<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
FISCHER IMAGING CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[FISCHER IMAGING CORPORATION LOGO]
12300 NORTH GRANT STREET
THORNTON, COLORADO 80241
(303) 452-6800
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 1997
----------------------
The Annual Meeting of Stockholders of Fischer Imaging Corporation
(the "Company") will be held at the Holiday Inn, 10 East 120th Avenue,
Northglenn, Colorado 80233, on Friday, May 16, 1997, at 1:00 p.m., for the
following purposes:
(1) To elect two Class III directors to the Board of Directors.
(2) To approve an increase in the number of shares of the Company's
$.01 par value common stock ("the Common Stock"), authorized for
issuance under the Company's 1993 Nonemployee Director Stock
Option Plan (the "1993 Director Plan") from 100,000 shares to
200,000 shares, eliminate the lifetime limitation on the number
of options a nonemployee director may receive under the plan,
permit discretionary grants of options under the plan and amend
certain other provisions of the plan.
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Only stockholders holding shares of Common Stock of record at the
close of business on April 11, 1997, will be entitled to notice of, or to vote
at, the Annual Meeting or any adjournment thereof.
STOCKHOLDERS, WHETHER OR NOT THEY EXPECT TO BE PRESENT AT THE ANNUAL
MEETING, ARE REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE ENCLOSED FOR THAT PURPOSE. ANY PERSON GIVING A PROXY
HAS THE POWER TO REVOKE IT AT ANY TIME, AND STOCKHOLDERS WHO ARE PRESENT AT THE
ANNUAL MEETING MAY WITHDRAW THEIR PROXIES AND VOTE IN PERSON.
By Order of the Board of Directors,
/s/ CARLA J. WOLIN,
Carla J. Wolin,
Secretary
April 21, 1997
<PAGE> 3
FISCHER IMAGING CORPORATION
12300 NORTH GRANT STREET
THORNTON, COLORADO 80241
--------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 1997
This Proxy Statement is furnished in connection with the solicitation
of proxies for use at the Annual Meeting of Stockholders of Fischer Imaging
Corporation (the "Company") to be held on Friday, May 16, 1997, or at any
adjournment or adjournments thereof, at the time and place and for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders. This
Proxy Statement and the enclosed proxy, together with the Company's Annual
Report for the year ended December 31, 1996, are being mailed to the Company's
stockholders on or about April 21, 1997.
The accompanying proxy is solicited on behalf of the Board of
Directors of the Company. It may be revoked at any time before it is exercised
by giving written notice of its revocation to the Secretary of the Company or
by filing a later-dated proxy with the Secretary. All shares of the Company's
Common Stock, $.01 par value ("Common Stock"), represented by properly executed
and unrevoked proxies, will be voted if said proxies are received prior to or
at the meeting.
Only holders of shares of the Company's Common Stock of record at the
close of business on April 11, 1997 will be entitled to vote at the Annual
Meeting. At the record date, there were outstanding 6,941,798 shares of Common
Stock, which constitute all of the voting securities of the Company. Each share
of Common Stock is entitled to one vote upon each matter presented at the
Annual Meeting. The affirmative vote of a plurality of the shares voting at the
Annual Meeting, assuming a quorum is present, is necessary for the election of
the directors. Stockholders do not have the right to cumulate votes in the
election of directors. See Proposal No. 1 "Election of Directors." Approval of
the amendment to the Company's 1993 Nonemployee Director Stock Option Plan,
which would increase the number of shares authorized for issuance under the
plan, eliminate the lifetime limitation on the number of options a nonemployee
director may receive under the plan, permit discretionary grants of options
under the plan, and amend certain other provisions of the plan, will require
the affirmative vote of a majority of the shares of Common Stock represented in
person or by proxy and entitled to vote at the Annual Meeting. Abstentions and
broker non-votes will be counted as present for purposes of determining whether
a quorum is present, and broker non-votes will not be treated as entitled to
vote on this matter at the Annual Meeting. See Proposal No. 2 "Approval of
Amendment to the Company's 1993 Nonemployee Director Stock Option Plan."
The Company will bear the costs of soliciting proxies. The Company
will supply banks, brokers, dealers and other custodians, nominees and
fiduciaries with proxy materials to enable them to forward such materials to
each beneficial owner of shares which they hold of record. Such persons will be
reimbursed for their reasonable out-of-pocket expenses. In addition to
solicitations by mail, some of the Company's directors, officers and regular
employees, without extra compensation, may supplement this solicitation by
telephone, facsimile, letter or personal interview.
Fischer Imaging Corporation was incorporated in Minnesota in 1973 and
was reincorporated in Delaware in July 1991. As used in this Proxy Statement,
the term "Company" refers to Fischer Imaging Corporation, a Delaware
corporation, and, where appropriate, to its predecessor, a Minnesota
corporation.
The principal executive offices of the Company are located at 12300
North Grant Street, Thornton, Colorado 80241. The Company's telephone number is
(303) 452-6800.
1
<PAGE> 4
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the meeting, two Class III directors are to be elected to hold
office for a term of three years, or until their successors have been duly
elected and qualified. Proxies submitted pursuant to this solicitation will be
voted, unless specified otherwise, for the election of Morgan W. Nields and
Kinney L. Johnson. Information with respect to each nominee is set forth in the
section entitled "Board of Directors." Messrs. Nields and Johnson are currently
directors of the Company. In the event either of the nominees, who have
expressed an intention to serve if elected, fail to stand for election, the
persons named in the enclosed form of proxy may vote for a substitute nominee
in their discretion. The proxy cannot be voted for more than two nominees.
Election of the directors will require the affirmative vote of a
plurality of the shares of Common Stock voted at the Annual Meeting, assuming a
quorum is present. Stockholders do not have a right to cumulate votes in the
election of directors.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE ELECTION OF THE TWO PERSONS NOMINATED AS DIRECTORS.
BOARD OF DIRECTORS
NOMINEES AND MEMBERS OF THE BOARD OF DIRECTORS
The Board of Directors consists of three classes of directors, each
class serving for a three-year term ending in successive years. The authorized
number of directors is currently six. The Class III directors, whose terms will
expire at the 1997 Annual Meeting, are Morgan W. Nields and Kinney L. Johnson.
The Class I directors, whose terms will expire at the 1998 Annual Meeting, are
Frank W. T. LaHaye and Lawrence A. Lehmkuhl. The Class II directors, whose
terms will expire at the 1999 Annual Meeting, are David G. Bragg, M. D., and
Thomas J. Cable.
The following table lists the members of the Board of Directors and
their ages, positions with the Company, terms of office and the years they were
first elected as directors.
<TABLE>
<CAPTION>
Position with the Director
Name Age Company Since
---- --- ----------------- --------
<S> <C> <C> <C> <C>
Class III Nominees for a Three Year Term Expiring in 2000:
Morgan W. Nields 51 Chairman of the Board 1973
and Chief Executive Officer
Kinney L. Johnson 53 Director 1973
Class II Directors Whose Terms Expire in 1999:
David G. Bragg, M. D. 63 Director 1985
Thomas J. Cable 57 Director 1984
Class I Directors Whose Terms Expire in 1998:
Frank W. T. LaHaye 68 Director 1984
Lawrence A. Lehmkuhl 59 Director 1993
</TABLE>
2
<PAGE> 5
DIRECTORS
David G. Bragg, M.D. has been a director of the Company since 1985.
Dr. Bragg is the Benning Presidential Endowed Professor and former Chairman of
the Department of Radiology, University of Utah School of Medicine, with which
he has been affiliated since 1970. He is also currently Special Assistant to
the Director, Diagnostic Imaging Program of the National Cancer Institute, a
member of the American Board of Radiology, and a director of the American
Investment Bank, N.A. Dr. Bragg is a member of the Audit Committee of the Board
of Directors.
Thomas J. Cable has been a director of the Company since 1984. Mr.
Cable founded and has been general partner of Cable & Howse Ventures, Inc., a
venture capital firm, since 1977. He is a director of EndoSonics Corporation,
Ostex International Corporation and Mycogen Corporation. Mr. Cable is a member
of the Compensation Committee of the Board of Directors.
Morgan W. Nields has served as Chief Executive Officer and Chairman
of the Board since the Company's incorporation in 1973 and served as President
from August 1990 until December 1992. Mr. Nields is a Director and member of
the Board of Governors of the National Electrical Manufacturers Association
(NEMA). He holds a BA degree from Williams College and an MBA from the Amos
Tuck School of Business Administration at Dartmouth College.
