UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
CAS MEDICAL SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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SEC 1913 (3-99)
<PAGE>
[LOGO]
CAS MEDICAL SYSTEMS, INC.
TECHNOLOGY APPLIED TO MEDICINE
44 East Industrial Road
Branford, Connecticut 06405
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 2000
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 14, 2000, 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 approve an Amendment to the 1994 Employees' Stock Option
Plan;
(3) To ratify the selection of Arthur Andersen LLP as independent
auditors for the Company's fiscal year ending December 31,
2000;
(4) To transact such other business as may properly come before
the Meeting.
Only stockholders of record at the close of business on April 21, 2000
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 21, 2000
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 STOCKHOLDERS
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 14, 2000, 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 21, 2000.
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 proposals indicated on such proxy. Management
does not know of any other matter which may be 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 21, 2000, 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 9,457,577. A majority of the issued and
outstanding shares of Common Stock, or 4,728,789 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.
2
<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 21,
2000:
<TABLE><CAPTION>
Name and Address of Amount and Nature of Percentage
Beneficial Owner or Identity of Group Beneficial Ownership (1) of Class
- -----------------------------------------------------------------------------------
<S> <C> <C>
Haulbowline, Ltd. 1,451,000 15.3%
c/o The Bank of Bermuda Limited
6 Front Street
PO Box HM 1020
Hamilton HMDX, Bermuda
Estate of Garry Evans 500,000 5.3%
Weybridge, Surrey
United Kingdom
J. Sanford Davis 500,000 5.3%
14 Longview Terrace
Madison, CT 06443
</TABLE>
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 21, 2000 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.
<TABLE><CAPTION>
Amount and Nature of Percentage
Name Beneficial Ownership (1) of Class
- -----------------------------------------------------------------------------------
<S> <C> <C>
Louis P. Scheps 1,303,325 (2) 12.7%
Myron L. Cohen, Ph.D. 955,453 (3) 10.1%
Lawrence S. Burstein 251,875 (4) 2.6%
Jerome Baron 1,675,200 (5) 17.4%
Saul S. Milles, M.D. 60,000 (6) 0.6%
All officers and directors
as a group (5 persons) 4,245,853 (7) 39.5%
</TABLE>
- -----------------
(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.
(2) Includes warrants to purchase 819,000 shares and options to purchase 50,000
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.
(7) Includes options to purchase 65,000 shares and warrants to purchase
1,229,000 shares, each exercisable within 60 days.
3
<PAGE>
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, 68, 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, 66, founder of the Company, has been involved in developing
and marketing medical products for over 34 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. Dr. Cohen received an
undergraduate degree from Purdue University and MS and Ph.D. degrees from the
University of Alabama and Polytechnic Institute of Brooklyn, respectively.
LAWRENCE S. BURSTEIN - DIRECTOR SINCE 1985
Mr. Burstein, 57, has been president and principal stockholder of Unity
Venture Capital Associates, Ltd. from March, 1996. Prior thereto he was
president, a director and principal stockholder of Trinity Capital Corporation
since October 1982. Mr. Burstein is a director of five other public companies:
THQ, Inc., a manufacturer of video game cartridges and toys; The MNI Group,
Inc., a company that markets nutritional supplements; Brazil Fast Food Corp.,
the second largest fast food restaurant chain in Brazil; I.D. Systems, Inc.,
which designs, develops and produces a wireless monitoring and tracking system
and Quintel Communications, Inc., which is a direct marketing company that
develops and operates Internet-based marketing companies. Mr. Burstein received
an L.L.B. from Columbia Law School.
JEROME S. BARON - DIRECTOR SINCE 1986
Mr. Baron, 73, 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 Vice-Chairman of Brean
Murray and Company, Inc. He is a Director of 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, 69, 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 gastroenterologist 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 related 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 advisor to the Office of
Technology 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.
4
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
During the Company's fiscal year ended December 31, 1999, the Board of
Directors held three meetings and acted three times by unanimous consent. Each
director attended at least 75% of the meetings of the Board of Directors held
and of all committees of the Board of Directors on which he served while he was
director or a member of a committee of the Board of Directors.
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 1999. 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 1999. 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.
