SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the
Securities Exchange Act of 1934
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 ss.240.14a-11(c) or ss.240.14a-12
IMATRON
- --------------------------------------------------------------------------------
(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 the table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE>
[IMATRON LOGO]
389 OYSTER POINT BOULEVARD
SOUTH SAN FRANCISCO, CALIFORNIA 94080
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 12, 2000
-----------------
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 May 12,
2000, at 10:00 a.m., local time, at the Embassy Suites Hotel, 250 Gateway
Boulevard, South San Francisco, California 94080, for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected and qualified.
2. To approve the increase in the number of shares which may be issued
annually pursuant to the Stock Bonus Incentive Plan from 400,000
common shares to 650,000 common shares.
3. To ratify the appointment of KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000.
4. 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 March 21, 2000 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,
Frank Cahill
Secretary
South San Francisco, California
April 13, 2000
-----------------------------------------------------------------------
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 LOGO]
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 May 12, 2000 at 10:00 a.m., local time, at
which shareholders of record on March 21, 2000 will be entitled to vote. On
March 21, 2000, the Company had issued and outstanding 101,140,347 shares of
Common Stock. The Annual Meeting will be held at the Embassy Suites Hotel, 250
Gateway Boulevard, South San Francisco, California 94080 .
VOTING AND REVOCABILITY OF PROXIES
All properly executed proxies that are not revoked will be voted at the
meeting in accordance with the instructions contained therein. Proxies
containing no instructions regarding the proposals specified in the form of
proxy will be voted FOR approval of all proposals in accordance with the
recommendation of the Company's Board of Directors. 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.
Holders of Common Stock are entitled to vote for each share of Common Stock
held. Under New Jersey law, approval of changes under the Company's Stock Bonus
Incentive Plan require the affirmative vote of the holders of a majority of the
votes cast at the Annual Meeting by the shareholders entitled to vote with
abstentions not counted as votes for or against. 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. Broker
non-votes and shares held by stockholders present in person or by proxy at the
meeting but abstaining on a vote will be counted in determining whether a quorum
is present at the Annual Meeting.
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. 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.
<PAGE>
Arrangements will also be made with brokerage firms and other custodians,
nominees and fiduciaries to forward proxy material to certain beneficial owners
of the Company's Common Stock, and the Company will reimburse such brokerage
firms, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith.
The Company intends to mail this proxy statement on or about April 14,
2000.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Proposals of shareholders that are intended to be presented at the
Company's 2001 Annual Meeting of shareholders must be received by the Company no
later than January 7, 2001 in order to be included in the proxy statement and
proxy relating to that meeting.
PROPOSAL ONE
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 eight nominees for the eight Board positions currently
established pursuant to the Company's Bylaws. All nominees are currently
directors of the Company. 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. If any director is unable to stand for re-election, the
Board may reduce the Board's size or designate a substitute. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
eight nominees named below. The eight 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
Eight directors will be elected at the Annual Meeting to serve for one year
expiring on the date of the annual meeting in 2001. Proxies can be voted for no
more than eight nominees. The following table sets forth certain information
regarding the Company's directors and nominees.
NAME AGE EXECUTIVE POSITION DIRECTOR SINCE
- ---- --- ------------------ --------------
Douglas P. Boyd, Ph.D 58 Chief Technology Officer; 1983
Chairman of the Board
Allen M. Chozen 57 1999(a)
John L. Couch 59 Vice President of R&D 1983
William J. McDaniel, M.D 57 1997
S. Lewis Meyer 55 Chief Executive Officer 1993
Richard K. Myler, M.D 64 1999(a)
Terry Ross 52 President 1987
Aldo J. Test 76 1983
- ----------
(a) Appointed by the Board of Directors on September 13, 1999.
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 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., a
company engaged in the design and manufacture of explosives detection scanners
for the baggage, par-
2
<PAGE>
cel, and freight market, and is a member of the Compensation Committee of its
board. Additionally, he serves as a director of AccuImage Diagnostics Corp., a
medical imaging company based in South San Francisco, and is a member of the
Compensation Committee of its board.
Mr. Chozen has been a director of the Company since September 1999. He has
been a partner at Thomas Weisel Partners since March 1999, and for two years
prior thereto, Mr. Chozen was a managing director at Montgomery Securities.
Before then he was private consultant.
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.
