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 Section 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.
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(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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20042005 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 22, 200414, 2005
---------------------
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 22, 200414, 2005, at 9:00 a.m., local time, for the following purposes:
(1) To elect three directors eachone director to serve for a term of three years expiring
upon the 20072008 annual meeting of shareholders or until their
successors arehis successor is
elected and qualified;
(2) To ratify the appointment of Ernst & Young LLP as the independent
auditorsregistered public accounting firm of the Company for the year ending
December 31, 2004;2005; and
(3) To transact any other business whichthat 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 23, 200415, 2005, 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 entitled to vote and attending the meeting may
vote in person even if a proxy is returned.
By Order of the Board of Directors,
/s/ JOHN COMERFORDJ. PUISIS
John ComerfordJ. Puisis
April 29, 20042005
THIRD WAVE TECHNOLOGIES, INC.
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PROXY STATEMENT FOR THE
20042005 ANNUAL MEETING OF THE SHAREHOLDERS
JUNE 22, 200414, 2005
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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 22, 200414, 2005, 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 29,
2004May 6,
2005, to all shareholders entitled to vote at the meeting.
RECORD DATE
Shareholders of record at the close of business on April 23, 2004,15, 2005, the
record date for the meeting, are entitled to notice of and to vote at the
meeting. At the record date, 40,173,41141,154,491 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","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","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 whichthat is not
marked as to a particular item will be voted for the election of the three
nomineesnominee
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 20052006 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 31, 200430, 2005, 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 the
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 tennine persons,
divided into three classes serving terms of three years. Shareholders elect one
class of directors at each annual meeting. Three directors areOne director is to be elected at this
annual meeting each to hold office until the 20072008 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 20052006 and 2006.2007.
If any of the nomineesnominee 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 nomineesnominee to be unavailable to serve.
The namesname of the three nomineesnominee for election to the board of directors at the
annual meeting, their ageshis age as of the record date for the meeting, and certain
information about them arehim is set forth below. The names of the current directors
with unexpired terms, their ages as of the record date, and certain information
about them also are also stated below.
Mr. Burrill and Dr. Smith's terms as directors expire at the annual meeting
of shareholders on June 14, 2005, and they are not being renominated. The board
has not nominated replacement board members because of timing. It is actively
conducting a search for new board members to replace Mr. Burrill and Dr. Smith
when
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NOMINEES FOR ELECTION AT THE ANNUAL MEETING FORtheir terms expire. The board highly values the long service and many
contributions of Mr. Burrill and Dr. Smith and seeks to appoint highly-qualified
board members that will provide leadership in achieving the company's long-term
strategic goals. The proxies cannot be voted for a greater number of persons
than the number of nominees named.
DIRECTORS - TERMS ENDING IN 2005
NAME AGE PRINCIPAL OCCUPATION
- ---- --- --------------------
G. Steven Burrill(2)...................... 60 Chief Executive Officer, Burrill & Company
Lloyd M. Smith, Ph.D...................... 50 John D. MacArthur Professor of Chemistry,
University of Wisconsin, Director of the
Genome Center at the University of
Wisconsin-Madison and Member, Advisory
Board, Third Wave Technologies, Inc.
Lionel Sterling(2)........................ 67 President, Equity Resources, Inc.
DIRECTORS - TERMS ENDING IN 2006
NAME AGE PRINCIPAL OCCUPATION
- ---- --- --------------------
Gordon F. Brunner(1)(3)................... 66 Retired; Former Senior Vice President,
Chief Technology Officer, and member of the
Board of Directors of Procter & Gamble
Company; Partner, Cincinnati Living Longer
ProActive Health Center
Sam Eletr, Ph.D.(3)....................... 66 Retired; Former Chairman and CEO of Applied
Biosystems
John Neis(1)(2)........................... 49 Senior Partner, Venture Investors LLC
DIRECTORS - TERMS ENDING IN 2007
NAME AGE PRINCIPAL OCCUPATION
- ---- --- --------------------
Lance Fors, Ph.D.......................... 46Ph.D. ........................ 47 Chairman of the Board, Third Wave
Technologies, Inc.
John J. Puisis............................ 45 President and Chief Executive Officer,
Third Wave Technologies, Inc.
David A. Thompson(3)...................... 62Thompson(1)(3)................... 63 Retired; Former Senior Vice President &
President, Diagnostic Division, Abbott
Laboratories
John J. Puisis............................ 44 President and Chief Operating Officer,
Third Wave Technologies, Inc.
DIRECTORS CONTINUING IN OFFICE - TERMS ENDING IN 2005
NAME AGE PRINCIPAL OCCUPATION
- ---- --- --------------------
Tom Daniel(1)(2)(3)....................... 39 General Partner, Schroder Ventures Life
Sciences
G. Steven Burrill(2)...................... 59 Chief Executive Officer, Burrill & Company
Lloyd M. Smith, Ph.D.(1)(3)............... 49 John D. MacArthur Professor of Chemistry,
University of Wisconsin, Director of the
Genome Center at the University of
Wisconsin, Madison and Member, 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.
