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:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
(X) Definitive Proxy Statement by Rule 14 a-6(E)(2))
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-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)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-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:
..............................................................................
5) Total fee paid:
..............................................................................
1 Set forth the amount on which the filing fee is calculated and state how it
was determined
(X) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.............................................................................
2) Form, Schedule or Registration Statement No.:
.............................................................................
3) Filing Party:
.............................................................................
4) Date Filed:
.............................................................................
<PAGE>
THE CARE GROUP, INC.
1 Hollow Lane, Suite 110
Lake Success, NY 11042
-----------------------------------------------------
AMENDED NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT
-----------------------------------------------------
The Annual Meeting of Stockholders of The Care Group, Inc. (the
"Company") was originally scheduled to be held on July 8, 1996. The Company
subsequently elected to postpone the July 8, 1996 Annual Meeting of
Stockholders until certain actions requiring stockholder approval were
finalized. Therefore, the Annual Meeting of Stockholders of the Company will
be held on October 4, 1996 at 10:00 A.M., local time, at the Inter-Continental
Hotel, 111 East 48th Street, New York, New York 10017, phone number (212)
755-5900, for the following purposes, all as more fully described in the
accompanying Proxy Statement:
(1) To elect two (2) Class III directors of the Company for a period of three
years;
(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants for the Company for the fiscal year ending December 31, 1996;
(3) To approve an amendment to the Company's Certificate of Incorporation to
increase the total number of shares of Common Stock authorized from
20,000,000 to 30,000,000 and the total number of shares of Preferred
Stock authorized from 1,000,000 to 2,000,000;
(4) To approve a private placement (the "Private Placement") of the sale of
58 Units of the Company's securities for a purchase price equal to
$50,000 per Unit. Each Unit shall consist of 40,000 shares of the
Company's Common Stock and 40,000 Common Stock Purchase Warrants,
exercisable for an aggregate of 40,000 shares of Common Stock. In the
aggregate, up to a maximum of 4,640,000 shares of the Company's Common
Stock may be issued in connection with the Private Placement. On August
14, 1996 the Company consummated the sale of 42 Units. No shareholder
approval was required for the sale of 42 units.
(5) To approve the 1996 Stock Option Plan.
The Company's Annual Report (the "Annual Report") was distributed to
stockholders of the Company in connection with the originally scheduled Annual
Meeting of Stockholders. If you require an additional copy of the Annual Report
please contact Marisa Perulli, at the Company at The Care Group, Inc. One
Hollow Lane, Suite 110, Lake Success, NY 11042 or call (516) 869-8383 or Fax
(516) 869-8401.
The Board of Directors has fixed the close of business on September 5,
1996 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. Mittasch
Secretary and Treasurer
New York, New York
September 9, 1996
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WHETHER OR NOT YOU
EXPECT TO ATTEND IN PERSON. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE
THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE.
<PAGE>
THE CARE GROUP, INC.
1 Hollow Lane, Suite 110
Lake Success, NY 11042
-----------------------------------------------------
AMENDED PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 4, 1996
-----------------------------------------------------
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 October 4, 1996 at 10:00 A.M., local time, at the
Inter-Continental Hotel, 111 East 48th Street, New York, New York 10017, phone
number (212) 755-5900, 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 September 9, 1996.
Only stockholders of record at the close of business on September 5,
1996 will be entitled to notice of and to vote at the Annual Meeting. As of
September 5, 1996 the outstanding voting securities of the Company consisted
of 10,277,053 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
election of the nominees for directors named herein, (ii) 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, 1996, (iii) FOR the approval of an amendment to the Company's Certificate
of Incorporation to increase the total number of shares of Common Stock
authorized from 20,000,000 to 30,000,000 and to increase the total number of
shares of Preferred Stock authorized from 1,000,000 to 2,000,000, (iv) FOR the
approval of a private placement (the "Private Placement") of 58 Units of the
Company's securities, which, on an as converted basis, may result in the
issuance of an aggregate of 4,640,000 shares of the Company's Common Stock,
and (v) FOR the approval of the 1996 Stock Option Plan.
The Company's officers and directors hold 31.50% 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.
<PAGE>
AVAILABLE INFORMATION
The Care Group is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and,
accordingly, files reports, proxy statements and other information with the
Securities Exchange Commission ("SEC"). Such reports, proxy statements and
other information filed with the SEC are available for inspection and copying
at the public reference facilities maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
SEC's Regional Offices located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and at Seven World Trade Center,
New York, New York 10048. Copies of such documents may also be obtained from
the Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.
4
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. Class
I, Class II and Class III each consists of two directors. The directors
designated as Class III are to be elected at the Annual Meeting and shall
serve until the annual meeting in 1999 and until their respective successors
shall have been elected and shall qualify. The directors designated as Class I
and II (who are not to be elected at the Annual Meeting), shall serve until
the Annual Meetings in 1998 and 1997, respectively, 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 is the name and age of each of the
nominees, John Pappajohn and Pat H. Celli, their respective positions with the
Company, if any, and their respective principal occupations at present and
during the past five years. Following the Annual Meeting, Dr. Alex Maurillo
will no longer be a director of the Company. The term of the nominees will
expire upon the election and qualification of the new directors at the Annual
Meeting to be held during 1999. The nominees have advised the Company that
they 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 the nominees will
be unavailable for 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 1995, there were a total of five (5) meetings of the Board of
Directors. The Board of Directors has an Audit Committee presently consisting
of John Pappajohn and Dr. Derace Lan Schaffer. During 1995, the Audit
Committee consisted of Messrs. Mittasch, 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 1995, there were a total of two (2) meetings of the Audit
Committee. The Board of Directors has a Compensation Committee presently
consisting of John Pappajohn and Dr. Derace Lan Schaffer. The Compensation
Committee was established in August 1996, therefore there were no meetings of
the Compensation Committee during 1995. The purpose of the Compensation
Committee is to set the compensation for the Company's executive officers and
to administer the 1996 Stock Option Plan.
THE BOARD RECOMMENDS THE ELECTION OF JOHN PAPPAJOHN AND PAT H. CELLI.
5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information relating to the current
directors and executive officers of the Company.
NAME Position with the Company
Class I Directors
Ann T. Mittasch Chairman of the Board
Randolph J. Mittasch Secretary/Treasurer, Director
Class II Directors
Richard G. Jung President, Chief Executive Officer, Director
Dr. Derace Lan Schaffer (1) Director
Class III Directors
Dr. Alex Maurillo Director
John Pappajohn (1) Director
Other Executive Officer
Pat H. Celli Chief Financial Officer, Assistant Secretary
and Assistant Treasurer
- -------------------------
(1) Member of the Audit and Compensation Committees.
Richard G. Jung, President, Chief Executive Officer and Director: (Age 33):
Mr. Jung has been President and Chief Executive Officer of the Company since
August 1996. Mr. Jung was named to the Board of Directors in August 1996
pursuant to the terms of the Private Placement. Prior to joining the Company
Mr. Jung has held a number of positions with US Healthcare, a nationwide
healthcare provider, including regional vice president and district manager of
the Pittsburgh, Pennsylvania region from May 1994 to June 1996, District New
Business Sales Manager from 1989 to May 1994 and Account Executive from 1987
to 1989.
