CAS MEDICAL SYSTEMS, INC.
21 Business Park Drive
Branford, Connecticut 06405
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 1996
To the Stockholders of
CAS MEDICAL SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CAS
MEDICAL SYSTEMS, INC., a Delaware corporation (the Company), will be held on
Wednesday, June 12, 1996, at 10:00 a.m., Eastern Daylight Time, at the offices
of the Company, 21 Business Park Drive, Branford, Connecticut 06405, for the
following purposes:
(1) To elect seven directors of the Company, each for a term of one year;
(2)To ratify the selection of Arthur Andersen LLP as independent auditors
for the Company's fiscal year ending December 31, 1996;
(3)To transact such other business as may properly come before the
Meeting.
Only stockholders of record at the close of business on May 3, 1996 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors,
Stanley D. Josephson
Secretary
Branford, Connecticut
May 1, 1996
If you do not plan to attend the Annual Meeting to vote your shares,
please complete, date, sign and promptly mail the enclosed proxy card in the
return envelope provided. No postage is necessary if mailed in the United
States. Any person giving a proxy has the power to revoke it at any time, and
shareowners who are present at the meeting may withdraw their proxies and vote
in person.
<PAGE>
CAS MEDICAL SYSTEMS, INC.
21 Business Park Drive
Branford, Connecticut 06405
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors and management of CAS Medical Systems, Inc., a Delaware
corporation (the Company), of proxies for use at the Annual Meeting of
Stockholders of the Company (the Annual Meeting) to be held on Wednesday, June
12, 1996, at 10:00 a.m. Eastern Daylight Time at the offices of the Company,
21 Business Park Drive, Branford, Connecticut 06405, and at any and all
postponements or adjournments thereof, for the purposes set forth in the
accompanying Notice of Meeting.
This Proxy Statement, Notice of Meeting and accompanying proxy card are
first being mailed to stockholders on or about May 3, 1996.
GENERAL
All proxies duly executed and received by the persons designated as
proxies therein will be voted on all matters presented at the Meeting in
accordance with the instructions given therein by the person executing such
proxy or, in the absence of specific instructions, will be voted in favor of
election to the Board of Directors of the seven (7) candidates nominated by
the board and in favor of the other proposal indicated on such proxy.
Management does not know of any other matter which may by brought before the
Meeting, but in the event that any other matter should properly come before
the Meeting or any nominee should not be available for election, the persons
named as proxies will have authority to vote all proxies not marked to the
contrary in their discretion as they deem advisable. Any stockholder may
revoke his proxy at any time before the Meeting by written notice to such
effect received by the Company at the address shown above, Attention:
Corporate Secretary, by delivering of a subsequently dated proxy, or by
attending the Meeting and voting in person.
The Common Stock is the only class of the Company's security entitled to
vote, each share being entitled to one vote. The total number of shares of
Common Stock outstanding as of May 3, 1996, the record date established by the
Company's Board of Directors for stockholders entitled to notice of the
Meeting and to vote thereat, were 9,279,479. A majority of the issued and
outstanding shares of Common Stock, collectively treated as a single class, or
4,639,740 shares, must be present at the Meeting in person or by proxy in
order to constitute a quorum for the transaction of business. Assuming the
presence of a quorum, the affirmative vote of a majority of the shares present
and voting at the Meeting is required to approve each of the matters
presented.
A list of stockholders entitled to vote at the Meeting will be available
for examination by any stockholder at the Company's offices, 21 Business Park
Drive, Branford, Connecticut 06405, for a period of ten days prior to the
Meeting and at the Meeting itself.
