STRATASYS INC, DEF 14A, 1997-04-15

STRATASYS INC
DEF 14A, 1997-04-15
COMPUTER PERIPHERAL EQUIPMENT, NEC

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SCHEDULE 14A
(RULE 14a-101)

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of
[x] Definitive Proxy Statement the Commission only
[ ] Definitive Additional Materials (as permitted by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-ll(c) or Rule 14a-12

STRATASYS, INC.
(Name of Registrant as Specified In Its Charter)

STRATASYS, INC.
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

[x] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
___________________________

(2) Aggregate number of securities to which transaction applies:
__________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: ________________________
(4) Proposed maximum aggregate value of transaction:
_____________________
(5) Total fee paid: __________________

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-ll(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

(1) Amount Previously Paid:$______________
(2) Form, Schedule or Registration Statement No.: _______________
(3) Filing Party: _________________
(4) Date Filed: __________________

<PAGE>

STRATASYS, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on May 15, 1997

To the Stockholders of Stratasys, Inc.:

Notice is hereby given that the Annual Meeting of Stockholders of
Stratasys Inc., a Delaware corporation (the "Company"), will be held on May 15,
1997, at the Marquette Hotel, 710 Marquette Avenue, Minneapolis, Minnesota
55402, at the hour of 3:30 p.m., for the following purposes:

1. To elect five Directors of the Company to serve until the next
annual meeting of stockholders and until their successors are
duly elected and qualified.

2. To approve an amendment of the Company's 1994-2 Amended and
Restated Stock Plan to permit the grant of performance-based
options under the Plan.

3. To transact such other business as may properly come before
the Annual Meeting or adjournments thereof.

Only stockholders of record at the close of business on April 10, 1997
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.

Eden Prairie, Minnesota By Order of the Board of Directors
April 15, 1997
Lisa Crump
Secretary

IMPORTANT:

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE PROMPTLY
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY, AND RETURN IT TO THE COMPANY. THE PROXY MAY BE REVOKED
AT ANY TIME BEFORE IT IS VOTED, AND STOCKHOLDERS EXECUTING PROXIES MAY ATTEND
THE MEETING AND VOTE IN PERSON SHOULD THEY SO DESIRE.

<PAGE>

STRATASYS, INC.
14950 MARTIN DRIVE
EDEN PRAIRIE, MINNESOTA 55344-2020
(612) 937-3000
www.stratasys.com

--------------------------

PROXY STATEMENT

--------------------------

The Board of Directors of Stratasys, Inc. (the "Company") presents this
Proxy Statement and the enclosed proxy card to all stockholders and solicits
their proxies for the Annual Meeting of Stockholders to be held on May 15, 1997.
The record date of this proxy solicitation is April 10, 1997. All proxies duly
executed and received will be voted on all matters presented at the Annual
Meeting in accordance with the instructions given by such proxies. In the
absence of specific instructions, proxies so received will be voted for the
named nominees for election to the Company's Board of Directors and to approve
the amendment of the Company's Amended and Restated 1994-2 Stock Plan (the
"Plan"). The Board of Directors anticipates that all of its nominees for
election to the Company's Board of Directors will be available for election and
does not know of any matters that may be brought before the Annual Meeting other
than those listed on the Notice of the Annual Meeting.

In the event that any other matter should come before the Annual
Meeting or that any nominee is not available for election, the persons named in
the enclosed proxy will have discretionary authority to vote all proxies not
marked to the contrary with respect to such matter in accordance with their best
judgment. A proxy may be revoked at any time before being voted by sending a new
proxy bearing a later date or a revocation notice to the Company at the above
address, attn: Secretary, or by notifying the Secretary of the Company at the
Annual Meeting. The Company is soliciting these proxies and will pay the entire
expense of solicitation, which will be made by use of the mails. This Proxy
Statement is being mailed on or about April 15, 1997.

The total number of shares of common stock, $.01 par value ("Common
Stock"), of the Company outstanding as of March 14, 1997, was 5,627,916 shares.
The Common Stock is the only outstanding class of securities of the Company
entitled to vote. Each share of Common Stock has one vote. Only stockholders of
record as of the close of business on April 10, 1997 will be entitled to vote at
the Annual Meeting or any adjournments thereof.

The affirmative vote by holders of a plurality of the votes represented
at the Annual Meeting is required for the election of Directors and a majority
of the shares present at the Annual Meeting and entitled to vote is required to
approve the amendment of the Plan. All proxies will be counted for determining
the presence of a quorum. Votes withheld in connection with the election of one
or more nominees for Director will not be counted as votes cast for such
individuals. In addition, where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not provided voting
instructions (commonly referred to as "broker non-votes"), those shares will not
be included in the vote totals.

A list of stockholders entitled to vote at the Annual Meeting will be
available at the Company's principal office, 14950 Martin Drive, Eden Prairie,
Minnesota, during business hours, for a period of ten (10) days prior to the
Annual Meeting for examination by any stockholder. Such list shall also be
available at the Annual Meeting.

ACTIONS TO BE TAKEN AT THE ANNUAL MEETING

PROPOSAL 1. ELECTION OF DIRECTORS

The Directors to be elected at the Annual Meeting will serve until the
next Annual Meeting of Stockholders and until their successors are duly elected
and qualified. Proxies not marked to the contrary will be voted "FOR" the
election to the Board of Directors of the following five persons, all of whom
are incumbent Directors.

The following table sets forth information concerning the nominees:

Name Age Position
- ---- --- --------

S. Scott Crump 44 Chairman of the Board of Directors; Chief
Executive Officer; President; Treasurer
and Chief Financial Officer

Ralph E. Crump 74 Director

Clifford H. Schwieter 49 Director

Arnold J. Wasserman 60 Director

Gregory L. Wilson 50 Director

BIOGRAPHICAL INFORMATION ABOUT NOMINEES

S. Scott Crump has served as Chief Executive Officer, President,
Treasurer and a director of the Company since its inception in 1988 and as Chief
Financial Officer since February 1990. During the period from 1982 to 1988, Mr.
Crump was a co-founder and Vice President of Sales of IDEA, Inc., which is now
called Structural Instrumentation, Inc., a public company that manufactures
on-board scales for the trucking industry. Mr. Crump remains on the board of
directors and is a significant shareholder of that company. Mr. Crump is a
registered professional engineer. He is the son of Ralph E. Crump, a director of
the Company, and the husband of Lisa Crump, the Company's corporate secretary.

Ralph E. Crump has been a director of the Company since 1990. Mr. Crump
is President of Crump Industrial Group, an investment firm located in Trumbull,
Connecticut. He is also a founder and director of Osmonics, Inc., a manufacturer
of reverse osmosis water filtration devices; IMTEC, Inc., which manufactures bar
code labeling equipment; and Structural Instrumentation, Inc. In 1962, Mr. Crump
founded Frigitronics, Inc., a manufacturer of ophthalmic goods and medical
instruments, and was its President and Chairman of the Board until December
1986. Mr. Crump is also a director and co-founder of Mity-Lite, Inc., a public
company that manufactures plastic tables. He is a Trustee of the Alumni
Foundation of UCLA and a member of the Board of Overseers for the Thayer
Engineering School at Dartmouth College. Mr. Crump is the father of Scott Crump
and the father-in-law of Lisa Crump.

Clifford H. Schwieter has been a director of the Company since July
1994. Since April 1994, Mr. Schwieter has been the President and a Managing
Director of C.H. Schweiter and Associates, a financial consulting firm. From
July 1992 to March 1994, he served as President, Chief Executive Officer and a
director of Centric Engineering Systems, Inc., which was engaged in the
development of mechanical design and analysis software for computing systems
ranging from workstations to mainframes and massively parallel networked
computing environments. Mr. Schwieter was Vice President and General Manager of
the Electronic Imaging Systems Division of the DuPont Company from 1986 to 1991.
From 1971 to 1986, Mr. Schwieter was with the General Electric Company, where he
served as Vice President of GE's Calma Company from 1985 to 1986 and was
responsible for that subsidiary's worldwide business in the mechanical design
and factory automation arena. He was President and Representative Director of GE
Industrial Automation, Ltd., a joint venture between GE and C. Itoh & Company
located in Tokyo, from 1982 to 1985. Mr. Schweiter is also a director of PCS
Technology, Inc., a software development company.

Arnold J. Wasserman became a director of the Company on November 21,
1994, as the designee of the M.H. Meyerson & Co., Inc., the underwriter of the
Company's initial public offering. Mr. Wasserman has, for the past 25 years,
been a principal of P & A Associates, a leasing/consulting firm. Prior to that,
he held positions with IBM and Litton Industries. Mr. Wasserman has consulted
with major corporations in the areas of marketing, advertising and sales. He is
a director of On-Sight Sourcing, Inc., a publicly traded company.

Gregory L. Wilson became a director of the Company on October 20, 1994.
He is the founder of Mity-Lite, Inc. (NASDAQ) and has served as President and a
director of that company since 1987, as well as its Chairman of the Board since
1988 and its Treasurer since 1993. From 1982 until 1987, Mr. Wilson was
President of Church Furnishings, Inc. in Provo, Utah. In 1988, he transferred
his ownership interest in Church Furnishings, Inc. to a co-founder of Mity-Lite,
Inc. in exchange for that person's interest in Mity-Lite, Inc.

