<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Cerion Technologies
(Name of Registrant as Specified In Its Charter)
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:
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<PAGE> 2
CERION TECHNOLOGIES INC.
1401 INTERSTATE DRIVE
CHAMPAIGN, ILLINOIS 61821
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1998
Notice is hereby given that the Annual Meeting of Stockholders of Cerion
Technologies Inc. will be held at the Union League Club, 65 West Jackson Street,
Chicago, Illinois, on May 28, 1998 at 10:00 a.m. central time, for the following
purposes:
1. To elect two Class II directors to hold office for three years and
until their respective successors have been duly elected and
qualified.
2. To act upon any other business as may properly be brought before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 8, 1998 as
the record date for determining the stockholders having the right to notice of,
and the right to vote at the meeting.
Please sign, date and return the enclosed proxy card in the enclosed
envelope at your earliest convenience. If you return the proxy, you may
nevertheless attend the meeting and vote your shares in person.
All shareholders of the Company are cordially invited to attend the
Meeting.
SAM ERWIN
Secretary
April 20, 1998
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE> 3
CERION TECHNOLOGIES INC.
1401 INTERSTATE DRIVE
CHAMPAIGN, ILLINOIS 61821
PROXY STATEMENT
GENERAL
The accompanying proxy is solicited on behalf of the Board of Directors
("the Board") of Cerion Technologies Inc. ("Cerion" or "the Company"), a
Delaware corporation, whose principal executive offices are located at 1401
Interstate Drive, Champaign, Illinois 61821, for use at the Annual Meeting of
the Stockholders of Cerion ("the Meeting") to be held on May 28, 1998, at 10:00
a.m., central time at the Union League Club, 65 West Jackson Street, Chicago,
Illinois, and at any adjournment thereof.
Shares represented by duly executed proxies in the form enclosed herewith
received by the Company prior to the Meeting will be voted as instructed in the
proxy on each matter submitted to the vote of shareholders. If any duly-executed
proxy is returned without voting instructions, the persons named as proxies
thereon intend to vote all shares represented by such proxy FOR the election of
the nominees for director named below described in this Proxy Statement.
Each proxy executed and returned by a stockholder may be revoked by
delivering written notice of such revocation to the Secretary of Cerion or by
executing and delivering to the Secretary a proxy bearing a later date, at any
time at or before the meeting except as to any matters upon which, prior to such
revocation, a vote shall have been cast pursuant to the authorization conferred
by such proxy. This proxy statement is being mailed to stockholders on or about
April 20, 1998.
VOTING SECURITIES
The only outstanding class of voting securities of Cerion is Common Stock,
$.01 par value (the "Common Stock"), each share of which entitles the holder
thereof to one vote. Only stockholders of record at the close of business on
April 8, 1998, are entitled to vote at the annual meeting and at any adjournment
thereof. As of the close of business on such date, there were 7,043,747 shares
of the Company's Common Stock outstanding. The holders of a majority of the
issued and outstanding stock entitled to vote, present in person or by proxy,
constitute a quorum for the transaction of business.
Shares that abstain from voting on a particular matter, and shares held in
"street name" by brokers or nominees who indicate on their proxies that they do
not have discretionary authority to vote such shares as to a particular matter,
will not be counted as votes in favor of such matter, and, except as described
below, also will not be counted as votes cast or shares voting on such matter.
