<PAGE>
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 240.14a-11(c) or 240.14a-12
NORLAND MEDICAL SYSTEMS, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
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.:
----------------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
----------------------------------------------------------------------
<PAGE>
[LOGO]
106 Corporate Drive Park, Suite 106
White Plains, N. Y. 10604
(914) 694-2285
April 29, 1998
To the Stockholders of Norland Medical Systems, Inc.:
The Annual Meeting of Stockholders of Norland Medical Systems, Inc.
(the "Company") will be held on Wednesday, June 3, 1998, at 10:00 a.m. at the
Rye Courtyard By Marriott, 631 Midland Avenue, Rye, New York 10580.
Details of the business to be conducted at the Annual Meeting are
provided in the enclosed Notice of Annual Meeting of Stockholders and Proxy
Statement. The Company's 1997 Annual Report is also enclosed and provides
additional information regarding the financial results of the Company during the
fiscal year ended December 31, 1997.
On behalf of the Board of Directors and employees of the Company, I
cordially invite all stockholders to attend the Annual Meeting. It is important
that your shares be voted on matters that come before the meeting. Whether or
not you plan to attend the meeting, I urge you to promptly complete, sign, date
and return the enclosed proxy card in the prepaid envelope provided.
Sincerely,
Reynald G. Bonmati
President and Chairman of the Board of Directors
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on June 3, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Norland Medical Systems, Inc., a Delaware corporation (the "Company"), will be
held at the Rye Courtyard By Marriott, 631 Midland Avenue, Rye, New York 10580,
at 10:00 a.m. on Wednesday, June 3, 1998, for the following purposes:
i. To elect six directors to serve for the ensuing year; and
ii. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on April 20, 1998 has been fixed as the record
date for determining the stockholders entitled to notice of and to vote at the
Annual Meeting. Only holders of record of Common Stock of the Company at that
date are entitled to vote at the Annual Meeting or any adjournments thereof.
By Order of the Board of Directors,
Kurt W. Streams
Secretary
White Plains, N.Y.
April 29, 1998
Your vote is important. Please complete, sign, date and mail the enclosed Proxy
in the accompanying envelope even if you intend to be present at the meeting.
Returning the Proxy will not limit your right to vote in person or to attend the
Annual Meeting, but will ensure your representation if you cannot attend. If you
hold shares in more than one name, or if your stock is registered in more than
one way, you may receive more than one copy of the proxy material. If so, please
sign and return each of the proxy cards that you receive so that all of your
shares may be voted. The Proxy is revocable at any time prior to its use.
<PAGE>
[LOGO]
106 Corporate Park Drive, Suite 106
White Plains, N. Y. 10604
(914) 694-2285
April 29, 1998
PROXY STATEMENT
This Proxy Statement is being mailed on or about April 30, 1998, to
holders of record as of April 20, 1998, of Common Stock, par value $0.0005 per
share ("Common Stock"), of Norland Medical Systems, Inc. (the "Company") in
connection with the solicitation by the Board of Directors of the Company of a
proxy in the enclosed form for the Annual Meeting of Stockholders of the Company
to be held on June 3, 1998.
A proxy card is enclosed for your use. YOU ARE REQUESTED ON BEHALF OF
THE BOARD OF DIRECTORS TO SIGN, DATE AND RETURN THE PROXY CARD IN THE
ACCOMPANYING ENVELOPE, which requires no postage if mailed in the United States.
If no instructions are specified on the proxy, shares represented
thereby will be voted (i) for the election of the six nominees listed herein as
directors of the Company and (ii) in the discretion of the holder of the proxy
on all other matters that may properly come before the meeting.
Any stockholder who has given a proxy may revoke his or her proxy by
executing a proxy bearing a later date or by delivering written notice of
revocation of his or her proxy to the Secretary of the Company at the Company's
executive offices at any time prior to the meeting or any postponement or
adjournment thereof. Any stockholder who attends in person the Annual Meeting or
any postponement or adjournment thereof may revoke any proxy previously given
and vote by ballot.
As of April 20, 1998, there were 7,164,031 shares of Common Stock
issued and outstanding. The presence of the holders of a majority of the issued
and outstanding shares of Common Stock entitled to vote at the Annual Meeting,
either in person or represented by properly executed proxies, is necessary to
constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions and broker "nonvotes" (which result when a broker holding shares for
a beneficial owner has not received timely voting instructions on certain
matters from such beneficial owner) will be counted for purposes of determining
the existence of a quorum at the Annual Meeting. If there are not sufficient
shares represented in person or by proxy at the meeting to constitute a quorum,
the meeting may be postponed or adjourned in order to permit further
solicitation of proxies by the Company. Proxies given pursuant to this
solicitation and not revoked will be voted at any postponement or adjournment of
the Annual Meeting in the manner set forth above.
<PAGE>
The election of directors will be determined by a plurality of the
votes cast by holders of shares of Common Stock, and the approval of any other
matters will require the affirmative vote of holders of a majority of the shares
present in person or represented by duly executed proxies and entitled to vote
on the subject matter. Cumulative voting for the election of directors is not
permitted. Abstentions will be treated as shares present and entitled to vote
for purposes of determining the presence of a quorum and for those matters
requiring the affirmative vote of a majority of the shares present and entitled
to vote at the meeting. Shares relating to any proxy as to which a broker
non-vote is indicated will be considered present and entitled to vote for
determining the presence of a quorum, but will not be considered present and
entitled to vote with respect to any matter as to which the broker has indicated
on the proxy that the broker does not have discretionary authority to vote the
shares. Accordingly, in the case of shares that are present at the Annual
Meeting for quorum purposes, not voting such shares for a particular nominee for
director will not prevent the election of such nominee if other stockholders
vote for such nominee; an abstention on any other proposal, however, will
operate as a vote "against" such proposal. Broker non-votes will have no effect
on the outcome of the vote on any proposals.
