<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
CELERIS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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> 2
CELERIS CORPORATION
1801 WEST END AVENUE, SUITE 750
NASHVILLE, TN 37203
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of Celeris Corporation (the "Company"), to be held at the Loews Vanderbilt
Plaza, 2100 West End Avenue, Nashville, Tennessee 37203, on May 25, 1999, at
9:00 a.m. (Central time).
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. Following the formal business
portion of the Annual Meeting, there will be a report on the operations of the
Company and shareholders will be given the opportunity to ask questions. At your
earliest convenience, please mark, sign and return the accompanying proxy card
in the enclosed postage pre-paid envelope. We hope you will be able to attend
the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, please complete,
sign, date and mail the enclosed proxy card promptly. If you attend the Annual
Meeting, you may revoke such proxy and vote in person if you wish, even if you
have previously returned your proxy card. If you do not attend the Annual
Meeting, you may still revoke such proxy at any time prior to the Annual Meeting
by providing written notice of such revocation to Paul R. Johnson, Secretary and
Chief Financial Officer of the Company. YOUR PROMPT COOPERATION WILL BE GREATLY
APPRECIATED.
Sincerely,
/s/ Barbara A. Cannon
Barbara A. Cannon
President and Chief Executive Officer
Nashville, Tennessee
April 9, 1999
<PAGE> 3
CELERIS CORPORATION
1801 WEST END AVENUE, SUITE 750
NASHVILLE, TENNESSEE 37203
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 25, 1999
TO THE SHAREHOLDERS OF CELERIS CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of Celeris
Corporation, a Minnesota corporation (the "Company") will be held at the Loews
Vanderbilt Plaza, 2100 West End Avenue, Nashville, Tennessee 37203, on May 25,
1999, at 9:00 a.m. (Central time).
The Annual Meeting is being held for the following purposes:
1. To elect six directors, each to serve for a one-year term or until
his or her respective successor is duly elected and qualified.
2. To approve the adoption of the Celeris Corporation Employee Stock
Purchase Plan.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
ONLY SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON MARCH 26, 1999 WILL
BE ENTITLED TO NOTICE OF AND TO VOTE AT THE MEETING AND ANY ADJOURNMENT THEREOF.
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN AND
RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE
AT YOUR EARLIEST CONVENIENCE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE
SUCH PROXY AND VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED
YOUR PROXY CARD. IF YOU DO NOT ATTEND THE ANNUAL MEETING, YOU MAY STILL REVOKE
SUCH PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING BY PROVIDING WRITTEN NOTICE
OF SUCH REVOCATION TO PAUL R. JOHNSON, SECRETARY AND CHIEF FINANCIAL OFFICER OF
THE COMPANY. YOUR PROMPT COOPERATION WILL BE GREATLY APPRECIATED.
BY ORDER OF THE
BOARD OF DIRECTORS,
/s/ Barbara A. Cannon
Barbara A. Cannon
President and Chief Executive Officer
Nashville, Tennessee
April 9, 1999
<PAGE> 4
CELERIS CORPORATION
1801 WEST END AVENUE, SUITE 750
NASHVILLE, TENNESSEE 37203
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 1999
---------------------
SOLICITATION OF PROXIES
This Proxy Statement is furnished to shareholders of Celeris Corporation
(the "Company"), in connection with the solicitation of proxies for use at the
Annual Meeting of Shareholders (or any adjournment thereof) to be held at the
Loews Vanderbilt Plaza, 2100 West End Avenue, Nashville, Tennessee 37203, at
9:00 a.m. (Central time), on May 25, 1999 (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting. The
accompanying proxy is being solicited by the Board of Directors of the Company.
This Proxy Statement and the accompanying form of proxy are being mailed to
shareholders commencing on or about April 12, 1999.
The cost of preparing, assembling and mailing the Notice of Annual Meeting,
this Proxy Statement and the form of proxy, including the reimbursement of
banks, brokers and other nominees for forwarding proxy materials to beneficial
owners, will be borne by the Company. Proxies may also be solicited personally
or by telephone by directors, officers and employees of the Company who will
receive no additional compensation.
VOTING, EXECUTION AND REVOCATION OF PROXIES
Only shareholders of record at the close of business on March 26, 1999, the
record date, will be entitled to notice of and to vote at the Annual Meeting. On
March 26, 1999, the Company had 9,419,429 shares of common stock, $.01 par value
(the "Common Stock"), outstanding and entitled to vote at the Annual Meeting.
Each share of Common Stock entitles the holder to one vote on all matters to
come before the Annual Meeting. There is no cumulative voting.
Shares represented by a proxy will be voted in the manner directed by the
shareholder. If no direction is made, the proxy will be voted (i) for the
election of the nominees for director named in this Proxy Statement and (ii) to
approve the adoption of the Celeris Corporation Employee Stock Purchase Plan.
The Company has not received notice of any other proposals to be presented at
the Annual Meeting. Accordingly, the shares represented by a proxy will be voted
in accordance with the judgment of the persons named in the proxy as to such
other matters as may properly come before the Annual Meeting. If a shareholder
returns a proxy and abstains from voting on any matter, or, in the case of the
election of director, withholds authority to vote with respect to any or all
nominees, the shares represented by such proxy will be considered present for
purposes of determining the presence of a quorum at the Annual Meeting and as
unvoted, although present and entitled to vote, for purposes of determining the
approval of each matter as to which the shareholder has abstained or withheld
authority. If a broker submits a proxy which indicates that the broker does not
have discretionary authority as to certain shares to vote on one or more
matters, those shares will be counted as shares that are present for purposes of
determining the presence of a quorum at the Annual Meeting, but will not be
considered as present and entitled to vote with respect to such matters.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD PROMPTLY. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY REVOKE SUCH PROXY AND VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD. IF YOU DO NOT ATTEND THE ANNUAL
MEETING, YOU MAY STILL REVOKE SUCH PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING
BY PROVIDING WRITTEN NOTICE OF SUCH REVOCATION TO THE COMPANY. ANY SUCH WRITTEN
NOTICE OF REVOCATION OR SUBSEQUENTLY DATED PROXY SHOULD BE MAILED OR DELIVERED
TO PAUL R. JOHNSON, SECRETARY AND CHIEF FINANCIAL OFFICER, CELERIS
<PAGE> 5
CORPORATION, 1801 WEST END AVENUE, SUITE 750, NASHVILLE, TENNESSEE 37203. YOUR
PROMPT CONSIDERATION WILL BE GREATLY APPRECIATED.
A COPY OF THE COMPANY'S 1998 ANNUAL REPORT TO SHAREHOLDERS, WHICH INCLUDES
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") FOR THE YEAR ENDED DECEMBER 31, 1998, ACCOMPANIES
THIS PROXY STATEMENT.
PROPOSAL 1:
ELECTION OF DIRECTORS
The Board of Directors recommends that the number of directors to be
elected for the coming year be set at six and that the shareholders elect the
nominees named below as directors of the Company for the ensuing year and until
their respective successors are elected and qualified. Unless authority to vote
for one or more nominees is withheld as specified in the proxy card, the persons
named in the enclosed form of proxy intend to vote FOR the election of the six
nominees listed below. All of the nominees are members of the present Board of
Directors. Each of the nominees has consented to serve as director, if elected.
If for any reason any nominee shall be unavailable for election to the Board of
Directors, votes will be cast pursuant to authority granted by the enclosed
proxy for such other candidate or candidates as may be nominated by the Board of
Directors. The Board of Directors has no reason to believe that any of the
nominees listed below will be unable to serve if elected to office. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES. The affirmative vote of a
majority of the shares of Common Stock entitled to vote and present in person or
by proxy at the Annual Meeting is required for election of each nominee.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
Certain biographical information regarding the nominees for election as
Directors, including the nominee's name, age, principal occupation, business
experience and period of service as a director of the Company is set forth
below.
