<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Readicare, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_
(2) Form, Schedule or Registration Statement No.:
_
(3) Filing Party:
_
(4) Date Filed:
_
<PAGE> 2
READICARE, INC.
1322 ORLEANS DRIVE
SUNNYVALE, CALIFORNIA 94089
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 25, 1996
------------------------
Notice is hereby given that the Annual Meeting of Stockholders of
ReadiCare, Inc., a Delaware corporation (the "Company"), will be held at The
Center Club, 650 Town Center Drive, Costa Mesa, California, on Thursday, July
25, 1996, at 9:30 a.m., Pacific Daylight Time.
At the Annual Meeting, the stockholders will consider and act upon the
following proposals:
1. To elect four Directors of the Company to hold office for a one-year
term or until their successors are elected and qualified;
2. To ratify the election of standing committee chairmen for the succeeding
year;
3. To ratify the selection of Price Waterhouse LLP to audit the
consolidated financial statements of ReadiCare, Inc. for the fiscal year
beginning March 1, 1996; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shares represented by properly executed proxies will be voted in accordance
with the specifications stated therein, and it is the intention of the Board of
Directors that shares represented by proxies, which are not limited to the
contrary, will be voted FOR the election of Directors and FOR each of the
proposals specified. In addition, the shares represented by properly executed
proxies specifying a vote FOR Proposal 1 above regarding the election of
Directors may be cumulated by the proxy holder(s) to cause the election of as
many of the nominees set forth in Proposal 1 above as possible.
All stockholders are cordially invited to attend the annual meeting in
person. In order to assure that at least 4,126,475 shares are represented and
that a quorum is present, those who cannot attend are urged to complete, sign
and date the accompanying proxy and return it promptly in the enclosed envelope.
If you return your proxy, you may nevertheless attend the meeting and vote your
shares in person or may change your vote by the delivery of a later dated proxy.
The Board of Directors has fixed the close of business on May 31, 1996, as
the record date for determining stockholders entitled to notice of and to vote
at the Annual Meeting and at any adjournment thereof.
By order of the Board of Directors,
LOGO
Dennis G. Danko
Chairman
Sunnyvale, California
June 14, 1996
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY
<PAGE> 3
READICARE, INC.
1322 ORLEANS DRIVE
SUNNYVALE, CALIFORNIA 94089
------------------------
PROXY STATEMENT
JUNE 14, 1996
ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of ReadiCare, Inc. (the "Company") of your proxy for use
at the Annual Meeting of Stockholders to be held July 25, 1996, or at any
adjournment thereof (the "Meeting"). This Proxy Statement, Notice of Annual
Meeting of Stockholders and the accompanying proxy card are being mailed to all
stockholders on or about June 14, 1996.
Any stockholder may revoke a proxy at any time prior to its exercise by
filing a later dated proxy or a written notice of revocation with the Secretary
of the Company, or by voting in person at the Meeting. If a stockholder is not
attending the Meeting, any proxy or notice should be returned in time for
receipt no later than the close of business on the day preceding the Meeting.
On May 31, 1996, the date (the "Record Date") fixed by the Board of
Directors for determining the stockholders entitled to notice of, and to vote at
the Meeting, the Company had outstanding 8,252,949 shares of Common Stock, $.01
par value. Stockholders have one vote for each share of Common Stock held of
record as of the Record Date on all business of the Meeting, except that
stockholders have cumulative voting rights with respect to the election at the
Meeting of four directors. No stockholders may cumulate votes unless a
stockholder has announced at the Meeting his intention to do so, but if any
stockholder makes such an announcement, all stockholders may cumulate votes.
Cumulative voting rights entitle a stockholder to give one nominee as many votes
as is equal to the number of directors to be elected, multiplied by the number
of shares owned by him, or to distribute his votes on the same principle among
two or more nominees, as he sees fit. The four nominees for Director receiving
the highest number of votes at the Meeting will be elected.