The expense of preparing, printing and mailing proxy solicitation
materials will be borne by the Company. In addition, certain directors,
officers, representatives and employees of the Company may solicit proxies by
telephone and personal interview. Such individuals will not receive additional
compensation from the Company for solicitation of proxies, but may be reimbursed
for reasonable out-of-pocket expenses in connection with such solicitation.
Banks, brokers and other custodians, nominees and fiduciaries also will be
reimbursed by the Company for their reasonable expenses for sending proxy
solicitation materials to the beneficial owners of Common Stock.
The Company's Annual Report to Stockholders for the year ended December
31, 1997, which contains the Company's Form 10-K for such year including
financial statements, is being mailed to all stockholders entitled to vote at
the Annual Meeting. The Annual Report does not constitute a part of the proxy
solicitation material.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's By-Laws authorize the Board of Directors to fix the
number of directors of the Company. Currently, the number is fixed at six. The
Board of Directors has nominated the six persons named below to serve as
directors until the next Annual Meeting of Stockholders or until their earlier
resignation or removal. Each nominee is presently a director of the Company.
Each of the directors, except for Jeremy C. Allen, was elected or reelected to
the Board at the 1997 Annual Meeting of Stockholders. Mr. Allen joined the Board
in October 1997. If any of the nominees should be unavailable to serve for any
reason (which is not anticipated), the Board of Directors may (i) designate a
substitute nominee or nominees, in which case the persons named on the enclosed
proxy card will vote all valid proxy cards for the election of such substitute
nominee, (ii) allow the vacancy to remain open until a suitable candidate or
candidates are located or (iii) by resolution provide for fewer directors.
Proxies for this Annual Meeting may not be voted FOR more than six nominees.
Nominees for Election at this Annual Meeting
Jeremy C. Allen, age 48, has served as a Director of the Company since October
1997. He has also been a special marketing consultant to the Company since
October 1997. From January 1992 until August 1995 and since May 1997, Mr. Allen
has been a marketing and general management consultant in the health care area.
From August 1995 until May 1997, he was Vice President, Marketing, Osteoporosis,
of Merck & Co., Inc.
James J. Baker, age 65, has served as a Director of the Company since May 1995.
He has been a private investor for over twelve years, specializing in start-up
venture capital. He is a consultant to Flight Landata, Inc., a company involved
in multi-spectral remote sensing. Previously, Mr. Baker spent twelve years at
Cullinet Software Corporation serving initially as Vice President in charge of
technical development and later as Senior Vice President in charge of Customer
Support. He holds a B.S. in Mathematics from the Massachusetts Institute of
Technology.
Reynald G. Bonmati, age 50, has served as a Director of the Company since its
formation in December 1993 and has served as Chairman of the Board, President
and Treasurer of the Company since January 1994. Mr. Bonmati has served since
January 1992 as a Managing Director of Norland Medical Systems, B.V. ("NMS BV"),
the holding company that owns Stratec Medizintechnik GmbH, a manufacturer of
bone densitometers marketed by the Company. He has also served as President and
Chairman of the Board of SBP Technologies, Inc., an environmental remediation
company, since November 1993, as President of Novatech Resource Corporation, a
private investment firm, since 1981 and as President of Novatech Management
Corporation, a private investment firm, since 1990. Mr. Bonmati received B.S.
and M.S. degrees from the Institute National Superieur de Chimie Industrielle,
an M.S. degree from the Ecole Nationale Superieure du Petrole et des Moteurs and
an M.B.A. from the University of Paris.
Michael W. Huber, age 70, has served as a Director of the Company since May
1995. He is retired Chairman and Chief Executive Officer and is currently a
Director of J.M. Huber Corporation, a diversified family-owned company engaged
in natural resource development, and specialty chemical and specialty
3
<PAGE>
equipment and wood product manufacturing. He is also a Director of Crompton and
Knowles Corporation, a specialty chemical and equipment manufacturing company.
Andre-Jacques Neusy, age 53, has served as a Director of the Company since
September 1997. Dr. Neusy is a Research Scientist and Attending Physician at
Tisch Hospital Center/NYU Medical Center and the Medical Director of the
Dialysis Unit and Chief of Nephrology at Bellevue Hospital Center in New York
City. He has been associated with both hospitals since 1978. Dr. Neusy is also
Associate Professor of Clinical Medicine at New York University School of
Medicine and Attending Physician in Nephrology at the New York Veteran's
Administration Hospital. Dr. Neusy received a B.A. Degree from the International
School in Lubumbashi, Zaire, and an M.D. degree from the Free University of
Brussels Medical School.
Albert S. Waxman, age 57, has served as a Director of the Company since January
1994. Dr. Waxman has served as a Managing Director of NMS BV since January 1992.
Since 1993, Dr. Waxman has been Chairman and Chief Executive Officer of Merit
Behavioral Care Corporation, the parent company of American Biodyne, Inc., which
he co-founded in 1985 and for which he served as Chairman and Chief Executive
Officer from 1988 to 1993. From 1983 to 1988, Dr. Waxman served as Chairman and
Chief Executive Officer of Diasonics, Inc., which he founded. Dr. Waxman
received a B.S.E.E. degree from City College of New York and M.A. and Ph.D.
degrees from Princeton University. He serves on the Advisor Council of Princeton
University's School of Engineering and Applied Sciences.