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><CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
--------------------------- Warrants/ All Other
Options/ Compen-
Salary Bonus SARs sation
Principal Position Year ($) ($) (#) ($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Louis P. Scheps 1999 185,254 75,000 0 3,325
President and CEO 1998 185,228 75,000 100,000 2,910
1997 185,203 50,000 0 2,483
Myron L. Cohen 1999 98,654 0 0 4,020
Executive Vice 1998 94,828 16,300 0 3,166
President 1997 91,153 14,000 0 3,103
</TABLE>
No stock options or warrants were granted to the persons named in the
Summary Compensation Table during 1999.
5
<PAGE>
<TABLE><CAPTION>
AGGREGATED WARRANTS/OPTION/SARS EXERCISED IN LAST FISCAL YEAR AND FY-END
WARRANTS/OPTION/SARS VALUES
Shares
Acquired Number of Unexercised Value of Unexercised
On Value Warrants/Options/SARs in-the-Money Options
Exercise Realized at FY-End (#) at FY-End (1)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Louis P. Scheps 31,000 $6,758 869,000 100,000 $121,755 $0
President and CEO
Myron L. Cohen 0 - 15,000 0 0 0
Executive Vice President
</TABLE>
(1) Computed based upon the difference between the closing price of the
Company's Common Stock on December 31, 1999 ($.468) and the exercise price.
LONG TERM INCENTIVE PLAN AWARDS IN FISCAL YEAR ENDED DECEMBER 31, 1999
No long-term incentive Plan awards were made in 1999.
EMPLOYMENT CONTRACTS AND TERMINATION BENEFITS
The Company and Mr. Scheps have entered into an employment agreement
pursuant to which Mr. Scheps serves 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 its 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 Control" 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, 2000
at an annual base salary of $102,400. There are no benefits payable to Dr. Cohen
upon termination of the agreement.
COMPENSATION OF DIRECTORS
During 1999, 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.
6
<PAGE>
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
Mr. Louis P. Scheps, 68, 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., 66, founder of the Company, has been involved in
developing and marketing medical products for over 34 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 1999 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with.
ITEM 2 - AMENDMENT TO 1994 EMPLOYEES' INCENTIVE STOCK OPTION PLAN
On October 26, 1999, the Board of Directors adopted, subject to
stockholder approval, an amendment to the Company's 1994 Employees' Incentive
Stock Option Plan (the "Plan") increasing the number of shares that may be
issued under the Plan from 250,000 to 1,250,000. The Board believes that it
requires additional shares for future grants under the Plan to meet the
Company's needs. Through December 31, 1999, options to purchase an aggregate of
576,900 shares have been granted under the Plan. The closing price for a share
of Common Stock on the over the counter market, commonly referred to as the
"pink sheets" on April 12, 2000 was $0.719.
7
<PAGE>
DESCRIPTION OF THE PLAN
On March 31, 1994, the Board of Directors adopted the Plan covering
250,000 shares of the Company's Common Stock pursuant to which all persons
employed by the Company, now, or in the future, including officers of the
Company, are eligible to receive incentive stock options ("incentive options")
within the meaning of Section 422 of the Internal Revenue Code (the "Code"). The
Plan, which terminates on December 31, 2003, is administered by the Board of
Directors. The purpose of the Plan is to encourage and enable the employees of
the Company to acquire a proprietary interest in the Company through the
ownership of shares of Common Stock in order to ensure a closer identification
of their interests with those of the Company by providing them with a more
direct stake in its welfare, thereby stimulating their efforts on the Company's
behalf and strengthening their desire to remain with the Company. The criteria
to be utilized by the Board of Directors in granting options pursuant to the
Plan will be consistent with this purpose. There are currently 64 employees
eligible to receive grants under the Plan.
Options granted under the Plan are incentive options. Incentive options
granted under the Plan are exercisable for a period of up to 10 years from date
of grant at an exercise price which is not less than the fair market value of
the Common Stock on the date of the grant, except that the term of an incentive
option granted under the Plan to a stockholder owning more that 10% of the
outstanding voting power may not exceed five years and its exercise price may
not be less than 110% of the fair market value of the Common Stock on the date
of the grant. The aggregate fair market value (determined at the time the option
is granted) of the shares with respect to which the option is exercisable for
the first time by the optionee during any calendar year shall not exceed
$100,000. Options granted under the Plan may be exercised at any time prior to
the expiration date of the option or within three months of the date of
termination of the employment, whichever is earlier, but only to the extent the
optionee had the right to exercise such option at the date of such termination.
