<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
THE MULTICARE COMPANIES, 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):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
5) Total fee paid:
-----------------------------------------------------------------------
/ / 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:
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4) Date Filed:
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<PAGE>
DRAFT 03/26/97
PRELIMINARY PROXY MATERIALS
FOR SEC REVIEW ONLY
---------------------------------------
[LOGO]
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
AND
PROXY STATEMENT
MEETING DATE
MAY 14, 1997
YOUR VOTE IS IMPORTANT!
PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY CARD AND
PROMPTLY RETURN IT TO THE COMPANY IN THE ENCLOSED ENVELOPE.
<PAGE>
THE MULTICARE COMPANIES, INC.
411 HACKENSACK AVENUE
HACKENSACK, NEW JERSEY 07601
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
The Multicare Companies, Inc., which will be held at the Company's principal
executive offices at Continental Plaza, 411 Hackensack Avenue, Hackensack, New
Jersey 07601 (lower level conference facilities) on Wednesday, May 14, 1997, at
10:00 a.m. (local time).
At the Annual Meeting, stockholders will be asked to elect directors, to
approve amendments to the Company's Stock Option Plan and to ratify the
appointment of KPMG Peat Marwick LLP as the Company's independent auditors for
the year ending December 31, 1997. Information about these matters is contained
in the attached Proxy Statement.
The Company's management would greatly appreciate your attendance at the
Annual Meeting. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
IT IS MOST IMPORTANT THAT YOUR SHARES BE REPRESENTED. Accordingly, please sign,
date and return the enclosed proxy card which will indicate your vote upon the
matters to be considered. If you do attend the meeting and desire to vote in
person, you may do so by withdrawing your proxy at that time.
I sincerely hope you will be able to attend the Annual Meeting and look
forward to seeing you on May 14, 1997.
Sincerely,
[LOGO]
Moshael J. Straus
CHAIRMAN AND CO-CHIEF EXECUTIVE
OFFICER
April , 1997
<PAGE>
THE MULTICARE COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1997
The Annual Meeting of Stockholders of The Multicare Companies, Inc. (the
"Company") will be held on Wednesday, May 14, 1997, at 10:00 a.m. at the
Company's principal executive offices at Continental Plaza, 411 Hackensack
Avenue, Hackensack, New Jersey 07601 (lower level conference facilities) for the
following purposes:
1. To elect three directors;
2. To consider and act upon a proposal to approve amendments to the
Company's Stock Option Plan.
3. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the year ending December 31, 1997; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 19, 1997 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting. Each stockholder, even though he or she may
presently intend to attend the Annual Meeting, is requested to execute and date
the enclosed proxy card and return it without delay in the enclosed postage-paid
envelope. Any stockholder present at the Annual Meeting may withdraw his or her
proxy card and vote in person on each matter brought properly before the Annual
Meeting.
Please sign, date and mail promptly the enclosed proxy in the enclosed
envelope, so that your shares of stock may be represented at the meeting.
By Order of the Board of Directors,
[LOGO]
Bradford C. Burkett
SECRETARY
Hackensack, New Jersey
April , 1997
<PAGE>
THE MULTICARE COMPANIES, INC.
411 HACKENSACK AVENUE
HACKENSACK, NEW JERSEY 07601
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of The Multicare
Companies, Inc., a Delaware corporation ("Multicare" or the "Company"), in
connection with the solicitation of proxies for use at the Company's Annual
Meeting of Stockholders (the "Annual Meeting"), to be held at the Company's
principal executive offices at Continental Plaza, 411 Hackensack Avenue,
Hackensack, New Jersey 07601 (lower level conference facilities) on Wednesday,
May 14, 1997, at 10:00 a.m., and at any and all adjournments thereof.
This solicitation is being made on behalf of the Board of Directors of the
Company, whose principal executive offices are located at 411 Hackensack Avenue,
Hackensack, New Jersey 07601, telephone (201) 488-8818. This Proxy Statement,
Notice of Annual Meeting of Stockholders, the enclosed proxy card and the
Company's 1996 Annual Report were first mailed to stockholders on or about April
, 1997.
The shares represented by a proxy in the enclosed form, if such proxy is
properly executed and is received by the Company prior to or at the Annual
Meeting, will be voted in accordance with the specifications made thereon.
Proxies on which no specification has been made by the stockholder will be
voted:
(i) in favor of the election of three nominees to the Board of Directors
listed in this Proxy Statement;
(ii) in favor of the approval of amendments to the Company's Stock
Option Plan; and
(iii) to ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the year ending December 31, 1997.
Any proxy given by a stockholder may be revoked at any time before its
exercise by sending a subsequently dated proxy or by giving written notice of
revocation to the Company, in each case, to the Company's Secretary, at the
address set forth above. Stockholders who attend the Annual Meeting may withdraw
their proxies at any time before their shares are voted by voting their shares
in person.
Stockholders of record at the close of business on March 19, 1997 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting. On
the Record Date, the issued and outstanding voting securities of the Company
consisted of 30,781,459 shares of common stock, par value $.01 per share (the
"Common Stock"), each of which is entitled to one vote on all matters which may
properly come before the Annual Meeting or any adjournment thereof.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the outstanding shares of Common Stock is necessary to constitute
a quorum. Each item presented herein to be voted on at the Annual Meeting must
be approved by the affirmative vote of a majority of the holders of the number
of shares present either in person or represented by proxy. The inspector of
elections appointed by the Company will count all votes cast, in person or by
submission of a properly executed proxy, before the closing of the polls at the
meeting. Abstentions and "broker non-votes" (nominees holding shares for
beneficial owners who have not voted on a specific matter) will be treated as
present for purposes of determining whether a quorum is present at the Annual
Meeting. However, abstentions and broker non-votes will have no effect on the
vote, because the vote required is a majority or plurality of the votes actually
cast (assuming the presence of a quorum).
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of eight directors divided into
three classes. Each class serves three years, with the terms of office of the
respective classes expiring in successive years. The term
<PAGE>
of Class III directors expires at the Annual Meeting. Three directors are to be
elected at the Annual Meeting as Class III directors for a term of three years.
The nominees for Class III directors are Moshael J. Straus, Daniel E. Straus and
Constance B. Girard-diCarlo, each of whom is currently serving as a Director.
All nominees were recommended by the Nominating Committee of the Board of
Directors. If elected, the nominees are expected to serve until the expiration
of their terms and until their successors are elected and qualified. The shares
represented by proxies in the accompanying form will be voted for the election
of these three nominees unless authority to so vote is withheld. The Board of
Directors has no reason to believe that any of the nominees will not serve if
elected, but if any of them should become unavailable to serve as a director,
and if the Board designates a substitute nominee, the persons named as proxies
will vote for the substitute nominee designated by the Board. Directors will be
elected by a plurality of the votes cast at the Annual Meeting.
The following information, which has been provided by the individuals named,
sets forth for each of the nominees for election to the Board of Directors and
the continuing Class I and II directors, such person's name, age, principal
occupation or employment during at least the past five years, the name of the
corporation or other organization, if any, in which such occupation or
employment is carried on and the period during which such person has served as a
director of the Company.
DIRECTORS STANDING FOR ELECTION
Class III
Term Expiring at the 2000 Annual Meeting
Moshael J. Straus, age 44, the brother of Daniel E. Straus, was a co-founder
of the Company in 1984, and since 1978 was involved in the business of the
Company's predecessors. Mr. Straus has been co-principal owner of the Company
since its establishment. He assumed the positions of Chairman of the Board of
Directors and Co-Chief Executive Officer of the Company in September 1992.
Daniel E. Straus, age 40, the brother of Moshael J. Straus, was a co-founder
of the Company in 1984, and since 1978 was involved in the business of the
Company's predecessors. Mr. Straus has been co-principal owner of the Company
since its establishment. He assumed the positions of President, Co-Chief
Executive Officer and Director of the Company in September 1992.
Constance B. Girard-diCarlo, age 50, has served as President of the
Healthcare Support Services Division of ARAMARK Corporation since 1990. ARAMARK
is a $6 billion service management company headquartered in Philadelphia,
Pennsylvania. Mrs. Girard-diCarlo is responsible for the non-clinical support
services ARAMARK manages for more than 300 healthcare institutions nationwide.
Mrs. Girard-diCarlo previously served as the President of ARAMARK School
Nutrition Services, the Vice President, Midlantic Region, ARAMARK Campus
Services and as an Assistant General Counsel of ARAMARK. Mrs. Girard-diCarlo is
a member of the Board of Directors of EnergyNorth, Inc., a public utility
holding company headquartered in Manchester, New Hampshire, and serves on the
boards of Widener University and the Free Library of Philadelphia Foundation.
Mrs. Girard-diCarlo has served on the Board of Directors since 1996.
DIRECTORS CONTINUING IN OFFICE
Class I
Term Expiring at the 1998 Annual Meeting
Menachem Rosenberg, age 46, has been a partner of the public accounting firm
of Margolin, Winer & Evens in Garden City, New York for the past 14 years. Mr.
