<PAGE> 1
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 the Commission only
(as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-ll(c) or Rule 14a-12
STRATASYS, INC.
(Name of Registrant as Specified In Its Charter)
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> 2
STRATASYS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on May 11, 1999
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 11,
1999, 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 six Directors of the Company to serve until the next
Annual Meeting of Stockholders and until their successors are
duly elected and qualified.
2. 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 6, 1999
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 6, 1999
Thomas Stenoien
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> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ACTIONS TO BE TAKEN AT THE ANNUAL MEETING.........................................................................2
PROPOSAL 1. ELECTION OF DIRECTORS.................................................................................2
Biographical Information about Nominees..................................................................2
INFORMATION ABOUT THE BOARD OF DIRECTORS, COMMITTEES OF THE BOARD, AND EXECUTIVE OFFICERS.........................3
Meetings of the Board of Directors and Information Regarding Committees..................................3
Changes in Number and Composition of the Board of Directors..............................................4
Executive Officers.......................................................................................4
Compliance with Section 16(a) of the Exchange Act........................................................4
EXECUTIVE COMPENSATION............................................................................................4
Summary Compensation.....................................................................................4
Summary Compensation Table...............................................................................5
Option Grants in Last Fiscal Year........................................................................6
Repricing of Options.....................................................................................7
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values.................................8
Directors' Fees..........................................................................................8
Employment Agreements....................................................................................8
Stock Option Plans ......................................................................................8
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...............................................10
CERTAIN TRANSACTIONS.............................................................................................12
INDEPENDENT ACCOUNTANTS..........................................................................................13
OTHER MATTERS....................................................................................................13
EXPENSES ........................................................................................................14
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS....................................................................14
AVAILABLE INFORMATION............................................................................................14
</TABLE>
<PAGE> 4
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 11, 1999.
The record date of this proxy solicitation is April 6, 1999. 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. 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 9, 1999.
The total number of shares of common stock, $.01 par value ("Common
Stock"), of the Company outstanding as of April 6, 1999, was 6,101,961 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 6, 1999 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. 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> 5
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 six persons, all of whom are
incumbent Directors.
The following table sets forth information concerning the nominees:
Name Age Position
S. Scott Crump 45 Chairman of the Board of Directors, Chief
Executive Officer, President and Treasurer
Ralph E. Crump 75 Director
Clifford H. Schwieter 51 Director
Arnold J. Wasserman 61 Director
Gregory L. Wilson 51 Director
Cameron Truesdell 41 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, and a
leading manufacturer of force, load and pressure transducers. 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.
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
2
<PAGE> 6
Centric Engineering Systems, Inc., which was engaged in the development of
mechanical design and analysis software for computing systems ranging from
workstations to mainframes and massively parallel networked computing
environments. Mr. Schwieter was Vice President and General Manager of the
Electronic Imaging Systems Division of the DuPont Company from 1986 to 1991.
From 1971 to 1986, Mr. Schwieter was with the General Electric Company, where he
served as Vice President of GE's Calma Company from 1985 to 1986 and was
responsible for that subsidiary's worldwide business in the mechanical design
and factory automation arena. He was President and Representative Director of GE
Industrial Automation, Ltd., a joint venture between GE and C. Itoh & Company
located in Tokyo, from 1982 to 1985.
Arnold J. Wasserman has been a director of the Company since 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 Micros-to-Mainframes, Inc., a publicly traded company.
Gregory L. Wilson has been a director of the Company since 1994. He is
the co-founder of Mity-Lite, Inc. (Nasdaq: MITY) and has served as President and
Chairman of the Board of that company since its inception. From 1982 until 1987,
Mr. Wilson was President of Church Furnishings, Inc. in Provo, Utah. Mr. Wilson
is an active investor in small, privately held manufacturing concerns.
Cameron Truesdell has been a director of the Company since February
1999. In 1985, he was the founder and Chairman of the Board of LTC,
Incorporated, an insurance marketing firm sold to General Electric Capital
Assurance in 1997. Mr. Truesdell is currently Chairman of the Board of Directors
of Global Kinetics and Adelide 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 1998.
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 four (4) meetings in 1998.