Admiral McDaniel, a retired United States Navy Rear Admiral, was elected a
director on January 28, 1997. From 1992 to 1995 he was Chief Executive Officer
of Naval Medical Center, Portsmouth, Virginia, a 346 bed tertiary training
medical center for the Navy. From 1995 to 1997 Admiral McDaniel was the Surgeon
General of the U.S. Pacific Command. In such position he was responsible for all
U.S. military contingency plans for the Pacific half of the world, including
preparing for responses to wartime, natural disasters, and peacetime
humanitarian relief efforts. Since 1997, Admiral McDaniel has been a consultant
to the Center for Naval Analysis; a consultant to Johns Hopkins Applied Physics
Laboratory; on the Board of Advisors of Alison Inc.; on the Board of Advisors of
the U.S. Dental Alliance; a consultant to SmileCare; and a member of the U.S.
Olympic Committee.
Mr. Meyer was appointed President and Chief Executive Officer of the
Company in June 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 Founder, President and Chief
Executive Officer of American Health Services Corp., (now Insight Health
Services) a developer and operator of diagnostic imaging and treatment centers.
Mr. Meyer is a director of Finet.com, Inc. and a member of its Compensation
Committee. Until 1998, Mr. Meyer was a member of the Board of Directors of the
American Electronics Association (AEA) and until 1999, he was a member of the
board of BSD Corporation.
Dr. Myler has been a director of the Company since September 1999. Since
1982, he has been a clinical professor of medicine at the University of
California, San Francisco and the Medical Director of the San Francisco Heart
Institute at Seton Medical Center. Since 1994, Dr. Myler has been the Director
of Interventional Cardiology at the Heart Institute at Seton Medical Center and
the co-director of the Cardiac Catheterization Laboratories at Seton Medical
Center. He has been a consulting physician to St. Vincent Hospital.
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.
From January 1988 through November 24, 1998, Mr. Ross served as President or
Chief Executive Officer of CEMAX-ICON, Inc., a privately held company engaged in
the manufacture and sale of medical imaging and networking software. Effective
January 1, 1999, Mr. Ross returned to the Company as its President.
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 intellectual property
law for more than the past five years.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Dr. Douglas Boyd, currently Chairman of the Board and Chief Technology
Officer for the Company, also serves as a director of AccuImage Diagnostics
Corp. During the year ended December 31, 1999, the Company sold no products to
AccuImage and purchased goods and services from AccuImage, primarily
workstations and other peripherals, at competitive prices. Goods and services
purchased from AccuImage during 1999 represented less than two percent (2%) of
goods and services purchased by the Company during the year.
3
<PAGE>
In February 1999, the Company sold the San Francisco center of HeartScan
Imaging, Inc. in an arm's length asset sale to Imaging Technology Group, a
Nevada corporation. In November 1999, the Company sold the Houston and District
of Columbia centers of HeartScan Imaging, Inc. to Imaging Technology Group.
HeartScan Imaging, Inc. is a majority-owned subsidiary of the Company. Dr. Boyd
is a minority shareholder of Imaging Technology Group, and his wife is a
substantial shareholder. The sales to Imaging Technology followed a solicitation
of bids by the Company from all viable purchasers in an open auction. The
successful bid by Imaging Technology contained the best and most favorable terms
for the Company.
Aldo Test, a director of the Company, is a member of the law firm of Flehr,
Hohbach, Test, Albritton & Herbert, which represents the Company with respect to
intellectual property matters and may be expected to continue to do so in the
future. The fees paid to the firm did not exceed five percent of the law firm's
gross revenues for the fiscal year.
S. Lewis Meyer, pursuant to authorization of the Board of Directors,
borrowed $336,000 from the Company in June 1998 pursuant to a full-recourse
promissory note bearing 5.6% simple interest, with interest payable quarterly
beginning July 1, 1998. The purpose of the loan was to enable Mr. Meyer to
exercise 600,000 options expiring in June 1998 granted in connection with his
employment in June 1993. The loan is secured by the 600,000 shares of common
stock he purchased upon exercise of the options plus other personal property. As
of December 31, 1999, there was a balance of $224,000 left on the note.
Douglas P. Boyd, pursuant to authorization of the Board of Directors,
borrowed $115,000 from the Company in August 1998 pursuant to a full-recourse
promissory note bearing 5.6% simple interest, with interest payable quarterly
beginning October 1, 1998. The purpose of the loan was to enable Dr. Boyd to
exercise 225,000 expiring options. The loan is secured by the 225,000 shares of
common stock he purchased upon exercise of the options plus other personal
property. Dr. Boyd paid off the note in December 1999.
On October 29, 1999, the shareholders approved a $3,025,000 private
placement to Mr. Ross. In connection with the sale, made in part pursuant to
agreements previously entered into, Imatron issued 3,767,713 shares of Common
Stock, 360,000 five-year warrants to purchase its Common Stock at $1.044 per
share, and 2,991,027 one-year warrants to purchase its Common Stock at $1.003.
