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 ss.240.14a-11(c) or ss.240.14a-12
Everest Medical Corporation
(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)(1)
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>
EVEREST MEDICAL CORPORATION
13755 First Avenue North
Minneapolis, Minnesota 55441
(612) 473-6262
-----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1998
-----------------------
TO THE SHAREHOLDERS OF EVEREST MEDICAL CORPORATION:
Notice is hereby given that the Annual Meeting of the Shareholders of
Everest Medical Corporation (the "Company") will be held on Tuesday, April 28,
1998, at 3:30 p.m. local time, at the Radisson Hotel and Conference Center, 3131
Campus Drive, Plymouth, Minnesota 55441, for the following purposes:
1. To elect four directors to serve for the ensuing year and until their
successors are elected and qualified.
2. To consider and act upon a proposal to ratify the selection of Ernst &
Young LLP as independent auditors of the Company for the fiscal year
ending December 31, 1998.
3. To transact such other business as may be properly brought before the
Annual Meeting or any adjournment thereof.
Only shareholders of record as shown on the books of the Company at the
close of business on March 16, 1998 will be entitled to vote at the Annual
Meeting or any adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU
PLAN TO BE PERSONALLY PRESENT AT THE MEETING, HOWEVER, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU
LATER DECIDE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS
EXERCISED.
By Order of the Board of Directors
John L. Shannon, Jr.
Chairman of the Board
March 23, 1998
<PAGE>
EVEREST MEDICAL CORPORATION
13755 First Avenue North
Minneapolis, Minnesota 55441
--------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 1998
--------------------
INTRODUCTION
Your proxy is solicited by the Board of Directors of Everest Medical
Corporation (the "Company") for use at the Annual Meeting of Shareholders to be
held on Tuesday, April 28, 1998, at 3:30 p.m. local time, at the Radisson Hotel
and Conference Center, 3131 Campus Drive, Plymouth, Minnesota 55441, or at any
adjournment thereof, for the purposes set forth in the Notice of Annual Meeting.
The cost of soliciting proxies, including the preparation, assembly and
mailing of the proxies and soliciting material, as well as the cost of
forwarding such material to the beneficial owners of the Company's stock, will
be borne by the Company. Directors, officers and regular employees of the
Company may, without compensation other than their regular compensation, solicit
proxies personally or by telephone. The Company may reimburse brokerage firms
and others for expenses in forwarding proxy material to the beneficial owners of
the Company's stock.
Any shareholder giving a proxy may revoke it any time prior to its use
at the Annual Meeting by giving written notice of such revocation to the
Secretary of the Company. Written notice of revocation may be given prior to the
Annual Meeting, or a shareholder may appear at the Annual Meeting and give
written notice of revocation prior to use of the proxy. The enclosed proxy, when
properly signed and returned to the Company, will be voted as directed therein.
Proxies which are signed by shareholders but which lack specific instruction
with respect to any proposals will be voted in favor of the proposals set forth
in the Notice of Meeting and in favor of the slate of directors proposed by the
Board of Directors and listed herein.
The presence at the Annual Meeting in person or by proxy of the holders
of a majority of the outstanding shares of the Company's stock entitled to vote
shall constitute a quorum for the transaction of business. If a broker returns a
"non-vote" proxy, indicating a lack of voting instructions by the beneficial
holder of the shares and a lack of discretionary authority on the part of the
broker to vote on a particular matter, then the shares covered by such non-vote
shall be deemed present at the meeting for purposes of determining a quorum but
shall not be deemed to be represented at the meeting for purposes of calculating
the vote required for approval of such matter. If a shareholder abstains from
voting as to any matter, then the shares held by such shareholder shall be
deemed present at the meeting for purposes of determining a quorum and for
purposes of calculating the vote with respect to such matter, but shall not be
deemed to have been voted in favor of such matter. An abstention as to any
proposal will therefore have the same effect as a vote against the proposal.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSALS SET FORTH IN THE NOTICE OF MEETING.
The Company expects that this Proxy Statement, the Proxy and Notice of
Annual Meeting will first be mailed to shareholders on or about March 23, 1998.