<PAGE>
STOCK OWNERSHIP
Stock Ownership of Certain Beneficial Owners
The following table sets forth information as to the beneficial
ownership of each person known to the Company to own more than 5% of the
outstanding Common Stock as of May 3, 1996:
Name and Address of
Beneficial Owner or Amount and Nature of Percentage
Identity of Group Beneficial Ownership (1) of Class
Estate of Garry Evans 500,000 5.3%
Weybridge, Surrey
United Kingdom
Venture Capital Associates, Ltd. 980,575 10.5%
c/o Jay M. Haft
529 Fifth Avenue
New York, NY 10022
Haulbowline Ltd. 1,832,000 19.7%
c/o The Bank of Bermuda Limited
6 Front Street
PO Box HM 1020
Hamilton HMDX, Bermuda
Stock Ownership of Directors and Executive Officers
The following table reflects shares of Common Stock beneficially owned
(or deemed to be beneficially owned pursuant to the rules of the Securities
and Exchange Commission) as of May 3, 1996 by each director of the Company,
each of the executive officers named in the Summary Compensation Table
included elsewhere herein and the current directors and executive officers of
the Company as a group:
Amount and Nature of Percentage
Name Beneficial Ownership (1) of Class
Louis P. Scheps 1,333,325 (2) 14.3%
Myron L. Cohen, Ph.D. 940,453 10.1%
Stanley D. Josephson 167,484 (3) 1.8%
Lawrence S. Burstein 463,563 (4) 4.9%
Jerome Baron 2,054,500 (5) 22.1%
Jay M. Haft 1,071,575 (6) 11.5%
Saul S. Milles, M.D. 60,000 (7) 0.6%
All officers and directors
as a group (7 persons) 6,090,900 65.6%
(1) Pursuant to the rules of the Securities and Exchange Commission, shares
of Common Stock which an individual or group has a right to acquire
within 60 days pursuant to the exercise of options or warrants are
deemed to be outstanding for the purpose of computing the percentage
ownership of such individual or group, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of
any other person shown in the table. Except as otherwise indicated, the
persons named herein have sole voting and dispositive power with
respect to the shares beneficially owned.
<PAGE>
(2) Includes options to purchase 900,000 shares.
(3) Includes options to purchase 75,000 shares.
(4) Includes options to purchase in the aggregate 150,000 shares; 185,000
shares owned by Trinity Capital Corporation Pension Trust, of which a
director is a trustee and a beneficiary; 9,375 shares owned, directly
and indirectly, by a family member.
(5) Includes options to purchase 200,000 shares; also includes 1,832,000
shares owned by Haulbowline Ltd., as to which shares Mr. Baron has
voting and dispositive power.
(6) Includes options to purchase 60,000 shares; also includes 980,575 shares
owned by Venture Capital Associates, Ltd., a limited partnership of
which the general partner is a corporation in which Mr. Haft is a
controlling shareholder.
(7) Includes options to purchase 60,000 shares.
ITEM 1 ELECTION OF DIRECTORS
Seven Directors are to be elected at the Meeting to serve for a term of
one year or until their respective successors are duly elected and qualify.
The shares represented by the proxies will be voted in favor of the election
as Directors of the persons named below unless authority to do so is withheld.
If any nominee is not a candidate for election at the Meeting, an event which
the Board of Directors does not anticipate, the proxies will be voted for a
substitute nominee and the others named below.
Louis P. Scheps - Director since 1990
Mr. Scheps, 64, was appointed President and CEO of the Company in
September of 1990. He had held the position of Director of Manufacturing since
1986. Prior thereto, Mr. Scheps was employed by Posi-Seal International as
Vice President from 1969 to 1985. Mr. Scheps received his engineering degree
from Purdue University and his business education from the GE Management
Program.
Myron L. Cohen, Ph.D. - Director since 1984
Dr. Cohen, 62, founder of the Company, has been involved in developing
and marketing medical products for over 20 years. Dr. Cohen was Director of
Research and Development for the Hospital Products Division of
Chesebrough-Pond's Inc. from 1978 to 1983. From 1966 through 1978, Dr. Cohen
was Professor of Mechanical Engineering at Stevens Institute of Technology and
was co-founder and director of the Institute's Medical Engineering Laboratory.
Dr. Cohen was awarded the Humboldt Prize by the Federal Republic of
Germany for his work in biomedical engineering. He has lectured throughout the
European Economic Community countries on problems in technology and medicine.
Stanley D. Josephson - Director since 1984
Mr. Josephson, 66, is an attorney in private practice in Branford,
Connecticut. Mr. Josephson is a graduate of New York University Law School and
specializes in corporate development law and international marketing. He is a
member of the Board of Directors and is General Counsel to several privately
held companies.
<PAGE>
Lawrence S. Burstein - Director since 1985
Mr. Burstein, 53, has been an officer, director and stockholder of
Trinity Capital Corporation since October 1982. Mr. Burstein is a
director of four other public companies, THQ, Inc., a manufacturer of
video game cartridges and toys, The MNI Group, Inc., a company that
markets specially formulated medical foods, U.S. Communications, Inc., a
company engaged in the activation of wireless products and Trinity
Americas, Inc. Mr. Burstein is President of Trinity Americas, Inc., which
is engaged in the acquisition of other companies.