A proxy, if properly executed, duly returned and not revoked, will be voted
in accordance with the instructions contained thereon. As to the proxies for
which no instructions are given, such proxy will be voted FOR the election of
nominees for Director listed and for each of the proposals specified in this
proxy statement. If the notice of cumulative voting is properly given by any
stockholder, votes represented by properly executed proxies with no instructions
specified therein, will be cumulated by the named proxies and will be
distributed among all or fewer than all of the nominees in such manner as the
named proxies in their discretion shall determine. The proxy also confers
discretionary authority on the persons designated therein to vote on other
business, not currently contemplated, which may come before the Meeting.
Votes cast in person or by proxy at the Annual Meeting will be tabulated by
the Inspector of Elections with the assistance of the Company's transfer agent.
A stockholder may indicate on the enclosed proxy or its substitute that it is
abstaining from voting on a particular matter (an "abstention"). A broker may
indicate on the enclosed proxy or its substitute that it does not have
discretionary authority as to certain shares to vote on a particular matter (a
"broker non-vote"). Abstentions and broker non-votes are each tabulated
separately. The Inspector of Elections will determine whether or not a quorum is
present at the Annual Meeting. In general, Delaware law provides that a majority
of the shares entitled to vote, present in person or represented by proxy
constitutes a quorum. Abstentions and broker non-votes of shares that are
entitled to vote are treated as shares that are present in person or represented
by proxy for purposes of determining the presence of a quorum. Except with
respect to the election of directors and except in certain other specific
circumstances, the affirmative vote of a majority of shares entitled to vote and
present in person or represented by proxy at a duly held meeting at which a
quorum is present is required under Delaware law for approval of proposals
presented to stockholders. In determining whether a proposal has been approved,
abstentions of shares that are entitled to vote are treated as present in person
or represented by proxy, but not as voting for such proposal, and hence have the
same effect as votes against such proposal, while broker non-votes of shares
that are entitled to vote are not treated as present in person or represented by
proxy, and hence have no effect on the vote for such proposal.
1
<PAGE> 4
BENEFICIAL SHARE OWNERSHIP
The beneficial share ownership in the Company as of May 31, 1996 of each
director and named executive officer, all directors and executive officers as a
group, and of the stockholders who are known by the Company to own five percent
or more of the outstanding shares of Common Stock, and the percentages of
outstanding shares held by each such person or group were as follows:
<TABLE>
<CAPTION>
NO. OF SHARES PERCENTAGE OF
OF COMMON COMMON
POSITION HELD STOCK OWNED STOCK
NAME AND ADDRESS WITH COMPANY BENEFICIALLY(1)(2) OUTSTANDING
- ------------------------------------------ -------------------- ------------------ -------------
<S> <C> <C> <C>
Dennis G. Danko........................... Director 961,850 11.7%
Chairman, President
and Chief Executive
Officer
Steve E. Busby............................ Senior Vice 66,250 *
President, Finance
and Secretary
Thomas P. Carey........................... Senior Vice 106,650 1.3
President,
Operations
Alfred E. Osborne, Jr..................... Director 109,250(3) 1.3
James M. Hall............................. Director 67,500 *
Harry L. Casari........................... Director 22,500 *
Trendalysis Securities, Inc............... 836,020 10.1
1301 McKinney, Suite 3740
Houston, TX 77010
Weiss, Peck & Greer, L.L.C................ 694,100 8.4
One New York Plaza
New York, NY 10004
WPG-Farber Partners Fund,L.P. ............ 499,600 6.1
One New York Plaza
New York, NY 10004
All directors and named executive officer
as a group (6 persons).................. 1,334,000 16.2
</TABLE>
- ---------------
* Less than 1%
(1) Includes 307,500, 66,250, 54,250, 57,500, 57,500 and 22,500 shares subject
to options which are exercisable on or within 60 days after May 31, 1996 by
Messrs. Danko, Busby, Carey, Osborne, Hall and Casari, respectively.
(2) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock.
