<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant /X/
Filed by a party other than the registrant/ /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CARING PRODUCTS INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No Fee Required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
-----------------------------------------------------------------------
(2) Form, Schedules or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing party:
-----------------------------------------------------------------------
(4) Date filed:
-----------------------------------------------------------------------
<PAGE>
CARING PRODUCTS INTERNATIONAL, INC.
200 FIRST AVENUE WEST
SUITE 200
SEATTLE, WASHINGTON 89119
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 28, 1998
------------------------
TO THE STOCKHOLDERS OF CARING PRODUCTS INTERNATIONAL, INC.
NOTICE is hereby given that the Annual Meeting (the "Meeting") of
Stockholders of CARING PRODUCTS INTERNATIONAL, INC. (the "Company"), a Delaware
corporation, will be held at the law offices of Ryan, Swanson & Cleveland,
P.L.L.C. located at 1201 Third Avenue, Suite 3400, Seattle, Washington
98101-3034 on September 28, 1998 at 8:30 A.M. (P.S.T.) for the following
purposes:
1. To elect six directors to serve until the 1999 Annual Meeting of
Stockholders.
2. To consider and vote upon a proposed amendment to the Company's
Certificate of Incorporation to decrease its authorized capital.
3. To ratify the selection of Grant Thorton LLP as the independent auditors
of the Company for the fiscal year ending March 31, 1999.
4. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
All of the above matters are more fully described in the accompanying Proxy
Statement.
The Board of Directors has fixed the close of business on Monday, August
24th, 1998 as the date for the determination of stockholders entitled to notice
of, and to vote at, the Meeting. A list of stockholders entitled to vote at the
Meeting will be open to examination by stockholders during ordinary business
hours for a period of ten (10) days prior to the Meeting at the executive
offices of the Company, 200 First Avenue West, Suite 200, Seattle, Washington
98119.
By order of the Board of Directors,
Steven A. Saide, Esq.
SECRETARY
Seattle, Washington
September 8, 1998
- --------------------------------------------------------------------------------
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE
MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
- --------------------------------------------------------------------------------
<PAGE>
CARING PRODUCTS INTERNATIONAL, INC.
200 FIRST AVENUE WEST
SUITE 200
SEATTLE, WASHINGTON 98119
------------------------
ANNUAL MEETING OF STOCKHOLDERS
---------------------
PROXY STATEMENT
APPROXIMATE DATE OF MAILING: SEPTEMBER 8, 1998
The enclosed Proxy is solicited on behalf of the Board of Directors (the
"Board" or the "Board of Directors") of Caring Products International, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held at the time
and place set forth in the foregoing notice and at any adjournment thereof (the
"Meeting"). Only stockholders of record (the "Stockholders") of the Company's
common stock, $.01 par value per share (the "Common Stock"), at the close of
business on August 24, 1998 are entitled to notice of, and to vote at, the
Meeting. Proxies in the accompanying form, which are properly executed and duly
returned to the Company and not revoked prior to exercise, will be voted in
accordance with the instructions contained therein. If a Proxy is executed and
returned without instructions as to how it is to be voted, such Proxy will be
voted in favor of all proposals contained in this Proxy Statement. Each Proxy
granted pursuant to this solicitation is revocable and may be revoked at any
time prior to its exercise provided written notice of revocation is received by
the Secretary of the Company prior to the Meeting. A Stockholder who attends the
Meeting in person may, if he or she wishes, vote by ballot at the Meeting,
thereby canceling any Proxy previously given by such Stockholder.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting, present in person or
represented by proxy, shall constitute a quorum at the Meeting. Any Stockholder
present in person or by proxy who abstains from voting on any particular matter
described herein will be counted for purposes of determining a quorum. For
purposes of voting on the matters described herein, (i) directors shall be
elected by a plurality of the voting power present in person or represented by
proxy at the Meeting and entitled to vote and (ii) the other matters shall be
determined by the affirmative vote of the majority of the voting power present
in person or represented by proxy at the Meeting and entitled to vote on the
matter. With respect to the election of directors, only shares that are voted in
favor of a particular nominee will be counted towards such nominee's achievement
of a plurality. Shares present at the Meeting that are not voted for a
particular nominee, shares present by proxy where the Stockholder properly
withholds authority to vote for such nominee and broker non-votes will not be
counted towards such nominee's achievement of a plurality. With respect to any
of the other matters to be voted upon, if the Stockholder abstains from voting
or directs his or her proxy to abstain from voting, the shares are considered
present at the Meeting for such matter but, since they are not affirmative votes
for the matter, they will have the same effect as votes against the matter. With
respect to broker non-votes on any such matter, the shares are not considered
present at the Meeting for such matter and they are, therefore, not counted in
respect of such matter. Provided that a quorum is otherwise present, such broker
non-votes do have the practical effect of reducing the number of affirmative
votes required to achieve a majority for such matter by reducing the total
number of shares from which the majority is calculated.
