SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. _________]
Filed by the Registrant _X_
Filed by a Party other than the Registrant ___
Check the appropriate box:
_X_ Preliminary Proxy Statement
___ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
___ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
NEWCARE HEALTH CORPORATION
(Name of Registrant as Specified in Its Charter)
NEWCARE HEALTH CORPORATION
(Name of Person(s) Filing Proxy Statement)
<PAGE>
PRELIMINARY COPY
NEWCARE HEALTH CORPORATION
6000 Lake Forrest Drive, #315
Atlanta, Georgia 30328
(404) 252-2923
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 9, 1998
TO THE SHAREHOLDERS OF NEWCARE HEALTH CORPORATION:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of
NewCare Health Corporation, a Nevada corporation (the "Company"), will be held
at the Four Seasons Resort and Club, 4150 North MacArthur Boulevard, Dallas,
Texas on Thursday, July 9, 1998, at 2:00 p.m., Central Time, and at any and
all adjournments thereof, for the purpose of considering and acting upon the
following matters.
1. The election of seven (7) Directors of the Company to serve until
the next Annual Meeting of Shareholders and until their successors have been
duly elected and qualified;
2. The ratification of the appointment of Laney, Boteler & Killinger as
the Company's independent auditors;
3. The approval of an amendment to the Company's Articles of
Incorporation to authorize the issuance of up to 10,000,000 shares of $.01 par
value Preferred Stock in such amounts, in one or more series, and with such
designations, preferences, limitations and relative rights for each series as
the Board of Directors shall determine; and
4. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of the $.02 par value Common Stock of the Company of record
at the close of business on June 23, 1998, will be entitled to notice of and
to vote at the Meeting or at any adjournment or adjournments thereof. The
proxies are being solicited by the Board of Directors of the Company.
All shareholders, whether or not they expect to attend the Annual
Meeting of Shareholders in person, are urged to sign and date the enclosed
Proxy and return it promptly in the enclosed postage-paid envelope which
requires no additional postage if mailed in the United States. The giving of
a proxy will not affect your right to vote in person if you attend the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
CHRIS BROGDON, CHAIRMAN OF THE BOARD
Atlanta, Georgia
June 23, 1998
<PAGE>
PRELIMINARY COPY
NEWCARE HEALTH CORPORATION
6000 Lake Forrest Drive, #315
Atlanta, Georgia 30328
(404) 252-2923
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 9, 1998
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of NewCare Health Corporation, a Nevada corporation (the "Company"),
for use at the Company's Annual Meeting of Shareholders to be held at the Four
Seasons Resort and Club, 4150 North MacArthur Boulevard, Dallas, Texas, on
Thursday, July 9, 1998, at 2:00 p.m., Central Time, and at any adjournment
thereof. It is anticipated that this Proxy Statement and the accompanying
Proxy will be mailed to the Company's shareholders on or about June 24, 1998.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report for the year ended December 31, 1997, is
being simultaneously mailed to the Company's shareholders, but does not
constitute part of these proxy soliciting materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
$.02 par value Common Stock, with each share entitled to one vote. Only
shareholders of record at the close of business on June 23, 1998, are entitled
to notice of and to vote at the Meeting or any adjournment thereof. On June
23, 1998, the Company had 12,128,525 shares of its $.02 par value Common Stock
outstanding, each share of which is entitled to one vote on all matters to be
voted upon at the Meeting, including the election of Directors. Cumulative
voting in the election of Directors is not permitted.