Rosenberg is a Certified Public Accountant and a member of the American
Institute of Certified Public Accountants and the New York State Society of
2
<PAGE>
Certified Public Accountants. Mr. Rosenberg is the author of numerous articles
on income tax, investments, finance, mergers and acquisitions and a lecturer on
similar topics to various professional and trade groups. Mr. Rosenberg has
served on the Board of Directors since 1994.
George R. Zoffinger, age 49, is the President and Chief Executive Officer of
Value Property Trust, a real estate investment trust traded on the New York
Stock Exchange. Mr. Zoffinger previously served as Chairman of CoreStates New
Jersey National Bank from April 1994 until its merger into CoreStates Bank, N.A.
in December 1996. He continues to serve on the Board of Directors of CoreStates
Bank, N.A. From December 1991 through 1994, Mr. Zoffinger served as President
and Chief Executive Officer of Constellation Bankcorp. From March 1990 through
December 1991, he served as the Commissioner of the New Jersey State Department
of Commerce and Economic Development and the Chairman of the Board of the New
Jersey Economic Development Authority. Mr. Zoffinger also served as Chairman of
New Jersey's Host Committee for the 1994 World Cup Soccer Games. Mr. Zoffinger
has also been appointed to the New Jersey Council of Economic Advisors and is
Chairman of the New Brunswick Development Corporation. He is also a member of
the Board of Trustees of St. Peter's Medical Center in New Brunswick, New
Jersey, and a member of the Board of Directors of New Jersey Resources, Inc.,
and the Public Affairs Research Institute of New Jersey, Inc. Mr. Zoffinger has
served on the Board of Directors since 1995.
Stuart H. Altman, age 59, has served as the Sol C. Chaikin Professor of
National Health Policy at The Heller School at Brandeis University since 1977.
Mr. Altman also served as Dean of The Heller School from September 1977 through
June 1993, and was Interim President of Brandeis University from 1990 through
September 1991. Mr. Altman has also served as Chairman of the Board, Institute
for Health Policy, at the Heller School since 1977. In addition, Mr. Altman has
served in several government positions including serving as the Chairman of the
Prospective Payment Assessment Commission from 1984 through 1996 and as a senior
member of the Clinton/Gore Health Advisory Group. Mr. Altman also served as
Deputy Assistant Secretary for Planning and Evaluation/Health in the Department
of Health, Education and Welfare from July 1971 through August 1976. Mr. Altman
currently serves as member of the Board of Directors of IDX Systems, Inc., a
healthcare information systems company and on several other charitable and
educational boards and foundations. Mr. Altman has served on the Board of
Directors since 1996.
Class II
Term Expiring at the 1999 Annual Meeting
Stephen R. Baker, age 41, has served as Executive Vice President responsible
for finance and operations of the Company since August 1994, and served as its
Senior Vice President and Chief Financial Officer beginning December 1992. Prior
to joining Multicare, Mr. Baker was a partner at the public accounting firm of
KPMG Peat Marwick LLP where he was employed for 16 years. Mr. Baker is a
Certified Public Accountant. Mr. Baker has served on the Board of Directors
since 1994.
Paul J. Klausner, age 39, has served as Director of Construction of the
Company since September 1996. Prior to September 1996, Mr. Klausner served as
Executive Vice President, Development of the Company since May 1995, as its
Executive Vice President, General Counsel since August 1994 and as its Senior
Vice President, General Counsel and Secretary beginning October 1993. Prior to
joining Multicare, Mr. Klausner had been engaged in the private practice of law
in New York City since 1981 and had also been a principal of KMF Partners, a New
York-based real estate investment and development firm, from 1986 to 1990. Mr.
Klausner has served on the Board of Directors since 1994.
MEETINGS OF THE BOARD
The Board of Directors met nine times during the Company's 1996 fiscal year.
No director attended fewer than 75% of the aggregate number of meetings of the
Board and Committees on which such director served.
3
<PAGE>
COMMITTEES OF THE BOARD
The Board of Directors has standing Audit, Compensation and Nominating
Committees.
The Audit Committee makes recommendations to the Board of Directors as to
the engagement or discharge of the independent auditors, reviews the plan and
results of the auditing engagement with the independent auditors, reviews the
adequacy of the Company's system of internal accounting controls, monitors
compliance with the Company's business conduct policy and directs and supervises
investigations into matters within the scope of its duties. The Audit Committee
met twice during 1996. The Audit Committee is comprised of Messrs. Altman,
Rosenberg and Zoffinger, all of whom are non-employee directors.
The Compensation Committee approves, or in some cases recommends, to the
Board, remuneration and compensation arrangements involving the Company's
directors, executive officers and other key employees, review of benefit plans
in which such persons are eligible to participate and periodic review of the
equity compensation plans of the Company as well as grants under such plans as
they may affect total compensation. The Compensation Committee is comprised of
Messrs. Rosenberg and Zoffinger, each of whom is a non-employee director. The
Compensation Committee met once in 1996.
The Nominating Committee was established to nominate persons for election to
the Board. The Nominating Committee will consider nominees recommended by other
stockholders but has not established any procedure therefor. The Nominating
Committee met in March 1997 to nominate the nominees identified in this Proxy
Statement. The Nominating Committee is currently composed of Mrs. Girard-diCarlo
(who did not participate in the March 1997 meeting) and Mr. Zoffinger.
COMPENSATION OF DIRECTORS
Each non-employee director receives a director's fee of $10,000 for each
year in which he or she serves as a director and a $1,000 stipend for each Board
of Directors meeting attended, as well as a $500 stipend for each Committee
meeting attended. Each non-employee director may elect to receive payment of
such fees in Multicare Common Stock in lieu of cash in accordance with the terms
and conditions of the Company's Non-Employee Director Retainer and Meeting Fee
Plan. Each person serving as a non-employee director on May 8, 1996 was issued
non-qualified options to purchase 4,500 shares of Common Stock at an exercise
price of $18.67 per share pursuant to the Company's Stock Option Plan for Non-
Employee Directors (the "Director's Option Plan"). Directors who are employees
of the Company or any of its subsidiaries do not receive additional compensation
for service on the Board of Directors.
EXECUTIVE COMPENSATION
The following table sets forth information regarding all cash and non-cash
compensation awarded to, earned by, or paid to the Company's two Co-Chief
Executive Officers, to each of the four other most highly compensated executive
officers of the Company serving in such capacity at December 31, 1996 and to a
former executive officer not serving in such capacity at December 31, 1996,
whose aggregate compensation from the Company and its subsidiaries for that
period exceeded $100,000.
4
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS (1)
-----------------
NUMBER OF
ANNUAL COMPENSATION SECURITIES
--------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(6) COMPENSATION
- ----------------------------------------------- --------- ---------- ---------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Moshael J. Straus.............................. 1996 $ 600,000 $ 750,000 93,750 $ 100,808(2)
Chairman of the Board of Directors and 1995 600,000 600,000 170,900 149,433(2)
Co-Chief Executive Officer 1994 500,000 402,500 599,664
Daniel E. Straus............................... 1996 600,000 750,000 93,750 $ 133,171(2)
President, Co-Chief Executive Officer and 1995 600,000 600,000 170,900 174,396(2)
Director 1994 500,000 402,500 599,664 --
Stephen R. Baker............................... 1996 300,000 178,125 23,438 --
Executive Vice President, Chief Operating 1995 250,000 125,000 42,162 --
Officer and Director 1994 210,648 69,774 26,865 --
Paul J. Klausner............................... 1996 225,000 -- 23,438 --
Director of Construction and Director 1995 250,000 50,000 42,162 --
1994 210,648 69,744 26,865 --
Andrew Horowitz (3)............................ 1996 198,057 69,794 7,500 --
Senior Vice President, Ancillary Services 1995 180,740 52,500 22,500 --
1994 -- -- -- --
Mark R. Nesselroad (4)......................... 1996 164,000 55,070 4,500 --
Senior Vice President, Acquisitions, 1995 12,500 -- 22,500 --
Construction & Development 1994 -- -- -- --
Bradford C. Burkett (5)........................ 1996 175,068 34,980 10,500 --
Senior Vice President, General Counsel & 1995 144,886 46,400 9,554 --
Secretary 1994 69,276 19,849 15,000 --
</TABLE>
- ------------------------
(1) The Company did not grant any long term incentive plan payouts ("LTIPs") to
any of the executive officers named in this table nor does the Company
maintain any LTIPs. Excludes perquisites and other personal benefits,
securities or property, the aggregate amount of which received by any named
person did not exceed the lesser of $50,000 or 10% of the total of annual
salary and bonus for such officer as well as certain incidental personal
benefits to executive officers of the Company resulting from expenses
incurred by the Company in interacting with the financial community and
identifying potential acquisition targets.
(2) Amounts paid in connection with obtaining term life insurance to fund a
stock purchase right from the other Co-Chief Executive Officer in connection
with an agreement among the Company and each of the Co-Chief Executive
Officers.
(3) Mr. Horowitz joined the Company in January 1995.
