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SCHEDULE 14A
(RULE 14-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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:
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CELERIS CORPORATION
1801 WEST END AVENUE, SUITE 750
NASHVILLE, TENNESSEE 37203
Dear Shareholder:
You are cordially invited to attend the 2000 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 April 27,
2000, at 1:00 p.m. (Central Daylight 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
President and Chief Executive Officer
Nashville, Tennessee
March 22, 2000
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CELERIS CORPORATION
1801 WEST END AVENUE, SUITE 750
NASHVILLE, TENNESSEE 37203
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 2000
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 April 27,
2000, 1:00 p.m. (Central Daylight 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 Fifth Amendment to the Celeris Corporation Stock
Option Plan of 1993.
3. To approve the adoption of the Celeris Corporation 2000 Stock Option
Plan.
4. 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 15, 2000 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
President and Chief Executive Officer
Nashville, Tennessee
March 22, 2000
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 2000
--------------------------
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 Loews
Vanderbilt Plaza, 2100 West End Avenue, Nashville, Tennessee 37203, at 1:00 p.m.
(Central Daylight time), on April 27, 2000 (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 March 22, 2000.
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 15, 2000, the
record date, will be entitled to notice of and to vote at the Annual Meeting. On
March 15, 2000, the Company had 3,129,437 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, (ii) for
the approval of the Fifth Amendment to the Celeris Stock Option Plan of 1993,
and (iii) for the adoption of the Celeris Corporation 2000 Stock Option 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 directors, 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
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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 CORPORATION,
1801 WEST END AVENUE, SUITE 750, NASHVILLE, TENNESSEE 37203. YOUR PROMPT
CONSIDERATION WILL BE GREATLY APPRECIATED.
A COPY OF THE COMPANY'S 1999 ANNUAL REPORT TO SHAREHOLDERS, WHICH INCLUDES
THE COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999,
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
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. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE
NOMINEES.
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.
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BARBARA A. CANNON (age 48) - 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 50) - 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 56) - 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. Mr. Fontaine is currently a director of Total Renal Care Holdings, Inc.
PETER T. GARAHAN (age 53) - 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 51) - 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
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partnership. Since December 1993, Mr. Nehra has also been a general partner of
New Enterprise Associates VI, VII, and VIII Limited Partnerships, a venture
capital limited partnership. Mr. Nehra also serves as a director of Iridex
Corporation, a medical instrumentation company.
ANDRE G. PERNET, PH.D. (age 55) - Dr. Pernet has served as a Director of
the Company since February 1999. Dr. Pernet has held the position of Senior Vice
President of Development of PathoGenesis, Inc. since September 1999. Prior to
that, Dr. Pernet served for 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. Dr. Pernet serves as a director of SYNSORB Biotech Inc. and Genset SA.
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 three times during the year ended December 31,
1999.
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 (the
"Stock Purchase Plan"), and will administer the 2000 Stock Option Plan upon
approval as well as 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 1999, the members of the Company's Compensation Committee were
Messrs. Fontaine and Nehra and Dr. Pernet. The Compensation Committee met two
times during the year ended December 31, 1999.
During the year ended December 31, 1999, the Board of Directors of the
Company held six regular meetings and two 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
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year ended December 31, 1999. 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 2,222 shares of Common
Stock, and each non-employee director on the day after each annual meeting of
the Company's shareholders automatically receives an option to purchase an
additional 667 shares of Common Stock. 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:
APPROVAL OF THE FIFTH AMENDMENT TO THE
CELERIS CORPORATION STOCK OPTION PLAN
OF 1993
The 1993 Stock Option Plan was initially approved by the shareholders
in 1993. In 1995, the 1993 Stock Option Plan was amended upon shareholder
approval to provide that a total of 820,000 shares of Common Stock (subject to
proportional adjustments to reflect certain subsequent stock changes, such as
stock dividends or splits, recapitalizations, reclassifications, or other
similar corporate changes) was authorized for issuance upon the exercise of
options granted under the 1993 Stock Option Plan. In 1996, the 1993 Stock Option
Plan was further amended to provide that a total of 2,126,666 shares of Common
Stock are authorized for issuance under the 1993 Stock Option Plan. In 1997, the
1993 Stock Option Plan was again amended to provide that a total of 2,626,666
shares of Common Stock are authorized for issuance under the 1993 Stock Option
Plan. On July 26, 1999, the Board of Directors declared a one-for-three reverse
stock split applicable to shareholders of record July 29, 1999. Taking into
account the July 26, 1999 reverse stock split, there are currently 875,555
shares of Common Stock authorized for issuance under the 1993 Stock Option Plan.
On February 22, 2000, the Board of Directors approved an amendment to the 1993
Stock Option Plan, subject to shareholder approval that provides for the
issuance of an additional 130,000 shares of Common Stock upon the exercise of
options granted pursuant to the 1993 Stock Option Plan.
In December 1999, the Company granted 400,000 options to five senior
level employees at the Company. This 400,000 option grant resulted in the
granting of options to purchase 130,000 shares of the Company's Common Stock
beyond the number of shares of Common Stock that were then, and currently are,
available and reserved for issuance upon the exercise of
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options granted under the 1993 Stock Option Plan. These 130,000 options were
granted 87,100 to Ms. Cannon, 21,450 to Dr. Fortin and 21,450 to Mr. Johnson.
The Company believes that stock options are an important element of compensation
in attracting skilled executives, other key employees and in motivating and
retaining these individuals by providing them with a means to acquire a
proprietary interest in the Company. If this proposal to increase the number of
options available under the 1993 Stock Option Plan is not approved by the
Company's shareholders, the Company will be required to declare 130,000 of the
400,000 options granted in December 1999 to be void. 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 will be necessary for approval. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE PROPOSAL TO APPROVE THE AMENDMENT TO
THE 1993 STOCK OPTION Plan.
DESCRIPTION OF THE 1993 STOCK OPTION PLAN
The following summary of the 1993 Stock Option Plan is qualified in its
entirety by reference to the full text of the plan, which is incorporated herein
by reference to the Company's previous filings with the Securities and Exchange
Commission, and the Fifth Amendment to the 1993 Stock Option Plan attached
hereto as EXHIBIT A. Capitalized terms used herein but not defined have the
meaning set forth in the 1993 Stock Option Plan.
The 1993 Stock Option Plan provides for the grant of options to
purchase shares of Common Stock to any full or part-time employee of or any
consultant to the Company. Options granted under the 1993 Stock Option Plan to
full or part-time employees may qualify as incentive stock options under Section
422A of the Code or may be non-qualified stock options. Options granted to
persons who are not full or part-time employees of the Company may not qualify
as incentive stock options. The 1993 Stock Option Plan is administered by the
Board of Directors, which has delegated all authority under the 1993 Stock
Option Plan to the Compensation Committee, which is solely comprised of
"non-employee directors" (as defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934) selected by the Board of Directors. The
Compensation Committee has the authority: (i) to interpret the 1993 Stock Option
Plan, (ii) to prescribe, amend and rescind rules and regulations relating to the
1993 Stock Option Plan, (iii) to provide for conditions and assurances deemed
necessary or advisable to protect the interest of the Company, and (iv) to make
all other determinations necessary or advisable for the administration of the
1993 Stock Option Plan, subject to the exclusive authority of the Board of
Directors to amend or terminate the 1993 Stock Option Plan. Determinations and
interpretations with respect to the Plan are in the sole discretion of the
Compensation Committee, whose determinations and interpretations will be final
and conclusive. The 1993 Stock Option Plan terminates in 2003 or at an earlier
date, if all shares subject to the 1993 Stock Option Plan have been purchased
pursuant to the exercise of then outstanding options. After termination of the
1993 Stock Option Plan, no options may be granted under that plan, but options
outstanding at the time of termination shall remain in effect in accordance with
their terms.