Ann T. Mittasch, Chairman of the Board of Directors: (Age 65): Ms. Mittasch
has been Chairman of the Company since 1984 and was President and Chief
Executive Officer of the Company from 1984 through August, 1996. Prior to
1984, Ms. 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. Ms. Mittasch is
the mother of Randolph J. Mittasch, Secretary/Treasurer and a director of the
Company.
Randolph J. Mittasch, Secretary/Treasurer and Director: (Age 34): 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,
Chairman of the Board of the Company.
Dr. Derace Lan Schaffer, Director: (Age 49): Dr. Schaffer was named to the
Board of Directors in August 1996 pursuant to the terms of the Private
Placement. Dr. Schaffer, a practicing radiologist, has served as Chairman of
the Board and President of the Ide Group, a medical group, since 1980, and as
6
<PAGE>
President of The Lan Group, a health care and biomedical consulting company,
since 1990. Dr. Schaffer also serves as a director of various other privately
held health care related organizations.
Dr. Alex Maurillo, Director: (Age 67): Dr. 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 the Local 3 of the
Electrical Union of New York. Dr. Maurillo has been a director of the Company
since 1992 and is not an officer of the Company.
John Pappajohn, Director: (Age 67): Mr. Pappajohn was named to the Board of
Directors in August 1996 pursuant to the terms of the Private Placement. Since
1969, Mr. Pappajohn has been the sole owner of Pappajohn Capital Resources, a
venture capital firm, and President of Equity Dynamics, Inc., a financial
consulting firm in Des Moines, Iowa. Mr. Pappajohn serves as a director of the
following public companies: CORE, Inc., Drug Screening Systems, Inc., Fuisz
Technologies Ltd., OncorMed, Inc., PACE Health Management Systems, Inc., and
United Systems Technologies, Inc.
Pat H. Celli, Assistant Treasurer, Assistant Secretary and Chief Financial
Officer: (Age 43): Mr. Celli has been Chief Financial Officer of the Company
since October 1990. From 1985 to September 1990, Mr. Celli was employed as
President of Alternative Health Care Systems, Inc., a health care holding
company that owned physician clinics, a health insurance company and a health
maintenance organization. Prior to that, Mr. Celli was employed as a Certified
Public Accountant with Touche Ross & Co.
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
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 September 5, 1996 or 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 proxy
statement and (iv) all officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Number of
Shares
Beneficially Percentage of
Name of Beneficial Owner Owned Total Shares
- ------------------------ ----- ------------
<S> <C> <C>
Ann T. Mittasch (1) 1,460,200 13.83%
1 Hollow Lane
Lake Success, NY 11042
John Pappajohn(2) 1,180,000 10.76%
2116 Financial Center
Des Moines, IA 50309
Edgewater Private 820,000 7.67%
Equity Fund II, L.P. (3)
666 Grand Avenue, Suite 200
Des Moines, IA 50309
Randolph J. Mittasch (4) 258,500 2.49%
Dr. Derace Lan Schaffer -0- -0-
Dr. Alex Maurillo (5) 2,000 *
Richard G. Jung (6) 60,000 *
Pat H. Celli (7) 117,500 1.13%
All officers and directors as a group (total of 7 persons) (8) 3,758,200 31.50%
</TABLE>
* Less than 1%
- ---------
(1) Ms. Mittasch, Chairman and President of the Company, directly owns
933,200 shares of Common Stock for her own account and may be deemed to
beneficially own an additional 245,000 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 105,000
shares directly owned by one other person. Ms. Mittasch also holds
options totaling 282,000 shares with an average exercise price of $1.96
that expire on February 27, 1999.
(2) John Pappajohn, a director of the Company, directly owns 490,000 shares
of Common Stock and holds warrants to purchase an aggregate of 490,000
shares of Common Stock at an exercise price of $2.50 per share of Common
Stock. Equity Dynamics, Inc., a company wholly owned by Mr. Pappajohn,
holds warrants to purchase an aggregate of 100,000 shares of Common Stock
at an exercise price of $2.50 per share of Common Stock and options to
purchase an aggregate of 100,000 shares of Common Stock at an exercise
price of $1.25 per share of Common Stock.
8
<PAGE>
(3) Edgewater Private Equity Fund II, L.P. directly owns 410,000 shares of
Common Stock and holds warrants to purchase an aggregate of 410,000
shares of Common Stock at an exercise price of $2.50 per share of Common
Stock.
(4) Randolph J. Mittasch, Secretary/Treasurer and a director of the Company,
directly owns 161,000 shares of Common Stock, 140,000 of which shares are
subject to the Voting Trust. Mr. Mittasch also holds options expiring
February 27, 1999 to acquire 97,500 shares of Common Stock at an exercise
price of $1.77. 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.
(5) Dr. Alex Maurillo has options expiring February 27, 1999 to acquire 2,000
shares of Common Stock at an exercise price of $2.07.
(6) Richard G. Jung has options expiring on December 31, 2005 to acquire
60,000 shares of Common Stock at an exercise price of $2.31.
(7) Pat H. Celli, Chief Financial Officer of the Company, directly owns 4,500
shares of Common Stock for his own account. Mr. Celli has options
expiring February 27, 1999 to acquire 113,000 shares of Common Stock at
an average exercise price of $1.77.
(8) Includes options and warrants held by all officers and directors of the
Company to acquire a total of 1,244,500 shares of Common Stock.
Compliance with Section 16 (a) of the Exchange Act
C G Holdings of New York, Inc., Jordan Belfort and Daniel Porush,
filing as a group, who were beneficial owners of more than 10% of the Common
Stock of the Company, filed one late report on Form 4 in October, 1995
covering 12 sale transactions that occurred in August and September, 1995
(this last report was an "exit" report), and failed to file one report on Form
4 with respect to one sale transaction that occurred in March 1995.
Certain Relationships and Related Transactions
On August 1, 1996 the Company entered into a consulting
agreement (the "Consulting Agreement") with Equity Dynamics, Inc. whereby
Equity Dynamics, Inc. will provide the Company with certain management and
financial consulting services. Under the Consulting Agreement, the Company
shall pay Equity Dynamics, Inc. $50,000 a year for two years. The Company
shall also grant Equity Dynamics, Inc. (i) an option to purchase 100,000
shares of Common Stock of the Company at an exercise price of $1.25 per share
vesting on the date of grant and (ii) stock purchase warrants to purchase an
aggregate of 100,000 shares of Common Stock at an exercise price of $2.50 per
share. John Pappajohn, a director of the Company, is the President and sole
owner of Equity Dynamics, Inc.
9
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table contains information with respect to the
compensation earned by the Company's Chief Executive Officer and the two other
most highly compensated executive officers of the Company whose compensation
exceeded $100,000 for the 1995 fiscal year for services rendered in all
capacities to the Company and its subsidiaries, for each of the last three
fiscal years. The listed individuals shall be hereinafter referred to as the
"Named Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation Awards
------------ -------------------
Securities Underlying
Name and Principal Position Year Salary ($) Bonus ($) Options/SARs (#)
- --------------------------------------------------------------------- ----------- ----------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Ann T. Mittasch 1995 $ 227,559 $ -0- 295,000 (2)
Chairman of the Board, President, Chief Executive Officer 1994 197,877 7,630 -0-
1993 172,154 3,317 40,000
Pat H. Celli 1995 $ 127,300 $ 2,500 170,000 (2)
Chief Financial Officer, Assistant Secretary & Assistant 1994 107,808 5,750 -0-
Treasurer 1993 95,000 1,827 30,000
Anthony J. Esposito, Jr. (1) 1995 $ 122,430 $ -0- -0-
V.P. of Company's Subsidiaries 1994 122,430 1,500 -0-
1993 116,048 2,354 -0-
</TABLE>
- ---------
(1) Anthony J. Esposito, Jr. resigned in all capacities from the Company on
February 9, 1996.