(4) Mr. Nesselroad joined the Company in December 1995.
(5) Mr. Burkett joined the Company in June 1994.
(6) Options adjusted for three-for-two stock split in May 1996.
5
<PAGE>
EMPLOYMENT AGREEMENTS
In January 1995, the Company entered into an employment agreement with each
of Moshael J. Straus and Daniel E. Straus. Each agreement provides for an
initial term of five years, which will extend automatically at the end of the
initial five year term for additional one year periods unless, not less than 180
days prior to the end of the initial term or any such additional term, notice of
non-extension is given either by the Company or the respective Co-Chief
Executive Officer. Each employment agreement provides for an annual base salary
of $600,000, which may be increased at the discretion of the Board of Directors,
and a bonus, to be determined pursuant to the Company's Key Employee Incentive
Compensation Plan (the "KEICP"), ranging from 70%-150% of base salary, based
upon goals and targets set forth in a business plan negotiated with the
Compensation Committee. Each of these employment agreements provides that if the
Company terminates the Co-Chief Executive Officer without Cause (as defined) or
fails to renew his employment agreement, or if such Co-Chief Executive Officer
terminates his employment agreement for Good Reason (as defined) or upon a
Change of Control (as defined) then (1) the Company will be obliged to pay the
respective Co-Chief Executive Officer the greater of (x) any remaining salary
payable during the term and (y) an amount equal to two times the annual salary
for the then current employment year (or, with respect to a Change of Control,
three times annual salary plus an amount equal to the highest bonus received
during the prior three years); (2) all stock options, stock awards and similar
equity rights will immediately vest and become exercisable; and (3) the Company
must maintain in effect the Co-Chief Executive Officer's other benefits for a
period equal to the greater of the remainder of the term or two years. Each of
the Co-Chief Executive Officers is also entitled (i) to life insurance benefits
in an amount equal to five times his then current salary (to a maximum of $5
million); (ii) life insurance benefits in an amount not exceeding $50 million in
connection with a buy-sell arrangement between the Co-Chief Executive Officers;
and (iii) disability insurance in an amount equal to 66.67% of his then current
salary.
In January 1995, the Company entered into an employment agreement with each
of Stephen R. Baker and Paul J. Klausner. Mr. Baker's agreement provides for an
initial term of three years which will be renewed automatically at the end of
the initial three year term for additional one-year periods unless, not less
than 180 days prior to the end of the initial term or any such additional term,
notice of non-renewal is given either by the Company or Mr. Baker. Mr.
Klausner's agreement, as amended, provides for a term of 37 months. The
agreements provide for an annual base salary of $150,000 in the case of Mr.
Klausner and $250,000 in the case of Mr. Baker, which may be increased at the
discretion of the Board of Directors, and a bonus to be determined pursuant to
the Company's KEICP, ranging from 30%-75% of base salary, based upon goals and
targets set forth in a business plan prepared by the Co-Chief Executive
Officers. Each employment agreement provides that if the Company terminates the
employee without Cause (as defined) or fails to renew his employment agreement,
or if the employee terminates his employment agreement for Good Reason (as
defined) or upon a Change of Control then (1) the Company will be obliged to pay
him the greater of (x) any remaining salary payable during the term and (y) an
amount equal to two times the annual salary for the then current employment year
(or, with respect to a Change of Control, three times annual salary plus an
amount equal to the highest bonus received during the prior three years); (2)
all stock options, stock awards and similar equity rights will immediately vest
and become exercisable; and (3) the Company must maintain in effect the
employee's other benefits for a period equal to the longer of the remainder of
the term or two years. Each of Messrs. Baker and Klausner is also entitled to
life insurance benefits in an amount equal to four times his then current salary
(to a maximum of $2 million) and disability insurance in an amount equal to
66.67% of his salary.
In January 1995, in connection with the Company's acquisition of Scotchwood
Pharmacy ("Scotchwood") the Company entered into a three year employment
agreement with Andrew Horowitz, an executive vice president and one of the
principal owners of Scotchwood. Mr. Horowitz now serves as the Company's Senior
Vice President, Ancillary Services. The agreement provides for an annual base
salary at the rate of $200,000 and a bonus to be determined pursuant to the
Company's KEICP under which Mr. Horowitz may earn a maximum annual bonus equal
to 35% of base salary.
6
<PAGE>
In December 1995, in connection with the Company's acquisition of Glenmark
Associates, Inc. ("Glenmark") the Company entered into a three year employment
agreement with Mark R. Nesselroad, the chief executive officer and co-founder of
Glenmark. Mr. Nesselroad now serves as the Company's Senior Vice President,
Construction, Acquisitions and Development. The agreement provides for an annual
base salary at the rate of $200,000 and a bonus to be determined pursuant to the
Company's KEICP under which Mr. Nesselroad may earn a maximum annual bonus equal
to 35% of base salary.
STOCK OPTION GRANTS
The following table sets forth as to each of the individuals named in the
Summary Compensation Table the following information with respect to stock
option grants during the calendar year 1996 ("Fiscal 1996") and the potential
realizable value of such option grants: (i) the number of shares of Common Stock
underlying options granted during Fiscal 1996, (ii) the percentage that such
options represent of all options granted to employees during Fiscal 1996, (iii)
the exercise price, (iv) the expiration date and (v) grant date present value.
OPTION(1) GRANTS DURING FISCAL 1996
AND ASSUMED POTENTIAL REALIZABLE VALUE
<TABLE>
<CAPTION>
NUMBER OF % OF
SECURITIES TOTAL GRANT
UNDERLYING OPTIONS DATE
OPTIONS GRANTED EXERCISE EXPIRATION PRESENT
NAME GRANTED(3) IN 1996 PRICE DATE VALUE(2)
- --------------------------------------------------------- ----------- ------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Moshael J. Straus........................................ 93,750 11% $ 16.00 2/1/2006 $ 936,572
Daniel E. Straus......................................... 93,750 11% 16.00 2/1/2006 936,572
Stephen R. Baker......................................... 23,438 3% 16.00 2/1/2006 234,148
Paul J. Klausner......................................... 23,438 3% 16.00 2/1/2006 234,148
Andrew Horowitz.......................................... 7,500 1% 16.00 2/1/2006 74,926
Mark R. Nesselroad....................................... 4,500 1% 16.00 2/1/2006 44,955
Bradford C. Burkett...................................... 10,500 1% 16.00 2/1/2006 104,986
</TABLE>
- ------------------------
(1) There were no SARs granted in 1996.
(2) The Company uses the Black-Scholes model of option valuation to determine
grant date present value with the following weighted average assumptions:
dividend yield of 0%; expected volatility of 38.4%; a risk-free interest
rate of 6.5%; and expected option life of 9.9 years. The actual value of the
options will depend on the excess of the stock price above the exercise
price on the date of exercise. There is no assurance that the value realized
will approximate the value estimated under the Black-Scholes model.
(3) Options vest at a rate of 33 1/3% per year over a three year period and
expire ten years from the date of grant.
TEN YEAR OPTION REPRICINGS
The following table sets forth the information noted for all repricings of
options held by any executive officer of the Company in the Company's last 10
complete fiscal years.
7
<PAGE>
OPTION REPRICING TABLE (3)
<TABLE>
<CAPTION>
SECURITIES MARKET LENGTH OF
UNDERLYING PRICE OF EXERCISE ORIGINAL OPTION
OPTIONS STOCK AT PRICE AT NEW TERM REMAINING
REPRICED TIME OF TIME OF EXERCISE AT DATE OF
NAME DATE OR AMENDED PRICING REPRICING PRICE REPRICING
- ------------------------------ ---------------------- ----------- --------- ----------- ----------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Stephen R. Baker.............. August 17, 1993(1) 90,000 $ 7.33(2) $ 7.39 $ 6.67 9 years 7 months
</TABLE>
- ------------------------
(1) Stephen R. Baker was originally granted options to purchase 90,000 shares of
Common Stock on April 1, 1993 at an exercise price of $7.39 per share.
Subsequently, coinciding with the Company's 1993 initial public offering of
its Common Stock at $6.67 per share, Mr. Baker's options were amended such
that the exercise price would equal that of the Company's 1993 initial
public offering price.
(2) This represents the closing price of the Common Stock on August 19, 1993
which was the first day the Common Stock was traded on The Nasdaq Stock
Market. Prior to August 19, 1993, there was no public market for the Common
Stock.
(3) Options and per share amounts adjusted for three-for-two stock split in May
1996.
STOCK OPTION VALUES
The following table sets forth the number and aggregate dollar value of
unexercised options held at December 31, 1996 by the individuals named in the
Summary Compensation Table. None of the named individuals exercised any options
during 1996.