The Board of Directors held eight (8) meetings in 1998. All Directors
attended at least 75% of the total number of Board meetings and of the meetings
of committees on which they served.
3
<PAGE> 7
CHANGES IN NUMBER AND COMPOSITION OF THE BOARD OF DIRECTORS
Pursuant to the power granted to the Board of Directors under the
Company's certificate of incorporation and by-laws, on February 10, 1999, the
Board amended the Company's by-laws to increase the number of directors
constituting the Board from five to six. The Board also appointed Cameron
Truesdell to the vacancy created by the increase in the number of Directors. Mr.
Truesdell has been nominated for election to the Board at the Annual Meeting.
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:
Thomas W. Stenoien, 48, has served as Chief Financial Officer of the
Company since May 1997 and as Corporate Secretary since January 1999. 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.
James P. Foley, 55, has served as Vice President of Engineering since
August 1997. Prior to joining the Company, Mr. Foley was Vice President of
Engineering at DataKey, a manufacturer of portable electronic tokens and
internet security products from January 1996 to August 1997. Before joining
DataKey, Mr. Foley was Vice President of Datacard, a manufacturer of plastic
card personalization products.
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, 1998.
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,
1996, December 31, 1997 and December 31, 1998 to the Company's Chief Executive
Officer and each other executive officer whose compensation exceeded $100,000
during such year.
4
<PAGE> 8
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 1998 $130,000(2) 0 -- 10,000
Chairman, 1997 $121,115(2) $ 35,000 -- 25,750
President, CEO and 1996 $ 95,000(2) $ 3,923(3) -- 2,000
Treasurer(1)
Thomas Stenoien, 1998 $ 90,000 $13,000 (4) $1,730(5) 6,000
Chief Financial
Officer and
Corporate Secretary
Donald W. Moffatt, 1998 $ 92,922(7) $ 14,000 -- --
former 1997 $116,152(7) $ 50,000 -- 22,750
C. O. O.(6) 1996 $ 97,385(7) $ 2,769(8) $ 30,000(9) 23,000
Lawrence E. Roscoe, 1998 $114,547(11) 0 -- --
former 1997 $ 96,794(11) $ 34,415 -- 9,750
V.P.- Software
Development(10)
</TABLE>
- ---------------------------
(1) Mr. Crump also served as Chief Financial Officer until May 1997.
(2) Mr. Crump was paid at the rate of $95,000 per year 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 and 1998.
(3) $2,923 of this bonus was earned in 1996 and paid in 1997.
(4) This bonus was earned in 1998 and paid in 1999.
(5) Payment for unused vacation pay earned in 1998.
(6) Mr. Moffatt resigned as Chief Operating Officer on June 30, 1998, but
was retained as a consultant by the Company.
(7) 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. In
February 1998, Mr. Moffatt became a part-time employee of the Company
paid at the rate of $95.00 per hour.
5
<PAGE> 9
(8) This bonus was earned in 1996 and paid in 1997.
(9) Represents the fair market value of 2,000 shares of Common Stock issued
to Mr. Moffatt on July 2, 1996, as additional compensation.
(10) Mr. Roscoe resigned as an officer of the Company on December 30, 1998.
(11) 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. On
November 27, 1998, Mr. Roscoe's compensation was increased to the rate
of $115,500 per year.
The table below includes the number of stock options granted to the
executive officers named in the Summary Compensation Table during the year ended
December 31, 1998 and exercise information.
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED(#) (1) FISCAL YEAR (2) PRICE($/sh) DATE
- ---- -------------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
S. Scott Crump 10,000 5.0% $5.00 11/18/04
Thomas W. Stenoien 6,000 3.0% $5.00 11/18/04
Donald W. Moffatt 0 - - -
Lawrence E. Roscoe 0 - - -
</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 200,500 option to employees in the fiscal
year ended December 31, 1998.
