SPECIAL NOTICE & INVITATION
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On October 19, 1995
Waters Instruments, Inc.
2411 Seventh Street, NW
Rochester, MN 55901
<PAGE>
Your Personal Invitation. . . .
September 28, 1995
Dear Shareholder:
We are pleased to notify you that the Annual Meeting of
Shareholders of WATERS INSTRUMENTS, INC. (the Company) will be
held on Thursday, October 19, 1995, at 3:00 p.m., local time, at
Waters Instruments, Inc., Team Room, 2411 Seventh Street,
Northwest, Rochester, Minnesota for the following purposes:
1. To set the number of directors at three (3).
2. To elect directors for the ensuing year.
3. To approve the Company's 1995 Stock Option Plan.
4. To transact such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on August
31, 1995 as the record date for determination of shareholders
entitled to notice of and to vote at such Annual Meeting.
OUR BOARD OF DIRECTORS AND I CORDIALLY INVITE YOU TO ATTEND THIS
MEETING. WHETHER OR NOT YOU PLAN TO BE PERSONALLY PRESENT AT THE
MEETING, HOWEVER, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
POSTAGE-PAID PROXY POSTCARD AND RETURN IT PROMPTLY. IF YOU
LATER DECIDE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME
BEFORE IT IS EXERCISED.
Sincerely,
Jerry W. Grabowski
Jerry W. Grabowski
President, CEO, CFO, Secretary, and
Treasurer
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
October 19, 1995
PROXY STATEMENT
OUTSTANDING SHARES, VOTING RIGHTS, AND GENERAL MATTERS
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Waters Instruments,
Inc. (the Company) of proxies to be voted at the Annual Meeting
of Shareholders of the Company to be held on October 19, 1995.
Holders of Common Stock of record at the close of business on
August 31, 1995 will be entitled to vote at the Meeting. Each
share of Common Stock entitles the holder to one vote;
shareholders are not entitled to cumulate their votes in the
election of directors. As of August 31, 1995 there were
1,462,271 shares of Common Stock issued and outstanding and
entitled to vote at the Meeting.
If the enclosed proxy is properly executed and returned to the
Company, all shares represented thereby will be voted as directed
thereby; if no direction is made, the proxy will be voted in
favor of the proposals set forth in the Notice of Annual Meeting
and in favor of the number and slate of directors proposed by the
Board of Directors. 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 or other Officer of
the Company or by filing a new written proxy with an Officer of
the Company. Personal attendance at the Meeting is not, by
itself, sufficient to revoke a proxy unless written notice of the
revocation or a subsequent proxy is delivered to an Officer
before the revoked or superseded proxy is used at the Meeting.
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
Common Stock entitled to vote shall constitute a quorum for the
transaction of business. If a broker returns a non-vote proxy,
indicating lack of authority to vote on such 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 with respect to such matter. If a
shareholder abstains from voting as to any matter, then the
shares held by such shareholder shall be deemed to be 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.
Proxies which are signed but which lack any such specification
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 mailing address of the principal executive offices of the
Company is: PO Box 6117, Rochester, MN 55903. The Company
expects that this Proxy Statement and the related Proxy and
Notice of Meeting will first be mailed to shareholders on or
about September 28, 1995.
<PAGE>
ELECTION OF DIRECTORS (Proposals #1 and #2)
The Bylaws of the Company provide that the number of directors
shall be determined by the shareholders at each Annual Meeting
provided that the number shall be not less than three nor more
than eleven. The Board of Directors recommends the election of
three directors at this Annual Meeting. Under applicable
Minnesota law, approval of the proposal to set the number of
directors at three 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. Each proxy will be voted for or against such number or
not voted at all as directed by the shareholder.
Each proxy will be voted for the nominees specified below unless
the proxy withholds a vote for one or more of such nominees. So
far as is known to the Board, each of such nominees intends to
serve if elected. In the presently unforeseen circumstance that
a nominee is unable or unwilling to serve, proxies will be voted
for such substitute nominee (if any) as may be determined by the
Board of Directors prior to the Meeting. Directors hold office
from the date of their election or reelection until the next
Annual Meeting and until their successors are elected. Nominees
to the Board of Directors are elected by a majority of the votes
cast for the election of Directors at the Annual Meeting.
