the accompanying Proxy Statement, each dated March 24, 1997.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
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.
