May 16, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: The Care Group, Inc.
Preliminary Proxy Statement
Gentlemen:
The following document is being filed electronically on the EDGAR system
on behalf of The Care Group, Inc.:
1.Confirming Copy of the revised Preliminary Proxy Statement.
The Care Group, Inc. intends to release the definitive proxy material to
shareholders on or about May 19, 1995.
Very truly yours,
/s/ Michael Harvey
__________________
Michael Harvey
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE
ACT OF 1934
(AMENDMENT NO. 1)
(X) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box
(X) Preliminary Proxy Statement
( ) Definitive Proxy Statement
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to S240.14 a-11(c) or S240 14 a-12
The Care Group,Inc.
(Name of Registrant as Specified In Its Charter)
_____________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
( ) $125 per Exchange Act Rules 0-11 (c)(1)(ii), 14a-6(i)(l), or
14a-6(i)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14(a)-6(i)(3)
( ) Fee computed on table below per Exchange Act Rules 14a-6(I)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
_____________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
_____________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________
1 Set forth the amount on which the filing fee is calculated and state
how it was determined.
( ) Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid
_____________________________________________________________
2) Form, Schedule or Registration Statement No.
_____________________________________________________________
3) Filing Party
_____________________________________________________________
PRELIMINARY PROXY
MATERIAL
THE CARE GROUP, INC.
1 HOLLOW LANE, SUITE 110
LAKE SUCCESS, NY 11042
_____________________________
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT
__________________________
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of The Care Group, Inc. (the
"Company") will be held on Wednesday, June 21, 1995 at 10:30 A.M., local
time, at the Roslyn Claremont Hotel, 1121 Old Northern Boulevard,
Roslyn, New York, 11576 for the following purposes, all as more fully
described in the accompanying Proxy Statement:
(1) To amend the Company's Certificate of Incorporation to provide
for directors to be divided into three classes, with each class to be
elected once every three years.
(2) To elect five (5) directors of the Company, one for a period of
one year, two for a period of two years and two for a period of three
years.
(3) To amend the Company's Certificate of Incorporation with respect
tot the Company's authorized but unissued preferred stock.
(4) To ratify the selection of Deloitte & Touche LLP as independent
public accountants for the Company for the fiscal year ending December
31, 1995; and
(5) To approve the Company's 1995 Stock Option Plan.
The Board of Directors has fixed the close of business on April 26, 1995
as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS:
RANDOLPH J. MITTACH
SECRETARY AND TREASURER
NEW YORK, NEW YORK
APRIL 26, 1995
THE CARE GROUP, INC.
1 HOLLOW LANE, SUITE 110
LAKE SUCCESS, NY 11042
_____________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 21, 1995
_____________________
INTRODUCTION
This Proxy Statement is furnished to the stockholders of The Care Group,
Inc., a Delaware corporation (the "Company"), in connection with a
solicitation of proxies by the Board of Directors of the Company (the
"Board of Directors") for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held on June 21, 1995 at 10:30 A.M., local time,
at the Roslyn Claremont Hotel, 1221 Old Northern Boulevard, Roslyn, New
York 11576, for the purposes set forth in the accompanying Notice of
Meeting. This Proxy Statement is first being mailed to the Company's
stockholders on or about May 10, 1995.
Only stockholders of record at the close of business on April 26, 1995
will be entitled to notice of and to vote at the Annual Meeting. At
such date the outstanding voting securities of the Company consisted of
8,390,015 shares of common stock, $.001 par value per share (the "Common
Stock"), each share of Common Stock being entitled to one vote with
respect to each of the proposals to be voted at the Annual Meeting. To
transact any business at the Annual Meeting, a quorum (a majority of the
total number of outstanding shares of Common Stock entitled to be voted
thereat) must be present or represented by proxy.
Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by either (i) giving written notice to the
Company bearing a later date than the proxy, (ii) by submission of a
later dated proxy, or (iii) by voting in person at the Annual Meeting.
The shares of Common Stock represented by all properly executed proxies
received in time for the Annual Meeting will be voted in accordance with
any specification made thereon, and if no specification is made thereon
will be voted (i) FOR the proposal to amend the Company's Certification
of Incorporation with respect to the Board of Directors, (ii) FOR the
elections of each of the nominees for directors named herein, (iii) FOR
the proposal to amend the Company's Certificate of Incorporation with
respect to the Company's Preferred Stock, (iv) FOR the ratification of
the selection by the Company's Board of Directors of Deloitte & Touche
LLP as the Company's independent public accountants for the year ending
December 31, 1995 and (v) FOR the approval of the 1995 Stock Option
Plan.
The Company's officers and directors hold 27.94% of the total number of
shares of Common Stock that are entitled to vote at the Annual Meeting.
The officers and directors intend to vote their shares FOR each proposal
set forth in this proxy statement.
PROPOSAL 1
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION WITH
RESPECT TO
THE BOARD OF DIRECTORS
The Board of Directors has recommended that in order to provide for
continuity for the Company in future years, the Company's Certificate of
Incorporation should be amended to provide for three classes of
directors for the Company. The members of each class are to be elected
once every three years for a term of three years and until their
successors are elected and shall have qualified. Each class will
consist of the same number of directors, except that if there are an odd
number of directors, Class III shall consist of one fewer director than
the other two classes. Under Article ELEVENTH of the Certificate of
Incorporation, the Board of Directors shall consist of at least three
and not more than seven individuals.
