<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
VENTANA MEDICAL SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
VENTANA MEDICAL SYSTEMS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of VENTANA
MEDICAL SYSTEMS, INC., a Delaware corporation (the "Company"), will be held on
Tuesday, April 29, 1997, at 9:00 a.m., local time, at the Arizona Inn, Pool
Conference Room, 2200 East Elm Street, Tucson, Arizona 85719 for the following
purposes (as more fully described in the Proxy Statement accompanying this
Notice):
1. To elect two Class I directors of the Company to serve for terms of
three years expiring upon the date of the Annual Meeting of
Stockholders held in the year 2000 or until their successors are
elected.
2. To ratify the appointment of Ernst & Young LLP as the independent
auditors of the Company for the fiscal year ending December 31, 1997.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 31, 1997 are
entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting. However, to
ensure your representation at the meeting, you are urged to mark, sign, date and
return the enclosed proxy as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. If you attend the meeting, you may vote in
person even if you return a proxy.
FOR THE BOARD OF DIRECTORS
Jack W. Schuler
Chairman of the Board of Directors
Tucson, Arizona
April 7, 1997
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING,
YOU MAY VOTE IN PERSON, EVEN IF YOU RETURN A PROXY.
<PAGE> 3
VENTANA MEDICAL SYSTEMS, INC.
------------------------
PROXY STATEMENT FOR
1997 ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1997
------------------------
INFORMATION CONCERNING VOTING AND PROXY SOLICITATION
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Ventana Medical Systems, Inc. ("Ventana" or the "Company") for use at the Annual
Meeting of Stockholders to be held on April 29, 1997 at 9:00 a.m., local time,
or at any adjournment thereof. The Annual Meeting will be held at the Arizona
Inn, Pool Conference Room, 2200 East Elm Street, Tucson, Arizona 85719. The
telephone number at the meeting location is (520) 325-1541.
These proxy solicitation materials and the Annual Report to stockholders
for the fiscal year ended December 31, 1996 (the "Last Fiscal Year"), including
financial statements, were first mailed on or about April 7, 1997, to all
stockholders entitled to vote at the Annual Meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on March 31, 1997 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
the Record Date, 12,883,912 shares of the Company's Common Stock, $.001 par
value (the "Common Stock"), were issued and outstanding and held of record by
approximately 351 stockholders.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person. Attending the Annual
Meeting in and of itself may not constitute a revocation of a proxy.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share held as of the
record date. Stockholders will not be entitled to cumulate their votes in the
election of directors.
The cost of soliciting proxies will be borne by the Company. The Company
expects to reimburse brokerage firms and other persons representing beneficial
owners of shares for their expense in forwarding solicitation material to such
beneficial owners. Proxies may be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation, in
person or by telephone or facsimile.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections (the "Inspector") with the assistance of the
Company's Transfer Agent. The Inspector will also determine whether or not a
quorum is present. Except in certain specific circumstances, the affirmative
vote of a majority of shares present in person or represented by proxy at a duly
held meeting at which a quorum is present is required under Delaware law for
approval of proposals presented to stockholders. In general, Delaware law also
provides that a quorum consists of a majority of shares entitled to vote and
present or represented by proxy at the meeting.
<PAGE> 4
The Inspector will treat shares that are voted "WITHHELD" or "ABSTAIN" as
being present and entitled to vote for purposes of determining the presence of a
quorum but will not be treated as votes in favor of approving any matter
submitted to the stockholders for a vote. Any proxy which is returned using the
form of proxy enclosed and which is not marked as to a particular item will be
voted for the election of the two Class I directors and for the confirmation of
the appointment of the designated independent auditors and, as the proxy holders
deem advisable, on other matters that may come before the meeting, as the case
may be with respect to the items not marked.
If a broker indicates on the enclosed proxy or its substitute that it does
not have discretionary authority as to certain shares to vote on a particular
matter ("Broker Non-Votes"), those shares will not be considered as present with
respect to that matter. The Company believes that the tabulation procedures to
be followed by the Inspector are consistent with the general statutory
requirements in Delaware concerning voting of shares and determination of a
quorum.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS TO BE PRESENTED AT 1998 ANNUAL
MEETING
Proposals that are intended to be presented by stockholders of the Company
at the 1998 Annual Meeting must be received by the Company no later than October
31, 1997 in order to be considered for inclusion in the proxy statement and form
of proxy relating to that meeting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors and
persons who own more than ten percent of a registered class of the Company's
equity securities to file an initial report of ownership on Form 3 and changes
in ownership on Form 4 or 5 with the Securities and Exchange Commission (the
"SEC") and the National Association of Securities Dealers, Inc. Executive
officers, directors and greater than ten percent stockholders are also required
by SEC rules to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, with respect to fiscal year 1996, all filing requirements applicable to
its officers, directors and ten percent stockholders were complied with.
SHARE OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information known to the Company with
respect to the beneficial ownership of its Common Stock as of December 31, 1996
for (i) each person who is known by the Company to own beneficially more than 5%
of the Company's Common Stock, (ii) each of the Company's directors and nominees
for director, (iii) each officer named in the Summary Compensation Table below
and (iv) all directors, nominees for election and executive officers as a group.
Unless otherwise indicated, officers and directors can be reached at the
Company's principal executive offices. A total of 10,978,238 shares of the
Company's Common Stock were issued and outstanding as of December 31, 1996.
