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 ss. 240.14a-11(c) or ss. 240.14a-12
AETRIUM INCORPORATED
(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:
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>
AETRIUM INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
The Annual Meeting of the Shareholders (the "Annual Meeting") of Aetrium
Incorporated, a Minnesota corporation (the "Company"), will be held at the
Company's corporate headquarters at 2350 Helen Street, North St. Paul,
Minnesota, beginning at 4:00 p.m. on Tuesday, May 19, 1998, for the following
purposes:
1. To elect six (6) persons to serve as directors until the next Annual
Meeting of the Shareholders or until their respective successors shall
be elected and qualified;
2. To consider and act upon a proposal to amend the Company's Restated
Articles of Incorporation to increase the number of the Company's
authorized shares of common stock, $.001 par value, from 16,000,000 to
30,000,000 shares; and
3. To transact such other business as may properly come before the
meeting.
The record date for determination of the shareholders entitled to notice of
and to vote at the meeting and any adjournments thereof is the close of business
on March 26, 1998.
Whether or not you expect to attend the Annual Meeting in person, please
complete, sign, date and promptly return the enclosed proxy in the envelope
provided, which requires no postage if mailed in the United States.
By Order of the Board of Directors
/s/ Darnell L. Boehm
Darnell L. Boehm
CHIEF FINANCIAL OFFICER AND SECRETARY
April 1, 1998
North St. Paul, Minnesota
<PAGE>
AETRIUM INCORPORATED
2350 HELEN STREET
NORTH ST. PAUL, MINNESOTA 55109
(612) 704-1800
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
INTRODUCTION
The Annual Meeting of the Shareholders of Aetrium Incorporated, a
Minnesota corporation (the "Company"), will be held at the Company's corporate
headquarters at 2350 Helen Street, North St. Paul, Minnesota, beginning at 4:00
p.m. on Tuesday, May 19, 1998.
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 the Common Stock of the Company, will be borne by the
Company. Directors, officers and regular 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 materials to the
beneficial owners of Common Stock.
Any shareholder giving a proxy may revoke it at any time prior to its
use at the Annual Meeting either by giving written notice of such revocation to
the Secretary of the Company, by filing a duly executed proxy bearing a later
date with the Secretary of the Company, or by appearing at the Annual Meeting
and filing written notice of revocation with the Secretary of the Company prior
to use of the proxy. Proxies will be voted as specified by shareholders. Proxies
that are signed by shareholders but that lack any such specification will be
voted in favor of the proposals set forth in the Notice of Meeting and in favor
of the election as directors of the nominees for directors listed in this Proxy
Statement. Abstentions from such proposals are treated as votes against such
proposals. Broker non-votes on such proposals (i.e., a card returned by a broker
because voting instructions have not been received and the broker has no
discretionary authority to vote) are treated as shares with respect to which
voting power has been withheld by the beneficial holders of those shares and,
therefore, as shares not entitled to vote on such proposals.
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 material will be first mailed to
shareholders on or about April 1, 1998.
<PAGE>
OUTSTANDING SHARES
Only holders of Common Stock of record at the close of business on
March 26, 1998 will be entitled to vote at the Annual Meeting. On March 26, 1998
the Company had 8,800,153 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. The holders of a majority of the shares entitled to vote and
represented in person or by proxy at the Annual Meeting will constitute a quorum
for the transaction of business at the Annual Meeting. 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 meeting for the purposes
of determining a quorum, without regard to whether the card reflects an
abstention (or is left blank) or reflects a broker non-vote on a matter. Holders
of shares of Common Stock are not entitled to cumulate voting rights.
ELECTION OF DIRECTORS
NOMINATION
The Company's Bylaws provide that the number of directors that shall
constitute the Board of Directors (the "Board") shall be at least one or such
other number as may be determined by the Board or the Company's shareholders. At
the 1997 Annual Meeting of the Shareholders of the Company, six directors were
elected. By resolution of the Board adopted at the meeting held on February 18,
1998, the Board resolved to nominate the same six persons to stand for election
at the 1998 Annual Meeting of the Shareholders. Directors elected at the Annual
Meeting will hold office until the next regular meeting of shareholders or until
their successors are duly elected and qualified.