However, in the event of death of an optionee while in the employ of the Company
(or within three months after termination of employment by reasons of retirement
with the consent of the Company), his option shall be exercisable by the person
or persons to whom such optionees' rights pass by will or by the laws of descent
and distribution at any time prior to the expiration date of the option or
within three months after the date of such death, whichever is earlier, but only
to the extent the optionee had the right to exercise such option on the date of
his death. Upon the exercise of an option, payment may be made by check payable
to the order of the Company. No option may be granted under the Plan after
December 31, 2003.
Options may be granted only to employees and officers of the Company
that the Board of Directors shall select from time to time in its sole
discretion. An optionee may be granted more than one option under the Plan. The
Board of Directors will, in its discretion, determine (subject to the terms of
the Plan) who will be granted options, the time or times at which options shall
be granted and the number of shares subject to each option. In making this
determination, consideration may be given to the value of the services rendered
by the respective individuals, their present and potential contributions to the
success of the Company and such other factors deemed relevant in accomplishing
the purpose of the Plan.
Under the Plan, the optionee has none of the rights of a stockholder
with respect to the shares issuable upon the exercise of the option until shares
are actually issued upon exercise of the option. During the lifetime of the
optionee, an option shall be exercisable only by the optionee. No option may be
sold, pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will or by the laws of decent and distribution.
The Board of Directors may amend or terminate the Plan except that
stockholder approval is required, except to the extent provided in the Plan, to
effect a change so as to increase the total number of shares for which options
may be granted under the Plan, change the minimum purchase price for the
optioned shares, affect outstanding options or any unexercised rights
thereunder, extend the option period or make an option exercisable earlier than
as specified in the Plan, or extend the termination date of the Plan.
8
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
Incentive option holders incur no regular Federal income tax liability
at the time of grant or upon exercise of an option, assuming that the optionee
was an employee of the Company from the date the option was granted until 90
days before exercise. However, upon exercise, the Spread must be added to
regular Federal taxable income in computing the optionee's "alternative minimum
tax" liability. An optionee's basis in the shares received on exercise of an
incentive stock option will be the option price of such shares for regular
income tax purposes. No deduction is allowable to the Company for Federal income
tax purposes in connection with the grant or exercise of an incentive option.
If the holder of shares acquired through exercise of an incentive
option sells those shares within two years of the date of grant of the option or
within one year from the date of exercise of the option (a "Disqualifying
Disposition"), the optionee will realize income taxable at ordinary rates.
Ordinary income is reportable during the year of sale equal to the difference
between the option price and the fair market value of the shares at the date the
option is exercised, but the amount includable as ordinary income will not
exceed the excess, if any, of the proceeds of the sale over the option price. In
addition to ordinary income, a Disqualifying Disposition may result in taxable
income subject to capital gains treatment if the sales proceeds exceed the
optionee's basis in the shares (i.e., the option price plus the amount
includable as ordinary income). The amount of the optionee's taxable ordinary
income will be deductible by the Company in the year of the Disqualifying
Disposition.
At the time of sale of shares received upon exercise of an option
(other than a Disqualifying Disposition of shares received upon the exercise of
an incentive option), any gain or loss is long-term or short-term capital gain
or loss, depending upon the holding period. The holding period for long-term
capital gain or loss treatment is more than one year.
The foregoing is not intended to be an exhaustive analysis of the tax
consequences relating to stock options issued under the Plan. For instance, the
treatment of options under state and local tax laws, which is not described
above, may differ from the treatment for Federal income tax purposes.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of Common
Stock issued, outstanding and entitled to vote, present or represented at the
meeting, a quorum being present, is required for the adoption of this proposal.
