<PAGE>
SCHEDULE 14A
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 Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Image Guided Technologies, Inc.
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(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
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):
-------------------------------------------------------------------
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.
[ ] 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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<PAGE>
IMAGE GUIDED TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1998
The 1998 Annual Meeting of Shareholders of Image Guided Technologies, Inc.
(the "Company") will be held at 5710-B Flatiron Parkway, Boulder, Colorado, on
May 19, 1998, at 10:00 a.m. local time for the following purposes:
1. To elect a board of directors to serve until the next Annual Meeting
of Shareholders and until their successors are elected and qualified.
2. To amend the Company's 1997 Stock Option Plan to increase the number
of shares of Common Stock available for grant thereunder to 800,000.
3. To approve the Company's Employee Stock Purchase Plan.
4. To ratify the selection of Price Waterhouse LLP, independent public
accountants, as auditors for the Company for the fiscal year ending
December 31, 1998.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on March 31, 1998, will be
entitled to vote at the meeting, and any adjournments thereof. A list of all
shareholders entitled to vote at the Annual Meeting will be open to inspection
by any shareholder at the Company's offices during the period beginning two
business days after notice of the meeting is given and continuing through the
meeting.
Shares can be voted at the meeting only if the holder is present or
represented by proxy. Even if you plan to attend the meeting, you are urged to
date and sign the enclosed proxy and return it promptly in the accompanying
envelope so that the presence of a quorum will be assured. The giving of a
proxy does not affect your right to vote in person if you attend the meeting.
By Order of the Board of Directors,
Waldean A. Schulz, Ph.D.,
Secretary
April 24, 1998
<PAGE>
IMAGE GUIDED TECHNOLOGIES, INC.
5710-B FLATIRON PARKWAY
BOULDER, COLORADO 80301
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 19, 1998
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Image Guided Technologies, Inc. (the "Company")
from holders of the outstanding shares of the Company's Common Stock entitled to
vote at the 1998 Annual Meeting of Shareholders (and any adjournment thereof).
This proxy statement and enclosed proxy are first being mailed to shareholders
on or about April 24, 1998. A copy of the Company's Annual Report for 1997 on
Form 10-KSB is being mailed to all shareholders with this proxy statement. The
Annual Report is not to be regarded as proxy soliciting material or as a
communication by means of which any solicitation is to be made.
The Company's Board has fixed the close of business on March 31, 1998, as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting. On that date, there were outstanding and entitled to
vote 3,693,822 shares of Common Stock. Holders of Common Stock are entitled to
one vote for each share held of record on the record date with respect to
matters on which the holder is entitled to vote.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock as of the record date constitutes a quorum and is
required in order for the Company to conduct business at the Annual Meeting.
The majority being present, the election of each nominee for Director requires a
plurality of the votes cast and the affirmative vote of the holders of a
majority of the shares of Common Stock represented in person or by proxy at the
Annual Meeting is required to approve or ratify the other proposals described
below. Abstentions and broker non-votes are counted towards a quorum.
Abstentions are counted in the tabulations of the votes cast, but broker
non-votes on any proposal are not considered to be represented at the meeting as
to such proposal and therefore are not counted for purposes of determining
whether a proposal has been approved.
1. ELECTION OF DIRECTORS
The Company currently has seven Directors, four of whom are officers and
employees of the Company or its subsidiaries. In order to create a smaller and
more independent Board, the Board of Directors has decided to reduce the number
of Directors to five at the 1998 Annual Meeting of Shareholders. Of the five
Directors nominated by the Board, three are independent Directors (i.e., not
officers or employees of the Company or its subsidiaries).
The Directors are to be elected by the holders of the Company's Common
Stock, to serve until the next Annual Meeting and until their successors are
elected and qualified. Unless instructions to the contrary are received,
proxies received in response to this solicitation will be voted in favor of the
nominees listed below. If any nominee should become unavailable for election,
the shares represented by the enclosed proxy will be voted for such substitute
nominee as may be proposed by the Board. Information regarding nominees for
election as directors is set forth below.
<PAGE>
Principal Occupation During Past
Five Years Director
Name & Age of Nominee and Other Directorships Since
- --------------------------------------------------------------------------------
Paul L. Ray, 51 Chief Executive Officer and Chairman 1992
of the Company since January 1994;
President of the Company from
January 1994 through November 1995
and from February 1998; Managing
Partner and Director of Paradigm
Partners, LLC, a venture investment
firm, from 1992 to January 1995;
Member of the Board of Commissioners
of the Colorado Advanced Technology
Institute.
Clifford F. Frith, 52 General Manager and Chief Operating 1994
Officer of Osmonics' Laboratory and
Specialty Products Group, a fluid
separations and control company
which is a division of Osmonics,
Inc.; Vice President of American
Business Advisors, Inc. from
November 1993 until January 1996;
President and Director of Boulder
Intertec, Inc., a business
management advising service, from
June 1992 through December, 1996.
William G. Lyons, 42 President of Brimfield Precision, 1997
Inc. since 1987; Co-Founder of
Mechtech of Western Massachusetts, a
non-profit apprenticeship and
training organization.
A. Clinton Allen, 54 Chairman and Chief Executive Officer 1998
of A.C. Allen & Company, Inc., an
investment banking consulting firm;
first outside director of
Blockbuster Entertainment and member
of the Board and Chairman of the
Compensation Committee until
Blockbuster was sold in 1994;
Director and Vice Chairman of
Psychemedics Corporation; Director
and Vice Chairman of The DeWolfe
Companies, Inc.; Director of Swiss
Army Brands, Inc., Response, U.S.A.,
Inc. and Diversified Corporation
Resources.
Terry R. Knapp, M.D., 54 Chairman, CEO and Medical Director Nominee
of Conception Technology, Inc., a
woman's healthcare company in the
field of reproductive medicine; from
1995 to 1996 Chief Medical Officer
of Collagen Corporation; from 1992
to 1995, Chairman, CEO and Medical
Director of LipoMatrix, Inc., a
breast implant company; from 1975 to
1992 Dr. Knapp practiced plastic and
reconstructive surgery.
-2-
<PAGE>
DIRECTOR COMPENSATION
Directors who are not employees of the Company are paid $1,000 for each
Board meeting physically attended plus $500 annually for each Committee on which
the director serves. Each outside director at the time was also granted in
April 1997 a nonqualified stock option for 3,000 shares of the Company's Common
Stock. Directors are also reimbursed for expenses incurred in attending Board
or Committee meetings.
DIRECTOR MEETINGS AND ATTENDANCE DURING 1997
The Board of Directors met seven times during 1997. All incumbent
directors attended at least 75% of both the meetings of the Board of Directors
and the meetings of the Committees on which they served.
COMMITTEES OF THE BOARD OF DIRECTORS
COMPENSATION COMMITTEE. The Board of Directors has a Compensation
Committee which in 1997 consisted of Messrs. O'Connor, Sengpiel and Hamilton.
The Compensation Committee recommends to the Board of Directors the compensation
to be paid to all officers of the Company and reviews general policy relating to
compensation and benefits of employees. The Committee met twice during 1997.
The current members of the Compensation Committee are Messrs. O'Connor and
Allen.
