<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(X) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
(X) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
( ) 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
( ) 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
---------------------------------
NOTICE OF ANNUAL MEETING OF
---------------------------------
The Annual Meeting of Stockholders of the Company will be held on June 25,
1997, at 10:00 a.M., local time, at the Company's office at 257 Park Avenue
South, Suite 12A, New York, New York 11010, for the following purposes:
(1) To elect one (1) Class II 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, 1997;
(3) To approve an amendment to the Company's Certificate of
Incorporation to increase the total number of shares of Common
Stock authorized for issuance from 30,000,000 to 50,000,000.
The Board of Directors has fixed the close of business on April 30, 1997
as the record date for the determination of stockholders entitled to notice of
and to vote at the annual meeting and any adjournment thereof. A complete list
of shareholders entitled to vote at the meeting will be available for
examination by any Company stockholder at the date, time and place of the
meeting.
Your attention is directed to the accompanying Proxy Statement for
further information regarding each proposal to be made at the meeting.
This Proxy Statement and the accompanying Form of Proxy are being mailed
beginning on or about May 15, 1997, to stockholders entitled to vote. The
Company's Annual Report, which includes financial statements, is being mailed
with this Proxy Statement. Kindly notify Marisa Perulli, The Care Group, Inc.,
One Hollow Lane, Lake Success, New York, telephone (516) 869-8383, if you did
not receive a report, and a copy will be sent to you.
BY ORDER OF THE BOARD OF DIRECTORS:
RANDOLPH J. MITTASCH
SECRETARY
NEW YORK, NEW YORK
MAY 15, 1997
YOUR VOTE IS IMPORTANT. STOCKHOLDERS UNABLE TO ATTEND THE MEETING IN PERSON
ARE ASKED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
BY MAIL IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
<PAGE>
THE CARE GROUP, INC.
1 HOLLOW LANE, SUITE 110
LAKE SUCCESS, NY 11042
--------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 25, 1997
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 of the Company
(the "Annual Meeting") to be held on June 25, 1997 at 10:00 A.M, local time
and at any adjournment thereof, at the Company's office at 257 Park Avenue
South, Suite 12A, New York, New York 11010, 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 15, 1997. The Annual Report of the
Company for the fiscal year ended December 31, 1996 is being mailed to
stockholders with this Proxy Statement and the accompanying Notice and Form of
Proxy. The principal executive offices of the Company are located at One
Hollow Lane, Lake Success, New York 11042.
The entire cost of preparing, assembling, printing and mailing the
Proxy materials and the cost of soliciting proxies relating to the meeting
will be borne by the Company. In addition to solicitation by mail, Proxies may
be solicited by Directors, officers and regular employees of the Company,
either personally, by telephone or telegram, and no additional compensation
will be paid to such individuals. 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. The
Company does not expect to pay any compensation for the solicitation of
proxies.
The Board of Directors has fixed the close of business on April 30,
1997 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and vote at the Annual Meeting or any
adjournments thereof. Only holders of record of the Company's common stock,
$.001 par value per share (the "Common Stock"), issued and outstanding at the
close of business on April 30, 1997 will be entitled to notice of and to vote
at the Annual Meeting. As of the Record date, 13,997,053 shares of common
stock were issued and outstanding. Each share of Common Stock is entitled to
one vote on any matter which properly comes before the meeting. There is no
right to cumulative voting by the stockholders as to any matter. Directors
will be elected by a plurality of the shares present in person or requested by
stockholders at the Annual Meeting.
The presence in person or by proxy of the holders of least a majority
of the outstanding shares of Common Stock entitle to be voted at the Annual
Meeting will constitute a quorum of the transaction of business at the Annual
Meeting. Abstentions and broker non-votes will be included in the computation
of the number of shares that we present for purposes of determining the
presence of a quorum at the Annual Meeting. Abstentions will be counted as
part of the total number of votes cash on a proposal submitted to the
stockholders for their consideration in determining whether such proposal has
received the requisite number of favorable votes, whereas broker non-votes
will not be counted as part of the total numbers of cast on such proposal.
Thus, abstentions will have the same as a vote cast against any given
proposal, whereas broker non-votes will have no effect in determining whether
any given proposal which requires the vote of a majority or greater number of
those voting has been approved by the stockholders.