Vote Required For Approval
The vote of a plurality of holders of the outstanding shares of Common
Stock present in person or represented by duly executed proxies at the Annual
Meeting for the election of a given nominee is necessary to elect such nominee
as a director of the Company. Accordingly, the six director nominees receiving
the greatest number of votes cast will be elected, regardless of the number of
votes withheld for the election of such director nominees. Shares represented by
an executed proxy in the form enclosed will, unless otherwise directed, be voted
for the election of the six persons nominated to serve as directors.
The Board of Directors recommends that stockholders vote FOR the
election of the six persons nominated to serve as directors.
Board Organization And Meetings
During the year ended December 31, 1997, the Board of Directors held
five meetings and acted on one other occasion by unanimous written consent. Each
Director attended at least 75% of the meetings of the Board of Directors and
committees of the Board of Directors ("Committees") held in 1997 during his
tenure as a Director or Committee member.
There are two standing Committees:
Audit Committee. The Audit Committee was established in June 1995.
The Audit Committee consists of James J. Baker, Michael W. Huber and Reynald G.
Bonmati. The Audit Committee: (i) makes recommendations to the Board of
Directors with respect to the independent auditors who conduct the annual
examination of the Company's accounts; (ii) reviews the scope of the annual
audit and meets periodically with the Company's independent auditors to review
their findings and recommendations; (iii) approves major accounting policies or
changes thereto; and (iv) periodically reviews principal internal controls to
assure that
4
<PAGE>
the Company is maintaining a sound and modern system of financial controls. The
Audit Committee held one meeting in 1997.
Compensation Committee. The Compensation Committee was established in
June 1995. The Compensation Committee consists of Albert S. Waxman, James J.
Baker, Michael W. Huber and Andre-Jacques Neusy. The Compensation Committee
periodically determines the amount and form of compensation and benefits payable
to all principal officers and certain other management personnel. This committee
also performs duties of administration with respect to the Company's Amended and
Restated 1994 Stock Option and Incentive Plan (the "1994 Plan"). The
Compensation Committee held one meeting during 1997, and acted on twelve other
occasions by unanimous written consent.
Directors' Remuneration
During the year ended December 31, 1997, fees for all directors
aggregated $10,000. Each director of the Company who is not an employee of or
consultant to the Company or any subsidiary (a "Non- Employee Director")
receives $1,000 for each regular Board meeting attended and is reimbursed for
all expenses relating to attendance at meetings. Under the 1994 Plan, each
Non-Employee Director receives options to acquire 30,000 shares of Common Stock,
vesting in four equal annual installments, commencing on the first anniversary
of the date of grant, at an exercise price per share equal to the market value
on the date of grant. For Mr. Baker, Mr. Huber and Dr. Waxman, such options were
granted on January 3, 1996 at an exercise price of $15.00 per share. For any
Non-Employee Director who first becomes a director after January 3, 1996, such
options will be deemed granted on the date such person becomes a Board member.
For Dr. Neusy, such options were granted on September 8, 1997 at an exercise
price of $11.50. Directors who are employees of or consultants to the Company do
not receive additional compensation for serving as directors. No member of the
Board of Directors was paid compensation during the 1997 fiscal year for his
service as a director of the Company other than pursuant to the standard
compensation arrangements described above.
5
<PAGE>
STOCK OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of April 20, 1998 (except as
otherwise indicated) by (i) each person known by the Company to be the
beneficial owner of more than 5% of the Company's Common Stock, (ii) each
director and nominee to be a director, (iii) each named executive officer and
(iv) all directors and executive officers as a group. Except as otherwise
indicated below, each of the persons named in the table has sole voting and
investment power with respect to the shares set forth opposite such person's
name.
<TABLE>
<CAPTION>
Amount of Beneficial Ownership (1)
Name of Beneficial Owner Shares Percent
- ------------------------ ------ -------
<S> <C> <C>
Reynald G. Bonmati (2)................................... 1,552,663 21.6%
Albert S. Waxman (3).................................... 411,049 5.7
Kurt W. Streams (4) ..................................... 16,250 *
Lewis N. Harrold (4)..................................... 16,250 *
Thomas P. Regan (5)..................................... 20,750 *
James A. Sperlazza (6).................................. 20,000 *
James J. Baker (4)....................................... 15,000 *
Michael W. Huber (7) ................................... 60,325 *
Andre-Jacques Neusy...................................... -- --
Jeremy C. Allen (8)...................................... 5,500 *
All directors and officers of the Company as a group (11 1,723,738 23.7
persons) (2), (3), (4), (5), (6), (7) and (8)............
Novatech Management Corporation. ........................ 396,049 5.5
Premium Point
New Rochelle, NY 10801
Novatech Resource Corporation............................ 87,842 1.2
Premium Point
New Rochelle, NY 10801
Hans Schiessl ........................................... 1,105,000 15.4
Markgrafenstrasse 8
75117 Pforzheim
Germany
Heartland Investors, Inc. (9)......................... 1,538,500 21.5
790 North Milwaukee Street
Milwaukee, WI 53202
Scudder Kemper Investments, Inc. (10).................... 694,400 9.7
345 Park Avenue
New York, NY 10154
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Amount of Beneficial Ownership (1)
Name of Beneficial Owner Shares Percent
- ------------------------ ------ -------
<S> <C> <C>
OppenheimerFunds, Inc. (11).............................. 480,000 6.7
Two World Trade Center, Suite 3400
New York, NY 10048-0203
</TABLE>
- -- -------------------
* Less than 1%.
