<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _____)
Filed by the Registrant [X]
Filed by 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 Section 240.14a-11(c) or Section 240.14a-12
--------------------------
REUTER MANUFACTURING, 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:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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paid previously. Identify the previous filing by registration statement
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<PAGE>
REUTER MANUFACTURING, INC.
410 Eleventh Avenue South
Hopkins, Minnesota 55343
April 10, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of Reuter Manufacturing, Inc. The meeting will be held on Tuesday, May 20,
1997 at 2:00 p.m. local time at the Marriott Hotel Southwest, 5801 Opus
Parkway, Minnetonka, Minnesota 55343. We suggest that you carefully read the
enclosed Notice of Annual Meeting and Proxy Statement.
We hope you will be able to attend the Annual Meeting. However, whether or
not you plan to attend, we urge you to complete, sign, date and return the
enclosed proxy card in the enclosed envelope in order to make certain that
your shares will be represented at the Annual Meeting.
Very truly yours,
James W. Taylor
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
Reuter Manufacturing, Inc.
410 Eleventh Avenue South
Hopkins, Minnesota 55343
_____________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1997
_____________________________
TO THE SHAREHOLDERS OF REUTER MANUFACTURING, INC.:
The Annual Meeting of Shareholders of Reuter Manufacturing, Inc. will be held
on Tuesday, May 20, 1997, at 2:00 p.m. local time at the Marriott Hotel
Southwest, 5801 Opus Parkway, Minnetonka, Minnesota 55343, for the following
purposes:
1. To elect one director to serve a three-year term, or until his successor is
elected and qualified.
2. To consider and act upon a proposal to ratify the appointment of Coopers &
Lybrand L.L.P. as independent auditors for the Company for the fiscal year
ending December 31, 1997.
3. To transact such other business as may be properly brought before the Annual
Meeting or any adjournments thereof.
Only shareholders of record as shown on the books of the Company at the close
of business on March 31, 1997 will be entitled to vote at the Annual Meeting
or any adjournments thereof.
By Order of the Board of Directors
William H. Johnson
SECRETARY
April 10, 1997
<PAGE>
REUTER MANUFACTURING, INC.
410 ELEVENTH AVENUE SOUTH
HOPKINS, MINNESOTA 55343
(612) 935-6921
_______________________________
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1997
_______________________________
INTRODUCTION
The 1997 Annual Meeting of Shareholders of Reuter Manufacturing, Inc. (the
"Company") will be held on Tuesday, May 20, 1997, at 2:00 p.m. local time at
the Marriott Hotel Southwest, 5801 Opus Parkway, Minnetonka, Minnesota 55343,
or at any adjournments thereof (the "Annual Meeting"), for the purposes set
forth in the Notice of Meeting.
A proxy card is enclosed for your use. You are solicited on behalf of the
Board of Directors to SIGN AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE. No postage is required if mailed within the United States. The
cost of soliciting proxies, including the preparation, assembly and mailing
of proxies and soliciting material, as well as the cost of forwarding such
material to the beneficial owners of Common Stock, will be borne by the
Company. Directors, officers and employees of the Company may, without
compensation other than their regular compensation, solicit proxies by
telephone, telegraph or personal conversation. The Company may reimburse
brokerage firms and others for expenses in forwarding proxy material to the
beneficial owners of Common Stock. This Proxy Statement, the Proxy and the
Notice of Meeting are being mailed to shareholders beginning on or about
April 10, 1997.
Any shareholder giving a proxy may revoke it at any time prior to its use at
the Annual Meeting either by: (i) giving notice of such revocation to the
Secretary of the Company prior to the Annual Meeting, or by appearing at the
Annual Meeting and giving written notice of revocation to the Secretary of
the Company prior to use of the proxy; (ii) filing a duly executed proxy
bearing a later date with the Secretary of the Company; or (iii) appearing at
the Annual Meeting and voting in person. Proxies will be voted as specified
by shareholders. Signed proxies on which no specification is made will be
voted in favor of the nominees for director listed in this Proxy Statement
and for the proposals in the Notice of Annual Meeting.