INFORMATION ABOUT THE BOARD OF DIRECTORS,
COMMITTEES OF THE BOARD, AND EXECUTIVE OFFICERS

MEETINGS OF THE BOARD OF DIRECTORS AND INFORMATION REGARDING COMMITTEES

The Board of Directors has two standing committees, an Audit Committee
and a Compensation Committee. The Board does not have a standing Nominating
Committee.

The Audit Committee is composed of Arnold J. Wasserman (Chairman),
Gregory Wilson and Clifford H. Schwieter. The duties of the Audit Committee
include recommending the engagement of independent auditors, reviewing and
considering actions of management in matters relating to audit functions,
reviewing with independent auditors the scope and results of its audit
engagement, reviewing reports from various regulatory authorities, reviewing the
system of internal controls and procedures of the Company, and reviewing the
effectiveness of procedures intended to prevent violations of law and
regulations. The Audit Committee held three (3) meetings in 1996.

The Company's Compensation Committee is composed of Clifford H.
Schwieter (Chairman), Ralph E. Crump, S. Scott Crump, Arnold J. Wasserman and
Gregory L. Wilson. The duties of this Committee are to recommend to the Board
remuneration for officers of the Company, to determine the number and issuance
of options pursuant to the Company's stock option plans and to recommend the
establishment of and to monitor a compensation and incentive program for all
executives of the Company. The Compensation Committee held one (1) meeting in
1996.

The Board of Directors held five (5) meetings in 1996. All Directors
attended at least 75% of the total number of Board meetings and of the meetings
of committees on which they served.

EXECUTIVE OFFICERS

In addition to Scott Crump, the Company's Chairman, President, Chief
Executive Officer, Treasurer, and Chief Financial Officer, the following
individuals serve as executive officers of the Company:

Donald W. Moffatt, 57, has served as Chief Operating Officer of the
Company since February 1996. Prior to joining the Company, from 1984 to 1995,
Mr. Moffatt served as President of Rosemont Aerospace, Inc., a manufacturer of
aircraft measuring instruments and a subsidiary of B.F. Goodrich. Before he
joined Rosemont Aerospace in 1978, Mr. Moffatt, who is an electrical engineer,
was employed by Control Data Corporation.

Lisa H. Crump, 44, a co-founder of the Company, has served as its
corporate Secretary since its inception in 1988 and as Vice President since
1990. From 1983 to 1988, Ms. Crump was marketing manager of IDEA, Inc. Ms. Crump
is the wife of S. Scott Crump and the daughter-in-law of Ralph E. Crump.

Lawrence E. Roscoe, 48, has served as Vice President of Software
Development of the Company since 1991. He has over 25 years of software
development experience in engineering and manufacturing applications. Prior to
joining the Company, Mr. Roscoe was Vice President of Software Development at
Camax from 1987 to 1991. Mr. Roscoe has also held similar positions with Zycad,
Inc., Control Data Corporation and Digital Equipment Corporation.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

The following table sets forth the cash and non-cash compensation paid by the
Company for services rendered (a) during the fiscal years ended December 31,
1994, December 31, 1995 and December 31, 1996 to Scott Crump, its Chairman,
President, Chief Executive Officer, Treasurer, and Chief Financial Officer and
(b) during the fiscal year ended December 31, 1996 to Donald W. Moffatt, its
Chief Operating Officer, the only executive officer of the Company who received
compensation in excess of $100,000 during any of the fiscal years ended December
31, 1994, 1995, and 1996.

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

Annual Compensation Long-Term Compensation
------------------------------------- ----------------------
Name and Other Securities
Principal Annual Underlying
Position Year Salary Bonus Compensation Options/SARs
-------- ---- ------ ----- ------------ ----------------------
<S> <C> <C> <C> <C> <C>
S. Scott Crump 1996 $95,000(1) $3,923(2) 0 2,000
Chairman,
President, 1995 $86,654(1) $3,654(3) 0 0
CEO,
Treasurer, and 1994 $67,721(4) $2,248 0 0
CFO

Donald W. Moffatt 1996 $97,385(5) $2,769(6) $30,000(7) 23,000
Chief
Operating
Officer

</TABLE>
- ----------------------
(1) Mr. Crump was paid at the rate of $85,000 per year until November 1,
1995. Upon approval by the Board of Directors, commencing on that date,
Mr. Crump was then paid at the rate of $95,000 per year for the
remainder of 1995 and for 1996.

(2) $2,923 of this bonus was earned in 1996 and paid in 1997.

(3) This bonus was earned in 1995 and paid in 1996.

(4) Mr. Crump was paid at the rate of $60,000 per year until October 20,
1994. On that date, an employment agreement between Mr. Crump and the
Company became effective, pursuant to which Mr. Crump was then paid at
the rate of $85,000 per year for the remainder of 1994.

(5) Mr. Moffatt became Chief Operating Officer of the Company on February
19, 1996 and was paid at the rate of $120,000 per year from February to
October 1996. Mr. Moffatt was paid at the rate of $90,000 per year for
the months of November and December 1996.

(6) This bonus was earned in 1996 and paid in 1997.

(7) The Company issued Mr. Moffatt 2,000 shares of its Common Stock on July
2, 1996, as additional compensation.

The table below includes the number of stock options granted to the
executive officers named in the Summary Compensation Table during the year ended
December 31, 1996 and exercise information.

<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)

Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted(#) Fiscal Year Price($/sh) Date
- ---- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
S. Scott Crump 2,000(1) .9% $16.50 3/25/2002

Donald W. Moffatt 23,000(1) 10.9% $16.50 3/25/2002

</TABLE>
- -----------------------
(1) One-fifth of these options vests on each of the first through the fifth
anniversaries of the date of grant. Termination of employment prior to
vesting results in forfeiture of the options that have not vested.

The table below includes information regarding the value realized on
option exercises and the market value of unexercised options held by the
executive officers named in the Summary Compensation Table during the year ended
December 31, 1996.

<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY- END OPTION VALUES

Value of
Number of Unexercised
Unexercised In-The-Money
Shares Options at Options at
Acquired FY-End(#) FY-End($)
on Exer- Value Exercisable/ Exercisable/
Name cise (#) Realized($) Unexercisable Unexercisable(1)
---- -------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
S. Scott Crump -- -- 0/2,000 0/$6,750

Donald W. Moffatt -- -- 0/23,000 0/$77,625

</TABLE>
- --------------------------
(1) Based upon a closing price of $19.875 on the Nasdaq National Market on
December 31, 1996.

DIRECTORS' FEES

Directors currently receive no cash compensation for serving on the
Board of Directors other than reimbursement of reasonable expenses incurred in
attending meetings. Three Directors have received a non-qualified stock option
to purchase 30,000 shares of the Company's Common Stock for their service on the
Board of Directors. One of such directors was granted options before the
Company's August 1994 stock split, and his options currently entitle him to
purchase 43,118 shares of Common Stock. "CERTAIN TRANSACTIONS--Directors'
Options" for a discussion of options granted to certain directors.

EMPLOYMENT AGREEMENTS

The Company entered into an Employment Agreement with S. Scott Crump,
its President, on September 1, 1994, which became effective on October 20, 1994.
The Employment Agreement expires in October 1997 and provides that Mr. Crump
shall devote all of his business time to the Company in consideration for an
annual salary of $85,000. Increased or additional compensation must be approved
by the Board of Directors, including the right to participate in incentive
compensation plans, if any, established by the Company. Mr. Crump's annual
salary under the Employment Agreement was increased by the Board of Directors to
$95,000, effective November 1, 1995. The Employment Agreement restricts Mr.
Crump's right to work for any competitor of the Company for a period of one year
after termination of his employment by the Company. In addition, if the Company
terminates Mr. Crump's employment for "Cause," as such term is defined in the
Employment Agreement, the Company must pay Mr. Crump only one monthly
installment of his salary. If Mr. Crump is terminated for "Good Reason," as such
term is defined in the Employment Agreement, Mr. Crump will receive one such
monthly installment of salary plus twelve additional monthly installments. Mr.
Crump received a bonus of $3,923 for 1996, of which, $2,923 was earned in 1996
and paid in 1997.

STOCK OPTION PLANS

The Company has established three employee stock option plans. The
three plans provide for the grant of options to qualified employees (including
officers and directors) of the Company, independent contractors, consultants and
other persons to purchase an aggregate of 800,000 shares of Common Stock. The
plans are administered by the Compensation Committee of the Board of Directors.

Options to purchase 70,000 shares of Common Stock (adjusted to 100,608
shares to reflect the Company's stock split in August 1994), which constitute
the total number of shares authorized under the Stratasys, Inc. Employee Stock
Option Plan #1, adopted in October 1990 ("Plan 1"), have all been granted. As of
March 14, 1997, options to purchase 65,970 shares under Plan 1 have been
exercised, and Plan 1 expires on April 19, 2001. Options to purchase 199,392
shares of Common Stock, which constitute the total number of shares authorized
under the Amended and Restated Stratasys, Inc. 1994 Stock Plan ("Plan 2"),
adopted in August 1994, have all been granted. As of March 5, 1997, options to
purchase 127,684 shares under Plan 2 have been exercised. The Stratasys, Inc.
1994-2 Stock Plan ("Plan 3"), adopted by the Board of Directors on December 13,
1994 and amended on March 1, 1996, authorizes the purchase of 1,000,000 shares
of Common Stock. Through March 5, 1997, options to purchase an aggregate of
734,952 shares have been granted under Plan 3, options to purchase 174,921
shares have been exercised and 82,064 options have terminated, expired or have
been canceled, and are again available for grant.

COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 14, 1997, certain
information concerning the beneficial ownership of Common Stock by (i) each
person known by the Company to be the owner of more than 5% of the outstanding
Common Stock, (ii) each Director, (iii) each executive officer named in the
Summary Compensation Table above, and (iv) all Directors and executive officers
as a group. The number of shares beneficially owned by each director or
executive officer is determined by the rules of the Securities and Exchange
Commission, and the information is not necessarily indicative of beneficial
ownership for any other purpose.

Name and Address Amount and Nature
of Beneficial of Beneficial Percentage of Outstanding
Owners Ownership(1) Owned(2)
- ---------------- ----------------- -------------------------

International Business 500,000 8.88%
Machines Corp.
Old Orchard Road
Armonk, NY 10504

S. Scott and Lisa Crump(3)(4) 760,435(4) 13.51%

Ralph E. Crump 309,330(5) 5.49%
28 Twisted Oak Cir.
Trumbull, CT 06611

Arnold J. Wasserman 58,330(6) 1.03%
1 Brookwood Dr.
West Caldwell, NJ 07006

Clifford H. Schwieter 5,318(7) *
102 E. Crest Dr.
Cincinnati, OH 45215

Donald W. Moffatt 6,600(8) *
6595 Harbor Beach
Prior Lake, MN 55372

Gregory L. Wilson 25,000(9) *
1301 W. 400 North
Orem, UT 84057

All directors and executive 1,172,062(10) 20.82%
officers as a group
(8 persons)

- ---------------------
* Represents less than 1%.

(1) Under Securities and Exchange Commission rules, beneficial ownership
includes any shares as to which an individual has sole or shared voting
power or investment power. Unless otherwise indicated, the Company
believes that all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock
beneficially owned by them. A person is also deemed to be the
beneficial owner of securities that can be acquired by such person
within 60 days from the date hereof upon the exercise of warrants or
options. Each beneficial owner's percentage ownership is determined by
assuming that options or warrants that are held by such person (but not
those held by any other person) and which are exercisable within 60
days from the date hereof have been exercised.

(2) Based on a total of 5,627,916 shares of Common Stock issued and
outstanding as of the date of March 14, 1997.

(3) The address of this person is in care of the Company, 14950 Martin
Drive, Eden Prairie, Minnesota 55344.

(4) S. Scott Crump owns 380,014 shares individually, and Lisa H. Crump owns
379,621 shares individually. Lisa and Scott Crump are husband and wife,
but disclaim beneficial ownership of each other's shares. They also
disclaim beneficial ownership of the 154,665 shares held by Ralph
Crump, Scott Crump's father and Lisa Crump's father-in-law, and the
154,665 shares held by Marjorie Crump, Scott Crump's mother and Lisa
Crump's mother-in-law. By virtue of their ownership of shares of Common
Stock and position with the Company, S. Scott Crump and Lisa Crump may
be deemed "parents" and "founders" of the Company as such terms are
defined under the federal securities laws. Includes 800 shares of
Common Stock issuable upon the exercise of options currently
exercisable by S. Scott Crump and Lisa Crump.

(5) Includes 154,665 shares owned by Marjorie Crump, Mr. Crump's wife, of
which Mr. Crump disclaims beneficial ownership. Excludes the following
shares of which Mr. Crump disclaims beneficial ownership: 380,014
shares held by Mr. Crump's son, S. Scott Crump, and 379,621 shares held
by Mr. Crump's daughter-in-law, Lisa H. Crump.

(6) Includes 58,330 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Wasserman. Excludes 11,670 shares
of Common Stock issuable pursuant to options granted to him, which
become exercisable through September 30, 1997. See "CERTAIN
TRANSACTIONS--Consulting Agreements" and "CERTAIN
TRANSACTIONS--Directors' Options."

(7) Includes 3,593 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Schwieter. Excludes 3,593 shares
issuable pursuant to options granted to him, which become exercisable
through June 30, 1997. See "CERTAIN TRANSACTIONS--Consulting
Agreements" and--Directors' Options."

(8) Includes 4,600 shares of Common Stock issuable upon the exercise of
options currently exercisable by Donald W. Moffatt.

(9) Includes 25,000 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Wilson. Excludes 5,000 shares
issuable pursuant to options granted to him, which become exercisable
through September 30, 1997. See "CERTAIN TRANSACTIONS--Directors'
Options."

(10) Includes 1,100 shares of Common Stock issuable upon options currently
exercisable by Lawrence E. Roscoe.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, Directors and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, Directors and ten percent stockholders are required by
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Based on the Company's copies of such forms received, or written
representations from certain reporting persons that no Form 5's were required
for those persons, the Company believes that, during 1996, Officers, Directors
and greater than ten percent beneficial owners complied with all applicable
filing requirements.

CERTAIN TRANSACTIONS

IBM ASSET PURCHASE

The Company purchased certain rapid prototyping assets (the "Assets")
from International Business Machines Corporation ("IBM"), on January 1, 1995,
pursuant to an Assignment and Sale of Rapid Prototyping Technology and Related
Assets Agreement.

The Assets acquired by the Company from IBM comprised both tangible and
intangible assets. All of the intangible assets related to rapid prototyping
technology developed by IBM and consisted of three patents, eight patent
applications, documentation (technical reference handbooks, technical
disclosures, publications and other written material used in connection with
such rapid prototyping technology), know-how (including trade secrets, technical
information and data, test reports and data, engineering, scientific and
practical information and formulae, equipment designs and drawings, and
commercial sources of information and material), computer software (including
programming codes), and certain licensing agreements. The tangible personal
property acquired comprised machinery, equipment, furniture, supplies, spare
parts, tools, prototypes and components of rapid prototyping devices and other
related assets (the "Non-Technology Assets").

In consideration for the Assets, the Company issued 500,000 shares of
its Common Stock to IBM and agreed to pay IBM an aggregate of $500,000. Of the
$500,000 to be paid, $285,284.64 was paid at closing in cash for the patents,
and the balance of $214,715.36 is being paid in installments through September
1999 as lease payments for certain of the Non-Technology Assets which support
the development of the rapid prototyping technology. The lease terms for the
Non-Technology Assets, are set forth in an Equipment Lease Agreement between the
parties dated as of January 1, 1995. In addition, the Company and IBM entered
into a Representations and Registration Rights Agreement wherein the Company
granted IBM "piggyback" registration rights with respect to the 500,000 shares
of Common Stock acquired by it, commencing at any time after January 1, 1997,
and two "demand" registration rights, commencing at any time after the January
1, 1998.

CONSULTING AGREEMENTS

On December 15, 1994, the Company entered into a three-year consulting
agreement with Arnold J. Wasserman, a director of the Company, pursuant to which
Mr. Wasserman is to provide services to develop the Company's OEM leasing
program and the sales and marketing to CT scanner manufacturers and to perform
such other services as are required by the Company. In consideration for these
services, Mr. Wasserman received a non-qualified option to purchase 40,000
shares of Stratasys Common Stock at an exercise price of $5.375. Options to
purchase 3,333 shares became exercisable as of December 31, 1994, with an
additional 3,333 vesting on the last day of each calendar quarter through
September 30, 1997. The options expire on December 14, 1999, and are covered by
the Company's S-8 Registration Statement.

On April 1, 1995, the Company entered into a two-year consulting agreement with
Clifford Schwieter, a director of the Company, pursuant to which Mr. Schwieter
provides marketing and technical consulting services to the Company. In
consideration for these services, Mr. Schwieter is to receive, on a per project
basis, between $0 and $5,000 per month depending on the project. In addition,
Mr. Schwieter received non-qualified stock options, pursuant to Plan 3, to
purchase 15,000 shares of Common Stock at an exercise price of $6.81 per share.

DIRECTORS' OPTIONS

In August 1994, the Company entered into a stock option agreement with
Clifford Schwieter. In consideration for his services as a director of the
Company, Mr. Schwieter received a non-qualified option to purchase 43,118 shares
of Common Stock at an exercise price of $3.83 per share. Options to purchase
3,593 shares became exercisable as of September 30, 1994, with an additional
3,593 shares vesting on the last day of each calendar quarter through June 30,
1997. The options expire on September 29, 1999, and all but 7,187 options have
been exercised.

On December 15, 1994, the Company entered into a stock option agreement
with Arnold J. Wasserman. In consideration for his services as a director of the
Company, Mr. Wasserman received a non-qualified option to purchase 30,000 shares
of Common Stock at an exercise price of $5.375. Options to purchase 2,500 shares
became exercisable as of December 31, 1994, with an additional 2,500 vesting on
the last day of each calendar quarter through September 30, 1997. The options
expire on December 14, 1999, and no options have been exercised.

On December 15, 1994, the Company entered into a stock option agreement
with Gregory L. Wilson. In consideration for his services as a director of the
Company, Mr. Wilson received a non-qualified option to purchase 30,000 shares of
Common Stock at an exercise price of $5.375. Options to purchase 2,500 shares
became exercisable as of December 31, 1994, with an additional 2,500 vesting on
the last day of each calendar quarter through September 30, 1997. The options
expire on December 14, 1999 and no options have been exercised.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE FOREGOING NOMINEES LISTED IN THE FOREGOING PROPOSAL 1.

