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 Rule 14a-11(c) or Rule 14a-12.
Merge Technologies Incorporated
--------------------------------------------------------------------------------
(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)(1) 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:
--------------------------------------------------------------------------------
Merge Technologies Incorporated
1126 South 70th Street
Milwaukee, Wisconsin 53214-3151
(414) 977-4000
==========================================
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
==========================================
To the Shareholders of Merge Technologies Incorporated:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting" or the "Meeting") of Merge Technologies Incorporated, a
Wisconsin corporation dba Merge eFilm (the "Company"), will be convened at the
Country Inn & Suites - Milwaukee West, 1250 South Moorland Road, Brookfield,
Wisconsin on May 21, 2003, at 10:00 a.m. Central Time (the "Meeting Date").
All Shareholders of the Company (the "Shareholders") are entitled to attend the
Meeting. The Annual Meeting will be held for the purpose of considering and
voting upon proposals to:
1. Elect nine individuals to serve as Directors until the next
annual meeting of Shareholders or otherwise as provided in the
Amended and Restated Bylaws of the Company;
2. Approve an increase of 750,000 shares in the number of shares
of Common Stock which may be issued under the Amended and
Restated 1996 Stock Option Plan for Employees of the Company;
and
3. Transact such other business as may properly come before the
Annual Meeting, or any adjournment thereof.
Only Shareholders of record at the close of business on March 21, 2003,
are entitled to receive notice of and to vote at the Annual Meeting or any
adjournment thereof (the "Eligible Holders"). Unless otherwise defined,
capitalized terms in this Notice shall have the meaning ascribed to them in
the Proxy Statement accompanying this Notice.
A Proxy Statement and proxy are enclosed. Whether or not you expect
to attend the Annual Meeting, it is important that you promptly fill in, sign,
date and mail the proxy in the enclosed envelope so that you may vote your
shares.
By order of the Board of Directors:
/s/ Richard A. Linden
-------------------------------------
Richard A. Linden
President and Chief Executive Officer
Milwaukee, Wisconsin
April 14, 2003
The Company's 2002 Annual Report to Shareholders is enclosed with this
Notice and Proxy Statement.
(This page intentionally left blank)
=====================================
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS OF
MERGE TECHNOLOGIES INCORPORATED
MAY 21, 2003
=====================================
This Proxy Statement is furnished to the holders of shares (the
"Shareholders") of Common Stock, par value $0.01 per share (the "Common
Shares" or "Common Stock"), of MERGE TECHNOLOGIES INCORPORATED, a Wisconsin
corporation dba Merge eFilm (the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors (the "Directors"
or the "Board") for use at the annual meeting of Shareholders to be held on
May 21, 2003 (the "Annual Meeting" or the "Meeting"), or any adjournment
thereof. The Annual Meeting will be convened at approximately 10:00 a.m.
Central Time. Any adjournment or postponement thereof will be announced at
the Annual Meeting. This Proxy Statement, the enclosed Notice and proxy
were first sent or given to Shareholders on or about April 14, 2003.
The Company will make arrangements with brokerage houses, banks and
other custodians, nominees and fiduciaries to forward solicitation materials
to the beneficial owners of the Common Shares held of record by those
persons. The Company may reimburse these custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses incurred in
forwarding the materials. The Company will bear the cost of soliciting
proxies, although the Company currently does not intend to solicit proxies.
Brokerage firms, fiduciaries, nominees and others holding Common Shares for
beneficial owners will be reimbursed for the out-of-pocket expenses in
forwarding proxy materials to these beneficial owners. In addition to the
use of the mail, proxies may be solicited by Directors, officers and
employees of the Company, who will not be specifically compensated for these
services, by means of personal calls upon, or telephonic, telegraphic or
telefacsimile communications with, Shareholders or their representatives.
Only Common Shares represented by properly executed proxies in the
accompanying form received by the Board prior to the Annual Meeting will
be voted at the Annual Meeting. If a Shareholder specifies a choice with
respect to any matter to be acted upon, the Common Shares represented by
that proxy will be voted as specified. If a Shareholder does not specify a
choice, in an otherwise properly executed proxy, with respect to any proposal
referred to therein, the Common Shares represented by that proxy will be
voted with respect to that proposal in accordance with the recommendations
of the Board described herein. A Shareholder who signs and returns a proxy
in the accompanying form may revoke it by: (i) giving written notice of
revocation to the Company before the proxy is voted at the Annual Meeting;
(ii) executing and delivering a later-dated proxy before the proxy is voted
at the Annual Meeting; or (iii) attending the Annual Meeting and voting the
Common Shares in person.
The close of business on March 21, 2003, has been fixed as the date
for determining Shareholders entitled to notice of and to vote at the Annual
Meeting (the "Record Date"). On the Record Date, the Company had 10,709,230
Common Shares outstanding which have voting rights, including: (i)
9,630,500 shares of Common Stock, (ii) One Preferred Series Special Voting
Share, which entitles the holder of record of such voting rights equal to
138,730 Common Shares, and (iii) One Preferred Series 2 Special Voting Share,
which entitles the holder of record of such share to voting rights equal to
940,000 Common Shares. The Preferred Series Special Voting Share was issued
by the Company in connection with the Company's acquisition of Interpra
Medical Imaging Network Ltd., now known as Merge Canada Technologies Ltd.,
("Interpra"), to provide voting rights to holders of Interpra Exchangeable
Shares, which shares are convertible into Common Shares. The Preferred
Series 2 Special Voting Share was issued by the Company in connection the
Company's acquisition of eFilm Medical Inc. ("eFilm") to provide voting
rights to holders of eFilm Exchangeable Shares, which shares are convertible
into Common Shares. Both the Preferred Series Special Voting Share and the
Preferred Series 2 Special Voting Share will be treated as Common Shares
having 138,730 and 940,000 votes, respectively, at the Annual Meeting.