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(1) Member of the compensation committee
(2) Member of the audit committee
(3) Member of the nominating and governance 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.
NOMINEESNOMINEE FOR ELECTION AT THE JUNE 14, 2005 ANNUAL MEETING FOR TERMSTERM ENDING IN 20072008
Lionel Sterling was appointed to the Third Wave board of directors in
August 2004. Mr. Sterling is president of Equity Resources, Inc., a private
investment firm. He previously co-founded and served as managing partner of the
private investment firm Whitehead/Sterling. Mr. Sterling serves on a number of
corporate and philanthropic boards. He most recently served on the Board of
I-STAT Corporation. He also has served as chairman of the Board of Directors of
Rayovac Corporation, Executive Vice President and Director of United Brands
Company, and Sector Executive and Chief Financial Officer of American Can
Company. He also held various investment and financial positions at Donaldson,
Lufkin & Jenrette Inc. and ITT Corporation. Mr. Sterling holds an M.B.A. from
New York University.
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THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
NOMINEE SET FORTH ABOVE.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE ANNUAL MEETING
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 Board of Directors of TomoTherapy, Inc., Deltanoid
Pharmaceuticals, Inc., NimbleGen Systems, Inc., and the Wisconsin Technology
Council, and on the Advisory Boards of the Weinert Applied Ventures Program and
Tandem Press at the University of Wisconsin-Madison. Mr. Neis received a B.S. in
finance from the University of Utah and an M.S. in business from the University
of Wisconsin-Madison, and is a Chartered Financial Analyst.
Gordon F. Brunner has served as a director since January 2003. Mr. Brunner
served as Chief Technology Officer as well as a member of the board of directors
of the Procter & Gamble Company, until his retirement after 40 years of service.
He has extensive experience leveraging innovative technology platforms to the
pharmaceutical, 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. degree from Xavier University. Mr. Brunner is a partner in the Cincinnati
Living Longer ProActive Health Center and serves as a director of two other
public companies, Scotts Miracle-Gro Corporation, and Natrol, Inc., as well as
privately-held Iams Imaging and Beverage Holdings, L.L.C. He also serves on the
boards of Christ Hospital (Cincinnati, Ohio), the Wisconsin Alumni Research
Foundation, and 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, which recently merged with Solexa. He currently serves
on the Boards of two privately held companies, Faust Pharmaceuticals, in
Strasbourg, France, and SpinX Technologies, in Geneva, Switzerland. He holds an
M.A. in physics and a Ph.D. in biophysical chemistry, both from the University
of California, Berkeley.
Lance Fors, Ph.D., our founder and Chairman of the Board, has served as our
Chief Executive Officer and one
of our directors since our inception in 1993. Dr. Fors served as our President
from 1993 until 2003.2003 and our Chief Executive Officer until 2004. Dr. Fors
received his Ph.D. in molecular biology from the California Institute of
Technology in 1990. Dr. Fors has more than over twenty years of research and
development experience and is the inventor on 2113 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 overmore than
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.
John J. Puisis, has servedour President and Chief Executive Officer, joined Third
Wave as our Senior Vice President sincein September 2001. Since that time, Mr. Puisis
also has served as our Chief Financial 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
title and duties of President.Officer. Mr.
Puisis was appointed to our board of directors in February 2004. 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 received an M.B.A. from Northwestern
University and a B.A. in accounting from Northern 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 received 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 John 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,
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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.nominee. Votes withheld from any director will have no
effect on the outcome.
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 tennine directors,
all but Dr. Fors, Dr. Smith 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 and governance committee. From
time to time, the board has created various ad hoc committees for special
purposes.
The board of directors held a total of sixnine meetings during 20032004 and all
directors attended at least 75%97% of the total number of meetings of the board and
committees of the board on which the director served during 2003.2004. The Company
encourages but does not require its directors to attend the annual meeting of
the shareholders. Three directors attended the 2004 annual meeting of the
shareholders.
Shareholders may communicate with our board of directors, either as a whole
or with an individual member, by following the procedures set forth on our
website twt.com.www.twt.com.
COMPENSATION COMMITTEE
The compensation committee consists of Messrs. Smith,Brunner, Neis and Daniel.Thompson.
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 five meetingsone
meeting during 2003.2004. The board of directors has adopted a compensation committee
charter, which is available at the Company's website twt.com.www.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 also 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.Sterling. The
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 board of directors also has also determined that G. Steven Burrill is anall committee members
are audit committee financial expertexperts as such term is defined by the rules of
the Securities and Exchange Commission. The board of directors has adopted an
Audit Committee Charter, which is available at the Company's website
twt.com.