<PAGE> 4
EXECUTIVE COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation paid
to the person who served as Cerion's Chief Executive Officer during 1997 and
Cerion's other executive officers who earned a salary and bonus in excess of
$100,000 in 1997 and 1996:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------------- LONG-TERM
NAME AND OTHER ANNUAL COMPENSATION ALL OTHER
PRINCIPAL POSITION YEAR SALARY $ BONUS $ COMPENSATION $ OPTIONS # COMPENSATION(1)
------------------ ---- -------- -------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
David A. Peterson............. 1997 $163,070 $144,193 $ -- 128,390 $7,736
President & 1996 160,611 -- -- 136,780 5,340
Chief Executive Officer 1995 148,874 83,567 -- 11,500(2) 4,285
Michael F. Brown.............. 1997 112,127 66,095 -- 51,300 3,413
Vice President -- 1996 110,434(3) -- 56,636(4) 52,600 2,884
Marketing
Richard A. Clark.............. 1997 112,127(3) 66,095 -- 51,300 3,372
Vice President -- Finance 1996 85,567 -- 117,427(5) 52,600 1,280
Paul A. Harter................ 1997 91,732(3) 54,074 -- 56,550 1,574
Vice President -- 1996 91,318 -- -- 63,100 3,334
Operations
William A. Hughes............. 1997 92,771(3) 54,074 -- 56,550 3,488
Vice President -- Product 1996 99,972 -- -- 63,100 5,446
Development
</TABLE>
- ---------------
(1) In 1997, Messrs. Peterson, Brown, Clark, Harter and Hughes earned (i)
$4,575, $2,988, $2,988, $1,434 and $2,470, respectively, as contributions to
the Company's Employees' Saving Plan; (ii) $2,430, $225, $184, $140, and
$143, respectively, as life insurance premiums and income; (iii) $731, $200,
$200, $0, and $0, respectively, as taxable club membership dues; and (iv)
$0, $0, $0, $0 and $875 as a car allowance. In 1996, Messrs. Peterson,
Brown, Clark, Harter and Hughes earned (i) $2,660, $2,660, $1,234, $3,194
and $3,360, respectively, as contributions to the Company's Employees'
Savings Plan; (ii) $2,430, $224, $46, $140 and $140, respectively, as life
insurance premiums and income; (iii) $250, $0, $0, $0 and $0, respectively,
as taxable club membership dues; and (iv) $0, $0, $0, $0 and $1,946,
respectively, as a car allowance.
(2) In 1995, Nashua (the then-parent of the Company) granted Mr. Peterson
options to purchase common stock of Nashua under Nashua's incentive plan.
The options terminated unexercised six months following the Company's
initial public offering.
(3) Messrs. Brown, Clark, Harter and Hughes first became executive officers in
1996.
(4) Includes moving expense reimbursements of $35,893 and tax equalization
payments of $20,743.
(5) Includes moving expense reimbursements of $70,550 and tax equalization
payments of $46,877.
2
<PAGE> 5
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information as to options granted
during fiscal 1997 to the individuals listed in the Summary Compensation Table.
<TABLE>
<CAPTION>
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (5)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION -----------------------
GRANTED IN 1997 ($/SHARE)(4) DATE 5% 10%
---------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David A. Peterson.... 128,390(1) 33.0% $2.25 - 4.13 2/3/07 & 7/22/07 $252,613 $640,170
Michael F. Brown..... 51,300(2) 13.2% 2.25 - 4.13 2/3/07 & 7/22/07 102,148 258,864
Richard A. Clark..... 51,300(2) 13.2% 2.25 - 4.13 2/3/07 & 7/22/07 102,148 258,864
Paul A. Harter....... 56,550(3) 14.5% 2.25 - 4.13 2/3/07 & 7/22/07 109,577 277,690
William A. Hughes.... 56,550(3) 14.5% 2.25 - 4.13 2/3/07 & 7/22/07 109,577 277,690
</TABLE>
- ---------------
(1) Options to purchase 60,000 and 26,300 shares will become exercisable on
February 3, 1998 and July 22, 1998, respectively, if Mr. Peterson remains in
the employ of the Company. Options to purchase 42,090 shares are
"performance-accelerated" options. These options will become exercisable in
tranches of 25% each based upon the Common Stock trading, for a period of 20
consecutive trading days, at an average premium of 25%, 50%, 75% and 100%,
respectively, above the exercise price, if the optionee remains an employee
of the Company on such date. However, if such performance goals are met
prior to the first anniversary of the grant date, the shares that would
otherwise become exercisable thereby only become exercisable on the first
anniversary date of the grant date, if the optionee remains an employee of
the Company on such date. On the eighth anniversary of the grant date, any
remaining shares subject to a "performance-accelerated" option will become
exercisable, if the optionee remains an employee of the Company on such
date.
(2) Options to purchase 25,000 and 15,775 shares each will become exercisable on
February 3, 1998 and July 22, 1998, respectively, if Messrs. Brown and Clark
remain in the employ of the Company. Options to purchase 10,525 shares are
"performance-accelerated" options subject to the conditions described in
footnote (1).