Directors and officers of the Company own 1,923,748 Common Shares or
approximately 18% of the Company's total outstanding Common Shares and
intend to vote in favor of the proposals. Only Shareholders of record as
of the Record Date (the "Eligible Holders") will be entitled to vote at the
Annual Meeting. A complete list of Eligible Holders will be available for
inspection at the Company's offices beginning two business days after the
date of this Notice. Votes cast by proxy or in person at the Annual
Meeting will be tabulated by an inspector of election appointed for the
Annual Meeting who will determine whether or not a quorum is present. The
presence of a majority of the outstanding Common Shares represented in
person or by proxy at the Annual Meeting will constitute a quorum.
The nine nominees receiving the highest vote totals of the shares
of Common Stock, including the Common Shares represented by the Preferred
Series Special Voting Share and the Preferred Series 2 Special Voting
Share, by Eligible Holders in person or represented by proxy at the Annual
Meeting will be elected as Directors of the Company. The affirmative vote
of a majority of the shares of Common Stock, including the Common Shares
represented by the Preferred Series Special Voting Share and the Preferred
Series 2 Special Voting Share, by Eligible Holders present in person or
represented by proxy at the Annual Meeting is required for approval of an
increase in the number of shares of Common Stock which may be issued under
the Option Plan. With regard to the election of Directors, votes may be
cast in favor or withheld; votes that are withheld will be excluded
entirely from the vote and will have no effect. Broker non-votes (shares
not voted by brokers due to the absence of instructions from street name
holders) on a matter are not considered voted or as present or represented
on that matter and will have no effect on the outcome of the election of
Directors.
The mailing address of the principal executive offices of the Company
is 1126 South 70th Street, Suite S107B, Milwaukee, Wisconsin 53214-3151. The
Company's shareholder e-mail address is shareholder-info@merge-efilm.com and
the Company's web site is located at www.merge-efilm.com. The Common Shares
are included for quotation on the Nasdaq SmallCap Market ("Nasdaq") under
the symbol "MRGE."
THE DATE OF THIS PROXY STATEMENT IS APRIL 14, 2003.
AVAILABLE INFORMATION
----------------------
The Company files reports, proxy materials and other information
with the Securities and Exchange Commission (the "Commission"). These
reports, proxy materials and other information concerning the Company can
be inspected and copied at the Public Reference Section maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N. W.,
Washington, D. C. 20549. Copies can be obtained by mail from the
Commission at prescribed rates from the Public Reference Section of the
Commission at its principal office in Washington, D. C. The Commission
also maintains a site on the World Wide Web (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
Common Shares are included for quotation on the Nasdaq SmallCap Market and
copies of reports and other material concerning the Company can be
inspected at the offices of the National Association of Securities Dealers,
Inc. at 1801 K Street, N. W., 8th Floor, Washington, D. C. 20006.
SUMMARY
---------
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information appearing elsewhere
in this Proxy Statement. Unless the context otherwise requires, all
references in this Proxy Statement to the "Company" refer to Merge
Technologies Incorporated dba Merge eFilm and its subsidiaries.
MATTERS TO BE CONSIDERED BY SHAREHOLDERS AT THE ANNUAL MEETING
----------------------------------------------------------------
The Annual Meeting of Shareholders of the Company will be held for
the purpose of considering and voting upon proposals to:
1. Elect nine individuals to serve as Directors until the next
annual meeting of Shareholders or otherwise as provided in
the Bylaws of the Company;
2. Vote to approve an increase in the number of shares of
Common Stock which may be issued under the Amended and
Restated 1996 Stock Option Plan for Employees of Merge
Technologies Incorporated (the "Option Plan"); and
3. Transact such other business as may properly come before
the Annual Meeting, or any adjournment thereof.
Only Shareholders of record at the close of business on the Record
Date are entitled to receive notice of and to vote at the Annual Meeting, or
any adjournment thereof.
PROPOSAL REGARDING ELECTION OF DIRECTORS
Nine individuals will be elected at the Annual Meeting to serve as
Directors until the next annual meeting of the Shareholders or otherwise as
provided in the Bylaws. Unless instructions to the contrary are given, the
persons named, as proxy voters in the accompanying proxy, or their
substitutes, will vote for the following nominees with respect to all
proxies received by the Company. If any nominee should become unavailable
for any reason, the votes will be cast for a substitute nominee designated
by the Board. The Directors have no reason to believe that any of the
nominees named below will be unable to serve if elected.
The nominees for election to the Board are as follows.
William C. Mortimore, 57, founder of the Company, has served as
Chairman of the Board and Chief Strategist since September 2000, as President
and Chief Executive Officer from November 1987 through August 2000 and as a
member of the Board of Directors of the Company since its inception in
November 1987. Mr. Mortimore has served as co-founder and a senior manager
of several businesses in the fields of information communications technology,
healthcare services and real estate and has been responsible for securing
public and private financing for these organizations. Mr. Mortimore is an
original member of the American College of Radiology / National Association
of Electrical Manufacturers ("ACR / NEMA") committee responsible for
establishing and maintaining the DICOM medical imaging standard. Mr.
Mortimore has served as a member of the Board of Directors of the Diagnostic
Imaging Division of NEMA, since the Spring of 1996. Mr. Mortimore has also
served as a member of the Board of Directors of MRI Devices, Inc., a
privately held diagnostic imaging manufacturer, since November 2002. Mr.
Mortimore received a B. S. in Electrical Engineering from Michigan State
University, an M.E.E. from the University of Minnesota and pursued doctoral
studies in Electrical Engineering at the University of Minnesota.
Richard A. Linden, 42, a Director, joined the Company as its
President and Chief Executive Officer and a member of its Board of Directors
in September 2000 with over 17 years of technology and healthcare industry
experience. Prior to joining the Company, Mr. Linden held several executive
positions with MMI Companies, Inc., a New York Stock Exchange company,
specializing in clinical risk management, professional services and liability
insurance to the healthcare industry. From October 1999 to August 2000, Mr.