(2) 60,000 of these shares consist of a regrant of previously outstanding
options.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows, with respect to the Named Executive Officers of the
Company, certain information concerning the grant of stock options in fiscal
year 1995. No stock appreciation rights were granted to these individuals
during fiscal year 1995.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option Term(3)
Number of % of Total
Securities Options Granted
Underlying to Employees Exercise Price Expiration
Name Options Granted (1) in Fiscal Year Per Share (2) Date 5%($) 10%($)
- ---- --------------------- -------------------- ------------------ --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Ann T. Mittasch 295,000 (4) 45% $2.75 2/27/99 $118,000 $249,000
Pat H. Celli 170,000 (4) 21% 2.75 2/27/99 55,000 117,000
Anthony J. Esposito -0- -0- -0- -0- -0-
</TABLE>
- ---------
(1) Options are immediately exercisable subject to repurchase and all shares
are fully vested at the time of grant.
(2) The exercise price may be paid only in cash.
(3) There can be no assurance provided to any executive officer or any other
holder of the Company's securities that the actual stock price appreciation
over the option term will be at the 5% or 10% assumed annual rates of
compounded stock price appreciation or at any other defined level. Unless
the market price of the Common Stock appreciates over the option term, no
value will be realized from the option grant made to the Named Executive
Officer.
(4) 60,000 of these shares consist of a regrant of previously outstanding
options.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following tables set forth certain information with respect to the
Named Executive Officers regarding stock option holdings as of December 31,
1995. No stock appreciation rights were granted to any Named Executive Officer
during the 1995 fiscal year.
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options Options at
at Fiscal Year-End (#) Fiscal Year-End ($)
Shares Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($)(1) Unexercisable (2) Unexercisable (3)
- ---- -------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Ann T. Mittasch 85,500 $235,000 282,000/-0- $ -0-
President, Chief Executive
Officer
Pat H. Celli 45,000 $ 95,000 113,000/-0- $ -0-
Chief Financial Officer,
Assistant Secretary &
Assistant Treasurer
Anthony J. Esposito, Jr. -0- -0- -0- -0-
V.P. of Company's
Subsidiaries
</TABLE>
- ---------
(1) Equal to the fair market value of the purchased shares on the option
exercise date less the exercise price paid for those shares.
(2) All stock options are immediately exercisable for fully vested shares
upon the date of grant.
(3) Based on the fair market value of the shares at the end of the 1995 fiscal
year ($1.94 per share) less the option exercise price payable for those
shares.
12
<PAGE>
TEN YEAR STOCK OPTION REPRICING
<TABLE>
<CAPTION>
No. of Options Market Price of Exercise Price at
that were Stock at Time of time of
Name Title Date Repriced Repricing Repricing
- -------------------------- --------------------- -------------- ---------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Ann T. Mittasch President 08/21/95 60,000 $3.75 $5.88
Ann T. Mittasch President 10/13/95 60,000 2.75 3.75
Ann T. Mittasch President 10/13/95 175,000 2.75 3.75
Ann T. Mittasch President 03/05/93 227,000 2.38 4.13
Pat H. Celli Chief Financial 08/21/95 60,000 3.75 4.75
Officer
Pat H. Celli Chief Financial 10/13/95 60,000 2.75 3.75
Officer
Pat H. Celli Chief Financial 10/13/95 50,000 2.75 3.75
Officer
Pat H. Celli Chief Financial 03/05/93 80,000 2.38 4.13
Officer
Randolph J. Mittasch Secretary and 08/21/95 25,000 3.75 6.00
Treasurer
Randolph J. Mittasch Secretary and 10/13/95 25,000 2.75 3.75
Treasurer
Randolph J. Mittasch Secretary and 10/13/95 50,000 2.75 3.75
Treasurer
Randolph J. Mittasch Secretary and 03/05/93 22,500 2.38 4.13
Treasurer
Gilda G. Schechter Executive Vice 03/05/93 45,000 2.38 4.13
President
</TABLE>
(The following table has been restubbed from above)
<TABLE>
<CAPTION>
Length of Original Term
New Exercise Remaining at Date of
Name Price Repricing or Amendment
- ---------------------- -------------------- ------------------------
<S> <C> <C>
Ann T. Mittasch $3.75 3 years, 6 months
Ann T. Mittasch 2.75 3 years, 4 months
Ann T. Mittasch 2.75 3 years, 4 months
Ann T. Mittasch 2.38 6 years
Pat H. Celli 3.75 3 years, 6 months
Pat H. Celli 2.75 3 years, 4 months
Pat H. Celli 2.75 3 years, 4 months
Pat H. Celli 2.38 6 years
Randolph J. Mittasch 3.75 3 years, 6 months
Randolph J. Mittasch 2.75 3 years, 4 months
Randolph J. Mittasch 2.75 3 Yrs. 4 months
Randolph J. Mittasch 2.38 6 years
Gilda G. Schechter 2.38 6 years
</TABLE>
13
<PAGE>
COMPANY'S REASON FOR STOCK OPTION REPRICING
The Company repriced its stock options for employees and officers in
order to provide an incentive to improve the performance of the Company using
the current market price of the Common Stock as a base. All options that have
been repriced were repriced from an "out of the money" exercise price to an
"at the money" exercise price at the time of repricing. In addition, the
repricing was based on management's attainment of certain milestones, such as
increased profitability and expansion of the Company's operations during the
first quarter of 1993, and the Company's successful entrance into certain
managed care contracts and the establishment of its subsidiary, Mail Order
Meds, Inc., during 1995. Submitted by the Company's Board of Directors
reporting on the actions of the Board of Directors of the Company as composed
at the time of the aforementioned action.
BOARD OF DIRECTORS
Ann T. Mittasch Dr. Alex Maurillo John Pappajohn
Richard G. Jung Randolph J. Mittasch Dr. Derace Lan Schaffer
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company
include in this proxy statement 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 a
group of peer companies selected by the Company.1 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, 1990 in the Common Stock of
the Company, the peer group 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
1990 1991 1992
----------------- ------------------ ----------
PEER GROUP $100 $276 $359
CARE GROUP 100 127 60
WILSHIRE 5000 100 134 146
The Care Group, Inc.
Five Year Cumulative Returns
1993 1994 1995
----------------- ------------------ ----------
PEER GROUP $393 $485 $452
- --------
1 The members of the peer group, all of which engage in the home care
and/or infusion business, include: American Med Technologies, Amserv
Healthcare, Inc., Coram Healthcare Corp., Health Management, Health
Professionals, Inc., Hospital Staffing Services, Inc., In Home
Health, Inc., Maxicare Health Plans, Medical Innovations, Inc., Mid
Atlantic Medial Services, Olsten Corp., Quantum Health Resources,
Inc.