All of the nominees are currently members of the Board. The election of
each director requires the affirmative vote of a majority of the shares of
Common Stock represented in person or by proxy at the Annual Meeting, provided
that a quorum consisting of a majority of the voting power of the Company's
outstanding shares is represented either in person or by proxy at the Annual
Meeting. The Board recommends a vote FOR the election of each of the nominees
listed in this Proxy Statement. The Board intends to vote the proxies solicited
on its behalf (other than proxies in which the vote is withheld) for the
election of each of the nominees as directors. If prior to the Annual Meeting
the Board should learn that any of the nominees will be unable to serve by
reason of death, incapacity or other unexpected occurrence, the proxies will be
cast for another nominee to be designated by the Board to fill such vacancy,
unless a shareholder indicates to the contrary on his or her proxy.
Alternatively, the proxies may, at the Board's discretion, be voted for such
fewer nominees as results from such death, incapacity or other unexpected
occurrence. The Board has no reason to believe that any of the nominees will be
unable to serve.
INFORMATION ABOUT NOMINEES
The following table sets forth certain information as of March 20, 1998
which has been furnished to the Company by the persons who have been nominated
by the Board to serve as directors for the ensuing year.
<PAGE>
<TABLE>
<CAPTION>
NOMINEES DIRECTOR
FOR ELECTION AGE PRINCIPAL OCCUPATION SINCE
------------ --- -------------------- -----
<S> <C> <C> <C>
Joseph C. Levesque 53 Chairman of the Board, President and
Chief Executive Officer of the Company 1986
Darnell L. Boehm 49 Chief Financial Officer and Secretary of the Company 1986
Terrence W. Glarner 54 President of West Concord Ventures, Inc. 1990
Andrew J. Greenshields 60 President of Pathfinder Venture Capital Funds. 1986
Douglas L. Hemer 51 President of the San Diego Division of the Company 1986
Terrance J. Nagel 43 President and Chief Executive Officer
of NOW Technologies, Inc. 1996
</TABLE>
OTHER INFORMATION ABOUT NOMINEES
JOSEPH C. LEVESQUE has served as President, Chief Executive Officer and
Chairman of the Board of Directors of the Company since 1986. From 1973 to 1986,
Mr. Levesque served in various capacities and most recently as Executive Vice
President of Micro Component Technology, Inc., a manufacturer of integrated
circuit testers and test handlers. Mr. Levesque was also a director of Arden
Industrial Products, Inc., a public company, until it was acquired in August
1997. Mr. Levesque is also a director of TSI Inc., a publicly held maker of
measurement and instrumentation equipment, and serves on its compensation
committee.
DARNELL L. BOEHM has served as Chief Financial Officer, Secretary and
as a director of the Company since 1986. From December 1994 until July 1995, Mr.
Boehm had also assumed executive management responsibilities for the Company's
San Diego Division. Mr. Boehm is also the principal of Darnell L. Boehm &
Associates, a management consulting firm. From October 1988 to March 1993, Mr.
Boehm served as the Acting President of Genesis Labs, Inc., a manufacturer of
medical diagnostic products. Mr. Boehm is also a director of Rochester Medical
Corporation, a public company, and serves on the audit and compensation
committees of such company. Mr. Boehm is also a director of Versa Companies, a
privately-held company, and serves on its compensation and audit committees.
TERRENCE W. GLARNER has served as a director of the Company since March
1990. Since February 1993, Mr. Glarner has been President of West Concord
Ventures, Inc. and has been a consultant to North Star Ventures, Inc. ("North
Star"), and Norwest Venture Capital. From 1988 to February 1993, Mr. Glarner was
President of North Star and North Star Ventures II, Inc. ("North Star II"), an
affiliate of North Star. Mr. Glarner is also a director of CIMA Labs, Inc., FSI
International, Inc., Datakey, Inc. and Premis Corporation, all of which are
public companies. Mr. Glarner also serves on the compensation committee of each
of these four companies.
<PAGE>
ANDREW J. GREENSHIELDS served as a director of the Company from July
1984 to October 1985 and has served continuously as a director since October
1986. Mr. Greenshields has been President of Pathfinder Venture Capital Funds
("Pathfinder"), an investment company, since September 1980. Mr. Greenshields is
also a partner of Pathfinder Partners II and Pathfinder Partners III, the
general partners of Pathfinder Venture Capital Fund II ("Pathfinder II") and
Pathfinder Venture Capital Fund III ("Pathfinder III"), respectively, each a
Minnesota limited partnership. Pathfinder is also the management company for
Pathfinder II and Pathfinder III. Mr. Greenshields also has been a general
partner of Spell Capital Partners since November 1997. Mr. Greenshields is also
a director and member of the compensation committee of CNS, Inc., a public
company.
DOUGLAS L. HEMER has served as a director of the Company since 1986 and
has served as the President of the San Diego Division since February 1, 1997.
