<PAGE>
SPECIAL NOTICE & INVITATION
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On October 23, 1997
WATERS INSTRUMENTS, INC.
(d/b/a WATERS CORPORATION)
2411 Seventh Street, NW
Rochester, MN 55901
<PAGE>
Your Personal Invitation. . . .
September 23, 1997
Dear Shareholder:
We are pleased to notify you that the Annual Meeting of Shareholders f
WATERS INSTRUMENTS, INC. (the Company) (d/b/a Waters Corporation) will
be held on Thursday, October 23, 1997, at 3:00 p.m., local time, at
Waters Corporation, Team Room, 2411 Seventh Street, Northwest,
Rochester, 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 the Company's 1997 Associates Stock Purchase 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 29, 1997 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
President & CEO
Waters Corporation 2411 Seventh Street, NW. Rochester, Minnesota 55901
507-288-7777
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
October 23, 1997
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) (d/b/a Waters Corporation) of proxies to be
voted at the Annual Meeting of Shareholders of the Company to
be held on October 23, 1997. Holders of Common Stock of
record at the close of business on August 29, 1997 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 29, 1997 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, 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 nonvote 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 55903-6117.
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 23, 1997.
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 four directors at this Annual Meeting. Under applicable
Minnesota law, approval of the proposal to set the number of
directors at four 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
Directors listed are presently serving as Directors of the
Company, and all were elected by the shareholders at the last
Annual Meeting, except Mr. Franta who the Board elected on May
12, 1997 and is proposing to stand for election as a nominee
at the Annual Meeting of Shareholders on October 23, 1997:
<TABLE>
<S> <C> <C>
<C>
Name Age Position with the Company Year in
and Principal Occupation Which
First Became a
Director William R. Franta 55
Director. Business Development
& Technology Consultant in
Minneapolis, Minnesota.
1997 Jerry W. Grabowski 45
President, Chief Executive Officer
and Director of the Company.
1993 John A. Grimstad 47
Secretary and General Counsel
of the Company. Vice President
of Fredrikson & Byron, P. A.
in Minneapolis, Minnesota
1996 Charles G.
Schiefelbein 58 Director. President of Capital
Growth Services of Minneapolis,
Minnesota.
19
86
</TABLE>
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. Franta has been a Business Development & Technology
Consultant since April 1996. From January 1987 to April 1996
he served as Senior Vice President of Network Systems
Corporation. He is a Director of HEI, Inc. in Victoria,
Minnesota.
Mr. Grabowski has been President and Chief Executive Officer
and a member of the Board of Directors of the Company since
August 1993. He additionally served as Chief Financial
Officer, Secretary, and Treasurer from December 1994 until
October 1996. From 1988 until joining the Company, he was
employed as General Manager of Onan Power/Electronics
Division.
Mr. Schiefelbein, from September 1996 to the present, is
President of Capital Growth Services, a Consulting and
Investment Company, based in Minneapolis, Minnesota. From
1979 until August 1996, Mr. Schiefelbein was Chairman of
Computer Petroleum Corporation (CPC), a public company that
provides electronic energy price and news information. 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.
Mr. Grimstad has been, since 1984, a Vice President and
shareholder of Fredrikson & Byron, P.A., the Company's
counsel, and serves as a Director and Secretary or Assistant
Secretary of several closely-held manufacturing companies.
<PAGE>
BOARD AND COMMITTEE MEETINGS
The Board held five meetings during fiscal year 1997. Each
Director whose reelection is proposed and who served as a
member of the Board during fiscal year 1997 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 Company does not
have a nominating committee.
The Audit Committee, consisting of Mr. Schiefelbein and Mr.
Stewart Siebens (who served as Chairman of the Board and
a Director through August 1997) for fiscal year 1997,
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
oversees 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 1997, the Audit Committee met
twice, 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. Mr.
Franta, Mr. Schiefelbein, and Mr. Grimstad will serve on the
Audit Committee for fiscal year 1998.
The Compensation Committee, which for fiscal year 1998 will
consist of Mr. Franta, Mr. Grimstad, and Mr. Schiefelbein,
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 1997, the Compensation Committee met twice and
each Committee member (Mr. Grimstad, Mr. Schiefelbein, and Mr.
Siebens) was present at both meetings.
Until November 1996, the Stock Option Committee has consisted
of two or more members of the Board of Directors or other
persons who were appointed by and served at the pleasure of
the Board and who were "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 years 1995, 1996 and 1997, the Board
delegated to its Compensation Committee all of the authority
of the Board under the Plan under certain circumstances. For
Fiscal Year 1998, the Board anticipates reassigning the duties
of the Stock Option Committee to the Board of Directors.