Jerome S. Baron - Director since 1986
Mr. Baron, 69, has been in the securities industry since 1944. He
was a Vice President in the International Department at Loeb Rhoades & Company,
a Partner at Andreson & Company, and Chairman and Chief Executive Officer of
Foster Securities, Inc., which he founded in 1974. In 1977, Foster
Securities merged with Brean Murray Securities Inc. Mr. Baron manages
individual portfolios, oversees compliance, and is a member of the
Investment Advisory Board for BMI Capital Corp., the firm's investment
management affiliate. He is a Director of USC Corporation, a public
cellular telephone software company and Haulbowline Ltd., a private
offshore company. He attended Kings Point Merchant Marine Academy and
Pace University.
Jay M. Haft - Director since 1991
Mr. Haft, 60, has been engaged in the practice of law for more than
ten years and is counsel to the firm of Parker Duryee Rosoff & Haft. Mr. Haft
is a director of six other public companies, Viragen, Inc., a medical
products company, Noise Cancellation Technologies, Inc., a company
engaged in the design of noise suppression equipment, Extech, Inc., a
company engaged in hotel management and other businesses, Robotic Vision
Systems, Inc., a manufacturer of testing systems for semiconductor
equipment, ORYX Technology, Inc., a company manufacturing and developing
power controls and test products, and Nova Technology, Inc., a company
engaged in the development of a hospital bed and patient transport
system. He is currently acting CEO of Noise Cancellation Technologies,
Inc. Mr. Haft received a B.A. and a LL.B. from Yale University.
Saul S. Milles, M.D. - Director since 1991
Dr. Milles, 65, is a Medical Director for Corporate Medical
Operations of the General Electric Corporation headquartered in
Fairfield, Connecticut since 1984. He has been actively involved in
issues related to medical screening, employing the handicapped, employee
assistance program design and assessment, and the development of policies
related to smoking abatement and the control of substance abuse. He has
served as an advisor to the Congress of the United States, Office of
Technology Assessment on screening tests and their ethical and
socioeconomic implications. Dr. Milles attended Cornell University and
received his M.D. degree from the University of Rochester and received
specialty training in Internal medicine and Gastroenterology at Yale
Medical Center. He is also currently Clinical Associate Professor of
Medicine at Yale Medical School.
Meetings of the Board of Directors
During the Company's fiscal year ended December 31, 1995, the Board
of Directors held four meetings and acted one time by unanimous consent.
A majority of the Directors were in attendance at a majority of the
meetings.
<PAGE>
Committees of the Board
The Board has standing Compensation and Audit Review Committees.
Compensation Committee. The Compensation Committee, composed of Messrs.
Burstein and Josephson, met three times during Fiscal 1995. Its functions are
to review the Company's general compensation strategy; establish salaries and
review benefit programs, and certain other compensation plans; and approve
certain employment contracts.
Audit Review Committee. The Audit Review Committee, composed of Messrs.
Burstein and Josephson, met twice during Fiscal 1995. Its functions are to
recommend the appointment of independent accountants; review the arrangements
for and scope of the audit by independent accountants; review the independence
of the independent accountants; consider the adequacy of the system of
internal accounting controls and review any proposed corrective actions;
review and monitor the Company's policies regarding business ethics and
conflicts of interest; and discuss with management and the independent
accountants the Company's draft annual financial statements and key accounting
and/or reporting matters.
1984 Stock Option Plan
Under the 1984 Incentive Stock Option Plan (1984 Plan), options were
granted at exercise prices which were not less than the fair market value of
the shares on the date that the options were granted. Options granted under
the 1984 Plan could not be exercised more than ten years after the grant and
no option could be granted after December 31, 1994. Accordingly, options may
no longer be granted under the 1984 Plan.
The following tabulation shows certain information pertaining to
grants, cancellations and exercises of options under the Plan during the
Company's fiscal year ended December 31, 1995.
All
Employees
All who
Current participate
Executive in the Stock
Officers as Option Plan
Louis P. Myron L. a Group as a Group
Scheps Cohen, Ph.D. (2 Persons) (26 Persons)
Period: 1/1/95-12/31/95:
Granted-
Number of Shares - - - -
Average Exercise
Price per Share - - - -
Cancelled - - - 45,000
Exercised
Number of Shares - - - 40,000
Net value realized
(market value less
exercise price) - - - -
Warrants/Options
Outstanding at
12/31/95 31,000 - 31,000 545,900
<PAGE>
1994 Stock Option Plan
In June 1994, the Board of Directors and stockholders adopted the 1994
Employees' Incentive Stock Option Plan. Pursuant to the Plan, 250,000 shares
of common stock have been reserved for employee purchase. This plan is the
successor to the 1984 Plan and contains provision which are similar to those
of the 1984 Plan.
Options may be granted under the Company's 1994 Employee Incentive Stock
Option Plan (the Plan) which are intended to meet the requirements of Section
422 of the Internal Revenue Code of 1986, as amended (Incentive Stock
Options).