Assuming that the Board of Directors consists of five individuals (as
the Board currently does), adoption of this amendment means (i) that at
future annual meetings of the Company either one or two rather than five
directors will be elected each year for terms of three years rather than
one year, (ii) that in the event of future vacancies on the Board of
Directors, the remaining directors may elect a replacement director and
such a replacement director will be of the same class as the director
replaced, and (iii) that it may be more difficult for a person or group
to acquire control of the Company in a contested transaction. Adoption
of this amendment will also make it more difficult to remove the
Company's management. Therefore passage of the amendment may enhance
the ability of the Company's officers and directors to maintain their
respective positions with the Company. The Company is currently not
aware of any attempt by any person or group to take over the Company.
The amendment provides that it cannot be changed without the affirmative
vote of the holders of at least two-thirds of the shares of Common Stock
present at the meeting in person or represented by proxy. This two-
thirds voting requirement will make it more difficult to change the
amendment and accordingly more difficult to eliminate or alter the
separate classes of directors. Therefore, this two-thirds voting
requirement may increase the difficulty for a person or group to remove
directors and thus acquire control of the Company in a contested
transaction.
At the Annual Meeting for this year, (i) if this amendment is adopted
all five directors will be elected, one for one year, two for two years
and two for three years, and (ii) if this amendment is not adopted all
five directors will be elected to a term at the next annual meeting and
until their successors are elected and shall have qualified.
The full text of the proposed amendment to the Company's Certificate of
Incorporation with respect to the election of directors appears as
Exhibit 1 to this Proxy Statement. Passage of this proposal requires
the approval of a majority of the issued and outstanding shares of
Common Stock present in person or represented by proxy voted at the
Annual Meeting (abstentions will be counted as being present and will be
deemed a vote against the proposal; broker non-votes will not be counted
as present for this proposal and will not affect the outcome of the
vote).
PROPOSAL 2
ELECTION OF DIRECTORS
A Board of five directors is to be elected at the Annual Meeting. The
nominees designated as Class I, II and III shall serve until the Annual
Meetings in 1998, 1997 and 1996, respectively, and thereafter until his
or her successor shall have been elected and shall qualify.
Ann T. Mittasch and Randolph J. Mittasch are designated as Class I
directors for three years expiring at the Annual Meeting in calendar
year 1998 and until their successors are elected and shall have
qualified. Gilda G. Schechter and John J. Lynch are designated Class II
directors for the two year term expiring at the Annual Meeting in
calendar year 1997 and until their successors are elected and shall have
qualified. Dr. Alex Maurillo is designated as the Class III director
for the one year term expiring at the Annual Meeting in the calendar
year 1996 and until his successor is elected and shall have qualified.
If proposal 1 set forth in this Proxy Statement is not adopted, then
each nominee will serve until the next annual meeting of stockholders
and thereafter until his or her successor shall have been elected and
shall qualify.
In order to be elected as a member of the Board of Directors, a nominee
must receive a plurality of the outstanding votes present in person or
represented by proxy at the Annual Meeting (abstentions and broker non-
votes will be disregarded and will have no effect on the outcome of the
vote).
Set forth on the following page are the names and ages of the nominees,
their positions with the Company, if any, and their principal
occupations at present and during the past five years. The terms of
each of the nominees will expire upon the election and qualification of
the new directors. Each of the nominees has advised the Company that he
or she will serve if elected. The persons named in the enclosed proxy
intend, unless such authority is withheld, to vote for the election as
directors of the nominees named below. The Company does not expect that
any of the nominees will be available for the election, but if that
should occur before the Annual Meeting, the proxies will be voted for a
substitute nominee who will be recommended by the Board of Directors.
During 1994, there were a total of five (5) meetings of the Board of
Directors. The Board of Directors has an Audit Committee consisting of
John Lynch and Dr. Alex Maurillo. The purpose of the Audit Committee is
to review the Company's financial condition and the qualifications of
the Company's independent accountants to serve as auditors. During
1994, there were a total of two (2) meetings of the Audit Committee.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information relating to the current directors
(who consist of all the nominees for directors for the 1995 Annual
Meeting) and executive officers of the Company.
NAME POSITION WITH THE COMPANY
Ann T. Mittasch President, Chief Executive Officer
Chairman of the Board
Gilda G. Schechter Executive Vice President, Director
Randolph J. Mittasch Secretary/Treasurer, Director
Dr. Alex Maurillo Director
John J. Lynch Director
Anthony J. Esposito, Jr. Vice President of the Company's
subsidiaries
Pat H. Celli Chief Financial Officer,
Assistant Secretary and
Assistant Treasurer
ANN T. MITTASCH, PRESIDENT, CHAIRMAN OF THE BOARD OF DIRECTORS: (Age
65): Mrs. Mittasch has been President and Chairman of the Company since
1984. Prior to 1984, Mrs. Mittasch served as President and then Chairman
of Superior Care, Inc. (predecessor to Lifetime Corporation), a national
home care corporation whose securities traded on the New York Stock
Exchange, Inc. Mrs. Mittasch is the mother of Randolph J. Mittasch,
Secretary/Treasurer and a director of the Company.
GILDA G. SCHECHTER, EXECUTIVE VICE PRESIDENT AND DIRECTOR: (Age 63): Ms.
Schechter has been Executive Vice President and a director of the
Company since 1985.
RANDOLPH J. MITTASCH, SECRETARY/TREASURER: (Age 33): Mr. Mittasch has
been Secretary/Treasurer of the Company since February, 1989 and has
been a director of the Company since 1985. From 1988 to February, 1992,
he was employed by the American Stock Exchange, Inc. as a Senior
Accountant. Mr. Mittasch received an MBA from Adelphi University in
1987 and in 1989 became a Certified Public Accountant. Mr. Mittasch is
the son of Ann T. Mittasch, President and Chairman of the Board of the
Company.
JOHN J. LYNCH, DIRECTOR: (Age 71): Mr. Lynch has been a consultant for
special projects from February, 1988 to the present. From November 1,
1989 to May 1, 1990, Mr. Lynch served as pro-bono health arbitrator for
the New York State Mediation Board. Mr. Lynch has been a director of
the Company since 1990 and he is not an officer of the Company.
