SCHEDULE 14A INFORMATION
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934, as amended.
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Exogen, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) 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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(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 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid: __________________________.
(2) Form, Schedule or Registration Statement No.: ___________________.
(3) Filing Party: ___________________________________.
(4) Date Filed: ___________________________________.
<PAGE>
EXOGEN, INC.
10 Constitution Avenue
Piscataway, New Jersey 08855
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
February 25, 1999
The annual meeting of stockholders (the "Annual Meeting") of Exogen,
Inc. (the "Company") will be held at The Holiday Inn Somerset, 195 Davidson
Avenue, Somerset, New Jersey 08873, telephone number (732) 356-1700 on February
25, 1999 at 9:00 a.m. (eastern standard time) for the following purposes:
(1) To elect seven Directors to serve until the next Annual
Meeting or until their respective successors shall have been
duly elected and qualified;
(2) To ratify the selection of Arthur Andersen LLP, independent
public accountants, as auditors of the Company for the fiscal
year ending September 30, 1999; and
(3) To transact such other business as may properly come before
the Annual Meeting.
Only stockholders of record at the close of business on December 31,
1998 will be entitled to notice of, and to vote at, the Annual Meeting. A list
of stockholders eligible to vote at the Annual Meeting will be available for
inspection at the Annual Meeting and for a period of ten days prior to the
Annual Meeting during regular business hours at the corporate headquarters at
the address above.
Whether or not you expect to attend the Annual Meeting, your proxy vote
is important. To assure your representation at the meeting, please sign and date
the enclosed proxy card and return it promptly in the enclosed envelope, which
requires no additional postage if mailed in the United States or Canada.
By Order of the Board of Directors
/s/Patrick A. McBrayer
----------------------
Patrick A. McBrayer
Chief Executive Officer and President
Piscataway, New Jersey
January 11, 1999
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
- --------------------------------------------------------------------------------
<PAGE>
EXOGEN, INC.
PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS
January 11, 1999
This Proxy Statement is furnished to stockholders of record of Exogen,
Inc. (the "Company") as of December 31, 1998 in connection with the solicitation
of proxies by the Board of Directors of the Company (the "Board of Directors" or
"Board") for use at the Annual Meeting of Stockholders to be held on February
25, 1999 (the "Annual Meeting").
Shares cannot be voted at the Annual Meeting unless the owner is
present in person or by proxy. All properly executed and unrevoked proxies in
the accompanying form that are received in time for the Annual Meeting will be
voted at the Annual Meeting or any adjournment thereof in accordance with
instructions thereon, or if no instructions are given, will be voted, "FOR" the
election of the named nominees as Directors of the Company, "FOR" the
ratification of Arthur Andersen LLP, Independent Public Accountants, as auditors
of the Company and will be voted in accordance with the best judgment of the
persons appointed as proxies with respect to other matters which properly come
before the Annual Meeting. Any person giving a proxy may revoke it by written
notice to the Company at any time prior to exercise of the proxy. In addition,
although mere attendance at the Annual Meeting will not revoke the proxy, a
stockholder who attends the meeting may withdraw his or her proxy and vote in
person. Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Annual Meeting. Abstentions will be counted in tabulations of the votes
cast on each of the proposals presented at the Annual Meeting, whereas broker
non-votes will not be counted for purposes of determining whether a proposal has
been approved.
The Annual Report of the Company (which does not form a part of the
proxy solicitation materials) is being distributed concurrently herewith to
stockholders.
The mailing address of the principal executive offices of the Company
is 10 Constitution Avenue, P.O. Box 6860, Piscataway, New Jersey 08855. This
Proxy Statement and the accompanying form of proxy are being mailed to the
stockholders of the Company on or about January 11, 1999.
VOTING SECURITIES
The Company has only one class of voting securities, its common stock,
par value $0.0001 per share (the "Common Stock"). At the Annual Meeting, each
stockholder of record at the close of business on December 31, 1998 will be
entitled to one vote for each share of Common Stock owned on that date as to
each matter presented at the Annual Meeting. On December 31, 1998, 12,709,343
shares of Common Stock were outstanding. A list of stockholders eligible to vote
at the Annual Meeting will be available for inspection at the Annual Meeting and
for a period of ten days prior to the Annual Meeting during regular business
hours at the principal executive offices of the Company at the address specified
above.
<PAGE>
PROPOSAL 1:
ELECTION OF DIRECTORS
================================================================================
Unless otherwise directed, the persons appointed in the accompanying
form of proxy intend to vote at the Annual Meeting for the election of the seven
nominees named below as Directors of the Company to serve until the next Annual
Meeting or until their successors are duly elected and qualified. If any nominee
is unable to be a candidate when the election takes place, the shares
represented by valid proxies will be voted in favor of the remaining nominees.
The Board of Directors does not currently anticipate that any nominee will be
unable to be a candidate for election.
The Board of Directors currently has seven members, all of whom are
nominees for election. Each director shall serve until the next Annual Meeting
or until their respective successors shall have been duly elected and qualified.
John P. Ryaby, Patrick A. McBrayer, Donald J. Lothrop, Terence D. Wall, Buzz
Benson, David J. Ottensmeyer, M.D. and Peter C. Madeja were elected to the Board
of Directors by the stockholders at the 1998 Annual Meeting.
The affirmative vote of a plurality of the Company's outstanding Common
Stock represented and voting at the Annual Meeting is required to elect the
Directors.
Information Regarding Nominees for Election as Directors
The Board of Directors currently has seven members. The following
information with respect to the principal occupation or employment, other
affiliations and business experience of each of the seven nominees during the
last five years has been furnished to the Company by such nominee. Except as
indicated, each of the seven nominees for election has had the same principal
occupation for the last five years.
John P. Ryaby, 64, a founder of the Company, has been a Director of the
Company since March 1992, Chairman of the Board of Directors since February
1994, and currently serves as Vice President and Chief Scientific Officer. Mr.