A majority of the Company's outstanding common stock represented in
person or by proxy shall constitute a quorum at the Meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
the Company's no par value common stock owned beneficially, as of June 23,
1998, by any person, who is known to the Company to be the beneficial owner of
5% or more of such common stock, and, in addition, by each Director of the
Company, and Nominee for Director, and by all Directors, Nominees for Director
and Officers of the Company as a group. Information as to beneficial
ownership is based upon statements furnished to the Company by such persons.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF BENEFICIAL PERCENTAGE
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ----------------------------- -------------------- ----------
<S> <C> <C>
Ashok Dalal 1,156,469<FN1> 9.4%
3703 Bridge Road
Cooper City, FL 33026
Dr. Kishor Karia 901,138<FN2> 7.5%
11001 Pines Blvd., Suite 106
Pembroke Pines, FL 33024
Dr. Dhiraj Patel 907,888<FN3> 7.5%
11801 N. Island Road
Cooper City, FL 33026
Chris Brogdon 2,295,415<FN4> 18.4%
6000 Lake Forrest Drive, Suite 200
Atlanta, GA 30328
Harlan Mathews 0 -0-
420 Hunt Club Road
Nashville, TN 37221
William McBride, III 50,000 0.4%
1647 Logan Creek Drive
Glenbrook, NV 89413
Timothy Beaulieu 125,000<FN5> 1.0%
6000 Lake Forrest Drive, #315
Atlanta, GA 30328
James H. Sanregret 90,000<FN6> 0.7%
6000 Lake Forrest Drive, #315
Atlanta, GA 30328
Frank Camma 85,001<FN7> 0.7%
6000 Lake Forrest Drive, #315
Atlanta, GA 30328
Arthur Doloresco 50,000<FN8> 0.4%
6000 Lake Forrest Drive, #315
Atlanta, GA 30328
Veena Holdings, Ltd.<FN9> 901,138 7.5%
1101 Pines Blvd., Suite 106
Pembroke Pines, FL 33024
Daksha Vakharia Revocable Trust 598,000 5.0%
3365 Bridle Path Lane
Fort Lauderdale, FL 33331
Darrell C. Tucker 195,000 <FN10> 1.6%
6000 Lake Forrest Drive, Suite 200
Atlanta, GA 30328
Jeff M. Moore -0- --
1999 Avenue of the Stars, Suite 1900
Los Angeles, CA 90067
Mark P. Clein -0- --
3990 Old Town Avenue
San Diego, CA 92110
Pro Futures Bridge Capital Fund, 1,000,002<FN11> 8.1%
L.P.
5350 S. Roslyn Street, Suite 350
Englewood, CO 80111
Renaissance Capital Group, Inc. 1,512,336<FN12> 11.1%
Suite 210-LB59
8080 North Central Expressway
Dallas, TX 75206
All Directors, Nominees for Director 5,825,911 44.9%
and Executive Officers as a Group
(13 Persons)
___________________
<FN>
<FN1>
Includes 900,000 shares held directly; an aggregate of 31,469 shares held of
record by certain family members of Mr. Dalal; and 225,000 shares underlying
stock options held by Mr. Dalal.
<FN2>
Represents shares held by Veena Holdings, Ltd., a partnership owned by Dr.
Karia and his family.
<FN3>
Includes 801,138 shares held in the name of Dr. Patel's wife, Pravinagauri
Patel; 26,750 shares held in the Karia & Patel Stirling Health Center Annuity
Plan for the benefit of Dr. Patel; and 80,000 shares held jointly by Dr. Patel
and his wife.
<FN4>
Includes 715,978 shares owned by Mr. Brogdon; 397,600 shares owned by Mr.
Brogdon's wife, Connie Brogdon; 219,837 shares of Common Stock which
represents 50% of the shares held by Winter Haven Homes, Inc., of which Connie
Brogdon is a 50% owner; 22,000 shares held by trusts of which Connie Brogdon
is the beneficial owner; 30,000 shares held by Retirement Care Associates,
Inc., of which Mr. Brogdon is President, Director and a principal shareholder
of which Mr. Brogdon disclaims beneficial ownership; 375,000 shares underlying
currently exercisable stock options held by Mr. Brogdon; and 535,500 shares
underlying options Mr. Brogdon holds to purchase stock from another
shareholder.