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www.twt.com. Information regarding the functions performed by the audit
committee and the number of meetings held during 20032004 is set forth in the
"Report of the Audit Committee",Committee," included in this proxy statement.
NOMINATING COMMITTEE
The nominating committee evaluates and recommends candidates for election
or appointment to the board of directors. The nominating committee has 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 nominating committee met
three times in 2004. The board of directors has adopted a Nominating Committee
Charter, which is available at the Company's website twt.com.www.twt.com.
5
The nominating committee consists of Messrs. Daniel, Neis, SmithEletr, Brunner, and Thompson.
The board of directors has determined that each member of the nominating
committee is "independent" as such term is defined in 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,Kevin T. Conroy, 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, and 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 and governance 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 or 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 Company stock on the date of grant. Following the third year
ofafter initial election, our non-employee directors receive an annual grant of
10,000 options. OptionsThe initial options vest at 25% peron a three-year vesting schedule and
the annual option grants vest in one 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's stock
option grant agreements.
Our non-employee directors receive an annual retainer of $12,000,$40,000, a board
meeting fee of $1,500 for regularly scheduled board meetings physically attended
and a board$500 for each meeting attended by teleconference. The lead director, David
Thompson, and committee meeting participation feechair directors receive an annual retainer of $500 per meeting.$7,500 and
directors who hold committee positions receive an annual retainer of $5,000. Our
directors are reimbursed for allreasonable director-related expenses incurred as a
result of providing service to the Company or at the Company's requestrequest.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF AUDITORSINDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The audit committee has appointed Ernst & Young LLP as the independent
auditorsregistered public accounting firm of the Company for the current fiscal year
ending December 31, 2004.2005. Ernst & Young LLP has audited the Company's financial
statements since its inception.
6
FEES PAID OR DUE TO ERNST & YOUNG LLP
In addition to retaining Ernst & Young LLP to audit our financial
statements, we engage it from time to time to perform other services. The table
below shows the total fees billed by Ernst & Young LLP for its services in 20022003
and 2003.2004.
FEE TYPE FISCAL 20022003 FISCAL 20032004
- -------- ----------- -----------
Audit Fees*................................................. $261,500 $189,650 $488,800
Audit Related Fees..........................................Fees**........................................ $ 15,1451,500 $ 1,500
Tax Fees**.................................................. $ 64,47540,450 $ 40,45032,895
All Other Fees..............................................Fees**............................................ 0 0
-------- --------
Total....................................................... $341,120 $231,600 $523,195
======== ========
- ---------------
* Audit related services include quarterlyIncludes fees 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 did meet with the Audit Committee in advance and upon
completion of the audit.
** Tax related services included workexpenses related to the filingfiscal year audit and interim
reviews, notwithstanding when the fees and expenses were billed or when the
services were rendered. For 2004, the audit fees also include the audit of
our internal control over financial reporting as required by Section 404 of
the Company tax
returnSarbanes-Oxley Act.
** Includes fees and expenses for 2002, tax estimatesservices rendered from January through
December of the fiscal year, notwithstanding when the fees and extension filings, and consultation with
management representatives on state tax related matters.expenses were
billed.
The audit 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 whichthat requires pre-approval by the
audit committee of all services to be provided by the Company's independent
auditor.registered public accounting firm. The audit committee has approved the
provision of audit services by Ernst & Young LLP for fiscal year 20042005 in
accordance 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 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 will reconsider
whether to retain that firm. Even if the selection is ratified, the audit
committee in its discretion may direct the appointment of a different
independent auditorsregistered public accounting firm 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 AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2004.2005.
