IMATRON INC.
389 Oyster Point Boulevard
South San Francisco, California 94080
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 28, 1996
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Imatron
Inc., a New Jersey corporation (the "Company"), will be held on Friday, June 28,
1996, at 10:00 a.m., local time, at The Ramada Inn, Terrace Ballroom, 245 South
Airport Boulevard, South San Francisco, California, for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To consider and vote upon a proposal to amend the Company's 1994
Employee Stock Purchase Plan to increase the number of shares available for
future issuance under the plan.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
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 May 1, 1996 are
entitled to notice of and to vote at the meeting and at any continuation or
adjournment thereof.
By order of the Board of Directors
/s/ Gary H. Brooks
-----------------
Gary H. Brooks
Secretary
South San Francisco, California
May 7, 1995
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO VOTE,
SIGN, AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
<PAGE>
IMATRON INC.
389 Oyster Point Boulevard
South San Francisco, California 94080
PROXY STATEMENT
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Imatron Inc., a New Jersey corporation (the "Company"), for use at the annual
meeting of shareholders to be held on June 28, 1996, at which shareholders of
record on May 1, 1996 will be entitled to vote. On May 1, 1996, the Company had
issued and outstanding 70,026,336 shares of Common Stock. The annual meeting
will be held at The Ramada Inn, Terrace Ballroom, 245 South Airport Boulevard,
South San Francisco, California.
Voting
Holders of Common Stock are entitled to one vote for each share of Common
Stock held. With respect to the election of directors, shareholders are entitled
to cast the number of votes held by the shareholder for as many persons as there
are directors to be elected.
Revocability of Proxies
Any person giving a proxy in the form accompanying this statement has the
power to revoke such proxy at any time before its exercise. The proxy may be
revoked by filing with the Secretary of the Company at the Company's principal
executive office an instrument of revocation or a duly executed proxy bearing a
later date, or by filing written notice of revocation with the secretary of the
meeting prior to the voting of the proxy or by voting the shares subject to the
proxy by written ballot.
Solicitation
The Company will bear the entire cost of solicitation, including
preparation, assembly, printing, and mailing of this proxy statement, the proxy,
and any additional material furnished to shareholders. Copies of solicitation
material will be furnished to brokerage houses, fiduciaries, and custodians
holding shares in their names which are beneficially owned by others to forward
to such beneficial owners. In addition, the Company may reimburse such persons
for their costs of forwarding the solicitation material to such beneficial
owners. Original solicitation of proxies by mail may be supplemented by
telephone, telegram, or personal solicitation by directors, officers, or
employees of the Company. No additional compensation will be paid for any such
services. Except as described above, the Company does not intend to solicit
proxies other than by mail.
The Company intends to mail this proxy statement on or about May 10, 1996.
Shareholder Proposals for Next Annual Meeting
Proposals of shareholders that are intended to be presented at the
Company's 1997 annual meeting of shareholders must be received by the Company no
later than January 8, 1997 in order to be included in the proxy statement and
proxy relating to that meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following tables, based in part upon information supplied by officers,
directors and principal shareholders, set forth certain information regarding
the ownership of the Company's voting securities as of April 15, 1996 by (i) all
those known by the Company to be beneficial owners of more than five percent of
any class of the Company's voting securities; (ii) each director; (iii) each
named executive officer; and (iv) all executive officers and directors of the
Company as a group. Unless otherwise indicated, each of the shareholders has
sole voting and investment power with respect to the shares beneficially owned,
subject to community property laws where applicable.
Security Ownership of Certain Beneficial Owners(1)
Name and Amount
Address of of Direct
Title of Beneficial Beneficial Percent
Class Owner Ownership of Class
Common Marukin 5,471,617 7.8%
Corporation(2)
(1) Security ownership information for beneficial owners is taken from
statements filed with the Securities and Exchange Commission pursuant to
Sections 13(d),13(g) and 16(a) and information made known to the Company.
(2) Marukin Corporation, 6, Rokuban-Cho Chiyoda-Ku, Tokyo 10
Security Ownership of Directors and Executive Officers
The table below presents the security ownership of the Company's Directors,
and Named Executive Officers.
Amount and
Name of Nature of
Beneficial Beneficial Percent of
Title of Class Owner Ownership(1) Class(2)
Common Douglas P. Boyd 2,009,095(3) 2.9%
Common Gary H. Brooks 123,886(4) *
Common John L. Couch 13,250(5) *
Common Dale E. Grant 124,000(5) *
Common Giovanni Lanzara 12,500(5) *
Common S. Lewis Meyer 887,440(6) 1.3%
Common Terry Ross 6,250(7) *
Common Aldo Test 50,000(8) *
Common All Directors and 3,226,421(9) *
Executive Officers 4.6%
as a Group
* Does not exceed 1% of the referenced class of securities.
(1) Ownership is direct unless indicated otherwise.
(2) Calculation based on 70,026,336 shares of Common Stock outstanding as
of April 17, 1996.
(3) Includes 40,000 shares held by Dr. Boyd's wife and
179,950 shares issuable upon the exercise of stock options that are
exercisable as of April 15, 1996 or that will become exercisable
within 60 days thereafter.