From May 1, 1996 until February 1, 1997 Mr. Hemer served as the Company's Chief
Administrative Officer. Mr. Hemer was a partner in the law firm of Oppenheimer
Wolff & Donnelly for over 15 years before joining the Company. Oppenheimer Wolff
& Donnelly has provided and is expected to continue to provide legal services to
the Company.
TERRANCE J. NAGEL has served as a director of the Company since June
1996. Mr. Nagel is also the President, Chief Executive Officer and co-founder of
NOW Technologies, Inc., a privately held company, a position he has held since
1988.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The business and affairs of the Company are managed by the Board, which
met or took action in writing seven times during the fiscal year ended December
31, 1997. Committees established and maintained by the Board include the Audit
Committee and the Compensation Committee.
The function of the Audit Committee is to review the Company's
financial statements, oversee the financial reporting and disclosures prepared
by management, make recommendations regarding the Company's financial controls,
and confer with the Company's outside auditors. The Audit Committee met once
during the fiscal year ended December 31, 1997. Messrs. Glarner, Greenshields
and Nagel served as members of the Audit Committee in fiscal 1997.
The responsibilities of the Compensation Committee include approving
the compensation for those officers who are also directors of the Company and
setting the terms of and grants of awards under the Company's 1993 Stock
Incentive Plan (the "1993 Plan"). The Compensation Committee met or took action
in writing 11 times during the fiscal year ended December 31, 1997. Messrs.
Glarner, Greenshields and Nagel served as members of the Compensation Committee
in fiscal 1997.
All of the Directors of the Company attended 75% or more of the
aggregate meetings of the Board and all such committees on which they served.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES. Directors of the Company receive no cash compensation
for their services as members of the Board, although their out-of-pocket
expenses incurred on behalf of the Company are reimbursed.
<PAGE>
AUTOMATIC OPTION GRANT. In September of 1996, the Board of Directors
amended the 1993 Plan to eliminate the feature providing for the automatic grant
of non-statutory stock options to non-employee directors upon the non-employee
director's initial election to the Board. Prior to this amendment to the 1993
Plan in September 1996, the 1993 Plan provided for the automatic grant of
non-statutory stock options to purchase 30,000 shares of Common Stock to
non-employee directors at an exercise price equal to the fair market value of
the Common Stock on the date of grant upon the non-employee director's initial
election to the Board. Under the 1993 Plan as amended, therefore, there are no
automatic option grants to non-employee directors, although all directors are
eligible for the grant of options under the 1993 Plan. Although the Board is not
obligated to do so, in the future the Board presently intends to grant
non-statutory stock options to purchase 30,000 shares of Common Stock to
non-employee directors at an exercise price equal to the fair market value of
the Common Stock on the date of grant upon such non-employee director's initial
election to the Board, with such options vesting in 20% increments beginning the
date of grant and on the first four anniversaries of the date of grant.
PRINCIPAL SHAREHOLDERS AND
BENEFICIAL OWNERSHIP OF MANAGEMENT
The table below sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of February 20, 1998, unless
otherwise noted, (a) by each shareholder who is known by the Company to own
beneficially more than 5% of the outstanding Common Stock, (b) by each director,
nominee and executive officer named in the Summary Compensation Table (set forth
herein), and (c) by all executive officers and directors of the Company as a
group. The address for all executive officers and directors of the Company is
2350 Helen Street, North St. Paul, Minnesota 55109.
SHARES OF COMMON STOCK BENEFICIALLY OWNED (1)
---------------------------------------------
NAME AMOUNT PERCENT OF CLASS
- ---- ------ ----------------
Joseph C. Levesque 202,198 (2) 2.3%
Darnell L. Boehm 40,034 (3) *
Daniel M. Koch 64,264 (4) *
Gerald C. Clemens 8,849 *
Terrence W. Glarner 40,330 (5) *
Andrew J. Greenshields 22,500 (5) *
Douglas L. Hemer 45,806 (6) *
James E. Serley 37,014 (7) *
Terrance J. Nagel 13,000 (8) *
Investment Advisors, Inc.
3700 First Bank Place
Box 357
Minneapolis, MN 55440 964,100 (9) 11.0%
<PAGE>
U.S. Bancorp.
601 Second Avenue South
Minneapolis, MN 55402-4302 840,390 (10) 9.6%
Kopp Investment Advisors, Inc.
6600 France Avenue South
Suite 672
Edina, MN 55435 1,628,464 (11) 18.3%
Putnam Investments, Inc.