NOMINEES FOR DIRECTORS
The following table provides certain information with respect to
the nominees for Directors of the Company. All of the three
Directors listed are presently serving as Directors of the
Company, and all were elected by the shareholders at the last
Annual Meeting:
<TABLE>
<S> <C> <C> <C>
Name Age Position with Year in Which
the Company and First Became
Principal Occupation a Director
Jerry W.
Grabowski 43 President and Chief
Executive Officer,
Chief Financial Officer,
Secretary and Treasurer
and Director of the Company . 1993
Charles G.
Schiefelbein 56 Director. Chairman of the
Board of Computer Petroleum
Corporation (CPC) in St. Paul,
Minnesota. 1986
Stewart D.
Siebens 49 Chairman of the Board of
Directors of the Company.
President of SDS Enterprises,
Inc. in Irving, Texas. 1986
</TABLE>
<PAGE>
BUSINESS EXPERIENCE OF NOMINEES:
The following information is presented as to each nominee's
business experience during the past five years and his
directorships of other publicly held corporations:
Mr. Grabowski has been President and Chief Executive Officer and
a member of the Board of Directors of the Company since August
1993. He was additionally elected to serve as Chief Financial
Officer, Secretary, and Treasurer in December 1994. From 1988
until joining the Company, he was employed as General Manager of
Onan Power/Electronics Division.
Mr. Schiefelbein has been Chairman of Computer Petroleum
Corporation (CPC), a public company that provides electronic
energy price and news information, since 1979. From 1979, when
he founded CPC, to 1991, Mr. Schiefelbein served as Chairman and
Chief Executive Officer. He is also currently a director of
Research, Inc. and CPC.
Mr. Siebens was named Chairman of the Board of the Company on
October 24, 1990. He has been President of SDS Enterprises, Inc.
in Irving, Texas since 1987.
BOARD AND COMMITTEE MEETINGS
The Board held five meetings during fiscal year 1995. Each
Director whose reelection is proposed and who served as a member
of the Board during fiscal year 1995 attended 100% of the
aggregate number of meetings of the Board and of the Committees
of which he is a member.
The Company's Board of Directors has formally designated three
Committees: an Audit Committee, a Compensation Committee, and a
Stock Option Committee.
The Audit Committee, consisting of Messrs. Schiefelbein and
Siebens for fiscal year 1995, generally engages in oversight of
the structure of the Company's internal controls, reviews the
selection of the independent auditors, reviews the annual audit
plan, and engages in oversight of the Company's financial
reporting. However, the responsibility to review and approve
internal accounting and controls, quarterly financials,
registration statements, reports to the SEC, financial press
releases, cost of conduct, and any legal/ethics audit except as
these matters have a direct bearing on the duties stated above,
remain the responsibility of the full Board of Directors. During
fiscal year 1995, the Audit Committee met three times, and the
full Board of Directors met once with the Company's independent
auditors to review the Company's financial statements, accounting
policies, and practices. Each Committee member was present at
the meetings.
The Compensation Committee, which consisted of Messrs.
Schiefelbein and Siebens for fiscal year 1995, generally assists
the Board of Directors in exercising its authority and
discharging its responsibilities concerning the hiring,
compensation, and termination of employment of the officers and
senior managers of the Company. During fiscal year 1995, the
Compensation Committee met twice and each Committee member was
present.
<PAGE>
The Stock Option Committee consists of two or more members of the
Board of Directors or other persons who are appointed by and
serve at the pleasure of the Board and who are "disinterested"
persons {a person who, among other things, has not been, at any
time within one year prior to such person's appointment to the
Committee, and who will not be, while serving on such Committee,
granted or awarded options under the 1995 Stock Option Plan (the
"Plan").} During fiscal year 1995, the Board delegated to its
Compensation Committee all of the authority of the Board under
the Plan under certain circumstances.
