<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Section240.14a-11(c) or
Section240.14a-12
MEDWAVE, 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)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
MEDWAVE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Medwave, Inc. will be held on
September 25, 1997 at 3:00 p.m. (Minneapolis time), in the Auditorium of the
Lutheran Brotherhood Building, 625 Fourth Avenue, Minneapolis, Minnesota, for
the following purposes:
1. To set the number of directors at four (4).
2. To elect directors for the ensuing year.
3. To approve a 300,000 share increase in the number of shares reserved for
issuance under the Amended and Restated Stock Option Plan from 1,400,000
to 1,700,000.
4. To consider and act upon such other matters as may properly come before
the meeting and any adjournments thereof.
Only shareholders of record at the close of business on August 12, 1997, are
entitled to notice of and to vote at the meeting or any adjournment thereof.
Your vote is important. We ask that you complete, sign, date, and return the
enclosed proxy in the envelope provided for your convenience. The prompt return
of proxies will save the Company the expense of further requests for proxies.
BY ORDER OF THE BOARD OF DIRECTORS
G. Kent Archibald
President and Chief Executive Officer
Arden Hills, Minnesota
August 15, 1997
<PAGE>
MEDWAVE, INC.
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 25, 1997
PROXY STATEMENT
INTRODUCTION
Your proxy is solicited by the Board of Directors of Medwave, Inc. ("the
Company") for use at the Annual Meeting of Shareholders to be held on September
25, 1997 at the location and for the purposes set forth in the notice of
meeting, and at any adjournment thereof.
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 beneficial owners of stock, will be borne by the
Company. Directors, officers, and regular employees of the Company may, without
compensation other than their regular remuneration, solicit proxies personally
or by telephone.
Any shareholder giving a proxy may revoke it at any time prior to its use at
the meeting by giving written notice of such revocation to the Secretary of the
Company. Proxies not revoked will be voted in accordance with the choice
specified by shareholders by means of the ballot provided on the Proxy for that
purpose. Proxies which are signed but which lack any such specification will,
subject to the following, 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. 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. Abstentions, therefore, as to any proposal will have the
same effect as votes against such proposal. 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 proxy 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.
The mailing address of the principal executive office of the Company is 4382
Round Lake Road West, Arden Hills, Minnesota 55112-3923. The Company expects
that this Proxy Statement, the related proxy and notice of meeting will first be
mailed to shareholders on or about August 15, 1997.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed August 12, 1997, as the
record date for determining shareholders entitled to vote at the Annual Meeting.
Persons who were not shareholders on such date will not be allowed to vote at
the Annual Meeting. At the close of business on August 12, 1997, 4,818,753
shares of the Company's Common Stock were issued and outstanding. The Common
Stock is the only outstanding class of capital stock of the Company entitled to
vote at the meeting. Each share of Common Stock is entitled to one vote on each
matter to be voted upon at the meeting. Holders of Common Stock are not entitled
to cumulative voting rights.
- 1 -
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table provides information concerning persons known to the
Company to be the beneficial owners of more than 5% of the Company's outstanding
Common Stock as of August 12, 1997. Unless otherwise indicated, the shareholders
listed in the table have sole voting and investment powers with respect to the
shares indicated.
<TABLE>
<CAPTION>
Number of Shares Percent of
Name and Address Beneficially Owned(1) Ownership
- -----------------------------------------------------------------------
<S> <C> <C>
G. Kent Archibald 501,743(2) 9.7%
4382 Round Lake Road West
Arden Hills, MN 55112
David B. Johnson 472,037(3) 9.6%
5500 Wayzata Boulevard
8th Floor - Suite 800
Minneapolis, MN 55416
</TABLE>
(1) Shares not outstanding but deemed beneficially owned by virtue of the right
of a person to
acquire them as of August 12, 1997 or within sixty days of such date are
treated as outstanding only when determining the percent owned by such
individual and when determining the percent owned by a group.