<PAGE>
If a quorum is not present at the time the Annual Meeting is
convened, or, if for any other reason, the Company believes that additional
time should be allowed for the solicitation of proxies, a majority of the
Common Stock represented in person or by proxy (even if not a quorum) may
adjourn or postpone the Annual Meeting. If the Company proposes to adjourn the
Annual Meeting by a vote of the Stockholders, the persons named in the
enclosed proxy will vote all shares for which they have voting authority in
favor of such adjournments.
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 nominee for director 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, 1997, (iii) FOR the approval of an amendment to the Company's Certificate
of Incorporation to increase the total number of shares authorized for
issuance from 30,000,000 to 50,000,000, and (iv) in connection with the
transaction of such other business as may properly be brought before the
Annual Meeting, in accordance with the judgment of the person or persons
voting the proxy. If the nominee for director is unable to serve or for good
cause will not serve, an event that is not anticipated by the Company, the
shares represented by the accompanying proxy will be voted for a substitute
nominee designated by the Board of Directors.
Votes will not be considered cast, however, if the shares are not
voted for any reason, including an abstention indicated as such on a written
proxy or ballot, if directors are given a written proxy to withhold votes or
if the votes are withheld by a broker.
The Company's officers directors and affiliates hold 28.64% 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.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, Class
I, consisting of two directors, Class II consisting of one director, and Class
III, consisting of two directors. The term of each class of directors is three
years, and the term of each class of directors expires each year in rotation.
The term of the director comprising Class II expires at the Annual Meeting.
The terms of the directors comprising Class I and Class III will expire at the
Company's Annual Meeting of Stockholders in 1999 and 1998, respectively.
At the present time it is intended that shares represented by the
proxies received will be voted for the election Dr. Derace Lan Schaffer, the
person nominated by the Board for a three year term expiring at the Company's
Annual Meeting of Stockholders in 2000. Dr. Schaffer is currently the sole
member of Class II. Information regarding Dr. Schaffer, as well as all the
directors whose term of office continues after the Annual Meeting, may be
found on the following page.
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).
Dr. Schaffer has advised the Company that he will serve if elected.
The persons named in the enclosed proxy intend, unless such authority is
withheld, to vote for the election. The Company does not expect that Dr.
Schaffer 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
DR. DERACE LAN SCHAFFER.
During 1996, there were a total of eight meetings of the Board of
Directors. All incumbent directors were in attendance at all meetings of the
Board of Directors and committees on which they served during 1996. Mr. Jung
was elected a director in August, 1996. Mr. Celli was elected to the Board of
Directors in November, 1996. Each of Messrs., Richard G. Jung and Pat H. Celli
has attended all meetings of the Board of Directors in 1996 subsequent to his
respective election. The Board of Directors has an Audit Committee presently
consisting of Mr. John Pappajohn and Dr. Schaffer. 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 1996, there were a total of two meetings of the Audit Committee. The
Board of Directors has a Compensation Committee presently consisting of Mr.
Pappajohn and Dr. Schaffer. The Compensation Committee was established in
August 1996. The purpose of the Compensation Committee is to set the
compensation for the Company's executive officers and to administer the
Company's Stock Option Plans.
The Board of Directors established an Executive Committee on
February 12, 1997 upon the departure of Mr. Jung, the Company's former
President and Chief Executive officer, to assume the responsibilities of the
office of the Chief Executive Officer. The members of the Executive committee
are Mr. Pappjohn, Dr. Schaffer and Mr. Celli.
3
<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.
<TABLE>
<CAPTION>
NAME POSITION WITH THE COMPANY
- ------------------------------------------- ------------------------------------------------------
<S> <C>
CLASS I DIRECTORS
Ann T. Mittasch Chairman of the Board
Randolph J. Mittasch Secretary/Treasurer, Director
CLASS II DIRECTOR
Dr. Derace Lan Schaffer (1)(2) Director
CLASS III DIRECTORS
Pat H. Celli (2) Chief Financial Officer, Assistant Secretary and
Treasurer
John Pappajohn (1), (2) Director
- -------------------------
</TABLE>
(1) Member of the Audit and Compensation Committees.
(2) Member of the Executive Committee
ANN T. MITTASCH, CHAIRMAN OF THE BOARD OF DIRECTORS: (Age 66): 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 35): 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 Directors of the Company.
DR. DERACE LAN SCHAFFER, DIRECTOR: (Age 48): 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
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.
JOHN PAPPAJOHN, DIRECTOR: (Age 68): 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., Patient Info System, Inc., HealthDesk Corporation and GalaGen.