The exercise price of an incentive stock option granted under the 1993
Stock Option Plan may not be less than the fair market value of the Common Stock
on the date the option is granted (in the event that a proposed optionee owns
more than 10% of the Company's Common Stock,
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any incentive stock option granted to such optionee must have an exercise price
not less than 110% of the then fair market value). The exercise price of any
non-incentive stock option granted under the 1993 Stock Option Plan is
determined by the Compensation Committee and is not subject to the restrictions
applicable to incentive stock options. The incentive stock options generally
vest over a four to five year period and expire after ten years. Non-qualified
stock options may vest immediately or over up to a five year period and expire
after ten years. A person who has been granted an option under the 1993 Stock
Option Plan may be granted additional options, but to the extent the aggregate
fair market value (determined at the time the option is granted) of the Common
Stock for which all incentive stock options held by an optionee are exercisable
exceeds $100,000, such options will be treated as options that do not qualify as
incentive stock options.
No option granted under the 1993 Stock Option Plan may be transferred,
other than by will or by the laws of descent and distribution. Each option is
exercisable, during such individual's lifetime, only by such individual.
In the event of the death of an employee or consultant, all options
held by such person may be exercised at any time prior to the expiration date or
twelve months after the date of death, whichever period is shorter, by the
persons entitled to such options by will or the laws of descent and
distribution. If an option holder's employment is terminated for cause, as
defined in the 1993 Stock Option Plan, any options held by such employee, not
yet exercised, shall terminate. If an option holder's employment is terminated
other than for cause or due to death, the option holder may exercise such
portion of the options that were exercisable at the date of termination at any
time within three months of the date of termination; provided, however, that
where the option holder is an employee and termination is due to disability, as
defined in the Code, the time period during which options may be exercised is
extended to one year.
If an option under the 1993 Stock Option Plan expires, or for any
reason is terminated or unexercised with respect to any shares, such shares
shall again be available for options thereafter granted during the term of the
1993 Stock Option Plan. If there shall be any change in the Common Stock through
a stock dividend or split, recapitalization, reclassification or other similar
change in the corporate structure, appropriate adjustments in the 1993 Stock
Option Plan and outstanding options shall be made by the Compensation Committee.
In the event of any such changes, adjustments shall include, where appropriate,
changes in the aggregate number of shares subject to the 1993 Stock Option Plan
and the number of shares and the price per share subject to outstanding options,
in order to prevent dilution or enlargement of option rights.
In the event of an acquisition of the Company, the Company will cancel
all outstanding options, whether or not such options are then exercisable, in
return for payment to the option holders of an amount equal to the difference
between the net amount payable per share in the acquisition, less the exercise
price of the option. If the Company is the surviving corporation in any merger
or consolidation, any option granted under the 1993 Stock Option Plan shall
pertain to and apply to the securities to which the holder of the number of
shares of stock subject to the option would have been entitled in such merger of
consolidation. In the event of a dissolution or liquidation of the Company or a
merger or consolidation in which the Company is not the
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surviving corporation, every option granted under the 1993 Stock Option Plan
shall terminate and the option holder either (i) shall be offered a firm
commitment whereby the surviving corporation will tender to the option holder an
option to purchase its shares on terms and conditions which will substantially
preserve the rights and benefits of the options outstanding prior to such an
event or (ii) shall have the right immediately prior to such an event to
exercise all outstanding options granted pursuant to the 1993 Stock Option Plan.
The 1993 Stock Option Plan is subject to amendment by the Compensation
Committee, subject to the restriction that the Compensation Committee may not
increase the number of shares that may be issued under the 1993 Stock Option
Plan or change the class of employees or consultants eligible to receive options
under the 1993 Stock Option Plan without the approval of the shareholders of the
Company. Further, no amendment, modification or termination of the 1993 Stock
Option Plan shall in any manner adversely affect any outstanding option under
the 1993 Stock Option Plan without the consent of the optionee holding the
option.
TAX TREATMENT
The grant of a stock option pursuant to the 1993 Stock Option Plan will
result in no tax consequences for the optionee or the Company. The holder of an
incentive stock option generally will have no taxable income upon exercising the
incentive stock option (except that the alternative minimum tax may apply), and
the Company generally will receive no tax deduction when an incentive stock
option is exercised. Upon exercise of a non-incentive stock option, the optionee
must recognize ordinary income equal to the excess of the fair market value of
the shares acquired on the date of exercise over the option price, and the
Company will then be entitled to a tax deduction for the same amount. The tax
consequences to an optionee of a disposition of shares acquired through the
exercise of an option will depend on how long the shares have been held and upon
whether such shares were acquired by exercising an incentive stock option or a
non-incentive stock option. Generally, there will be no tax consequence to the
Company in connection with a disposition of shares acquired under an option
except that the Company may be entitled to a tax deduction in the case of a
disposition of shares acquired under an incentive stock option before the
applicable incentive stock option holding period has been satisfied.
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PROPOSAL 3:
ADOPTION AND RATIFICATION OF
CELERIS CORPORATION 2000 STOCK OPTION PLAN
GENERAL
On February 22, 2000, the Board of Directors adopted the Celeris
Corporation 2000 Stock Option Plan (the "2000 Stock Option Plan"), subject to
shareholder approval.
The following summary of the 2000 Stock Option Plan is qualified in its
entirety by reference to the full text of the plan, which is attached to this
Proxy Statement as EXHIBIT B. Capitalized terms used herein but not defined have
the meaning set forth in the 2000 Stock Option Plan.
ELIGIBILITY
Under the Company's 2000 Stock Option Plan, options to purchase shares of
Common Stock are available for grant to consultants, advisors, directors and
employees of the Company, providing an equity interest in the Company and
additional compensation to such grantees based on appreciation of the value of
such stock.
NUMBER OF SHARES AVAILABLE FOR OPTIONS AND DETERMINATION OF OPTION PRICE UNDER
THE PLAN
The 2000 Stock Option Plan allows for options to purchase in the aggregate
up to 300,000 shares of Company Common Stock to be granted by the Board of
Directors. The Board of Directors may, in its discretion, grant incentive stock
options ("ISO's") or non-qualified stock options.
The 2000 Stock Option Plan provides that the exercise price of an ISO
option must not be less than the fair market value of the Common Stock on the
trading day next preceding the date of the grant. The exercise price of a
non-qualified stock option shall be determined by the Board of Directors.
Payment for shares of Common Stock to be issued upon exercise of an option may
be made either in cash, Common Stock or any combination thereof, at the
discretion of the Board of Directors. Options are nontransferable, other than by
will, the laws of descent and distribution or pursuant to certain domestic
relations orders. Shares subject to options granted under the 2000 Stock Option
Plan that expire, terminate or are canceled without having been exercised in
full become available again for option grants. Shares acquired pursuant to the
exercise of an option, if repurchased by the Company, will again become
available for option grants.
ADMINISTRATION
The 2000 Stock Option Plan is administered by the Board of Directors, or,
at the discretion of the Board of Directors, a committee of directors. Subject
to certain limitations, the Board and its committee have the authority to
determine the recipients, as well as the exercise prices, exercise periods,
length and other terms of stock options granted pursuant to the 2000 Stock
Option Plan.
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In making such determinations, the Board may take into account the nature of the
services rendered or to be rendered by option recipients, and their past,
present or potential contributions to the Company.
