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 [ ]
[ ] 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. 240.14a-11(c) or ss. 240.14a-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
[ ] Fee computed on table below per Exchange Act Rule ss. 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>
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 27, 2000
------------------------------
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 Crowne Plaza Northstar Hotel, 618 2nd Avenue South,
Minneapolis, Minnesota 55402, on Thursday, April 27, 2000 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 adopt the 1999 Non-Employee Director and Medical Advisory
Board Stock Option Plan.
4. To ratify the appointment of independent auditors for the
current fiscal year.
5. 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 15, 2000 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 25, 2000
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
MEDAMICUS, INC.
15301 Highway 55 West
Plymouth, Minnesota 55447
(612) 559-2613
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS, APRIL 27, 2000
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 27, 2000 at 3:30
p.m. Minneapolis time at the Crowne 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 25, 2000.
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 either by
submitting a new proxy card or by completing a ballot at the meeting 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, 3 and 4 described herein.
VOTING SECURITIES AND RIGHTS
Only shareholders of record at the close of business on March 15, 2000
are entitled to execute proxies or to vote at the annual meeting. As of said
date there were outstanding 4,116,574 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.
2
<PAGE>
OWNERSHIP OF VOTING SECURITIES BY PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth certain information as of March 15, 2000
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>
AMOUNT AND NATURE OF PERCENTAGE OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2) SHARES(2)
- ------------------------------------ -------------------------- -------------------------
<S> <C> <C>
Richard L. Little 398,317(3) 9.6%
6200 Upland Lane North
Maple Grove, MN 55391
James D. Hartman 167,850(4) 4.0%
15301 Highway 55 West
Plymouth, MN 55447
Richard F. Sauter 28,317(5) *
205 Kentucky Ave. North
Golden Valley, MN 55427
Thomas L. Auth 50,000(6) 1.2%
2266 North Second Street
North St. Paul, MN 55109
Michael M. Selzer 15,000(6) *
205 Black Oaks Lane North
Wayzata, MN 55391
Pyramid Trading Limited Partnership 347,613(7) 8.4%
440 South LaSalle Street
Chicago, IL 60605
All Officers and Directors 850,064(8) 19.7%
As a Group (8 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.
3
<PAGE>
(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 13,917 shares which Mr. Little has the right to acquire within
60 days pursuant to options granted under the Non-Employee Director
Stock Option Plan. Does not include approximately 30,000 shares owned
by Mr. Little's adult children, as to which he disclaims beneficial
ownership.
(4) 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) 7,500 shares that Mr. Hartman has the right to acquire within 60
days at $3.625 per share pursuant to outstanding options; (iii) 8,600
shares that Mr. Hartman has the right to acquire within 60 days at
$3.25 per share pursuant to outstanding options; (iv) 6,500 shares that
Mr. Hartman has the right to acquire within 60 days at $1.50 per share
pursuant to outstanding options; (v) 2,000 shares that Mr. Hartman has
the right to acquire within 60 days at $1.03 per share pursuant to
outstanding options and (vi) 500 shares owned by Mr. Hartman's spouse
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.
(5) Includes 18,917 shares which Mr. Sauter has the right to acquire within
60 days pursuant to options granted under the Non-Employee Director
Stock Option Plan.
(6) Includes 5,000 shares which such director has the right to acquire
within 60 days pursuant to options granted under the Non-Employee
Director Stock Option Plan.
(7) As of December 29, 1999, based on a Schedule 13(d) filed with the
Securities and Exchange Commission by a group consisting of (i) Pyramid
Trading Limited Partnership ("PT"), Oakmont Investments, LLC ("OI"),
the general partner of PT and Daniel Asher, as Manager of OI and
individually, as beneficial owners of 187,400 shares; (ii) Gary Kohler,
as beneficial owner of 80,500 shares; and (iii) Andrew Redleaf, as
beneficial owner of 79,713 shares.
(8) See footnotes 3 through 5 above. Also includes 43,950 shares that
officers have the right to acquire within 60 days pursuant to
outstanding options.