Linden served as President of MMI's Healthcare Consulting Group. From April
1998 to September 1999, he served as Chief Operating Officer for MMI's
Healthcare Consulting Group and from April 1992 to March 1998, he served
as MMI's Chief Information Officer. Mr. Linden received his B. S. in
Systems Analysis from Miami University, Ohio and his M.B.A. from the
University of Chicago.
Robert A. Barish, M. D., 49, a Director, is Associate Dean for
Clinical Affairs and a Professor in the Department of Surgery and Medicine
at the University of Maryland School of Medicine. From 1996 to 1998, he
served as the Chief Executive Officer of University Care, for University of
Maryland Medical. He is a Trustee of the Endowment Fund of the University
of Maryland. Dr. Barish holds a B. A. from the University of New Hampshire,
an M.D. from the New York Medical College and an M.B.A. from Loyola College.
Dr. Barish has been a Director of the Company since its initial public
offering in February 1998.
Patrice M. Bret, M. D., 51, was appointed to the Board of Directors
on August 21, 2002, in connection with the acquisition of eFilm Medical Inc.
Dr. Bret was a founder of eFilm Medical Inc. Dr. Bret has been a Professor
of Radiology at University of Toronto serving since October 1, 1997, and has
served as Radiologist-in-Chief at Mount Sinai Hospital and University Health
Network in Toronto since October 1. 1997. Dr. Bret is a graduate in medicine
from the University of Lyons.
Dennis Brown, 55, a new nominee for election to the Board, has
served as Vice President of Finance, Chief Financial Officer and Treasurer
of Sybron International Corporation ("Sybron"), a publicly traded company
formerly headquartered in Milwaukee, Wisconsin. He served in that capacity
from January 1993 through December 2000, at which time Sybron was reorganized
through a tax free spin off of its dental group located in Orange,
California, and the relocation of its life sciences group to Portsmouth,
New Hampshire, at which point Sybron was renamed Apogent Technologies Inc.
("Apogent"). Mr. Brown served as a financial consultant to Apogent from
December 2000 through January 2003. In January 2003, Mr. Brown was
reappointed Vice President of Finance, Chief Financial Officer and Treasurer
of Apogent. Mr. Brown is a member of the Board of Directors of Sybron Dental
Specialties Incorporated. Mr. Brown is a Fellow of the Chartered Institute
of Management Accountants (England). Mr. Brown previously served as a
director of the Company since its initial public offering in February 1998
until May 2000, at which time Mr. Brown chose to decline nomination for
another term due to his widespread obligations.
Michael D. Dunham, 57, a Director, is Senior Vice President of
Business Development of IFS Industrial and Financial Systems, a
publicly-traded Sweden-based corporation that markets and supports
manufacturing software systems, since 1999. Mr. Dunham is also the owner
and serves as President of Dunham Global Associates, Ltd., which owns three
private companies in the software technology industry, since 2001. Mr.
Dunham co-founded and served as Chief Financial Officer of publicly-traded
Effective Management Systems, Inc. between 1978 and 1999. Mr. Dunham is a
director of several private companies including the bank subsidiary with
which the Company has its depository accounts and line of credit. Mr.
Dunham has also served as a Director of the Milwaukee Metropolitan
Association of Commerce, since 1991. Mr. Dunham holds a B. S. in Electrical
Engineering from the University of Denver and a M.M.S. from the Stevens
Institute of Technology. Mr. Dunham has been a Director of the Company
since its initial public offering in February 1998.
Robert T. Geras, 65, a Director, has been a Shareholder of the
Company since May 1989 and a Director of the Company prior to its initial
public offering in 1998. Mr. Geras has been a private venture investor for
more than 25 years and has participated as a director of, investor in,
and/or advisor to numerous small businesses in fields ranging from medical
equipment, computer software, banking, telecommunications, industrial
distribution and internet. He has also assisted in corporate planning,
capital formation and management for his various investments. Mr. Geras
holds a B.S.B.A. from Northwestern University.
Anna M. Hajek, 54, a Director, has been President and Chief
Executive Officer of Clarity Group, Inc., a business operations and
insurance management firm, since she co-founded the firm in 2001. From
1995 to 2000, Ms. Hajek served as Executive Vice President and President
of the Healthcare Risk Services Group operating division of MMI Companies,
Inc., a New York Stock Exchange company specializing in risk management and
liability insurance to the healthcare industry. From 1985 to 1994, she
served in various other capacities at MMI. Prior to that time, Ms. Hajek
worked in hospital and academic medical center settings in her capacity
as a medical technologist and educator. Ms. Hajek received her B. A. with
honors from the College of St. Teresa, Winona, Minnesota, and her Masters
Degree in Health Professions Education from the University of Illinois at
Chicago. She holds an active Medical Technologist Certification from the
American Society of Clinical Pathologists. Ms. Hajek joined the Board of
Directors in May 2001.
Richard A. Reck, 53, a new nominee for election to the Board, has
served for the certified public accounting firm of KPMG LLP from June 1973
until his retirement as a Partner in July 2002. Mr. Reck has served as the
President of Business Strategy Advisors, a strategist consulting firm since
his retirement from KPMG LLP. Since 2002, Mr. Reck has served as a director
of Greenbrier & Russel, Inc., as Chairman; and Liquid Generation, Inc., as
Vice Chairman; both of which are privately held companies. Mr. Reck also
serves on the boards of three not for profit entities: the Chicago Software
Association, which is a trade association servicing software companies in
the Midwest; the Illinois Coalition, which is a public / private partnership
between businesses and the State of Illinois, with its objective being to
foster economic growth in Illinois; and the Advisory Board of the Illinois
Fatherhood Initiative, to provide focus on the importance of fathers in the
growth and development of children. Mr. Reck holds a B. A. in Mathematics
from DePauw University and an M.B.A. in Accounting from the University of
Michigan.