One Post Office Square
Boston. MA 02109 661,727 (12) 7.5%
All executive officers and directors
as a group (15 persons) 592,719 (13) 6.5%
- ----------------------------
*Less than 1%.
(1) 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. 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.
(2) Includes options to purchase 105,116 shares of Common Stock exercisable
within 60 days.
(3) Includes options to purchase 18,938 shares of Common Stock exercisable
within 60 days.
(4) Includes options to purchase 32,188 shares of Common Stock exercisable
within 60 days.
(5) 22,500 shares of Common Stock exercisable within 60 days.
(6) Includes options to purchase 32,656 shares of Common Stock exercisable
within 60 days.
(7) Includes options to purchase 35,625 shares of Common Stock exercisable
within 60 days.
(8) Includes options to purchase 12,000 shares of Common Stock exercisable
within 60 days.
(9) Based solely on a Schedule 13G dated January 30, 1998, Investment
Advisers, Inc. has sole voting and dispositive power over 737,400
shares, and shared voting and dispositive power over 226,700 shares.
(10) Based solely on a Schedule 13G dated February 9, 1998, includes shares
of Common Stock held by The Regional Equity Fund, a mutual fund of
First American Investment Funds, Inc., an open-end investment company.
U.S. Bancorp (formerly First Bank System, Inc.) ("US Bancorp") has sole
voting power over 822,400 shares and shared voting power over 17,590
shares.
<PAGE>
US Bancorp has sole dispositive power over 809,800 shares and shared
dispositive power over 17,590 shares.
(11) Based solely on a Schedule 13G dated February 9, 1998, includes
1,398,464 shares of Common Stock held of record by clients of Kopp
Investment Advisers, Inc. ("KIA"), for which KIA has shared dispositive
power, 210,000 shares of Common Stock over which KIA has sole
dispositive power, 403,000 shares over which KIA has sole voting power
and 20,000 shares over which LeRoy C. Kopp has sole voting and
dispositive power. Mr. LeRoy C. Kopp owns 100% of Kopp Holding Company
which owns 100% of KIA.
(12) Based solely on a Schedule 13G dated January 16, 1998, includes 640,999
shares of Common Stock held by Putnam OTC & Emerging Growth Fund, a
mutual fund of Putnam Investment Management, Inc. ("PIM"). Putnam
Investments, Inc. ("PI"), a wholly-owned subsidiary of Marsh & McLennan
Companies, Inc. ("MMC"), wholly owns two registered investment
advisers: PIM (which is the investment adviser to the Putnam family of
mutual funds) and The Putnam Advisory Company, Inc. ("PAC"). PIM, PAC
and PI have shared voting and dispositive over 661,727 shares.
(13) Includes options to purchase 324,924 shares of Common Stock exercisable
within 60 days.
EXECUTIVE COMPENSATION AND OTHER BENEFITS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the cash and non-cash compensation for
each of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company whose salary and bonus exceeded $100,000 in the fiscal
year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
---------------------------- COMPENSATION
NAME AND SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS($)(1) OPTIONS(#) COMPENSATION($)(2)
- ------------------ ---- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Joseph C. Levesque 1997 $189,000 $ 80,714 -- $ 4,500
PRESIDENT AND CHIEF 1996 187,385 51,640 200,000 4,750
EXECUTIVE OFFICER 1995 174,769 86,975 -- (3) 5,680
Douglas L. Hemer (4) 1997 $125,000 $ 54,750 -- $ 4,662
PRESIDENT-- 1996 80,769 27,500 52,500 --
SAN DIEGO DIVISION 1995 -- -- -- --
James E. Serley (5)
VICE PRESIDENT AND 1997 $ 99,800 $ 39,521 15,000 $ 3,908
GENERAL MANAGER -- 1996 98,669 27,151 -- 3,811
IC HANDLING PRODUCTS 1995 45,000 21,025 60,000 --
Daniel M. Koch 1997 $123,400 $ 62,440 -- $ 4,569
<PAGE>
VICE PRESIDENT-- 1996 122,431 21,108 7,500 4,413
WORLDWIDE SALES 1995 114,769 63,105 -- (3) 5,463
Gerald C. Clemens
VICE PRESIDENT-- 1997 $112,800 $ 32,261 -- $ 4,139
RELIABILITY TEST 1996 111,669 32,068 -- 4,178
PRODUCTS 1995 103,000 44,033 -- 3,799
- -------------------------
</TABLE>
(1) Cash bonuses and sales commissions for services rendered have been
included as compensation for the year earned, even though a portion of
such bonuses and sales commissions were actually paid in the following
year. Such bonuses and sales commissions were payable pursuant to each
executive's individual bonus arrangement, which is based upon the
achievement of certain individual and Company goals.