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.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by us during 2001,2004,
2003 and 2002 and 2003 to our chief executive officer, executive chairman and our next
four most highly compensated other executive officers who received salary
compensation of more than $100,000 during 20032004 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION SECURITIES
------------------------------------------------------- UNDERLYING ALL OTHER
NAME PRINCIPAL POSITION(S) YEAR SALARY($) BONUS($) OPTIONS/SARS(#) COMPENSATION($)
- ---- --------------------- ---- --------- ------------------ --------------- ---------------
Dr. Lance Fors.........John J. Puisis(1)........ President, 2004 $440,305 $286,000 29,333 $20,987(1)
Chief Executive 2003 $349,798 $200,000 480,000 $24,246(2)
Officer, Director 2002 $253,380 $150,000 145,000 $26,106(3)
Dr. Lance Fors........... Executive Chairman, 2004 $474,254 $ 0 10,000 $58,857(4)
Director, and Former 2003 $430,523 $ 200,000$200,000 220,000 $52,563(2)
Officer,$98,540(5)
Chief Executive 2002 $398,239 $ 150,000$150,000 291,000 $ 2,826(2)
Chairman, Director 2001 $384,790 $ 0 141,480 0
John J. Puisis(1)...... President, Chief 2003 $349,798 $ 200,000 480,000 $11,048(2)
Operating7,824(6)
Officer
2002 $253,380 $ 150,000 145,000 $20,705(2)
Director 2001 $ 65,587 $2,111,864 275,000 $ 4,924(2)
Maneesh Arora(3).......Ivan Trifunovich......... Senior Vice President 2003 $206,7392004 $269,972 $106,000 32,000 $ 110,000 350,000 $13,409(2)
Ivan Trifunovich(4).... Senior Vice6,500(7)
2003 $263,693 $ 85,750 0 0
President &$ 6,000(7)
2002 $260,713 $ 0 100,000 0
General Manager, 2001$ 5,500(7)
Maneesh Arora(8)......... Senior Vice President 2004 $278,134 $ 75,000 68,333 $28,887(9)
2003 $206,739 $110,000 350,000 $26,819(10)
Vecheslav Elagin(11)..... Vice President 2004 $177,298 $110,000 198,500 $ 6,500(7)
Research & 2003 $ 61,214 $ 0 $ 0 210,000 0
Genomics Business
Unit
John Comerford.........58,000 $52,472(12)
Development
Jacob Orville(13)........ Vice President, 2004 $199,385 $ 60,000 16,000 $ 6,500(7)
Global Sales 2003 $223,198$161,445 $ 90,000 75,000 0
General Counsel &40,000 210,000 $ 6,000(7)
2002 $209,879 $ 15,000 140,000 0
Secretary 2001 $200,46198,527 $ 0 81,000 011,850 40,000 $28,603(14)
- ---------------
(1) Mr. Puisis joined us in September 2001.
(2) Consists ofRepresents payment for relocation expenses paid by us.and the Company's matching
contribution to a 401(k) plan of $14,487 and $6,500, respectively.
(2) Represents payment for relocation expenses and the Company's matching
contribution to a 401(k) plan of $18,246 and $6,000, respectively.
(3) Represents payment for relocation expenses and the Company's matching
contribution to a 401(k) plan of $20,706 and $5,400, respectively.
(4) Represents payment for relocation expenses and the Company's matching
contribution to a 401(k) plan of $52,357 and $6,500, respectively.
(5) Represents payment for relocation expenses and the Company's matching
contribution to a 401(k) plan of $92,540 and $6,000, respectively.
(6) Represents payment for relocation expenses and the Company's matching
contribution to a 401(k) plan of $2,826 and $4,998, respectively.
(7) Represents the Company's matching contribution to a 401(k) plan.
(8) Mr. Arora joined usthe Company in January 2003
(4)(9) Represents payment for relocation expenses and the Company's matching
contribution to a 401(k) plan of $22,387 and $6,500, respectively.
(10) Represents payment for relocation expenses and the Company's matching
contribution to a 401(k) plan of $21,437 and $5,382, respectively.
(11) Mr. TrifunovichElagin joined usthe Company in December 2001.June 2003 and became Vice President of
Research & Development in October 2004.
8
(12) Represents payment for relocation expenses and the Company's matching
contribution to a 401(k) plan of $50,777 and $1,695, respectively.
(13) Mr. Orville joined the Company in April 2002 and became Vice President of
Global Sales in October 2003.
(14) Represents payment for relocation expenses and the Company's matching
contribution to a 401(k) plan of $25,844 and $2,759, respectively.
OPTION GRANTS IN 20032004
The following table sets forth information relating to stock options
granted during 20032004 to the Named Executive Officers. In accordance with the
rules of the Securities and Exchange Commission, also shown below is the
potential realizable value overduring the term of the option (the period from the
grant date to the expiration date) based on assumed rates of stock appreciation
of 5% and 10%, compounded annually. These amounts are mandated by the Securities
and Exchange Commission and do not represent our estimate of
8
future stock price.
Actual gains, if any, on stock option exercises will depend on the future
performance of our common stock.
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------
NAME GRANTED(#)(1) 2003(2)2004(2) SHARE($) DATE 5%($) 10%($)
- ---- ------------- ------------ --------- ---------- --------- ----------------------- --------
Dr. Lance Fors.......... 220,000 7.8% 4.16 05/13/2013 575,564 1,458,593Fors......... 10,000 .47% 7.82 11/04/2014 49,180 124,631
John J. Puisis.......... 280,000 9.9% 2.69 01/01/2013 473,683 1,200,407
200,000 7.1% 4.00Puisis......... 29,333 1.38% 3.37 02/25/2014 62,168 157,545
Maneesh Arora.......... 68,333 3.21% 3.37 02/25/2014 144,823 367,011
Ivan Trifunovich....... 32,000 1.50% 3.37 02/25/2014 67,820 171,869
Vecheslav Elagin....... 108,500 5.10% 3.37 02/25/2014 229,952 582,744
50,000 2.35% 3.19 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........ 0 -- -- -- -- --
John Comerford.......... 75,000 2.7% 4.00 07/17/2013 188,668 478,12326/2014 100,309 254,202
40,000 1.88% 6.88 10/28/2014 173,072 438,598
Jacob Orville.......... 16,000 .75% 3.37 02/25/2014 33,910 85,935
- ---------------
(1) For each of the Named Executive Officers, 25% of the options vest on each of
the first four anniversaries of the grant date.date with the exception of Lance
Fors whose options vest in one year.