BOARD COMMITTEES
----------------
The Board is required to meet at least once per year, either in
person or by telephonic conference. The Board met eight times during the
calendar year 2002. All of the Directors attended at least 75% of (i) the
number of meetings of the Board of Directors, and (ii) the number of
meetings of all committees on which they served with the exception of Dr.
Bret, who joined the Board on August 21, 2002, and was able to attend one
of the two meetings of the Board which took place in 2002 during his term
of office.
The Board of Directors has four standing committees: an Audit
Committee; a Compensation Committee; an Executive Committee and a Nominating
Committee.
The Audit Committee recommends engagement of the Company's
independent accountants, approves services performed by these accountants,
and reviews and evaluates the Company's accounting system and its system of
internal accounting controls. The Audit Committee, which met five times in
2002, is currently comprised of Michael D. Dunham, as chair, Robert T. Geras
and John D. Halamka, M. D.
The Compensation Committee reviews and administers the compensation
of the executive officers of the Company. This committee also reviews and
administers the granting of stock options under the Company's Option Plan.
The Compensation Committee met five times in 2002 and is currently comprised
of Anna M. Hajek, as chair, and Michael D. Dunham.
The Executive Committee provides guidance to management on corporate
matters such as strategic relationships, capital formation and business
planning. The Executive Committee met eight times in 2002. It is currently
comprised of Richard A. Linden, as chair, Michael D. Dunham, Robert T. Geras
and William C. Mortimore.
The Nominating Committee nominates candidates for the Board and will
consider nominees recommended by Shareholders. The Nominating Committee,
which met two times in 2002, is currently comprised of William C. Mortimore,
as chair, Robert A. Barish, M. D. and Robert T. Geras.
For a discussion of Directors' compensation, as well as additional
information regarding the management of the Company, see "Management,
Executive Officers" and "Compensation of Directors and Executive Officers."
RECOMMENDATION OF THE BOARD: The Board recommends and nominates
Messrs. Mortimore, Linden, Barish, Bret, Brown, Dunham, Geras, Ms. Hajek and
Mr. Reck for election as Directors of the Company by the Shareholders at the
Annual Meeting to serve until the next annual meeting of Shareholders or as
otherwise provided in the Bylaws.
VOTE REQUIRED: The nine nominees receiving the highest vote totals
will be elected as Directors of the Company.
AUDIT COMMITTEE REPORT
-----------------------
We, the members of the Audit Committee of the Company, represent the
following:
1. The Audit Committee has reviewed and discussed the Company's
audited financial statements with management of the Company;
2. The Audit Committee has discussed with KPMG LLP, the
Company's independent auditors, the matters required to be
discussed by Statement of Auditing Standards No. 61, as may
be modified or supplemented;
3. The Audit Committee has received the written disclosures and
the letter from KPMG LLP required by Independence Standards
Board Standard No. 1, as may be modified or supplemented, and
has discussed with KPMG LLP its independence; and
4. Based on the review and discussions referred to above, the
Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the Company's
Annual Report on Form 10-KSB for the year ended December 31,
2002, for filing with the Securities and Exchange Commission.
Michael D. Dunham Robert T. Geras John D. Halamka, M. D.
The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is available from the Company upon request. All
of the members of the Audit Committee are independent, as independence is
defined in Section 4200 of the rules of the Nasdaq Stock Market.
PROPOSAL TO APPROVE AN INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK
BY 750,000 WHICH MAY BE ISSUED UNDER THE AMENDED AND RESTATED
1996 STOCK OPTION PLAN FOR EMPLOYEES
The purpose of the Option Plan is to provide the qualified employees
of the Company with an opportunity to purchase Common Shares through options
granted by the Company, enabling such persons to acquire a proprietary
interest in the Company in order to strengthen the mutuality of interests
between such persons and the Shareholders. Its intention is to provide a
benefit that will assist the Company in competing to motivate and retain
employees of high quality and to attract high quality new employees who will
help the Company to continue to grow and prosper. The Company may also
elect at some point in the future to grow by merging with or acquiring other
businesses, and stock options would serve as a key benefit and motivating
factor to employees of an acquired entity.
The Compensation Committee of the Board of Directors reviewed the
following table in determining the recommendation to approve the increase
in the number of shares of Common Stock that may be issued under the Option
Plan:
As of December 31, 2002
------------------------
Current Percentage Proposed Percentage
---------- ---------- ---------- ----------
Common and Exchangeable
Shares Outstanding 10,686,856 86.5% 10,686,856 81.6%
Employee Options,
if all issued 1,667,297 13.5% 2,417,297 18.4%
---------- ----------
Total 12,354,153 13,104,153
The Option Plan presently allows, in the aggregate, up to 2,515,826
Common Shares (subject to adjustment for certain corporate transactions as
described in the Option Plan) to be issued in connection with options
granted by the Company under the Option Plan to any employees of the
Company. The Shareholders of the Company amended the Option Plan in 2002
to increase the number of shares under the plan by 500,000 shares. Of this
number, 281,000 were utilized in connection with the acquisition of eFilm
Medical Inc. in June 2002.
The Board of Directors has approved an amendment to the Option Plan
to increase the number of shares available by 750,000 shares, for a total of
3,265,826 shares, and is seeking approval of the Shareholders. Shareholder
approval of the Option Plan is sought because of the requirements of Nasdaq
in connection with the listing of the Company's Common Shares on the Nasdaq
SmallCap Market, and to continue to qualify the Option Plan under Rule
16(b)-3 of the Securities Exchange Act of 1934, and thereby render certain
transactions under the Option Plan exempt from certain provisions of Section
16 of the Securities Exchange Act of 1934. With the exception of increasing
the number of Common Shares that may be issued under the Option Plan, the
Company is not seeking Shareholder approval of any other amendments to the
provisions of the Option Plan. The Board of Directors believes that it is
in the best interests of the Company and the Shareholders to increase the
number of Common Shares that may be issued under the Option Plan.