The aggregate purchase price for the stock and the warrants was $3,025,000. The
terms were negotiated at arms length and were approved by the Company's Board of
Directors and by its Audit Committee. The purchase price per share was $0.84 and
was determined based on a 10% discount from the ten-day average closing bid
price for the Company's Common Stock during the period from May 5, 1999 through
May 17, 1999. The Common Stock issued or issuable to Mr. Ross is not entitled to
preemptive rights.
BOARD COMMITTEES AND MEETINGS
During 1999 the Board of Directors held four 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 accountants, and review and evaluate the Company's accounting system and
system of internal controls. The Audit Committee, which consists of Mr. Test,
Admiral McDaniel, and Mr. Chozen (from December 10, 1999) held four meetings
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 Stock Option Plan,
including the grant of options, the Company's Stock Bonus Incentive Plan, and
the Company's Employee Stock Purchase Plan; and performs such other functions
regarding compensation as the Board may delegate. The Compensation Committee,
which consists of Mr. Test, Admiral McDaniel, and Dr. Myler (from December 10,
1999) held four meetings during the year.
4
<PAGE>
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 $18,000
during 1999, 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 partner, represents
the Company with respect to intellectual property matters and may be expected to
continue to do so in the future.
Admiral McDaniel, a director of the Company, renders consulting services to
the Company on a month-to-month basis for which he received compensation of
$36,000 during 1999 and may be expected to do so in the future.
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 a Non-Employee Directors' Stock Option Plan to
purchase shares of Common Stock. In 1991, the shareholders approved, the 1991
Non-Employee Directors' Stock Option Plan (the "1991 Plan") authorizing the
issuance of 250,000 shares of the Company's Common Stock. In 1993, the
shareholders approved an increase in the number of shares reserved for issuance
under the 1991 plan to 550,000 shares. In February 1998, the Board of Directors
amended and restated the 1991 Plan in its entirety to, among other provisions,
modify the vesting schedule contained in the prior plan and to increase the
number of shares reserved for issuance thereunder to 1,000,000. The shareholders
approved the 1998 Amended and Restated Non-Employee Directors' Stock Option Plan
at the 1998 Annual Meeting (the "Directors' Plan"). At the 1999 Annual Meeting,
the shareholders voted to approve an increase in the Directors' Plan's
authorized shares from 1,000,000 to 1,500,000 shares.
The Directors' Plan provides for the automatic grant of nonqualified
options to non-employee directors. The Board believes that the success of the
Company is affected by the ability of the Company to attract and retain as
members of its Board of Directors knowledgeable persons of broad business or
professional experience who have no employment relationship with the Company.
The Directors' Plan was adopted to enhance the ability of the Company to attract
and retain qualified non-employee directors, by providing eligible directors
with a proprietary interest in the Company through the grant of stock options.
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 under the Directors' Plan vest
pursuant to one of two schedules: immediately; or 25% per year starting with the
first anniversary of the date of grant. Options granted under the Directors'
Plan have a ter of ten years, and each option terminates prior to the expiration
date if the optionee's service as a non-employee director terminates, or if the
optionee's service continues thereafter as an employee, when that service
terminates.
The Directors' Plan is administered by the Board of Directors, which may
suspend or terminate the Directors' Plan at any time. If no such termination
occurs, the Directors' Plan will terminate at the end of the year 2008.
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
40,000 shares of the Company's Common Stock. The Directors' Plan also provides
that every non-employee director is to receive an option to purchase 40,000
shares on January 1st of each year if such director served continuously as such
for the thirty days preceding that date.
Under the Directors' Plan, Messrs. Myler and Chozen, upon their election as
directors, each received 40,000 shares in fiscal year 1999 at an option price of
$1.18 per share, and Messrs. Myler, Chozen, Test, and Admiral McDaniel each
received 40,000 shares on January 1, 2000 at an option price of $2.14 per share.
On January 1, 1999, Mr. Test and Admiral McDaniel received 25,000 options at a
price of $1.17. In addition, directors who are not officers of the Company are
eligible for reimbursement in accordance with Company policy for their expenses
but not fees in connection with attending meetings of the Board of Directors and
any committees thereof.
5
<PAGE>
EMPLOYEE DIRECTOR COMPENSATION. Employees who serve as directors of the
Company (Dr. Boyd and Messrs. Meyer, Couch and Ross) receive no additional
compensation for such service. Dr. Boyd, Mr. Meyer and Mr. Ross are also Named
Executive Officers of the Company. The compensation for Dr. Boyd, Mr. Meyer and
Mr. Ross is reflected in the Summary Compensation Table contained elsewhere in
this statement.