<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed March 16, 1998 as the
record date for determining shareholders entitled to notice of and to vote at
the 1998 Annual Meeting. Persons who are not shareholders of record on such date
will not be allowed to vote at the Annual Meeting. At the close of business on
March 16, 1998, there were 7,457,274 shares of Common Stock (the "Common
Stock"), 632,937 shares of Series A Convertible Preferred Stock, 637,273 shares
of Series B 8% Convertible Preferred Stock, 410,906 shares of Series C 6%
Convertible Preferred Stock and 471,500 shares of Series D 10% Convertible
Preferred Stock (the Series A, Series B, Series C and Series D Convertible
Preferred Stock are hereinafter collectively referred to as "Preferred Stock"),
all of which have a par value of $.01, issued and outstanding. Each share of
Common Stock and Preferred Stock is entitled to one vote in person or by proxy
on each matter to be voted on at the Annual Meeting, voting together as a single
class. Holders of Common Stock and Preferred Stock are not entitled to cumulate
their votes for the election of directors.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth as of March 16, 1998 certain information
regarding beneficial ownership of the Company's capital stock by: (i) each
person known by the Company to be the beneficial owner of more than 5% of any
class of the outstanding capital stock; (ii) each director and nominee of the
Company; (iii) the executive officers named in the Summary Compensation Table;
and (iv) all executive officers and directors of the Company as a group. Unless
otherwise indicated, each holder named or included in the group has sole voting
and investment power with respect to the shares set forth opposite such holder's
name.
SEE TABLE ON FOLLOWING PAGES
<PAGE>
<TABLE>
<CAPTION>
Series A Series B
Common Stock Convertible Preferred Stock Convertible Preferred Stock
Beneficially Owned Beneficially Owned Beneficially Owned
(1)(2)
---------------------- --------------------------- ---------------------------
Name (and Address of
5% Owners) or Percent Percent Percent
Identity of Group Shares of Class Shares of Class Shares of Class
-------------------------- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
David D. Koentopf 55,000(3) * -- -- -- --
John L. Shannon, Jr 402,823(4) 5.1% -- -- -- --
Donald R. Brattain
601 Lakeshore Pkwy 327,588(5) 4.2% 40,000 6.3% 90,910 14.3%
Suite 1140
Minnetonka, MN 55305
Richard J. Migliori, M.D 20,000(3) * -- -- -- --
Perkins Capital
Management, Inc. 2,680,950(6) 35.6% -- -- 5,000 *
730 East Lake Street
Wayzata, MN 55391
John R. Albers
9400 North Central Expy 980,630(7) 11.9% 412,937 65.2% 109,090 17.1%
Suite 1250
Dallas, TX 75231
Guidant Corporation
3200 Lakeside Drive 411,765 5.5% -- -- -- --
Santa Clara, CA 95054
Aaron Boxer TTEE Aaron
Boxer Rev Trust 357,454(7) 4.6% 140,000 22.1% 36,000 5.6%
7287 Sidonia Court
Boca Raton, FL 33433
Kenneth R. Parker
1250 - 11th St. SW 220,000(7) 2.0% -- -- 50,000 7.8%
Willmar, MN 56201
Jeffrey A. Sowada
1151 Dunbar Way 90,000(8) 1.2% -- -- -- --
Mahtomedi, MN 55115
VBS General Partnership
445 Tigertail Road 175,000(7) 2.0% -- -- 50,000 7.8%
Los Angeles, CA 90049
John O. Hanson
14116 Frontier Lane 170,000(7) 2.2% -- -- 40,000 6.3%
Burnsville, MN 55337
Steven G. Loe
#4 Watertower Place 36,363 * -- -- -- --
4300 Baker Road
Minnetonka, MN 55343
Jennifer J. Naegle TTEE
Jennifer J. Naegle Rev 36,363 * -- -- -- --
Trust dtd 3/15/95
150 Bradley Place, #803
Palm Beach, FL 33408
Steve Romanek
3571 Hwy. 33 North 34,545 * -- -- -- --
Cloquet, MN 55720
Paul A. Liedl
531 Mariner Drive 51,400 * -- -- -- --
Bayport, MN 55003
James N. Owens TTEE
James N. Owens Rev 40,000 * -- -- -- --
Trust
P.O. Box 2387
Port Aransas, TX 78373
All current executive 910,880(9) 10.9% 40,000 6.3% 90,910 14.3%
officers and directors as
a group (7 persons)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(continued)
Series C Series D
Convertible Preferred Stock Convertible Preferred Stock
Beneficially Owned Beneficially Owned
--------------------------- ---------------------------
Name (and Address of
5% Owners) or Percent Percent
Identity of Group Shares of Class Shares of Class
-------------------------- ------- -------- -------- ----------
<S> <C> <C> <C> <C>
David D. Koentopf -- -- -- --
John L. Shannon, Jr -- -- -- --
Donald R. Brattain
