Draft 4/21/04
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material under Rule 14a-12Section 240.14a-12
Third Wave Technologies, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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THIRD WAVE TECHNOLOGIES, INC.
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20032004 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 10, 200322, 2004
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To our Shareholders:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Third
Wave Technologies, Inc., a Delaware corporation (the "Company"), will be held at
the offices of the Company, 502 South Rosa Road, Madison, Wisconsin 53719 on
June 10, 200322, 2004 at 9:00 a.m., local time, for the following purposes:
(1) To elect three directors each to serve for a term of three years
expiring upon the 20062007 annual meeting of shareholders or until their
successors are elected and qualified;
(2) To ratify the appointment of Ernst & Young LLP as the independent
auditors of the Company for the year ending December 31, 2003;2004; and
(3) To transact any other business which is properly presented at the
meeting.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice. Only shareholders of record at the close of
business on April 18, 200323, 2004 are entitled to notice of and to vote at this
meeting.
All shareholders are invited to attend the meeting in person. However, to
assure your representation at the meeting, you are urged to sign and return the
enclosed proxy as promptly as possible in the postage prepaid envelope enclosed
for that purpose. Any shareholder attending the meeting may vote in person even
if a proxy is returned.
By Order of the Board of Directors,
/s/ LANCE FORS, PH.D
Lance Fors, Ph.D
Chairman of the Board and
Chief Executive OfficerJOHN COMERFORD
John Comerford
April 25, 200329, 2004
THIRD WAVE TECHNOLOGIES, INC.
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PROXY STATEMENT FOR THE
20032004 ANNUAL MEETING OF THE SHAREHOLDERS
JUNE 10, 200322, 2004
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of Third Wave Technologies, Inc.
(the "Company", "us", "we" or "our") for use at the annual meeting of
shareholders to be held on Tuesday, June 10, 200322, 2004 at 9:00 a.m., local time, or
at any adjournment or adjournments thereof, for the purposes set forth herein
and in the accompanying notice of annual meeting of shareholders. The annual
meeting will be held at the principal executive offices of the Company at 502
South Rosa Road, Madison, Wisconsin 53719. The telephone number at that location
is (608) 273-8933.
These proxy solicitation materials are being mailed on or about April 25,
200329,
2004 to all shareholders entitled to vote at the meeting.
RECORD DATE
Shareholders of record at the close of business on April 18, 2003,23, 2004, the
record date for the meeting, are entitled to notice of and to vote at the
meeting. At the record date, 39,578,77440,173,411 shares of the Company's common stock
were issued and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a duly
executed proxy bearing a later date, by attending the shareholder meeting and
voting in person or by delivering to the Secretary of the Company, at the
Company's principal executive offices, a written notice of revocation.
VOTING AND SOLICITATION
Each shareholder is entitled to one vote for each share held as of the
record date for the meeting. Shareholders will not be entitled to cumulate their
votes in the election of directors.
The cost of soliciting proxies will be borne by the Company. The Company
expects to reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and employees, without additional compensation, personally
or by telephone, telegram, facsimile or other means of communication. We have
engaged Georgeson & Co. to assist us in distributing materials, for a fee
estimated at $5,000, plus reimbursement of out-of-pocket expenses.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Votes cast by proxy or in person at the annual meeting will be tabulated by
the inspector of elections appointed for the meeting and will determine whether
a quorum is present.
We need a majority of the shares of common stock issued and outstanding on
the record date present, in person or by proxy, to have a quorum to allow us to
hold the annual meeting. Shares that are voted "For", "Against" or "Abstain"
with respect to any matter are treated as being present at the meeting.
In the election of directors, you can withhold your vote for any nominee.
Withheld votes will be excluded entirely from the vote on the election of
directors and will have no effect on the outcome. On the ratification of the
appointment of Ernst & Young LLP, you can vote to "abstain". If you vote to
"abstain", your vote will have the effect of a vote against the ratification.
If you hold shares through a broker, follow the voting instructions you
receive from your broker. If you do not submit voting instructions with respect
to a matter and your broker does not vote your shares on that matter (so-called
"broker non-votes"), your shares will not be counted in determining the outcome
of the vote on that matter.
Any proxy that is returned using the form of proxy enclosed and which is
not marked as to a particular item will be voted for the election of the three
nominees named in this proxy statement, for the ratification of the appointment
of the independent auditors, and as the proxy holders deem advisable on other
matters that may come before the meeting, as the case may be, with respect to
the items not marked.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented by those
shareholders at the Company's annual meeting to be held in 20042005 must be
submitted in writing to the Secretary of the Company at the Company's executive
offices and received by the Company no later than December 26, 200331, 2004 in order
that those proposals may be considered for possible inclusion in the proxy
statement relating to that meeting.
In addition, the by-laws of the Company provide that any shareholder
entitled to vote may nominate persons for election as directors or propose
business to be brought before a meeting, or both, only if the shareholder has
given timely notice in proper written form of the shareholder's intent to make a
nomination or propose business. To be timely, the shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company not less than 120 days in advance of the first anniversary date of
mailing of the Company's proxy statement released to shareholders in connection
with the previous year's annual meeting of shareholders, unless no annual
meeting was held in the previous year or the date of the annual meeting has been
changed by more than 30 days from the date contemplated at the time of the
previous year's proxy statement, in which case, to be timely such notice must be
so received a reasonable time before the solicitation is made. The by-laws
contain provisions regarding information that must be set forth in the
shareholder's notice in order for it to be in proper form.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's board of directors currently consists of nineten persons, divided
into three classes serving terms of three years. Shareholders elect one class of
directors at each annual meeting. Three directors are to be elected at this
annual meeting each to hold office until the 20062007 annual meeting of shareholders
or until a successor has been duly elected and qualified. The other classes of
directors will be elected at the Company's annual meetings of shareholders to be
held in 20042005 and 2005.2006.
If any of the nominees for director at the annual meeting becomes
unavailable or declines to serve as a director at the time of the annual
meeting, the proxy holders will vote the proxies in their discretion for any
nominee who is designated by the current board of directors to fill the vacancy.
We do not expect any of the nominees to be unavailable to serve.
The names of the three nominees for election to the board of directors at
the annual meeting, their ages as of the record date for the meeting, and
certain information about them are set forth below. The names of the current
directors with unexpired terms, their ages as of the record date, and certain
information about them are also stated below.
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NOMINEES FOR ELECTION AT THE ANNUAL MEETING FOR TERMS ENDING IN 2006
NAME AGE PRINCIPAL OCCUPATION
- ---- --- -------------------------------------------
John Neis(1)(2)(3)........................ 47 Senior Partner, Venture Investors
Management LLC
Sam Eletr, Ph.D. ......................... 64 Retired; Former Chairman and CEO of Applied
Biosystems.
Gordon F. Brunner......................... 64 Partner, Living Longer Proactive Health;
retired Senior Vice President, Chief
Technology Officer, and member of the Board
of Directors of Procter & Gamble Co.
DIRECTORS CONTINUING IN OFFICE - TERMS ENDING IN 20042007
NAME AGE PRINCIPAL OCCUPATION
- ---- --- --------------------
Lance Fors, Ph.D.......................... 4546 Chairman of the Board President and Chief Executive
Officer, Third Wave Technologies, Inc.