ALEX MAURILLO, M.D., DIRECTOR: (Age 66): Dr. Alex Maurillo has been a
General Surgeon at St. Clares Hospital since 1962. He is currently on
the Board of Directors of the Central Labor Council of New York City and
a Medical Coordinator of the Workman's Compensation Board & Self
Insurance Fund of Local 3 of the Electrical Union of New York. Dr.
Maurillo has been a director of the Company since 1992 and he is not an
officer of the Company.
ANTHONY J. ESPOSITO, JR., VICE PRESIDENT OF THE COMPANY'S HOME CARE
SUBSIDIARIES: (Age 47): Mr. Esposito has been serving as Vice President
of the Company's subsidiaries providing home care services since the
later of 1985 or their formation.
PAT H. CELLI, ASSISTANT TREASURER, ASSISTANT SECRETARY AND CHIEF
FINANCIAL OFFICER: (Age 42): Mr. Celli has been Chief Financial Officer
of the Company since 1990.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned (calculated in accordance with Rule 13d-
3 under the Securities Exchange Act of 1934) as of April 4, 1995 or such
other date as indicated below by (i) owners of more than 5% of the
Company's outstanding Common Stock, (ii) all directors and director
nominees of the Company, (iii) the named executive officers referred to
in the "Executive Compensation" section of this report and (iv) all
officers and directors of the Company as a group:
NAME OF NUMBER OF SHARES PERCENTAGE OF
BENEFICIAL OWNER BENEFICIALLY OWNED TOTAL SHARES
Ann T. Mittasch (1) 1,297,000 15.25%
1 Hollow Lane
Lake Success, NY 11042
Gilda G. Schechter (2) 265,500 3.16%
1 Hollow Lane
Lake Success, NY 11042
Randolph J. Mittasch (3) 190,300 2.26%
John L. Lynch (4) 3,250 *
Dr. Alex Maurillo (5) 2,000 *
Anthony J. Esposito, Jr. (6) 90,000 1.07%
C.G. Holding of New York, Inc. (7) 981,206 11.69%
1979 Marcus Avenue
Lake Success, NY 11042
The Care Group, Inc. 981,206 11.69%
Board of Directors (8)
1 Hollow Lane
Lake Success, NY 11042
Pat Celli (9) 63,000 *
All officers and directors as a group
(total of 7 persons) (10) 2,752,256 31.79%
*Less than 1%
(1) Mrs. Mittasch, Chairman and President of the Company, directly owns
900,000 shares of Common Stock for her own account and may be deemed to
beneficially own an additional 280,000 shares of Common Stock subject to
a voting trust (the "Voting Trust") expiring February 27, 1999 of which
she is the sole voting trustee with respect to 140,000 shares of Common
Stock directly owned by Randolph J. Mittasch, and an additional 140,000
shares directly owned by five other persons. Mrs. Mittasch also holds
options as of April 4, 1995 totaling 117,000 shares an average exercise
price of $4.46 that expire February 27, 1999. Mrs. Mittasch disclaims
beneficial ownership of the 981,206 shares of Common Stock beneficially
owned by the Company's Board of Directors (See (7)).
(2) Gilda G. Schecter, Executive Vice President and a director of the
Company, directly owns 260,000 shares of Common Stock for her own
account. The shares beneficially owned by Ms. Schechter as of April 4,
1995 include options expiring February 27, 1999 to acquire 5,500 shares
of Common Stock at an average exercise price $5.13. Ms. Schechter
disclaims beneficial ownership of the 981,206 shares of Common Stock
beneficially owned by the Company's Board of Directors (See (7)).
(3) Randolph J. Mittasch directly owns 142,800 shares of Common Stock
as of April 4, 1995, 140,000 of which shares are subject to the Voting
Trust. Mr. Mittasch also holds options expiring February 27, 1999 to
acquire 47,500 shares of Common Stock at an average exercise price of
$4.50. Randolph J. Mittasch disclaims beneficial ownership of the
shares of Common Stock owned by Ann T. Mittasch, except for his 140,000
shares that are subject to the Voting Trust. Randolph J. Mittasch
disclaims beneficial ownership of the 981,206 shares of Common Stock
beneficially owned by the Company's Board of Directors (See (7)).
(4) John J. Lynch has options expiring February 27, 1999 to acquire
3,250 shares of Common Stock at an average exercise price of $3.00.
John J. Lynch disclaims beneficial ownership of the 981,206 shares of
Common Stock beneficially owned by the Company's Board of Directors (See
(7)).
(5) Dr. Alex Maurillo has options expiring February 27, 1999 to acquire
2,000 shares of Common Stock at an average exercise price of $3.38. Dr.
Alex Maurillo disclaims beneficial ownership of the 981,206 shares of
Common Stock beneficially owned by the Company's Board of Directors (See
(7)).
(6) Anthony Esposito, Jr. directly owns 60,000 shares of Common Stock
and has options expiring February 27, 1999 to acquire 30,000 shares of
Common Stock at an average exercise price of $4.13.
(7) The 981,206 shares beneficially owned by C.G. Holdings of New York,
Inc. are subject to a voting trust terminating in December 1995 pursuant
to which the Board of Directors of the Company, as the voting trustee,
has exclusive voting power (and accordingly beneficial ownership) over
such shares during the term of the voting trust. Also, during the term
of the voting trust, C.G. Holdings of New York, Inc. has certain limited
rights to transfer the shares, provided that the shares will remain in
the voting trust upon transfer. The individual members of the Board of
Directors each disclaims beneficial ownership of the 981,206 shares.
