<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Confidential, for Use of the
[_] Preliminary Proxy Statement 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
CARESIDE, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
<PAGE>
CARESIDE, INC.
6100 Bristol Parkway
Culver City, California 90230
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 9, 2000
----------------
To the Shareholders of Careside:
The Annual Meeting of Shareholders of Careside, Inc., a Delaware corporation
(the "Company") will be held at 2:00 p.m., Eastern Standard Time, on May 9,
2000, at the Peninsula Hotel, 700 Fifth Avenue, New York, New York for the
following purposes:
1. To elect three directors of the Company for a three-year term;
2. To ratify the appointment of Arthur Andersen LLP as independent auditors
for the Company for the year ending December 31, 2000; and
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only holders of the Company's Series A Preferred Stock and Common Stock at
the close of business on March 31, 2000, are entitled to notice of, and to
vote at, the Annual Meeting and any adjournments or postponements thereof.
Holders of shares of Series A Preferred Stock vote as if such preferred shares
were converted into the applicable number of shares of Common Stock. Such
shareholders may vote in person or by proxy. The stock transfer books of the
Company will not be closed. The accompanying form of proxy is solicited by the
Board of Directors of the Company.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOU ARE
CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT
TO ATTEND IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD IN THE SELF-ADDRESSED ENVELOPE, ENCLOSED FOR YOUR CONVENIENCE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU DECIDE TO
ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOU MAY REVOKE YOUR PROXY BY
WRITTEN NOTICE AT THAT TIME.
By Order of the Board of Directors
/s/ W. Vickery Stoughton
W. Vickery Stoughton
Chairman of the Board and Chief
Executive Officer
March 31, 2000
<PAGE>
CARESIDE, INC.
6100 Bristol Parkway
Culver City, California 90230
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 9, 2000
----------------
GENERAL
This Proxy Statement, which is first being mailed to shareholders on or
about April 7, 2000, is furnished in connection with the solicitation by the
Board of Directors of Careside, Inc. (the "Company") of proxies to be used at
the Annual Meeting of Shareholders of the Company (the "Annual Meeting"), to
be held at 2:00 p.m. on May 9, 2000, at the Peninsula Hotel, 700 Fifth Avenue,
New York, New York, and at any adjournments or postponements thereof.
RECORD DATE
Holders of record of the Company's Series A Preferred Stock or Common Stock
on March 31, 2000, will be entitled to vote at the Annual Meeting or any
adjournments or postponements thereof. As of that date, there were 8,796,511
shares of Common Stock and 162,914 shares of Common Stock into which the
Series A Preferred Stock is convertible outstanding and entitled to vote.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by a
shareholder prior to its exercise upon written notice to the Secretary of the
Company, by delivering a duly executed proxy bearing a later date, or by the
vote of a shareholder cast in person at the Annual Meeting.
VOTING PROCEDURES
The presence, in person or by proxy, of holders of Series A Preferred Stock
and Common Stock entitled to cast at least a majority of the votes which all
holders of Series A Preferred Stock and Common Stock are entitled to cast will
constitute a quorum for purposes of the transaction of business.
Each share of Common Stock and each shares of Series A Preferred Stock
entitles the holder thereof to one vote on the election of three nominees for
director and on any other matter that may properly come before the Annual
Meeting. Shareholders are not entitled to cumulative voting in the election of
directors.
If proxies in the accompanying form are properly executed and returned prior
to voting at the meeting, the shares represented thereby will be voted as
instructed on the proxy. If no instructions are given on a properly executed
and returned proxy, the shares represented thereby will be voted (i) for the
election of the nominees for director named below, (ii) for the ratification
of the appointment of Arthur Andersen LLP as independent auditors, and (iii)
in support of management on such other business as may properly come before
the Annual Meeting or any adjournments thereof. Shareholders whose shares are
held of record by a broker or other nominee are nevertheless encouraged to
fill in the boxes of their choice on the proxy, as brokers and other nominees
may
<PAGE>
not be permitted to vote shares with respect to certain matters for which they
have not received specific instructions from the beneficial owners of the
shares.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Under Delaware law and the By-laws of the Company, the presence of a quorum
is required for each matter to be acted upon at the Annual Meeting. The
presence at the Annual Meeting in person or by proxy, of shareholders entitled
to cast at least a majority of the votes that all shareholders are entitled to
cast on a particular matter shall constitute a quorum for the purposes of
consideration and action on the matter. Votes that are withheld, abstentions
and broker non-votes (described below) will be counted in determining the
presence of a quorum.
Directors are elected by the affirmative vote of a plurality of the votes of
the shares entitled to vote, present in person or represented by proxy. All
other actions to be taken by the shareholders at the Annual Meeting shall be
taken by the affirmative vote of a majority of the shares present, in person
or by proxy, at the meeting and entitled to vote thereon. Votes that are
withheld and abstentions will be counted in determining the number of votes
present in connection with any particular matter. Broker non-votes, which
occur when a broker or other nominee holding shares for a beneficial owner
does not vote on a proposal because the broker or other nominee has not
received specific instructions from the beneficial owners, will not be counted
in determining the number of votes present in connection with any particular
matter. Broker non-votes will, therefore, have no effect on the outcome of any
of the matters to be voted upon at the Annual Meeting.
