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
CONTINENTAL HEALTH AFFILIATES, INC.
(Name of Registrant as Specified in Its Charter)
Registrant
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act
Rule 0-11:<F1>
(4) Proposed maximum aggregate value of transaction:
/_/ 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:
- ----------------
[FN]
<F1> Set forth the amount on which the filing fee is calculated and
state how it was determined.
<PAGE>
CONTINENTAL HEALTH AFFILIATES, INC.
910 SYLVAN AVENUE
ENGLEWOOD CLIFFS, NEW JERSEY 07632
-------------------
Notice of Annual Meeting of Stockholders
November 14, 1995
-------------------
To the Stockholders of CONTINENTAL HEALTH AFFILIATES, INC.
Notice is hereby given that the Annual Meeting of
Stockholders of Continental Health Affiliates, Inc., will be held
at the RIHGA Royal Hotel, 151 West 54th Street, New York, New York,
on November 14, 1995 at 10 A.M., for the following purposes:
1. To elect six directors for the ensuing year.
2. To transact such other business as may properly
come before the meeting.
Only stockholders of record at the close of business on
October 2, 1995 will be entitled to notice of or to vote at the
meeting or any adjournments of the meeting. The Company's transfer
books will not be closed.
IF YOU DO NOT INTEND TO BE PRESENT IN PERSON AT THE
MEETING, PLEASE SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY. IF
YOU ATTEND THE MEETING AND VOTE IN PERSON, THE PROXY WILL NOT BE
USED.
By Order of the Board of Directors
ISRAEL INGBERMAN
Secretary
October 10, 1995
<PAGE>
PROXY STATEMENT
-----------------
CONTINENTAL HEALTH AFFILIATES, INC.
The accompanying Proxy is solicited by the Board of Directors
of Continental Health Affiliates, Inc. (the "Company"). All shares
represented by proxies will be voted in the manner designated. If
no designation is made on a proxy, it will be voted for the
election of the six directors named below. THIS PROXY STATEMENT
AND THE ACCOMPANYING FORM OF PROXY ARE BEING MAILED TO THE
COMPANY'S STOCKHOLDERS ON OR ABOUT OCTOBER 10, 1995.
REVOCATION
Execution and delivery of the enclosed proxy will not affect
the right of any person to attend the meeting and vote in person.
Any stockholder who gives a proxy has the power to revoke it at any
time before it is voted by delivery of a written instrument of
revocation or a duly executed proxy bearing a later date to the
Secretary of the Company, 910 Sylvan Avenue, Englewood Cliffs, New
Jersey 07632, or at the meeting. The presence of a stockholder at
the meeting will not operate to revoke a proxy, but the casting of
a ballot by a stockholder who is present at the meeting will revoke
a proxy as to the matter on which the ballot is cast.
SOLICITATION EXPENSES
The Company will bear the cost of soliciting proxies. Proxies
are being solicited by mail and, in addition, directors, officers
and employees of the Company may solicit proxies personally or by
telephone or telegraph. The Company will reimburse custodians,
brokerage houses, nominees and other fiduciaries for the cost of
sending proxy material to their principals.
VOTING SECURITIES
Only stockholders of record at the close of business on
October 2, 1995 will be entitled to vote at the meeting. The
outstanding voting securities of the Company on that date were
7,830,059 shares of Common Stock. Each of the outstanding shares
is entitled to one vote. Jack Rosen, Joseph Rosen and Israel
Ingberman, who together own 34.0% of the Common Stock (including
stock held by their wives as custodians for their children and by
one of their children), intend to vote for the election to the
Board of Directors of all the nominees named in the section of this
Proxy Statement captioned "Election of Directors."
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table contains information concerning the
ownership of the Company's voting securities on October 2, 1995 by
the only persons who owned of record or, insofar as the Company is
aware, owned beneficially more than 5% of any class of the
Company's voting securities:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
Title of Class Of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C> <C>
Common Stock Colonial Management 530,000 shares 6.8%
Associates, Inc.