Kinney L. Johnson has been a director of the Company since 1973 and
was actively involved with the management of the Company from 1973 through
February 1985. Since February 1985, Mr. Johnson has been a principal at Capital
Health Venture Partners, a venture capital firm located in Denver, Colorado.
Mr. Johnson is a director of Access Health, Inc. Mr. Johnson is a member of the
Audit Committee of the Board of Directors.
Frank W.T. LaHaye has been a director of the Company since 1984. Mr.
LaHaye has been a general partner of Peregrine Associates and Miller & LaHaye,
the partnerships that serve as the general partners of Peregrine Ventures and
Peregrine Ventures II Venture Capital Funds since 1981 and 1984, respectively.
Mr. LaHaye is an unaffiliated outside director or trustee of twenty seven
mutual funds or trusts of the Franklin/Templeton Group of Funds. He is chairman
and director of Quarterdeck Corporation and a director of Digital Transmission
Systems, Inc. Mr. LaHaye is a member of the Compensation Committee of the Board
of Directors.
Lawrence A. Lehmkuhl has been a director of the Company since 1993.
He is retired from St. Jude Medical, Inc., a medical device manufacturer, where
he has held, variously, the positions of Chairman of the Board, President and
Chief Executive Officer. Mr. Lehmkuhl was employed by American Hospital Supply
Corporation from 1966 through the date of his appointment as President and
Chief Executive Officer of St. Jude Medical, Inc. in February 1985. Mr.
Lehmkuhl is also a director of St. Jude Medical, Inc., Aequitron Medical, Inc.,
and Kera Vision, Inc. Mr. Lehmkuhl is a member of the Compensation Committee.
3
<PAGE> 6
BOARD MEETINGS AND COMMITTEES
The Board of Directors held six meetings in 1996. Each director
attended at least 75% of the meetings during 1996.
The Board of Directors has an Audit Committee, which is presently
composed of Mr. Johnson and Dr. Bragg. The Audit Committee met twice in 1996 to
consider various accounting and auditing matters related to the Company, to
review the Company's financial statements, to review the services rendered by
the Company's independent public accountants and to recommend the selection of
independent public accountants for the Company.
The Board of Directors also has a Compensation Committee, which is
presently composed of Messrs. Cable, LaHaye and Lehmkuhl. The Compensation
Committee met four times in 1996 to review and recommend compensation for the
Company's senior officers. The Compensation Committee also administers the
Company's 1991 Stock Option Plan and Employee Stock Purchase Plan.
The Board of Directors does not have a nominating committee.
COMPENSATION OF DIRECTORS
All nonemployee directors of the Company are reimbursed for expenses
incurred for attendance at meetings of the Board of Directors. In addition, Dr.
Bragg and Mr. Lehmkuhl receive an annual director's fee of $10,000.
In 1993, the Company adopted a Nonemployee Director Stock Option Plan
(the "1993 Director Plan"). Pursuant to the 1993 Director Plan, which is
administered by the Board of Directors, a director who is not an employee of
the Company automatically receives a grant of options to purchase 2,000 shares
of Common Stock upon his or her election to the Board of Directors, plus an
additional grant of options to purchase 2,000 shares on each February 26th
thereafter (if the person remains a director on such date). Members of the
Board of Directors serving on the Compensation and Audit Committees receive
additional options to purchase, respectively, 2,000 and 1,000 shares of Common
Stock upon election to these committees and each February 26th thereafter. The
1993 Director Plan currently provides that each director may receive options to
purchase a maximum of 18,000 shares of Common Stock. The options granted under
the 1993 Director Plan have an exercise price equal to the fair market value of
the Common Stock on the date of grant, are immediately exercisable and expire
five years from their date of grant. If a person ceases to be a director for
any reason other than death or disability, the options remain exercisable for a
period of three months. In the event of death or disability, the options remain
exercisable for twelve months. A total of 100,000 shares of Common Stock has
been reserved for issuance under the 1993 Director Plan. As of December 31,
1996, options to purchase 70,000 shares of Common Stock had been granted at an
average price of $8.10 per share.
There is a proposal to amend the 1993 Director Plan to increase the
number of shares of Common Stock authorized for issuance under the plan from
100,000 to 200,000 shares, eliminate the lifetime limitation on the number of
options a nonemployee director may receive under the plan, permit discretionary
grants of options under the plan, and amend certain other provisions of the
plan. See Proposal No. 2 "Approval of Amendment to the Company's 1993
Nonemployee Director Stock Option Plan."
In addition, on February 4, 1997, the Company granted to each
nonemployee director options to purchase 4,000 shares (7,000 shares in the case
of Dr. Bragg) of Common Stock in recognition of
4
<PAGE> 7
additional services to the Company over the preceding year. These options,
which vest and are exercisable six months from date of grant, have an exercise
price of $6.625, the market price of the Common Stock on the date of grant.
These options were not granted under the 1993 Director Plan.
EXECUTIVE OFFICERS
The current executive officers of the Company, who serve at the
pleasure of the Board of Directors, are as follows:
<TABLE>
<CAPTION>
Name Age Position with Company
---- --- ---------------------
<S> <C> <C>
Morgan W. Nields 51 Chairman of the Board and
Chief Executive Officer
Anthony G. DeCarolis 50 Vice President, Sales and Marketing
James A. Newcomb 50 Vice President, Finance and
Chief Financial Officer
Mike Tesic, Ph.D. 59 Vice President, Engineering
Carla J. Wolin 47 Vice President, Administration and Secretary
</TABLE>
Biographical information regarding Mr. Nields is set forth above
under the heading "Directors."
Anthony G. DeCarolis joined the Company in May 1995 as Vice President
of Sales and became Vice President, Sales and Marketing shortly thereafter.
Prior to joining the Company, Mr. DeCarolis served in national sales management
positions for Toshiba America Medical Systems from 1989 to March 1995 and in
management positions at General Electric Company from 1985 to 1989. Mr.
DeCarolis holds a BS degree from the University of Pittsburgh.
James A. Newcomb joined the Company in June 1995 as its Vice
President, Finance and Chief Financial Officer. Previously, Mr. Newcomb was
Vice President of Finance, Chief Financial Officer for Neodata Services, Inc.,
a direct marketing and fulfillment company, from September 1993 to May 1994,
and Vice President Controller of Teco Energy Inc., a diversified utility
holding company, from June 1989 to August 1993. From 1985 to 1989, Mr. Newcomb
was Vice President of Finance for the defense electronics business of
AlliedSignal Inc. Mr. Newcomb holds a BA degree in Economics from Beloit
College in Wisconsin and an MBA from the Amos Tuck School of Business
Administration at Dartmouth College.
Dr. Tesic joined the Company in November 1993 as Vice President,
Engineering. Prior to joining the Company, Dr. Tesic served as Vice President
of Engineering and Strategic Development of Lunar Corporation, a medical
capital equipment manufacturer, from January 1992 to November 1993. Dr. Tesic
was also previously Manager of Research and Development for Varian
Corporation's Magnetic Resonance Spectroscopy business from July 1986 to
January 1992 and, prior to that, held several management positions with Picker
International. Dr. Tesic holds a Ph.D. degree in physics from Case Western
Reserve University.
Carla J. Wolin joined the Company in February 1992 and, in 1994,
became the Company's Vice President, Administration. In June 1995, she assumed
the additional responsibilities of Secretary of the Corporation. From February
1990 to January 1992, Ms. Wolin served as Vice President of Human Resources and
Risk Management of Aerospatiale Helicopter Corporation. Ms. Wolin holds a BS
degree in business from Capital University and attended graduate school at
Rockford College.
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 1,
1997, with respect to the beneficial ownership of the Company's Common Stock by
(i) each stockholder known by the Company to be the beneficial owner of more
than 5% of the Company's Common Stock; (ii) each director of the Company; (iii)
the Company's Chief Executive Officer and the four most highly compensated
executives other than the Chief Executive Officer at the end of the Company's
last fiscal year; and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned(1)
----------------------------
Name and Address of Beneficial Owner Number Percentage
------------------------------ ------------ ----------
<S> <C> <C>
GE Medical Systems, a division of
General Electric Company 1,333,333(2) 16.1%
P. O. Box 414
Milwaukee, Wisconsin 53201
Kennedy Capital Management, Inc. 441,525 6.4
10829 Olive Boulevard
St. Louis, Missouri 63141
Deerfield Capital L.P. et al 400,000 5.8
450 Lexington Avenue
Suite 1930
New York, NY 10017
Morgan W. Nields 1,052,893(3) 15.0
12300 North Grant St.
Denver, CO 80241
Kinney L. Johnson 287,500(4) 3.9
Frank W.T. LaHaye 161,901(5) 2.3
David G. Bragg, M.D. 9,000(6) *
Thomas J. Cable 21,064(7) *
Lawrence A. Lehmkuhl 18,000(8) *
Anthony G. DeCarolis 12,000(9) *
James A. Newcomb 8,000 *
Mike Tesic 7,500(10) *
Carla J. Wolin 10,993(11) *
All directors and executive officers
as a group (10 persons) 1,573,851(12) 22.1%
</TABLE>
* Less than 1%
- ------------------------
(1) Unless otherwise noted, each person identified possesses sole voting and
investment power with respect to the shares listed. A beneficial owner is
any person who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power or
investment power over the shares. Number of shares includes all shares
underlying options that will be exercisable prior to May 1, 1997.
