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 14, 1998
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 14,
1998, at the Fifth Seasons Room, Minneapolis Marriott City Center Hotel, 30
South Seventh Street, 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 the adoption of the Company's 1998 Incentive Stock
Option 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 9, 1998
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 13, 1998
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 14, 1998.
The record date of this proxy solicitation is April 9, 1998. 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 for the
approval of the Company's 1998 Incentive Stock Option 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 13, 1998.
The total number of shares of common stock, $.01 par value ("Common
Stock"), of the Company outstanding as of April 9, 1998, was 6,080,146 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 9, 1998 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. The affirmative
vote by the holders of a majority of the shares present and entitled to vote on
the proposal is required for the approval of the Company's 1998 Incentive Stock
Option 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 will also be
available at the Annual Meeting.
<PAGE>
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 and Treasurer
Ralph E. Crump 75 Director
Clifford H. Schwieter 50 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 from February 1990 to May 1997. 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,
a registered professional engineer, is the son of Ralph E. Crump, a director of
the Company, and the husband of Lisa H. Crump, the Vice President and Corporate
Secretary of the Company.
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 having sales of $175 million and
listed on the New York Stock Exchange; Chairman of IMTEC, Inc., which
manufactures bar code labeling equipment; and Chairman of 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. Schwieter 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
2
<PAGE>
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.
Schwieter 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 30 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., IAT Multimedia, Inc., and
Micros-to-Mainframes, Inc., all of which are publicly traded companies.
Gregory L. Wilson became a director of the Company on October 20, 1994.
He is the co-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 four (4) meetings in 1997.
The Company's Compensation Committee is composed of Clifford H.
Schwieter (Chairman), Ralph E. 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 1997.
The Board of Directors held six (6) meetings in 1997. 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, and Treasurer, the following individuals serve as executive
officers of the Company:
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.
3
<PAGE>
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.
Lawrence E. Roscoe, 49, 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.
Thomas W. Stenoien, 47, has served as Chief Financial Officer of the
Company since May 1997. Mr. Stenoien joined the Company in February 1993 as
Controller, and has also served as Director of Finance. Before joining the
Company, Mr. Stenoien served as Controller of Anderberg Lund Printing Co. and as
Accounting Manager for Braemar Corporation.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Pursuant to Section 16 of the Securities Exchange Act of 1934, the
Company's Directors and executive officers and beneficial owners of more than
10% of the Company's Common Stock are required to file certain reports, within
specified time periods, indicating their holdings of and transactions in the
Common Stock and derivative securities. Based solely on a review of such reports
provided to the Company and written representations from such persons regarding
the necessity to file such reports, the Company is not aware of any failures to
file reports or report transactions in a timely manner during the Company's
fiscal year ended December 31, 1997, except that each Director and executive
officer failed to file timely reports on Form 5 and Mr. Schwieter failed to file
a timely report of one sale.
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the cash and non-cash compensation paid
by the Company for services rendered during the fiscal years ended December 31,
1995, December 31, 1996 and December 31, 1997 to the Company's Chief Executive
Officer and each other executive officer whose compensation exceeded $100,000
during such year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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 1997 $121,115(2) $35,000 -- 25,750
Chairman, 1996 $ 95,000(2) $ 3,923(3) -- 2,000
President, CEO 1995 $ 86,654(2) $ 3,654(4) -- --
and Treasurer(1)
Donald W. 1997 $116,152(5) $50,000 -- 22,750
Moffatt 1996 $ 97,385(5) $ 2,769(6) $30,000(7) 23,000
C.O.O.
Lawrence E. 1997 $ 96,794(8) $34,415 -- 9,750
Roscoe
V.P.- Software
Development
</TABLE>
- ---------------------
(1) Mr. Crump also served as Chief Financial Officer until May 1997.
(2) 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. Commencing April 1997, upon approval of
the Board of Directors, Mr. Crump was paid at the rate of $130,000 per
year for the remainder of 1997.
(3) $2,923 of this bonus was earned in 1996 and paid in 1997.
(4) This bonus was earned in 1995 and paid in 1996.