Ryaby served as Chief Executive Officer and President of the Company from March
1992 to February 1994, and as Vice President of Research and Development and
Regulatory Affairs from February 1994 to October 1998. Mr. Ryaby served from
1989 until 1992 as the President and Chief Operating Officer of Interpore
Orthopaedics, Inc. ("Interpore"), a division of Interpore International, Inc., a
physical and biological research company. Mr. Ryaby was a founder of, and from
1975 to 1982, was President and Chief Operating Officer of Electro-Biology, Inc.
("EBI"), a company involved in bone growth electrical stimulation technology,
and was responsible for obtaining regulatory approval of EBI's pre-market
approval ("PMA") in 1979 and for establishing EBI's direct sales force.
Patrick A. McBrayer, 47, was named Chief Executive Officer, President
and a Director of the Company in February 1994. Prior to joining the Company,
Mr. McBrayer served in various executive positions from 1987 to February 1994 at
Osteotech, Inc., including President and Chief Executive Officer. While at
Osteotech, Inc., a company that develops and markets biologic, biomaterial and
implant systems for musculoskeletal surgery, Mr. McBrayer guided the company's
transition from its inception to a public entity. From 1979 through 1986, he
served in a variety of positions of increasing responsibility with Johnson &
Johnson, including Marketing Manager of the Patient Care Division, where he
built a significant business in surgical products.
3
<PAGE>
Donald J. Lothrop, 39, has been a Director of the Company since March
1993. Mr. Lothrop has been a General Partner of Delphi Management Partners II,
L.P. since July 1994, a General Partner of Delphi Management Partners III,
L.L.C. since March 1995 and a General Partner of Delphi Management Partners IV,
L.L.C. since October 1997. From January 1991 to June 1994, Mr. Lothrop was a
Partner of Marquette Venture Partners, a venture capital firm, where he focused
on the healthcare area. From 1989 to 1990, he worked at Bain & Company, Inc., a
management consulting firm. Mr. Lothrop serves on the Board of Directors of BMJ
Medical Management, Inc.
Terence D. Wall, 57, has been a Director of the Company since March
1993. Mr. Wall founded Vital Signs, Inc., a medical products company, in 1972
and has been President, Chief Executive Officer and a Director of Vital Signs,
Inc. since that time. Mr. Wall serves on the Board of Directors of Vital Signs,
Inc., EchoCath, Inc. and Bionix, Inc.
Buzz Benson, 44, has been a Director of the Company since January 1995.
Mr. Benson has been the President and Managing Director of Piper Jaffray
Ventures, a venture capital fund, since November 1992. Piper Jaffray Ventures is
the managing general partner of Piper Jaffray Healthcare Capital Limited
Partnership (SBIC). From 1986 to November 1992, Mr. Benson was a Managing
Director in the investment banking department of Piper Jaffray Inc. Mr. Benson
serves on the Board of Directors of Unologix, Inc. and several privately-held
healthcare companies.
David J. Ottensmeyer, M.D., 68, has been a Director of the Company
since October 1996. From 1991 to December 1995, Dr. Ottensmeyer served as
President and Chief Executive Officer of The Lovelace Institutes, a health
services and biomedical research organization. From 1990 to 1991, Dr.
Ottensmeyer served as President of the Travelers Health Companies and Chief
Medical Officer of the Travelers Companies - Managed Care and Employee Benefits
Operations. Dr. Ottensmeyer serves on the Board of Directors of Access Anytime
Bank Corporation.
Peter C. Madeja, 40, has been a Director of the Company since February
1997. Since October 1993, Mr. Madeja has been the President and Chief Executive
Officer of Genex Services, Inc. ("Genex"), a company that provides services to
insurance companies, third party administrators and companies with respect to
integrated disability management and medical cost containment. Mr. Madeja has
held various positions at Genex since 1982. Since March 1997, Mr. Madeja has
served as an Executive Vice President of Provident Companies, Inc., the parent
company of Genex and a provider of disability and life insurance and other
voluntary benefits.
Committees of the Board
The Audit Committee consists of Messrs. McBrayer, Benson and Lothrop
and its functions include recommending to the Board of Directors the selection
of the Company's auditors and reviewing with such auditors the plan and results
of their audit and the adequacy of the Company's systems of internal accounting
controls and management information systems. In addition, the Audit Committee
reviews the independence of the auditors and their fees for services rendered to
the Company.
The Compensation Committee currently consists of Messrs. Madeja and
Lothrop and its functions include recommending, reviewing and overseeing
salaries, benefits and stock option plans relating to the Company's employees,
consultants, directors and other individuals compensated by the Company.
<PAGE>
Pursuant to the provisions of the Company's 1995 Stock Option/Stock Issuance
Plan (the "Option Plan"), the Committee has complete discretion to authorize
options and direct stock issuances. Until December 2, 1997, the Compensation
Committee consisted of Messrs. Lothrop and Wall. From December 2, 1997 until
August 7, 1998, the Compensation Committee consisted of Mr. Madeja and Dr.
Ottensmeyer.
Attendance at Board and Committee Meetings
During fiscal 1998, the Board of Directors held six meetings. The
Compensation Committee acted by unanimous written consent in lieu of a meeting
seven times during fiscal 1998. The Audit Committee held two meetings during
fiscal 1998.
4
<PAGE>
Compensation of Directors
Cash Compensation. Directors do not receive a fee for attending Board
of Directors or committee meetings, but are reimbursed for expenses incurred in
connection with performing their respective duties as Directors of the Company.
Pursuant to a consulting agreement with the Company, Dr. Ottensmeyer receives
payments of $10,000 per year for consulting services on issues relating to third
party reimbursement.
Stock Option Grant. Under the Automatic Option Grant Program in effect
under the Option Plan, each non-employee Director first elected or appointed to
the Board of Directors after the initial public offering of the Company's Common
Stock will automatically be granted an option for 7,500 shares of Common Stock
on the date of his or her election or appointment to the Board of Directors,
provided such individual has not previously been in the employ of the Company.