(2) Includes options to purchase 347,500 shares of Common Stock which are
currently exercisable as of August 12, 1997 or will become exercisable
within 60 days of such date.
(3) Includes 28,500 shares held by Mr. Johnson's spouse and minor children, over
which he may be deemed to share voting and disposition power, and includes
warrants to purchase 82,658 shares of Common Stock which are exercisable as
of August 12, 1997 or will become exercisable within 60 days of such date.
- 2 -
<PAGE>
MANAGEMENT SHAREHOLDINGS
The following table sets forth the number of shares of Common Stock
beneficially owned as of August 12, 1997, by the executive officers of the
Company named in the Summary Compensation Table, by each director and nominee
for director of the Company and by all directors and executive officers as a
group. Unless otherwise indicated, the shareholders listed in the table have
sole voting and investment powers with respect to the shares indicated.
<TABLE>
<CAPTION>
Name and Address of Beneficial Number of Shares Percent of
Owner or Identity of Group Beneficially Owned(1) Ownership
- ------------------------------------------------------------------------
<S> <C> <C>
G. Kent Archibald 501,743(2) 9.7%
4382 Round Lake Road West
Arden Hills, MN 55112
Norman Dann 15,000(3) *
4382 Round Lake Road West
Arden Hills, MN 55112
Todd A. Erdmann 49,400(4) *
4382 Round Lake Road West
Arden Hills, MN 55112
Jeffrey W. Green -- *
3401 4th Avenue North
Sioux Falls, SD 57104
Jerry E. Robertson 15,000(3) *
4382 Round Lake Road West
Arden Hills, MN 55112
All current officers and 591,143(5) 11.3%
directors as a group (6 persons)
</TABLE>
* Less than 1%
(1) See footnote (1) to preceding table.
(2) See footnote (2) to preceding table.
(3) Such shares are not outstanding but may be purchased upon exercise of
options which are exercisable as of August 12, 1997 or will become
exercisable within 60 days of such date.
(4) Includes 872 shares owned by Mr. Erdmann's wife, over which he may be deemed
to share voting and investment power and an option to purchase 43,750 shares
of Common Stock which are currently exercisable or will become exercisable
within 60 days of the date hereof.
(5) Includes 448,750 shares which may be purchased upon exercise of options
which are exercisable as of August 12, 1997 or will become exercisable
within 60 days of such date.
- 3 -
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL #1 AND #2)
GENERAL INFORMATION
The Bylaws of the Company provide that the number of directors, which shall
not be less than one, shall be determined by the Board of Directors or by the
shareholders. The Board of Directors recommends that the number of directors be
set at four and that four directors be elected at the Annual Meeting. Under
applicable Minnesota law, approval of the proposal to set the number of
directors at four, as well as the election of each nominee, requires the
affirmative vote of the holders of the greater of (1) a majority of the voting
power of the shares represented in person or by proxy at the Annual Meeting with
authority to vote on such matter or (2) a majority of the voting power of the
minimum number of shares that would constitute a quorum for the transaction of
business at the Annual Meeting.
In the absence of other instructions, each proxy will be voted for each of
the nominees listed below. If elected, each nominee will serve until the next
annual meeting of shareholders and until his successor shall be elected and
qualified. If, prior to the meeting, it should become known that any of the
nominees will be unable to serve as a director after the meeting by reason of
death, incapacity or other unexpected occurrence, the proxies will be voted for
such substitute nominee as is selected by the Board of Directors or,
alternatively, not voted for any nominee. The Board of Directors has no reason
to believe that any nominee will be unable to serve.
The names and ages of all the director nominees and the positions held by
each with the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ------------------------------ --- ----------------------------------
<S> <C> <C>
G. Kent Archibald 56 President, Chief Executive
Officer, Secretary, and Director
Norman Dann(1),(2) 70 Director
Jeffrey W. Green 57 Director
Jerry E. Robertson(1),(2) 64 Director
</TABLE>
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
G. KENT ARCHIBALD is the President, Chief Executive Officer, Secretary, and
a director of the Company. He has served in these positions since October 1991.