6
<PAGE> 10
REPRICING OF OPTIONS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES EXERCISE PRICE OPTION TERM
UNDERLYING MARKET PRICE OF OF STOCK AT REMAINING AT
OPTIONS STOCK AT TIME TIME OF NEW 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 7/9/98 25,750 $7.0625 $15.00 $8.00 5 years
7/9/98 2,000 $7.0625 $16.50 $8.00 4.7 years
Thomas W. Stenoien 7/9/98 6,750 $7.0625 $15.00 $8.00 5 years
7/9/98 2,500 $7.0625 $16.50 $8.00 4.7 years
Donald W. Moffatt 7/9/98 23,000 $7.0625 $16.50 $8.00 3.7 years
7/9/98 750 $7.0625 $15.00 $8.00 5 years
Lawrence E. Roscoe 7/9/98 9,750 $7.0625 $15.00 $8.00 5 years
7/9/98 2,500 $7.0625 $16.50 $8.00 4.7 years
7/9/98 2,500 $7.0625 $16.13 $8.00 4.3 years
</TABLE>
The Compensation Committee of the Board of Directors approved the
replacement of these options to Messrs. Crump, Stenoien, Moffatt and Roscoe and
options to other employees of the Company, at exercise prices ranging from
$16.50 per share to $15.00 per share, having concluded that the principal
purpose of the Company's stock option program (i.e., to provide an equity
incentive to employees to remain in the employment of the Company and to work
diligently in its best interests) would not be achieved for those employees
holding options exercisable substantially above the market price of the Common
Stock. In connection with the granting of these replacement options,
participating option holders agreed not to exercise any option for a period of
six months from the date of such regrant.
The table below includes information regarding the value realized on
option exercises and the market value of unexercised options held by the
executive officers named in the Summary Compensation Table during the year ended
December 31, 1998.
7
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS/SARs AT
SHARES OPTIONS/SARs AT FY-END (#) FY-END ($)(1)
ACQUIRED ON VALUE --------------------------- ----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
S. Scott Crump -0- -0- 14,550 23,200 -0- -0-
Thomas W. Stenoien 1,149 $9,807 7,850 9,800 -0- -0-
Donald W. Moffatt -0- -0- 20,750 25,000 -0- -0-
Lawrence E. Roscoe 4,312 $24,854 13,250 3,500 -0- -0-
</TABLE>
- ---------------
(1) Based upon a closing price of $4.8125 on the Nasdaq National Market on
December 31, 1998.
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 currently entitle
him to purchase 43,118 shares of Common Stock. In July 1997, and in November
1998, respectively, each of the four Directors who is not an employee of the
Company also received a non-qualified stock option to purchase 15,000 and 6,000
shares of the Company's Common Stock, respectively, for their continued service
on the Company's Board of Directors. In February 1999, a newly appointed
Director received a non-qualified stock option to purchase 7,000 shares of the
Company's Common Stock in connection with his service on the Board.
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 four employee stock option plans. The four
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 1,800,000 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
8
<PAGE> 12
March 13, 1998, Options to purchase 96,587 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, 35,950 of
which have terminated or expired and are again available for grant. As of March
15, 1999, options to purchase 139,334 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 15, 1999, options to purchase an aggregate of 1,410,752
shares have been granted under Plan 3, options to purchase 212,358 shares have
been exercised, and 413,344 options have terminated, expired, or been canceled
and are again available for grant. On February 13, 1998, the Board of Directors
authorized, and on May 14, 1998, the stockholders approved the Company's 1998
Incentive Option Plan ("Plan 4"). Plan 4 authorized the grant of options to
purchase an aggregate of 500,000 shares of Common Stock. Through March 15, 1998,
options to purchase an aggregate of 344,000 shares have been granted under Plan
4, and 1,600 options have terminated and are again available for grant.
9
<PAGE> 13
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1999, 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.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL PERCENTAGE OF OUTSTANDING
OWNER OWNERSHIP(1) SHARES OWNED(2)
<S> <C> <C>
S. Scott and 743,867(4) 12.2%
Lisa H. Crump (3)
Donald W. Moffatt (3) 26,150(5) *
Lawrence E. Roscoe (3) 21,050(6) *
Ralph E. Crump 321,830(7) 5.3%
28 Twisted Oak Circle
Trumbull, CT 06611
Arnold J. Wasserman 62,500(8) *
1 Brookwood Drive
West Caldwell, NJ 07006
Clifford H. Schwieter 29,912(9) *
102 E. Crest Drive
Cincinnati, OH 45215
Gregory L. Wilson 43,500(10) *
1301 W. 400 North
Orem, UT 84057
Archery Capital, LLC 520,045(11) 8.5%
237 Park Avenue
New York, NY 10017
Cameron Truesdell 447,100(12) 7.3%
5522 308th N.E.