(3) Options to purchase 25,000 and 15,775 shares each will become exercisable on
February 3, 1998 and July 22, 1998 respectively if Messrs. Harter and Hughes
remain in the employ of the Company. Options to purchase 15,775 shares are
"performance-accelerated" options subject to the conditions described in
footnote (1).
(4) The one year vesting options granted on February 3, 1997 were granted at
$4.13. The one year vesting options and performance-accelerated options
granted on July 22, 1997 were granted at $2.25.
(5) In accordance with SEC rules, also shown are the hypothetical gains or
"option spreads," on the pre-tax basis, that would exist for the respective
options. These gains are based on assumed rates of annual compound stock
price appreciation of 5% and 10% from the date the options were granted over
the full option term. To put this data into perspective, the resulting
Cerion stock prices for the grants expiring on February 3, 2007 and July 22,
2007 would be $6.73 and $3.67, respectively, at a 5% rate of appreciation
and $10.71 and $5.84, respectively, at a 10% rate of appreciation. The
amounts reflected in the table may not accurately reflect or predict the
actual value of the stock options.
3
<PAGE> 6
OPTION EXERCISES IN FISCAL YEAR 1997 AND
VALUE OF OPTIONS AT END OF FISCAL 1997
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS HELD AT IN-THE-MONEY, OPTIONS
SHARES ACQUIRED VALUE FISCAL YEAR END AT FISCAL YEAR END
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE(#) EXERCISABLE/UNEXERCISABLE($)
- ---- --------------- ----------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
David A. Peterson..... 0 $0 0/128,390 $0/$0
Michael F. Brown...... 0 $0 0/ 51,300 $0/$0
Richard A. Clark...... 0 $0 0/ 51,300 $0/$0
Paul A. Harter........ 0 $0 0/ 56,550 $0/$0
William A. Hughes..... 0 $0 0/ 56,550 $0/$0
</TABLE>
SEVERANCE BENEFITS
The Company has entered into employment agreements with executive officers
Messrs. Peterson, Brown, Clark, Harter and Hughes in order to ensure their
continued service to Cerion in the event of an attempt by a person or group of
persons to gain control of Cerion. Such employment agreements provide that upon
termination of employment under certain circumstances within three years of a
"change in control" as defined in these agreements, the employee would receive
severance pay equal to three times the sum of his annual salary and bonus for
Messrs. Peterson, Brown, Clark, Harter and Hughes. In addition, if within three
years following the "change in control", Messrs. Peterson, Brown, Clark, Harter
or Hughes elect to terminate employment for "good reason" (as defined), he would
receive the above described severance pay. These severance payments are subject
to reduction to the extent necessary to avoid excise taxes under Section 280G of
the Internal Revenue Code.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee, which is composed of three independent directors, establishes and
administers the Company's executive compensation policies and plans, and
administers the Company's stock option plan. The Committee considers internal
and external information in determining officers' compensation, including input
from independent compensation consultants and outside survey data.
Compensation Philosophy
The Company's compensation policies for executive officers are based on the
belief that the interests of executives should be closely aligned with those of
the Company's shareholders. The Compensation policies are designed to achieve
the following objectives:
- Offer compensation opportunities that attract highly qualified
executives, reward outstanding initiative and achievement, and retain
the leadership and skills necessary to build long-term shareholder
value.
- Maintain a significant portion of executives' total compensation at
risk, tied to both the annual and long-term financial performance of
the Company and the creation of shareholder value.
- Further the Company's short and long-term strategic goals and values
by aligning compensation with business objectives and individual
performance.
Compensation Program
The Company's executive compensation program has three major integrated
components: base salary, annual incentive awards, and long-term incentives.
Base Salary. Base salary levels for executive officers are determined
annually by reviewing the competitive pay practices of companies of similar size
and market capitalization, the skills, performance level, and contribution to
the business of individual executives, and the needs of the Company. Overall,
the
4
<PAGE> 7
Company believes that base salaries for executive officers are approximately
competitive with median base salary levels for similar positions in similar
companies, but the Committee has not attempted to aim for any specific range of
any particular group of companies.