(3) Includes 10,750 shares for which Mr. Osborne has voting power, but for which
he disclaims beneficial ownership.
2
<PAGE> 5
PROPOSAL 1
ELECTION OF DIRECTORS
Directors serve for a term of one year or until their successors are duly
elected and qualified. Officers serve at the pleasure of the Board of Directors.
NOMINEES
Certain information with respect to the nominees for directors is set forth
below. Each nominee is presently a member of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
--------------------------------------- --- ---------------------------------------
<S> <C> <C>
Dennis G. Danko........................ 49 Director, Chairman, President & Chief
Executive Officer
Harry L. Casari........................ 59 Director
James M. Hall.......................... 62 Director
Alfred E. Osborne, Jr. ................ 51 Director
</TABLE>
A brief summary of the business experience for the past five years of the
nominees for directors of the Company is as follows:
DENNIS G. DANKO, the Company's founder and Chairman, has been President,
Chief Executive Officer and Director since the inception of the Company in 1982.
Mr. Danko received a bachelor's degree in economics from Clemson University and
a master's degree in health care management from the University of Pittsburgh.
Mr. Danko has nearly 25 years of experience in the health care field, during
which time he held executive management positions with various publicly-held
organizations, including American Medical International, Inc., and National
Medical Enterprises, Inc.
HARRY L. CASARI joined the Board of Directors in April, 1995. He is a
certified public accountant and private investor. Mr. Casari was associated with
Ernst & Young, LLP from 1969 until 1994 when he retired as a partner. He is a
member of the California Society of Certified Public Accountants and American
Institute of Certified Public Accountants, and serves as a director of COHU,
Inc., Infrasonics, Inc., and Mail Boxes, etc.
JAMES M. HALL has been a Director since November 1989. Mr. Hall is an
attorney engaged in private practice in San Diego, California. Mr. Hall also
served as the California Secretary of Health and Welfare from 1971 to 1972 in
the Cabinet of former California Governor, Ronald Reagan, and as the California
Secretary of Business, Transportation and Housing in 1970. Mr. Hall served as
the California Superintendent of Banks from 1967 to 1970.
ALFRED E. OSBORNE, JR., PH.D., has served as a Director since 1986. He is
presently the Director of the Harold Price Center for Entrepreneurial Studies
and an Associate Professor of Business Economics at UCLA, John E. Anderson
Graduate School of Management. Dr. Osborne has been employed by UCLA since 1972,
except during the two year period between July 1977 and September 1979 during
which time he was on leave as a Brookings Institution Economic Policy Fellow at
the Securities and Exchange Commission. Dr. Osborne is a director of Greyhound
Lines, Inc., Nordstrom, Inc., Seda Specialty Packaging Corporation, The Times
Mirror Company, and United States Filter Corporation. He is an independent
General Partner of Technology Funding Venture Partners V, and a member of
Governor Wilson's Council of Economic Advisors of California.
UNLESS OTHERWISE INSTRUCTED ON THE PROXY CARD, THE SHARES REPRESENTED BY
PROXIES WILL BE VOTED FOR THE FOUR NOMINEES NAMED ABOVE, IN SUCH PROPORTIONS AS
THE PROXY HOLDER SEES FIT. SHOULD ANY NOMINEE DECLINE OR BE UNABLE TO ACCEPT
NOMINATION OR ELECTION, WHICH IS NOT ANTICIPATED, THE PROXIES WILL BE VOTED FOR
SUCH SUBSTITUTE NOMINEE AS MAY BE DESIGNATED BY THE BOARD OF DIRECTORS.
3
<PAGE> 6
COMMITTEES OF THE BOARD
The Board of Directors has standing Audit, Executive Compensation and Stock
Option, and Strategic Planning Committees. It does not have a nominating
committee or a committee performing the functions of a nominating committee.
