SCHEDULE 14A INFORMATION
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
___ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
_X_ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
RETIREMENT CARE ASSOCIATES, INC.
(Name of Registrant as Specified in Its Charter)
RETIREMENT CARE ASSOCIATES, INC.
(Name of Person(s) Filing Proxy Statement)
PAGE
<PAGE>
RETIREMENT CARE ASSOCIATES, INC.
6000 LAKE FORREST DRIVE, SUITE 200
ATLANTA, GEORGIA 30328
(404) 255-7500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 10, 1997
TO THE SHAREHOLDERS OF RETIREMENT CARE ASSOCIATES, INC.:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of
Retirement Care Associates, Inc., a Colorado corporation, will be held at the
Company's office at 6000 Lake Forrest Drive, Suite 200, Atlanta, Georgia
30328, on Thursday, July 10, 1997, at 1:00 p.m., Eastern Time, and at any and
all adjournments thereof, for the purpose of considering and acting upon the
following matters.
1. The election of five (5) Directors of the Company to serve until
the next Annual Meeting of Shareholders and until their successors have been
duly elected and qualified.
2. The approval of an amendment to the Company's 1993 Stock Option
Plan to increase the total number of shares which may be issued upon the
exercise of options granted under the Plan from 1,682,625 shares to 2,182,625
shares; and
3. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of the $.0001 par value Common Stock and Series AA
Convertible Preferred Stock of the Company of record at the close of business
on June
6, 1997, will be entitled to notice of and to vote at the Meeting or at any
adjournment or adjournments thereof. The proxies are being solicited by the
Board of Directors of the Corporation.
All shareholders, whether or not they expect to attend the Annual
Meeting of Shareholders in person, are urged to sign and date the enclosed
Proxy and return it promptly in the enclosed postage-paid envelope which
requires no additional postage if mailed in the United States. The giving of
a proxy will not affect your right to vote in person if you attend the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
CHRIS BROGDON, PRESIDENT
Atlanta, Georgia
June 6, 1997<PAGE>
<PAGE>
RETIREMENT CARE ASSOCIATES, INC.
6000 LAKE FORREST DRIVE, SUITE 200
ATLANTA, GEORGIA 30328
(404) 255-7500
______________________________
PROXY STATEMENT
______________________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 10, 1997
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Retirement Care Associates, Inc., a Colorado corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders to be held
at the Company's office at 6000 Lake Forrest Drive, Suite 200, Atlanta,
Georgia 30328, on Thursday, July 10, 1997, at 1:00 p.m., Eastern Time, and at
any adjournment thereof. It is anticipated that this Proxy Statement and the
accompanying Proxy will be mailed to the Company's shareholders on or about
June 10, 1997.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees
and fiduciaries will be requested to forward the proxy soliciting materials to
the beneficial owners of the Company's shares held of record by such persons,
and the Company will reimburse such persons for their reasonable out-of-pocket
expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report for the year ended June 30, 1996, is being
simultaneously mailed to the Company's shareholders, but does not constitute
part of these proxy soliciting materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
$.0001 par value Common Stock and Series AA Convertible Preferred Stock. Each
share of Common Stock and Series AA Convertible Preferred Stock entitles the
holder to one (1) vote. Only shareholders of record at the close of business
on June 6, 1997, are entitled to notice of and to vote at the Meeting or any
adjournment thereof. On June 6, 1997, the Company had 14,381,947 shares of
its $.0001 par value Common Stock and 180,000 shares of Series AA Convertible
Preferred Stock outstanding. Cumulative voting in the election of Directors
is not permitted.
A majority of the Company's outstanding Common and Preferred Stock,
considered as a single class, represented in person or by proxy shall
constitute a quorum at the Meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares
entitled to vote owned beneficially, as of June 6, 1997, by any person, who is
known to the Company to be the beneficial owner of 5% or more of the Company's
Common and Preferred Stock, considered as a single class, and, in addition, by
each Director of the Company and by all Directors and Officers of the Company
as a group. Information as to beneficial ownership is based upon statements
furnished to the Company by such persons.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF BENEFICIAL PERCENTAGE
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------ -------------------- ----------
<S> <C> <C>
Chris Brogdon 2,835,275 <FN1> 19.0%
Suite 200
6000 Lake Forrest Drive
Atlanta, GA 30328
Edward E. Lane 2,673,941 <FN2> 17.9%
Suite 200
6000 Lake Forrest Drive
Atlanta, GA 30328
Darrell C. Tucker 655,664 <FN3> 4.4%
Suite 200
6000 Lake Forrest Drive
Atlanta, GA 30328
Julian S. Daley 46,243 <FN4> 0.3%
805 Edgewater Trail
Atlanta, GA 30328
Harlan Mathews 10,000 <FN5> 0.1%
420 Hunt Club Road
Nashville, TN 37221
Connie Brogdon 2,835,275 <FN6> 19.0%
Suite 200
6000 Lake Forrest Drive
Atlanta, GA 30328
All Officers and Directors 6,221,123 39.7%
as a Group (5 Persons)
_________________________
<FN>
<FN1>
Includes 927,948 shares of Common Stock owned by Mr. Brogdon; 1,266,031 shares
of Common Stock owned by Mr. Brogdon's wife, Connie Brogdon; 1,159 shares of
Common Stock held by Mr. Brogdon's daughter; 245,731 shares of Common Stock
which represents 50% of the shares held by Winter Haven Homes, Inc. of which
Mr. Brogdon's wife, Connie Brogdon, is a 50% owner; and 394,406 shares
underlying stock options held by Mr. Brogdon.