<FN5>
Includes 50,000 shares owned by Mr. Beaulieu and 75,000 shares underlying
stock options held by him.
<FN6>
Includes 40,000 shares owned by Mr. Sanregret and 50,000 shares underlying
stock options held by him.
<FN7>
Includes 10,001 shares owned by Mr. Camma and 75,000 shares underlying stock
options held by him.
<PAGE>
<FN8>
Represents 50,000 shares underlying stock options held by Mr. Doloresco.
<FN9>
The shareholders of Veena Holdings, Ltd. are Dr. Kishor Karia, Veena Karia,
Ojus Karia and Tajus Karia.
<FN10>
Includes 25,000 shares held directly by Mr. Tucker; 35,000 shares held by Mr.
Tucker's wife; 105,000 shares held by a trust of which Mr. Tucker's wife is
trustee; and 30,000 shares of Retirement Care Associates, Inc., of which Mr.
Tucker is an officer and director, of which Mr. Tucker disclaims beneficial
ownership.
<FN11>
Includes 666,668 shares held directly and 333,334 shares underlying warrants
held by Pro Futures Bridge Capital Fund, L.P.
<FN12>
Includes 200,000 shares underlying stock options held by Renaissance Capital,
Group, and 1,312,336 shares issuable upon the conversion of Convertible
Debentures held by two entities controlled by Renaissance Capital Group, Inc.
The number of shares issuable upon the conversion of the Convertible
Debentures may be increased in April or May 1999 as a result of an adjustment
to the conversion price based on the weighted average closing price of the
Company's Common Stock for the 21 consecutive trading days following the
announcement of the financial results for the year ended December 31, 1998.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The Company's Bylaws have been amended to provide that effective at the
Annual Meeting of Shareholders that the Board of Directors will consist of
eight members. The Board of Directors recommends the ELECTION as Directors of
the seven (7) nominees listed below, to hold office until the next Annual
Meeting of Shareholders and until their successors are elected and qualified
or until their earlier death, resignation or removal. Each of the current
members of the present Board of Directors has been nominated for reelection,
except for William C. McBride and Dr. Dhiraj Patel, who have advised the
Company that they do not wish to serve as Directors after the Annual Meeting
of Shareholders. The person named as "Proxy" in the enclosed form of Proxy
will vote the shares represented by all valid returned proxies in accordance
with the specifications of the shareholders returning such proxies. If at the
time of the Meeting any of the nominees named below should be unable to serve,
which event is not expected to occur, the discretionary authority provided in
the Proxy will be exercised to vote for such substitute nominee or nominees,
if any, as shall be designated by the Board of Directors.
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently
held, and the period during which each person has served as a Director:
POSITIONS AND OFFICES HELD AND
NAME AGE TERM AS A DIRECTOR
- --------------------- --- ------------------------------
Ashok Dalal 58 President, Chief Executive Officer and
Director since April 1994
Chris Brogdon 49 Chairman of the Board and Director since
February 1997
Dr. Kishor Karia 54 Director since July 1995
Harlan Mathews 70 Director since February 1997
<PAGE>
Darrell C. Tucker 40 Nominee for Director
Jeff M. Moore 38 Nominee for Director
Mark P. Clein 38 Nominee for Director
There is no family relationship between any Director or Executive
Officer of the Company.
The Company has no Nominating Committee, but does have a Compensation
Committee, an Audit Committee and an Executive Committee, all of which were
established on January 6, 1998. As a result, these committees did not hold
any meetings during 1997. The Audit Committee and Compensation Committee both
consist of Harlan Mathews, William McBride, III, and Ashok Dalal. The
Executive Committee consists of Timothy Beaulieu, James H. Sanregret, and
Philip M. Rees (counsel to the Company).