David A. Thompson(3)...................... 6162 Retired; Former Senior Vice President &
President, Diagnostic Division, Abbott
Laboratories
Kenneth R. McGuire........................ 61John J. Puisis............................ 44 President and Chief ExecutiveOperating Officer,
Burbank Group of
CompaniesThird Wave Technologies, Inc.
DIRECTORS CONTINUING IN OFFICE - TERMS ENDING IN 2005
NAME AGE PRINCIPAL OCCUPATION
- ---- --- --------------------
Tom Daniel(1)(2)(3)....................... 3839 General Partner, Schroder Ventures Life
Sciences
G. Steven Burrill(2)...................... 5859 Chief Executive Officer, Burrill & Company
Lloyd M. Smith, Ph.D.(1)(3)............... 48 Kellett49 John D. MacArthur Professor of Chemistry,
University of Wisconsin, Director of the
Genome Center at the University of
Wisconsin, Madison and Member, Scientific Advisory
Board, Third Wave Technologies, Inc.
DIRECTORS CONTINUING IN OFFICE - TERMS ENDING IN 2006
NAME AGE PRINCIPAL OCCUPATION
- ---- --- --------------------
John Neis(1)(2)(3)........................ 48 Senior Partner, Venture Investors LLC
Sam Eletr, Ph.D........................... 65 Retired; Former Chairman and CEO of Applied
Biosystems
Gordon F. Brunner......................... 65 Partner, Living Longer Proactive Health;
retired Senior Vice President, Chief
Technology Officer, and member of the Board
of Directors of Procter & Gamble Co.
- ---------------
(1) Member of the compensation committee
(2) Member of the audit committee
(3) Member of the nominating committee
The nominating committee unanimously recommended to the board of directors
that Mr. McGuire, whose term as a member of the board of directors expires at
the annual meeting of shareholders, not be nominated for an additional term. The
board of directors unanimously adopted the nominating committee's
recommendation.
There are no family relationships among any of the directors or executive
officers of the Company.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING FOR TERMS ENDING IN 2006
John Neis has served as one of our directors since August 1994. Mr. Neis is
Senior Partner of Venture Investors Management LLC, a firm that is the manager
and general partner of Madison, Wisconsin-based venture capital management
funds. He also serves on the Advisory Board of the Weinert Applied Ventures
Program at the University of Wisconsin. Mr. Neis received a B.S. in finance from
the University of Utah and an M.S. in business from the University of Wisconsin,
and is a Chartered Financial Analyst.
Gordon F. Brunner has served as one of our directors since January 2003.
Mr. Brunner is currently a partner with Living Longer Proactive Health and was
senior vice president, chief technology officer, head of worldwide research and
development, and a member of the board of directors of Procter & Gamble Co. He
has more than 40 years' experience leveraging innovative technology platforms to
the pharmaceutical, over-the-counter and consumer markets. He earned a B.S.
degree in biochemical engineering from the University of Wisconsin-Madison and
an M.B.A. from Xavier University.
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Sam Eletr, Ph.D., has served as one of our directors since June 2002. Dr.
Eletr co-founded Applied Biosystems, Inc. and served as its Chairman and Chief
Executive Officer. Prior to founding Applied Biosytems, Dr. Eletr managed the
analytical and medical instruments group at Hewlett-Packard Co.'s corporate
research laboratories. Dr. Eletr most recently co-founded and served as chairman
and chief executive officer of Lynx Therapeutics Inc., a publicly traded
genomics company. He earned an M.A. in physics and a Ph.D. in biophysical
chemistry, both at the University of California-Berkeley.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
NOMINEES SET FORTH ABOVE.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE ANNUAL MEETING2007
Lance Fors, Ph.D., our founder and Chairman of the Board, has served as our
President, Chief Executive Officer and one of our directors since our inception in 1993.
Dr. Fors served as our President from 1993 until 2003. Dr. Fors received his
Ph.D. in molecular biology from the California Institute of Technology in 1990.
Dr. Fors has over twenty years of research and development experience and is the
inventor on 1921 issued and pending patents in the area of DNA and RNA sequence
analysis.
David A. Thompson has served as one of our directors since August 1997. Mr.
Thompson retired from Abbott Laboratories in 1995 where he worked for over 30
years. He held several corporate officer positions
3
with Abbott Laboratories including: Senior Vice President & President Diagnostic
Division 1983-1995, Vice President Human Resources 1982-1983, Vice President
Corporate Materials Management 1981-1982 and Vice President Operations
1974-1981. Mr. Thompson currently serves on the board of directors of St. Jude
Medical Inc., a medical device company.
Kenneth R. McGuireJohn J. Puisis has served as one of our directorsSenior Vice President since October 1998.
In 1986,September
2001. Mr. McGuire founded the first of the Burbank Group of Companies,
manufacturers of commercial aircraft noise suppression equipment. He hasPuisis also served as our Chief ExecutiveFinancial Officer from September 2001
until October 2003. In January 2003, Mr. Puisis was also assigned the title and
duties of Chief Operating Officer and in October of 2003, he was assigned the
member companiestitle and duties of President. Mr. Puisis was appointed to our board of
directors in February 2004. From 1996 until he joined the Burbank Group since
their respective inceptions.Company, Mr. McGuirePuisis
held senior management positions at the Spencer Stuart and Egon Zehnder
executive recruitment firms, specializing in recruiting for the biotechnology
and pharmaceutical industries. From 1989 to 1996, Mr. Puisis held key financial
executive positions at DEKALB Genetics and Kraft Foods. Prior to 1989, Mr.
Puisis held various positions at several large public accounting firms. Mr.
Puisis received a B.S.an M.B.A. from the United States
Naval AcademyNorthwestern University and a J.D.B.A. in accounting
from ColumbiaNorthern Illinois University. He is a certified public accountant.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
NOMINEES SET FORTH ABOVE.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE ANNUAL MEETING
Tom Daniel has served as one of our directors since October 1999. He is
General Partner with Schroder Ventures Life Sciences, a venture capital
investment firm, where he has focused on life science investments in the United
States and Europe since 1998. From 1995 to 1998, Mr. Daniel was an associate
with Domain Associates, a United States venture capital firm focused on the life
sciences. Before Domain, Mr. Daniel worked for Charles River Ventures, a United
States venture capital firm focused on biotechnology investments. Mr. Daniel is
a director of Oxagen and Solexa and is responsible for investments in Cellzome,
Sunesis and a number of other private and public companies. Mr. Daniel received
an M.B.A. from Harvard Business School, was a member of a genetics research team
at the University of North Carolina, Chapel Hill from 1983-1984, and hasreceived an
M.A. in Biological Sciences from Oxford University.
G. Steven Burrill has served as one of our directors since October 1998.
Mr. Burrill is Chief Executive Officer of Burrill & Company, a Life Sciences
Private Merchant Bank which he founded in 1994. Prior to founding Burrill &
Company, Mr. Burrill was a partner of Ernst & Young from 1977 through 1993. Mr.
Burrill is a director of Catalyst Biosciences, DepoMed (DEPO), Galapagos
Genomics, and Targacept. He currently serves as Board Chairman for Paradigm
Genetics (PDGM) and Pyxis Genomics. Mr. Burrill received a B.B.A. from the
University of Wisconsin, Madison.