AUDIT COMMITTEE. The Board of Directors has an Audit Committee which in
1997 consisted of Dr. Hauser and Messrs. Frith and Sengpiel. Such committee
recommends the selection of the Company's independent public accountants to the
Board of Directors, evaluates the independent public accountants, and consults
with the independent public accountants as to the Company's internal accounting
controls. The Audit Committee makes recommendations to the Board of Directors
with respect to the foregoing and brings to the attention of the Board any
criticism and recommendations that the independent accountants or the Audit
Committee itself may suggest. The Committee met once in 1997. The current
members of the Audit Committee are Dr. Hauser and Mr. Frith.
NOMINATING COMMITTEE. The Board of Directors established a Nominating
Committee for the purpose of recommending to the Board of Directors nominees for
the Board for the 1998 Annual Meeting of Shareholders. The committee consisted
of Messrs. Ray, Frith and Lyons. The Nominating Committee is not a standing
committee.
EXECUTIVE COMPENSATION
INFORMATION ABOUT EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
Paul L. Ray, age 51 Chief Executive Officer and Chairman of
the Board of the Company since January
1994; President of the Company from
January 1994 through November 1995, and
since March 1998; Director of the
Company since 1992; Managing Partner and
Director of Paradigm Partners, LLC, a
venture investment company, from 1992 to
January 1994.
William J. O'Connor, D.B.A., age 55 Vice President of the Company and Chief
Operating Officer of the Boulder,
Colorado operations since March 1998;
Executive Vice President and Chief
Operating Officer of Erbtec Engineering,
Inc., a division of Colorado MEDtech,
Inc., a medical electronics OEM
-3-
<PAGE>
company, from July 1995 through February
1998; Vice President of Sales and
Marketing, Medgraphics, Inc., from July
1994 through June 1995; Senior Vice
President of Sales and Marketing,
Valleylab, Inc., a division of Pfizer,
Inc., April 1989 through June 1994;
Adjunct Professor of Marketing and
Strategy, University of Phoenix, June
1994 through March 1998; Director of the
Company since November 1996.
Waldean A. Schulz, Ph.D, age 52 Vice President of Technology and
Secretary of the Company since December
1990; founded the Company and served as
its President from inception until
December 1990; Director of the Company
since 1990.
Jeffrey J. Hiller, age 45 Chief Financial Officer and Vice
President of Finance of the Company from
January 1994 (CFO) and May 1994 (VP);
Chief Financial Officer and Vice
President of BI Incorporated, an
electronic monitoring equipment company,
from 1989 through 1993.
William G. Lyons, age 42 Director of the Company since December
1997; President of Brimfield Precision,
Inc. from 1987 through 1995, and as Vice
President and General Manager from 1981
through 1987.
Daniel T. Hannify, age 55 Vice President of the Company since
April 1998; Vice President, Operations
of BPI since December 1997; prior to
working for BPI served as President and
CEO of G.S. Precision, a manufacturer of
precision machine parts for the
aerospace industry.
COMPENSATION
The following table sets forth certain information regarding the
compensation earned for services rendered in all capacities to the Company by
the Company's Chief Executive Officer and each of the other executive officers
whose compensation from the Company exceeded $100,000 for such fiscal year (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL OPTIONS COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) OTHER ($) GRANTED ($) ($)(1)
- ------------------------------ ---- ---------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Paul L. Ray . . . . . . . 1997 142,657 0 None 70,000 2,260
Chief Executive Officer 1996 110,521 8,036 None 6,400 1,593
and Chairman
Robert E. Silligman . . . 1997 117,847 0 None 20,000 1,879
President and Chief 1996 97,112 7,395 None 6,400 1,416
Operating Officer
Jeffrey J. Hiller . . . . 1997 102,848 0 None 20,000 1,650
Chief Financial Officer 1996 89,375 6,430 None 6,400 1,231
and Vice President of
Finance
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the matching contributions made to 401(k) plan account.
-4-
<PAGE>
OPTION GRANTS
The following table contains information concerning stock options granted
to the Named Executive Officers during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN THE LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED TO
UNDERLYING EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME OPTIONS GRANTED FISCAL YEAR PRICE/SHARE DATE
---- --------------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Paul L. Ray . . . . . . . . . 14,121 7% $6.25 01/29/02
35,879 18% $5.25 04/23/02
20,000 10% $3.75 10/30/02
Robert E. Silligman . . . . . 20,000 10% $3.75 10/30/02
Jeffrey J. Hiller . . . . . . 20,000 10% $3.75 10/30/02
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning option exercises and
option holdings for the fiscal year ended December 31, 1997, with respect to the
Named Executive Officers.
<TABLE>
<CAPTION>
AGGREGATE OPTIONS EXERCISED IN THE LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
NUMBER OF NUMBER OF SHARES
SHARES UNDERLYING UNEXERCISED OPTIONS VALUE OF UNEXERCISED, IN-THE-MONEY
ACQUIRED HELD AT DECEMBER 31, 1997 (1) OPTIONS AT DECEMBER 31, 1997(1)
ON VALUE ------------------------------- ----------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul L. Ray . . . . . . . None N/A 143,544 62,856 $266,345 $ 7,916
Robert E. Silligman . . . . None N/A 63,200 43,200 $138,100 $47,500
Jeffrey J. Hiller . . . . . None N/A 81,867 24,533 $183,074 $ 3,166
</TABLE>
- ---------------
(1) Based on the fair market value of the underlying shares of Common Stock of
$3.625 per share, the "last" price on December 31, 1997, as reported by
Nasdaq SmallCap Market, less the per share exercise price.
COMPENSATION COMMITTEE
The Board of Directors determines compensation of the executive officers of
the Company based upon recommendations made by the Company's compensation
committee.
EMPLOYMENT AGREEMENTS
Paul L. Ray, Chief Executive Officer, Chairman of the Board and President
of the Company, has an employment agreement (the "Ray Agreement") with the
Company that terminates on December 31, 1998. Mr. Ray's current annual salary
is $170,000. Under the Ray Agreement, options granted prior to 1996 to Mr. Ray
expire seven years from the date of grant and remain exercisable for a
seven-year period regardless of whether Mr. Ray's employment with the Company
terminates earlier. In the event of a Change in Control of the
-5-
<PAGE>
Company (as defined in the Ray Agreement), all options previously granted to Mr.
Ray which remain unvested will vest immediately. If Mr. Ray's employment is
terminated (i) upon his death, (ii) following a Change in Control, (iii) by the
Company due to various described disability circumstances, (iv) by the Company
without cause or (v) by Mr. Ray voluntarily upon the Company's default or
unremedied Adverse Change in Duties (as defined in the Ray Agreement), then the
Company will pay Mr. Ray a lump sum severance payment of one-half of his then
current annual salary. Mr. Ray may terminate his employment at any time upon at
least thirty days written notice to the Company.
Jeffrey J. Hiller, Vice President, Finance and Chief Financial Officer of
the Company, has an employment agreement with the Company which expires on
December 31, 1998 (the "Hiller Agreement"). Mr. Hiller's current annual salary
is $120,000. The Hiller Agreement has similar provisions to the Ray Agreement
with respect to automatic option vesting on Change in Control and severance.
William O'Connor, Vice President and Chief Operating Officer of the Boulder
Operation, has a one-year employment agreement with the Company which expires on
February 28, 1999 (the "O'Connor Agreement"). Mr. O'Connor's current annual
salary is $135,000. Under the O'Connor Agreement, which has not yet been
consummated, there will be provisions similar to the Hiller Agreement except
there will be no severance for the first three months and thereafter the Company
will pay O'Connor severance of $11,250 per month for the greater of six months
or the number of months employed under the O'Connor Agreement (but not more than
twelve months).