1
<PAGE>
PRINCIPAL STOCKHOLDERS
The outstanding voting stock of the Company as of August 1, 1998 consisted
of 2,781,343 shares of Common Stock, with each share entitled to one vote.
Beneficial ownership has been determined for purposes herein in accordance with
Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), under which a person is deemed to be the beneficial owner of securities
if such person has or shares voting power or investment power in respect of such
securities or has the right to acquire beneficial ownership within 60 days. So
far as is known to the Company, the following was the only beneficial owner of
more than 5% of the outstanding Common Stock of the Company on such date:
<TABLE>
<CAPTION>
AMOUNT OF SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
- ------------------------------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Wayne M. Hamersly ................................................................... 175,000 6.3%
811 Southwest Front Avenue
Suite 200
Portland, Oregon 97204
</TABLE>
EXECUTIVE OFFICERS
The executive officers of the Company are identified in the table below.
Each executive officer of the Company serves at the pleasure of the Board of
Directors.
<TABLE>
<CAPTION>
YEAR BECAME
AN EXECUTIVE
NAME AGE OFFICER POSITIONS
- --------------------------------------- --- ------------- ------------------------------------------------------
<S> <C> <C> <C>
William H.W. Atkinson.................. 55 1992 Chairman of the Board and Chief Executive Officer
Susan A. Schreter...................... 37 1992 President and Director
Priscilla A. Cain...................... 40 1996 Chief Operating Officer
Sandra L. Sternoff..................... 40 1997 Chief Financial Officer
Paul Stanton........................... 60 1996 Vice Chairman of the Board
</TABLE>
ELECTION OF DIRECTORS
At the Meeting, six directors are to be elected until their successors are
elected and qualified. The Board of Directors has designated William H.W.
Atkinson, Susan A. Schreter, Anthony A. Cetrone, Michael M. Fleming, Paul
Stanton and Dr. Herbert Sohn as nominees. Proxies received from Stockholders
will be voted, unless authority to so vote is withheld, for the election of the
nominees identified in the following table. Authority to vote for any or all of
the nominees may be withheld in the manner indicated on the enclosed Proxy. If
for any reason any of the nominees becomes unavailable for election, the Proxies
solicited will be voted for such other nominees as are selected by the Board of
Directors. The Board of Directors has no reason to believe that any of the
nominees will not be available or will not serve if elected. Set forth in the
following table is certain information with respect to each nominee nominated to
serve as a Director. Each nominee described is presently a director of the
Company. Each nominee for director at the Meeting was previously elected to the
Board by the Stockholders of the Company.
2
<PAGE>
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
YEAR FIRST BECAME A
NAME AGE DIRECTOR
- ---------------------------------------------------------------------------------------- --- ---------------------
<S> <C> <C>
William H.W. Atkinson................................................................... 55 1992
Susan A. Schreter....................................................................... 37 1992
Anthony A. Cetrone...................................................................... 69 1993
Michael M. Fleming...................................................................... 49 1992
Paul Stanton............................................................................ 60 1996
Dr. Herbert Sohn........................................................................ 70 1997
</TABLE>
The Board of Directors recommends a vote FOR each of the nominees for
election as directors.
BIOGRAPHICAL INFORMATION
Certain information about the executive officers and directors of the
Company is set forth below. This information has been furnished to the Company
by the individuals named.
WILLIAM H.W. ATKINSON co-founded the Company in November 1992 and has been
Chairman of the Board since inception. He became the Company's Chief Executive
Officer in May 1994. Since January 1994, Mr. Atkinson also has served as the
Chairman of the Board of Caring Products Industries, Ltd., Burnaby, British
Columbia, a subsidiary of the Company that engaged in healthcare product
manufacturing and distribution. From September 1987 through April 1994, Mr.
Atkinson was Vice Chairman and a Trustee of Mercer International, Vancouver,
British Columbia, a Nasdaq-traded company with interests in the financial
services, natural resources and pulp and paper businesses in Europe.
SUSAN A. SCHRETER co-founded the Company in November 1992 and has served as
President and a director since inception. From July 1985 to December 1992, she
was founder and President of Beta International, Inc., New York, New York, a
firm providing consulting services to growing companies, private business
investors and buy-out funds in the areas of acquisition due diligence, cash flow
planning, strategic business planning and capital investment. From February 1992
to January 1995, Ms. Schreter served as a director of Omnicorp Limited, a
provider of environmental services.