COSTS OF SOLICITATION OF PROXIES
The cost of solicitation of proxies by the Board of Directors will be borne
by the Company. Proxies may be solicited by mail, personal interview,
telephone or telegraph and, in addition, directors, officers and regular
employees of the Company may solicit proxies by such methods without
additional remuneration. Banks, brokerage houses and other institutions,
nominees or fiduciaries will be requested to forward the proxy materials to
beneficial owners in order to solicit authorizations for the execution of
proxies. The Company will, upon request, reimburse such banks, brokerage
houses and other institutions, nominees and fiduciaries for their expenses in
forwarding such proxy materials to the beneficial owners of the Company's
stock.
ELECTION OF DIRECTORS
(Proposal 1)
The Company's Board of Directors consists of nine members, divided into
three classes, which serve for staggered three-year terms and until their
successors are elected and qualified. At the meeting, three directors will be
elected to serve for a term of three years and until their successors are
elected and qualified. Unless otherwise specified in the accompanying proxy,
the shares of Common Stock and shares of Series A Preferred Stock voted
pursuant thereto will be cast for James R. Koch, Kenneth Kermes and Philip B.
Smith, each for terms expiring at the Annual Meeting of Shareholders to be
held in 2003. If, for any reason, at the time of election, any of the nominees
named should decline or be unable to accept his or her nomination or election,
it is intended that such proxy will be voted for the election, in the
nominee's place, of a substituted nominee, who would be recommended by the
Board of Directors. The Board of Directors, however, has no reason to believe
that any of the nominees will be unable to serve as a director. Nine directors
will continue to serve as directors following the Meeting as set forth below,
with three directors having a term expiring at the 2001 Annual Meeting of
Shareholders, three directors having a term expiring at the 2002 Annual
Meeting of Shareholders and three newly-elected directors having a term
expiring at the 2003 Annual Meeting of Shareholders.
2
<PAGE>
The following biographical information is furnished as to each nominee for
election as a director and each of the current directors:
Nominees for Election to the Board of Directors for a Three Year Term Expiring
at the 2003 Annual Meeting
James R. Koch, Chief Financial Officer, Treasurer, Executive Vice President
and Director, 45. Mr. Koch has served as our Chief Financial Officer,
Treasurer, Executive Vice President and as one of our directors since July
1998. Prior to joining us, Mr. Koch served as Vice President and Chief
Financial Officer of ILEX Oncology, Inc., a company that develops oncology
drugs, from August 1996 to July 1998. In addition, Mr. Koch served as Vice
President, Finance and Chief Financial Officer for two start-up specialty
pharmaceutical companies, Symphony Pharmaceuticals, Inc., from September 1993
to August 1996, and Neose Pharmaceuticals, Inc., currently Neose Technologies,
Inc., from September 1991 to September 1993. His prior experience also
includes ten years in senior financial management positions with G.D. Searle
Pharmaceutical, a manufacturer of pharmaceutical products. Mr. Koch holds a
B.S. in Mechanical Engineering from General Motors Institute and an M.S. from
the Krannert School of Management at Purdue University.
Kenneth N. Kermes, Director, 64. Mr. Kermes has served as one of our
directors since February 1997. Since June 1998, he has served as a principal
of Riparian Partners Limited and of Bay View Equity Partners, two related
investment banking and private equity investment partnerships. Prior to that,
he served as Vice President of Business and Finance for the University of
Rhode Island from December 1994 to June 1998 and as Chief Financial Officer
for SmithKline Beecham Corporation from October 1986 to July 1989 and as
Senior Vice President and Group Director of Corporate Development for
SmithKline from July 1989 to 1991. From 1991 to 1994, Mr. Kermes was a
consultant and an investor in the venture capital industry. Mr. Kermes
obtained a B.A. from Amherst College and attended the New York University
Graduate School of Business and the Harvard Business School Advanced
Management Program. In addition to Careside, Mr. Kermes serves as a director
of five private, closely held manufacturing companies in the Northeast.
Philip B. Smith, Director, 64. Mr. Smith has served as one of our directors
since November 1996. Since June 1998, Mr. Smith has served as a Vice-Chairman
of Laird & Co., LLC, a merchant bank. In addition, from 1991 until August
1998, Mr. Smith served as a Vice-Chairman with Spencer Trask Securities
Incorporated, an investment banking firm. Mr. Smith served in a number of
other senior management positions. From June 1986 to June 1988, Mr. Smith
served as Managing Director of Prudential Securities, an investment firm, in
its merchant bank division. From December 1967 to December 1972, Mr. Smith
served as President and Chief Executive Officer of Citicorp Venture Capital, a
venture capital company that he founded. Mr. Smith currently serves on the
board of directors of Movie Gallery, Inc., Digital Video Systems, Inc., and
KLS Enviro Resources, Inc. and several private companies. Mr. Smith has a
B.S.E. from Princeton University and an M.B.A. from the Harvard Business
School.
The Board of Directors Recommends a Vote FOR Proposal 1 to Elect All
Nominees.
Members of the Board of Directors Continuing in Office; Terms Expiring at 2001
Annual Meeting
William F. Flatley, Director, 58. Mr. Flatley has served as one of our
directors since November 1996. Since July 1997, he has served as the President
and Chief Executive Officer of Executive Health Group, a provider of
preventive healthcare services to corporations. From 1980 to December 1994, he
held a number of senior management positions with Bristol-Myers Squibb
Corporation, a pharmaceutical company, including President of a multi-division
medical device business, the Health Care Group, and President of the Drackett
Company, a household product manufacturer. Mr. Flatley retired from Bristol-
Myers Squibb at the end of 1994 but continued to provide the company with
certain consulting services after his retirement. Mr. Flatley obtained a B.S.
from Villanova University and a M.B.A. from the Wharton School of the
University of Pennsylvania.