<PAGE>
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 29, 1997:
<TABLE>
<S> <C> <C>
Name and Address Number of Shares
of Beneficial Owner Beneficially Owned Percent of
Class
Charles G. Schiefelbein
2920 Norwest Center,
Minneapolis, MN 55402 194,603 (1)
12.8%
Woodland Investment Company
3007 Skyway Circle North,
Irving, TX 75038 172,000 (2)
11.3%
Kohl Gift Trust
3007 Skyway Circle North,
Irving, TX 75038 90,000 (3)
5.9% </TABLE>
[FN]
(1) Includes 60,000 shares of stock held in the name
of Peace Shalom Foundation, an organization of which Mr.
Schiefelbein is a Director and Vice President.
(2) 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, each of whom are thereby deemed to be beneficial
owners of such shares.
(3) 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>
<PAGE>
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 29, 1997. 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.
<TABLE>
<S> <C> <C>
Name of Director or Number of Shares Percent
Number of Persons in Group Beneficially Owned(1) of Class
(1) Charles G. Schiefelbein 194,603 (2)
12.8% Jerry W. Grabowski 59,000 (3)
3.9% John A. Grimstad 5,000
0.3% William R. Franta 0
0.0% Officers and Directors as a Group
(5 persons) 263,603 (4) 17.4%
</TABLE>
[FN]
(1) 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 29, 1997 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.
(2) Includes 60,000 shares of stock held in the name of
Peace Shalom Foundation, of which Mr. Schiefelbein is a
Director and Vice President.
(3) 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 29, 1997.
(4) Includes 55,000 shares which may be purchased pursuant
to options held by Officers which are or will become
exercisable within 60 days of August 29, 1997. </FN>
<PAGE>
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 1997 to the named executive
officer as of June 30, 1997:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards Payouts
Name & Fiscal Salary Bonus Other Restricted # Options LTIP
All
Principal Year $ $(1) $ Stock Granted Payouts
Other
Position Awards $
Compen
sati
on $
(2)
Jerry W.
Grabowski 1997 143,780 61,000 - - - -
4,632
President & CEO
1996 139,521 13,446 - - - -
4,420
1995 119,414 48,912 15,400 - 50,000 -
2,776
</TABLE>
[FN]
(1) Represents incentive compensation payment.
(2) Represents insurance premiums and 401(k) match paid
by the Company.
</FN>
<PAGE>
OPTION GRANTS DURING FISCAL YEAR 1997
There were no stock options granted during fiscal year 1997 to
the named executive officer in the Summary Compensation
Table. OPTION EXERCISES DURING FISCAL YEAR 1997 AND FISCAL
YEAR-END OPTION VALUES
<TABLE>
<S> <C> <C> <C>
The named executive officer in the Summary Compensation Table
did not exercise any options during fiscal year 1997.
Name Shares # of Unexercised Value of
Unexercised
Acquired Options at Options at
on Value June 30, 1997 June 30, 1997
Exercise Realized Exercisable/ Exercisable/
Unexercisable Unexercisable (1)
Jerry W.
Grabowski 0 $0 50,000 exercisable $143,625 exercisable
0 $0 0 unexercisable $ 0
unexercisable
</TABLE>
[FN]
(1) 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, 1997 of $5.00 as
quoted on the NASDAQ National Market
System, multiplied by the number of shares of Common Stock
underlying the option.
</FN>
<PAGE>
COMPENSATION OF DIRECTORS
Each non-employee, non-officer 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. Such Directors also receive a monthly stipend of
$50 to cover miscellaneous travel, telephone, and meal
expenses associated with Board responsibilities.
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 health/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" (most recently
ended fiscal year) 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.
<PAGE>
1995 STOCK OPTION PLAN
In May 1995, the Company's Board adopted, and shareholders
subsequently approved in October 1995, the Company's
1995 Stock Option 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, both of which expired in
1995. Incentive Stock Options granted under the 1995 Plan are
intended to qualify under Section 422 of the Internal Revenue
Code (IRC)(or any successor provision it relates to as
"incentive" stock options which can provide favorable tax
treatment to the optionees.)
APPROVAL OF 1997 ASSOCIATES STOCK PURCHASE PLAN (Proposal #3)
In December 1996, the Company's Board adopted, subject to
shareholder approval, the Company's 1997 Associates Stock
Purchase Plan (the "ASP Plan"). Under the IRC requirements,
shareholder approval of the ASP Plan must be obtained within
12 months after the Board's adoption date. Accordingly, the
ASP Plan is being presented to the shareholders for their
approval. A general description of the basic features of the
ASP Plan is presented below, but such description is qualified
in its entirety by reference to the full text of the ASP Plan,
a copy of which may be obtained without charge
upon written request to Roni E. Henry, the Company's Assistant
Secretary.