<PAGE>
(4) Includes 8,886 shares owned directly and 115,000 shares that are
exercisable as of April 15, 1996 or that will become exercisable
within 60 days thereafter.
(5) All shares are issuable upon the exercise of stock options that are
exercisable as of April 15, 1996 or that will become exercisable within
60 days thereafter.
(6) Includes 37,440 shares owned directly, 450,000 shares issuable upon the
exercise of stock options that are exercisable as of April 15, 1996 or
that will become exercisable within 60 days thereafter and 400,000
shares issuable upon conversion of a warrant that are exercisable as
of April 15, 1996.
(7) Includes 6,250 shares that are exercisable as of April 15, 1996 or
that will become exercisable within 60 days thereafter.
(8) Includes 50,000 shares owned directly.
(9) Includes 1,300,950 shares that directors and executive officers had
the right to acquire pursuant to the exercise of options and a warrant
that were exercisable on April 15, 1996 or that will become
exercisable within 60 days thereafter. The percentage of beneficial
ownership assumes the exercise of the aforesaid options by officers
and directors.
PROPOSAL 1
ELECTION OF DIRECTORS
Each director to be elected will hold office until the next annual meeting
of shareholders and until his successor is elected and has qualified, or until
his death, resignation, or removal.
There are five nominees for the five Board positions authorized by the
Company's Bylaws. All directors were previously elected to the Board by the
shareholders. Each person nominated for election has agreed to serve if elected,
and management has no reason to believe that any nominee will be unavailable to
serve. Unless otherwise instructed, the proxy holders will vote the proxies
received by them for five nominees named below. The five candidates receiving
the highest number of affirmative votes of the shares entitled to vote at the
annual meeting will be elected directors of the Company.
MANAGEMENT RECOMMENDS A VOTE FOR EACH
OF THE NOMINEES FOR DIRECTOR NAMED BELOW
Nominees
Five directors will be elected at the annual meeting to serve for one year
expiring on the date of the annual meeting in 1997. Set forth below is
information regarding the nominees, including information furnished by them.
Percentage of 1995
Board or Committee
Name Age Meetings Attended(1) Executive Position
Douglas P. Boyd 54 100% Chairman of the Board
John L. Couch 54 100%
S. Lewis Meyer 51 100% President and Chief
Executive Officer
Terry Ross 48 86%
Aldo J. Test 72 100%
(1) The percentage of meetings attended is based on the total number of
Board and Committee meetings which the particular director was eligible to
attend.
<PAGE>
Dr. Boyd has held several positions with the Company since its inception in
1983 including Chief Executive Officer, President, Chief Technical Officer and
Director. Dr. Boyd is currently Chairman of the Board and Chief Technology
Officer. He is an Adjunct Professor of Radiology (Physics) at the University of
California, San Francisco ("UCSF") and spends approximately 5% of his time on
his duties at the University. He has held various academic positions with UCSF
for more than the past five years. Dr. Boyd also serves as a director of
Invision Technologies, Inc.
Dr. Couch has been a director of the Company since its inception in 1983.
In May 1987 he became Vice President, Scientific Affairs. He served as Secretary
from March 1990 to December 1993.
Mr. Meyer was elected President and Chief Executive Officer of the Company
on June 23, 1993. From April 1991 until joining the Company he was Vice
President, Operations of Otsuka Electronics (U.S.A.), Inc., Fort Collins,
Colorado, a manufacturer of clinical MR systems and analytical NMR
spectrometers. From August 1990 to April 1991 he was a founding partner of
Medical Capital Management, a company engaged in providing consulting services
to medical equipment manufacturers, imaging services providers and related
medical professionals. Prior thereto he was President and Chief Executive
Officer of American Health Services Corp., a developer and operator of
diagnostic imaging and treatment centers. Mr. Meyer is a director of BSD Medical
Corporation.
Mr. Ross has been a director of the Company since January 1987 and served
as its Vice President, Marketing and Sales from October 1985 to December 1987.
Since January 1988 Mr. Ross has been President of CEMAX/ICON, Inc., a privately
held company engaged in the manufacture and sale of medical imaging and
networking software.
Mr. Test has been a director of the Company since its inception in 1983. He
is a senior partner of the San Francisco and Palo Alto law firm of Flehr,
Hohbach, Test, Albritton & Herbert where he has practiced patent law for more
than the past five years.
Retiring Director
Dr. Giovanni Lanzara, for more than the past five years, has been a
professor on the faculty of engineering at the University of Aquila, Rome, a
part of the Italian state university system. Dr. Lanzara's service on the Board
of Directors of the Company is in accordance with a Series A Preferred Stock
Purchase Agreement dated July 20, 1988 (the "Series A Agreement") among the
Company, FI.M.A.I. (a member of the Italimprese group of companies), and Societe
d'Investissements dan des entreprises commerciales, industrielles et
technologiques, S.A. ("SIECIT"). Pursuant to the terms of the Series A
Agreement, the Company agreed that so long as FI.M.A.I. and SIECIT own an
aggregate of at least 2,000,000 shares of the Company's Common Stock (or Series
A Preferred Stock convertible into such shares), the Company was obligated
include a person chosen by FI.M.A.I. among the persons nominated for election to
the Board of Directors at each annual meeting of shareholders, and so long as
FI.M.A.I and SIECIT own an aggregate of at least 8,000,000 shares of the
Company's Common Stock (or Series A Preferred Stock convertible into such
shares), the Company was obligated to include two persons chosen by FI.M.A.I.
among the persons nominated for election to the Board of Directors at each
annual meeting of shareholders. The obligations of the Company pursuant to such
agreement have terminated. Dr. Lanzara has indicated to the Company his desire
not to stand for reelection to the Board of Directors.
