NOTICE OF ANNUAL SHAREHOLDERS' MEETING
TO BE HELD MAY 9, 1995
TO THE SHAREHOLDERS OF INCSTAR CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Shareholders' Meeting of
INCSTAR Corporation will be held at the Minneapolis Club, 729 Second
Avenue South, Minneapolis, Minnesota 55402, on Tuesday, May 9, 1995, at
3:30 p.m. local time for the purpose of considering and acting upon:
1. The election of a Board of Directors.
2. Such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record on March 20, 1995, are the only persons
entitled to notice of, and to vote at, the meeting. In addition to
voting on these matters at the meeting, we will review recent operations
and plans for growth.
WHETHER YOU CAN BE PRESENT AT THE MEETING OR NOT, PLEASE PROMPTLY
COMPLETE AND RETURN THE ENCLOSED PROXY CARD. FOR YOUR CONVENIENCE, A
RETURN ENVELOPE IS ENCLOSED.
By Order of the Board of Directors
J. Andrew Herring
Secretary
April 7, 1995
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of INCSTAR
Corporation (the "Company") in connection with the Annual Shareholders'
Meeting of the Company to be held on May 9, 1995, and any adjournments
thereof (the "Meeting"). The costs of solicitation are being paid by the
Company.
A proxy may be revoked at any time prior to its exercise by giving
written notice of revocation to the Secretary of the Company or by filing
a new written appointment of a proxy with the Secretary of the Company.
Unless so revoked, all properly executed proxies will be voted in
accordance with the instructions indicated on such proxies. Shares voted
as abstentions on any matter (or a "withhold vote for" as to directors)
will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum at the meeting and as
unvoted, although present and entitled to vote, for purposes of
determining the approval of each matter as to which the shareholder has
abstained. If a broker submits a proxy which indicates that the broker
does not have discretionary authority as to certain shares to vote on one
or more matters, those shares will be counted as shares that are present
and entitled to vote for purposes of determining the presence of a quorum
at the meeting, but will not be considered as present and entitled to
vote with respect to such matters.
Only shareholders of record at the close of business on March 20,
1995, may vote at the Meeting or any adjournment thereof. As of that
date, there were issued and outstanding 16,362,477 shares of Common Stock
of the Company, the only class of securities of the Company entitled to
vote at the Meeting. Each shareholder of record is entitled to one vote
for each share registered in his or her name as of the record date. This
Proxy Statement and accompanying form of Proxy will be first mailed to
shareholders on or about April 7, 1995.
The Company's Annual Report to Shareholders is being furnished to
each shareholder with this Proxy Statement.
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
The following information is furnished as of March 4, 1995, to
indicate beneficial ownership of the Common Stock of the Company by each
director, nominee and certain executive officers, individually, and all
directors and executive officers of the Company as a group. Except as
otherwise indicated, the persons listed have sole voting and investment
power of such shares.
<TABLE>
<CAPTION>
Amounts and Nature
of Beneficial Percent of
Name of Beneficial Owner Ownership(1)(2) Outstanding Shares
<S> <C> <C>
D. Ross Hamilton 138,776 *
John J. Booth 102,405 *
George Wellock 28,333 *
Gerald L. Majewski, Ph.D. 28,333 *
Michael W. Steffes, M.D., 21,233 *
Ph.D.
George A. Dixon 14,333 *
Ennio Denti 13,333 *
Umberto Rosa 13,333 *
Vittorio Vellano 13,333 *
Franco Fornasari --- *
Pierre Galletti --- *
Ezio Garibaldi --- *
Carlo Vanoli --- *
All directors and executive
officers as a group (15 385,546 2.3%
persons)
<FN>
* Less than 1%
(1) Includes the following shares held by wives or children: Mr. Hamilton,
34,608 shares; Mr. Booth, 385 shares; Dr. Steffes, 1,600 shares; and all
directors and executive officers as a group, 37,077 shares.
(2) Includes the following shares which could be acquired within 60 days upon
exercise of options: Mr. Hamilton, 13,333 shares; Mr. Booth, 71,667
shares; Mr. Wellock, 28,333 shares; Dr. Majewski, 18,333 shares; Dr.
Steffes, 13,333 shares; Mr. Dixon, 13,333 shares; Dr. Denti, 13,333
shares; Prof. Rosa, 13,333 shares; Mr. Vellano, 13,333 shares; and all
directors and executive officers as a group, 203,481 shares.