PRINCIPAL SHAREHOLDERS
The following table provides information concerning the only
persons known to the Company to be the beneficial owners of more
than 5% of the Company's outstanding Common Stock as of August
31, 1995:
<TABLE>
<S> <C> <C>
Name and Address Shares Percent
of Beneficial Owner Beneficially Owned of Class
Woodland Investment Company
3007 Skyway Circle North,
Irving, TX 75038 172,000 (1) 11.8%
Charles G. Schiefelbein
5075 Norwest Center,
Minneapolis, MN 55402 194,603 13.3%
Kohl Gift Trust
3007 Skyway Circle North,
Irving, TX 75038 90,000 (2) 6.2%
George F. Waters
825 Third Street, SW.,
Rochester, MN 55902 97,944 6.7%
Stewart D. Siebens
3007 Skyway Circle North,
Irving, TX 75038 73,800 5.0%
<FN>
<F1>
According to the most current Schedule 13D filed by Woodland
Investment Company and information provided by it, the power to
vote and dispose (or to direct the vote or disposition) of such
shares is shared with Atlee M. Kohl and Nicole F. Kohl who are
each thereby deemed to be beneficial owners of such shares.
<F2>
According to the most current Schedule 13D filed by Kohl Gift
Trust, the power to vote and dispose (or to direct the vote or
disposition) of such shares is shared with Atlee M. Kohl who is
deemed to be a beneficial owner of such shares.
</FN>
</TABLE>
MANAGEMENT SHAREHOLDINGS
The following table sets forth the beneficial ownership of the
Company's Common Stock by (i) each Director and nominee of the
Company, (ii) the named executive officer in the Summary
Compensation Table, and (iii) all Directors and Executive
Officers as a group, as of August 31, 1995. Except as otherwise
indicated, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock owned
by them.
<PAGE>
<TABLE>
<S> <C> <C>
Name of Director or No. of Shares Percent
Number of Persons in Group Beneficially Owned of Class
(1) (1)
Jerry W. Grabowski 59,000 (2) 4.0%
Charles G. Schiefelbein 194,603 13.3%
Stewart D. Siebens 73,800 5.0%
Officers and Directors
as a Group (4 persons) 327,503 (2) 22.4%
<FN>
<F1>
Under rules of the Securities and Exchange Commission, an
individual is also deemed to beneficially own shares which are
not outstanding but which the individual has the right to acquire
as of August 31, 1995 or within 60 days of such date. Such
shares not outstanding but so deemed beneficially owned are
treated as outstanding when determining the percent of the class
owned by the particular individual and when determining the
percent owned by the group.
<F2>
Includes 50,000 shares which may be purchased pursuant to options
held by Mr. Grabowski which are or will become exercisable within
60 days of August 31, 1995.
</FN>
</TABLE>
EXECUTIVE COMPENSATION
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 fiscal year 1995 to the named executive
officer as of June 30, 1995:
<TABLE>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-Term
Compensation
Annual Compensation Awards Payouts
Name &
Principal Fiscal
Position Year Salary $ Bonus $ Other Restricted
# Options LTIP All Other
(2) (3)
Compensation
(4)
Jerry W.
Grabowski 1995 119,414 48,912 15,400 - 50,000(1)
- 2,776
President
& CEO 1994 106,578 - - - - 1,545
<FN>
<F1>
Mr. Grabowski was granted an Incentive Stock Option in 1993 in
conjunction with the Company's 1985 Incentive Stock Option Plan
to purchase 50,000 shares of Waters Instruments, Inc. common
stock. Such option was terminated in 1995 and a new option to
purchase 50,000 shares was granted under the 1995 Stock Option
Plan which is subject to shareholder approval (Proposal #3). See
"Report on Repricing of Options."
<F2>
Represents incentive compensation payments for the performance
periods ending June 30, 1995 and June 30, 19
<F3>
Represents temporary living expenses paid by the Company.
<F4>
Represents insurance premiums paid by the Company.
</FN>
</TABLE>
<PAGE>
OPTION GRANTS DURING FISCAL YEAR 1995
The following table provides information regarding stock options
granted during fiscal year 1995 to the named executive officer in
the Summary Compensation Table.