From 1988 to 1991, Mr. Archibald was a private consultant and investor. From
1978 to 1984, Mr. Archibald was founder, president and director of AVI, Inc., a
medical device company acquired by 3M Company's Medical Products Division in
1984. After this acquisition, Mr. Archibald served until 1988 as a general
manager and engineering director for 3M. Prior to his involvement with AVI,
Inc., Mr. Archibald held engineering positions at 3M, Control Data Corporation,
and The Boeing Company, Inc. Mr. Archibald holds a B.S. degree in electrical
engineering and is a professional engineer in the State of Minnesota. He serves
as a director of RayMedica, Inc., a privately held company which is developing a
prosthetic disc nucleus.
NORMAN DANN, a director of the Company since August 1995, has extensive
experience in the medical device industry. Since 1992, Mr. Dann has been a
business consultant concentrating in the areas of venture capital, strategic
planning, marketing and product development. Mr. Dann also
- 4 -
<PAGE>
currently serves as a director of Minntech Corporation, and several private
companies. From 1980 to 1992, Mr. Dann served as an executive officer of and
consultant to Pathfinder Ventures, Inc., a venture capital firm ("Pathfinder"),
and served as a general partner of three of Pathfinder's funds and partnerships.
From 1971 to 1977, Mr. Dann served as Vice President of Sales and Marketing and
Senior Vice President of Development with Medtronic, Inc., a leading
manufacturer of cardiac pacemakers and other medical products. In 1960, Mr. Dann
founded The Dann Company, an independent representative and service organization
for medical products which was acquired by Medtronic, Inc. in 1971. Mr. Dann
holds a B.S. degree in industrial engineering from Pennsylvania State
University.
JEFFREY W. GREEN, has been a director of the Company since August 1997. Mr.
Green serves as Chairman of the Board of Hutchinson Technology, Inc. Mr. Green
co-founded Hutchinson Technology, Inc. in 1965 and served as its Chief Executive
Officer from January 1983 to May 1996. Hutchinson Technology, Inc. is the
world's leading supplier of suspension assemblies for rigid magnetic disk
drives. Mr. Green is a board member of the following privately held businesses,
ContiMed, Inc. which is developing urinary catheters and QAI Inc. which is a
retailer of local and long distance telephone services. Mr. Green is also a
board member of the following community business organizations, the Minnesota
Chamber of Commerce, the Minnesota Business Partnership, and the Industry and
Commerce Association of South Dakota.
JERRY E. ROBERTSON, Ph.D., has been a director of the Company since August
1995. Dr. Robertson also currently serves as a director of the following
publicly traded companies: Manor Care, Inc., Cardinal Health, Inc., CHOICE
Hotels International, Inc., Haemonetics Corporation, Coherent, Inc., Steris
Corporation, and Allianz Life Insurance Company of North America. Dr. Robertson
also serves as a director of Project HOPE, a nonprofit organization which
provides medical services throughout the world. From 1963 to 1994, Dr. Robertson
served in various supervisory, management, and executive positions with 3M
Company. He served as executive vice president of 3M's Life Sciences Sector and
Corporate Services from 1984 to 1994 and a member of 3M's Board of Directors
from 1990 to 1994. Prior to that time, Dr. Robertson served in various
capacities in the areas of surgical and medical products, chemical and synthetic
medicinal research, and technical planning and coordination. Dr. Robertson holds
a Ph.D. in organic chemistry.
COMMITTEE AND BOARD MEETINGS
The Company's Board of Directors has two standing committees, the Audit
Committee and the Compensation Committee. The Audit Committee is responsible for
reviewing the Company's internal control procedures and the quarterly and annual
financial statements of the Company, and reviewing with the Company's
independent public accountants the results of the annual audit. The Audit
Committee held one formal meeting during fiscal 1997. The Compensation Committee
recommends to the Board of Directors from time to time the salaries and
incentive compensation to be paid to executive officers of the Company and
administers the Company's stock option plan. The Compensation Committee held one
formal meeting during fiscal 1997. Members of both of such Committees also meet
informally from time to time throughout the year on Committee matters.