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 March 21, 2000 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(A)
AMOUNT OF DIRECT
TITLE OF NAME AND ADDRESS OF BENEFICIAL PERCENT OF
CLASS BENEFICIAL OWNER OWNERSHIP CLASS(B)
- -------- ------------------- ---------- ----------
Common Marukin Corporation(c) 5,471,617 5.4%
Common Terry Ross(d) 7,445,190(e) 7.4%
(a) 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.
(b) Calculation based on 101,140,347 shares of Common Stock outstanding as of
March 21, 2000.
(c) Marukin Corporation, 6, Rokuban-Cho Chiyoda-Ku, Tokyo 10
(d) 389 Oyster Point Boulevard, So. San Francisco, Californi 94080.
(e) Includes 3,844,163 shares owned directly, 50,000 shares issuable upon the
exercise of stock options, which may be acquired within 60 days from March
21, 2000, and 3,551,027 shares issuable upon the exercise of warrants,
which may be acquired within 60 days from March 21, 2000.
6
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The table below presents the security ownership of the Company's Directors
and Named Executive Officers.
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(A)(B) PERCENT OF CLASS(C)
AMOUNT AND NATURE
TITLE OF NAME OF OF BENEFICIAL PERCENT OF
CLASS BENEFICIAL OWNER OWNERSHIP(A)(B) CLASS(C)
- -------- ------------------- ---------------------- ----------
Common Douglas P. Boyd, Ph.D 1,957,569(d)
Common Gary H. Brooks 28,704(e) *
Common Frank Cahill 50,000(f)(m) *
Common Allen M. Chozen 80,000(f) *
Common John L. Couch 70,875(g) *
Common William J. McDaniel, M.D. 128,750(h) *
Common S. Lewis Meyer 343,406(i) *
Common Richard K. Myler, M.D. 120,000(j) *
Common Terry Ross 7,445,190(k) 7.4%
Common Aldo Test 141,250(l) *
Common All Directors and
Executive Officers as a Group 10,365,744 10.3%
- ----------
* Does not exceed 1% of the referenced class of securities
(a) Ownership is direct unless indicated otherwise.
(b) Includes shares beneficially owned which may be acquired within 60 days
from March 21, 2000.
(c) Calculation based on 101,140,347 shares of Common Stock outstanding as of
March 21, 2000.
(d) Includes 1,929,441 shares owned directly and 28,128 shares issuable upon
the exercise of stock options.
(e) Includes 25,237 shares owned directly and 3,467 shares issuable upon the
exercise of stock options. Mr. Brooks was the Company's Chief Financial
Officer through August 31, 1999.
(f) All shares are issuable upon the exercise of stock options.
(g) Includes 27,000 shares owned directly and 43,875 shares issuable upon the
exercise of stock options.
(h) Includes 20,000 shares owned directly and 108,750 shares issuable upon the
exercise of stock options.
(i) Includes 225,906 shares owned directly and 117,500 share issuable upon the
exercise of stock options.
(j) Includes 40,000 shares owned directly and 80,000 shares issuable upon the
exercise of stock options.
(k) Includes 3,844,163 shares owned directly, 50,000 shares issuable upon the
exercise of stock options, and 3,551,027 shares issuable upon the exercise
of warrants.
(l) Includes 20,000 shares owned directly and 121,250 shares issuable upon the
exercise of stock options.
(m) Mr. Cahill was appointed the Company's Vice President--Finance and
Administration, Chief Financial Officer and Secretary on January 26, 2000.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION OF NAMED EXECUTIVES
The Summary Compensation Table shows certain compensation information for
each person who served as Chief Executive Officer during the year and the other
most highly compensated executive officers whose aggregate compensation exceeded
$100,000 for services rendered in all capacities during fiscal year 1999
(collectively referred to as the "Named Executive Officers"). Compensation data
is shown for the fiscal years ended December 31, 1999, 1998, 1997. 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 COMPENSATION AWARDS
ALL OTHER
NAME AND STOCK COMPENSA-
PRINCIPAL POSITION YEAR SALARY(A) BONUS OPTIONS(#) TION(C)
- ------------------ ---- --------- ----- ---------- ---------
Douglas P. Boyd 1999 $182,000 -- -- $ 4,750
Chairman of the Board 1998 182,000 -- 75,008(b) 4,750
1997 174,300 -- -- 4,750
S. Lewis Meyer 1999 234,000 -- 960,000 4,750
Chief Executive Officer 1998 234,000 -- 100,000(b) 4,750
1997 221,500 -- -- 4,750
Terry Ross(d) 1999 200,000 $167,135 300,000 --
President
Gary H. Brooks 1999 103,961 -- -- 3,796
Vice President and 1998 144,000 -- 50,000(b) 4,320
Chief Financial Officer 1997 137,000 -- -- 4,020
(through 8/31/99)
- --------------------------------------------------------------------------------
(a) Amounts shown include cash and non-cash compensation earned with respect to
the year listed.