The Audit Committee meets at least annually with management and the
Company's independent certified public accountants to review the work of each
and to ensure that each is properly discharging its responsibilities. The
independent certified public accountants have free access to the Audit
Committee, without management representatives present, to discuss the results of
their examination and their opinion with respect to the adequacy of internal
controls and the quality of financial reporting of the Company. The Audit
Committee recommends to the Board of Directors the selection of the firm of
independent certified public accountants to audit the financial statements of
the Company. The members of the Audit Committee are Harry L. Casari, Chairman,
Alfred E. Osborne, Jr., and James M. Hall.
The Executive Compensation and Stock Option Committee has the
responsibility to meet with management to review the compensation policies and
practices of the Company, to formulate recommendations to the Board of Directors
on these policies and practices, to recommend to the Board the level of
compensation of executive officers, and to make recommendations to the Board
concerning compensation of directors. The members of the Executive Compensation
and Stock Option Committee are James M. Hall, Chairman, Alfred E. Osborne, Jr.,
and Harry L. Casari.
The Strategic Planning Committee has the responsibility to meet with
management to review the annual operating plans developed by management, and to
formulate along with management, strategies and business plans designed to
enhance stockholder value. The members of the Strategic Planning Committee are
Alfred E. Osborne, Jr., Chairman, James M. Hall, Harry L. Casari, and Dennis G.
Danko.
MEETINGS OF THE BOARD AND COMMITTEES
During the fiscal year ended February 29, 1996, the Board of Directors held
four (4) meetings, the Audit Committee of the Board held one (1) meeting, the
Executive Compensation and Stock Option Committee of the Board held three (3)
meetings, and the Strategic Planning Committee of the Board held one (1)
meeting. Each of the nominees for election at the Annual Meeting attended at
least 75% of the meetings of the Board of Directors and the committees of the
Board of Directors of which they are members.
COMPENSATION TO DIRECTORS
Non-employee directors are paid $1,000 for each Board of Director meeting
attended, plus reimbursement of reasonable expenses in attending meetings. No
fees or reimbursements are paid for telephonic meetings or committee meetings.
During fiscal year 1992, the Company's stockholders approved a stock option
plan, (the "Directors' Plan"), whereby non-qualified stock options to purchase a
total of 200,000 shares of Common Stock may be granted to members of the
Company's Board of Directors. During fiscal year 1994, the stockholders approved
an amendment to the Directors' Plan providing for an automatic grant of options
to each non-employee director to purchase 10,000 shares of Common Stock upon
initial election to the Board of Directors, options to purchase 7,500 shares of
Common Stock annually upon re-election to the Board of Directors, and options to
purchase 5,000 shares of Common Stock annually upon election as the chairman of
a standing committee of the Board of Directors. The options are for a term of
five years and may be exercised six months after the date of grant. During the
year ended February 29, 1996, options for 47,500 shares were granted with
exercise prices ranging from $1.92 to $2.50 per share, options for 12,500 shares
were exercised, and options for 27,500 shares were terminated. At February 29,
1996, options to purchase 137,500 shares were issued, outstanding and eligible
for exercise, and options to purchase 50,000 shares were available for future
grant.
4
<PAGE> 7
PROPOSAL 2
RATIFICATION OF ELECTION OF STANDING COMMITTEE CHAIRMEN
FOR THE SUCCEEDING YEAR
The Board of Directors has elected each of the individuals set forth below
to be chairman of the standing committee of the Board of Directors set forth
opposite such director's name and recommends that the stockholders ratify such
election. Such elections are subject to such individuals being re-elected as
directors of the Company by the stockholders at the Annual Meeting. Biographical
information with respect to such directors is located in this Proxy Statement
under the heading "Election of Directors".
<TABLE>
<S> <C>
Harry L. Casari.......................... Chairman of the Audit Committee
James M. Hall............................ Chairman of the Executive Compensation
and Stock Option Committee
Alfred E. Osborne, Jr. .................. Chairman of the Strategic Planning
Committee
</TABLE>
This matter is being submitted to the stockholders pursuant to the
requirements of the Directors' Plan. In the event of a negative vote, the Board
of Directors will reconsider its selections.