PROPOSAL 2. APPROVAL OF AMENDMENT TO STRATASYS, INC. AMENDED AND
RESTATED 1994-2 STOCK PLAN

The Board of Directors of the Company has adopted, subject to the
approval of stockholders, an amendment to the Stratasys, Inc. Amended and
Restated 1994-2 Stock Plan (the "Amended and Restated Plan"), to authorize the
grant of performance-based options and to set performance standards with respect
to such options upon which vesting is conditioned. The terms of the Amended and
Restated Plan require approval of that amendment by the Company's stockholders.
The Board of Directors also amended the Amended and Restated Plan in certain
other respects that do not require approval by the Company's stockholders. The
Amended and Restated Plan as further amended by the Board is referred to below
as the "Plan". The Company has granted 48,500 performance-based options under
the Plan, subject to stockholder approval.

GENERAL

The Plan was initially approved by the Company's stockholders in May
1995, and an amendment to increase the number of shares of Common Stock that may
be issued under the Plan was approved in May 1996. The Plan, however, does not
afford the Company the latitude to grant performance-based options. The Board of
Directors has deemed it in the best interest of the Company to amend the Plan so
as to provide for both performance-based and non-performance-based options. A
performance-based option is an option that vests based on the attainment of
specified performance goals by the participant or by the Company and/or one or
more of its subsidiaries and/or divisions. It is the opinion of the Board of
Directors that by affording the Company the latitude to grant performance-based
options, the Plan may be further used to maintain and strengthen the desire of
the Company's employees and other persons contributing to the Company and its
subsidiaries to remain with the Company, to stimulate their efforts on the
Company's behalf, and also to attract other qualified personnel to provide
services on behalf of the Company.

The affirmative vote by holders of a majority of the votes cast is
required for approval of the amendment to the Plan to provide for
performance-based options. If the amendment is not approved, the Company will
not be permitted to grant performance-based options under the Plan and any
previously granted performance-based options will become null and void. Other
amendments to the Plan not requiring stockholder approval will be effective
regardless of whether the Company's stockholders approve the amendment
authorizing performance-based options. The Board recommends a vote in favor of
approval of the amendment to the Plan.

SUMMARY OF THE AMENDMENT

The Plan will be amended to specifically allow the grant of
performance-based options and to amend the vesting provisions to allow for
vesting based upon the attainment of specified performance goals. The vesting
provisions currently require all options granted under the Plan to become
exercisable no later than five years from the date of grant and to vest at a
rate of not less than 20% in any of the first five years of the option. As
amended, the Plan would allow the Board of Directors, or a committee thereof, in
its discretion, to condition an option's vesting upon the attainment of one or
more performance standards. The performance standards may vary among the
options.

NEW PLAN BENEFITS

The Company has granted, subject to stockholder approval, 48,500
performance-based options through the date hereof, none of which have vested.
The weighted average exercise price of such performance-based options is $16.42.
No executive officers named in the Summary Compensation Table has received
performance-based options under the Plan, and one other executive officer has
received performance-based options to purchase 2,500 shares, subject to
stockholder approval.

SUMMARY OF THE PLAN

The following description summarizes certain provisions of the Plan,
which is qualified in its entirety by reference to the text of the Plan, copies
of which are available for examination at the Securities and Exchange Commission
and at the principal office of the Company, 14950 Martin Drive, Eden Prairie,
Minnesota 55344. Additional information about the Plan may be obtained from the
Company's Secretary at (612) 937-3000.

The Plan allows the Company to grant incentive stock options ("ISOs"),
as defined in Section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code"), Non-Qualified Stock Options ("NQSOs") not intended to qualify
under Section 422(b) of the Code, and Stock Appreciation Rights ("SARs"). ISOs,
NQSOs, and SARs are collectively referred to below as "Options." The Plan is
intended to provide the employees, directors, independent contractors and
consultants of the Company with an added incentive to continue their services to
the Company and to induce them to exert their maximum efforts toward the
Company's success. The Board has deemed it in the best interest of the Company
to establish the Plan so as to provide employees and the other persons listed
above the opportunity to acquire a proprietary interest in the Company by means
of grants of options to purchase Common Stock. The Plan is not subject to ERISA.

ELIGIBILITY FOR PARTICIPATION

Under the Plan, ISOs or ISOs in tandem with SARs, subject to the
requirements set forth in Temp. Reg. Section 14a.422A-1, A-39 (a)-(e), may be
granted, from time to time, to employees of the Company, including officers, but
excluding directors who are not otherwise employees of the Company. NQSOs and
NQSOs in tandem with SARs may be granted from time to time under the Plan to
employees of the Company, officers, directors, independent contractors,
consultants and other individuals who are not employees of, but are involved in
the continuing development and success of, the Company (persons entitled to
receive Options are referred to herein as "Participants"). ISOs and ISOs in
tandem with SARs may not be granted under the Plan to any person for whom shares
first become exercisable under the Plan or any other stock option plan of the
Company in any calendar year having an aggregate fair market value (measured at
the respective time of grant of such Options) in excess of $100,000. Any grant
in excess of such amount will be deemed a grant of an NQSO. Furthermore, not
more than 50,000 Options may be granted to a Participant in any calendar year.
The Company presently has 119 employees (including one director-employee), four
outside directors and two outside consultants who are eligible for grants of one
or more types of Options under the Plan.

ADMINISTRATION

The Plan is to be administered by the Board of Directors, by the
Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee"), or another committee of the Board of Directors of the
Company composed solely of at least two "outside directors" (as defined under
Section 162(m) of the Code). The administrator of the Plan, whether the Board of
Directors itself, the Compensation Committee and/or any other Committee of the
Board of Directors is referred to below as the "Committee," unless the context
otherwise requires. The Committee has the authority, in its discretion, to
determine the persons to whom Options will be granted, the character of such
Options, the manner of exercising and making payment for shares of Common Stock
and the number of shares of Common Stock to be subject to each Option. A
committee of the Board of Directors composed solely of at least two outside
directors, to the extent the Company has two such outside directors, will be
required to administer the Plan with respect to employees included within the
term "covered employee" under Section 162(m) of the Code (generally, executive
officers of the Company).

TERMS OF OPTIONS

The terms of options granted under the Plan will be determined by the
Committee. Each Option is to be evidenced by a stock option agreement between
the Company and the employee to whom such Option is granted, and is subject to
the following additional terms and conditions:

(a) Exercise of the Option: The Committee will determine the time
periods during which Options granted under the Plan may be exercised. An Option
must be granted within ten (10) years from the date the Plan was adopted by the
Board may not have an expiration date later than ten (10) years from the date of
grant. Unless otherwise provided in any option agreement issued under the Plan,
any Option granted under the Plan may be exercisable in whole or in part at any
time during the exercise period and, other than with respect to
performance-based options, must become fully exercisable within five years from
the date of its grant and vest at a rate of not less than 20% of the Option in
the aggregate in each of the first five years of the Option. The Committee may,
in its sole discretion, accelerate any such vesting period after the grant
thereof. The vesting of one or more Options granted under the Plan may also be
based on the attainment of specified performance goals of the Participant or the
performance of the Company, one or more subsidiaries, parent and/or division of
one or more of the above. Notwithstanding the above, ISOs or SARs granted in
tandem with ISOs granted to a Participant owning directly or through attribution
more than 10% of the Company's Common Stock are subject to the additional
restriction that the expiration date of the Option may not be later than five
(5) years from the date of grant. An Option is exercised by giving written
notice of exercise to the Company specifying the number of full shares of Common
Stock to be purchased and tendering payment of the purchase price to the Company
in cash or certified check. At the discretion of the Committee, the exercise
price may also be paid by delivery of shares of Common Stock having a fair
market value equal to the option price, an interest-bearing promissory note in
the principal amount of the exercise price and bearing interest at a rate not
less than the imputed interest rate under the Code, or a combination of a cash
payment and/or delivery or shares and/or an interest-bearing promissory note.
Furthermore, in the case of an NQSO, at the discretion of the Committee, the
Participant may have the Company withhold from the Common Stock to be issued
upon exercise of the Option that number of shares having a fair market value
equal to the exercise price and/or the withholding amount due.

(b) Option Price: The option price of an NQSO or an SAR or in tandem
with an NQSO granted pursuant to the Plan will be determined by the Committee in
its sole discretion, but in no event may such price be less than 85% of the fair
market value of the Company's Common Stock on the date of grant. In no event may
the option price of an ISO be less than the fair market value of the Company's
Common Stock on the date of grant. Such fair market value of an ISO will be
determined by the Committee and, if the shares of Common Stock are listed on a
national securities exchange or traded on the over-the-counter market, the fair
market value will be the closing price on such exchange, or the mean of the
reported bid and asked prices of the Common Stock on the over-the-counter market
as reported by NASDAQ, the NASD OTC Bulletin Board or the National Quotation
Bureau, Inc., as the case may be, on such date. ISOs or SARs granted in tandem
with ISOs granted to holders of more than 10% of the Company's Common Stock are
subject to the additional restriction that the option price must be at least
110% of the fair market value of the Company's Common Stock on the date of
grant.

(c) Termination of Employment or Consulting Agreement; Death: Except as
provided in the Plan, or otherwise determined by the Committee in its sole
discretion, upon voluntary termination of employment with the Company or
termination of a consultant's consulting agreement prior to expiration of its
term, a Participant may exercise his Option, to the extent such Option would
otherwise be exercisable as of the date of termination or at any time within
three (3) months after the date of such termination. However, unless otherwise
determined by the Committee in its sole discretion, any Options granted under
the Plan will immediately terminate in the event the Participant is convicted of
a felony committed against the Company.