1 Financial Center
Boston, MA 02111
Common Stock Israel Ingberman 886,072 shares 11.3%
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock Michael S. Klein 939,160 shares 12.0%
100 Shoreline Highway
Building A
Suite 190
Mill Valley, CA 94941
Common Stock Jack Rosen 1,386,076 shares <F1> 16.6%
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock Joseph Rosen 893,577 shares 11.4%
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock Andrew J. McLaughlin, Jr. 1,869,000 shares<F2> 20.0%
61 Broadway
New York, NY 10006
- ----------------
<FN>
<F1> Includes 500,000 shares of Common Stock issuable to Mr.
Rosen on exercise of outstanding stock options.
<F2> Includes 1,532,000 shares issuable on conversion of convertible notes
and 145,000 shares held in a profit sharing trust for the account of
Mr. McLaughlin.
</TABLE>
-2-
<PAGE>
As of October 2, 1995, the Company's directors, its chief
executive officer, its other executive officers whose cash
compensation exceeded $100,000 during 1994, and all its officers
and directors as a group, beneficially owned the following numbers
of shares of voting securities of the Company:
<TABLE>
<CAPTION>
Name of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
<S> <C> <C> <C>
Common Stock Israel Ingberman 886,072 shares 11.3%
Common Stock Jack Rosen 1,386,076 shares<F1> 16.6%
Common Stock Joseph Rosen 893,577 shares 11.4%
Common Stock Bruce Slovin 92,500 shares <F1> 1.2%
Common Stock Joseph M. Giglio 95,517 shares <F1> 1.2%
Common Stock Carl D. Glickman 75,000 shares <F1> <F2>
Common Stock Richard S. Gordon 5,000 shares <F1> <F2>
Common Stock Gary Finkel 14,500 shares <F1> <F2>
Common Stock Benjamin Geizhals 10,000 shares <F1> <F2>
Common Stock All directors and 3,458,242 shares <F1> 40.2%
executive officers
as a group (9 persons)
- -------------------
<FN>
<F1> Includes shares of Common Stock issuable on exercise of
outstanding stock options as follows: Mr. Rosen 500,000
shares; Mr. Giglio, 85,000 shares; Mr. Glickman, 75,000
shares; Mr. Slovin, 85,000 shares; Mr. Geizhals, 10,000
shares; Mr. Finkel, 14,500 shares; Mr. Gordon, 5,000
shares; all directors and executive officers as a group,
774,500 shares.
<F2> Less than 1%.
</TABLE>
On October 2, 1995, Cede & Co. owned of record 4,787,736
shares of the Company's Common Stock, constituting 61% of the
outstanding Common Stock. The Company understands those shares
were held beneficially for members of the New York Stock Exchange,
some of whom may in turn have been holding shares beneficially for
customers.
-3-
<PAGE>
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
It is the intention of the people named in the accompanying
proxy to vote for the following people as directors of the Company
(except as otherwise directed in proxies which are submitted), to
hold office until the next annual meeting of stockholders and until
their successors are elected and qualify:
Served on
the Board of
Directors
Name Age Since
----- ----- --------------
Jack Rosen . . . . . . . . . 49 1981
Joseph Rosen . . . . . . . . 44 1981
Israel Ingberman . . . . . . 49 1981
Joseph Giglio. . . . . . . . 54 1981
Bruce Slovin . . . . . . . . 59 1988
Carl D. Glickman . . . . . . 69 1989
Jack Rosen has served as the chief executive officer (the
President or Chairman of the Board) and as a Director of the
Company since its incorporation in 1981 and of its subsidiaries
from their respective dates of incorporation, the first of which
was in 1976. Mr. Rosen is also the Chairman of the Board and
President of Hazel Bishop International, a cosmetics manufacturer, the
President and a Director of CompreMedx Corporation, formerly known
as CompreMedx Cancer Centers Corporation ("CompreMedx"), an 89.1%-owned
subsidiary of the Company, and the Chairman of the Board of
Directors and Chief Executive Officer of Infu-Tech, Inc. ("Infu-Tech"),
a 59% owned subsidiary of the Company. He first became involved
in the health care field in September 1971 when he became a
director of Garden State Health Care Center of East Orange, New
Jersey. He is actively engaged, together with Joseph Rosen and
Israel Ingberman, who are officers and directors, and along with
Jack Rosen, are the three principal stockholders of the Company
(the "Principal Stockholders"), in a variety of enterprises,
including nursing home ownership and management, real estate
development and hotel ownership (the "Rosen-Ingberman
Enterprises"). Jack Rosen is the brother of Joseph Rosen.