Board Committees and Meetings
During 1995 the Board of Directors held 4 meetings. The Board of Directors
has a standing Audit Committee whose function is to recommend the engagement of
the Company's independent accountants, approve services performed by such
<PAGE>
accountants, and review and evaluate the Company's accounting system and system
of internal controls. The Audit Committee, which consisted of Messrs. Meyer and
Test and Dr. Ugo Busatti, who resigned as a director on March 7, 1996, held one
meeting during the fiscal year.
The Board of Directors has a standing Compensation Committee which makes
recommendations to the Board of Directors concerning salaries and incentive
compensation paid to officers; administers the Company's 1983 and 1993 Stock
Option Plans, including the grant of options, the Company's 1987 Stock Bonus
Incentive Plan, the Company's 1994 Employee Stock Purchase Plan; and performs
such other functions regarding compensation as the Board may delegate. The
Compensation Committee, which consisted of Messrs. Ross and Test, held four
meetings during the year.
Compensation of Directors
Aldo Test, a director of the Company, renders consulting services to the
Company on a month-to-month basis for which he received compensation of $17,500
during 1995, and may be expected to do so in the future. The law firm of Flehr,
Hohbach, Test, Albritton & Herbert, of which Mr. Test is a member, represents
the Company with respect to intellectual property matters and may be expected to
continue to do so in the future. Terry Ross, a director of the Company, renders
consulting services to the Company pursuant to a month-to-month consulting
agreement which commenced in November 1993. In 1995 Mr. Ross received $17,500
pursuant to such agreement.
Non-Employee Director Compensation. In connection with their services to
the Company, directors who are not employees of the Company have periodically
received stock options under the Non-Employee Directors' Stock Option Plan (the
"Directors' Plan") to purchase shares of Common Stock. The exercise price of the
options is 85% of the fair market value of the Common Stock on the date of grant
as quoted on the NASDAQ National Market System. Typically, the options granted
to directors vest 25% per year on the anniversary of the date of grant and have
a term of five years. Each option terminates prior to the expiration date if the
optionee's service as a non-employee director, or, subsequently as an employee,
of the Company terminates.
In 1991 the directors and shareholders approved the Directors' Plan in
order to attract and retain highly qualified non-employee directors by providing
each non-employee director with an opportunity to purchase the Company's stock
and to provide incentives for such persons to exert maximum efforts on behalf of
the Company. Subject to provisions relating to adjustments upon changes in
stock, the Directors' Plan currently covers an aggregate of 550,000 shares of
the Company's Common Stock.
The Directors' Plan is administered by the Board of Directors. The Board
may suspend or terminate the Directors' Plan at any time. If no such termination
occurs, the Directors' Plan will terminate in the year 2001.
Options may be granted only to directors of the Company who are not
employees of the Company or any affiliate of the Company. The Directors' Plan
provides for the automatic grant of options to purchase shares of Common Stock
of the Company to non-employee directors. Each person elected for the first time
to be a Non-Employee Director automatically receives an option to purchase
25,000 shares of the Company's Common Stock. The Directors' Plan also provides
that every non-employee director is to receive an option to purchase 25,000
shares on July 1st of each year if such director served continuously as such for
the entire preceding twelve months.
The non-employee directors (Messrs. Lanzara, Ross and Test) are
entitled to receive options to purchase 25,000 shares each under the plan on
July 1st of each year. In fiscal 1995 such persons received 25,000 shares each
at an option price of $0.82 per share representing options for service during
the 1993-1994 plan year and options to purchase 25,000 shares each at an option
price of $0.71 representing options for service during the 1994-1995 plan year.
In addition, directors who are not officers of the Company are eligible for
reimbursement in accordance with Company policy for their expenses in connection
with attending meetings of the Board of Directors and any committees thereof.
<PAGE>
Employee Director Options. Employees who serve as directors of the Company
receive no additional compensation for such service.
EXECUTIVE COMPENSATION
Summary Compensation of Named Executives
The Summary Compensation Table shows certain compensation information for
the Chief Executive Officer and the three other most highly compensated
executive officers each of whose aggregate compensation exceeded $100,000 for
services rendered in all capacities during fiscal year 1995 (collectively
referred to as the "Named Executive Officers"). Compensation data is shown for
the fiscal years ended December 31, 1995, 1994 and 1993. This information
includes the dollar value of base salaries, bonus awards, the number of stock
options granted, and certain other compensation, if any, whether paid or
deferred.