3
<PAGE>
Thomas H. Grove, Executive Vice President--Chief Technology Officer,
Secretary and Director, 50. Dr. Grove has served as our Executive Vice
President--Chief Technology Officer, Secretary and as one of our directors
since our formation in July 1996. From April 1984 to July 1996, he served in a
number of management positions at SmithKline Beecham Clinical Laboratories,
Inc. involving research and development activities, including the position of
Vice President of Scientific Affairs from January 1991 to July 1996, where,
among other things, he was in charge of National Quality Control and Quality
Assurance for SBCL. Dr. Grove has received a number of awards, including a
NATO Science Fellowship to attend Oxford University from 1978 to 1979. He was
also named Young Investigator of the Year in 1980 by the American Association
for Clinical Chemistry and was elected to the National Academy of Clinical
Biochemistry in 1977. Dr. Grove holds a B.S. in Biology from SUNY-Albany and a
Ph.D. in Biochemistry from Syracuse University.
Diana Mackie, Director, 52. Ms. Mackie has served as one of our directors
since February 1997. As of January 2000, Ms. Mackie has accepted the position
to co-lead the merger integration process for Glaxo-SmithKline. From June 1999
to January 2000, she held the position of Vice President and Director,
Category Management, Dermatologicals, Phytomedicines and Vitamins, SmithKline
Beecham Consumer Healthcare (SBCH). From October 1997 to May 1999, she held
the position of Vice President for Strategy and Business Development at
SmithKline Beecham Healthcare Services, the business development division of
SmithKline Beecham Corporation, where her responsibilities included developing
business plans, long-range strategy and negotiating external alliances and
investments. Prior to that, Ms. Mackie served as Vice President, Group
Business Initiatives for SBHS from November 1996 to October 1997. From March
1996 to November 1996, she was General Manager of Diversified Prescription
Delivery, a pharmaceutical mail services company and a wholly owned subsidiary
of Diversified Pharmaceutical Services, a pharmaceutical benefit management
group. From March 1993 to March 1996, she served as Vice President, Strategy
Development, SmithKline Beecham Pharmaceuticals, a pharmaceutical company. Ms.
Mackie holds a B.S. in Chemistry from the University of Illinois, a M.B.A.
from The Massachusetts Institute of Technology Sloan School of Management and
a M.S. in Polymer and Fiber Engineering from The Massachusetts Institute of
Technology.
Members of the Board of Directors Continuing in Office; Terms Expiring at 2002
Annual Meeting
W. Vickery Stoughton, Chairman of the Board of Directors and Chief Executive
Officer, 53. Mr. Stoughton has served as our Chairman of the Board of
Directors and the Chief Executive Officer since our formation in July 1996.
Prior to that, he served as President of SmithKline Beecham Diagnostics
Systems Co. (SBDS), a diagnostic services and product company, from October
1995 to July 1996, and was President of SmithKline Beecham Clinical
Laboratories, Inc. (SBCL), a provider of diagnostic laboratory services, from
August 1992 to September 1995. As President of SBDS, Mr. Stoughton had
responsibility for SBCL, SmithKline Beecham Clinical Laboratories
International and SBDS's genetic testing and point-of-care testing projects.
In addition, Mr. Stoughton served as Chief Executive Officer and Vice
Chancellor for Health Affairs of Duke University Hospital from 1991 to 1992,
Chief Executive Officer of Toronto Hospital in Toronto, Canada from 1981 to
1991, Chief Operating Officer of Brigham and Women's Hospital in Boston from
1980 to 1981 and Chief Executive Officer of Peter Bent Brigham Hospital in
Boston from 1978 to 1980. Mr. Stoughton holds a B.S. in Chemistry from
St. Louis University and a M.B.A. from the University of Chicago. He is
currently a director of Sun Life Assurance Company of Canada, a financial
services company, and Biomira, Inc., a pharmaceutical company.
Anthony P. Brenner, Director, 42. Mr. Brenner has served as one of our
directors since November 1996. Since January 1998, he has served as a Managing
Director with Crosslink Capital, a venture capital firm, where he oversees
investment activities in the e-Business and outsourcing industries. Prior to
that, Mr. Brenner served as Senior Managing Director of Advanta Partners LP, a
private equity investment partnership, and as a member of the Board of
Directors of Advanta Corporation, a financial services company, from 1992 to
1996. In addition, from 1989 to 1998 Mr. Brenner served as President of Cedar
Point Partners, a private equity investment partnership. Mr. Brenner earned a
B.A. from Yale University and a M.B.A. from Stanford University.
4
<PAGE>
C. Alan MacDonald, Director, 66. Mr. MacDonald has served as one of our
directors since November 1996. Since 1999, Mr. MacDonald has served as
President of the Club Management Co., LLC. Since October 1997, Mr. MacDonald
has also served as a Managing Director of Directorship, Inc., a consulting
firm specializing in corporate governance issues. Prior to that, he served as
General Partner of the Marketing Partnership, Inc., a full service marketing
consulting firm, from January 1995 to July 1997 and as an acquisitions
consultant with the Noel Group, a venture capital firm, from July 1994 to
December 1994. In addition, he served as Chairman and Chief Executive Officer
of Lincoln Snacks Co., a caramelized popcorn snack company, from September
1992 to July 1994. Mr. MacDonald holds a B.S. in Hotel Administration from
Cornell University and is a member of the Cornell Society of Hotelmen and the
Dean's Advisory Committee at Cornell. Mr. MacDonald is also a director of
Lincoln Snacks Co., Lord, Abbot, J.B. Williams and Fountainhead Water Co.