GENERAL
-------
The Compensation Committee of the Board of Directors has authority
under the Option Plan to grant options pursuant to the Option Plan. As of
the date of this Proxy Statement, the Company has granted options to purchase
a total of 2,349,046 Common Shares and options to purchase a total of 953,279
Common Shares have been exercised. As a result, the Company presently is
able to grant additional options to purchase a total of 166,780 Common
Shares under the Option Plan.
The Option Plan allows the Compensation Committee to determine
those employees who should be granted options under the Option Plan,
whether such options are to be incentive stock options or nonqualified
options and any other terms and conditions of such options. Options
evidencing incentive stock options must contain such terms and conditions
as may be necessary to qualify such options as "incentive stock options"
under Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code").
The exercise price of nonqualified stock options shall not be less
than the lesser of 85% of the fair market value of the Common Shares on
the five most recent trading days prior to the date that such option is
granted. The exercise price of incentive stock options shall not be less
than 100% of the fair market value of the Common Shares on the date that
such option is granted. Under most circumstances, fair market value shall
mean the closing price of the Common Shares on the Nasdaq SmallCap Market.
In the case of an incentive stock option, the aggregate fair market value
of the Common Shares with respect to which incentive stock options are
exercisable for the first time by an optionee during any calendar year
shall not exceed $100,000.
Options granted under the Option Plan shall expire at the earliest
to occur of (i) the expiration of the option term (no more than 10 years
for incentive stock options and no more than 15 years for nonqualified
options), (ii) the expiration of 90 days from the date of the optionee's
termination of employment, or (iii) the engagement by the employee in
willful misconduct. Options granted under the Option Plan may be exercised
in whole or in part until termination of the exercise period. Each option
granted under the Option Plan is evidenced by a written agreement between
the Company and the employee.
The Compensation Committee, in its absolute discretion, may impose
such restrictions on the transferability of shares purchasable upon the
exercise of an option granted under the Option Plan, as it deems appropriate.
The Compensation Committee may alter, amend, suspend or discontinue
the Option Plan at any time. However, certain amendments may require
Shareholder approval pursuant to applicable laws or regulations. Any such
amendment or termination of the Option Plan shall not affect options already
granted and such options shall remain in full force and effect as if the
Option Plan had not been amended or terminated.
TAX EFFECTS
------------
DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES
The following summary of tax consequences is not comprehensive and
is based on laws and regulations in effect on March 15, 2003. These laws
and regulations are subject to change on a retroactive basis.
The grant of a nonqualified option under the Option Plan is not a
taxable event and the Company is not entitled to a deduction upon such
grant. Upon exercise of a nonqualified option, participants will be taxed
at ordinary income rates on the difference between the exercise price of
the option and the fair market value of the Common Stock issued pursuant to
such exercise. Fair market value generally will be determined on the date
of exercise (or in the case where a sale of property could subject a
transferor to suit under Section 16(b) of the Securities Exchange Act of
1934, the later of the date of exercise and the date which is six months
and one day after the date on which the option was granted, unless the
participant elects to be taxed on the fair market value at the date of
exercise). The Company will receive a corresponding deduction for the
amount of income recognized by a participant upon exercise of an option
in the same year the participant recognizes income in connection with the
exercise of an option. The participant, generally, will have a tax basis
for the Common Stock acquired equal to the fair market value of the Common
Stock at the date of exercise. Any gain or loss realized upon the subsequent
sale of the Common Stock issued upon exercise of a nonqualified option will
be taxed at either long-term or short-term capital gain (or loss) rates,
depending on the selling Shareholder's holding period. The subsequent sale
would have no tax consequences for the Company.
The recipient of an incentive stock option generally will not
recognize any income upon its grant or upon its exercise if no disposition
of the Common Stock received upon exercise is made within two years from
the date of grant or within one year after the acquisition of the Common
Stock. The excess of the fair market value of the Common Stock over the
exercise price of the Common Stock received upon the exercise of an
incentive stock option, however, is a tax preference item in the year of
exercise which may subject the recipient to an alternative minimum tax.
Upon a subsequent sale of Common Stock acquired pursuant to exercise of an
incentive stock option, if the foregoing holding periods are met, the
recipient will recognize a long-term capital gain upon the difference
between the sale price and the exercise price, and the Company will receive
no deduction from taxable income. If these holding periods are not met,
the recipient generally will realize ordinary income to the extent of the
difference between the exercise price and the fair market value of the
Common Stock on the date the option is exercised. However, if the
disposition is by a sale or exchange at a price less than the fair
market value of the Common Stock on the date of exercise, then, in
general, the amount of ordinary income is limited to the gain recognized
on such sale or exchange. If the sale price exceeds the fair market
value of the Common Stock on the date of exercise, such excess will be a
long-term or short-term capital gain, depending on the employee's holding
period for the Common Stock being sold. The Company will have a deduction
in an amount equal to the ordinary income recognized by the optionee.
PLAN BENEFITS
--------------
Because awards under the Option Plan are determined by the
Compensation Committee in its sole discretion, the Company cannot determine
the benefits or amounts that will be received or allocated in the future
under the Option Plan. The table under the heading "Compensation of
Directors and Executive Officers" shows stock options granted in 2002 to
the individual and group indicated. These awards are not necessarily
indicative of awards that the Company may make in the future.
RECOMMENDATION OF THE BOARD: The Board recommends that the
Shareholders concur in approving the increase in the number of shares of
Common Stock which may be issued under the Option Plan.
VOTE REQUIRED: The affirmative vote of a majority of the votes
cast by Shareholders present in person or by proxy and eligible to a vote
at the Meeting, a quorum being present, is required to approve this matter.
MANAGEMENT
------------
DIRECTORS
----------
For the names of and biographical information regarding each of the
Directors and a discussion of Board Committees, see "Proposal Regarding
Election of Directors."