2
<PAGE> 5
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
DECEMBER 31,
1996(1)(2)
---------------------
CERTAIN EXECUTIVE OFFICERS, DIRECTORS OR 5% STOCKHOLDERS NUMBER PERCENT
- ------------------------------------------------------------------------- --------- -------
<S> <C> <C>
Entities affiliated with Marquette Venture Partners(3) 520 Lake Cook Rd.,
Suite 450 Deerfield, IL 60015.......................................... 1,918,650 17.5%
MBW Venture Partners, L.P.(4) James R. Weersing 350 Second Street Los
Altos, CA 94022........................................................ 1,442,350 12.9%
State Farm Mutual Automobile Insurance Company(5) One State Farm Plaza
Bloomington, IL 61701.................................................. 887,173 8.0%
Jack W. Schuler(6) 1419 Lake Cook Road, Suite 410 Deerfield, IL 60015.... 965,607 8.7%
R. James Danehy(7)....................................................... 245,550 2.2%
R. Michael Rodgers(8).................................................... 41,086 *
Michael K. Cusack(9)..................................................... 20,221 *
David P. Pauluzzi(10).................................................... 16,170 *
Bernard O.C. Questier(11) Ventana Medical Systems, S.A. Service d'
Anatomie Hopital de Hautepierre 1 Avenue Moliere 67098 Strasbourg Cedex
France................................................................. 12,319 *
Rex J. Bates(12)......................................................... 31,152 *
Michael R. Danzi(13)..................................................... 9,566
Edward M. Giles(14)...................................................... 279,333 2.5%
Thomas M. Grogan, M.D.(15)............................................... 174,055 1.6%
John Patience(16)........................................................ 292,789 2.6%
C. Anthony Stellar, M.D.(17)............................................. 19,959 *
James M. Strickland(18).................................................. 402,547 3.7%
James R. Weersing(4)(19)................................................. 1,452,857 13.0%
Henry T. Pietraszek...................................................... -- --
All directors and executive officers as a group (18 persons)............. 4,036,614 34.8%
</TABLE>
- ---------------
* Less than 1%.
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have
sole voting and investment power with respect to all shares of Common
Stock.
(2) Applicable percentage of ownership is based on 10,978,238 shares of Common
Stock outstanding as of December 31, 1996 together with shares issuable
pursuant to applicable options and warrants of such
3
<PAGE> 6
stockholder which may be exercised within 60 days after December 31, 1996.
Shares of Common Stock subject to options and/or warrants currently
exercisable or exercisable within 60 days after December 31, 1996 are
deemed outstanding for computing the percentage ownership of the person
holding such options and/or warrants, but are not deemed outstanding for
computing the percentage of any other person.
(3) Includes 1,464,153 shares beneficially owned by Marquette Venture Partners,
L.P.; 441,871 shares beneficially owned by Marquette Venture Partners II,
L.P.; and 12,626 shares beneficially owned by MVP II Affiliate Fund, L.P.
(4) Includes 162,059 shares issuable upon the exercise of warrants held by MBW
Venture Partners, L.P. Mr. Weersing, a director of the Company, is Managing
Director of MBW Venture Partners Limited. Mr. Weersing disclaims beneficial
ownership of the shares beneficially owned by MBW Venture Partners, L.P.
except to the extent of his proportional partnership interest therein.
(5) Includes 108,893 shares issuable upon the exercise of warrants held by
State Farm Mutual Automobile Insurance Company.
(6) Includes 118,917 shares issuable upon the exercise of warrants held by Mr.
Schuler; 73,512 shares beneficially owned by Mr. Schuler, as custodian for
Tanya Eva Schuler; 73,513 shares beneficially owned by Mr. Schuler, as
custodian for Tess Heidi Schuler; and 73,512 shares beneficially owned by
Mr. Schuler, as custodian for Tino Hans Schuler.
(7) Includes 70,382 shares issuable upon the exercise of options exercisable
within 60 days of December 31, 1996 held by Mr. Danehy.
(8) Includes 7,608 shares issuable upon the exercise of options exercisable
within 60 days of December 31, 1996 held by Mr. Rodgers.
(9) Includes 4,312 shares issuable upon the exercise of options exercisable
within 60 days of December 31, 1996 held by Mr. Cusack.
(10) Includes 4,929 shares issuable upon the exercise of options exercisable
within 60 days of December 31, 1996 held by Mr. Pauluzzi.
(11) Includes 12,319 shares issuable upon the exercise of options exercisable
within 60 days of December 31, 1996 held by Mr. Questier.
(12) Includes 11,173 shares issuable upon the exercise of warrants held by Mr.
Bates.
(13) Includes 1,087 shares beneficially owned by Barbara A. Danzi.
(14) Includes 122,814 shares beneficially owned by Vertical Fund, L.P. (of which
85,945 shares are issuable upon the exercise of warrants held by Vertical
Fund, L.P.); 36,869 shares beneficially owned by Vertical Medical Partners,
L.P.; 68,542 shares beneficially owned by Vertical Fund Associates, L.P.;
and 27,679 shares beneficially owned by Vertical Partners, L.P. (of which
21,831 shares are issuable upon the exercise of warrants held by Vertical
Partners, L.P.). Also includes 23,429 shares beneficially owned by Edward
M. Giles IRA (of which 5,157 shares are issuable upon the exercise of
warrants held by Edward M. Giles IRA). Mr. Giles, a director of the
Company, is Chairman and President of The Vertical Group, Inc. Mr. Giles
disclaims beneficial ownership of the shares beneficially owned by such
entities affiliated with The Vertical Group, Inc. except to the extent of
his proportionate partnership interest therein.