-2-
<PAGE>
<FN2>
Includes 2,033,804 shares of Common Stock owned by Mr. Lane; 245,731 shares of
Common Stock which represents 50% of the shares held by Winter Haven Homes,
Inc. of which Mr. Lane is a 50% owner; and 394,406 shares underlying stock
options held by Mr. Lane.
<FN3>
Includes 370,128 shares of Common Stock owned by Mr. Tucker, 12,268 shares
held by Mr. Tucker's wife, and 268,268 shares underlying stock options held by
Mr. Tucker.
<FN4>
Includes 1,603 shares held directly by Mr. Daley, 12,497 shares held by Mr.
Daley's wife, 67 shares held by a partnership, and 32,076 shares underlying
stock options held by Mr. Daley.
<FN5>
Represents 10,000 shares underlying stock options held by Mr. Mathews.
<FN6>
Includes 1,266,031 shares of Common Stock owned by Connie Brogdon; 927,948
shares of Common Stock owned by Mrs. Brogdon's husband, Chris Brogdon; 1,159
shares of Common Stock held by Mrs. Brogdon's daughter; 245,731 shares of
Common Stock which represents 50% of the shares held by Winter Haven Homes,
Inc., of which Connie Brogdon is a 50% owner; and 394,406 shares underlying
stock options held by her husband.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The Bylaws currently provide for a Board of Directors of five (5)
members. The Board of Directors recommends the election as Directors of the
five (5) nominees listed below, to hold office until the next Annual Meeting
of Shareholders and until their successors are elected and qualified or until
their earlier death, resignation or removal. Each member of the present Board
of Directors has been nominated for reelection. The persons named as
"Proxies" in the enclosed form of Proxy will vote the shares represented by
all
valid returned proxies in accordance with the specifications of the
shareholders returning such proxies. If at the time of the Meeting any of the
nominees
named below should be unable to serve, which event is not expected to occur,
the discretionary authority provided in the Proxy will be exercised to vote
for such substitute nominee or nominees, if any, as shall be designated by the
Board of Directors.
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently
held, and the period during which each person has served as a Director:
POSITIONS AND OFFICES HELD
NAME AGE AND TERM AS A DIRECTOR
---- --- --------------------------
Chris Brogdon 48 President and a Director since October 1991
Edward E. Lane 61 Secretary and a Director since October 1991
Darrell C. Tucker 39 Treasurer since November 1993, and a Director
since November 1991
Julian S. Daley 70 Director since November 1993
Harlan Mathews 70 Director since July 1996
There is no family relationship between any Director or Executive
Officer of the Company.
-3-
<PAGE>
The Company has no Nominating Committee, but does have a Compensation
Committee and an Audit Committee.
The Compensation Committee consists of Julian S. Daley and Harlan
Mathews. The Compensation Committee reviews the compensation arrangements for
each of the Company's Executive Officers and makes recommendations to the
Board of Directors. This Committee held one (1) meeting during the fiscal
year ended June 30, 1996.
The Audit Committee consists of Julian S. Daley and Harlan Mathews. The
Audit Committee reviews audit plans, reports on material changes in accounting
principles and audit reports. This Committee held one meeting during the
fiscal year ended June 30, 1996.
Set forth below are the names of all Directors, Nominees for Director
and Executive Officers of the Company, all positions and offices with the
Company held by each such person, the period during which he has served as
such, and the principal occupations and employment of such persons during at
least the last five years:
CHRIS BROGDON - PRESIDENT AND A DIRECTOR. Mr. Brogdon has served as
President and a Director of the Company since October 1991. He also served as
Treasurer of the Company from October 1991, to November 1993. He served as
Secretary of Capitol Care from October 1990, until it was merged into the
Company in November 1992, and now serves in these same capacities with Capitol
Care. Mr. Brogdon has been involved in financing and operating nursing homes
and retirement communities since 1982. From 1969 until 1982, Mr. Brogdon was
employed in the securities business as a retail salesman. Mr. Brogdon
attended Georgia State University in Atlanta, Georgia. Since March 1987, Mr.
Brogdon has been Secretary/Treasurer of Winter Haven Homes, Inc. ("WHH") and
since August 1990, he has been Secretary/Treasurer of National Assistance
Bureau, Inc. ("NAB"). Both WHH and NAB are engaged in the business of owning
and operating nursing homes and retirement communities. These two companies
either own or operate pursuant to long-term leases with options to purchase,
or are the sole or managing general partner of limited partnerships that own
or lease, a total of five properties. Mr. Brogdon also serves as a Director
and Chairman of the Board of Contour Medical, Inc., a publicly-held company,
of which the Company is a majority shareholder. He is also a Director of
In-House Rehab Corporation, a publicly-held company of which the Company is a
minority shareholder which provides physical, speech and occupational therapy
services to nursing home and other long-term care providers. Mr. Brogdon is
also a Director and Chairman of the Board of NewCare Health Corporation, a
publicly-held company which provides senior residential care services,
primarily as an operator of long-term care facilities.
