CAS MEDICAL SYSTEMS, INC.
44 East Industrial Road
Branford, Connecticut 06405
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 16, 1999
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 16, 1999, at 10:00 a.m., Eastern Daylight Time, at the offices
of the Company, 44 East Industrial Road, Branford, Connecticut 06405, for the
following purposes:
(1) To elect five 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, 1999;
(3)To transact such other business as may properly come before the
Meeting.
Only stockholders of record at the close of business on April 23, 1999 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors,
Louis Celano
Secretary
Branford, Connecticut
April 23, 1999
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.
44 East Industrial Road
Branford, Connecticut 06405
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of CAS Medical Systems, Inc., a Delaware corporation
(the "Company"), of proxies for use at the Annual Meeting of Stockholders of
the Company (the "Meeting") to be held on Wednesday, June 16, 1999, at 10:00
a.m. Eastern Daylight Time at the offices of the Company, 44 East Industrial
Road, 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 April 23, 1999.
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 five (5) 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 or her 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
delivery of a subsequently dated proxy, or by attending the Meeting and voting
in person.
The Common Stock is the only class of security entitled to vote at the
meeting, each share being entitled to one vote. The total number of shares of
Common Stock outstanding as of April 23, 1999, the record date established by
the Company's Board of Directors for stockholders entitled to notice of the
Meeting and to vote at the Meeting, were 9,346,777. A majority of the issued
and outstanding shares of Common Stock, or 4,673,389 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, 44 East
Industrial Road, 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 who is not a director or executive officer, known to
the Company to own more than 5% of the outstanding Common Stock as of April
23, 1999:
Name and Address of
Beneficial Owner or Amount and Nature of Percentage
Identity of Group Beneficial Ownership (1) of Class
Haulbowline Ltd. 1,451,000 15.5%
c/o The Bank of Bermuda Limited
6 Front Street
PO Box HM 1020
Hamilton HMDX, Bermuda
Estate of Garry Evans 500,000 5.4%
Weybridge, Surrey
United Kingdom
J. Sanford Davis 500,000 5.4%
14 Longview Terrace
Madison, CT 06443
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 April 23, 1999 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) 13.0%
Myron L. Cohen, Ph.D. 955,453 (3) 10.2%
Lawrence S. Burstein 251,875 (4) 2.7%
Jerome Baron 1,675,200 (5) 17.6%
Saul S. Milles, M.D. 60,000 (6) 0.6%
All officers and directors
as a group (5 persons) 4,275,853 40.1%
(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 warrants to purchase 819,000 shares and options to purchase
81,000 shares, each exercisable within 60 days.
(3) Includes options to purchase 15,000 shares exercisable within 60 days.
(4) Includes warrants to purchase 150,000 shares exercisable within 60 days.
Also includes 92,500 shares held in Mr. Burstein's IRA rollover account
and 9,375 shares owned directly and indirectly by a family member.
(5) Includes warrants to purchase 200,000 shares exercisable within 60 days.
Also includes 1,451,000 shares owned by Haulbowline Ltd., as to which
shares Mr. Baron has voting and dispositive power.
(6) Consists of Common Stock underlying warrants to purchase 60,000 shares
exercisable within 60 days.
ITEM 1 ELECTION OF DIRECTORS
Five 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, 67, 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, 65, founder of the Company, has been involved in developing
and marketing medical products for over 33 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 Union countries on problems in technology and medicine.
<PAGE>
Lawrence S. Burstein - Director since 1985
Mr. Burstein, 56, has been an officer, director and stockholder of
Unity Venture Capital Associates, Ltd. from March, 1996. Prior thereto
he was 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, Brazil Fast Food Corp., a company operating approximately
160 fast food restaurants in Brazil and Unity First Acquisition Corp.
which is engaged in the acquisition of other companies.
Jerome S. Baron - Director since 1986
Mr. Baron, 72, 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 is
President of Brean Murray and Company, Inc. He is a Director of U.S.