(2) Represents amounts of matching contributions made by the Company to the
officers' respective 401(k) accounts.
(3) The options received in 1996 by each of Messrs. Levesque and Koch
represent options originally granted to such individuals in 1995 that
were repriced in September 1996.
(4) Mr. Hemer joined the Company in May 1996.
(5) Mr. Serley has resigned from the Company effective March 31, 1998.
OPTION GRANTS
The following table summarizes option grants during fiscal 1997 to the
executive officers named in the Summary Compensation Table and the potential
realizable value of the options held by such person at December 31, 1997.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM (1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#)(2) FISCAL YEAR ($/SHARE) DATE 5% 10%
- ----- ------------- ---- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
James E. Serley 15,000 4.2% $16.6250 5/20/02 $68,898 $152,246
- ------------------------------
</TABLE>
(1) These amounts represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises are dependent upon the
future performance of the Company's Common Stock, overall market
conditions and the executive's continued involvement with the Company.
The amounts represented in this table will not necessarily be achieved.
(2) All options shown reflect the amendment and repricing of existing
options. The 1993 Plan is administered by the Compensation Committee
(the "Committee"). The options set forth above vest in 1/48th
increments on the 20th of each month commencing on June 20, 1997. In
the event a "change in control" of the Company occurs, then, if
approved by the Committee, all
<PAGE>
outstanding options will become immediately exercisable in full and
will remain exercisable for the remainder of their terms, regardless of
whether the participant remains in the employ or service of the Company
or any subsidiary. For purposes of the 1993 Plan, a "change in control"
of the Company will be deemed to have occurred upon (i) a sale or other
transfer of substantially all of the assets of the Company to an entity
that is not controlled by the Company, (ii) a merger or consolidation
to which the Company is a party if, after such merger or consolidation,
the Company's shareholders do not beneficially own more than 80% of the
combined voting power of the surviving corporation's outstanding voting
securities, (iii) any person becoming the beneficial owner of 40% or
more of the combined voting power of the Company's outstanding
securities, or (iv) a change in the composition of the Board such that
the individuals constituting the Board on the effective date of the
1993 Plan cease for any reason to constitute at least a majority of the
Board (with exceptions for individuals who are nominated or otherwise
approved by the current Board). The payment of an option exercise price
may be made either in cash or, subject to the discretion of the
Committee, in shares of Common Stock.
OPTION EXERCISES
The following table summarizes option exercises during fiscal 1997 and
the number and value of options held by the executive officers named in the
Summary Compensation Table as of December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND 1997 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
VALUE UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES ACQUIRED ON REALIZED DECEMBER 31, 1997(#) AT DECEMBER 31, 1997($)(1)
--------- --------------------- --------------------------
NAME EXERCISE (#) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph C. Levesque 75,000 $1,101,978 80,012 109,375 $688,616 $880,468
Douglas L. Hemer 15,000 179,063 32,656 27,344 280,272 211,916
James E. Serley 7,500 110,156 28,125 24,375 217,969 188,906
Daniel M. Koch 20,000 220,000 28,750 7,500 310,156 70,781
Gerald C. Clemens 35,000 364,063 --- --- --- ---
</TABLE>
(1) Based on the December 31, 1997 closing price of the Common Stock of
$18.00.
(2) The "Value Realized" and the "Value of Unexercised In-the-Money
Options" amounts are calculated based on the excess of the market value
of the Common Stock on the date of exercise or December 31, 1997,
respectively, over the exercise price. The exercise price of options
may be paid in cash or in shares of the Company's Common Stock valued
at fair market value on the day prior to the date of exercise. In
addition, at the discretion of the Compensation Committee the exercise
price of options granted may be paid 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.
<PAGE>
EMPLOYMENT AGREEMENT
Pursuant to an employment agreement, effective April 1, 1986, between
the Company and Mr. Levesque, the President and Chief Executive Officer of the
Company, Mr. Levesque is entitled to receive six months salary as severance pay
in the event of an involuntary termination (including by reason of death or
disability but excluding termination for cause). In the event of voluntary
termination, the Company may elect to pay Mr. Levesque severance pay for any
portion of the employment period remaining after notice of termination in lieu
of continued employment.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors approves the
compensation for executive officers who are also directors of the Company and
acts on such other matters relating to their compensation as it deems
appropriate. During fiscal 1997, Mr. Levesque, the Company's Chairman of the
Board, President and Chief Executive Officer, Mr. Boehm, the Company's Chief
Financial Officer and Secretary, and Mr. Hemer, the President of the Company's
San Diego Division, were the only executive officers who were also directors of
the Company. The Compensation Committee consists of at least two non-employee
directors and meets at least once per year. The members of the Compensation
Committee during fiscal 1997 were Messrs. Glarner, Greenshields and Nagel. Mr.