Barbara A. Cannon (age 47) -- Ms. Cannon has served as a Director and
President and Chief Executive Officer since joining the Company in October 1997.
Prior to joining the Company, Ms. Cannon was a consultant from September 1996 to
September 1997. She also served as acting President of Integrated Neuroscience
Consortium, a specialty site management organization start-up, from January 1997
to September 1997. From September 1990 to September 1996, Ms. Cannon was
employed at ClinTrials Research Inc. ("ClinTrials"), a contract research
organization formed in 1990 by Ms. Cannon and others. From January 1993 to
September 1996, she served as Executive Vice President at ClinTrials, where she
was responsible for pharmaceutical, device and biotechnology business
development. Prior to that, she served as Chief Operating Officer of ClinTrials'
Nashville operations from September 1990 to December 1992.
W. Hudson Connery, Jr. (age 49) -- Mr. Connery has served as a Director of
the Company since October 1996. From March 1997 to July 1997, he served as
interim Chairman of the Board of the Company. Since March 1999, Mr. Connery has
been President and Chief Executive Officer of Essent Healthcare, Inc., an owner
and operator of acute care hospitals. From June 1995 to October 1998, Mr.
Connery was the Chairman of the Board, President and Chief Executive Officer of
Arcon Healthcare Inc., ("Arcon"). In September 1998, Arcon filed a voluntary
petition under Chapter 11 of the Federal Bankruptcy laws to reorganize its
debts. Arcon subsequently withdrew its petition and entered into a voluntary
liquidation of its business. From August 1991 to April 1995, Mr. Connery was
Senior Vice President and Chief Operating Officer and a director of Health
Trust, the Hospital Company.
Richard B. Fontaine (age 55) -- Mr. Fontaine has served as a Director of
the Company since April 1998. From March 1997 to October 1997, Mr. Fontaine was
a consultant to the Company. Since 1992, Mr. Fontaine has been an adjunct
professor at Westminster College, Salt Lake City, Utah. From June 1995 to
September 1995, he served as interim Chief Executive Officer of Health
Advantage, Inc., a diabetes management subsidiary of VIVRA Specialty Partners,
Inc. In 1993, he served as interim Chief Executive Officer of Vivocell Therapy,
Inc.
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<PAGE> 6
Peter T. Garahan (age 52) -- Mr. Garahan has served as a Director of the
Company since April 1998. Since 1998, he has been Chief Operating Officer of
Amteva Technologies, Inc., an internet voice application services company. Since
1997, he has been a Principal of The Ryegate Group, a business and financial
consulting firm. From 1992 to 1996, Mr. Garahan was President of Mitchell
Medical (formerly Medical Decision Systems, Inc.), an information technology
provider of automated medical utilization review products and services to the
insurance industry and since 1994, a division of Mitchell International. From
1994 to 1996, he served as Executive Vice President -- Sales and Marketing of
Mitchell International. Mr. Garahan also serves as a director of Condor
Technology Solutions, Inc., Amteva Technologies, Inc. and National Medical
Advisory Services, Inc.
John M. Nehra (age 50) -- Mr. Nehra has served as Chairman of the Board
since July 1997 and a Director of the Company since November 1992. Since 1989,
Mr. Nehra has been the managing general partner of Catalyst Ventures, Limited
Partnership, a venture capital limited partnership. Since December 1993, Mr.
Nehra has also been a general partner of New Enterprise Associates VI, VII, and
VIII Limited Partnerships, venture capital limited partnerships. Mr. Nehra also
serves as a director of Iridex Corporation, a medical instrumentation company.
Andre G. Pernet, Ph.D. (age 54) -- Dr. Pernet has served as a Director of
the Company since February 1999. Dr. Pernet has spent the last 25 years with
Abbott Laboratories ("Abbott") most recently as Corporate Vice President,
Research and Development, Pharmaceutical Products Division, where he was
responsible for basic research and all phases of worldwide development of drugs.
Dr. Pernet retired from Abbott effective March 1999.
Kent J. Thiry -- Mr. Thiry has served as a Director of the Company since
May 1994, and is retiring from the Board of Directors as of the Annual Meeting
in order to concentrate his efforts on VSP Holdings, Inc., of which Mr. Thiry is
President and Chief Executive Officer. The Board of Directors expresses its
gratitude to Mr. Thiry for his dedication and contributions to the Company.
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board of Directors has established Audit and Compensation Committees.
The Company does not have a nominating committee.
The Audit Committee supervises and reviews the Company's accounting and
financial practices, makes recommendations to the Board of Directors as to the
nomination of independent auditors, confers with the independent auditors
regarding the scope of their proposed audits and their audit findings, reports
and recommendations, reviews the Company's financial controls, procedures and
practices, and approves all non-audit services by independent auditors. The
current members of the Company's Audit Committee are Messrs. Connery and
Garahan. The Audit Committee met two (2) times during the year ended December
31, 1998.
The Compensation Committee sets the actual compensation for the Chief
Executive Officer, sets the compensation policies for all executive officers of
the Company, and reviews the recommendations of the Chief Executive Officer
regarding compensation for other employees. The Compensation Committee's goal is
to establish compensation policies and programs that will attract and retain
highly qualified executives and that closely align the financial interests of
these executives with long-term shareholder interests. The Compensation
Committee also administers the Company's Stock Option Plan of 1993 (the "1993
Stock Option Plan"), the 1995 Non-Employee Director Stock Option Plan (the "1995
Director Plan"), the Celeris Corporation Employee Stock Purchase Plan, and any
other stock option plans implemented by the Company. All decisions of the
Compensation Committee, including the grant of stock options, are submitted to
and approved by the full Board of Directors. The Compensation Committee is
composed solely of directors who constitute "non-employee directors" as defined
in Rule 16b-3 promulgated under the Securities Exchange Act of 1934. In 1998,
the members of the Company's Compensation Committee were Messrs. Fontaine, Nehra
and Thiry. The Compensation Committee met three (3) times during the year ended
December 31, 1998.
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<PAGE> 7
During the year ended December 31, 1998, the Board of Directors of the
Company held seven (7) regular meetings and three (3) special meetings. No
director attended fewer than 75 percent of the meetings of the Board of
Directors and committees upon which such director served during the year ended
December 31, 1998. The Board of Directors and committees also acted from time to
time by written consent in lieu of meetings.
DIRECTOR COMPENSATION
Non-employee directors receive an annual retainer of $24,000 for membership
on the Board of Directors, which includes compensation for membership on
committees of the Board. Directors employed by the Company receive no fees
solely for their service to the Company as director. Under the 1995 Director
Plan, upon first being elected to the Board of Directors, all new directors who
are not full-time employees receive an option to purchase 6,666 shares of Common
Stock, and each then-current non-employee director automatically receives an
option to purchase an additional 2,000 shares of Common Stock on the day after
each annual meeting of the Company's shareholders. Stock options are granted
under the 1995 Director Plan with an exercise price equal to the fair market
value of the Common Stock at the grant date, vest over a one-year period and
expire after ten years. In addition, the Company reimburses reasonable travel,
lodging and other incidental expenses incurred by the directors in attending
meetings of the Board of Directors and committees.
PROPOSAL 2:
ADOPTION AND RATIFICATION OF
CELERIS CORPORATION EMPLOYEE STOCK PURCHASE PLAN
GENERAL
On November 3, 1998, the Board of Directors adopted the Celeris Corporation
Employee Stock Purchase Plan (the "Purchase Plan"), subject to shareholder
approval. The Purchase Plan provides for the purchase of Common Shares by
employees of the Company and of its designated Affiliates at the end of any
purchase period (the "Purchase Period"). The Purchase Plan is intended to
qualify under Section 423 of the Code.
The following summary of the Purchase Plan is qualified in its entirety by
reference to the full text of the Purchase Plan, which is attached to this Proxy
Statement as Exhibit A. Capitalized terms used herein but not defined have the
meaning set forth in the Purchase Plan.