(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
through October 1996. Mr. Moffatt was paid at the rate of $90,000 per
year for the months of November and December 1996, and at the rate of
$94,500 per year from January through April 1997. Effective May 1,
1997, Mr. Moffatt was paid at the rate of $126,000 per year.
(6) This bonus was earned in 1996 and paid in 1997.
(7) Represents the fair market value of 2,000 shares of Common Stock issued
to Mr. Moffatt on July 2, 1996, as additional compensation.
5
<PAGE>
(8) Mr. Roscoe was paid at the rate of $88,549 per year until March 1,
1997. Effective March 1, 1997, Mr. Roscoe's compensation was increased
to the rate of $92,977 per year, and effective September 24, 1997, his
compensation was increased to the rate of $110,000 per year.
The table below includes the number of stock options granted to the
executive officers named in the Summary Compensation Table during the year ended
December 31, 1997 and exercise information.
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR(2) PRICE($/Sh) DATE
- ---- ------------- -------------- ----------- -------
<S> <C> <C> <C> <C>
S. Scott Crump 15,000 4.3% $15.00 7/30/03
10,750 3.1% $15.00 7/29/02
Donald W. Moffatt 10,000 2.9% $15.00 7/30/03
8,750 2.5% $15.00 7/29/02
4,000 1.2% $21.81 2/19/03
Lawrence E. Roscoe 2,000 0.6% $15.00 7/30/03
7,750 2.2% $15.00 7/29/02
</TABLE>
- -------------------
(1) Stock options granted under the Company's stock option plans are intended to
qualify as incentive stock options ("ISO's") under Section 422 of the Internal
Revenue Code of 1986, as amended. Under the terms of these plans, ISO's may be
granted to officers and other key employees of the Company for a maximum term of
10 years. The price per share of an ISO may not be less than the fair market
value of the Company's shares on the date the ISO is granted. However, ISO's
granted to persons owning more than 10% of the Company's Common Stock may not
have a term in excess of five years and may not have an option price of less
than 110% of the fair market value per share of the Company's shares on the date
the ISO is granted. The maximum number of ISO's is limited to such number so
that the aggregate fair market value, determined as of the date the ISO's are
granted, of the shares of Common Stock with respect to which ISO's are
exercisable for the first time during any calendar year shall not exceed
$100,000. Any options granted in excess of the $100,000 limitation would not
qualify as ISO's under the Internal Revenue Code.
(2) The Company granted a total of 346,574 option to employees in the fiscal
year ended December 31, 1997.
(3) 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.
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<PAGE>
REPRICING OF OPTIONS
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES ORIGINAL OPTION
UNDERLYING MARKET PRICE OF EXERCISE PRICE OF TERM REMAINING
OPTIONS STOCK AT TIME STOCK AT TIME OF NEW AT DATE OF
REPRICE/ REPRICED OF REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME REGRANT DATE OR AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
- ---- ------------ ---------- -------------- ----------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
S. Scott Crump 7/30/97 15,000 $15.00 $17.50 $15.00 5.8 years
Donald W. Moffatt 7/30/97 10,000 $15.00 $17.50 $15.00 5.8 years
Lawrence E. Roscoe 7/30/97 2,000 $15.00 $17.50 $15.00 5.8 years
</TABLE>
The Compensation Committee of the Board of Directors approved the
replacement of these options to Messrs. Crump, Moffatt, and Roscoe, and options
to other employees of the Company, at exercise prices ranging from $17.50 per
share to $15.00 per share, having concluded that the principal purpose of the
Company's stock option program (I.E., to provide an equity incentive to
employees to remain in the employment of the Company and to work diligently in
its best interests) would not be achieved for those employees holding options
exercisable substantially above the market price of the Common Stock. In
connection with the granting of these replacement options, participating option
holders agreed not to exercise any option for a period of six months from the
date of such regrant.
The table below includes information regarding the value realized on
option exercises and the market value of unexercised options held by the
executive officers named in the Summary Compensation Table during the year ended
December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY- END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-
NUMBER OF SECURITIES MONEY OPTIONS/SARs AT
SHARES UNDERLYING UNEXERCISED FY-END($)(1)
ACQUIRED ON VALUE OPTIONS/SARs AT FY-END(#) ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
S. Scott Crump -0- -0- 1,150 26,600 - -
Donald W. -0- -0- 5,350 40,400 - -
Moffatt
Lawrence E. -0- -0- 8,400 12,662 41,534 13,438
Roscoe
</TABLE>
- -------------------
(1) Based upon a closing price of $11.50 on the Nasdaq National Market on
December 31, 1997.