Subject to certain limitations as set forth in the Plan, options to
purchase shares may be granted thereunder to persons who are full time
employees (including officers and directors) of either the Company or any
subsidiary. Options granted under the Plan are exercisable in two equal
installments, commencing one year from the date of grant and expire between
five and ten years thereafter, as determined in each instance by the Company's
Board of Directors, the term of each option depending on the optionee's equity
interest in the Company.
The option price of shares of Common Stock subject to an Incentive Stock
Option may not be less than fair market value of the shares on the date upon
which such option is granted. In addition, in the case of an optionee of an
Incentive Stock Option who owns, at the time the option is granted, more than
10% of the total combined voting power of all classes of stock of the Company
or of a subsidiary of the Company, the purchase price of the shares may not be
less than 110% of the fair market value of the shares on the date on which
such option is granted.
The following tabulation shows certain information pertaining to grants,
cancellations and exercises of options under the Plan during the Company's
fiscal year ended December 31, 1995: All
Employees
All who
Current participate
Executive in the Stock
Officers as Option Plan
Louis P. Myron L. a Group as a Group
Scheps Cohen, Ph.D. (2 Persons) (26 Persons)
Period: 1/1/95-12/31/95:
Granted-
Number of Shares - - - -
Average Exercise
Price per Share - - - -
Cancelled - - - -
Exercised
Number of Shares - - - -
Net value realized
(market value less
exercise price) - - - -
Warrants/Options
Outstanding at
12/31/95 - - - 25,000
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation
during the last three fiscal years of the executive officers of the Company
(hereinafter referred to collectively as the named executive officers).
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long
All Rest- Term
All
Annual ricted Incen-
Other
Compen- Stock tive
Compen-
Salary Bonus sation Awards SARs Payouts
sation
Principal Position Year ($) ($) ($) ($) (#) ($)
($)
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Louis P. Scheps 1995 175,000 40,000 0 0 0 0
1,700
President 1994 150,000 0 0 0 0 0
1,318
and CEO 1993 133,333 22,500 0 0 750,000 0
1,015
Myron L. Cohen 1995 165,862 10,000 5,000 0 0 0
2,695
Executive Vice 1994 150,645 0 5,000 0 0 0
2,000
President 1993 136,950 7,500 5,000 0 0 0
1,325
<FN>
No warrants/options/SARs were granted in 1995.
</FN>
Aggregated Warrants/Option/SARs Exercised in last Fiscal Year-End and
FY-end Warrants/Option/SARs Values
<CAPTION>
Value
of
Unexercised
in-the-Money
Shares Number of
Warrants/
Acquired Unexercised
Options/SARs
or Value Warrants/Options/SARs at
FY-End ($)
Exercised Realized at FY-End (#)
Exercisable/
Name (#) ($) Exercisable Unexercisable
Unexercisable
<S> <C> <C> <C> <C>
<C>
Louis P. Scheps - - 400,000 500,000 -
President and CEO
<FN>
No warrants/options were exercised by the named executive officers in 1995.
</FN>
</TABLE>
Long-Term Incentive Plan Awards in Fiscal Year Ended December 31, 1995
No long-term incentive Plan awards were made in 1995.
<PAGE>
Employment Contracts and Termination Benefits
The Company has an employment agreement with Mr. Scheps which provides
that he will serve as President and Chief Executive Officer of the Company
through August 31, 1996 at an annual base salary of $175,000. There are no
benefits payable to Mr. Scheps upon termination of the agreement. In
recognition of his outstanding service to the Company and the results he
obtained, in October, 1993, the Board of Directors awarded Mr. Scheps a
warrant to purchase 750,000 shares at a purchase price of $.31 per share.
During the term of his contract and continued employment thereunder, on
the first, second and third anniversary of Mr. Scheps' employment contract
(September 1, 1994, 1995 and 1996) the right to purchase 125,000 shares shall
vest. The right to purchase the remaining 375,000 shares shall vest on August
31, 1997. Provided, however, if the Company consolidates with or merges into
another corporation or other entity in a transaction in which the Company is
not the surviving corporation, or receives an offer to purchase thirty percent
(30 percent) or more of the issued and outstanding common stock of the
Company, or if all or substantially all of the assets of the Company are sold
or leased or thirty percent (30 percent) or more of the issued and outstanding
common stock of the Company is purchased by any person or group of persons
acting in concert, then in any of such events, the right to purchase all of
said 750,000 shares shall vest immediately. The vesting of the remaining
375,000 shares is not contingent upon Mr. Scheps' employment by the Company
between September 1, 1996 and August 31, 1997.