AGGREGATE OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN THE MONEY OPTIONS
AT DECEMBER 31, 1996 AT DECEMBER 31, 1996(1)
-------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Moshael J. Straus........................................ 307,242 557,072 $ 2,644,466 $ 4,301,746
Daniel E. Straus......................................... 307,242 557,072 2,644,466 4,301,746
Stephen R. Baker......................................... 85,964 96,503 997,430 872,814
Paul J. Klausner......................................... 85,964 96,503 997,430 872,814
Andrew Horowitz.......................................... 4,500 25,500 31,860 159,315
Mark R. Nesselroad....................................... 7,500 19,500 41,850 102,825
Bradford C. Burkett...................................... 9,184 25,870 81,329 178,048
</TABLE>
- ------------------------
(1) The value of unexercisable in the money options was determined by reference
to the closing price of the Common Stock on December 31, 1996, reported by
The New York Stock Exchange, which was $20 1/4.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
currently comprised of Messrs. Rosenberg and Zoffinger, each of whom is a
non-employee director. The Committee is responsible for approval or
recommendation to the Board of Directors of remuneration and compensation
arrangements involving the Company's directors, executive officers and other key
employees, review of benefit plans in which such persons are eligible to
participate, and periodic review of the equity compensation plans of the Company
and grants under such plans as they may impact total compensation.
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Committee believes that the total compensation of the Company's
executive officers should be based primarily on the subjective determination of
the Committee as to the Company's overall financial performance. At the
executive officer level, the Committee has a policy that a significant portion
of total compensation should consist of variable, performance-based components
such as stock option awards and bonuses, which it can increase or decrease to
reflect its assessment of changes in corporate and individual performance. These
incentive compensation programs are intended to reinforce management's
commitment to enhance profitability and stockholder value.
In general, the Committee also considers advice from independent
compensation consultants and also takes into account the recommendations of the
Co-Chief Executive Officers, who together beneficially own approximately 43.2%
of the Company's Common Stock. Based on a review of comparable companies in the
Company's industry, the Committee believes that the compensation of the
Company's executive officers for 1996 was in the median range of comparable
companies.
In determining base salaries of executive officers, the Committee makes a
subjective determination, taking into consideration the seniority of the
officer, his rank within the Company and prior performance. The base
compensation in 1996 for each of Moshael J. Straus and Daniel E. Straus, the
Co-Chief Executive Officers of the Company, was determined under an employment
agreement entered into by each of them with the Company in January 1995. See
"Executive Compensation--Summary Compensation Table--Employment Agreements."
In 1996, the Compensation Committee granted 93,750 options to purchase
shares of Common Stock to each of the Co-Chief Executive Officers as described
in the table captioned "Option Grants During Fiscal 1996 and Assumed Potential
Realizable Value." The grants were made under the Company's 1993 Amended Stock
Option Plan (the "Stock Option Plan") as annual performance grants in connection
with a grant to executive officers and key employees of the Company. These
options were granted in recognition of such persons services to the Company. In
addition, in 1996 certain officers and key employees were granted options as a
method of recruiting their services. The five persons serving as non-employee
directors of the Company on May 8, 1996 were each granted options on such date
to purchase 4,500 shares of Common Stock under the Company's Non-Employee
Director Stock Option Plan (the "Director's Option Plan") in recognition of
their contributions to the Company in terms of their insights into the
operations of the Company. Each of the foregoing grants was evaluated in the
subjective discretion of the Compensation Committee in accordance with the terms
of the Stock Option Plan and the Director's Option Plan which were devised with
the advice and consultation of independent compensation consultants.
The Board of Directors adopted in early 1996 the Company's Key Employee
Incentive Compensation Plan (the "KEICP"), which was devised with the advice and
consultation of independent compensation consultants. Under the KEICP, the
Compensation Committee, after consideration of recommendations from the
executive management of the Company, establishes one or more target performance
goals for the Company's executive officers and other key employees and
determines the amount of the bonus award (as a percentage of total compensation)
payable to such participant based upon the achievement of such target
performance goal(s). The target performance goals may include pre-established
"threshold" "expected" and "outstanding" levels of performance that must be
achieved in order to result in the payout of an award to a participant. Awards
are payable under the KEICP only upon written certification by the Compensation
Committee that the target performance goals for the performance period have been
achieved.
In 1996, bonuses were determined by the Compensation Committee pursuant to
the KEICP based on the overall performance of the Company and the achievement by
the individual officer or employee in question of personal performance goals and
contribution standards established by the Compensation Committee after
consideration of recommendations from the executive management of the Company.
The
9
<PAGE>
bonuses for the Co-Chief Executive Officers were determined based on the
earnings and revenue levels attained by the Company in 1996.
To the extent readily determinable, and as one of the factors in its
consideration of compensation matters, the Compensation Committee considers the
anticipated tax treatment to the Company and to the executives of various
payments and benefits. Under Section 162(m) of the Internal Revenue Code, the
Company is subject to the loss of deduction for compensation in excess of
$1,000,000 paid to one or more of the executive officers named in this Proxy
Statement. The deduction may be preserved if the Company is able to comply with
certain conditions in the design and administration of its compensation
programs. However, interpretations of and changes in the tax laws and other
factors beyond the Committee's control also affect the deductibility of
compensation. For these and other reasons, the Committee will not necessarily
limit executive compensation to that deductible under Section 162(m). The
Committee will consider various alternatives to preserving the deductibility of
compensation payments and benefits to the extent consistent with its other
compensation objectives. The Committee believes all compensation paid in fiscal
year 1996 is deductible by the Company.
MENACHEM ROSENBERG, GEORGE ZOFFINGER
MEMBERS OF THE COMPENSATION COMMITTEE
10
<PAGE>
PERFORMANCE GRAPH
The following line graph displays the cumulative total return to
stockholders of the Company's Common Stock from August 19, 1993 (the date of the
Company's initial public offering of Common Stock) to December 31, 1996,
compared to the cumulative total return for the S&P 500 Composite Index and to
the S&P Long-Term Care Composite Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1991 1992 8-19-93 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
MUL 100 166 180 218 276
S&P 500 Index 86 92 100 102 103 142 174
S&P LTC Index 84 119 100 124 137 144 173
</TABLE>
The graph assumes a $100 investment in Multicare Common Stock on August 19,
1993 at the initial offering price of $10 per share. The graph also assumes
investments in the S&P 500 Composite Index and the S&P Long-Term Care Composite
Index of $86 and $84, respectively, on December 31, 1991. The value of these
investments would have amounted to $100 on August 19, 1993.
Although the Common Stock has been publicly held only since August 1993, the
graph shows the performance of the S&P 500 Composite Index and S&P Long-Term
Care Composite Index for the past five years. This information is being provided
as the Company believes that it enhances the reader's understanding of the
performance of the Common Stock. Depicting the two indices only for the period
that the Common Stock has been publicly held would deprive the reader of the
historical perspective of the indices.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock on the Record Date, with respect to (i) each
person known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock; (ii) each person who is currently a director or
nominee to be a director of the Company; (iii) all current directors and
executive officers of the Company as a group; and (iv) the Company's Co-Chief
Executive Officers and those persons named in the Summary
11
<PAGE>
Compensation Table. To the best of the Company's knowledge, the holders listed
below have sole voting power and investment power over the Common Stock they
beneficially own.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES(1) PERCENT OF CLASS
- ---------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
Moshael J. Straus........................................................... 6,984,595 21.6%
The Multicare Companies, Inc.
411 Hackensack Avenue
Hackensack, New Jersey 07601
Daniel E. Straus............................................................ 6,984,595 21.6%
The Multicare Companies, Inc.
411 Hackensack Avenue
Hackensack, New Jersey 07601
Pilgrim Baxter & Associates, Ltd. (3)....................................... 2,232,400 6.9%
1255 Drummers Lane, Suite 300
Wayne, Pennsylvania 19087-1590
Wellington Management Company, LLP (4)...................................... 1,963,000 6.1%
75 State Street
Boston, Massachusetts 02109
Stuart Altman............................................................... 4,707 *
Constance B. Girard-diCarlo................................................. 4,890 *
Menachem Rosenberg.......................................................... 14,800 *
Alan D. Solomont............................................................ 343,137 *
George R. Zoffinger......................................................... 13,500 *
Stephen R. Baker............................................................ 127,167 *
Paul J. Klausner............................................................ 108,679 *
All current directors and executive officers as a group (20 persons)........ 14,923,010 46.1%
</TABLE>
- ------------------------
(1) Includes for all directors, nominees and executive officers options to
purchase an aggregate of 1,463,100 shares of common stock which are
currently exercisable or will be exercisable within the next 60 days.
(2) Excludes shares owned by the other Co-Chief Executive Officer that the named
Co-Chief Executive Officer has the right to purchase upon the death of such
other Co-Chief Executive Officer.
(3) The following information was provided to the Company by Pilgrim Baxter &
Associates, Ltd.: Consists of shares of common stock of the Company held by
the PBHG Growth Fund of The PBHG Funds, Inc. The PBHG Growth Fund is advised
by Pilgrim Baxter & Associates, Ltd.