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 received a non-qualified stock option to
purchase 30,000 shares of the Company's Common Stock upon commencement of 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
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<PAGE>
currently entitle him to purchase 43,118 shares of Common Stock. In July 1997,
each of the four Directors who is not an employee of the Company also received a
non-qualified stock option to purchase 15,000 shares of the Company's Common
Stock for their continued service on the Company's Board of Directors. "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 expired in October 1997, and the Company and Mr. Crump
have not entered into a new agreement.
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 100,608 shares, 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 13, 1998,
Options to purchase 78,622 shares under Plan 1 have been exercised, and 574
options have terminated. 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 been granted, 32,350 of which have terminated
or expired and are again available for grant. As of March 13, 1998, options to
purchase 137,834 shares under Plan 2 have been exercised. The Stratasys, Inc.
1994-2 Stock Plan, as amended ("Plan 3"), adopted by the Board of Directors on
December 13, 1994, originally authorized the purchase of 500,000 shares of
Common Stock. On March 1, 1996, the Board of Directors authorized, and on May
23, 1996, the stockholders approved, amending Plan 3 to increase the number of
shares authorized to 1,000,000 shares. Since its adoption, through March 13,
1998, options to purchase an aggregate of 1,003,578 shares have been granted
under Plan 3, options to purchase 210,208 shares have been exercised, and
146,664 options have terminated, expired, or 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 13, 1998, 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.
8
<PAGE>
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL PERCENTAGE OF OUTSTANDING
OWNER OWNERSHIP(1) SHARES OWNED(2)
---------------- ----------------- -------------------------
S. Scott and 736,077(4) 12.1%
Lisa H. Crump (3)
Donald W. Moffatt (3) 20,250(5) *
Lawrence E. Roscoe (3) 22,436(6) *
Ralph E. Crump 313,080(7) 5.1%
28 Twisted Oak Circle
Trumbull, CT 06611
Arnold J. Wasserman 42,250(8) *
1 Brookwood Drive
West Caldwell, NJ 07006
Clifford H. Schwieter 17,185(9) *
102 E. Crest Drive
Cincinnati, OH 45215
Gregory L. Wilson 33,750(10) *
1301 W. 400 North
Orem, UT 84057
Archery Capital, LLC 1,230,135(11) 18.1%
237 Park Avenue
New York, NY 10017
Cameron Truesdell 380,350(12) 6.3%
5522 308th N.E.
Preston, WA 98050
All directors and executive 1,196,078(13) 19.1%
officers as a group
(9 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.
9
<PAGE>
(2) Based on a total of 6,080,146 shares of Common Stock issued and
outstanding as of March 13, 1998.
(3) The address of this person is in care of the Company, 14950 Martin
Drive, Eden Prairie, Minnesota 55344.
(4) S. Scott Crump owns 359,180 shares individually and Lisa H. Crump owns
358,797shares 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. Includes 18,100 shares of Common Stock issuable
upon the exercise of options currently exercisable by S. Scott Crump
and Lisa Crump.
(5) Represents 20,250 shares of Common Stock issuable upon the exercise of
options currently exercisable by Donald W. Moffatt.
(6) Represents 22,436 shares of Common Stock issuable upon the exercise of
options currently exercisable by Lawrence E. Roscoe.
(7) Includes 154,665 shares owned by Marjorie Crump, Mr. Crump's wife, of
which Mr. Crump disclaims beneficial ownership, and 3,750 shares of
Common Stock issuable upon the exercise of options currently
exercisable by Mr. Crump. Excludes the following shares of which Mr.
Crump disclaims beneficial ownership; 359,180 shares held by Mr.
Crump's son, S. Scott Crump, and 358,797 shares held by Mr. Crump's
daughter-in-law, Lisa H. Crump.