ADJUSTMENTS UPON CERTAIN EVENTS
The number of shares of Common Stock that may be granted under the 2000
Stock Option Plan or under any outstanding options granted thereunder will be
proportionately adjusted, to the nearest whole share, in the event of any stock
dividend, stock split, share combination or similar recapitalization involving
the Common Stock or any spin-off, spin-out or other significant distribution of
the Company's assets to its stockholders for which the Company receives no
consideration.
EMPLOYEE TERMINATION
Generally, in the event an Option holder is terminated as an employee by
reason of disability or death, the holder or his or her representative may
exercise the option for a period of twelve months following such termination. In
the event the Option holder is terminated as an employee for any reason other
than disability, death or cause, the holder may exercise his or her option for a
period of three months following termination. The Board of Directors may, but
need not, cause Options to provide that if the employment of an Option holder is
terminated for "cause," as defined in the 2000 Stock Option Plan, the
unexercised options expire.
Unless stated otherwise in a non-qualified stock option agreement, for a
period of 60 days following the date the employment of a non-qualified stock
option holder terminates, the Company has the right to purchase such
participant's vested options at a price equal to the difference between the
exercise price of such options and the fair market value of the underlying
shares of Common Stock.
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 2000 Stock Option Plan. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE CELERIS CORPORATION 2000 STOCK OPTION PLAN.
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.
NAME AGE POSITION
---- --- --------
Donald F. Fortin 42 Vice President
Paul R. Johnson 34 Vice President, Chief Financial Officer &
Secretary
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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 served within the division of Cardiology at
Duke University Medical Center as an Assistant Professor of Medicine from 1993
to 1999, and is currently an Adjunct Clinical Professor of Medicine
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.
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
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factors, to Company performance and individual performance. The Company also
provides long-term equity based compensation generally through participation in
the 1993 Stock Option Plan and will continue to provide through the 2000 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.
STOCK OPTIONS. The 1993 Stock Option Plan, and if approved, the 2000 Stock
Option Plan permit 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 Stock
Option Plans, 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.
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."
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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 size comparable 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
1999 resulted in compensation of $57,979.
In recognition of her commitment to the Company and her performance in
1999, Ms. Cannon was awarded a salary increase of $25,000 effective January 1,
2000, a bonus of $50,000 and an option to purchase 200,000 shares of Common
Stock exercisable as to 25% immediately and 25% on each anniversary date of the
grant for three 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
ANDRE G. PERNET, Ph.D.
The Members of the Compensation Committee
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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, 1999, 1998 and 1997
awarded to or earned by the Chief Executive Officer of the Company and the three
highest paid executive officers of the Company whose salary and bonus earned in
1999 exceeded $100,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
----------------------------------- ---------------------------
Other Annual Securities All Other
Compensation Underlying Compensation
Name and Principal Position Year Salary($) Bonus ($) ($)(1) Options (#) ($)(2)
- -------------------------------------- --------- ---------- ---------- ------------- ------------- -------------
Barbara A. Cannon 1999 195,000 50,000 57,979(3) 200,000 (5) --
President and Chief Executive Officer 1998 195,000 25,000 77,070(3) 33,333 --
1997 45,000 1,000 -- 133,667 13
Donald F. Fortin, M.D. 1999 156,750 25,000 -- 50,000 (5) --
Vice President 1998 156,862 -- -- 6,667 --
1997 135,577 1,000 -- 100,333 156
Paul R. Johnson 1999 125,000 25,000 -- 50,000 (5) --
Vice President, Chief Financial 1998 99,520 -- -- 46,667 --
Officer and Secretary 1997 -- -- -- -- --
Charles L. McIntosh, M.D., Ph.D. 1999 175,847 -- -- -- --
Vice President and President of C.L. 1998 186,413 -- -- 5,000 --
McIntosh & Associates, Inc. 1997 188,237 1,000 -- 23,667 156
("CLMA")(4)
(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
$50,000 or 10% of the total annual salary and bonus for the applicable
Named Executive Officer for such year.
(2) Represents the dollar value of premiums paid by the Company for life
insurance policies for the benefit of the applicable Named Executive
Officer.
(3) Represents forgiveness of principal and interest on Promissory Note between
Ms. Cannon and the Company. See description under the caption "Compensation
of Chief Executive Officer."
(4) Dr. McIntosh's employment agreement expired on December 31, 1999, and was
not renewed under mutual agreement of Dr. McIntosh and the Company.
(5) Includes options granted subject to shareholder approval in the amount of
87,100 shares for Ms. Cannon, 21,450 shares for Dr. Fortin, and 21,450
shares for Mr. Johnson. See description under Proposal Two.
The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during the
fiscal year ended December 31, 1999.
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STOCK OPTIONS, AWARDS, EXERCISES AND HOLDINGS
The following table sets forth certain information in connection with stock
option grants during the year ended December 31, 1999 to each of the Named
Executive Officers.
OPTION GRANTS IN THE YEAR ENDED DECEMBER 31, 1999
Potential Realizable
Individual Grants Value at Assumed
Number of Percentage of Annual Rates of
Securities Total Options Stock Price
Options Employees in Exercise or Option Term (3)
Granted Fiscal Year Per Share Expiration ---------------------------
Name (#)(1) (%) ($)(2) Date 5% ($) 10% ($)
- ----------------------------- -------------- -------------- ------------- ------------- ------------- -------------
Barbara A. Cannon 200,000 (4) 36.9 1.875 12/15/2009 235,835 597,653
Donald F. Fortin, M.D. 50,000 (4) 9.2 1.875 12/15/2009 58,959 149,413
Paul R. Johnson 50,000 (4) 9.2 1.875 12/15/2009 58,959 149,413
Charles L. McIntosh,
M.D., Ph.D. -- -- -- -- -- --
- ----------------------------
(1) Options granted to Named Executive Officers during the year ended December
31, 1999 vest 25% immediately and then in 25% increments over three years.
(2) All options granted under the 1993 Stock Option Plan during the fiscal year
ended December 31, 1999 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.
(4) Includes options granted subject to shareholder approval in the amount of
87,100 shares for Ms. Cannon, 21,450 shares for Dr. Fortin, and 21,450
shares for Mr. Johnson. See description under Proposal Two.
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, 1999
and unexercised options held by the Named Executive Officers as of the end of
the fiscal year ended December 31, 1999.
OPTION VALUES AT DECEMBER 31, 1999
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
December 31, 1999 (#)(2) December 31, 1999 ($)(1)
Shares --------------------------- ----------------------------
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------- -------------- -------------- ------------- ------------- ------------- --------------
Barbara A. Cannon -- -- 133,501 233,499 -- --
Donald F. Fortin, M.D. -- -- 85,332 71,668 -- --
Paul R. Johnson -- -- 24,166 72,501 -- --
Charles L. McIntosh, M.D.,
Ph.D. -- -- 10,750 17,917 -- --
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(1) The value of unexercised in-the-money options represents the aggregate
difference between the market value on December 31, 1999, 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, 1999,
the closing price of the Common Stock was $1.4375.
(2) Includes options granted subject to shareholder approval in the amount of
87,100 shares for Ms. Cannon, 21,450 shares for Dr. Fortin, and 21,450
shares for Mr. Johnson. See description under Proposal Two.
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
initial 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 "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 36,364
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 February 29, 2000, the principal amount due under the Promissory Note was
$83,333. The Promissory Note is secured by an interest in 24,242 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. Effective January
1, 1999, 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. STOCK PRICE PERFORMANCE GRAPH AND TABLE
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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") and (c) the CRSP Index for Nasdaq Health Services Stocks
("Nasdaq Health Services Index"). The table assumes the reinvestment of all
dividends. In the past, the Company has compared total stockholder returns from
the Standard & Poor's 500 Stock Index and 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
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. Therefore, the Company has decided to no longer include the Standard &
Poor's 500 Stock Index and the Standard & Poor's Healthcare Index in its stock
performance graph.