Lloyd M. Smith, Ph.D., has served as one of our directors since our
formation and also serves on our scientific advisory board. Dr. Smith is KellettJohn D.
MacArthur Professor of Chemistry and Director of the Genome Center at the
University of Wisconsin, Madison. Dr. Smith was the primary inventor of
automated DNA sequence analysis. Dr. Smith regularly consults and advises us in
our research and development efforts. He is chair of the scientific advisory
boards of ProCognia Ltd. and GenTel Corporation and a member of the scientific
advisory board of Curagen Corporation.
John Neis has served as one of our directors since August 1994. Mr. Neis is
Senior Partner of Venture Investors LLC, a firm that is the manager and general
partner of Madison, Wisconsin-based venture capital management funds. He also
serves on the Advisory Board of the Weinert Applied Ventures Program at the
University of Wisconsin. Mr. Neis received a B.S. in finance from the University
of Utah and an M.S. in business from the University of Wisconsin, and is a
Chartered Financial Analyst.
Gordon F. Brunner has served as one of our directors since January 2003.
Mr. Brunner is currently a partner with Living Longer Proactive Health and was
senior vice president, chief technology officer, head of worldwide research and
development, and a member of the board of directors of Procter & Gamble Co. He
has more than 40 years' experience leveraging innovative technology platforms to
the pharmaceutical,
4
over-the-counter and consumer markets. He received a B.S. degree in biochemical
engineering from the University of Wisconsin-Madison and an M.B.A. from Xavier
University.
Sam Eletr, Ph.D., has served as one of our directors since June 2002. Dr.
Eletr co-founded Applied Biosystems, Inc. and served as its Chairman and Chief
Executive Officer until 1987. Prior to founding Applied Biosystems, Dr. Eletr
managed the analytical and medical instruments group at Hewlett-Packard Co.'s
corporate research laboratories. Dr. Eletr most recently co-founded and served
as chairman and chief executive officer of Lynx Therapeutics Inc., a publicly
traded genomics company. He received an M.A. in physics and a Ph.D. in
biophysical chemistry, both at the University of California-Berkeley.
VOTE REQUIRED
Directors are elected by a plurality of the votes cast. Shares represented
by executed proxies will be voted, if authority to do so is not withheld, for
the election of the three nominees. Votes withheld from any director will have
no effect on the outcome.
4
BOARD MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
The board of directors provides oversight with respect to the Company's
strategic direction and significant corporate policies. Of the ten directors,
all but Dr. Fors and Mr. Puisis are "independent" as such term is defined in the
listing standards of the National Association of Securities Dealers. The board
of directors has adopted Corporate Governance Guidelines which are available at
the Company's website twt.com.
The board of directors has three standing committees: a compensation
committee, an audit committee and a nominating committee. From time to time, the
board has created various ad hoc committees for special purposes.
The board of directors held a total of six meetings during 20022003 and all
directors attended at least 75% of the total number of meetings of the board and
committees of the board on which the director served during 2002.2003. The Company
encourages but does not require its directors to attend the annual meeting of
the shareholders.
Shareholders may communicate with our board of directors, haseither as a compensation committee,whole
or with an audit committee and
a nominating committee. From time to time,individual member, by following the board has created various ad hoc
committees for special purposes.procedures set forth on our
website twt.com.
COMPENSATION COMMITTEE
The compensation committee consists of Messrs. Smith, Neis and Daniel. The
board of directors has determined that each member of the compensation committee
is "independent" as such term is defined in the listing standards of the
National Association of Securities Dealers. The compensation committee makes
recommendations to the board of directors regarding our employee benefit plans
and the compensation of officers. The compensation committee held a total of
fourfive meetings during 2002.2003. The board of directors has adopted a compensation
committee charter, which is available at the Company's website twt.com.
AUDIT COMMITTEE
The audit committee appoints our independent auditors, directs the scope of
the audit of our financial statements and other services provided by our
independent auditors, reviews the accounting principles and procedures to be
used for financial statements and reviews the results of the audit. The audit
committee is also responsible for the pre-approval of all services provided by
our independent auditors.
The audit committee consists of Messrs. Neis, Burrill and Daniel. EachThe board
of directors has determined that each member is "independent" as such term is
defined in the listing standards of the National Association of Securities
Dealers. The audit committee makes
recommendations to the board of directors regardinghas also determined that G. Steven Burrill is an
audit committee financial expert as such term is defined by the selectionrules of independent
auditors, reviews the
scopeSecurities and Exchange Commission. The board of audit and other services by our independent
auditors, reviewsdirectors has adopted an Audit
Committee Charter, which is available at the accounting principles and auditing practices and
procedures to be used for our financial statements and reviews the results of
those audits.Company's website twt.com.
5
Information regarding the functions performed by the audit committee and the
number of meetings held during 20022003 is set forth in the "Report of the Audit
Committee", included in this proxy statement.
The nominating committee consists of Messrs. Daniel, Neis, Smith and
Thompson.NOMINATING COMMITTEE
The nominating committee evaluates and recommends candidates for election
or appointment to the board of directors. The nominating committee held
four meetingshas not
established any specific, minimum qualifications that any candidate for director
must meet but considers a wide array of factors, including the candidate's
knowledge of our industry, the candidate's educational and professional
experience as well the candidate's reputation. The board of directors has
adopted a Nominating Committee Charter, which is available at the Company's
website twt.com.
The nominating committee consists of Messrs. Daniel, Neis, Smith and
Thompson. The board of directors has determined that each member of the
nominating committee is "independent" as such term is defined in 2002.the listing
standards of the National Association of Securities Dealers.
The nominating committee will consider director candidates recommended by
shareholders. Recommendations may be sent to John Comerford, Vice President,
General Counsel and Secretary, 502 South Rosa Road, Madison, Wisconsin 53719.
Any recommendation submitted by a shareholder must include the name and address
of the shareholder, any arrangements between the shareholder and the candidate
pursuant to which the candidate is being nominated, any information that would
be required under the rules of the Securities and Exchange Commission to be
included in the Proxy Statement had the candidate been nominated by the board of
directors. The nominating committee will apply the same standards in considering
candidates submitted by shareholders as it applies to other candidates.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the compensation committee is currently, or has ever
been at any time since our formation, an officer or employee of the Company or
any of its subsidiaries. No member of the compensation committee serves as a
member of the board of directors or compensation committee of any entity that
has one ofor more officers serving as a member of our board of directors or
compensation committee.
DIRECTOR COMPENSATION
Upon initial election, our non-employee directors receive a stock option
grant of 30,000 options. The price of these options is determined by the fair
market value of the companyCompany stock on the date of grant. Following the third year
of initial election, our non-employee directors receive an annual grant of
10,000 options. Options vest at 25% per year on the anniversary date of the
option grant and accelerate upon a change of control of the Company consistent
with the terms outlined in the company'sCompany's stock option grant agreements.
Our non-employee directors receive an annual retainer of $12,000, a board
meeting fee of $1,500 for regularly scheduled board meetings physically
attended, and a board committee meeting participation fee of $500 per meeting.