Unless extended by the Committee, if a Participant dies (i) while
employed by the Company or a subsidiary or parent corporation or (ii) within
three (3) months after the termination of his employment, his Options may be
exercised by a legatee or legatees of such Options under such individual's last
will or by such individual's estate, to the extent such Option was exercisable
as of the date of death or date of termination of employment, whichever date is
earlier, but in no event later than six (6) months after the date of death.

If a Participant becomes disabled within the definition of section
22(e)(3) of the Code while employed by the Company or a subsidiary or parent
corporation, his Options may be exercised at any time within six months after
the termination of his employment due to the disability.

An Option may not be exercised except to the extent that the
Participant was entitled to exercise the Option at the time of termination of
employment or death, and in any event it may not be exercised after the original
expiration date of the Option. In addition, in the event a Participant dies
during such time as he is employed by the Company, then fifty percent (50%) of
any outstanding Options that have not vested as of the date of death, to the
extent they have not expired, shall be automatically deemed vested and
exercisable by the Participant's estate and his legatees in accordance with
subparagraph 6(b) of the Plan.

(d) Nontransferability of Options; No Liens: ISOs and SARs granted in
tandem with ISOs are not transferable or assignable, except by will or the laws
of intestacy, and any ISO or SAR granted in tandem with an ISO is exercisable
during the lifetime of the Participant only by the Participant, or in the event
of his or her death, by a person who acquires the right to exercise the Option
by bequest or inheritance or by reason of the death of the Participant. The
Committee has the right to grant options other than ISO's or SAR's in tandem
with ISO's which may or may not be transferable or assignable.

The option agreement may contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the Board of
Directors or the Compensation Committee.

TERMINATION, MODIFICATION AND AMENDMENT OF THE PLAN

The Plan (but not Options previously granted under the Plan) will
terminate ten years from the date of its adoption by the Board of Directors. No
Option will be granted after termination of the Plan.

The Board of Directors of the Company may terminate the Plan at any
time prior to its expiration date, or from time to time make such modifications
or amendments of the Plan as it deems advisable. However, the Board may not,
without the approval of a majority of the then outstanding shares of the Company
entitled to vote thereon, except under conditions described under "Adjustments
Upon Changes in Capitalization," increase the maximum number of shares as to
which Options may be granted under the Plan, materially change the standards of
eligibility under the Plan, or adopt a new plan.

No termination, modification or amendment of the Plan may adversely
affect the terms of any outstanding options without the consent of the holders
of such Options.

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

In the event that the number of outstanding shares of Common Stock of
the Company is changed by reason of recapitalization, reclassification, stock
split, stock dividend, combination, exchange of shares, or the like, the Board
of Directors of the Company will make an appropriate adjustment in the aggregate
number of shares of Common Stock available under the Plan, in the number of
shares of Common Stock reserved for issuance upon the exercise of then
outstanding Options and in the exercise prices of such Options. Any adjustment
in the number of shares will apply proportionately only to the unexercised
portion of Options granted under the Plan. Fractions of shares resulting from
any such adjustment shall be revised to the next higher whole number of shares.

In the event of the proposed dissolution or liquidation of
substantially all of the assets of the Company, all outstanding Options will
automatically terminate, unless otherwise provided by the Board.

FEDERAL INCOME TAX CONSEQUENCES

The following discussion is only a summary of the principal Federal
income tax consequences of the Options granted under the Plan and is based on
existing federal law, which is subject to change, in some cases retroactively.
This discussion is also qualified by the particular circumstances of individual
Participants, which may substantially alter or modify the Federal income tax
consequences herein discussed.

Generally, under present law, when an option qualifies as an ISO under
Section 422 of the Code, (i) an employee will not realize taxable income either
upon the grant or the exercise of the option, (ii) the amount by which the fair
market value of the shares acquired by the exercise of the option at the time of
exercise exceeds the option price is included in alternative minimum taxable
income for purposes of determining the employee's alternative minimum tax, (iii)
any gain or loss (the difference between the net proceeds received upon the
disposition of the shares and the option price paid therefor), upon a qualifying
disposition of the shares acquired by the exercise of the option will be treated
as capital gain or loss if the stock qualifies as a capital asset in the hands
of the employee, and (iv) no deduction will be allowed to the Company for
federal income tax purposes in connection with the grant or exercise of an
incentive stock option or a qualifying disposition of the shares. A disposition
by an employee of shares acquired upon exercise of an ISO will constitute a
qualifying disposition if it occurs more than two years after the grant of the
option and one year after the issuance of the shares to the employee. If such
shares are disposed of by the employee before the expiration of those time
limits, the transfer would be a "disqualifying disposition" and the employee, in
general, will recognize ordinary income (and the Company will, subject to the
limitation under Section 162(m) of the Code discussed below, receive an
equivalent deduction) equal to the aggregate fair market value of the shares as
of the date of exercise less the option price. Ordinary income from a
disqualifying disposition will constitute compensation for which withholding may
be required under federal and state law. In addition, a holder of Options
granted after August 10, 1993 may be entitled to exclude up to 50% of the gain
on any such sale occurring more than five years after the date of exercise. The
availability of such exclusion is dependent upon, among other things, the
Company not having in excess of $50 million of aggregate gross assets at any
time before the exercise of such Option. Currently under the Code, the maximum
rate of tax on ordinary income is greater than the rate of tax on long-term
capital gains. Many proposals have been made to reduce the marginal rate of tax
on capital gains. However, to date, no such proposals have been enacted into
law. Furthermore, in the future, the rate of tax on such gains may be increased.
No assurance can be given of when, if ever, new tax legislation will be enacted
into law, and the effective date of any such legislation.

In the case of an NQSO granted under the Plan, no income generally is
recognized by the Participant at the time of the grant of the Option assuming
such NQSO does not have a readily ascertainable fair market value. The
Participant generally will recognize ordinary income when the NQSO is exercised
equal to the aggregate fair market value of the shares acquired less the option
price. Ordinary income from NQSOs will constitute compensation for which
withholding may be required under federal and state law, and the Company will
receive an equivalent deduction, subject to the limitations of Section 162(m) of
the Code, which limits the amount a publicly held corporation may deduct with
respect to remuneration generally paid to an executive officer of the
Corporation to $1,000,000. Income recognized by such executive officer on the
exercise of a NQSO or SAR would be deemed remuneration. However, there are
certain requirements which, if met, will allow income from the exercise of a
NQSO or NQSO in tandem with an SAR to be excluded from remuneration for such
purposes. One of the requirements is that the Plan set forth the maximum number
of Options to which a Participant may be entitled. Even though it is believed
that the Company and the Plan satisfy such requirements, no assurance can be
given that they will be met in the future.

Shares acquired upon exercise of NQSOs will have a tax basis equal to
their fair market value on the exercise date or other relevant date on which
ordinary income is recognized and the holding period for the shares generally
will begin on the date of the exercise or such other relevant date. Upon
subsequent disposition of the shares, the Participant will recognize capital
gain or loss if the stock is a capital asset in his hands. Provided the shares
are held by the Participant for more than one year prior to disposition, such
gain or loss will be long-term capital gain or loss. As set forth above, the
maximum rate of tax on ordinary income is currently greater than the rate of tax
on long-term capital gains. To the extent an Participant recognizes a capital
loss, such loss may currently generally offset capital gains and $3,000 of
ordinary income. Any excess capital loss is carried forward indefinitely.

The grant of an SAR is generally not a taxable event for the
Participant. Upon the exercise of an SAR, the Participant will recognize
ordinary income in an amount equal to the amount of cash and the fair market
value of any Common Stock received upon such exercise, and the Company will be
entitled to a deduction equal to the same amount. However, if the sale of any
shares received would be subject to Section 16(b) of the Securities Exchange Act
of 1934, ordinary income attributable to such shares received will be recognized
on the date such sale would not give rise to a Section 16(b) action, valued at
the fair market value at such later time, unless the Participant has made an
election under Section 83(b) of the Code within 30 days after the date of
exercise to recognize ordinary income as of the date of exercise based on the
fair market value at the date of exercise.

The foregoing discussion is only a brief summary of the applicable
federal income tax laws as in effect on this date and should not be relied upon
as being a complete statement. The federal tax laws are complex, and they are
subject to legislative changes and new or revised judicial or administrative
interpretations at any time. In addition to the federal income tax consequences
described herein, a Participant may also be subject to state and/or local income
tax consequences in the jurisdiction in which the Participant works and/or
resides.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE AMENDMENT OF THE
COMPANY'S AMENDED AND RESTATED
1994-2 STOCK OPTION PLAN.

INDEPENDENT ACCOUNTANTS

Rothstein, Kass & Company, P.C. ("RK&Co.") audited the Company's
financial statements for the fiscal years ended December 31, 1996, December 31,
1995, and December 31, 1994, and has been the independent public accountants of
the Company since December 20, 1994. RK&Co. has no financial interest, either
direct or indirect, in the Company. The Board of Directors has not yet selected
independent accountants to audit the Company's financial statements for the
fiscal year ending December 31, 1997. It was the determination of the Board of
Directors that the Company should not be obligated at this time to retain a
specific firm of independent accountants.

No representative of RK&Co. is expected to attend the Annual Meeting or
to make a statement or respond to questions from stockholders.