(8) The shares beneficially owned by C. G. Holdings of New York, Inc.,
may be deemed to be beneficially owned by Jordan Belfort and Daniel
Porusch whose addresses are 1979 Marcus Avenue, Lake Success, NY 11042.
(9) Pat Celli has options expiring February 27, 1999 to acquire 63,000
shares of Common Stock at an average exercise price of $4.75.
(10) Includes options held by all officers and directors of the Company
to acquire a total of 268,250 shares of Common Stock and the 981,206
shares placed in the voting trust referred to in Note 7.
Executive Compensation
The following table contains information with respect to all
compensation paid to each of the executive officers of the Company whose
total compensation exceeded $100,000 in all capacities to the Company
during the fiscal year ended December 31, 1994.
<TABLE>
SUMMARY COMPENSATION TABLE (1)
<CAPTION>
ANNUAL COMPENSATION
(a) (b) (c)
Name and
Principal Position Year Salary ($)
<S> <C> <C>
Ann Mittasch 1994 197,877
Chairman of the Board 1993 172,154
President, Chief 1992 152,885
Executive Officer
Anthony J. Esposito, Jr. 1994 122,430
V.P. of Company's 1993 116,048
Subsidiaries 1992 103,488
Pat H. Celli 1994 107,808
Chief Financial Officer 1993 95,000
Assistant Secretary & 1992 90,865
Assistant Treasurer
SUMMARY COMPENSATION TABLE (1)
<CAPTION>
ANNUAL COMPENSATION LONG TERM
COMPENSATION
Award
(a) (d) (g)
Name and Securities Underlying
Principal Position Bonus ($) Options/SAR's (#) (2)
<S> <C> <C>
Ann Mittasch 7,630 -0-
Chairman of the Board 3,317 40,000
President, Chief 27,885 75,000
Executive Officer
Anthony J. Esposito, Jr. 1,500 -0-
V.P. of Company's 2,354 -0-
Subsidiaries 12,047 10,000
Pat H. Celli 5,750 -0-
Chief Financial Officer 1,827 30,000
Assistant Secretary & 1,827 70,000
Assistant Treasurer
</TABLE>
(1) Certain columns have not been included in this table because the
information called for therein is not applicable to the Company or the
individuals named above for the periods indicated.
(2) Only stock options have been granted; no SARs have been granted.
Each Stock Option is exercisable to purchase one share of Common Stock
at an exercise price equal to the market value of the Common Stock on
the date that the option is granted.
<TABLE>
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
<CAPTION>
(a) (b) (c) (d) (e)
<S> <C> <C> <C> <C>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Options Options
/SARs at FY /SARs at FY
-End (#) -End ($)
Shares Exercisable/ Exercisable/
Acquired on Value Unexercisable Unexercisable
Name Exercise (#) Realized ($) (1) (1)
ANN MITTASCH 95,000 $101,548 132,000(1) $198,000(1)
PRESIDENT, CHIEF
EXECUTIVE OFFICER
PAT CELLI 52,000 $34,232 48,000(1) $82,260(1)
CHIEF FINANCIAL
OFFICER
ASSISTANT SECRETARY
& ASSISTANT TREASURER
ANTHONY J. ESPOSITO, JR.
V.P. OF COMPANY'S
SUBSIDARIES 0 0 30,000(1) $0.00
</TABLE>
(1) All stock options reflected in columns (d) and (e) are presently
exercisable.
Performance Graph
The Securities and Exchange Commission requires that the Company include
in this report a line-graph presentation comparing cumulative, five year
stockholder returns on an indexed basis with a broad equity market index
and a published industry or line of business index, or an index of peer
companies selected by the Company. The Board of Directors has approved
the use of the Wilshire Index as the broad equity market index and the
Wilshire Index of Health Care Providers as its published industry index.
The table below compares the cumulative total return as of the end of
each of the Company's last five fiscal years on $100 invested as of
December 31, 1989 in the Common Stock of the Company, the Index of
Health Care Providers and the Wilshire 5000 index assuming the
reinvestment of all dividends (the Company has not paid any dividends):
THE CARE GROUP, INC.
FIVE YEAR CUMULATIVE RETURNS
THE CARE GROUP, INC.
FIVE YEAR CUMULATIVE RETURNS
1989 1990 1991
PEER GROUP $100 $121 $235
CARE GROUP 100 100 127
WILSHIRE 5000 100 94 126
THE CARE GROUP, INC.
FIVE YEAR CUMULATIVE RETURNS
1992 1993 1994
PEER GROUP $215 $168 $221
CARE GROUP 59 66 75
WILSHIRE 5000 137 153 153
401 (K) PLAN
In 1992, the Company adopted a defined contribution plan under section
401(k) of the Internal Revenue Code of 1986 to begin operation in 1993.
A substantial portion of the employees of the Company and its
subsidiaries are entitled to participate in this plan. The Company
currently has no other deferred compensation plans. Except as described
herein, the Company has no current plans relating to bonuses and awards
that may be granted to management, although the Company reserves the
right in the future to grant such other bonuses or awards.
EMPLOYMENT AGREEMENTS
Ann T. Mittasch, President and Chairman of the Company, entered into an
employment agreement with the Company pursuant to which she agreed to
serve the Company on a full-time basis. Her employment agreement runs
from January 1, 1992 and ends December 31, 1996. Under this agreement,
her base salary is $228,131 for 1995 with annual increases of 15%.
Bonuses, awards and other benefits may be granted to Mrs. Mittasch on a
periodic basis by the Board of Directors, including the right to
participate in group life insurance, medical and retirement plans, if
any. The employment agreement also contains non-competition and other
covenants.