(b) Represents the number of options granted by the Board of Directors on
February 24, 1998 at 100% of the closing price of a share of Company stock
on that date, and subsequently repriced and regranted on October 23, 1998.
(c) Represents the Company's matching contributions to its 401(k) plan.
(d) Mr. Ross was appointed President on January 1, 1999. Pursuant to Mr. Ross'
employment agreement, he receives an annual base salary of $200,000 and an
annual commission in the amount of 0.5% of product and upgrade sales
revenue paid monthly
INCENTIVE AND REMUNERATION PLANS
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 was
amended and restated by the Board in 1996 and is administered by the
Compensation Committee of the Board of Directors, which presently consists of
Mr. Test, Dr. Myler, and Admiral McDaniel. 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
8
<PAGE>
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 Stock Bonus Plan; and all other
actions the Committee deems necessary or advisable to administer the Stock Bonus
Plan.
The total number of shares of Common Stock which may be issued under the
Stock Bonus Plan is 2,200,000 shares, with no more than 400,000 shares available
for issuance in any single calendar year. This number of shares available for
issuance in any single year will increase to 650,000 shares if approved by the
shareholders. (SEE PROPOSAL TWO OF THIS STATEMENT.)
In addition, the Compensation Committee has authorized additional bonus
opportunities for participants based on the participant achieving specific
corporate objectives. The bonus opportunity for each participant is expressed as
a percentage of base salary, with a maximum bonus opportunity of 40% of base
salary. The number of shares of Common Stock to be issued is determined by
dividing the bonus award by the market price for the Common Stock on the
issuance date.
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 1999 fiscal year, 644,173 shares were granted to all employees under the
Stock Bonus Plan of which no shares were granted to any Named Executive Officer.
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 Named 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, as amended, but it is not
subject to the provisions of ERISA.
The purposes of the 1994 Plan are to induce persons of outstanding ability
and potential to join and remain with the Company, to provide an incentive for
such employees to expand and improve the profits and prosperity of the Company
by enabling such person to acquire proprietary interests in the Company, and to
attract and retain key personnel by providing employees the opportunity to
purchase shares of the Company's common stock. The maximum aggregate number of
shares to be offered under the Plan is 2,300,000 shares of the Company's Common
Stock. In fiscal year 1999, 244,902 shares of the Company's Common Stock were
issued under the Plan.
All employees who are regular employees of the Company, and who are
customarily employed for at least 20 hours per week are eligible to participate
in the Plan. The first Offering Period began January 1, 1994 and ran through
March 31, 1996. The second Offering Period began April 1, 1996 and ran through
June 30, 1998. The third Offering Period began July 1, 1998 and runs through
September 30, 2000. Each Interim Offering Period is a calendar quarter. As of
March 21, 2000, a total of 204 employees met the eligibility requirements under
the Plan.
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
established from time to time (currently established at $7,000) 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.
9
<PAGE>
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 (4) 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
succeeded the 1983 Stock Option Plan which expired in 1993. The Option Plan
covers an aggregate of 11,500,000 shares of Common Stock. As of March 21, 2000,
options to purchase 7,849,360 shares of common stock had been granted since the
Company instituted the Option Plan.
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 1993 Option Plan is not qualified under Section 401(a)
of the Internal Revenue Code nor is it subject to the provisions of ERISA.
Options may be granted under the Option Plan to all full-time regular
employees including officers, directors (if 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 March 21, 2000 approximately 204
employees were eligible to participate in the Option Plan.
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.
10
<PAGE>
The maximum term of each option is ten years. Incentive Stock Options (ISO)
granted under the Plan generally vest in sixteenths, one-sixteenth each quarter
of a year over a four year period following the date of grant. Non-Statutory
Options (NSO) 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
The following table sets forth the options granted during the last fiscal
year to each of the Named Executive Officers of the Company:
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
- ---------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERM(B)
- ---------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (#) YEAR(A) ($)/SHARE DATE 5% 10%
- ---- ---------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Lewis Meyer(c) 960,000 29.9% $2.19 12/10/09 $1,322,188 $2,107,227
Terry Ross(d) 300,000 9.3% $1.13 01/01/09 213,195 540,279
</TABLE>
- ----------
(a) Based on 3,211,742 options granted to all employees in fiscal year 1999.