Our directors are reimbursed for all director-related expenses incurred as a
result of providing service to the companyCompany or at the company's request.Company's request
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The board of directors has, based on the determination of the audit committee has appointed Ernst & Young LLP as the independent
auditors of the Company for the current fiscal year ending December 31, 2003.2004.
Ernst & Young LLP havehas audited the Company's financial statements since its
inception.
56
FEES PAID OR DUE TO ERNST & YOUNG LLP
Audit Fees.In addition to retaining Ernst & Young LLP to audit our financial
statements, we engage it from time to time to perform other services. The aggregatetable
below shows the total fees for professional services renderedbilled by Ernst & Young LLP for its services in connection with their 2002
annualand 2003.
FEE TYPE FISCAL 2002 FISCAL 2003
- -------- ----------- -----------
Audit Fees*................................................. $261,500 $189,650
Audit Related Fees.......................................... $ 15,145 $ 1,500
Tax Fees**.................................................. $ 64,475 $ 40,450
All Other Fees.............................................. 0 0
-------- --------
Total....................................................... $341,120 $231,600
======== ========
- ---------------
* Audit related services include quarterly and year-end reviews to discuss
operating results, current business and accounting issues. The auditors have
also issued a letter to management detailing observations made during the
course of the audit and reviewsdid meet with the Audit Committee in advance and upon
completion of financial
statements in our Quarterly Reports on Form 10-Qthe audit.
** Tax related services included work related to the filing of the Company tax
return for 2002, were approximately
$261,500.
Financial Information Systems Designtax estimates and Implementation Fees.extension filings, and consultation with
management representatives on state tax related matters.
The Company
did not engageaudit committee has considered whether the provision of the non-audit
services described above is compatible with maintaining the independence of
Ernst & Young LLP and determined that such services are compatible with
maintaining independence.
The audit committee has adopted a policy which requires pre-approval by the
audit committee of all services to undertake any financial information systems
design and implementation work during 2002.
All Other Fees.be provided by the Company's independent
auditor. The aggregate fees for all otheraudit committee has approved the provision of audit services rendered by
Ernst & Young LLP for fiscal year 2004 in 2002 was approximately $51,020, consistingaccordance with that policy. All other
services to be provided by the Company's independent auditor must be
specifically pre-approved by the audit committee or a designated member of the
audit related
services of approximately $15,145 and non-audit services of approximately
$35,875. Audit related services generally include fees for accounting
consultations and registration statements.committee.
Representatives of Ernst & Young LLP are expected to be present at the
annual meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions. If
shareholders fail to ratify the selection, the audit committee and the board
will reconsider
whether or not to retain that firm. Even if the selection is ratified, the audit
committee and the board in theirits discretion may direct the appointment of different independent
auditors at any time during the year.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003.2004.
VOTE REQUIRED
The ratification of the appointment of Ernst & Young LLP requires the
affirmative vote of a majority of the shares of common stock represented at the
annual meeting and entitled to vote thereon.
67
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by us during 2000,
2001,
2002 and 20022003 to our chief executive officer and our next four most highly
compensated other executive officers who received salary compensation of more
than $100,000 during 20022003 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION SECURITIES
----------------------------- UNDERLYING ALL OTHER
NAME PRINCIPAL POSITION(S) YEAR SALARY($) BONUS($) OPTIONS/SARS(#) COMPENSATION($)
- ---- --------------------- ---- --------- ---------- --------------- ---------------
Dr. Lance Fors......... President, Chief Executive 2003 $430,523 $ 200,000 220,000 $52,563(2)
Officer, 2002 $398,239 $150,000$ 150,000 291,000 $ 2,826(2)
Executive Officer,Chairman, Director 2001 $384,790 $0$ 0 141,480 Chairman, Director 2000 $317,513 $166,600 693,6000
John J. Puisis(1)...... Senior VicePresident, Chief 2003 $349,798 $ 200,000 480,000 $11,048(2)
Operating Officer, 2002 $253,380 $150,000$ 150,000 145,000 $20,705(2)
President, ChiefDirector 2001 $ 65,587 $2,111,864 275,000 $ 4,924(2)
Financial Officer,
Chief Operating
Officer
Dr. Bruce Neri.........Maneesh Arora(3)....... Senior Vice 2002 $247,549 $75,000 145,000
President Research 2001 $221,987 $0 59,400
& Development 2000 $193,734 $68,750 62,4002003 $206,739 $ 110,000 350,000 $13,409(2)
Ivan Trifunovich(3)Trifunovich(4).... Senior Vice 2003 $263,693 $ 85,750 0 0
President & 2002 $260,713 $0$ 0 100,000 President &0
General Manager, 2001 $ 0 $0$ 0 210,000 General Manager,0
Genomics Business
Unit
John Comerford(4)......Comerford......... Vice President, 2002 $209,879 $15,000 140,0002003 $223,198 $ 90,000 75,000 0
General Counsel & 2002 $209,879 $ 15,000 140,000 0
Secretary 2001 $200,461 $ 0 81,000 Secretary 2000 $ 53,539 $21,678 39,6000
- ---------------
(1) Mr. Puisis joined us in September 2001.
(2) Consists of relocation expenses paid by us.
(3) Mr. Arora joined us in January 2003
(4) Mr. Trifunovich joined us in December 2001.
(4) Mr. Comerford joined us in September 2000.
OPTION GRANTS IN 20022003
The following table sets forth information relating to stock options
granted during 20022003 to the Named Executive Officers. In accordance with the
rules of the Securities and Exchange Commission, also shown below is the
potential realizable value over the term of the option (the period from the
grant date to the expiration date) based on assumed rates of stock appreciation
of 5% and 10%, compounded annually. These amounts are mandated by the Securities
and Exchange Commission and do not represent our estimate of
78
future stock price. Actual gains, if any, on stock option exercises will depend
on the future performance of our common stock.
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF POTENTIAL REALIZABLE VALUE AT ASSUMED
NUMBER OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------------------------------------
NAME GRANTED(#)(1) 2002(2)2003(2) SHARE($) DATE 5%($) 10%($)
- ---- ------------- ------------ --------- ---------- ------------- ---------------------- -----------
Dr. Lance Fors....... 291,000 12.61 2.13 6/12/2012 389,808 987,849Fors.......... 220,000 7.8% 4.16 05/13/2013 575,564 1,458,593
John J. Puisis....... 145,000 6.28 2.13 6/12/2012 194,234 492,227
Dr. Bruce Neri....... 145,000 6.28 2.13 6/12/2012 194,234 492,227Puisis.......... 280,000 9.9% 2.69 01/01/2013 473,683 1,200,407
200,000 7.1% 4.00 07/17/2013 503,116 1,274,994
Maneesh Arora........... 175,000 6.2% 2.64 01/03/2013 290,549 736,309
25,000 0.9% 3.07 03/24/2013 48,268 122,320
25,000 0.9% 3.65 04/17/2013 57,387 145,429
125,000 4.4% 4.00 07/17/2013 314,447 796,871
Ivan Trifunovich..... 100,000 4.33 2.13 6/12/2012 133,955 339,467Trifunovich........ 0 -- -- -- -- --
John Comerford....... 140,000 6.07 2.13 6/12/2012 187,536 475,254Comerford.......... 75,000 2.7% 4.00 07/17/2013 188,668 478,123
- ---------------
(1) For each of the Named Executive Officers, 25% of the options vest on each of
the first four anniversaries of the grant date.