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 2001
annual meeting of shareholders. The Board of Directors has nominated the
following persons for election:
RICHARD L. LITTLE, JAMES D. HARTMAN, RICHARD F. SAUTER, THOMAS L. AUTH
AND MICHAEL M. SELZER.
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
4
<PAGE>
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
NOMINEE AND PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
----------------------------------------- ------- --------------
Richard L. Little 66 1981
Retired
James D. Hartman 54 1991
President and Chief Executive Officer
MedAmicus, Inc.
Richard F. Sauter 58 1992
Associate Professor of Marketing
University of St. Thomas
Thomas L. Auth 55 1999
President and Chief Executive Officer
ITI Technologies, Inc.
Michael M. Selzer 47 1999
President and Chief Executive Officer
Urologix, 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. Mr. Hartman 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.
5
<PAGE>
RICHARD F. SAUTER became a director of the Company in March 1992. Mr.
Sauter is currently an Associate 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.
THOMAS L. AUTH became a director of the Company in October 1999. Mr.
Auth is Chairman and CEO of ITI Technologies, Inc., a publicly held company and
a leading designer and manufacturer of electronic security products. Mr. Auth
joined ITI in 1981 and has been its CEO and director since that time. Mr. Auth
also owns Vomela Specialty Corporation, a specialized vinyl graphics
manufacturer and serves on the Boards of several privately held companies. Mr.
Auth is also a certified public accountant.
MICHAEL M. SELZER became a director of the Company in October 1999. Mr.
Selzer is currently President and CEO of Urologix, Inc., a manufacturer of
medical products for the treatment of urological disorders. Prior to joining
Urologix in January 1999, Mr. Selzer spent 23 years in various management
positions with Medtronic, Inc. including the past five years where he served as
Vice President and General Manager of Medtronic's Neurostimulation business.
BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 1999, the Board of Directors
held five 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, consisting of Messrs. Kramp
and Little which met once during the fiscal year ended December 31, 1999. Mr.
Kramp resigned from the Board in October 1999 and was replaced by Mr. Auth. The
Compensation Committee may grant options pursuant to the Company's Stock Option
Incentive Plan, its 1991 Non-Statutory Stock Option Plan and its 1999
Non-Employee Director and Medical Advisory Board 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 and
Sauter which met once with the Company's outside auditors during the fiscal year
ended December 31, 1999. Mr. Kramp resigned from the Board in October 1999 and
was replaced by Mr. Selzer. 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 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 currently receive $250 for each Board
meeting attended and $100 for each breakfast update or Committee meeting
attended which was not a part of a regular or special Board meeting. On April
25, 1996, shareholders approved the 1996 Non-Employee Director and Medical
Advisory Board Stock Option Plan (the "1996 Plan"). Under the 1996 Plan, Mr.
Sauter received options to purchase 5,000 Common Shares, effective January 25,
1996. In addition, each of Messrs. Sauter and Little received options to
purchase 1,000 Common Shares on the date of the 1996, 1997, 1998 and 1999 Annual
Meetings of Shareholders. The Board of Directors has resolved that the 1996 Plan
shall be terminated effective on the date of shareholder approval of the 1999
Non-Employee Director and
6
<PAGE>
Medical Advisory Board Stock Option Plan (the "Plan") pursuant to Proposal 3
included herein. Under the Plan, Messrs. Sauter and Little each received options
to purchase 15,000 Common Shares on July 29, 1999 and Messrs. Auth and Selzer
each received options to purchase 15,000 Common Shares on October 29, 1999. The
exercise price of options under the Plan is 100% of the fair market value of the
Common Shares on the date of grant and the term of options is eight 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 54 President and Chief Executive Officer
Dennis S. Madison 56 Vice President of Administration and
Regulatory Affairs
Christina M. Temperante 48 Vice President and General Manager - Fiber
Optic Division
Mark C. Kraus 36 Vice President and General Manager -
Vascular Delivery Systems Division
David A. Liebl 35 Vice President of Operations and Technology
- Fiber Optic Division
DENNIS S. MADISON has been Vice President of Administration and
Regulatory Affairs since May 1995. Prior to that time, he 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.