(15) Includes 3,696 shares beneficially owned by Andrew Grogan; 7,710 shares
beneficially owned by C. Ovens, Inc. (of which 459 shares are issuable upon
the exercise of warrants held by C. Ovens, Inc.); and 14,077 shares
issuable upon exercise of options exercisable within 60 days of December
31, 1996 held by Dr. Grogan.
(16) Includes 96,689 shares issuable upon the exercise of warrants held by Mr.
Patience.
(17) Includes 740 shares beneficially owned by Diane Stellar, and 740 shares
beneficially owned by Andrew Stellar.
(18) Includes 860 shares issuable upon the exercise of warrants held by Mr.
Strickland. Also includes 120,670 shares beneficially owned by Coronado
Venture Fund; 163,059 shares beneficially owned by
4
<PAGE> 7
Coronado Venture Fund II, L.P.; 103,996 shares beneficially owned by Coronado
Venture Fund III, L.P.; and 13,962 shares beneficially owned by Coronado Venture
Co-Investors Limited Partnership. Mr. Strickland, a director of the Company, is
a general partner of Coronado Venture Management. Mr. Strickland disclaims
beneficial ownership of the shares beneficially owned by such entities
except to the extent of his proportionate partnership interest therein.
(19) Includes 6,209 shares beneficially owned by James R. Weersing and Mary H.
Weersing, Trustees of the Weersing Family Trust U/D/T dated April 24, 1991.
Also includes 4,298 shares issuable upon the exercise of warrants held by
Mr. Weersing.
5
<PAGE> 8
PROPOSAL NO. 1
ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES FOR DIRECTOR
Pursuant to the Company's Certificate of Incorporation, as amended, the
Company's Board of Directors currently consists of eight persons, divided into
three classes serving staggered terms of three years. Currently there are three
directors in Class I, two directors in Class II and four directors in Class III.
Two Class I directors are to be elected at the Annual Meeting. The Class II and
Class III directors will be elected at the Company's 1998 and 1999 Annual
Meetings of Stockholders, respectively. Each of the two Class I directors
elected at the Annual Meeting will hold office until the year 2000 Annual
Meeting of Stockholders or until his successor has been duly elected and
qualified.
In the event that any of such persons becomes unavailable or declines to
serve as a director at the time of the Annual Meeting, the proxy holders will
vote the proxies in their discretion for any nominee who is designated by the
current Board of Directors to fill the vacancy. It is not expected that any of
the nominees will be unavailable to serve.
The names of the two Class I nominees for election to the Board of
Directors at the Annual Meeting, their ages as of the Record Date and certain
information about them are set forth below. The names of the current Class II
and Class III directors with unexpired terms, their ages as of the Record Date
and certain information about them are also set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ----------------------------------------- --- ----------------------------------- --------
<S> <C> <C> <C>
NOMINEES FOR CLASS I DIRECTORS
Henry T. Pietraszek...................... 50 President and Chief Executive --
Officer of Ventana Medical Systems,
Inc.
James R. Weersing........................ 57 Managing Director of MBW Venture 1994
Partners
CONTINUING CLASS II DIRECTORS
Edward M. Giles.......................... 61 President and Chairman of The 1992
Vertical Group, Inc.
Rex Bates................................ 73 Private Investor 1996
CONTINUING CLASS III DIRECTORS
Thomas M. Grogan, M.D.................... 51 Professor, University of Arizona, 1985
College of Medicine
John Patience............................ 49 General Partner, Crabtree Partners 1989
Jack W. Schuler.......................... 56 General Partner, Crabtree Partners 1991
R. James Danehy.......................... 51 Consultant 1994
</TABLE>
There are no family relationships among directors or executive officers of
the Company.
MR. PIETRASZEK joined the Company as President and Chief Executive Officer
on March 3, 1997. From 1996 until joining the Company, Mr. Pietraszek served as
President of D.M.S., a consulting company which he co-founded. From 1994 to
1996, Mr. Pietraszek served as President and Chief Executive Officer of Biostar,
Inc., a medical diagnostic company. From 1980 to 1994, Mr. Pietraszek worked for
Abbott Laboratories in a variety of executive capacities. From 1986 to 1994, he
served as President and Chief Executive Officer of TAP Pharmaceuticals, a joint
venture between Abbott Laboratories and Takeda Chemical Industries, from 1982 to
1986, he served as President of Dainabot K.K., a joint venture between Abbott
and Dainippon Pharmaceutical Company of Japan and from 1980 to 1982 he was Vice
President of Field Service Operations for Abbott's Diagnostic Division. He
received a B.S. in Marketing from Gannon University.
6
<PAGE> 9
MR. WEERSING has served as a director of Ventana since October 1994. Since
1984, Mr. Weersing has been a Managing Director of MBW Venture Partners, a
venture capital investment firm. Mr. Weersing has also served as President of
JRW Technology, Inc., a consulting firm. Mr. Weersing served as a director of
Circadian, Inc., an asthma dosage management company, from December 1993 until
January 1996. Circadian filed a petition under Chapter 7 of the federal
bankruptcy laws in January 1996. Mr. Weersing received a B.S.M.E. and an M.B.A.
from Stanford University.