(2) WeDuring 2004, we granted options to purchase a total of 2,818,3002,127,255 shares of
common stock
during 2003.stock.
9
AGGREGATE OPTION EXERCISES IN 20032004 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for the Named Executive Officers
relating to option exercises in 20032004 and the number and value of securities
underlying exercisable and unexercisable options held at December 31, 2003:2004:
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 20032004 DECEMBER 31, 2003($2004($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Dr. Lance Fors......... 0 0 537,959 449,641 506,631 613,965677,100 320,500 2,123,661 1,681,785
John Puisis............J. Puisis......... 0 0 173,750 726,250 87,725 893,975398,750 530,583 1,593,338 2,713,774
Maneesh Arora.......... 0 0 0 350,000 0 462,50087,500 330,833 470,000 1,767,382
Ivan Trifunovich....... 0 0 130,000 180,000 60,500 181,500
John Comerford.........207,500 134,500 658,975 602,685
Vecheslav Elagin....... 0 0 113,300 222,300 84,700 295,35014,500 242,000 71,770 1,122,065
Jacob Orville.......... 0 0 72,500 193,500 388,625 983,225
- ---------------
(1) Value of unexercised in-the-money options are based on a value of $4.55$8.60 per
share, the fair market value of our common stock on December 31, 2003.2004.
Amounts reflected are based on the value of $4.55$8.60 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, then CEO, that providesprovided for an initial base salary of $400,000. The
agreement also providesprovided that Dr. Fors' employment maycould be terminated at any
time by us or by Dr. Fors. In June of 2004, in connection with the transition in
his role from Chairman and CEO to Executive Chairman, we amended Dr. Fors'
employment agreement. The amended agreement provides for a base salary of
$400,000, comprised of $133,000 per year for Executive Chairman services ("Base
Compensation") and $267,000 per year as a severance obligation ("Severance
Compensation") associated with his transition from CEO to Executive Chairman.
The term of his agreement is through June 30, 2007 unless terminated sooner by
either party. If Dr. Fors' employment as Executive Chairman 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(i) the greater of the remaining
Base Compensation or 24 months of his then current base salary (6 months
of which would be paid in an up front lump sum), any accruedBase Compensation, (ii) the remaining
Severance Compensation, (iii) compensation intended for medical and unpaid bonuses
as of the date of termination and we would purchaseinsurance
expense equal to $30,400, (iv) an outplacement consulting package for Dr. Fors
for up to a maximum of $15,000.
IfIn September of 2001, 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 providesprovided for an initial base salary of $225,000 and a target annual
bonus of nonot 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 moneysmonies 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
if we terminate Mr. Puisis other than foragreement was amended in July
of 2003 to accelerate the vesting of his stock options in the event of
termination without "cause" or Mr. Puisis voluntarily
terminates his employmentresignation for "good reason",reason." Mr. Puisis'
employment agreement was amended again in 2004 prior to his promotion to CEO.
Under his agreement, Mr. Puisis would, upon termination without "cause" or
resignation for "good reason," receive (i) a lump sumlump-sum severance payment equal to
onetwo year's base salary, and(ii) a pro-rated portion of his target bonus, (iii)
$15,000 outplacement compensation and (iv) continued coverage for one year under
our health and other welfare benefit plans. The employment agreement with Mr.
Puisis defines "good reason" to include a resignation by Mr. Puisis following a
"change of control" (as defined in the employment agreement).
In March of 2005, we entered into employment agreements with Mr. Kevin
Conroy, Vice President, General Counsel & Secretary and James Herrmann, Vice
President, Finance. Mr. Conroy's employment agreement provides for an initial
base salary of $225,00. Mr. Herrmann's agreement provides for an initial base
salary of $190,000. The agreements provide that employment may be terminated at
any time by either the
10
executive or the company. If the agreements are terminated by us other than for
"cause" (as defined in the agreement) or the executive voluntarily terminates
his employment for "good reason" (as defined in the agreement), the executive
would receive (i) an amount equal to one year's base salary, (ii) in the event
that the termination occurs within one year following a change of control (as
defined in the employment agreements), a pro-rated target bonus, (iii) twelve
months of health insurance premiums, (iv) $10,000 of outplacement consulting
fees, (v) earned but not earlier than six months after
the changeunpaid bonuses and (vi) earned but unpaid long
term-incentive plan payments (as "earned" is defined in control.those plans).
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, 2003.2004.