Robert E. Silligman, the former President and Chief Operating Officer of
the Company, had an employment agreement similar to the Hiller Agreement which
expired on December 31, 1998. In connection with Mr. Silligman's resignation as
President and Chief Operating Officer of the Company, Mr. Silligman's employment
agreement was cancelled and he entered into a new employment agreement with the
Company for the balance of 1998, at his then current salary of $11,250 per
month.
Daniel T. Hannify, Vice President of the Company and Vice President,
Operations of Brimfield Precision, Inc., a wholly-owned subsidiary of the
Company ("BPI"), has a one-year agreement with BPI which expires on December 1,
1998, but which will be automatically extended for three successive year terms
unless terminated on three months advance written notice by either party. His
base salary is $175,000 per annum (subject to annual review) and will be raised
to $200,000 per annum upon assuming additional responsibilities. In the event
of termination without cause by BPI or Mr. Hannify's death or disability, Mr.
Hannify is entitled for the first six months of employment to no additional
compensation and thereafter BPI shall continue to pay his monthly base salary
for a period equal to the number of months employed but not more than one year.
Mr. Hannify may terminate his employment without cause at any time upon 90 days
written notice.
In connection with the acquisition of BPI, BPI entered into a one-year
employment contract with William G. Lyons which expires on December 11, 1998.
Mr. Lyons' annual salary is $150,000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock as of March 31, 1998 by (i)
each director and director-nominee, (ii) each Named Executive Officer, (iii)
each shareholder known by the Company to own beneficially five percent or more
of the outstanding shares of Common Stock and (iv) all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE OF
BENEFICIAL OWNER(1) OF COMMON STOCK OUTSTANDING COMMON
------------------- BENEFICIALLY STOCK BENEFICIALLY
OWNED(2) OWNED
---------------- ------------------
<S> <C> <C>
Paul L. Ray(3) . . . . . . . . . . . . . . . . . 149,630 3.90%
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE OF
BENEFICIAL OWNER(1) OF COMMON STOCK OUTSTANDING COMMON
------------------- BENEFICIALLY STOCK BENEFICIALLY
OWNED(2) OWNED
---------------- ------------------
<S> <C> <C>
Ray L. Hauser, Ph.D.(4). . . . . . . . . . . . . 310,693 8.35%
Clifford F. Frith(5) . . . . . . . . . . . . . . 24,973 *
William O'Connor(6). . . . . . . . . . . . . . . 4,083 *
William G. Lyons.. . . . . . . . . . . . . . . . 337,043 9.12%
A. Clinton Allen . . . . . . . . . . . . . . . . 0 *
Terry R. Knapp, M.D. . . . . . . . . . . . . . . 0 *
Robert E. Silligman(7) . . . . . . . . . . . . . 63,200 1.58%
Waldean A. Schulz(8) . . . . . . . . . . . . . . 172,229 4.64%
Jeffrey J. Hiller(9) . . . . . . . . . . . . . . 89,867 2.38%
Edgewater Private Equity Fund, L.P.. . . . . . . 413,845 11.20%
667 Grand Avenue, Suite 200
Des Moines, Iowa 50309
John Pappajohn . . . . . . . . . . . . . . . . . 232,820 6.30%
2116 Financial Center
Des Moines, Iowa 50309
Mellon Bank(10). . . . . . . . . . . . . . . . . 430,000 11.64%
One Mellon Bank Center
Pittsburgh, PA 15258
Farm Bureau Life Insurance(11) . . . . . . . . . 208,685 5.65%
5400 University Avenue
West Des Moines, IA 50266
Matthew Lyons. . . . . . . . . . . . . . . . . . 242,667 6.57%
90 Brookdale Drive
Springfield, MA 01104
Imperial Bank(12). . . . . . . . . . . . . . . . 250,000 6.34%
225 Franklin Street, 29th Floor
Boston, MA 02110
Austin W. Marxe(13). . . . . . . . . . . . . . . 330,800 8.96%
153 East 53rd Street
New York, NY 10022
All executive officers and directors . . . . . . 1,088,518 27.26%
as a group (9 persons)(14)
</TABLE>
- -------------------
*Less than one percent.
(1) Unless otherwise noted, the address for each beneficial owner is c/o the
Company, 5710-B Flatiron Parkway, Boulder, Colorado 80301.
-7-
<PAGE>
(2) Except as otherwise noted, each individual or entity has sole voting and
investment power with respect to the shares listed. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission ("SEC") and generally includes voting or investment power with
respect to securities. In accordance with SEC rules, shares of the
Common Stock which may be acquired upon exercise of stock options and
warrants which are currently exercisable or which become exercisable
within 60 days of March 31, 1998, are deemed beneficially owned by the
optionee and each beneficial owner's percentage ownership is determined
by assuming that options or warrants that are held by such person (but
not those held by any other person) and which are exercisable within
60 days of March 31, 1998, have been exercised. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons or entities named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(3) Includes 143,544 shares which Mr. Ray has a right to acquire upon
exercise of stock options currently exercisable or exercisable within 60
days of March 31, 1998. Does not include (i) 5,318 shares of Common
Stock held by Paradigm Partners ("Paradigm"), a limited liability company
of which Mr. Ray is a member, but not a manager, (ii) 10,000 shares
Paradigm has a right to acquire upon exercise of stock options currently
exercisable or exercisable within 60 days of March 31, 1998, and (iii)
14,070 shares of Common Stock held by Paradigm Capital Network, Ltd., a
Colorado limited partnership of which Paradigm is the general partner.
(4) Includes 24,973 shares of Common Stock Dr. Hauser has a right to acquire
upon exercise of stock options currently exercisable or exercisable
within 60 days of March 31, 1998, and excludes 3,200 shares of Common
Stock owned by Dr. Hauser's wife of which Dr. Hauser disclaims beneficial
ownership.
(5) Includes 24,973 shares of Common Stock Mr. Frith has a right to acquire
upon exercise of stock options currently exercisable or exercisable
within 60 days of March 31, 1998.
(6) Includes 4,083 shares of Common Stock Mr. O'Connor has a right to acquire
upon exercise of stock options currently exercisable or exercisable
within 60 days of March 31, 1998.
(7) Includes 63,200 shares of Common Stock Mr. Silligman has a right to
acquire upon exercise of stock options currently exercisable or
exercisable within 60 days of March 31, 1998.
(8) Includes 19,680 shares of Common Stock Dr. Schulz has a right to acquire
upon exercise of stock options currently exercisable or exercisable
within 60 days of March 31, 1998.
(9) Includes 81,867 shares of Common Stock Mr. Hiller has a right to acquire
upon exercise of stock options currently exercisable or exercisable
within 60 days of March 31, 1998.
(10) Includes 430,000 shares of Common Stock of which Dreyfus Corporation has
sole voting and dispositive powers as the investment advisor and 280,000
shares of Common Stock of which Premier Aggressive Growth Fund has sole
voting and dispositive power as an investment company.
(11) Includes 120,685 shares of Common Stock owned by FBL Ventures of South
Dakota, which is a wholly-owned subsidiary of Farm Bureau Life Insurance.
(12) Includes 250,000 shares of Common Stock which Imperial Bank has the right
to acquire upon exercise of warrants currently exercisable.
(13) Mr. Marxe has sole voting power over 79,800 shares, shared voting power
over 251,000 shares and shared dispositive power over 330,800 shares.
Represents shares owned by Special Situations Fund III,
-8-
<PAGE>
L.P. and Special Situations Cayman Fund, L.P. The investment advisor of
both funds is controlled by Mr. Marxe.