SUMMARY OF THE PURCHASE PLAN
Purpose. The purpose of the Purchase Plan is to provide employees of the
Company and designated Affiliates with an opportunity to share in the ownership
of the Company by providing them with a convenient means for regular and
systematic purchases of Common Stock and, thus, to develop a stronger incentive
to work for the continued success of the Company.
Administration. The Purchase Plan will be administered by the Compensation
Committee of the Board of Directors or such other committee as established by
the Board of Directors (the "Committee"). The Committee has full authority to
interpret the Purchase Plan and establish rules and regulations for the
administration of the Purchase Plan. Decisions of the Committee are final and
binding on all parties who have an interest in the Purchase Plan. The Board of
Directors may exercise the Committee's powers and duties under the Purchase
Plan.
Stock Purchases. The Purchase Plan permits Common Stock to be sold to
participating employees on the last business day of any Purchase Period at a
price equal to the lesser of (i) 85% of the fair market value of Common Stock on
the first business day of the Purchase Period or (ii) 85% of the fair market
value of Common Stock on the last business day of each Purchase Period. The
first Purchase Period began on January 1, 1999 and will end on the last business
day of June 1999. Thereafter, each six-month Purchase Period will begin on the
first business day in each of January and July of each year and end on the last
business day in each of June and December of each year.
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<PAGE> 8
Eligibility. Any employee of the Company or designated Affiliate (other
than any employee whose customary employment is less than 20 hours per week or
any employee who has not been employed by the Company or its Affiliates for more
than three (3) months) is eligible to participate in the Purchase Plan. As of
January 1, 1999, there were approximately 70 persons who were eligible to
participate in the Purchase Plan.
Number of Shares. The Purchase Plan provides for the issuance of up to
500,000 Common Shares, subject to adjustment in the event of a reorganization,
recapitalization, reclassification, stock dividend, stock split, amendment to
the Company's Articles of Incorporation, reverse stock split, merger,
consolidation or otherwise. The Common Shares to be sold under the Purchase Plan
may be authorized but unissued shares or shares acquired in the open market or
otherwise.
No participant may purchase (a) more than 60,000 shares under the Purchase
Plan for a given Purchase Period or (b) shares having a fair market value
(determined at the beginning of each Purchase Period) exceeding $25,000 under
the Purchase Plan and all other employee stock purchase plans (if any) for any
calendar year.
The closing price of the Company's Common Shares on March 26, 1999, as
reported by the Nasdaq National Market System, was $1.06 per share.
Certain Terms and Conditions. Participating employees may direct the
Company to make payroll deductions of any whole percentage from 1% through 15%
of their current, regular compensation (excluding annual bonuses, expense
allowances and all other forms of special compensation) for each pay period
during the Purchase Period. Participating employees may voluntarily withdraw
from the Purchase Plan at any time (although no employee may enroll again after
a withdrawal until commencement of the next Purchase Period). Upon such
voluntary withdrawal, the participant may elect to either (a) have the entire
credit balance in such participant's account be paid to the participant in cash
within 30 days, or (b) have the entire credit balance in such account's plan be
held in the account until used to purchase shares at the end of the Purchase
Period. Upon a participant's termination of employment with the Company or a
subsidiary for any reason, participation in the Purchase Plan will cease. In the
event of termination due to death, the participant's estate may elect to have
the balance of the participant's share purchase account paid, in cash, to the
participant's estate or a designated beneficiary within 30 days after the end of
the Purchase Period during which such termination occurred. In the event of any
termination other than termination due to death, the balance of the
participant's share purchase account will be paid, in cash, to the participant
within 30 days after such termination.
Promptly after the last day of each Purchase Period and subject to any
terms and conditions the Committee may impose, the Company will cause the Common
Stock purchased to be issued to the participants. All Common Stock issued under
the Plan will be issued in uncertificated form.
Duration, Termination and Amendment. Unless earlier discontinued or
terminated by the Board of Directors, the Purchase Plan shall automatically
terminate when all of the Common Shares issuable under the Purchase Plan have
been sold. The Purchase Plan permits the Board of Directors to amend or
discontinue the Purchase Plan at any time, except that prior shareholder
approval will be required for any amendment which would (a) authorize an
increase in the number of shares of Common Stock which may be purchased under
the Purchase Plan, (b) permit the issuance of Common Stock before payment in
full is received, (c) increase the rate of payroll deductions above 15% of
compensation, (d) reduce the price per share at which the Common Stock may be
purchased, or (e) cause Rule 16b-3 under the Exchange Act to become unavailable
with respect to the Purchase Plan.
The affirmative vote of a majority of the shares of Common Stock entitled
to vote and present in person or by proxy at the Annual Meeting is required for
the approval of the Celeris Corporation Employee Stock Purchase Plan. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE CELERIS CORPORATION EMPLOYEE STOCK
PURCHASE PLAN.
5
<PAGE> 9
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company, other than Ms. Cannon whose information is set forth
above.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Donald F. Fortin..................... 41 Vice President
Paul R. Johnson...................... 33 Vice President, Chief Financial Officer & Secretary
Charles L. McIntosh.................. 60 Vice President and President of C.L. McIntosh &
Associates, Inc.
</TABLE>
Donald F. Fortin, M.D. Dr. Fortin joined Celeris in December of 1996 as
Vice President. In 1995, Dr. Fortin co-founded Cordillera, LLC, a joint venture
between Duke University and the Company, which was eventually acquired by the
Company in 1996. From 1991 to 1996, Dr. Fortin served as Director of Data
Management of the Duke University Databank for Cardiovascular Diseases. Dr.
Fortin also practiced as a cardiologist from 1991 to 1998, and has served as an
Assistant Professor of Medicine within the division of Cardiology at Duke
University Medical Center since 1993.
Paul R. Johnson. Mr. Johnson joined Celeris in April of 1998 as Vice
President, Chief Financial Officer & Secretary. From 1997 to 1998, Mr. Johnson
was Vice President and Chief Financial Officer for Cardiology Partners of
America, a physician practice management organization. In this role, Mr. Johnson
directed all aspects of the company's financial operations. From 1992 to 1997,
Mr. Johnson served as Corporate Controller for ClinTrials Research Inc., a
clinical research services organization, where he was responsible for corporate
financial reporting and extensively involved with the company's public offerings
and acquisitions. Mr. Johnson is a Certified Public Accountant.
Charles L. McIntosh, M.D., Ph.D. Dr. McIntosh is Vice President and
President of C.L. McIntosh & Associates, Inc., a Celeris subsidiary located in
Rockville, Maryland. Prior to founding C.L. McIntosh in 1990, Dr. McIntosh
served 22 years as a cardiac surgeon and researcher at the National Heart, Lung
and Blood Institute of the National Institutes of Health. In addition to medical
practice, Dr. McIntosh was actively involved in FDA regulatory issues serving on
several advisory panels, including the FDA's Circulatory System Devices Panel,
of which he was Chairman.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICY
The Compensation Committee intends to make the Company's executive
compensation package competitive with the marketplace, with an emphasis on
compensation in the form of equity ownership, the value of which is contingent
on the long-term market performance of the Company's Common Stock. The
Compensation Committee also seeks to control the Company's fixed salary costs
and to enhance the Company's annual performance by providing executive officers
with opportunities to earn annual cash bonuses for achieving Company and
individual performance goals. In establishing the Company's compensation
policies, the Compensation Committee also considers information regarding
compensation levels and practices at other companies in the clinical research
service industry, which the Compensation Committee regards as comparable to the
Company. Although the Compensation Committee does not establish specific targets
for compensation of the Company's executive officers relative to executive
officers at comparable companies, the Compensation Committee believes that the
compensation for the Company's executive officers generally falls in the median
range of executive compensation for such comparable companies.