Annual Incentive Awards. The Company's executive officers are eligible to
receive annual cash bonus awards designed to motivate executives to attain
short-term and longer-term corporate and individual management goals. The
Committee establishes the annual incentive opportunity for each executive
officer in relation to his or her base salary. Awards under this program are
based on the attainment of specific Company performance measures established by
the Committee early in the fiscal year. For 1997 and 1998, the formula for these
bonuses was determined as a function of net income and cash flow objectives,
thus establishing a direct link between executive pay and Company profitability.
The Company's financial performance in 1997 met the objectives set by the
Committee, as such, awards were earned.
Long-Term Incentives. The Committee believes that stock options are an
excellent vehicle for compensating its officers and employees. The Company
provides long-term incentives through its 1996 Stock Incentive Plan, the purpose
of which is to create a direct link between executive compensation and increases
in shareholder value. Stock options are granted at fair market value and vest in
installments, generally over two years. When determining option awards for an
executive officer, the Committee considers the executive's current contribution
to Company performance, the anticipated contribution to meeting the Company's
long-term strategic performance goals, and industry practices and norms, but
without using any specific targets or criteria. Long-term incentives granted in
prior years and existing levels of stock ownership also are taken into
consideration, but the Committee has no specific ownership target. Because the
receipt of value by an executive officer under a stock option is dependent upon
an increase in the price of the Company's Common Stock, this portion of the
executives' compensation is directly aligned with an increase in shareholder
value.
Chief Executive Officer Compensation
Mr. Peterson's base salary, annual incentive award and long-term incentive
compensation are determined by the Committee based upon the same factors as
those employed by the Committee for executive officers generally. Mr. Peterson's
current annual base salary is $168,000 subject to annual review and adjustment
by the Board of Directors of the Company. Mr. Peterson also may be entitled to
an annual cash bonus depending on the Company's achievement of certain
performance objectives, including certain milestones in earnings and cash flows
during a fiscal year, as compared to the preceding fiscal year. Any such cash
bonus shall be computed on a formula basis established by the Committee. For the
year ending December 31, 1997, Mr. Peterson was paid a cash bonus totaling
$144,188, or 88.4 percent of his 1997 base salary.
Section 162(m) of the Internal Revenue Code limits the tax deduction to $1
million for compensation paid to certain executives of public companies. Having
considered the requirements of Section 162(m), the Committee believes that
grants made pursuant to the Company's Stock Incentive Plan meet the requirement
that such grants be "performance based" and are, therefore, exempt from the
limitations on deductibility. Historically, the combined salary and bonus of
each executive officer has been well below the $1 million limit. The Committee's
present intention is to comply with Section 162(m) unless the Committee feels
that required changes would not be in the best interest of the Company or its
shareholders.
Respectfully Submitted by the Compensation Committee
Sheldon A. Buckler, Chairman
Daniel M. Junius
Osmund M. Fundingsland
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Sheldon A. Buckler, Daniel M.
Junius and Osmund M. Fundingsland. No member of the Compensation Committee was
or is an officer or employee of the Company.
5
<PAGE> 8
PERFORMANCE GRAPHS
The following graph compares the cumulative total returns for Cerion's
Common Stock with the comparable returns for Standard and Poor's SmallCap 600
Index and the Standard and Poor's Computers (Hardware) Index for the period
beginning May 24, 1996 and ending December 31, 1997.
<TABLE>
<CAPTION>
CERION S&P COMPUTERS
Measurement Period TECHNOLOGIES SMALLCAP (HARDWARE)- PEER
(Fiscal Year Covered) INC 600 INDEX 500 GROUP
<S> <C> <C> <C> <C>
May 96 100 100 100 100
1996 34.21 104.12 115.00 182.54
1997 10.36 130.76 168.33 112.50
</TABLE>
Standard & Poor's Compustat-1-15-98
This graph assumes the investment of $100 in Cerion's Stock, the Standard
and Poor's SmallCap 600 Index and the Standard and Poor's Computers (Hardware)
Index and a Peer Group of eight companies within the data storage segment of the
computer industry as of May 24, 1996 (the date on which Cerion's Common Stock
was first registered with the SEC and began trading) and assumes dividends were
reinvested. Additional measurement points are at the remaining fiscal year ends
for the years ended December 31, 1996 and 1997.