The directors often communicate informally to discuss the affairs of the
Company and, when appropriate, take formal Board action by unanimous written
consent of all directors, in accordance with Minnesota law, rather than hold
formal meetings. During fiscal 1997, the Board of Directors held five formal
meetings. Each incumbent director attended 75% or more of the total number of
meetings (held during the period(s) for which he has been a director or served
on committee(s)) of the Board and of committee(s) of which he was a member.
- 5 -
<PAGE>
DIRECTOR FEES
Directors are not currently paid fees for attending Board or Committee
meetings. Under the Company's Stock Option Plan each non-employee director
receives a non-qualified option to purchase 30,000 shares of the Company's
Common Stock upon his or her initial election as a director. As of April 30,
1997, the end of the Company's most recent fiscal year, Messrs. Norman Dann and
Jerry E. Robertson each received an option to purchase 30,000 shares at an
exercise price of $3.00 per share, vesting over a four year period. In
connection with his election to the Board in August 1997, Jeffrey W. Green
received an option to purchase 30,000 shares at an exercise price of $13 7/8 per
share, vesting over a four year period. See Proposal #3 below for a more
complete description of the automatic director option provisions of the Stock
Option Plan.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
earned or awarded to G. Kent Archibald, the President and Chief Executive
Officer and Mr. Todd Erdmann, Vice President of Sales and Marketing of the
Company during the Company's last three fiscal years ended April 30, 1995, 1996,
and 1997. No other executive officer of the Company received total salary and
bonus compensation in excess of $100,000 for fiscal 1997.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------
Securities
Underlying
Options
(# of All Other
Name and Principal Position Year Salary Bonus shares)(1) Compensation
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
G. Kent Archibald, 1997 $ 150,000 -- -- $ 4,500(2)
President and Chief Executive 1996 110,425 -- 175,000 1,312(2)
Officer 1995 54,840 -- 85,000 --
Todd A. Erdmann, 1997 $ 162,669 -- -- $ 3,206
Vice President Sales & Marketing 1996 60,288 -- 175,000 --
1995 -- -- -- --
</TABLE>
(1) Number of shares of Common Stock subject to options that were granted during
the fiscal year.
(2) Reflects the Company's contribution to executive's individual retirement
account under the Company's Simplified Employee Pension Plan.
EMPLOYMENT AGREEMENTS
Although the Company has non-compete and confidentiality agreements with its
employees, the Company does not have an employment agreement with, or key-man
life insurance on, Mr. Archibald, Mr. Erdmann, or any other individual.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No options were granted during fiscal year 1997 to the Named Executive
Officers.
- 6 -
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth certain information concerning each exercise
of stock options during the fiscal year ended April 30, 1997 by each Named
Executive Officer and the aggregated fiscal year-end value of the unexercised
options of such Named Executive Officer.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Securities Underlying In-the-Money
Options at Options at
Fiscal Year-End (#) Fiscal Year-End ($)
---------------------------- ---------------------------
Shares
Acquired on Value
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
G. Kent Archibald -0 - $ -0 - 303,750 131,250 $2,580,625 $ 984,375
Todd A. Erdmann -0 - -0 - 43,750 131,250 205,188 615,563
</TABLE>
APPROVAL OF AN INCREASE IN THE NUMBER OF
SHARES IN THE AMENDED AND RESTATED
STOCK OPTION PLAN
(PROPOSAL #3)
GENERAL
On July 10, 1997, the Board of Directors adopted, subject to shareholder
approval, a 300,000 share increase in the number of shares available in the
Amended and Restated Stock Option Plan (the "Restated Plan") from 1,400,000 to
1,700,000.