NASDAQ HEALTH SERVICES
NASDAQ STOCK MARKET STOCKS SIC 8000-8099 US
CELERIS CORPORATION (US COMPANIES) & FOREIGN
------------------- ---------------------- -----------------------
8/4/95 100.00 100.00 100.00
12/1995 159.00 107.00 124.00
12/1996 56.00 131.00 124.00
12/1997 11.00 161.00 127.00
12/1998 6.00 227.00 107.00
12/1999 4.00 410.00 89.00
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PRINCIPAL SHAREHOLDERS
The following table sets forth as of February 29, 2000 (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 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:
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT (1)
- ------------------------------------ ------ -------
John M. Nehra (2)(3) 150,900 4.8%
1119 St. Paul Street
Baltimore, MD 21202
Catalyst Ventures, Limited Partnership 117,777 3.8%
and New Enterprise Associates VI,
Limited Partnership (4)
1119 St. Paul Street
Baltimore, MD 21202
Dimensional Fund Advisors (5) 249,263 8.0%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Barbara A. Cannon (6) 178,197 5.4%
Celeris Corporation
1801 West End Avenue, Suite 750
Nashville, TN 37203
Donald F. Fortin, M.D. (7) 116,832 3.6%
Celeris Corporation
5150 McCrimmon Parkway, Suite 405
Morrisville, NC 27560
Richard B. Fontaine (8) 20,305 *
155 Webster Ct.
Park City, UT 84060
Paul R. Johnson (9) 32,499 1.0%
Celeris Corporation
1801 West End Avenue, Suite 750
Nashville, TN 37203
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W. Hudson Connery, Jr. (10) 9,889 *
5520 South Stanford
Nashville, TN 37215
Peter T. Garahan (11) 4,222 *
10200 Akhpamar Dr.
Great Falls, VA 22066
Andre Pernet, Ph.D. (12) 6,222 *
1221 South Estate Lane
Lake Forest, IL 60045
All Executive Officers and Directors as a group (8 persons) (13) 519,066 15.0%
- -------------------
* Represents beneficial ownership of less than 1%.
(1) Shares of Company Common Stock subject to options exercisable within 60
days of February 29, 2000 ("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 31,445 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) 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 solely on a Schedule 13G, dated February 3, 2000, Dimensional Fund
Advisors is record holder of 249,263 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.
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(6) Includes 141,834 shares issuable pursuant to Currently Exercisable Options.
(7) Includes 114,332 shares issuable pursuant to Currently Exercisable Options.
(8) Includes 10,305 shares issuable pursuant to Currently Exercisable Options.
(9) Includes 32,499 shares issuable pursuant to Currently Exercisable Options.
(10) Includes 3,556 shares issuable pursuant to Currently Exercisable Options.
(11) Includes 2,889 shares issuable pursuant to Currently Exercisable Options.
(12) Includes 2,222 shares issuable pursuant to Currently Exercisable Options.
(13) Includes 339,082 shares issuable pursuant to Currently Exercisable Options.
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, 2000. 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.
SHAREHOLDER PROPOSALS FOR THE
2001 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 2001 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
November 22, 2000. Any such proposal must be 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 2001 Annual Meeting which is not included in the 2001 Proxy
Statement. However, under the rules of the Securities and Exchange Commission,
such discretionary authority may not be exercised if the shareholder proponent
has not given the Secretary of the Company notice of such proposal prior to
February 5, 2001 and certain other conditions provided for in the rules of the
Securities and Exchange Commission exist.
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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, 1999. The Company believes that all Section 16(a) filing
requirements applicable to its executive officers, directors and 10%
shareholders were satisfied.
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
President and Chief Executive Officer
Nashville, Tennessee
March 22, 2000
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EXHIBIT A
FIFTH AMENDMENT TO CELERIS CORPORATION
STOCK OPTION PLAN OF 1993
The proposed amendment ("Amendment") to the Celeris Corporation Stock
Option Plan of 1993, as amended (the "Plan"), as approved by Celeris
Corporation's Board of Directors on February 22, 2000, will increase the number
of shares available for issuance under the plan by 130,000 shares and,
accordingly, following the Amendment Section 5.1 of the Plan will read as
follows:
"5.1 NUMBER. The number of shares of Stock hereby made available and
reserved for issuance under the plan is 1,005,555. The aggregate number by
increasing the number of shares of Stock available under this Plan shall be
subject to adjustment as provided in Section 5.3. The total number of
shares of Stock may be authorized but unissued shares of Stock, or shares
acquired by purchase as directed by the Board from time to time in its
discretion, to be used for issuance upon exercise of Options granted
hereunder."
26
EXHIBIT B
CELERIS CORPORATION
2000 STOCK OPTION PLAN
27
TABLE OF CONTENTS
PAGE
----
Section 1. PURPOSE.................................................................................. 1
Section 2. DEFINITIONS.............................................................................. 1
Section 3. GENERAL RULES............................................................................ 4
3.1 Eligibility..................................................................... 4
3.2 Shares Subject to Plan.......................................................... 4
3.3 Term of the Plan................................................................ 5
Section 4. ADMINISTRATION OF THE PLAN............................................................... 5
4.1 Creation of Committee to Administer the Plan.................................... 5
4.2 Committee Meetings and Actions.................................................. 5
4.3 Committee Exculpation........................................................... 5
4.4 Committee Indemnification....................................................... 5
4.5 Authority of Committee.......................................................... 6
4.6 Amendment of Agreements......................................................... 6
4.7 Amendment and Termination of the Plan........................................... 6
Section 5. TERMS AND CONDITIONS OF OPTIONS.......................................................... 6
5.1 Grants of Options Under the Plan................................................ 6
5.2 Option Agreements and Terms..................................................... 6
5.2.1 Number of Shares and Types of Options.................................. 7
5.2.2 Option Price........................................................... 7
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5.3 Exercise........................................................................ 7
5.3.1 Notice................................................................. 7
5.3.2 Deferral of Exercise................................................... 7
5.3.3 Medium of Payment...................................................... 8
5.4 Termination of Options.......................................................... 8
5.4.1 Events of Termination.................................................. 8
5.4.2 Extension of Term...................................................... 9
5.4.3 Exercise after Termination............................................. 10
5.5 Limitation on ISO Grants........................................................ 10
5.6 Other Provisions................................................................ 10
Section 6. CHANGE OF CONTROL........................................................................ 10
6.1 Effect of a Change of Control................................................... 10
6.2 Events Causing a Change of Control.............................................. 10
6.3 Discretion of Board............................................................. 11
Section 7. ADJUSTMENTS UPON CERTAIN EVENTS.......................................................... 11
Section 8. TRANSFERS................................................................................ 11
Section 9. NO COMMITMENT TO RETAIN.................................................................. 12
Section 10. RIGHTS AS A SHAREHOLDER.................................................................. 12
Section 11. WITHHOLDING OF TAXES..................................................................... 12
Section 12. NOTICES.................................................................................. 12
Section 13. APPLICABLE LAW........................................................................... 12
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CELERIS CORPORATION
2000 STOCK OPTION PLAN
1. PURPOSE. The purpose of the CELERIS CORPORATION 2000 STOCK OPTION PLAN
(the "Plan") is to recognize the contributions made to CELERIS CORPORATION by
certain selected Employees of the Company or an Affiliate in connection with
their employment with the Company or as Affiliate, to provide such Employees
with additional incentive to devote themselves to the future success of the
Company or an Affiliate, and to improve the ability of the Company or an
Affiliate to attract, retain, and motivate individuals upon whom the Company's
sustained growth and financial success depend. Through the Plan, the Company
will provide such persons with an opportunity to acquire or increase their
proprietary interest in the Company and to align their interest with the
interests of shareholders through the granting of Incentive Stock Options and
Non-Qualified Options to acquire the Company's Common Stock.