Committees and Meetings of the Board of Directors
During the year ended December 31,1999, the Board of Directors held five
meetings (including regularly scheduled and special meetings). Each director
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and committees, if any, of the Board of Directors on which
he or she served.
The Audit Committee, which consists of Mr. Flatley, Mr. Kermes and Mr.
MacDonald, met once in 1999. The Committee's function is to make
recommendations to the Board of Directors regarding the annual selection of
independent public accountants, to audit annually the Company's books and
records, and to review recommendations made by such accounting firm as a
result of their audit. The Audit Committee also periodically reviews the
activities of the Company's accounting staff and the adequacy of the Company's
internal controls.
The Compensation Committee, which consists of Ms. Mackie, Mr. Brenner and
Mr. Smith, met two times in 1999. The Compensation Committee is responsible
for establishing the salaries of the executive officers of the Company,
incentives and other forms of compensation and benefit plans, administering
the Company's employee benefit plans and reviewing and recommending to the
Board annual objectives that are the basis for the option grants.
The Company did not have a standing Nominating Committee in 1999.
Compensation of Directors
The Company pays each director who is not also an employee of the Company
(an "outside director") a fee of $1,000 for each Board meeting and each
Committee meeting attended by such director in person, $500 for each of such
meeting attended telephonically, and an annual fee of $5,000 payable semi-
annually. Ms. Mackie is precluded by SmithKline policy from receiving any fees
or stock options for her service as a director. The Company will also
reimburse the directors for expenses incurred in attending Board of Directors
or committee meetings. In addition, the non-employee directors, other than the
SmithKline representative, Ms. Mackie, participate in our 1996 Incentive and
Non-Qualified Stock Option Plan. For each year that Mr. Brenner, Mr. Flatley,
Mr. Kermes, Mr. MacDonald and Mr. Smith served as directors, we granted each
an annual option to purchase 2,163 shares of common stock at the then
applicable market price. The options granted after the end of 1996 were issued
at $5.20 per share. The options granted after the end of 1997 were issued at
$6.76 per share. The options granted after the end of 1998 were issued at
$7.50 per share. Beginning in 2000, options granted to non-employee directors
will only be made under our 1998 Director Stock Option Plan. Under our 1998
Director Stock Option Plan, we will grant each non-employee director an annual
option to purchase 2,000 shares of common stock at the then applicable market
price.
5
<PAGE>
RATIFICATION OF APPOINTMENT OF AUDITORS
(Proposal 2)
The Board of Directors has selected Arthur Andersen LLP, independent public
accountants, to audit the consolidated financial statements of the Company for
the year ending December 31, 2000, and recommends that the shareholders ratify
such selection. This appointment will be submitted to the shareholders for
ratification at the Annual Meeting.
The submission of the appointment of Arthur Andersen LLP is not required by
law or by the By-laws of the Company. The Board of Directors is nevertheless
submitting it to the shareholders to ascertain their views. If the
shareholders do not ratify the appointment, the selection of other independent
public accountants will be considered by the Board of Directors. If Arthur
Andersen LLP shall decline to accept or become incapable of accepting its
appointment, or if its appointment is otherwise discontinued, the Board of
Directors will appoint other independent public accountants.
The Board of Directors Recommends a Vote FOR Proposal 2 to Ratify the
Appointment of Arthur Andersen LLP as Independent Auditors for the Year Ending
December 31, 2000.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, with respect to services rendered during
1999, 1998 and 1997, the total compensation paid by the Company to the
Company's Chief Executive Officer and each other executive officer whose total
annual salary and bonus exceeded $100,000 during 1999 (the "named executive
officers"). The Company has written employment agreements with Mr. Stoughton,
Dr. Grove and Mr. Koch. No named executive officer who otherwise would have
been includable in such table on the basis of salary and bonus earned during
the year ended December 31, 1999 has resigned or otherwise terminated
employment in 1999.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
----------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus(1) Options Compensation(2)
- --------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
W. Vickery Stoughton....... 1999 $210,892 -- -- $20,797
Chairman of the Board of
Directors and 1998 $203,481 -- 9,135 $20,797
Chief Executive Officer 1997 $195,281 $27,000 158,655 $20,547
Thomas H. Grove............ 1999 $167,852 -- -- $ 8,603
Executive Vice President-- 1998 $163,880 -- 5,529 $ 8,603
Research and Development 1997 $154,013 $25,000 79,327 $ 8,353
James R. Koch.............. 1999 $164,800 -- 1,202 $ 5,000
Executive Vice President
and 1998 $ 64,242 -- 40,384 $15,000
Chief Financial Officer
</TABLE>
- --------
(1) Bonus earned in 1997 and paid in 1998.
(2) Includes $4,750 contributed under our 401(k) Plan for the benefit of each
of Mr. Stoughton and Dr. Grove in 1997 and $5,000 for the benefit of each
of Mr. Stoughton and Dr. Grove in 1998 and 1999. Also includes $15,797 and
$3,603 of premiums paid for life insurance for Mr. Stoughton and Dr.