The Company also has an employment agreement with Dr. Cohen under which he
now serves as Executive Vice President of the Company. The agreement
terminated on December 31, 1995. Dr. Cohen's compensation for 1995 was
$165,862. On January 1, 1996, the Company extended Dr. Cohen's employment
contract to December 31, 1996. There are no benefits payable to Dr. Cohen upon
termination of the agreement.
Compensation of Directors
The Company paid $250.00 to the Directors for attendance at meetings of
the Board of Directors and pays no fee for serving as Directors.
RELATED TRANSACTION
During 1995 the Company retained Stanley D. Josephson as counsel to
represent it in certain legal matters. The Company paid Mr. Josephson $43,041
for his services and expenses during 1995.
<PAGE>
ITEM 2 RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Unless otherwise instructed, the persons named in the enclosed proxy
intend to vote the same in favor of the ratification of the selection by the
Company's Board of Directors of Arthur Andersen LLP to serve as the Company's
independent auditors for the fiscal year ending December 31, 1996. That firm
has reported to the Company that none of its members has any direct financial
interest or material indirect financial interest in the Company or any of its
subsidiaries, nor has any member of such firm had any such connection during
the past three years.
Arthur Andersen LLP has served as the Company's independent auditor since
1985. A representative from Arthur Andersen LLP is expected to attend the
Meeting and will be afforded the opportunity to make a statement or respond to
appropriate questions from stockholders or both.
The Board of Directors recommends that stockholders vote FOR ratification
of the appointment of Arthur Andersen LLP as the Company's independent
accountants for Fiscal 1996.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than the
items referred to above. Proxies in the enclosed form will be voted in respect
of any other business that is properly brought before the Annual Meeting in
accordance with the judgment of the person or persons voting the proxies.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1997
Annual Meeting of Stockholders pursuant to the provisions of Rule 14a-8,
promulgated under the Exchange Act, must be received at the Company's offices
not later than February 15, 1997, for inclusion in the Company's Proxy
Statement and form of proxy relating to that meeting.
A COPY OF THE COMPANY'S 1995 ANNUAL REPORT ACCOMPANIES THIS PROXY
STATEMENT. ADDITIONAL COPIES OF SUCH REPORT, AS WELL AS COPIES OF THE
COMPANY'S ANNUAL REPORT OF FORM 10-K, INCLUSIVE OF SCHEDULES THERETO, FOR THE
YEAR ENDED DECEMBER 31, 1995, FILED WITH THE COMMISSION, WILL BE PROVIDED
WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN REQUEST. REQUESTS SHOULD BE
ADDRESSED TO STANLEY D. JOSEPHSON, CAS MEDICAL SYSTEMS, INC., 21 BUSINESS PARK
DRIVE, BRANFORD, CONNECTICUT 06405.
<PAGE>
CAS MEDICAL SYSTEMS, INC.
21 Business Park Drive, Branford, Connecticut 06405
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Louis P. Scheps and Stanley D. Josephson
as Proxies, each with the power to appoint his substitute, and hereby
authorizes them, and each of them, to represent and vote, as designated on the
reverse, all the shares of Common Stock of CAS MEDICAL SYSTEMS, INC. (the
"Company") held of record by the undersigned on May 3, 1996 at the Annual
Meeting of Stockholders to be held on June 12, 1996 or any adjournment
thereof.
(To Be Signed on Reverse Side.)
Please mark your
[X] votes as in this
example.
FOR
all nominees WITHHOLD
listed at right AUTHORITY
(except as to vote
marked to the for all
the contrary nominees
below) below
1. Election of [ ] [ ] Nominees: Louis P. Scheps
Directors Myron L. Cohen, Ph.D.
Stanley D. Josephson
(INSTRUCTION: To withhold authority to Lawrence S. Burstein
vote for any individual nominee, strike Jerome Baron
out such nominee's name listed at right Jay M. Haft
and write name on the space provided below.) Saul S. Milles, M.D.
FOR AGAINST ABSTAIN
2. To ratify the selection of Arthur [ ] [ ] [ ]
Andersen LLP as independent audi-
tors for the Company's fiscal year
ending December 31, 1996.
3. In their discretion, the Proxies are authorized to vote upon such
other matters as may properly come before the Meeting.
This proxy, when properly executed, will be voted in the manner directed by
the undersigned stockholder. If no direction is made, this proxy will be
voted FOR proposals 1 and 2. Please sign exactly as name appears on the left.
<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S)________________________________DATE_______________________
Note: 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 the
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