PAT H. CELLI, CHIEF FINANCIAL, ASSISTANT SECRETARY AND OFFICER TREASURER: (Age
43): Mr. Celli has been Chief Financial Officer of the Company since October,
1990 and a director since 1996. 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.
4
<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 April 10, 1997 or by (i)
owners of more than 5% of the Company's outstanding Common Stock, (ii) each
directors and director nominees of the Company, (iii) each 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) 1,620,200 11.28%
1 Hollow Lane
Lake Success, NY 11042
John Pappajohn(2) 2,735,364 17.68%
2116 Financial Center
Des Moines, IA 50309
Edgewater Private 2,719,808 17.64%
Equity Fund II, L.P. (3)
666 Grand Avenue, Suite 200
Des Moines, IA 50309
Randolph J. Mittasch (4) 298,500 2.11%
Pat H. Celli (5) 397,534 2.78%
Dr. Derace Lan Schaffer (6) 320,000 2.26%
All officers, directors as and affiliates a group (total of 5 persons 7,951,406 44.58%
and 1 company) (7)
</TABLE>
- ---------------------------
(1) Ms. Mittasch, Chairman of the Company, directly owns 1,013,200 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 $1.97 per share of
Common Stock that expire between the year 2000 and 2005, Ms. Mittasch
holds warrants to purchase an aggregate of 80,000 shares of common stock
at $2.50.
(2) John Pappajohn, a director of the Company, directly owns 1,230,000 shares
of Common Stock and holds warrants to purchase an aggregate of 1,310,000,
59,808 and 55,556 shares of Common Stock at an exercise price of $2.50,
$2.09 and $2.25 per share of Common Stock, respectively. Mr. Pappajohn
has options to purchase an aggregate of 80,000 shares of Common Stock at
an exercise price of $1.25 per share of Common Stock.
(3) Edgewater Private Equity Fund II, L.P. directly owns 1,330,000 shares of
Common Stock and holds warrants to purchase an aggregate of 1,330,000 and
59,808 shares of Common Stock at an exercise price of $2.50 and $2.09 per
share of Common Stock, respectively.
5
<PAGE>
(4) Randolph J. Mittasch, Secretary/Treasurer and a director of the Company,
directly owns 181,000 shares of Common Stock, 140,000 of which shares are
subject to the Voting Trust. Mr. Mittasch also holds options expiring
between the years 2001 and 2005 to acquire 97,500 shares of Common Stock
at an average exercise price of $1.77 per share of Common Stock. Plus
warrants to purchase 20,000 shares of common stock at an exercise price
of $2.50. 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.
(5) Pat H. Celli, Chief Financial Officer of the Company, directly owns
94,534 shares of Common Stock for his own account. Mr. Celli has options
expiring between the years 2001 and 2005 to acquire a aggregate of
213,000 shares of Common Stock at an average exercise price of $1.88 per
share of Common Stock and warrants to purchase 90,000 shares of Common
Stock at an exercise price of $2.50 per share of Common Stock.
(6) Dr. Derace Lan Schaffer, a director of the company, directly owns 160,000
shares of Common Sock and warrants to purchase 160,000 shares of Common
Stock and warrants to purchase 160,000 shares at an exercise price of
$2.50 per share of Common Stock.
(7) Includes options and warrants held by all officers and directors and
affiliates of the Company to acquire a total of 3,837,672 shares of
Common Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Exchange Act Rule 15a-3(e) during its
fiscal year ended December 31, 1996, Form 5 and amendments thereto furnished
to the Company with respect to its fiscal year ended December 31, 1996, and my
written representations, from a reporting person that no Form 5 was required
to be filed, no person who was a director, officer or beneficial owner of more
than ten percent (10%) of Common Stock and otherwise subject to Section 16 of
the Exchange Act with respect to the Company failed to file on a timely basis,
as discussed in the above Forms, reports required by Section 16(a) of the
Exchange Act during the Company's fiscal year ended December 31, 1996.