EDWARD E. LANE - SECRETARY AND A DIRECTOR. Mr. Lane has served as
Secretary and a Director of the Company since October 1991. Mr. Lane attended
the University of Iowa from 1954 to 1958. From 1961 until 1968, he was
self-employed as Gene Lane & Associates where he was engaged in industrial
financing with municipal tax exempt bonds. From 1968 until 1971, he was
employed by
the investment banking firm of Johnson, Lane, Space, Smith & Co. in Atlanta,
Georgia. From 1972 until 1984, he was self-employed as Gene Lane & Associates
where he was involved with private investment banking principally in the areas
of municipal and industrial finance. In 1984, he was involved in the creation
of the full service investment banking firm of Lane, McNally & Jackson where
he was a principal until the firm was sold and merged into Bay City
Securities, Inc. in 1987. In 1988, Mr. Lane co-founded Winter Haven Homes,
Inc. to
acquire defaulted retirement centers and nursing homes. Mr. Lane also serves
as President and a Director of Gordon Jensen Health Care Association, Inc., a
-4-
<PAGE>
nonprofit corporation that owns eight nursing homes and personal care
facilities and National Assistance Bureau, Inc., a nonprofit corporation that
owns
two health care facilities. Mr. Lane is also a Director of Contour Medical,
Inc., a publicly-held company, of which the Company is a majority shareholder.
DARRELL C. TUCKER - TREASURER AND A DIRECTOR. Mr. Tucker has been a
Director of the Company since November 1991, and Treasurer since November
1993. Mr. Tucker has also served as President of the Company's Capitol Care
subsidiary since November 1992. He also served as President of Capitol Care
from October 1990, until it was merged into the Company in November 1992.
From July 1990 to October 1990, he was a consultant to Winter Haven Homes,
Inc., an affiliate of the Company. From September 1988, to July 1990, he was
a risk manager for Pruitt Corporation where he was involved in insurance
management for 30 long-term health care facilities. From April 1987 to August
1988, he was Chief Financial Officer for Allgood Health Care, Inc. which
managed 12 nursing home facilities. Mr. Tucker received a Bachelors Degree in
Accounting from the University of Georgia in 1980. Mr. Tucker is also a
Director of Contour Medical, Inc., a publicly-held company, of which the
Company is a majority shareholder.
JULIAN S. DALEY - DIRECTOR. Mr. Daley has been a Director of the
Company since November 1993. Since 1975, he has been a real estate broker and
developer in Atlanta, Georgia. From 1969 to 1975, he was engaged in financial
analysis of companies in the Southeastern United States for Reynolds
Securities, Inc. (1969 to 1974) and Fundamental Service Corporation (1974 to
1975).
From 1950 to 1969, he was a senior financial analyst with Courts & Co. in
Atlanta, Georgia. Mr. Daley received a B.B.A. Degree from the University of
Georgia in 1950.
HARLAN MATHEWS - DIRECTOR. Mr. Mathews has been a Director of the
Company since July 1996. Since 1994 he has been a partner in the law firm of
Farris, Mathews, Gilman, Branan & Hellen, P.L.C., in Nashville, Tennessee.
From 1993 to 1994, he served as a United States Senator from the State of
Tennessee. From 1987 to 1993, he was Deputy to the Governor of Tennessee and
Cabinet Secretary. From 1974 to 1987, Mr. Mathews was Treasurer of the State
of Tennessee. He received a Bachelor's Degree in Business from Jacksonville
State University in Alabama in 1949 and a Master's Degree in Public
Administration from Vanderbilt University in 1950. Mr. Mathews received a law
degree
from the Nashville School of Law in 1962. Mr. Mathews currently serves as a
Director of Murray Guard, Inc., and NewCare Health Corporation, which are
publicly-held companies.
The Company's Board of Directors held six (6) meetings during the year
ended June 30, 1996. Each Director attended at least 75% of the aggregate
number of meetings held by the Board of Directors and its Committees during
the time each such Director was a member of the Board or of any Committee of
the Board.
The Company's executive officers hold office until the next annual
meeting of directors of the Company, which currently is scheduled for July 10,
1997. There are no known arrangements or understandings between any director
or executive officer and any other person pursuant to which any of the
above-named executive officers or directors was selected as an officer or
director
of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain written representations, the following persons who
were either a director, officer or beneficial owner of more than 10% of the
Company's Common
-5-
<PAGE>
Stock, failed to file on a timely basis reports required by Section 16(a) of
the Exchange Act during the most recent fiscal year: Chris Brogdon and Connie
Brogdon (a greater than 10% shareholder) each filed one Form 5 late which
reported six late Form 4 transactions, filed one Form 4 late reporting two
transactions, and reported three transactions late by amendments to the Form 4
filings. Edward E. Lane filed one Form 5 late which reported six late Form 4
transactions, and reported three transactions late by amendments to Form 4
filings. Darrell C. Tucker, Michael P. Traba (a former Director) and Julian
S. Daley each filed one Form 4 late reporting one transaction.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the executive
compensation for Retirement Care's President and each other Executive Officer
who received compensation in excess of $100,000 for the fiscal years ended
June 30, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
PAYOUTS
--------------------------------
- ---------------------------
SECURI-
TIES
UNDERLY-
OTHER RE- ING
ALL
ANNUAL STRICTED OPTIONS/
OTHER
NAME AND PRINCIPAL COMPEN- STOCK SARs LTIP
COMPEN-
POSITION YEAR SALARY BONUS SATION AWARD(S) (NUMBER)
PAYOUTS SATION
- ------------------ ---- -------- ----- ------ -------- --------
- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Chris Brogdon, 1996 $171,000 -0- -0- -0- 105,000
- -0- -0-
President 1995 $ 90,000 -0- -0- -0- -0-
- -0- -0-
1994 $ 30,000 -0- -0- -0- 289,406
- -0- -0-
Darrell C. Tucker, 1996 $234,103 -0- $14,400 -0- 52,500
- -0- $2,000
Treasurer <FN1>
<FN2>
1995 $160,000 -0- $ 6,000 -0- -0-
- -0- $ 665
<FN1>
<FN2>
1994 $120,000 $20,000 $ 6,000 -0- 115,764
- -0- $ 600
<FN1>
<FN2>
Edward E. Lane, 1996 $180,000 -0- -0- -0- 105,000
- -0- -0-
Secretary
_____________________
<FN>
<FN1>
Represents an automobile allowance paid to Mr. Tucker.