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CARE GROUP 63 75 35
WILSHIRE 5000 163 163 222
401 (K) Plan
In 1992, the Company adopted a defined contribution plan under
section 401(k) of the Internal Revenue Code of 1986, as amended, 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
Richard G. Jung, President and Chief Executive Officer of the Company,
entered into an employment agreement with the Company on August 19, 1996 (the
"RJ Agreement"). Under the RJ Agreement, Mr. Jung shall serve as President and
Chief Executive Officer and Director of the Company for a period of one year,
commencing on August 19, 1996 and the RJ Agreement shall be automatically
renewed for successive one year periods unless earlier terminated pursuant to
the RJ Agreement. Mr. Jung will receive an annual salary of $200,000 for the
1996 fiscal year. Mr. Jung shall receive options to purchase 300,000 shares of
Common Stock at an exercise price equal to the fair market value of the Common
Stock on the date of grant.
Ann T. Mittasch, former President and Chief Executive Officer of the
Company, entered into an employment agreement with the Company whereby Ms.
Mittasch shall serve as Chairman of the Company (the "Chairman Agreement").
Under the Chairman Agreement, Ms. Mittasch shall serve as Chairman of the
Company until December 31, 2000. Ms. Mittasch will receive base compensation of
$250,000 per year for her services as Chairman and an annual bonus not to exceed
$50,000 per year.
Randolph J. Mittasch, Secretary and Treasurer of the Company, entered
into an employment agreement with the Company on January 1, 1996 (the "RJM
Agreement"). Under the RJM Agreement, Mr. Mittasch shall serve as Secretary
and Treasurer of the Company for a period of five years, commencing on January
1, 1996 and ending on December 31, 2000 with base compensation of $90,000 for
the fiscal year of 1996. Mr. Mittasch shall receive options to purchase shares
of Common Stock at the exercise price of two dollars ($2.00) per share within
120 days following the end of each fiscal year of the Company based upon the
Company's net income.
Pat H. Celli, Chief Financial Officer of the Company, entered into an
employment agreement with the Company on January 1, 1996 (the "PHC
Agreement"). Under the PHC Agreement, Mr. Celli shall serve as Chief Financial
Officer of the Company for a period of five years, commencing on January 1,
1996 and ending on December 31, 2000 with base compensation of $130,000 for
the fiscal year of 1996. Mr. Celli shall receive options to purchase shares of
Common Stock at the exercise price of two dollars ($2.00) per share within 120
days following the end of each fiscal year of the Company based upon the
Company's net income.
Director Compensation
Richard G. Jung and Randolph J. Mittasch, each serving as both director
and officer of the Company, do not receive additional compensation for serving
as directors. Pat H. Celli, who serves
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as an officer of the Company, will not receive any additional compensation for
serving as a director if elected. Dr. Alex Maurillo, Dr. Derace Lan Schaffer
and John Pappajohn, who are the Company's three independent directors, each
receive $250 for each Board of Directors meeting they attend as compensation
for serving as directors. Ann T. Mittasch receives compensation for her
services as Chairman of the Board of Directors. See "Employment Agreements."
1990, 1991, 1993 and 1995 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") and the 1995
Stock Option Plan (the "1995 Plan"), (the 1990 Plan, the 1991 Plan, the 1993
Plan and the 1995 Plan are sometimes collectively referred to herein as the
"Plans"). Under the Plans, a total of 2,025,000 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, 1995,
options to purchase a total of 23,000 shares and 1,168,000 shares were granted
under the 1990 Plan and the 1991,1993 and 1995 Plans, respectively, of which
490,000 shares were exercised. The options granted under the 1990 Plan on the
one hand, and the 1991,1993 and 1995 Plans on the other hand, as of December
31, 1995 are exercisable at an average exercise price of $5.17 and $2.93,
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.
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, 1995, 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 in the fiscal year
of 1995 are generally made by the Board of Directors in accordance with the
General Corporation Law of the State of Delaware. The Board of Directors did not
have a separate compensation committee during the fiscal year of 1995. During
the fiscal year of 1995, Ann T. Mittasch, Gilda G. Schechter and Randolph J.
Mittasch, were both members of the Board of Directors and officers and employees
of the Company. Ms. Mittasch, Ms. Schechter and Mr. Mittasch did not participate
in any discussions or decisions of the Board regarding their salary, bonus or
option grants received by them during the fiscal year of 1995. On August 23,
1996 the Board of Directors established a Compensation Committee consisting of
two non-employee directors, John Pappajohn and Dr. Derace Lan Schaffer.
BOARD COMPENSATION COMMITTEE REPORT
Compensation Policies Toward Executive Officers
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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 in 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 or 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.
During the fiscal year of 1995 the whole Board of Directors acted as the
Compensation Committee. On August 23, 1996 the Board of Directors established
a Compensation Committee consisting of two non-employee directors, John
Pappajohn and Dr. Derace Lan Schaffer. See "Executive
Compensation-Compensation Committee Interlocks and Insider Participation."
Fiscal 1995 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,
successful completion of financing, increases in revenues and earnings and
attainment of other goals such as commencement of new subsidiaries or areas of
business.
Ann T. Mittasch Fiscal 1995 Compensation
Regulations of the Securities and Exchange Commission require the
Board of Directors to disclose the Board's basis for compensation reported for
Ann T. Mittasch in fiscal year of 1995 and to discuss the relationship between
the Company's performance during the last fiscal year and Ms. Mittasch's
compensation. Ms. Mittasch's base salary was based on an employment agreement
entered into with the Company in February, 1992. The options granted and the
option price regrants to Ms. Mittasch were based on her successful efforts to
establish and expand the Company's subsidiary, Mail Order Meds, her successful
efforts at maintaining the profitability of the Company in the fiscal year of
1995 and her leading the Company into various arrangements with managed care
companies. Submitted by the Company's Board of Directors reporting on the
actions of the Board of Directors of the Company, as composed at the time of
the aforementioned action.
BOARD OF DIRECTORS
Ann T. Mittasch Dr. Alex Maurillo John Pappajohn
Richard G. Jung Randolph J. Mittasch Dr. Derace Lan Schaffer
17
<PAGE>
PROPOSAL 2
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 accountants to audit and report on the
financial statements of the Company for the year ending December 31, 1996,
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 recommendation of its
Board of Directors, replaced Geschwind, Davidson & Company ("GDC") as the
Company's independent auditors and appointed Deloitte & Touche LLP as the new
independent auditors. GDC's report on the financial statements of the Company
for the year ended December 31, 1993 contained no adverse opinion or
disclaimer of opinion and was not otherwise qualified or modified as to
uncertainty, audit scope or accounting principles.
During the year ended on December 31, 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 statement disclosures or auditing scope or
procedure. No events of the kind described in paragraphs (A) through (D) of
Section (a)(1)(v) of SEC Regulation S-K, Item 304, occurred with respect to the
Company during the Prior Period.
THE BOARD RECOMMENDS APPROVAL OF THIS PROPOSAL.
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<PAGE>
PROPOSAL 3
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Board of Directors has unanimously approved and recommends that
the stockholders adopt an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of the Company's
Common Stock from 20,000,000 shares to 30,000,000 shares and to increase the
total number of shares of Preferred Stock authorized from 1,000,000 shares to
2,000,000 shares (the "Amendment"). The affirmative vote of a majority of the
Company's outstanding Common Stock on the record date is required for the
adoption of such Amendment.
If the Amendment is approved, the increased number of authorized
shares of Common Stock and Preferred Stock will be available for issue, from
time to time, for such purposes and consideration, and on such terms as the
Board of Directors may approve and no further vote of the stockholders is
required, except as set forth in the following paragraph. The Board of
Directors believes that the limited number of authorized but unissued and
unreserved shares of Common Stock and Preferred Stock unduly restricts its
ability to respond to business and corporate financing opportunities. The
availability of additional shares of Common Stock and Preferred Stock for
issuance will afford the Company flexibility in these areas.