A general description of the Restated Plan is set forth below, but such
description is qualified in its entirety by reference to the full text of the
Restated Plan, a copy of which may be obtained without charge upon written
request to the Company's Chief Financial Officer.
DESCRIPTION OF PLAN
PURPOSE. The purpose of the Restated Plan is to advance the interests of
the Company and its shareholders by enabling the Company and its subsidiaries to
attract and retain persons of ability as employees, directors, and key
consultants by providing an incentive to such individuals through equity
participation in the Company and by rewarding such employees, directors and key
consultants who contribute to the achievement by the Company of its long-term
economic objectives. Assuming the shareholder's approve the increases, a total
of 1,700,000 shares of Common Stock will be reserved for options under the
Restated Plan.
TERM. Incentive stock options may be granted under the Restated Plan for a
period of ten years from the date of its adoption by the Board of Directors.
Non-qualified stock options may be granted pursuant to the Restated Plan until
it is discontinued or terminated by the Board.
ADMINISTRATION. The Restated Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee"). The Restated Plan gives
broad powers to the Committee to administer and interpret the Restated Plan,
including the authority to select the individuals to be granted options and to
prescribe the particular form and conditions of each option granted.
- 7 -
<PAGE>
ELIGIBILITY. All employees of the Company or any subsidiary are eligible to
receive incentive stock options pursuant to the Restated Plan. All employees,
directors and officers of, and consultants and advisors to, the Company or any
subsidiary are eligible to receive non-qualified stock options. As of August 14,
1997, the Company had approximately 17 employees (of which three are officers),
and three directors who are not employees.
OPTIONS. When an option is granted under the Restated Plan, the Committee,
at its discretion, specifies the option price, the type of option (either
"incentive" or "non-qualified") to be granted, and the number of shares of
Common Stock which may be purchased upon exercise of the option. The exercise
price of an incentive stock option may not be less than 100% of the fair market
value of the Company's Common Stock on the date of grant and, unless otherwise
determined by the Committee, the option price of a non-qualified option will not
be less than 85% of the fair market value of the Company's Common Stock on the
date of grant. The market value of the Company's Common Stock on August 8, 1997
was $14. The term during which the option may be exercised and whether the
option will be exercisable immediately, in stages or otherwise are set by the
Committee, but the term of an incentive stock option may not exceed ten years
from the date of grant. Optionees may pay for shares upon exercise of options
with cash, certified check or Common Stock of the Company valued at the stock's
then fair market value or some combination of cash and Common Stock. Each stock
option granted under the Restated Plan is nontransferable during the lifetime of
the optionee. Each outstanding option under the Restated Plan may terminate
earlier than its stated expiration date in the event of the optionee's
termination of employment or directorship. All outstanding options become
immediately exercisable in full upon a "change of control" which includes, (i)
the purchase of at least 60% of the Company's stock, (ii) a merger,
consolidation, sale of substantially all of the Company's assets, or liquidation
of the Company, and (iii) certain changes in the Company's Board of Directors.
In addition to other options which may be granted under the Restated Plan,
each non-employee director of the Company (excluding persons who were
non-employee directors on the date the Restated Plan was adopted by the Board)
will automatically be granted a non-qualified option for 30,000 shares of Common
Stock upon his or her initial election as a director. Each non-qualified option
expires ten years from the date of grant and will be vested over a four-year
period at an exercise price per share equal to 100% of the fair market value of
the Common Stock on the date of grant. Options to purchase 60,000 shares are
currently outstanding as a result of the non-employee director automatic option
provisions of the Restated Plan.