(8) Represents 42,250 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Wasserman. See "Item 12. Certain
Relationships and Related Transactions - Consulting Agreements" and "-
Directors' Options."
(9) Represents 17,185 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Schwieter. See "Item 12. Certain
Relationships and Related Transactions - Consulting Agreements" and "-
Directors' Options."
(10) Represents 33,750 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Wilson. See "Item 12. Certain
Relationships and Related Transactions - Directors' Options."
(11) Represents shares of Common Stock beneficially owned as of November 14,
1997, by Archery Capital, LLC as the investment advisor for four
investment funds, as indicated in its report on Form 13D. Includes an
aggregate of 710,090 shares of Common Stock issuable upon the exercise
of currently exercisable warrants.
(12) Represents shares of Common Stock beneficially owned as of February 23,
1998, by Cameron Truesdel, as indicated in his amended report on Form
13D.
(13) Includes 5,650 shares of Common Stock issuable upon the exercise of
options currently exercisable by Thomas W. Stenoien.
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CERTAIN TRANSACTIONS
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.
On July 30, 1997, the Company entered into a stock option agreement
with Mr. Schwieter, pursuant to which Mr. Schwieter provides acquisition
consulting services to the Company. Under this agreement, Mr. Schwieter received
a non-qualified option to purchase 15,000 shares of Common Stock at an exercise
price of $15.00. Options corresponding to 1,250 Shares are exercisable at any
time on or after October 30, 1997, with additional options corresponding to
1,250 shares becoming exercisable on the 30th day of the last month of each
subsequent quarterly period thereafter through and including July 30, 1999.
These options expire on July 29, 2002.
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 all but 25,000 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.
All independent Board Members, as compensation for serving as directors
of the Company, received a non-qualified options to purchase 15,000 shares of
Common stock at a price of $15.00. Options corresponding to 1,250 shares are
exercisable at any time on or after October 30, 1997, with additional options
corresponding to 1,250 shares becoming first exercisable on the 30th day of the
last month of each subsequent quarterly period thereafter through and including
July 30, 1999. These options expire on July 29, 2002.
In September 1997, the Company entered into certain agreements with a
company that is in the business of
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developing, manufacturing and selling rapid prototyping devices (the "RP
Company"). Members of the RP Company have purchased, for $250,000 each, 11
Investment Units consisting of an equity payment of $130,000 and a $120,000
Subordinated Note of the RP Company bearing interest at the rate of 10% per
year, compounded annually and maturing on December 31, 1999. Scott Crump, the
Chairman of the Board, President, Chief Executive Officer, and Treasurer of the
Company, and Arnold Wasserman, a Director of the Company, each owns one
Investment Unit in the RP Company, and two investment funds for which Archery
Capital LLC ("Archery") acts as investment manager own a total of three
Investment Units. Mr. Crump is a member of the RP Company's governing board,
which consists of five members. Under the agreements, the Company granted the RP
Company the right and license to use Company technology without payment of a
royalty, solely for the purpose of developing a product having the
specifications set forth in the agreements (the "RP Product"). If the RP Company
successfully completes the RP Product, the Company will have the option (the
"Option") to acquire either (i) ownership of the RP Product or (ii) ownership of
all membership interests in the RP Company. If the Company exercises its Option,
it will be required to make an aggregate payment of between approximately
$3,500,000 and $4,100,000, depending upon the date of completion, and to issue
warrants to purchase an aggregate of 88,000 shares of the Company's Common Stock
("Member Warrants"). In that event, Mr. Crump, Mr. Wasserman, the investment
funds for which Archery acts as investment manager and each other member of the
RP Company will each receive a minimum payment of $325,000 plus 8,000 Member
Warrants per Investment Unit. Mr. Crump and Mr. Wasserman have both agreed not
to participate as members of the Company's Board in any decision of the Company
related to its exercise of the Option. If the RP Product is completed, but the
Company does not exercise its Option, it has agreed to license the Company's
technology used in the RP Product for a royalty of 6% of the net revenues
received by the RP Company from the RP Product and related support and services.
There can be no assurance that the RP Company will complete the RP Product, that
the Company will exercise its Option, or that any member of the RP Company will
receive a return of the amounts paid for their Investment Unit or any return
thereon.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" NOMINEES LISTED IN PROPOSAL 1.