6
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table shows the number of shares and percentage of Cerion's
Common Stock deemed to be beneficially owned by each director and nominee for
director, each executive officer named in the Summary Compensation Table above
and by all directors and officers of Cerion as a group, as of March 27, 1998.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF SHARES
NAME BENEFICIAL OWNERSHIP (a) OUTSTANDING
- ---- ------------------------ -----------------
<S> <C> <C>
David A. Peterson (e)..................................... 62,000 0.9%
Michael F. Brown (f)...................................... 25,100 0.3%
Richard A. Clark (f)...................................... 27,650 0.4%
Paul A. Harter (f)........................................ 25,000 0.3%
William A. Hughes (f)..................................... 25,300 0.3%
Gerald G. Garbacz......................................... 4,000 0.1%
Joseph A. Baute (c)....................................... 5,925 0.1%
Sheldon A. Buckler (c).................................... 9,925 0.1%
Osmund M. Fundingsland (b)................................ 4,265 0.1%
Daniel M. Junius (d)...................................... 2,500 *
Ross W. Manire (b)........................................ 8,936 0.1%
Gerard V. Schenkkan....................................... 4,848 0.1%
Ronald D. Verdoorn........................................ 4,848 0.1%
Directors and Officers as a group (13 persons) (g)........ 210,297 2.9%
</TABLE>
- ---------------
(a) Information as to the interests of the respective nominees has been
furnished in part by them. The inclusion of information concerning shares
held by or for their spouses or children or by corporations in which they
have an interest does not constitute an admission by such nominees of
beneficial ownership thereof. Unless otherwise indicated, all persons have
sole voting and dispositive power as to all shares they are shown as
owning.
(b) Includes 1,000 shares each Non-Employee Director (Directors who are not
employees of the Company, Nashua or of any affiliated company) has a right
to acquire within 60 days of April 6, 1998 through the exercise of stock
options.
(c) Includes 2,000 shares each Non-Employee Director has a right to acquire
within 60 days of April 6, 1998 through the exercise of stock options.
(d) Includes 1,500 shares held in a retirement account of Mr. Junius's spouse.
Mr. Junius disclaims beneficial ownership of these shares.
(e) Includes 60,000 shares Mr. Peterson has a right to acquire within 60 days
of April 6, 1998 through the exercise of stock options.
(f) Includes 25,000 shares each Executive officer has a right to acquire within
60 days of April 6, 1998 through the exercise of stock options.
(g) Includes 166,000 shares which the directors and officers of Cerion have the
right to acquire within 60 days of April 6, 1998 through exercises of stock
options.
7
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the number of shares and percentage of Cerion's
common stock beneficially owned by all persons known to Cerion to be the
beneficial owners of more than 5% of its common stock, as of March 27, 1998.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE COMMON STOCK
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OUTSTANDING
- ------------------------ ----------------------- ------------
<S> <C> <C>
Nashua Corporation......................................... 2,599,000(b) 37.0%
State of Wisconsin Investment Board........................ 686,200(a) 9.8%
</TABLE>
- ---------------
(a) Based on information reported in a Schedule 13G filed with the Securities
and Exchange Commission dated January 20, 1998.
(b) Based on information reported in a Schedule 13G filed with the Securities
and Exchange Commission dated February 13, 1998.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
The Board of Directors of Cerion Technologies Inc. is divided into three
classes. The Class II Directors' term will expire at the Meeting and the Class
III and Class I Directors' terms will expire in 1999 and 2000, respectively. All
Directors elected at this and future Annual Meetings of Stockholders will be
elected for three-year terms. All directors will hold office until their
successors have been duly elected and qualified. Prior to the Meeting, Ross W.
Manire, David A. Peterson and Gerard V. Schenkkan were the Class I Directors;
Sheldon A. Buckler, Osmund M. Fundingsland and Joseph A. Baute were the Class II
Directors; and Gerald G. Garbacz, Daniel M. Junius and Ronald D. Verdoorn were
the Class III Directors. Mr. Baute's term as director will expire at the Annual
Meeting.
The nominees for Class II Directors are Sheldon A. Buckler and Osmund M.
Fundingsland. Mr. Buckler and Mr. Fundingsland currently are serving as Class II
Directors of the Company. Shares represented by all proxies received by the
Board of Directors and not so marked as to withhold authority to vote for Mr.