In addition, at each annual meeting of stockholders, each individual with at
least six months of service on the Board of Directors who will continue to serve
as a non-employee Director following the meeting will automatically be granted
an option for 1,250 shares of Common Stock, whether or not such individual has
been in the prior employ of the Company or joined the Board of Directors prior
to the initial public offering. Each option granted under the Automatic Option
Grant Program will have an exercise price equal to 100% of the fair market value
of the Common Stock on the automatic grant date and a maximum term of ten years,
subject to earlier termination upon the optionee's cessation of Board of
Director service. Each automatic option will be immediately exercisable;
however, any shares purchased upon exercise of the option will be subject to
repurchase by the Company should the optionee's service as a non-employee
Director cease prior to vesting in the shares. The initial 7,500-share option
will vest in successive equal annual installments over the optionee's initial
four-year period of service on the Board of Directors; each annual 1,250 share
option will vest upon completion of one (1) year of Board service measured from
the option grant date. However, each outstanding option will immediately vest
upon (i) certain changes in the ownership or control of the Company or (ii) the
death or disability of the optionee while serving on the Board of Directors.
On February 25, 1998, the date of the 1998 Annual Meeting, each of
Messrs. Benson, Lothrop, Madeja and Wall and Dr. Ottensmeyer received an option
to purchase 1,250 shares of Common Stock under the Automatic Option Grant
Program at an exercise price of $5.125 per share, the fair market value per
share of Common Stock on such date. The terms and conditions of such options are
as described above. In accordance with the Automatic Option Grant Program, each
of Messrs. Benson, Lothrop, Madeja and Wall and Dr. Ottensmeyer, if elected to
the Board of Directors for the ensuing year, will receive options to purchase
1,250 shares of Common Stock at an exercise price equal to the fair market value
of the Company's Common Stock on the date of the Annual Meeting.
5
<PAGE>
EXECUTIVE OFFICERS AND INFORMATION REGARDING
EXECUTIVE COMPENSATION
Executive Officers
The executive officers of the Company as of December 31, 1998 were the
following:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Patrick A. McBrayer......................... 47 Chief Executive Officer and President
John P. Ryaby............................... 64 Vice President and Chief Scientific Officer
Richard H. Reisner.......................... 55 Vice President, Chief Financial Officer
and Secretary
Roger J. Talish............................. 56 Vice President and Chief Technical Officer
</TABLE>
Information Concerning Executive Officers Who Are Not Directors
Richard H. Reisner, a founder of the Company, has served as its Vice
President and Chief Financial Officer since September 1992. From 1991 to 1992,
Mr. Reisner was Vice President and Chief Financial Officer of Cirrus Diagnostics
Inc. ("Cirrus"), a company which developed a system for the automation of
diagnostic immunoassay and chemistry testing. Mr. Reisner was directly involved
with the acquisition of Cirrus by Diagnostic Products Corporation in May 1992.
From 1990 to 1991, Mr. Reisner was the Corporate Controller for Datascope Corp.,
a manufacturer of medical instruments. From 1989 to 1990, Mr. Reisner was
President and Chief Executive Officer of Pain Suppression Labs, Inc., a
manufacturer of electrical stimulation devices to suppress chronic headache
pain. From 1979 to 1988, Mr. Reisner was Vice President of Finance and
Administration of EBI and was responsible for obtaining third-party
reimbursement for EBI's bone growth electrical stimulation devices.
Roger J. Talish, a founder of the Company, currently serves as Vice
President and Chief Technical Officer. Previously, Mr. Talish served as Vice
President of Operations for the Company from March 1992 to October 1998. From
1989 to 1992, Mr. Talish was Vice President of Operations at Interpore and from
1985 to 1989 he held the same position at Meditron, Inc. From 1978 to 1985, Mr.
Talish held various engineering management positions at EBI, including Director
of Research and Product Engineering.
6
<PAGE>
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and each of the
other most highly compensated executive officers of the Company who were serving
as such at the end of fiscal 1998, and whose salary and bonus during fiscal 1998
exceeded $100,000 for services rendered in all capacities to the Company and its
subsidiaries for the fiscal years ended September 30, 1996, 1997 and 1998. The
listed individuals shall be hereinafter referred to as the "Named Executive
Officers."
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation (1) Awards
---------------------------- ------------
Securities
Underlying
Name and Principal Position Fiscal Year Salary Bonus Options
--------------------------- ----------- ------ ----- -------
<S> <C> <C> <C> <C>
Patrick A. McBrayer........................ 1998 $200,000 $25,000(2) 175,000(3)
Chief Executive Officer and President 1997 200,000 -- --
1996 200,000 -- --
John P. Ryaby.............................. 1998 144,000 10,000(2) 25,000
Vice President and Chief Scientific 1997 144,000 -- --
Officer 1996 144,000 10,000(4) --
Richard H. Reisner......................... 1998 130,000 10,000(2) 25,000
Vice President, Chief Financial Officer 1997 130,000 -- --
and Secretary 1996 128,333 -- --
Roger J. Talish............................ 1998 130,000 -- 25,000
Vice President and Chief Technical 1997 127,750 -- --
Officer 1996 128,750 6,666(4) --
</TABLE>
- --------------------------
(1) Other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits constituted the lesser of $50,000
or 10% of the total annual salary and bonus for the executive officer for
such year.
(2) Represents a bonus earned in fiscal year 1998, but not paid until fiscal
year 1999.
(3) Includes an option for 25,000 shares of Common Stock granted on March 30,
1998 which was surrendered by Mr. McBrayer to the Company for cancellation
on September 16, 1998 in order to allow the option shares subject to such
option to be returned to the share reserve for the Option Plan and made
available for option grants to other officers and employees of the Company.
(4) Represents a portion of a loan made to each of Messrs. Ryaby and Talish
which was forgiven by the Company on January 1, 1996.
7
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding the option
grants made pursuant to the Option Plan during fiscal 1998 to each of the Named
Executive Officers. No stock appreciation rights were granted to any Named
Executive Officer during fiscal 1998.