2. DEFINITIONS. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:
2.1 "Affiliate" means a corporation which is a parent corporation or
a subsidiary corporation with respect to the Company within the meaning of
Section 424(e) or (f) of the Code.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Change of Control" shall have the meaning as set forth in
Section 6.2 of the Plan.
2.4 "Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute.
2.5 "Committee" means the committee or committees established by the
Board pursuant to Section 4.1 of the Plan to which it delegates administration
of the Plan or, if at any time no such committee is so established and then
administering the Plan, the Board.
2.6 "Common Stock" means the common stock, 0.01 par value, of the
Company.
2.7 "Company" means CELERIS CORPORATION, a Minnesota corporation.
2.8 "Company Voting Stock" means Company's stock entitled to vote in
the election of directors.
2.9 "Continuing Directors" means the members of the Board on the date
of adoption of this Plan, provided that any person becoming a member of
the Board subsequent to such
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date whose election or nomination for election was supported by two-thirds of
the members of the board who then comprised the Continuing Directors shall be
considered to be a Continuing Director.
2.10 "Disability" means a permanent and total disability causing an
Employee to be unable to engage in substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period not less than 12 months. The definition of "Disability" for purposes of
the Plan is intended to be identical to the definition of "permanent and total
disability" found in section 22(e)(3) of the Code. For purposes of the Plan, the
definition of "Disability" shall incorporate any amendments to section 22(e)(3)
of the Code and the issuance of any Regulations thereunder further defining
"permanent and total disability."
2.11 "Domestic Relations Order" shall have the same meaning as set
forth in section 414(p) of the Code.
2.12 "Employee" means, (i) with respect to an ISO, any person who, at
the time an ISO is granted to such person hereunder, is an employee, as such
term is used in section 422 of the Code and described in Regulations section
1.421-7(h)(1), of the Company or an Affiliate and (ii) with respect to a NQO,
any person employed by or performing services for, whether as an employee or
otherwise, the Company or an Affiliate including, without limitation, directors,
officers, consultants or advisors of the Company or an Affiliate.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations issued pursuant
to that statute or any successor statute.
2.14 "Fair Market Value" means, with respect to the right to purchase
a Share pursuant to an ISO, (i) the last reported sale price for a share of
Common Stock on the date the ISO is granted, if the Common Stock is traded in a
public market and is listed on a national securities exchange or is included in
the NASDAQ System, or (ii) the mean between the last reported "bid" and "asked"
prices for shares of Common Stock on the date the ISO is granted, as reported on
NASDAQ if the Common Stock is traded in a public market but is not listed on a
national securities exchange or included in the NASDAQ System, or (iii) if
transactions in shares of Common Stock are not so reported, the determination of
Fair Market Value on the date the ISO is granted shall be by reference to the
reporting of such transactions by the National Daily Quotation Bureau, Inc. or
as reported in any other customary financial reporting service, as may be
applicable and as the Committee determines to be appropriate, or (iv) if the
Common Stock is not traded in a public market, or if trading of the Common Stock
in a public market is not, as determined in the discretion of the Committee,
indicative of fair market value of a Share as would be required to be determined
for purposes of section 422 of the Code, or as may be required to be determined
for any other plan purposes, then Fair Market Value shall be such value as is
determined at the discretion of the Committee, such discretion to be exercised
in good faith, to be representative of the fair market value of a Share in
accordance with sections 422(b)(4) and 422(c)(7) of the Code. With respect to
the right
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to purchase a Share pursuant to a NQO, "Fair Market Value" shall be
determined by the Committee in its discretion.
2.15 "Forfeiture Event" means a finding by the Committee, after full
consideration of the facts presented on behalf of both the Company and the
Employee, that the Employee has been engaged in disloyalty to the Company or an
Affiliate, including, without limitation, fraud, embezzlement, theft, commission
of a felony or proven dishonesty in the course of his or her employment or
service, or has disclosed trade secrets or confidential information of the
Company or an Affiliate.
2.16 "Immediate Family Members" means an Employee's spouse, parents,
issue (including adopted or "step" issue), siblings and issue of siblings.
2.17 "Incentive Stock Option" or "ISO" means an option to purchase
Common Stock granted to an Employee under the Plan which constitutes an
"incentive stock option" within the meaning of section 422(b) of the Code.
2.18 "Non-Employee Director" means a member of the Board who is a
"non-employee director" as that term is defined in paragraph (b)(3) of Rule
16b-3 and who is an "outside director" as that term is defined in Regulations
section 1.162-27(e)(3).
2.19 "Non-Qualified Option" or "NQO"means an option to purchase Common
Stock granted to an Employee under the Plan which is described in Regulations
section 1.83-7 and which is not intended to qualify, or otherwise does not
qualify, as an ISO under section 422 of the Code.
2.20 "Option" means either an ISO or a NQO granted under the Plan.
2.21 "Optionee" means a person to whom an Option has been granted
under the Plan, which Option has not been exercised and has not expired or
terminated.
2.22 "Option Agreement" means the agreement between the Company and
the Employee with respect to an Option granted pursuant to the Plan.
2.23 "Option Price" means the price at which Shares may be purchased
upon exercise of an Option, as calculated pursuant to Section 5.2.2 of the Plan.
2.24 "Person" shall have the same meaning as such term is used in
Sections 13(d) and 14(d) of the Exchange Act; provided, however, that the term
Person shall not include (a) the Company, (b) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, (c) any
corporation or other entity owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their ownership of the
Company immediately prior
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to such entity's acquisition of Company Voting Stock, (d) any shareholder of the
Company who, as of the date of the adoption of the Plan, owned 50% or more of
the Company's Voting Stock, (e) any Affiliate of such shareholder, or (f) any
other entity that would be an Affiliate of such shareholder if such entity were
a corporation.
2.25 "Prior Shareholders" means the shareholders of the Company
immediately prior to a merger, consolidation, other form of business combination
of the Company or a sale of all or substantially all of the assets of the
Company.
2.26 "Regulations" means the Income Tax Regulations, including
Temporary Regulations promulgated under the Code, as such Regulations may be
amended from time to time (including corresponding provisions of succeeding
Regulations).
2.27 "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act.
2.28 "Section 16 Officers" means any person who is an "officer" within
the meaning of Rule 16a-1(f) promulgated under the Exchange Act and who is
subject to the reporting requirements under Section 16 of the Exchange Act with
respect to Common Stock.
2.29 "Securities Act" means the Securities Act of 1933, as amended, or
any successor statute, and the rules and regulations issued pursuant to that
statute or any successor statute.
2.30 "Share" or "Shares" means the shares of Common Stock of the
Company which are the subject of Options under the Plan.
3. General Rules.
3.1 Eligibility. All Employees shall be eligible to receive Options
hereunder; provided, however, only an Employee, as such term is defined in
Section 2.12 may be eligible to receive an ISO. The Committee shall have the
sole authority to select Employees to whom Options will be granted, to determine
whether an Employee will be granted ISOs or NQOs or a combination of ISOs or
NQOs and to determine the number of Shares to which each Option relates.
Consultants and advisors shall be eligible only if they render bona fide
services to the Company unrelated to the offer or sale of securities.