CHRISTINA M. TEMPERANTE has been with the Company since April 1998. She
was hired as Vice President of Sales and Marketing and was named Vice President
and General Manager of the Fiber Optic Division in January 1999. She spent the
first twenty years of her career in various positions with 3M, most recently as
Global Marketing Manager of the Medical Devices Division. In 1996, she left 3M
to become Vice President of Sales, Marketing and Professional Services with
Graseby Medical, Inc., a 3M spin-off company.
MARK C. KRAUS has been with the Company since February 1992. He was
elected Vice President of Operations in January 1998 and was named Vice
President and General Manager of the Vascular Delivery Systems Division in
January 1999. Prior to that, he served as Director of Manufacturing from July
1996; Manufacturing Manager of the Optical Sensors Division from January 1995;
Manufacturing Manager of the Vascular Access Division from November 1992; and
Sales Engineer from February 1992. Mr. Kraus also held manufacturing engineering
positions with GV Medical, Inc. and Honeywell, Inc. from 1987 to 1992.
7
<PAGE>
DAVID A. LIEBL has been with the Company since January 1992. He was
elected Vice President of Research and Development in January 1998 and was named
Vice President of Operations and Technology of the Fiber Optic Division in
January 1999. Prior to that, he served as Director of Research and Development
from July 1996; General Manager of the Vascular Access Division from August
1994; and Product Development Manager from January 1992. Prior to joining the
Company, Mr. Liebl served as a Senior Engineer for GV Medical, Inc. and from
1986 to May 1990 in an engineering role for Honeywell, Inc.
EXECUTIVE COMPENSATION
The following information is given with respect to remuneration of
James D. Hartman and Christina M. Temperante. Mr. Hartman was elected President
of the Company in February 1995 and Chief Executive Officer in January 1996. Ms.
Temperante joined the Company in April 1998 and was named General Manager in
January 1999. Other than Mr. Hartman and Ms. Temperante, none of the executive
officers of the Company received total annual salary and bonus in excess of
$100,000 for the fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------- ------------------------
OTHER ANNUAL SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) COMPENSATION($)(1) OPTIONS(#)(2)(3)
- --------------------------------- -------- --------- ------------------ ------------------------
<S> <C> <C> <C> <C>
James D. Hartman, Chief 1999 $130,000 $668 10,000
Executive Officer and President 1998 130,000 667 22,500
1997 108,000 524 0
Christina M. Temperante, Vice 1999 $120,000 $633 5,000
President and General Manager 1998 92,692 0 50,000
</TABLE>
(1) Consists of a matching contribution made by the Company to its 401(k)
plan.
OPTION/SAR GRANTS DURING FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS/SAR GRANTED
UNDERLYING OPTIONS/SAR'S TO EMPLOYEES IN FISCAL EXERCISE OR EXPIRATION
NAME GRANTED(#) YEAR BASE PRICE DATE
- ----------------------- ------------------------ ---------------------- ----------- ----------
<S> <C> <C> <C> <C>
James D. Hartman 10,000 10.40% $1.03 03/02/2005
Christina M. Temperante 5,000 5.20% 1.03 03/02/2005
</TABLE>
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following indicates the exercise of stock options or stock
appreciation rights during the last completed fiscal year by executive officers
named in the Summary Compensation Table. As of December 31, 1999, Mr. Hartman's
and Ms. Temperante's stock options which remain unexercised had the following
value, based on the difference between the option exercise price and the last
sale price of the Company's common stock on December 31, 1999, as quoted in the
National Association of Securities Dealers Automated Quotation System:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END($)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------- --------------- ------------ -------------------------- -------------------------
<S> <C> <C> <C> <C>
James D. Hartman 0 $0 101,200 / 30,800 $1,521 / $0
Christina M. Termerante 0 0 10,000 / 45,000 $0 / $0
</TABLE>
EMPLOYMENT AGREEMENT
James D. Hartman has an employment agreement with the Company with an
initial term through December 31, 1996. Since December 31, 1996, the agreement
has continued 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 by the Board of Directors for 2000 is $150,000. 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 required Section 16(a) filings applicable to
officers, directors and greater than ten percent shareholders in 1999 were
timely filed.