PROPOSAL 2. APPROVAL BY STOCKHOLDERS OF THE COMPANY'S 1998
INCENTIVE STOCK OPTION PLAN
The Board of Directors of the Company has adopted, subject to the
approval of Stockholders, the Company's 1998 Incentive Stock Option Plan (the
"Plan"), which authorizes the grant of options to purchase an aggregate of
500,000 shares of Common Stock.
Management recommends voting "FOR" approval of the Company's 1998
Incentive Stock Option Plan. The affirmative vote of a majority of the shares
present at the Annual Meeting and entitled to vote is necessary for such
approval.
GENERAL
The Board of Directors has deemed it in the best interest of the
Company to establish the Plan so as to provide employees and other persons
involved in the continuing development and success of the Company and its
subsidiaries an opportunity to acquire a proprietary interest in the Company by
means of grants of options to purchase Common Stock. It is the opinion of the
Board of Directors that by rewarding the Company's employees and other
individuals contributing to the Company and its subsidiaries with the
opportunity to acquire an equity investment in the Company, the Plan will
maintain and strengthen their desire to remain with the Company, stimulate their
efforts on the Company's behalf, and also attract other qualified personnel to
provide services on behalf of the Company.
The following description summarizes certain provisions of the Plan.
All statements are qualified in their 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.
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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") in
tandem with ISO's or NQSO's. 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 or any subsidiary 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 166 employees (including one
director-employee), and four outside directors who are eligible for grants of
one or more types of Options under the Plan. The Company cannot presently
determine the number of non-employees who may be entitled to NQSO's or SAR's in
tandem with NQSO's 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 and/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
"Outside Committee"). The administrator of the Plan, whether the Board of
Directors itself, the Compensation Committee and/or the Outside Committee 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. The Outside Committee, to the extent the
Company has two 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 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 and 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
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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, ISO's or SAR's granted in tandem with
ISO's, 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 or, at the discretion of the Committee, 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, 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. With
respect to ISO's, the Committee must designate the method of payment of the
exercise price at the time of the grant. In any event, to the extent allowed by
applicable federal and state securities laws, the purchase price may also be
paid in full by a broker-dealer to whom the Participant has submitted an
exercise notice.
(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 if the Participant's employment is
terminated as a result of his not having adequately performed the services for
which he was hired.
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 (unless termination is
for cause), 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, provided that such extension is not
beyond the original expiration date of the Option.
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, provided that such
extension is not beyond the original expiration date of the Option.
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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.
(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 at the meeting called for such purpose, 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 or change the standards of eligibility under the 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
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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 limitations 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. The maximum rate of tax
on long-term capital gains depends upon the period the Participant holds the
stock after exercise and prior to sale.
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 an NQSO or SAR would be deemed remuneration. However, there are
certain requirements which, if met, will allow income from the exercise of an
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 and that the Options be
granted by the Outside Committee. Even though the Company believes that it 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 previously indicated,
the maximum rate of tax on long-term capital gains is dependent on the
Participant's holding period. 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
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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.
NEW PLAN BENEFITS.
The Company has granted, subject to stockholder approval, 15,578
Options under the Plan through the date hereof, none of which has vested. The
weighted average exercise price of such Options is approximately $9.50. No
executive officer has received Options under the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE APPROVAL OF THE COMPANY'S 1998 INCENTIVE 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, 1997, December 31,
1996, and December 31, 1995, 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, 1998. 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.
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DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be
presented at the Company's next Annual Meeting of Stockholders must be received
by the Company no later than December 10, 1998, in order for them to be included
in the proxy statement and form of proxy relating to that meeting. 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.
AVAILABLE INFORMATION
Copies of the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1997 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 Corporate 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 13, 1998
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STRATASYS, INC
1998 INCENTIVE STOCK OPTION PLAN
1. Purposes.
The STRATASYS, INC. 1998 INCENTIVE STOCK OPTION PLAN (the "Plan") 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") in tandem with
ISOs or NQSOs (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, $0.01 par
value per share, that may be subject to Options granted under the Plan shall be
five hundred thousand (500,000) 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
<PAGE>
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.