Grove, in each year, respectively. Includes $15,000 of relocation
assistance paid to Mr. Koch in 1998 and $5,000 contributed under the
401(K) plan for the benefit of Mr. Koch.
Stock Options Granted to Certain Executive Officers During 1999
The following table shows, as to named executive officers, information
concerning stock options granted during 1999.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Percent of Annual Rates of Stock
Shares Total Options Price Appreciation for
Underlying Granted to Exercise or Option Term(4)
Options Employees in Base Price Expiration ----------------------
Granted(1) 1999(2) Per Share(3) Date 5% 10%
---------- ------------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
James R. Koch........... 1,202 1.4% $8.01 01/10/09 $ 7,559 $ 19,157
</TABLE>
- --------
(1) All options were granted under our 1996 Incentive and Non-Qualified Stock
Option Plan. The listed grant vested or will vest 20% at grant, and on
December 31, 1999, 2000, 2001, and 2002.
(2) Based on an aggregate of 84,202 shares of common stock underlying options
granted to employees in 1999.
(3) Options were granted at fair market value, as determined by our Board of
Directors, based on all factors available to them on the date of grant.
These factors included our history and prospects, as well as the history
and prospects of our industry, an assessment of our past and present
operations and financial performance, the prospects for our future
earnings, the present state of our development, the possibility of an
initial public offering by us and market prices of publicly traded common
stocks of comparable companies in recent periods.
7
<PAGE>
(4) Assumes stock price appreciation of 5% and 10% compounded annually from
the date the respective options were granted to their expiration date, as
mandated by the rules of the Securities and Exchange Commission, and does
not represent our estimate or projection of the future appreciation of our
stock price. Actual gains, if any, on stock option exercises and common
stock holdings, are dependent upon the timing of such exercise and the
future performance of the common stock and may be greater or less than the
potential realizable value set forth in the table.
Aggregated Options Exercised in Last Fiscal Year And Fiscal Year-end Option
Values
The following table sets forth, as to the named executive officers, certain
information concerning the number of shares subject to both exercisable and
unexercisable stock options as of December 31, 1999. Also reported are values
for unexercised "in-the-money" options, which values represent the positive
spread between the respective exercise prices of outstanding stock options and
the fair market value of the Company's Common Stock as of December 31, 1999.
No options were exercised by the Named Officers in 1999.
<TABLE>
<CAPTION>
Number of Shares
Underlying Unexercised Value of Unexercised
Options at Fiscal Year In-the-Money
End Options at Fiscal Year End(1)
------------------------- -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- -----------------------------
<S> <C> <C> <C> <C>
W. Vickery
Stoughton........... 157,403 10,387 $ 678,692 $ 30,596
Dr. Thomas H. Grove.. 79,085 5,771 $ 353,463 $ 18,382
James R. Koch........ 36,265 5,321 $ 108,133 $ 14,709
</TABLE>
- --------
(1) The value of the underlying securities is based on the $9.75 per share
closing price of the Company's Common Stock on December 31, 1999 (the last
trading in 1999), minus the aggregate exercise price.
Employment Agreements
We are party to employment agreements with each of Mr. Stoughton, Dr. Grove
and Mr. Koch. On the anniversary date of each employment agreement, the
agreement is automatically extended for three-year rolling terms unless either
party, at least 60 days prior to the annual extension date, gives notice that
the employment agreement shall not be extended or otherwise terminates the
agreement. Mr. Stoughton, Dr. Grove and Mr. Koch may resign upon 90 days
notice to us. Under the employment agreements, Mr. Stoughton, Dr. Grove or Mr.
Koch will be entitled to have his base salary, bonus and stock options
continue to accrue through the end of the then current term if he is
terminated without cause, or becomes disabled. "Cause" includes disloyalty,
dishonesty, fraud, conviction of a felony or the disclosure of confidential
information. He will also be entitled to such amounts if he terminates his
employment agreement as a result of a reduction in his duties, our breach of
the employment agreement or a transaction resulting in our sale. The
employment agreements prohibit Mr. Stoughton, Dr. Grove and Mr. Koch from
engaging in the point-of-care diagnostics business during the term of such
employment agreements. These non-compete clauses will remain in effect for one
year after the expiration or termination of employment. If, however, the term
of employment had continued for at least two years then the non-compete
clauses have no effect when employment is terminated or expires. However, if
we terminate employment without cause or if the employee terminates his
employment following our breach of the agreement or because of a change of
control, the non-compete clause terminates.
Under their respective employment agreements, Mr. Stoughton serves as our
Chairman of the Board of Directors and Chief Executive Officer, and as of
March 31, 2000 earns an annual base salary of $210,892, Dr. Grove serves as
Executive Vice President--Research and Development, and currently earns an
annual base salary of $167,832, and Mr. Koch serves as our Chief Financial
Officer, Treasurer and Executive Vice President, and currently earns an annual
base salary of $164,800. In addition, Mr. Koch received a $15,000 relocation
allowance in connection with entering into his employment agreement. At the
discretion of our Board of Directors, an annual bonus may be paid to Mr.