Joseph Rosen has served as a Vice President and as a Director
of the Company since its incorporation in 1981 and as a director
and officer of all its subsidiaries (including CompreMedx and Infu-Tech)
from their respective dates of incorporation. He became an
Assistant Secretary of the Company in March 1983. He first became
involved in the health care field in October 1974 with the
organization of Jayber Inc., which operates a nursing home in West
Orange, New Jersey and now is a subsidiary of the Company. He is
actively engaged, together with the other Principal Stockholders,
in the Rosen-Ingberman Enterprises. He is the brother of Jack
Rosen.
-4-
<PAGE>
Israel Ingberman has served as Secretary, Treasurer and as a
Director of the Company since its incorporation in 1981 and as a
director and officer of all its subsidiaries (including CompreMedx
and Infu-Tech) from their respective dates of incorporation. He
first became involved in the health care field in October 1974 with
the organization of Jayber Inc. He is actively engaged, together
with the other Principal Stockholders, in the Rosen-Ingberman
Enterprises.
Joseph M. Giglio has been a director of the Company since
January 1983 and is also a Director of Infu-Tech. Since December
1993, he has been serving as the Chairman of Apogee Research, Inc.,
an infrastructure consulting firm. From December 1993 until August
1994 he was the Senior Advisor to the First Southwest Company.
From April 1992 to November 1993, he was an Executive Vice
President of Smith Barney & Co. From June 1991 to April 1992, he
was a Managing Director of that firm. From January 1990 to June
1991, he was the President of Chase Municipal Securities, Inc., an
affiliate of The Chase Manhattan Bank, N.A. From August 1988
through December 1989, Mr. Giglio was a Senior Vice President at
Chase Securities, Inc. in the Municipal Finance Division. For more
than five years prior to joining Chase, Mr. Giglio was the Senior
Managing Director of the Public Finance Department at Bear Stearns
& Co., Inc. Mr. Giglio served as Chairman of the National Council
on Public Works Improvement, which released its final report,
"Fragile Foundation," in February 1988. Mr. Giglio chaired the
U.S. Senate Budget Committee's Private Sector Advisory Panel on
Infrastructure Financing. He serves on the boards of directors of
Small Business Foundation of America, Inc.; The Hudson Institute;
and Empire Blue Cross/Blue Shield. Mr. Giglio has served as an
Associate Professor of Finance at New York University. He is a
graduate of Rutgers University, and holds a Master of Public
Administration degree from New York University and a Master's
degree in Business from Columbia University.
Carl D. Glickman has been a director of the Company since
August 1989 and is also a Director of Infu-Tech. Since 1953, he
has been the president of The Glickman Organization, a real estate
ownership and management company. In addition, Mr. Glickman is a
director of Andal Corporation (a diversified manufacturing
company), Bear Stearns Companies, Inc. (an investment banking
company), Custodial Trust Company (a New Jersey bank), Jerusalem
Economic Corporation (an Israeli real estate company), Alliance
Tyre and Rubber Co. (an Israeli tire manufacturer), Franklin
Holdings, Inc. (an investment company), Lexington Corporate
Properties, Inc. (a real estate investment trust), Modern Video Co.
(a motion picture production company) and Office Max, Inc. (an
office supply retailer).
Bruce Slovin has been a Director of the Company since June
1988 and is also a Director of Infu-Tech. Mr. Slovin is a graduate
of Harvard Law School and Cornell University. Since 1985, he has
been president and a director of Revlon Group Incorporated, an
industrial products holding company. Since 1980, he has been
president and a director of MacAndrews & Forbes Group, Inc., an
industrial holding company. In addition, Mr. Slovin is a director
of Andrews Group Incorporated (a publishing and entertainment
company), Power Control Technologies, Inc. (a manufacturer of
aerospace components), Cantel Industries, Inc. (a distributor of
furniture and medical equipment) and The Coleman Company, Inc. (an
outdoor recreational equipment manufacturer).
-5-
<PAGE>
VOTE REQUIRED
The election of a director requires a plurality of the votes
cast for the position on the Board of Directors. Because no
minimum vote is required, shares which are present at the meeting
but are not voted (whether due to abstentions or otherwise) will
not directly affect the outcome of the election.