(2) Represents 1,333,333 shares of Series D Convertible Preferred Stock
("Preferred Stock") that are immediately convertible into 1,333,333 shares
of Common Stock at the option of their holder. Until converted, the
Preferred Stock is non-voting, except as required by law.
(3) Includes 170,523 and 118,943 shares held by The Robert L. Nields Trust and
the Florence Wesson Nields Irrevocable Trust, respectively. Mr. Nields is
a co-trustee and a beneficiary of both trusts and exercises shared voting
and investment power as to such shares. The amount shown also includes
66,250 shares which may be purchased pursuant to options exercisable prior
to May 1, 1997.
6
<PAGE> 9
(4) Includes 18,000 shares which may be purchased pursuant to options
exercisable prior to May 1, 1997.
(5) Mr. LaHaye is a general partner of the general partner of each of
Peregrine Ventures II, L.P. ("PVII") and Peregrine Ventures, L.P. ("PV").
The table includes 79,145 shares held by PVII and 64,756 shares held by
PV. Mr. LaHaye is a general partner of Miller & LaHaye, the general
partner of PVII and is a general partner of Peregrine Associates, the
general partner of PV. Mr. LaHaye exercises shared voting and investment
power with respect to all of such shares and disclaims beneficial
ownership of such shares. The amount shown includes 18,000 shares which
may be purchased pursuant to options exercisable prior to May 1, 1997.
(6) Represents 9,000 shares which may be purchased pursuant to options
exercisable prior to May 1, 1997.
(7) Includes 18,000 shares which may be purchased pursuant to options
exercisable prior to May 1, 1997.
(8) Represents 18,000 shares which may be purchased pursuant to options
exercisable prior to May 1, 1997.
(9) Includes 5,000 shares which may be purchased pursuant to options
exercisable prior to May 1, 1997.
(10) Represents 7,500 shares which may be purchased pursuant to options
exercisable prior to May 1, 1997.
(11) Includes 8,750 shares which may be purchased pursuant to options
exercisable prior to May 1, 1997.
(12) Includes 168,500 shares which may be purchased pursuant to options
exercisable prior to May 1, 1997.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company
to its Chief Executive Officer and to the four most highly compensated
executive officers other than the Chief Executive Officer for services rendered
during the fiscal years ended December 31, 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards -
# of Securities All Other
Annual Compensation Underlying Compen-
Name and Principal Position Year Salary(1) Bonus Options(2) sation(3)
--------------------------- ---- --------- ----- ---------- ---------
<S> <C> <C> <C> <C> <C>
Morgan W. Nields 1996 $214,709 $ 0 125,000 $ 75,750
Chairman of the Board 1995 187,904 34,856 125,000 76,674
Chief Executive Officer 1994 185,277 0 25,000 55,632
Richard F. Balla (4) 1996 123,937 0 0 33,464
Vice President, 1995 123,934 17,660 70,000 34,388
Operations-Chicago 1994 112,266 0 10,000 33,464
Anthony G. DeCarolis (5) 1996 133,699 45,504 76,000 0
Vice President, Sales and 1995 85,355 29,167 90,000 0
Marketing 1994 0 0 0 0
Charles L. Dumas (6) 1996 129,504 0 0 36,578
Vice President , Operations 1995 142,611 45,000 70,000 35,818
1994 45,874 0 30,000 0
James A. Newcomb (7) 1996 132,305 15,000 76,000 0
Vice President Finance and 1995 65,305 15,000 90,000 0
Chief Financial Officer 1994 0 0 0 0
Mike Tesic, Ph.D 1996 152,622 0 76,000 21,577
Vice President, Engineering 1995 132,383 30,020 70,000 21,577
1994 130,000 0 20,000 21,577
Carla J. Wolin 1996 121,993 0 76,000 0
Vice President, 1995 109,323 16,445 70,000 924
Administration and Secretary 1994 99,017 3,200 10,000 0
</TABLE>
(1) The amount includes payouts, if any, for excess accrued vacation.
(2) Included in the 1996 option awards are options repriced during the year
(100,000 as to Mr. Nields and 56,000 as to Ms. Wolin and Messrs.
DeCarolis, Newcomb and Tesic). The remainder of the 1996 option awards
represent new options granted during the year. See "Option Grants in Last
Fiscal Year" and "Ten-Year Option Repricings in Last Fiscal Year".
(3) This amounts principally represent the premiums paid under "split-dollar"
life insurance on behalf of certain officers under which the Company will
be reimbursed for premiums paid upon the officer's death. The executive
receives no ownership in the portion of cash surrender value representing
premiums paid under the policies until retirement, and then only if
minimum service requirements have been met.
The 1995 amounts for Ms. Wolin and Messrs. Balla, Dumas, and Nields
include, in addition to "split-dollar" life insurance premiums, $924 of
contributions made on behalf of each of these executives by the Company to
The Fischer Imaging Employee Capital Accumulation Plan, a savings plan
governed by Section 401(k) of the Internal Revenue Code of 1986, as
amended. There were no contributions made on behalf of the executives or
any other employees of the Company during 1996 or 1994.
(4) Mr. Balla left the Company in November 1996. Accordingly, no compensation
was paid to him subsequent to that date.
(5) Mr. DeCarolis joined the Company in May 1995. Accordingly, no compensation
was paid prior to him prior to that date.
(6) Mr. Dumas joined the Company in September 1994 and left the Company in
August 1996. Accordingly, no compensation was paid to him prior to or
subsequent to those dates, respectively.
(7) Mr. Newcomb joined the Company in June 1995. Accordingly, no compensation
was paid to him prior to that date.
8
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to
individual grants of stock options to the Company's Chief Executive Officer and
the four most highly compensated executive officers other than the Chief
Executive Officer, during the fiscal year ended December 31, 1996:
<TABLE>
<CAPTION>
Percent of Potential Realizable
Number of Total Value at Assumed
Securities Options Exercise Annual Rates of
Underlying Granted to or Base Stock Price Appreciation
Options Employees Price Expiration for Option Term (5)
Name Granted (#) in 1996 ($/Share) Date At 5%($) At 10%($)
---- -------------- ------------ ------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Morgan W. Nields 20,000(1),(2) 24.4% $5.81 10/03/05 $ 64,064 $157,794
80,000(1),(3) 5.81 12/14/05 258,257 631,174
25,000(4) 5.81 12/20/06 91,347 231,491
Anthony G. DeCarolis 16,000(1),(2) 14.8% 5.81 10/03/05 51,251 126,235
40,000(1),(3) 5.81 12/14/05 128,129 315,587
20,000(4) 5.81 12/20/06 73,078 185,193
James A. Newcomb 16,000(1),(2) 14.8% 5.81 10/03/05 51,251 126,235
40,000(1),(3) 5.81 12/14/05 128,129 315,587
20,000(4) 5.81 12/20/06 73,078 185,193
Mike Tesic 16,000(1),(2) 14.8% 5.81 10/03/05 51,251 126,235
40,000(1),(3) 5.81 12/14/05 128,129 315,587
20,000(4) 5.81 12/20/06 73,078 185,193
Carla J. Wolin 16,000(1),(2) 14.8% 5.81 10/03/05 51,251 126,235
40,000(1),(3) 5.81 12/14/05 128,129 315,587
20,000(4) 5.81 12/20/06 73,078 185,193
</TABLE>
No options were granted to Messrs. Balla or Dumas during 1996, as
both individuals had left the Company prior to the date options were granted
for 1996.
(1) On December 20, 1996, the Company's Board of Directors granted new stock
options to the Company's officers and key employees in exchange for
certain options granted to those officers and employees in 1995. See
"Ten-Year Option Repricing in Last Fiscal Year."