(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Under Rule 13d-3(d), shares not
outstanding that are subject to options, warrants, rights or conversion
privileges exercisable within 60 days are deemed outstanding for the
purpose of calculating the number and percentage owned by such person, but
not deemed outstanding for the purpose of calculating the percentage owned
by any other person.
(2) Includes 40,000 shares issuable pursuant to stock options exercisable
within 60 days. Includes 396,049 shares held of record by Novatech
Management Corporation and 87,842 shares held of record by Novatech
Resource Corporation that Mr. Bonmati may be deemed to beneficially own
due to his relationship with such entities. Mr. Bonmati is President
and a principal stockholder of Novatech Management Corporation and
Novatech Resource Corporation. Such beneficial ownership is disclaimed
by Mr. Bonmati, except to the extent of his proportionate interest in
each such corporation. Also includes 21,110 shares held by Mr.
Bonmati's wife, as trustee for their children, with respect to which
Mr. Bonmati disclaims beneficial ownership. Mr. Bonmati's address is
106 Corporate Park Drive, Suite 106, White Plains, New York 10604.
(3) Includes 15,000 shares issuable pursuant to stock options exercisable
within 60 days. Includes 396,049 shares held of record by Novatech
Management Corporation that Dr. Waxman may be deemed to beneficially own
due to his relationship with such entity. Dr. Waxman is Chairman of the
Board and a principal stockholder of Novatech Management Corporation. Such
beneficial ownership is disclaimed by Dr. Waxman, except to the extent of
his proportionate interest in such corporation. Dr.
Waxman's address is 19 Undermountain Road, Lenox, Massachusetts 01240.
(4) Consists solely of shares issuable pursuant to stock options exercisable
within 60 days.
(5) Includes 750 shares issuable pursuant to options exercisable within 60
days
(6) Includes 1,250 shares issuable pursuant to stock options exercisable
within 60 days.
(7) Includes 15,000 shares issuable pursuant to stock options exercisable
within 60 days.
(8) Shares owned by Mr. Allen's wife, with respect to which Mr. Allen
disclaims beneficial ownership.
(9) Information as of April 7, 1998 based on Schedule 13G filed with the
Securities and Exchange Commission. Heartland Investors, Inc. reported
sole voting power with respect to 1,479,300 shares and sole dispositive
power with respect to 1,538,500 shares.
7
<PAGE>
(10) Information as of December 31, 1997 based on Schedule 13G filed with the
Securities and Exchange Commission. Scudder, Kemper Investments Inc.
reported sole voting power with respect to 295,600 shares, shared voting
power with respect to 281,200 shares and sole dispositive power with
respect to 694,400 shares.
(11) Information is as of December 31, 1997 based on Schedule 13G filed with
the Securities and Exchange Commission. OppenheimerFunds, Inc. reported
shared dispositive power with respect to 480,000 shares, and Oppenheimer
Discovery Fund reported sole voting power and shared dispositive power
with respect to 480,000 shares.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides, for the periods indicated, certain summary
information concerning the cash and non-cash compensation earned by or awarded
to the Company's President (the chief executive officer) and each of the four
other most highly compensated executive officers who were serving as executive
officers as of December 31, 1997 (collectively, the "named executive officers"):
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
--------------
Securities
Annual Compensation Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Options (#)(1) Compensation($)(2)
<S> <C> <C> <C> <C> <C>
Reynald G. Bonmati.................. 1997 $ 195,741 $ 0 130,000 $3,137
Chairman of the Board, 1996 156,000 0 30,000 0
President and Treasurer 1995 100,000 100,000 0 0
Kurt W. Streams..................... 1997 101,038 0 40,000 723
Vice President, Finance, 1996 96,000 0 0 0
and Secretary
Lewis N. Harrold.................... 1997 86,910 0 35,000 916
Vice President, Product 1996 81,085 0 0 0
Development and Assistant
Secretary
Thomas P. Regan..................... 1997 139,791 0 28,000 1,134
Vice President, Sales 1996 107,704 0 0 0
1995 155,529 0 0 0
James A. Sperlazza.................. 1997 192,279 0 30,000 0
Vice President, Sales 1996 257,674 0 0 0
1995 326,602 0 0 0
</TABLE>
- ---------------
(1) Represents shares of Common Stock issuable upon exercise of options
granted to the named executive officers. Includes repriced options
referred to below.
(2) Represents life insurance premiums paid by the Company, and, for Messrs.
Bonmati and Harrold, also includes $2,375 and $220, respectively, of
Company contributions to 401(k) plan.
8
<PAGE>
Employment Agreements
The Company does not have employment agreements with any of the named
executive officers.
Option Grants/Exercises/Repricings in 1997
The following table sets forth certain information concerning grants of
stock options made during the fiscal year ended December 31, 1997 to the named
executive officers.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
- -------------------------------------------------------------------------------------------------------------------------
Potential Realizable
Percentage Value at Assumed
of Total Annual Rates of Stock
Number of Options Price Appreciation For
Securities Granted to Exercise Option Term (3)
Underlying Employees or -------------------------------
Options in Base
Granted Fiscal-Year Price Expiration
Name (#)(1) (%) ($/sh) Date 5% ($) 10% ($)
- ------- --------------- -------------- ---------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Reynald G. Bonmati........... 100,000 14.5% $6.63 2/20/07 $1,079,143 $1,718,354
30,000(2) 4.3 9.75 1/2/06 476,452 758,670
50,000 7.2 7.06 11/15/07 575,203 915,915
Kurt W. Streams.............. 5,000 0.7 6.63 2/20/97 53,957 85,918
5,000 0.7 9.69 9/25/07 78,900 125,634
15,000(2) 2.2 9.75 8/30/05 238,226 379,335
15,000(2) 2.2 9.75 12/28/05 238,226 379,335
Lewis N. Harrold............. 5,000 0.7 6.63 2/20/07 53,957 85,918
30,000(2) 4.3 9.75 11/2/05 476,452 758,670
Thomas P. Regan.............. 3,000 0.4 6.63 2/20/07 32,374 51,551
25,000 3.6 6.38 11/3/07 259,605 413,378
James A. Sperlazza........... 5,000 0.7 6.63 2/20/07 53,957 85,918
25,000 3.6 6.38 11/3/07 259,605 413,378
</TABLE>
- --------------
(1) All options were granted pursuant to the 1994 Plan. These options are
incentive stock options, except those granted to Mr. Bonmati, which are
non-qualified stock options. All options become exercisable on each
anniversary of the date of grant in four equal installments, except for
the replacement options (see note 2).