EXECUTIVE OFFICER COMPENSATION
The annual compensation package of executive officers of the Company
provides for base salaries, as well as for the opportunity to receive annual
bonuses that are related, among other factors, to Company performance and
individual performance. The Company also provides long-term equity based
compensation
6
<PAGE> 10
generally through participation in the 1993 Stock Option Plan. This assures that
key management employees have a meaningful stake in the Company, the ultimate
value of which is dependent on the Company's long-term stock price appreciation,
and that the interests of executive officers are aligned with those of the
Company's shareholders.
Base Salary. The Company competes for talented executives with a wide
variety of companies. Executive officers' base salaries reflect their positions
and experience, as well as the compensation package required to attract them to
the Company in light of relevant market factors. Annual base salary increases
for executive officers are established as a result of an analysis of each
executive's individual performance during the prior year, the overall
performance of the Company during the prior year and his or her level of
responsibility, prior experience and breadth of knowledge. The Company believes
that current executive officer salaries are competitive with comparable
companies.
Annual Bonus. To control fixed salary costs and reward annual performance,
the Company pays annual bonuses to executive officers for achieving Company and
individual performance goals. In setting annual bonus awards, the Compensation
Committee considers, among other factors, the Company's revenue growth, the
development and expansion of its business, improvement of management structures
and general management objectives. Actual awards are recommended by the Chief
Executive Officer and approved by the Compensation Committee based on its
assessment of each executive's individual performance and responsibility for the
Company's financial and business condition. The executive officers, other than
the Chief Executive Officer, were not awarded cash bonuses in 1998.
Stock Options. The 1993 Stock Option Plan permits grants of incentive
stock options and non-qualified stock options. The incentive stock options are
granted with an exercise price at the fair market value on the grant date, vest
over a four or five year period depending on the date of issuance, and expire
after ten years. Non-qualified stock options are granted with an exercise price
established by the Board of Directors, vest from immediately after the date of
grant up to five years after the date of grant and expire after ten years.
Accordingly, stock options have value only if the stock price appreciates from
the date such options are granted. This component of executive compensation
focuses executives on long-term creation of shareholder value and encourages
equity ownership in the Company. In determining the actual size of stock option
awards under the 1993 Stock Option Plan, the Compensation Committee considers
the value of the stock on the date of grant, competitive practices, the
executive's stock holdings, the amount of options previously granted to the
executive, individual performance and the Company's performance. The executive
officers, other than the Chief Executive Officer, were awarded stock options in
the combined amount of 75,000 shares in 1998 in recognition of their continued
commitment to the Company and to encourage creation of shareholder value.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Barbara A. Cannon. Ms. Cannon became the President and Chief Executive
Officer of the Company on October 6, 1997. Ms. Cannon and the Company entered
into an employment agreement, dated October 6, 1997, which is described under
the heading, "EXECUTIVE COMPENSATION -- Employment Contracts and Termination of
Employment Arrangements."
The Compensation Committee and the Board of Directors approved a total
compensation package that was designed to be competitive with compensation
provided to chief executive officers at companies of comparable size to the
Company as well as provide a compensation level and structure necessary to
obtain an executive with Ms. Cannon's experience and credentials. Ms. Cannon's
employment agreement provides for an annual salary of $195,000 and a bonus in an
amount of up to 50% of her base salary upon achievement of certain performance
targets established by the Board of Directors, after consultation with Ms.
Cannon, prior to each fiscal year. Ms. Cannon's employment agreement also
provides for a promissory note in the amount of $200,000 for the purchase of
Company stock. The principal and interest due under the promissory note is
reduced based on Ms. Cannon's continued employment with the Company, which in
1998 resulted in compensation of $77,070.
7
<PAGE> 11
In recognition of her commitment to the Company and her performance in its
ongoing restructuring, Ms. Cannon was awarded a bonus of $25,000 and an option
to purchase 100,000 shares of Common Stock exercisable as to 25% on each
anniversary date of the grant for four years.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits the tax deduction of $1 million per year for compensation paid
to executive officers named in the "Summary Compensation Table" unless certain
requirements are met. Section 162(m) did not affect the deductibility of
compensation paid to the Company's executive officers in 1998. The Compensation
Committee, along with the Company, will continue to evaluate the Company's
compensation plans and programs in view of the Section 162(m) limitation. The
Compensation Committee may at some point in the future approve executive
compensation, including incentive compensation, which exceeds the deductibility
limits established under Section 162(m) of the Code.
This report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such acts.
RICHARD B. FONTAINE
JOHN M. NEHRA
KENT J. THIRY
The Members of the Compensation
Committee
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation for each
of the Company's last three fiscal years ended December 31, 1998, 1997 and 1996
awarded to or earned by the Chief Executive Officer of the Company and the four
highest paid executive officers of the Company whose salary and bonus earned in
1998 exceeded $100,000 (collectively, the "Named Executive Officers"). For 1998,
only three (3) persons qualified as Named Executive Officers based on this
requirement.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#) ($)(2)
- --------------------------- ---- ------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Barbara A. Cannon........................ 1998 195,000 25,000 77,070(3) 100,000 --
President and Chief 1997 45,000 1,000 -- 401,000 13
Executive Officer 1996 -- -- -- -- --
Donald F. Fortin, M.D.................... 1998 156,862 -- -- 20,000 --
Vice President 1997 135,577 1,000 -- 301,000 156
1996 74,997 -- -- -- --
Charles L. McIntosh, M.D., Ph.D.......... 1998 186,413 -- -- 15,000 --
Vice President, and 1997 188,237 1,000 -- 71,000 156
President of C.L. McIntosh 1996 -- -- -- -- --
& Associates, Inc. ("CLMA")
</TABLE>
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those cases where the aggregate amount of such
perquisites and other personal benefits constituted less than the lesser of
$50,000 or 10% of the total annual salary and bonus for the applicable Named
Executive Officer for such year.
(2) Represents the dollar value of premiums paid by the Company for life
insurance policies for the benefit of the applicable Named Executive
Officer.
(3) Represents forgiveness of principal and interest on Promissory Note between
Ms. Cannon and the Company. See description under the caption "Compensation
of Chief Executive Officer."
The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during the
fiscal year ended December 31, 1998.
9
<PAGE> 13
STOCK OPTIONS, AWARDS, EXERCISES AND HOLDINGS
The following table sets forth certain information in connection with stock
option grants during the year ended December 31, 1998 to each of the Named
Executive Officers.
OPTION GRANTS IN THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL VALUE AT ASSUMED
GRANTS ANNUAL RATES OF
NUMBER OF PERCENTAGE OF STOCK PRICE
SECURITIES TOTAL OPTIONS EXERCISE OR APPRECIATION FOR
UNDERLYING GRANTED TO BASE PRICE OPTION TERM(3)
OPTIONS EMPLOYEES IN PER SHARE EXPIRATION ----------------
NAME GRANTED (#)(1) FISCAL YEAR (%) ($)(2) DATE 5% ($) 10% ($)
- ---- -------------- --------------- ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Barbara A. Cannon................... 100,000 11.7 1.06 11/03/08 66,851 169,415
Donald F. Fortin, M.D............... 20,000 2.3 1.06 11/03/08 13,370 33,883
Charles L. McIntosh, M.D., Ph.D..... 15,000 1.8 1.06 11/03/08 10,028 25,412
</TABLE>
- ---------------
(1) All options granted during the year ended December 31, 1998 vest in 25%
increments over four years.
(2) All options granted under the 1993 Stock Option Plan during the fiscal year
ended December 31, 1998 were granted at an exercise price equal to the fair
market value of the Common Stock on the date of grant.
(3) The 5% and 10% assumed annual compound rates of stock price appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of future Common Stock
prices. Potential realizable value is calculated from a base stock price
equal to the exercise price of the options granted.
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the exercise of options
by the Named Executive Officers during the fiscal year ended December 31, 1998
and unexercised options held by the Named Executive Officers as of the end of
the fiscal year ended December 31, 1998.