(2) The new options granted in exchange for the options originally granted to
executive officers on October 3, 1995 retained the original October 3,
2005 expiration date and the original four year vesting period (25%
vesting per year commencing one year from date of original grant and on
each subsequent anniversary date), except that the new options are not
exercisable until six months after the date of exchange. The vesting of
these options accelerates upon a change of control of the Company.
(3) The new options granted in exchange for the options originally granted to
executive officers on December 14, 1995 retained the original December 14,
2005 expiration date and vesting formula, which provides for vesting in
four equal installments upon successive 30% increases in the market price
of the Company's common stock over the market price on date of option
exchange, or the target price relating to the preceding vesting date, as
applicable. The installments vest only if the market price of the common
stock meets or exceeds these targets for at least 45 consecutive trading
days. Any such options which have not vested 9 years and 11 months from
date of their original grant will vest at that time. These new options are
not exercisable until six months after the date of exchange. The vesting
of these options accelerates upon a change of control of the Company.
9
<PAGE> 12
(4) On December 20, 1996, the Company's Board of Directors granted new options
to the Company's executive officers at an exercise price of $5.81 per
share, the market price of the Company's stock at that date. These options
vest upon the earlier of (a) the date that the market value of the
Company's stock has reached targeted price levels for a period of 20
consecutive trading days, (b) upon the attainment of certain annual
earnings per share targets, or (c) 25% on the date that is six months from
date of grant, with the remainder vesting in equal monthly installments
over the following 24 months.
(5) Potential realizable values are reported net of the option exercise price,
but before taxes associated with the exercise of the option. These amounts
are based on the total of all option grants to the executive for the year
and upon the assumed rates of appreciation only over the option term (10
years as to new options granted during 1996 and the 9 year remaining
option term as to options exchanged during 1996). Actual gains, if any, on
stock option exercises are dependent on the future performance of the
Common Stock, as well as the option holder's continued employment through
the vesting period. The amounts reflected in this table may not
necessarily be achieved.
10
<PAGE> 13
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END STOCK OPTION VALUES
The table below sets forth information concerning exercises of stock
options during 1996 and the value of stock options held at the end of the
fiscal year ended December 31, 1996 by the Company's Chief Executive Officer
and the four most highly compensated executive officers other than the Chief
Executive Officer:
<TABLE>
<CAPTION>
# of Securities Underlying Value of Unexercise
# of Shares Value Realized Unexercised Options In-the-Money Options
Acquired (market price at December 31, 1996 at December 31, 1996 (1)
on at exercise, less ---------------------------- -------------------------------
Name Exercise exercise price) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- --------------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Morgan W. Nields 0 $ 0 66,250 143,750 $ 27,969 $ 27,656
Richard F. Balla 23,910 106,146 0 0 0 0
Anthony G. DeCarolis 0 0 5,000 91,000 3,125 14,315
Charles L. Dumas 8,000 26,000 0 0 0 0
James A. Newcomb 5,000 12,188 0 91,000 0 33,065
Mike Tesic 10,000 77,375 7,500 88,500 6,875 18,690
Carla J. Wolin 10,000 65,500 8,750 82,250 7,344 12,284
</TABLE>
(1) Based on the closing stock price at December 31, 1996 of $5.875 per share,
as reported on the Nasdaq National Market, less exercise price.
TEN-YEAR OPTION REPRICINGS IN LAST FISCAL YEAR
As described in the table below, on December 20, 1996, the Company's
Board of Directors granted new stock options to the Company's officers and key
employees in exchange for certain options granted to those officers and
employees in 1995.
<TABLE>
<CAPTION>
Number of Number of
Securities Securities
Underlying Underlying Market Price Exercise Length of Original
Options Options of Stock Price New Option Term
Date of Before After at Time of at Time of Exercise Remaining at
Name Exchange Exchange Exchange Exchange Exchange Price Date of Exchange
- ---- -------- -------- -------- ---------- ---------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Morgan W. Nields 12/20/96 25,000 20,000 $5.81 $8.38 $5.81 8 years,10 months
12/20/96 100,000 80,000 5.81 10.00 5.81 9 years
Anthony G. DeCarolis 12/20/96 20,000 16,000 5.81 8.38 5.81 8 years, 10 months
12/20/96 50,000 40,000 5.81 10.00 5.81 9 years
James A. Newcomb 12/20/96 20,000 16,000 5.81 8.38 5.81 8 years, 10 months
12/20/96 50,000 40,000 5.81 10.00 5.81 9 years
Mike Tesic 12/20/96 20,000 16,000 5.81 8.38 5.81 8 years, 10 months
12/20/96 50,000 40,000 5.81 10.00 5.81 9 years
Carla J. Wolin 12/20/96 20,000 16,000 5.81 8.38 5.81 8 years, 10 months
12/20/96 50,000 40,000 5.81 10.00 5.81 9 years
</TABLE>
None of the options previously granted Messrs. Balla or Dumas were
repriced during 1996, as both individuals had left the Company prior to the
date of exchange.
The Compensation Committee of the Board of Directors approved the
exchange of new options for old options described above in an attempt to assure
that such options would continue to provide appropriate incentives for the
retention of officers and key employees, in view of the significant decline in
the market value of the Company's common stock. The Compensation Committee
structured the
11
<PAGE> 14
exchange of the options to offset the decreased exercise price of the options
(and, thus, their increased value to their holders) against a decrease in the
number of shares of the Company's common stock for which the options are
exercisable. Based on this approach, and on the Company's calculations of the
value of the old options and the new options under the Black-Scholes option
pricing model, the new options have an exercise price of $5.81 per share (the
fair market value of the Company's common stock on the date of grant), but are
exercisable for only 80% as many shares of common stock as the original
options. The Compensation Committee believes that terms of the exchange provide
appropriate incentives to the Company's officers and key employees and are fair
to the Company and its stockholders.
<TABLE>
<S> <C> <C>
Thomas J. Cable Frank W.T. LaHaye Lawrence A. Lehmkuhl
Compensation Committee Member Compensation Committee Member Compensation Committee Member
</TABLE>
RETENTION BONUS PLAN
In December 1995, the Board of Directors adopted a Retention Bonus
Plan (the "Plan"). Under the Plan, the Company will vest all options to
purchase shares of Common Stock and will make payments to executive officers
and other key employees of the Company (the "Participants") in the event of a
change of control of the Company. A "change of control" under the Plan is
defined to include acquisition of 35% or more of the Company's outstanding
Common Stock by a single person or group, certain changes in the composition of
the Board of Directors, a consolidation or merger in which the Company is not
the surviving corporation, the sale or other transfer of 50% or more of the
assets or earnings power of the Company, the adoption of a plan of liquidation
or dissolution of the Company, or certain other similar events. Payments made
to a Participant under the Plan will not exceed an amount equal to his or her
annual base salary in effect immediately prior to the change of control. The
Participants, which presently include the executive officers of the Company,
are selected by the Board of Directors, who may select additional Participants
in the future.
COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee is composed of three nonemployee Directors.
The Committee's executive compensation policies are designed to
provide competitive levels of compensation that integrate compensation with the
Company's performance, recognize individual initiative and achievements, and
assist the Company in attracting and retaining qualified executives.
Since its inception, the Company has maintained the philosophy that
compensation of its executive officers and others should be directly and
materially linked to the Company's operating performance. To achieve this
linkage, executive compensation is partially weighted towards incentive
compensation bonuses paid on the basis of the Company's operating performance.
After its review of the Company's programs, the Committee believes that the
total compensation program for executives of the Company during 1996 was
adequate.
12
<PAGE> 15
1996 EXECUTIVE OFFICER COMPENSATION
In 1996, the compensation packages paid to the executives consisted
of base salary, incentive compensation (in the form of cash bonuses), and
long-term incentive compensation (in the form of stock options).
BASE SALARY
The Compensation Committee reviews the base salary levels for the
Company's executive officers annually based on the Chief Executive Officer's
recommendations. Base salaries are set to be competitive with the salaries paid
by other publicly-traded medical capital equipment manufacturers with similar
revenues (as determined by a review of publicly available information). These
manufacturers include some of the companies that comprise the Company's Peer
Index on page 15. Base salaries are also set based on each particular
executive's experience, expertise, responsibilities, potential for advancement,
and other factors. The Compensation Committee has not found it practicable, nor
has it attempted, to assign relative weights to the specific factors used in
determining base salary levels, and the specific factors used may vary among
individual officers. As is typical for most companies, payment of base salary
is not conditioned upon the achievement of any specific, pre-determined
performance targets.