PRISCILLA A. CAIN has been the Vice President of Operations since August
1996 and was promoted to Chief Operating Officer on June 22, 1998. She was the
director of Cain Consulting from February 1998 through July 1998, providing
information systems and manufacturing expertise to emerging growth companies.
From August 1988 through July 1996, she served as the Corporate Manager of
Information Systems for Derby Cycle Corporation, a producer of private label and
name-brand pleasure and racing bicycles.
SANDRA L. STERNOFF joined the Company as Chief Financial Officer on October
1, 1997. From October 1994 to September 1997, she served as Vice President of
Finance for John F. Throne & Co., a firm providing insurance brokerage services
to the aviation and transportation industries. From October 1993 to September
1994, she was Controller for Jones/Rodolfo Corporation, a designer and
manufacturer of men's and women's golf and casual apparel. From September 1990
through September 1993, Ms. Sternoff was managing partner of Sternoff
Development Company, a real estate development and management company.
ANTHONY A. CETRONE, a director of the Company since September 1993, has been
President and Chief Executive Officer of Micron Medical Products ("Micron
Medical"), Fitchburg, Massachusetts, a medical products company, since April
1988. Micron Medical has been a subsidiary of Arrhythmia Research Technology,
Inc., Austin, Texas, a company that manufactures cardiological medical products
("Arrhythmia Research") since November 1992. Since October 1991, he has also
served as the chairman of
3
<PAGE>
the Board of Micron Products, the parent of Micron Medical. From January 1993 to
February 1995, Mr. Cetrone also served as the President and Chief Executive
Officer of Arrhythmia Research and has served on its Board since November 1992.
MICHAEL M. FLEMING has been affiliated with the law firm of Ryan, Swanson &
Cleveland, Seattle, Washington, since November 1992, where he has specialized in
real estate, dispute resolution, securities and environmental matters. He was
associated with the firm on an "of counsel" basis from November 1992 until
January 1996, at which time, he became a partner in the firm. Since July 1988,
Mr. Fleming has also served as the President and owner of Kidcentre, Inc., a
provider of childcare services in Seattle, Washington. Since April 1985, he has
also been the President and owner of Fleming Investment Co., Seattle,
Washington, a private investment company. Mr. Fleming was elected to the
Company's Board of Directors in November 1992.
DR. HERBERT SOHN was elected to the Board of Directors in August 1997. Since
1989, Dr. Sohn has served as an attending urologist at the Louis A. Weiss
Memorial Hospital in Chicago. He has also served as a clinical associate
professor of surgery at the Abraham Lincoln School of Medicine at the University
of Illinois since 1973. A graduate of the Chicago Medical School, Dr. Sohn
completed residencies in urology and surgery at the University Hospitals of
Cleveland. He also received a Juris Doctorate degree from the John Marshall Law
School.
PAUL STANTON was elected to the Board of Directors in September 1996 and has
served as Vice Chairman of the Board since joining the board. He also has served
as a consultant to the Company since February 1996. Mr. Stanton has been
employed as President of Paul Stanton & Associates, which provides strategic
analysis and consulting services to product manufacturers and retail drug
chains, since January 1996. From February 1986 to December 1995, he was Vice
President of General Merchandise and Drug Store Merchandising of Pathmark, an
East Coast supermarket chain.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Executive Committee which is composed of William H.W.
Atkinson, Susan A. Schreter and Anthony A. Cetrone. The Executive Committee has
been delegated the authority to exercise all powers and authority of the Board
of Directors in the management of the business and affairs of the Company,
including the right to: (i) authorize the purchase of stock; (ii) adopt an
agreement of merger or consolidation; (iii) recommend to the stockholders the
sale, lease or exchange of all or substantially all of the Company's properties
or assets; (iv) recommend to the stockholders a dissolution of the Company or a
revocation of dissolution; (v) amend the by-laws; or (vi) authorize the
declaration of a dividend. The Executive Committee meets at such times, as it
deems appropriate.
In addition, the Company has an Audit Committee which is composed of William
H.W. Atkinson, Michael M. Fleming and Anthony Cetrone. The Audit Committee has
been established to review and monitor the general policies and practices of the
Company and its subsidiaries with regard to accounting, financial reporting,
internal auditing and financial controls and to serve as a channel of
communication between the Board of Directors and the Company's independent
certified accountants. At least a majority of the Audit Committee consists of
independent directors. The Audit Committee meets as such times, as it deems
appropriate.