(2) We granted options to purchase a total of 2,307,9502,818,300 shares of common stock
during 2002.2003.
AGGREGATE OPTION EXERCISES IN 20022003 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for the Named Executive Officers
relating to option exercises in 20022003 and the number and value of securities
underlying exercisable and unexercisable options held at December 31, 2002:2003:
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 20022003 DECEMBER 31, 2002(1)2003($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------------------- ----------- ------------- ----------- -------------
Dr. Lance Fors.......Fors......... 0 0 601,770 674,310 99,792 119,310537,959 449,641 506,631 613,965
John Puisis..........Puisis............ 0 0 275,000 145,000 59,450
Dr. Bruce Neri.......173,750 726,250 87,725 893,975
Maneesh Arora.......... 0 0 181,650 214,750 184,800 59,4500 350,000 0 462,500
Ivan Trifunovich.....Trifunovich....... 0 0 52,500 257,500 41,000130,000 180,000 60,500 181,500
John Comerford.......Comerford......... 0 0 48,750 211,850 57,400113,300 222,300 84,700 295,350
- ---------------
(1) Value of unexercised in-the-money options are based on a value of $2.54$4.55 per
share, the fair market value of our common stock on December 31, 2002.2003.
Amounts reflected are based on the value of $2.54$4.55 per share, minus the per
share exercise price, multiplied by the number of shares underlying the
option.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
In October of 2003 we entered into a three-year employment agreement with
Dr. Fors that provides for an initial base salary of $400,000. The agreement
also provides that Dr. Fors' employment may be terminated at any time by us or
by Dr. Fors. If Dr. Fors' employment is terminated by us other than for "cause"
(as defined in the agreement) or Dr. Fors voluntarily terminates his employment
for "good reason" (as defined in the agreement), Dr. Fors would receive
severance payments totaling 18 months of his then current base salary (6 months
of which would be paid in an up front lump sum), any accrued and unpaid bonuses
as of the date of termination and we would purchase an outplacement consulting
package for Dr. Fors for up to a maximum of $15,000. If we do not elect to renew
Dr. Fors employment at the end of his employment term, Dr. Fors would
9
receive an amount of severance pay equal to six months of his then current base
salary, payable over 12 months and any accrued and unpaid bonuses.
We have entered into an employment agreement with Mr. Puisis that provides
for an initial base salary of $225,000 and a target annual bonus of no less than
22.5% of base salary. The agreement provided for an initial option grant to Mr.
Puisis and for the one-time sign-on bonus to Mr. Puisis (the "Sign-on Bonus")
listed under "Summary Compensation Table" to partially compensate Mr. Puisis for
certain moneys lost upon Mr. Puisis beginning employment with us. Mr. Puisis'
employment may be terminated by either us or Mr. Puisis at any time, except that
(i) if we terminate Mr. Puisis for "cause" (as defined in the employment
agreement) or Mr. Puisis voluntarily terminates his employment other than for
"good reason" (as defined in the employment agreement) after the first twelve
months but within the first twenty-four months, Mr. Puisis must repay to us
$700,000 of the Sign-on Bonus and (ii) if we terminate Mr. Puisis other than for "cause" or Mr. Puisis voluntarily
terminates his employment for "good reason", Mr. Puisis would receive a lump sum
severance payment equal to one year's base salary and a pro-rated portion of his
target bonus and continued coverage for one year under our health and other
welfare benefit plans. The employment agreement with Mr. Puisis defines "good
reason" to include (i) Dr. Fors
voluntarily ceasing to be the CEO or Chairman of the
8
board of directors within eighteen months of the beginning of Mr. Puisis'
employment and (ii) a resignation by Mr. Puisis following a "change of control"
(as defined in the employment agreement), but not earlier than six months after
the change in control.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes the number of outstanding options granted to
employees and directors, as well as the number of securities remaining available
for future issuance, under our compensation plans as of December 31, 2002.2003.
NUMBER OF
SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
NUMBER OF SECURITIES WEIGHTED AVERAGE UNDER EQUITY
TO BE ISSUED UPON EXERCISE PRICE COMPENSATION PLANS
EXERCISE OF OUT- OF OUTSTANDING (EXCLUDING SECURITIES
STANDING OPTIONS, OPTION WARRANTS REFLECTED IN THE
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS FIRST COLUMN)
- ------------- -------------------- ---------------- ---------------------
Equity compensation plans approved by
security holders......................... 6,140,859 $5.35 2,801,5877,256,505 $4.37 1,478,692
Equity compensation plans not approved by
security holders......................... 0 0 0
--------- ----- ---------
Total...................................... 6,140,859 $5.35 2,801,5877,256,505 $4.37 1,478,692
========= ===== ===================
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report is provided to shareholders by the compensation
committee of the board of directors:
The compensation committee of the board of directors, which is composed of
three independent, non-employee directors, is responsible for the administration
of the Company's compensation programs. These programs include base salary for
executive officers and both annual and long-term incentive compensation
programs. The Company's compensation programs are designed to provide a
competitive level of total compensation and include incentive and equity
ownership opportunities linked to the Company's performance and shareholder
return.
Compensation Philosophy. The Company's overall executive compensation
philosophy is based on a series of guiding principles derived from the Company's
values, business strategy and management requirements. These principles are
summarized as follows:
- Provideprovide competitive levels of total compensation which will enable the
Company to attract and retain the best possible executive talent;
- Motivatemotivate executives to achieve optimum performance for the Company;
- Alignalign the financial interest of executives and shareholders through
equity-based plans; and
10
- Provideprovide a total compensation program that recognizes individual
contributions as well as overall business results.
Compensation Program. The compensation committee is responsible for
reviewing and recommending to the board the compensation and benefits of all
officers of the Company and establishes and reviews general policies relating to
compensation and benefits of employees of the Company. The compensation
committee is also responsible for the administration of the Company's 2000 Stock
Plan. There are two major components to the Company's executive compensation:
base salary and potential cash bonus, as well as potential long-term
compensation in the form of stock options.options and a long-term incentive plan. The
compensation committee considers the total current and potential long-term
compensation of each executive officer in establishing each element of
compensation.
1. Base Salary. In setting compensation levels for executive
officers, the compensation committee reviews competitive information to
compensation levels for comparable positions at biotechnology and
9
high
technology companies. In addition, the compensation committee may, from
time to time, hire compensation and benefit consultants to assist in
developing and reviewing overall salary strategies. Individual executive
officer base compensation may vary based on time in position, assessment of
individual performance, salary relative to internal and external fairness
and the critical nature of the position relative to the success of the
Company.
2. Annual Incentive Awards. The Company does establish both corporate
and individual goals and performance measures consistent with factors
necessary to achieve strategic business objectives. Annual incentive awards
paid to Company employees, including the executive officers, are determined
based on a combination of the achievement of the predetermined corporate
and individual performance goals and measures. The annual incentive awards
are designed to drive individual and Company performance to enhance
shareholder value.