6
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table contains information with respect to the
compensation earned by the Company's former Chief Executive Officer and the
one other most highly compensated executive officers of the Company whose
compensation exceeded $100,000 for the 1996 fiscal year for services rendered
in all capacities to the Company and its subsidiaries, for each of the last
three fiscal years. The listed individuals shall be hereafter referred to as
the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION AWARDS
----------------------- ----------------------------
SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#)
- -------------------------------------------------------------- ---------- ---------- ------------- ----------------------------
<S> <C> <C> <C> <C>
Richard G. Jung (4) 1996 $69,231 $ -0- 300,000
President and Chief Executive Officer 1995 -0- -0- -0-
1994 -0- -0- -0-
Ann T. Mittasch (5) 1996 $282,737 $ -0- 235,000(1)
Chairman of the Board 1995 227,559 -0- 295,000(1)
1994 197,877 7,630 -0-
Pat H. Celli 1996 $128,712 $ -0- 210,000(3)
Chief Financial Officer, Assistant Secretary & Treasurer 1995 127,300 2,500 170,000(2)
1994 107,808 5,750 -0-
</TABLE>
- --------------------
(1) All of these shares consist of previously repriced outstanding options.
(2) 60,000 of these shares consist of a previously repriced outstanding
options.
(3) 110,000 of these shares consist of a previously repriced outstanding
options.
(4) Mr. Jung served as President and Chief Executive Officer from
August 19, 1996 to February 12, 1997.
(5) Ms. Mittasch served as President and Chief Executive Officer until
August 19, 1996.
7
<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 1996. No stock appreciation rights were granted to these individuals
during fiscal year 1996.
<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>
Richard G. Jung 300,000 20.60% $2.13 8/19/97 $ 31,950 $ 63,900
Ann T. Mittasch 175,000(4) 12.02 1.75 2/27/03 124,241 286,992
Ann T. Mittasch 60,000(4) 4.12 1.75 2/27/03 57,725 142,260
Pat H. Celli 110,000(4) 7.55 1.75 2/27/03 78,094 162,269
Pat H. Celli 100,000 6.87 2.00 2/27/05 114,462 244,222
</TABLE>
- -----------------------
(1) Except for Pat Celli's 100,000 which vest over 5 years, the remaining
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) These shares consisted of repriced options that were previously
outstanding.
8
<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, 1996. No
stock appreciation rights were granted to any Named Executive Officer during
the 1996 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 ($)(3)
SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---- ------------------ ---------------------------- ---------------------------- ---------------------------
<S> <C> <C> <C> <C>
Richard G. Jung -0- $-0- 300,000-(1) -0-
Ann T. Mittasch -0- -0- 282,000-(1) $7,050
Pat H. Celli -0- -0- 213,000-(2) 3,300
</TABLE>
- ------------------
(1) All stock options are immediately exercisable for fully vested shares upon
the date of grant.
(2) 113,000 stock options are immediately exercisable and fully vested shares,
and 100,000 stock options vest over 5 years with the first 20% vesting
in October 1997
(3) The closing price on December 31, 1996 was $1.78.
9
<PAGE>
<TABLE>
<CAPTION>
TEN YEAR STOCK OPTION REPRICING
MARKET
NO. OF PRICE EXERCISE
OPTIONS OF STOCK PRICE NEW LENGTH OF ORIGINAL TERM
THAT WERE AT TIME OF AT TIME OF EXERCISE REMAINING AT DATE OF
NAME TITLE DATE REPRICED REPRICING REPRICING PRICE REPRICING OR AMENDMENT
- -------------------- ------------------- --------- ----------- ---------- ------------ ------------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ann T. Mittasch Chairperson 3/12/96 235,000 $1.75 $2.75 $1.75
Ann T. Mittasch Chairperson 08/21/95 60,000 3.75 5.88 3.75 6 years, 6 months
Ann T. Mittasch Chairperson 10/13/95 60,000 2.75 3.75 2.75 6 years, 4 months
Ann T. Mittasch Chairperson 10/13/95 175,000 2.75 3.75 2.75 6 years, 4 months
Ann T. Mittasch Chairperson 03/05/93 227,000 2.38 4.13 2.38 6 years
Pat H. Celli Chief Financial 3/12/96 110,000 1.75 2.75 1.75
Officer, Treasurer
Pat H. Celli Chief Financial 08/21/95 60,000 3.75 4.75 3.75 6 years, 6 months
Officer, Treasurer
Pat H. Celli Chief Financial 10/13/95 60,000 2.75 3.75 2.75 6 years, 4 months
Officer, Treasurer
Pat H. Celli Chief Financial 10/13/95 50,000 2.75 3.75 2.75 6 years, 4 months
Officer, Treasurer
Pat H. Celli Chief Financial 03/05/93 80,000 2.38 4.13 2.38 6 years
Officer, Treasurer
Randolph J. Mittasch Secretary 3/12/96 95,000 1.75 2.75 1.75
Randolph J. Mittasch Secretary 08/21/95 25,000 3.75 6.00 3.75 6 years, 6 months
Randolph J. Mittasch Secretary 10/13/95 25,000 2.75 3.75 2.75 6 years, 4 months
Randolph J. Mittasch Secretary 10/13/95 50,000 2.75 3.75 2.75 6 Yrs. 4 months
Randolph J. Mittasch Secretary 03/05/93 22,500 2.38 4.13 2.38 6 years
10
</TABLE>
<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.