Set forth below are the names of all directors, nominees for director
and executive officers of the Company, all positions and offices with the
Company held by each such person, the period during which he has served as
such, and the principal occupations and employment of such persons during at
least the last five years:
ASHOK DALAL has served as Executive Vice President and a Director of the
Company since April 1994 and has held such positions with ANH since November
1989 and with NewCare since its inception in February 1993. Mr. Dalal has
served as Chief Executive Officer of the Company since the resignation of
Robert W. Bell, Sr. on January 3, 1997. Mr. Dalal was a private investor in
several limited partnerships whose properties were managed by ANH. He has a
B.S. Degree and a Masters of Business Administration Degree.
CHRIS BROGDON has served as a Director of the Company since February 19,
1997. He has served as President and a Director of Retirement Care
Associates, Inc., a publicly-held company headquartered in Atlanta, Georgia,
since October 1991. He has also served as Secretary of Capitol Care
Management Company, Inc. ("Capitol Care") since October 1990. Capitol Care is
a wholly-owned subsidiary of Retirement Care Associates, Inc. Mr. Brogdon has
been involved in financing and operating long-term care facilities and
assisted living/independent living communities since 1982. From 1969 until
1982, Mr. Brogdon was employed in the securities business as a retail
salesman. Mr. Brogdon attended Georgia State University in Atlanta, Georgia.
Since March 1987, Mr. Brogdon has been Secretary/Treasurer of Winter Haven
Homes, Inc. ("WHH") and since August 1990, he has been Secretary/Treasurer of
National Assistance Bureau, Inc. ("NAB"). Both WHH and NAB are engaged in the
business of owning and operating long-term care facilities and assisted
living/independent living communities. Mr. Brogdon also serves as a Director
of Contour Medical, Inc., a publicly-held company, of which Retirement Care
Associates, Inc. is a majority shareholder, and In-House Rehab, Inc., a
publicly-held company of which Retirement Care Associates, Inc. is a minority
shareholder.
DR. KISHOR KARIA has served as a director of the Company since July,
1995. Dr. Karia is an internal medicine physician specializing in Hematology
Oncology and has been practicing in South Florida since 1982. Dr. Karia was a
limited partner in several Florida long-term care facilities operated by the
Company until 1993 when he exchanged his ownership interest in the long-term
care facilities with NewCare, Inc.
HARLAN MATHEWS has been a Director of the Company since February 1997.
Since 1994 he has been a partner in the law firm of Farris, Mathews, Branan &
Hellen, P.L.C., in Nashville, Tennessee. From 1993 to 1994, he served as a
<PAGE>
United States Senator from the State of Tennessee. From 1987 to 1993, he was
Deputy to the Governor of Tennessee and Cabinet Secretary. From 1974 to 1987,
Mr. Mathews was Treasurer of the State of Tennessee. He received a Bachelor's
Degree in Business from Jacksonville State University in Alabama in 1949 and a
Master's Degree in Public Administration from Vanderbilt University in 1950.
Mr. Mathews received a law degree from the Nashville School of Law in 1962.
Mr. Mathews currently serves as a Director of Retirement Care Associates,
Inc., a publicly-held company based in Atlanta, Georgia, and Murray Guard,
Inc., a publicly-held company based in Jackson, Tennessee.
DARRELL C. TUCKER. Mr. Tucker has been President of Capitol Care
Management Company, Inc. ("Capitol Care"), a subsidiary of the Retirement Care
Associates, Inc. ("Retirement Care"), a publicly-held company headquartered in
Atlanta, Georgia, since October 1990. He has also served as a Director of
Retirement Care since November 1991 and as Treasurer of Retirement Care since
November 1993. From July 1990 to October 1990, he was a consultant to Winter
Haven Homes, Inc., an affiliate of Retirement Care. From September 1988 to
July 1990, he was a risk manager for Pruitt Corporation where he was involved
in insurance management for 30 long-term health care facilities. From April
1987 to August 1988, he was Chief Financial Officer for Allgood Health Care,
Inc. which managed 12 nursing home facilities. Mr. Tucker received a
Bachelors Degree in Accounting from the University of Georgia in 1980. Mr.