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......................... 7,256,505 $4.37 1,478,6927,446,523 $4.55 2,013,365
Equity compensation plans not approved by
security holders......................... 0 0 0
--------- ----- ---------
Total...................................... 7,256,505 $4.37 1,478,6927,446,523 $4.55 2,013,365
========= ===== =========
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:
- provide competitive levels of total compensation whichthat will enable the
Company to attract and retain the best possible executive talent;
- motivate executives to achieve optimum performance for the Company;
- align the financial interest of executives and shareholders through
equity-based plans; and
10
- provide 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 also 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
11
compensation in the form of stock 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 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.
In January 2004, the Company implemented a long-term incentive plan
designed to encourage results orientedresults-oriented actions on the part of executive
officers and other key employees of the Company. A second long-term
incentive plan was implemented in February 2005. The plan isplans are 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 isThe plans are administered
by the Compensation Committee, which establishes the term of the plan,plans,
performance goals, target awards, performance measurement criteria and
calculation of awards. The long-term incentive plan isplans are 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 20032004 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 2003.
11
2004.
The total compensation of Dr. Fors,Mr. Puisis, 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.
12
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 DanielGordon Brunner
John Neis
David Thompson
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company as of April 29, 20042005 are set forth
below:
Lance Fors, Ph.D. (46), (47) our founder and Chairman of the Board, has served
as our Chief Executive Officer and one of our directors since our inception in 1993. Dr. Fors served as our
President from 1993 until 2003.2003 and our Chief Executive Officer until 2004. Dr.
Fors received his Ph.D. in molecular biology from the California Institute of
Technology in 1990. Dr. Fors has overmore than twenty years of research and
development experience and is the inventor on 2113 issued and pending patents in
the area of DNA and RNA sequence analysis.
John J. Puisis (44) has served(45), our President and Chief Executive Officer, joined
Third Wave as our Senior Vice President sincein September 2001. Since that time, Mr.
Puisis also has served as our Chief Financial Officer from September 2001
until October 2003. In January 2003,and Chief Operating
Officer. Mr. Puisis was also assigned the title and
dutiesappointed to our board of Chief Operating Officer anddirectors in October of 2003, he was assigned the
title and duties of President.February 2004.
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 received an M.B.A. from
Northwestern University and a B.A. in accounting from Northern Illinois
University. He is a certified public accountant.
Maneesh Arora, (35)(36) joined us in January 2003 as Director of Marketing. In
October 2003, Mr. AroraMarketing and
was promoted to Vice President of Marketing and Strategy and in October 2003. In
March 2004 he was promoted totook on the role of Senior Vice President.President of Commercial
Operations. Prior to joining us,Third Wave, Mr. Arora was Director of Corporate
Strategy and New Ventures for Ondeo Nalco.
PriorNalco, a $3-billion subsidiary of Suez, a
global provider of industrial services. Previous to that, he spent nine years at
Kraft Foods in a varietynumber of key roles of increasing responsibility in marketing
and sales. Mr. Arora received his M.B.A. in marketing and management and
strategy from the Kellogg Graduate School of Management and his B.A. in
economics from the University of Chicago.
David Nuti (44)James Herrmann (43) joined the Company in April 2002us 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 in October 2004
and Vice President of Operations.assumed responsibility for the Company's finance and accounting functions as
our principal financial officer shortly thereafter. After beginning his career
at Arthur Andersen, Mr. NutiHerrmann held several senior financial and operations
positions at Tribune Company. Immediately prior to joining Third Wave, he was a
general partner in an electronics distribution company. Mr. Herrmann received
his B.S.bachelor's degree in business administrationaccountancy from Northern Illinoisthe University of Notre Dame and an
M.B.A. from Lewis University.the University of Chicago. He is a certified public accountant.
Ivan D. Trifunovich, Ph.D. (40)(41) 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
previously held successive positions as Vice
President of e-Business and Vice President of Research Strategy and Operations
at Pharmacia Corp. Prior to 1999,joining Pharmacia, Dr. Trifunovich was a Director of
New Product Marketing at Johnson & Johnson, Inc. From 1992 to 1997, Dr.
Trifunovich held various positionsHe began his career at
Bristol-Meyers Squibb, Inc. as a bench scientist, where he held several
positions of increasing responsibility. Dr. Trifunovich received his Ph.D. in
organic chemistry at UCLA and hisan M.B.A. at the University of Pennsylvania's
Wharton School of Business. He is the holder of ten10 U.S. patents.
John Comerford (41)13
Kevin Conroy (39) joined us in September 2000July 2004 as Vice President General
Counselof Legal Affairs
and Secretary. From 1998 until joining us, Mr. Comerford was Corporateappointed General Counsel and Secretary at Lunar Corporation, a medical device company.