The Company has a Compensation Committee (the "Committee" or the
"Compensation Committee") which currently consists of Anthony A. Cetrone and
Michael M. Fleming. The Compensation Committee has been established to review
and make recommendations to the Board regarding the compensation to be paid by
the Company and its subsidiaries to their executive officers, key employees and
consultants, including, without limitation, the grant of incentive awards under
the Company's incentive program. The Compensation Committee consists solely of
independent directors and meets as such times, as it deems appropriate.
4
<PAGE>
The Company does not have a nominating committee.
MEETINGS OF THE BOARD
During the fiscal year ended March 31, 1998 ("fiscal year 1998"), the Board
of Directors held one meeting and no committee meetings. In addition, during
fiscal year 1998, the Board of Directors acted four times by written consent of
its members. The Company's directors discharge their responsibilities throughout
the year, not only at Board of Directors' and committee meetings, but also
through personal meetings and other communications, including telephone contacts
with the Chairman and others.
EQUITY SECURITIES BENEFICIALLY OWNED BY THE DIRECTORS AND NAMED EXECUTIVE
OFFICERS
According to information furnished to the Company as of August 1, 1998, the
directors of the Company, the Company's "named executive officers" (the "Named
Executive Officers") within the meaning of Item 402(a)(3) of Regulation S-K of
the Securities Act of 1933, as amended (the "Act"), and all directors and
executive officers as a group, beneficially owned shares of Common Stock of the
Company as set forth below. Beneficial ownership has been determined for
purposes herein in accordance with Rule 13d-3 of the Exchange Act under which a
person is deemed to be the beneficial owner of securities if such person has or
shares voting power or investment power in respect of such securities or has the
right to acquire beneficial ownership within 60 days.
<TABLE>
<CAPTION>
AMOUNT OF SHARES PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
- ------------------------------------------------------------------------------------ ------------------ -----------
<S> <C> <C>
Susan A. Schreter (1) .............................................................. 126,095 4.5%
c/o Caring Products International, Inc.
200 First Avenue West, Suite 200
Seattle, WA 98119
William H.W. Atkinson (2) .......................................................... 126,142 4.5%
290 Montroyal
Vancouver, BC
Canada
Priscilla Cain (3).................................................................. 22,917 *
Anthony A. Cetrone (4).............................................................. 9,512 *
Michael M. Fleming (4).............................................................. 9,512 *
Paul Stanton (5).................................................................... 12,500 *
Dr. Herbert Sohn (6)................................................................ 2,083 *
All Executive Officers and Directors as a Group (7 persons) (7)..................... 308,761 11.1%
</TABLE>
- ------------------------
* Less than 1%
(1) Includes 87,200 shares issuable upon exercise of currently outstanding stock
options.
(2) Includes 88,242 shares issuable upon exercise of currently outstanding stock
options.
(3) Includes 22,917 shares issuable upon exercise of currently exercisable stock
options.
(4) Includes 9,417 shares issuable upon exercise of currently exercisable stock
options.
(5) Includes 12,500 shares issuable upon exercise of currently exercisable stock
options.
(6) Includes 2,083 shares issuable upon exercise of currently exercisable stock
options.
(7) Includes 222,359 shares issuable upon exercise of currently exercisable
stock options.
5
<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth certain information
concerning the compensation of the Named Executive Officers for each of the
three fiscal years during the period ending March 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION ----------------
------------- OPTIONS/SAR'S
NAME AND PRINCIPAL POSITION YEAR SALARY ($) (#)
- ------------------------------------------------------------------------ --------- ------------- ----------------
<S> <C> <C> <C>
William H.W. Atkinson .................................................. 1998 $ 125,000 112,500
Chief Executive Officer and Chairman 1997 125,000 13,583
1996 96,000 11,075
Susan A. Schreter ...................................................... 1998 $ 125,000 112,500
President and Director 1997 125,000 13,583
1996 96,000 11,075
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain summary information concerning
individual grants of stock options made to Named Executive Officers during the
fiscal year ended March 31, 1998. Except as set forth in the table below, during
fiscal year 1998, the Company did not grant any stock options to any of the
Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------------- RATES OF STOCK PRICE
NUMBER OF PERCENT OF TOTAL APPRECIATION FOR
SHARES OPTIONS GRANTED OPTION TERM(1)
UNDERLYING TO EMPLOYEES IN EXERCISE EXPIRATION --------------------
NAME GRANT (#) FISCAL YEAR(1) (%) PRICE ($) DATE 5% ($) 10% ($)
- -------------------------------------- ----------- --------------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
William H.W. Atkinson................. 112,500(2) 37% 5.00 8/27/02 155,250 343,125
Susan A. Schreter..................... 112,500(2) 37% 5.00 8/27/02 155,250 343,125
</TABLE>
- ------------------------
(1) Based on options to purchase 306,250 shares of Common Stock granted to
employees, directors and consultants, including executive officers, in
fiscal 1998.