Tucker is also a Director of Contour Medical, Inc., a publicly-held company,
of which Retirement Care is a majority shareholder.
JEFF M. MOORE. Mr. Moore is a limited partner of Apollo Advisors, L.P.,
Ares Management L.P. and Lion Advisors L.P., which act as managing general
partner of Apollo Investment Fund, L.P., Ares Leveraged Investment Fund L.P.
and AIF II, L.P., respectively, securities investment funds, and a financial
advisor to and representative for certain institutional investors with respect
to securities investments since 1992. From 1990 until joining Apollo, Mr.
Moore was Vice President -- Investment Management at First Executive
Corporation, where he was responsible for the management of a diversified
securities portfolio. Prior to 1990, Mr. Moore was a Certified Public
Accountant at Deloitte & Touche LLP, where he specialized in financial
instruments and credit analysis.
MARK P. CLEIN. Since 1996, Mr. Clein has been Chief Financial Officer of
PMR Corporation, a NASDAQ National Market System-listed company, which
develops, manages and markets programs and services for individuals who have
been diagnosed with serious mental illness, including outpatient, case
management and chemical dependency programs. From 1982 to 1996, Mr. Clein was
employed by several New York based investment banking firms, including
Jefferies & Co., where he held the position of managing director of investment
banking (specializing in the health care industry), Sprout Group, an affiliate
of Donaldson, Lufkin and Jenrette, Inc., and Merrill Lynch Venture Capital,
Inc., where he focused on early stage investing in the healthcare industry.
Mr. Clein received a Masters of Business Administration Degree from Columbia
University in 1983 and a Bachelor's Degree from the University of North
Carolina in 1981. He is also a Director of Children's Discovery Centers of
America, Inc. and In-House Rehab Corporation, which are publicly held.
TIMOTHY BEAULIEU has served as Executive Vice President of the Company in
charge of all long-term care facilities since July 1997. Mr. Beaulieu was
previously employed by Life Care Centers of America for 14 years and was Chief
Operating Officer from 1994 to May 1997. As Chief Operating Officer, he was
responsible for the operations of approximately 210 long-term care facilities
and 15 assisted living/independent living properties. He also had direct
responsibility for marketing, human resources, professional development, and
clinical services support. Mr. Beaulieu was Senior Vice President of Support
Services from 1993 to 1994 and was responsible for the creation of ancillary
<PAGE>
companies with the purpose of providing services to Life Care's facilities in
the area of pharmacy, rehab, home health, enteral and parenteral therapy, etc.
He also had oversight of the Associate Benefit Trust Program, a self-insured
group insurance program with approximately 3,500 enrollees with in excess of
$8 million in annual premiums. From 1992 to 1993, he was Eastern Division
Vice President and coordinated the operating activities in 38 facilities on
the East Coast from Massachusetts to Florida. From 1988 to 1992, he was
Regional Vice President and was responsible for the operation of facilities in
Florida, Georgia and Tennessee. From 1985 to 1988, he was acquisition
specialist for Life Care Affiliates, a subsidiary of Life Care. During this
time, he was responsible for the generation of leads for the acquisition of
long-term care centers, certificates of need, and management agreements. From
1984 to 1985, he was an Administrator for Life Care, opening a new 80-bed
long-term care facility and operating a 120-bed facility. Mr. Beaulieu
received his Bachelor of Science degree in Business Administration, as well as
his Associate of Science degree in Health Care Administration from Southern
College of Seventh Day Adventist. He is 39 years old.