<TABLE>
<S> <C> <C> <C> <C>
Name Options % of Total Exercise or
Granted Options Granted Base Price Expiration
in Fiscal Year Per Share Date
Jerry W
Grabowski 50,000(1) 100% $2.1275 5-10-2005
<FN>
<F1>
This ten-year option was granted at fair market value and is
immediately fully vested. See "Report on Repricing of Options."
</FN>
</TABLE>
OPTION EXERCISES DURING FISCAL YEAR 1995 AND FISCAL YEAR-END
OPTION VALUES
The named executive officer in the Summary Compensation Table did
not exercise any options during fiscal year 1995.
<TABLE>
<S> <C> <C> <C> <C>
Name Shares Value # of Unexercised Value of
Acquired Realized Options at Unexercised
on Exercise June 30, 1995
Options at
Exercisable/ June 30, 1995
Unexercisable Exercisable/
Unexercisable
(1)
Jerry W. 0 $0 50,000 exercisable $56,125
exercisable
Grabowski 0 $0 0 unexercisable
$0 unexercisable
<FN>
<F1>
Value is calculated on the basis of the difference between the
option exercise price and the closing sale price for the
Company's Common Stock at June 30, 1995 as quoted on the NASDAQ
National Market System, multiplied by the number of shares of
Common Stock underlying the option.
</FN>
</TABLE>
REPORT ON REPRICING OF OPTIONS
In 1993 the Company granted Mr. Grabowski an incentive stock
option to purchase 50,000 shares of Company Common Stock pursuant
to the Company's 1985 Incentive Stock Option Plan. The ten-year
option was exercisable at $2.50 and vested with respect to 50% of
the shares on August 18, 1994, 30% on August 18, 1995, and the
remaining 20% on August 18, 1996. Such option was terminated in
May 1995, and the Company granted Mr. Grabowski a new ten-year
option to purchase 50,000 shares of Company Common Stock, at an
exercise price of $2.1275, the fair market value on the date of
grant. The option was fully vested on the date of grant and was
granted pursuant to the 1995 Stock Option Plan, which is subject
to shareholder approval (See Proposal #3). The Board of
Directors of the Company terminated the first option and granted
a new option in recognition of the substantial management changes
Mr. Grabowski has implemented since he became President and the
need to connect Mr. Grabowski's commitment to the success of
those efforts to the Board's commitment to improving stock values
for the shareholders generally.
<PAGE>
COMPENSATION OF DIRECTORS
Each non-employee Director receives an annual retainer fee of
$4,000, $350 for each attended quarterly meeting of the Board,
$50 for each breakfast or dinner meeting of the Board, $150 for
each attended meeting of a Committee on which he serves and a fee
of $500 for each time he provides additional services as a
special consultant to the Company, plus, in each case,
reimbursement of travel expenses. Directors also receive a
monthly stipend of $50 to cover miscellaneous travel, telephone,
and meal expenses associated with Board responsibilities. The
Chairman of the Board of the Company receives an additional
annual retainer of $12,000, paid in monthly installments, for the
capacity in which he serves.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company has entered into an employment agreement with Jerry
W. Grabowski, which provides for compensation in the event Mr.
Grabowski's employment with the Company is terminated under
certain circumstances. Upon termination of employment initiated
by the Company's Board of Directors, Mr. Grabowski will have the
right to receive an amount equal to twelve-months' base salary
and the cost of all existing heath/medical and other benefit
plans enjoyed by Mr. Grabowski on the effective date of
termination (subject to the terms of the plans) or substantially
the same benefits if the terms of a plan exclude non-employees.
Mr. Grabowski will also be entitled to receive on August 31, in
the year immediately following the Performance Period in which a
termination occurred, the incentive compensation he would have
earned had his employment not been terminated, in an amount
proportionate to the number of months that he was employed by the
Company prior to such termination. In the event Mr. Grabowski's
employment with the Company is terminated within one year of a
change in control, then upon such termination in addition to the
Company's obligation stated above, the Company will pay Mr.