Summary Compensation Table
Long Term
Annual Compensation All Other
Compensation Awards Compensation(b)
- ------------------------------------------------------------------------------
Name and Principal Options/
Position Year Salary($)(a) Bonus SARs
Douglas P. Boyd 1995 158,000 4,620
Chairman of the 1994 150,000 2,250
Board 1993 135,853 100,000 -0-
S. Lewis Meyer 1995 201,000 4,620
President and Chief 1994 196,833 25,000(d) 1,845
Executive Officer(c) 1993 105,100 50,000(d) 600,000(e) -0-
Dale E. Grant 1995 164,000
Executive Vice 1994 156,000 50,000(f) 400,000(g)
President 1993 -0-
Gary H. Brooks 1995 125,000 3,627
Vice President and 1994 120,000 1,710
Chief Financial 1993 4,469 200,000(h) -0-
Officer
- ------------------------------------------------------------------------------
(a) Amounts shown include cash and non-cash compensation earned with respect to
the year shown above.
(b) Represents the Company's matching contributions to its 401(k) plan.
(c) Mr. Meyer was elected President and Chief Executive Officer on June 23,
1993.
(d) Represents portion of a $75,000 bonus payable to Mr. Meyer upon commencement
of his employment with the Company.
(e) Includes 600,000 options granted under the Company's 1994 Stock Option Plan.
Excludes a warrant, exercisable for six years commencing June 14, 1994, but
not later than 12 months following Mr. Meyer's termination of employment,
to purchase 400,000 shares of the Company's Common Stock at a purchase price
of $1.50 per share. On May 20, 1994, the Board of Directors approved a
reduction of the warrant purchase price from $1.50 to $0.75 per share.
<PAGE>
(f) Represents a bonus payable to Mr. Grant upon commencement of his employment
with the Company.
(g) Represents options granted in January 1994 under the 1994 Stock Option Plan.
(h) Represents options granted in December 1993 under the 1994 Stock Option
Plan.
Incentive and Remuneration Plans
1987 Stock Bonus Incentive Plan. In 1988 the shareholders of the Company
approved the adoption of a Stock Bonus Incentive Plan ("Stock Bonus Plan"). The
Stock Bonus Plan was adopted to reward participants for past services and to
encourage them to remain in the Company's service. The Stock Bonus Plan is
administered by the Compensation Committee of the Board of Directors which
presently consists of Messrs. Test and Ross. The Committee has exclusive
authority to act on the following matters: selection of the persons among the
eligible participants (which consists of all employees, including officers and
directors of the Company, and consultants to the Company) who are to participate
in the Stock Bonus Plan; the determination of each participant's stock bonus
opportunity and actual bonus; changes in the Plan, and all other actions the
Committee deems necessary or advisable to administer the Plan.
The total number of shares of Common Stock which may be issued under the
Stock Bonus Plan is 1,200,000 shares with no more than 400,000 shares available
for issuance in any single calendar year.
The Compensation Committee, when making the determination of participants,
also establishes a bonus opportunity for each participant which is expressed as
a percentage of base performance goals to be reached by each participant. A
participant is entitled to earn a maximum bonus of 40% of his or her salary.
After the end of each fiscal year, the Committee determines each participant's
bonus award expressed in dollars. The number of shares of Common Stock to be
issued is determined by dividing the bonus award by the closing stock price for
the Common Stock on the first Thursday in February of each year following the
calendar year to which the bonus relates.
No participant is eligible to receive a bonus award unless such participant
is either employed by the Company or providing consulting services to the
Company on the last day of the calendar year to which the bonus relates.
During the 1995 fiscal year no shares were granted under the Stock Bonus
Plan.
Stock Participation and Option Plans
1994 Employee Stock Purchase Plan. In 1993 the directors approved the
adoption of the 1994 Employee Stock Purchase Plan (the "Plan"). The Plan was
approved by the shareholders at the 1994 Annual Meeting and became effective
January 1, 1994. All employees, including executive officers, may purchase
shares of the Company's Common Stock at a discount of 15% from the market price
of the shares. The plan replaced the Company's 1984 Employee Stock Participation
Plan which expired January 17, 1994. The Plan is intended to qualify under
Section 423 of the Internal Revenue Code of 1986, but is not subject to the
provisions of ERISA.
The maximum aggregate number of shares to be offered under the Plan is
1,000,000 shares of the Company's Common Stock. As of April 15, 1996, 993,534
shares of the Company's Common Stock have been issued under the Plan and no
further shares were issuable. Subject to shareholder approval at this meeting,
the directors of the Company have approved an amendment to the Plan increasing
the number of shares eligible for sale under the Plan from 1,000,000 to
1,800,000 shares.
All employees who are regular employees of the Company, whose date of hire
is at least six months prior to the beginning of the Offering Period or Interim
Offering Period, and who are customarily employed for at least 20 hours per week
and more than five months in any calendar year are eligible to participate in
the Plan. The first Offering Period began January 1, 1994 and ran through March
31, 1996. Each Interim Offering Period is a calendar quarter. As of April 1,
1996, a total of 150 employees met the eligibility requirements under the Plan.