</FN>
</TABLE>
<PAGE>
Principal Shareholders
The following information indicates the identity of each person or group
known to the Company to own beneficially more than 5% of the outstanding Common
Stock of the Company, the only class of security entitled to vote at the
meeting. Except as otherwise indicated, the persons listed have sole voting
and investment power of such shares.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Outstanding
Name and Address of Beneficial Owner Beneficial Ownership Shares
<S> <C> <C>
Biofin Holding International B.V. 9,239,211(2) 53.9%
("BFHI") (1)
Locatellikade
Amsterdam, Holland
Kopp Investment Advisors 1,086,290(3) 6.6%
6600 France Avenue South
Suite 672
Edina, MN 55435
<FN>
(1) A subsidiary of Sorin Biomedica S.p.A. ("Sorin") and an indirect subsidiary
of the Fiat Group ("Fiat").
(2) Includes a currently exercisable warrant to purchase 730,720 shares to
maintain an approximate 51% majority ownership interest in the Company.
(3) As of December 31, 1994. A Schedule 13G filed by the investment advisor
indicates that the advisor has sole power of disposition with respect to
the shares.
</FN>
</TABLE>
ELECTION OF DIRECTORS
Nominees
The number of directors of the Company is currently set at ten. The Board
of Directors recommends the election of the individuals named below to serve as
directors until the next Annual Shareholders' Meeting or until their successors
are elected and qualified. Nine nominees are currently Directors of the
Company and one has not previously served on the Board. Proxies solicited by
the Board of Directors will, unless otherwise directed, be voted for the
election of the nominees named. Assuming that a quorum is present, a director
candidate must receive the vote of a majority of the voting power of the shares
present in order to be elected. In the unlikely event that any one or more of
the nominees are not available for election at the Meeting, the persons named
as proxies will vote for such other person or persons as the Board of Directors
may designate.
<PAGE>
Name Principal Occupation and Other Information
Pierre M. Galletti Chairman of the Board since March 1995, age 67.
M.D., Ph.D. Dr. Galletti was Vice President and CEO of the
Brown University Division of Biology and Medicine from
1972 to 1991. He retired from this position in 1991
and is currently a University Professor and Professor
of Medical Science at Brown University. Dr. Galletti
is a Fellow of the American College of Cardiology and a
Founding Fellow of the American Institute for Medical
and Biological Engineering. He is also a Founding
Scientist and currently chairs the Scientific Advisory
Board of CytoTherapeutics, Inc., Providence, RI. Dr.
Galletti is a director of Sorin in Turin, Italy, and of
Sorin Biomedical, Inc. in Irvine, CA.
John J. Booth Director, President and Chief Executive Officer
since September 1994, age 40. Senior Vice President and
Chief Financial Officer from May 1992 to September 1994
and Vice President of Finance and Administration from
1989 to 1992. Mr. Booth was Vice President, Controller
and Secretary of Clinical Sciences, Inc. ("CSI") prior
to joining the Company in 1989.
Ennio Denti Director since December 1989, Chairman from
December 1989 to September 1994, age 63. Dr. Denti is
President and CEO of SNIARICERCHE S.p.A., the research
and development company of SNIA BPD Group. Dr. Denti
was General Manager of Sorin from 1990 to 1992. From
1981 to 1990, he was Vice President of External Affairs
of Sorin. Dr. Denti is also a director of Conbiotec
S.p.A., an affiliate of Sorin involved in research and
development activities relating to medical diagnostics,
and director of R.I.C.E. Friuli S.p.A., a research
company affiliated with SNIA BPD involved in research
in the fine chemistry field. Prior to December 1989
Dr. Denti was Chairman of the Board of CSI.
George H. Dixon Director since February 1987, age 74. Prior to
his retirement in November 1985, Mr. Dixon held various
management positions with First Bank System, Inc.,
including Chairman and Chief Executive Officer from
November 1983 to November 1985. Mr. Dixon is also a
director of Toro Credit Company.
Franco Fornasari Director nominee, age 44. Mr. Fornasari is
Executive Vice President of Fiat U.S.A., Inc. He was
<PAGE>
Vice President for International Trade at Fiat S.p.A.,
from 1990 to 1995 and has served as Secretary General
of the International Advisory Board of Fiat S.p.A.
since March 1994. From 1985 to 1990, Mr. Fornasari
held a variety of positions with the World Bank
Organization.