<TABLE>
<CAPTION>
Potential Realizable Value at
Number of Assumed Annual Rates of
Securities Percentage Stock Price Appreciation for
Underlying of Total Exercise Option Term(4)
Options Options Price(3) Expiration -----------------------------
Name Granted(1) Granted(2) ($/sh) Date 5% 10%
---- ---------- ---------- ------ ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Patrick A. McBrayer......... 25,000(5) 4.52 % $4.313 03/29/2008 $67,811 $171,845
50,000 9.05 2.50 08/30/2008 78,612 199,218
100,000(6) 18.10 2.50 08/30/2008 157,224 398,436
John P. Ryaby............... 25,000 4.52 4.313 03/29/2008 67,811 171,845
Roger J. Talish............. 25,000 4.52 4.313 03/29/2008 67,811 171,845
Richard H. Reisner.......... 25,000 4.52 4.313 03/29/2008 67,811 171,845
</TABLE>
(1) The options were granted under the Company's 1995 Stock Option/Stock
Issuance Plan. The exercise price per share for each option is the fair
market value per share of the Common Stock on the date of grant. Unless
otherwise noted, each option becomes exercisable in a series of four
consecutive, equal annual installments over the optionee's period of
service, with the first such installment to become exercisable one year
after the option grant date. Each option will become exercisable on an
accelerated basis upon a liquidation or dissolution of the Company or a
merger or consolidation in which there is a change in ownership of
securities possessing more than 50% of the total combined voting power
of the Company's outstanding securities, unless the option is assumed by
the successor entity. In the event the option is so assumed, it will
accelerate in full in the event the optionee's service with the
successor entity is terminated within eighteen (18) months following
such transaction. In addition, should the optionee's service be
terminated within eighteen (18) months following (i) a change in the
composition of the Board of Directors over a period of thirty-six (36)
months or less such that those individuals serving as Board members at
the beginning of the period cease to represent a majority of the Board
or (ii) a change of ownership of securities possessing more than 50% of
the total combined voting power of the Company's outstanding securities
pursuant to a hostile tender offer, the option will accelerate in full
in connection with such termination of service.
(2) Based on an aggregate of 552,500 options granted to employees in fiscal
1998, including options granted to the Named Executive Officers.
(3) The exercise price may be paid in cash or in shares of Common Stock
valued at fair market value on the exercise date. Alternatively, the
option may be exercised through a cashless exercise procedure pursuant
to which the optionee provides irrevocable instructions to a brokerage
firm to sell the purchased shares and to remit to the Company, out of
the sale proceeds, an amount equal to the exercise price plus all
<PAGE>
applicable withholding taxes. The Plan Administrator of the Option Plan
may also assist an optionee in the exercise of an option by (i)
authorizing a loan from the Company in a principal amount not to exceed
the aggregate exercise price plus any tax liability incurred in
connection with the exercise or (ii) permitting the optionee to pay the
option price in installments over a period of years upon terms
established by the Plan Administrator.
(4) There can be no assurance provided to any executive officer or other
holder of the Company's securities that the actual stock price
appreciation over the ten-year option term will be at the assumed 5% and
10% levels or at any other defined level. Unless the market price of the
Common Stock appreciates over the option term, no value will be realized
from those option grants which were made to the Named Executive Officers
with an exercise price equal to the fair market value of the option
shares on the grant date.
(5) The option was surrendered by Mr. McBrayer to the Company for
cancellation on September 16, 1998 in order to allow the option shares
subject to such option to be returned to the share reserve for the
Option Plan and made available for option grants to other officers and
employees of the Company.
8
<PAGE>
(6) The option becomes exercisable in a series of four consecutive, annual
installments of 25,000 shares with the first installment to become
exercisable on July 15, 2003. However, the option is subject to
acceleration in full as of the close of the first fiscal quarter in
which the Company achieves profitability.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information with respect to the
Named Executive Officers regarding stock option holdings as of September 30,
1998. No stock options were exercised by such persons in fiscal year 1998. No
stock appreciation rights were exercised by any Named Executive Officer during
fiscal year 1998 and no stock appreciation rights were outstanding as of
September 30, 1998.
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexercised In-The-Money
Options at Options at
Fiscal Year End Fiscal Year End(1)
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Patrick A. McBrayer.......... -- 150,000 -- $75,000
John P. Ryaby................ -- 25,000 -- 0
Richard H. Reisner........... -- 25,000 -- 0
Roger J. Talish.............. -- 25,000 -- 0
</TABLE>
(1) Based upon the market price of $3.00 per share, determined on the basis of
the closing selling price per share of Common Stock on the Nasdaq National
Market on September 30, 1998, less the option exercise price payable for
such shares.
Employment Contracts, Termination of Employment and Change in Control
Arrangements
Patrick A. McBrayer and the Company are parties to an employment
agreement, dated as of March 1, 1997, and amended as of October 1, 1998.
Pursuant to the terms of this agreement, effective October 1, 1998, Mr. McBrayer
receives annual minimum compensation of $235,000, which amount is subject to
annual review by the Compensation Committee during the term of the agreement.
The agreement also provides that Mr. McBrayer is entitled to participate in an
executive performance bonus program, which is to be developed by Mr. McBrayer
and approved by the Board of Directors. Mr. McBrayer is entitled to receive all
employee benefits generally made available to executive officers, as well as a
monthly car allowance of $600. In the event Mr. McBrayer's employment is
terminated by the Company without good cause, the Company is required to provide
Mr. McBrayer with severance payments equal to his base compensation in effect at
the time of such termination until the earlier of one year following the date of
termination or March 1, 2000.
<PAGE>
John P. Ryaby entered into an arrangement with the Company in May 1995
whereby if he is terminated by the Company without good cause prior to November
13, 1999, he will be entitled to receive certain benefits from the date of such
termination until November 13, 1999.
Each option granted to a Named Executive Officer under the Option Plan
will become exercisable on an accelerated basis upon a liquidation or
dissolution of the Company or a merger or consolidation in which there is a
change in ownership of securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities, unless such option is
assumed by the successor entity. In the event an option is so assumed, it will
accelerate in full in the event the officer's service with the successor entity
is terminated within eighteen (18) months following such transaction. In
addition, should the officer's service be terminated within eighteen (18) months
following (i) a change in the composition of the Board of Directors over a
period of thirty-six (36) months or less such that those individuals serving as
Board members at the beginning of the period cease to represent a majority of
the Board or (ii) a change of ownership of securities possessing more than 50%
of the total combined voting power of the Company's outstanding securities
pursuant to a hostile tender offer, the option will accelerate in full in
connection with such termination of service.