(2) The term of such options are consistent with those of options granted to
other employees and directors under the Company's Stock Option Plans. The
options vested immediately because of length of service. The Plans
provisions permit the Board of Directors to, among other things, accelerate
vesting of options in the event of a change in control of the Company.
6
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides certain summary information concerning stock
option exercises during the fiscal year ended March 31, 1998 by the Named
Executive Officers and the value of unexercised stock options held by the Named
Executive Officers as of March 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT "IN THE MONEY" OPTIONS
NUMBER OF FISCAL YEAR END (#) AT FISCAL YEAR END ($)
SHARES ACQUIRED VALUE -------------------------- ----------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- --------------- ------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William W.H. Atkinson.......... -0 - - 0 - 140,325 -0 - -0 - -0 -
Susan A. Schreter.............. -0 - -0 - 140,325 -0 - -0 - -0 -
</TABLE>
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
In December 1993, the Company entered into three-year employment agreements
with Mr. Atkinson and Ms. Schreter, the Company's Chief Executive Officer and
President, respectively. Both agreements were subsequently amended as of March
1996 to provide, among other things, for an additional three-year term. Each
agreement may be terminated for "cause" (as defined in the agreements) and under
circumstances set forth in the agreements. Under the terms of the agreements,
Mr. Atkinson and Ms. Schreter are both entitled to receive an annual base salary
of $125,000, or such higher salary as may be approved by the Board of Directors
from time to time. Each year during the term of their agreements, Mr. Atkinson
and Ms. Schreter are entitled to receive stock options in an amount equal to at
least 20% of the aggregate number of options offered under the Company's option
and incentive plans to all officers, key executives, directors, professional or
administrative employees or consultants or advisors, any of its subsidiaries or
any of its agents (as defined in the respective plans), or to a cash payment to
compensate for the shortfall in the event this provision is not complied with.
Mr. Atkinson and Ms. Schreter also are entitled to participate in any bonus or
profit sharing plan that may be adopted from time to time by the Company, and to
specified additional bonus payments and option grants upon termination under
certain specified circumstances. Upon a change in control, as defined in the
agreements, Mr. Atkinson and Ms. Schreter will be entitled to receive, in
addition to other compensation and benefits due them, his or her then-effective
base salary for a period of three years from the date of termination, plus all
benefits, other than the bonus and stock options (or the value thereof), to
which they would have been entitled had they continued their employment. In
addition, the agreements provide that Mr. Atkinson and Ms. Schreter are entitled
to receive all rights, privileges and fringe benefits afforded to other senior
executives of the Company and to payment or reimbursement for reasonable
expenses incurred in the performance of his or her respective services under the
agreement. The agreements also contain confidentiality provisions.
COMPENSATION OF DIRECTORS
During the fiscal year ended March 31, 1998, each director who was not an
officer or an employee of the Company (an "Outside Director") received a
director's fee of $2,500 for attendance at each meeting of the Board of
Directors. All directors of the Company are also reimbursed for expenses. The
Board of Directors, in its discretion, is authorized to grant to each Outside
Director options to purchase shares of the Company's Common Stock, at option
prices equal to the fair market value of the Company's Common Stock on the date
of grant. During fiscal year 1998, no Outside Director received any options to
purchase shares of Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Anthony A. Cetrone and
Michael M. Fleming. No member of the Company's Compensation Committee is a
current or former officer or employee of the
7
<PAGE>
Company or any of its subsidiaries. There are no compensation committee
interlocks between the Company and any other entities involving any of the
executive officers or directors of such other entities.
CERTAIN TRANSACTIONS
Paul Stanton, the Vice Chairman of the Board of Directors of the Company,
has provided consulting services to the Company since June 1996. Pursuant to an
oral arrangement with the Company, Mr. Stanton received consulting fees of
$56,500 in fiscal 1998.
It is the policy of the Company with respect to insider transactions, that
all transactions between the Company, its officers, directors, principal
stockholders and their affiliates be on terms no less favorable to the Company
than could be obtained from unrelated third parties in arms-length transactions,
and that all such transactions shall be approved by a majority of the
disinterested members of the Board of Directors. The Company believes that the
transactions described above complied with such policy.