From 1990 to 1997, Mr. Comerford was Associate Resident Counsel at National
Presto Industries, Inc.in October 2004. Prior to
1990,joining Third Wave, Mr. ComerfordConroy worked for GE Healthcare, where he oversaw the
development and management of its information technologies group intellectual
property portfolio, and developed and executed litigation, licensing, and
corporate product acquisition legal strategies. Before joining GE, Mr. Conroy
was an intellectual property litigator at two Chicago law firms, McDermott Will
& Emery, and Pattishall, McAuliffe, Newbury, Hilliard and Geraldson, where he
was a Staff Attorneypartner. He earned his B.A. in electrical engineering at Fort Howard Corporation. Mr. Comerford received aMichigan State
University and his J.D. from Marquettethe University and a B.A. in business administration from St. Norbert College.of Michigan.
Jacob Orville (30)(31) joined us in April 2002 as Director of Clinical Sales,
leading U.S. clinical sales growth of more than 100%, 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. As the National
Sales Manger for Smiths, he managed the company's key product line, leading U.S.
clinical sales growth of that line from $1 million to more than $30 million. Mr.
Orville received his B.A. from the University of Massachusetts.
Lander Brown (39) joined us in December 2004 as Vice President of Human
Resources and Administration. Mr. Brown's 15-year history in strategic human
resources, business process, planning and administration includes the roles of
Executive Vice President of Human Resources and member of the U.S. operating
board of Leo Burnett USA, Executive Director Human Resources of the Global
Specialty Operations group at Pharmacia Corporation, and Vice President of
Planning and Administration at the former Moore Corporation, Ltd. Mr. Brown
earned his B.A. in social science from Michigan State University and his M.B.A.
in human resources management from National-Louis University in Evanston,
Illinois.
Vecheslav Elagin, Ph.D. (37) joined us in June 2003 as our head of
infectious disease research and development and was appointed Vice President,
Research and Development in October 2004. Prior to joining Third Wave, Dr.
Elagin worked for Visible Genetics Corporation/Bayer HealthCare, where he
managed the Hepatitis B and C and HIV product development groups. Before joining
Visible Genetics, Dr. Elagin was a senior scientist at Photonic Sensor
Corporation; an assistant professor, Department of Biology, University of Notre
Dame; and a research scientist at the Institute of Gene Biology in Moscow. Dr.
Elagin earned a B.A. degree from Moscow Institute of Physics and Technology, an
M.B.A. from Vavilov Institute of General Genetics, and a Ph.D. from Engelhard
Institute of Molecular Biology.
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 with management 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 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,
14
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 sixseven meetings in 2003.2004. 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, 2003.2004. The audit committee and the board also 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
Lionel Sterling
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 for 5% shareholders as of February 14,
2004,2005, and for officers and directors as of April 29, 2005 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
1415
individuals for which an address is not otherwise indicated is: c/o Third Wave
Technologies, Inc., 502 South Rosa Road, Madison, Wisconsin 53719.
SHARES BENEFICIALLY OWNED
---------------------------------------------
SHARES SUBJECT TO
BENEFICIAL OWNER TOTAL NUMBER OPTIONS PERCENTAGE
- ---------------- ------------ ----------------- ----------
5% SHAREHOLDERS:
State of Wisconsin Investment Board(1)................. 5,523,0005,345,000 0 13.88%13.14%
Mazama Capital Management, Inc.(2)..................... 3,639,4844,949,684 0 9.17%
Bank of America Corporation(3)......................... 2,503,050 0 6.40%12.17%
NAMED EXECUTIVE OFFICERS AND DIRECTORS:
Lance Fors, Ph.D.(4)(3)................................... 2,448,759 537,959 6.01%2,377,002 677,100 5.68%
John Puisis............................................ 278,073 243,750 *J. Puisis......................................... 531,032 476,083 1.28%
G. Steve Burrill(4).................................... 1,071,963 41,100 2.60%
Lloyd M. Smith, Ph.D.(5)............................... 2,054,500 27,700 5.11%1,719,100 41,100 4.17%
John Neis(6)........................................... 1,848,025 27,700 4.60%1,866,425 41,100 4.53%
David A. Thompson...................................... 70,900 70,90094,300 84,300 *
Tom Daniel(7).......................................... 1,349,326 27,700 3.36%
G. Steven Burrill(8)................................... 1,058,563 27,700 2.63%
Kenneth R. McGuire..................................... 2,531,200 27,700 6.30%
Gordon F. Brunner...................................... 18,500 7,50039,500 15,000 *
Sam Eletr.............................................. 7,500 7,50015,000 15,000 *
Lionel Sterling........................................ 21,000 0 *
Maneesh Arora.......................................... 60,156 56,250166,972 154,583 *
Ivan Trifunovich....................................... 130,000 130,000 *
John Comerford......................................... 142,871 113,300 *
David Nuti............................................. 63,125 37,500215,500 215,500 *
Jacob Orville.......................................... 44,379 35,000114,004 89,000 *
Vecheslav Elagin....................................... 45,560 41,625 *
All directors and executive officers as a group (15(13
persons)............................................. 12,105,877 1,378,159 *8,277,358 1,891,491 19.99%
- ---------------
* 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 11, 2004.8, 2005. 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, 2004.14, 2005. The Schedule 13G reports that MCM has sole voting power
with respect to 1,870,5002,792,200 of those shares and sole dispositive power with
respect to 3,639,4844,949,684 of those shares. It does not indicate who has voting
power with respect to the remaining 1,764,4342,157,484 shares. The address of MCM is
One S.W. Columbia, Suite 1860,1500, 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, N.A.