<PAGE>
Eligible employees are offered the opportunity to purchase Common Stock by
means of payroll deductions of 2%, 4%, 6%, 8% or 10% of compensation. The
specific percentage selected is at the employee's option, up to a yearly maximum
currently established at $2,000 of the fair market value of the Stock,
determined on the Offering Date, and so long as the participant would not own 5%
or more of the voting power of the Company's stock following the purchase. Each
participant may begin participation in the Plan at the beginning of the Offering
Period or any Interim Offering Period, may decrease but not increase
participation during the Offering Period, and may terminate participation in the
Plan before the end of any Interim Offering Period, all subject to certain
notice and filing requirements.
Administration of the Plan is by the Company's Board, or Compensation
Committee by delegation. The Committee is comprised of at least two members of
the Company's Board, each of whom must be disinterested as defined in Securities
and Exchange Commission regulations. The Committee has the powers of the Board
pursuant to the Plan, including the power to determine questions of policy and
expediency that may arise in the administration of the Plan, all subject to the
provisions of the Plan. Members of the Committee receive no compensation for
their services in connection with the administration of the Plan.
The price for the shares purchased pursuant to the Plan is equal to 85% of
the fair market value of the shares on either the Offering Date (or date of
entry for new or re-enrolling employees) or the last day of each Interim
Offering Period, whichever is less. The funds contributed by the participant
earn no interest while they are being held by the Company.
To participate in the Plan, employees must submit the appropriate
documentation authorizing deductions from payroll in specified amounts to the
Company prior to the Offering Period or Interim Offering Period. Funds deducted
during the quarter are used to purchase shares of the Company's Common Stock,
the number of which is determined (in whole shares) on the final day of that
quarter by dividing the amount in the participant's Plan Account by the purchase
price of the stock as determined above. Participants receive certificates
quarterly for all shares purchased during that quarter. They may retain the
certificated shares or sell them in the open market or otherwise, subject to
securities and tax law restrictions. Upon termination of employment,
participants will receive certificates evidencing previously purchased shares
and a return of any balance remaining in the participant's account on the date
of termination.
The Board reserves the right to amend or discontinue the Plan, provided
that no participant's existing rights are adversely affected, and provided
further that without Shareholder approval, no amendment will be effective: (1)
increasing the aggregate number of shares authorized for purchase under the Plan
or to be purchased by any participant; (2) materially changing the requirements
for eligibility to participate, or reducing the purchase price formula in the
Plan, or materially increasing the benefits accruing to participants under the
Plan; (3) extending the term of the Plan; or (5) otherwise modifying the Plan if
the modification requires shareholder approval to satisfy applicable statutes or
Internal Revenue Service and/or Securities and Exchange Commission regulations.
1993 Stock Option Plan. The Company's 1993 Stock Option Plan, which was
approved by the Shareholders at the 1993 Annual Meeting (the "Option Plan"), is
intended to advance the interests of the Company by inducing persons of
outstanding ability and potential to join and remain with the Company by
enabling them to acquire proprietary interests in the Company. The Option Plan
covers an aggregate of 5,500,000 shares of Common Stock. At the June 25, 1995
Annual Meeting, the shareholders approved an increase in the number of shares
which may be issued under the Option Plan from 3,000,000 to 5,500,000.
The Option Plan provides for the granting of two types of options:
"incentive stock options" and "nonstatutory stock options." The incentive stock
options (but not the nonstatutory stock options) are intended to qualify as
"incentive stock options" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended. The Option Plan succeeded the 1983 Stock Option Plan which
expired in 1993.
Options may be granted under the Option Plan to all full-time regular
employees including officers, directors (whether or not employees) and
consultants of the Company; provided, however, that incentive stock options may
not be granted to any non-employee director or consultant. As of April 1, 1996
approximately 150 employees and consultants were eligible to participate in the
Option Plan.
<PAGE>
The Compensation Committee of the Board of Directors administers the Option
Plan. The Committee has the power, subject to the provisions of the Option Plan,
to determine the persons to whom and the dates on which options will be granted,
the number of shares to be subject to each option, the time or times during the
term of each option within which all or a portion of such option may be
exercised, and the other terms of the options.
The maximum term of each option is ten years. Incentive Stock Options (ISO)
granted under the Plan generally vest quarterly over a four year period
following the date of grant. Non-Statutory Options (NOS) granted under the Plan
generally vest annually over a four-year period following the date of grant.
The exercise price of all nonstatutory stock options granted under the
Option Plan must be at least equal to 85% of the fair market value of the
underlying stock on the date of grant. The exercise price of all incentive stock
options granted under the Option Plan must be at least equal to the fair market
value of the underlying stock on the date of grant.
Option Grants in Last Fiscal Year
No options to purchase shares of the Company's Common Stock were granted to
any Executive Officer of the Company during the last fiscal year.