OPTION VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT THE-MONEY OPTIONS AT
SHARES ACQUIRED DECEMBER 31, 1998 (#) DECEMBER 31, 1998 ($)(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Barbara A. Cannon............ -- -- 100,250 400,750 -- --
Donald F. Fortin, M.D........ -- -- 215,230 105,770 -- --
Charles L. McIntosh, M.D.,
Ph.D....................... -- -- 14,250 71,750 -- --
</TABLE>
- ---------------
(1) The value of unexercised in-the-money options represents the aggregate
difference between the market value on December 31, 1998, based on the
closing price of the Common Stock as reported on the Nasdaq National Market
and the applicable exercise prices for such options. At December 31, 1998,
the exercise price for all unexercised options held exceeded the closing
price of the Common Stock of $0.75.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Ms. Cannon. In October 1997, the Company entered into an employment
agreement with Ms. Cannon, as the Company's President and Chief Executive
Officer, pursuant to which she agreed to provide services to the Company for an
annual salary of $195,000. Ms. Cannon is also eligible to receive a bonus in an
amount of up to 50% of her base salary upon achievement of certain performance
targets. The employment agreement provides for a two-year term with an automatic
renewal unless either party gives written notice of its intent not to renew the
agreement. The employment agreement may be terminated (i) upon the death or
disability of Ms. Cannon, (ii) by the Board of Directors for "Cause" or without
"Cause," or (iii) by Ms. Cannon for
10
<PAGE> 14
"Good Reason" or without "Good Reason." If Ms. Cannon's termination is without
"Cause" or for "Good Reason," the Company will continue to provide to Ms. Cannon
her base salary and health insurance benefits for a period of eighteen months
following the date of such termination. If, within twelve months after a "Change
in Control" of the Company, the Company terminates Ms. Cannon's employment,
except for "Cause," or Ms. Cannon terminates her employment for "Good Reason,"
the Company will pay to Ms. Cannon an amount in cash equal to two times her
annual base salary in effect immediately prior to the "Change in Control."
In connection with her employment, Ms. Cannon agreed to purchase 109,091
shares of Common Stock, payment for which was in the form of a promissory note
in favor of the Company in principal amount of $200,000 (the "Promissory Note")
and $100,000 cash. Under the terms of the Promissory Note, the unpaid principal
amount and all accrued interest is due and payable on October 8, 2001. However,
pursuant to the terms of the Promissory Note, the principal amount due was
reduced by $50,000 on October 8, 1998 and all interest accrued on that date was
forgiven as the condition that Ms. Cannon remain with the Company was met. From
October 8, 1998, the principal amount due has been and will be reduced each
calendar month that Ms. Cannon continues to be employed by the Company in an
amount of $4,167 and all interest accrued through such date will be forgiven. As
of March 31, 1999, the principal amount due under the Promissory Note was
$129,167. The Promissory Note is secured by a security interest in 72,727 shares
of the Common Stock purchased by Ms. Cannon.
Dr. Fortin. In December 1996, the Company entered into an employment
agreement with Dr. Fortin. Dr. Fortin agreed to provide services to the Company
for an initial annual salary of $150,000 for a four-year term and a signing
bonus of $129,371. Effective January 1, 1998, Dr. Fortin's annual salary was
increased to $156,750. Under the agreement, Dr. Fortin has agreed that the
Company has rights to all inventions, including intellectual property, conceived
or produced by Dr. Fortin during the period of his employment.
Dr. McIntosh. In December 1996, the Company entered into an employment
agreement with Dr. McIntosh. Dr. McIntosh agreed to serve as President of C.L.
McIntosh & Associates, Inc. ("CLMA") and Vice President of the Company for an
initial annual salary of $175,000 for a three-year term. Effective January 1,
1998, Dr. McIntosh's annual salary was increased to $182,000. Under the
agreement, Dr. McIntosh has agreed that the Company has rights to all
inventions, including intellectual property, conceived or produced by Dr.
McIntosh during the period of his employment. Dr. McIntosh is also subject to a
confidentiality provision, a nonsolicitation provision and a one-year
noncompetition provision, each of which is included in the agreement.
11
<PAGE> 15
STOCK PRICE PERFORMANCE GRAPH AND TABLE
The following graph and table compare the cumulative total shareholder
return of $100 invested on August 4, 1995 (the effective date of the Company's
initial public offering) in (a) the Company, (b) the Center for Research in
Security Prices ("CRSP") Index for Nasdaq Stock Market (U.S. Companies) ("Nasdaq
U.S. Stock Index"), (c) the CRSP Index for Nasdaq Health Services Stocks
("Nasdaq Health Services Index"), (d) the Standard & Poor's 500 Stock Index and
(e) the Standard & Poor's Healthcare Index. The table assumes the reinvestment
of all dividends. In the future, the Company intends to compare total
stockholder returns from Nasdaq U.S. Stock Index and the Nasdaq Health Services
Index with that of the Company and will not list the Standard & Poor's 500 Stock
Index nor the Standard & Poor's Healthcare Index. The Company believes the
Nasdaq U.S. Stock Index, which encompasses all the stocks quoted on the Nasdaq
National Market, including large and small market capitalization, is a more
representative comparison for the Company than the Standard & Poor's 500 Stock
Index which is comprised of large capitalization stocks that do not trade on the
Nasdaq National Market. In addition, the Company believes that the Nasdaq Health
Services Index is a more representative industry comparison due to the change in
the Company's business strategy over the past year.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
NASDAQ STOCK MARKET (US COMPANIES)
(PERFORMANCE GRAPH CHART)
<TABLE>
<CAPTION>
8/1995 12/1995 12/1996 12/1997 12/1998
------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Celeris Corporation 100.0 159.3 56.5 11.1 5.6
Nasdaq Stock Market (US Companies) 100.0 106.9 131.4 161.2 227.1
Nasdaq Health Services Stocks 100.0 124.5 124.3 126.7 107.3
SIC 8000-8099 US & Foreign
S&P 500 Index 100.0 111.1 136.6 182.2 234.2
Health Care-500 100.0 124.3 150.1 215.8 311.2
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Arthur Andersen LLP has been selected by the Board
of Directors to serve as the Company's independent public accountants for the
fiscal year ending December 31, 1999. A representative of that firm will be
present at the meeting and will have the opportunity to make a statement if he
so desires and to respond to questions.
12
<PAGE> 16
PRINCIPAL SHAREHOLDERS
The following table sets forth as of December 31, 1998 (unless otherwise
indicated), information regarding the beneficial ownership of the Company's
Common Stock by (i) each person known by the Company to beneficially own 5% or
more of the outstanding shares of Common Stock, (ii) each of the Company's
directors, (iii) each of the Company's Named Executive Officers and (iv) all
Directors and Named Executive Officers as a group. Except as otherwise
indicated, all persons listed below have sole voting and investment powers with
respect to the shares indicated:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT(1)
- ------------------------------------ --------- ----------
<S> <C> <C>
John M. Nehra(2)(3)......................................... 1,109,426 11.7%
1119 St. Paul Street
Baltimore, MD 21202
Catalyst Ventures, Limited Partnership and New Enterprise
Associates VI, Limited Partnership(4)..................... 1,065,414 11.3
1119 St. Paul Street
Baltimore, MD 21202
Dimensional Fund Advisors(5)................................ 751,000 8.0
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Edward F. Sweeney........................................... 744,897 7.9
27101 N. Agua Verde Dr.
Rio Verde, AZ 85263
Charles L. McIntosh, M.D., Ph.D.(6)......................... 730,989 7.7
C.L. McIntosh & Associates, Inc.