3. Long-Term Incentives. The Company's 2000 Stock Plan provides for
the issuance of stock options to officers and employees of the Company to
purchase shares of the Company's common stock at an exercise price equal to
the fair market value of such stock on the date of grant. Stock options are
granted to the Company's executive officers and other employees both as a
reward for past individual and corporate performance and as an incentive
for future performance. The compensation committee believes that
stock-based performance compensation arrangements are essential in aligning
the interests of management and the shareholders in enhancing the value of
the Company's equity.
3.In January 2004, the Company implemented a long-term incentive plan
designed to encourage results oriented actions on the part of executive
officers and other key employees of the Company. The plan is intended to
align closely the financial rewards for executive officers and key
employees with the interests of shareholders and the achievement of
specific performance objectives of the Company. This program is
administered by the Compensation Committee which establishes the term of
the plan, performance goals, target awards, performance measurement
criteria and calculation of awards. The long-term incentive plan is also
designed to reduce reliance on stock option grants as the sole source of
long-term incentive compensation.
4. Benefits. The Company provides benefits to the Named Executive
Officers that are generally available to all employees of the Company. The
amount of executive level benefits and perquisites, as determined in
accordance with the rules of the Securities and Exchange Commission
relating to executive compensation, did not exceed 10% of total salary and
bonus for the calendar year 20022003 for any executive officer.
Section 162(m) of the Internal Revenue Code Limitations on Executive
Compensation. Section 162(m) of the United States Internal Revenue Code may
limit the Company's ability to deduct for United States federal income tax
purposes compensation in excess of $1,000,000 paid to the Company's chief
executive officer and its four other highest paid executive officers in any one
fiscal year. No executive officer of the Company received any such compensation
in excess of this limit during fiscal 2002.2003.
11
The total compensation of Dr. Fors, the Company's Chief Executive Officer,
is consistent with the Company's overall executive compensation philosophy as
described above, and the compensation of Dr. Fors was based on the factors
described above.
It is the opinion of the compensation committee that the aforementioned
compensation policies and structures provide the necessary discipline to
properly align the Company's corporate economic performance and the interest of
the Company's shareholders with progressive, balanced and competitive executive
total compensation practices in an equitable manner.
The foregoing report shall not be "soliciting material" or to be "filed"
with the Securities and Exchange Commission, nor shall such information be
incorporated by reference into any future filing under this Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent the Company specifically incorporates it by reference into such
filing.
Respectfully submitted,
The compensation committee of the
board of directors
Lloyd Smith, Ph.D.
Tom Daniel
John Neis
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company as of April 25, 200329, 2004 are set forth
below:
Lance Fors, Ph.D. (45)(46), our founder and Chairman of the Board, has served
as our President, Chief Executive Officer and one of our directors since our inception in
1993. Dr. Fors served as our President from 1993 until 2003. Dr. Fors received
his Ph.D. in molecular biology from the California Institute of Technology in
1990. Dr. Fors has over twenty years of 10
research and development experience and
is the inventor on 1921 issued and pending patents in the area of DNA and RNA
sequence analysis.
John J. Puisis (43)(44) has served as our Senior Vice President since September
2001. Mr. Puisis also served as our Chief Financial Officer sincefrom September 2001.2001
until October 2003. In January 2003, Mr. Puisis was also assigned the title and
duties of Chief Operating Officer.Officer and in October of 2003, he was assigned the
title and duties of President. From 1996 until he joined the Company, Mr. Puisis
held senior management positions at the Spencer Stuart and Egon Zehnder
executive recruitment firms, specializing in recruiting for the biotechnology
and pharmaceutical industries. From 1989 to 1996, Mr. Puisis held key financial
executive positions at DEKALB Genetics and Kraft Foods. Prior to 1989, Mr.
Puisis held various positions at several large public accounting firms. Mr.
Puisis earnedreceived an M.B.A. from Northwestern University and a B.A. in accounting
from Northern Illinois University. He is a certified public accountant.
Bruce Neri, Ph.D. (56)Maneesh Arora, (35) joined us in July 1996January 2003 as Director of Marketing. In
October 2003, Mr. Arora was promoted to Vice President of ResearchMarketing and DevelopmentStrategy
and in March 2004 he was promoted to Senior Vice President of Research and
Development in July 1997. From 1991 untilPresident. Prior to joining us,
Dr. NeriMr. Arora was Vice
PresidentDirector of DNA probe development at Becton, DickinsonCorporate Strategy and Company.New Ventures for Ondeo Nalco.
Prior to 1991, Dr. Neri directed Researchthat he spent nine years at Kraft Foods in a variety of roles of
increasing responsibility in marketing and Development at Gene-Trak Systems, Angenics,
Inc., Instrumentation Laboratoriessales. Mr. Arora received his M.B.A.
in marketing, management and Abbott Laboratories. Dr. Neri isstrategy from the inventor on ten United States patents, with an additional 19 pending in the areaKellogg Graduate School of
human in-vitro diagnostic products,Management and over 60 publications. Dr. Neri
received ahis B.A. in chemistry from Cornell College and a Ph.D. in analytical
chemistryeconomics from the University of Arizona.Chicago.
David Nuti (44) joined the Company in April 2002 as Corporate Controller
and assumed the roles of Vice President of Operations and Chief Financial
Officer in 2003. Prior to joining the Company in 2002, Mr. Nuti was Vice
President and Corporate Controller of Fiskars Brands from 2000 to 2002. From
1991 to 1999, Mr. Nuti held positions at Rubbermaid Inc., including Vice
President of Finance and Vice President of Operations. Mr. Nuti received his
B.S. in business administration from Northern Illinois University and an M.B.A.
from Lewis University.
Ivan D. Trifunovich, Ph.D. (39)(40) joined us as Senior Vice President and
General Manager of our Genomics business unit in December 2001. From 1999 until
joining us, Dr. Trifunovich was, successively,
12
Vice President of e-Business and Vice President of Research Strategy and
Operations at Pharmacia Corp. Prior to 1999, Dr. Trifunovich was a Director of
New Product Marketing at Johnson & Johnson, Inc. From 1992 to 1997, Dr.
Trifunovich held various positions at Bristol-Meyers Squibb, Inc. Dr.
Trifunovich earnedreceived his Ph.D. at UCLA and his M.B.A. at the University of
Pennsylvania's Wharton School of Business. He is the holder of ten U.S. patents.
John Comerford (40)(41) joined us in September 2000 as Vice President, General
Counsel and Secretary. From 1998 until joining us, Mr. Comerford was Corporate
General Counsel and Secretary at Lunar Corporation, a publicly-traded medical device company.
From 1990 to 1997, Mr. Comerford was Associate Resident Counsel at National
Presto Industries, Inc. Prior to 1990, Mr. Comerford was a Staff Attorney at
Fort Howard Corporation. Mr. Comerford received a J.D. from Marquette University
and a B.A. in business administration from St. Norbert College.
Jacob Orville (30) joined us in April 2002 as Director of Clinical Sales
and assumed the role of Vice President of Global Sales in September 2003. Prior
to joining us, Mr. Orville held sales and management positions with Smiths
Medical. Mr. Orville received his B.A. from the University of Massachusetts.