Preston, WA 98050
Thomas W. Stenoien (3) 11,549(13) *
James Foley (3) 2,000(14) *
All directors and executive 1,679,083(15) 27.5%
officers as a group (8 persons)
</TABLE>
- -------------
* Represents less than 1%.
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(1) Under Securities and Exchange Commission rules, beneficial ownership
includes any shares as to which an individual has sole or shared voting
power or investment power. Unless otherwise indicated, the Company believes
that all persons named in the table have sole voting and investment power
with respect to all shares of Common Stock beneficially owned by them. A
person is also deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon the
exercise of warrants or options. Each beneficial owner's percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not those held by any other person) and which are
exercisable within 60 days from the date hereof have been exercised.
(2) Based on a total of 6,101,961 shares of Common Stock issued and outstanding
as of March 31, 1999.
(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
358,787 shares individually. Lisa and Scott Crump are husband and wife, but
disclaim beneficial ownership of each other's shares. They also disclaim
beneficial ownership of the 154,665 shares held by Ralph Crump, Scott
Crump's father and Lisa Crump's father-in-law, and the 154,665 shares held
by Marjorie Crump, Scott Crump's mother and Lisa Crump's mother-in-law.
Includes 14,950 shares of Common Stock issuable upon the exercise of
options currently exercisable by S. Scott Crump, 8,000 shares of Common
Stock issuable to S. Scott Crump on the exercise of currently exercisable
warrants, and 2,950 shares of Common Stock issuable upon the exercise of
options currently exercisable by Lisa Crump.
(5) Represents 26,150 shares of Common Stock issuable upon the exercise of
options currently exercisable by Donald W. Moffatt.
(6) Represents 13,750 shares of Common Stock issuable upon the exercise of
options currently exercisable by Lawrence E. Roscoe.
(7) Includes 154,165 shares owned by Marjorie Crump, Mr. Crump's wife, of which
Mr. Crump disclaims beneficial ownership, and 13,500 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
358,787 shares held by Mr. Crump's daughter-in-law, Lisa Crump.
(8) Represents 54,500 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Wasserman and 8,000 shares issuable
upon the exercise of currently exercisable warrants.
(9) Represents 29,912 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Schwieter.
(10) Represents 43,500 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Wilson.
(11) Represents shares of Common Stock reported as 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, less 710,090
shares of Common Stock that were issuable under warrants repurchased by the
Company on September 30, 1998. The Company has no further information
regarding the beneficial ownership of its shares by Archery Capital, LLC.
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<PAGE> 15
(12) Includes 7,000 shares of Common Stock issuable upon the exercise of
currently exercisable options and 16,000 shares of Common Stock issuable
upon the exercise of currently exercisable warrants.
(13) Represents 8,250 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Stenoien.
(14) Represents 2,000 shares of Common Stock issuable upon the exercise of
options currently exercisable by Mr. Foley.
(15) Includes 175,362 shares of Common Stock issuable on the exercise of
currently exercisable options and 32,000 shares issuable on the exercise of
currently exercisable warrants. Does not include shares beneficially owned
by Messrs. Moffatt and Roscoe and by Lisa Crump, who are no longer
executive officers of the Company.
CERTAIN TRANSACTIONS
On July 30, 1997, the Company entered into a stock option agreement
with Clifford Schwieter, a director of the Company, 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.
On July 30, 1997, all non-employee Board members received, as
compensation for serving as directors of the Company, 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 developing, manufacturing and selling rapid
prototyping devices (the "RP Company"). At that time, the entire ownership of
the RP Company was comprised of 10 Investment Units for $250,000 each. Each
Investment Unit consisted 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 purchased one
Investment Unit in the RP Company, and two investment funds for which Archery
Capital LLC ("Archery") acts as investment manager purchased a total of three
Investment Units. Mr. Crump is a member of the RP Company's governing board,
which consists of five members. In 1998, existing and new members of the RP
Company purchased six additional Investment Units. Of these additional
Investment Units, Cameron Truesdell, who became a member of the Company's Board
in 1999, purchased two Investment Units and Constance Crump, Scott Crump's
sister, and Constance Crump's husband jointly purchased one Investment Unit.