DIRECTOR COMPENSATION
Ann Mittasch, Gilda Schechter and Randolph Mittasch, who serve as both
directors and officers of the Company, do not receive compensation for
serving as directors. Mr. John Lynch and Dr. Alex Maurillo, who are the
Company's two independent directors, receive $250 for each Board of
Directors meeting they attend as compensation for serving as directors.
1990, 1991 AND 1993 STOCK OPTION PLANS
The Company's currently operative Stock Option Plans consist of the 1990
Stock Option Plan (the "1990 Plan"), the 1991 Stock Option Plan (the
"1991 Plan") and the 1993 Stock Option Plan (the "1993 Plan") (the 1990
Plan, the 1991 Plan, and the 1993 Plan are sometimes collectively
referred to herein as the "Plans"). Under the Plans, a total of
1,025,000 shares of Common Stock have been reserved for issuance to
officers, directors, key employees and consultants who are not employees
of the Company. As of December 31, 1994, options to purchase a total of
23,000 shares and 674,250 shares of Common Stock have been granted under
the 1990 Plan and the 1991/1993 Plans, respectively. Options to
purchase 450,000 shares of Common Stock have been granted to the
executive officers and directors of the Company as a group. The options
granted under the 1990 Plan, and the 1991/1993 Plans as of December 31,
1994 were granted at an average exercise price of $5.17 and $2.68,
respectively (although such terms are subject to modification by the
Board of Directors). Each Plan operates similarly. All Plans permit
the issuance of both options that qualify for treatment as "incentive
stock options" ("ISOs") under Section 422 of the Internal Revenue Code
of 1986 ("Section 422") and non-statutory options.
The Company has approved the 1995 Stock Option Plan and is submitting
the 1995 Plan for approval at the Annual Meeting; see "PROPOSAL 5 (
Approval of the 1995 Stock Option Plan."
1991 STOCK INCENTIVE PLAN
Effective July 1, 1991, the Company established the 1991 Stock Incentive
Plan (the "Stock Plan") pursuant to which the Board of Directors may
from time to time award up to 50,000 shares of Common Stock under the
Stock Plan.
As of December 31, 1994, the Company issued a total of 4,350 shares of
Common Stock under the Stock Plan to 18 employees of the Company in
consideration for their services to the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Decisions on compensation of the Company's executives are generally made
by the Board of Directors in accordance with the General Corporation Law
of the State of Delaware. Ann T. Mittasch, Gilda G. Schechter and
Randolph T. Mittasch, who are three of the five members of the Board of
Directors, are also officers and employees of the Company. Ann T.
Mittasch did not participate in any discussions or decisions of the
Board regarding her salary, bonus or option grants received by her
during fiscal 1994.
BOARD COMPENSATION COMMITTEE REPORT
COMPENSATION POLICES TOWARD EXECUTIVE OFFICERS
The Board of Directors' compensation policies are designed to provide
competitive levels of compensation that relate to the Company's annual
and long-term performance goals, reward above-average corporate
performance, recognize individual initiative and achievements, and
assist the Company in attracting and retaining qualified executives.
Target levels of the executive officers' overall compensation are
intended to be consistent with others within the Company's peer group in
the home healthcare and healthcare services industry. The Company
generally targets the low to mid-range of compensation paid by the peer
group companies for comparison, although the Company reserves the right
to change policies based on the Company's growth and performance. As a
result of the implementation of these policies, the Company's executives
may be paid more or less than the executives of the Company's
competitors in any particular year.
The Board of Directors also believes that stock ownership by management
and stock-based performance compensation arrangements are beneficial in
aligning management's and stockholders' interests in the enhancement of
stockholder value. Thus, the Board of Directors has also increasingly
utilized the grant of stock options in the Company's compensation
package for its executive officers.
The Board of Directors does not have a separate compensation committee.
See "Executive Compensation ( Compensation Committee Interlocks and
Issuer Participation."
FISCAL 1994 BONUS AWARDS
Executive performance bonus opportunities are based on objective and
subjective performance criteria such as contribution to the Company's
revenue and the potential for long-term expansion and growth in revenues
and earnings (of which there can be no assurance). Performance criteria
vary each year depending on the Company's changing and evolving issues,
challenges and goals. Performance criteria can include consummation of
proposed transactions, successfuly completion of financing, increases in
revenues and earnings and attainment of other goals such as commencement
of new subsidiaries or areas of business.
Performance criteria were generally met in 1994 in light of the increase
in the Company's earnings and revenue, completion of two acquisitions
and the formation of a new pharmaceutical mail order subsidiary.
MRS. MITTASCH FISCAL 1994 COMPENSATION
Regulations of the Securities and Exchange Commission require the Board
of Directors to disclose the Board's basis for compensation reported for
Mrs. Mittasch in fiscal 1994 and to discuss the relationship between the
Company's performance during the last fiscal year and Mrs. Mittasch's
compensation. Mrs. Mittasch's base salary was based on her employment
agreement entered into with the Company in February, 1992. Mrs.
Mittasch's bonus was determined by the Board of Directors and was based
on her significant contributions toward the Company's performance during
1994, including increased revenue and earnings (and, in particular, her
efforts at continuing to reduce cost of revenues), increased working
capital, completion of two acquisitions and formation of a new
pharmaceutical mail order subsidiary.
SUBMITTED BY THE COMPANY'S BOARD OF DIRECTORS
ANN T. MITTASCH GILDA G. SCHECHTER RANDOLPH J. MITTASCH
JOHN J. LYNCH DR. ALEX MAURILLO
PROPOSAL 3
AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION WITH RESPECT TO THE
COMPANY'S PREFERRED STOCK
Article FOURTH of the Company's Certificate of Incorporation authorizes
the Company to issue up to one million shares of Preferred Stock, par
value $.001 per share. Article FOURTH also authorized the Board of
Directors to determine the designations, powers, preferences and terms
of the Preferred Stock. There are currently no outstanding shares of
Preferred Stock.