REPORT OF THE AUDIT COMMITTEE
The audit committee oversees the Company's financial reporting process on
behalf of the board of directors. The audit committee is governed by a written
charter approved by the board of directors. Management has the primary
responsibility for the financial statements and the reporting process including
the systems of internal controls. In fulfilling its oversight responsibilities,
the audit committee reviewed the audited financial statements in the Company's
Annual Report on Form 10-K, the unaudited financial statements in Quarterly
Reports on Form 10-Q, and financial result press releases with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The audit committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the United
States, their judgments as to the quality, not just the acceptability, of the
Company's accounting principles and such other matters as are required to be
discussed with the audit committee under auditing standards generally accepted
in the United States. In addition, the audit committee has discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 and the audit committee has discussed with the
independent auditors the auditors' independence from management 11
and the Company
including the matters in the written disclosures required by the Independence
Standards Board Standard No. 1 and considered the compatibility of non-audit
services with the auditors' independence.
The audit committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The audit committee meets with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting.
The audit committee held six meetings in 2002.2003. In reliance on the reviews
and discussions referred to above, the audit committee recommended to the board
of directors (and the board has approved) that the audited financial statements
be included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002.2003. The audit committee and the board have also recommended the
selection of the Company's independent auditors.
13
The foregoing report shall not be "soliciting material" or to be "filed"
with the Securities and Exchange Commission, nor shall such information be
incorporated by reference into any future filing under this Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent the Company specifically incorporates it by reference into such
filing.
Respectfully submitted,
The audit committee of the board of
directors
John Neis
G. Steven Burrill
Tom Daniel
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND MANAGEMENT
The following table shows information known to us with respect to the
beneficial ownership of our common stock as of April 18, 2003February 14, 2004, by:
- each person (or group of affiliated persons) who owns beneficially 5% or
more of our common stock;
- each of our directors;
- each of the Named Executive Officers; and
- all of our directors and executive officers as a group.
Except as indicated in the footnotes to this table and subject to community
property laws where applicable, the persons named in the table have sole voting
and investment power with respect to all shares of our common stock shown as
beneficially owned by them. Beneficial ownership and percentage ownership are
determined in accordance with the rules of the Securities and Exchange
Commission. Addresses for those
14
individuals for which an address is not otherwise indicated is: c/o Third Wave
Technologies, Inc., 502 South Rosa Road, Madison, Wisconsin 53719.
12
SHARES BENEFICIALLY OWNED
---------------------------------------------
SHARES SUBJECT TO
BENEFICIAL OWNER TOTAL NUMBER OPTIONS PERCENTAGE
- ---------------- ------------ ----------------- ----------
5% SHAREHOLDERS:
State of Wisconsin Investment Board(1)................................. 5,523,000 0 13.96%13.88%
Mazama Capital Management, Inc.(2)..................... 3,639,484 0 9.17%
Bank of America Corporation(2)........................ 3,419,450Corporation(3)......................... 2,503,050 0 8.64%6.40%
NAMED EXECUTIVE OFFICERS AND DIRECTORS:
Lance Fors, Ph.D.(3).................................. 2,507,816 601,770 6.24%(4)................................... 2,448,759 537,959 6.01%
John Puisis........................................... 293,698 275,000 *
Bruce Neri, Ph.D...................................... 202,188 181,650 *
Ivan Trifunovich...................................... 52,500 52,500 *
John Comerford........................................ 69,824 48,750Puisis............................................ 278,073 243,750 *
Lloyd M. Smith, Ph.D.(4).............................. 2,043,600 16,800 5.16%(5)............................... 2,054,500 27,700 5.11%
John Neis(5).......................................... 1,837,125 16,800 4.64%Neis(6)........................................... 1,848,025 27,700 4.60%
David A. Thompson..................................... 58,800 58,800Thompson...................................... 70,900 70,900 *
Tom Daniel(6)......................................... 1,338,426 16,800 3.38%Daniel(7).......................................... 1,349,326 27,700 3.36%
G. Steven Burrill(7).................................. 1,047,663 16,800 2.65%Burrill(8)................................... 1,058,563 27,700 2.63%
Kenneth R. McGuire(2)................................. 3,119,850 16,800 7.88%McGuire..................................... 2,531,200 27,700 6.30%
Gordon F. Brunner..................................... 6,000 0Brunner...................................... 18,500 7,500 *
Sam Eletr............................................. 0 0Eletr.............................................. 7,500 7,500 *
Maneesh Arora.......................................... 60,156 56,250 *
Ivan Trifunovich....................................... 130,000 130,000 *
John Comerford......................................... 142,871 113,300 *
David Nuti............................................. 63,125 37,500 *
Jacob Orville.......................................... 44,379 35,000 *
All directors and executive officers as a group (13(15
persons)............................................ 12,577,490 1,302,470 30.77%............................................. 12,105,877 1,378,159 *
- ---------------
* indicates less than 1%
(1) Based on information provided in the Schedule 13G filed by the State of
Wisconsin Investment Board ("SWIB") with the Securities and Exchange
Commission on February 14, 2003.11, 2004. The address of SWIB is P.O. Box 7842,
Madison, Wisconsin 53707.
(2) Based on information provided in Schedule 13G filed by Mazama Capital
Management, Inc. ("MCM") with the Securities and Exchange Commission on
February 11, 2004. The Schedule 13G reports that MCM has sole voting power
with respect to 1,870,500 of those shares and sole dispositive power with
respect to 3,639,484 of those shares. It does not indicate who has voting
power with respect to the remaining 1,764,434 shares. The address of MCM is
One S.W. Columbia, Suite 1860, Portland, Oregon 97258.
(3) Based on information provided in the Schedule 13G filed by Bank of America
Corporation ("BAC"), NB Holdings Corporation ("NBH"), Bank of America, NAN.A.
("BA"), BANA #1 LLC ("BANA") and Bank of America Strategic Solutions, Inc.
("BASS") with the Securities and Exchange Commission on February 14, 2003.17, 2004.
The Schedule 13G reports that BANAeach of BAC, NBH, BA and BASS have shared voting and
dispositive power with respect to 3,417,450 of those shares, BA has sole
vote and dispositive power with respect to 2,000 of those shares, and BAC
and NBHBANA have shared
voting and dispositive power with respect to all 3,419,4502,503,050 shares.
The Schedule 13G reports that the shares reported in the
Schedule are owned by Mr. McGuire and have been pledged by Mr. McGuire to BA
to secure certain obligations under a loan agreement. The address of BAC is
100 N. Tryon Street, Charlotte, NC 28255.
(3)(4) Includes 1,900,800 shares of common stock held in a voting trust for the
benefit of Dr. Fors' family members. Dr. Fors and his wife, Charlotte H.
Selover, are co-trustees of this voting trust.
(4)(5) Includes 148,800 shares of common stock held in a voting trust for the
benefit of Dr. Smith's family members. Dr. Smith is the sole trustee of this
voting trust.
(5)15
(6) Includes 369,787 shares held by Venture Investors of Wisconsin; 269,400
shares held by Venture Investors Early Stage II Limited Partnership; 170,400
shares held by Venture Investors Early Stage Fund III Limited Partnership.