EXECUTIVE OFFICERS
------------------
The names of the executive officers of the Company, and their
respective ages and positions with the Company, are as follows:
Name Age Position
-----------------------------------------------------------------------------------------
Richard A. Linden 42 President and Chief Executive Officer, Director
William C. Mortimore 57 Chief Strategist, Director
Scott T. Veech 41 Chief Financial Officer, Treasurer and Secretary
David M. Noshay 42 Vice President, Business Development
Scott T. Veech, has served as Chief Financial Officer, Treasurer and
Secretary of the Company since August 2002. Prior to joining the Company,
Mr. Veech was Chief Financial Officer of Penn Millers Insurance Company from
August 2000 until March 2002 and was Vice President at MMI Companies, Inc.
from September 1987 to August 2000. Mr. Veech has B. A. degrees in
Accounting and Finance from Miami University, Ohio and a M.S.T. from DePaul
University.
David M. Noshay, has served as Vice President, Business Development
since December 2001. From May 2000 to December 2001, Mr. Noshay served as
Vice President, Strategic Marketing and from January 1999 to April 2000, he
served as Vice President Sales, and Marketing - Systems. From August 1997
until December 1998, Mr. Noshay served as Vice President, Marketing of the
Company. From September 1995 until July 1997, Mr. Noshay served as the
Company's Eastern Regional Sales Manager. From July 1994 until August
1995, Mr. Noshay was Sales Manager of Scitex Medical Systems, a manufacturer
of medical image printing equipment. Mr. Noshay has worked for such major
medical companies as Konica Medical Corporation, Agfa Corporation and
Siemens Medical Systems. Mr. Noshay holds a B. S. in Electrical Engineering
and an M. S. in Biomedical Engineering from Rutgers University.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------------------------
DIRECTORS' COMPENSATION
------------------------
Directors who are employees of the Company do not receive any cash
compensation for their service as members of the Board of Directors,
although they are reimbursed for certain expenses incurred in connection
with attendance at Board meetings. The Board of Directors may, in its
discretion, alter this policy in the future.
Directors who are not employees of the Company receive (i) $2,500
per annum for their participation on the Board, payable in shares of the
Company's Common Stock valued at the closing price of the Company's shares
on the day before the Annual Shareholders' Meeting; (ii) immediately
exercisable options to purchase 5,000 shares of Common Stock under the
Company's 1998 Stock Option Plan for Directors, as amended (the "Directors'
Plan"), with an exercise price equal to the closing price of the Company's
shares on the day before the Annual Shareholders' Meeting; and (iii) $1,000
for each Board meeting and for each committee meeting which they attend in
person, and $500 for meetings in which they participate by teleconference.
Directors also are reimbursed for certain expenses incurred in connection
with attendance at Board meetings.
Options granted under the Company's Directors' Plan, shall expire
at the earliest to occur of (i) the expiration of the option term (no more
than 10 years), or (ii) the expiration of 30 days from the date the
Director ceases to serve on the Company's Board of Directors. Options
granted under the Option Plan may be exercised in whole or in part until
termination of the exercise period.
The purposes of the Director's Plan are to attract and retain the
best available, qualified resources for service as Directors; to provide
additional incentive to individuals to serve as Directors; to motivate
Directors to achieve superior performance for the benefit of the Company's
Shareholders; and to encourage Directors' continued service on the Board.
Each option granted under the Directors' Plan is evidenced by a written
agreement between the Company and the Director.
EXECUTIVE COMPENSATION
-----------------------
Set forth below is information concerning the compensation for
2002, 2001, and 2000 for the Company's President and Chief Executive Officer
and each other executive officer of the Company whose salary and bonus
exceeded $100,000:
SUMMARY COMPENSATION TABLE
---------------------------
Annual Compensation Long Term Compensation Awards
--------------------------------------------------------------------------------------------------------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus(1) Compensation Options Compensation(2)
---------------------- ---- -------- -------- ------------ ---------- ----------------
Richard A. Linden 2002 $195,833 $37,245 ----- ----- $2,625
President and Chief 2001 177,083 41,125 ----- 30,000 27,375(4)
Executive Officer 2000(3) 66,667 ----- ----- 220,000 1,000
William C. Mortimore 2002 $175,000 $22,750 ----- ----- $3,500
Chief Strategist 2001 177,083 35,613 ----- ----- 3,541
2000 173,333 ----- ----- 142,278 3,467
David M. Noshay 2002 $119,167 $14,196 ----- 4,000 $2,383
Vice President, 2001 115,833 2,000 ----- 5,000 2,450
Business Development 2000 121,250 6,667 ----- 10,000 2,425
(1) Represents amounts earned and accrued during calendar year, but not paid until
following calendar year.
(2) Represents paid contributions to 401(k) plan for the benefit of employees.
(3) Mr. Linden's salary in 2000 includes only the period from September 2000 (the
effective date of Mr. Linden's employment) through December 2000.
(4) Includes the forgiveness of $25,000 in November 2001 of a loan to Mr. Linden
used to buy the Company's Common Stock.
Option Grants in Fiscal Year 2002
-----------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Exercise Expiration
Granted Fiscal Year Price Date
---------- ------------ --------- ----------
Richard A. Linden............. ----- ----- ----- -----
William C. Mortimore.......... ----- ----- ----- -----
David M. Noshay (1)........... 4,000 (*) $4.16 02/13/2008
(*) Less than 1% to total options granted to employees in Fiscal Year 2002.
(1) Options granted to purchase 1,000 shares vesting to the extent of 25% on the first,
second, third and fourth anniversaries of the grant date.