(b) Pursuant to the rules of the Securities and Exchange Commission, the dollar
amounts set forth in these columns are the result of calculations based on
the set rates of 5% and 10%, and therefore are not intended to forecast
possible future appreciation, if any, of the price of the Common Stock.
(c) Granted on December 10, 1999 and vest quarterly over three years.
(d) Pursuant to Mr. Ross' employment agreement, dated Januar 5, 1999, 125,000
vest quarterly over the first 12 months of employment, 125,000 vest
quarterly over the second 12 months of employment, and 50,000 vest
quarterly in the event Mr. Ross serves for a third 12 months of employment.
11
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth the options exercised during the last fiscal
year by Named Executive Officers of the Company:
<TABLE>
<CAPTION>
Aggregated Options Exercised and Option Values in Fiscal Year 1999
- ----------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN
UNDERLYING UNEXERCISED THE MONEY OPTIONS AT
OPTIONS AT YEAR-END (#) YEAR-END ($)
SHARES ACQUIRED VALUE
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Terry Ross 31,250 $53,719 150,000/225,000 $328,125/$546,875
Gary Brooks 35,000 $111,164 15,000/40,000 $37,500/$100,000
</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:
o Link rewards to business results and stockholder returns;
o Encourage creation of stockholder value and achievement of
strategic objectives;
o Maintain an appropriate balance between base salary and short-and
long-term incentive opportunity;
o Attract and retain, on a long-term basis, highly qualified
executive personnel; and
o 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.
12
<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 INCENTIVES
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.
CASH BONUS PROGRAM. From time to time, the Committee adopts an Executive
Officer Cash Bonus Program, pursuant to which executive officers are eligible to
receive a bonus from a pool consisting of a set percentage of net profits from
that particular fiscal year. The Committee allocates to each executive officer a
percentage of the bonus pool. For the year 1999 the Committee did not adopt a
Cash Bonus Program.
STOCK BONUS INCENTIVE PLAN. In 1988 the shareholders approved the adoption
of the 1987 Stock Bonus Incentive Plan, which was subsequently updated and
amended in 1996 and in 1999. Under the terms of the Stock Bonus Plan, the
Committee may award shares of the Company's Common Stock to employees, including
executive officers. In 1999, no stock bonus awards were made to any executive
officer.
LONG-TERM INCENTIVES
Long-term incentive awards provided by shareholder-approved compensation
programs are designed to develop and maintain strong management through share
ownership and incentive awards. During 1999, the Compensation Committee awarded
300,000 and 960,000 options to the President and the Chief Executive Officer,
respectively, as set forth on the above chart.
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, which number
was increased to 11,500,000 shares at the 1999 Annual Meeting. 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.
13
<PAGE>
1999 COMPENSATION
Total revenue, net product revenue, scanner shipments and total assets for
the year ended December 31, 1999 increased from the prior fiscal year, but
HeartScan Imaging, Inc., the Company's majority-owned subsidiary, sustained
losses, albeit substantially less than those sustained during the prior fiscal
year. Nevertheless, compensation levels during 1999 were principally driven by a
highly competitive market in San Francisco and Silicon Valley, particularly for
personnel with engineering and technical training. As a consequence,
compensation for such personnel increased approximately 3% to 5%.
Effective January 1, 1999, at the recommendation of the Chief Executive
Officer, the Board adopted a freeze on the base salaries of all executive
officers, including the Chief Executive Officer. The salary freeze will remain
in effect until the Board determines that such action should be revised or
terminated.
1999 CHIEF EXECUTIVE OFFICER COMPENSATION
Effective January 1, 1997, Mr. Meyer's base salary was increased from
$205,000 to $215,250. Effective January 1, 1998, it was increased to $228,000.
All of these adjustments reflect modest cost of living increases. 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
William J. McDaniel, M.D.
Aldo J. Test
Richard K. Myler, M.D.
14
<PAGE>
- --------------------------------------------------------------------------------
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 includes
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.
PERFORMANCE GRAPH
[THE FOLLOWING IS A LINE GRAPH IN ITS PRINTED PIECE.]
<PLOT POINT NEEDED>
YEAR 1994 1995 1996 1997 1998 1999
- ---- ---- ---- ---- ---- ---- ----
Imatron Inc. 100 183 303 211 126 229
NASDAQ Stock Market 100 141 174 213 300 542
H&Q Technology Index 100 150 186 218 339 757
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
S. Lewis Meyer became President and Chief Executive Officer of the Company
in June 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, 1994 and continuing for rolling
15
<PAGE>
six month periods thereafter (filed as an Exhibit to Annual Report on Form 10-K
for 1993.) Pursuant to the agreement, in the event of his termination, Mr. Meyer
is entitled to receive six months of compensation at the annual salary rate then
in effect.