601 Lakeshore Pkwy -- -- -- --
Suite 1140
Minnetonka, MN 55305
Richard J. Migliori, M.D -- -- -- --
Perkins Capital
Management, Inc. -- -- -- --
730 East Lake Street
Wayzata, MN 55391
John R. Albers
9400 North Central Expy -- -- 100,000 21.2%
Suite 1250
Dallas, TX 75231
Guidant Corporation
3200 Lakeside Drive -- -- -- --
Santa Clara, CA 95054
Aaron Boxer TTEE Aaron
Boxer Rev Trust 145,454 35.4% -- --
7287 Sidonia Court
Boca Raton, FL 33433
Kenneth R. Parker
1250 - 11th St. SW -- -- -- --
Willmar, MN 56201
Jeffrey A. Sowada
1151 Dunbar Way -- -- 25,000 5.3%
Mahtomedi, MN 55115
VBS General Partnership
445 Tigertail Road 50,000 12.2% 25,000 5.3%
Los Angeles, CA 90049
John O. Hanson
14116 Frontier Lane -- -- 50,000 10.6%
Burnsville, MN 55337
Steven G. Loe
#4 Watertower Place 36,363 8.8% -- --
4300 Baker Road
Minnetonka, MN 55343
Jennifer J. Naegle TTEE
Jennifer J. Naegle Rev 36,363 8.8% -- --
Trust dtd 3/15/95
150 Bradley Place, #803
Palm Beach, FL 33408
Steve Romanek
3571 Hwy. 33 North 34,545 8.4% -- --
Cloquet, MN 55720
Paul A. Liedl
531 Mariner Drive -- -- 50,000 10.6%
Bayport, MN 55003
James N. Owens TTEE
James N. Owens Rev 10,000 2.4% 30,000 6.4%
Trust
P.O. Box 2387
Port Aransas, TX 78373
All current executive -- -- -- --
officers and directors as
a group (7 persons)
</TABLE>
<PAGE>
* Less than 1% of the outstanding shares.
(1) Shares not outstanding, but deemed beneficially owned by virtue of the
right of a holder 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 holder or group.
(2) Includes shares issuable upon conversion of Preferred Stock beneficially
owned by such persons, which shares are also shown separately in the table.
(3) Represents shares that holder has the right to acquire pursuant to exercise
of currently exercisable options.
(4) Includes 400,000 shares that Mr. Shannon has the right to acquire pursuant
to currently exercisable options.
(5) Includes 104,165 shares Mr. Brattain has a right to acquire upon exercise
of currently exercisable warrants and 50,000 shares he has the right to
acquire pursuant to the exercise of currently exercisable options.
(6) Includes 2,013,950 shares held by Perkins Capital Management, Inc.
("Perkins Capital") on behalf of clients for which Perkins Capital acts as
fiduciary; 67,000 shares that may be acquired upon exercise of currently
exercisable warrants held for clients of Perkins Capital; 600,000 shares
owned by The Perkins Opportunity Fund (the "Perkins Fund"), for which
Perkins Capital acts as investment adviser. Perkins Capital disclaims
beneficial ownership of shares held by Perkins Fund. Perkins Capital has
sole power to vote 864,000 of the shares, including the 600,000 shares
owned by the Perkins Fund, and no power to vote the remaining 1,816,950
shares. The Company has relied upon information set forth in a Schedule 13G
dated February 11, 1998 filed with the Securities and Exchange Commission
by Perkins Capital and the Perkins Fund.
(7) Includes shares that holder has the right to acquire pursuant to currently
exercisable warrants: Mr. Albers - 134,090 shares; Aaron Boxer Trust -
36,000 shares; Mr. Parker - 50,000 shares; VBS Partnership - 50,000 shares;
and Mr. Hanson - 40,000 shares.
(8) Includes 60,000 shares held by Mr. Sowada's spouse and 5,000 shares held by
Mr. Sowada as a trustee of a trust.
(9) Includes 631,750 shares which could be acquired upon currently exercisable
options and 104,165 shares which could be acquired upon exercise of
currently exercisable warrants.
ELECTION OF DIRECTORS
(Proposal #1)
Nomination
The Bylaws of the Company provide that the Board shall consist of four
members, or such other number as may be determined by the Board of Directors or
by the shareholders, and the Certificate of Designation for the Company's Series
A Convertible Preferred Stock ("Series A Preferred Stock") provides that the
Board shall consist of not more than seven members as long as any shares of
Series A Preferred Stock are outstanding. The Board of Directors has determined
that the Board will consist of five members. Four directors of the Company will
be elected at the Annual Meeting, and one seat on the Board will be left vacant
as described in the following paragraph. Nominees to the Board of Directors are
elected by a majority of the votes cast in person or by proxy, with the Common
Stock and Preferred Stock voting together as a single class.