Communications, Inc., a company engaged in the activation of wireless
products, and Haulbowline Ltd., a private offshore company. He attended
Kings Point Merchant Marine Academy and Pace University.
Saul S. Milles, M.D. - Director since 1991
Dr. Milles, 68, served as Medical Director of the General Electric
Company from 1984 to 1998. Prior to that, he was in active medical
practice in New Haven, Connecticut, as an internist and gastro-
enterologist from 1961 to 1984. He had served as Attending Physician at
the Yale Medical Center and had been appointed a Clinical Associate
Professor of Medicine at the Yale Medical School, as well as President of
the Medical staff. He has been involved in issues relating to medical
ethics, health screening and employment of the handicapped. Dr. Milles
was active in developing policies for smoking abatement and substance
abuse treatment. He has served as an adviser to the Office of
Technolology Assessment of the U.S. Congress. Dr. Milles attended
Cornell University and received his M.D. degree from the University of
Rochester. He received post-graduate medical education at Yale Medical
Center.
Meetings of the Board of Directors
During the Company's fiscal year ended December 31, 1998, the Board
of Directors held three meetings and acted twice by unanimous consent.
Each director attended at least 75% of the meetings of the Board of
Directors held and of all committess of the Board of Directors on which
he served while he was Director or a member of a committee of the Board
of Directors.
<PAGE>
Committees of the Board
The Board has standing Compensation and Audit Review Committees.
Compensation Committee. The Compensation Committee, composed of Messrs.
Burstein and Baron, met twice during Fiscal 1998. 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 Baron, met twice during Fiscal 1998. 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.
<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
Other Rest- Term
All
Annual ricted Warrants Incen-
Other
Compen- Stock /Options tive
Compen-
Salary Bonus sation Awards SARs Payouts
sation
Principal Position Year ($) ($) ($) ($) (#) ($)
($)
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Louis P. Scheps 1998 185,228 75,000 0 0 100,000 0
2,910
President 1997 185,203 50,000 0 0 0 0
2,483
and CEO 1996 178,333 50,000 0 0 34,000 0
2,276
Myron L. Cohen 1998 94,828 16,300 0 0 0 0
3,166
Executive Vice 1997 91,153 14,000 0 0 0 0
3,103
President 1996 85,000 21,000 0 0 15,000 0
3,037
The following table sets forth the grant of stock options and warrants made
during the year ended December 31, 1998 to the persons named in the Summary
Compensation Table:
OPTION/WARRANT GRANTS IN LAST FISCAL YEAR
Number of
Securities % of Total Options/
Underlying Warrants Granted to
Options/ Employees in Exercise
Expiration
Warrants Granted Fiscal Period Price
Date
<C> <C> <C> <C>
Louis P. Scheps 100,000 80% $1.00
8/31/2008
Myron L. Cohen - - -
- -
</TABLE>
<PAGE>
<TABLE>
Aggregated Warrants/Option/SARs Exercised in last Fiscal Year and
FY-End Warrants/Option/SARs Values
<CAPTION>
Number of
Unexercised Value of Unexercised
Warrants/Options/SARs in-the-Money Options
at FY-End (#) at FY-End (1)
Name Exercisable Unexercisable Exercisable
Unexercisable
<S> <C> <C> <C> <C>
Louis P. Scheps 900,000 100,000 $231,329 $0
President and CEO
Myron L. Cohen 15,000 0 0 0
Executive Vice
President
(1) Computed based upon the difference between the closing price of the
Company's Common Stock on December 31, 1998 ($.594) and the exercise
price.
<FN>
No warrants/options were exercised by the named executive officers in 1998.
</FN>
</TABLE>
<PAGE>
Long-Term Incentive Plan Awards in Fiscal Year Ended December 31, 1998
No long-term incentive Plan awards were made in 1998.