Broker non-votes with respect to this matter will be treated as neither a vote
"for" or a vote "against" the matter, although they will be counted in
determining if a quorum is present. However, abstentions will be considered in
determining the number of votes required to attain a majority of the shares
present or represented at the meeting and entitled to vote. Accordingly, an
abstention from voting by a stockholder present in person or by proxy at the
meeting has the same legal effect as a vote "against" the matter because it
represents a share present or represented at the meeting and entitled to vote,
thereby increasing the number of affirmative votes required to approve this
proposal.
The Board of Directors deems "Proposal No. 2 - Amendment to 1994
Employee's Incentive Stock Option Plan" to be in the best interests of the
Company and its stockholders and recommends a vote "FOR" approval of this
proposal.
9
<PAGE>
NEW PLAN BENEFITS
The following table sets forth information regarding grants, subject to
stockholder approval, under the Amended and Restated 1994 Employees' Incentive
Stock Option Plan to (i) each executive officer of the Company; (ii) all current
executive officers as a group; (iii) all current directors who are not executive
officers as a group; and (iv) all employees, including all current officers who
are not executive officers, as a group.
<TABLE><CAPTION>
NAME AND POSITION DOLLAR VALUE(1) NUMBER OF SHARES
- ----------------- ------------ ----------------
<S> <C> <C>
Louis P. Scheps - President and Chief $ 0 0
Executive Officer
Myron L. Cohen, Ph.D. - Executive Vice $ 0 0
President
All current executive officers as a $ 0 0
group
All current directors who are not $ 0 0
executive officers as a group
All employees, including current $ 250,682 474,400
officers who are not executive
officers, as a group
</TABLE>
(1) Amounts are determined by multiplying the number of options granted by the
exercise price of the applicable options, which in each case was the
market price of a share of Common Stock on the applicable grant date.
ITEM 3 - 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, 2000. 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 served as the Company's principal 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 2000.
10
<PAGE>
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 2001
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 21, 2000, for inclusion in the Company's Proxy Statement
and form of proxy relating to that meeting.
------------------------
A COPY OF THE COMPANY'S 1999 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,
1999, 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.
11
<PAGE>
APPENDIX A
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 Louis Celano 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 21, 2000 at the Annual Meeting of
Stockholders to be held on June 14, 2000 or any adjournment thereof.
(To Be Signed on Reverse Side.)
- --------------------------------------------------------------------------------
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
CAS MEDICAL SYSTEMS, INC.
June 14, 2000
.................Please Detach and Mail in the Envelope Provided................
A [X] Please mark your votes
as in this example.
FOR all nominees
listed at right WITHHOLD AUTHORITY
(except as marked to vote for all
to the contrary below) nominees listed below
1. Election of [_] [_]
Directors.
Nominees: Louis P. Scheps (INSTRUCTION: To withhold authority
Myron L. Cohen, Ph.D. to vote for any individual nominee,
Lawrence S. Burstein strike out such nominee's name listed
Jerome Baron at right and write name on the space
Saul S. Milles, M.D. provided below.)
2. To approve the Amendment to the 1994 Employees' Incentive Stock Option Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To ratify the selection of Arthur Andersen LLP as independent auditors for
the Company's fiscal year ending December 31, 2000.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. 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.
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 partnership, please sign in
partnership name by authorized person.
<PAGE>
APPENDIX B
CAS MEDICAL SYSTEMS, INC.
1994 EMPLOYEES' INCENTIVE STOCK OPTION PLAN
-------------------------------------------
1. Purpose. The purpose of this 1994 Employees' Incentive Stock Option
Plan (hereinafter referred to as the "Plan"), which is intended to qualify as an
incentive stock option plan within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), is to encourage and enable the
employees of CAS Medical Systems, Inc., and its subsidiaries, if any
(hereinafter collectively called the "Company"), to acquire a proprietary
interest in the Company through the ownership of shares of Common Stock, in
order to assure a closer identification of their interests with those of the
Company by providing them with a more direct stake in its welfare, thereby
stimulating their efforts on the Company's behalf and strengthening their desire
to remain with the Company. This is accomplished by the granting of options to
qualified employees of the Company.