In October 1995 the Company's wholly-owned subsidiary, HeartScan Imaging,
Inc. ("HSI") approved the adoption of the HeartScan Imaging, Inc. 1995 Stock
Option Plan (the "HSI Option Plan"). The HSI Option Plan is intended to advance
the interests of HSI by inducing persons of outstanding ability and potential to
join and remain with HSI by enabling them to acquire proprietary interests in
HSI. The HSI Option Plan covers an aggregate of 250,000 shares of HSI Common
Stock. The Option Plan provides for the granting of two types of options:
"incentive stock options" and "nonstatutory stock options." The incentive stock
options (but not the nonstatutory stock options) are intended to qualify as
"incentive stock options" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended. Options may be granted under the HSI Option Plan to all
employees including officers, directors (whether or not employees) and
consultants of HSI; provided, however, that incentive stock options may not be
granted to any non-employee director or consultant. HSI's Board of Directors has
the power, subject to the provisions of the HSI Option Plan, to determine the
persons to whom and the dates on which options will be granted, the number of
shares to be subject to each option, the time or times during the term of each
option within which all or a portion of such option may be exercised, and the
other terms of the options. The functions of HSI's Board of Directors under the
HSI Option Plan are presently being administered by the Compensation Committee
of Imatron's Board of Directors.
The maximum term of each option is ten years. Options granted under the
HSI Option Plan generally vest annually over a four-year period.
The exercise price of all nonstatutory stock options granted under the HSI
Option Plan must be at least equal to 85% of the fair market value of the
underlying stock on the date of grant. The exercise price of all incentive stock
options granted under the HSI Option Plan must be at least equal to the fair
market value of the underlying stock on the date of grant.
During HSI's last fiscal year, two options were granted under the plan to
purchase an aggregate of 112,500 shares of the HSI's Common Stock at $.001 per
share, HSI's estimate of the fair market value of such shares at the date of
grant. The options were granted to Dale E. Grant, HSI's President and Chief
Operating Officer (75,000 shares) and to Gary H. Brooks, HSI's Vice President,
Secretary and Chief Financial Officer (37,500). The options granted to Messrs.
Grant and Brooks were granted pursuant to the terms of employment agreements
entered into in 1993 with Messrs. Grant and Brooks in connection with the
commencement of their employment by Imatron and HSI, and vest over a four year
period commencing January 1, 1994. The options are subject to adjustment in
price and amount based on the amount and terms of HSI's future financings. HSI
has reserved an additional 325,000 shares of Common Stock for future issuance to
employees under the HSI Option Plan and under plans to be adopted. It is HSI's
intention to reserve, in the aggregate, approximately 20% of its capital stock
for grants to employees under the HSI Option Plan and under plans to be adopted.
<PAGE>
Option Exercises in Last Fiscal Year and Year-End Option Values
The following table sets forth the options exercised during the last fiscal
year by Named Executive Officers of the Company:
<TABLE>
Aggregated Options Exercised and Option Values in Fiscal Year Ended 1995
<CAPTION>
Number of securities Value of unexercised
underlying unexercised in the money options at
options at year-end (#) year-end ($)
Shares acquired Value
Name on exercise(#) realized ($) exercisable/unexercisable exercisable/unexercisable
<S> <C> <C> <C> <C> <C> <C>
Douglas P. Boyd 70,000 $ 167,300 167,450/62,500 $248,128/$93,600
Dale E. Grant 51,000 $ 119,635 124,000/226,000 $194,680/353,250
</TABLE>
Compensation Committee Report
This report is provided by the Compensation Committee of the Board of
Directors (the "Committee") to assist stockholders in understanding the
Committee's objectives and procedures in establishing the compensation of
Imatron's Chief Executive Officer and other executive officers. The Committee,
made up of non-employee Directors, is responsible for establishing and
administering the Company's executive compensation program. None of the members
of the Committee are eligible to receive awards under the Company's incentive
compensation programs.
Imatron's executive compensation program is designed to motivate, reward,
and retain the management talent needed to achieve its business objectives and
maintain its competitiveness in the medical imaging industry. It does this by
utilizing competitive base salaries that recognize a philosophy of career
continuity and by rewarding exceptional performance and accomplishments that
contribute to the Company's success.
Compensation Philosophy and Objective
The philosophical basis of the compensation program is to pay for
performance and the level of responsibility of an individual's position. The
Committee finds greatest value in executives who possess the ability to
implement the Company's business plans as well as to react to unanticipated
external factors that can have a significant impact on corporate performance.
Compensation decisions for all executives, including the named executive
officers and the Chief Executive Officer, are based on the same criteria. These
include quantitative factors that directly improve the Company's short-term
financial performance, as well as qualitative factors that strengthen the
Company over the long term, such as demonstrated leadership skills and the
ability to deal quickly and effectively with difficulties which sometimes arise.
The Committee believes that compensation of Imatron's key executives
should:
*Link rewards to business results and stockholder returns;
*Encourage creation of stockholder value and achievement of strategic
objectives;
*Maintain an appropriate balance between base salary and short-and
long-term incentive opportunity;
*Attract and retain, on a long-term basis, highly qualified executive
personnel; and
*Provide total compensation opportunity that is competitive with that
provided by competitors in the medical imaging industry, taking into
account relative company size and performance as well as individual
responsibilities and performance.
<PAGE>
Key Elements of Executive Compensation
Imatron's executive compensation program consists of three elements: Base
Salary, Short-Term Incentives and Long-Term Incentives. Payout of short-term
incentives depends on corporate performance measured against annual objectives
and overall performance. Payout of the long-term incentives depends on
performance of Imatron stock, both in absolute and relative terms.