AMENDMENT. The Board of Directors may, from time to time, suspend or
discontinue the Restated Plan or revise or amend it in any respect; provided,
(i) no such revision or amendment may impair the terms and conditions of any
outstanding option to the material detriment of the optionee without the consent
of the optionee except as authorized in the event of merger, consolidation or
liquidation of the Company, (ii) the provisions relating to the formula grant to
non-employee directors may not be amended more than once every six months except
to conform to certain changes in the laws, and (iii) the Restated Plan may not,
without the approval of the shareholders, be amended in any manner that will (a)
materially increase the number of shares subject to the Restated Plan except as
provided in the case of stock splits, consolidations, stock dividends or similar
events, (b) change the designation of the class of employees eligible to receive
options; (c) decrease the price at which options will be granted; or (d)
materially increase the benefits accruing to optionees under the Restated Plan.
FEDERAL INCOME TAX CONSEQUENCES OF THE RESTATED PLAN. Under present law, an
optionee will not realize any taxable income on the date a non-qualified option
is granted pursuant to the Restated Plan. Upon exercise of the option, however,
the optionee must recognize, in the year of exercise, ordinary income equal to
the difference between the option price and the fair market
- 8 -
<PAGE>
value of the Company's Common Stock on the date of exercise. Upon the sale of
the shares, any resulting gain or loss will be treated as capital gain or loss.
The Company will receive an income tax deduction in its fiscal year in which
non-qualified options are exercised equal to the amount of ordinary income
recognized by those optionees exercising options, and must withhold income and
other employment related taxes on such ordinary income.
Incentive stock options granted under the Restated Plan are intended to
qualify for favorable tax treatment under Section 422 of the Internal Revenue
Code of 1986, as amended. Under Section 422, an optionee recognizes no taxable
income when the option is granted. Further, the optionee generally will not
recognize any taxable income when the option is exercised if he or she has at
all times from the date of the option's grant until three months before the date
of exercise been an employee of the Company. The Company ordinarily is not
entitled to any income tax deduction upon the grant or exercise of an incentive
stock option. Certain other favorable tax consequences may be available to the
optionee if he or she does not dispose of the shares acquired upon the exercise
of an incentive stock option for a period of two years from the granting of the
option and one year from the receipt of the shares.
RESTATED PLAN BENEFITS. The table below shows the total number of stock
options that have been received by the following individuals and groups under
the Restated Plan:
<TABLE>
<CAPTION>
Total Number of
Name and Position/Group Options Received(1)
- -------------------------------------------------------------------------------
<S> <C>
G. Kent Archibald, President, Chief Executive Officer, 435,000
Secretary, and Director
Todd A. Erdmann, Vice President Sales and Marketing 175,000
Current Executive Officer Group (3 persons) 665,000
Current Non-Executive Officer Director Group (3 persons) 90,000
Current Non-Executive Officer Employee Group (14 persons) 206,000
</TABLE>
(1) This table reflects the total stock options granted without taking into
account exercises or cancellations. Because future grants of stock options
are subject to the discretion of the Compensation Committee, the future
benefits that may be received by these individuals or groups under the
Restated Plan cannot be determined at this time, except for the automatic
option grants to outside directors as described above.
VOTE REQUIRED
Because of the employees' positive response to the Restated Plan and because
of its belief that making a greater number of shares available to employees,
directors, and advisors is an effective means to insure the future growth and
development of the Company, the Board of Directors recommends that the
shareholders approve the 300,000 share increase in the number of shares reserved
for the Amended and Restated Stock Option Plan. Approval of the increase
requires the affirmative vote of the greater of (i) a majority of the shares
represented at the meeting with authority to vote on such matter and (ii) a
majority of the voting power of the minimum number of shares that would
constitute a quorum for the transaction of business at the meeting.
INDEPENDENT PUBLIC ACCOUNTANT
Ernst & Young, LLP acted as the Company's independent public accountant for
fiscal 1997. Representatives from Ernst & Young LLP are expected to be present
at the meeting, will be given
- 9 -
<PAGE>
an opportunity to make a statement regarding financial and accounting matters of
the Company if they so desire, and will be available at the meeting to respond
to appropriate questions from the Company's shareholders.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors, and greater
than 10% shareholders ("Insiders") are required by SEC regulations 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, or
written representations from certain reporting persons that no Form 5 was
required for such persons, the Company believes that during the fiscal year
ending April 30, 1997, all filing requirements applicable to its officers,
directors, and greater than 10% beneficial owners were complied with.