Ezio Garibaldi Director since September 1994, age 57. Mr.
Garibaldi has been President and Chief Executive
Officer of Sorin Biomedica Group, the biomedical sector
of SNIA BPD, since 1990.
D. Ross Hamilton Director since December 1989, age 57. Mr.
Hamilton was a director of CSI. He is President and a
director of Hamilton Research Inc., a financial
consulting firm. He is also a director of Luther
Medical Products, Inc., a medical device company, and
Belen, Inc., a natural resource company.
Umberto Rosa Director since December 1989, age 61. Professor
Rosa has been the Chief Executive Officer of SNIA BPD
S.p.A., a chemical group controlled by Fiat, since
1990. Prior to that he was Chief Executive Officer and
General Manager of Sorin. Professor Rosa is also
President of BFHI and Executive Vice President of
Technobiomedica S.p.A., a biotechnology research
holding company. He is also a member of the Board of
Directors of Tecnogen S.p.A., a biotechnology research
company, and President of SNIA Fibre S.p.A., a nylon
fibers manufacturer.
Michael W. Steffes, Director since September 1984, age 51. Dr.
M.D., Ph.D. Steffes served as the Director of Clinical
Laboratories at the University of Minnesota Hospital
from October 1984 to July 1992 and has been a Professor
in the Department of Laboratory Medicine and Pathology
at the University of Minnesota since 1981.
Carlo Vanoli Director since September 1994, age 45. Mr.
Vanoli is Vice President of Corporate Development of
SNIA BPD. Prior to that, he was President and CEO of
Sorin Biomedical Inc., in Irvine, CA from 1992 to 1994
and Strategic Planning Manager of merger and
acquisition activities for SNIA BPD from 1987 to 1992.
Meetings and Committees of the Board of Directors
The Board of Directors held four meetings during the year ended December
31, 1994. Except for Messrs. Rosa and Vellano, each director attended at least
<PAGE>
75% of the aggregate of the total number of meetings of the Board of Directors
plus the total number of meetings of all committees of the Board on which he
served.
The Board of Directors has an Audit Committee and a Compensation Committee.
During the year ended December 31, 1994, the Audit Committee was comprised
of Mr. Dixon, Mr. Hamilton and Mr. Vellano. It held two meetings during the
year. The Audit Committee recommends to the full Board of Directors the
selection of independent accountants, reviews the activities and reports of the
Company's independent accountants and performs such other duties as may be
authorized by the Board of Directors.
During the year ended December 31, 1994, the Compensation Committee was
comprised of Mr. Vanoli, Mr. Dixon, Mr. Hamilton, Dr. Steffes and Mr. Vellano.
The Compensation Committee held three meetings during the year; Mr. Vellano was
unable to attend these meetings. As set forth more fully in its report below,
the Compensation Committee reviews salaries, stock options and bonus and
compensation plans and performs such other duties as may be authorized by the
Board of Directors.
The Company does not have a nominating committee. The Board of Directors
will consider nominees for the position of director who are recommended by the
Company's shareholders. Any such recommendations may be submitted in writing
to the Secretary of the Company.
Compensation of Directors
The Company pays all directors who are not affiliated with Fiat an annual
retainer of $10,000. Fiat-affiliated directors receive no annual retainer. In
addition, directors are paid $500 for each meeting of the Board of Directors or
any committee attended, plus the expense of attendance in the case of non-
employee directors who are not affiliated with the Fiat Group. Upon election
to the Board of Directors, each director is granted a nonqualified stock option
to purchase 10,000 shares of the Company's Common Stock at the then fair market
value; these options vest over a three-year period and expire on the fifth
anniversary of the date of grant.
Certain Transactions
The Company has an agreement with Fiat Finance U.S.A., Inc., an affiliate
of the Company, pursuant to which the Company may borrow up to $4,000,000 at an
interest rate of LIBOR plus 1.00%. At December 31, 1994, the Company had no
borrowings outstanding pursuant to the agreement. The Company also has a long-
term note payable to Fiat Finance U.S.A., Inc. due December 1996. This note
was originally in the amount of $7,500,000 and had a balance outstanding at
December 31, 1994, of $4,020,000. The total amount of interest paid to Fiat
Finance U.S.A., Inc. in 1994 for all of such borrowings was $312,000.