The Board of Directors proposes to amend the provision of Article FOURTH
to clarify the Board's broad latitude in establishing the designations,
powers, rights and preferences (collectively, "terms") of the Preferred
Stock. The Certificate of Incorporation currently permits the Board of
Directors to establish the terms of the Preferred Stock. In particular,
the current provision in the Certificate of Incorporation permitting the
Board of Directors to establish the terms of the Preferred Stock reads
as follows:
"The Preferred Stock is to be issued in one or more series as determined
by the Corporation's Board of Directors in which the designations,
powers, preferences, justifications, limitations, restrictions and
relative, optional, conversion and other special rights of the shares of
Preferred Stock contained in each such series shall be as fixed by the
Board of Directors of the Corporation (authority to do so being hereby
expressly granted) and stated and expressed in a resolution or
resolutions for the issuance of the shares of Preferred Stock contained
in such series."
The proposed amendment, which is set forth in full on Exhibit II of this
Proxy Statement, enumerates with greater detail, specificity and
comprehensiveness the terms of the Preferred Stock that the Board of
Directors is authorized to determine. For example, the proposed
amendment specifies that the Board of Directors is authorized to
determine voting, liquidation, dividend and redemption rights and
conversion privileges of the Preferred Stock, which are not expressly
enumerated in the current provision. The purpose of the greater
specificity is to remove possible ambiguities as to whether certain
terms of the Preferred Stock are in fact subject to determination by the
Board under Delaware corporate law.
No financings using the Preferred Stock are currently contemplated.
Preferred Stock whose terms can be established by the Board of Directors
might make it more difficult for a person or group to acquire the
Company in a contested transaction.
Passage of this proposal requires the approval of a majority of the
issued and outstanding shares of Common Stock present in person or
represented by proxy at the annual meeting (abstentions will be counted
as being present and will be deemed a vote against the proposal; broker
non-votes will not be counted as present for this proposal and will not
affect the outcome of the vote).
PROPOSAL 4
RATIFICATION OF
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Deloitte & Touche LLP
to act as the independent public accounts to audit and report on the
financial statements of the Company for the year ending December 31,
1995, subject to the right of the Board of Directors to replace this
firm. This selection, subject to the Board's aforementioned right of
replacement, is being submitted for ratification by stockholders and, to
be effective, must be approved by the holders of a majority of the
issued and outstanding shares of the Company's voting stock present in
person or represented by proxy at the Annual Meeting (abstentions will
be counted as an "against" vote and broker non-votes will be disregarded
and will have no outcome on the vote).
A representative of Deloitte & Touche LLP is expected to be present at
the Annual Meeting with an opportunity to make a statement if he desires
to do so, and is expected to be available to respond to appropriate
questions.
On September 19, 1994, the Company, at the recommendations of its Board
of Directors, replaced Geschwind, Davidson & Company ("GDC") as the
Company's independent accountants and appointed Deloitte & Touche LLP as
the new independent auditors. GDC's reports on the financial statements
of the Company for the years ended December 31, 1992 and 1993 contained
no adverse opinions or disclaimers of opinions and were not otherwise
qualified or modified as to uncertainty, audit scope or accounting
principles.
During the years ended on December 31, 1992 and 1993 and the subsequent
interim period preceding GDC's replacement (the "Prior Period"), there
were no disagreements between the Company and GDC on any matter of
accounting principles or practices, financial statements disclosure or
auditing scope or procedure. No events of the kind described in
paragraphs (A) through (D) of Section (a)(1)(v) of SEC Rule SK, item
304, occurred with respected to the Company during the Prior Period.
THE BOARD RECOMMENDS APPROVAL OF THIS PROPOSAL.
PROPOSAL 5
APPROVAL OF THE 1995 STOCK OPTION PLAN
The Company's Board of Directors has approved the Company's 1995 Stock
Option Plan (the "1995 Plan"). The 1995 Plan provides that the Company
may grant up to 1,000,000 options, where each option is exercisable to
purchase one share of Common Stock as described below. The 1995 Plan
permits the issuance thereunder of options that qualify for treatment as
"incentive stock options" ("ISOs") under Section 422 ("Section 422") of
the Internal Revenue Code of 1986, as amended (the "Code"), as well as
non-statutory options.
Passage of this proposal requires the approval of the holders of a
majority of the issued and outstanding shares of Common Stock present in
person or represented by proxy at the Annual Meeting (abstentions will
be counted as being present and will be deemed a vote against the
proposal; broker non-votes will not be counted as present for this
proposal and will not affect the outcome of the vote).
THE BOARD RECOMMENDS ADOPTION OF THE PLAN
DESCRIPTION OF THE PLAN
(a) Stock Subject to Options. The 1995 Plan provides that an aggregate
of 1,000,000 shares of Common Stock may be granted to officers,
directors and certain employees of the Company or its subsidiaries,
currently consisting of approximately 180 individuals, and to
consultants, advisers or affiliates who are not employees of the Company
or the Company's subsidiaries. Each option to be granted under the 1995
Plan will be exercisable to purchase one share of Common Stock, subject
to appropriate adjustment in the event of corporate recapitalization,
reorganization or similar transactions.
(b) Administration. The 1995 Plan will be administered by the
Company's Board of Directors. The Board of Directors reserves the right
to select a separate committee to administer the 1995 Plan. The Board
of Directors has the authority to determine, among other things, the
persons to whom options will be granted (subject to certain eligibility
requirements for grants of ISOs), whether the optionee will receive ISOs
or non-statutory options, the exercise price of non-statutory options
(subject to restrictions discussed below) and the time or times at which
options will be granted.