OTHER MATTERS

The Board of Directors is not aware of any business to be presented at
the Annual Meeting except the matters set forth in the Notice and described in
this Proxy Statement. Unless otherwise directed, all shares represented by Board
of Directors' Proxies will be voted in favor of the proposals of the Board of
Directors described in this Proxy Statement. If any other matters come before
the Annual Meeting, the persons named in the accompanying Proxy will vote on
those matters according to their best judgment.

EXPENSES

The entire cost of preparing, assembling, printing and mailing this
Proxy Statement, the enclosed Proxy and other materials, and the cost of
soliciting Proxies with respect to the Annual Meeting, will be borne by the
Company. The Company will request banks and brokers to solicit their customers
who beneficially own shares listed of record in names of nominees, and will
reimburse those banks and brokers for the reasonable out-of-pocket expenses of
such solicitations. The original solicitation of Proxies by mail may be
supplemented by telephone and telegram by officers and other regular employees
of the Company, but no additional compensation will be paid to such individuals.

STOCKHOLDER PROPOSALS

No person who intends to present a proposal for action at a forthcoming
stockholders' meeting of the Company may seek to have the proposal included in
the proxy statement or form of proxy for such meeting unless that person (a) is
a record beneficial owner of at least 1% or $1,000 in market value of shares of
Common Stock, has held such shares for at least one year at the time the
proposal is submitted, and such person shall continue to own such shares through
the date on which the meeting is held, (b) provides the Company in writing with
his name, address, the number of shares held by him and the dates upon which he
acquired such shares with documentary support for a claim of beneficial
ownership, (c) notifies the Company of his intention to appear personally at the
meeting or by a qualified representative under Delaware law to present his
proposal for action, and (d) submits his proposal timely. A proposal to be
included in the proxy statement or proxy for the Company's next annual meeting
of stockholders will be submitted timely only if the proposal has been received
at the Company's principal executive office no later than December 15, 1997. If
the date of such meeting is changed by more than 30 calendar days from the date
such meeting is scheduled to be held under the Company's By-Laws, or if the
proposal is to be presented at any meeting other than the next annual meeting of
stockholders, the proposal must be received at the Company's principal executive
office at a reasonable time before the solicitation of proxies for such meeting
is made.

Even if the foregoing requirements are satisfied, a person may submit
only one proposal with a supporting statement of not more than 500 words, if the
latter is requested by the proponent for inclusion in the proxy materials, and
under certain circumstances enumerated in the Securities and Exchange
Commission's rules relating to the solicitation of proxies, the Company may be
entitled to omit the proposal and any statement in support thereof from its
proxy statement and form of proxy.

AVAILABLE INFORMATION

Copies of the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1996 as filed with the Securities and Exchange
Commission, including the financial statements, can be obtained without charge
by stockholders (including beneficial owners of the Company's Common Stock) upon
written request to Lisa H. Crump, the Company's Secretary, 14950 Martin Drive,
Eden Prairie, Minnesota 55344-2020, or on the Commission's Web Site at
www.sec.gov.

By Order of the Board of Directors

Lisa H. Crump, Secretary

Eden Prairie, Minnesota
April 15, 1997

<PAGE>

STRATASYS, INC.
SECOND AMENDED AND RESTATED
1994-2 STOCK PLAN

1. Purposes.

The STRATASYS, INC. 1994-2 STOCK OPTION PLAN (the "Plan") as amended
and restated as of March 1, 1996 and as further amended and restated is intended
to provide the employees, directors, independent contractors and consultants of
Stratasys, Inc. (the "Company") and/or any subsidiary or parent thereof with an
added incentive to commence and/or continue their services to the Company and to
induce them to exert their maximum efforts toward the Company's success. By thus
encouraging employees, directors, independent contractors and consultants and
promoting their continued association with the Company, the Plan may be expected
to benefit the Company and its stockholders. The Plan allows the Company to
grant Incentive Stock Options ("ISOs") (as defined in Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), Non-Qualified Stock
Options ("NQSOs") not intended to qualify under Section 422(b) of the Code and
Stock Appreciation Rights ("SARs") (collectively the "Options"). The vesting of
one or more Options granted hereunder may be based on the attainment of
specified performance goals of the participant or the performance of the
Company, one or more subsidiaries, parent and/or division of one or more of the
above.

2. Shares Subject to the Plan.

The total number of shares of Common Stock of the Company, $.01 par
value per share, that may be subject to Options granted under the Plan shall be
1,000,000 in the aggregate, subject to adjustment as provided in Paragraph 8 of
the Plan; however, the grant of an ISO to an employee together with a tandem SAR
or any NQSO to an employee together with a tandem SAR shall only require one
share of Common Stock available subject to the Plan to satisfy such joint
Option. The Company shall at all times while the Plan is in force reserve such
number of shares of Common Stock as will be sufficient to satisfy the
requirement of outstanding Options granted under the Plan. In the event any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part, the unpurchased shares subject thereto shall again be
available for granting of Options under the Plan.

3. Eligibility.

ISOs or ISOs in tandem with SARs (provided the SAR meets the
requirements set forth in Temp. Reg. Section 14a.422A-1, A-39 (a) through (e)
inclusive) may be granted from time to time under the Plan to one or more
employees of the Company or of a "subsidiary" or "parent" of the Company, as the
quoted terms are defined within Section 424 of the Code. An Officer is an
employee for the above purposes. However, a director of the Company who is not
otherwise an employee is not deemed an employee for such purposes. NQSOs or
NQSOs in tandem with SARs may be granted from time to time under the Plan to one
or more employees of the Company, Officers, members of the Board of Directors,
independent contractors, consultants and other individuals who are not employees
of, but are involved in the continuing development and success of the Company
and/or of a subsidiary of the Company, including persons who have previously
been granted Options under the Plan.

4. Administration of the Plan.

(a) The Plan shall be administered by the Board of Directors of the
Company as such Board of Directors may be composed from time to time and/or by
one or more committees of the Company's Board of Directors (the "Committee"). As
and to the extent authorized by the Board of Directors of the Company, the
Committee may exercise the power and authority vested in the Board of Directors
under the Plan. Within the limits of the express provisions of the Plan, the
Board of Directors or Committee shall have the authority, in its discretion, to
determine the individuals to whom, and the time or times at which, Options shall
be granted, the character of such Options (whether ISOs, NQSOs, and/or SARs in
tandem with NQSOs, and/or SARs in tandem with ISOs) and the number of shares of
Common Stock to be subject to each Option, the manner and form in which the
optionee can tender payment upon the exercise of his Option, and to interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of Option agreements that may be
entered into in connection with Options (which need not be identical), subject
to the limitation that agreements granting ISOs must be consistent with the
requirements for the ISOs being qualified as "incentive stock options" as
provided in Section 422 of the Code, and to make all other determinations and
take all other actions necessary or advisable for the administration of the
Plan. In making such determinations, the Board of Directors and/or the Committee
may take into account the nature of the services rendered by such individuals,
their present and potential contributions to the Company's success, and such
other factors as the Board of Directors and/or the Committee, in its discretion,
shall deem relevant. The Board of Directors' and/or the Committee's
determinations on the matters referred to in this Paragraph shall be conclusive.

(b) Notwithstanding anything contained herein to the contrary, at
anytime during the period the Company's Common Stock is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "1934 Act), a
Committee, if one has been appointed to administer all or part of the Plan,
comprised of solely of at least two Outside Directors (as such term is defined
in regulations promulgated from time to time with respect to Section
162(m)(4)(C)(i) of the Code) appointed by such Board of Directors of the
Company, shall have the exclusive right to grant Options to Covered Employees as
defined under Section 162(m)(3) of the Code (generally executive officers
subject to Section 16 of the 1934 Act) and set forth the terms and conditions
thereof. With respect to persons subject to Section 16 of the 1934 Act,
transactions under the Plan are intended, to the extent possible, comply with
all applicable conditions of Rule 16b-3, as amended from time to time, (and its
successor provisions, if any) under the 1934 Act and Section 162(m)(4)(C) of the
Code of 1986, as amended. To the extent any provision of the Plan or action by
the Board of Directors or Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Board of
Directors and/or such Committee.

5. Terms of Options.

Within the limits of the express provisions of the Plan, the Board of
Directors or the Committee may grant either ISOs or NQSOs or SARs in tandem with
NQSOs or SARs in tandem with ISOs. An ISO or an NQSO enables the optionee to
purchase from the Company, at any time during a specified exercise period, a
specified number of shares of Common Stock at a specified price (the "Option
Price"). The optionee, if granted a SAR in tandem with a NQSO or ISO, may
receive from the Company, in lieu of exercising his option to purchase shares
pursuant to his NQSO or ISO, at one of the certain specified times during the
exercise period of the NQSO or ISO as set by the Board of Directors or the
Committee, the excess of the fair market value upon such exercise (as determined
in accordance with subparagraph (b) of this Paragraph 5) of one share of Common
Stock over the Option Price per share specified upon grant of the NQSO or
ISO/SAR multiplied by the number of shares of Common Stock covered by the SAR so
exercised. The character and terms of each Option granted under the Plan shall
be determined by the Board of Directors and/or the Committee consistent with the
provisions of the Plan, including the following:

(a) An Option granted under the Plan must be granted within 10 years
from the date the Plan is adopted, or the date the Plan is approved by the
stockholders of the Company, whichever is earlier.