In October 1997, Paulson Investment Company, Inc., one of the
representatives of the underwriters of the Company's public offering completed
in December 1997 (the "Offering"), loaned the Company a total of $550,000. The
loans were non-interest bearing and were repaid by the Company out of the net
proceeds of the Offering in December 1997.
SECTION 16(A) REPORTING UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of the Common Stock of
the Company to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the exchange on which the Common Stock is
listed for trading. Executive officers, directors and more than ten percent
stockholders are required by regulations promulgated under the Exchange Act to
furnish the Company with copies of all Section 16(a) reports filed. Based solely
on the Company's review of copies of the Section 16(a) reports filed for the
fiscal year ended March 31 1998 the Company believes that all reporting
requirements applicable to its executive officers, directors, and more than ten
percent stockholders were complied with for the fiscal year ended March 31,
1998.
8
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the Company's cumulative stockholder return on the Common Stock with the
cumulative total return during the same period of (i) the NASDAQ Market Index,
(ii) a peer group selected by the Compensation Committee consisting of Raven
Industries, Inc. (the "Peer Group"). All of the indexes include only companies
whose common stock has been registered under Section 12 of the Securities
Exchange Act of 1934 for at least the time frame set forth in the graph.
Cumulative total returns are calculated assuming that $100 was invested on
December 10, 1997 in each of the Common Stock, the NASDAQ Market Index, and the
Peer Group, and that all dividends were reinvested.
The total shareholder returns depicted in the graph are not necessarily
indicative of future performance. The graph and related disclosure shall not be
deemed to be incorporated by reference in any filing by the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates the graph and such disclosure
by reference.
COMPARISON OF CUMULATIVE TOTAL RETURN
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG CARING PRODUCTS INTERNATIONAL, INC.,
THE NASDAQ MARKET INDEX
AND THE PEER GROUP
INDEXED RETURNS FOR THE PERIOD ENDED MARCH 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CARING PRODUCTS INTERNATIONAL, INC. SIC CODE INDEX NASDAQ MARKET INDEX
<S> <C> <C> <C>
12/10/97 $ 100.00 $ 100.00 $ 100.00
12/31/97 93.94 104.64 98.35
1/30/98 74.24 109.10 101.43
2/27/98 74.24 107.42 111.11
3/31/98 63.64 102.50 114.33
</TABLE>
9
<PAGE>
REPORT OF BOARD OF DIRECTORS
OVERALL POLICY
The Company's executive compensation program is designed to be closely
linked to corporate performance and the total return to stockholders over the
long-term. To that end, the Company has developed an overall compensation
strategy and specific compensation plans which tie executive compensation to the
Company's success in meeting specified objectives and to appreciation in the
Company's stock price. The overall objectives are to attract and retain the best
possible executive talent, motivate key executives to achieve the goals inherent
in the Company's business strategy, link executive and stockholder interests
through participation in the Company's 1996 Incentive Program (the "Program")
and provide a compensation package that recognizes individual contributions as
well as overall business results.
The Board of Directors or the Compensation Committee approves the
compensation of executive officers of the Company, including the individuals
whose compensation is detailed in this Proxy Statement. The key elements of the
Company's executive compensation during the last fiscal year consisted of base
salary and grants of stock options under the Program. The Company's policies
with respect to each of these elements, are discussed below. In addition, while
the elements of compensation described below are considered separately, the
Company takes into account the full compensation package afforded by the Company
to each individual.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION PLANS
It is the policy of the Company to have the executive compensation plans of
the Company treated as fully tax deductible under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") whenever, in the judgment of the
Board of Directors or the Compensation Committee, to do so would be consistent
with the business objectives of those plans. All compensation paid during fiscal
year 1998 was, in fact, fully tax deductible. The Board of Directors or the
Compensation Committee, however, reserves the right to grant future compensation
awards in such amounts as it may deem appropriate in the exercise of its
business judgment, notwithstanding whether those awards are fully tax
deductible.
BASE SALARIES
Base salaries for executive officers are determined by evaluating the
responsibilities of the position held and the experience of the individual, and
by reference to the competitive marketplace for executive talent. Annual salary
adjustments are determined by evaluating the performance of the Company and of
each executive officer, and by taking into account added responsibilities. The
Board of Directors or the Compensation Committee, where appropriate, also
considers non-financial performance measures. These include increases in market
share, improvements in product quality and improvements in relations with
customers, suppliers and employees. These factors are afforded varying levels of
significance by the Board of Directors or the Compensation Committee depending
upon the circumstances. All final determinations are subjective.