INCENTIVE COMPENSATION
The incentive compensation program provides the potential for the
executive officers and other key employees to earn cash incentive bonuses based
on the Company's performance for the year. The incentive bonus pool for 1996
was based on the Company's achievement of certain earnings targets. These
targets were set during 1996 by the Compensation Committee, based on the
recommendations of the Chief Executive Officer. Executive officers and other
key employees generally share in the bonus pool in proportion to their base
salary. Because the earnings targets were not met, the Company did not make any
incentive compensation payments in 1996.
The Compensation Committee may also approve, in its sole discretion,
bonus payments to executive officers that are not directly linked to previously
established performance objectives. In 1996, such bonuses were paid to Anthony
G. DeCarolis and James A. Newcomb in connection with their recruitment and
employment by the Company. Additionally, the Compensation Committee has
authorized the Chief Executive Officer to, where appropriate to an executive's
specific employment responsibilities, establish bonus opportunities based upon
individual performance objectives. Under such an arrangement, Mr. DeCarolis
received a cash bonus in 1996.
LONG-TERM INCENTIVE COMPENSATION
The Company provides long-term incentive compensation through its
1991 Stock Option Plan (the "1991 Plan"), which provides for grants of stock
options to executive officers and other key employees. The Compensation
Committee uses stock options as a significant element of the executive
officers' compensation packages. Because the executive officers receive no
benefit from the stock options unless the Company's stock price appreciates,
the options are intended to provide incentives for the executive officers to
enhance long-term Company performance, as reflected in stock price
appreciation, thereby increasing stockholder value.
13
<PAGE> 16
The Compensation Committee approved the stock options granted to the
executive officers in 1996 based on the objectives described above. The options
granted on December 20, 1996 vest upon the earlier of (1) the date that the
market value of the Company's stock has reached targeted price levels for a
period of 20 consecutive trading days, (2) upon the attainment of certain
annual earnings per share targets, or (3) 25% on the date that is six months
from date of grant, with the remainder vesting in equal monthly installments
over the following 24 months. In addition, the Compensation Committee modified
the terms of certain options issued in 1995 based on the objectives described
above. See "Ten-Year Option Repricings in Last Fiscal Year." The size and
nature of the option grants made to the executive officers in 1996 were
determined based on a subjective evaluation of the appropriate level of
incentive necessary to retain on a long-term basis the services of executives
with the experience, expertise, and responsibilities of the executive group.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
1n 1996, the Compensation Committee structured the compensation
package of Morgan Nields, the Company's Chief Executive Officer, in the same
manner and based upon the same objectives as the Company's other executive
officers. The Compensation Committee believes that Mr. Nields' total
compensation package for 1996 properly reflects his importance and
contributions to the Company.
SECTION 162 (M)
Section 162(m) of the Internal Revenue Code of 1986, as amended,
limits the federal income tax deductions of publicly traded companies to the
that extent total compensation (including base salary, annual bonus, restricted
stock awards, stock option exercises, and non-qualified benefits) for certain
executive officers exceeds $1 million in any one year. The Compensation
Committee intends to design the Company's compensation program so that the
compensation paid to its employees will be completely deductible by the
Company.
<TABLE>
<S> <C> <C>
Thomas J. Cable Frank W.T. LaHaye Lawrence A. Lehmkuhl
Compensation Committee Member Compensation Committee Member Compensation Committee Member
</TABLE>
14
<PAGE> 17
FIVE YEAR STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph set forth below compares the cumulative total
stockholder return on the Company's Common Stock for the five year period from
December 31, 1991 to December 31, 1996, with the cumulative total return on the
Nasdaq National Market Index and a Peer Group Index over the same period.
(Assumes the investment of $100 in the Company's Common Stock and the
respective indexes on December 31, 1991, with reinvestment of all dividends.)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/91 3/92 6/92 9/92 12/92 3/93 6/93 9/93 12/93 3/94 6/94 9/94 12/94 3/95 6/95
----- ---- ---- ---- ----- ---- ---- ---- ----- ---- ---- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fischer Imaging 100 88 68 81 48 43 33 28 28 34 24 26 28 27 29
Nasdaq 100 103 98 100 116 118 121 131 134 128 122 132 131 142 183
Peer Group 100 80 82 72 83 72 64 63 62 55 48 57 58 51 83
<CAPTION>
9/95 12/95 3/96 6/96 9/96 12/96
---- ----- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Fischer Imaging 45 52 75 62 29 30
Nasdaq 182 185 183 209 217 227
Peer Group 75 79 100 121 102 108
</TABLE>
*Companies in Peer Group are:
Acuson Corp. EndoSonics Corporation
ADAC Laboratories Fonar Corp.
Advanced Technology Labs, Inc. Hologic, Inc.
Biomagnetic Technologies, Inc. Imatron, Inc.
Elscint Limited Lunar Corp.
15
<PAGE> 18
CERTAIN TRANSACTIONS
The Company's Thornton headquarters and manufacturing facility is
leased from a partnership whose general partners are Morgan W. Nields, Chief
Executive Officer and Chairman of the Company, and Kinney L. Johnson, a member
of the Company's Board of Directors, under a lease effective August 1, 1992,
which expires July 31, 2012. The lease requires the Company to pay all taxes,
insurance, operating and maintenance expenses for the facility, and provides
for an annual base rent which is subject to adjustment at the beginning of the
3rd, 8th, 13th and 18th lease year based on the then current market rent for
similar premises, provided the base rent may not be increased at any one time
by more than 7%. The Company made total lease payments of $744,000 in 1996.
The foregoing lease was approved by a majority of the Company's
disinterested directors at the time it was entered into by the Company. The
Company believes that this lease was entered into for bona fide business
purposes and was on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.
GE Medical Systems ("GEMS"), a division of General Electric Company,
owns 1,333,333 shares of Series D Convertible Preferred Stock, representing an
approximately 16% current ownership interest in the Company. In 1996, the
Company's sales to GEMS under an Original Equipment Manufacturer contract
accounted for $10.0 million, or 12.9%, of the Company's total revenues.
APPROVAL OF AMENDMENT TO THE
COMPANY'S 1993 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
(THE "1993 DIRECTOR PLAN")
(PROPOSAL NO. 2)
On February 26, 1997, the Board of Directors unanimously approved and
recommended for adoption certain amendments to the Company's 1993 Director Plan
which, if approved by the Company's stockholders, would (i) increase the number
of shares of Common Stock authorized for issuance under the 1993 Director Plan
from 100,000 to 200,000 shares, (ii) eliminate the lifetime limitation on the
number of options a nonemployee director may receive under the plan, (iii)
permit discretionary grants of options under the plan and (iv) amend certain
other provisions of the plan.
Currently, there are 100,000 shares of Common Stock authorized for
issuance under the 1993 Director Plan. As of March 31, 1997, options to
purchase 78,000 shares were outstanding, at a weighted average exercise price
of $8.10 per share. Through March 31, 1997, a total of 6,000 shares had been
issued upon the exercise of options granted under the plan. Therefore, if the
1993 Director Plan is not amended, options to purchase up to only 16,000 shares
of Common Stock may be granted under the plan in the future. In addition, the
1993 Director Plan presently provides that each nonemployee director may
receive options to purchase a maximum of 18,000 shares of Common Stock under
the plan. Under this limitation, three of the five nonemployee directors are
now unable to receive additional options. Also, the 1993 Director Plan does not
permit discretionary grants of options to nonemployee directors and does not
contain certain other provisions that would increase the flexibility of the
plan and are now permitted under applicable law. Accordingly, in order to
preserve the effectiveness of the 1993 Director Plan as an equity compensation
vehicle for attracting and retaining nonemployee directors, the Company
believes that it is necessary to amend the 1993 Director Plan as described
above.
16
<PAGE> 19
As of March 31, 1997, all of the Company's five nonemployee directors
were eligible to participate in the 1993 Director Plan, subject to the terms of
the plan. Only nonemployee directors are eligible to participate in the 1993
Director Plan. In 1996, as described under the heading "Compensation of
Directors," these nonemployee directors received automatic grants of options
under the 1993 Director Plan, as well as certain discretionary grants of
options outside of the 1993 Director Plan. If the amendments to the 1993
Director Plan are approved, the nonemployee directors will continue to receive
the same automatic grants of options under the plan. The Company is unable to
determine the extent to which it will make discretionary grants of options
under the plan.
DESCRIPTION OF THE PLAN
The following summary of the 1993 Director Plan, and the proposed
amendments to the plan, are qualified in all respects by reference to the full
text of the 1993 Director Plan, copies of which are available upon written
request to Carla J. Wolin, Secretary, Fischer Imaging Corporation, 12300 North
Grant Street, Thornton, Colorado, 80241.