VOTING OF SHARES
Only holders of Common Stock of record at the close of business on March 31,
1997 will be entitled to vote at the Annual Meeting. On March 31, 1997, the
Company had 3,219,770 outstanding shares of Common Stock, each such share
entitling the holder thereof to one vote on each matter to be voted on at the
Annual Meeting. Holders of shares of Common Stock are not entitled to
cumulative voting rights. The presence at the Annual Meeting, in person or
by proxy, of the holders of a majority of the outstanding shares of Common
Stock (1,609,886 shares) is required for a quorum for the transaction of
business.
<PAGE>
In general, shares of Common Stock represented by a properly signed and
returned Proxy Card will be counted as shares present and entitled to vote at
the Annual Meeting for purposes of determining a quorum, without regard to
whether the card reflects abstentions (or is left blank) or reflects a broker
non-vote on a matter (i.e., a card returned by a broker on behalf of its
beneficial owner customer that is not voted on a particular matter because
voting instructions have not been received and the broker has no
discretionary authority to vote). Shares represented by a Proxy Card
including any broker non-votes on a matter will be treated as shares not
entitled to vote on that matter, and thus will not be counted in determining
whether that matter has been approved. Shares represented by a Proxy Card
voted as abstaining on any of the other proposals will be treated as shares
present and entitled to vote that were not cast in favor of a particular
matter and thus will be counted as votes against that matter.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
NOMINATION
The Company's Restated Articles of Incorporation provide that the Board of
Directors shall consist of not less than three nor more than 15 members, as
determined from time to time by the Board, divided into three classes of as
nearly equal number as possible. The term of each class is three years and
the term of one class expires each year in rotation. The Board of Directors
has determined that there will be six directors of the Company for the
ensuing year. The Board has nominated Mr. Robert W. Heller to serve as a
director of the Company for a term of three years, expiring at the 2000
Annual Meeting of Shareholders, or until his successor is elected and
qualified. Mr. Heller was elected to the Board on February 3, 1997 by the
Board pursuant to its authority under the Company's Bylaws to elect directors
between annual meetings of shareholders, to serve until the annual meeting.
Proxies can only be voted for the number of persons named as nominees in this
Proxy Statement. The election of a nominee requires the affirmative vote of
a majority of the shares of Common Stock voting in person or by proxy for
directors at the Annual Meeting. The Board recommends a vote FOR the
election of the nominee listed below. In the absence of other instructions,
the proxies will be voted for the nominee listed below. If, prior to the
Annual Meeting, the Board should learn that a director will be unable to
serve by reason of death, incapacity or other unexpected occurrence, the
proxies that would have been voted for such nominee will be voted for a
substitute nominee as selected by the Board of Directors. Alternatively, the
proxies may, at the Board's discretion, be voted for such fewer number of
nominees as results from such death, incapacity or other unexpected
occurrence. The Board has no reason to believe that the nominee will be
unable to serve.
2
<PAGE>
INFORMATION ABOUT NOMINEE AND OTHER DIRECTORS
The following table sets forth certain information, as of March 18, 1997,
which has been furnished to the Company by each director and each person who
has been nominated by the Board for election as a director.
<TABLE>
<CAPTION>
NAME OF NOMINEE PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
<S> <C> <C> <C>
NOMINEE FOR THREE YEAR TERM EXPIRING IN 2000:
Robert W. Heller* Chief Executive Officer of MiTech, 51 1997
Inc.
DIRECTORS NOT STANDING FOR ELECTION THIS YEAR WHOSE TERMS EXPIRE IN 1999:
Edward E. Strickland* Chairman of the Board of Directors 70 1989
of the Company
Kenneth E. Daugherty** President of KD Consulting, Inc. 58 1990
DIRECTORS NOT STANDING FOR ELECTION THIS YEAR WHOSE TERMS EXPIRE IN 1998:
Gary W. Laidig* Minnesota State Senator 48 1990
James W. Taylor** President, Chief Executive Officer 78 1989
and Chief Financial Officer of the
Company, President of Taylor
Consultants, Inc. (management and
financial consulting)
Caroline Avey** Independent Consultant 41 1992
</TABLE>
- ------------------------------
* Members of Audit Committee
** Members of Compensation and Benefits Committee
OTHER INFORMATION ABOUT NOMINEE AND OTHER DIRECTORS
Except as indicated below, there has been no change in principal occupations
or employment during the past five years for the nominees or other directors.