Submitted by the Compensation Committee of 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.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ANN T. MITTASCH PAT H. CELLI JOHN PAPPAJOHN
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 (the "Peer Group"). 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, 1991 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):
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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.
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 agreed to serve as
President and Chief Executive Officer and Director of the Company for a period
of one year, commencing on August 19, 1996. Mr. Jung received an annual salary
of $200,000, prorated for the 1996 fiscal year. Mr. Jung received options to
purchase 300,000 shares of Common Stock at an exercise price of $2.13 which
was equal to the fair market value of the Common Stock on the date of grant.
Mr. Jung resigned on February 12, 1997.
Ann T. Mittasch, former President and Chief Executive Officer of the
Company, entered into an employment agreement with the Company on January 1,
1996 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
a base compensation of $250,000 per year for her services as Chairman and an
annual bonus not to exceed $50,000 per year. There were no bonuses paid in
1996.
Randolph J. Mittasch, Secretary 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 Secretary of the Company for
a period of five years, commencing on January 1, 1996 and ending on
December 31, 2000, with a base compensation of $90,000 for the 1996 fiscal year.
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 a base compensation of $130,000 for the 1996
fiscal year. 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.
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DIRECTOR OF COMPENSATION
None of the Company's directors received a fee for their services as directors.
1990, 1991, 1993, 1995 AND 1996 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") and the 1996 Stock Option Plan (the "1996 Plan"),
(the 1990 Plan, the 1991 Plan, the 1993 Plan, the 1995 Plan and the 1996 Plan
are sometimes collectively referred to herein as the "Plans"). Under the Plans,
a total of 842,500 shares have been reserved for issuance to officers,
directors, key employees and consultants who are not employees of the Company.
As of December 31, 1996, options to purchase a total of 20,500 shares and
1,562,100 shares were granted under the 1990 Plan and the 1991, 1993, 1995 and
1996 Plans, respectively. No options were exercised for the 1996 fiscal year.
The options granted under the 1990 Plan on the one hand, and the 1991, 1993,
1995 and 1996 Plans on the other hand, as of December 31, 1996 are exercisable
at an average exercise price of $5.13 and $2.04, 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, 1996, 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 1996 are generally made by the Compensation Committee in accordance with
the General Corporation Law of the State of Delaware. On August 23, 1996 the
Board of Directors established a Compensation Committee consisting of two
non-employee directors, Mr. Pappajohn and Dr. Schaffer. None of such persons
has ever been an officer or employee of the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
The Compensation Committee of the Board of Directors of the Company
presents this report on the compensation policies for its executive officers.
This report sets forth the major components of the Company's executive
compensation policies and the bases by which the compensation of the
Company's former Chief Executive Officer for the fiscal year ended December 31,
1996 was determined.
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.
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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. The Board of Directors believes that the
compensation paid to Mr. Jung was commensurate with compensation paid to other
Chief Executive Officers of similar size health care companies.
FISCAL 1996 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. There were no bonus awards granted during fiscal 1996.
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 PAT H. CELLI JOHN PAPPAJOHN
RANDOLPH J. MITTASCH DR. DERACE LAN SCHAFFER
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PROPOSAL 2
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company, subject to stockholder
ratification, 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, 1997, subject to the right of the
Board of Directors to replace this firm. Deloitte & Touche LLP was first
appointed by the Company as its independent auditors in 1994 and has been the
independent auditors for the Company for each of the two preceding fiscal
years of the Company. If the stockholders do not ratify the appointment of
Deloitte & Touche LLP, the Company may reconsider it selection.
A representative of Deloitte & Touche LLP is expected to be present
at the Annual Meeting to respond to appropriate questions. Such representative
will have an opportunity to make a statement if he or she so desires.
The affirmative vote of the holders of a majority of the shares of
Common Stock voted at the Annual Meeting is requested for the ratification of
the selection of auditors.
THE BOARD RECOMMENDS APPROVAL OF THIS PROPOSAL.