Purpose
The purpose of the 1993 Director Plan is to provide long-term
incentives and rewards to the Company's nonemployee directors in recognition of
their services to the Company.
Plan Administration
The 1993 Director Plan is administered by the Board of Directors.
Subject to the terms of the 1993 Director Plan, the Board of Directors
determines the persons to whom options are granted, the number of shares
covered by the options and certain other terms and conditions of the options.
The 1993 Director Plan may also be administered by a Committee of the Board of
Directors, although it has not been so administered in the past.
Eligibility
Options may be granted only to nonemployee directors of the Company.
Any nonemployee director who is prohibited by a policy of his or her employer
from receiving options under the 1993 Director Plan is not eligible to receive
options.
Terms and Conditions of Options
Certain options are granted automatically under the 1993 Director
Plan as follows: (i) upon his or her initial election or appointment to the
Board of Directors and on each February 26th thereafter (if the person remains
a director on such date), each of the nonemployee directors receives options to
purchase 2,000 shares of Common Stock and (ii) each nonemployee director
serving on the Compensation and Audit Committees of the Board of Directors
receive additional options to purchase 2,000 and 1,000 shares of Common Stock,
respectively, upon his or her election to these committees and on each February
26th thereafter.
Options automatically granted to nonemployee directors are fully
vested on the date of grant and expire five years from the date of grant. If a
director is removed or resigns from the Board of Directors, such options
terminate, except that if his or her status as a director is terminated for any
17
<PAGE> 20
reason other than death or disability, he or she may exercise the options
within three months of such termination. If the director dies or is disabled
while serving as a director, such options may be exercised for a period of
twelve months. However, under no circumstances may such options be exercised
after the expiration of their five year term.
The purchase price per share of Common Stock to be purchased upon the
exercise of any option automatically granted under the 1993 Director Plan shall
be fixed by the Board of Directors at the time of grant of the option, but
shall always equal 100% of the fair market value of the shares of Common Stock
on the date such option is granted. On April 11, 1997, the last reported sale
price of the Common Stock on the Nasdaq National Market was $4.75 per share.
Other terms of options automatically granted under the 1993 Director
Plan are determined by the Board of Directors. Each option may contain terms
and provisions different from other options granted to the same or other
recipients. A written option agreement, signed by an officer of the Company, is
issued to each nonemployee director to whom an option is granted.
Under the 1993 Director Plan as currently in effect, discretionary
grants of options to nonemployee directors are not permitted. The 1993 Director
Plan is proposed to be amended to allow the Board of Directors to make
discretionary grants of options to nonemployee directors. The number of shares
underlying such discretionary grants of options and the exercise price, vesting
and other terms and conditions of such options shall be determined by the Board
of Directors at the time such options are granted.
Under the 1993 Director Plan as currently in effect, no nonemployee
director may receive options to purchase more than 18,000 shares of Common
Stock. This limitation is proposed to be eliminated.
Shares of Common Stock Subject to the 1993 Director Plan
The maximum number of shares of Common Stock that may be issued
pursuant to the exercise of options granted under the 1993 Director Plan cannot
presently exceed, in the aggregate, 100,000 shares of Common Stock, subject to
adjustment upon certain adjustments to the capital stock of the Company. The
1993 Director Plan is proposed to be amended to increase this number to 200,000
shares. If any option terminates or expires for any reason without having been
exercised in full, the shares of Common Stock not purchased under such option
will be once again available for issuance under the 1993 Director Plan.
Exercise of Options
Options are exercised by delivery of written notice to the Board of
Directors, setting forth the number of shares as to which the option is being
exercised and accompanied by the full purchase price. The Board of Directors,
in its own discretion, may permit a nonemployee director to deliver a
promissory note or surrender shares of Common Stock previously acquired as part
or full payment of the exercise price, such shares to be valued at their then
fair market value. The Board of Directors may also allow a nonemployee director
to conduct a simultaneous exercise of an option and sale of the underlying
Common Stock through a broker.
18
<PAGE> 21
Changes in the Company's Capital Structure
In the event of any stock split, subdivision, re-division,
consolidation or other similar adjustment of the Common Stock, the aggregate
number of shares of Common Stock that may be granted under the 1993 Director
Plan, the number of shares of Common Stock covered by each outstanding option
and the price per share thereof in each option may be appropriately adjusted by
the Board of Directors.
Sale, Reorganization, Merger or Liquidation
If the Company or its stockholders enter into an agreement to dispose
of all, or substantially all, of the assets or outstanding capital stock of the
Company by means of a sale, reorganization, merger or liquidation, the Board of
Directors shall have the power and discretion to prescribe the terms and
conditions for the exercise of, or modification of, the options granted under
the 1993 Director Plan.
Non-Transferability of Options
Under the 1993 Director Plan as currently in effect, options are not
transferable by the holder thereof other than by will or under the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code, Title I of the Employee Retirement Income
Security Act or the rules thereunder. The 1993 Director Plan is proposed to be
revised to allow a nonemployee director to transfer an option if the transfer
is approved by the Board of Directors.
Six Month Holding Period
Under the 1993 Director Plan as currently in effect, shares of Common
Stock received upon exercise of an option may not be sold or disposed of within
six months of the date the option was granted. This limitation is proposed to
be eliminated.
Amendment and Termination of the 1993 Director Plan
The 1993 Director Plan, as amended, shall remain in effect until such
time as it is terminated by the Board of Directors. The Board of Directors may
discontinue or amend the 1993 Director Plan, provided that no amendments may
adversely affect outstanding options without the approval of the holder
thereof. Under the 1993 Director Plan as currently in effect, any amendment to
the 1993 Director Plan that would increase the maximum number of shares of
Common Stock that may be made subject to options (unless necessary to effect
certain adjustments as a result of a stock split, stock dividend or similar
event), change the class of persons to whom options may be granted or
materially increase the benefits accruing to participants under the 1993
Director Plan requires the approval of the Company's stockholders. In addition,
the 1993 Director Plan currently provides that certain of its provisions
concerning eligibility, the number of shares subject to the 1993 Director Plan,
the granting of options and the price of options shall not be amended more than
once every six months, except in certain specified instances. The 1993 Director
Plan is proposed to be amended to eliminate the provisions described in the
preceding two sentences and to add a provision that the 1993 Director Plan may
be amended by the Board of Directors without stockholder approval to the extent
permitted by applicable law or the rules of the Nasdaq National Market (or any
other
19
<PAGE> 22
automated quotation system or securities exchange upon which the Company's
securities are listed). The Nasdaq National Market generally requires that
material amendments to director stock option plans be approved by a company's
stockholders. The Nasdaq National Market staff has informally indicated that
increases in the number of shares authorized for issuance under such a plan
(other than aggregate increases of less than 10%), significant increases in the
benefits offered under the plan and significant changes in the type of persons
eligible to participate in the plan would be material amendments to the plan
and would, therefore, require stockholder approval.
FEDERAL INCOME TAX CONSEQUENCES OF THE 1993 DIRECTOR PLAN
The following is a general summary of the federal income tax
consequences that may apply to the recipients of stock options under the 1993
Director Plan. Because the application of tax laws may vary according to
individual circumstances, a participant should seek professional tax advice
concerning the tax consequences to him or her of participating in the 1993
Director Plan, including the potential application and effect of state, local
and foreign tax laws and estate and gift tax considerations.
Non-Statutory Stock Options
Under the 1993 Director Plan, the Company may grant only
non-statutory stock options. A person who is granted a non-statutory stock
option recognizes no taxable income at the time of grant. However, upon the
exercise of a non-statutory stock option, the difference between the fair
market value of the shares on the date of exercise and the exercise price of
the option is taxable as ordinary income and generally is deductible by the
Company.
Upon the disposition of shares acquired pursuant to the exercise of a
non-statutory stock option, the participant will recognize a capital gain or
loss in an amount equal to the difference between the selling price and the
participant's adjusted basis in such shares. There are no tax consequences to
the Company as a result of the participant's disposition of shares acquired
upon exercise of a non-statutory stock option.
Withholding
The Company may withhold any taxes required by any law or regulation
of any governmental authority, whether federal, state or local, in connection
with any stock option or other award under the 1993 Director Plan, including,
but not limited to, withholding of any portion of any payment or withholding
from other compensation payable to the participant, unless such person
reimburses the Company for such amount.
REQUIRED VOTE
Approval of this amendment will require the affirmative vote of a
majority of the shares of Common Stock represented in person or by proxy and
entitled to vote at the Annual Meeting. Abstentions and broker non-votes will
be counted as present for purposes of determining whether a quorum is present,
and broker non-votes will not be treated as entitled to vote on this matter at
the Annual Meeting.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE 1993 DIRECTOR PLAN.