Pursuant to two distributorship agreements between the Company and Sorin,
which provide for the distribution by the Company and Sorin of certain of each
other's diagnostic products in specified areas, the Company had product sales
<PAGE>
to and product purchases from Sorin in the amounts of $6,903,000 and
$1,248,000, respectively, for the year ended December 31, 1994. Pursuant to an
agreement entered into in connection with the acquisition of the Clinical
Assays products from Baxter International, Inc., the Company also accrued
royalties to Sorin of $176,000 during the year ended December 31, 1994.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
Overview
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for developing and making recommendations to the Board with respect
to the Company's executive compensation policies. The Committee also
administers all aspects of the Company's executive compensation program,
including all of the Company's employee benefit plans. The Committee is
composed of independent directors of the Company, two of whom are officers of
Fiat or its affiliates and three of whom are not affiliated with the Company or
Fiat.
The components of the Company's executive compensation program include (a)
base salaries, (b) annual cash bonuses (c) stock options, and (d) miscellaneous
fringe benefits comparable to those of similar size companies.
Officer Cash Compensation
The Company has a written employment and noncompetition agreement with its
Chief Executive Officer, Mr. Booth. This agreement provides for employment at
a set base salary that must be adjusted each year to reflect cost of living
increases as indicated by changes in the consumer price index and that may be
increased to reflect promotions (as was done this year, when Mr. Booth was
promoted to Chief Executive Officer) and performance, and for bonuses under the
Company's Economic Value Sharing Plan, discussed below.
The Company's other executive officers do not have written employment
agreements. The Company's other executive officers' base salaries have been
primarily determined on the basis of the historical salary structure of the
Company. The Board may increase their base salaries each year based upon
recommendations by the Chief Executive Officer. These recommendations are
based on each individual's performance relative to objectives set by the Chief
Executive Officer and on overall corporate performance.
Annual Cash Bonuses
In May 1993 the Compensation Committee and the Board of Directors approved
an economic value sharing incentive compensation plan (the "EVA Plan") for the
determination of bonuses to be paid to the Company's executive officers. The
EVA Plan was designed with the assistance of a national compensation consulting
firm, which advised the Committee concerning participation levels and other
variables of the EVA Plan, and is intended to provide an incentive compensation
<PAGE>
program that links executive officers' annual cash bonuses directly to the
creation of shareholder value. The EVA Plan allocates bonus units to each
executive officer based upon a percentage of that officer's base salary. These
percentages are 40% for the CEO and 32% for all other executive officers of the
Company. Bonus units are then valued based upon the Company's performance
under the EVA system for both current year performance (the "performance
factor") and for improvement over the prior year's performance (the
"improvement factor"). Unit value can be lost if EVA results for the current
year are significantly below the prior year's EVA results, since the
improvement factor can become a negative number. No EVA bonuses were granted
in 1994.
Stock Option Policies
Historically, the Company granted stock options annually, with awards
dependent primarily on the recipient's compensation and grade level and
allocations based largely on subjective judgments. In 1993, however, the
Board, on the recommendation of the Committee, adopted a policy of making stock
option grants to executive officers of the Company once every three years. The
levels of these grants, which vest over the three-year period, are intended to
be comparable to those made on an annual basis prior to 1993. In 1994, two
special stock option grants were made to executive officers; one grant was made
to Mr. Booth when he assumed the position of Chief Executive Officer and one
grant was made to one other executive officer of the Company who was promoted.
These special grants of stock options were made to these executive officers in
light of their respective promotions.
Compensation of the Chief Executive Officer
The base salary of Mr. Booth, who was promoted to Chief Executive Officer
during 1994, is set by the terms of his employment agreement. The amount of
this current base salary was increased by the Board of Directors when Mr. Booth
assumed the position of Chief Executive Officer on the basis of Mr. Booth's
experience in the industry and with the Company, the level of his prior salary
as Chief Financial Officer, the Company's historical compensation levels for
executive officers and with consideration for salaries of positions with
comparable responsibilities within companies in similar industries. In light
of the fact that Mr. Booth assumed his new position in September 1994, the
Compensation Committee did not consider the Company's year to date 1994
performance when determining Mr. Booth's compensation.