Under the agreements, the Company granted the RP Company the right and license
to use Company technology, solely for the purpose of developing a product having
the specifications set forth in the agreements (the "RP Product"), in exchange
for an option (the "Option") to acquire either (i) ownership of the RP Product
or (ii) ownership of all membership interests in the RP Company. The agreements
also provided that if the Company exercised its Option, it would be required to
make an aggregate payment of between approximately $5.5 million and $6.7
million, depending upon the date of completion, and to issue warrants to
purchase an aggregate of 128,000 shares of the Company's Common Stock ("Member
Warrants"). In that event, Mr. Crump, Mr. Wasserman, Mr. Truesdell, Ms. Crump,
the investment funds for which Archery acts as investment manager and each other
member of the RP Company would have each
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<PAGE> 16
received a minimum payment of $325,000 plus 8,000 Member Warrants per Investment
Unit. If the Company did not exercise its Option, the RP Company 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. Mr. Crump and Mr. Wasserman 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. Mr. Truesdell was not a member of the Company's Board at
the time of his investment.
On September 30, 1998, the Company purchased warrants to purchase an
aggregate of 710,090 shares of Common Stock expiring on October 31, 2000. The
sellers were funds managed by Archery. The aggregate purchase price of the
warrants was $1,000,000.
Under a Technology Sale and Assignment Agreement, dated as of December
21, 1998, the Company agreed to purchase from the RP Company, and the RP Company
agreed to sell to the Company, in-process rapid prototyping technology (the "RP
Technology"). The RP Technology was the subject of the agreements that the
Company and the RP Company had entered into in September 1997. The Company
agreed to pay the RP Company $5,945,709.04 in cash and to issue warrants to
purchase 128,000 shares of the Company's common stock at an exercise price of
$13.875 per share exercisable until January 4, 2003. The parties also agreed to
amend or terminate the agreements that they had entered into in 1997 as
necessary to conform the two transactions. In a separate transaction, the
Company submitted a purchase order to the RP Company for $519,000 of ongoing
development work with respect to the RP Technology. The RP Company transferred
the RP Technology to the Company before the end of 1998, and the Company paid
the full consideration for the RP Technology in early 1999. In connection with
the transaction, S. Scott Crump received a cash distribution of $375,137 from
the RP Company; Arnold Wasserman received a cash distribution of $359,521 from
the RP Company; Constance Crump and her husband received a cash distribution of
$346,986 from the RP Company; Cameron Truesdell received a cash distribution of
$693,973 from the RP Company; and the investment funds for which Archery acts
as the investment advisor received a cash distribution of $1,056,165 from the
RP Company. Each of the foregoing investors also received warrants to purchase
8,000 shares of common stock per Investment Unit exercisable on the terms
described above. The disinterested Directors of the Company approved the terms
of the Technology Sale and Assignment Agreement. The Company deemed the
consideration paid by it for the RP Technology fair and reasonable.
On February 10, 1999, the Company entered into a stock option agreement
with Cameron Truesdell. In consideration for his services as a director of the
Company, Mr. Truesdell received a non-qualified option to purchase 7,000 shares
of Common Stock at an exercise price of $5.00. All of the options are
immediately exercisable and expire on February 10, 2004.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
NOMINEES LISTED IN PROPOSAL 1.
INDEPENDENT ACCOUNTANTS
Rothstein, Kass & Company, P.C. ("RK&Co.") audited the Company's
financial statements for the fiscal years ended December 31, 1998, December 31,
1997, and December 31, 1996, 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, 1999. 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.
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<PAGE> 17
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.
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 9, 1999, 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, 1998 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 Thomas W. Stenoien, 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
Thomas W. Stenoien, Secretary
Eden Prairie, Minnesota
April 6, 1999
14