(c) Consideration. Options under the 1995 Plan can be exercised only
for cash.
(d) ISO Price. The exercise price per share of ISOs granted under the
1995 Plan cannot be less than the fair market value of the Common Stock
on the date of grant, or, in the case of ISOs granted to persons holding
more than ten percent of the total combined voting power of all classes
of stock of the Company ("Significant Stockholder"), 110% of the fair
market value of he Common Stock on the date of the grant.
(e) Non-Statutory Option Price. Non-Statutory stock options are
exercisable at a price equal to at least 90% of the fair market value of
the Company's Common Stock at the date of grant, subject to the right of
the Board of Directors to modify the terms of options as described
below.
(f) Allocation of Plan Benefits. The benefits under the 1995 Plan that
will be received, or that would have been received for the fiscal year
ended December 31, 1994 had the 1995 Plan then been in effect, by the
Company's executive officers, directors, employees or other eligible
participants is not determinable.
(g) Market Value of the Securities Underlying Options. No options have
been granted under the 1995 Plan. Assuming that all 1,000,000 options
under the 1995 Plan are granted, the aggregate market value of the
shares of Common Stock underlying such options as of April 4, 1995 would
equal $4,560,000.
(h) Option Duration. The 1995 Plan requires that each option shall
expire on December 31, 2004. However, in the case of any ISO granted to
a Significant Stockholder, such ISO shall expire on the date specified
by the Board of Directors but not more than five years from its date of
grant.
(i) Exercise of Options and Payment of Stock Repurchases. Each option
granted under the 1995 Plan shall be fully exercisable at the time of
grant. The Company reserves the right to purchase outstanding options
issued under the 1995 Plan for $.10 per option in the event of the
consummation of certain mergers or consolidations involving the Company
or the sale of 50% or more of the Company's assets.
(j) Non-Assignability of Options. No assignment or transfers of
options are permitted without the Company's prior consent. No ISO
optionee can assign or transfer any shares of Common Stock issued
thereunder until the expiration of both (i) two years after the date of
grant of the ISO and (ii) one year after the optionee acquires such
shares.
(k) Early Termination of Options. Sixty days after an individual's
employment or affiliation with the Company terminates, any options under
the 1995 Plan granted to such individual will terminate.
(l) Amendment, Suspension and Termination of the Plan. The Board of
Directors may amend the 1995 Plan in any respect at any time, except
that if any amendment shall adversely affect any optionee or require
stockholder vote, such amendment must be consented to in writing by such
optionee or approved by the Company's stockholders, as the case may be.
(m) Modification of Options. The Board of Directors may either modify
the terms of any options after they are granted or terminate and re-
issue any options.
(n) Registration of the Plan. The Company intends to register the
options and the shares of Common Stock underlying the options under the
Securities Act of 1933, as amended, as soon as practical after the
Annual Meeting.
FEDERAL INCOME TAX CONSEQUENCES
(a) Incentive Stock Options. The following general rules are
applicable for Federal Income Tax purposes under existing law to
employees who receive ISOs under the 1995 Plan.
1. No taxable income results to the optionee upon the grant of an ISO
or upon the issuance of shares to him upon exercise of the ISO except as
provided in applicable sections of the Internal Revenue Code of 1986, as
amended, dealing with alternative minimum taxable income.
2. No tax deduction is allowed to the Company upon either grant or
exercise of an ISO.
3. If shares acquired upon exercise of an ISO are not disposed of
prior to the later of (i) two years following the date the option was
granted or (ii) one year following the date the shares are transferred
to the optionee pursuant to the exercise of the option, the difference
between the amount realized on any subsequent disposition of the shares
and the exercise price will be treated as capital gain or loss to the
optionee.
4. If shares acquired upon exercise of an ISO are disposed of before
the expiration of one or both of the requisite holding periods (a
"disqualifying disposition"), then in most cases the lesser (i) any
excess of the fair market value of the shares at the time of exercise of
the option over the exercise price or (ii) the actual gain on
disposition will be treated as compensation to the optionee and will be
taxed as ordinary income in the year of such disposition.
5. In any year that an optionee recognizes compensation income on a
disqualifying disposition of stock by exercising an ISO, the Company
will generally be entitled to a corresponding deduction for income tax
purposes (this generally does not apply to capital gains received by the
optionee).
6. The aggregate fair market value of Common Stock that can be
acquired for the first time in a year by an optionee exercising an ISO
cannot exceed $100,000, and otherwise, such options will not be treated
as ISOs. The aggregate fair market value of Common Stock for which an
ISO is exercisable is determined at the time of the option's grant.
(b) Non-Statutory Stock Options. A non-statutory stock option granted
under the 1995 Plan is taxed accordance with Section 83 of the Code and
the regulations issued thereunder. The following general rules are
applicable to holders of such options and to the Company for Federal
income tax purposes under existing law, based upon the assumptions that
(i) the options do not have a readily ascertainable fair market value at
the date of grant, and (ii) the Common Stock acquired by exercising the
non-qualified stock option is either transferable or not subject to a
substantial risk of forfeiture (as defined in Regulations under Section
83 of the Code):
1. The optionee does not realize any taxable income upon the grant of
an option, and the Company is not allowed a business expense deduction
by reason of such grant.
2. The optionee will recognize ordinary compensation income at the
time of exercise of the option or at the time of the transfer of the
option prior to exercise in an amount equal to the excess, if any, of
the fair market value of the shares of Common Stock on the date of
exercise over the exercise price.
3. Except as provided in paragraph (b)(2) above, when the optionee
sells the shares of Common Stock issued upon exercise of options, he
will recognize a capital gain or loss in an amount equal to the
difference between the amount realized upon the sale of such shares an
this basis in such shares (i.e., the exercise price plus the amount
deemed received by the optionee as compensation income). If the
optionee holds the shares for longer than the statutory holding period,
this gain or loss will be a long-term capital gain or loss.