Possible Limitations on Deductibility of Compensation
The Compensation Committee has given only limited attention to the effect
of Section 162(m) of the Internal Revenue Code (the "Code") (added in 1993),
which limits the deductibility of executive compensation in excess of
$1,000,000 since the Committee did not expect any officer's 1994 compensation
to exceed $1,000,000. In 1993 the Board of Directors amended the Company's
Stock Option Plan to include certain restrictions designed to comply with
Section 162(m) and will also change the composition of the Committee
administering the Plan if that becomes necessary. The changes to the Company's
Stock Option Plan should cause any income recognized by an officer upon
exercise of a stock option granted under the Plan to be treated as performance-
based income, which will be deductible to the Company. The Committee expects
<PAGE>
to review the application of Section 162(m) periodically in light of the
Company's compensation policies and new regulations or interpretations of the
Section.
George H. Dixon
D. Ross Hamilton
Michael W. Steffes
Vittorio Vellano
Carlo Vanoli
Members of the Committee
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by each person who served
as the Chief Executive Officer of the Company during 1994, the two executive
officers of the Company whose total annual salary and bonus earned in 1994
exceeded $100,000 and two additional executive officers no longer serving at
the end of 1994 whose total annual salary and bonus earned in 1994 exceeded
$100,000:
<TABLE>
<CAPTION>
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation(1)
<S> <C> <C> <C> <C> <C>
John J. Booth (2) 1994 $166,800 $ 0 50,000 $ 4,500
President and Chief 1993 146,000 14,800 35,000 4,500
Executive Officer 1992 133,000 47,950 20,000 4,400
Gerald L. Majewski 1994 147,900 0 0 4,500
Vice President of 1993 135,000 53,500 25,000 2,500
Research and Development 1992 22,000 27,000 15,000 0
George E. Wellock 1994 133,400 0 0 4,400
Vice President of 1993 129,600 13,200 25,000 4,000
Operations 1992 120,000 43,650 15,000 4,400
Orwin L. Carter (3) 1994 229,300 0 0 925,400 (4)
President and Chief 1993 286,800 36,400 60,000 4,500
Executive Officer 1992 278,200 125,600 15,000 4,400
Charles G. Truffer (5) 1994 109,600 0 0 280,600 (6)
Senior Vice President of 1993 182,700 18,550 35,000 4,500
Sales and Marketing 1992 177,700 61,050 10,000 4,400
Jacques A. Bagdasarian (7) 1994 188,000 0 0 327,100 (8)
Senior Vice President of 1993 182,700 18,550 35,000 4,500
Sales and Marketing 1992 177,700 67,450 10,000 4,400
<FN>
(1) Includes Company contributions under a Salary Savings Plan qualified under
Section 401(k) of the Internal Revenue Code. In 1994, Company
contributions equaled 50% of the first 6% of compensation (or the
allowable IRS limit, if less) contributed by the employee.
(2) Mr. Booth began serving as the Company's Chief Executive Officer in
September 1994; prior to that, he served as its Senior Vice President and
Chief Financial Officer.
(3) Dr. Carter served as the Company's Chief Executive Officer until September
1994.
<PAGE>
(4) Consists of amounts payable through August 22, 1997, under an employment
continuity agreement between the Company and Dr. Carter whereby Dr. Carter
will provide consulting services for the Company and will continue to work
on a part-time basis after ceasing to serve as the Company's Chief
Executive Officer.
(5) Mr. Truffer served as the Company's Senior Vice President of Sales and
Marketing until July 18, 1994.
(6) Consists of amounts payable through July 18, 1996, pursuant to a
separation agreement with Mr. Truffer.
(7) Mr. Bagdasarian served as the Company's Senior Vice President of Sales and
Marketing until January 12, 1995.
(8) Consists of amounts payable through July 12, 1996, pursuant to a
separation agreement between the Company and Mr. Bagdasarian.
</FN>
</TABLE>
Options
The following tables summarize option grants and exercises during 1994 to
or by the executive officers named in the Summary Compensation Table above, and
the values of the options held by such persons at December 31, 1994.
<TABLE>
OPTIONS GRANTED IN 1994
<CAPTION>
Number of % of
Securities Total Grant
Underlying Options Date
Options Granted to Expiration Present
Name Granted (1) Employees Price Date Value (2)
<S> <C> <C> <C> <C> <C>
John J. Booth 50,000 67% $ 2.500 9/20/04 $ 64,000
<FN>
(1) Granted September 20, 1994. All options are granted with an exercise
price equal to the closing price of the Company's Common Stock on the
American Stock Exchange on the date of grant. Options become exercisable
in equal installments over the first three years of the option term.