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
February 24, 2000 will increase the number of shares issuable pursuant to
options under the Incentive Plan from 400,000 to 600,000 Common Shares.
9
<PAGE>
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, January 1994 and April 1997, 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 400,000 Common Shares to employees of the
Company. The Amendment increases the maximum number of Common Shares available
to 600,000. 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 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 or non-employee directors 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
non-employee directors.
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
All employees are eligible to receive options under the Incentive Plan,
including officers of the Company and directors who are also employees of the
Company. As of March 15, 2000, approximately 70 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. In addition, all
hourly employees of the Company, upon reaching 1 year of service, and on each 1
year anniversary thereafter, have been granted options to purchase 100 Common
Shares.
OPTION PRICING 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
10
<PAGE>
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 or
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 leave the Company
for reasons other than death, disability or termination for cause has three
months 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, 1999, the Company had outstanding options to
purchase an aggregate of 321,175 Common Shares under the Incentive Plan. The
aggregate market value, as of March 15, 2000, of the securities underlying such
options was $963,525 or $3.00 per share and the aggregate exercise price of
such options was $453,000 or an average of $1.41 per share. Sixty-eight
employees have options outstanding under the Plan at exercise prices ranging
from $.81 to $2.25 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 last
sale price for the Common Shares on that date.
On November 18, 1998, the board of directors elected to re-price all
outstanding incentive options with an exercise price over $1.50/share down to
$1.50/share. In addition, the vesting schedule and the expiration date of these
options was extended one year.
11
<PAGE>
The following table sets forth information as to options outstanding
under the Incentive Plan as of December 31, 1999.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
NUMBER OPTION EXERCISE AGGREGATE
NAME OF SHARES PRICE RANGE DOLLAR BENEFIT(1)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
James D. Hartman 32,500(2) $1.03 - $1.50 $2,360
- ------------------------------------------------------------------------------------------
Christina M. Temperante 55,000 $1.03 - $1.50 $1,180
- ------------------------------------------------------------------------------------------
All Executive Officers as a Group 165,500 $1.03 - $1.50 $6,844
- ------------------------------------------------------------------------------------------
Employees as a Group, excluding Executive
Officers (65 Persons) 155,675 $ .81 - $2.25 $9,426
- ------------------------------------------------------------------------------------------
</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.
(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.
12
<PAGE>
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:
APPROVAL OF THE MEDAMICUS, INC. 1999 NON-EMPLOYEE DIRECTOR AND MEDICAL
ADVISORY BOARD STOCK OPTION PLAN
The Board of Directors of the Company recommends the adoption of the
proposed 1999 Non-Employee Director and Medical Advisory Board Stock Option Plan
("the Plan"). The Board of Directors adopted the Plan in July 1999. The Plan
provides for the automatic grant of options to non-employee directors
("Directors Options") and provides for discretionary grants to members of the
Company's Medical Advisory Board ("Advisor Options"). Subject to adjustment, as
provided in the Plan, the maximum number of Common Shares for which options can
be exercised under the Plan is 200,000. 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 Plan and subject to outstanding options
will be adjusted accordingly. Any unsold shares subject to an option under the
Plan which for any reason expires or otherwise terminates may again be subject
to an option under the Plan. The purpose of the Plan is to advance the interests
of the Company and its shareholders by allowing the Company to better attract
and retain the best available persons for service as members of the Board of
Directors and Medical Advisory Board of the Company and to provide additional
incentive to the non-employee directors and advisors to continue to serve by
affording them an opportunity to acquire a proprietary interest in the Company.
The Plan terminates on the earlier of (i) July 29, 2011, or (ii) the decision of
the Board of Directors to discontinue the Plan.