Levesque, as the Company's President and Chief Executive Officer, establishes
the compensation of all executive officers who are not also directors of the
Company. The Compensation Committee also administers, with respect to all
eligible recipients, the Company's stock option plans and determines the
participants in such plans and the amount, timing and other terms and conditions
of awards under such plans.
COMPENSATION PHILOSOPHY AND OBJECTIVES. The Compensation Committee is
committed to the general principle that overall executive compensation should be
commensurate with performance by the Company and the individual executive
officers, and the attainment of predetermined corporate goals. The primary
objectives of the Company's executive compensation program are to:
* Reward the achievement of desired Company and individual
performance goals.
* Provide compensation that enables the Company to attract and
retain key executives.
* Provide compensation opportunities that are linked to the
performance of the Company and that directly link the
interests of executives with the interests of shareholders.
The Company's executive compensation program provides a level of
compensation opportunity that is competitive for companies in comparable
industries and of comparable development, complexity and size. In determining
compensation levels, the Compensation Committee considers a number of factors,
including Company performance, both separately and in relation to other
companies competing in the Company's markets, the individual performance of each
executive officer, comparative compensation surveys concerning compensation
levels and stock grants at other companies, historical compensation levels and
stock awards at the Company, and the overall competitive environment for
executives and the level of compensation necessary to attract and retain key
executives. Compensation levels may be greater or less than competitive levels
in comparable companies based upon factors such as annual and long-term Company
performance and individual performance.
<PAGE>
EXECUTIVE COMPENSATION PROGRAM COMPONENTS. The Company's executive
compensation program consists of base salary, bonuses and long-term incentive
compensation in the form of stock options. The particular elements of the
compensation program are discussed more fully below.
BASE SALARY. Base pay levels of executives, including the Chief
Executive Officer, are determined by the potential impact of the individual on
the Company and its performance, the skills and experiences required by the
position, the individual performance and potential of the executive and the
Company's overall performance. Base salaries for executives are evaluated and
adjusted annually. A portion of each executive officer's base salary (including
the Chief Executive Officer) is determined based on a formula related to Company
revenue, and may be increased or decreased during the year based upon actual
Company revenue levels.
BONUSES. The Company also may pay bonuses to executive officers,
including the Chief Executive Officer, as part of its executive compensation
program. The purpose of the cash bonus component of the executive compensation
program is to provide a direct financial incentive for executives who help the
Company achieve certain Company financial objectives and who meet individual
performance goals. In fiscal 1997, bonuses were awarded to senior executives
based upon achievement of an individual's personal goals as well as the
achievement of corporate profitability goals. The Chief Executive Officer was
awarded a bonus for 1997 due to the initiation and completion of two significant
acquisitions and the achievement of overall operating goals including
profitability, revenue growth and expense control. The Compensation Committee
has determined that potential bonuses in fiscal 1998 will range from 0% to 50%
of base salary (excluding sales commissions) for all executive officers,
including the Chief Executive Officer.
LONG-TERM INCENTIVE COMPENSATION. Stock options are used to enable key
executives to participate in a meaningful way in the success of the Company and
to link their interests directly with those of the shareholders. The number of
stock options granted to executives, including the Chief Executive Officer, is
based upon a number of factors, including base salary level and how such base
salary level relates to those of other companies in the Company's industry, the
number of options previously granted and individual and Company performance
during the year.
SECTION 162(m). The Omnibus Reconciliation Act of 1993 added Section
162(m) to the Internal Revenue Code of 1986, as amended (the "Code"), limiting
corporate deductions to $1,000,000 for certain compensation paid to the chief
executive officer and each of the four other most highly compensated executives
of publicly held companies. The Company does not believe it will pay
"compensation" within the meaning of Section 162(m) to such executive officers
in excess of $1,000,000 in the foreseeable future. Therefore, the Company does
not have a policy at this time regarding qualifying compensation paid to its
executive officers for deductibility under Section 162(m), but will formulate a
policy if compensation levels ever approach $1,000,000.