AGGREGATED 2002 FISCAL YEAR END OPTION VALUES
-----------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Shares Fiscal Year End Fiscal Year End
Acquired Value ----------------------------- -------------------------------
on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
----------- ---------- ----------- ------------- ----------- ---------------
Richard A. Linden...... 25,000 $137,000 92,500 132,500 $436,400 $601,600
William C. Mortimore... 67,721 $219,712 81,139 71,139 $401,258 $347,158
David M. Noshay........ 16,930 $ 80,756 69,041 12,750 $146,366 $ 62,330
(1) The value realized is the difference between the fair market value of the underlying stock at
the time of the exercise and the exercise price.
EMPLOYMENT AGREEMENTS
----------------------
The Company entered into employment agreements as of November 29, 2001,
with Richard A. Linden, and as of December 21, 2001, with William C. Mortimore,
each of which is in effect until terminated by either the employee or the
Company upon 30 days written notice. The Company entered into an employment
agreement with Scott T. Veech as of July 15, 2002, which is in effect until
terminated by either the employee or the Company.
Mr. Linden's contract provides for a monthly salary of no less than
$16,667 and an annual performance bonus of up to 30% of salary and requires
Mr. Linden to devote his full time and attention to the Company. The
employment agreement also includes confidentiality provisions, and awards
Mr. Linden twelve months severance pay following termination of his employment
under certain conditions in a change of control. As permitted under Mr.
Linden's employment agreement, Mr. Linden borrowed $50,000 from the Company
on December 21, 2000, $25,000 of which remains outstanding, toward the purchase
price for the purchase of shares of the Company. Such loan is a full recourse
loan bearing interest at the Applicable Federal Rate as of the date of
borrowing and is secured by a pledge of the shares. The loan is a
grandfathered loan under the Sarbanes - Oxley Act of 2002 and any modification
of the terms of such loan is prohibited.
Mr. Mortimore's contract provides for a monthly salary of no less than
$14,583 and an annual performance bonus of up to 25% of salary and requires
Mr. Mortimore to devote his full time and attention to the Company. The
employment agreement also includes confidentiality provisions, restricts Mr.
Mortimore's ability to compete with the Company for a period of two years
after termination of his employment and awards Mr. Mortimore twelve months
severance pay following termination of his employment under certain conditions
in a change of control. Under Wisconsin law, a non-compete clause in an
employment agreement may be voided if the court determines that the non-compete
clause is unfairly restrictive.
Mr. Veech's contract provides for a monthly salary of no less than
$12,500 and an annual performance bonus of up to 25% of salary and requires
Mr. Veech to devote his full time and attention to the Company. The employment
agreement awards Mr. Veech six months severance pay following termination of
his employment under certain conditions in a change of control. As provided
for in his employment agreement, Mr. Veech was issued 80,000 stock options
with an exercise price of $4.61, the closing price of the Company's Common
Stock on the date of grant, August 21, 2002. The options are exercisable to
the extent of 20,000 shares on each of August 21, 2002, 2003, 2004 and 2005.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
----------------------------------------------------------------
The following table sets forth certain information regarding the
beneficial ownership of the Common Shares as of April 4, 2003 by: (i) each
person that is known by the Company to beneficially own or exercise the voting
or dispositive control over five percent or more of the outstanding Common
Shares; (ii) each Director; and (iii) all Directors and executive officers of
the Company as a group. Except as otherwise indicated in the footnotes to the
table, the persons named below have sole voting and investment power with
respect to the shares beneficially owned by such persons. In general, a
person is deemed to be a "beneficial owner" of a security if that person has
or shares the power to vote or direct the voting of such security, or the
power to dispose of or to direct the disposition of such security. A person
is also deemed to be a beneficial owner of any securities of which the person
has the right to acquire the beneficial ownership within 60 days.
Shares Beneficially
Owned (1)
-----------------------
Name and Address (2) Number Percent
----------------------------------------------------- --------- -------
Harvey L. Poppel (3)................................. 1,065,648 10%
Robert T. Geras (4).................................. 753,180 7%
William C. Mortimore (5)............................. 661,558 6%
Richard A. Linden (6)................................ 269,350 3%
Robert A. Barish, M. D. (7).......................... 89,181 (*)
Patrice M. Bret, M. D (8)............................ 317,796 3%
Dennis Brown......................................... 0 (*)
Michael D. Dunham (9)................................ 34,912 (*)
Anna M. Hajek (10)................................... 17,201 (*)
John D. Halamka, M. D (11)........................... 12,934 (*)
David M. Noshay (12)................................. 77,847 (*)
Richard A. Reck...................................... 0 (*)
Scott T. Veech (13).................................. 33,500 (*)
All Directors, Director Nominees and Executive
Officers as a Group (12 persons)................... 2,267,459 21%
(*) Less than 1% of outstanding Common Stock.
(1) Except pursuant to applicable marital property laws or as indicated in the
footnotes to this table, to the Company's knowledge, each Shareholder
identified in the table possesses sole voting and investment power with
respect to all Common Stock shown as beneficially owned by such
Shareholder.
(2) The business address for Mr. Poppel is 1391 Sixth Street, Sarasota,
Florida 34236. The business address for each of Messrs. Geras,
Mortimore, Linden, Barish, Bret, Brown, Dunham, Halamka, Ms. Hajek and
Mr. Reck is Merge Technologies Incorporated, 1126 South 70th Street,
Suite S107B, Milwaukee, Wisconsin 53214-3151.
(3) Includes 588,236 shares held by Poptech L. P. of which Mr. Poppel is the
general partner, and 1,200 shares in an IRA held by the spouse of Mr.
Poppel.
(4) Reflects 203,164 shares held by trusts for the benefit of Mr. Geras'
adult children, the beneficial ownership of which Mr. Geras disclaims,
and includes vested options held by Mr. Geras to acquire 22,500 shares.
(5) Includes vested options held by Mr. Mortimore to acquire 81,139 shares.
(6) Includes vested options held by Mr. Linden to acquire 92,500 shares.
(7) Includes vested options held by Dr. Barish to acquire 5,000 shares.