(b) The Option Price of the shares of Common Stock subject to each ISO
and each SAR issued in tandem with an ISO shall not be less than the fair market
value of such shares of Common Stock at the time such ISO is granted. Such fair
market value shall be determined by the Board of Directors and, if the shares of
Common Stock are listed on a national securities exchange or traded on the
over-the-counter market, the fair market value shall be the closing price on
such exchange, or the mean of the closing bid and asked prices of the shares of
Common Stock on the over-the-counter market, as reported by the National
Association of Securities Dealers Automated Quotation System (NASDAQ), the
National Association of Securities Dealers OTC Bulletin Board or the National
Quotation Bureau, Inc., as the case may be, on the day on which the Option is
granted or, if there is no closing price or bid or asked price on that day, the
closing price or mean of the closing bid and asked prices on the most recent day
preceding the day on which the Option is granted for which such prices are
available. If an ISO or SAR in tandem with an ISO is granted to any individual
who, immediately before the ISO is to be granted, owns (directly or through
attribution) more than 10% of the total combined voting power of all classes of
capital stock of the Company or a subsidiary or parent of the Company, the
Option Price of the shares of Common Stock subject to such ISO shall not be less
than 110% of the fair market value per share of the shares of Common Stock at
the time such ISO is granted.

(c) The Option Price of the shares of Common Stock subject to an NQSO
or a SAR in tandem with a NQSO granted pursuant to the Plan shall be determined
by the Board of Directors or the Committee, in its sole discretion, but in no
event less than 85% of the fair market value per share of the shares of Common
Stock at the time of grant.

(d) In no event shall any Option granted under the Plan have an
expiration date later than 10 years from the date of its grant, and all Options
granted under the Plan shall be subject to earlier termination as expressly
provided in Paragraph 6 hereof. If an ISO or a SAR in tandem with an ISO is
granted to any individual who, immediately before the ISO is granted, owns
(directly or through attribution) more that 10% of the total combined voting
power of all classes of capital stock of the Company or of a subsidiary or
parent of the Company, such ISO shall by its terms expire and shall not be
exercisable after the expiration of five (5) years from the date of its grant.

(e) An SAR may be exercised at any time during the exercise period of
the ISO or NQSO with which it is granted in tandem and prior to the exercise of
such ISO or NQSO. Notwithstanding the foregoing, the Board of Directors and/or
the Committee shall in their discretion determine from time to time the terms
and conditions of SAR's to be granted, which terms may vary from the
afore-described conditions, and which terms shall be set forth in a written
stock option agreement evidencing the SAR granted in tandem with the ISO or
NQSO. The exercise of an SAR granted in tandem with an ISO or NQSO shall be
deemed to cancel such number of shares subject to the unexercised Option as were
subject to the exercised SAR. The Board of Directors or the Committee has the
discretion to alter the terms of the SARS if necessary to comply with Federal or
state securities law. Amounts to be paid by the Company in connection with an
SAR may, in the Board of Director's or the Committee's discretion, be made in
cash, Common Stock or a combination thereof.

(f) An Option granted under the Plan shall become exercisable, in whole
at any time or in part from time to time, but in no event may an Option (i) be
exercised as to less than one hundred (100) shares of Common Stock at any one
time, or the remaining shares of Common Stock covered by the Option if less than
one hundred (100), and (ii) except with respect to performance based Options,
become fully exercisable more than five years from the date of its grant nor
shall less than 20% of the Option become exercisable in any of the first five
years of the Option, if not terminated as provided in Section 6 hereof. The
Board of Directors or the Committee, if applicable, shall, in the event it so
elects in its sole discretion, set one or more performance standards with
respect to one or more Options upon which vesting is conditioned (which
performance standards may vary among the Options).

(g) An Option granted under the Plan shall be exercised by the delivery
by the holder thereof to the Company at its principal office (to the attention
of the Secretary) of written notice of the number of full shares of Common Stock
with respect to which the Option is being exercised, accompanied by payment in
full, which payment at the option of the optionee shall be in the form of (i)
cash or certified or bank check payable to the order of the Company, of the
Option Price of such shares of Common Stock, or, (ii) if permitted by the
Committee or the Board of Directors, as determined by the Committee or the Board
of Directors in its sole discretion at the time of the grant of the Option with
respect to an ISO and at or prior to the time of exercise with respect to a
NQSO, by the delivery of shares of Common Stock having a fair market value equal
to the Option Price or the delivery of an interest-bearing promissory note
having an original principal balance equal to the Option Price and an interest
rate not below the rate which would result in imputed interest under the Code
(provided, in order to qualify as an ISO, more than one year shall have passed
since the date of grant and one year from the date of exercise), or (iii) at the
option of the Committee or the Board of Directors, determined by the Committee
or the Board of Directors in its sole discretion at the time of the grant of the
Option with respect to an ISO and at or prior to the time of exercise with
respect to a NQSO, by a combination of cash, promissory note and/or such shares
of Common Stock (subject to the restriction above) held by the employee that
have a fair market value together with such cash and principal amount of any
promissory note that shall equal the Option Price, and, in the case of a NQSO,
at the discretion of the Committee or Board of Directors by having the Company
withhold from the shares of Common Stock to be issued upon exercise of the
Option that number of shares having a fair market value equal to the exercise
price and/or the tax withholding amount due, or otherwise provide for
withholding as set forth in Paragraph 9(c) hereof, or in the event an employee
is granted an ISO or NQSO in tandem with an SAR and desires to exercise such
SAR, such written notice shall so state such intention. The Option Price may
also be paid in full by a broker-dealer to whom the optionee has submitted an
exercise notice consisting of a fully endorsed Option, or through any other
medium of payment as the Board of Directors and/or the Committee, in its
discretion, shall authorize.

(h) The holder of an Option shall have none of the rights of a
stockholder with respect to the shares of Common Stock covered by such holder's
Option until such shares of Common Stock shall be issued to such holder upon the
exercise of the Option.

(i) All ISOs or SARs in tandem with ISOs granted under the Plan shall
not be transferable otherwise than by will or the laws of descent and
distribution and may be exercised during the lifetime of the holder thereof only
by the holder. The Board or the Committee, in its sole discretion, shall
determine whether an Option other than an ISO or SAR in tandem with an ISO shall
be transferable. No Option granted under the Plan shall be subject to execution,
attachment or other process.

(j) The aggregate fair market value, determined as of the time any ISO
or SAR in tandem with an ISO is granted and in the manner provided for by
Subparagraph (b) of this Paragraph 5, of the shares of Common Stock with respect
to which ISOs granted under the Plan are exercisable for the first time during
any calendar year and under incentive stock options qualifying as such in
accordance with Section 422 of the Code granted under any other incentive stock
option plan maintained by the Company or its parent or subsidiary corporations,
shall not exceed $100,000. Any grant of Options in excess of such amount shall
be deemed a grant of a NQSO.

(k) Notwithstanding anything contained herein to the contrary, a SAR
which was granted in tandem with an ISO shall (i) expire no later than the
expiration of the underlying ISO; (ii) be for no more than 100% of the spread at
the time the SAR is exercised; (iii) shall only be transferable when the
underlying ISO is transferable; (iv) only be exercised when the underlying ISO
is eligible to be exercised; and (v) only be exercisable when there is a
positive spread.

(l) In no event shall an employee be granted Options for more than
50,000 shares of Common Stock during any calendar year period; provided,
however, that the limitation set forth in this Section 5(l) shall be subject to
adjustment as provided in Section 8 herein.

(m) In no event shall Options in excess of 10% of the to-
be-outstanding shares of Common Stock be granted to any individual who,
immediately before such Option is granted, owns stock possessing more than 10%
of the total combined voting power or value of all classes of stock of the
Company.

(n) The Board of Directors or the Committee, in its sole discretion,
may at such time or times as it deems appropriate, if ever, accelerate all or
part of the vesting provisions with respect to one or more outstanding options.
The acceleration of one option shall not infer that any option is or to be
accelerated.

6. Death or Termination of Employment/Consulting Relationship.

(a) Except as provided herein, or otherwise determined by the Board of
Directors or the Committee in its sole discretion, upon termination of
employment with the Company or termination of a consulting relationship with the
Company prior to the termination of the term thereof for any reason, a holder of
an Option under the Plan may exercise such Options to the extent such Options
were exercisable as of the date of termination at any time within three (3)
months after the date of such termination, subject to the provisions of
Subparagraph (d) of this Paragraph 6. Notwithstanding anything contained herein
to the contrary, unless otherwise determined by the Board of Directors or the
Committee in its sole discretion, any options granted hereunder to an optionee
and then outstanding shall immediately terminate in the event the optionee is
convicted of a felony committed against the Company, and the provisions of this
Subparagraph (a) shall not be applicable thereto.

(b) If the holder of an Option granted under the Plan dies (i) while
employed by the Company or a subsidiary or parent corporation or (ii) within
three (3) months after the termination of such holder's employment, such Options
may, subject to the provisions of subparagraph (d) of this Paragraph 6, be
exercised by a legatee or legatees of such Option under such individual's last
will or by such individual's personal representatives or distributees at any
time within such time as determined by the Board of Directors or the Committee
in its sole discretion, but in no event less than six months after the
individual's death, to the extent such Options were exercisable as of the date
of death or date of termination of employment, whichever date is earlier.

(c) If the holder of an Option under the Plan becomes disabled within
the definition of section 22(e)(3) of the Code while employed by the Company or
a subsidiary or parent corporation, such Option may, subject to the provisions
of subparagraph (d) of this Paragraph 6, be exercised at any time within six
months after such holder's termination of employment due to the disability.