<PAGE>
The holders of a majority of the outstanding shares of Series A Preferred
Stock, voting as a single class, are entitled to elect one director. Pursuant to
the terms of the Company's Articles of Incorporation, the holders of a majority
of the outstanding shares of Series A Preferred Stock have the right to
designate an individual for one directorship on the Company's Board of
Directors. As of the date of this Proxy Statement, the Company has not been
advised that the holders of a majority of the Series A Preferred Stock want to
designate an individual as a nominee for election as a director at the 1998
Annual Meeting. A vacancy on the Board remains for this purpose. In addition, in
connection with securing the Company's line of credit (see "Certain
Transactions"), John Albers, a principal shareholder of the Company, was granted
the right to be appointed to the Board and nominated for election at each Annual
Meeting while the Letter of Credit is still outstanding; however, he has
indicated that he does not wish to be a nominee for a directorship at this time.
All of the nominees are members of the current Board of Directors and were
elected at last year's Annual Meeting of Shareholders. If, prior to the Annual
Meeting, it should become known to the Board of Directors that any one of the
nominees will be unable or unwilling to serve as a director after the Annual
Meeting, the proxies will be voted for such substitute nominee as may be
selected by the Board of Directors. Alternatively, the proxies may, at the
discretion of the Board of Directors, be voted for such fewer number of
nominees. The Board of Directors has no reason to believe that any of the
nominees will be unable or unwilling to serve.
In the absence of other instructions, the proxies will be voted for each of
the individuals named below, each of whom the Company's Board of Directors
proposes for election as a director of the Company. If elected, such individuals
will serve until the next Annual Meeting of Shareholders and until their
successors are duly elected and qualified.
THE BOARD RECOMMENDS A VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED BELOW.
<PAGE>
Information About Nominees
The following information has been furnished to the Company by the
respective nominees for the directorships.
Director
Name Age Position Since
---- --- -------- -------
John L. Shannon, Jr. 44 Chairman of the Board, President 1993
and Chief Executive Officer
David D. Koentopf 55 Director 1993
Donald R. Brattain 57 Director 1991
Richard J. Migliori, M.D. 41 Director 1995
John L. Shannon, Jr. has served as Chairman of the Board of the Company
since May 1997 and as President and Chief Executive Officer since August 1993.
Mr. Shannon was President and Chief Executive Officer of EdenTec Corporation, a
medical device manufacturer, from May 1989 to June 1993. From November 1985 to
May 1989, Mr. Shannon served in various capacities with Threshold Venture, Inc.,
a venture capital firm, most recently as President.
David D. Koentopf has served as Chairman of the Board and Chief Executive
Officer of Command Tooling Systems, LLC, a precision machining company, since
May 1997. Mr. Koentopf was Chairman of the Board of the Company from May 1993 to
May 1997 and Interim President and Chief Executive Officer from May 1993 through
August 1993. From June 1985 to December 1992, he held various positions with
LIFETOUCH Inc., a school photography and portrait company, most recently as
President and Chief Executive Officer. Mr. Koentopf is also a director of
Intranet Solutions, Inc.
Donald R. Brattain has been President of Brattain and Associates, LLC, an
investment management company, since May 1985. Mr. Brattain is a director of
Sunrise International Leasing Corporation, Harmony Brook, Inc. and Featherlite
Mfg., Inc. Mr. Brattain was originally designated for election to the Board by
Miller, Johnson & Kuehn, Incorporated pursuant to an Underwriting Agreement
dated December 6, 1990 which arose from the Company's initial public offering.
Richard J. Migliori, M.D. began serving as Vice President of United Health
Care Corporation in March 1998. Dr. Migliori served as Chief Executive Officer
of United Health Care of New England from September 1996 through February 1998.
Dr. Migliori served as Senior Vice President and Chief Operating Officer of
Health Systems Minnesota from August 1994 to September 1996 and as Staff Surgeon
at Park Nicollet Medical Center from April 1989 until September 1996.
Board and Committee Meetings
The Company's Board of Directors met four times and took action by
unanimous written consent once during fiscal 1997. Each director attended 75% or
more of the meetings of the Board of Directors and committees on which such
director served during 1997.