("BA"), BANA #1 LLC ("BANA") and Bank of America Strategic Solutions, Inc.
("BASS") with the Securities and Exchange Commission on February 17, 2004.
The Schedule 13G reports that each of BAC, NBH, BA and BANA have shared
voting and dispositive power with respect to all 2,503,050 shares.
(4) Includes 1,900,8001,699,902 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.
(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.
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.
(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 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.
(8)(4) 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.
(5) Includes 148,800 shares of common stock held in a voting trust for the
benefit of Dr. Smith's family members. Peter Smith, Dr. Smith's brother, is
the sole trustee of this voting trust.
(6) Includes 1,196,550 shares held by Venture Investors of Wisconsin; 445,200
shares held by Venture Investors Early Stage II Limited Partnership; 170,400
shares held by Venture Investors Early Stage Fund III Limited Partnership.
16
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, 2003,2004, our directors, officers
and ten percentten-percent shareholders complied with their Section 16(a) filing
requirements, except that a change in beneficial ownership of Lance Fors wasas noted below. With respect to Maneesh Arora, Jacob
Orville, and John Puisis, Form 4s, each for one transaction, were not timely
filed; Form 4s for each transaction were subsequently filed. With respect to
Lionel Sterling and Lander Brown, Form 3s were not timely filed late.and were
subsequently filed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December2000, the Company entered into agreements with the University of
2003,Wisconsin-Madison and the stepsonWisconsin Alumni Research Foundation pursuant to which
the Company provided enzyme and technical support for research projects by the
University, and the Company received certain rights to inventions or other
intellectual property arising out of the research project. The principal
investigator for the projects was Dr. Fors,Lloyd Smith, who had been an employeeis currently a director
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
termswhose term as director will expire at the 2005 annual meeting 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.
16shareholders.
17
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 53.57 65.66 37.12 62.54 39.95 28.59 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 3/31/04 6/30/04 9/30/04 12/31/04
- --------------------- -------------------------------------------------------------------------------------------------
TWTI 41.09 29.36 41.36 42.55 40.09 62.55 78.18
- -----------------------------------------------------------------------------------------------------
NASDAQ 65.67 72.32 81.08 Former80.71 82.87 76.76 88.04
- ---------------------------------------------------------------------------------------------------------------
Peer Group 24.57 28.32 42.19
Current Peer Group 165.11 201.95 234.39 221.70 268.96 235.62 270.97
- -------------------------------------------------------------------------------------------------------------------------
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:Gen-Probe
Incorporated, 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/ JOHN COMERFORDJ. PUISIS
John ComerfordJ. Puisis
Dated: April 29, 2004
172005
18
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" THE DIRECTORSDIRECTOR 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 29, 20042005, and hereby appoints David NutiJames Herrmann and
John
Comerford proxyKevin Conroy each of them proxies, and attorneyattorneys in fact, with full power 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 22, 200414, 2005, 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 electionElection of the following persons as directors of the Company to
serve until their successors shall be duly elected and qualified:Director
NAME OF NOMINEE FOR AGAINSTWITHHELD
- --------------------------------------- --- ---------------
Lance Fors [ ] [ ]
David A. Thompson [ ] [ ]
John J. PuisisLionel Sterling [ ] [ ]
For, except vote withheld from the following nominee(s):
2. To ratify the appointment of Ernst & Young LLP as independent
auditorsregistered public accounting firm of the Company for the fiscal year ending
December 31, 2004.2005.
[ ] For [ ] Against [ ] Abstain
3. In their discretion, upon any such other matters which may properly
come before the meeting or any adjournments thereof.
The Board of Directors recommends a vote "FOR" each of the proposals.
MARK FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Grant AuthorityMARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
Withhold Authority(PLEASE NOTE THAT MEMBERS OF MANAGEMENT ARE NOT EXPECTED TO BE PHYSICALLY
PRESENT AT THE MEETING.)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC INDICATION ABOVE. IN
THE ABSENCE OF SUCH INDICATION, THIS PROXY WILL BE VOTED FOR THE DIRECTORS
LISTED ABOVE AND FOR ITEM 2 AND, AS THE PROXYHOLDER DEEMS ADVISABLE, ON ANY
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF.
DATED: _____________________________, 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 PROXYPROXY.
Signature: Date: Signature: Date:
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