<FN2>
Represents amounts paid for a term life insurance policy for Mr. Tucker.
</FN>
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning individual
grants of stock options made to each of the Executive Officers named above
during the fiscal year ended June 30, 1996:
-6-
<PAGE>
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED
ANNUAL
RATES
OF STOCK
PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION
TERM<FN1>
----------------------------------------------
- ------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARs
OPTIONS/ GRANTED TO EXERCISE EXPIR-
SARs EMPLOYEES IN OR BASE ATION
NAME GRANTED(#) FISCAL YEAR PRICE($/SH) DATE 5%($)
10%($)
---- ---------- ------------ ----------- ------ -------
- ------
<S> <C> <C> <C> <C> <C>
<C>
Chris Brogdon 105,000 24.3% $9.762 11/03/00 $283,191
$625,778
Darrell C. Tucker 52,000 12.2% $9.762 11/03/00 $141,596
$312,889
Edward E. Lane 105,000 24.3 $9.762 11/03/00 $283,191
$625,778
______________
<FN>
<FN1>
Gains are reported net of the option exercise price, but before taxes
associated with
exercise. These amounts represent assumed rates of appreciation only. Actual
gains,
if any, on stock option exercise are dependent on the future performance of
the RCA
Common Stock as well as the option holder's continued employment. The amounts
reflected in t his table may not necessarily be achieved.
</FN>
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table sets forth information as to the value of stock
options held by the Executive Officers named above as of June 30, 1996. None
of these Executive Officers exercised any options during the year ended June
30, 1996.
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS/SARs
SARs AT FY-END AT FY-END
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ----------------- -------------- --------------
Chris Brogdon 394,406 / 0 $1,968,586 / 0
Darrell C. Tucker 168,264 / 0 $ 800,444 / 0
Edward E. Lane 394,406 / 0 $1,968,586 / 0
Effective July 1, 1995, Mr. Tucker entered into a two year employment
agreement which will continue on a year-to-year basis thereafter unless either
party decides to terminate prior to an annual renewal. Pursuant to the
agreement he will receive an annual salary of $220,000 during the first year,
$245,000 during the second year, and his salary will increase by 10% per year
thereafter. Mr. Tucker also receives a $1,200 per month automobile allowance,
a $1,000,000 term life insurance policy paid for by the Company, and full
family health insurance paid for by the Company. He is also entitled to
receive options to purchase 50,000 shares of common stock under the Company's
stock option plan each year. However, such options will only be granted in
years in which the Company
-7-
<PAGE>
increases its profits over the previous year's profit. Mr. Tucker has agreed
that during the term of his employment, and for a period of two years
thereafter he will not engage in the business of, or be employed by a business
entity
engaged in, the management of health care facilities in the areas in which the
Company does business. Mr. Tucker has also agreed not to disclose any
confidential information or trade secrets of the Company which he may acquire
during the course of his employment.
Until January 1, 1994, Edward E. Lane and Chris Brogdon received no
salaries for their services as Officers of the Company and they received no
other compensation, directly or indirectly, from the Company. Messrs. Lane
and Brogdon have received compensation from Winter Haven Homes, Inc., which
owns or controls three of the facilities which are currently managed by the
Company. Some of this compensation is in the form of financial advisory fees
which are earned by Messrs. Lane and Brogdon in connection with the financing
related to the ownership of these facilities and the rest of the compensation
is related to the fees derived by Winter Haven from its ownership and
operation of the facilities.
Effective January 1, 1994, Edward E. Lane and Chris Brogdon each
received a salary of $60,000 per year for their services as Officers of the
Corporation. Effective January 1, 1995, their salaries were each increased to
$120,000 per year. Effective January 1, 1996, their salaries were each
increased to $240,000 per year.
COMPENSATION OF DIRECTORS
Commencing in the year ended June 30, 1994, outside Directors of the
Company received $1,000 for each Board meeting attended. Effective July 1,
1996, outside Directors receive $500 per month. In addition, Directors are
entitled to receive reimbursement for reasonable out-of-pocket expenses
incurred by them in attending meetings of the Board of Directors.
STOCK OPTION PLAN
In December, 1993, the Company's Board of Directors adopted the Company's
1993 Stock Option Plan (the "1993 Plan"). The 1993 Plan allows the
Board to grant stock options from time to time to employees, officers and
directors of the Company and consultants to the Company. The Board has the
power to determine at the time the option is granted whether the option will
be an Incentive Stock Option (an option which qualifies under Section 422 of
the Internal Revenue Code of 1986) or an option which is not an Incentive
Stock Option. However, Incentive Stock Options will only be granted to
persons who are key employees of the Company. Vesting provisions are
determined by the Board at the time options are granted. The option price
must be
satisfied by the payment of cash. The total number of shares of Common Stock
subject to options under the 1993 Plan currently may not exceed 1,682,625,
subject to adjustment in the event of certain recapitalizations,
reorganizations and similar transactions. However, the Board of Directors has
adopted
an amendment to the 1993 Plan to increase the number of shares which may be
issued upon the exercise of options granted under the 1993 Plan to 2,182,625,
subject to shareholder approval of this amendment.