ISO's or ISO's in tandem with SAR's (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 and
NQSO's 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 a
Compensation Committee or Stock Option Committee which consist 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 (the Compensation Committee or stock
Option committee hereinafter referred to as 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 one or both Committees 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
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<PAGE>
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
any time 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), the Stock
Option Committee, if one has been appointed to administer all or part of the
Plan, shall have the exclusive right to grant Options to Covered Employees as
defined under Section 162(m)(3) of the Code (generally persons 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
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<PAGE>
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
an SAR in tandem with an 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 as
reported by such exchange or market or, if no such closing price is reported,
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 Nasdaq Stock Market, 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
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<PAGE>
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 an SAR in tandem with an 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 an 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
5
<PAGE>
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, unless the Committee or Board of
Directors in its sole discretion authorizes a different vesting schedule,
subject to compliance with applicable federal and state laws. 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 an
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 an 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 an NQSO,
at the
6
<PAGE>
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. To the extent allowed by applicable Federal and
state securities laws, 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 an NQSO.
(k) Notwithstanding anything contained herein to the contrary, an
SAR which was granted in tandem with an ISO shall (i)
7
<PAGE>
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.
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 for any reason other than cause, such Options may be
exercised at any time within three (3) months after such termination.
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 terminated for cause, and the
other provisions of this Section 6 shall not be applicable thereto. For purposes
of this Section 6, termination for cause shall be deemed the decision of the
Company, in its sole discretion, that Optionee has not adequately performed the
services for which he/she/it was hired.
(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
8
<PAGE>
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. Notwithstanding anything contained herein which may be to the
contrary, such termination or death prior to vesting shall, unless otherwise
determined by the Board of Directors or Committee, in its sole discretion, be
deemed to occur at a time the holder was not entitled to exercise the Option.
(e) 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 imply that any other Option is or to be
accelerated.
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.
9
<PAGE>
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 for solely stock and/or securities, 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, or, except as provided in
(b) below, the sale of substantially all the assets of the Company for other
than stock and/or securities, 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, 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
10
<PAGE>
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
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<PAGE>
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 present and entitled to vote thereon at a
meeting of stockholders.
(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 present and
entitled to vote thereon at a meeting of stockholders, 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
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<PAGE>
without the consent of the individual to whom such Option shall have been
previously granted.
11. Effective Date of the Plan.
The Plan shall become effective upon adoption by the Board of
Directors of the Company. The Plan 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 the Plan by the Board of Directors.
12. Not a Contract of Employment or For Services.
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 or service 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 or engagement of any consultant.
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.
14. Distribution of Financial Statements.
The Company shall provide copies of the Company's annual financial
statements for its most recently completed fiscal year to each person granted or
exercising an option pursuant to the Plan as long as that person continues to
hold such options or shares. The Company shall not be required to provide such
financial statements to key employees whose duties in connection with the
Company assure their access to equivalent information.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder 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
the undersigned at the Annual Meeting of Stockholders of STRATASYS, INC., to be
held on May 14, 1998 at 3:30 p.m., at the Fifth Seasons Room, Minneapolis
Marriott City Center Hotel, 30 South Seventh Street, Minneapolis, Minnesota
55402, and any adjournment or adjournments thereof, and to vote all shares of
Common Stock that the undersigned would be entitled to vote if then and there
personally present, on the matters set forth below.
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 OR OTHERWISE STRIKE
OUT HIS NAME BELOW.)
S. Scott Crump, Ralph E. Crump, Clifford H. Schwieter, Arnold
J. Wasserman and Gregory L. Wilson.
2. To approve the adoption of the Company's 1998 Incentive Stock Option
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 or any adjournments thereof.
The undersigned hereby revokes any other proxy to vote at such Annual
Meeting and hereby ratifies and confirms all that said attorneys and proxies,
and each of them, may lawfully do by virtue hereof.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
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 DIRECTORS, FOR THE ADOPTION OF PROPOSAL 2, 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 13, 1998 relating to the Annual
Meeting and the Annual Report to Stockholders for the year ended December 31,
1997.
________________________________________
________________________________________
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______________________ 1998
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. IT IS IMPORTANT THAT YOU VOTE.