3.2 Shares Subject to Plan. The aggregate maximum number of Shares
for which Options may be granted pursuant to the Plan is 300,000, subject to
adjustment in accordance with Section 7. The Shares shall be issued from
authorized and unissued Common Stock or Common Stock held in or hereafter
acquired for the treasury of the Company. If an Option terminates or expires
without having been fully exercised for any reason, the Shares for which the
Option was not exercised shall again be available for issuance pursuant to the
Plan.
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3.3 Term of the Plan. The Plan is effective as of the date on which
it is approved by the Board. Any ISO granted under the Plan will not be
exercisable or effective unless the Plan is approved by the shareholders of the
Company (i) within twelve (12) months of its adoption by the Board and (ii)
consistent with the requirements for shareholder approval of matters requiring
shareholder approval under applicable law. The Plan shall continue in effect
until such time as it is terminated by the Board or until no more Shares are
available under the Plan; provided, however, that no ISO may be granted under
the Plan after the earlier of ten years from the date the Plan is adopted by the
Board or ten years from the date the Plan is approved by the Shareholders as
provided in this Section 3.3.
4. Administration of the Plan.
4.1 Creation of Committee to Administer the Plan. The Board shall
administer the Plan except to the extent it, in its sole discretion, designates
a Committee or Committees composed of two or more of directors or other persons
to operate and administer all or any portion of the Plan. In the event the
Company is or becomes a publicly traded corporation or is otherwise subject to
Section 16 of the Exchange Act, the Board may designate a Committee consisting
exclusively of two or more Non-Employee Directors that is empowered to
administer the Plan with respect to those Employees who are Section 16 Officers
or to those persons whose compensation may be subject to limits on deductibility
under section 162(m) of the Code.
4.2 Committee Meetings and Actions. The Committee shall hold meetings
at such times and places as it may determine and shall keep minutes of its
meetings. The Committee may take action only upon the agreement of a majority of
the whole Committee. Any action which the Committee shall take through a written
instrument signed by a majority of its members shall be as effective as though
it had been taken at a meeting duly called and held.
4.3 Committee Exculpation. No member of the Committee shall be
personally liable for monetary damages for any action taken or any failure to
take any action in connection with the administration of the Plan, unless (i)
the member has breached or failed to perform the duties of such member's office
under applicable provisions of state law, and (ii) the breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness; provided,
however, that the provisions of this Section 4.3 shall not apply to the
responsibility or liability of a member pursuant to any criminal statute or to
the liability of a member for the payment of taxes pursuant to local, state or
federal law.
4.4 Committee Indemnification. Service on the Committee shall
constitute service as a member of the Board. Each member of the Committee shall
be entitled, without further action on the member's part, to indemnity from the
Company and limitation of liability to the fullest extent provided by applicable
law and by the Company's Articles of Incorporation and/or Bylaws in connection
with or arising out of any action, suit or proceeding with respect to the
administration of the Plan in which the member may be involved by reason of the
member being or having been a
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member of the Committee, whether or not the member continues to be such member
of the Committee at the time of the action, suit or proceeding.
4.5 Authority of Committee. In addition to the other powers granted to
the Committee in the Plan, the Committee shall have the power and authority to
(i) interpret the Plan, (ii) adopt, amend and revoke rules and regulations for
its administration that are not inconsistent with the express terms of the Plan,
(iii) subject to the terms of the Plan, determine the terms and conditions
related to any Option and any Option Agreement, (iv) place restrictions on any
Shares issued under the Plan, and (v) waive requirements relating to formalities
or other matters that do not either modify the substance of the rights intended
to be granted by the applicable Option or, with respect to an ISO, constitute a
modification, extension, or renewal under section 424(d) of the Code unless such
waiver is consented to by the Optionee. Any such actions by the Committee shall
be final, binding and conclusive on all parties in interest.
4.6 Amendment of Agreements. Subject to the specific provisions of the
Plan, the Committee shall have the right to amend any Option Agreement issued to
an Employee under the Plan, subject to the Employee's consent if such amendment
is not favorable to the Employee or if such amendment has the effect of changing
an ISO to a NQO.
4.7 Amendment and Termination of the Plan. The Board, without further
action on the part of the shareholders of the Company, may amend the Plan from
time to time in such manner as it may deem advisable or, at any time it may deem
advisable, suspend or terminate the Plan. Nevertheless, the Board may not change
the class of Employees eligible to receive an ISO or increase the maximum number
of Shares as to which Options may be granted under the Plan without obtaining
approval, within twelve months before or after such action, by the shareholders
of the Company in the manner required by state law. No amendment to the Plan may
adversely affect any outstanding Option, however, without the consent of the
Employee to which such Option relates.
5. Terms and Conditions of Options. The following rules shall apply with
respect to all Options issued hereunder:
5.1 Grants of Options Under the Plan. Grants of Options under the
Plan, in the discretion of the Committee, may be in the form of NQOs, ISOs or
any combination thereof. If any Option designated as an ISO is determined for
any reason not to qualify as an Incentive Stock Option within the meaning of
section 422 of the Code, such Option shall be treated as a NQO for all purposes
under the provisions of the Plan.
5.2 Option Agreements and Terms. Options granted pursuant to the Plan
shall be evidenced by Option Agreements in such form as the Committee shall
approve from time to time. Such Option Agreements shall comply with and be
subject to the terms and conditions set forth in this Section 5.2 and such other
terms and conditions as the Committee shall require from time to time which are
not inconsistent with the terms of the Plan.
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5.2.1 Number of Shares and Types of Options. Each Option
Agreement shall state the number of Shares to which it pertains. An Optionee may
receive more than one Option. The Option Agreement shall state specifically
whether each Option is intended to be an ISO or a NQO.
5.2.2 Option Price. Each Option Agreement shall state the Option
Price which, for a NQO, need not be the Fair Market Value of the Shares on the
date the Option is granted and, for an ISO, shall be at least 100% of the Fair
Market Value of the Shares on the date the Option is granted; provided, however,
that if an ISO is granted to an Optionee who then owns, directly or by
attribution under section 424(d) of the Code, more than ten percent of the total
combined voting power of all classes of stock of the Company or an Affiliate,
then the Option Price shall be at least 110% of the Fair Market Value of the
Shares, determined as of the date the Option is granted.
5.3 Exercise. No Option may be exercised except as provided in this
Section 5.3.
5.3.1 Notice. No Option shall be deemed to have been exercised
prior to the receipt by the Company of written notice of such exercise and,
unless arrangements satisfactory to the Company have been made for payment
through a broker in accordance with procedures permitted by rules or regulations
of the Federal Reserve Board, receipt of payment in full of the Option Price for
the Shares to be purchased. Each such notice shall specify the number of Shares
to be purchased and, unless the Shares are covered by a then current
registration statement or a notification under Regulation A under the Securities
Act, shall contain the Optionee's acknowledgment, in form and substance
satisfactory to the Company, that (i) such Shares are being purchased for
investment and not for distribution or resale (other than a distribution or
resale which, in the opinion of counsel satisfactory to the Company, may be made
without violating the registration provisions of the Securities Act), (ii) the
Optionee has been advised and understands that (a) the Shares have not been
registered under the Securities Act and are "restricted securities" within the
meaning of Rule 144 under the Securities Act and are subject to restrictions on
transfer, and (b) the Company is under no obligation to register the Shares
under the Securities Act or to take any action which would make available to the
Optionee any exemption from such registration, (iii) such Shares may not be
transferred without compliance with all applicable federal and state securities
laws, and (iv) an appropriate legend referring to the foregoing restrictions on
transfer and any other restrictions imposed under the applicable Option
Agreement may be endorsed on the certificates.