2. Amount of Stock Subject to the Plan. The total number of shares of
the Company's Common Stock which may be sold pursuant to the Plan shall not
exceed 1,250,000 shares plus an indeterminate number of shares required to be
issued pursuant to Paragraph 10 of the Plan. Shares sold under the Plan may be
reacquired by the Company at any time, as the Board of Directors of the Company,
from time to time, may determine. In the event that any options granted under
the Plan shall not have been exercised in full, the shares not purchased
hereunder shall be available again for purposes of the Plan.
3. Administration of the Plan. The Board of Directors shall administer
the Plan, including, without limitation:
(a) Determination of participants, allotment of shares and prices of
shares;
(b) Construing, amending or rescinding terms of the Plan; and
(c) The terms and conditions of each option agreement for the purchase
of stock under the Plan, subject to the provisions of the Plan.
The Company's contribution to the Plan will consist of making its
shares of Common Stock available for purchase by employees and bearing all costs
of administering the Plan.
4. Eligibility. All persons employed by the Company, now, or in the
future, including officers of the Company, shall be eligible to participate
under the Plan, but shall have no right to participate in the Plan except as
specifically determined in each instance by the Board of Directors.
<PAGE>
5. Time of Granting Options. Neither anything contained in the Plan nor
in any resolution adopted or to be adopted by the Board of Directors or by the
stockholders of the Company shall constitute the granting of any options under
the Plan. The granting of an option to purchase stock shall take place only when
a Grant of Option shall have been duly executed and tendered to the employee by
or on behalf of the Company.
6. Terms of Options. The terms of each option granted under the Plan
shall be determined by the Board of Directors consistent with the provisions of
the Plan, and shall include the following:
(a) An option granted under the Plan must be granted within ten (10)
years from the date the Plan is adopted by the Board of Directors, or the date
the Plan is approved by the stockholders of the Company, whichever is earlier.
(b) The purchase price of the shares subject to each option shall not
be less than the fair market value of the Company's Common Stock at the time
such option is granted except, however, that if the optionee owns more than 10%
of the outstanding Common Stock of the Company at the time the option is
granted, including stock attributable to the optionee under applicable
provisions of the Code but not including stock obtainable under the option, the
purchase price of the shares to the optionee shall not be less than 110% of the
fair market value of the Common Stock at the time such option is granted. Such
fair market value shall be determined by the Board and good faith shall be
exercised in such determination.
(c) An option granted under the Plan shall become exercisable in two
equal annual installments, commencing one year from the date of the grant of the
option. Each option granted under the Plan shall be its terms expire and shall
not be exercisable after the expiration of ten (10) years from the date of the
grant except, however, that if the optionee owns more than 10% of the
outstanding Common Stock of the Company at the time the option is granted,
including stock attributable to the optionee under applicable provisions of the
Code but not including stock obtainable under the option, any option granted to
such optionee shall not be exercisable after the expiration of five (5) years
from the date of its grant. Every option granted under the Plan shall be subject
to early termination as expressly provided in Paragraph 11 hereof.
(d) In the event that employment of an optionee by the Company or any
subsidiary is terminated for any reason other than death, an option granted
hereunder shall be exercisable by the optionee at any time prior to the
expiration date of the option or within three months after the date of such
termination, whichever is earlier, but only to the extent the optionee had the
right to exercise such option at the date of such termination. In the event of
the death of an optionee while in the employ of the Company (or within three
months after termination of employment by reasons of retirement with the consent
of the Company), his option shall be exercisable by the person or persons to
whom such optionee's rights pass by will or by the laws of descent and
distribution at any time prior to the expiration date of the option or within
three months after the date of
<PAGE>
such death, whichever is earlier, but only to the extent the optionee had the
right to exercise such option on the date of his death.
(e) The aggregate fair market value (determined at the time the option
is granted) of the shares with respect to which the option is exercisable for
the first time by the Optionee during any calendar year (under all plans
relating to incentive stock options, as defined in the Code, maintained by the
Company and a parent and subsidiary corporation of the Company and a predecessor
corporation of any such corporation shall not exceed one hundred thousand
dollars ($100,000).
(f) An option granted under the Plan shall be exercised by the delivery
by the holder thereof to the Company at its principal office (attention of the
Secretary) of written notice of the number of shares with respect to which the
option is being exercised, accompanied by payment in full by check payable to
the order of the Company, of the purchase price of such shares.