Stoughton, Dr. Grove and Mr. Koch. In each case, we may agree to future raises
and other compensation for each of Mr. Stoughton, Dr. Grove and Mr. Koch. In
addition, Mr. Stoughton, Dr. Grove and Mr. Koch are eligible to receive stock
options pursuant to the 1996 Incentive and
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<PAGE>
Non-Qualified Stock Option Plan, the 1996 Key Executive Stock Option Plan and
the 1998 Incentive and Non-Qualified Stock Option Plan. Such executive
officers are also entitled to reimbursement for certain travel and
entertainment expenses incurred in connection with the performance of their
duties.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company consists of Mr. Brenner, Ms.
Mackie and Mr. Smith, outside directors of the Company. The Committee was
established in 1997 and is responsible for reviewing and making
recommendations to the Board regarding all forms of compensation to be
provided to the executive officers and directors of Careside, including stock
compensation and loans, and all bonus and stock compensation to all employees.
The goal of the Committee is to ensure that our compensation practices are
sufficient to attract the necessary talent to enable growth from a development
stage company into one with commercialized products. The Compensation
Committee administers the Company's 1996 Incentive and Stock Option Plan, 1996
Key Executive Stock Option Plan, 1998 Incentive and Non-Qualified Stock Option
Plan, 1998 Director Stock Option Plan and Employee Stock Purchase Plan.
Careside's compensation program is designed to attract and retain
experienced executives and motivate them for both the short and long term. The
executive compensation program is comprised of four elements: competitive base
salary, benefits comparable to those shared by the general employee
population, annual bonus, and long term incentives linked to corporate
performance.
Compensation Committee Purposes
The Compensation Committee of the Board serves as an administrative arm of
the Board to make decisions on behalf of the Board with respect to all forms
of compensation to executive officers, and all bonus and stock compensation to
employees.
Compensation for officers and key employees includes both cash and equity
elements. Cash compensation consists of base salary, which is determined on
the basis of the level of responsibility, expertise and experience of the
employee, taking into account competitive conditions in the industry. In
addition, cash bonuses may be awarded to officers and other key employees.
Such bonuses are based on accomplishment of designated Company goals.
Ownership of the Company's Common Stock is a key element of executive
compensation. Officers and other employees of Careside are eligible to
participate in the 1996 Incentive and Stock Option Plan, 1996 Key Executive
Stock Option Plan, 1998 Incentive and Non-Qualified Stock Option Plan and
Employee Stock Purchase Plan. These plans permit the Board or a committee
designated by the Board to grant stock options to employees on such terms as
the Board or such committee may determine. Employee option grants typically
vest over a [four]-year period and thus require the employee's continuing
efforts. The Committee believes that it is in the stockholders' interests to
link employee compensation as closely as possible to equity appreciation and
thus to share with the employees the benefits of their efforts on behalf of
our success.
Description of 401(K) Plan
We have a 401(k) Salary Reduction Plan and Trust for eligible employees.
Eligible employees may contribute up to 15% of their current compensation, up
to a statutorily prescribed annual limit, to the 401(k) plan. Each participant
is fully-vested in his or her deferred salary contributions. A participant's
contributions are held in trust and invested pursuant to his or her directions
from among 20 or more investment funds made available under the 401(k) plan.
We may make matching contributions of 50% of each participant's deferred
salary contributions, up to a maximum of 4% of such participant's
compensation. Our matching contributions vest after a participant has
completed three years of service with us, or earlier upon attainment of age
55, death while in service, retirement for disability or termination of the
401(k) plan. Payment of 401(k) plan benefits are
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<PAGE>
made in a single lump-sum payment. Distribution of a participant's vested
interest in his or her account generally occurs after a participant's
termination of employment for any reason, including retirement, death or
disability.
1999 Executive Compensation
Executive compensation for 1999 included base salary, other compensation
and, in one instance, the grant of stock options (as reflected elsewhere in
this Proxy Statement under "Option Grants in Year Ended December 31, 1999").
We issued no cash bonuses in 1999.
1999 Chief Executive Officer Compensation
The compensation for Mr. Stoughton included salary of $211,788 and
additional compensation in the amount of $20,797. Our Board of Directors
increased Mr. Stoughton's salary from 1998 to reflect Mr. Stoughton's
performance and competitive salaries in the marketplace. See "Executive
Compensation --Summary Compensation Tables" and "--Employment Agreements."
Limits of Deductibility of Compensation
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on
the allowable tax deduction of compensation paid by a publicly-held
corporation to its Chief Executive Officer and its other four most highly
compensated executive officers employed at year-end, subject to certain pre-
established objective performance-based exceptions. The Committee intends to
take Section 162(m) into account when formulating its compensation policies
for the Company's Chief Executive Officer and its other Executive Officers and
to comply with Section 162(m), if and where the Committee determines
compliance to be practicable and in the best interests of the Company and its
stockholders.
Summary
The Compensation Committee advises the Board regarding our cash and equity
incentive programs for the purpose of attracting and retaining highly skilled
executives who will promote our business goals and providing incentive for
these persons to achieve goals which are intended to build long-term
stockholder value.