There are no family relationships between or among the nominees of the
Company.
Mr. Heller has been a director of the Company since February 1997. He has
been the Chief Executive Officer of MiTech, Inc., a start-up company involved
in the environmental clean up business since September 1996. Mr. Heller held
various management positions with Advance Circuits, Inc. ("ACI"), a
manufacturer of circuit boards from 1977 to September 1996. He became Chief
Executive Officer of ACI in 1991, and was Chairman of the Board in 1994 and
1995.
3
<PAGE>
Mr. Strickland served on the Executive Committee of the Board of Directors,
which performed the duties of Chief Executive Officer, from October 1, 1990
until January 28, 1991. He has been Chairman of the Board of Directors since
that time, and a director of the Company since 1989. He has been an
independent financial consultant for more than eight years. Mr. Strickland
also serves as a director of AVECOR Cardiovascular Inc., Bio-Vascular, Inc.,
Communication Systems Inc., Hector Communications Corp. and Quantech, Ltd.
Dr. Daugherty served as a Professor at the University of North Texas for over
fifteen years until his retirement from that position in 1995. He has been a
director of the Company since 1990. Currently, Dr. Daugherty is the
President of KD Consulting, Inc., a consulting firm. Dr. Daugherty also
serves as a director of TRAC Laboratories, Inc., The KEDS, Inc. and Pyro
Industries, Inc.
Mr. Laidig has been a director of the Company since 1990. Mr. Laidig has
been a Minnesota State Senator since 1982 and has been employed on an on-call
basis by Dayton Hudson Corporation as a Sales Associate since October 1994.
Mr. Taylor was elected Chief Executive Officer and President of the Company
in November 1992 and Chief Financial Officer in March 1994. He has also been
the President of Taylor Consultants, Inc., a management and financial
consulting firm, for more than five years. Mr. Taylor is also a director of
Compositech Ltd. and QC Solutions, Inc.
Ms. Avey has been a director of the Company since 1992. She had been an
Account Executive with Business Incentives, Inc., a performance services
company, from April 1991 until January 1994 and is now performing consulting
work for International Learning Systems.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
Standing committees of the Board of Directors include the Audit Committee,
the Compensation and Benefits Committee and the Nominating Committee.
The Audit Committee provides assistance to the Board in satisfying its
fiduciary responsibilities relating to the accounting, auditing, operating
and reporting practices of the Company. The Audit Committee reviews the
annual financial statements of the Company, the selection and work of the
Company's independent accountants and the adequacy of internal controls for
compliance with corporate policies and directives. The members of the Audit
Committee are Messrs. Strickland, Laidig and Heller. The Audit Committee met
one time in 1996.
The Compensation and Benefits Committee reviews general programs of
compensation and benefits for all employees of the Company, reviews salary
levels, bonuses and other forms of compensation paid to the Company's
officers, makes recommendations to the Board concerning such compensation and
administers the Company's stock-based employee benefit plans. The members of
the Compensation and Benefits Committee are Ms. Avey, Mr. Daugherty and Mr.
Taylor. The Compensation and Benefits Committee met one time in 1996.
The Nominating Committee identifies, evaluates and nominates persons for
election to the Board and makes recommendations to the Board with respect to
such persons. The Nominating Committee will consider nominees recommended by
shareholders if submitted in writing to the Secretary of the Company at the
Company's principal office address specified at the beginning of the first
page of this Proxy Statement. All directors who are not employees of the
Company are members of the Nominating Committee. The Nominating Committee
did not meet in 1996.
4
<PAGE>
The Company's Board of Directors met three times during 1996, and took action
pursuant to unanimous written consent resolutions three times during 1996.
All of the Directors, except for Mr. James McGuire, attended 75% or more of
the meetings with the Board of Directors and all committees on which they
served during 1996. Mr. McGuire was absent from three Board meetings, and
resigned from the Board of Directors effective September 22, 1996 due to
scheduling conflicts.