The Board of Directors may amend the 1993 Plan at any time, provided
that the Board may not amend the 1993 Plan to materially increase the number
of shares available under the 1993 Plan, materially increase the benefits
accruing to Participants under the 1993 Plan, or materially change the
eligible class of employees without shareholder approval.
As of June 30, 1996, options to purchase 1,498,368 shares of Common
Stock were outstanding under the 1993 Plan to purchase exercisable at prices
ranging
-8-
<PAGE>
from $4.647 to $10.238 per share. The exercise prices of all of the options
granted under the 1993 Plan are at least equal to the market value of the
Company's Common Stock on the date of grant.
Included in options granted on December 14, 1993, are non-qualified
stock options granted to Chris Brogdon and Edward E. Lane, Officers and
Directors of the Company, to purchase 289,406 shares each; an incentive stock
option granted to Darrell C. Tucker, an Officer and Director of the Company,
to purchase 115,764 shares; and non-qualified stock options granted to Michael
P. Traba, a former Director, and Julian S. Daley, a Director of the Company,
to purchase 11,576 shares each. These options are exercisable at $4.647 per
share. Included in options granted on November 3, 1995, are non-qualified
stock options granted to Chris Brogdon and Edward E. Lane to purchase 105,000
shares each; to Darrell C. Tucker to purchase 52,500 shares; and to Michael P.
Traba and Julian S. Daley to purchase 10,500 shares each. These options are
exercisable at $9.762 per share.
In July 1996, the Company granted non-qualified stock options to Julian
S. Daley and Harlan Mathews each to purchase 10,000 shares of common stock at
$8.875 per share. In addition, the Company granted non-qualified stock
options to Darrell C. Tucker to purchase 100,000 shares, and to two employees
to purchase an aggregate of 125,000 shares, at an exercise price of $8.50 per
share. The grant of the options exercisable at $8.50 per share is contingent
on shareholder approval of the increase in the number of shares covered by the
1993 Plan.
EMPLOYEE RETIREMENT PLAN
During the year ended June 30, 1996, the Company established a defined
contribution retirement plan. Employees qualify for the plan upon the
completion of three months of service with the Company and reaching the age of
twenty-one. Company contributions to the plan represent a matching percentage
of certain employee contributions. The matching percentage is subject to
management's discretion based upon consolidated financial performance. For
the year ended June 30, 1996, the Company did not make any contributions to
the plan.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee has not yet established any general
policies with respect to compensation of the Company's executive officers, but
intends to establish such policies if the Company's proposed merger involving
Sun Healthcare Group, Inc. is not completed.
Until January 1, 1994, the Company's President, Chris Brogdon, and
Edward E. Lane, the Company's Secretary, received no salary. Effective on
that date, each of these persons began receiving an annual salary of $60,000.
On January 1, 1995, their annual salaries were increased to $120,000, and on
January 1, 1996, their salaries were increased to $240,000 per year. This
level of salary is considered to be appropriate in light of the amount of
time and energy devoted to the Company's business by these persons as well as
their increased responsibilities resulting from the Company's rapid growth
and its listing on the New York Stock Exchange. Such salaries were not based
on any performance criteria.
In addition to the above-mentioned salaries, Chris Brogdon and Edward E.
Lane have each been granted non-qualified stock options to purchase up to
394,406 shares of Common Stock under the Company's 1993 Stock Option Plan.
The Compensation Committee believes that these options provide substantial
incentives to these persons to work toward the Company's long-term success.
-9-
<PAGE>
The salary level of Darrell C. Tucker, the President of the Company's
principal subsidiary, during the last fiscal year was determined by an
employment agreement entered into in July 1995. This employment agreement
provides that Mr. Tucker will receive $220,000 in the first year, $245,000 in
the second year, and 10% annual increases thereafter. The Compensation
Committee did not separately review the terms of this employment agreement in
advance, but believes that they are reasonable given the level of
responsibilities held by Mr. Tucker as President of this subsidiary.
Compensation Committee:
Julian S. Daley
Harlan Mathews
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The performance graph shown below was prepared using data prepared by
Carl Thompson & Associates, Inc. As required by applicable rules of the SEC,
the graph was prepared based upon the following assumptions:
1. $100 was invested in Common Stock, the S&P 500 Composite Index and
the Peer Group (as defined below) on June 30, 1993.
2. Peer Group investment is weighted based on the market capitalization
of each individual company within the Peer Group at the beginning of each
year.
3. Dividends are reinvested on the ex-dividend dates.
The companies that comprise the Company's Peer Group are as follows:
Beverly Enterprises, Inc., Sun Healthcare Group, Inc., Mariner Health Group,
Inc., Evergreen Healthcare, Inc., Forum Group, Inc., Genesis Health Ventures,
Inc., Grancare, Inc., Hillhaven Corp., Horizon/CMS Healthcare Corp., Living
Centers of America, Inc. and Summit Care Corp. (collectively, the "Peer
Group").
RETIREMENT CARE ASSOCIATES, INC.
COMPARATIVE FIVE-YEAR CUMULATIVE TOTAL RETURNS
RETIREMENT CARE ASSOCIATES, INC.