BOARD RECOMMENDS APPROVAL
The Board of Directors recommends that the stockholders ratify the election
of Messrs. Casari, Hall and Osborne as the chairmen of the standing committees
of the Board of Directors. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF
THE COMPANY'S OUTSTANDING COMMON STOCK REPRESENTED AND ENTITLED TO VOTE IS
REQUIRED TO RATIFY SUCH ELECTIONS.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP, independent
accountants, to audit the financial statements of the Company for the fiscal
year beginning March 1, 1996 and recommends that the stockholders confirm such
selection. In the event of a negative vote, the Board of Directors will
reconsider its selection. Price Waterhouse LLP has audited the Company's
financial statements since the year ended February 28, 1991. Representatives of
Price Waterhouse LLP are expected to be available at the Annual Meeting, with
the opportunity to make a statement if they desire to do so, and are expected to
be available to respond to appropriate questions.
BOARD RECOMMENDS APPROVAL
The Board of Directors recommends that the stockholders ratify the
selection of Price Waterhouse LLP as the Company's independent accountants for
the fiscal year beginning March 1, 1996.
COMPENSATION TO EXECUTIVE OFFICERS
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the Performance Graph on
page 7 and the Report of the Stock Option and Executive Compensation Committee
on pages 7, 8 and 9 shall not be incorporated by reference into any such
filings.
5
<PAGE> 8
SUMMARY COMPENSATION TABLE
The following table sets forth for the fiscal years ended February 29, or
28, 1996, 1995 and 1994 the compensation paid or accrued by the Company for the
Chief Executive Officer and all other executive officers of the Company (the
"Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION ------------
-------------------- AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)*
- ------------------------------------------ ---- --------- -------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Dennis G. Danko........................... 1996 205,000 -0- 187,500 8,352
Chairman, CEO & 1995 195,000 15,000 60,000 8,624
President 1994 189,850 -0- 60,000 8,648
Steve E. Busby............................ 1996 97,600 17,000 10,000 2,944
Senior Vice President, 1995 92,333 10,000 25,000 2,296
Finance & Secretary 1994 87,000 4,450 25,000 2,315
Thomas P. Carey........................... 1996 95,500 17,000 23,000 2,938
Senior Vice President 1995 90,333 10,000 25,000 2,292
Operations 1994 85,500 4,350 25,000 2,309
</TABLE>
- ---------------
* For all executive officers, amounts include incremental health and disability
insurance benefits.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information for the fiscal year ended
February 29, 1996, with respect to grants of options to purchase Common Stock of
the Company to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM($)*
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% 10%
- -------------------------------- ---------- ------------- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Dennis G. Danko................. 87,500 38% 2.25 4/00 54,393 120,194
Dennis G. Danko................. 100,000 43 3.25 10/00 89,792 198,416
Steve E. Busby.................. 10,000 4 2.25 4/00 6,216 13,736
Thomas P. Carey................. 23,000 10 2.25 4/00 14,298 31,594
</TABLE>
- ---------------
* Potential realizable value is based on an assumption that the stock price of
the common stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the five year option term. These
numbers are calculated based on the requirements promulgated by the Securities
and Exchange Commission and do not reflect the Company's estimate of future
stock price growth.
The ReadiCare option plans, other than the Directors' Plan, are
administered by a Committee of the Board of Directors. The Committee determines
the eligibility of employees and consultants, the number of shares to be granted
and the terms of such grants. All stock options granted in fiscal year 1996 had
an exercise price equal to the fair market value on the date of grant, and had a
term of five (5) years. The Plans also provide for same day sales, i.e.,
cashless exercises.