Terry Ross became President of the Company on January 1, 1999. The Company
entered into a two-year employment agreement with Mr. Ross dated January 5,
1999, which provides for an annual base salary of $200,000 and an annual
commission in the amount of 0.5% of product and upgrade sales revenue paid
monthly. Pursuant to the Agreement, Mr. Ross received (i) a warrant to purchase
200,000 shares of Common Stock at an exercise price of $1.375 per share, 100,000
shares of which vest on the date 6 months after commencement of employment, with
the remaining 100,000 shares vesting on the date 12 months after employment
commences; and (ii) an option to purchase 300,000 shares of Common Stock at an
exercise price of $1.13 per share, 125,000 shares of which vest quarterly over
the first 12 months of employment, 125,000 shares of which vest quarterly over
the second 12 months of employment, and 50,000 shares of which vest quarterly in
the event Mr. Ross serves for a third 12 months of employment.
In connection with his employment, the Company and Mr. Ross have an
understanding that if his employment terminates within the first 24 months of
employment for any reason other than termination for cause or voluntary
resignation, he will be entitled to: salary and benefits that would have been
payable for the greater of twelve months or the then balance from the
termination date to 24 months; immediate vesting of options and warrants granted
in connection with his employment; and an exercise period regarding those
options and warrants of two years from the date of termination.
REPORT ON REPRICING OF OPTIONS/SARS
Effective February 24, 1998, the Compensation Committee of the Board of
Directors repriced all options previously granted to employees pursuant to the
Company's 1993 Stock Option Plan to the lesser of the actual grant price or 100%
of the closing price of a price of the Company's common stock on that date,
which price was subsequently determined to be $2.56. This repricing applied to
all employees equally, including Named Executive Officers, to the extent that
they held options previously granted under the 1993 Plan. Pursuant to this
repricing, the Company repriced 760,597 options previously granted to employees.
Named Executive Officers held none of the repriced options.
Thereafter, effective October 23, 1998, the Board of Directors approved a
resolution pursuant to which all optionholders, including Named Executive
Officers, were given the option of returning to the Company any outstanding
option having an exercise price of greater than $1.50 for cancellation and
repricing at $1.50, which was 100% of the closing price of a share of the
Company's common stock as of that date. Pursuant to this repricing, the Company
cancelled and regranted 1,158,992 options previously granted to employees, of
which 100,000, 75,008 and 50,000 respectively were granted to Messrs. Meyer,
Boyd and Brooks. Pursuant to the October 23, 1998 repricing option, the vesting
schedule with respect to any options cancelled and thereupon regranted for a ten
year term at an exercise price of $1.50 began anew with a new original grant
date of October 23, 1998.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF MARKET
SECURITIES PRICE EXERCISE
UNDER OF STOCK PRICE NEW LENGTH OF
OPTIONS AT TIME OF AT TIME OF EXERCISE ORIGINAL
NAME DATE REPRICED REPRICING REPRICING PRICE($) OPTION TERM
- ---- ---- ---------- ---------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Douglas P. Boyd 10/23/98 75,008 $1.50 $2.56 $1.50 2/24/08
S. Lewis Meyer 10/23/98 100,000 $1.50 $2.56 $1.50 2/24/08
Gary H. Brooks 10/23/98 50,000 $1.50 $2.56 $1.50 2/24/08
</TABLE>
The basis of the regrant to all employees, including to the above Named
Executive Officers, was the opinion of the Compensation Committee that this
method provided employees with the greatest amount of incentive to increase the
value of the Company.
16
<PAGE>
FILINGS BY DIRECTORS, EXECUTIVE OFFICERS AND TEN PERCENT HOLDERS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, 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.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that three reports were not
timely filed. Mr. Meyer and Dr. Boyd were four days late filing a Form 4
beneficial ownership report, and Mr. Test was one day late filing a Form 4
report.
PROPOSAL TWO
TO APPROVE THE INCREASE IN THE NUMBER OF SHARES AUTHORIZED TO BE
ISSUED PURSUANT TO THE EMPLOYEE STOCK BONUS INCENTIVE PLAN
The following is a summary of the material features of the Imatron Inc.
Stock Bonus Incentive Plan, as amended, including amendments for which
shareholder approval is being requested.