4. In general, the Company will be entitled to a tax deduction in the
year in which compensation income is recognized by the optionee (this
generally does not apply to capital gains received by the optionee).
(c) ERISA. The 1995 Plan is not an employee benefit plan which is
subject to the provisions of the Employee Retirement Income Security Act
of 1974 and the provisions of Section 401(a) of the Code are not
applicable to the 1995 Plan.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended for inclusion in the proxy statement
to be mailed to all stockholders entitled to vote at the next annual
meeting of the Company must be received by the Company or its principal
executive officers no later than April 1, 1996. The Company will only
include proposals by stockholders who meet the eligibility requirements
described in Rule 14a-8 (a)(1) under the Securities Exchange Act of
1934.
COST OF SOLICITATION
The cost of soliciting proxies on the accompanying proxy form will be
borne by the Company. In addition to solicitation by mail, the Company
will request banks, brokers and other custodians, nominees and
fiduciaries to send proxy material to the beneficial owners and to
secure their voting instructions, if necessary. The Company will
reimburse them for their reasonable expenses in so doing. Directors,
officers and regular employees of the Company may solicit proxies
personally, by telephone and by telegram from stockholders if proxies
are not received promptly.
GENERAL
The Board of Directors knows of no business that will be presented for
action at the Annual Meeting in addition to the matters specified in the
accompanying Notice of Annual Meeting. If other matters do come before
the Annual Meeting, it is intended that proxies will be voted in
accordance with the judgment of the person or persons exercising at the
Annual Meeting the authority conferred by the proxy.
It is important that proxies be returned promptly. Therefore,
stockholders are requested to complete, sign and date the accompanying
proxies and to return them properly in the enclosed envelope.
NEW YORK, NEW YORK BY ORDER OF THE BOARD OF DIRECTORS
APRIL 26, 1995
RANDOLPH J. MITTASCH
SECRETARY AND TREASURER
EXHIBIT I
PROPOSED AMENDMENT TO
THE COMPANY'S
CERTIFICATE OF INCORPORATION
WITH RESPECT TO DIRECTORS
RESOLVED, that a new ARTICLE TWELFTH shall be added to the Company's
Certificate of Incorporation that shall read in its entirety as follows:
12. Directors shall be divided into three classes, Class I, Class II
and Class III. The Board of Directors of the Company shall determine
into which class each director or nominee is assigned. Each class shall
consist of the same number of directors; provided, however that (i) if
the directors cannot be divided evenly into three classes, Class III
shall consist of one fewer director than Class I and II, and (ii) if
there are fewer than five directors, Class I shall consist of one more
director than Classes II and III. The members of each class shall be
elected for three year terms and until their successors are elected and
shall have qualified; provided however, that the first directors to be
assigned to Class II initially shall be elected for a term of two years
and the first director or directors to be assigned to Class III
initially shall be elected for a term of one year. The provisions of
this Article TWELVE cannot be amended without the affirmative vote of
the holders of more than two-thirds of the shares of Common Stock
present at a meeting in person or represented by proxy, provided that a
quorum is present thereat.
EXHIBIT II
PROPOSED AMENDMENT
TO THE
COMPANY'S CERTIFICATE OF INCORPORATION
WITH RESPECT TO THE
COMPANY'S PREFERRED STOCK
RESOLVED, that the paragraph in ARTICLE FOURTH of the Company's
Certificate of Incorporation that describes the Preferred Stock shall be
amended in its entirety to read as follows:
The Board of Directors is hereby authorized to provide for the issuance
of Preferred Stock from time to time in one or more series with such
distinctive serial voting powers, designations, preferences, rights,
qualifications, limitations, and restrictions of the shares of each such
series as the Board of Directors with respect to each such series shall
determine, which shall include, without limiting the generality of the
foregoing, the determination of any or all of the following:
(i) the number of shares constituting such series, the par value and
the distinctive designation of such series;
(ii) the extent, if any, to which the shares of such series shall
have voting rights;
(iii) whether dividends, if any, with respect to such series shall be
cumulative or noncumulative, the dividend rate or method or determining
the dividend rate of such series, and the dates and preferences of
dividends on such series;
(iv) the rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution, or winding up of the
Corporation, or upon any distribution of the Corporation's assets;
(v) whether the shares of such series shall have conversion
privileges and, if so, the terms and conditions of such conversion
privileges, including a provision, if any, for adjustment of the
conversion rate and for payment of additional amounts by holders of
Preferred Stock of such series upon exercise of such conversion
privileges;
(vi) whether or not the shares of such series shall be redeemable,
and, if so, the price at and the terms and conditions upon which such
shares shall be redeemable, and whether such series shall have a sinking
fund for the redemption or purchase of shares of such series, and, if
so, the terms and amount of such sinking fund; and
(vii) any other preference and relative, participating, optional, or
other special rights, and qualifications, limitations, or restrictions
thereof.
The powers, designations, preferences, rights, qualifications,
limitations and restrictions of the Preferred Stock shall be determined
from time to time by the Board of Directors and shall be stated in a
resolution or resolutions thereof providing for the issuance of such
Preferred Stock (a "Preferred Stock Designation").
Except as may be provided by the Board of Directors in a Preferred Stock
Designation or by law, shares of any series of Preferred Stock that have
been redeemed (whether through the operation of a sinking fund or
otherwise) or purchased by the Corporation, or which, if convertible or
exchangeable, have been converted into or exchanged for shares of stock
of any other class or classes, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as a part of the
series of which they were originally a part or may be reissued as part
of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors or as part of any other series of
Preferred Stock.