(4) The following information was provided to the Company by Wellington
Management Company, LLP ("WMC"): WMC is an investment adviser registered
with the Securities and Exchange Commission under the Investment Advisers
Act of 1940, as amended. As of December 31, 1996, WMC, in its capacity as
investment adviser, may be deemed to have beneficial ownership of 1,963,000
shares of common stock of the Company that are owned by numerous investment
advisory clients, none of which is known to have such interest with respect
to more than five percent of the class. As of December 31, 1996, WMC had
voting power and dispositive power as follows:
<TABLE>
<S> <C>
Sole Voting Power:.................................................................................. 0 shares
Shared Voting Power:................................................................................ 1,307,500 shares
Sole Dispositive Power:............................................................................. 0 shares
Shared Dispositive Power:........................................................................... 1,963,000 shares
</TABLE>
12
<PAGE>
ITEM 2
PROPOSAL TO APPROVE AMENDMENTS TO THE COMPANY'S STOCK OPTION PLAN
The Company's 1993 Amended and Restated Stock Option Plan (the "Stock Option
Plan") was adopted and approved by the Company's Board of Directors and
stockholders, respectively, in July 1993, and amended in May 1994. The Board of
Directors has adopted, subject to approval by the stockholders of the Company,
amendments to the Stock Option Plan to (i) increase the number of shares of
Common Stock available under the Stock Option Plan from 3,750,000 to 5,300,000
and (ii) limit to the number of options that may be granted per year to
any individual under the Stock Option Plan. The Board of Directors has also
adopted certain conforming amendments to the Stock Option Plan in response to
recent changes to Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended. The Stock Option Plan, as amended, is set forth in Appendix 1
to this proxy statement and should be referred to for a complete description of
its provisions. The following summary of the Stock Option Plan is qualified in
its entirety by reference to the Stock Option Plan.
The purpose of the Stock Option Plan is to secure for the Company the
benefits of the additional incentive inherent in the ownership of the Company's
stock by selected employees, directors and consultants of the Company and its
subsidiaries who are important to the success and growth of the Company's
business and to secure and retain the services of such employees, directors and
consultants. The Stock Option Plan provides for the grant of both incentive
stock options intended to qualify as such under Section 422 of the Internal
Revenue Code of 1986, as amended, and non-qualified stock options. Subject to
stockholder approval of the amendments described above, options to purchase a
maximum of 5,300,000 shares of Common Stock may be granted under the Stock
Option Plan and a maximum of options per year may be granted to any
individual under the Stock Option Plan. Currently, a maximum of 3,750,000
options may be granted under the Stock Option Plan and a maximum of 937,500
options may be granted to any individual over the term of the Stock Option Plan.
The Stock Option Plan is currently administered by the Compensation
Committee of the Board of Directors subject to the limitations set forth in the
Stock Option Plan, the Compensation Committee has the authority to determine to
whom options will be granted, the number of shares of Common Stock that may be
purchased under each option, the option price and the vesting schedule.
Incentive stock options may be granted only to key employees of the Company.
Non-qualified stock options may be granted to directors (provided they are not
current members of the Compensation Committee) or key employees or consultants
of the Company. Approximately 70 individuals are presently eligible to receive
options under the Stock Option Plan.
The exercise price of shares of Common Stock subject to options qualifying
as incentive stock options may not be less than the fair market value of the
Common Stock on the date of grant. The Stock Option Committee has the authority
to determine the price at which any non-qualified stock options may be granted.
All options granted to date pursuant to the Stock Option Plan have been
non-qualified stock options.
Vested stock options granted under the Stock Option Plan must be exercised
by the optionee before the earlier of (i) ten years from the date such options
were granted, (ii) one year from the optionee's death or retirement due to
disability, (iii) the date of termination of the optionee's employment by reason
of "cause," (iv) three months after termination of the optionee's employment
other than by reason of death, disability, or termination for cause, or (v) such
earlier time or upon the occurrence of such earlier event as the Stock Option
Committee shall determine.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE STOCK
OPTION PLAN.
13
<PAGE>
ITEM 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP as the Company's
independent auditors for the year ending December 31, 1997. KPMG Peat Marwick
LLP has audited the Company's financial statements since 1989. Ratification of
the appointment of KPMG Peat Marwick LLP as the Company's independent auditors
will require the affirmative vote of a majority of the shares of Common Stock
represented in person or by proxy and entitled to vote at the Annual Meeting. In
the event shareholders do not ratify the appointment of KPMG Peat Marwick LLP as
the Company's independent auditors, such appointment will be reconsidered by the
Audit Committee and the Board of Directors. Representatives of KPMG Peat Marwick
LLP will be present at the Annual Meeting to respond to appropriate questions
and to make such statements as they may desire.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF KPMG PEAT
MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER
31, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1996, each of the Co-Chief Executive Officers was
indebted to one of the Company's subsidiaries in the amount of $325,000. This
indebtedness is payable on demand and interest is payable on such indebtedness
at the rate of 9.5% per annum. Prior to the Company's reorganization in November
1992 (the "Reorganization"), the land and building of one of the Company's
facilities was owned by Gwendolyn Straus, the mother of the Co-Chief Executive
Officers. Mrs. Straus had taken a mortgage on that land to make a loan to four
of her children in the aggregate principal amount of $1,300,000, each child
being responsible for one-quarter of the principal indebtedness and interest.
Mrs. Straus then created a corporate entity and transferred her interest in the
land and building as well as the $1,300,000 indebtedness owed by her four
children into the corporate entity. Multicare eventually acquired the corporate
entity and with such acquisition the Co-Chief Executive Officers of the Company
became indebted to that subsidiary for their pro rata share of the aggregate
principal balance and interest. During 1996, each Co-Chief Executive Officer
paid interest to the subsidiary in the amount of $30,875.
As a result of regulatory constraints, interests owned by the Co-Chief
Executive Officers relating to a 140 licensed bed facility to be constructed
were not transferred to the Company pursuant to the Reorganization. Transfer of
this facility to the Company prior to the completion of construction and
licensure could have caused the Certificate of Need to be voided. Accordingly,
pursuant to an option agreement the Company was granted an option to acquire
this facility, subject to the debt incurred in the construction and licensure,
for a purchase price of $100 plus the assumption of such indebtedness. In 1995,
the Company and the Co-Chief Executive Officers restructured the agreement to
provide for a long term lease of the Facility to the Company. In connection with
the lease, the Co-Chief Executive Officers repaid the indebtedness of the
Facility to the Company. The lease is for an initial term of ten years, subject
to extension at the option of the Company for four additional five year periods.
The lease provides for an annual rental payment of $973,404 for the initial five
year period, subject to increase at stated amounts set forth in the lease. This
restructuring was approved by a committee of the Board composed entirely of
outside directors which was advised by outside financial and legal advisors.
The real property relating to one of the Company's facilities is owned 50%
by a general partnership wholly owned by the Co-Chief Executive Officers and 50%
by an unrelated party. Neither such real property nor the interests of the
Co-Chief Executive Officers in the general partnership were transferred to the
Company in the Reorganization. The facility's lease is a "net lease" for an
initial term of ten years, with optional extensions on the part of the tenant
aggregating an additional eleven years and seven months. The Company's operating
subsidiary that leases the facility pays an annual rent of $1,181,714.
As a result of potential adverse tax consequences to the Co-Chief Executive
Officers, the real property relating to one of the Company's facilities was not
transferred to the Company by the Co-Chief Executive Officers in the
Reorganization. In lieu of a transfer, one of the Company's operating
subsidiaries has
14
<PAGE>
leased the real property pursuant to a "net lease" for a term of 10 years,
expiring in December 2002. The Company's operating subsidiary that leases the
real property pays an annual rent of $725,000.
In December 1995, the Company acquired Glenmark Associates, Inc.
("Glenmark"), a long-term care provider that currently operates 21 facilities
primarily in West Virginia. Mark R. Nesselroad, a senior vice president of the
Company, was a co-founder and the chief executive officer of Glenmark. Under the
terms of the acquisition agreement, $1.5 million of the purchase price payable
to Mr. Nesselroad and the other principal owner of Glenmark was placed into an
escrow account and scheduled to be paid out over a period of three years upon
Glenmark's achievement of certain financial targets. In July 1996, in connection
with an amendment to the acquisition agreement, Mr. Nesselroad and the other
former owner each received $250,000 of the deferred purchase price. Pursuant to
the amendment, Mr. Nesselroad and the other former owner are each entitled to
receive (i) on December 1, 1997, 25% of the amount, if any, remaining in the
escrow account as of such date and (ii) on December 1, 1998, one-half of the
amount, if any, remaining in the escrow account as of such date. The foregoing
payments are subject to indemnification obligations of Glenmark which, under the
terms of the acquisition agreement, are required to be paid out of the escrow
account.