Employment Contracts and Termination Benefits
The Company and Mr. Scheps have entered into an employment agreement
pursuant to which Mr. Scheps will serve as President and Chief Executive
Officer of the Company. As of September 1, 1998, the employment agreement
was amended (as amended, the "Employment Agreement") to extend is term
through August 31, 2000 and provide for a base salary of $185,000 per year.
The Employment Agreement also provides that if a "Change of Control" (as
defined below) occurs, and upon such Change of Control occurring the
Employment Agreement is not extended for a period of at least one year
following the stated termination date of the Employment Agreement, then Mr.
Scheps shall be paid a lump sum of $250,000 on such stated termination date.
"Change of Conrol" is defined in the Employment Agreement to mean (i) a
sale of all or substantially all of the Company's assets, (ii) a merger
involving the Company in which the Company is not the survivor and the
Company's stockholders prior to the merger control less than fifty percent
of the voting stock of the surviving entity, (iii) a sale by the Company's
stockholders to an acquiror or acquirors acting in concert of more than a
majority of the then outstanding stock of the Company owned by the Company's
stockholders, or (iv) any event similar to any of the foregoing. In
connection with the amendment of the Employment Agreement, Mr. Scheps was
granted a warrant to purchase 100,000 shares of Company common stock at an
exercise price of $1.00 per share. This warrant is exercisable solely in
the event of a Change of Control.
The Company also has an employment agreement with Dr. Cohen under which
he serves as Executive Vice President of the Company through December 31,
1999 at an annual base salary of $99,600. There are no benefits payable to
Dr. Cohen upon termination of the agreement.
<PAGE>
Compensation of Directors
During 1998, the Company paid an annual fee of $10,000 to each of the
Directors, other than those also serving as officers, and paid no other fee
for attendance at the meetings.
MANAGEMENT
Executive Officers
The following table sets forth the names and positions of the executive
officers of the Company:
Name Position
Louis P. Scheps President and CEO
Myron L. Cohen Executive Vice President
Louis P. Scheps, 67, 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., 65, founder of the Company, has been involved
in developing and marketing medical products for over 33 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 Union
countries on problems in technology and medicine.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's Common Stock, to file initial reports
of ownership and reports of changes in ownership with the SEC and the
National Association of Securities Dealers. Executive officers, directors
and greater than ten percent beneficial owners are required by the SEC to
furnish the Company with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and
directors, the Company believes that during fiscal 1998 all Section 16(a)
filing requirements applicable to its executive officers, directors and
greater than ten percent beneficial owners were complied with.
<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, 1999. 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 1999.
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 2000
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 December 29, 1999 for inclusion in the Company's Proxy
Statement and form of proxy relating to that meeting.
A COPY OF THE COMPANY'S 1998 ANNUAL REPORT ACCOMPANIES THIS PROXY
STATEMENT. ADDITIONAL COPIES OF SUCH REPORT, AS WELL AS COPIES OF THE
COMPANY'S FORM 10-KSB, INCLUSIVE OF SCHEDULES THERETO, FOR THE YEAR ENDED
DECEMBER 31, 1998, FILED WITH THE COMMISSION, WILL BE PROVIDED WITHOUT CHARGE
TO ANY STOCKHOLDER UPON WRITTEN REQUEST. REQUESTS SHOULD BE ADDRESSED TO LOUIS
CELANO, CAS MEDICAL SYSTEMS, INC., 44 EAST INDUSTRIAL ROAD, BRANFORD,
CONNECTICUT 06405.
<PAGE>
CAS MEDICAL SYSTEMS, INC.
44 East Industrial Road, Branford, Connecticut 06405
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Louis P. Scheps and Lawrence S. Burstein
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 April 23, 1999 at the Annual
Meeting of Stockholders to be held on June 16, 1999 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.
Lawrence S. Burstein
(INSTRUCTION: To withhold authority to Jerome Baron
vote for any individual nominee, strike Saul S. Milles, M.D.
out such nominee's name listed at right
and write name on the space provided below.)
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, 1999.
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.