OTHER BUSINESS
Management knows of no other matters to be presented at the meeting. If any
other matter properly comes before the meeting, the appointees named in the
proxies will vote the proxies in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the 1998 annual meeting of shareholders must be
received by the Company by April 30, 1998, to be includable in the Company's
proxy statement and related proxy for the 1998 annual meeting.
- 10 -
<PAGE>
FORM 10-KSB
A COPY OF THE COMPANY'S FORM 10-KSB ANNUAL REPORT FOR THE FISCAL YEAR ENDED
APRIL 30, 1997 (WITHOUT EXHIBITS) ACCOMPANIES THIS NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT. NO PORTION OF SUCH REPORT IS INCORPORATED HEREIN OR IS TO BE
CONSIDERED PROXY SOLICITING MATERIAL. THE COMPANY WILL FURNISH TO ANY
SHAREHOLDER, UPON WRITTEN REQUEST, ANY EXHIBIT DESCRIBED IN THE LIST
ACCOMPANYING THE FORM 10-KSB UPON THE PAYMENT, IN ADVANCE, OF REASONABLE FEES
RELATED TO THE COMPANY'S FURNISHING SUCH EXHIBIT(S). ANY SUCH REQUEST SHOULD
INCLUDE A REPRESENTATION THAT THE SHAREHOLDER WAS THE BENEFICIAL OWNER OF SHARES
OF MEDWAVE COMMON STOCK ON AUGUST 12, 1997, THE RECORD DATE FOR THE 1997 ANNUAL
MEETING AND SHOULD BE DIRECTED TO MR. MARK T. BAKKO, CHIEF FINANCIAL OFFICER, AT
THE COMPANY'S PRINCIPAL ADDRESS.
BY ORDER OF THE BOARD OF DIRECTORS
G. Kent Archibald
President and Chief Executive Officer
Dated: August 15, 1997
Arden Hills, Minnesota
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<PAGE>
MEDWAVE, INC.
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PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints G. KENT ARCHIBALD and MARK T. BAKKO, or
either of them acting alone, with full power of substitution, as proxies to
represent and vote, as designated below, all shares of Common Stock of Medwave,
Inc. registered in the name of the undersigned, at the Annual Meeting of the
Shareholders to be held on Thursday, September 25, 1997 at 3:00 p.m.,
Minneapolis Time, in the Auditorium of the Lutheran Brotherhood Building, 625
Fourth Avenue, Minneapolis, Minnesota, and at all adjournments of such meeting.
The undersigned hereby revokes all proxies previously granted with respect to
such meeting.
The Board of Directors recommends that you vote "FOR" the following
proposals:
<TABLE>
<S> <C> <C>
(1) SET NUMBER OF DIRECTORS AT FOUR:
/ / FOR / / AGAINST / / ABSTAIN
(2) ELECT DIRECTORS: Nominees: G. Kent Archibald, Norman Dann, Jeffrey W. Green and Jerry E. Robertson
/ / FOR all Nominees listed above / / WITHOUT AUTHORITY
(except those whose names have to vote for all nominees
been written on the line below) listed above
(To withhold authority to vote for any nominee, write that nominee's name on the line below.)
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</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
(3) APPROVE A 300,000 SHARE INCREASE IN THE MEDWAVE, INC. AMENDED AND RESTATED STOCK OPTION PLAN:
/ / FOR / / AGAINST / / ABSTAIN
(4) OTHER MATTERS. In their discretion, the appointed proxies are authorized to vote upon such other business as may
properly come before the Meeting or any adjournment.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.
Date ___________________________, 1997.
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PLEASE DATE AND SIGN ABOVE exactly as
name appears at the left, indicating,
where appropriate, official position or
representative capacity. If stock is
held in joint tenancy, each joint owner
should sign.