DIRECTOR COMPENSATION
Directors of the Company received no cash compensation for their services as
members of the Board of Directors from August 1995 through March 1996.
Commencing in April of 1996, all directors of the Company, except for Messrs.
Taylor and Strickland, received compensation for their services as directors
at the rate of $400 per month, as well as a meeting fee of $500 for each
Board and Committee meeting attended. Directors are not compensated for
telephonic meetings.
In November 1992, the Company entered into a consulting agreement with Taylor
Consultants, whereby Taylor Consultants agreed to provide the services of
James W. Taylor to act as President and Chief Executive Officer of the
Company. Taylor Consultants is currently paid $13,000 per month under the
consulting agreement. In addition, Taylor Consultants was granted an option
to purchase 25,000 shares of Common Stock pursuant to the Consulting
Agreement. Taylor Consultants is an independent contractor, and neither it
nor Mr. Taylor is an employee of the Company. The agreement lasts
indefinitely, but may be terminated by either party upon 30 days' written
notice. During 1996, Taylor Consultants received $161,500 for services under
this agreement. See "Executive Compensation and Other Benefits - Summary of
Cash and Certain other Compensation - Summary Compensation Table" and
"Certain Transactions."
In December 1990, the Company entered into a consulting agreement with Edward
E. Strickland whereby Mr. Strickland agreed to provide his services to the
Company as its Chairman of the Board of Directors. The agreement was
temporarily suspended and reinstated in April 1996. Mr. Strickland is
currently paid $2,000 per month under the consulting agreement and has
received $19,000 for his services during 1996. See "Executive Compensation
and Other Benefits - Summary of Cash and Certain other Compensation - Summary
Compensation Table" and "Certain Transactions."
The Company has entered into Standstill Agreements with Mr. Taylor and Mr.
Strickland, respectively, which may require the Company to make certain
payments to such directors. See "Certain Transactions."
Prior to April 1995, the Company maintained the 1991 Non-Employee Director
Stock Option Plan, pursuant to which members of the Board of Directors who
were not employees of the Company or its subsidiaries, received periodic
grants of non-qualified stock options. In March 1996, the Board of
Directors, upon recommendation of the Compensation and Benefits Committee,
amended stock options which had been granted under the 1991 Non-Employee
Directors Stock Option Plan held by Ms. Avey, Mr. Daugherty and Mr. Laidig to
reduce the exercise price per share under such options from a range of
$4.25-$5.13 to $.42, the fair market value of the Company's stock on the date
the options were repriced ("Repricing Agreement"). Pursuant to the Repricing
Agreement, the number of outstanding options to such directors which were
within the price range of $4.25 to $5.13 was reduced by 50%.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER BENEFITS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides summary information concerning cash and non-cash
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each of the executive officers of the Company
whose cash and non-cash salary and bonus exceeded $100,000 in 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------
LONG-TERM
COMPENSATION AWARDS
-------------------
ANNUAL COMPENSATION SECURITIES
NAME AND --------------------------------- UNDERLYING
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) OTHER(3) OPTIONS
- ------------------ ---- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
James W. Taylor 1996 $161,500 20,000 $112,000 0
CHIEF EXECUTIVE OFFICER 1995 $121,000 0 0 0
1994 $156,000 0 0 100,000
Edward E. Strickland 1996 $19,000 20,000 $123,000 0
CHAIRMAN OF THE BOARD 1995 $12,000 0 0 0
1994 $26,000 0 0 0
</TABLE>
- ------------------------
(1) Mr. Taylor's annual salary for 1994, 1995 and 1996 represents consulting
fees paid to Taylor Consultants for Mr. Taylor's services rendered as
President and Chief Executive Officer of the Company. A portion of Mr.
Taylor's salary for 1996 represents deferred salary from 1995. Mr.
Strickland's Consulting Agreement had been temporarily suspended in August,
1995, and was reinstated in March 1996. Mr. Strickland's salary for Fiscal
Year 1996 represents payments made to him from mid-March 1996 through
December 1996.