Pursuant to the requirements of the Nasdaq National Market, Inc. on
which the Company's Common Stock is listed, stockholder approval is required
for the listing of additional shares of Common Stock and Preferred Stock under
certain circumstances. These circumstances primarily include listing of
additional shares (i) reserved for options granted or to be granted to
officers, directors or key employees, (ii) the issuance of which would result
in a Change of Control of the Company, (iii) to be issued as sole or partial
consideration for an acquisition of stock or assets of another company, where
an individual director, officer of substantial stockholder of the Company has
a 5% or greater interest in the company to be acquired or the issuance could
result in an increase in outstanding Common Stock of 20% or more, and (iv)
certain other transactions involving the sale or issuance of the Company's
Common Stock at a price less than the greater of book or market value.
Although not a consideration in the Board's decision to recommend the
amendment, the existence of additional authorized shares of Common Stock and
Preferred Stock could have the effect of rendering more difficult or
discouraging hostile takeover attempts. The Company is not aware of any
existing or planned effort on the part of any party to accumulate material
amounts of voting stock, or to acquire the Company by means of merger, tender
offer, solicitation of proxies in opposition to management or otherwise, or to
change the Company's management, nor is the Company aware of any person having
made any offer to acquire the voting stock or assets of the Company.
The terms of the additional shares of Common Stock and Preferred
Stock for which authorization is sought will be identical with the terms of
the shares of Common Stock and Preferred Stock now authorized and outstanding,
and the amendment will not affect the terms, or the rights of the holders of,
those shares. The Company's Preferred Stock may have such designations, rights
and preferences as may be determined from time to time by the Board of
Directors. The Company's Common Stock has no cumulative voting, conversion,
preemptive or subscription rights, and is not redeemable.
A certificate authorizing the increased number of shares of Common
Stock and Preferred Stock will be filed with the Secretary of State of the
State of Delaware as soon as the amendment is adopted.
THE BOARD RECOMMENDS APPROVAL OF THIS PROPOSAL.
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<PAGE>
PROPOSAL 4
APPROVAL OF PRIVATE PLACEMENT
The Board of Directors has unanimously approved and recommends that
the stockholders approve the Private Placement of up to 58 Units of the
Company's securities to be sold to "accredited investors" at an offering price
equal to $50,000 per Unit. Assuming that all 58 Units are sold in the private
placement, the Company will receive net proceeds of approximately $2,726,000
substantially all of which will be used for working capital and general
corporate purposes. Each Unit shall consist of 40,000 shares of the Company's
Common Stock and 40,000 Common Stock Purchase Warrants, exercisable for an
aggregate of 40,000 shares of Common Stock. In the aggregate, up to 4,640,000
shares of the Company's Common Stock may be issued in connection with the sale
of 58 Units in the Private Placement if all of the Common Stock Purchase
Warrants are exercised. The Company will receive net proceeds of an additional
$5,800,000 if all of the Common Stock Purchase Warrants issued as part of the
58 Units are exercised. The sale of 42 Units, consummated on August 14, 1996,
is not subject to stockholder approval. The Company received net proceeds of
approximately $1,974,000 from the sale of the 42 Units. The Company will
receive net proceeds of an additional $4,200,000 if all of the Common Stock
Purchase Warrants issued as part of the 42 Units already sold are exercised.
The Company believes this additional capital is necessary and prudent for the
implementation of the Company's plans for the future.
Pursuant to the requirements of the Nasdaq National Market, Inc. on
which the Company's Common Stock is listed, stockholder approval is required
for the sale or issuance by the Company of Common Stock (or securities
convertible into or exercisable for Common Stock) equal to 20% or more of the
Common Stock or 20% or more of the voting power outstanding before the
issuance, for less than the greater of book or market value of the stock. To
satisfy the requirements of the Nasdaq National Market, Inc., the sale of 58
Units must be approved by the affirmative vote of a plurality of the Common
Stock of record on September 5, 1996, excluding those shares of Common Stock
purchased in connection with the sale of 42 Units previously sold in the
Private Placement. No approval was required for the sale of 42 Units on August
14, 1996.
Pursuant to the terms of the Term Sheet governing the Private
Placement, the sale of the Units will be conducted by Royce Investment Group,
Inc. (the "Placement Agent") and the Units will be sold solely to "accredited
investors" as such term is defined in Rule 501(a) under the Securities Act of
1933, as amended. Certain of the terms and conditions contained in the Term
Sheet are set forth below:
Terms of the
Offering:
Assuming the approval of this Proposal 4, the final closing will be
held within ten (10) days after the earlier to occur of (i) the sale
of all the Units in the Private Placement or (ii) October 31, 1996.
The Placement Agent and its affiliates have reserved the right to
purchase Units in the Private Placement.
Placement Agent:
The Placement Agent will receive (i) a placement fee equal to four
and one half percent (4.5%) of the proceeds from the sale of the 100
Units in the Private Placement; (ii) a non-accountable expense
allowance equal to one and one half percent (1.5%) of the proceeds
from the sale of the 100 Units in the Private Placement; and (iii) a
unit purchase option to purchase seven and one half percent (7.5%)
of the 100 Units sold in the Private Placement. In addition, the
Placement Agent will receive indemnification for liabilities
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<PAGE>
arising out of the Private Placement and registration rights with
respect to the shares of Common Stock underlying the unit purchase
option.
Terms of
Warrants:
The Warrants will be exercisable through the fifth anniversary of
the Initial Closing Date to purchase one (1) share of Common Stock
at a price (the "Exercise Price") of $2.50. The Exercise Price and
the number of shares purchasable upon exercise thereof will be
subject to anti-dilution adjustments in the event of future sales of
securities by the Company below fair market value or the Exercise
Price.
At the sole discretion of the Company, commencing one year from the
final closing, the Warrants may be redeemed by the Company at a
redemption price of $.05 per Warrant, upon no less than thirty (30)
days' prior notice, provided the closing bid price of the Common
Stock exceeds $7.00 (subject to adjustment) on each of the thirty
consecutive (30) trading days ending not more than 5 days prior to
the notice of redemption.
Registration
Rights:
Upon request of at least 50% of the shares of Common Stock included
in the Units and shares of Common Stock underlying the Warrants
offered pursuant to this private placement, purchasers in this
private placement will have one demand registration right and
unlimited piggyback registration rights with respect to the shares
of Common Stock included in the Units and issuable upon exercise of
the Warrants. Such registration rights will be exercisable between
three months and six years after the final closing of this private
placement.
Use of Proceeds:
Upon completion of the Private Placement, the Company will receive
net proceeds of $4,700,000 of which (i) $1,000,000 from the Initial
Closing has been used to temporarily place the Company in compliance
with its credit facility with The Chase Manhattan Bank, N.A.
("Chase") and (ii) the balance will be used for working capital and
general corporate purposes.
The Company will not receive any cash proceeds from the sale of the
ten (10) Units issuable upon conversion of the Investor Debentures.
THE BOARD RECOMMENDS APPROVAL OF THIS PROPOSAL.
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PROPOSAL 5
APPROVAL OF THE 1996 STOCK OPTION PLAN
The Company's Board of Directors has approved the Company's 1996
Stock Option Plan (the "1996 Plan") (attached hereto as Appendix A). The 1996
Plan provides that the Company may grant up to 500,000 options, where each
option is exercisable to purchase one share of Common Stock as described
below. The 1996 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).