<PAGE>
Purpose. The primary purpose of the ASP Plan is to provide an
opportunity for Eligible Associates (defined below) of the
Company to become shareholders of the Company, thereby
providing them with an incentive to remain in the Company's
employ, to improve operations, to increase profits and to
contribute more significantly to the Company's success.
Term. The ASP Plan terminates on December 31, 2006,
provided that the Board of Directors may extend the term of
the ASP Plan for such period as the Board, in its sole
discretion, deems advisable. In the event the shareholders
fail to approve the ASP Plan within twelve (12) months after
the ASP Plan is adopted by the Board, this ASP Plan shall not
become effective and shall have no force and effect,
participation in the ASP Plan shall immediately cease and all
outstanding options shall immediately be canceled. No shares
of stock shall be issued to any Participant for any Phase
(defined below) unless and until the shareholders approve the
ASP Plan within such twelve-month period.
Phases. The ASP Plan shall be carried out in one or more
Phases of twelve (12) months each. Unless otherwise
determined by the Administrator, in its discretion, Phases
shall commence on January 1 of each fiscal year during the
term of the ASP Plan, with the first Phase commencing January
1, 1997. No two Phases shall run concurrently.
Administration. The ASP Plan is administered by the Board of
Directors or by a Committee appointed by the Board.
The Board or the Committee may, in its sole discretion,
authorize the officers of the Company to carry out the day-to-
day operation of the ASP Plan. In its sole discretion, the
Board may take such actions as may be taken by the
Administrator, in addition to those powers expressly reserved
to the Board under this ASP Plan.
Eligibility. Eligible Associate means any associate
(including executives) who, as determined on or immediately
prior to an enrollment period, is (i) a United States employee
of the Company or one of its Subsidiaries, (ii) is regularly
scheduled to work more than 20 hours per week, and (iii) has
been employed by the Company or the Subsidiary at
least six (6) consecutive months prior to the commencement
date of a Phase. There are currently approximately 130
Eligible Associates.
<PAGE>
Shares Reserved. A total of 200,000 shares of Common Stock
(or the number and kind of securities to which said 200,000
shares may be adjusted by any future action by the
shareholders of the Company), which may be authorized
but unissued shares of the Company, have been reserved for
issuance upon the exercise of options to be granted under the
ASP Plan. Shares subject to the unexercised portion of any
lapsed or expired option may again be subject to option under
the ASP Plan.
Payroll Deduction. Each Eligible Associate who elects to
participate in any Phase of the ASP Plan completes an
enrollment form and designates a percentage (between 1% and
10%) of his or her compensation to be withheld during the
Phase; provided the payroll deduction equals or exceeds $10
per paycheck. The Eligible Associate may increase,
decrease or discontinue payroll deductions for subsequent
Phases by completing a change of election form.
Options. A Participant who has elected to participate in the
ASP Plan and who is employed by the Company or a Subsidiary as
of the commencement date of a Phase shall be granted an option
as of such date to purchase that number of whole shares of
Common Stock determined by dividing the total amount to be
credited to the Participant's
account by the option price per share set forth below,
provided, however, that the Participant shall not be entitled
to purchase more than 2,000 shares in any Phase, or such other
maximum number of shares as the Administrator may establish
from time to time.
The option price per share for Common Stock shall be the lower
of: (i) eighty-five percent (85%) of the closing price for a
share of the Company's Common Stock as reported on the NASDAQ
Stock Market or on an established securities exchange as of
the commencement date of the Phase; or (ii) eighty-five
percent
(85%) of the closing price for a share of the Company's Common
Stock as reported on the NASDAQ Stock Market or on an
established securities exchange as
of the termination date of the Phase.
If the Company's Common Stock is not so reported in the NASDAQ
Stock Market or upon an established securities exchange, the
option price shall equal the lesser of (i) eighty-five percent
(85%) of the average of the closing "bid" and "asked" prices
quoted by a recognized specialist in the Company's Common
Stock as of the commencement date of
the Phase, or if there are no such quoted "bid" and "asked"
prices on such date, on the next preceding date for which
there are quotes, and (ii) eighty-five percent (85%) of the
average of the closing "bid" and "asked" prices quoted by a
recognized specialist in the Company's Common Stock as of the
termination date of the Phase, or if there are no such quoted
"bid" and "asked" prices on such date, on the next preceding
date for which there are such quotes.