5.3.2 Deferral of Exercise. Notwithstanding the foregoing, if the
Company determines that issuance of Shares should be delayed pending (i)
registration under federal or state securities laws, (ii) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available, (iii) the listing or inclusion of the
Shares on any securities exchange or an automated quotation system, or (iv) the
consent or approval of any governmental regulatory body whose consent or
approval is necessary in connection with the issuance of such Shares, the
Company may defer exercise of any Option granted hereunder until any of the
events described in this sentence has occurred. Notwithstanding anything herein
to the
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contrary, the Company shall be under no obligation to issue any Shares to the
extent the Committee determines that such issuance of Shares would be in
violation of any applicable state or federal law.
5.3.3 Medium of Payment.
5.3.3.1 PAYMENT IN GENERAL. Subject to the terms of the
applicable Option Agreement, an Optionee shall pay for Shares (i) in cash, (ii)
by certified or cashier's check payable to the order of the Company, or (iii) by
such other mode of payment as the Committee may approve, including payment
through a broker in accordance with procedures permitted by rules or regulations
of the Federal Reserve Board.
5.3.3.2 PAYMENT WITH COMMON STOCK. The Committee may provide
in an Option Agreement that payment may be made in whole or in part in shares of
the Company's Common Stock held by the Optionee. In such case, the Optionee
shall deliver to the Company certificates registered in the name of such
Optionee representing the shares owned by such Optionee, free of all liens,
claims and encumbrances of every kind and having an aggregate Fair Market Value
on the date of delivery that is at least as great as the Option Price of the
Shares (or relevant portion thereof) with respect to which such Option is to be
exercised by the payment in shares of Common Stock, endorsed in blank or
accompanied by stock powers duly endorsed in blank by the Optionee. In the event
that certificates for shares of the Company's Common Stock delivered to the
Company represent a number of shares in excess of the number of shares required
to make payment for the Option Price of the Shares (or relevant portion thereof)
with respect to which such Option is to be exercised by payment in shares of
Common Stock, the stock certificate or certificates issued to the Optionee shall
represent the Shares in respect of which payment is made, and such excess number
of shares. Notwithstanding the foregoing, the Committee may from time to time
impose such limitations and prohibitions on the use of shares of the Common
Stock to exercise an Option as it deems appropriate.
5.4 Termination of Options.
5.4.1 Events of Termination. No Option shall be exercisable after
the first to occur of the following:
5.4.1.1 EXPIRATION OF OPTION TERM. Expiration of the Option
term specified in the Option Agreement, which, in the case of an ISO, shall not
extend beyond the period ending on the day prior to the tenth anniversary of the
date of grant of the ISO and which shall not extend beyond the period ending on
the day prior to the fifth anniversary of the date of grant of the ISO in the
case of any ISO granted to an Optionee who, as of the date of grant, owns,
directly or by attribution under section 424(d) of the Code, more than ten
percent of the total combined voting power of all classes of stock of the
Company or of an Affiliate.
5.4.1.2 OCCURRENCE OF FORFEITURE EVENT. Except to the extent
otherwise provided in the Option Agreement, upon the occurrence of a Forfeiture
Event. In such
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event, in addition to immediate termination of the Option, the Optionee shall
automatically forfeit all Shares for which the Company has not yet delivered the
Share certificates upon refund by the Company of the Option Price, and,
notwithstanding anything herein to the contrary, the Company may withhold
delivery of Share certificates for any Shares otherwise transferable following
exercise of an Option, pending the resolution of any inquiry that could lead to
a finding that a Forfeiture Event has occurred.
5.4.1.3 ACCELERATED EXPIRATION. The date, if any, set by the
Committee as an accelerated expiration date in the event of the liquidation or
dissolution of the Company; or the occurrence of such other event or events as
may be set forth in this Plan or in the applicable Option Agreement as causing
an accelerated expiration of the Option.
5.4.1.4 TERMINATION OF EMPLOYMENT. Except as otherwise set
forth in the Option Agreement, the three month or one year anniversary, as
applicable, of the date the Optionee's employment or service with the Company or
an Affiliate terminates for any reason. If the Optionee's employment or service
with the Company or an Affiliate terminates for any reason other than Disability
or death, the applicable anniversary for these purposes is the three month
anniversary, and if the Optionee's employment or service with the Company or an
Affiliate terminates by reason of the Optionee's Disability or death, the
applicable anniversary is the one year anniversary. During the period following
the termination of the Optionee's employment or service with the Company or its
Affiliates, the Optionee may only, unless otherwise specifically provided by the
Committee in the applicable Option Agreement, exercise his or her Options to the
extent such Options were exercisable immediately prior to the Optionee's
termination of employment or service (and may not exercise any Options with
respect to Shares for which the Options would have become exercisable if the
Optionee were still employed or rendering service prior to the termination of
the applicable three-month or one-year period). Further, no Option shall be
exercisable by reason of the three-month or one-year period of exercise
following a termination of employment or service on any date after the
expiration of the Option term specified in the Option Agreement.
5.4.2 Extension of Term. Notwithstanding any of the foregoing
provisions, to the extent that the terms of an executive severance agreement or
other agreement between the Company and an Optionee, approved by the Committee,
whether entered into prior to or after the grant of an Option, and any other
action taken by the Committee, at its discretion, which provide for Option
exercise dates later than those set forth in Section 5.4.1, such provisions
shall be deemed to be Option terms approved by the Committee and consented to by
the Optionee, and shall, for purposes of the Plan, have the same effect as if
such provisions had been included in the Option Agreement as granted to the
Optionee; provided, however, that any modification to the terms of an Option
that would, but for such modification, have qualified as an ISO, shall only be
effective upon the consent of the Optionee to such modification. Notwithstanding
the forgoing, no term pertaining to an ISO may be extended beyond the term set
forth for ISOs in Section 5.4.1.1.
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5.4.3 Exercise after Termination. In the event an Option which is
denominated as an ISO is exercised by the Optionee at any time after the
expiration of the time periods described 5.4.1.4, such Option shall be treated
for all Plan purposes as a NQO.
5.5 Limitation on ISO Grants. To the extent that the aggregate Fair
Market Value of the shares of Common Stock (determined at the time an ISO is
granted) with respect to which ISOs under all incentive stock option plans of
the Company or its Affiliates are exercisable for the first time by the Optionee
during any calendar year exceeds $100,000, such ISOs shall, to the extent of
such excess, be treated as NQOs.
5.6 Other Provisions. Subject to the provisions of the Plan, the
Option Agreements may contain such other provisions as the Committee deems
appropriate or advisable, at its discretion, including, without limitation,
provisions regarding the timing or the events upon which the Option may become
exercisable in whole or in part, additional restrictions on the exercisability
of the Option, and provisions authorizing the Committee to accelerate the
exercisability of all or any portion of the Option.
6. Change of Control.
6.1 Effect of a Change of Control. In the event of a Change of
Control, the Committee may take whatever actions it deems necessary or desirable
with respect to any outstanding Option not yet fully vested, all of which need
not be treated identically, including, without limitation, accelerating (a) the
expiration or termination date in the Option Agreement to a date no earlier than
thirty (30) days after notice of such acceleration is given to the Employee, or
(b) the exercisability of any Option.
6.2 Events Causing a Change of Control. A "Change of Control" shall
be deemed to have occurred upon the earliest to occur of any of the following
events, each of which shall be determined independently of the others:
6.2.1 Any Person becomes a "beneficial owner," as such term is
used in Rule 13d-3 promulgated under the Exchange Act, of 50% or more (as
determined by the Committee) of Company Voting Stock.
6.2.2 Individuals who are Continuing Directors cease to
constitute a majority of the members of the Board.