EXECUTIVE COMPENSATION
The following table sets forth the compensation received
during each of the three years ended December 31, 1994, by the
Company's chief executive officer and its other executive officers
whose cash compensation exceeded $100,000:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
Other
Annual
Name and Principal Salary Bonus Compensation
Position Year ($) ($) ($)
<S> <C> <C> <C> <C>
Jack Rosen, Chairman, 1994 300,000<F1>
President and Chief 1993 300,000<F1> None None
Executive Officer 1992 300,000<F1>
Richard S. Gordon, 1994<F2> 99,920<F1> 37,154<F1>
Executive Vice 1993 -- -- None
President 1992 -- --
Benjamin Geizhals, 1994 130,000
Vice President 1993 130,000 None None
1992 130,000
Gary Finkel, 1994 120,000 --
Vice President 1993 115,125 5,000 None
1992 110,250 --
Israel Ingberman, 1994 149,846
Secretary 1993 25,000 None None
1992 25,000
</TABLE>
<TABLE>
<CAPTION>
Long-Term Compensation
Awards Payouts
Restricted All
Stock Options/ LTIP Other
Award(s) SARs Payouts Compensation
($) (#) ($) ($)
<C> <C> <C> <C>
None None None None
5,000
None -- None None
--
2,000
None -- None None
--
5,000
None -- None None
--
None None None None
<FN>
<FN1> Includes compensation paid by Infu-Tech.
<FN2> For the period since Mr. Gordon became employed by the
Company and Infu-Tech in March 1994. Mr. Gordon became
an officer of the Company in August 1994.
</TABLE>
DIRECTORS' COMPENSATION
During 1994, the directors waived directors' fees (which,
prior to 1993, had been paid to directors who were not employees at
the rate of $10,000 plus $500 for each directors' meeting
attended). In recognition of this, and the waiver of fees for
1995, in January 1995, each director who was not an officer of the
Company was granted an option under the Company's 1989 Key
Employees and Key Personnel Plan to purchase 20,000 shares of
Common Stock.
-6-
<PAGE>
OPTIONS
The following table sets forth certain information with regard
to options granted during 1994 to the Company's chief executive
officer and its other executive officers whose cash compensation
exceeded $100,000:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Percent
of Total
Options/
Number of SARs
Securities Granted Potential Realizable Value at
underlying to Exercise Assumed Annual Rates of
options/ Employees or Base Stock Price Appreciation For
SARs in Fiscal Price Expiration Option Term
Name Granted (#) Year (%) ($/Sh) Date 5% 10%$
<S> <C> <C> <C> <C> <C> <C>
Jack Rosen 500,000 95 1.00 1/27/01 $703,550 $974,359
Richard S. Gordon 5,000 1.0 1.03 8/19/04 8,144 12,969
Benjamin Geizhals 2,000 0.4 1.00 5/4/04 3,258 5,187
Gary S. Finkel 5,000 1.0 1.00 5/4/04 8,144 12,969
Israel Ingberman 0 0 -- -- -- --
<TABLE/>
The following table sets forth certain information with
regard to exercises of options and SARs during 1994 and options and
SARs held at December 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Options/SARs Options/SARs
at Fiscal Year-End* at Fiscal Year End
(#) ($)**
Shares Value
Acquired on Realized Exercisable(E)/ Exercisable(E)/
Name Exercise (#) ($) Unexercisable(U) Unexercisable(U)
<S> <C> <C>
Jack Rosen -- -- 500,000(E) $187,500(E)
0(U) 0(U)
Richard S. Gordon -- -- 0(E) 0(E)
5,000(U) 1,725(U)
Benjamin Geizhals -- -- 10,000(E) 5,625(E)
0(U) 0(U)
Gary Finkel -- -- 14,000(E) 10,688(E)
0(U) 0(U)
Israel Ingberman -- -- 0(E) 0(E)
0(U) 0(U)
</TABLE>
[FN]
<F1> The Corporation has not granted any SARs.
<F2> Based upon the amount by which the high bid price of the
Company's Common Stock on December 30, 1994 ($1.375 per share)
exceeded the exercise price of the options.