(14) Includes 299,120 shares of Common Stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 31, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ray L. Hauser, a shareholder and member of the Board of Directors of the
Company, is an owner of the facility that was leased by the Company until it
moved into its current office space in February 1996. Rent expense under such
lease was $10,000 during 1996.
On December 12, 1997, the Company finalized the acquisition of all the
outstanding shares of BPI from William G. and Matthew Lyons. For their BPI
shares, the Company paid William G. and Matthew Lyons $4,235,465 and $3,049,535
in cash and 337,043 shares and 242,667 shares of the Company's Common Stock,
respectively. In connection with the acquisition of BPI, the Company paid off
approximately $171,000 in principal due on a note to Pasqualina C. Lyons,
William G. and Matthew Lyons' mother.
The Company subleases 13,821 square feet of a manufacturing facility in
Springfield, Massachusetts from Blackstone Medical, Inc., a corporation owned by
William G. and Matthew Lyons. The lease agreement requires rental payments of
approximately $5,000 per month and expires in December 2001. The Company also
leases equipment and computer network and telephone services to Blackstone
Medical on a month-to-month basis.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Such persons are also required
by SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the best of the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, all Section 16(a) filing requirements applicable
to transactions during 1996 by its officers, directors and greater than ten
percent beneficial owners were complied with, except as follows: Messrs.
O'Connor and Lyons each inadvertently failed to timely file an initial statement
of beneficial ownership on Form 3.
2. APPROVAL OF AMENDMENT OF 1997 STOCK OPTION PLAN
The Company's 1997 Stock Option Plan provides for the grant of incentive
stock options to employees of the Company and of nonqualified stock options to
employees, consultants and non-employee directors.
PROPOSED AMENDMENT
At the Annual Meeting, the shareholders are being asked to approve the
amendment of the 1997 Stock Option Plan adopted by the Board of Directors
increasing the number of shares reserved for issuance thereunder from a total of
300,000 to 800,000.
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VOTE REQUIRED
The affirmative vote of a majority of the shares represented at the
meeting (exclusive of broker non-votes) will be required to approve the proposed
amendment to the 1997 Stock Option Plan.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AMENDMENT OF THE 1997
STOCK OPTION PLAN AND RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE THE
AMENDMENT.
DESCRIPTION OF THE 1997 STOCK OPTION PLAN
The following is a summary of the terms of the 1997 Stock Option Plan and
does not contain a description of all of the terms and conditions of the 1997
Stock Option Plan. This summary is qualified in its entirety by reference to
the 1997 Stock Option Plan document, copies of which are available upon request
from the Company. In addition, a copy of the 1997 Stock Option Plan is on file
with the SEC.
PURPOSE. The 1997 Stock Option Plan was established for the purpose of
providing employees, consultants and directors of the Company with the
opportunity of participating in the growth of the Company through the purchase
of Common Stock by the exercise of options granted under the 1997 Stock Option
Plan.
ADMINISTRATION. The 1997 Stock Option Plan may be administered by the
Board of Directors of the Company or by a committee (the "Committee") of two or
more members of the Company's Board of Directors, consisting solely of
non-employee directors. The Board or the Committee determines the persons who
shall receive options, the time period during which the options may be partially
or fully exercised, the number of shares of Common Stock issuable upon the
exercise of each option, and the option exercise price. The 1997 Stock Option
Plan is currently administered by the Board.
SHARES SUBJECT TO OPTIONS. The 1997 Stock Option Plan, as proposed to be
amended, provides that the total number of shares of Common Stock that may be
subject to options granted thereunder shall be 800,000. Shares subject to any
option which terminates or expires unexercised are returned to the 1997 Stock
Option Plan and become available for subsequent grants.
ELIGIBILITY. The 1997 Stock Option Plan provides for the grant of
incentive stock options to employees of the Company and any "parent" or
"subsidiary" of the Company and of nonqualified stock options to employees,
consultants and directors of the Company and any "parent" or "subsidiary" of the
Company. At December 31, 1997, the Company had 118 employees.
TERMS OF OPTIONS. The exercise price of incentive stock options granted
under the 1997 Stock Option Plan shall be at least 100% of the "fair market
value" of the Common Stock on the date of grant and at least 110% of such value
for incentive stock options granted to any holder of ten percent or more of the
voting power of all classes of stock of the Company. The exercise price of
nonqualified stock options shall be at least 85% of the fair market value of the
Common Stock on the date of grant. The 1997 Stock Option Plan provides that no
options may be granted thereunder after January 29, 2007, ten years after the
1997 Stock Option Plan was adopted by the Board of Directors. Options granted
under the 1997 Stock Option Plan shall be exercisable for no more than ten years
from the date of grant or, in the case of incentive stock options granted to a
10% shareholder, for no more than five years from the date of grant. Unless
otherwise determined by the Board or Committee, options have a vesting schedule
pursuant to which shares for 1/6 of the option vest six months from the date of
grant and shares for 1/12 of the option vest every three months thereafter;
provided that options shall not become exercisable for additional shares (i.e.,
no future vesting) following the date of termination. Unless otherwise
determined by the Board or Committee, vested options must be exercised within
three months of any
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termination of employment. Termination for "cause" immediately terminates any
rights to exercise any vested options. Under certain circumstances, including
termination of employment upon disability or death, the option may be exercised
for a longer period. Vested options granted to non-employee directors may be
exercised at any time up to their specified expiration dates, even if the
director ceases to be a director of the Company. The optionee shall pay for
his/her shares upon exercise of an option in cash; provided, the Company may
permit the optionee to transfer to the Company as payment shares of Common Stock
held for at least six months prior to the date of exercise. A stock option
granted under the 1997 Stock Option Plan is not transferable by the individual
to whom it is granted otherwise than by will or the laws of descent and
distribution, and may be exercised during the lifetime of the optionee only by
him or her; provided, however, that if such individual becomes legally disabled
(as such term is defined in Section 105(d)(4) of the Code), his or her legal
representative may exercise the stock option on his or her behalf; and provided,
further, the Board or Committee may permit transferability of nonqualified stock
options by so providing in the optionee's Stock Option Agreement. No incentive
stock options shall be granted under the 1997 Stock Option Plan to any employee
where the aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options are
exercisable for the first time by such employee during any calendar year (under
all such plans of the Company and its parent and subsidiary corporations) shall
exceed $100,000. All options shall be exercisable even though there may be
outstanding any other option(s) which was or were granted before the granting of
such options. The Board or Committee shall have the power at any time to amend
or discontinue the 1997 Stock Option Plan, except that any amendment which
increases the aggregate number of shares which may be granted under the Plan
shall require the approval of the shareholders. The Board or Committee may
impose on any option any additional or other terms and conditions which it deems
advisable and which are not inconsistent with the 1997 Stock Option Plan.
Under the 1997 Stock Option Plan as of December 31, 1997, no options to
purchase shares of Common Stock had been exercised, options to purchase a total
of 142,379 shares at a weighted average price of $4.44 per share were
outstanding and 157,621 shares remained available for future grants.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. The Company anticipates that all options
granted under the 1997 Stock Option Plan and treated by the Company as
"incentive stock options," that is, a stock option described in Section 422 of
the Code, will have the following anticipated (but not guaranteed) federal
income tax consequences, among others:
The optionee will recognize no income at the time of grant.
Upon exercise of the incentive stock option, no income will result to any
party.