S&P 500 INDEX AND PEER GROUP
(Performance results through June 30, 1996)
[STOCK PERFORMANCE GRAPH INSERTED HERE]
6/30/93 6/30/94 6/30/95 6/30/96
------- ------- ------- -------
Retirement Care
Associates, Inc. $100.00 $552.59 $928.61 $894.31
Peer Group $100.00 $200.64 $191.59 $216.81
S&P 500 Total
Return $100.00 $ 98.61 $120.91 $148.85
-10-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board of Directors of the Company is of the opinion that, even
though the transactions described below were not the result of arms'-length
negotiations, the terms of each of these transactions were at least as
favorable to the Company as could have been obtained from unaffiliated
parties. All ongoing and future transactions with affiliates will be on terms
no less favorable than those which could be obtained from unaffiliated
parties.
The Company has agreements to provide management and accounting services
for nursing homes and personal care facilities which are owned or controlled
by entities which are owned or controlled by Officers, Directors and principal
shareholders of the Company. As of October 17, 1996, the Company had
agreements to manage 2 facilities owned or controlled by Winter Haven Homes,
Inc.
("Winter Haven"); 8 facilities owned or controlled by Gordon Jensen Health
Care Associates, Inc. ("Gordon Jensen"); 2 facilities owned or controlled by
National Assistance Bureau, Inc. ("NAB"); one facility owned by Southeastern
Cottages, Inc. ("SCI"); and 2 facilities owned by Chamber Health Care Society,
Inc. ("Chamber"). The Company previously managed a facility owned by Senior
Care, Inc. ("Senior Care"). Winter Haven is owned by a corporation which is
owned 50% by Edward E. Lane, an Officer and Director of the Company, and 50%
by Connie Brogdon, the wife of an Officer and Director of the Company. Gordon
Jensen is a non-profit corporation of which Edward E. Lane is President. NAB
is also a non-profit corporation of which Edward E. Lane is President and
Chris Brogdon is Secretary/Treasurer. Chamber and Senior Care are non-profit
corporations. Edward E. Lane is President and a director of Chamber. SCI is
a corporation owned 50% by Chris Brogdon and 50% by Edward E. Lane.
The agreements to provide management and accounting services to the
affiliated entities are for periods of five years but are cancelable upon 60
days' notice by either party. The agreements provide for monthly fees ranging
from $1,000 to $24,000 per facility and expire in 1998. During the fiscal
year ended June 30, 1996, these agreements resulted in revenue to the Company
of $3,472,900.
The Company currently manages 14 facilities owned or controlled by
affiliates of the Company, and as part of its duties, the Company also manages
the cash and pays the bills for these facilities. In doing so, the Company
maintains a cash management system where the deposits of all properties are
swept into an investment account daily. The Company also advances working
capital to these properties when needed. At June 30, 1996, the aggregate
amounts due from these entities were as follows: Winter Haven - $8,887,833;
Gordon Jensen - $2,982,975; SCI - $679,144; NAB - $1,326,391; Chamber -
$336,857; Senior Care - $84,095; and other affiliates - $19,366. Subsequent to
June 30, 1996, entities controlled by Winter Haven assumed the liabilities of
NAB, SCI, Chamber and Senior Care.
On October 14, 1996, Winter Haven sold two retirement facilities to the
Company for their fair value, based on an independent appraisal, for a total
purchase price of $19,200,000. These include the Jackson Oaks retirement
facility in Jackson, Tennessee, which the Company previously leased, and the
Cumberland Green retirement facility which the Company previously managed.
The purchase prices for these facilities were $12,400,000 and $6,800,000,
respectively. These facilities were acquired subject to total bond debt of
$7,670,000, resulting in $11,530,000 due to Winter Haven, which was applied to
eliminate the $11,214,320 owed to the Company by Winter Haven.
-11-
<PAGE>
On September 27, 1996, Gordon Jensen transferred 399,426 shares of the
Company's Common Stock to the Company with a fair market value of $3,000,000
in exchange for the cancellation of its debt totaling $2,982,000. These
shares were loaned to Gordon Jensen by Edward E. Lane, Chris Brogdon and
Connie Brogdon.
In February 1996, the Company purchased a 36-unit retirement facility
known as Summers Landing-Cordele, from Gordon Jensen for $2,000,000.
In May 1996, the Company leased the 60-bed Lake Forest Health Care
Center from a partnership controlled by Winter Haven. The lease is for a
period of 10 years at $25,000 per month.
On June 30, 1996, the Company leased the 158-unit Jackson Oaks retirement
facility from Winter Haven for a period of 15 years. The Company paid
Winter Haven $50,000 per month under this lease. As noted above, Winter Haven
subsequently sold this facility to the Company in October 1996 to retire a
portion of its debt to the Company.
On September 1, 1996, the Company leased the 58-unit Summer's
Landing-Douglas facility from Gordon Jensen. The Company paid $300,000 to
Gordon
Jensen on execution of the lease and is paying the debt service on an existing
mortgage each month during the first year. During year two, there will be an
additional payment of $500 per month; in year three - $750 per month; in year
four - $1,000 per month; and in year five (and any extension of the lease) -
$1,250 per month. The lease is for an initial term of five years, but the
Company may extend the lease for additional terms of five years each.
During the fiscal year ended June 30, 1996, the Company received fees of
$150,000 from NAB in connection with locating financing for certain of its
facilities.