6
<PAGE> 9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during fiscal 1996 and
unexercised options held as of the end of fiscal 1996.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR END(#) AT FISCAL YEAR END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dennis G. Danko................ -0- -0- 257,500 100,000 357,675 69,000
Steve E. Busby................. -0- -0- 47,500 37,500 53,712 52,438
Thomas P. Carey................ -0- -0- 41,750 31,250 67,432 49,688
</TABLE>
PERFORMANCE GRAPH
The following graph demonstrates the performance of the cumulative total
return to the stockholders of the Company's Common Stock during the previous
five years in comparison to the cumulative total return of the Standard & Poor's
Health Care Composite Index and the Standard & Poor's 500 Stock Index. Note that
historic stock price performance is not necessarily indicative of future stock
price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG READICARE, INC., THE S & P 500 INDEX
AND THE S & P HEALTH CARE COMPOSITE INDEX
<TABLE>
<CAPTION>
S & P HEALTH
MEASUREMENT PERIOD READICARE, CARE COM-
(FISCAL YEAR COVERED) INC. S & P 500 POSITE
<S> <C> <C> <C>
2/91 100 100 100
2/92 83 116 125
2/93 37 128 97
2/94 26 139 98
2/95 20 149 127
2/96 53 201 193
</TABLE>
* $100 INVESTED ON 02/28/91 IN STOCK OR INDEX
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING FEBRUARY 29.
REPORT OF THE STOCK OPTION AND EXECUTIVE COMPENSATION COMMITTEE
The compensation policies of ReadiCare, Inc. (the "Company") are determined
and administered by the Stock Option and executive Compensation Committee (the
"Committee") of the Board of Directors consisting of Messrs. Hall, Casari, and
Osborne. The policies adopted are structured to link the compensation of the
named executive officers and key management of the Company to enhanced
stockholder value, while
7
<PAGE> 10
providing compensation at competitive levels. Through the establishment of short
and long-term incentive plans, the Company has attempted to align the financial
interests of its executive officers and key management personnel with those of
its stockholders.
EXECUTIVE COMPENSATION PHILOSOPHY
In designing its compensation programs, the Company follows the belief that
compensation should reflect the value created for stockholders while supporting
the business strategies and long-range plans of the Company taking into
consideration, among other factors, the markets and clients the Company serves
and the operating environment faced by the Company. In doing so, the
compensation programs reflect the following themes:
- A competitive compensation program that stresses both the Company's
financial performance and individual performance.
- An annual incentive plan that generates a portion of compensation based
on the achievement of specific performance goals and objectives; and,
superior individual performance resulting in total annual compensation
above competitive levels.
The Committee reviews and determines the compensation of the executive
officers and key management personnel of the Company based on this philosophy on
an annual basis.
EXECUTIVE COMPENSATION COMPONENTS
The Company's executive compensation program consists of three components,
each of which is intended to guide the overall compensation philosophy.
- Base Salary
Base salary is intended to be set at levels within the range of the
competitive amounts paid to executive officers and key management personnel of
companies of similar business structure, size and marketplace orientation.
Salary levels are reviewed by the Committee on an annual basis.
- Annual Incentive Compensation
Under an annual incentive plan, annual incentive awards may be granted to
the executive officers and other key personnel upon the achievement of annual
financial goals and specific objectives established by the Committee or the
Company's President at the beginning of the fiscal year.
- Stock Options
Executive officers and other key employees are eligible to receive periodic
grants of stock options pursuant to the terms of the Company's Stock Option
Plan. Such grants are intended to retain and motivate executive officers to
improve long-term stock market performance and thus Company valuation. Stock
options are granted at or above the fair market value of the underlying common
stock at the date of grant. Generally, stock options vest in installments over
multiple years.
FISCAL 1996 ACTIONS
During fiscal 1996, the Committee reviewed a market analysis of competitive
compensation practices for selected executive positions in several other
companies of similar size and scope. This analysis then was used by the
Committee, in conjunction with its own evaluation of Company performance and
individual executive performance, in making specific decisions with respect to
the compensation level of the Company's executive officers and key management
personnel.