MR. BATES has served as a director of Ventana since April of 1996. From
August 1991 to May 1995, Mr. Bates served on the Board of Directors of Twentieth
Century Industries and was a member of its compensation committee. Prior to
Twentieth Century Industries, Mr. Bates served as the Vice-Chairman of the Board
of Directors of the State Farm Mutual Automobile Insurance Company. Mr. Bates
also served as State Farm's Chief Investment Officer. In March of 1991, Mr.
Bates retired from State Farm. Prior to Mr. Bates' employment with State Farm,
he was a partner in the investment firm of Stein, Roe & Farnham in Chicago. Mr.
Bates received a B.S. and an M.S. from the University of Chicago.
MR. GILES has served as a director of Ventana since September 1992. Mr.
Giles has served as Chairman and President of The Vertical Group, Inc., a
venture capital investment firm, since January 1989. Mr. Giles was previously
President of F. Eberstadt & Co., Inc., a securities firm, and Vice Chairman of
Peter B. Cannell & Co., Inc., an investment management firm. He is currently a
director of McWhorter Technologies, Inc. Mr. Giles received a B.S.E.E. in
Chemical Engineering from Princeton University and an M.S. in Industrial
Management from the Massachusetts Institute of Technology.
MR. SCHULER has served as a director of Ventana since April 1991 and as
Chairman of the Board of Directors since November 1995. Mr. Schuler has been
Chairman of the Board of Directors of Stericycle, Inc., a specialized medical
waste management company, since March 1990. Mr. Schuler is also a partner in
Crabtree Partners, a Chicago based venture capital firm. Prior to joining
Stericycle, Mr. Schuler held various executive positions at Abbott from December
1972 through August 1989, serving most recently as President and Chief Operating
Officer. He is currently a director of Medtronic, Inc., Somatogen, Inc. and
Chiron Corporation. Mr. Schuler received a B.S. in Mechanical Engineering from
Tufts University and an M.B.A. from Stanford University.
DR. GROGAN is a founder, a director and Chairman Emeritus of Ventana. He
has served as a director since the founding of the Company in June 1985 and as
Chairman of the Board of Ventana from June 1985 to November 1995. He is
currently a professor of pathology at the University of Arizona, College of
Medicine, where he has taught since 1979. He received a B.A. in Biology from the
University of Virginia and an M.D. from George Washington School of Medicine.
Dr. Grogan completed a post-doctorate fellowship at Stanford University.
MR. PATIENCE has served as a director of Ventana since July 1989. Mr.
Patience was a co-founder and served as a General Partner of Marquette Venture
Partners, a venture capital investment firm, from January 1988 until March 1995.
Since April 1995, Mr. Patience has been a partner in Crabtree Partners, a
Chicago-based venture capital firm. Mr. Patience was previously a partner in the
consulting firm of McKinsey & Co., specializing in health care. He is currently
a director of TRO Learning, Inc. and Stericycle, Inc. Mr. Patience received a
B.A. in Liberal Arts and an L.L.B. from the University of Sydney, Australia and
an M.B.A. from the University of Pennsylvania Wharton School of Business.
MR. DANEHY served as President and Chief Executive Officer and a director
of Ventana from September 1994 until February 1997. From June 1994 to September
1994, Mr. Danehy served as a consultant to the Company. From November 1993 to
June 1994, Mr. Danehy served as an interim Chief Executive Officer and
consultant for BioStar Diagnostics, where he also served as a director from
January 1994 to March 1995. From 1972 to 1993, Mr. Danehy worked in a variety of
capacities for Abbott. From 1977 through 1989, Mr. Danehy held marketing and
general management responsibilities in Abbott's Diagnostics Division that
included
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<PAGE> 10
Product Manager for hepatitis products, Marketing Manager for Clinical Chemistry
Systems, Group Marketing Manager for TDx Systems, Director of Marketing for
North America and General Manager for Transfusion Diagnostics which included the
AIDS test. Mr. Danehy received a B.S. in Chemistry from St. Joseph's College and
an M.B.A. from Loyola University of Chicago.
In February 1997, Mr. Danehy resigned his position as President and Chief
Executive Officer of the Company because he was not able to relocate permanently
to Tucson for family and personal reasons. Mr. Danehy will continue to serve as
a member of the Company's Board of Directors.
BOARD MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
The Board of Directors of the Company held thirteen meetings during the
fiscal year ended December 31, 1996.
The Board of Directors has an Audit Committee and a Compensation Committee.
It does not have a nominating committee or a committee performing the functions
of a nominating committee. From time to time, the Board has created various ad
hoc committees for special purposes. No such committee is currently functioning.
The Audit Committee consists of directors James Weersing, John Patience and
James Strickland. As of the Annual Meeting, Mr. Strickland will cease to be a
director and member of the Audit Committee. The Audit Committee is responsible
for reviewing the results and scope of the audit and other services provided by
the Company's independent auditors. The Audit Committee held two meetings in the
last fiscal year.
The Compensation Committee consists of directors Jack Schuler, James
Weersing and Edward Giles. The Compensation Committee reviews and makes
recommendations to the Board concerning salaries and incentive compensation for
executive officers and certain employees of the Company. The Compensation
Committee held one meeting during the last fiscal year. The President and Chief
Executive Officer of the Company participates fully with all other committee
members in recommending salaries and incentive compensation to the board of
directors, except that he does not participate in committee proceedings relating
to his salary and compensation. Mr. Danehy served on the Compensation Committee
until April 1996.