(2) Messrs. Taylor and Strickland were each granted a $20,000 cash bonus which
was accrued in Fiscal Year 1996, but has not yet been paid.
(3) Other compensation includes estimated amounts the Company is obligated to
pay under the Compensation Agreement. See "Certain Transactions."
6
<PAGE>
OPTION GRANTS AND EXERCISES
There were no options granted to or exercised by the named executive officer
during 1996. The following table provides information as to the value of
options held by the named executive officer.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END (2)
-------------------------- ----------------------
EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
James W. Taylor 139,000 0 $345,375 0
Edward E. Strickland 38,000 0 $18,750 0
</TABLE>
- ------------------------
(1) In the fiscal year ended December 31, 1996, no options were exercised by
the named executive officers. The exercise price may be paid in cash or, in
the Compensation and Benefits Committee's discretion, in shares of the
Company's Common Stock valued at fair market value on the date of exercise
or pursuant to a cashless exercise procedure under which the executive
provides irrevocable instructions to a brokerage firm to sell the purchased
shares and to remit to the Company, out of the sale proceeds, an amount
equal to the exercise price plus all applicable withholding taxes. The
Compensation and Benefits Committee also has the discretion to grant a
supplemental cash bonus to an optionee in connection with the grant or
exercise of an option or both the grant and an exercise of an option.
(2) The fair market value of the Common Stock on December 31, 1996 was $3.375.
Of Mr. Taylor's 139,000 outstanding options, 129,000 of such options were
in-the-money and 10,000 of such options were not. Of Mr. Strickland's
38,000 outstanding options, 8,000 of such options were in-the-money and
30,000 of such options were not.
7
<PAGE>
PRINCIPAL SHAREHOLDERS AND BENEFICIAL
OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial ownership
of the Common Stock of the Company as of March 18, 1997 by (a) each
shareholder who is known by the Company to own beneficially more than 5% of
the outstanding Common Stock, (b) each director, (c) each executive officer
named in the Summary Compensation Table above and (d) all executive officers
and directors of the Company as a group.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)(2)
-------------------------
NAME AMOUNT PERCENT OF CLASS
---- ------ ----------------
Perkins Capital Management, Inc. 324,450 (3) 10.1%
730 East Lake Street
Wayzata, MN 55391
Edward E. Strickland 262,250 (4) 8.1%
520 Warbass Way
Friday Harbor, WA 98250
Richard W. Perkins 246,200 (5) 7.7%
730 East Lake Street
Wayzata, MN 55391
James W. Taylor 237,600 (6) 7.1%
719 Lenape Trail
Westfield, NJ 07090
Kenneth E. Daugherty 140,100 (7) 4.3%
1913 East Hunskor Road
Oak Harbor, WA 98277
Robert W. Heller 30,000 *
10992 Mount Curve Road
Eden Prairie, MN 55347
Gary W. Laidig 10,000 (8) *
Room 155 - State Office Building
St. Paul, MN 55155
Caroline C. Avey 5,000 (9) *
16341 Wild Plum Circle
Morrison, CO 80465
All directors and executive officers 742,450 (10) 21.4%
as a group (9 persons)
- -----------------------------
* Less than 1% of the outstanding shares.
(1) As of March 18, 1997, unless noted. Unless otherwise noted, all of the
shares shown are held by individuals or entities possessing sole voting
and investment power with respect to such shares.
8
<PAGE>
(2) Shares not outstanding but deemed beneficially owned by virtue of the
right of a person or member of a group to acquire them within 60 days are
treated as outstanding only when determining the amount and percent owned
by such person or group.
(3) According to a Schedule 13D, dated February 6, 1997, as filed with the
Securities and Exchange Commission. Does not include 246,200 shares
beneficially owned by Richard W. Perkins, President of Perkins Capital
Management, Inc., as to which shares Perkins Capital Management, Inc.
disclaims beneficial ownership.
(4) Includes 38,000 shares that Mr. Strickland has the right to acquire
within 60 days upon the exercise of options.