8
<PAGE> 11
REPORT ON GRANT OF OPTIONS
Stock options are granted to executive officers and key management
personnel of the Company under the Company's Stock Option Plans. Such grant
actions are primarily based on the executive's ability to influence the
Company's long-term growth and profitability. The Committee believes that stock
option grants afford a desirable long-term compensation method because they
closely align the interests of management with stockholder value and that grants
of stock options would be the best way to link directly the financial interests
of management with those of stockholders.
In granting stock options to the named executive officers and to other key
employees, the Committee reviewed individual circumstances, taking into account
the respective scope of accountability, strategic and operational goals,
anticipated performance requirements and contributions of each person, the
general market conditions faced by the Company, the performance of the Company
versus its competitors, and the importance of maintaining the long term
commitment of executive officers and key employees to the Company. During fiscal
1996, the Committee noted that a number of key employees of the Company held
options having exercise prices substantially in excess of the market price of
the Company's stock. The Committee believed that one purpose of the stock option
plan, to provide equity incentives, would not be achieved for employees holding
such options exercisable above the market price. As a result, upon the surrender
of those holders of 241,000 outstanding options in excess of an exercise price
of $3.50 per share, the Committee granted 120,500 new options with an exercise
price of $2.25 per share. The exchanged options were contingent upon, among
other terms, a six month holding period before such options could be exercised
by the holder.
CEO COMPENSATION
Dennis G. Danko, the Chairman, President and Chief Executive Officer of the
Company was compensated at an annual rate of $205,000 for the fiscal year 1996.
The Committee's review of compensation practices for chief executive officers of
other comparable companies indicated that Mr. Danko's compensation was at the
low end of the annual compensation level paid to other such chief executive
officers. After considering various compensation alternatives in order to
financially reward Mr. Danko for the achievement of Company performance
objectives and individual goals, the Committee adopted an incentive compensation
program for Mr. Danko as follows:
(1) Mr. Danko agreed to freeze his annual base compensation rate at
its current level through the 1997 fiscal year;
(2) Mr. Danko agreed to waive his rights to receive cash incentive
awards for the fiscal years 1996 and 1997;
(3) The Committee granted Mr. Danko 100,000 stock options under the
Company's 1991 Stock Option Plan, consisting of 30,769 incentive options
and 69,231 non-qualified options, all of which will become fully
exercisable not later than October 26, 1996. The option price was $3.25 per
share, the closing price of the Company's stock on October 24, 1995, the
date on which the Committee took action on the matter.
The foregoing report has been furnished by Committee members Messrs. Hall,
Casari and Osborne.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDE PARTICIPATION
Directors Hall, Casari and Osborne comprised the Compensation Committee of
the Board of Directors during the fiscal year ended February 29, 1996. Neither
of these persons has ever been an officer or employee of the Company or any of
its subsidiaries, nor were there any compensation committee interlocks or other
relationships during such fiscal year requiring disclosure under item 402(j) of
Regulation S-K of the Securities and Exchange Commission.
9
<PAGE> 12
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at the Company's
1997 Annual Meeting of Stockholders must be received by the Company no later
than February 14, 1997 in order to be considered for inclusion in the proxy
statement and form of proxy for that meeting.
SOLICITATION OF PROXIES
The Company bears the cost of this solicitation. Proxies may be solicited
by mail, telephone, telegraph or personally by directors, officers or regular
employees of the Company without remuneration other than normal employees'
salaries. The Company will reimburse persons holding shares in their names or in
the names of their nominees for reasonable expenses of forwarding proxy
materials to their principals. Brokerage houses, custodians, nominees and
fiduciaries will be reimbursed by the Company for their reasonable expenses in
forwarding solicitation materials to the Company's beneficial stockholders.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities
to file with the Securities and Exchange Commission (the "SEC") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than
ten-percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely upon review of the copies of such
reports furnished to the Company and written representation that no other
reports were required, during the fiscal year ended February 28, 1996 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with.