-7-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not have a Compensation Committee. Salaries
of its senior executive officers, other than its Chairman of the
Board, are set by the Chairman of the Board. The salary of the
Chairman of the Board is approved by the Board of Directors. Jack
Rosen, who is Chairman of the Board, and Joseph Rosen (Jack Rosen's
brother) and Israel Ingberman (the third of the Principal
Stockholders), both of whom are officers of the Company, are
members of the Board of Directors and participate in its
deliberations.
Transactions between the Company and members of its Board of
Directors during 1994 were as follows:
The Company is occupying approximately 15,300 square feet of
office space (including 7,400 square feet leased by Infu-Tech) in
an office building in Englewood Cliffs, New Jersey which is owned
by the Principal Stockholders. The rent expense is $26,120 per
month. The Company believes the terms on which it is occupying this
space are more favorable to it than the terms on which it could
rent a similar amount of comparable space from an unaffiliated
person.
Early in 1990 a dispute over management fees between the
Company and three nursing homes owned by the Principal Stockholders
was resolved by the nursing homes' agreeing to pay a total of
$1,940,000 in satisfaction of all their December 31, 1989
obligations to the Company. In early 1992, the settlement
agreement between the Company and the three nursing homes was
modified to provide that the then-existing balance of $1,046,000
would be paid in sixteen equal quarterly payments of $76,000 each
(which included interest at 7 1/2% and principal) beginning June 15,
1992 and continuing through March 15, 1996. The balances remaining
on the modified settlement agreement at December 31, 1994 and 1993
(including accrued interest due to payment delinquencies) were
$839,000 and $783,000. In January 1995 the settlement agreement
was further modified to provide for a $227,000 principal and
interest payment to be made on or before March 30,1995 and the
remaining balance of $626,000 to be paid in twelve equal quarterly
installments of $60,000 each (including interest at 8 1/2%)
beginning July 1, 1995 and continuing through March 31, 1998.
At October 16, 1995, the nursing homes had made the payments due through
July 1, 1995.
A subsidiary of the Company which owns and operates a nursing
home in Atlantic City, New Jersey has for several years moved
residents of the subsidiary's nursing home to one of the Principal
Stockholders' nursing homes during hurricanes or serious storms.
During 1994, the subsidiary paid the Principal Stockholders'
nursing home a total of $27,000 for lodging residents of the
subsidiary's nursing home during storms. The Company believes the
amounts charged by the Principal Stockholders' nursing home were at
least as low as what would have been charged by comparable nursing
homes in the area owned by unaffiliated persons.
At December 31, 1994, the Company was owed a total of $180,000
from two entities owned by the Principal Stockholders resulting
from loans to the entities from various corporations which now are
subsidiaries of the Company, but which were not owned by the
-8-
<PAGE>
Company when the loans were made. The Company is also owed $20,000
for health insurance premiums and other charges with regard to
nursing homes owned by the Principal Stockholders.
In December 1993, the Company, four nursing homes owned or
operated by the Company and three nursing homes partly owned by the
Principal Stockholders received document subpoenas. At the Company's
request, one law firm represented both the Company and the non-Company
nursing homes with regard to the subpoenas. The law firm billed
the Company a total of $87,520 for services related to the
subpoenas, including $71,045 regarding the non-Company nursing
homes. There also were substantial disbursements related to
production of the subpoenaed documents, most of which were
allocable to the non-Company nursing homes. In December 1994, the
law firm agreed to give the Company an approximately 15% discount
with regard to several years' unpaid fees, including those relating
to the nursing home subpoenas, if the Company met a payment
schedule which contemplated payment of the full discounted amount
by June 30, 1995. By September 30, 1995, the Company still had not
made some of the discounted payment, in part because the non-Company
nursing homes had failed to pay, or arrange to reimburse the
Company for, $37,500 of the sum allocable to them.
During 1994, the Company (including its Infu-Tech subsidiary)
was charged $89,000 by a corporation owned by Jack Rosen for use of
an airplane owned by that corporation. The Company believes the
rates it was charged for use of that airplane were lower than those
which would have been available from an independent charter company
for use of a similar airplane.
In November 1993, as part of a financial restructuring, the
Company offered to exchange 530 shares of its Common Stock for each
$1,000 principal amount of its 14-1/8% Subordinated Debentures due
1996 ("Subordinated Debentures"). In response to this offer, The
1965 Trust, of which Carl D. Glickman, a director of the Company
and of Infu-Tech is the sole trustee, tendered $1,774,000 principal
amount of Subordinated Debentures, which it had purchased on
October 12, 1993 for $709,600 (40% of their principal amount) and
received in exchange 940,220 shares of the Company's Common Stock.