(2) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. Estimated values under this model are based on
arbitrary assumptions as to variables such as interest rates, stock price
volatility and future dividend yield. The Company has assumed a risk-free
rate of 8.13%, which was the yield on ten year U.S. Treasury notes on the
date of issuance of the options. The assumed annual stock price
volatility was calculated on the basis of the Company's daily stock prices
from January 1, 1990, to December 31, 1994. Finally, the Company assumes
no future dividend yield given the Company's dividend history and current
dividend policy. The actual value, if any, an executive may realize upon
exercise of an option will depend on the excess of the stock price over
the exercise price on the date the option is exercised, so there is no
assurance the value realized by an executive will be at or near the value
estimated by the Black-Scholes model.
</FN>
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN 1994 AND VALUE AT DECEMBER 31, 1994
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options At
Options
Shares At December 31, December 31, 1994
Acquired 1994
Name on Value Exer- Unexer- Exer- Unexer-
Exercise Realized cisable cisable cisable cisable
<S> <C> <C> <C> <C> <C> <C>
John J. Booth 0 $ 0 71,667 68,333 $ 0 $ 0
Gerald L. Majewski 0 0 18,333 21,667 0 0
George E. Wellock 0 0 28,333 21,667 0 0
Orwin L. Carter 0 0 105,000 50,000 0 0
Charles G. Truffer 0 0 0 0 0 0
Jacques A. Bagdasarian 0 0 65,333 26,667 0 0
</TABLE>
Employment Agreements
The Company has a written employment agreement with Mr. Booth, the initial
term of which expired in December 1993 and which provides for automatic one
year extensions unless one of the parties gives notice at least 30 days prior
to the expiration date that the agreement will terminate at the end of the
current extension. Neither the Company nor Mr. Booth has given any termination
notice with respect to this agreement. The employment agreement includes
provisions with respect to base salary level, annual cost of living increases,
annual bonus and termination of employment. The employment agreement also
provides that one year of Mr. Booth's base salary shall be paid to him in the
event the Company terminates his employment without cause.
In September 1994 the Company entered into an employment continuity
agreement with Dr. Carter, who until that time served as the Company's Chief
Executive Officer. Under the terms of this agreement Dr. Carter will serve as
a part-time employee and consultant to the Company from September 20, 1994, to
August 27, 1997. Payments to be made under this agreement have been accrued as
of December 31, 1994, and are included in the Summary Compensation Table
contained elsewhere herein.
In June 1994 the Company entered into a separation agreement with Mr.
Truffer. The provisions of this agreement include the payment of regular base
salary through July 1995 and additional payments through July 1996. Payments
to be made under this agreement have been included in the Summary Compensation
<PAGE>
Table contained elsewhere herein.
In January 1995 the Company entered into a separation agreement with Mr.
Bagdasarian under which he will continue to receive, through July 1996, his
regular base salary in effect at the time the agreement was signed. From July
1996 to July 1997 Mr. Bagdasarian is entitled to certain contingent payments
should he not attain new employment before such time or attain employment at a
salary below his base salary in effect as of the signing of this separation
agreement. With the exception of these contingent amounts, payments to be made
under this agreement have been included in the Summary Compensation Table
contained elsewhere herein.
Retirement Arrangements
The Company has retirement agreements with Messrs. Booth, Carter,
Bagdasarian and Truffer which are intended to provide continued compensation to
such individuals or their respective beneficiaries upon the later of (1) an
individual's retirement from the Company after attainment of 60 years of age
(55 years of age for Dr. Carter), (2) his attainment of 60 years of age
following termination of employment (55 years of age for Dr. Carter) or (3) his
death during the term of employment (each one a "triggering event"). Subject
to vesting requirements (the annual benefit amounts vest at the rate of 10% per
year of employment), this retirement agreement provides for the payment to the
individuals or their beneficiaries of annual benefits for a period of 15 years
following the occurrence of a triggering event. The amount of the benefit is
adjusted annually to reflect changes in the cost of living. The annual benefit
amounts at December 31, 1994, were as follows: Mr. Booth, $59,500; Dr. Carter,
$98,000; Mr. Bagdasarian, $65,300; and Mr. Truffer, $65,300.