7. Status as Stockholder. No employee shall, by reason of the Plan or
any rights granted pursuant thereto, have any rights of a stockholder of the
Company until shares of stock shall have been delivered to him by the Company.
8. Non-Transferability. An option granted under the Plan shall not be
transferable other than by will or the laws of descent and distribution, and any
option granted under the Plan may be exercised during the lifetime of the holder
thereof only by him. No right granted under the Plan to an employee may be
pledged, hypothecated, assigned, or otherwise encumbered by him.
9. Use of Funds. Funds paid in purchase of the stock are to be added to
the general funds of the Company and may be used by the Company for any lawful
purpose.
10. Dilution or Other Adjustments. In the event that there is any
change in the stock subject to the Plan through merger, consolidation or
reorganization, or in the event of any change in the capital structure, the
Board of Directors of the Company shall make such adjustments as it, in its sole
discretion, deems equitable to prevent dilution or enlargement of the employee's
rights hereunder. In the event that the Company should declare a stock dividend
on its shares of Common Stock, the number of shares which an employee has
elected to purchase but which have not been delivered at the record date of such
stock dividend shall be changed proportionately to the extent of the number of
whole shares that would have been issuable on such stock; no provision will be
made for, or in lieu of, fractional shares.
11. Termination and Amendment of the Plan. The Plan is scheduled to
terminate December 31, 2003; however, the Board of Directors of the Company
shall have the right, at any time, to amend, suspend or terminate the Plan in
any respect which it may deem to be in the best interests of the Company,
provided, however, no amendments shall be made in the Plan without the approval
of the stockholders of the Company which:
<PAGE>
(a) Increase the total number of shares for which options may be
granted under this Plan for all employees or for any one of them except as
provided herein.
(b) Change the minimum purchase price for the optioned shares, except
as provided herein.
(c) Affect outstanding options or any unexercised rights thereunder,
except as provided herein.
(d) Extend the option period provided in Section 6 or make an option
exercisable earlier than as specified in Section 6.
(e) Extend the termination date of the Plan.
12. Plan Not an Employment Contract. The Plan does not and shall not be
deemed to constitute a contract of employment with any employee. Terms of
employment and the right of the Company to terminate the employment of any
employee, with or without cause, shall depend entirely upon the terms of
employment otherwise existing between any employee and the Company without
regard to the Plan.
13. Approval of Issuance. The Company shall not be obligated to issue
and deliver any shares of Common Stock until there has been qualification under
or compliance with such state or federal laws, rules or regulations as the
company may deem applicable. If requested by the Company, any employee acquiring
shares of Common Stock hereunder shall deliver a representation to the Company
to the effect that such shares are being acquired for investment and not with a
view to the resale or distribution thereof.
14. Governing Law. The Plan shall be governed by and all questions
arising hereunder shall be determined in accordance with the laws of the State
of Delaware.
15. Other Terms and Conditions. Any option granted hereunder shall
contain such other and additional terms, not inconsistent with the terms of this
Plan, which are deemed necessary or desirable by the Board, which such terms,
together with the terms of this Plan, shall constitute such option as an
"Incentive Stock Option" within the meaning of Section 422 of the 1986 Internal
Revenue Code and lawful regulations thereunder.
16. Effective Date, Term and Approval. Subject to the approval of the
stockholders of the Company at the Annual Meeting in 1994, the Plan shall take
effect on April 1, 1994. This Plan will terminate on December 31, 2003, and no
options may be granted under the Plan after that date unless an earlier
termination date after which no options may be granted under the Plan is fixed
by action of the Board of Directors, but any option granted prior thereto may be
exercised in accordance with its terms. The Plan and all options granted
pursuant to it are subject to all laws, approvals, requirements and regulations
of any governmental authority which may be applicable thereto and,
<PAGE>
notwithstanding any provisions of the Plan or option agreement, the holder of an
option shall not be entitled to exercise his option nor shall the Company be
obligated to issue any shares to the holder if such exercise or issuance shall
constitute a violation by the holder or the Company of any provisions of any
such approval requirements, law or regulation.
As amended by the Board of Directors on October 26, 1999