Prior to the purchase of the Subordinated Debentures, the Board of
Directors had been informed of the proposed purchase and had
determined that the Company would not at that time be able to
purchase the Subordinated Debentures for the price at which they
were being made available to The 1965 Trust. The day after it
purchased the Subordinated Debentures, The 1965 Trust gave the
Company the option, exercisable until October 12, 1994, to purchase
939,160 of the shares it would receive in exchange for the
Subordinated Debentures for $779,680 (which was 110% of the amount
The 1965 Trust paid for the Subordinated Debentures). The option
expired without being exercised.
REPORT ON COMPENSATION BY THE BOARD OF DIRECTORS
The Company does not have a Compensation Committee. Executive
officers have been hired by the chief executive officer. Because
of the level of compensation of the executive officers (no
executive officer other than the chief executive officer received
salary and bonus totaling as much as $150,000 during 1994), the
compensation of the executive officers other than
-9-
<PAGE>
the chief executive officer himself has been set by the chief
executive officer without consultation with, or action by, the
Board of Directors or any committee of the Board of Directors.
Stock options have been granted by a committee of the
Company's Board of Directors, of which the chief executive officer
is a member, in accordance with recommendations by the chief
executive officer. A total of 26,250 stock options were granted in
1994 to persons other than the chief executive officer. These
options were granted to provide the officers to whom they were
granted with incentives related to the performance of the Company's
stock.
The chief executive officer's salary has been fixed at
$300,000 per year since 1988. From the time when the chief
executive officer's salary was fixed at $300,000 per year until
April 1995, there was no annual or other periodic review of the
chief executive officer's compensation.
In January 1994, the Chief Executive Officer was granted a
seven-year option to purchase 500,000 shares of the Company's
Common Stock for $1 per share. This option was proposed by the
non-employee directors of the Company in recognition that a 1993
financial restructuring of the Company, which included the issuance
of common and preferred stock in exchange for debt, had
substantially reduced the percentage of the Company's stock owned
by the chief executive officer. These directors felt that, in view
of the substantial effort that restructuring required, and the
substantial benefit to the Company from the restructuring, it would
be appropriate to give the chief executive officer an option which,
if exercised, would restore the chief executive officer's stock
ownership to approximately the same percentage of the outstanding
Common Stock that he owned before the restructuring (approximately
16%).
During 1992, in anticipation of a public offering of stock of
Infu-Tech, Inc. which reduced the Company's ownership of Infu-Tech
from 100% to 58%, it was decided that Infu-Tech would pay the chief
executive officer $100,000 per year for acting as chief executive
officer of Infu-Tech, and that his salary from the Company would be
reduced by that amount. This allocation of the chief executive
officer's salary between the Company and Infu-Tech was approved by
the Board of Directors of Infu-Tech, which at the time consisted of
the chief executive officer of the Company and the other two
Principal Stockholders (one of whom is the chief executive
officer's brother). At the time the Board of Directors of the
Company voted to approve the public offering of Infu-Tech stock, it
was aware that the chief executive officer's total compensation
from the Company and Infu-Tech would remain at $300,000 per year,
with $200,000 paid by the Company and $100,000 paid by Infu-Tech.
Although the Board of Directors of the Company was not asked to
take action with regard to this arrangement, it did not object to
it.
JOSEPH GIGLIO CARL GLICKMAN
ISRAEL INGBERMAN JACK ROSEN
JOSEPH ROSEN BRUCE SLOVIN
-10-
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Company's Board of Directors met three times during 1994.
All the directors attended all of these meetings, except Mr.
Giglio, who attended one meeting. The Company has an Audit
Committee consisting of Joseph Giglio, Carl D. Glickman and Bruce
Slovin. The principal functions of this Committee are reviewing
the arrangements for and scope of the engagement of the Company's
independent auditors and reviewing with those auditors any concerns
they may have about the Company's financial reporting or internal
controls. The Audit Committee met once during 1994. All members,
except Mr. Giglio, attended the meeting of the Audit Committee.