Description of the Plan
(a) Stock Subject to Options. The 1996 Plan provides that an
aggregate of 500,000 shares of Common Stock may be granted to officers,
directors and certain employees of the Company or its subsidiaries, currently
consisting of approximately 160 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 1996 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 1996 Plan will be administered by a separate
committee comprised of two or more non-employee members of the Company's Board
of Directors. The Board of Directors reserves the right to select a separate
committee to administer the 1996 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 1996 Plan can be exercised
only for cash.
(d) ISO Price. The exercise price per share of ISOs granted under the
1996 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 the
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 1996 Plan
that will be received, or that would have been received for the fiscal year
ended December 31, 1995 had the 1995 Plan then been in effect, by the
Company's executive officers, directors, employees or other eligible
participants is not determinable.
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<PAGE>
(g) Market Value of the Securities Underlying Options. No options
have been granted under the 1996 Plan. Assuming that all 500,000 options under
the 1996 Plan are granted, the aggregate market value of the shares of Common
Stock underlying such options as of August 15, 1996 would equal $1,062,500.
(h) Option Duration. The 1996 Plan requires that each option shall
expire on December 31, 2005. 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 1996 Plan shall be fully exercisable at the time of grant.
The Company reserves the right to purchase outstanding options issued under
the 1996 Plan for $0.10 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 assignments 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. Ninety days after an individual's
employment or affiliation with the Company terminates, any options under the
1996 Plan granted to such individual will terminate.
(l) Amendment, Suspension and Termination of the Plan. The Board of
Directors may amend the 1996 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 1996 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
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<PAGE>
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 of (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 1996 Plan is taxed in 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 share 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 and 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 1996 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(e) of the Code are not applicable to
the 1996 Plan.
THE BOARD RECOMMENDS APPROVAL OF THIS PROPOSAL.
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ADDITIONAL INFORMATION
Change in Management
On August 19, 1996, Richard G. Jung became the Company's President
and Chief Executive Officer. On that date Ann T. Mittasch, the Company's
previous President and Chief Executive Officer, became Chairman of the Board
of Directors of the Company.
Change in Board of Directors
Pursuant to the Agency Agreement with the Placement Agent (the
"Agency Agreement"), the Company has agreed that the Company will, for a
period of three years following the Initial Closing, at the Placement Agent's
option, nominate two designees of the Placement Agent and at Equity Dynamic,
Inc.'s option, two designees of Equity Dynamics,Inc., to the Company's Board
of Directors. Mr. John Pappajohn and Mr. Richard G. Jung were nominated at the
request of Equity Dynamics, Inc.
Adjustment of Goodwill, Accounts Receivable and Certain Other Assets
In June 1996, the Company recorded a non-cash charge of $8,842,000. This
charge consisted of three components:
o As a result of the Company's decision to decentralize its
billing and collection functions, the Company has
reevaluated its accounts receivable and has identified
certain accounts that will be given to outside collection
agencies for follow-up. As a result, in June 1996, the
reserve of doubtful accounts was increased by $4,500,000
along with a direct write-off of $800,000 of bad debts.
o During the second quarter of 1996, the Company moved its
home medical equipment central office from Pennsylvania to
Texas. As part of this move, the Company evaluated certain
inventory and equipment on hand and decided to sell or
otherwise dispose of all slow moving items. The net result
was that the Company increased the reserve for obsolete
inventory and equipment by $559,000.
o The Company examined its goodwill, intangibles and certain
other assets and wrote- off $2,970,000 of such assets. This
write-off was primarily related to the goodwill from its
acquisition of businesses in 1992 and 1994 in Los Angeles,
California and Atlanta, Georgia, respectively. The Company
believes the patient base related to these acquisitions are no
longer contributing to these offices and since neither office
is currently profitable, the related goodwill has been written
off.
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 May 9, 1997. 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, as amended.
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
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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 the 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 promptly in the enclosed envelope.
New York, New York By order of the Board of Directors
September 9, 1996
Randolph J. Mittasch
Secretary and Treasurer
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APPENDIX A
THE CARE GROUP, INC.
1996
STOCK OPTION PLAN
SECTION I
NATURE AND PURPOSE
This Plan shall be known as "The Care Group, Inc. 1996 Stock
Option Plan." This Plan permits the grant of both (i) options intended to
qualify as incentive stock options ("ISOs") under Section 422 of the Internal
Revenue Code of 1986 (the "Code"), and (ii) nonstatutory restricted stock
options ("ROs"). This Plan is designed to encourage certain highly talented
officers, directors, employees and consultants of The Care Group, Inc. (the
"Company") and its subsidiaries to help build the Company and its subsidiaries
into a strong, profitable and growing business. This Plan is in addition to
the Company's 1990 Stock Option Plan, 1991 Stock Option Plan, 1993 Stock
Option Plan and 1995 Stock Option Plan.
SECTION II
GRANT OF OPTIONS
1. Grant of Options. The Board of Directors of the
Company is empowered from time to time to grant (i) ISOs to one
or more officers or key employees of the Company or any of its
subsidiaries and (ii) ROs to one or more of the officers,
directors, employees, consultants, advisers or affiliates of the
Company or any of its subsidiaries (ISOs and ROs are hereinafter
collectively referred to as "Company Options" and, individually,
as a "Company Option"). A total of five hundred thousand
<PAGE>
(500,000) Company Options may be granted under this Plan. Each Company Option
shall be expressly designated as an ISO or RO.
2. Exercise of Company Options.
(a) Each Company Option is exercisable for one
(1) share of Common Stock, par value $.001 per share, of the Company (the
"Common Stock"), subject to adjustment as provided below (the share of Common
Stock subject to each Company Option is sometimes hereinafter referred to as a
"Company Option Share," and all such shares are hereinafter sometimes
collectively referred to as the "Company Option Shares"; the share of Common
Stock subject to an ISO is sometimes hereinafter referred to as an "ISO
Share," and all such shares are sometimes hereinafter referred to as the "ISO
Shares"; the share of Common Stock subject to an RO is sometimes hereinafter
referred to as an "RO Share," and all such shares are sometimes hereinafter
referred to as the "RO Shares").
(b) Subject to Paragraph 4 of this Section II,
each Company Option (other than an ISO granted to a "Significant Stockholder"
(hereinafter defined)) may be exercised by an optionee upon ten days prior
written notice to the Company at any time during the period commencing upon
the date of grant of such option and expiring on December 31, 2005. At 11:59
p.m. on December 31, 2005, each Company Option (other than an ISO granted to a
Significant Stockholder) will expire. Each ISO granted to a Significant
Stockholder at the date of grant will expire 5 years after date of grant. Each
Company Option shall be nontransferable by the optionee to whom it is granted
and, except
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as provided in Subparagraph 4(c) of this Section 11, shall be exercisable only
by such optionee.
3. Purchase Price of Company Options.
(a) The purchase price of each RO Share shall be
at least ninety percent of the per share fair market value of the Common Stock
on the date of grant (as determined pursuant to paragraph 3(c)).
(b) The purchase price of each ISO Share shall be
the fair market value per share of Common Stock on the date of grant (as
determined pursuant to paragraph 3(c)). In the case of an ISO to be granted to
a person owning stock possessing more than ten percent of the total combined
voting power of all classes of the stock of the Company and all of its
subsidiaries (a "Significant Stockholder"), the purchase price of the ISO
share subject to such option shall be 110% of the fair market value of the
Common Stock on the date of grant (as determined pursuant to paragraph 3(c)).