Grabowski an additional amount equal to the base salary, then in
effect, for one year.
APPROVAL OF 1995 STOCK OPTION PLAN (Proposal #3)
In May 1995, the Company's Board adopted, subject to shareholder
approval, the Company's 1995 Stock Option Plan (the "Plan") and
reserved 150,000 shares of its Common Stock for issuance upon the
exercise of options to be granted pursuant to the terms of the
Plan. The 1995 Plan replaces the Incentive Stock Option Plan and
Nonqualified Stock Option Plan adopted in 1985. (The 1985
Incentive and Nonqualified Stock Option Plans both expired in
1995.) Incentive Stock Options granted under the 1995 Plan are
intended to qualify under Section 422 of the Internal Revenue
Code (or any successor provision it relates to as "incentive"
stock options which can provide favorable tax treatment to the
optionees.) Under the IRC requirements, shareholder approval of
the Plan must be obtained before options under the Plan may
receive the favorable tax treatment. The adoption of the Plan,
therefore, is subject to shareholder approval and, accordingly,
the Plan is being presented to the shareholders for their
approval. Nonqualified stock options may also be granted under
the Plan.
A general description of the basic features of the Plan is
presented below, but such description is qualified in its
entirety by reference to the full text of the Plan, a copy of
which may be obtained without charge upon written request to Roni
E. Henry, the Company's Assistant Secretary.
Purpose. The purpose of the Plan is to promote the success of
the Company and its affiliates (Parent or Subsidiary of the
Company) by facilitating the employment and retention of
competent persons and by providing performance incentives to
officers, directors, employees, and consultants upon whose
efforts the success of the Company and its affiliates depends.
<PAGE>
Term. The term of the Plan expires on May 10, 2005, ten years
from the date the Plan was approved by the Board of Directors;
however, in the event of a sale by the Company of substantially
all of its assets, or in the event of a merger, exchange,
consolidation or liquidation of the Company, the Board of
Directors is authorized to terminate the Plan.
Administration. The Plan is administered by the Board of
Directors, or to the extent empowered by the Board, by a
Committee consisting of two or more disinterested Board members,
as defined in Rule 16b-3. The Plan gives broad powers to the
Board to administer and interpret the Plan, including the
authority to select the director, officer, employee, consultant,
or advisor of the Company or of an Affiliate to be granted
options and prescribe the form and conditions of the option
(which may vary from optionee to optionee). If the Board so
directs, a stock option committee of two or more members of the
Company's Board of Directors or other persons who are appointed
by and serve at the pleasure of the Board and who are
"disinterested" persons within the meaning of Rule 16b-3, may
administer the Plan.
Eligibility. No person may be granted an incentive stock option
under the Plan unless the Optionee is an employee of the Company
or of an affiliate. No person may be granted a nonqualified
stock option under the Plan unless the Optionee is a director,
officer, employee, consultant, or advisor of the Company or of an
affiliate. Consultants or advisors will not be eligible to
receive stock options under the Plan unless such consultant or
advisor renders bona-fide services to the Company or affiliate
and such services are not in connection with the offer or sale of
securities in a capital-raising transaction.
Shares Reserved. A total of 150,000 shares of authorized but
unissued shares of Common Stock of the Company have been reserved
for issuance pursuant to the exercise of options to be granted
under the Plan.
Options. When an option is granted under the Plan, the Board or
Committee in its discretion specifies the number of shares of
Common Stock which may be purchased upon exercise of the option
and the option price. The option price set by the Board may not
be less than 100% of the fair market value of the Company's
Common Stock on the date of grant. For each incentive stock
option granted, if an optionee owns stock possessing more than
ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of its parent or any
subsidiary, the option price per share of an incentive stock
option granted to such optionee cannot be less than one hundred
ten percent (110%) of the fair market value of the option stock
per share on the date of the grant.
No incentive or nonqualified stock option will be transferable,
in whole or in part, by an optionee other than by will or by the
laws of descent and distribution and, during an optionee's
lifetime, an incentive or nonqualified stock option may be
exercised only by an optionee. If an optionee attempts any
transfer of any option granted under the Plan during the
optionee's lifetime, such transfer will be void and the
nonqualified or incentive stock option, to the extent not fully
exercised, will terminate.