9
<PAGE>
Compensation Committee Interlocks and Insider Participation
During fiscal 1998, Messrs. Lothrop and Wall served as members of the
Company's Compensation Committee until December 2, 1997. On December 2, 1997,
Messrs. Lothrop and Wall resigned from the Compensation Committee and Mr. Madeja
and Dr. Ottensmeyer were appointed to the Compensation Committee. Messrs.
Lothrop and Wall resigned from the Compensation Committee because, as a result
of their participation in a private placement of Common Stock of the Company in
October 1997, option grants approved by the Compensation Committee would no
longer be exempt from the short-swing profit liability rules of the federal
securities laws. See "Certain Transactions" for a description of the October
1997 private placement.
On August 7, 1998, Dr. Ottensmeyer resigned from the Compensation
Committee and Mr. Lothrop was appointed to the Compensation Committee. Dr.
Ottensmeyer resigned from the Compensation Committee because, as a result of the
consulting fee payable to him, option grants approved by the Compensation
Committee during the period of Dr. Ottensmeyer's tenure on such committee would
not qualify as performance-based compensation for purposes of Section 162(m) of
the Internal Revenue Code of 1986, as amended. See "Compensation of Directors"
for a description of the consulting fee paid to Dr. Ottensmeyer.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors advises the Chief
Executive Officer and the Board of Directors on matters of the Company's
compensation philosophy and the compensation of executive officers and other
individuals compensated by the Company. The Compensation Committee also is
responsible for the administration of the Option Plan under which option grants
and direct stock issuances may be made to executive officers. The Compensation
Committee has reviewed and is in accord with the compensation paid to executive
officers in fiscal 1998.
General Compensation Policy. The fundamental policy of the Compensation
Committee is to provide the Company's executive officers with competitive
compensation opportunities based upon their contribution to the development and
financial success of the Company and their personal performance. It is the
Compensation Committee's objective to have a portion of each executive officer's
compensation contingent upon the Company's performance as well as upon such
executive officer's own level of performance. Accordingly, the compensation
package for each executive officer is comprised of two elements: (i) base salary
which reflects individual performance and is designed primarily to be
competitive with salary levels in the industry and (ii) long-term stock-based
incentive awards which strengthen the mutuality of interests between the
executive officers and the Company's stockholders.
Factors. The principal factors which the Compensation Committee
considered with respect to each executive officer's compensation package for
fiscal 1998 are summarized below. The Compensation Committee may, however, in
its discretion apply entirely different factors in advising the Chief Executive
Officer and the Board of Directors with respect to executive compensation for
future years.
<PAGE>
o Base Salary. The suggested base salary for each executive
officer is determined on the basis of the following factors: experience,
personal performance, the salary levels in effect for comparable positions
within and without the industry and internal base salary comparability
considerations. The weight given to each of these factors differs from
individual to individual, as the Compensation Committee deems appropriate.
While it is the general policy of the Compensation Committee not to
award performance-based cash bonuses, from time to time, the Compensation
Committee may advocate cash bonuses when such bonuses are deemed to be in the
best interests of the Company.
o Long-Term Incentive Compensation. Long-term incentives are
provided through grants of stock options. The grants are designed to align the
interests of each executive officer with those of the stockholders and to
provide each individual with a significant incentive to manage the Company from
the perspective of an owner with an equity stake in the Company. Each option
grant allows the individual to acquire shares of the Company's
10
<PAGE>
Common Stock at a fixed price per share (generally, the market price on the
grant date) over a specified period of time (up to ten years). Each option
generally becomes exercisable in four consecutive, equal annual installments
commencing one year after the date of the option grant, contingent upon the
executive officer's continued employment with the Company. Accordingly, the
option grant will provide a return to the executive officer only if the
executive officer remains employed by the Company during the vesting period, and
then only if the market price of the underlying shares appreciates.
The number of shares subject to each option grant is set at a level
intended to create a meaningful opportunity for stock ownership based on the
executive officer's current position with the Company, the base salary
associated with that position, the size of comparable awards made to individuals
in similar positions within the industry, the individual's potential for
increased responsibility and promotion over the option term and the individual's
personal performance in recent periods. The Compensation Committee also
considers the number of unvested options held by the executive officer in order
to maintain an appropriate level of equity incentive for that individual.
However, the Compensation Committee does not adhere to any specific guidelines
as to the relative option holdings of the Company's executive officers.
Through the Company's Employee Stock Purchase Plan, the Company offers
additional opportunities for equity ownership to executive officers.
CEO Compensation. In advising the Board of Directors with respect to
the compensation payable to the Company's Chief Executive Officer, the
Compensation Committee seeks to achieve two objectives: (i) to establish a level
of base salary competitive with that paid by companies within the industry which
are of comparable size to the Company and by companies outside of the industry
with which the Company competes for executive talent and (ii) to make a
significant percentage of the total compensation package contingent upon the
Company's performance and stock price appreciation.
In August 1998, Mr. McBrayer was granted (i) an option to purchase
100,000 shares of Common Stock, which becomes exercisable in a series of four
consecutive, equal annual installments commencing on July 15, 2003, subject to
acceleration in full as of the close of the first fiscal quarter in which the
Company achieves profitability and (ii) an option to purchase 50,000 shares of
Common Stock, which becomes exercisable in a series of four consecutive, equal
annual installments commencing July 15, 1999. These options made a significant
portion of Mr. McBrayer's total compensation contingent on the Company's
performance as well as on increased value for the Company's stockholders, since
the options will have value for Mr. McBrayer only if the market price of the
underlying option shares appreciates over the market price in effect on the date
the grants were made.
In March 1998, Mr. McBrayer was granted an option to purchase 25,000
shares of Common Stock, which he surrendered to the Company for cancellation in
September 1998 in order to allow the option shares subject to such option to be
returned to the share reserve for the Option Plan and made available for option
grants to other officers and employees of the Company.