The Company has guaranteed the debts of two facilities owned by Winter
Haven totaling approximately $6,000,000.
On September 30, 1996, the Company leased the 101-unit (with 28
additional units under construction) retirement facility known as "The
Renaissance
- - Titusville" in Titusville, Florida from a partnership controlled by Winter
Haven for a period of 10 years. The Company has the right to extend the lease
for an additional five year term. The Company paid Winter Haven $1,500,000 on
execution of the lease, and will pay monthly rent equal to 1.1 times the debt
service requirements on the facility. For the purposes of this calculation,
the principal debt will not exceed $6,000,000.
AMENDMENT TO 1993 STOCK OPTION PLAN
DESCRIPTION OF THE PLAN
In December 1993, the Company's Board of Directors approved the
establishment of a Stock Option Plan (the "1993 Plan") and the Company's
shareholders approved the 1993 Plan in February 1994. The Board of Directors
believes
that the 1993 Plan advances the interests of the Company by encouraging and
providing for the acquisition of an equity interest int he success of the
Company by employees, officers, directors and consultants, and by providing
additional incentives and motivation toward superior Company performance. The
Board believes the 1993 Plan enables the Company to attract and retain the
services of key employees, officers, directors and consultants upon whose
judgment, interest and special effort the successful conduct of its operations
is largely dependent.
-12-
<PAGE>
The 1993 Plan allows the Board to grant stock options from time to time
to employees, officers and directors of the Company and consultants to the
Company. The Board has the power to determine at the time the options is
granted whether the option will be an Incentive Stock Option (an option which
qualifies under Section 422 of the Internal Revenue Code of 1986) or an option
which is not an Incentive Stock Option. However, Incentive Stock Options may
only be granted to persons who are employees of the Company. Vesting
provisions are determined by the Board at the time options are granted. Prior
to
the proposed amendment, the total number of shares of Common Stock subject to
options under the 1993 Plan may not exceed 1,102,500, subject to adjustment in
the event of certain recapitalization, reorganizations and similar
transactions. The option price must be satisfied by the payment of cash.
The Board of Directors may amend the 1993 Plan at any time, provided
that the Board of Directors may not amend the 1993 Plan to materially increase
the number of shares available under the 1993 Plan, materially increase the
benefits accruing to Participants under the 1993 Plan, or materially change
the eligible class of employees without shareholder approval.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF 1993 PLAN
An employee, officer, director or consultant who has been granted a
stock option under the 1993 Plan which is not an incentive stock option will
not realize income tax and Retirement Care will not be entitled to a deduction
at the time of grant. Upon exercise of such an option, the optionee will
generally realize ordinary income in an amount measured by the excess, if any,
of the fair market value of the shares on the date of exercise over the option
price, and Retirement Care will be entitled to a corresponding compensation
deduction.
Upon exercise, Retirement Care may be required to withhold from the
employee's wages a tax on such income. Upon a subsequent disposition of such
shares, the employee will realize short-term or long-term capital gain or
loss, depending on whether the stock is held for more than one year after the
date of exercise, with the basis for computing such gain or loss equal to the
option price plus the amount of ordinary income realized upon exercise.
An employee who has been granted a stock option which is an incentive
stock option will not realize income tax at the time of grant. Upon exercise
of an Incentive Stock Option, an employee will not ordinarily recognize
income. However, the amount by which the fair market value of the option
shares exceeds the purchase price is an item of tax preference for alternative
minimum tax purposes in the year of exercise. In the year of sale or other
taxable disposition of the shares acquired upon exercise of an incentive stock
option, an employee will recognize ordinary income or a capital gain to the
extent that the sale price exceeds the exercise price. However, the
transaction will only qualify for treatment as a capital gain if the sale or
disposition is later than (i) two years after the option is granted and (ii)
one year
after the option is exercised. Retirement Care receives no deduction at any
time for Incentive Stock Options.
The Tax Reform Act of 1986 repealed the exclusion for long-term capital
gains of individuals after 1986. Long-term capital gains are taxed at a
maximum rate of 28%.
The foregoing summary is not intended to be a complete statement of the
current federal income tax consequences of the grant and exercise of the
options pursuant to the Plan, or of the disposition of shares acquired upon
exercise of such options. Because of the complexities of the tax law,
optionees are advised
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<PAGE>
to consult their own tax advisers for further information regarding such
consequences.
PROPOSED AMENDMENT
On July 16, 1996, the Board of Directors voted, subject to shareholder
approval, to increase the number of shares of Common Stock subject to options
under the 1993 Plan from 1,682,625 to 2,182,625. The Board of Directors
believes that the proposed increase is necessary in order for the Company to
have sufficient flexibility to provide the amounts and types of incentives to
its officers, employees, directors and consultants which are deemed necessary
to encourage the Company's success.
As of June 2, 1997, stock options granted under the 1993 Plan to
purchase up to 1,690,073 shares of Common Stock are outstanding under the 1993
Plan, and options to purchase 113,896 shares of Common Stock have been
exercised. (See "EXECUTIVE COMPENSATION" for additional information
concerning these options.) Of these options, options to purchase 225,000
shares of
Common Stock are contingent on the approval of the amendment to the 1993 Plan.