(5) According to a Schedule 13D, dated February 6, 1997, as filed with the
Securities and Exchange Commission. Does not include 324,450 shares
beneficially owned by Perkins Capital Management, Inc., as to which
shares Mr. Perkins, the President of Perkins Capital Management, Inc.
disclaims beneficial ownership.
(6) Includes 139,000 shares that Mr. Taylor has the right to acquire within
60 days upon the exercise of options.
(7) Includes 11,000 shares that Mr. Daugherty has the right to acquire within
60 days upon the exercise of options.
(8) Includes 9,000 shares that Mr. Laidig has the right to acquire within 60
days upon the exercise of options.
(9) Includes 5,000 shares that Ms. Avey has the right to acquire within 60
days upon the exercise of options.
(10)Includes an aggregate of 252,000 shares that executive officers and
directors have the right to acquire within 60 days upon the exercise of
options.
CERTAIN TRANSACTIONS
On January 1, 1994, the Company's wholly owned subsidiary, EPR, Inc. ("EPR"),
ceased operations of its waste processing facilities in Eden Prairie,
Minnesota. On September 1, 1994, EPR sold substantially all of its assets,
and a portion of the net proceeds from the sale were used to prepay a portion
of the debt underlying the EPR facility. The Company retained all
liabilities of EPR, including the balance of the loan underlying the facility
(the "EPR Loan") from Sanwa Business Credit Corporation ("Sanwa"), which was
guaranteed by the Company. In January 1996, the Company and Sanwa entered
into a series of agreements (the "Restructuring Agreements"), pursuant to
which Sanwa agreed to restructure the Company's obligation to guarantee
repayment of the EPR Loan. Pursuant to the Restructuring Agreements, Sanwa
agreed to restructure the Company's obligations on the EPR Loan into three
separate obligations: the Senior Note; the Junior Note; and the Income
Sharing Agreement. The Company also granted Sanwa a warrant to purchase up
to 3,178,780 shares of Common Stock of the Company for an aggregate purchase
price of ten dollars ($10.00) (the "Sanwa Warrant"), which will become
exercisable if there is an ownership change of the Company as defined in
Section 382(g)(1) of the Internal Revenue Code of 1986, as amended.
9
<PAGE>
In addition, the Company and Sanwa entered into separate Standstill
Agreements (the "Standstill Agreements') with each of James W. Taylor, the
Chief Executive Officer and a Director of the Company, and Edward E.
Strickland, the Chairman of the Board of Directors of the Company, under
which Mr. Taylor and Mr. Strickland have agreed not to, directly or
indirectly, acquire, dispose of any stock of the Company, or exercise any
option or other right to acquire any capital stock or options of the Company.
In connection with the Standstill Agreements, the Company agreed to pay
these individuals, under a predetermined formula, based on the increases in
the market value of shares of Common Stock of the Company that they hold and
are unable to trade due to the Standstill Agreements (the "Compensation
Agreement"). In addition, these individuals will be paid an aggregate of
$100,000 pursuant to the Compensation Agreement. See "Election of Directors
- - Director Compensation."
The Company has entered into an agreement with Sanwa to retire the Company's
obligations under the Junior Note and Income Sharing Agreement. In
connection therewith, the Sanwa Warrant, Standstill Agreements and
Compensation Agreement will be terminated. The Company's present obligations
to Sanwa under the Senior Note and to compensate Mr. Strickland and Mr.
Taylor under the Compensation Agreement will remain obligations of the
Company. The Senior Note bears interest at a rate of 8% per annum, and the
Company is obligated to make quarterly payments thereon in the amount of
$75,000 plus accrued interest until December 31, 1999, when a final balloon
payment is due. The Company's obligations to compensate Mr. Strickland and
Mr. Taylor under the Compensation Agreement will be determined upon the
closing of the agreement with Sanwa. The Company's obligations under the
Compensation Agreement are estimated at approximately $235,000, based on the
price of the Company's Common Stock of $3.375 per share at December 31, 1996.