(6)(7) Includes 774,312 shares owned by Schroder Ventures International Life
Sciences Fund II LPI; 329,524 shares held by Schroder Ventures International
Life Sciences Fund II LPII; 88,630 shares held by Schroder Ventures
International Life Sciences Fund II LPIII; 22,282 shares held by Schroder
Ventures International Life Sciences Fund Group Co-Investments Scheme;
11,842 shares held by Schroder Ventures International Life Sciences Fund II
Strategic Partners LP; and 25,200 shares held by Schroder Ventures
Investments Limited. Mr. Daniel is a manager of a company that provides
consulting services to Schroder Ventures funds. Mr. Daniel disclaims
beneficial ownership of the shares held by the 13
various Schroder Venture
funds. The address of Schroder Ventures International Life Sciences Fund II,
LPI, Schroder Ventures International Life Sciences Fund II LPII, and
Schroder Ventures International Life Sciences Fund II LPIII is 875 Third
Avenue, 22nd Floor, New York, NY 10022-6225. The address of Schroder
Ventures Co-Investment Scheme is 22 Church Street, Hamilton HM 11, Bermuda.
The address of Schroder Ventures Investments Limited is P.O. Box 255,
Barfield House, St. Julian's Avenue, St. Peter Port, Guernsey GY1 4ND
Channel Islands, United Kingdom.
(7)(8) Includes 1,020,863 shares held by the Burrill Agbio Capital Fund, LP. Mr.
Burrill is general partner of Burrill Agbio Capital Fund, LP and disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest in these shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and any persons who beneficially own more than ten
percent of our common stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of common
stock. To our knowledge, based solely on review of the copies of such reports
sent to us and written representations that no other reports were required, we
believe that during the year ended December 31, 2002,2003, our directors, officers
and ten percent shareholders complied with their Section 16(a) filing
requirements, except that the initial statement ofa change in beneficial ownership for Dr.
Eletrof Lance Fors was
filed late.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December of 2003, the stepson of Dr. Fors, who had been an employee of
the Company for more than six years, was terminated due to a position
elimination. The terminated employee was provided with a severance package. The
terms of the severance package were reviewed and approved by the compensation
committee and were found to be consistent with severance packages offered to
similarly affected employees in comparable positions with equivalent terms of
employment.
16
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative return
on our common stock against the NASDAQ Stock Market U.S. Index (the "NASDAQ
Index") and a peer group composed of the companies listed below (the "Peer
Group"). The graph assumes a $100 investment on February 9, 2001 (the date of
our initial public offering) in each of our common stock, the NASDAQ Index and
the Peer Group and assumes that all dividends, if paid, were reinvested. This
table does not forecast future performance of our common stock.
(PERFORMANCE GRAPH)
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2/9/01 3/31/01 6/30/01 9/30/01 12/31/01 3/31/02 6/30/02 9/30/02 12/31/02 3/31/03
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TWTI 100.00 63.64 93.91 57.45 66.82 30.45 20.36 12.27 24.45 29.82
NASDAQ 100.00 74.48 87.44 60.66 78.93 74.68 59.22 47.43 54.05 54.28
Former Peer Group 100.00 53.61 65.69 37.14 62.5653.57 65.66 37.12 62.54 39.95 28.58 18.98 19.1728.59 19.00 19.20 18.77
Current Peer Group 100.00 86.60 132.47 91.84 112.48 118.85 105.97 91.23 111.79 102.42
- --------------------- ----------------------------
6/30/03 9/30/03 12/31/03
- --------------------- ----------------------------
TWTI 41.09 29.36 41.36
NASDAQ 65.67 72.32 81.08
Former Peer Group 24.57 28.32 42.19
Current Peer Group 165.11 201.95 234.39
14
The former Peer Group consists of the following companies: Applera
Corporation, Orchid Biosciences, Inc., Sequenom, Inc., Affymetrix, Inc. and
Nanogen, Inc. The current Peer Group consists of the following companies: Celera
Diagnostics, LLC, Ventana Medical Systems, Digene, Bio-Rad Laboratories. This
change in peer group was made to better reflect the Company focus on molecular
diagnostics businesses.
The foregoing graph and accompanying material shall not be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor
shall such information be incorporated by reference into any future filing under
this Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent the Company specifically incorporates it by
reference into such filing.
OTHER MATTERS
We know of no other matters to be submitted to the shareholders at the
meeting. If any other matters properly come before the shareholders at the
meeting, it is the intention of the persons named in the enclosed form of proxy
to vote the shares they represent as the board of directors may recommend.
By Order of the Board of Directors,
/s/ LANCE FORS, PH.D.
Lance Fors, Ph.D.
Chairman of the Board and
Chief Executive OfficerJOHN COMERFORD
John Comerford
Dated: April 25, 2003
1529, 2004
17
THIRD WAVE TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
THIRD WAVE TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1THE DIRECTORS LISTED
BELOW AND 2 BELOW.
The undersigned shareholder of Third Wave Technologies, Inc., a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Proxy Statement
of the Company dated April 25, 200329, 2004 and hereby appoints Lance ForsDavid Nuti and John
Comerford proxy and each of them, proxies and attorneysattorney in fact, with full power to
each of substitution, on behalf
and in the name of the undersigned, to represent the undersigned at the Annual
Meeting of Shareholders of the Company to be held at the offices of the Company
at 9:00 a.m. on Tuesday, June 10, 200322, 2004 and any adjournment or adjournments
thereof, and to vote all shares of common stock of the Company that the
undersigned would be entitled to vote if the undersigned were present, as
follows:
1. The election of the following persons as directors of the Company to
serve until their successors shall be duly elected and qualified:
NAME OF NOMINEE FOR AGAINST
- ------------------------- ------------------------- ---------------------------------------------- --- -------
Gordon F. BrunnerLance Fors [ ] [ ]
Sam H. EletrDavid A. Thompson [ ] [ ]
John NeisJ. Puisis [ ] [ ]
For, except vote withheld from the following nominee(s):
2. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending December 31, 2003.2004.
[ ] For [ ] Against [ ] Abstain
3. In their discretion, upon any such other matters which may properly come
before the meeting or any adjournments thereof.
[ ] Grant Authority [ ] Withhold Authority
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC INDICATION ABOVE. IN
THE ABSENCE OF SUCH INDICATION, THIS PROXY 20
WILL BE VOTED FOR MANAGEMENT'S SLATE OFTHE DIRECTORS
LISTED ABOVE AND FOR ALL OTHER ITEMS SET
FORTH ABOVEITEM 2 AND, INAS THE DISCRETION OF THE PROXYHOLDERS,PROXYHOLDER DEEMS ADVISABLE, ON ANY
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF.
DATED: -------------------------, 2003_____________________________, 2004
- ---------------------------------------------------------------------
Signature of Shareholder
- ---------------------------------------------------------------------
PLEASE PRINT NAME(S)
- --------------------------------
I plan to attend the meeting: [ ] Yes [ ] No
Taxpayer Identification No. (or Social Security Number):
----------------------------------------------
Sign exactly as your name(s) appear(s) on the stock certificate(s). A
corporation is requested to sign its name by its President or other authorized
officer, with the office held designated. Executors, administrators, trustees,
etc., are requested to so indicate when signing. If a stock is registered in two
names, both should sign.
SHAREHOLDERS SHOULD SIGN THIS PROXY PROMPTLY AND RETURN IT IN THE ENCLOSED
ENVELOPE.
PLEASEENVELOPE.PLEASE RETURN ALL PAGES OF THIS PROXY