COMPENSATION OF DIRECTORS
Directors of the Company do not receive cash for services they provide as
directors. From time to time, certain directors who are not employees of the
Company have received grants of options to purchase shares of the Company's
Common Stock. Under the 1996 Director Option Plan, commencing with the Company's
1997 annual meeting of stockholders, each nonemployee director will be granted a
nonstatutory option to purchase an amount of shares of Common Stock of the
Company equal to 5,000 shares multiplied by a fraction, the numerator of which
shall be $15.00 and the denominator of which shall be the fair market value of
one share of the Company's Common Stock on the date of grant. The Company does
not provide additional compensation for committee participation or special
assignments of the Board of Directors.
VOTE REQUIRED
The two nominees receiving the highest number of affirmative votes of the
shares entitled to vote on this matter shall be elected as the Class I
directors.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
NOMINEES SET FORTH HEREIN.
8
<PAGE> 11
PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending December 31, 1997 and recommends that the stockholders vote FOR
confirmation of such selection. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
EXECUTIVE COMPENSATION
COMPENSATION TABLES
Summary Compensation Table. The following table sets forth certain
compensation paid by the Company to the Chief Executive Officer and the four
other most highly compensated executive officers of the Company for services
rendered during each of the fiscal years ended December 31, 1995 and 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-----------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES ALL OTHER
-------------------- STOCK UNDERLYING ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($) OPTIONS COMPENSATION($)
- ------------------------------------ ---- --------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
R. James Danehy..................... 1996 200,130 -- -- 28,975 --
President and Chief Executive
Officer 1995 200,000 -- -- -- --
Bernard O. C. Questier(1)........... 1996 137,500 7,500(2) -- -- 8,067(5)
Vice President, European Operations 1995 -- -- -- 36,956 63,800(3)
R. Michael Rodgers.................. 1996 100,830 -- -- -- --
Vice President, Finance and Chief 1995 97,030 -- -- 15,152 --
Financial Officer and Secretary
Michael K. Cusack................... 1996 100,130 -- -- -- --
Vice President, International 1995 100,054 -- -- -- --
David P. Pauluzzi................... 1996 92,630 -- -- 3,696 6,960(5)
National Sales Manager 1995 84,855 48,207(4) -- 23,098 --
</TABLE>
- ---------------
(1) Mr. Questier signed an employment contract with the Company in October of
1995 and began working at the Company in February 1996. His annual
compensation is set at $150,000 and his salary is fixed to the French Franc
to protect against currency fluctuations should the United States Dollar
depreciate relative to the French Franc; however, if the United States
Dollar appreciates relative to the French Franc, Mr. Questier's salary shall
remain unchanged.
(2) Mr. Questier received a one-time nonrecurring $7,500 bonus in 1996 for
signing his employment contract in October of 1995 and meeting certain other
conditions.
(3) Consists of relocation expenses of $55,000 associated with Mr. Questier's
move from Germany to France, which have been accrued but not yet fully paid,
and a scheduled $8,800 annual automobile allowance.
(4) Consists entirely of commissions earned through employment as the Company's
Northern Regional Sales Manager prior to his promotion to National Sales
Manager in June of 1995.
(5) Automobile allowance.
9
<PAGE> 12
Option Grants in Last Fiscal Year. The following table sets forth
information with respect to each grant of stock options made during the fiscal
year ended December 31, 1996 to each executive officer named in the Summary
Compensation Table above:
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK
SECURITIES OPTIONS EXERCISE PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(4)
OPTIONS EMPLOYEES PRICE EXPIRATION ------------------
NAME GRANTED(1) IN 1996(2) ($/SH)(3) DATE 5%($) 10%($)
- ---------------------------------- ----------- ----------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
R. James Danehy................... 28,975 10.67% $1.62 1/6/06 $76,625 $122,012
Bernard O. C. Questier............ -- -- -- -- -- --
R. Michael Rodgers................ -- -- -- -- -- --
Michael K. Cusack................. -- -- -- -- -- --
David P. Pauluzzi................. 3,696 1.36 1.62 1/6/06 9,774 15,564
</TABLE>
- ---------------
(1) Options were granted under the Company's 1988 Stock Option Plan. These
generally vest over four years from the date of grant.
(2) Based on an aggregate of 271,396 options granted by the Company in the year
ended December 31, 1996 under the Company's stock option plans to all
employees of and consultants to the Company, including the Chief Executive
Officer and four other most highly compensated officers.
(3) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant as determined by the
Company's Board of Directors.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of the
Company's securities that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of the Common Stock appreciates over
the option term, no value will be realized from the option grants made to
the executive officers.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End
Values. The following table sets forth, for each of the executive officers
named in the Summary Compensation Table above, information with respect to each
exercise of stock options during the fiscal year ended December 31, 1996 and the
value of unexercised options at December 31, 1996:
AGGREGATE OPTION EXERCISES IN FISCAL 1996 AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1996 AT DECEMBER 31, 1996(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. James Danehy............. 42,337 $ 578,050 58,064 142,957 $ 776,659 $ 1,952,960
Bernard O.C. Questier....... -- -- 10,780 26,177 147,268 357,609
R. Michael Rodgers.......... 12,120 164,923 5,744 17,616 78,170 239,955
Michael K. Cusack........... 12,935 176,708 3,080 13,550 42,076 185,109
David P. Pauluzzi........... 8,131 110,727 3,620 17,765 49,073 240,378
</TABLE>
- ---------------
(1) The value of "in-the-money" stock options represents the positive spread
between the exercise price of stock options, which ranges from $0.60 per
share to $1.62 per share, and the fair market value for the Company's Common
Stock of $14.50 per share as of December 31, 1996, which was the closing
price of the Company's Common Stock on December 31, 1996.