The suggested base salary established for Mr. McBrayer on the basis of
the foregoing criteria was intended to provide a level of stability and
certainty each year. Accordingly, this element of compensation was not affected
to any significant degree by Company performance factors.
<PAGE>
Compliance with Internal Revenue Code Section 162(m). As a result of
Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
enacted into law in 1993, the Company will not be allowed a federal income tax
deduction for compensation paid to certain executive officers, to the extent
that compensation exceeds $1 million per officer in any one year. This
limitation will apply to all compensation paid to the covered executive officers
which is not considered to be performance based. Compensation which does qualify
as performance-based compensation will not have to be taken into account for
purposes of this limitation. The provisions and administration of the Option
Plan are intended to assure that any compensation deemed paid in connection with
the exercise of stock options granted under that plan with an exercise price
equal to the market price of the option shares on the grant date will qualify as
performance-based compensation. However, compensation deemed paid by the Company
in future fiscal years in connection with the exercise of options granted under
the Option Plan during the period of Dr. Ottenmeyer's tenure on the Compensation
Committee may not qualify as performance-based compensation and such
compensation may, accordingly, be required to be taken into account for purposes
of calculating the $1 million limitation per officer.
11
<PAGE>
The Compensation Committee does not expect that the compensation to be
paid to the Company's executive officers for the 1999 fiscal year will exceed
the $1 million limit per officer. Because it is very unlikely that the cash
compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1 million limit, the Compensation
Committee has decided at this time not to take any other action to limit or
restructure the elements of cash compensation payable to the Company's executive
officers. The Compensation Committee will reconsider this decision should the
individual compensation of any executive officer ever approach the $1 million
level.
THE COMPENSATION COMMITTEE
Peter C. Madeja
Donald J. Lothrop
12
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the annual percentage change in
the Company's cumulative total stockholder return on its Common Stock from July
20, 1995 (the date public trading of the Company's stock commenced) to the last
day of the Company's last completed fiscal year (as measured by dividing (i) the
sum of (A) the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment, and (B) the excess of the Company's share price
at the end over the price at the beginning of the measurement period, by (ii)
the share price at the beginning of the measurement period) with the cumulative
total return so calculated of The Nasdaq Stock Market (US) Index and a group of
peer issuers in a line of business similar to the Company during the same
period.
COMPARISON OF 38 MONTH CUMULATIVE TOTAL RETURN*
AMONG EXOGEN, INC. THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
Cumulative Total Return
------------------------------------------------------
7/20/95 9/95 9/96 9/97 9/98
------- ------ ------ ------ ------
Exogen, Inc. 100 128.26 34.78 40.22 26.09
PEER GROUP 100 112.23 125.77 187.38 211.22
NASDAQ STOCK MARKET-U.S. 100 108.87 129.16 177.29 181.21
$100 INVESTED ON 7/20/95 IN STOCK OR INDEX,
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
The Peer Group consists of Biomet, Inc., Orthofix International N.V.,
Orthologic Corp., Sofamor/Danek Group, Inc., Stryker Corp., and Osteotech Inc.
In the performance graphs included in the Company's proxy statements furnished
to stockholders through fiscal 1997, the Peer Group included Spine-Tech, Inc. In
January 1998, Spine-Tech, Inc. became a wholly-owned indirect subsidiary of
Sulzur Medica Ltd. and ceased to be listed on a stock exchange.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, which might incorporate future
filings made by the Company under those statutes, the preceding Compensation
Committee Report on Executive Compensation and the Company Stock Performance
Graph will not be incorporated by reference into any of those prior filings, nor
will such report or graph be incorporated by reference into any future filings
made by the Company under those statutes.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of November 15, 1998 by (i) each
Director and nominee for Director, (ii) each of the Named Executive Officers,
(iii) each person known by the Company to be the beneficial owner of more than
5% of the Company's Common Stock and (iv) all executive officers and Directors
as a group.
<TABLE>
<CAPTION>
Number of Shares of Percentage of
Common Stock Beneficially Shares
Name and Address of Beneficial Owner Owned(1) Outstanding(1)
------------------------------------ -------- --------------
<S> <C> <C>
Delphi Ventures III, L.P. (2)............... 1,151,534 9.1%
State of Wisconsin Investment Board (3)..... 909,800 7.2%
Smith & Nephew Holdings, Inc. (4)........... 820,000 6.5%
DLJ Capital Corporation (5)................. 815,384 6.4%
Marquette Venture Partners II, L.P. (6)..... 744,463 5.9%
Pequot Private Equity Fund, L.P. (7)........ 735,294 5.8%
Patrick A. McBrayer (8)..................... 292,400 2.3%
John P. Ryaby............................... 141,950 1.1%
Richard H. Reisner (9)...................... 147,412 1.2%
Roger J. Talish (10)........................ 136,250 1.1%
Buzz Benson (11)............................ 323,240 2.5%
Donald J. Lothrop (12)...................... 1,214,396 9.6%
Terence D. Wall (13)........................ 169,882 1.3%
David J. Ottensmeyer, M.D. (14)............. 8,750 *
Peter C. Madeja (15)........................ 8,750 *
All executive officers and directors
as a group (9 persons) (16)................ 2,443,030 19.2%
</TABLE>
- ------------------------
* Represents beneficial ownership of less than one percent of the Common
Stock.
(1) Applicable percentage of ownership as of November 15, 1998 is based upon
12,709,343 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission, and includes voting and investment power with respect to
shares. Gives effect to the shares of Common Stock issuable within 60 days
of November 15, 1998 upon the exercise of all options and other rights
beneficially owned by the indicated stockholders on that date.
<PAGE>
(2) Consists of (i) 443,439 shares owned by Delphi Ventures II, L.P. ("Ventures
II"); (ii) 2,213 shares owned by Bio-Investments II, L.P. ("Bio-Investments
II"); (iii) 693,398 shares owned by Delphi Ventures III, L.P. ("Ventures
III") and (iv) 12,484 shares owned by Delphi Bio-Investments III, L.P.
("Bio-Investments III") (collectively, the "Delphi Entities"). Messrs.