NEW PLAN BENEFITS
On July 16, 1996, subject to shareholder approval of the increase in the
number of shares covered by the 1993 Plan, the Board of Directors approved
stock options under the 1993 Plan to Executive Officers and employees of the
Company indicated in the chart below:
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION ($) <FN1> NUMBER OF UNITS
----------------- ------------ ---------------
<S> <C> <C>
Darrell C. Tucker,
Treasurer $137,500 100,000
All Executive Officers $137,500 100,000
as a group <FN2>
All employees as a group, $171,875 125,000
excluding Executive
Officers (2 persons)
____________________
<FN>
<FN1>
The dollar value shown in this column was computed by multiplying the number
of shares by the difference between the closing price of the Company's Common
Stock, as reported on the New York Stock Exchange on June 2, 1997 ($10.125)
and the exercise price ($8.75).
<FN2>
Other than Mr. Tucker, there were no executive officers or directors of the
Company who received options under the 1993 Plan pending shareholder approval
of this proposal.
</FN>
</TABLE>
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<PAGE>
VOTE REQUIRED; BOARD OF DIRECTORS RECOMMENDATIONS
Approval of the amendment to the 1993 Plan requires the affirmative vote
of a majority of the shares of Common Stock represented at the meeting. The
Board of Directors recommends a vote FOR approval of the amendment to the 1993
Plan.
INDEPENDENT ACCOUNTANTS
The independent accounting firm of Coopers & Lybrand L.L.P. audited the
financial statements of the Company for the year ended June 30, 1996. No
accounting firm has yet been selected for the fiscal year ended June 30, 1997,
due to the proposed merger involving Sun Healthcare Group, Inc.
A representative of Coopers & Lybrand L.L.P. has been invited to attend
the meeting. If he attends he will have the opportunity to make a statement
if he desires to do so and he is expected to be available to respond to
appropriate questions.
On February 12, 1996, the Company engaged Coopers & Lybrand L.L.P. as
its independent accountants for the fiscal year ended June 30, 1996. Also on
February 12, 1996, BDO Seidman, LLP was dismissed as the Company's independent
accountants. BDO Seidman, LLP's reports on the financial statements for the
fiscal years ended June 30, 1995, 1994 and 1993 contained no adverse opinion
or disclaimer of opinion nor were they qualified as to uncertainty, audit
scope or accounting principles. The Company's Audit Committee approved the
decision to engage Coopers & Lybrand, L.L.P.
In connection with the prior audits for the fiscal years ended June 30,
1995, 1994 and 1993, and during the interim period from June 30, 1995 to
February 12, 1996, there were no disagreements with BDO Seidman, LLP on any
matter of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure other than the matter described in the
following paragraph.
During the fourth quarter of the fiscal year ended June 30, 1995, the
Company realized approximately $4.5 million in cash from the purchase and
resale of bonds associated with the acquisition of a distressed retirement
facility in Florida. It was the Company's belief that the $4.5 million should
be recorded as gain; however, personnel of BDO Seidman, LLP were of the
opinion that the Company should not report the $4.5 million as income because
they believed that the transaction was a refinancing of the property. The
Company then treated the transaction as recommended by BDO Seidman, LLP.
Individual members of the audit committee and the Board of Directors discussed
this disagreement with BDO Seidman, LLP. The Company has authorized BDO
Seidman, LLP to respond fully to the inquiries of Coopers & Lybrand, L.L.P.
concerning the subject matter of this disagreement.
The Company did not consult with Coopers & Lybrand, L.L.P. with regard
to any matter concerning the application of accounting principles to any
specific transactions, either completed or proposed, of the type of audit
opinion that might be rendered with respect to the Company's financial
statements.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was
not aware of any other matter to be presented at the Meeting other than as set
forth
herein. However, if any other matters are properly brought before the
Meeting, the shares represented by valid proxies will be voted with respect to
such
-14-
<PAGE>
matters in accordance with the judgment of the persons voting them. A
majority vote of the shares represented at the meeting is necessary to approve
any such matters.
ANNUAL REPORT
The Company's Annual Report for the year ending June 30, 1996,
accompanies this Proxy Statement. The Annual Report is not incorporated into
this
Proxy Statement and is not to be considered part of the solicitation material.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN JANUARY 1998
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in January 1998 must be received at
the offices of the Company, 6000 Lake Forrest Drive, Suite 200, Atlanta,
Georgia 30328, a reasonable amount of time before the Company begins to
solicit proxies for that meeting in order to be included in the Company's
proxy statement and proxy relating to that meeting.
CHRIS BROGDON, PRESIDENT
Atlanta, Georgia
June 6, 1997
-15-
<PAGE>
P R O X Y
RETIREMENT CARE ASSOCIATES, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Chris Brogdon with the power to appoint
his substitute, and hereby authorizes him to represent and to vote as
designated below, all the shares of common stock of Retirement Care
Associates, Inc. held of record by the undersigned on June 6, 1997, at the
Annual Meeting of Shareholders to be held on July 10, 1997, or any adjournment
thereof.
1. Election of Directors:
[ ] FOR all nominees listed below
[ ] FOR all nominees except as crossed out below:
Chris Brogdon Edward E. Lane
Darrell C. Tucker Julian S. Daley
Harlan Mathews
[INSTRUCTION: To withhold authority to vote for any individual nominee, cross
out that nominee's name above.]
2. The approval of an amendment to the Company's 1993 Stock Options
Plan to increase the total number of shares which may be issued upon the
exercise of options granted under the Plan from 1,682,625 to 2,182,625.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, Proxy Statement and Annual Report.
Dated: __________________ _____________________________________
Signature(s) of Shareholder(s)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RETIREMENT
CARE ASSOCIATES, INC. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED
PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.