In November 1992, the Company entered into a consulting agreement with Taylor
Consultants, Inc. whereby Taylor Consultants agreed to provide the services
of James W. Taylor to act as President and Chief Executive Officer of the
Company. Taylor Consultants is currently paid $13,000 per month under the
consulting agreement. In addition, Taylor Consultants was granted an option
to purchase 25,000 shares of Common Stock pursuant to the Consulting
Agreement. Taylor Consultants is an independent contractor, and neither it
nor Mr. Taylor is an employee of the Company. The agreement lasts
indefinitely, but may be terminated by either party upon 30 days' written
notice. During 1996, Taylor Consultants received $161,500 for services under
this agreement. See "Executive Compensation and Other Benefits - Summary of
Cash and Certain other Compensation - Summary Compensation Table" and
"Certain Transactions."
In December 1990, the Company entered into a consulting agreement with Edward
E. Strickland whereby Mr. Strickland agreed to provide his services to the
Company as its Chairman of the Board of Directors. The agreement was
temporarily suspended and reinstated in April 1996. Mr. Strickland is
currently paid $2,000 per month under the consulting agreement and has
received $19,000 for his services during 1996. See "Executive Compensation
and Other Benefits - Summary of Cash and Certain other Compensation - Summary
Compensation Table" and "Certain Transactions."
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of the Company's Common Stock, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.
Executive officers, directors and greater than 10% shareholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a)
reports they file. To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company during the year ended
December 31, 1996, all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than 10% shareholders were met.
10
<PAGE>
RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
The Board of Directors has appointed Coopers & Lybrand L.L.P. as independent
auditors to make an examination of the accounts of the Company for the fiscal
year ending December 31, 1997 and to perform other appropriate accounting and
audit services at the request of the Company. Although not required to do
so, the Board of Directors wishes to submit the selection of Coopers &
Lybrand L.L.P. to the shareholders for ratification. The Board of Directors
recommends a vote for ratification of Coopers & Lybrand L.L.P. as independent
auditors for the fiscal year ending December 31, 1997. Unless a contrary
choice is specified, a proxy solicited by the Board of Directors will be
voted FOR the selection of Coopers & Lybrand L.L.P. If the selection of
Coopers & Lybrand L.L.P. is not ratified, the Board of Directors will
reconsider its selection. The Company has requested and expects a
representative of Coopers & Lybrand L.L.P. to be present at the Annual
Meeting to make a statement if he or she so desires and to respond to
appropriate questions.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Shareholder proposals intended to be presented in the proxy materials
relating to the next annual meeting of shareholders must be received by the
Company at its principal executive offices on or before December 31, 1997.
OTHER BUSINESS
The Company knows of no business which will be presented for consideration at
the Annual Meeting other than that described in this Proxy Statement. As to
other business, if any, that may properly come before the Annual Meeting, it
is intended that proxies solicited by the Board will be voted in accordance
with the judgment of the person or persons voting the proxies.
ANNUAL REPORT ON FORM 10-KSB
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM
10-KSB (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 TO
EACH PERSON WHO IS A SHAREHOLDER OF THE COMPANY AS OF MARCH 31, 1997, UPON
RECEIPT FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH ANNUAL REPORT.
SUCH REQUEST SHOULD BE SENT TO REUTER MANUFACTURING, INC., 410 11TH AVENUE
SOUTH, HOPKINS, MINNESOTA 55343, ATTENTION: SECRETARY.
BY ORDER OF THE BOARD OF DIRECTORS
William H. Johnson
Secretary
Minneapolis, Minnesota
April 10, 1997
11
<PAGE>
REUTER MANUFACTURING, INC.
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints JAMES W. TAYLOR and WILLIAM H. JOHNSON, and
each of them, as Proxies, each with power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all
the shares of Common Stock of Reuter Manufacturing, Inc. held of record by
the undersigned on March 31 1997, at the Annual Meeting of Shareholders to be
held on May 20, 1997, or any adjournment thereof.
1. ELECTION OF DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2000:
// FOR nominee listed below // AGAINST nominee listed below
Robert W. Heller
2. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS AUDITORS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997:
// FOR // AGAINST // ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 ABOVE.
(Please sign on reverse side)
<PAGE>
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 THE NOMINEE LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2 ABOVE.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated:------------------------, 1997
------------------------------------
Signature
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