The Board of Directors has established a Compensation Committee which
reviews general programs of compensation and benefits for all employees of the
Company and makes recommendations to the Board concerning such matters as
compensation to be paid to the Company's officers and directors. The
Compensation Committee consists of David D. Koentopf and Donald R. Brattain. The
Compensation Committee did not meet during 1997, but it took action by unanimous
written consent three times during 1997.
The Board of Directors has established a Stock Option Committee which
administers the Company's Stock Option Plans and the Employee Stock Purchase
Plan. The Stock Option Committee consists of David D. Koentopf and Donald R.
Brattain. The Stock Option Committee did not meet during 1997, but it took
action by unanimous written consent four times during 1997.
The Board of Directors has established an Audit Committee which provides
assistance to the Board in satisfying its fiduciary responsibilities relating to
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 auditors and the adequacy of
internal controls for compliance with corporate policies and directives. David
D. Koentopf and Donald R. Brattain are the current Audit Committee members, and
the Audit Committee met once during 1997.
The Board of Directors has not established a Nominating Committee.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all cash compensation paid or to be paid by
the Company, as well as certain other compensation paid or accrued during each
of the Company's last three fiscal years, to the Company's Chief Executive
Officer for fiscal 1997.
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------
Awards Payouts
----------------------- --------
Annual Compensation
Restricted LTIP All Other
Name and Principal Fiscal Stock Payouts Compensation
Position Year Salary ($) Bonus ($) Other ($) Awards Options ($) ($)
($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John L. Shannon, Jr. 1997 150,000 -- -- -- -- -- --
President and Chief 1996 150,000 -- -- -- -- -- --
Executive Officer 1995 150,000 -- -- -- -- -- --
</TABLE>
Option Grants During 1997 Fiscal Year
No stock options were granted during fiscal 1997 to the named executive
officer in the Summary Compensation Table. The Company has not granted any stock
appreciation rights.
Option Exercises During 1997 Fiscal Year and Fiscal Year-End Option Values
The following table provides information as to options exercised by the
executive officer named in the Summary Compensation Table during fiscal 1997 and
the number and value of options at December 31, 1997. The Company has no
outstanding stock appreciation rights.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired December 31, 1997 December 31, 1997
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable(1)
<S> <C> <C> <C> <C>
John L. Shannon, Jr. -- -- 400,000 exercisable $20,000 exercisable
0 unexercisable $0 unexercisable
</TABLE>
(1) Value is calculated on the basis of the difference between the option
exercise price and $1.875, the closing price for the Company's Common Stock
at December 31, 1997 as quoted on the Nasdaq SmallCap Market, multiplied by
the number of shares of Common Stock underlying the option.
<PAGE>
Compensation of Directors
Each director who is not an employee of the Company ("Non-Employee
Director") was paid $250 for each Board meeting attended. The Company reimburses
directors for out-of-pocket expenses incurred while attending meetings. In
addition, Non-Employee Directors are automatically granted options under the
1997 Stock Option Plan to purchase 10,000 shares of Common Stock upon initial
election and upon re-election at each annual meeting of shareholders; provided,
however, that if a Non-Employee Director is initially elected by the Board or at
a special shareholders' meeting, the number of shares shall be equal to 10,000
multiplied by the number of months from the date of the initial election to the
next annual meeting, divided by 12. The automatic options have an exercise price
per share equal to 100% of the fair market value of the Company's Common Stock
on the date of grant and are immediately exercisable. The automatic options
expire on the earlier of (i) three months after the optionee ceases to be a
director (except by death) and (ii) seven (7) years after the date of grant. In
the event of the death of a Non-Employee Director, any option granted to such
Non-Employee Director may be exercised at any time within twelve (12) months of
the death of such Non-Employee Director or on the date on which the option, by
its terms, expires, whichever is earlier.
Employment Contracts and Termination of Employment Arrangements
The Company entered into an employment agreement dated August 9, 1993 with
John L. Shannon, Jr., which agreement has been amended from time to time.
Pursuant to the terms of the agreement, as amended, Mr. Shannon's annual base
pay for 1997 was $150,000, and is $198,000 for 1998. The agreement terminates on
December 31, 1998. The agreement provides for compensation in the event Mr.
Shannon's employment with the Company is terminated under certain circumstances.