The Company leases office space for its West Virginia divisional offices
from a limited liability company in which Mark R. Nesselroad, a senior vice
president of the Company, owns a 50% membership interest. The Company pays under
several leases an aggregate annual rent of approximately (i) $350,000 (plus
additional amounts for utilities and maintenance costs) for an aggregate 18,279
square feet of space used by corporate personnel and (ii) $66,000 (including
utilities and maintenance costs) for an aggregate 7,790 square feet of space
used for pharmacy and ancillary services personnel. In addition, the Company
leases 5,159 square feet of warehouse space for an annual rent of approximately
$15,500 (plus additional amounts for utilities and maintenance costs) from a
corporation in which Mr. Nesselroad owns a one-third interest. Each lease has an
initial term which ranges from one year to 16 months and renews automatically
for successive one-year periods unless a termination notice is delivered by
either party not less than 120 days prior to the end of the initial term or any
extended term. The rental payments are subject to re-negotiation prior to each
one-year renewal term based upon the fair market rental value of each premises.
In December 1996, the Company acquired The A-D-S Group ("A-D-S"), a group of
companies of which Alan D. Solomont, a member of the Company's Board of
Directors from 1994 until his resignation in March 1997, was the founder and a
principal owner. A-D-S owns, operates or manages 22 long-term care facilities
with 2,930 beds, 20 hospital based subacute units with 514 beds and eight
assisted living facilities with 821 beds, all but one of which are located in
Massachusetts. A-D-S also provides consulting services to an additional 14
facilities with 1,668 beds, operates several ancillary businesses including home
health, both Medicare-certified and private, and provides out-patient
rehabilitation services at numerous locations. Under the terms of the
acquisition agreement, Multicare paid approximately $10 million in cash,
financed approximately $51 million through a lease facility, assumed or repaid
approximately $29.8 million in debt and issued 554,973 shares of its common
stock for A-D-S.
Mr. Solomont received approximately $12.2 million in cash consideration and
326,637 shares of Multicare common stock deliverable for his ownership
interests. In addition, the President of A-D-S, Susan S. Bailis, who joined the
Company upon consummation of the transaction as a Senior Vice President and as
President of the Company's subsidiaries that operate or manage the Company's
businesses in Massachusetts, Rhode Island, Connecticut and Vermont, received in
the transaction approximately $2.3 million in cash consideration and 123,588
shares of Multicare common stock deliverable for her ownership interests. In
connection with the transaction, each of Mr. Solomont, who became Vice Chairman
of the Company upon consummation of the transaction, and Ms. Bailis entered into
an employment agreement with the Company. Mr. Solomont resigned as the Company's
Vice Chairman and as a member of its Board of Directors in March 1997 and became
a consultant to the Company. Mr. Solomont's employment agreement was terminated
upon such resignation. As a consultant, Mr. Solomont is to be paid a fee of
$25,000 per month and is eligible for payments to be made under his employment
agreement upon a Change of Control as described below. In addition, at any time
prior to December 31, 1998, Mr. Solomont
15
<PAGE>
may upon 30 days notice to the Company and upon the satisfaction of certain
conditions, rejoin the Company as its Vice Chairman under the employment
agreement for a period expiring December 31, 1999. The employment agreements
entered into by Mr. Solomont and Ms. Bailis upon the consummation of the
transaction each provide for an initial term of three years that automatically
renews for successive one-year periods unless notice of non-renewal is provided
by either party in accordance with the agreement. The employment agreements
provide for an annual base salary of $300,000 in the case of Mr. Solomont and
$250,000 in the case of Ms. Bailis, and a bonus to be determined pursuant to the
Company's KEICP of up to 50% of base salary. Each employment agreement provides
that if the Company terminates the employee without Cause (as defined) or if the
employee terminates his employment agreement for Good Reason (as defined) or
upon a Change of Control then (1) the Company will be obliged to pay the
employee the greater of (x) any remaining salary payable during the term or (y)
an amount equal to the annual salary for the then current employment year (or,
with respect to a Change of Control, three times annual salary plus an amount
equal to the highest bonus received during the prior three years); (2) all stock
options, stock awards and similar equity rights will immediately vest and become
exercisable; and (3) the Company must maintain in effect the employee's other
benefits for a period of one year (or, with respect to a Change of Control, two
years). In addition, Mr. Solomont and Ms. Bailis received 300,000 and 97,500
options, respectively, to purchase Multicare common stock. In connection with
the transaction, Mr. Solomont was relieved of certain guarantees of indebtedness
of A-D-S. Mr. Solomont and Ms. Bailis each have certain indemnification
obligations to the Company which extend post closing.
Mr. Solomont has ownership interests in and is an officer of certain
unaffiliated entities which own five assisted living facilities to which a
subsidiary of the Company provides management services. The management
agreements for such facilities provide that the Company's management affiliate
receives an annual percentage of net revenues at market rates. The term of the
management agreements are extended automatically for successive one year terms
as each current term expires, subject to termination by the owner for material
breach, non-performance or upon sale. Upon termination upon sale, the management
agreement provides that a payment of up to 160% of the management fees realized
for the prior four quarters (subject to a minimum) for a sale occurring in 1997
declining ratably to 100% of such fees for a sale occurring after 1999 will be
made to the Company. In addition, the Company has the right of first opportunity
to acquire Mr. Solomont's ownership interests.
Mr. Solomont also owns a 51% interest in and is an officer and director of
two long term care facilities which are owned 49% and managed by affiliates by
the Company. The management agreement provides that the Company's management
affiliate shall receive an annual percentage of net revenues at market rates and
also grants the Company an option to acquire Mr. Solomont's interests. In
addition, the Company has the option to acquire a facility owned by Mr.
Solomont, Ms. Bailis and members of Mr. Solomont's family, exercisable during
1997, at a price equal to $ . Under the acquisition agreement, Mr.
Solomont is also transferring to the Company ownership interests in three
assisted living development projects, subject to the rights of third parties.
GENERAL INFORMATION
VOTING PROCEDURES
All matters specified in this Proxy Statement that are to be voted on at the
Annual Meeting will be by written ballot. One or more inspectors of election
will be appointed, among other things, to determine the number of shares
outstanding and the voting power of each, the shares represented at the Annual
Meeting, the existence of a quorum and the authenticity, validity and effect of
proxies, to receive votes or ballots, to hear and determine all challenges and
questions in any way arising in connection with the right to vote, to count and
tabulate all votes and to determine the results.
16
<PAGE>
SOLICITATION COSTS
The Company will pay the cost of preparing and mailing this Proxy Statement
and other costs of the proxy solicitation made by the Board of Directors.
Certain of the Company's officers and employees may solicit the submission of
proxies authorizing the voting of shares in accordance with the Board of
Directors' recommendations, but no additional remuneration will be paid by the
Company for the solicitation of those proxies. Such solicitations may be made by
personal interview or telephone. Arrangements have also been made with brokerage
firms and others for the forwarding of proxy solicitation materials to the
beneficial owners of Common Stock, and the Company will reimburse such persons
for reasonable out-of-pocket expenses incurred in connection therewith.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 1998 ANNUAL MEETING
A stockholder desiring to submit an otherwise eligible proposal for
inclusion in the Company's proxy statement for the 1998 annual meeting of
stockholders of the Company must deliver the proposal so that it is received by
the Company no later than December 1, 1997. The Company requests that all such
proposals be addressed to the Company's Secretary at the Company's offices, 411
Hackensack Avenue, Hackensack, New Jersey 07601, and mailed by certified mail,
return-receipt requested. In addition, the Company's By-Laws require that notice
of stockholder nominations for directors and related information with respect to
the 1998 annual meeting to be received by the Secretary of the Company not less
than 60 nor more than 90 days prior to May 14, 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes of ownership of the Company's Common Stock with the
Securities and Exchange Commission. Executive officers and directors are
required to furnish the Company with copies of all Section 16(a) forms that they
file. Based upon a review of these filings and written representations from
certain of the Company's directors and executive officers that no other reports
were required, the Company notes that Mr. Rosenberg inadvertently failed to file
a Statement of Changes in Beneficial Ownership on Form 4 to report one
transaction which was subsequently reported on Mr. Rosenberg's Annual Statement
of Changes in Beneficial Ownership on Form 5.
FINANCIAL AND OTHER INFORMATION
The Company's Annual Report for the year ended December 31, 1996, including
financial statements, is being sent to stockholders of record as of the Record
Date together with this Proxy Statement. The Annual Report is not a part of the
proxy solicitation materials. THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY
OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION TO ANY STOCKHOLDER WHO SUBMITS A
WRITTEN REQUEST TO THE COMPANY'S SECRETARY, AT THE COMPANY'S OFFICES, 411
HACKENSACK AVENUE, HACKENSACK, NEW JERSEY 07601.
OTHER MATTERS
The Board of Directors knows of no matters other than those described in
this Proxy Statement which are likely to come before the Annual Meeting. If any
other matters properly come before the Annual Meeting, or any adjournment
thereof, the persons named in the accompanying form of proxy intend to vote the
proxies in accordance with their best judgment.
By Order of the Board of Directors,
Bradford C. Burkett
Secretary
Hackensack, New Jersey
April , 1997
17
<PAGE>
APPENDIX 1
THE MULTICARE COMPANIES, INC.