JAMES H. SANREGRET has served as Chief Financial Officer of the Company
since June 1997. Mr. Sanregret was previously employed by Delta Air Lines
for 24 years. He was Treasurer of Delta from 1992 to May 1997. As Treasurer
he was responsible for all Corporate Finance, Tax and Corporate Insurance
activities on a global basis for the $12 billion airline. He was Assistant
Vice President of Financial Planning in 1992 and was responsible for analyzing
the economics of all proposed spending activities, preparation of projected
income statement for quarterly Board of Directors meetings, and the
development of expense levels and capital outlays for all major corporate
acquisitions/mergers. From 1985 to 1992, he was the Director of Financial
Planning. He coordinated all financial activities related to the acquisition
of Western Airlines. He functioned as Manager of Financial Planning from 1981
to 1985, Analyst of Financial Planning from 1974 to 1981, and Accountant of
Property Accounting from 1973 to 1974. Mr. Sanregret received a Bachelor of
Business Administration from the University of Wisconsin in 1972. He is 48
years old.
FRANK CAMMA has served as Vice President of Strategic Planning of the
Company since July 1997. Mr. Camma began his career in the healthcare
industry in 1990, when he served as an accountant in the Contract Services
division of NovaCare Incorporated, a rehabilitation services company until
1992. From June 1992 to October 1993, he served as a Financial Analyst at
First Fidelity Bank Corporation. He completed the Professional Banker
training program and returned to NovaCare Incorporated as a Financial Analyst
in the Corporate Finance department. In this capacity he was responsible for
the annual budget as well as weekly operating reports. From September 1994 to
August 1996, he served as a Senior Financial Analyst at Acquisition Management
Services. Acquisition Management Services is a captive investment banking
boutique for Foster Management Company, a $250 million venture capital firm
specializing in the consolidation of niche healthcare businesses. He was
responsible for valuing, performing due diligence and negotiating potential
transactions. His primary client was NovaCare Incorporated. From August 1996
to March 1997, he served as an Associate with the investment banking firm of
NatWest Markets. Mr. Camma graduated summa cum laude from Villanova
University with a Bachelors Degree in Business Administration in 1992. He is
28 years old.
ARTHUR DOLORESCO has served as President of NewCare Hospital Corporation
since August 1997. Mr. Doloresco has served in various leadership positions
in the healthcare industry for the past 20 years. Working with both 501(c)3
and investor-owned facilities, he served from May 1996 to July 1997 as the
President of the Kentucky Division for Columbia/HCA. His responsibilities
included all operations in Kentucky, including 13 hospitals, home health
<PAGE>
agencies, and surgery centers, which accounted for over $680 million in net
revenues. Prior to joining Columbia/HCA, he served as a Regional Vice
President for Champion Healthcare Corporation from December 1994 to May 1996
in Houston, Texas, where he was responsible for half of that company's
operations. He has served as the President and Chief Executive Officer of
various hospitals, including an urban teaching facility with over 500 beds.
Mr. Doloresco received his Masters Degree in Health Administration from the
Medical College of Virginia in 1979 and a Bachelor of Science Degree in
Business Administration from Old Dominion University in Norfolk, Virginia in
1975. He is 47 years old.
The Company 's Board of Directors held four (4) meetings during the year
ended December 31, 1997. Each Director attended at least 75% of the aggregate
number of meetings held by the Board of Directors and its Committees during
the time each such Director was a member of the Board or of any Committee of
the Board, except for William McBride, III who did not attend any of the
meetings held during the period he was a Director.
The Company's executive officers hold office until the next annual
meeting of directors of the Company, which currently is scheduled for July 9,
1998. There are no known arrangements or understandings between any director
or executive officer and any other person pursuant to which any of the
above-named executive officers or directors was selected as an officer or
director of the Company.
No event occurred during the past five years which is material to an
evaluation of the ability or integrity of any Director or person nominated to
be Director or Executive Officer of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain representations, no persons who were either a
director, officer, or beneficial owner of more than 10% of the Company's
common stock, failed to file on a timely basis reports required by Section
16(a) of the Exchange Act during the most recent fiscal year, except as
follows: Chris Brogdon, Harlan Mathews, Arthur Doloresco, Frank Camma and
William McBride, III, each filed Form 3's late; Chris Brogdon filed two Form
4's late reporting a total of 13 transactions, and reported one transaction
late by amending a Form 4 filing; and James H. Sanregret, Dr. Kishor Karia and
Dr. Dhiraj Patel each filed one Form 4 late reporting one transaction.