PROPOSAL
In May 1987, the Company adopted the 1987 Stock Bonus Incentive Plan
("Stock Bonus Plan") to enable the Company to award stock bonuses to select
employees as a reward for past services and to encourage them to remain with the
Company. The shareholders approved the Stock Bonus Plan in 1988. In October
1996, the Company amended and restated the Stock Bonus Plan, deregistered all
unsold shares of common stock issuable under the Plan, and filed a new
registration statement as to such unsold shares. At the 1999 Annual Meeting, the
shareholders approved an amendment increasing the number of shares authorized to
be issued pursuant to the Plan from 1,200,000 common shares to 2,200,000 common
shares, with no more than 400,000 shares available for issuance in any single
calendar year. On August 1, 1999, the Board amended the Stock Bonus Plan to
increase the number of shares available for issuance in any single year to
650,000. At the Annual Meeting, the shareholders are being requested to consider
and approve this increase. The remaining provisions of the Stock Bonus Plan
remain unchanged from the 1996 amendments. The affirmative vote of the holders
of a majority of the shares represented and voting at the meeting is required
for approval.
MANAGEMENT RECOMMENDS A VOTE "FOR" PROPOSAL TWO
PURPOSE
The purpose of the Stock Bonus Plan is to enable the Company to reward past
services of selected employees with bonuses consisting of common stock and to
encourage them to remain in the Company's service, as well as to provide the
Company with a valuable tool for recruitment and retention of managers and
employees of outstanding ability in the current competitive marketplace.
ADMINISTRATION
The Plan is administered by the Compensation Committee of the Board of
Directors, which determines the meaning and application of the Plan's
provisions, selects employees, including officers, and consultants who
participate; determines each participant's stock bonus award; waives or changes
any of the Plan's conditions; adopts or amends rules and guidelines relating to
the Plan; and takes other actions deemed necessary to administer the Plan.
17
<PAGE>
ELIGIBILITY
Any consultant or employee currently providing services is eligible to
receive a bonus. The Committee selects participants whom it believes are in a
position to contribute materially to the attainment of the Company's goals and
objectives. Actual awards are made to reward participants for helping the
Company meet annual business plan goals through a high level of goal oriented
performance which exceeds that normally expected for which the participant is
regularly paid a salary.
BONUS AWARDS
Participants are eligible to receive up to a maximum bonus of 40% of the
participant's salary. The Committee determines any participant's actual stock
bonus award, if any. Participants receiving stock valued at less than $3,000 are
issued stock as soon as practicable following the award. Bonuses of stock valued
at greater than that amount are issued within 60 days thereafter. Distributions
of bonus shares are made from authorized but unissued shares. Participants must
be currently employed or providing consulting service to the Company at the time
of the bonus award.
SHARES SUBJECT TO THE PLAN
The total number of shares of the Company's Common Stock which may be
issued under the Plan may not exceed 2,200,000 shares, subject to stock split,
recapitalization or similar change in corporate structure. If the shareholders
approve the proposal, in no event may the Company make more than 650,000 shares
per year available for issuance pursuant to bonus awards in any fiscal year.
PROPOSAL THREE
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected KPMG LLP, independent auditors, to audit the
financial statements of the Company for the fiscal year ending December 31,
2000. KPMG LLP has audited the Company's financial statements since 1997.
Representatives of KPMG LLP are expected to be present at the Annual Meeting,
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 affirmative vote of the holders of a majority of the shares of Common
Stock voting in person or by proxy on this proposal is required to ratify the
appointment of the independent auditors.
MANAGEMENT RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS
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,
Frank Cahill
Secretary
April 13, 2000
18
<PAGE>
IMATRON INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS--MAY 12, 2000
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 Embassy Suites Hotel, 250 Gateway Boulevard,
South San Francisco, California, at 10:00 a.m. local time on Friday, May 12,
2000, 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 AN AFFIRMATIVE VOTE FOR PROPOSALS ONE, TWO AND
THREE:
1. To elect directors to hold office until the 2001 annual meeting of
shareholders or until their successors are elected.
[_] FOR all nominees [_] WITHHOLD AUTHORITY
listed below to vote for all nominees
(except as marked below) listed below
Douglas P. Boyd William J. McDaniel Richard K. Myler Terry Ross
John L. Couch S. Lewis Meyer Allen M. Chozen Aldo Test
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, STRIKE THAT NOMINEE'S NAME FROM
THE LIST ABOVE:
- --------------------------------------------------------------------------------
2. To approve the increase in the number of shares authorized to be issued in
any single year pursuant to the Stock Bonus Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To ratify the appointment of KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
(cont. on reverse side)
<PAGE>
The undersigned hereby acknowledges receipt of (a) Notice of Annual Meeting of
Shareholders to be held May 12, 2000, (b) the accompanying Proxy Statement, and
(c) the annual report of the Company for the year ended December 31, 1999. If no
specification is made, this proxy will be voted FOR proposals one, two and
three.
Date:_______________________ , 2000
___________________________________
___________________________________
Please sign exactly as signature
appears on this proxy card.
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.