(2) Replacement stock options - see option repricing table below. These
options have same vesting schedule as options they replaced (i.e.,
immediate vesting to the extent the options they replaced were vested and
25% vesting on each anniversary of the date of grant of the options they
replaced). Their term is ten years from the date of grant of the options
they replaced.
9
<PAGE>
(3) Pursuant to Securities and Exchange Commission rules, the table shows the
value of the options at the end of the option terms (ten years) if the
underlying market price of the Common Stock were to appreciate in value
from the date of grant to the end of the option term at annualized
rates of 5% and 10%. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent upon the future performance of the Common Stock and overall
market conditions. There can be no assurance that the amounts reflected
in this table will be achieved.
The following table sets forth certain information concerning the
exercise of options to purchase Common Stock of the Company during 1997 and the
value at December 31, 1997 of outstanding options held by each of the named
executive officers.
Option Exercises in 1996 and Value of Options at December 31, 1997
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-the-
Options Held at Fiscal Money(1) Options at Fiscal
Year End (#) Year End ($)(2)
Shares ---------------------------- ------------------------------
Acquired on Value
Name Exercise (#)(3) Realized($)(4) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Reynald G. Bonmati 187,500 $ 1,265,513 7,500 172,500 $ 0 $108,875
Kurt W. Streams 0 0 15,000 25,000 0 4,375
Lewis N. Harrold 0 0 15,000 20,000 0 4,375
Thomas P. Regan 22,500 177,176 0 28,000 0 30,750
James A. Sperlazza 18,750 110,147 0 30,000 0 32,500
</TABLE>
- ---------------
(1) Options are "in-the-money" if the closing market price of the Company's
Common Stock exceeds the exercise price of the options.
(2) The value of unexercised options represents the difference between the
exercise price of such options and $7.50, the closing market price of the
Company's Common Stock on December 31, 1997.
(3) Represents the number of shares received upon exercise or, if no shares
were received, the number of shares with respect to which the options
were exercised.
(4) The value of exercised options represents the difference between the
exercise price of such options and the closing market price of the
Company's Common Stock on the date of exercise.
During 1997, the Company canceled certain outstanding stock options and
replaced them with new stock options having a lower exercise price equal to the
then market value. This was the first time that the Company repriced any stock
options. The following table sets forth certain information concerning the
repricing of options held by any named executive officer.
10
<PAGE>
<TABLE>
<CAPTION>
Ten-Year Option Repricings
Number of Length of
Securities Market Price Original Term
Underlying of Stock at Exercise Price at New Remaining at
Options Time of Time of Exercise Date of
Name Date Repriced (#) Repricing Repricing ($) Price ($) Repricing
---- ---- ------------ ----------- --------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Reynald G. Bonmati 7/28/97 30,000 $9.75 $15.00 $9.75 8.5 yrs.
Kurt W. Streams 7/28/97 15,000 9.75 10.67 9.75 8.5 yrs.
7/28/97 15,000 9.75 13.83 9.75 8.0 yrs.
Lewis N. Harrold 7/28/97 30,000 9.75 12.83 9.75 8.7 yrs.
</TABLE>
Compensation Committee Report on Executive Compensation
General. The Company's Compensation Committee is composed of four
independent, Non-Employee Directors. The Committee and the Board of Directors
believe that compensation must be competitive, but that it should be directly
and materially linked to the Company's performance. The compensation program is
designed to attract and retain executive talent, to motivate executives to
maximize operating performance, to provide an opportunity to measure performance
on an individual basis, as well as on an overall Company-wide basis, and to link
executive and stockholder interests through the grant of stock options.
The key components of the Company's executive compensation program
consist of salary, bonuses and stock options. The Committee's policy with
respect to each of these elements, including the basis of the compensation
awarded to Mr. Bonmati, the Company's President, are discussed below. Through
these programs, a very significant portion of the Company's executive
compensation is linked to performance and the alignment of executive interests
with those of stockholders. The long-term compensation of all Company executive
officers consists of stock options; the short term compensation consists of base
salary and, in certain cases, bonuses.
Base Salary. The Company has established base salary levels based upon
competitive market pay rates, each executive's role in the Company and each
executive's performance over time (including, where relevant, executives'
performance prior to joining the Company). Base salaries for executives are
reviewed annually based on a variety of factors, including individual
performance, market salary levels for comparable positions within comparable
companies and the Company's overall financial results, and may be adjusted to
reflect such factors. In the case of Mr. Sperlazza, a significant amount of his
compensation is based upon commissions.