10
<PAGE> 13
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Bernard O.C. Questier, its
Vice President of European Operations. The agreement provides for annual
compensation of $150,000, which is fixed to the French Franc to protect against
currency fluctuations should the United States Dollar depreciate relative to the
French Franc; however, if the United States Dollar appreciates relative to the
French Franc, Mr. Questier's salary shall remain unchanged. The agreement also
provides for, in the event of Mr. Questier's termination, continued compensation
through the quarter in which notice of termination is given plus one additional
full quarter. The agreement does not provide for any specified term of
employment. The Company currently has no employment contracts or agreements with
any of the other officers named in the Summary Compensation Table or with any
other person.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Compensation Committee of the Board of Directors consists of Jack W.
Schuler, James R. Weersing and Edward M. Giles. The Compensation Committee makes
recommendations to the Board of Directors concerning salaries and incentive
compensation for employees of and consultants to the Company, except that the
Compensation Committee has full power and authority to grant stock options to
the Company's executive officers under the Company's 1996 Stock Option Plan. Mr.
Danehy served as a member of the Compensation Committee until April 1996.
11
<PAGE> 14
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The following is provided to stockholders by the members of the
Compensation Committee of the Board of Directors:
The Compensation Committee of the Board of Directors (the "Committee"),
comprised of three outside directors, is responsible for the administration of
the Company's compensation programs. These programs include base salary for
executive officers and both annual and long-term incentive compensation
programs. The Company's compensation programs are designed to provide a
competitive level of total compensation and include incentive and equity
ownership opportunities linked to the Company's performance and stockholder
return.
COMPENSATION PHILOSOPHY
The design and implementation of the Company's executive compensation
programs are based on a series of guiding principles derived from the Company's
values, business strategy and management requirements. These principles may be
summarized as follows:
- Align the financial interests of the management team with the Company and
its stockholders;
- Attract, motivate and retain high-caliber individuals necessary to
increase total return to stockholders;
- Provide a total compensation program where a significant portion of pay
is linked to individual achievement and short- and long-term Company
performance; and
- Emphasize reward for performance at the individual, team and Company
levels.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code adopted under the Federal Revenue Reconciliation Act of
1993. Section 162(m) disallows a tax deduction for any publicly-held corporation
for individual compensation exceeding $1 million in any taxable year for any of
the named executive officers, unless compensation is performance based. Since
the targeted cash compensation of each of the named executive officers is well
below the $1 million threshold and the Committee believes that any options
granted under the Company's stock option plan will meet the requirement of being
performance based under the transition provisions provided in the regulations
under Section 162(m), the Committee believes that Section 162(m) will not reduce
the tax deduction available to the Company. The Company's policy is to qualify
to the extent reasonable its executive officers' compensation for deductibility
under applicable tax laws.
COMPENSATION PROGRAM
The Company's executive compensation program has three major components,
all of which are intended to attract, retain and motivate executive officers
consistent with the principles set forth above. The Committee considers these
components of compensation individually as well as collectively in determining
total compensation for executive officers.
1. Base salary. Each fiscal year the Committee establishes base
salaries for individual executive officers based upon (i) industry and peer
group surveys, (ii) responsibilities, scope and complexity of each position
and (iii) performance judgments as to each individual's past and expected
future contributions. The Committee reviews with the Chief Executive
Officer and approves, with appropriate modifications, an annual base salary
plan for the Company's executive officers other than the Chief Executive
Officer. The Committee reviews and fixes the base salary of the Chief
Executive Officer based on similar competitive compensation data and the
Committee's assessment of his past performance and its expectations as to
his future contributions in leading the Company.
12
<PAGE> 15
2. Annual cash (short-term) incentives. Annual cash incentives will
be established to provide a direct linkage between individual pay and
annual corporate performance. Target annual bonus awards will be
established for executive officer positions based upon industry and peer
group surveys and range from 5% to 25% of base salary, with 25% for the
chief executive officer position. Of the officers who served in an
executive capacity during the Last Fiscal Year, including the Chief
Executive Officer, none received cash bonuses for such service. The
National Sales Manager received a cash bonus based entirely on commissions
earned through employment as the Company's Northern Regional Sales Manager
prior to his promotion to National Sales Manager in June 1995. The Vice
President of European Operations received a one-time, nonrecurring bonus
for signing his employment contract in October 1995 and meeting certain
other conditions. In establishing bonus amounts in the future, the
Committee will primarily consider the financial performance of the Company
measured in terms of revenue growth and growth in earnings, and secondarily
consider the performance of each officer in his or her respective area of
accountability. In deciding against bonus awards for the Last Fiscal Year,
the Committee also considered the Company's unprofitable operating
performance. Each officer will establish operating objectives for the
functional area of the business for which they take responsibility at the
beginning of the Company's fiscal year. At the end of the year, they will
be rated on the attainment of those objectives. Each officer may receive a
portion or the full amount of their targeted annual performance based
bonus.
3. Equity based incentive compensation. Long-term incentives for the
Company's employees are provided under the Company's stock option plans.