Buckler and Mr. Fundingsland will be voted FOR the election of both nominees.
Messrs. Buckler and Fundingsland would be elected to hold office until the
Annual Meeting of Shareholders to be held in 2001 and until their respective
successors are duly elected and qualified. Both of these nominees have indicated
their willingness to serve, if elected; however, if either should be unable or
unwilling to serve, the proxies will be voted for the election of a substitute
nominee designated by the Board of Directors or for fixing the number of
directors at a lesser number.
The following table sets forth for each nominee to be elected at the
Meeting and for each director whose term of office will extend beyond the
Meeting, his age, the position(s) currently held by each nominee or director
with the Company, the year such nominee or director was first elected a
director, the year each nominee's or director's term will expire and the class
of director of each nominee or director.
<TABLE>
<CAPTION>
DIRECTOR YEAR TERM CLASS OF
NOMINEE OR DIRECTOR'S NAME AGE POSITION(S) HELD SINCE WILL EXPIRE DIRECTOR
- -------------------------- --- ---------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Gerald G. Garbacz....................... 61 Chairman of the Board 1996 1999 III
of Directors
Daniel M. Junius........................ 45 Director 1996 1999 III
Ronald D. Verdoorn...................... 42 Director 1998 1999 III
Sheldon A. Buckler...................... 66 Director 1996 1998 II
Osmund M. Fundingsland.................. 54 Director 1997 1998 II
Ross W. Manire.......................... 46 Director 1997 2000 I
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
DIRECTOR YEAR TERM CLASS OF
NOMINEE OR DIRECTOR'S NAME AGE POSITION(S) HELD SINCE WILL EXPIRE DIRECTOR
- -------------------------- --- ---------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
David A. Peterson....................... 58 President, Chief 1996 2000 I
Executive Officer and
Director
Gerard V. Schenkkan..................... 48 Director 1998 2000 I
</TABLE>
BUSINESS EXPERIENCE
Gerald G. Garbacz has served as director of the Company since January 1996.
Mr. Garbacz has been President, Chief Executive Officer and the Chairman of the
Board of Nashua Corporation since January 1996. From 1994 through 1995, Mr.
Garbacz was a private investor. He was Chairman and Chief Executive Officer of
Baker & Taylor Inc., an information distribution company from 1992 to 1994. He
is also a Director of Handy & Harman Inc.
Daniel M. Junius has served as a director of the Company since January
1996. Mr. Junius has served as Vice President -- Finance and Chief Financial
Officer of Nashua Corporation since 1995 and as Treasurer of Nashua since 1985.
Sheldon A. Buckler has served as a director of the Company since March
1996. Mr. Buckler has been Chairman of the Board of Commonwealth Energy System
since May 1995. He was Vice Chairman of the Board of Polaroid Corporation from
1990 until his retirement in 1994. He also is a Director of Nashua Corporation,
ASECO Corporation, PARLEX Corporation, Commonwealth Energy Corporation and
Spectrum Information Technologies, Inc.
Osmund M. Fundingsland has served as a director of the Company since
February 1997 and has been the Chief Executive Officer of OSF International, a
sales marketing consulting company, since its inception in 1995. From 1983
through 1994, Mr. Fundingsland was an Executive Vice President of Applied
Magnetics Corporation, an independent manufacturer of magnetic recording heads
and head stack assemblies for disk drives. Mr. Fundingsland is a director of the
ISERA group, a software company. He also serves on the board of directors for
the International Disk Drive Equipment and Materials Association (IDEMA).
Ronald D. Verdoorn has served as a director of the Company since March
1998. Mr. Verdoorn has been a consultant since 1997. Mr. Verdoorn served as
Executive Vice President and Chief Operating Officer of the Storage Products
Group Media and LSI at Seagate Technologies, Inc. from 1995 through 1997. Mr.
Verdoorn was Senior Vice President of Worldwide Manufacturing Operations at
Seagate Technologies, Inc. from 1992 through 1995. Seagate Technologies, Inc.
develops and manufacturers advanced information technology, including disk and
tape storage devices, magnetic recording heads and media, precision motors,
microelectronics, and data access and management software. Mr. Verdoorn is also
a director of EA Industries, Inc. and Marvel.