20
<PAGE> 23
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, which has been the independent public
accountants for the Company and its subsidiaries since 1973, has been selected
by the Company's Board of Directors, upon recommendation of its Audit
Committee, as independent public accountants for the Company and its
subsidiaries for the fiscal year ending December 31, 1997. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting and will
be provided an opportunity to make comments with respect to the Company's
financial statements and to respond to appropriate inquiries from stockholders.
DISCLOSURE OF FILINGS BY INSIDERS
The Company's officers and directors and persons who are beneficial
owners of more than 10% of the Company's Common Stock ("10% beneficial owners")
are required to file reports of their holdings and transactions in the
Company's Common Stock with the Securities and Exchange Commission ("SEC") and
the Nasdaq National Market and to furnish the Company with copies of such
reports.
Based solely upon its review of the reports it has received and upon
written representations it has obtained from some of these persons, the Company
believes that the Company's officers, directors and 10% beneficial owners have
complied with all such filing requirements with respect to 1996 except as set
forth in this paragraph. Late Form 4 filings were made with respect to one
transaction each by Messrs. DeCarolis and Nields, and Ms. Wolin and with
respect to two transactions by Mr. Newcomb. Late Form 5 filings were made with
respect to one transaction each by Dr. Bragg, Ms. Wolin, and Messrs. Balla,
Cable, DeCarolis, Dumas, Johnson, LaHaye, Lehmkuhl, Newcomb, Nields, and Tesic.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 1998 ANNUAL MEETING
Stockholder proposals submitted for presentation at the 1998 Annual
Meeting of Stockholders of the Company must be received by the Company no later
than January 23, 1998.
DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the Annual Meeting any
matters other than those disclosed in the Notice of Annual Meeting of
Stockholders, and it does not know of any business which persons, other than
management, intend to present at the meeting. Should any other matters
requiring a vote of the stockholders arise, the proxies in the enclosed form
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote the same in respect of any such
other matter in accordance with their best judgment.
Any shareholder who executes and returns the proxy may revoke the
same at any time before it is exercised by filing with the Secretary of the
Company written notice of such revocation or a duly executed proxy bearing a
later date, or by attending the Annual Meeting and voting in person. Attendance
at the Annual Meeting will not in and of itself constitute revocation of a
proxy.
UPON WRITTEN REQUEST BY ANY STOCKHOLDER TO JAMES A. NEWCOMB, VICE
PRESIDENT FINANCE AND CHIEF FINANCIAL OFFICER, FISCHER IMAGING CORPORATION,
12300 NORTH GRANT STREET, THORNTON, COLORADO 80241, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 WILL BE
PROVIDED WITHOUT CHARGE.
By Order of the Board of Directors,
/s/ CARLA J. WOLIN,
CARLA J. WOLIN,
Secretary
Thornton, Colorado
April 21, 1997
<PAGE> 24
FISCHER IMAGING CORPORATION
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
Adopted on February 26, 1993
Amended on February 26, 1997
I. PURPOSE
The Fischer Imaging Corporation Nonemployee Director Stock Option Plan
(the "Plan") provides for the grant of Stock Options to Nonemployee Directors
of Fischer Imaging Corporation (the "Company") in order to advance the
interests of the Company through the attraction, motivation and retention of
its Nonemployee Directors.
II. NON-STATUTORY STOCK OPTIONS
The Stock Options granted under the Plan shall be nonstatutory stock
options ("NSOs") which are intended to be options that do not qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
III. ADMINISTRATION
3.1 Committee. The Plan shall be administered by the Board of
Directors of the Company (the "Board") or by a committee of two or more
directors (the "Committee"). The Committee or the Board, as the case may be,
shall have full authority to administer the Plan, including authority to
interpret and construe any provision of the Plan and any Stock Option granted
thereunder, and to adopt such rules and regulations for administering the Plan
as it may deem necessary in order to comply with the requirements of the Code
or in order to conform to any regulation or to any change in any law or
regulation applicable thereto. The Board of Directors may reserve to itself
any of the authority granted to the Committee as set forth herein, and it may
perform and discharge all of the functions and responsibilities of the
Committee at any time that a duly constituted Committee is not appointed and
serving. All references in this Plan to the "Committee" shall be deemed to
refer to the Board of Directors whenever the Board is discharging the powers
and responsibilities of the Committee.
3.2 Actions of the Committee. All actions taken and all
interpretations and determinations made by the Committee in good faith
(including determinations of Fair Market Value) shall be final and binding upon
all Participants in the Plan, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
and all members of the Committee shall, in addition to their rights as
directors, be fully protected by the Company with respect to any such action,
determination or interpretation.
<PAGE> 25
IV. DEFINITIONS
4.1 "Stock Option." A Stock Option is the right granted under the
Plan to a Nonemployee Director to purchase shares of Common Stock.
4.2 "Common Stock." A share of Common Stock means a share of
authorized but unissued or reacquired common stock (par value $.01 per share)
of the Company.
4.3 "Fair Market Value." If the Common Stock is not traded
publicly, the Fair Market Value of a share of Common Stock on any date shall be
determined, in good faith, by the Board or the Committee after such
consultation with outside legal, accounting and other experts as the Board or
the Committee may deem advisable, and the Board or the Committee shall maintain
a written record of its method of determining such value. If the Common Stock
is traded publicly, the Fair Market Value of a share of Common Stock on any
date shall be the average of the representative closing bid and asked prices,
as quoted by the National Association of Securities Dealers through Nasdaq (its
automated system for reporting quotes), for the date in question or, if the
Common Stock is listed on the Nasdaq National Market or is listed on a national
stock exchange, the officially quoted closing price on Nasdaq or such exchange,
as the case may be, on the date in question.
4.4 "Nonemployee Director". A Nonemployee Director is a Member of
the Board of Directors of the Company who is not also an employee of the
Company.
4.5 "Participant". A Participant is a Nonemployee Director to
whom a Stock Option is granted.
V. OPTION GRANTS
5.1 Automatic Grants of Shares. Upon the initial election or
appointment of a Nonemployee Director to the Company's Board of Directors, the
Nonemployee Director shall be automatically granted a Stock Option to purchase
2,000 shares of Common Stock, plus an additional 2,000 shares of Common Stock
if he or she shall serve on the Compensation Committee, and an additional 1,000
shares of Common Stock if he or she shall serve on the Audit Committee (subject
to adjustment pursuant to Section 6.2 hereof) effective as of the date such
person is elected or appointed to the Board of Directors. Thereafter, on each
succeeding February 26th, each Nonemployee Director then serving on the Board
of Directors shall be automatically granted a Stock Option to purchase 2,000
shares of Common Stock, plus an additional 2,000 shares of Common Stock if such
person is then serving on the Compensation Committee and an additional 1,000
shares of Common Stock if such person is then serving on the Audit Committee
(subject to adjustment pursuant to Section 6.2 hereof). The purchase price per
share of Common Stock for the shares to be purchased pursuant to the exercise
of any such Stock Option shall be 100% of the Fair Market Value of a share of
Common Stock on the date on which the Nonemployee Director is granted the Stock
Option. Such Stock Options shall be fully vested on the date of grant and
shall expire, to the extent not exercised, five years after the date of grant.
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<PAGE> 26
5.2 Discretionary Grants of Options. The Board of Directors may
also make discretionary grants of Stock Options to Nonemployee Directors. The
number of shares of Common Stock underlying such Stock Options and the exercise
price, vesting, and other terms and conditions of such Stock Options shall be
determined by the Board of Directors at the time such Stock Options are
granted.
5.3 Other Terms. Except for the limitations set forth in Section
5.1 with respect to Stock Options automatically granted to Nonemployee
Directors, the terms and provisions of Stock Options shall be as determined
from time to time by the Committee, and each Stock Option issued may contain
terms and provisions different from other Stock Options granted to the same or
other Stock Option recipients. Each Stock Option shall be evidenced by a
written agreement ("Option Agreement") containing such terms and provisions as
the Committee may determine, subject to the provisions of the Plan. Any
Nonemployee Director who is prohibited by a policy of his or her employer from
receiving Stock Options under the Plan will not be eligible to receive Stock
Options under the Plan.
VI. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
6.1 Maximum Number. The maximum aggregate number of shares of
Common Stock that may be made subject to Stock Options shall be 200,000
authorized but unissued shares. If any shares of Common Stock subject to Stock
Options are not purchased or otherwise paid for before such Stock Options
expire, such shares may again be made subject to Stock Options.