1993 SECOND AMENDED AND RESTATED STOCK OPTION PLAN
<PAGE>
THE MULTICARE COMPANIES, INC
1993 SECOND AMENDED AND RESTATED STOCK OPTION PLAN
(AS AMENDED AND RESTATED EFFECTIVE , 1997,
AND APPROVED BY THE BOARD OF DIRECTORS OF THE COMPANY ON , 1997)
The Multicare Companies, Inc., a Delaware corporation (the "Company"),
previously adopted The Multicare Companies, Inc. 1993 Stock Option Plan (the
"Plan") for directors and employees of the Company and its Subsidiaries (as
defined in Paragraph 4), effective as of July 14, 1993. The Plan was
subsequently amended by Amendment No. 1, approved by the Board of Directors on
March 15, 1994, and Amendment No. 2, approved by the Board of Directors on April
4, 1994. The Plan is hereby amended and restated effective as of ,
1997.
1. PURPOSE. The purpose of the Plan is to secure for the Company the
benefits of the additional incentive inherent in the ownership of common stock,
par value one cent ($0.01) per share, of the Company ("Common Stock") by
selected employees, directors and consultants of the Company and its
Subsidiaries who, in the judgment of the Committee (as defined in Paragraph 2),
are important to the success and growth of the business of the Company and its
Subsidiaries, and to secure and retain the services of such employees, directors
and consultants.
2. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the Company (the
"Board"), which Committee shall consist of two or more directors. It is intended
that the directors appointed to serve on the Committee shall be "outside
directors" (within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code")) and "Non-Employee Directors" (within the meaning
of Rule 16b-3(b)(3)(i) of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"). However, the mere fact that a Committee member shall fail
to qualify under either of these requirements shall not invalidate any award
made by the Committee which award is otherwise validly made under the Plan. The
Committee shall select one of its members as Chairman and shall make such rules
and regulations as it shall deem appropriate concerning the holding of its
meetings and transaction of its business. A majority of the whole Committee
shall constitute a quorum, and the act of a majority of the members of the
Committee present at a meeting at which a quorum is present shall be the act of
the Committee. Any member of the Committee may be removed at any time either
with or without cause by resolution adopted by the Board of Directors, and any
vacancy on the Committee may at any time be filled by resolution adopted by the
Board of Directors.
Subject to the express provisions of the Plan, the Committee shall have
plenary authority to interpret the Plan, to prescribe, amend and rescind the
rules and regulations relating to it and to make all other determinations deemed
necessary and advisable for the administration of the Plan. The determinations
of the Committee shall be conclusive.
3. COMMON STOCK SUBJECT TO OPTIONS. Subject to the adjustment provisions
of Paragraph 12 below, a maximum of 5,300,000 shares may be made subject to
options granted under the Plan. If, and to the extent that, options granted
under the Plan shall terminate, expire or be canceled for any reason without
having been exercised, new options may be granted in respect of the shares
covered by such terminated, expired or canceled options. The granting and terms
of such new options shall comply in all respects with the provisions of the
Plan.
Shares sold upon the exercise of any option granted under the Plan may be
shares of authorized and unissued Common Stock, shares of issued Common Stock
held in the Company's treasury, or both.
There shall be reserved at all times for sale under the Plan a number of
shares, of either authorized and unissued shares of Common Stock, shares of
Common Stock held in the Company's treasury, or both,
1
<PAGE>
equal to the maximum number of shares which may be purchased pursuant to the
options granted or that may be granted under the Plan. No person eligible to
receive options under the Plan may be granted options covering a total of more
than shares of Common Stock per year under the Plan.
4. ELIGIBILITY. Incentive Options (as defined in Paragraph 5 below) may be
granted to any key employee of the Company or any of its Subsidiaries (an
"Employee"), and Nonqualified Options (as defined in Paragraph 5 below) may be
granted to any director, employee or consultant to the Company. Options may be
granted to the directors and employees who hold or have held options under this
Plan or any similar or other awards under any other plan of the Company or any
of its Subsidiaries. Employees who are also officers and directors of the
Company or any of its Subsidiaries shall not by reason of such offices be
ineligible to receive grants of options; provided that no person who is then a
member of the Committee shall be eligible to receive any grant of options under
the Plan and any grant made to such a member of the Committee shall be null and
void.
For purposes of the Plan, a "Subsidiary" of the Company shall mean any
"subsidiary corporation" as such term is defined in Section 424(f) of the Code.
An entity shall be deemed a Subsidiary of the Company only for such periods as
the requisite ownership relationship is maintained.
No person who would own, directly or indirectly, immediately after the
granting of an option to such person, more than 10% of the total combined voting
power of all classes of stock of the Company or any of its Subsidiaries, except
as permitted by Section 422(c)(5) of the Code, shall be eligible to receive an
Incentive Option under the Plan.
A director, employee or consultant receiving an option pursuant to the Plan
is hereinafter referred to as an "Optionee".
5. GRANT OF OPTIONS. The Committee shall have the authority and
responsibility, within the limitations of the Plan, to determine the directors
and employees to whom options are to be granted, whether the options granted
shall be "incentive stock options" ("Incentive Options"), within the meaning of
Section 422(b) of the Code, or options which are not Incentive Options
("Nonqualified Options"), the number of shares that may be purchased under each
option and the option price.
In determining the directors and employees to whom options shall be granted
and the number of shares to be covered by each such option, the Committee shall
take into consideration such person's present and potential contribution to the
success of the Company and its Subsidiaries and such other factors as the
Committee may deem proper and relevant.
6. PRICE. The option price of each share of Common Stock purchasable under
any Incentive Option granted pursuant to the Plan shall not be less than the
Fair Market Value (as defined below) thereof at the time the option is granted.
The Committee is hereby given the authority to determine the price at which any
Nonqualified Option may be exercised.
For the purposes of the Plan, "Fair Market Value" of a share of Common Stock
means the average of the high and low sales prices of a share of Common Stock on
the New York Stock Exchange Composite Tape on the date in question. If the
shares of Common Stock are not traded on the New York Stock Exchange on such
date, "Fair Market Value" of a share of Common Stock shall be determined by the
Committee in its sole discretion.
7. DURATION OF OPTIONS. Each option granted hereunder shall become
exercisable, in whole or in part, at the time or times provided by the
Committee; provided, however, that if an Optionee's employment with or service
as a director for the Company or any Subsidiary shall terminate by reason of
death or "permanent and total disability", within the meaning of Section
22(e)(3) of the Code ("Disability"), each outstanding option granted to such
Optionee shall become exercisable in full in respect of the aggregate number of
shares covered thereby.
2
<PAGE>
Notwithstanding any provision of the Plan to the contrary, the unexercised
portion of any option granted under the Plan shall automatically and without
notice terminate and become null and void at the time of the earliest to occur
of the following:
(a) The expiration of 10 years from the date on which such option was
granted;
(b) The expiration of one year from the date the Optionee's employment
with or service as a director for the Company or any of its Subsidiaries
shall terminate by reason of Disability; provided, however, that if the
Optionee shall die during such one-year period, the provisions of
Subparagraph (c) below shall apply;
(c) The expiration of one year from the date of the Optionee's death, if
such death occurs either during employment with or service as a director for
the Company or any of its Subsidiaries or during the one-year period
described in Subparagraph (b) above;
(d) The date of the Optionee's employment with or service as a director
of the Company or any of its Subsidiaries shall terminate by reason of
"cause" (as hereafter defined). Termination by reason of "cause" shall mean,
unless some other definition shall be applicable under any employment
agreement to which such employee is subject, termination by reason of
participation and conduct during employment or service as a director
consisting of fraud, felony, willful misconduct or commission of any act
which causes or may reasonably be expected to cause substantial damage to
the Company or any of its Subsidiaries;
(e) The expiration of three months from the date the Optionee's
employment with or service as a director of the Company or any of its
Subsidiaries shall terminate other than by reason of death, Disability or
termination for cause; and
(f) In whole or in part, at such earlier time or upon the occurrence of
such earlier event as the Committee in its discretion may provide upon the
granting of such option.
The Committee may determine whether any given leave of absence constitutes a
termination of employment. The options granted under the Plan shall not be
affected by any change of employment or service as a director so long as the
Optionee continues to be an employee or director of the Company or any of its
Subsidiaries.
8. EXERCISE OF OPTIONS. An option granted under this Plan shall be deemed
exercised when the person entitled to exercise the option (a) delivers written
notice to the Company at its principal business office, directed to the
attention of its Secretary, of the decision to exercise, (b) concurrently
tenders to the Company full payment for the shares to be purchased pursuant to
such exercise, and (c) complies with such other reasonable requirements as the
Committee establishes pursuant to Paragraph 2 of the Plan. Payment for shares
with respect to which an option is exercised may be made in cash, check or money
order and, subject to the Committee's consent, by Common Stock.
9. TRANSFERABILITY OF OPTIONS.
(a) No option or any right evidenced thereby may be transferred,
pledged, assigned or hypothecated, except as provided in Paragraph 9(b)
hereof, by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order (within the meaning of Section 414(p) of
the Code), nor subjected to execution, attachment or similar process. Any
attempted transfer, pledge, assignment, hypothecation or other disposition
of an option or any right evidenced thereby not specifically permitted
herein shall be null and void and without effect.