Compensation Committee of the Board
of Directors
Anthony P. Brenner
Diana Mackie
Philip B. Smith
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STOCK PERFORMANCE CHART
The following Stock Performance Chart compares the Company's cumulative total
shareholder return on its Common Stock for the period from June 16, 1999 (the
date the Common Stock commenced trading on the American Stock Exchange) to
December 31, 1999 (the date of the Company's 1999 fiscal year end) and its
cumulative total shareholder return on its Common Stock and publicly-traded
warrants for the period from June 16, 1999 to December 31, 1999, with the
cumulative total return of the American Stock Exchange Index and the NASDAQ
Healthcare Index. The comparison assumes $1.00 was invested on June 16, 1999 in
the Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CSA CSA Combined NASDAQ
Measurement Period Common Common Stock AMEX Healthcare
(Fiscal Year Covered) Stock and Warrant Index Index
- --------------------- ------ ------------ ----- ----------
<S> <C> <C> <C> <C>
Measurement Pt- 6/16/1999 1.000 1.000 1.000 1.000
FYE 6/30/1999 1.000 0.817 1.046 1.099
FYE 7/19/1999 1.010 1.067 1.070 0.976
FYE 7/31/1999 0.938 0.983 1.029 0.951
FYE 8/31/1999 0.865 0.858 0.999 0.850
FYE 9/30/1999 0.927 0.925 1.015 0.812
FYE 10/31/1999 0.823 0.800 1.017 0.683
FYE 11/30/1999 0.990 1.025 1.084 0.723
FYE 12/31/1999 1.625 1.700 1.159 0.800
</TABLE>
11
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 29, 2000, by (1) each person or group of
affiliated persons known by us to be the beneficial owner of more than 5% of
our outstanding Common Stock, (2) each of our directors, (3) each of our
executive officers and (4) all of our executive officers and directors as a
group.
The number of shares of Common Stock actually owned by each principal
stockholder is listed in Column A, entitled "Shares of Common Stock." In
addition, each principal stockholder is deemed to be the beneficial owner of
Common Stock that such stockholder can acquire upon the exercise of warrants
or options on or within 60 days after March 29, 2000. These option and warrant
shares are listed separately in Column B, entitled "Shares Underlying
Options/Warrants." The total of these two columns is then set forth in
Column C. Each principal stockholder's maximum potential percentage ownership
is in Column D. Unless otherwise noted, we believe that all persons named in
the table have sole voting and investment power with respect to all shares
beneficially owned by them.
<TABLE>
<CAPTION>
(A) (B) (C) (D)
Shares Total
of Shares Beneficial
Common Underlying Ownership Percentage
Name of Beneficial Owner Stock Options/Warrants (A plus B) Owned
------------------------ ------- ---------------- ---------- ----------
<S> <C> <C> <C> <C>
Kevin Kimberlin............ 765,891(1) 336,349(2) 1,102,240 13.9%
c/o Spencer Trask
Securities Incorporated
535 Madison Avenue, 18th
Floor
New York, New York 10022
SmithKline Beecham
Corporation............... 229,808 561,122(3) 790,930 9.7%
One Franklin Plaza
Philadelphia, Pennsylvania
19101
W. Vickery Stoughton....... 285,005 161,405 446,410 5.7%
c/o Careside, Inc.
6100 Bristol Parkway
Culver City, California
90230
Peter Friedli.............. 373,521(4) 42,974(5) 416,495 5.4%
c/o Friedli Corp. Finance
Freigustrasse 5, 8002
Zurich, Switzerland
Dr. Thomas H. Grove........ 205,294 81,087 286,380 3.7%
Philip B. Smith............ 94,315(6) 115,261(7) 209,576 2.7%
James R. Koch.............. 338 38,506 38,844 *
William F. Flatley......... 15,470 6,490 21,962 *
Anthony P. Brenner......... 9,615 7,644(8) 17,260 *
Kenneth Kermes............. 2,959 4,326 7,285 *
Diana Mackie............... 4,438 -- 4,438 *
C. Alan MacDonald.......... -- 6,490 6,490 *
All executive officers and
directors as a group
(9 persons)............... 617,434 421,209 1,038,643 12.9%
</TABLE>
- --------
* Represents less than 1% of our outstanding shares of Common Stock.
(1) Includes 371,090 shares of Common Stock held by Oshkim Limited Partners,
L.P., and 339,041 shares of Common Stock held by Kevin Kimberlin Partners,
L.P., both of which are limited partnerships of which
12
<PAGE>
Mr. Kimberlin is the general partner, and 55,760 shares of Common Stock
held by Spencer Trask Securities Incorporated of which Mr. Kimberlin is
Chairman and exercises voting control.
(2) Includes 20,517 shares of Common Stock issuable upon the exercise of
warrants held by Oshkim Limited Partners, L.P., and 38,095 shares of
Common Stock issuable upon the exercise of warrants held by Kevin
Kimberlin Partners, L.P. Also includes 277,737 shares of Common Stock
issuable upon the exercise of warrants owned by Spencer Trask Securities
Incorporated of which Mr. Kimberlin is Chairman and exercises voting
control.
(3) Includes 325,828 shares of Common Stock underlying shares of Series A
Preferred Stock, and underlying warrants which will be received if the
Series A Preferred Stock is converted, owned by S.R. One, Limited, an
affiliate of SmithKline Beecham Corporation, as of completion of the
offering. Also includes 235,294 shares of Common Stock issuable upon
exercise of bridge loan warrants that will be owned by S.R. One, Limited.
(4) Includes 373,521 shares of Common Stock owned by Venturetec, Inc., of
which Mr. Friedli is the controlling stockholder.
(5) Includes 9,320 shares of Common Stock issuable upon the exercise of
warrants owned by Pine Incorporated, a corporation owned and controlled by
Mr. Friedli.