If there is no disposition of the shares until a date that is both (i)
two years from the grant of an incentive stock option and (ii) one year
from its exercise, no amount will be ordinary income and, upon
disposition in a taxable transaction, the employee will receive long-term
capital gain or loss treatment equal to the difference between his amount
realized and the option price. Any gain realized upon a disposition
other than as set forth above may result in ordinary income tax treatment
to the optionee.
In the event of the tax treatment to the employee described above, the
Company receives no deduction in connection with the transaction.
Certain optionees may incur alternative minimum tax treatment under the
Code upon exercise of an incentive stock option.
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NONQUALIFIED STOCK OPTIONS. The Company anticipates that all
nonqualified stock options granted under the Plan will have the following
anticipated (but not guaranteed) federal income tax consequences, among others:
The optionee will recognize no income at the time of grant.
Upon exercise of the nonqualified stock option, the individual to whom
the option is granted should be deemed to receive ordinary income at the
time of exercise equal to the excess, if any, of the fair market value of
the acquired shares at such time over the option price for such shares.
The Company will receive a deduction in connection with the transaction.
If the shares acquired upon the exercise of a nonqualified stock option
are disposed of in a taxable transaction, the individual disposing of
such shares will have a realized and recognized capital gain or loss
equal to the difference, if any, between the amount realized and the
adjusted basis of such shares to him. The adjusted basis usually (but
not always) will include the option price plus any ordinary income
described above with respect to such shares.
3. APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors of the Company has adopted, and recommended for
submission to the Company's shareholders, the Image Guided Technologies, Inc.
Employee Stock Purchase Plan (the "Purchase Plan").
VOTE REQUIRED
The affirmative vote of a majority of the shares represented at the
meeting (exclusive of broker non-votes) will be required to approve the Purchase
Plan.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PURCHASE PLAN AND
RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE IT.
DESCRIPTION OF THE PURCHASE PLAN
The following is a summary of the terms of the Purchase Plan and does not
contain a description of all of the terms and conditions of the Purchase Plan.
This summary is qualified in its entirety by reference to the Purchase Plan
document, copies of which are available upon request from the Company. In
addition, a copy of the Purchase Plan is on file with the SEC.
PURPOSE. The purpose of the Purchase Plan is to provide eligible
employees of the Company and its subsidiaries with convenient opportunities to
purchase, through payroll deductions, shares of the Company's Common Stock at a
discount. The Purchase Plan enables and, through the discount, encourages these
eligible employees to participate in the growth and success of the Company, not
only as employees, but also as shareholders.
ADMINISTRATION. The Purchase Plan may be administered by the Board of
Directors of the Company or by a committee appointed by the Board. All
questions of interpretation or application of the Purchase Plan are determined
by the Board or the committee administering the Purchase Plan, whose decisions
are final, conclusive and binding upon all participants.
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ELIGIBILITY AND PARTICIPATION. Any employee (including an officer) who
is, and for the prior six months has been, employed for at least 20 hours per
week by the Company is eligible to participate in the Purchase Plan, provided
that such employee is so employed on the date his or her participation in the
Purchase Plan is effective and subject to limitations imposed by Section 423(b)
of the Internal Revenue Code and limitations on stock ownership described in the
Purchase Plan. Eligible employees become participants in the Purchase Plan by
delivering to the Company's payroll office, prior to the commencement of the
applicable offering period, a subscription agreement authorizing payroll
deductions. The discount permits shares to be purchased at 85% of the lower of
the fair market value of the Common Stock on the first day of each offering
period (or, if not a business day, the nearest prior business day) or on the
last business day of each offering period. Subject to shareholder approval at
the Annual Meeting, the initial offering period will commence on July 1, 1998
and end on December 31, 1998. Thereafter, there will be two offering periods
each calendar year from January 1 to June 30 and from July 1 to December 31.
The last offering period permitted under the Plan will be January 1 to June 30,
2008. At December 31, 1997, the Company had 118 employees.
Since all eligible employees have the same ability to participate in the
Purchase Plan and the decision to take advantage of that ability is dependent
upon the individual investment decisions of the eligible employees, it is not
possible to determine the benefits that the executive officers of the Company
will receive under the Purchase Plan.
SHARES AVAILABLE FOR ISSUANCE. The aggregate number of shares of Common
Stock which may be issued under the Plan is 200,000 shares, subject to
adjustment in the case of stock dividends, stock splits and similar events. In
addition, an annual increase will be made to the Purchase Plan in an amount
equal to the number of shares required to restore the maximum number of shares
of Common Stock reserved for issuance to 200,000, or a lesser amount determined
by the Board.
FEDERAL INCOME TAX CONSEQUENCES
The Company anticipates (but cannot guarantee) that the Purchase Plan
will be treated as an employee stock purchase plan under Section 423 of the
Code, and therefore, will have substantially the same federal income tax
consequences as incentive stock options granted under the 1997 Stock Option
Plan, except that on sale of the shares at a price higher than that paid
(assuming the incentive stock option holding periods are met) the employee will
recognize ordinary income in an amount equal to the lesser of (i) the market
price of the shares on the date the offering commenced over the price paid, or
(ii) the excess of the sale price over the price paid.
4. RATIFICATION OF SELECTION OF AUDITORS
The Board has selected Price Waterhouse LLP, independent public
accountants, as independent auditors for the Company for 1998. A resolution
will be submitted to shareholders at the meeting for ratification of such
selection and the accompanying proxy will be voted for such ratification, unless
instructions to the contrary are indicated therein. Although ratification by
shareholders is not a legal prerequisite to the Board's selection of Price
Waterhouse LLP as the Company's independent public accountants, the Company
believes such ratification to be appropriate. If the shareholders do not ratify
the selection of Price Waterhouse LLP, the selection of independent public
accountants will be reconsidered by the Board; however, the Board may select
Price Waterhouse LLP, notwithstanding the failure of the shareholders to ratify
its selection.
The Board expects that representatives of Price Waterhouse LLP will be
present at the meeting, will have an opportunity to make a statement if they so
desire, and will be available to respond to appropriate questions.
Price Waterhouse LLP has been the Company's independent public
accountants since 1994. During the fiscal year ended December 31, 1997, Price
Waterhouse LLP performed audit and other services for the Company including
consultations during the year on matters related to accounting, financial
reporting and the
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review of financial and related information that was included in filings with
the Securities and Exchange Commission. The appointment of auditors is approved
annually by the Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
5. MISCELLANEOUS MATTERS
As of the date of this Proxy Statement, the Board knows of no business
that will be presented for consideration at the meeting other than that which
has been referred to above. As to other business, if any, that may come before
the meeting, proxies in the enclosed form will be voted in accordance with the
judgment of the person or persons voting the proxies.
SHAREHOLDER NOMINATIONS AND PROPOSALS
In accordance with the rules of the SEC, any proposal of a shareholder
(including a nomination of a person to stand for election as a director of the
Company at the next Annual Meeting of Shareholders) intended to be presented at
the Company's 1999 Annual Meeting of Shareholders must be received by the
Secretary of the Company by December 25, 1998, in the form and subject to the
other requirements of the applicable rules of the SEC, in order for the proposal
to be considered for inclusion in the Company's notice of meeting, proxy
statement and proxy relating to the 1999 Annual Meeting.
COST OF PROXY SOLICITATION
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of shares of Common Stock. In
addition to solicitation by mail, officers and regular employees of the Company
may solicit proxies personally or by telephone. No compensation other than
their regular compensation will be paid to officers or employees for any
solicitation which they may make.