Ross W. Manire has served as a director since February 1997. Mr. Manire has
been a Senior Vice President of the Carrier Systems Business Unit at 3Com since
the merger of 3Com Corporation and U.S. Robotics Corporation in June 1997. Mr.
Manire served as Senior Vice President and General Manager of the Networks
Systems Division of U.S. Robotics, Inc. from May 1995 through June 1997 and
served as its Senior Vice President -- Operations and Chief Financial Officer
from early 1993 through May 1995. U.S. Robotics, Inc. was an international
designer, manufacturer and marketer of high-performance information access
products. 3Com is a supplier of local area network and wide area network systems
for the large enterprise, small business, home and service provider markets. Mr.
Manire also is a director of AT Financial Corp. and EA Industries, Inc.
9
<PAGE> 12
David A. Peterson is a co-founder of the original operations of the Company
and has served as Chief Executive Officer, President and a director of the
Company since its incorporation on December 31, 1995. From December 1991 through
December 1995, Mr. Peterson served as President and General Manager of the
Precision Technologies division of Nashua, the predecessor of the Company. From
April 1991 until December 1991 he served as Vice President -- Operations of the
Thin-film unit of the Computer Products Division of Nashua. From July 1986 until
April 1991, Mr. Peterson served as Vice President -- Manufacturing of Disk-Tec
(acquired by Nashua in July 1986 and became the Precision Technologies division
of Nashua). From June 1982 until July 1986 he served as Director of Operations
of Disk-Tec.
Gerard V. Schenkkan has served as a director of the Company since March
1998. Mr. Schenkkan has been Vice President and General Manager of the Optical
Storage Business Unit of Quantum Corporation since November 1997. He also served
as Vice President of Corporate Development at Quantum Corporation from July 1996
until late 1997. From 1993 through 1996, Mr. Schenkkan was Marketing Manager of
the Storage Systems Division of Hewlett-Packard Company. Quantum Corporation
designs and manufactures storage products and is one of the largest global
suppliers of hard disk drives.
BOARD OF DIRECTORS COMMITTEES
Included among the committees of the Board of Directors are standing Audit
and Compensation Committees. The Board of Directors has no standing nominating
committee.
AUDIT COMMITTEE
The Audit Committee approves the appointment of the independent accountants
of the Company, reviews with those accountants the annual audits of the
Company's financial statements and performs such other functions relating to the
auditing of the Company as the Committee or the Board may from time to time
determine to be appropriate. The members of the Audit Committee are Messrs.
Baute, Garbacz and Manire. The Audit Committee held two meetings in 1997.
COMPENSATION COMMITTEE
The Compensation Committee reviews executive compensation, sets the Chief
Executive Officer's base salary, and administers the Management Incentive
Compensation Program and the Company's stock option and incentive plans. The
members of the Compensation Committee are Messrs. Buckler, Junius and
Fundingsland. The Compensation Committee held two meetings in 1997.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1997 the Board of Directors held five regular meetings. Each of the
directors attended at least 75 percent of the aggregate of (1) the total number
of meetings of the Board of Directors held during 1997 while he was a director
and (2) the total number of meetings held by all committees of the Board on
which he served.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company, Nashua or of any affiliated
company ("Non-Employee Directors") will receive a fee of $750 per meeting of the
Board of Directors or any committee thereof. All directors are reimbursed for
their out-of-pocket expenses incurred in attending such meetings. The Company,
under its 1996 Stock Incentive Plan, also grants each Non-Employee Director, on
the election or re-election
10
<PAGE> 13
date of each such director and annually until term expires, that number of
shares of Common Stock which is equal in value to $10,000 (subject to adjustment
annually), calculated with reference to the closing price of the Common Stock on
the trading day immediately prior to the date of grant, and an option to
purchase 1,000 shares of Common Stock exercisable at the same price.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE NOMINEES LISTED ABOVE.