Base Salary
A competitive base salary is crucial to support the philosophy of
management development and career orientation of executives. Salaries are
targeted to pay levels of the Company's competitors and companies having similar
capitalization and revenues, among other attributes. Executive salaries are
reviewed annually.
Short-Term Incentive
Short-term awards to executives are made in cash and in stock to recognize
contributions to the Company's business during the past year. The bonus an
executive receives is dependent on individual performance and level of
responsibility. Assessment of an individual's relative performance is made
annually based on a number of factors which include initiative, business
judgment, technical expertise, and management skills.
Stock Bonus Incentive Plan. In 1988 the shareholders approved the adoption
of the 1987 Stock Bonus Incentive Plan. Under the terms of the Stock Bonus Plan
the Committee may award shares of the Company's Common Stock to employees,
including executive officers.
Long-Term Incentive
Long-term incentive awards provided by shareholder-approved compensation
programs are designed to develop and maintain strong management through share
ownership and incentive awards. Stock options were the only long term incentive
granted to executive officers in 1995.
Stock Option Plan. In 1994, the shareholders approved the adoption of the
1993 Stock Option Plan (which replaced the 1983 Stock Option Plan). In 1995 the
directors and shareholders approved an increase in the number of shares reserved
under the Option Plan from 3,000,000 shares to 5,500,000 shares. At the sole
discretion of the Committee, eligible officers and employees periodically
receive options to purchase shares of the Company's Common Stock pursuant to the
Option Plan. The value of the options depends entirely on appreciation of
Imatron stock. Grant of options depends upon quarterly and annual Company
performance, as determined by review of qualitative and quantitative factors.
Employee Stock Purchase Plan. In 1994 the directors and shareholders
approved the adoption of the 1994 Employee Stock Purchase Plan. All employees,
including executive officers, may purchase shares of the Company's Common Stock
at a discount of 15% from the market price of the shares. The Plan became
effective January 1, 1994.
1995 Compensation. During 1995 the Company's revenues decreased 25.6% from
the prior year and the Company incurred a loss of $2,449,000 versus a profit of
$2,310,000 during the prior fiscal year. However, the Company made substantial
progress in improving its technology, raised a significant amount of additional
equity capital and bank credit to finance its future growth, and was successful
in opening and pre-opening phases of two coronary artery disease risk assessment
centers. Based on this performance, only selective cost-of-living and merit
salary increases were implemented during the year and no new stock option grant
or stock of cash bonuses were given during the year to any Named Executive
Officer. Stock options were granted to other employees of the Company based on
the employee's level of responsibility and other factors. If the Company's
financial condition improves in 1996, the Company anticipates implementing a
program of regular merit salary adjustments for executive officers together with
other forms of compensation such as incentive stock option awards and bonus
payments based on achievement of specific goals and objectives.
<PAGE>
1995 Chief Executive Officer Compensation
Mr. Meyer's 1994 base salary of $185,000 was increased in 1994 to $195,000
and on March 1, 1996 was increased to $205,000. The Committee believes that
the base salary and other terms and conditions of his employment are consistent
with the foregoing philosophy and objectives and reflect the scope and level of
his responsibilities.
Members of the Compensation Committee
Terry Ross
Aldo Test
Share Investment Performance
The following graph compares the total return performance of the Company
for the periods indicated with the performance of the NASDAQ Index (presented on
a dividends reinvested basis) and the performance of the Hambrecht & Quist
Technology Index. The Company's shares are traded on the NASDAQ National Market
System under the symbol "IMAT". The Hambrecht & Quist Technology Index is
comprised of the publicly traded stocks of 200 technology companies and include
companies in the electronics, medical and related technology industries. The
total return indices reflect reinvested dividends and are weighted on a market
capitalization basis at the time of each reported data point.
<PAGE>
Performance Graph
Year 1990 1991 1992 1993 1994 1995
Imatron Inc. 100 323.93 166.67 304.88 166.77 304.88
NASDAQ Index 100 160.55 186.85 214.50 209.67 296.51
Hambrecht & Quist 100 147.83 170.04 185.56 215.39 323.40
Technology Index
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
S. Lewis Meyer became President and Chief Executive Officer of the Company
on June 14, 1993. In connection with such employment the Company entered into an
Executive Employment Agreement with Mr. Meyer providing for an initial term
ending December 31, 1993 and continuing for rolling six month periods. Pursuant
to the agreement Mr. Meyer is entitled to a base salary of $185,000 per year
subject to annual review, a one time hiring bonus of $75,000, a non-qualified
stock option to purchase 600,000 shares of the Company's Common Stock at $0.58
per share (85% of the closing price of a share of the Company's Common Stock on
the date of grant) (subsequently repriced to $0.56), to be vested over a four
year period, a warrant to purchase 400,000 shares of the Company's Common Stock
at an exercise price of $1.50 (subsequently reduced to $0.75 per share)
exercisable for six years commencing June 14, 1994, but not later than 12 months
following Mr. Meyer's termination of employment, and certain other benefits.
Filings by Directors, Executive Officers and Ten Percent Holders
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
<PAGE>
executive officers, 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 Securities and Exchange Commission.