There also is a subcommittee of the Board of Directors which
considers and grants stock options, consisting of Jack Rosen,
Joseph Rosen and Israel Ingberman. The subcommittee informally met
several times in 1994. No formal meetings were held by the
subcommittee. All members of the subcommittee attended all the
informal meetings. The Company does not have a Compensation
Committee.
CERTAIN TRANSACTIONS
Transactions between the Company and members of its Board of
Directors are described under "Compensation Committee Interlocks
and Insider Participation."
-11-
<PAGE>
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Among Continental Health Affiliates, Dow Jones Equity Market Index
and Dow Jones Health Care Providers Index
Calendar Years Ended December 31
Scaled to represent $100 investments in initial year with
dividends invested over period.
<CAPTION>
(Line graph omitted in EDGAR filing)
<S> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994
____________________________________________________________________________________
Continental Health Affiliates 100 7 26 43 30 48
Dow Jones Equity Market Index 100 96 127 138 152 153
Dow Jones Health Care Providers 100 107 118 124 194 212
The Health Care Providers Index is made up of companies who
are operators of hospitals, nursing and convalescent homes,
long-term care facilities and in-home health services.
</TABLE>
-12-
<PAGE>
FILING OF REPORTS
To the best of the Company's knowledge, no director, officer,
or beneficial owner of more than 10% of the Company's stock failed
to file on a timely basis reports required by Sec. 16(a) of the
Securities and Exchange Act of 1934, as amended, during the year
ended December 31, 1994.
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick audited the accounts of the Company for
1994. In connection with a financing, it is auditing the Company's
accounts at June 30, 1995. The Company is considering changing its
fiscal year to end on June 30, in which case the audit by KPMG Peat
Marwick will be the audit of the Company's accounts for 1995. The
Company has not yet determined who will audit its accounts for 1995
if it does not change its fiscal year.
A representative of KPMG Peat Marwick is expected to be
present at the stockholders meeting, will be given an opportunity
to make a statement if so desired and will be available to respond
to appropriate questions.
OTHER MATTERS
The management knows of no matters other than the ones
described above which will be presented for action at the meeting.
If any other matters properly come before the meeting, or any
adjournments, the people voting the management proxies will vote
them in accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Stockholder proposals intended to be presented at the 1996
Annual Meeting must be received not later than January 31, 1996.
Proposals should be addressed to the Secretary of the Company, 910
Sylvan Avenue, Englewood Cliffs, New Jersey 07632 and should be
sent Certified Mail-Return Receipt Requested.
By order of the Board of Directors
ISRAEL INGBERMAN
Secretary
-13-
<PAGE>
CONTINENTAL HEALTH AFFILIATES, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of CONTINENTAL HEALTH AFFILIATES, INC.,
hereby appoints JACK ROSEN, JOSEPH ROSEN and ISRAEL INGBERMAN, or any
of them present, with full power of substitution, as attorneys and
proxies of the undersigned to appear at the Annual Meeting of
Stockholders of CONTINENTAL HEALTH AFFILIATES, INC., to be held on
November 14, 1995, and at any and all adjournments of that meeting, and
there to act for the undersigned and vote all shares of stock of
CONTINENTAL HEALTH AFFILIATES, INC. standing in the name of the
undersigned, with all the powers the undersigned would possess if
personally present at the meeting, as follows:
(1)ELECTION OF DIRECTORS:
/_/
FOR all nominees listed below (except as marked to the contrary
below)
/_/
WITHHOLD AUTHORITY to vote for any nominee listed below
Jack Rosen, Joseph Rosen, Israel Ingberman, Joseph M. Giglio, Bruce
Slovin and Carl D. Glickman
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
-------------------------------------
(2)In their discretion, the Proxies are authorized to vote upon any
other business that may properly come before the meeting.
(sign on reverse side)
<PAGE>
Please sign exactly as name appears below. Where 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 president or other
authorized officer. If a partnership, sign in partnership name by
authorized person.
Dated , 1995
-----------------------------------
Signature
-----------------------------------
Signature if held jointly
THIS PROXY IS BEING SOLICITED
BY THE BOARD OF DIRECTORS OF
CONTINENTAL HEALTH AFFILIATES,
INC. UNLESS OTHERWISE
SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL
SIX OF THE NOMINEES FOR
ELECTION TO THE BOARD OF
DIRECTORS LISTED ABOVE.
<PAGE>