The Company maintains an executive income continuation plan for the benefit
of Dr. Majewski, Mr. Wellock and one other executive officer. The plan
provides payments for 15 years to such officers or their respective
beneficiaries upon the later of (1) an officer's retirement from the Company
after attainment of 60 years of age, (2) his attainment of 60 years of age
following termination of employment or (3) his death during the term of
employment. The annual retirement payment is the product of an annual benefit
rate set by the Board of Directors ($3,333 for 1994) multiplied by the number
of years of employment, up to a maximum of 15 years, and as adjusted to reflect
cost of living changes during the payment period. An officer's rights under
the plan are fully vested after 10 years of employment. As of December 31,
1994, the estimated annual retirement payment amounts for Dr. Majewski were
$10,000 and for Mr. Wellock, $35,000.
<PAGE>
COMPARATIVE STOCK PERFORMANCE GRAPH
The following graph provides a five year comparison of cumulative total
return*, of an investment on December 31, 1989, of $100 in the Common Stock of
the Company as compared to an equivalent investment in the S&P 500 Index and
the DJ Medical Supplies Index.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
INCSTAR Corporation 100 150 204 186 98 50
S & P 500 Index 100 83 126 136 150 152
DJ Medical Supplies Index 100 126 191 175 164 201
<FN>
Assumes $100 invested on December 31, 1989 in INCSTAR Corporation Common Stock,
S&P Index and DJ Medical Supplies Index
*Total return assumes reinvestment of dividends.
</FN>
</TABLE>
<PAGE>
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
All shareholder proposals intended to be presented at the 1996 Annual
Shareholders' Meeting of the Company must be received by the Company at its
offices on or before November 27, 1995.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed KPMG Peat Marwick LLP to audit the books and accounts of the Company
for the year ending December 31, 1995. The same firm audited the books and
accounts of the Company for the year ended December 31, 1994. A representative
of KPMG Peat Marwick LLP is expected to be present at the Meeting with the
opportunity to make a statement if he or she desires to do so and is expected
to be available to respond to appropriate questions.
OTHER MATTERS
The Company is aware of no other matters that may come before the Meeting.
If other matters properly come before the Meeting, it is the intention of the
persons named in the enclosed proxy to vote such shares in accordance with
their judgment as to the best interests of the Company.
By Order of the Board of Directors
J. Andrew Herring
Secretary
April 7, 1995
<PAGE>
PROXY INCSTAR
Science Technology and Research
INCSTAR CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
1995 Annual Shareholders' Meeting
The undersigned hereby appoints John J. Booth and Thomas P. Maun, and
each of them, with power to appoint a substitute, to vote all shares the
undersigned is entitled to vote at the 1995 Annual Shareholders' Meeting of
INCSTAR Corporation, a Minnesota corporation, to be held on Tuesday, May 9,
1995 at 3:30 p.m., Minneapolis time, and at any adjournment thereof, as
specified below and, in their discretion, upon any other matters which may
properly come before the meeting, and hereby revokes all former proxies:
ELECTION OF DIRECTORS
Nominees: Pierre M. Galletti, John J. Booth, Ennio Denti, George H.
Dixon, Franco Fornasari, Ezio Garibaldi, D. Ross Hamilton, Umberto
Rosa, Michael W. Steffes, Carlo Vanoli
VOTE FOR all nominees listed, WITHHOLD AUTHORITY to vote
except as marked to the contrary for all nominees listed
above. (To withhold your vote above.
for any individual nominee strike
a line through the nominee's name
in the list above.)
(Continued, and to be completed and signed on the reverse side)
(Continued from the other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO CHOICE
IS SPECIFIED, PROXIES WILL BE VOTED FOR THE ELECTION OF ALL DIRECTORS NAMED
ABOVE.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
DATED: ___________________________, 1995
(month) (day)
Signature of shareholder
(If there are co-owners both should sign)
The signature(s) should be exactly as the
name(s) appear printed to the left. If a
corporation, please sign the corporation name
in full by a duly authorized officer and
indicate the office of the signer. When
signing as executor, administrator, fiduciary,
attorney, trustee or guardian, or as custodian
for a minor, please give full title as such.
If a partnership, sign in the partnership
name by authorized person.