At any time prior to being voted, the enclosed proxy is revocable by
written notice to the Secretary of the Company or by appearance at the meeting
to vote in person.
By Order of the Board of Directors.
Waldean A. Schulz, Ph.D.
Secretary
April 24, 1998
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Appendix
IMAGE GUIDED TECHNOLOGIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I - PURPOSE
The Image Guided Technologies, Inc. Employee Stock Purchase Plan is
intended to provide a method whereby employees of Image Guided Technologies,
Inc. and its subsidiary corporations (hereinafter referred to, unless the
context otherwise requires, as the "Company") will have an opportunity to
acquire a proprietary interest in the Company through the purchase of shares of
no par value common stock of the Company (the "Common Stock"). It is the
intention of the Company to have the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The provisions of the Plan shall be construed and interpreted in a
manner consistent with the requirements of that section of the Code.
ARTICLE II - DEFINITIONS
2.1. BASE PAY. "Base Pay" shall mean regular straight-time earnings,
including shift premiums, but excluding payments for overtime, bonuses and other
special payments, commissions and other marketing incentive payments.
2.2. EMPLOYEE. "Employee" means any person who is, and for the prior six
months has been, customarily employed on a regular full-time or part-time basis
by the Company and is regularly scheduled to work more than 20 hours per week.
2.3. PLAN ADMINISTRATOR. "Plan Administrator" shall mean the individual
designated pursuant to Section 11.3.
2.4. SUBSIDIARY CORPORATION. "Subsidiary Corporation" shall mean any
present or future corporation which (i) would be a "subsidiary corporation" of
Image Guided Technologies, Inc. as that term is defined in Section 424 of the
Code and (ii) is designated as a participant in the Plan by the Board.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.1. INITIAL ELIGIBILITY. Any employee who is employed by the Company on
the Offering Commencement Date (as defined below) shall be eligible to
participate in such Offering.
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3.2. LEAVE OF ABSENCE. For purposes of participation in the Plan, a person
on leave of absence shall be deemed to be an employee for the first 90 days of
such leave of absence and such employee's employment shall be deemed to have
terminated (for purposes of this Plan only) at the close of business on the 90th
day of such leave of absence unless such employee shall have returned to regular
full-time or part-time employment (as the case may be) prior to the close of
business on such 90th day. Termination by the Company of any employee's leave
of absence, other than termination of such leave of absence on return to
full-time or part-time employment, shall terminate an employee's employment for
all purposes of the Plan and shall terminate such employee's participation in
the Plan and right to exercise any option.
3.3. RESTRICTIONS ON PARTICIPATION. Notwithstanding any provisions of the
Plan to the contrary, no employee shall be granted an option to participate in
the Plan:
(a) If, immediately after the grant, such employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company (for
purposes of this paragraph, the rules of Section 424(d) of the Code shall apply
in determining stock ownership of any employee); or
(b) Which permits his rights to purchase stock under all employee
stock purchase plans of the Company to accrue at a rate which exceeds $25,000 in
fair market value of the Common Stock (determined at the time such option is
granted) for each calendar year in which such option is outstanding.
3.4. COMMENCEMENT OF PARTICIPATION. An eligible employee may become a
participant by completing an authorization for a payroll deduction on the form
provided by the Company and filing it with the office of the Treasurer of the
Company on or before the date set therefor by the Board, which date shall be
prior to the Offering Commencement Date for the Offering (as such terms are
defined below). Payroll deductions for a participant shall commence on the
applicable Offering Commencement Date when his authorization for a payroll
deduction becomes effective and shall end on the Offering Termination Date of
the Offering to which such authorization is applicable unless sooner terminated
by the participant as provided in Article VIII.
ARTICLE IV - OFFERINGS
4.1. SEMI-ANNUAL OFFERINGS. The Plan will be implemented by semiannual
offerings of the Common Stock (the "Offerings")
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beginning on the 1st day of January and the 1st day of July in each year, and
terminating on June 30 and December 31 of the same year, respectively. The
first offering shall begin on July 1, 1998.
As used in the Plan, "Offering Commencement Date" means the January 1 or
July 1 date, as the case may be, on which the particular Offering begins and
"Offering Termination Date" means the June 30 or December 31 date, as the case
may be, on which the particular Offering terminates. If an Offering period
begins or terminates on a Saturday, Sunday or legal holiday, then the first or
last day of the Offering, as applicable, shall be the first business day after
that date (for Offering period commencements) or the last business day prior to
that date (for Offering period terminations).
ARTICLE V - PAYROLL DEDUCTIONS
5.1. AMOUNT OF DEDUCTION. At the time a participant files his
authorization for payroll deduction, he shall elect to have deductions made from
his pay on each payday during the time he is a participant in an Offering at the
rate of 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10% of his Base Pay in effect at the
Offering Commencement Date of such Offering.
5.2. PARTICIPANT'S ACCOUNT. All payroll deductions made for a participant
shall be credited to his account under the Plan. A participant may not make any
separate cash payment into such account except when on leave of absence and then
only as provided in Section 5.4, below.
5.3. CHANGES IN PAYROLL DEDUCTIONS. A participant may discontinue his
participation in the Plan as provided in Article VIII, but no other change can
be made during an Offering, except that a participant may decrease the amount of
his payroll deductions for that Offering one (1) time during any Offering.
5.4. LEAVE OF ABSENCE. If a participant goes on a leave of absence, such
participant shall have the right to elect: (a) to withdraw the balance in his
account pursuant to Section 7.2, (b) to discontinue contributions to the Plan
but remain a participant in the Plan, or (c) remain a participant in the Plan
during such leave of absence, authorizing deductions to be made from payments by
the Company to the participant during such leave of absence provided the
participant undertakes to make cash payments to the Plan at the end of each
payroll period to the extent that amounts payable by the Company are not
sufficient to meet such participant's authorized Plan deductions.
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ARTICLE VI - GRANTING OF OPTION
6.1. NUMBER OF OPTION SHARES. On each Offering Commencement Date, a
participating employee shall be deemed to have been granted an option to
purchase a maximum number of shares of the Common Stock equal to an amount
determined as follows: an amount equal to (i) that percentage of the employee's
Base Pay which he has elected to have withheld (but not in any case in excess of
10%) multiplied by (ii) the employee's Base Pay on the Offering Commencement
Date divided by (iii) 85% of the fair market value of the Common Stock on the
Offering Commencement Date or Offering Termination Date (as determined pursuant
to Section 6.2, below). The fair market value of the Common Stock shall be
determined as provided in paragraphs (a) and (b) of Section 6.2 below. An
employee's Base Pay during the period of an Offering shall be determined by
multiplying his normal monthly rate of pay (as in effect on the Offering
Commencement Date) by 6, or the hourly rate by 1040, as the case may be,
provided that, in the case of a part time hourly employee, the employee's Base
Pay during the period of an Offering shall be determined by multiplying such
employee's hourly rate by the number of regularly scheduled hours of work for
such employee during such Offering.
6.2. OPTION PRICE. The option price of Common Stock purchased with payroll
deductions made during an Offering for a participant therein shall be the lower
of:
(a) 85% of the "last" price of the Common Stock as reported on the
Offering Commencement Date or the nearest prior business day on which trading
occurred on the Nasdaq SmallCap Market; or
(b) 85% of the "last" price of the Common Stock as reported on the
Offering Termination Date or the nearest prior business day on which trading
occurred on the Nasdaq SmallCap Market.