(6) Includes 50,952 shares of Common Stock owned by Private Equity
Partnership, of which Mr. Smith is the general partner.
(7) Includes 108,771 shares of Common Stock issuable upon exercise of warrants
held by Private Equity Partnership.
(8) Includes 1,154 shares of Common Stock issuable upon the exercise of
options which were issued pursuant to a consulting agreement with an
affiliate of Mr. Brenner.
13
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Compensation Committee Interlocks and Insider Participation
None of Mr. Brenner, Ms. Mackie and Mr. Smith, the other members of our
Compensation Committee, has been, at any time since our formation, an officer
or employee of ours. In addition, none of our executive officers serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving on our Board of Directors or
Compensation Committee. Ms. Mackie, who co-leads the merger integration
process of Glaxo-SmithKline, was nominated to serve on the Board of Directors
by SmithKline Beecham Corporation pursuant to the terms of a stockholders'
agreement by and among us and our stockholders and warrantholders prior to the
initial public offering. Mr. Smith, who served as a Vice Chairman of Spencer
Trask Securities Incorporated until August 1998, was nominated to serve on the
Board of Directors by Spencer Trask Securities and was formerly a partner in
Exigent Partners L.P.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1999, all Section
16(a) filing requirements applicable to the Company's officers, directors and
greater than ten-percent beneficial owners were complied with, except that Ms.
Mackie filed her Form 5 on March 1, 2000.
OTHER MATTERS
Management knows of no other matters that will be presented at the Annual
Meeting. However, if any other matter properly comes before the meeting, or
any adjournment or postponement thereof, it is intended that proxies in the
accompanying form will be voted in accordance with the judgment of the
proxyholders named therein.
ANNUAL REPORT
A copy of the Company's 1999 Annual Report to Shareholders accompanies this
Proxy Statement.
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<PAGE>
SHAREHOLDER PROPOSALS
In order for a nomination for the election of a director or any other
proposal to be presented by any shareholder at the Annual Meeting of
Shareholders to be held in 2001, notice of the nomination or other proposal
must be delivered by the shareholder to the Secretary of the Company at its
principal executive offices not earlier than the close of business on February
10, 2001 and not later than the close of business on March 11, 2001, and, in
the case of a proposal, the proposal must be an appropriate subject for
shareholder action under applicable law. In the event that the Company
receives notice of a shareholder proposal within the time frame set forth
above, then so long as the Company includes in its proxy statement for the
Annual Meeting of Shareholders to be held in 2000 advice on the nature of the
matter and how the named proxyholders intend to vote the shares for which they
have received discretionary authority, such proxyholders may exercise
discretionary authority with respect to such proposal, except to the extent
limited by the SEC's rules governing shareholder proposals. In order for a
shareholder proposal to be considered for inclusion in the Company's proxy
statement and form of proxy relating to that Meeting, the proposal must be
received by the Company at its principal executive offices not later than
December 7, 2000.
----------------
THE COMPANY WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE EXCEPT FOR
EXHIBITS, UPON REQUEST IN WRITING, A COPY OF ITS ANNUAL REPORT ON FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31,
1999. REQUESTS SHOULD BE DIRECTED TO CHIEF FINANCIAL OFFICER, CARESIDE, INC.,
6100 BRISTOL PARKWAY, CULVER CITY, CALIFORNIA 90230.
By Order of the Board of Directors
/s/ W. Vickery Stoughton
W. Vickery Stoughton
Chairman of the Board and Chief
Executive Officer
Date: March 31, 2000
Culver City, California
15
<PAGE>
Careside, Inc.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W. Vickery Stoughton and Thomas H. Grove, and
each of them, as proxies with full power of substitution, to vote all shares
of common stock which the undersigned has power to vote at the Annual Meeting
of Shareholders of Careside, Inc. to be held at 2 pm EDT on May 9, 2000, and
at any adjournment or postponement thereof, in accordance with the
instructions set forth herein and with the same effect as though the
undersigned were present in person and voting such shares. The proxies are
authorized in their discretion to vote upon such other business as may
properly come before the meeting.
This Proxy will be voted as directed. If no direction is made, it will be
voted "FOR" Items 1 and 2.
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 AND 2.
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
- FOLD AND DETACH HERE -
<PAGE>
Please mark your
[X] votes as in this
example.
WITHHOLD
1. Election of FOR AUTHORITY
Directors James R. Koch, all listed to vote for all
Kenneth N. Kermes and nominees listed nominees
Phillip B. Smith
[_] [_]
[_] LISTED NOMINEES except the following (Instruction: To withhold authority to
vote for any individual nominee, write the name of such nominee(s) in the
space provided.
______________________________________________________________________________
FOR AGAINST ABSTAIN
2. Approval of appointment of Arthur [_] [_] [_]
Andersen LLP as independent auditor
Please indicate whether you will attend the Annual Meeting of Shareholders on
May 9, 2000.
I [_] plan / [_] do not plan to attend the Annual Meeting.
Dated: , 2000
- --------------------------- ----------------------------- ---------
(Shareholders Sign Here)
Please sign exactly as name appears. Joint owners should each sign. Executors,
administrators, trustees, etc. should so indicate when signing. If signer is a
corporation, please sign full name by duly authorized officer.
<PAGE>
CARESIDE, INC.
ANNUAL MEETING
The Peninsula Hotel
700 Fifth Avenue
New York, NY 10019
May 9, 2000
2 pm Eastern Standard Time