Bonuses. At the end of each year, bonuses for executive officers may be
recommended by the Company and reviewed and approved by the Committee. Any such
bonuses will be payable out of a bonus pool determined by the Board of Directors
or the Compensation Committee, and will be determined by measuring such
officer's performance, the performance of the operations for which officer has
primary responsibility and the Company's overall performance against target
performance levels to be established by the Compensation Committee. No bonuses
were awarded to any executive officer with respect to 1997.
11
<PAGE>
Stock Options. The Committee believes that aligning management's
interest with those of stockholders is an important element of the Company's
executive compensation plan. Stock options align the interests of employees and
stockholders by providing value to the executive through stock price
appreciation only. At December 31, 1997, there were outstanding under the 1994
Plan options to purchase an aggregate of 735,750 shares of Common Stock. In all
cases, the exercise prices of these options are not less than the fair market
value of the Common Stock on the grant dates.
In July of 1997, the Compensation Committee approved the repricing of
certain outstanding stock options granted under the Plan having exercise prices
in excess of the fair market value of the Company's Common Stock at the date of
the repricing. Many outstanding options were exercisable at prices that exceeded
the market price of the Common Stock at that time, thereby substantially
impairing the effectiveness of such options as performance incentives.
Consistent with the Company's philosophy of utilizing equity incentives to
motivate and retain management and employees, the Committee felt that it was
important to restore the performance incentives intended to be provided by
options by repricing options having exercise prices in excess of the market
price at the time of repricing. The exercise price of the repriced options was
set at the fair market value of a share ($9.75 per share) of the Company's
Common Stock on July 28, the date of the repricing. A total of 20 option holders
holding options to purchase an aggregate of 232,250 shares of the Company's
Common Stock with exercise prices ranging from $10.125 to $22.167 per share were
granted new options at the $9.75 exercise price. Except for the change in
exercise price, the terms of the new options are the same as those of the
options they replaced.
Future awards of stock options will be made periodically at the
discretion of the Compensation Committee, in certain cases based upon
recommendations of the Company's President. The size of such grants, in general,
will be evaluated by regularly assessing competitive market practices, the
individual's position and level of responsibility within the Company, and the
overall performance of the Company, including its historic financial success and
its future prospects. The Company believes that stock options are the single
most important element in providing incentives for management performance and
intends to continue to plan to award significant stock options to officers and
key employees.
Compensation of the Chief Executive Officer. The Compensation Committee
considers several factors in establishing the President's compensation package,
including market pay practices, performance level, experience, contributions
toward achievement of strategic goals and the overall financial and operations
success of the Company.
Mr. Bonmati's base salary for most of 1997 was $150,000. At the time
the Company acquired Norland Corporation ("Norland Corp.") on September 11,
1997, Mr. Bonmati was President of Norland Corp. and was receiving a salary of
$150,000 per year from Norland Corp. Following the acquisition of Norland Corp.,
his salary from Norland Corp. was terminated, and his base salary from the
Company was increased to $300,000. No bonus was paid to Mr. Bonmati for 1997.
On February 21, 1997, and October 16, 1997, Mr. Bonmati was granted
options for 100,000 shares and 50,000 shares of the Company's Common Stock, at
exercise prices of $6.63 and $7.06 per share, respectively. These options vest
in four equal annual installments commencing February 21, 1998, and October 16,
1998, respectively. On July 28, 1997, in connection with the option repricing
described above,
12
<PAGE>
options for 30,000 shares of Common Stock that had been granted to Mr. Bonmati
on January 3, 1996 at an exercise price of $15.00 per share, were repriced at
$9.75 per share. These options vest in four equal annual installments commencing
on January 3, 1997. On January 2, 1998, Mr. Bonmati was granted options for an
additional 180,000 shares at an exercise price of $7.06 per share. These options
vest in four equal annual installments commencing January 2, 1999.
Compensation Committee:
Albert S. Waxman
James J. Baker
Michael W. Huber
Andre-Jacques Neusy
Compensation Committee Interlocks and Insider Participation
During the period from June 6, 1995 through September 11, 1997, the
Compensation Committee of the Board of Directors consisted of James J. Baker,
Michael W. Huber and Albert S. Waxman. Andre-Jacques Neusy was added to the
Compensation Committee on September 11, 1997. None of these individuals has ever
served as an officer or an employee of the Company. Except as described below,
no executive officer of the Company served during 1997 as (i) a member of the
compensation committee or equivalent of another entity, one of whose executive
officers served on the Company's Compensation Committee, (ii) a director of
another entity, one of whose executive officers served on the Company's
Compensation Committee, or (iii) a member of the compensation committee or
equivalent of another entity, one of whose executive officers served as a
director of the Company. Prior to the Company's acquisition of Norland Corp.,
Dr. Waxman and Reynald G. Bonmati were directors of Norland Corp. Mr. Bonmati
was also an executive officer of Norland Corp. During 1997, Dr. Waxman and Mr.
Bonmati were also directors of The EICON Group, Inc. ("EICON"). Mr. Bonmati was
also a member of the compensation committee of the EICON Board and an executive
officer of EICON. Mr. Bonmati is also President, a director and 50% stockholder
of Novatech Management Corporation ("Novatech Management"), the general partner
of Norland Partners, L.P, which owns 41.2% of the outstanding stock of NMS BV.
Dr. Waxman is a Managing Director of NMS BV, and the Chairman, a director and
50% stockholder of Novatech Management, the general partner of Norland Partners,
L.P. Mr. Baker's wife and Mr. Huber are limited partners of Novatech Ventures,
L.P., which is a limited partner in Norland Partners, L.P.