If the Common Stock is not admitted to trading on any of the aforesaid dates for
which closing prices of the Common Stock are to be determined, then reference
shall be made to the fair market value of the Common Stock on that date, as
determined on such basis as shall be established or specified for the purpose by
the Board.
ARTICLE VII - EXERCISE OF OPTION
7.1. AUTOMATIC EXERCISE. Unless a participant gives written notice to the
Company as hereinafter provided, his option
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for the purchase of Common Stock with payroll deductions made during any
Offering will be deemed to have been exercised automatically on the Offering
Termination Date applicable to such Offering, for the purchase of the number of
full shares of Common Stock which the accumulated payroll deductions in his
account at that time will purchase at the applicable option price (but not in
excess of the number of shares for which options have been granted to the
employee pursuant to Section 6.1), and any excess in his account at that time
will be returned to him.
7.2. WITHDRAWAL OF ACCOUNT. By written notice to the Plan Administrator,
at any time prior to the Offering Termination Date applicable to any Offering, a
participant may elect to withdraw all the accumulated payroll deductions in his
account at such time.
7.3. FRACTIONAL SHARES. Fractional shares will not be issued under the
Plan and any accumulated payroll deductions which would have been used to
purchase fractional shares will be returned to any employee promptly following
the termination of an Offering, without interest.
7.4. TRANSFERABILITY OF OPTION. During a participant's lifetime, an option
held by such participant shall be exercisable only by that participant.
7.5. DELIVERY OF STOCK. As promptly as practicable after the Offering
Termination Date of each Offering, the Company will deliver to each participant,
as appropriate, a certificate representing the shares of Common Stock purchased
upon exercise of his option.
ARTICLE VIII - WITHDRAWAL
8.1. IN GENERAL. As indicated in Section 7.2, a participant may withdraw
payroll deductions credited to his account under the Plan at any time by giving
written notice to the Plan Administrator. All of the participant's payroll
deductions credited to his account will be paid to him promptly after receipt of
his notice of withdrawal, and no further payroll deductions will be made from
his pay during such Offering. The Company may, at its option, treat any attempt
to borrow by an employee on the security of his accumulated payroll deductions
as an election, under Section 3.2, to withdraw such deductions.
8.2. EFFECT ON SUBSEQUENT PARTICIPATION. A participant's withdrawal from
any Offering will not have any effect upon his eligibility to participate in any
succeeding Offering or in any similar plan which may hereafter be adopted by the
Company.
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8.3. TERMINATION OF EMPLOYMENT. Upon termination of the participant's
employment for any reason (but excluding retirement or death while in the employ
of the Company or during continuation of a leave of absence for a period beyond
90 days), the payroll deductions credited to his account will be returned to
him, or, in the case of his death subsequent to the termination of his
employment, to the person or persons entitled thereto under Section 12.1.
8.4. TERMINATION OF EMPLOYMENT DUE TO DEATH. Upon termination of the
participant's employment because of his death, his beneficiary (as defined in
Section 12.1) shall have the right to elect, by written notice given to the
Plan Administrator prior to the earlier of the Offering Termination Date or the
expiration of a period of sixty (60) days commencing with the date of the death
of the participant, either:
(a) To withdraw all of the payroll deductions credited to the
participant's account under the Plan, or
(b) To exercise the participant's option for the purchase of Common
Stock on the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full shares of stock which
the accumulated payroll deductions in the participant's account at the date of
the participant's death will purchase at the applicable option price, and any
excess in such account will be returned to said beneficiary, without interest.
In the event that no such written notice of election shall be duly received
by the Plan Administrator, the beneficiary shall automatically be deemed to have
elected, pursuant to paragraph (b), to exercise the participant's option.
8.5. TERMINATION OF EMPLOYMENT DUE TO RETIREMENT. Upon termination of the
participant's employment because of his retirement, the participant shall have
the right to elect, by written notice given to the Plan Administrator prior to
the earlier of the Offering Termination Date or the expiration of a period of
sixty (60) days commencing with the date of the retirement of the participant,
either:
(a) To withdraw all of the payroll deductions credited to the
participant's account under the Plan, or
(b) To exercise the participant's option for the purchase of Common
Stock on the Offering Termination Date next following the date of the
participant's retirement for the purchase of the number of full shares of stock
which the accumulated payroll deductions in the participant's account at
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the date of the participant's retirement will purchase at the applicable option
price, and any excess in such account will be returned to the participant,
without interest.
In the event that no such written notice of election shall be duly received by
the Plan Administrator, the participant shall automatically be deemed to have
elected to withdraw all payroll deductions pursuant to paragraph (a), above.
8.6. LEAVE OF ABSENCE. A participant on leave of absence shall, subject to
the election made by such participant pursuant to Section 5.4, continue to be a
participant in the Plan so long as such participant is on continuous leave of
absence. A participant who has been on leave of absence for more than 90 days
and who therefore is not an employee for the purpose of the Plan shall not be
entitled to participate in any offering commencing after the 90th day of such
leave of absence. Notwithstanding any other provisions of the Plan, unless a
participant on leave of absence returns to regular full time or part time
employment with the Company at the earlier of: (a) the termination of such leave
of absence, or (b) three months from the 90th day of such leave of absence, such
participant's participation in the Plan shall terminate on whichever of such
dates first occurs.
ARTICLE IX - NO INTEREST
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participant employee.
ARTICLE X - STOCK
10.1. MAXIMUM SHARES. Subject to adjustment upon changes in capitalization
of the Company as provided in Section 12.4 hereof, the maximum number of shares
of Common Stock which shall be made available for sale under the Plan shall be
200,000 shares, plus an annual increase to be added on each anniversary date of
the adoption of the Plan equal to the lesser of (i) the number of shares needed
to restore the maximum aggregate number of shares available for sale under the
Plan to 200,000, or (ii) a lesser amount determined by the Board. If the total
number of shares for which options are exercised in any Offering Termination
Date in accordance with Article VI exceeds the maximum number of shares for the
Plan, the Company shall make a pro rata allocation of the shares available for
delivery and distribution in as nearly a uniform manner as shall be practicable
and as it shall determine to be equitable, and the balance of payroll deductions
credited
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to the account of each participant under the Plan shall be returned to him as
promptly as possible.
10.2. PARTICIPANT'S INTEREST IN OPTION STOCK. The participant will have no
interest in the shares of Common Stock covered by his option until such option
has been exercised.
10.3. REGISTRATION OF STOCK. Stock to be delivered to a participant under
the Plan will be registered in the name of the participant, or, if the
participant so directs by written notice to the Plan Administrator prior to the
Offering Termination Date applicable thereto, in the names of the participant
and one such other person as may be designated by the participant, as joint
tenants with rights of survivorship or as tenants by the entireties, to the
extent permitted by applicable law.
10.4. RESTRICTIONS ON EXERCISE. The Board of Directors may, in its
discretion, require as conditions to the exercise of any option that the shares
of Common Stock reserved for issuance upon the exercise of the option shall have
been duly listed, upon official notice of issuance, upon the Nasdaq SmallCap
Market, and that either:
(a) A Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective, or
(b) The participant shall have represented at the time of purchase,
in form and substance satisfactory to the Company, that it is his intention to
purchase the shares for investment and not for resale or distribution.
ARTICLE XI - ADMINISTRATION
11.1. AUTHORITY OF BOARD. Subject to the express provisions of the Plan,
the Board shall have plenary authority in its discretion to interpret and
construe any and all provisions of the Plan, to adopt rules and regulations for
administering the Plan, and to make all other determinations deemed necessary or
advisable for administering the Plan. The Board's determination on the foregoing
matters shall be conclusive and binding upon all participants.