James J. Bochnowski, David L. Douglass and Donald J. Lothrop are the
general partners of Delphi Management Partners II, L. P. which is the
general partner of Ventures II and Bio-Investments II, and as such, may be
deemed to share voting and investment power with respect to such shares.
Messrs. James J. Bochnowski, David L. Douglass and Donald J. Lothrop and
Dr. Deborah Yu are the general partners of Delphi Management Partners III,
L.P. which is the general partner of Ventures III and Bio-Investments III,
and, as such, may be deemed to share voting and investment power with
respect to such shares.
14
<PAGE>
The address for the Delphi Entities is 3000 Sand Hill Road, Building 1,
Suite 135, Menlo Park, California 94025.
(3) The address for the State of Wisconsin Investment Board is P.O. Box 7842,
Madison, Wisconsin 53707.
(4) Smith & Nephew plc is the ultimate parent corporation of Smith & Nephew
Holdings, Inc. Mr. Christopher J. O'Donnell is the chief executive officer
of Smith & Nephew plc and, as such, may be deemed to have voting and
investment power with respect to such shares. The address for Smith &
Nephew Holdings, Inc. is 1450 Brooks Road, Memphis, Tennessee 38116.
(5) Consists of 111,470 shares owned by DLJ Capital Corporation and 703,914
shares owned by Sprout Capital VI, L.P. DLJ Capital Corporation is the
Managing General Partner of Sprout Capital VI, L.P. Mr. Richard Kroon is
the president of DLJ Capital Corporation and, as such, may be deemed to
have voting and investment power with respect to such shares. The address
for DLJ Capital Corporation is 277 Park Avenue, New York, New York 10172.
(6) Consists of 723,783 shares owned by Marquette Venture Partners II, L.P. and
20,680 shares owned by MVP II Affiliates Fund, L.P. Messrs. James E.
Daverman and Lloyd D. Ruth are the general partners of Marquette General
II, L.P. which is the general partner of Marquette Venture Partners II,
L.P. and MVP II Affiliates Fund, L.P. and, a such, may be deemed to share
voting and investing power with respect to such shares. The address for
Marquette Venture Partners II, L.P. and MVP II Affiliates Fund, L.P. is 520
Lake Cook Road, Suite 450, Deerfield, Illinois 60015.
(7) Consists of 652,660 shares owned by Pequot Private Equity Fund, L.P. and
82,634 shares owned by Pequot Offshore Private Equity Fund, Inc. Voting and
investment power for these shares is owned by Dawson-Samberg Capital
Management, Inc. ("Dawson-Samberg"), as investment manager, and Mr. Arthur
J. Samberg, Chairman and Chief Executive Officer of Dawson-Samberg, and Mr.
Jonathan T. Dawson, Vice-Chairman of Dawson Samberg, may be deemed to share
voting and investment power with respect to those shares. The address for
Pequot Private Equity Fund, L.P. is 354 Pequot Avenue, Southport,
Connecticut 06490.
(8) Includes (i) 30,000 shares held by Mr. McBrayer's spouse; and (ii) 1,000
shares held by each of Mr. McBrayer's two children. Mr. McBrayer disclaims
beneficial ownership of the shares held by his spouse and two children.
(9) Includes 4,000 shares held by Mr. Reisner's spouse. Mr. Reisner disclaims
beneficial ownership of such shares.
(10) Includes 120,793 shares pledged to Merrill Lynch Credit Corp.
(11) Includes (i) 299,465 shares owned by Piper Jaffray Healthcare Capital
Limited Partnership (SBIC) ("Piper Jaffray"); (ii) 3,025 shares held by Mr.
Benson's children; and (iii) 3,750 shares issuable upon the exercise of
stock options, of which 1,250 shares, if issued, would be subject to the
Company's repurchase right. Mr. Benson is the President and Managing
Director of Piper Jaffray Ventures which is Managing General Partner of
Piper Jaffray Healthcare Limited Partnership (SBIC) and, as such, may be
deemed to share voting and investment power with respect to Piper Jaffray's
shares. Mr. Benson disclaims beneficial ownership of Piper Jaffray's shares
except to the extent of his pecuniary interest in such shares arising from
his interest in the partnership.
(12) Includes (i) 443,439 shares owned by Ventures II; (ii) 2,213 shares owned
by Bio-Investments II; (iii) 693,398 shares owned by Ventures III; (iv)
12,484 shares owned by Bio-Investments III and (v) 3,750 shares issuable
upon the exercise of stock options, of which 1,250 shares, if issued, would
be subject to the Company's repurchase right. Mr. Lothrop is a general
partner of the general partners of Ventures II, Bio-Investments II,
Ventures III and Bio-Investments III, respectively, and, as such, may be
deemed to share voting and investment power with respect to such shares.
Mr. Lothrop disclaims beneficial ownership of such shares except to the
extent of his pecuniary interest in such shares arising from his interest
in Ventures II, Bio-Investments II, Ventures III and Bio-Investments III,
respectively.
<PAGE>
(13) Includes 3,750 shares issuable upon the exercise of stock options, of which
1,250 shares, if issued, would be subject to the Company's repurchase
right.
(14) Includes 8,750 shares issuable upon the exercise of stock options, of which
5,000 shares, if issued, would be subject to the Company's repurchase
right.
(15) Includes 8,750 shares issuable upon the exercise of stock options, of which
6,875 shares, if issued, would be subject to the Company's repurchase
right.
(16) See Notes (8) through (15) above.
Compliance with Reporting Requirements
Under the securities laws of the United States, the Company's
Directors, executive officers, and any persons holding more than ten percent of
the Company's Common Stock are required to report their ownership of
15
<PAGE>
the Company's Common Stock and any changes in that ownership to the Securities
and Exchange Commission and the Nasdaq National Market Surveillance Department.