In the event of an increase or decrease in the number of shares
of Common Stock of the Company resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any
other increase or decrease in the number of shares of common
stock effected without receipt of consideration by the Company,
the number of shares of Option Stock reserved by the Plan and the
number of shares of Option Stock covered by each outstanding
incentive and nonqualified stock option and the price per share
of such Option Stock will be equitably adjusted by the Board or
the Committee, as the case may be, to reflect such change.
Additional shares of Option Stock which may be credited by such
adjustment will be subject to the same restrictions as are
applicable to the shares of Option Stock with respect to which
the adjustment relates.
<PAGE>
Amendment. The Board of Directors may from time to time, insofar
as the law permits, suspend, or discontinue the Plan or revise it
in any respect; provided, however, that no such revision or
amendment, except as is specifically authorized, will impair the
terms and conditions of any option which is outstanding on the
date of such revision or amendment to the material detriment of
an Optionee without the consent of such Optionee.
Notwithstanding the foregoing, no such revision or amendment
will: (i) materially increase the number of shares of Common
Stock subject to the Plan, (ii) change the designation of the
class of employees eligible to receive options, (iii) decrease
the price at which options may be granted, or (iv) materially
increase the benefits accruing to Optionees under the Plan,
unless such revision or amendment is approved by the
Shareholders. Furthermore, the Plan may not, without the
approval of the Shareholders, be amended in any manner that will
cause incentive stock options to fail to meet the requirements of
"Incentive Stock Options" as defined in Section 422 of the
Internal Revenue Code.
Federal Income Tax Consequences of the Plan. Options granted
pursuant to the Plan are intended to qualify for favorable tax
treatment to the optionee under Section 422 of the Internal
Revenue Code. Under Section 422, an employee realized no taxable
income when the option is granted. If the employee has at all
times from the date of grant until three months before the date
of exercise been an employee of the Company, the employee will
realize no taxable income when the option is exercised. If the
employee does not dispose of shares acquired upon exercise for a
period of two years from the granting of the option and one year
after receipt of the shares, the employee may sell the shares and
report any gain as long-term capital gain. No deduction is
allowable to the Company for federal income tax purposes in
connection with either the grant or exercise of an incentive
stock option.
If the employee should dispose of the shares prior to the
expiration of the above-described two and one-year periods, the
employee will be deemed to have received compensation taxable as
ordinary income in the year of the early sale in an amount equal
to the lesser of (i) the difference between the fair market value
of the shares on the date of exercise and the option price of the
shares and (ii) the difference between the sale price of the
shares and the option price of the shares. In the event of such
an early sale, the Company will be entitled to a tax deduction
equal to the amount recognized by the employee as ordinary
income.
New Plan Benefits. Because the options will only be granted upon
the approval of the Company's Stock Option Committee, in its
discretion, benefits under this Plan are not determinable.
Vote Required. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS APPROVE THE 1995 STOCK OPTION PLAN. The affirmative
vote is 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.
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 (10%) of the 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 the period from July 1,
1994 through June 30, 1995, all filing requirements applicable to
its officers, directors, and greater than ten-percent beneficial
owners were complied with.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of McGladrey & Pullen, LLP, Certified Public
Accountants, served as the Company's independent accountants for
the fiscal year ended June 30, 1995. Such firm is expected to be
designated by the Board of Directors of the Company to audit the
Company's accounts for the new fiscal year to end June 30, 1996.
Such action is customarily taken at the Annual Meeting of the
Board preceding the Annual Meeting of Shareholders.
Representatives of McGladrey & Pullen, LLP will be present at the
Annual Meeting of Shareholders and will be afforded the
opportunity to make a statement, if they desire to do so, and
will be available to respond to appropriate questions.
SHAREHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING
Any appropriate proposal submitted by a shareholder of the
Company and intended to be presented at the next Annual Meeting
in October 1996 must be received by the Company by May 24, 1996
to be includable in the Company's proxy statement and related
proxy for the October 1996 Meeting.