11.2. APPOINTMENT OF COMMITTEE. The Board of Directors may appoint a
committee (the "Committee") consisting of two or more members of the Board to
administer the Plan, with all powers granted to the Board under the Plan.
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11.3. ADMINISTRATION OF PLAN. The day to day functions of the Plan shall
be administered by a Plan Administrator who shall be appointed by the Board.
All notices and authorizations under the Plan shall be directed to the attention
of the Plan Administrator.
ARTICLE XII - MISCELLANEOUS
12.1. DESIGNATION OF BENEFICIARY. A participant may file a written
designation of a beneficiary who is to receive any shares of Common Stock and/or
cash distributed under the Plan. Such designation of beneficiary may be changed
by the participant at any time by written notice to the Plan Administrator.
Upon the death of a participant and upon receipt by the Company of proof of
identity and existence at the participant's death of a beneficiary validly
designated by him under the Plan, the Company shall deliver such shares of
Common Stock and/or cash to such beneficiary. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares of Common Stock and/or cash to the executor or administrator
of the estate of the participant, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares of Common Stock and/or cash to the spouse or
to any one or more dependents of the participant as the Company may designate.
No beneficiary shall, prior to the death of the participant by whom he has been
designated, acquire any interest in the shares of Common Stock or cash credited
to the participant under the Plan.
12.2. TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares of Common Stock under the Plan may be assigned, transferred,
pledged, or otherwise disposed of in any way by the participant other than by
will or the laws of descent and distribution. Any such attempted assignment,
transfer, pledge or other disposition shall be without effect, except that the
Company may treat such act as an election to withdraw funds in accordance with
Section 7.2.
12.3. USE OF FUNDS. All payroll deductions received or held by the Company
under this Plan may be used by the Company for any corporate purpose and the
Company shall not be obligated to segregate such payroll deductions.
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12.4. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) If, while any options are outstanding, the outstanding shares of
Common Stock have increased, decreased, changed into, or been exchanged for a
different number or kind of shares or securities of the Company through
reorganization, recapitalization, reclassification, stock split, reverse stock
split or similar transaction, appropriate and proportionate adjustments may be
made by the Board in the number and/or kind of shares which are subject to
purchase under outstanding options and on the option exercise price or prices
applicable to such outstanding options. In addition, in any such event, the
number and/or kind of shares which may be offered in the Offerings described in
Article IV hereof shall also be proportionately adjusted. No adjustments shall
be made for stock dividends. For the purposes of this paragraph, any
distribution of shares to shareholders in an amount aggregating 10% or more of
the outstanding shares shall be deemed a stock split and any distributions of
shares aggregating less than 10% of the outstanding shares shall be deemed a
stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a reorganization, merger or consolidation of the Company with one or
more corporations as a result of which the holders of the Corporation's capital
stock prior to such transaction hold less than 50% of the capital stock of the
entity surviving such transaction, or upon a sale of all or substantially all of
the property or stock of the Company to another corporation, the holder of each
option then outstanding (and for which payroll deductions have been made) under
the Plan will thereafter be entitled to receive at the next Offering Termination
Date upon the exercise of such option for each share as to which such option
shall be exercised, as nearly as reasonably may be determined, the cash,
securities and/or property which a holder of one share of the Common Stock was
entitled to receive upon and at the time of such transaction. The Board of
Directors shall take such steps in connection with such transactions as the
Board shall deem necessary to assure that the provisions of this Section 12.4
shall thereafter be applicable, as nearly as reasonably may be determined, in
relation to the said cash, securities and/or property as to which such holder of
such option might thereafter be entitled to receive.
12.5. AMENDMENT AND TERMINATION. The Board of Directors shall have
complete power and authority to terminate or amend the Plan; provided, however,
that the Board of Directors shall not, without the approval of the shareholders
of the Corporation (i)
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increase the maximum number of shares which may be issued under any Offering
(except pursuant to Section 12.4) or (ii) amend the requirements as to the
class of employees eligible to purchase stock under the Plan. No termination,
modification, or amendment of the Plan may, without the consent of an employee
then having an option under the Plan to purchase stock, adversely affect the
rights of such employee under such option; provided that the Plan may be
terminated at any time by the Company's Board of Directors. Upon any
termination of the Plan, all payroll deductions not used to purchase shares of
Common Stock shall be refunded. Unless the Plan is terminated earlier, the last
Offering shall be for the period from January 1, 2008 to June 30, 2008.
12.6. EFFECTIVE DATE. The Plan was adopted by the Board of Directors in
January 1998 and shall become effective on approval by the holders of a majority
of the shares of Common Stock (exclusive of broker non-votes) represented at a
special or annual meeting of the shareholders held on or before July 31, 1998.
If the Plan is not so approved, the Plan shall not become effective.
12.7. NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly,
create any right for the benefit of any employee or class of employees to
purchase any shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company,
and it shall not be deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an employee's employment at any time.
12.8. EFFECT OF PLAN. The provisions of the Plan shall, in accordance with
its terms, be binding upon, and inure to the benefit of, all successors of each
employee participating in the Plan, including, without limitation, such
employee's estate and the executors, administrators or trustees thereof, heirs
and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such employee.
12.9. GOVERNING LAW. The law of the State of Colorado will govern all
matters relating to this Plan except to the extent it is superseded by the laws
of the United States.
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SOLICITED BY THE BOARD OF DIRECTORS
IMAGE GUIDED TECHNOLOGIES, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS--MAY 19, 1998
The undersigned hereby appoints Paul L. Ray and Jeffrey J. Hiller, or either
of them, attorneys and proxies for the undersigned, with full power of
substitution, for and in the name, place and stead of the undersigned, to
represent and vote, as designated below, all the shares of stock of Image Guided
Technologies, Inc., a Colorado corporation, held of record by the undersigned on
March 31, 1998, at the Annual Meeting of the Shareholders to be held at 5710-B
Flatiron Parkway, Boulder, Colorado at 10:00 a.m., Boulder Time on May 19, 1998,
and at any adjournment or postponement of such meeting, and with discretionary
authority as to any other matters that may properly come before the meeting, in
accordance with and as described in the Notice of Annual Meeting of Shareholders
and Proxy Statement. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2, 3, AND 4.
<TABLE>
<S> <C>
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. Election of Directors
NOMINEES: Paul L. Ray, Clifford F. Frith, William G. Lyons, A. Clinton Allen, Terry R. Knapp
FOR / / WITHHELD / /
/ / ---------------------------------------------------------------------------------------------------------------
FOR all nominees except as stated on line above
</TABLE>
<PAGE>
<TABLE>
<S> <C>
2. Approval of Amendment of 1997 Stock Option Plan
FOR / / AGAINST / / ABSTAIN / /
3. Approval of Employee Stock Purchase Plan
FOR / / AGAINST / / ABSTAIN / /
4. Ratification of Selection of Price Waterhouse LLP as Auditors
FOR / / AGAINST / / ABSTAIN / /
</TABLE>
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies all that the proxies,
their substitutes, or any of them, may lawfully do by virtue hereof.
Please sign exactly as your name
appears. If acting as attorney,
executor, trustee or in other
representative capacity, sign
name and title.
Signature: ______________________
Date: ___________________________
Signature: ______________________
Date: ___________________________
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