Specific due dates for these reports have been established and the Company is
required to report in this Proxy Statement any failure to file by these dates
during fiscal 1998. Based solely on its review of such forms received by it from
such persons for their fiscal 1998 transactions, the Company believes that such
executive officers, directors and holders of more than ten percent of the
Company's Common Stock have complied with all filing requirements applicable to
such persons. During fiscal 1998, it came to the attention of the Company that
Mr. Reisner failed to timely file a Form 4 Statement of Changes of Beneficial
Ownership of Securities during fiscal 1997.
Certain Transactions
In October 1997, the Company completed a $7.5 million private placement
(the "Private Placement") of 1,799,019 shares of its Common Stock. Participants
in the Private Placement included Messrs. Benson, Lothrop and Wall. Mr. Benson
is the President and Managing Director of Piper Jaffray Ventures which is the
Managing General Partner of Piper Jaffray Healthcare Capital Limited Partnership
(SBIC). Mr. Lothrop is a general partner of Delphi Management Partners III,
L.L.C., which is the general partner of each Ventures III and Bio-Investments
III. Piper Jaffray, Ventures III, Bio-Investments III and Mr. Wall purchased
117,647, 693,398, 12,484 and 117,647 shares, respectively, in the Private
Placement.
On August 10, 1998, the Company and Smith & Nephew, Inc. ("S&N")
entered into a multi-year master agreement, together with a U.S. sales
representative agreement and a stock purchase agreement, under which S&N
obtained exclusive rights to market the Company's SAFHS devices in the United
States. S&N paid $4.1 million (or $5.00 per share) to purchase 820,000 shares of
the Company's Common Stock at the closing. An additional up-front fee of $1.0
million was paid for the distribution rights in the United States. The
agreements also provide S&N with certain options resulting in potential
additional aggregate payments to the Company of $5.0 million. The agreements
also provide S&N a one-time right to purchase additional shares of the Company's
Common Stock, in certain circumstances, up to 19% (including the shares already
acquired by S&N) of the then outstanding shares of the Company's Common Stock,
after giving effect to the shares issuable upon exercise of the right. Pursuant
to the agreements, the Company filed a registration statement with the
Securities and Exchange Commission following the closing date to register the
shares of the Company's Common Stock sold to S&N under these agreements.
16
<PAGE>
PROPOSAL 2:
RATIFICATION OF SELECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
================================================================================
Upon the recommendation of the Audit Committee, the Board of Directors
appointed Arthur Andersen LLP, independent public accountants and auditors of
the Company since the Company's inception, as auditors of the Company to serve
for the fiscal year ending September 30, 1999, subject to the ratification of
such appointment by the stockholders at the Annual Meeting. The affirmative vote
of a majority of the outstanding voting shares of the Company present or
represented and entitled to vote at the 1999 Annual Meeting is required to
ratify the appointment of the auditors. A representative of Arthur Andersen LLP
will attend the Annual Meeting of Stockholders with the opportunity to make a
statement if he or she so desires and will also be available to answer
inquiries.
The Board of Directors recommends that the stockholders vote FOR the
ratification of Arthur Andersen LLP as the Company's independent public
accountants for the fiscal year ending September 30, 1999.
STOCKHOLDER PROPOSALS
Pursuant to the stockholder proposal rules adopted by the Commission,
if the Company has not received notice prior to November 29, 1999 of any matter
a stockholder intends to propose for a vote at the 2000 Annual Meeting of
Stockholders, then a proxy solicited by the Board of Directors may be voted on
such matter in the discretion of the proxy holder, without discussion of the
matter in the proxy statement soliciting such proxy and without such matter as a
separate item on the proxy card.
The deadline for stockholders to submit proposals to be considered for
inclusion in the Company's Proxy Statement for next year's Annual Meeting of
Stockholders is anticipated to be September 9, 1999. Such proposals may be
included in next year's Proxy Statement, if they comply with certain rules and
regulations promulgated by the Commission. Stockholder proposals must be mailed
to the attention of the Company's Secretary at the Company's principal executive
offices located at 10 Constitution Avenue, Piscataway, New Jersey 08855.
OTHER MATTERS
Management knows of no matters that are to be presented for action at
the Annual Meeting other than those set forth above. If any other matters
properly come before the Annual Meeting, the persons named in the enclosed form
of proxy will vote the shares represented by proxies in accordance with their
best judgment on such matters.
Proxies will be solicited by mail and may also be solicited in person
or by telephone by some regular employees of the Company. The Company may also
consider the engagement of a proxy solicitation firm. Costs of the solicitation
will be borne by the Company.
By Order of the Board of Directors
Patrick A. McBrayer
Chief Executive Officer and President
Piscataway, New Jersey
January 11, 1999
17
<PAGE>
REVOCABLE PROXY
EXOGEN, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
PROXY FOR ANNUAL MEETING OF
STOCKHOLDERS -- FEBRUARY 25, 1999
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned stockholder of Exogen, Inc. hereby appoints Patrick A.
McBrayer and Richard H. Reisner, and each of them, with full power of
substitution, proxies to vote the shares of common stock which the undersigned
could vote if personally present at the Annual Meeting of Stockholders of
Exogen, Inc. to be held at The Holiday Inn Somerset, 195 Davidson Avenue,
Somerset, New Jersey 08873 on February 25, 1999, telephone number (732) 356-1700
at 9:00 a.m. (eastern standard time), or any adjournment thereof.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
John P. Ryaby, Patrick A. McBrayer, Donald J. Lothrop, Terence D. Wall, Buzz
Benson, David J. Ottensmeyer, M.D. and Peter C. Madeja.
[ ] FOR [ ] WITHHOLD [ ] EXCEPT
INSTRUCTION: To withhold authority to vote for an individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. RATIFICATION OF ACCOUNTANTS: proposal to ratify the selection of Arthur
Andersen LLP, as independent auditors of the Company as described in the
Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
PERSONS NOMINATED BY MANAGEMENT AS DIRECTORS AND FOR PROPOSAL 2.
Please date and sign exactly as your name appears on this proxy card. If shares
are held jointly, each stockholder should sign. Executors, administrators,
trustees, etc. should use full title and, if more than one, all should sign. If
the stockholder is a corporation, please sign full corporate name by an
authorized officer.
<PAGE>
Please be sure to sign and date
this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
EXOGEN, INC.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