ANNUAL REPORT & FORM 10-KSB
A COPY OF THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS FOR THE
FISCAL YEAR ENDED JUNE 30, 1995 ACCOMPANIES THIS PROXY STATEMENT.
NO PORTION OF THE ANNUAL REPORT IS INCORPORATED HEREIN AND NO
PORTION IS TO BE CONSIDERED PROXY SOLICITING MATERIAL. A COPY OF
THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS AND
THE SCHEDULES THERETO, FOR THE FISCAL YEAR ENDED JUNE 30, 1995
WILL BE SENT TO THOSE SHAREHOLDERS WHO REQUEST A COPY BY SENDING
A LETTER ADDRESSED TO RONI HENRY, ASSISTANT SECRETARY, WATERS
INSTRUMENTS, INC., PO BOX 6117, ROCHESTER, MN 55903.
OTHER BUSINESS
The Board of Directors does not know of any matters to be brought
before the Meeting other than those described above. If,
however, any other matters properly come before the Meeting, it
is the intention of the persons named in the enclosed proxy to
vote such proxy in accordance with their judgment on such
matters.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
To management's knowledge, no Director, Director Nominee,
Officer, or ten percent Shareholder or any affiliates of such
persons had in 1994 or 1995 or currently has any material
interest, direct or indirect, in any transaction in which the
Company was involved.
SOLICITATION
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 stock, will be borne by the Company and such
solicitation will be effected solely by mail, provided that it is
expected that banks, brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward soliciting
material to their principals and to obtain authorization for the
execution of proxies and will be reimbursed for their reasonable
expenses incurred in connection therewith. If it should become
necessary, Directors, Officers, or regular employees of the
Company may, without compensation other than their regular
compensation, solicit proxies personally or by telephone.
<PAGE>
BY ORDER OF THE BOARD OF DIRECTORS,
Jerry W. Grabowski
Jerry W. Grabowski
President, CEO, CFO, Secretary, and Treasurer
September 28, 1995
<PAGE>
WATERS INSTRUMENTS, INC.
Corporate Offices
2411 Seventh Street, NW., PO Box 6117, Rochester, MN 55903
PROXY
This PROXY is solicited on behalf of the Board of Directors. The
undersigned hereby appoints JERRY W. GRABOWSKI and STEWART D.
SIEBENS, or either of them, with full power of substitution, as
proxies to vote for me and in my name with like effect as if I
were personally present and voting at the Annual Meeting of
Shareholders of Waters Instruments, Inc., called to be held at
3:00 PM, Thursday, October 19, 1995, local time, at Waters
Instruments, Inc., Team Room, 2411 Seventh Street, Northwest,
Rochester, Minnesota and at all adjournments thereof, hereby
revoking any proxy or proxies heretofore given:
The Board of Directors recommends that you vote "FOR" each
proposal.. Check One Box Only for each Proposal
1. NUMBER OF DIRECTORS. Proposal to establish the number of
directors at three(3)
FOR, AGAINST ABSTAIN
2. ELECTION OF DIRECTORS.
Nominees: Jerry W. Grabowski, Charles G. Schiefelbein, Stewart D.
Siebens
FOR all nominees except those written in this box.
WITHHOLD AUTHORITY to vote for all nominees
3. 1995 STOCK OPTION PLAN. To approve the Company's 1995 Stock
Option Plan.
FOR AGAINST ABSTAIN
4. OTHER MATTERS. Upon such other business as may properly come
before the Meeting.
FOR AGAINST ABSTAIN
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no direction
is made as to a particular proposal, this proxy will be voted for
such proposal.
Please sign exactly as your name appears above. Executors,
administrators, trustees, guardians, etc. so indicate when
signing. For stock held in Joint Tenancy, each joint owner
should sign.
Signature Date ,
1995
Signature, if held jointly Date ,
1995
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY.
YOU MAY FAX YOUR PROXY TO: 1-800-962-2880, Ext. 700.
Please check here if you plan on attending the annual meeting.
Please check here if you would like to receive a copy of the
Form 10-KSB