OTHER MATTERS
The Company does not intend to present any other business for action at the
Meeting and does not know of any other business intended to be presented by
others.
STOCKHOLDERS OF THE COMPANY MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, FOR THE
FISCAL YEAR ENDED FEBRUARY 29, 1996, BY WRITING THE COMPANY AT 1322 ORLEANS
DRIVE, SUNNYVALE, CALIFORNIA 94089, ATTENTION: STEVE E. BUSBY. THE WRITTEN
REQUEST MUST SPECIFY THE STOCKHOLDER'S GOOD FAITH REPRESENTATION THAT, AS OF THE
RECORD DATE FOR THE 1996 ANNUAL MEETING OF STOCKHOLDERS, SUCH STOCKHOLDER WAS A
BENEFICIAL HOLDER OF SHARES OF THE COMPANY'S COMMON STOCK.
Dennis G. Danko
Chairman
LOGO
Sunnyvale, California
June 14, 1996
10
<PAGE> 13
PROXY
READICARE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JULY 25, 1996
The undersigned hereby (i) acknowledge(s) receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement each dated June 14, 1996, relating
to the Annual Meeting of Stockholders of ReadiCare, Inc. (the "Company") to be
held July 25, 1996 and (ii) appoint(s) Dennis G. Danko, Steve E. Busby and each
or either of them as proxies, with full power of substitution, and authorizes
them, or either of them, to vote all the shares of Common Stock, $.01 par
value, of the Company standing in the name of the undersigned at the Annual
Meeting of Stockholders of the Company to be held July 25, 1996 or any
adjournment thereof upon the matters specified below.
PLEASE DATE, SIGN ON THE REVERSE SIDE AND MAIL PROXY IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR DOMESTIC MAILING.
<PAGE> 14
Please mark
your votes as /X/
indicated in
this example.
<TABLE>
<S> <C> <C> <C>
FOR WITHHOLD
all nominees AUTHORITY
listed (except to vote for
as withheld) nominee listed
1. Except as indicated below, FOR the election of / / / /
the following persons, who have been nominated
for election to the Board of Directors:
Dennis G. Danko, Harry L. Casari, James M.
Hall, and Alfred E. Osborne, Jr.
Please enter the names of any nominee(s) for whom
you wish to withhold authority to vote:
- ------------------------------------------------ FOR AGAINST ABSTAIN
2. TO RATIFY THE ELECTION OF STANDING COMMITTEE / / / / / /
CHAIRMAN FOR THE SUCCEEDING YEAR.
FOR AGAINST ABSTAIN
3. TO RATIFY THE APPOINTMENT OF PRICE / / / / / /
WATERHOUSE LLP AS THE INDEPENDENT
AUDITORS FOR THE COMPANY.
FOR AGAINST ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHO- / / / / / /
RIZED TO VOTE UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING.
YES NO
I/We will attend the meeting. / / / /
STOCKHOLDERS WHO ATTEND THE MEETING MAY
VOTE IN PERSON EVEN THOUGH THEY PREVIOUSLY
MAILED THIS PROXY.
UNLESS OTHERWISE INDICATED TO THE CONTRARY,THIS
PROXY WILL BE TAKEN AS AUTHORITY TO VOTE FOR THE
ABOVE LISTED MATTERS. IN THE EVENT THAT THE UNDER-
SIGNED SPECIFIES A CHOICE WITH RESPECT TO THE MAT-
TERS LISTED IN ITEMS 1, 2 AND 3 ABOVE, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCOR-
DANCE WITH THAT CHOICE.
Signature(s) Date , 1996
------------------------------------------------------ --------------
IMPORTANT: Please date this Proxy and sign exactly as your name(s) appears. When signing as a
fiduciary or as an agent of a corporation, partnership, trust or other entity, please give
your full title. When shares are held by joint tenants or tenants in common both should sign
the proxy. Please return this Proxy promptly in the enclosed envelope.
- ----------------------------------------------------------------------------------------------
</TABLE>