13
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares, from August 2, 1995, the date that the
Company's Common Stock began trading on The Nasdaq National Market following its
initial public offering, through December 31, 1997, the percentage change in the
Company's Common Stock to the cumulative total return of the NASDAQ Composite
Index ("NASDAQ Composite") and the S&P Healthcare (Medical Products and
Supplies) Midcap Index ("Midcap Medical Products"). The graph plots the growth
in value of an initial $100 investment over the indicated time period, assuming
the reinvestment of dividends.
[GRAPH OMITTED]
<TABLE>
<CAPTION>
Aug. 2, Dec. 31, Dec. 31, Dec. 31,
1995 1995 1996 1997
------- -------- -------- --------
<S> <C> <C> <C> <C>
Norland Medical Systems, Inc. 100 221 $ 96 $107
NASDAQ Composite 100 104 130 159
Midcap Medical Products 100 118 125 156
</TABLE>
The performance of the Company's Common Stock reflected above is not
necessarily indicative of future performance of the Common Stock. The
performance graph that appears above shall not be deemed incorporated by
reference by any general statement incorporating this Proxy Statement by
reference into any filing under the Securities Act of 1933, as amended, or under
the Exchange Act, and shall not be deemed filed under either of such Acts except
to the extent that the Company specifically incorporates this information by
reference.
14
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons holding more than ten percent of a registered
class of the Company's equity securities to file with the Securities and
Exchange Commission and the Nasdaq National Market initial reports of ownership,
reports of changes in ownership and annual reports of ownership of Common Stock
and other equity securities of the Company. Such directors, executive officers
and ten percent stockholders are also required to furnish the Company with
copies of all such filed reports.
Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required during
the 1996 fiscal year, the Company believes that all Section 16(a) reporting
requirements related to the Company's directors and executive officers were
timely fulfilled during 1997, with the exception of one late filing of a Form 4
by Hans Schiessl with respect to one transaction and a late filing by
Andre-Jacques Neusy of his Form 3.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand L.L.P. has acted as independent public accountants
for the Company continuously since 1993. Representatives of Coopers & Lybrand
L.L.P. are expected to be present at the annual meeting and will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions. The Audit Committee has not yet met to
recommend an independent public accountant to perform the audit function for
1998. Such recommendation will be made to the Board of Directors later in the
year.
CERTAIN TRANSACTIONS
Transactions Involving Norland Corp. and Stratec
Prior to September 11, 1997, the Company was the distributor of bone
densitometers manufactured by Norland Corp. and Stratec Medizintechnik GmbH
("Stratec"), both of which were wholly-owned subsidiaries of NMS BV. On
September 11, 1997, the Company acquired all of the outstanding stock of Norland
Corp. from NMS BV. There are significant overlaps in the ownership and
management of NMS BV and the ownership and management of the Company. Norland
Partners, L.P. owns 41.2% of NMS BV. Reynald G. Bonmati, the President and a
Director of the Company is a Managing Director of NMS BV. Through his
relationship with Norland Partners, L.P., as President and 50% stockholder of
Novatech Management, the sole general partner of Norland Partners, L.P., Mr.
Bonmati may be considered the beneficial owner of the 41.2% of NMS BV held by
Norland Partners, L.P. Albert S. Waxman, a Director of the Company, is also a
Managing Director of NMS BV. As Chairman and 50% stockholder of Novatech
Management, he may also be considered the beneficial owner, through Norland
Partners, L.P., of the same 41.2% of the capital stock of NMS BV. Two of the
other directors of the Company, James J. Baker and Michael W. Huber, neither of
whom is an officer or employee of the Company, have small indirect ownership
interests in NMS BV, but neither is an officer, director or employee of NMS BV
or Stratec. Mr.
15
<PAGE>
Huber and Mr. Baker's wife are limited partners in Novatech Ventures, L.P.,
which holds a limited partnership interest in Norland Partners, L.P. Hans
Schiessl, the third Managing Director of NMS BV and the President of Stratec,
owns 50% of NMS BV and approximately 15.4% of the outstanding Common Stock of
the Company. In addition, Mr. Bonmati and Mr. Schiessl are parties to an
agreement which contemplates that they may in the future combine their interests
in NMS BV in an entity to be jointly owned by them.
The $17,500,000 purchase price for Norland Corp. was paid by the
Company to NMS BV at closing, $1,250,000 in cash and $16,250,000 by the
Company's 7% promissory note issued to NMS BV (the "Purchase Note"). A
$1,250,000 principal payment on the Purchase Note was originally payable on
March 11, 1998. The Purchase Note has been amended to provide that such payment
will not be due until such time as the Company receives at least $2,000,000 in
proceeds from a debt or equity financing. The balance is payable on September
11, 2002 with a right on the part of the Company to extend the maturity for up
to an additional two years. If the maturity is so extended, the applicable
interest rate will be subject to increases during the extension period. The
Company may repay the Purchase Note at any time and, except for the $1,250,000
payment referred to above, the Company may make payments of principal by
delivering shares of its Common Stock, valued at the average closing price for
the five trading days preceding the delivery. The Purchase Note is
collateralized by a pledge to NMS BV of all of the stock of Norland Corp. At the
time of acquisition, the Company's Distribution Agreement with Norland Corp. and
Stratec was terminated, and the Company entered into the new Distribution
Agreement with Stratec containing substantially the same provisions with respect
to Stratec as the prior Distribution Agreement.