6.2.3 Shareholders of the Company adopt a plan of complete or
substantial liquidation or an agreement providing for the distribution of all or
substantially all of its assets.
6.2.4 The Company is party to a merger, consolidation, other form
of business combination or a sale of all or substantially all of its assets,
unless the business of the Company is continued following any such transaction
by a resulting entity (which may be, but need
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39
not be, the Company) and the Prior Shareholders hold, directly or indirectly, at
least two-thirds of the voting power of the resulting entity (there being
excluded from the voting power held by the Prior Shareholders, but not from the
total voting power of the resulting entity, any voting power received by
Affiliates of a party to the transaction (other than the Company) in their
capacities as shareholders of the Company); provided, however, that a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person acquires more than ten percent of the
combined voting power of the Company's Voting Stock shall not constitute a
Change in Control.
6.2.5 There is a "change of control" of the Company of a nature
that would be required to be reported in response to item 1(a) of Current Report
on Form 8-K or item 6(e) of Schedule 14A of Regulation 14A or any similar item,
schedule or form under the Exchange Act, as in effect at the time of the change,
whether or not the Company is then subject to such reporting requirement.
6.2.6 The Company is a subject of a "Rule 13e-3 transaction" as
that term is defined in Exchange Act Rule 13e-3.
6.2.7 There has occurred a "change of control," as such term (or
any term of like import) is defined in any of the following documents which is
in effect with respect to the Company at the time in question: any note,
evidence of indebtedness or agreement to lend funds to the Company, any option,
incentive or employee benefit plan of the Company or any employment, severance,
termination or similar agreement with any person who is then an employee of the
Company.
6.3 Discretion of Board. Notwithstanding the foregoing, no Change of
Control shall be deemed to have occurred if the Board of Directors determines,
prior to the occurrence of an event described in Section 6.2.2 above, that an
event that otherwise comes within the definition of a Change of Control under
any provision of Section 6 other than Section 6.2.2 is not appropriately treated
for purposes of the Plan as constituting a Change of Control.
7. Adjustments Upon Certain Events. In the event of a stock split or
stock dividend of or with respect to Common Stock, the number of Shares subject
to outstanding Options, the Option Prices, and the aggregate number of Shares
which may be subject to Options shall be automatically adjusted proportionately
to reflect such stock split or dividend. The number of Shares subject to
outstanding Options, the Option Prices, and the aggregate number of Shares which
may be subject to Options shall be subject to such adjustment, if any, as the
Committee, in its sole discretion, deems appropriate to reflect such events as
the adoption of stock rights plans, recapitalizations, mergers, consolidations,
or reorganizations of or by the Company and the like.
8. Transfers. Except as otherwise provided in this Section 8, no Option
granted under the Plan may be transferred, except by will or by the laws of
descent and distribution, and, during the lifetime of the person to whom an
Option is granted, such Option may be exercised only by the
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Optionee. Notwithstanding the foregoing, the Committee may provide in an Option
Agreement that any Option that is not an ISO shall be transferrable (i) pursuant
to a Domestic Relations Order and/or (ii) to (a) Immediate Family Members of the
Optionee, (b) trusts for the sole benefit of such Immediate Family Members, (c)
partnerships whose only partners are such Immediate Family Members, and (d) any
transferee permitted by a rule adopted by the Committee or approved by the
Committee in an individual case; provided, in any case, the Optionee receives no
consideration for such transfer. Any transferee will be subject to all of the
conditions set forth in the Plan and the Option Agreement prior to its transfer.
9. No Commitment to Retain. The grant of an Option pursuant to the Plan
shall not be construed to imply or to constitute evidence of any agreement,
express or implied, on the part of the Company or any Affiliate to retain the
Optionee as an employee, director, consultant or advisor of the Company or any
Affiliate or in any other capacity.
10. Rights as a Shareholder. No Optionee hereunder shall have any right as
a shareholder of the Company unless and until certificates of shares of Common
Stock are issued to such Optionee.
11. Withholding of Taxes. In connection with any event relating to an
Option as may be granted pursuant to the Plan, the Company shall have the
absolute right to require the Employee to remit or otherwise make available to
the Company an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements prior to the delivery or transfer of any
certificates for such Shares and to take whatever other action the Company deems
necessary, in its discretion, to protect its interests with respect to tax
liabilities, including, without limitation, withholding any Shares, funds or
other property otherwise due to the Employee. The Company's obligations under
the Plan shall be conditioned on the Employee's compliance, to the Company's
satisfaction, with any withholding requirement.
12. Notices. Every direction, revocation or notice authorized or required
by the Plan shall be deemed delivered to the Company (i) on the date it is
personally delivered to the secretary of the Company at its principal executive
offices or (ii) three business days after it is sent by registered or certified
mail, postage prepaid, addressed to the secretary at such offices, and shall be
deemed delivered to an Employee (i) on the date it is personally delivered to
him or her or (ii) three business days after it is sent by registered or
certified mail, postage prepaid, addressed to the Employee at the last address
shown for the Employee on the records of the Company.
13. Applicable Law. All questions pertaining to the validity, construction
and administration of the Plan and Options granted hereunder shall be determined
in conformity with the laws of the state of Tennessee (but, with respect to
ISOs, Tennessee law shall apply only to the extent not inconsistent with Section
422 of the Code and regulations thereunder).
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APPENDIX B
ANNUAL MEETING OF STOCKHOLDERS, APRIL 27, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Barbara A. Cannon and Paul R. Johnson, or
either of them, as proxies, with power of substitution, to vote all shares of
the undersigned at the Annual Meeting of the Stockholders of Celeris
Corporation, to be held on April 27, 2000, at 1:00 p.m. Central Daylight Time,
at Loews Vanderbilt Plaza, 2100 West End Avenue, Nashville, Tennessee 37203 and
at any adjournments or postponements thereof, in accordance with the following
instructions:
(1) ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked [ ] WITHHOLD AUTHORITY to vote for all nominees listed
to the contrary below) below
(INSTRUCTION: To withhold authority to vote for any individual nominee check the box to vote "FOR" all nominees and
strike a line through the nominee's name in the list below.)
Barbara A. Cannon, W. Hudson Connery, Jr., Richard B. Fontaine,
Peter T. Garahan, John M. Nehra, Andre G. Pernet, Ph.D.
(2) APPROVE THE FIFTH AMENDMENT TO THE CELERIS CORPORATION STOCK OPTION PLAN OF 1993 TO INCREASE THE NUMBER OF SHARES
AVAILABLE FROM 875,555 TO 1,005,555.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) APPROVE THE ADOPTION OF THE CELERIS CORPORATION 2000 STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion, on such other matters as may properly come before the meeting.
[ ] FOR DISCRETION [ ] AGAINST DISCRETION [ ] ABSTAIN
(Continued on reverse side)
(Continued from other side)
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, THE SHARES WILL BE VOTED FOR THE NOMINEES IN THE ELECTION OF DIRECTORS,
FOR THE AMENDMENT TO THE CELERIS CORPORATION STOCK OPTION PLAN OF 1993, FOR THE
ADOPTION OF THE CELERIS CORPORATION 2000 STOCK OPTION PLAN AND, IN THE
DISCRETION OF THE PROXIES, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
PLEASE SIGN AND DATE BELOW AND RETURN PROMPTLY.
Dated: , 2000
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Dated: , 2000
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Signatures of stockholder(s)
should correspond exactly with
the name printed hereon. Joint
owners should each sign
personally. Executors,
administrators, trustees,
etc., should give full title
and authority.
CELERIS CORPORATION
1801 WEST END AVENUE, SUITE 750
NASHVILLE, TENNESSEE 37203