<PAGE>
Transferability of Options. Options granted under any Phase
of the ASP Plan shall not be transferable and shall be
exercisable only by the Participant during the Participant's
lifetime. Neither payroll deductions granted to a
Participant's account, nor any rights with regard to the
exercise of an option or to receive Common Stock under any
Phase of the ASP Plan may be assigned, transferred, pledged or
otherwise disposed of in any way by the Participant. Any such
attempted assignment, transfer, pledge, or other disposition
shall be null and void and without effect, except that the
Company may, at its option, treat such act as an election to
withdraw.
Withdrawal and Discontinuation. A Participant may request a
withdrawal or discontinuance of all accumulated and
any further payroll deductions credited to such Participant's
bookkeeping account by completing a change of election
form and filing such form with the Administrator. The
Participant's request shall be effective as of the beginning
of the next payroll period immediately following the date that
the Administrator receives the Participant's properly
completed change of election form. For a withdrawal, as soon
as administratively feasible after the end of that Phase, all
payroll deductions credited to a bookkeeping account for the
Participant will be paid to such Participant and no further
payroll deductions will be made during that Phase or any
future Phase unless the Participant completes a new Plan
enrollment form. Partial withdrawals of payroll deductions
are not permitted. For a discontinuation, the Company will
discontinue making further payroll deductions for that Phase
and all future phases.
Adjustments. In the event of an increase or decrease in the
number of outstanding shares of Common Stock of the Company or
in the event the Common Stock is changed into or exchanged for
a different number or kind of shares of stock or other
securities of the Company or another corporation by reason of
a reorganization, merger, consolidation, divestiture
(including a spin-off), liquidation, recapitalization,
reclassification, stock dividend, stock split, combination of
shares, rights offering or any other change in the corporate
structure or shares of the Company, the Board, in its sole
discretion, shall adjust the number and kind of securities
subject to and reserved under the ASP Plan and, to prevent the
dilution or enlargement of rights of those Eligible Associates
to whom options have been granted, shall adjust the number and
kind of securities subject to such outstanding options and,
where applicable, the exercise price per share for such
securities. Amendment and Termination. The ASP Plan may be
terminated at
any time by the Board of Directors, provided that, except as
permitted in the preceding paragraph, no such termination
shall take effect with respect to any options then
outstanding. The Board may, from time to time, amend the ASP
Plan as it may deem proper and in the best interests
of the Company or as may be necessary to comply with Code
Section 423, as amended, and the regulations thereunder,
or other applicable laws or regulations; provided, however, no
such amendment shall, without the consent of a Participant,
materially adversely affect or impair the right of a
Participant with respect to any outstanding option; and
provided, further, that no such amendment shall: (a) increase
the total number of shares for which options may be granted
under the Plan (except as provided in the preceding
paragraph); (b) modify the group of Subsidiaries whose
associates may be eligible to participate in the ASP Plan or
materially modify any other requirements as to eligibility for
participation in the Plan; or (c) materially increase the
benefits accruing to Participants under the ASP Plan; without
the approval of the Company's shareholders, if such approval
is required for compliance with Code Section 423, as amended,
and the regulations thereunder, or other applicable laws or
regulations.
Plan Benefits Table. Because benefits and amounts are not
determinable under the ASP Plan, no plan benefits table
is provided.
<PAGE>
Vote Required. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS APPROVE THE 1997 ASSOCIATES
STOCK PURCHASE PLAN. The affirmative vote 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 is
required for approval of the ASP Plan.
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, 1996 through June 30, 1997, 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, 1997. 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, 1998. 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 1998 ANNUAL MEETING
Any appropriate proposal submitted by a shareholder of the
Company and intended to be presented at the next Annual
Meeting in October 1998 must be received by the Company by
June 25, 1998 to be includable in the Company's proxy
statement and related proxy for the October 1998 Meeting.
ANNUAL REPORT & FORM 10-KSB
A copy of the Company's Annual Report to shareholders for the
fiscal year ended June 30, 1997 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, 1997 will be
sent to those shareholders who request a copy by sending a
letter addressed to Roni Henry, Assistant Secretary, Waters
Corporation, PO Box 6117, Rochester, MN 55903-6117.
<PAGE>
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 1996 or 1997 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.
BY ORDER OF THE BOARD OF DIRECTORS,
Jerry Grabowski
President & Chief Executive Officer September 23, 1997
Proxy Statement for the October 23, 1997 Annual Meeting of
Shareholders
Waters Corporation 2411 Seventh Street, NW.
Rochester, Minnesota 55901 507-288-7777