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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 30,000,000 shares to 50,000,000 shares. The affirmative vote
of the holders of a majority of the Company's Common Stock voted in person or
by proxy at the Annual Meeting is required for the adoption of such Amendment.
If the Amendment is approved, the increased number of authorized
shares of Common 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 restricts its ability to respond to business and corporate financing
opportunities. The availability of additional shares of Common 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.
Neither the proposed increase in the number of authorized shares of
Common Stock nor the issuance of such additional shares will alter the rights
of the stockholders of the Company, but the issuance of additional shares
could dilute the voting power of the then outstanding shares of Common Stock.
As a result, although not a consideration in the Board's decision to recommend
the amendment, the existence of additional authorized shares of Common 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 for which
authorization is sought will be identical with the terms of the shares of
Common 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 Common
Stock has no cumulative voting, conversion, preemptive or subscription rights,
and is not redeemable.
The increase in the authorized number of shares of Common Stock will
effected though an amendment to the Company's Certificate of Incorporation.
A Certificate of Amendment authorizing the increased number of shares
of Common 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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ADDITIONAL INFORMATION
CHANGE IN MANAGEMENT
On August 19, 1996, Mr. Jung became the Company's President and Chief
Executive Officer and he resigned on February 12, 1997, at which time an
Executive Committee of the Board was established to assume the
responsibilities of the office of the Chief Executive Officer.
CHANGE IN BOARD OF DIRECTORS
Pursuant to the Agency Agreement (the "Agency Agreement") between the
Company and Royce Investment (the "Placement Agent"), the Company has agreed
that the Company will, at the request of the Placement Agent and Equity
Dynamics, Inc., nominate two designees, respectively, of each of the Placement
Agent and Equity Dynamics, Inc., to the Company's Board of Directors. Mr. John
Pappajohn and Dr. Schaffer were nominated at the request of Equity Dynamics,
Inc.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any stockholder proposals intended to be presented at the Company's
1998 Annual Meeting of stockholders must be received by the Company at its
offices at One Hollow Lane, Lake Success, New York 11042, on or before January
15, 1998, in order to be considered for inclusion in the proxy statement and
form of proxy for such Annual Meeting.
GENERAL
The Board of Directors knows of no business that will be presented
for action at the Annual Meeting other than to the matters described in the
Proxy Statement. If other matters shall properly come before the Annual
Meeting, the persons named in the enclosed Form of Proxy intend to vote the
shares represented by said proxy on such matters in accordance with their best
judgment, pursuant to the discretionary authority granted by the Proxy.
The Annual Report of the Company for the fiscal year ending, December
31, 1996, which is being mailed to shareholders with this Proxy Statement, is
not regarded as proxy solicitation material.
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
MAY 15, 1997
RANDOLPH J. MITTASCH
SECRETARY
<PAGE>
PROXY
THE CARE GROUP, INC.
ONE HOLLOW LANE
LAKE SUCCESS, NEW YORK 11042
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 25, 1997
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoints Ann T. Mittasch, John Pappajohn, Pat
Celli and Randolph J. Mittasch and each of them, proxies, with full power of
substitution, to vote the shares of common stock of The Care Group, Inc. (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held at the Company's New York City office at 257 Park
Avenue South, Suite 12A, New York, New York 11010 on June 25, 1997 at 10:00
A.M. (eastern daylight savings time) and any adjournments thereof, on the
matters set forth in the Notice of Meeting and Proxy Statement dated
____________ as follows:
TO BE SIGNED ON REVERSE SIDE
- ------------------------------------------------------------------------------
<PAGE>
1. Election of director (for the terms as described in the Proxy
Statement).
NOMINEE: Dr. Derace Lan Schaffer
[ ] For the nominee listed at right.
[ ] Withhold authority to vote for the nominee listed at right.
2. RATIFICATION OF ACCOUNTANTS proposal to ratify the selection of
Deloitte & Touche LLP, independent public accountants as auditors
of the Company as described in the Proxy Statement.
[ ] For [ ] Against [ ] Abstain
3. AMENDMENT OF CERTIFICATE OF INCORPORATION proposal to approve an
amendment to the company's Certificate of Incorporation to increase
the total number of authorized shares of Common Stock as described
in the Proxy Statement.
[ ] For [ ] Against [ ] Abstain
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
PERSON NOMINATED BY MANAGEMENT AS DIRECTOR AND FOR PROPOSAL 2, AND PROPOSAL 3.
Signature(s) of Stockholder: ___________________________ _____________________
Dated: _______________________________
NOTE: 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.