The Plan has the following features:
ADMINISTRATION
The Plan is to be administered by the Board of Directors of the
Company. The Board may authorize the Compensation Committee or other Board
committee, appointed by the Board of Directors, consisting of at least two
directors, to exercise the powers conferred under the Plan, other than the
powers to amend or terminate the Plan.
Neither the Board nor the Compensation Committee may exercise any
discretion regarding to whom Director Options will be granted, when they will be
granted, the number of Director Options to be granted or the vesting schedule
and duration thereof.
ELIGIBILITY AND GRANTS
Each member of the Board of Directors and Medical Advisory Board is
eligible to participate in the Plan provided that the member is not currently,
and has not during the previous 12-month period, been an employee of the
13
<PAGE>
Company or any of its subsidiaries and the member does not hold any options to
purchase Common Shares, except for stock options previously granted under the
Plan or, with respect to members of the Board of Directors or the 1996
Non-Employee Director and Medical Advisory Board Stock Option Plan.
Each Non-Employee Director who was a Non-Employee Director of the
Company on July 29, 1999, received, subject to shareholder approval of the plan,
and by virtue of serving as a Non-Employee Director, an initial Non-Statutory
Stock Option to purchase 15,000 shares. Upon re-election to the Board at the
annual stockholder's meeting in 2002, each Non-Employee Director shall be
granted a Non-Statutory Stock Option to purchase 18,000 shares and on
re-election to the Board at the annual meeting in 2005 and each three year
annual meeting dates thereafter, each Non-Employee Director shall be granted a
Non-Statutory Stock Option to purchase 21,000 shares, provided the Non-Employee
Director continues to be elected to the Board of Directors.
Each Non-Employee Director first elected or appointed to the Board at
any time after July 29, 1999, shall receive, by virtue of serving as a
Non-Employee Director of the Company, an initial grant of a Non-Statutory Stock
Option to purchase 15,000 Shares which shall be deemed to be granted to a
Non-Employee Director immediately after the Non-Employee Director's initial
election or appointment to the Board. On the third anniversary after the grant
of the Initial Non-Employee Director Option, each Non-Employee Director shall be
granted a Non-Statutory Stock Option to purchase 18,000 shares and on the sixth
anniversary, and each three year anniversary thereafter, after the grant of the
Initial Non-Employee Director Option, each Non-Employee Director shall be
granted a Non-Statutory Stock Option to purchase 21,000 shares, provided the
Non-Employee Director continues as a member of the Board of Directors.
An Advisor may be granted, from time to time, one or more Advisor
Options under the Plan as determined by the Committee in its sole discretion.
OPTION PRICE
The exercise price of all Director Options shall be 100% of the fair
market value of the Common Shares on the date of grant. The exercise price of
all Advisor Options is determined by the Committee on the date of grant provided
that the exercise price cannot be less than 85% of the fair market value of the
Common Shares on the date of grant. Fair market value of a Common Share is the
last sale price of the Common Shares on that date as reported in the National
Association of Securities Dealers Automated Quotation System.
VESTING
Director Options vest and become exercisable cumulatively as follows:
* Director Options granted on or before July 29, 1999 vest one
third on the date of grant and one third upon each re-election to
the Board.
* Director Options granted after July 29, 1999 vest one third on
the date of grant and one third upon each one-year anniversary of
the grant date, provided such director has been re-elected to the
Board.
Advisor Options become exercisable at such times and in such
installments as determined by the Committee in its sole discretion at the time
the Advisor Option is granted.
Options become fully vested if a director or advisor ceases to be a
member of the Board or Advisory Board within one year of any certain occurrences
constituting a change in control of the Company, including (i) if the
14
<PAGE>
Company merges or consolidates with another company and is not the surviving
entity, (ii) if the Company transfers all or substantially all of its assets,
(iii) if any person becomes beneficial owner of 30% or more of the outstanding
Common Shares or (iv) during any period of two years, individuals who at the
beginning of such period constitute the entire Board of Directors cease to
constitute a majority of the Board.