In no event shall the aggregate fair market value (determined at the time the
option is granted) of Common Stock for which ISOs granted to any employee are
exercisable for the first time by such employee during any calendar year
(under all stock option plans of the Company and all its subsidiaries) exceed
$ 1,000,000.
(c) For the purpose of this paragraph 3(b), the
"fair market value" of the Common Stock "on the date of grant" shall be
determined as of the last business day for which the prices or quotes of the
Common Stock are available prior to such date of grant and shall mean (i) the
closing bid price (or average of bid prices) last quoted (on the date) by an
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<PAGE>
established quotation service for over-the-counter securities, if the Common
Stock is reported on neither the NASDAQ National Market System ("NMS") nor a
national securities exchange; or (i) the last reported sale price (on the
date) of the Common Stock on the NMS, if the Common Stock is then traded on
the NMS but not on a national securities exchange; or (iii) the average (on
the date) of the high and low, prices of the Common Stock on the principal
national securities exchange, if the Common Stock is traded on a national
securities exchange. However, if the Common Stock is not publicly traded at
the time a Company Option is granted under this Plan, "fair market value"
shall be deemed to be the fair value of the Common Stock as determined by the
Company's Board of Directors after taking into consideration all factors which
the Board of Directors deems appropriate, including, without limitation,
recent sale and offer prices of the Common Stock in private transactions
negotiated at arm's length.
4. Early Expiration of Options.
(a) If an optionee ceases to be employed or
affiliated with the Company such that he is no longer an officer, director,
employee, adviser, consultant or affiliate thereof prior to expiration of his
Company Options other than by Disability (hereinafter defined), death or for
Cause (hereinafter defined), his Company Options, if then exercisable, may be
exercised by the optionee only within three months after the date that his
employment or affiliation with the Company ceases (but in no event may his
Company Options be exercised beyond December 31, 2005); provided, however,
that if the optionee dies within
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such three-month period the provisions of subparagraph (c) of this paragraph 4
shall govern. A leave of absence for less than 90 days or where the optionee's
return to employment is guaranteed by contract or statute is not deemed a
termination of employment.
(b) If an optionee ceases to be employed or
affiliated with the Company such that he is no longer an officer, director,
employee, adviser, consultant or affiliate thereof prior to the expiration of
his Company Options by Disability, his Company Options, if then exercisable,
may be exercised by the optionee only within one year after the date of such
Disability (but in no event later than December 31, 2005), provided, however,
that if the optionee dies within such one year period the provisions of
subparagraph (c) of this paragraph 4 shall govern.
(c) In the event of the death of an optionee
prior to the expiration of his Company Options, his Company Options, if then
exercisable, may be exercised by his estate, personal representative or
beneficiaries who has acquired the Company Option by will or by the laws of
descent or distribution at any time prior to one year following the optionee's
death but no later than December 31, 2005.
(d) If an optionee ceases to be either an
officer, director or employee of the Company for Cause prior to expiration of
his Company Options, then each of his then outstanding Company Options shall,
upon his so ceasing to be an officer, director or employee, thereupon expire
and be cancelled in full.
5
<PAGE>
(e) As used in this paragraph 5, the following
terms shall have the following meanings:
(i) "Cause": The grossly negligent or otherwise
unsatisfactory performance of the optionee's duties to the Company as
an officer, director or employee thereof, or the optionee's willfully
engaging in either misconduct materially injurious to, or fraudulent
conduct involving, the Company.
(ii) "Disability": The inability of the optionee,
due to total and permanent physical or mental incapacity, to be able
to perform substantially all of the duties and activities to be
performed by such optionee as an officer, director, employee,
consultant or agent of the Company or any of its subsidiaries
performed during the six months prior to such incapacity or illness.
5. Buy-Out. If at any time prior to expiration of the
Company Options the Company approves (i) a definitive agreement to merge or
consolidate the Company with or into another corporation or other business
entity whereby the holders of all of the issued and outstanding shares of
Common Stock immediately prior to the merger or consolidation will,
immediately after the merger or consolidation, hold no more than 60% of the
aggregate value of the capital stock of the surviving entity or (ii) the sale
of at least 50% of the assets, of the Company based on fair value, then the
Company may, within seven days after the Company so approves such definitive
agreement or asset sale, purchase any or all of the then outstanding Company
Options with respect to which the optionees shall not have then exercised
(whether or not notice of exercise of any such Company Options shall then have
been delivered pursuant to subparagraph 2(b)) at a per option price equal to
$.10; provided, however, that (i) if the Company shall purchase less than all
then outstanding Company Options, the Company shall purchase Company Options
from each optionee on a prorated basis in accordance with
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<PAGE>
the number of Company Options held by each such optionee as such number bears
to the total number of then issued and outstanding Company Options, and (ii)
the Company shall not have the right under this paragraph to purchase any
outstanding ISOs to the extent that the right to effect such purchases will
disqualify the ISOs granted hereunder as "incentive stock options" under
Section 422A of the Code.
6. Reclassification, Reorganization or Merger.
(a) Subject to the Company's rights under
Section II.5, in case of any reclassification, capital reorganization or other
change of outstanding shares of the Common Stock of the Company (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of an issuance of Common Stock by way of dividend or
other distribution or of a subdivision or combination), or in case of any
consolidation or merger of the Company with or into any corporation or a
merger of another corporation with and into the Company or in case of any sale
or conveyance to another corporation of all or substantially all of the
property of the Company (any of the foregoing transactions hereinafter being
referred to as an "Extraordinary Transaction"), the Company shall cause
effective provision to be made so that each optionee shall have the right
thereafter, upon exercising his Company Options, to receive the kind and
amount of shares of stock and other securities and property receivable upon
such Extraordinary Transaction as if such optionee had exercised his Company
Options immediately prior to such Extraordinary Transaction. Any such
provision shall include provision for adjustments which shall be
7
<PAGE>
as nearly equivalent as may be practicable to the adjustments provided for in
this Plan. The foregoing provisions of this paragraph shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances.
(b) Notwithstanding the foregoing, any adjustment
made pursuant to paragraph 6(a) with respect to ISOs shall only be made after
the Board of Directors, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 425 of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Company's Board
of Directors determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from making such
adjustments.
SECTION III
PROVISIONS GOVERNING
THE GRANT OF ISOs
Notwithstanding anything to the contrary contained herein,
each ISO and each ISO Share subject thereto shall be subject to the following
terms and conditions:
1. No ISO optionee can transfer, sell, pledge, hypothecate,
gift or otherwise dispose of an ISO Share until the expiration of both (i) two
years after the date of grant of the ISO pursuant to which such ISO Share was
issued, and (ii) one year after the optionee acquires the ISO Share. Provided,
however, that the foregoing sentence does not apply to ISOs that are exercised
after the death of the ISO optionee.
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<PAGE>
2. A Company Option shall be treated as an ISO only if the
optionee, at all times during the period beginning on the date of the granting
of the option and ending on the day 3 months before the date of exercise of
the option, was an employee of either the Company, a subsidiary or parent of
the Company, or a company (or a parent or subsidiary of such company) issuing
or assuming such Company Option.