(b) An Optionee may transfer Nonqualified Options granted to the
Optionee hereunder to (i) members of the Optionee's immediate family, (ii)
trusts for the benefit of such immediate family members and (iii)
partnerships in which such immediate family members are the only partners;
provided, however, the Nonqualified Options so transferred shall continue to
be subject to the same
3
<PAGE>
terms and conditions as were applicable to such Nonqualified Options
immediately prior to their transfer; and, provided further, that the
transferee of such Nonqualified Options may not subsequently transfer such
Nonqualified Options to any person other than a person to whom the Optionee
is permitted to transfer Nonqualified Options hereunder. For purposes of
this Paragraph 9, "immediate family members" shall mean the children,
grandchildren and spouse of the Optionee.
10. RIGHTS OF OPTIONEE. Neither the Optionee nor the Optionee's executor
or administrator shall have any of the rights of a stockholder of the Company
with respect to the shares subject to an option until certificates for such
shares shall actually have been issued upon the due exercise of such option. No
adjustment shall be made for any regular cash dividend for which the record date
is prior to the date of such due exercise and full payment for such shares has
been made therefor.
11. RIGHT TO TERMINATE EMPLOYMENT OR SERVICE AS A DIRECTOR Nothing in the
Plan or in any option shall confer upon any Optionee the right to continue in
the employment of or service as a director for the Company or any of its
Subsidiaries or affect the right of the Company or any of its Subsidiaries to
terminate Optionee's employment or service as a director at any time subject,
however, to the provisions of any employment agreement between the Company or
any of its Subsidiaries and the Optionee.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any stock
split, stock dividend, stock change, reclassification, recapitalization or
combination of shares which changes the character or amount of Common Stock
prior to exercise of any portion of an option theretofore granted under the
Plan, such option, to the extent that it shall not have been exercised, shall
entitle the Optionee (or the Optionee's executor or administrator) upon its
exercise to receive in substitution therefor such number and kind of shares as
the Optionee would have been entitled to receive if the Optionee had actually
owned the stock subject to such option at the time of the occurrence of such
change; provided, however, that if the change is of such a nature that the
Optionee, upon the exercise of the option, would receive property other than
shares of stock the Committee shall make an appropriate adjustment in the option
to provide that the Optionee (or the Optionee's executor or administrator) shall
acquire upon exercise only shares of stock of such number and kind as the
Committee, in its sole judgment, shall deem equitable; and, provided further,
that any such adjustment shall be made so as to conform to the requirements of
Section 424(a) of the Code.
In the event that any transaction (other than a change specified in the
preceding paragraph) described in Section 424(a) of the Code affects the Common
Stock subject to any unexercised option, the Board of Directors of the surviving
or acquiring corporation shall make such similar adjustment as is permissible
and appropriate.
If any such change or transaction shall occur, the number and kind of shares
for which options may thereafter be granted under the Plan shall be adjusted to
give effect thereto.
13. PURCHASE FOR INVESTMENT. Whether or not the options, and shares
covered by the Plan have been registered under the Securities Act of 1933, as
amended, each person exercising an option under the Plan may be required by the
Company to give a representation in writing that such person is acquiring such
shares for investment and not with a view to, or for sale in connection with,
the distribution of any part thereof. The Company will endorse any necessary
legend referring to the foregoing restriction upon the certificate or
certificates representing any shares issued or transferred to the Optionee upon
the exercise of any option granted under the Plan.
14. FORM OF AGREEMENTS WITH OPTIONEES. Each option granted pursuant to the
Plan shall be in writing and shall have such form, terms and provisions, not
inconsistent with the provisions of the Plan, as the Committee shall provide for
such option. Unless otherwise set forth in such writing, the effective date of
the granting of an option shall be the date on which the Committee approves such
grant. Each Optionee shall be notified promptly of such grant, and a written
agreement shall be promptly executed and delivered by the Company and the
Optionee.
4
<PAGE>
15. TERMINATION AND AMENDMENT OF PLAN AND OPTIONS. Unless the Plan shall
theretofore have been terminated as hereinafter provided, options may be granted
under the Plan at any time, and from time to time, prior to the tenth
anniversary of the Effective Date (as defined below), on which date the Plan
will expire, except as to options then outstanding under the Plan. Such options
shall remain in effect until they have been exercised, have expired or have been
canceled.
The Plan may be terminated or amended at any time by the Board of Directors;
provided, however, that any such amendment shall comply with all applicable laws
(including Sections 162(m) and 422(b)(1) of the Code), applicable stock exchange
listing requirements, and applicable requirements for exemption (to the extent
necessary) under Rule 16b-3 under the Exchange Act.
No termination, modification or amendment of the Plan, without the consent
of the Optionee, may adversely affect the rights of such person with respect to
such option. With the consent of the Optionee and subject to the terms and
conditions of the Plan, the Committee may amend the outstanding option
agreements with any Optionee.
16. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company with
respect to options granted under the Plan shall be subject to all applicable
laws, rules and regulations and such approvals by any governmental agency as may
be required, including, without limitation, the effectiveness of any
registration statement required under the Securities Act of 1933, as amended,
and the rules and regulations of any securities exchange on which the Common
Stock may be listed.
17. WITHHOLDING. The Company's obligation to deliver shares of Common
Stock in respect of any option granted under the Plan shall be subject to all
applicable federal, state, and local tax withholding requirements. Federal,
state and local withholding tax due upon the exercise of any option (or upon any
disqualifying disposition of shares of Common Stock subject to an incentive
option), in the Committee's sole discretion, may be paid in shares of Common
Stock (including the withholding of shares subject to an option) upon such terms
and conditions as the Committee may determine.
18. SEPARABILITY. If any of the terms or provisions of the Plan conflict
with the requirements of Rule 16b-3 under the Exchange Act and/or Sections
162(m) and 422 of the Code, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of Rule 16b-3
under the Exchange Act and/or Sections 162(m) and 422 of the Code. With respect
to Incentive Options, if the Plan does not contain any provision to be included
herein under Section 422 of the Code, such provision shall be deemed to be
incorporated herein with the same force and effect as if such provision had been
set out at length herein; provided, further, that to the extent any option which
is intended to qualify as an Incentive Option cannot so qualify, such option, to
that extent, shall be deemed to be Nonqualified Option for all purposes of the
Plan.
19. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board of Directors nor the submission of the Plan to the shareholders of the
Company for approval shall be construed as creating any limitation on the power
of the Board of Directors to adopt such other incentive arrangements as it may
deem desirable, including, without limitation, the granting of stock options and
the awarding of stock and cash otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
20. EXCLUSION FROM PENSION AND PROFIT-SHARING COMPUTATION. By acceptance
of an option, each Optionee shall be deemed to have agreed that such grant is
special incentive compensation that will not be taken into account, in any
manner, as salary, compensation or bonus in determining the amount of any
payment under any pension, retirement or other benefit plan of the Company or
any of its Subsidiaries. In addition, such option will not affect the amount of
any life insurance coverage, if any, provided by the Company on the life of the
Optionee which is payable to such beneficiary under life insurance plan covering
directors or employees of the Company or any of its Subsidiaries.
21. GOVERNING LAW. The Plan shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
5
<PAGE>
PROXY
THE MULTICARE COMPANIES, INC.
411 HACKENSACK AVENUE, HACKENSACK, NEW JERSEY 07601
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, MAY 14, 1997
The undersigned hereby appoints Moshael J. Straus, Daniel E. Straus and
Stephen R. Baker or any of them, with full power of substitution and with
discretionary authority to represent and to vote, in accordance with the
instructions set forth on the reverse, all shares of Common Stock which the
undersigned is entitled to vote at the 1997 Annual Meeting of Stockholders of
The Multicare Companies, inc., or any adjournments thereof.
/X/ Please mark your vote as in this example.
<TABLE>
<CAPTION>
FOR
all nominees listed NOMINEES FOR DIRECTORS:
at right (except as AGAINST Moshael J. Straus
marked to the all nominees Daniel E. Straus
contrary) listed at right Constance B. Girard-diCarlo
<S><C> <C> <C> <C>
1. ELECTION OF DIRECTORS / / / /
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME AT RIGHT.
<TABLE>
<S><C> <C> <C> <C>
2. Proposal to approve amendments to the Company's Stock Option Plan.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
<TABLE>
<S><C> <C> <C> <C>
3. Ratification of KPMG Peat Marwick LLP as the independent auditors of the Company for the fiscal year
ending December 31, 1997.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S><C> <C> <C> <C>
4. In their discretion on all matters that may properly come before the
meeting.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (3).
SIGNATURE _________________________
DATE ______________________________
SIGNATURE, IF HELD JOINTLY ________
DATE ______________________________
NOTE: If signing as Executor,
Attorney, Administrator, Guardian,
Trustee or Corporate Officer,
please add your title as such.
Please date and sign exactly as
name appears above and return this
proxy in the enclosed post paid
envelope.