12300 Twinbrook Parkway, Suite 625
Rockville, MD 20852
Barbara A. Cannon(7)........................................ 251,018 2.6
Celeris Corporation
1801 West End Avenue, Suite 750
Nashville, TN 37203
Kent J. Thiry(8)(9)......................................... 237,333 2.5
1850 Gateway Drive Suite 500
San Mateo, CA 94404
Donald F. Fortin, M.D.(10).................................. 222,730 2.3
Celeris Corporation
5150 McCrimmon Parkway, Suite 405
Morrisville, NC 27560
Richard B. Fontaine(11)..................................... 62,000 *
155 Webster Ct.
Park City, UT 84060
</TABLE>
13
<PAGE> 17
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT(1)
- ------------------------------------ --------- ----------
<S> <C> <C>
W. Hudson Connery, Jr.(12).................................. 12,666 *
5520 South Stanford
Nashville, TN 37215
Peter T. Garahan............................................ 2,000 *
10200 Akhpamar Dr.
Great Falls, VA 22066
Andre G. Pernet, Ph.D.(13).................................. -- *
1221 South Estate Lane
Lake Forest, IL 60045
All Named Executive Officers and Directors as a group(14)... 2,628,162 26.6
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1%.
(1) Shares of Company Common Stock subject to options exercisable within 60
days of December 31, 1998 ("Currently Exercisable Options") are deemed
outstanding for computing the percentage of the person holding such options
but are not deemed outstanding for computing the percentage of any other
person.
(2) Includes 42,334 shares issuable pursuant to Currently Exercisable Options.
(3) Includes shares owned by Catalyst Ventures, Limited Partnership
("Catalyst") and New Enterprise Associates, VI ("NEAVI"). Mr. Nehra, a
director of the Company, is managing general partner of Catalyst. He is
also a general partner of NEAVI. By virtue of these positions, Mr. Nehra
may be deemed to share voting and investment control over the shares owned
by Catalyst and NEAVI. Therefore, Mr. Nehra may be deemed a beneficial
owner of those shares. Mr. Nehra disclaims any beneficial ownership of such
shares.
(4) Based on a Schedule 13G, dated February 18, 1999, Catalyst is record holder
of 412,081 shares and NEAVI is record holder of 653,333 shares. By virtue
of their relationship as affiliated partnerships, Catalyst and NEAVI may be
deemed to share voting and investment control over such shares. Therefore,
each of Catalyst and NEAVI may be deemed to beneficially own all of such
shares. Each of Catalyst and NEAVI disclaims beneficial ownership of any
shares, which it does not hold of record.
(5) Based on a Schedule 13G, dated February 11, 1999, Dimensional Fund Advisors
is record holder of 751,000 shares. Dimensional Fund Advisors is an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940, and furnishes advice to four investment companies registered
under the Investment Company Act of 1940, and serves as investment manager
to certain other investment vehicles, including commingled group trusts. In
its role as investment advisor and investment manager, Dimensional
possesses both voting and investment power over the shares owned.
(6) Includes 14,250 shares issuable pursuant to Currently Exercisable Options.
(7) Includes 141,927 shares issuable pursuant to Currently Exercisable Options.
(8) Includes 17,333 shares issuable pursuant to Currently Exercisable Options.
(9) Mr. Thiry, a retiring director of the Company, is President, Chief
Executive Officer and a director of VSP Holdings, Inc. By virtue of these
positions, Mr. Thiry may be deemed to share voting and investment control
over the 220,000 shares owned by VSP Holdings. Therefore, Mr. Thiry may be
deemed a beneficial owner of those shares. Mr. Thiry disclaims any
beneficial ownership of such shares.
(10) Includes 215,230 shares issuable pursuant to Currently Exercisable Options.
(11) Includes 32,000 shares issuable pursuant to Currently Exercisable Options.
(12) Includes 8,666 shares issuable pursuant to Currently Exercisable Options.
(13) As of the date Dr. Pernet joined the Board, he owned no Common Stock in the
Company.
(14) Includes 471,740 shares issuable pursuant to Currently Exercisable Options.
14
<PAGE> 18
SHAREHOLDER PROPOSALS FOR THE
2000 ANNUAL MEETING OF SHAREHOLDERS
Any shareholder who wishes to present a proposal for action at the next
Annual Meeting of Shareholders to be held in 2000 and who wishes to have it set
forth in the Proxy Statement and identified in the form of proxy prepared by the
Company must notify the Company at the Company's principal executive offices,
1801 West End Avenue, Suite 750, Nashville, Tennessee 37203, Attention:
Secretary, in such manner so that such notice was received by the Company by
December 7, 1999. Any such proposal must have been in the form required under
the rules and regulations promulgated by the Securities and Exchange Commission.
In addition, the form of proxy issued with the Company's 2000 Proxy Statement
will confer discretionary authority to vote for or against any proposal made by
a shareholder at the 2000 Annual Meeting which is not included in the 2000 Proxy
Statement. However, under the rules of the Securities and Exchange Commission,
such discretionary authority may not be exercised if the shareholder proponent
has given the Secretary of the Company notice of such proposal prior to February
20, 2000 and certain other conditions provided for in the rules of the
Securities and Exchange Commission exist.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under federal securities laws, the Company's directors and officers, and
any beneficial owner of more than 10% of a class of equity securities of the
Company, are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Commission. Specific due
dates for these reports have been established by the Commission, and the Company
is required to disclose in this Proxy Statement any delinquent filing of such
reports and any failure to file such reports during the fiscal year ended
December 31, 1998. The Company believes that all Section 16(a) filing
requirements applicable to its executive officers, directors and 10%
shareholders were satisfied, with the exception of a failure by Dr. Charles L.
McIntosh to report before January 10, 1999 the sale of 9,000 shares of Common
Stock by him in December 1998. Such shares were reported on a Form 4 filed
January 22, 1999.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters that are
intended to be brought before the Annual Meeting. If other matters, of which the
Board of Directors is not aware, are presented for action, it is the intention
of the person named in the enclosed form of proxy to vote on such matters in
their sole discretion.
By Order of the Board of Directors,
/s/ Barbara A. Cannon
Barbara A. Cannon
President and Chief Executive Officer
Nashville, Tennessee
April 9, 1999
15
<PAGE> 19
EXHIBIT A
CELERIS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
Section 1.01 Purpose. The purpose of the Celeris Corporation (the
"Company") Employee Stock Purchase Plan is to provide the employees of the
Company and related corporations with an opportunity to share in the ownership
of the Company by providing them a convenient means for regular and systematic
purchases of the Company's Common Stock and, thus, to develop a stronger
incentive to work for the continued success of the Company.
Section 1.02 Rules of Interpretation. It is intended that the Plan be an
"employee stock purchase plan" as defined in Section 423(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations
promulgated thereunder, if approved by the Company's shareholders. Accordingly,
the Plan will be interpreted and administered in a manner consistent therewith
if so approved. All Participants in the Plan will have the same rights and
privileges consistent with the provisions of the Plan.
Section 1.03 Definitions. For purposes of the Plan, the following terms
will have the meanings set forth below:
(a) "Acceleration Date" means either an Acquisition Date or a
Transaction Date.
(b) "Acquisition Date" means (i) the date of public announcement of
the acquisition of "beneficial ownership" (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934 (the "Exchange Act") or any successor
rule thereto) of more than fifty percent (50%) of the outstanding voting
stock of the Company by any "person" (as defined in Section 13(d) of the
Exchange Act) other than the Company, by means of a tender offer, exchange
offer or otherwise; and (ii) the date five (5) business days after the date
of public announcement of the acquisition of beneficial ownership (as so
defined) of more than twenty-five percent (25%) but not more than fifty
(50%) of the outstanding voting stock of the Company by any person (as so
defined) other than the Company, by means of a tender offer, exchange offer
or otherwise if, during such five (5) business day period, the Board or the
Committee has not, by resolution duly adopted, elected that such
acquisition not give rise to an Acquisition Date. In any such resolution,
the Board or Committee may elect that any continued acquisition or
acquisitions by the same person (as so defined) which would otherwise
trigger an Acquisition Date under clause (ii) above shall also not give
rise to an Acquisition Date.
(c) "Affiliate" means any parent or subsidiary corporation of the
Company, as defined in Sections 425(e) and 425(f) of the Code.
(d) "Board" means the Board of Directors of the Company.