Upon termination of employment for any reason other than for cause or voluntary
resignation, Mr. Shannon will receive a severance payment equal to his base pay
for twelve (12) months following termination of employment. In addition, such
severance payment shall be payable to Mr. Shannon if the Company does not extend
Mr. Shannon's employment beyond December 31, 1998 and Mr. Shannon desires to
continue such employment. Mr. Shannon has agreed to a one-year non-compete
provision following the term of his employment agreement with the Company. If
the Company is acquired by another entity, either pursuant to a purchase of
assets or the acquisition of 50% or more of the Company's outstanding capital
stock, Mr. Shannon will be paid $250,000.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that, during fiscal year 1997, all officers, directors and
greater than ten-percent beneficial owners complied with the applicable filing
requirements except that Mr. Brattain reported one transaction late on a Form 5
that was timely filed.
Certain Transactions
In June 1997, the Company obtained a line of credit with a bank, which line
of credit expires in March 1999 and is secured by a standby letter of credit
from John Albers, a principal shareholder of the Company. Mr. Albers has a
security interest in all of the assets of the Company, subordinate only to
senior debt. As consideration, the Company will pay Mr. Albers $50,000 per year
during the term of the Company's line of credit agreement, and Mr. Albers
received a three-year warrant to purchase 25,000 shares of the Company's Common
Stock at $2.50 per share.
<PAGE>
On March 6, 1998, the Company sold 411,765 Shares of its Common Stock at
$1.70 per share to Guidant Corporation pursuant to a Stock Purchase Agreement,
pursuant to which transaction, Guidant became a principal shareholder of the
Company. The Company has supplied Guidant with laparoscopy instruments pursuant
to an agreement signed in 1992, which agreement was amended in 1997 to include
versions of the Company's proprietary bipolar instruments for the emerging
minimally invasive vascular and cardiovascular markets. Under the agreement,
Guidant's purchases from the Company totaled $597,094 in 1997 and $194,869 in
1996.
SELECTION OF INDEPENDENT AUDITORS
(Proposal #2)
The Board of Directors has approved the selection of Ernst & Young LLP
("Ernst & Young") as independent auditors to audit the financial statements of
the Company for the fiscal year ending December 31, 1998 and to perform other
appropriate accounting services. Although it is not required to do so, the Board
of Directors wishes to submit the selection of Ernst & Young to the shareholders
for ratification. The Board recommends a vote FOR ratification of Ernst & Young
as independent auditors for the fiscal year ending December 31, 1998. Unless a
contrary choice is specified, proxies solicited by the Board will be voted FOR
the ratification of Ernst & Young. The ratification of Ernst & Young as
independent auditors for the Company requires the affirmative vote of a majority
of the shares represented in person or by proxy at the Annual Meeting. If the
selection of Ernst & Young is not ratified, the Board of Directors will
reconsider its selection.
The Company has requested and expects a representative of Ernst & Young 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 on or before November 23, 1998.
OTHER BUSINESS
The Company knows of no business that will be presented for consideration
at the Annual Meeting other than as 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
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, 1997 TO
EACH PERSON WHO WAS A SHAREHOLDER OF THE COMPANY AS OF MARCH 16, 1998, UPON
RECEIPT FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN ANNUAL REPORT.
SUCH REQUEST SHOULD BE SENT TO: EVEREST MEDICAL CORPORATION, 13755 FIRST AVENUE
NORTH, MINNEAPOLIS, MINNESOTA 55441, ATTN: SHAREHOLDER INFORMATION.
By Order of the Board of Directors
John L. Shannon, Jr.
Chairman of the Board
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Proxy
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints JOHN L. SHANNON, JR. and
THOMAS F. MURPHY, and each of them, as Proxies, each with
the power of substitution, and hereby authorizes each of
them to represent and to vote, as designated below, all the
shares of voting stock of Everest Medical Corporation held
of record by the undersigned on March 16, 1998, at the
Annual Meeting of Shareholders to be held on April 28, 1998,
or any adjournment thereof.
Everest Medical Corporation
13755 First Avenue North
Minneapolis, Minnesota 55441
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1. ELECTION OF FOR all nominees listed below WITHHOLD AUTHORITY
DIRECTORS. (except as marked to the contrary below) [ ] to vote for the nominees listed below [ ]
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a line through the nominee's name)
DAVID D. KOENTOPF DONALD R. BRATTAIN
JOHN L. SHANNON, JR. RICHARD J. MIGLIORI, M.D.
2. RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
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This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted for Proposals 2 and 3 and will grant authority to vote for all nominees
named in Proposal 1 above. Please sign exactly as name appears below. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated:_______________________, 1998
____________________________________
Signature
____________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