STOCK OPTIONS
Under the Program, stock options are periodically granted to the Company's
employees, including executive officers. The Board of Directors or the
Compensation Committee sets guidelines for the size of the stock option awards
based on similar factors, including competitive compensation data, as are used
to determine base salaries. In the event of poor corporate performance, the
Board of Directors or the Compensation Committee can elect not to award stock
options. Final determinations are subjective.
Stock options are designed to align the interests of executives with those
of the stockholders. Stock options are granted with an exercise price equal to
the market price of the Common Stock on the date of grant and generally vest in
increments over a period of five years. This approach is designed to incentivize
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the creation of stockholder value over the long term since the full benefit of
the compensation package cannot be realized by the option recipients unless
stock price appreciation occurs over a number of years.
BOARD OF DIRECTORS
WILLIAM H.W. ATKINSON
SUSAN A. SCHRETER
ANTHONY A. CETRONE
MICHAEL M. FLEMING
PAUL STANTON
DR. HERBERT SOHN
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APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
TO DECREASE THE AUTHORIZED SHARES OF COMMON STOCK
PROPOSED AMENDMENT
The Board has approved an amendment to Article Fourth of the Company's
Certificate of Incorporation, as restated and amended (the "Certificate of
Incorporation"), to decrease the authorized shares of Common Stock from
75,000,000 to 15,000,000, subject to the approval by the Company's Stockholders
at the Meeting. If the proposed amendment is approved by the Stockholders, the
text of the first sentence of Article Fourth of the Certificate of Incorporation
would be amended to read as follows:
"FOURTH: The total number of shares of stock which the Corporation shall
have the authority to issue shall be 16,000,000 million shares of capital stock,
of which 1,000,000 shares shall be classified as Preferred Stock, par value $.01
per share, and 15,000,000 shall be classified as Common Stock, par value $0.01
per share."
As of August 1, 1998, there were 75,000,000 shares of Common Stock
authorized, 2,781,343 shares outstanding, 3,365,696 shares reserved for issuance
and 68,852,961 shares available for issuance.
REASONS FOR PROPOSED AMENDMENT
The proposed amendment to the Company's Certificate of Incorporation to
decrease the number of authorized shares of Common Stock has been recommended by
the Board to reduce the amount of franchise taxes payable annually by the
Company to the State of Delaware which are based, in part, on the total
authorized shares of capital stock. If the proposed amendment had been adopted
in fiscal 1998, the Company's franchise taxes would have been reduced by
approximately $27,000.
If approved by the Stockholders, the proposed amendment would reduce the
authorized and unissued shares of Common Stock available for issuance at the
discretion of the Board without further Stockholder approval. The Board has
concluded that the 8,852,961 shares of authorized Common Stock that would be
available for issuance assuming the proposed amendment is approved would
constitute an adequate supply of authorized and unissued shares of Common Stock
to meet foreseeable corporate purposes, such as financing acquisitions with
capital stock, declaring stock splits or stock dividends, raising additional
equity capital and granting awards pursuant to employee benefit plans, and for
such other corporate purposes as may arise. However, if such supply should prove
inadequate, the Board would seek Stockholder approval at such time to increase
the authorized and unissued shares of Common Stock as may be appropriate.
The Board recommends a vote FOR approval of the proposed amendment to the
Certificate of Incorporation.
INDEPENDENT AUDITORS
Grant Thorton LLP, certified public accountants, have been appointed by the
Board of Directors, upon recommendation of the Audit Committee of the Board of
Directors, as independent auditors for the Company to examine and report on its
financial statements for the fiscal year ending March 31, 1999, which
appointment is being submitted to the Stockholders for ratification at the
Meeting. Representatives of Grant Thorton LLP are expected to be present at the
Meeting, with the opportunity to make a statement if they desire to do so, and
to be available to respond to appropriate questions. The appointment of the
independent auditors will be ratified if it receives the affirmative vote of the
holders of a majority of shares of the Common Stock of the Company present at
the Meeting, in person or by proxy. Submission of the appointment of the
auditors to the Stockholders for ratification will not limit the authority of
the Board of Directors to appoint another accounting firm to serve as
independent auditors if the present auditors resign or their engagement is
otherwise terminated.
The Board of Directors recommends a vote FOR the appointment of Grant
Thorton LLP as independent auditors for the fiscal year ending March 31, 1999.
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STOCKHOLDERS' PROPOSALS
Any proposal by a Stockholder of the Company intended to be presented at the
1999 Annual Meeting of Stockholders must be received by the Company at its
principal executive office not later than May 10, 1999 for inclusion in the
Company's proxy statement and form of proxy relating to that meeting. Any such
proposal must also comply with the other requirements of the proxy solicitation
rules of the Securities and Exchange Commission.