Each fiscal year, the Committee considers the desirability of granting to
executive officers long-term incentives in the form of stock options. These
option grants are intended to motivate the executive officers to manage the
business to improve long-term Company performance and align the financial
interests of the management team with the Company and its stockholders. The
Committee established the grants of stock options to executive officers
(other than the Chief Executive Officer) in the Last Fiscal Year, based
upon a review with the Chief Executive Officer of proposed individual
awards, taking into account each officer's scope of responsibility and
specific assignments, strategic and operational goals applicable to the
officer, anticipated performance requirements and contributions of the
officer and competitive data for similar positions. The Committee
independently reviewed these same factors in determining the option grant
to Mr. Danehy as Chief Executive Officer. During the Last Fiscal Year, an
option award of 28,975 shares of Common Stock was granted to Mr. Danehy.
This was the only option grant made to Mr. Danehy since early 1995. Stock
options granted to executive officers typically provide for vesting over
approximately a four year period.
Respectfully submitted,
Jack W. Schuler
Edward M. Giles
James R. Weersing
The foregoing Compensation Committee Report shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
be incorporated by reference into any future filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act, except to the
extent the Company specifically incorporates it by reference into such filing.
13
<PAGE> 16
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders of
the Company's Common Stock at December 31, 1996 since July 26, 1996 (the date
the Company first became subject to the reporting requirements of the Exchange
Act) to the cumulative total return over such period of (i) the Nasdaq Stock
Market Composite Index, (ii) the Russell 2000 Index and (iii) the Dillon, Read &
Co. Medical Diagnostic Index. The graph assumes the investment of $100 on July
26, 1996 in the Company's Common Stock and each of such indices (from July 26,
1996) and reflect the change in the market price of the company's Common Stock
relative to the noted indices at December 31, 1996 and not for any interim
period. The performance shown is not necessarily indicative of future price
performance.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) COMP AVG VMSI NASDAQ Russell 2000
<S> <C> <C> <C> <C>
07/26/96 1.000000 1.000000 1.000000 1.000000
08/30/96 1.04780 1.44578 1.05750 1.06386
09/30/96 1.15450 1.78313 1.13665 1.10160
10/31/96 1.03880 1.68675 1.13161 1.08262
11/29/96 1.04927 1.63855 1.19750 1.12623
12/31/96 1.05085 1.39759 1.19599 1.15268
</TABLE>
The information contained in the Stock Performance Graph shall not be
deemed to be "soliciting material" or to be filed with the SEC, nor shall such
information be incorporated by reference into any future filing under the
Securities Act or the Exchange Act, except to the extent the Company
specifically incorporates it by reference into such filing.
14
<PAGE> 17
CERTAIN TRANSACTIONS
In April and May 1996, the Company sold an aggregate of 646,664 shares of
Common Stock to Jack Schuler, the Company's Chairman, John Patience, a director
of the Company, and venture capital funds affiliated with Marquette Venture
Partners ("Marquette"), a principal stockholder of the Company, at a purchase
price of $1.62 per share. Messrs. Schuler and Patience paid the purchase price
for their shares 10% in cash and 90% through a full recourse promissory note
secured by the underlying shares of Common Stock. Marquette paid the purchase
price for their shares in cash. These stock purchases were approved by the
Company's Board of Directors in principle in January 1996 and the specific terms
of the stock purchases were approved by the Board of Directors on February 23,
1996. The purchase price of $1.62 per share was determined by the Board of
Directors of the Company in January 1996 and equals the fair market value of
Company's Common Stock as of such date, as determined by the board. Messrs.
Schuler and Patience were provided with the opportunity to purchase these shares
in connection with (i) their efforts and assistance in completing the
acquisition of BioTek Solutions, Inc. and assisting management with the
integration of the companies, (ii) Mr. Schuler's decision to serve as Chairman
of the Board of Directors and (iii) Mr. Schuler's and Mr. Patience's devotion of
a significant portion of their work time to the Company's business.
In February 1996 the Company acquired BioTek Solutions, Inc. ("BioTek") for
aggregate consideration of $19.1 million including the issuance of approximately
$12.0 million in exchange notes (the "Exchange Notes") in exchange for notes
held by the holders of BioTek. In addition, $0.2 million in Exchange Notes were
held back from the amounts payable at the closing of the acquisition and placed
in escrow to indemnify Ventana from losses incurred in connection with certain
matters related to the acquisition.
The Exchange Notes provided each holder, during a 30-day period, the
opportunity to convert Exchange Notes into shares of Ventana Common Stock at a
conversion price of $13.53 per share. Holders of Exchange Notes who did not make
an election to convert all or any portion of such holders' Exchange Notes were
deemed to have automatically converted one-half of the principal amount of such
holders' Exchange Notes. No interest was deemed to accrue on the balance of
Exchange Notes which were converted. Upon expiration of the conversion period,
an aggregate of $3.0 million in principal amount of Exchange Notes were
converted into 222,973 shares of Common Stock and an aggregate of $9.0 million
of Exchange Notes remained outstanding.