Executive officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
forms furnished to it, and written representations that no other reports were
required, during the fiscal year ended December 31, 1995 all Section 16(a)
filing requirements applicable to its officers, directors, and beneficial owners
of more than ten percent of the Company's equity securities were complied with
by such persons.
PROPOSAL 2
ADOPTION OF AN AMENDMENT TO THE 1994 EMPLOYEE STOCK PURCHASE PLAN
Proposal
The shareholders are being requested to consider and act upon a proposal to
amend Section 3 of the Company's 1994 Employee Stock Purchase (the "Plan") to
increase the aggregate number of shares of Common Stock for purchase pursuant to
the Plan from 1,000,000 to 1,800,000 shares. The Board of Directors of the
Company, at its February 9, 1995 meeting, approved a resolution proposing to
amend the Plan conditioned upon shareholder approval. The affirmative vote of
the holders of a majority of the shares represented and voting at the meeting is
required for approval.
The Plan is intended to advance the interests of the Company by inducing
persons of outstanding ability and potential to join and remain with the Company
by enabling them to acquire proprietary interests in the Company. For
information concerning the operation of the Plan, see 1994 Employee Stock
Purchase Plan, above. Presently there are approximately 150 persons eligible to
participate in the Plan.
If the proposed amendment is approved by the shareholders, 800,000
additional shares of Common Stock may be issued, subject to adjustment for
certain changes in capitalization. As of the date hereof, 993,534 shares had
been issued under the Plan and no further shares were being offered. The number
of units and dollar value of future grants under the Plan are not determinable.
<PAGE>
The table below shows, as to each of the Company's Named Executive Officers
and the various indicated groups, the number of shares of Common Stock purchased
under the Plan in fiscal 1995 and fiscal 1994, together with the weighted
average purchase price paid per share.
Fiscal 1995 Fiscal 1994
Number of Weighted Number of Weighted
Purchased Average Purchased Average
Shares Purchase Shares Purchase
(#) Prices (#) Price($)
Dr. Douglas P. Boyd 4,651 $0.43 9,302 $0.43
S. Lewis Meyer 4,651 $0.43 9,301 $0.43
Dale S. Grant -0- -0-
Gary H. Brooks 2,352 $0.85 4,705 $0.85
All Named Executive
Officers as a
group 11,654 $0.51 23,308 $0.51
All employees who are
not executive officers 323,321 $0.49 479,934 $0.44
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL TWO
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP has served as the Company's independent auditors for the
year ended December 31, 1995, and has been selected by the Company's Board of
Directors as the independent auditors for the year ending December 31, 1996.
Representatives of Ernst & Young LLP are expected to be present at the
annual meeting. Such representatives will have the opportunity to make a
statement at the meeting if they desire to do so and will be available to
respond to appropriate questions.
The Company is not asking shareholders to approve the selection of Ernst &
Young LLP because the Company believes that such a selection is more
appropriately left to the discretion of its Board of Directors.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the annual meeting. If other matters are properly brought
before the meeting, however, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
By Order of the Board of Directors
/s/ Gary H. Brooks
-------------------
Gary H. Brooks
Secretary
May 7, 1996
<PAGE>
IMATRON INC.
Proxy Solicited by Board of Directors
For Annual Meeting of Shareholders -- June 28, 1996
Douglas P. Boyd and S. Lewis Meyer, or either of them, each with the power
of substitution and revocation, are hereby authorized to represent the
undersigned with all powers which the undersigned would possess if personally
present, to vote the securities of the undersigned at the annual meeting of
shareholders of IMATRON INC. to be held at the Company's corporate offices, 389
Oyster Point Boulevard, South San Francisco, California 94080, at 10:00 a.m.
local time on Friday, June 28, 1996, and at any postponements or adjournments of
that meeting as set forth below, and in their discretion upon any other business
that may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR
DIRECTOR LISTED BELOW:
1. To elect directors to hold office until the 1997 annual
meeting of shareholders or until their successors are elected.
[__] FOR all nominees [__]WITHHOLD AUTHORITY
listed below (except to vote for all nominees
as marked below) listed below
Douglas P. Boyd John L. Couch S. Lewis Meyer
Terry Ross Aldo Test
To withhold authority to vote for any nominee, write that nominee's name below:
______________________________________________________________
2. To approve an amendment to the Company's 1994 Employee Stock Purchase
Plan to increase the authorized number of shares from 1,000,000 to 1,800,000.
[ ] FOR approving the amendment [ ] AGAINST approving the amendment
to the 1994 Employee Stock Purchase Plan to the 1994 Employee Stock Purchase
Plan
The undersigned hereby acknowledge receipt of (a) Notice of Annual Meeting
of Shareholders to be held May 20, 1994, (b) the accompanying Proxy Statement,
and (c) the annual report of the Company for the year ended December 31, 1995.
Date: ______________________, 1996
__________________________________
__________________________________
Please sign exactly as signature appears at left.
Executors, administrators, traders, guardians,
attorneys-in-fact, etc.should give their full titles.
If signer is a corporation, please give full
corporate name and have a duly authorized officer
sign, stating title. If a partnership, please sign
in partnership name by authorized person. If stock
is registered in two names, both should sign.