SUBMISSION OF STOCKHOLDERS' PROPOSALS
FOR 1999 ANNUAL MEETING
Stockholders who wish to submit proposals pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, as amended, at the 1998 Annual Meeting of
Stockholders will be required to deliver the proposals to Cerion on or before
December 8, 1998. Such proposals should be directed to Cerion Technologies Inc.,
1401 Interstate Drive, Champaign, Illinois 61821-1090, Attention: Richard A.
Clark, Vice President -- Finance, Chief Financial Officer and Treasurer. It is
suggested that proponents submit their proposals by certified mail, return
receipt requested. The Company's By-Laws also contain certain provisions which
impose additional requirements upon the submission of stockholder nominations
for Directors and other stockholder proposals. A copy of the By-Laws of the
Company may be obtained by a stockholder without charge upon written request
addressed to Mr. Clark at the address set forth above.
MISCELLANEOUS
The Board of Directors does not presently know of any other matters to be
presented to the annual meeting. If any other matters are brought before the
annual meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of proxy to vote the proxies on such matters in
accordance with their best judgment, pursuant to the discretionary authority
granted by the proxy.
The cost of solicitation of proxies will be borne by Cerion. In addition to
the use of the mails, proxies may be solicited by officers and regular employees
of Cerion, without extra compensation, by telephone or by other means of
communication.
It is expected that a member of the firm of Price Waterhouse LLP, the
Company's auditors, will be present at the Meeting and will be available to
respond to appropriate questions.
CERION WILL PROVIDE FREE OF CHARGE TO ANY STOCKHOLDER FROM WHOM A PROXY IS
SOLICITED PURSUANT TO THIS PROXY STATEMENT, UPON WRITTEN REQUEST FROM SUCH
STOCKHOLDER, A COPY OF ITS ANNUAL REPORT OR FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES THERETO. REQUESTS FOR SUCH
REPORTS SHOULD BE DIRECTED TO CERION TECHNOLOGIES INC., 1401 INTERSTATE DRIVE,
CHAMPAIGN, ILLINOIS 61821, ATTENTION: RICHARD A. CLARK, VICE PRESIDENT --
FINANCE, CHIEF FINANCIAL OFFICER AND TREASURER.
SAM ERWIN
Secretary
Champaign, Illinois
April 20, 1998
11
<PAGE> 14
PROXY PROXY
CERION TECHNOLOGIES INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- MAY 28, 1998
The undersigned appoints Gerald G. Garbacz as proxy, with full power of
substitution and revocation, to vote, as designated on the reverse side hereof,
all the Common Stock of Cerion Technologies Inc. which the undersigned has
power to vote, with all powers which the undersigned would possess if
personally present, at the annual meeting of stockholders thereof to be held on
May 28, 1998 or at any adjournment thereof.
Unless otherwise marked, this proxy will be voted FOR the election of the
nominees named, FOR Proposal Number 1.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
- --------------------------------------------------------------------------------
<PAGE> 15
CERION TECHNOLOGIES INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. (X)
<TABLE>
<S> <C>
[ ]
For Withhold For All
1. Election of Directors -- All All Except
Nominees: S. Buckler, O. Fundingsland [ ] [ ] [ ]
---------------------------------------
(Except for nominee(s) written above)
The undersigned acknowledges receipt of the Notice of Annual
Meeting of Shareholders and of the Proxy Statement.
Dated: __________________________, 1998
Signature(s) ________________________________________________
_____________________________________________________________
Please sign exactly as your name appears. Joint owners should
each sign personally. Where applicable, indicate your
official position or representation capacity.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE> 16
CERION (TM)
TECHNOLOGIES
April 20, 1998
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of Cerion Technologies Inc. which will be held at the Union League Club, 65 West
Jackson Street, Chicago, Illinois on May 28, 1998 at 10:00 a.m., central time.
The Notice of Annual Meeting of Stockholders and a Proxy Statement, which
describe the formal business to be conducted at the meeting, follow this letter.
The Company's Annual Report to Shareholders also is enclosed for your
information.
Please promptly mark, sign and return the enclosed proxy card in the
prepaid envelope so that your shares can be voted at the meeting in accordance
with your instructions. Your shares cannot be voted unless you date, sign and
return the enclosed proxy card or attend the annual meeting in person.
Regardless of the number of shares you own, your careful consideration of, and
vote on, the matters before the shareholders is important.
Very truly yours,
[David A. Peterson Signature]
David A. Peterson
President and
Chief Executive Officer
1401 INTERSTATE DRIVE
CHAMPAIGN, IL 61821-1090
TEL: 217/359-3700
FAX: 217/359-3702
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