6.2 Capital Changes. In the event any changes are made to the
number of shares of Common Stock outstanding (whether by reason of merger,
consolidation, reorganization, recapitalization, stock dividend in excess of
ten percent (10%) at any single time, stock split, combination of shares,
exchange of shares, change in corporate structure or otherwise), appropriate
adjustments shall be made in: (i) the number of shares of Common Stock
theretofore made subject to Stock Options, and in the purchase price of said
shares; and (ii) the aggregate number of shares which may be made subject to
Stock Options. If any of the foregoing adjustments shall result in a
fractional share, the fraction shall be disregarded, and the Company shall have
no obligation to make any cash or other payment with respect to such fractional
share.
VII. EXERCISE OF STOCK OPTIONS
7.1 Exchange of Outstanding Stock. The Committee, in its sole
discretion, may permit a Participant to surrender to the Company shares of
Common Stock previously acquired by the Participant as part or full payment for
the exercise of a Stock Option. Such surrendered shares shall be valued at
their Fair Market Value on the date of exercise.
7.2 Use of Promissory Note. The Committee may, in its sole
discretion, impose terms and conditions, including conditions relating to the
manner and timing of payments, on the exercise of Stock Options. Such terms
and conditions may include, but are not limited to, permitting a
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<PAGE> 27
Participant to deliver to the Company a promissory note as full or partial
payment for the exercise of a Stock Option.
7.3 Stock Restriction Agreement. The Committee may provide that
shares of Common Stock issuable upon the exercise of a Stock Option shall,
under certain conditions, be subject to restrictions whereby the Company has a
right of first refusal with respect to such shares or a right or obligation to
repurchase all or a portion of such shares, which restrictions may survive a
Participant's term as a Director of the Company. The acceleration of time or
times at which a Stock Option becomes exercisable may be conditioned upon the
Participant's agreement to such restrictions.
7.4 Termination of Director Status before Exercise. If a
Participant's term as a Director of the Company shall terminate for any reason
other than the Participant's death or disability, any Stock Option then held by
the Participant, to the extent then exercisable under the applicable Option
Agreement(s), shall remain exercisable after the termination of his Director
status for a period of three months (but in no event beyond five years from the
date of grant of the Stock Option). If the Participant's Director status is
terminated because the Participant dies or is disabled within the meaning of
Section 22(e)(3) of the Code, any Stock Option then held by the Participant, to
the extent then exercisable under the applicable Option Agreement(s), shall
remain exercisable after the termination of his Director status for a period of
twelve months (but in no event beyond five years from the date of grant of the
Stock Option). If the Stock Option is not exercised during the applicable
period, it shall be deemed to have been forfeited and of no further force or
effect.
7.5 Disposition of Forfeited Stock Options. Any shares of Common
Stock subject to Stock Options forfeited by a Participant shall not thereafter
be eligible for purchase by the Participant but may be made subject to Stock
Options granted to other Participants.
VIII. NO EFFECT UPON STOCKHOLDER RIGHTS
Nothing in this Plan shall interfere in any way with the right of the
stockholders of the Company to remove the Participant from the Board pursuant
to the Delaware General Corporation Law or the Company's Certificate of
Incorporation or Bylaws.
IX. NO RIGHTS AS A STOCKHOLDER
A Participant shall have no rights as a stockholder with respect to
any shares of Common Stock subject to a Stock Option. Except as provided in
Section 6.2, no adjustment shall be made in the number of shares of Common
Stock issued to a Participant, or in any other rights of the Participant upon
exercise of a Stock Option by reason of any dividend, distribution or other
right granted to stockholders for which the record date is prior to the date of
exercise of the Participant's Stock Option.
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<PAGE> 28
X. ASSIGNABILITY
Except as approved by the Board, no Stock Option granted under this
Plan, nor any other rights acquired by a Participant under this Plan, shall be
assignable or transferable by a Participant, or any other person other than by
will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code, Title I of the Employee
Retirement Income Security Act ("ERISA"), or the rules thereunder.
Notwithstanding the foregoing, in the event of the Participant's death, the
Stock Option may be exercised by the personal representative of the
Participant's estate or, if no personal representative has been appointed, by
the successor or successors in interest determined under the Participant's will
or under the applicable laws of descent and distribution.
XI. MERGER OR LIQUIDATION OF THE COMPANY
If the Company or its stockholders enter into an agreement to dispose
of all, or substantially all, of the assets of the Company or enters into a
merger or reorganization in which the Company is not the surviving corporation
or the Corporation is the surviving corporation but in which securities
possessing more than 50% of the total combined voting power of the Company's
outstanding securities are transferred to a person or persons different from
the persons holding those securities immediately prior to such merger or
reorganization, the Board shall have the power and discretion to prescribe the
terms and conditions for the exercise of, or modification of, the Stock Options
granted hereunder. By way of illustration, and not by way of limitation, the
Board may provide that such Stock Options will be exchanged or converted into
options to acquire securities of the surviving or acquiring corporation, or may
provide for a payment or distribution in respect of outstanding Stock Options
(or the portion thereof that is currently exercisable) in cancellation thereof.
The Board may provide that Stock Options or other rights granted hereunder must
be exercised in connection with the closing of such transaction, and that if
not so exercised such Stock Options will expire. Any such determinations by
the Board may be made generally with respect to all Participants, or may be
made on a case-by- case basis with respect to particular Participants. The
provisions of this Article XI shall not apply to any transaction undertaken for
the purpose of reincorporating the Company under the laws of another
jurisdiction, if such transaction does not materially affect the beneficial
ownership of the Company's capital stock.
XII. AMENDMENT
The Board may from time to time alter, amend, suspend or discontinue
the Plan, including, where applicable, any modifications or amendments as it
shall deem advisable in order to conform to any regulation or to any change in
any law or regulation applicable thereto; provided, however, that except as
provided in Article XI, no such action shall adversely affect the rights and
obligations with respect to Stock Options at any time outstanding under the
Plan; and provided further that no such action shall be taken without the
approval of the stockholders of the Company if such approval is required by
applicable law or the rules of the Nasdaq National Market (or any other
automated quotation system or securities exchange upon which the Company's
securities are listed).
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<PAGE> 29
XIII. REGISTRATION OF OPTIONED SHARES
The Stock Options shall not be exercisable unless the purchase of such
optioned shares is pursuant to an applicable effective registration statement
under the Securities Act of 1933, as amended (the "Act"), or unless, in the
opinion of counsel to the Company, the proposed purchase of such optioned
shares would be exempt from the registration requirements of the Act and from
the registration or qualification requirements of applicable state securities
laws.
XIV. BROKERAGE ARRANGEMENTS
The Committee, in its discretion, may enter into arrangements with one
or more banks, brokers or other financial institutions to facilitate the
disposition of shares acquired upon exercise of Stock Options including,
without limitation, arrangements for the simultaneous exercise of Stock Options
and sale of the shares acquired upon such exercise.
XV. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan (or any amendments thereto) by the
Board nor the submission of the Plan (or any amendments thereto) to
stockholders of the Company for their approval shall be construed as creating
any limitations on the power or authority of the Board to adopt such other or
additional compensation arrangements of whatever nature as the Board may deem
necessary or desirable or preclude or limit the continuation of any other plan,
practice or arrangement for the payment of compensation or fringe benefits to
Nonemployee Directors, which the Company now has lawfully put into effect.
XVI. EFFECTIVE DATE
This Plan was adopted by the Board of Directors and became effective
on February 26, 1993. This Plan was amended effective February 26, 1997
(subject to stockholder approval).
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<PAGE> 30
PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
FISCHER IMAGING CORPORATION
The undersigned hereby appoints Morgan W. Nields and James A. Newcomb,
and either of them, with power of substitution, as proxies of the undersigned,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of Common Stock of Fischer Imaging Corporation held of record by the
undersigned on April 11, 1997, at the Annual Meeting of Stockholders to be held
on May 16, 1997 or any adjournment or adjournments thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees listed
below, see instructions)
</TABLE>
Nominees: Morgan W. Nields; Kinney L. Johnson
2. APPROVAL OF AMENDMENT TO 1993 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below:
- -----------------------------------------------------------------------------
<PAGE> 31
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
adjournments thereof, upon matters incident to the conduct of the meeting and
upon the election of substituted nominees for directors designated by the Board
of Directors if the persons named in Proposal 1 above are unable to serve as
directors.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted FOR Proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If partnership, please sign in partnership name by
authorized person.
----------------------------------------
Signature
----------------------------------------
Signature if held jointly
----------------------------------------
Date
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