In connection with the acquisition of BioTek in February 1996, the Company
issued (the "BioTek Financing") $4.6 million of convertible subordinated notes
(the "Ventana Notes") together with warrants to purchase 800,356 shares of
Series D Preferred Stock at an exercise price of $5.82 per share (the
"Warrants") to certain current stockholders of the Company. The proceeds from
the issuance of the Ventana Notes were used to fund all of the cash portion of
the consideration paid by Ventana to acquire BioTek plus related working capital
requirements. In May 1996, the Company provided all holders of Preferred Stock
who did not participate in the BioTek Financing the opportunity to purchase
identical securities to those issued in the BioTek Financing and pursuant to the
election by such holders, $0.5 million in principal amount of Ventana Notes and
Warrants to acquire 87,384 shares of Series D Preferred Stock were issued. The
Ventana Notes were convertible into Common Stock at a conversion price of $13.53
per share for a period of 30 days from issuance. No holders elected to convert
their Ventana Notes into Common Stock. The following table sets forth the
aggregate principal amount of the Ventana Notes and the number of shares of
Series D Preferred
15
<PAGE> 18
Stock underlying the Warrants held by executive officers, directors and 5%
stockholders as of December 31, 1996:
<TABLE>
<CAPTION>
PREFERRED
ORIGINAL SHARES
LOAN UNDERLYING
NAME PRINCIPAL WARRANTS
--------------------------------------------------------------- --------- ----------
<S> <C> <C>
MBW Venture Partners, L.P...................................... $ 938,424 162,059
Jack W. Schuler................................................ 688,601 118,917
Entities affiliated with Edward M. Giles....................... 653,944 112,933
State Farm Mutual Automobile Insurance Company................. 630,555 108,893
John Patience.................................................. 559,884 96,689
Rex J. Bates................................................... 64,698 11,728
James R. Weersing.............................................. 24,884 4,298
James M. Strickland............................................ 5,000 860
Thomas M. Grogan, M.D.(1)...................................... 2,667 459
</TABLE>
- ---------------
(1) Represents shares beneficially owned by C. Ovens, Inc.
Each share of Preferred Stock was converted into 0.37 shares of Common
Stock upon the closing of the Company's initial public offering.
In September 1996, the Company offered to repay an aggregate of $4.0
million of Exchange Notes and Ventana Notes at 90.5% of the principal amount of
such notes. On October 18, 1996, the Company repaid $3.7 million of Exchange
Notes and Ventana Notes at a discounted amount of $3.4 million. As part of such
repayments, the Company repaid $62,500, $168,000 and $50,000 in original
principal amount of Exchange Notes and Ventana Notes held by directors Jack
Schuler, Anthony Stellar and John Patience for payments of $56,562, $152,040 and
$45,250, respectively. The remaining outstanding Exchange Notes and Ventana
Notes were repaid in full with no interest accrued thereon in February 1997.
16
<PAGE> 19
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the shares they
represent as the Board of Directors may recommend.
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF EXHIBITS. REQUESTS SHOULD BE SENT
TO [INVESTOR RELATIONS], VENTANA MEDICAL SYSTEMS, INC., 3865 NORTH BUSINESS
CENTER DRIVE, TUCSON, ARIZONA 85705.
THE BOARD OF DIRECTORS
Dated: April 7, 1997
17
<PAGE> 20
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF VENTANA MEDICAL SYSTEMS, INC.
1997 ANNUAL MEETING OF SHAREHOLDERS
The undersigned stockholder of Ventana Medical Systems, Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement each dated April 7, 1997, and hereby appoints
Henry T. Pietraszek and Pierre H. Sice or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned to represent the undersigned at the 1997 Annual Meeting
of Stockholders of Ventana Medical Systems, Inc. to be held on April 29, 1997 at
9:00 a.m., local time, at the Arizona Inn, Pool Conference Room, 2200 East Elm
Street, Tucson, Arizona 85719 and at any postponement or adjournment thereof,
and to vote all shares of Common Stock which the undersigned would be entitled
to vote if then and there personally present, on the matters set forth below:
SEE REVERSE SIDE
<PAGE> 21
<TABLE>
<C> <S> <C> <C> <C> <C>
- ------ PLEASE MARK YOUR -
VOTES AS IN THIS
X EXAMPLE. -------
- ------
FOR W/H FOR AGAINST ABSTAIN
1. Election of Class I [ ] [ ] 2. Proposal to ratify the appointment [ ] [ ] [ ]
Directors of Ernst & Young LLP as independent
auditors of the Company for the year
ending December 31, 1997.
Nominees: Henry T. Pietraszek,
James R. Weersing
</TABLE>
THIS PROXY WILL BE VOTED AS
DIRECTED OR, IF NO CONTRARY
DIRECTION IS INDICATED, WILL BE
VOTED AS FOLLOWS: (1) FOR THE
ELECTION OF THE TWO NOMINATED
CLASS I DIRECTORS, (2) FOR
RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS, AND AS THE
PROXY HOLDERS DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING.
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. IF THE STOCK IS
REGISTERED IN THE NAMES OF TWO
OR MORE PERSONS, EACH SHOULD
SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND
ATTORNEYS-IN-FACT SHOULD ADD
THEIR TITLES. IF SIGNER IS A
CORPORATION, PLEASE GIVE FULL
CORPORATE NAME AND HAVE A DULY
AUTHORIZED OFFICER SIGN, STATING
TITLE. IF SIGNER IS A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
PLEASE SIGN, DATE AND PROMPTLY
RETURN THIS PROXY IN THE
ENCLOSED RETURN ENVELOPE WHICH
IS POSTAGE PREPAID IF MAILED IN
THE UNITED STATES.
Signature(s)
- ------------------------------------------ Date
- ------------------
Signature(s)
- ------------------------------------------ Date
- ------------------
NOTE: (This Proxy should be marked, signed by the stockholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