CHIEF EXECUTIVE OFFICER COMPENSATION COMMITTEE
Joseph C. Levesque Terrence W. Glarner
Andrew J. Greenshields
Terrance J. Nagel
<PAGE>
STOCK PERFORMANCE GRAPH
In accordance with the rules of the Securities and Exchange Commission,
the following performance graph compares the yearly cumulative total shareholder
return on the Company's Common Stock on the Nasdaq National Market since the
date of the Company's initial public offering, completed in August 1993, with
the yearly cumulative total return over the same period of the Nasdaq Stock
Market (U.S. Companies) Index and of a self-determined group of peer companies
(the "Peer Group"). The Peer Group consists of Electroglas Inc., Aseco
Corporation, Teradyne Inc., Cohu, Inc. and Micro Component Technology, Inc. The
comparison assumes the investment of $100 in Common Stock, the Nasdaq Stock
Market (U.S. Companies) Index and the Peer Group at the beginning of the period
and assumes reinvestment of all dividends.
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Aug-93 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
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ATRM $100.00 $115.71 $131.43 $342.85 $227.15 $308.56
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Peers $100.00 $ 99.30 $106.69 $168.98 $151.30 $184.91
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Nasdaq $100.00 $108.64 $106.20 $150.19 $184.73 $226.68
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<PAGE>
PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK OF THE COMPANY
PROPOSAL NO. 2
INTRODUCTION
At present, the Restated Articles of Incorporation of the Company
authorize the issuance of 16,000,000 shares of Common Stock, $.001 par value. As
of March 26, 1998, 8,800,153 shares of the Company's authorized shares of Common
Stock were issued and outstanding and 7,199,847 shares were authorized but
unissued. Of the 7,199,847 shares of Common Stock that were authorized and
unissued, 1,008,309 shares are reserved for issuance pursuant to outstanding
options and warrants of the Company. Accordingly, as of March 26, 1998, there
were 6,191,538 shares of Common Stock available for issuance or sale by the
Company other than those issuable as described above.
The Board of Directors has unanimously proposed that the Company
amend its Restated Articles of Incorporation to increase the authorized number
of shares of common stock from 16,000,000 to 30,000,000 shares and that this
amendment should be presented to the Company's shareholders at the Annual
Meeting. If this amendment is approved by the shareholders, 20,191,538 shares of
Common Stock will be authorized for issuance and unreserved immediately after
the Annual Meeting. The number of shares of undesignated shares authorized under
the Restated Articles of Incorporation, which is currently 2,000,000 shares,
will not be changed by this amendment. At the Annual Meeting, the shareholders
of the Company are being asked to approve this amendment.
PURPOSE AND EFFECTS OF THE PROPOSED AMENDMENT
The Board of Directors believes that it is necessary and desirable to
increase the number of shares of Common Stock the Company is authorized to issue
to give the Board additional flexibility to declare stock splits or dividends,
adopt additional future employee benefit plans and make acquisitions through the
use of stock. The Company's Asset Purchase Agreement with Web Technology Inc.
dated March 20, 1998, providing for the Company's purchase of the assets of the
equipment business of Web Technology Inc., and scheduled to close April 1, 1998,
provides for issuance of 900,000 shares of Common Stock as part of the purchase
price thereunder. The Board of Directors has no other immediate plans,
understandings or agreements or commitments to issue additional shares of Common
Stock for any of these purposes, except as permitted or required by outstanding
options and additional options which may be granted from time to time under the
1993 Plan. The flexibility inherent in having the authority to issue shares of
Common Stock will, in the opinion of the Board of Directors, be advantageous to
the Company in any negotiations involving the issuance of such stock. If the
shareholders failed to approve the proposed amendment and authorization of the
additional shares of Common Stock were deferred until a specific need existed,
the time and expense required in connection with obtaining the necessary
shareholder action for each proposed issuance could deprive the Company of
flexibility that the Board of Directors believes will result in the most
efficient use of such shares. If this proposed amendment is adopted, no
additional action or authorization by the Company's shareholders will be
necessary prior to the issuance of such additional shares, unless required by
applicable law or regulation, or unless deemed desirable or advisable by the
Board of Directors.
If adopted, the proposal will not, by itself, have any effect on the
rights of holders of presently issued and outstanding shares of Common Stock.
Under the Company's Restated Articles of
<PAGE>
Incorporation, the shareholders of the Company do not have preemptive rights
with respect to the Common Stock. Thus, should the Board of Directors elect to
issue additional shares of Common Stock, existing shareholders would not have
any preferential rights to purchase such additional shares of Common Stock.