ANNUAL REPORT
Concurrently with the mailing of these Proxy Materials, the Company is
mailing a copy of its Annual Report to Stockholders for the fiscal year ended
March 31, 1998. Such Annual Report is not to be regarded as proxy solicitation
material.
UPON WRITTEN REQUEST BY A STOCKHOLDER ENTITLED TO VOTE AT THE 1998 ANNUAL
MEETING, THE COMPANY WILL FURNISH THAT PERSON WITHOUT CHARGE WITH A COPY OF THE
FORM 10-KSB ANNUAL REPORT FOR FISCAL 1998 WHICH IS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO.If
the person requesting the report was not a Stockholder of Record on August 24,
1998, the request must contain a good faith representation that the person
making the request was a beneficial owner of the Common Stock of the Company at
the close of business on such date. Requests should be addressed to Caring
Products International, Inc., 200 First Avenue West, Suite 200, Seattle,
Washington 89119, ATTN: Sandra L. Sternoff.
OTHER BUSINESS
Management does not know of any other matters to be brought before the
Meeting except those set forth in the notice thereof. If other business is
properly presented for consideration at the Meeting, it is intended that the
proxies will be voted by the persons named therein in accordance with their
judgment on such matters.
SOLICITATION AND EXPENSES OF SOLICITATION
Officers and employees of the Company may solicit proxies. Proxies may be
solicited by personal interview, mail, telegraph and telephone. No compensation
will be paid by the Company to any person in connection with the solicitation of
proxies. Brokers, bankers and other nominees will be reimbursed for
out-of-pocket and other reasonable clerical expenses incurred in obtaining
instructions from beneficial owners of the Company's stock. The cost of
preparing this Proxy Statement and all other costs in connection with
solicitation of proxies for the Annual Meeting of Stockholders are being borne
by the Company.
Even if you plan to attend the Meeting in person, please sign, date and
return the enclosed proxy promptly. If you attend the Meeting, your proxy will
be voided at your request and you can vote in person. A postage-paid
return-addressed envelope is enclosed for your convenience.
Your cooperation in giving this matter your immediate attention and in
returning your proxies will be appreciated.
By order of the Board of Directors,
Steven A. Saide, Esq.
SECRETARY
September 8, 1998
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CARING PRODUCTS INTERNATIONAL, INC.
200 FIRST AVENUE WEST, SUITE 200, SEATTLE, WA 89119
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CARING PRODUCTS
INTERNATIONAL, INC.
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON SEPTEMBER 28, 1998.
COMMON STOCK PROXY
PROXY/VOTING INSTRUCTION CARD
The undersigned appoints William H.W. Atkinson and Susan A. Schreter, and
each of them, with full power of substitution in each, the proxies of the
undersigned, to represent the undersigned and vote all shares of Caring Products
International, Inc. Common Stock which the undersigned may be entitled to vote
AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 28, 1998, AND AT
ANY ADJOURNMENT OR POSTPONEMENT THEREOF, AS INDICATED ON THE REVERSE SIDE.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy will
be voted FOR proposals 1, 2 and 3.
1. ELECTION OF DIRECTORS
FOR / / all nominees listed below WITHHOLD AUTHORITY / / to vote for all
nominees listed below *EXCEPTIONS / / Nominees: William H.W. Atkinson,
Susan A. Schreter, Anthony A. Cetrone, Michael M. Fleming, Paul Stanton and
Dr. Herbert Sohn
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below.)
*Exceptions_________________________________________________________________
2. FOR / / AGAINST / / ABSTAIN / / Amendment to the Certificate of
Incorporation to decrease the Company's authorized Common Stock from
75,000,000 shares to 15,000,000 shares.
3. FOR / / AGAINST / / ABSTAIN / / To ratify the selection, by the Board
of Directors, of Grant Thorton LLP as the independent auditors of the
Company for the fiscal year ending March 31, 1999.
4. To transact such other business as may properly come before the Meeting or
any adjournments thereof.
If you plan to attend the meeting please check here / / Change of address or
Comments mark here / /
Date: _______________________________________ ,
1998
________________________________________________
Signature
________________________________________________
Signature, if held jointly
(Please sign, date and return this Proxy in the
enclosed postage prepaid envelope.)
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
When shares are held by joint tenants, both
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such, if a corporation, please
sign in full corporate name by an authorized
officer. If a partnership, please sign in
partnership name by an authorized person.
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE
INK /X/