(8) Includes 313,630 Non-Voting Exchangeable shares of eFilm Medical Inc.,
and includes vested options held by Dr. Bret to acquire 3,781 shares.
(9) Includes vested options held by Mr. Dunham to acquire 27,500 shares.
(10) Includes vested options held by Ms. Hajek to acquire 10,000 shares.
(11) Includes vested options held by Dr. Halamka to acquire 10,000 shares.
(12) Includes vested options held by Mr. Noshay to acquire 71,291 shares.
(13) Includes vested options held by Mr. Veech to acquire 20,000 shares.
The Company is not aware of any arrangements, the operation of which
may at a subsequent date result in a change of control of the Company.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and Directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
initial statements of beneficial ownership (Form 3), and statements of changes
in beneficial ownership (Forms 4 or 5), of equity securities of the Company
with the Securities and Exchange Commission (the "SEC") and the National
Association of Securities Dealers, Inc. (the "NASD"). The SEC requires
officers, Directors and greater than ten percent Shareholders to furnish the
Company with copies of all these forms filed with the SEC or the NASD.
To the Company's knowledge, based solely upon its review of the copies
of these forms received by it, or written representations from certain
reporting persons that no additional forms were required for those persons,
the Company believes that all filing requirements applicable to its officers,
Directors, and greater than ten percent beneficial owners have been complied
with during 2002.
INDEPENDENT PUBLIC ACCOUNTANTS
---------------------------------
The firm of KPMG LLP was the Company's independent public accountants
for the 2002 fiscal year. Representatives of KPMG LLP will be present at the
Annual Meeting. They will have the opportunity to make a statement if they so
desire and to respond to appropriate questions.
KPMG LLP continues to serve as the Company's independent public
accountants of record for 2003.
The following table presents fees for professional audit services
rendered by KPMG LLP for the audit of the Company's annual financial
statement for 2002 and fees billed for other services rendered by KPMG LLP.
Audit fees (1)................................... $309,000
Audit related fees............................... 0
Audit and audit related fees..................... $196,000
--------
Tax fees (2)..................................... 37,000
All other fees................................... 0
--------
Total fees....................................... $346,000
(1) Audit fees include fees for the annual audit, quarterly reviews, consents,
review of registration statements and review of and assistance with Form
8-K filings.
(2) Tax fees consist of fees for tax compliance and tax consulting.
The Audit Committee of the Board of Directors has considered whether
the provision of the services not related to the audit of the financial
statements acknowledged above, other than audit fees, is compatible with
maintaining the independence of KPMG LLP.
ANNUAL REPORT ON FORM 10-KSB
-----------------------------
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Proxy Statement has been delivered, upon
written or oral request of the person, a copy of the Company's Form 10-KSB
Annual Report for the fiscal year ended December 31, 2002. Requests should
be made to the Investor Relations Department at the Company's principal
executive offices located at 1126 South 70th Street, Suite S107B, Milwaukee,
Wisconsin 53214-3151; telephone number (414) 977-4000.
STOCKHOLDER PROPOSALS
----------------------
No Shareholder proposals were received by the Company for inclusion
in this year's Proxy Statement. If a Shareholder wishes to present a proposal
to be included in the Proxy Statement for the next Annual Meeting of
Shareholders, the proposal must be submitted in writing and received by the
Company's Secretary at the Company's offices no later than December 15, 2003.
===================================================
YOUR VOTE IS IMPORTANT. THE PROMPT RETURN
OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES. PLEASE
PROMPTLY MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE.
===================================================
MERGE TECHNOLOGIES INCORPORATED
1126 SOUTH 70TH STREET
SUITE S107B
MILWAUKEE, WISCONSIN 53214-3151
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard A. Linden and Scott T. Veech,
and each of them, as Proxies, with the power to appoint their substitutes, and
hereby authorizes them to represent and to vote, as designated below, all of
the shares of common stock, par value $0.01 per share (the "Common Stock"), of
Merge Technologies Incorporated (the "Company") held of record by the
undersigned on March 21, 2003, at the Annual Meeting of Shareholders to be held
on May 21, 2003, or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned Shareholder. If no direction is made, this proxy
will be voted FOR the proposals set forth herein.
** DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED **
===============================================================================
[ MERGE TECHNOLOGIES INCORPORATED 2003 ANNUAL MEETING ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSALS 2 AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [ X ]
1. Elect nine individuals to serve as Directors until the next annual meeting
of Shareholders or otherwise as provided in the Amended and Restated Bylaws
of the Company.
NOMINEES
--------
[ ] For all Nominees [ ] 1. William C. Mortimore
[ ] 2. Richard A. Linden
[ ] 3. Robert A. Barish, M.D.
[ ] Withold Authority [ ] 4. Patrice M. Bret, M.D.
For all [ ] 5. Dennis Brown
Nominees [ ] 6. Michael D. Dunham
[ ] 7. Robert T. Geras
[ ] For All Except [ ] 8. Anna M. Hajek
(See Instructions [ ] 9. Richard A. Reck
Below)
Instructions: To withhold authority to vote for any individual nominee(s),
mark "FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: [xxx]
2. Approve an increase of 750,000 shares in the number of shares of Common
Stock which may be issued under the Amended and Restated 1996 Stock Option
Plan for Employees of Merge Technologies Incorporated.
[ ] For [ ] Against [ ] Abstain
3. In their discretion, the Proxies are authorized to transact any other
business as may properly come before the Meeting or any adjournment
thereof.
[ ] For [ ] Against [ ] Abstain
-------------------------------------------------------------------------------
To change the address on your account, please check the box at right and [ ]
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
Signature of Shareholder:_____________________________________ Date:___________
Signature of Shareholder:_____________________________________ Date:___________
NOTE: This proxy must be signed exactly as the name appears hereon. When
shares are held jointly, each holder should sign. When signing as an
executor, administrator, attorney, trustee or guardian, please give full title
as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. Is signer is a partnership,
please sign in partnership name by authorized person.