(e) "Committee" means the committee appointed under Section 10.01.
(f) "Company" means Celeris Corporation, a Minnesota corporation, and
its successors by merger or consolidation as contemplated by Article XI
herein.
(g) "Current Compensation" means the gross cash compensation
(including wage, salary and overtime earnings) paid by the Company or a
Participating Affiliate to a Participant in accordance with the terms of
employment, but excluding all bonus payments, expense allowances and
compensation payable in a form other than cash.
(h) "Employer" means the Company or a Participating Affiliate, as the
case may be.
(i) "Fair Market Value" as of a given date means such value of the
Stock which is equal to (i) the last sale price of the Stock as reported on
the Nasdaq National Market System on such date, if the Stock
A-1
<PAGE> 20
is then quoted on the Nasdaq National Market System; (ii) the average of
the closing representative bid and asked prices of the Stock as reported on
the National Association of Securities Dealers Automated Quotation System
("Nasdaq") on such date, if the Stock is then quoted on Nasdaq; or (iii)
the closing price of the Stock on such date on a national securities
exchange, if the Stock is then quoted on a national securities exchange. If
on a given date the Stock is not traded on an established securities
market, the Committee shall make a good faith attempt to satisfy the
requirements of this Section 1.03(i) and in connection therewith shall take
such action as it deems necessary or advisable.
(j) "Participant" means a Permanent Full-Time Employee who is eligible
to participate in the Plan under Section 2.01 and who has elected to
participate in the Plan.
(k) "Participating Affiliate" means an Affiliate which has been
designated by the Committee in advance of the Purchase Period in question
as a corporation whose eligible Permanent Full-Time Employees may
participate in the Plan.
(l) "Permanent Full-Time Employee" means an employee of the Company or
a Participating Affiliate as of the first day of a Purchase Period,
including an officer or director who is also an employee, except an
employee whose customary employment is less than twenty (20) hours per week
or any employee who has not been employed by the Company or its
Participating Affiliates for more than three months.
(m) "Plan" means the Celeris Corporation Employee Stock Purchase Plan,
the provisions of which are set forth herein.
(n) "Purchase Period" means the approximate six (6) month periods
beginning on the first business day in January and ending on the last
business day in June and beginning on the first business day of July and
ending on the last business day in December of each year; provided however,
the then current Purchase Period will end upon the occurrence of an
Acceleration Date.
(o) "Stock" means the Company's Common Stock, $.01 par value, as such
stock may be adjusted for changes in the stock or the Company as
contemplated by Article XI herein.
(p) "Stock Purchase Account" means the account maintained in the books
and records of the Company recording the amount received from each
Participant through payroll deductions made under the Plan.
(q) "Transaction Date" means the date of shareholder approval of (i)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Company
stock would be converted into cash, securities or other property, other
than a merger of the Company in which shareholders immediately prior to the
merger have the same proportionate ownership of stock of the surviving
corporation immediately after the merger; (ii) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of
all or substantially all, of the assets of the Company; or (iii) any plan
of liquidation or dissolution of the Company.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
Section 2.01 Eligible Employees. All Permanent Full-Time Employees shall
be eligible to participate in the Plan beginning on the first day of the first
full Purchase Period to commence after such person becomes a Permanent Full-Time
Employee. Subject to the provisions of Article VI, each such employee will
continue to be eligible to participate in the Plan so long as he or she remains
a Permanent Full-Time Employee.
Section 2.02 Election to Participate. An eligible Permanent Full-Time
Employee may elect to participate in the Plan for a given Purchase Period by
filing with his or her Employer in advance of that Purchase Period a form
provided by such Employer for such purpose (which authorizes regular payroll
A-2
<PAGE> 21
deductions from Current Compensation beginning with the first payday in that
Purchase Period and continuing until the employee withdraws from the Plan or
ceases to be eligible to participate in the Plan).
Section 2.03 Limits on Stock Purchase. No employee shall be granted any
right to purchase hereunder if such employee, immediately after a right to
purchase is granted, would own, directly or indirectly, within the meaning of
Section 423(b)(3) and Section 425(d) of the Code stock possessing five percent
(5%) or more of the total combined voting power or value of all the then classes
of the capital stock of the Company or of all Affiliates.
Section 2.04 Voluntary Participation. Participation in the Plan on the
part of the Participant is voluntary and such participation is not a condition
of employment nor does participation in the Plan entitle a Participant to be
retained as an employee.
ARTICLE III
PAYROLL DEDUCTIONS AND STOCK PURCHASE ACCOUNT
Section 3.01 Deduction from Pay. The form described in Section 2.02 will
permit a Participant to elect payroll deductions of any whole percentage from
one percent (1%) through fifteen percent (15%) of Current Compensation for each
pay period. The Participant may reduce or increase future payroll deductions
(within the foregoing limitations) by filing with such Participant's Employer a
form provided by such Employer for such purpose. The effective date of any
reduction in future payroll deductions will be the first day of the next
succeeding pay period. The effective date of any increase in future payroll
deductions will be the first day of the next succeeding Purchase Period. Also,
the Participant may cease making payroll deductions at any time, as provided in
Section 6.01.
Section 3.02 Credit to Account. Payroll deductions will be credited to
the Participant's Stock Purchase Account on each payday.
Section 3.03 Interest. No interest will be paid upon payroll deductions
or on any amount credited to, or on deposit in, a Participant's Stock Purchase
Account.
Section 3.04 Nature of Account. The Stock Purchase Account is established
solely for accounting purposes, and all amounts credited to the Stock Purchase
Account will remain part of the general assets of the Company or the
Participating Affiliate (as the case may be).
Section 3.05 No Additional Contributions. A Participant may not make any
payment into the Stock Purchase Account other than the payroll deductions made
pursuant to the Plan.
ARTICLE IV
RIGHT TO PURCHASE SHARES
Section 4.01 Number of Shares. Each Participant will have the right to
purchase on the last business day of the Purchase Period all, but not less than
all, of the largest number of whole shares of Stock that can be purchased at the
price specified in Section 4.02 with the entire credit balance in the
Participant's Stock Purchase Account, subject to the limitations that (a) no
more than 60,000 shares of Common Stock may be purchased under the Plan by any
one Participant for a given Purchase Period, and (b) in accordance with Section
423(b)(8) of the Code, no more than Twenty-five Thousand Dollars ($25,000) in
Fair Market Value (determined at the beginning of each Purchase Period) of Stock
and other stock may be purchased under the Plan and all other employee stock
purchase plans (if any) of the Company and the Affiliates by any one Participant
for each calendar year. If the purchases for all Participants would otherwise
cause the aggregate number of shares of Stock to be sold under the Plan to
exceed the number specified in Section 10.03, however, each Participant shall be
allocated a pro rata portion of the Stock to be sold.
Section 4.02 Purchase Price. The purchase price for any Purchase Period
will be the lesser of (a) Eighty-five percent (85%) of the Fair Market Value of
the Stock on the first business day of that Purchase
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Period or (b) Eighty-five percent (85%) of the Fair Market Value of the Stock on
the last business day of that Purchase Period, in each case rounded up to the
next higher full cent.
ARTICLE V
EXERCISE OF RIGHT
Section 5.01 Purchase of Stock. On the last business day of a Purchase
Period, the entire credit balance in each Participant's Stock Purchase Account
will be used to purchase the largest number of whole shares of Stock purchasable
with such amount (subject to the limitations of Section 4.01) unless the
Participant has filed with the Committee in advance of that date a form provided
by his or her Employer and elected to receive the entire credit balance in cash.
Section 5.02 Cash Distributions. Any amount remaining in a Participant's
Stock Purchase Account after the last business day of a Purchase Period will be
paid to the Participant in cash within thirty (30) days after the end of that
Purchase Period; provided, however, that if the amount remaining in the
Participant's Stock Purchase Account at the end of a Purchase Period results
from the fact that such amount was not sufficient to purchase a whole share of
Stock, such amount will be transferred to the Participant's Stock Purchase
Account for the immediately succeeding Purchase Period.