(d) Except as otherwise determined by the Board of Directors or the
Committee in its sole discretion, an Option may not be exercised pursuant to
this Paragraph 6 except to the extent that the holder was entitled to exercise
the Option at the time of termination of employment/consulting relationship or
death, and in any event may not be exercised after the original expiration date
of the Option.

(e) In addition, and notwithstanding anything contained herein to the
contrary, in the event an optionee dies during such time as the optionee is
employed by the Company, then fifty percent (50%) of any outstanding Options of
such optionee which have not vested and have not expired as of the date of death
shall be automatically deemed vested and exercisable by the optionee's estate
and/or his legatees in accordance with Subparagraph 6(b) hereof.

7. Leave of Absence.

For the purposes of the Plan, an individual who is on military or sick
leave or other bona fide leave of absence (such as temporary employment by the
Government) shall be considered as remaining in the employ of the Company or of
a subsidiary or parent corporation for ninety (90) days or such longer period as
such individual's right to reemployment is guaranteed either by statute or by
contract.

8. Adjustment Upon Changes in Capitalization.

(a) In the event that the outstanding shares of Common Stock are
hereafter changed by reason of recapitalization, reclassification, stock
split-up, combination or exchange of shares of Common Stock or the like, or by
the issuance of dividends payable in shares of Common Stock, an appropriate
adjustment shall be made by the Board of Directors, as determined by the Board
of Directors and/or the Committee, in the aggregate number of shares of Common
Stock available under the Plan, in the number of shares of Common Stock issuable
upon exercise of outstanding Options, and the Option Price per share. In the
event of any consolidation or merger of the Company with or into another
company, or the conveyance of all or substantially all of the assets of the
Company to another company, each then outstanding Option shall upon exercise
thereafter entitle the holder thereof to such number of shares of Common Stock
or other securities or property to which a holder of shares of Common Stock of
the Company would have been entitled to upon such consolidation, merger or
conveyance; and in any such case appropriate adjustment, as determined by the
Board of Directors of the Company (or successor entity) shall be made as set
forth above with respect to any future changes in the capitalization of the
Company or its successor entity. In the event of the proposed dissolution or
liquidation of the Company, all outstanding Options under the Plan will
automatically terminate, unless otherwise provided by the Board of Directors of
the Company or any authorized committee thereof.

(b) Any Option granted under the Plan, unless waived by the Board of
Directors or the Committee, may, at the discretion of the Board of Directors of
the Company and said other corporation, be exchanged for options to purchase
shares of capital stock of another corporation which the Company, and/or a
subsidiary thereof is merged into, consolidated with, or all or a substantial
portion of the property or stock of which is acquired by said other corporation
or separated or reorganized into. The terms, provisions and benefits to the
optionee of such substitute option(s) shall in all respects be identical to the
terms, provisions and benefits of optionee under his Option(s) prior to said
substitution. To the extent the above may be inconsistent with Sections
424(a)(1) and (2) of the Code, the above shall be deemed interpreted so as to
comply therewith.

(c) Any adjustment in the number of shares of Common Stock shall apply
proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock would result from any such
adjustment, the adjustment shall be revised to the next higher whole number of
shares of Common Stock.

9. Further Conditions of Exercise.

(a) Unless the shares of Common Stock issuable upon the exercise of an
Option have been registered with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended, prior to the exercise of the Option,
an optionee must represent in writing to the Company that such shares of Common
Stock are being acquired for investment purposes only and not with a view
towards the further resale or distribution thereof, and must supply to the
Company such other documentation as may be required by the Company, unless in
the opinion of counsel to the Company such representation, agreement or
documentation is not necessary to comply with said Act.

(b) The Company shall not be obligated to deliver any shares of Common
Stock until they have been listed on each securities exchange on which the
shares of Common Stock may then be listed or until there has been qualification
under or compliance with such state or federal laws, rules or regulations as the
Company may deem applicable.

(c) The Board of Directors or Committee may make such provisions and
take such steps as it may deem necessary or appropriate for the withholding of
any taxes that the Company is required by any law or regulation of any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with the exercise of any Option, including, but not
limited to, (i) the withholding of payment of all or any portion of such Option
and/or SAR until the holder reimburses the Company for the amount the Company is
required to withhold with respect to such taxes, or (ii) the cancelling of any
number of shares of Common Stock issuable upon exercise of such Option and/or
SAR in an amount sufficient to reimburse the Company for the amount it is
required to so withhold, (iii) the selling of any property contingently credited
by the Company for the purpose of exercising such Option, in order to withhold
or reimburse the Company for the amount it is required to so withhold, or (iv)
withholding the amount due from such employee's wages if the employee is
employed by the Company or any subsidiary thereof.

10. Termination, Modification and Amendment.

(a) The Plan (but not Options previously granted under the Plan) shall
terminate ten (10) years from the earliest of the date of its adoption by the
Board of Directors, or the date the Plan is approved by the stockholders of the
Company, or such date of termination, as hereinafter provided, and no Option
shall be granted after termination of the Plan.

(b) The Plan may from time to time be terminated, modified or amended
by the affirmative vote of the holders of a majority of the outstanding shares
of capital stock of the Company entitled to vote thereon.

(c) The Board of Directors of the Company may at any time, prior to ten
(10) years from the earlier of the date of the adoption of the Plan by such
Board of Directors or the date the Plan is approved by the stockholders,
terminate the Plan or from time to time make such modifications or amendments of
the Plan as it may deem advisable; provided, however, that the Board of
Directors shall not, without approval by the affirmative vote of the holders of
a majority of the outstanding shares of capital stock of the Company entitled to
vote thereon, increase (except as provided by Paragraph 8) the maximum number of
shares of Common Stock as to which Options or shares may be granted under the
Plan, or materially change the standards of eligibility under the Plan. Any
amendment to the Plan which, in the opinion of counsel to the Company, will be
deemed to result in the adoption of a new Plan, will not be effective until
approved by the affirmative vote of the holders of a majority of the outstanding
shares of capital stock of the Company entitled to vote thereon.

(d) No termination, modification or amendment of the Plan may adversely
affect the rights under any outstanding Option without the consent of the
individual to whom such Option shall have been previously granted.

11. Effective Date of the Plan.

The Plan is in effect, provided, however, that provisions hereof with
respect to the ability to grant performance options and the vesting thereof
based on the attainment of specified performance goals of the participant or the
performance of the Company, one or more subsidiaries, parent and/or division of
one or more of the above, shall be subject to approval by the affirmative vote
of the holders of a majority of the outstanding shares of capital stock of the
Company entitled to vote thereon within one year before or after adoption of
such amendment by the Board of Directors.

12. Not a Contract of Employment.

Nothing contained in the Plan or in any option agreement executed
pursuant hereto shall be deemed to confer upon any individual to whom an Option
is or may be granted hereunder any right to remain in the employ of the Company
or of a subsidiary or parent of the Company or in any way limit the right of the
Company, or of any parent or subsidiary thereof, to terminate the employment of
any employee.

13. Other Compensation Plans.

The adoption of the Plan shall not affect any other stock option plan,
incentive plan or any other compensation plan in effect for the Company, nor
shall the Plan preclude the Company from establishing any other form of stock
option plan, incentive plan or any other compensation plan.

<PAGE>

[LOGO]
PROXY

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

The undersigned, a holder of Common Stock of Stratasys, Inc., a Delaware
corporation (the "Company"), hereby appoints S. SCOTT CRUMP and LISA CRUMP,
and each of them, the proxies of the undersigned, each with full power of
substitution, to represent and vote for the undersigned, all of the shares of
the Company which the undersigned would be entitled to vote, at the Annual
Meeting of Stockholders of the Company to be held on May 15, 1997 and any
adjournments thereof, as follows:

1. The election of five members to the Board of Directors to hold office
until the next annual meeting of stockholders and until their successors
are duly elected and qualified, as provided in the Company's Proxy
Statement:

[ ] FOR all nominees listed below

[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
(Instructions: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH HIS NAME BELOW.)

S. Scott Crump, Clifford H. Schwieter, Gregory L. Wilson,
Arnold J. Wasserman and Ralph E. Crump.

2. Proposal to amend the Stratasys, Inc. 1994-2 Amended and Restated Stock
Plan to permit the grant of performance-based options under the Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. In their discretion, the proxies are authorized to vote in accordance with
their best judgment upon such other matters as may properly come before
the meeting and any adjournments thereof.

The undersigned hereby revokes all previous proxies to vote at the
Annual Meeting.

(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)

(CONTINUED FROM OTHER SIDE)

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS HEREON. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE FIVE DIRECTORS NAMED IN PROPOSAL 1, FOR THE PROPOSAL TO
AMEND THE AMENDED AND RESTATED STRATASYS 1994-2 STOCK PLAN, AND AS SAID
PROXIES SHALL DEEM ADVISABLE ON SUCH OTHER BUSINESS AS MAY COME BEFORE THE
MEETING.

The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated April 15, 1997 relating to the
Annual Meeting, and the Annual Report to Stockholders for the year ended
December 31, 1996.

___________________________________

___________________________________
Signature(s) of Stockholder(s)

The signature(s) hereon should
correspond exactly with the name(s)
of the Stockholder(s) appearing on
the Stock Certificate. If stock is
jointly held, all joint owners
should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such. If signer is a
corporation or partnership, please
sign the full corporate or
partnership name, and give the
title of signing officer or general
partner.

Date ________________________, 1997

PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. IT IS IMPORTANT
THAT YOU VOTE.