Although the Board of Directors is proposing this amendment to the
Company's Restated Articles of Incorporation for the reasons stated above, the
amendment could, under certain circumstances, discourage or make more difficult
an attempt by a person or organization to gain control of the Company by tender
offer or proxy contest, or to consummate a merger or consolidation with the
Company after acquiring control, and to remove incumbent management, even if
such transactions were favorable to the shareholders of the Company. Issuance of
shares of Common Stock in a private placement to a person sympathetic to
management and opposed to any attempt to gain control of the Company could make
a change in control of the Company more difficult. Accordingly, this proposal to
amend the Company's Restated Articles of Incorporation may be deemed (under
certain circumstances which may or may not occur) to be an anti-takeover
measure. However, the proposal is not being presented as an anti-takeover
measure.
PROPOSED RESOLUTION
A resolution in substantially the following form will be submitted to
the shareholders at the Annual Meeting:
RESOLVED, That the first sentence of Section 6.1 in Article 6 of the
Company's Restated Articles of Incorporation is amended in its entirety
to read as follows:
"The aggregate number of shares which the corporation shall
have the authority to issue shall be Thirty-Two Million
(32,000,000), $.001 par value per share, of which Thirty
Million (30,000,000) shall be common voting shares and Two
Million (2,000,000) shall be undesignated shares."
RESOLVED FURTHER, That the appropriate officers of the Company are
authorized and directed to make, execute, acknowledge and file such
certificates and documents as may be required by law with respect to
the foregoing resolutions.
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors recommends a vote FOR approval of this
amendment. The affirmative vote of the holders of a majority of shares of Common
Stock of the Company present in person or by proxy at the Annual Meeting,
provided a quorum is present at the meeting in person or by proxy, is necessary
for approval. Unless a contrary choice is specified, proxies solicited by the
Board of Directors will be voted FOR the approval of this amendment.
SELECTION OF AUDITORS
The Company does not intend to request that the shareholders approve
the selection of Price Waterhouse LLP, independent public accountants, for
fiscal 1998. The Company has requested and expects, however, a representative of
Price Waterhouse LLP to be present at the Annual Meeting. Such representatives
will have an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
<PAGE>
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and all
persons who beneficially own more than 10% of the outstanding shares 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 the
Company's Common Stock. Executive officers, directors and greater than 10%
beneficial owners are also required to furnish the Company with copies of all
Section 16(a) forms they file. Based upon a review of the copies of such reports
furnished to the Company and written representations, the Company believes that
for the year ended December 31, 1997, none of its directors, officers or
beneficial owners of greater than 10% of the Company's Common Stock failed to
file on a timely basis the form required by Section 16 of the Exchange Act,
except that the Form 3s for the following persons were filed after their
respective due dates: Kenneth R. Lee, John J. Pollock, Lee A. Schafer and Steven
R. Weisbrod.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented in the proxy
materials relating to the next Annual Meeting must be received by the Company at
its principal executive offices on or before December 1, 1998.
OTHER BUSINESS
The Company knows of no business that 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.
<PAGE>
MISCELLANEOUS
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT
ON FORM 10-K (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED DECEMBER 31,
1997, TO EACH PERSON WHO WAS A SHAREHOLDER OF THE COMPANY AS OF MARCH 26, 1998,
UPON RECEIPT FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN ANNUAL
REPORT. SUCH REQUEST SHOULD BE SENT TO: AETRIUM INCORPORATED, 2350 HELEN STREET,
NORTH ST. PAUL, MINNESOTA 55109; ATTN.: SHAREHOLDER INFORMATION.
By Order of the Board of Directors
/s/ Joseph C. Levesque
Joseph C. Levesque
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: April 1, 1998
North St. Paul, Minnesota
<PAGE>
AETRIUM INCORPORATED
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph C. Levesque and Darnell L. Boehm,
and each of them, as Proxies, each with full power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all the
shares of Common Stock of Aetrium Incorporated held of record by the undersigned
on March 26, 1998, at the Annual Meeting of Shareholders to be held on May 19,
1998, or any adjournment thereof.
1. ELECTION OF DIRECTORS.
[ ] FOR ALL [ ] WITHHOLD ALL [ ] FOR ALL (Except nominee(s)
written below)
______________________________
JOSEPH C. LEVESQUE ANDREW J. GREENSHIELDS
DARNELL L. BOEHM DOUGLAS L. HEMER
TERRENCE W. GLARNER TERRANCE J. NAGEL
2. PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
<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 PROPOSAL 2 AND 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
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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