Section 5.03 Notice of Acceleration Date. The Company shall use its best
efforts to notify each Participant in writing at least ten (10) days prior to
any Acceleration Date that the then current Purchase Period will end on such
Acceleration Date.
ARTICLE VI
WITHDRAWAL FROM PLAN
Section 6.01 Voluntary Withdrawal. A Participant may, at any time,
withdraw from the Plan and cease making payroll deductions by filing with such
Participant's Employer a form provided for this purpose. In such event, the
Participant may request that either (a) the entire credit balance in the
Participant's Stock Purchase Account be paid to the Participant in cash within
thirty (30) days, or (b) the entire credit balance in the Participant's Stock
Purchase Account be held in such account until used to purchase shares of Stock
in accordance with Section 5.01. A Participant who withdraws from the Plan will
not be eligible to reenter the Plan until the beginning of the next Purchase
Period following the date of such withdrawal.
Section 6.02 Death. Participation in the Plan will cease on the date of
the Participant's death, and the entire credit balance in the Stock Purchase
Account will be paid to the Participant's estate in cash within thirty (30)
days. Each Participant, however, may designate one or more beneficiaries who,
upon death, are to receive the amount that otherwise would have been paid to the
Participant's estate and may change or revoke any such designation from time to
time. No such designation, change or revocation will be effective unless made by
the Participant in writing and filed with the Participant's Employer during the
Participant's lifetime. Unless the Participant has otherwise specified in the
beneficiary designation, the beneficiary or beneficiaries so designated will
become fixed as of death so that, if a beneficiary survives the Participant but
dies before the receipt of the payment due such beneficiary, the payment will be
made to such beneficiary's estate.
Section 6.03 Termination of Employment. Participation in the Plan also
will cease on the date the Participant ceases to be a Permanent Full-Time
Employee for any reason other than death. In such event, the entire credit
balance in the Participant's Stock Purchase Account will be paid to the
Participant in cash within thirty (30) days. For purposes of this Section, a
leave of absence which has been approved by the Committee will not be deemed a
termination of employment as a Permanent Full-Time Employee.
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ARTICLE VII
NONTRANSFERABILITY
Section 7.01 Nontransferable Right to Purchase. The right to purchase
Stock hereunder may not be assigned, transferred, pledged or hypothecated
(whether by operation of law or otherwise) and will not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition or levy of attachment or similar process upon
the right to purchase will be null and void and without effect.
Section 7.02 Nontransferable Account. The amounts credited to a Stock
Purchase Account may not be assigned, transferred, pledged or hypothecated in
any way, and any attempted assignment, transfer, pledge, hypothecation or other
disposition of such amounts will be null and void and without effect.
ARTICLE VIII
STOCK CERTIFICATES
Section 8.01 Delivery. Within thirty (30) days after the last day of each
Purchase Period, the Company will cause to be delivered to the Participant a
certificate representing the Stock purchased on the last business day of such
Purchase Period.
Section 8.02 Securities Laws. The Company shall not be required to issue
or deliver any certificate representing Stock prior to registration under the
Securities Act of 1933, as amended, or registration or qualification under any
state law if such registration is required. The Company will use its best
efforts to accomplish such registration (if and to the extent required) not
later than a reasonable time following the Purchase Period, and delivery of
certificates may be deferred until such registration is accomplished.
Section 8.03 Completion of Purchase. A Participant will have no interest
in the Stock purchased until a certificate representing the same is issued.
Section 8.04 Form of Ownership. The certificates representing Stock
issued under the Plan will be registered in the name of the Participant or
jointly in the name of the Participant and another person, as the Participant
may direct on a form provided by the Participant's Employer.
ARTICLE IX
EFFECTIVE DATE AND AMENDMENT OR TERMINATION OF PLAN
Section 9.01 Effective Date. The Plan will become effective on January 1,
1999, subject to shareholder approval.
Section 9.02 Powers of Board. The Board may at any time amend or
terminate the Plan, except that no amendment will be made without prior approval
of the shareholders which would (a) authorize an increase in the number of
shares of Stock which may be purchased under the Plan, except as provided in
Section 11.01, (b) permit the issuance of Stock before payment therefor in full,
(c) increase the rate of payroll deductions above fifteen percent (15%) of
Current Compensation, (d) reduce the price per share at which the Stock may be
purchased, or (e) absent such shareholder approval, cause Rule 16b-3 to become
unavailable with respect to the Plan.
Section 9.03 Automatic Termination. The Plan will terminate automatically
on December 31, 2008, unless extended by the Board. The Board may by resolution
extend the Plan for one or more additional periods of five years each.
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ARTICLE X
ADMINISTRATION
Section 10.01 Appointment of Committee. The Plan shall be administered by
a committee (the "Committee") established by the Board and meeting the
requirements of Rule 16b-3 as in effect from time to time.
Section 10.02 Powers of Committee. Subject to the provisions of the Plan,
the Committee will have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan, to establish
deadlines by which the various administrative forms must be received in order to
be effective, and to adopt such other rules and regulations for administering
the Plan as it may deem appropriate. Decisions of the Committee will be final
and binding on all parties who have an interest in the Plan.
Section 10.03 Stock to be Sold. The Stock to be issued and sold under the
Plan may be treasury Stock or authorized but unissued Stock, or the Company may
go into the market and purchase Stock for sale under the Plan. Except as
provided in Section 11.01, the aggregate number of shares of Stock to be sold
under the Plan will not exceed 500,000 shares.
Section 10.04 Notices. Notices to the Committee should be addressed as
follows:
Celeris Corporation
Attention: Corporate Secretary
1801 West End Avenue
Suite 750
Nashville, Tennessee 37203
ARTICLE XI
ADJUSTMENT FOR CHANGES IN STOCK OR COMPANY
Section 11.01 Stock Dividend or Reclassification. If the outstanding
shares of Stock are increased, decreased, changed into or exchanged for a
different number or kind of securities of the Company, or shares of a different
par value or without par value, through reorganization, recapitalization,
reclassification, stock dividend, stock split, amendment to the Company's
Articles of Incorporation, reverse stock split or otherwise, an appropriate
adjustment shall be made in the maximum numbers and/or kind of securities to be
sold under this Plan with a corresponding adjustment in the purchase price to be
paid therefor.
Section 11.02 Merger or Consolidation. If the Company is merged into or
consolidated with one or more corporations during the term of the Plan,
appropriate adjustments will be made to give effect thereto on an equitable
basis in terms of issuance of shares of the corporation surviving the merger or
of the consolidated corporation, as the case may be.
ARTICLE XII
APPLICABLE LAW
Rights to purchase Stock granted under this Plan shall be construed and
shall take effect in accordance with the laws of the State of Minnesota.
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APPENDIX B
CELERIS CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Barbara A. Cannon and Paul R. Johnson as
proxies, each with the power to appoint a substitute, and hereby authorizes them
to present and to vote, as designated below, all shares of capital stock of
Celeris Corporation (the "Company") the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company, to be held May 25, 1999 and at
all adjournments thereof:
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked to [ ] WITHHOLD AUTHORITY to vote for all nominees listed
the contrary below by lining through the names of below
nominees)
Barbara A. Cannon, W. Hudson Connery, Jr., Richard B. Fontaine, Peter T. Garahan, John M. Nehra, Andre G. Pernet, Ph.D.
2. PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S 1999 EMPLOYEE STOCK PURCHASE PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the
meeting including any proposals for which notice to the Company was not given at least 45 days prior to the date
of the Proxy Statement accompanying this Proxy:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ABOVE ITEMS.
(Continued and to be signed and dated, on other side)
INSTRUCTIONS: Please sign exactly as your name appears on the label affixed
hereto. When shares are held by joint tenants, both must sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in the full corporate name by an
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: , 1999
------------------
------------------------------
Signature
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Please print name
------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY. A RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