Under the Distribution Agreements in effect with Norland Corp. and
Stratec during 1997, the Company had exclusive worldwide distribution rights to
all medical diagnostic products developed or manufactured by Norland Corp. and
Stratec. The Company's purchases from Norland Corp. and Stratec in 1997 (prior
to September 11 in the case of Norland Corp.) were $7,826,914 and $1,424,474,
respectively. Sales of Norland Corp. products and services by the Company to
Stratec in 1997 were $108,845. The Company invoiced Norland Corp. $240,638 in
1997 (with respect to the period prior to September 11) for services performed
by the Company in support of Norland Corp.'s product warranties.
The Company was party to a Product Development Loan Agreement with
Norland Corp. and Stratec. At December 31, 1996, there were outstanding loans of
$289,785 from the Company to Norland Corp. under the Product Development Loan
Agreement. During 1997, the Company advanced $2,144,382 to Norland Corp.
Following the acquisition of Norland Corp., the loan and interest, which accrued
at 10% per annum, and the advances were eliminated. The Product Development Loan
Agreement has been terminated.
Mr. Bonmati and Mr. Schiessl each own a 50% interest in a building in
Pforzheim, Germany, part of which is leased to Stratec at a monthly rent of
approximately DM 9,000.
Loans and Advances
In September 1996, the Company made an $80,000 loan to Kurt W. Streams,
Vice President, Finance of the Company, to assist with relocation of his
residence. The loan bears interest at 6% per annum and is payable in full in
March 1999, subject to rights which Mr. Streams has to extend the maturity date.
The outstanding balance of the loan, including interest, was $86,504 at December
31, 1997.
16
<PAGE>
In August 1996, the Company agreed to lend up to $2,500,000 to Reynald
G. Bonmati, President of the Company, on a revolving credit basis during the
period ending December 31, 1997, to assist in the payment of tax liabilities
incurred in connection with stock option exercises. The loans carried interest
at 6% per annum and were payable on demand. The maximum principal amount of
loans outstanding in 1997 was $2,350,000. All loans were paid in full during
1997.
Other Transactions
The Company leases its principal executive offices at 106 Corporate
Park Drive, Suite 106, White Plains, New York 10604. The Company sublets a
portion of the leased office space to SBP. Both the lease and sublease expire on
August 31, 2000. The Company also subleased office space in New Haven,
Connecticut, from affiliates of SBP. The New Haven sublease terminated on March
31, 1997. The White Plains rent is and will be allocated between the SBP and the
Company on a pro rata basis (based on square footage used). Mr. Bonmati,
President and a Director of the Company, is President and a Director of SBP.
Novatech Ventures, L.P., the general partner of which is controlled by Mr.
Bonmati, is the majority owner of SBP.
The Company leases approximately 18,000 square feet of space in Fort
Atkinson, Wisconsin. Prior to the acquisition of Norland Corp., the Company
sublet approximately 14,000 square feet of this space to Norland Corp.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal to be presented by a stockholder at the Company's 1999
Annual Meeting of Stockholders must be received by the Company no later than
December 27, 1998, so that it may be considered by the Company for inclusion in
its proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
The Board of Directors knows of no matters that are expected to be
presented for consideration at the Annual Meeting other than those described in
this proxy statement. Should any other matter properly come before the Annual
Meeting, however, the persons named in the form of proxy accompanying this proxy
statement will vote all shares represented by proxies in accordance with their
best judgment on such matters.
17
<PAGE>
PROXY
NORLAND MEDICAL SYSTEMS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 3, 1998
The stockholder(s) whose signature(s) appear(s) on the reverse side of
this proxy form hereby appoint(s) Reynald G. Bonmati, Kurt W. Streams and Ralph
G. Theodore or any of them as proxies, with full power of substitution, and
hereby authorize(s) them to represent and vote all shares of Common Stock of the
Company which the stockholder(s) would be entitled to vote on all matters which
may come before the Annual Meeting of Stockholders to be held at the Rye
Courtyard By Marriott, 631 Midland Avenue, Rye, New York 10580, at 10:00 a.m. on
Wednesday, June 3, 1998, or at any adjournment thereof. The proxies shall vote
subject to the directions indicated on the reverse side of this card and the
proxies are authorized to vote in their discretion upon such other business as
may properly come before the meeting and any adjournments or postponements
thereof. The proxies will vote as the Board of Directors recommends where a
choice is not specified.
The nominees for Director are: Jeremy C. Allen, James J. Baker,
Reynald G. Bonmati, Michael W. Huber, Andre-Jacques Neusy and Albert S. Waxman.
(To Be Signed on Reverse Side.)
- --------------------------------------------------------------------------------
A Please mark
/X/ your votes as in
this example.
The Board of Directors recommends that stockholders vote
FOR ALL Directors.
<TABLE>
<S> <C> <C> <C> <C>
FOR WITHHOLD FOR Please complete, sign, date and mail the enclosed Proxy in the
ALL ALL accompanying envelope even if you intend to be present at the
meeting. Returning the Proxy will not limit your right to vote
1. Election of / / / / Nominees: Jeremy C. Allen in person or to attend the Annual Meeting, but will ensure
directors. James J. Baker your representation if you cannot attend. If you hold shares
Reynald G. Bonmati in more than one name, or if your stock is registered in more
Michael W. Huber than one way, you may receive more than one copy of the proxy
Andre-Jacques Neusy material. If so, please sign and return each of the proxy
Albert S. Waxman cards that you receive so that all of your shares may be
voted. The Proxy is revocable at any time prior to its use.
INSTRUCTION: To withhold authority
to vote for any individual nominee or
nominees, write the names on the space
provided below.
SIGNATURE(S)
-------------------------------------------------------
DATE
------------------------------------------------------- -------------------
(Note: Please sign above exactly as the shares are issued. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please give the full title as such.
If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.)
</TABLE>