DURATION OF OPTIONS
Each Director Option expires on the earlier of (i) the eight-year
anniversary of the date of grant of such option or (ii) one year after the date
the director ceases to be a director of the Company, to the extent that such
option was exercisable on the date of termination, but in no case after the
expiration of the eight-year option term. Each Advisor Option expires on the
date fixed by the Committee in its sole discretion on the date of grant. The
Director Options and Advisor Options terminate and may no longer be exercised if
the Board of Directors determines that the director or advisor, as the case may
be, holding the options has committed an act of dishonesty or breach of
fiduciary duty to the detriment of the Company.
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 or discontinue the Plan at any time,
provided, however, such action cannot impair any options previously granted and,
if necessary to comply with Rule 16b-3 under the Exchange Act, the Plan may not
be amended more than once every six months, other than to comply with changes in
the Internal Revenue Code, the Employee Retirement Income Security Act or the
rules thereunder. In addition, if necessary to comply with Rule 16b-3 under the
Exchange Act, the Board may not take any action without shareholder approval if
such action would (i) increase by more than 10% the number of Common Shares
issuable under the Plan (not including increases to reflect stock splits and
stock dividends), (ii) change the eligibility requirements, or (iii) decrease
the minimum option price, extend the maximum option term or materially increase
the benefits which may accrue to participants under the plan.
TERMS OF OUTSTANDING DIRECTOR OPTIONS
Subject to shareholder approval, each of Thomas L. Auth, Richard L.
Little, Richard F. Sauter and Michael M. Selzer have received options to
purchase 15,000 Common Shares under the Plan.
As of March 15, 2000, the aggregate market value of the Common Shares
subject to Options under the Plan was $180,000, based on the last sale price for
a Common Share as quoted in the National Association of Securities Dealers
Automated Quotation System.
EFFECT OF FEDERAL INCOME TAXATION
The Options will not qualify as incentive stock options under the Code.
Generally, with respect to options that do not qualify as incentive options
under the Code, the acquisition of Common Shares through the exercise of the
option will result in ordinary income to the optionee 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, the difference
15
<PAGE>
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 Plan does not purport to be complete and
is qualified in its entirety by reference to the Plan itself. The full text of
the 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 3.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE MEDAMICUS, INC. 1999
NON-EMPLOYEE DIRECTOR AND MEDICAL ADVISORY BOARD STOCK OPTION PLAN.
PROPOSAL 4:
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, 1995-1999.
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 4.
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 25, 2000 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.
16
<PAGE>
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 25, 2000
17
<PAGE>
MEDAMICUS, INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, APRIL 27, 2000
3:30 P.M., LOCAL TIME
CROWNE PLAZA NORTHSTAR HOTEL
618 2ND AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55402
MEDAMICUS, INC.
15301 HIGHWAY 55 WEST, PLYMOUTH, MN 55447 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON APRIL 27, 2000.
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 27, 2000 at 3:30 p.m., local time, and any adjournment thereof,
and thereat to vote the undersigned's shares in the Company.
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, 3, AND 4.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
[ARROW] PLEASE DETACH HERE [ARROW]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.
<TABLE>
<S> <C>
1. Election of directors: To elect the management slate of directors. [ ] Vote FOR [ ] Vote WITHHELD
01 Richard L. Little 03 Richard F. Sauter 05 Michael M. Selzer all nominees from all nominees
02 James D. Hartman 04 Thomas L. Auth (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. Proposal to adopt an amendment to the MedAmicus, Inc. Stock Option
Incentive Plan. [ ] For [ ] Against [ ] Abstain
3. Proposal to adopt the 1999 Non-Employee Director and Medical Advisory
Board Stock Option Plan. [ ] For [ ] Against [ ] Abstain
4. 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, 2000. [ ] For [ ] Against [ ] Abstain
5. 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 25, 2000.
Address Change? Mark Box [ ] Indicate changes below: Date __________________________________
___________________________________________
| |
| |
|___________________________________________|
Signature(s) in Box
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.
</TABLE>