3. The Company's Board of Directors, at the written request
of any ISO optionee, may in its discretion take such actions as may be
necessary to convert such optionee's ISOs that have not been exercised on the
date of conversion into ROs at any time prior to the expiration of such ISOs,
regardless of whether the optionee is an employee of the Company or a
subsidiary thereof at the time of such conversion. Such actions may include,
but not be limited to, extending the exercise period or reducing the exercise
price of the appropriate installments of such Options. At the time of such
conversion, the Company's Board of Directors (with the consent of the
optionee) may impose such conditions on the exercise of the resulting ROs as
the Company's Board of Directors in its discretion may determine, provided
that such conditions shall not be inconsistent with this Plan. Nothing in the
Plan shall be deemed to give any ISO optionee the right to have such option's
ISO converted into ROs, and no such conversion shall occur until and unless
the Board of Directors take appropriate action. The Company's Board of
Directors, with the consent of the optionee, may also terminate any portion of
any ISO that has not been exercised at the time of such termination.
9
<PAGE>
4. In order for the Company to issue any ISOs, this
Plan must receive the approval of the holders of a majority of the Company's
Common Stock.
SECTION IV
ERISA; CERTIFICATES:
AMENDMENT OF PLAN; RESERVATION OF SHARES
1. ERISA and Federal Income Taxes. This Plan is not
subject to the Employee Retirement Income Security Act of 1974, nor is this Plan
and Agreement qualified under Section 401(a) or the Internal Revenue Code of
1954, as amended.
2. Certificates. The Company Options granted hereunder will
be represented by certificates. Upon the exercise of any Company Option the
optionee will submit the certificate representing such option to the Company
at its principal executive offices, and if the exercise is for a portion of
such optionee's Company Options, a new certificate will be issued to the
optionee by the Company representing the remainder of such optionee's
unexercised Company Options.
3. Amendment to the Plan. It is understood that the Board of
Directors of the Company may from time to time amend this Plan except that if
any such amendment shall adversely affect any optionee under this Plan 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.
Provided, however, that the Company may, without receiving the written consent
of any optionee, amend this Plan to permit any or all transactions to be
effectuated under this Plan to be exempt from the operation of Section 16(b)
of the Securities Exchange
10
<PAGE>
Act of 1934, as amended (the "Exchange Act"), pursuant to Rule 16b-3 under the
Exchange Act or any successor law, rule or regulation thereof. The Board of
Directors may either modify any of the terms of any or all of the Company
Options after they are granted or terminated and reissue any or all Company
Options that may be outstanding from time to time. The Board of Directors may
in its discretion assign and delegate all responsibilities for administering
this Plan and granting Company Options to a compensation committee comprised
of two or more non-employee members of the Board of Directors, and such
assignment and delegation shall not require the consent of any optionee.
Nothing in this Plan shall in any way limit or restrict the Company's right or
ability to establish any other compensation, incentive, pension, stock option
or similar plans or programs or to issue shares of the Company's securities to
any person or entity for any reason whatsoever.
4. Reservation of Shares. The Company agrees that at all
times there shall be reserved for issuance upon exercise of the Company
Options granted hereby a sufficient number of shares of Common Stock and/or
other securities as shall be required for such issuance.
SECTION V
ASSIGNMENTS; INVESTMENT INTENTION
1. Assignment and Successors and Assigns. The terms
of this Plan shall bind and inure to the benefit of the respective heirs,
appointees, assigns, executors, administrators and successors of the respective
parties hereto but shall not be assignable by any optionee without the Company's
affirmative
11
<PAGE>
consent, except as otherwise expressly provided in any other
section of this Plan.
2. Investment Intention. Each optionee hereby represents,
warrants, covenants and agrees that he is acquiring the Company Options
hereunder, and that upon exercise of such options he will be purchasing the
Company Option Shares, for investment and not with intention of distribution
or resale and that the Company Options and Company Option Shares may not be
offered or sold except in compliance with the provisions of the Securities Act
of 1933, as amended
SECTION VI
MISCELLANEOUS
1. Notices.
(a) Any notice which any party hereto may be
required or permitted to give shall be in writing, or may be delivered
personally or by mail, postage prepaid, or telegram, telecopy or telex,
addressed as follows: to the Company, at 1 Hollow Lane, Lake Success, New York
11042, or at such other address as the Company, by written notice to the
optionee, may designate from time to time; to each optionee, at the last
address contained in the Company's records for the optionee or at such other
address as the optionee, by written notice to The Company, may designate from
time to time.
2. No Implied Right of Employment. The selection of
an optionee for participation in this Plan shall not ipso facto
give the optionee any rights to serve as a director, officer or
employee of the Company or any subsidiary.
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<PAGE>
3. No Contingent Voting Rights. An optionee shall have no
voting or other rights with respect to any Company Option Shares until
certificates representing such Company Option Shares shall actually have been
delivered to him following his exercise of the corresponding Company Options.
4. Other Benefits. The benefits provided for the
optionees under this Plan and Agreement shall be in addition to
and shall in no way preclude other benefits or forms of
compensation from the Company to the optionees.
5. Governing Law. This Plan shall be construed in
accordance with the substantive laws of the State of New York
without regard to its conflict of law doctrine.
6. Consolidation Clause; Survival. This Plan
contains the entire understanding of the parties with respect to
its subject matter. All representations, warranties, covenants
and agreements made herein shall survive the execution of this
Plan.
7. Effective Date of Plan. This Plan was approved by
the Company's Board of Directors as of August 23, 1996.
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Appendix B
(Form of Proxy)
THE CARE GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 9, 1996
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned stockholder of The Care Group, Inc. hereby appoints Richard
H. Jung and Ann T. Mittasch and each of them, with full power of substitution,
proxies to vote the shares of stock which the undersigned could vote if
personally present at the Annual Meeting of Stockholders of The Care Group,
Inc. to be held at the InterContinental Hotel, 111 East 48th Street, New York,
New York 10017 on October 4, 1996 at 10:00 A.M. (eastern daylight savings
time), or any adjournment thereof.
THE BOARD RECOMMENDS VOTING FOR PROPOSALS 1, 2, 3, 4 AND 5.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
[ ] FOR all nominees below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees below
John Pappajohn and Pat H. Celli
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE,
WRITE THE NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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2. RATIFICATION OF ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to ratify the selection of Deloitte & Touche LLP, independent
public accountants, as auditors of the Company as described in the Proxy
Statement.
3. AMENDMENT OF CERTIFICATE OF INCORPORATION
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to approve an amendment to the Company's Certificate of
Incorporation to increase the total number of authorized shares of
Common Stock and Preferred Stock as described in the Proxy Statement.
4. APPROVAL OF PRIVATE PLACEMENT
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to approve the private placement of 58 Units of the Company's
securities pursuant to the terms described in the Proxy Statement.
5. 1996 STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to approve the Company's 1996 Stock Option Plan as described in
the proxy statement.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
THE PERSONS NOMINATED BY MANAGEMENT AS DIRECTORS AND FOR PROPOSAL 2,
PROPOSAL 3, PROPOSAL 4 AND PROPOSAL 5.
Please date and sign exactly as your name appears on the envelope in
which this material was mailed. If shares are held jointly, each
stockholder should sign. Executors, administrators, trustees, etc. should
use full title and, if more than one, all should sign. If the stockholder
is a corporation, please sign full corporate name by an authorized
officer. If the stockholder is a partnership, please sign full
partnership name by an authorized person.
-----------------------------------------
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Signature(s) of Stockholder
Date:
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