COMPENSATION
The following tables set forth information regarding executive
compensation for the Company's President and Chief Executive Officer and each
other executive officer who received total annual salary and bonus in excess
of $100,000 for any of the years ended December 31, 1997, 1996 or 1995.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS PAYOUTS
------------------------
SECURI-
ANNUAL COMPENSATION TIES
--------------------- RE- UNDERLY- ALL
OTHER STRICT- ING OTHER
NAME AND ANNUAL ED OPTIONS/ LTIP COM-
PRINCIPAL COMPEN- STOCK SARs PAY- PEN-
POSITION YEAR SALARY BONUS SATION AWARD(S) (NUMBER) OUTS TION
- ---------- ---- -------- ----- ------- -------- -------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ashok Dalal, 1997 $ 24,167 -0- -0- -0- 225,000 -0- -0-
President<FN1>
Arthur 1997 $121,875 $10,000 135,000 -0- 50,000 -0- $4,884
Doloresco, <FN3> <FN4> <FN5>
President of
Subsidiary<FN2>
Robert Bell, 1996 $ 96,000 -0- -0- -- -- -- -0-
Sr., Presi- 1995 $ 96,000 -0- -0- -- -- -- -0-
dent<FN6>
- -----------------
<FN>
<FN1>
Mr. Dalal became President on January 3, 1997.
<FN2>
Mr. Doloresco became President of the Company's 1997 NewCare Hospital Subsidiary
on during August 1997.
<FN3>
Includes $26,500 paid for Mr. Doloresco's moving expenses and $108,600 which
represents the net cost to the Company of purchasing his former residence from
him and reselling it.
<FN4>
Does not include the value of restricted stock of NewCare Hospital Corporation,
a majority-owned subsidiary of the Company, issued to Mr. Doloresco pursuant to
his employment agreement. Please see the description of that agreement under the
heading "EMPLOYMENT AGREEMENTS" below.
<FN5>
Represents amounts paid for a term life insurance policy provided for the benefit
of Mr. Doloresco.
<FN6>
Mr. Bell resigned as President on January 3, 1997.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
POTENTIAL
REALIZABLE
PERCENT OF VALUE
NUMBER TOTAL OP- AT ASSUMED
OF SECURI- TIONS/SARs ANNUAL RATES
TIES UNDER- GRANTED TO EXERCISE OF STOCK PRICE
LYING OP- EMPLOYEES OR BASE EXPIRA- APPRECIATION
TIONS/SARs IN FISCAL PRICE TION FOR OPTION TERM
NAME GRANTED(#) YEAR ($/SH) DATE 5%($) 10%($)
- ---------------- ----------- --------- ------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ashok Dalal 175,000 38.9% $2.25 2-25-2002 $108,786 $240,388
Arthur Doloresco 50,000 11.1% $4.85 8-18-2002 $ 66,998 $148,049
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
SECURITIES
UNDERLYING VALUE OF UNEXER-
SHARES UNEXERCISED CISED IN-THE
ACQUIRED OPTIONS MONEY OPTIONS/
ON SARs AT FY-END SARs AT FY-END
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (NUMBER) REALIZED UNEXERCISABLE UNEXERCISABLE
- ---------------- -------- -------- -------------- ---------------
Ashok Dalal -0- -0- 225,000/0 $295,312/$0
Arthur Doloresco -0- -0- 0/50,000 $ 0/$0
Except for the Company's 1997 Stock Option Plan described below, the only
benefit plan offered at the present involves a major medical plan, which is made
available to all full-time employees on a non-discriminatory basis.
Members of the Board of Directors receive a fee of $500 per meeting
attended. They are also entitled to reimbursement of reasonable expenses
incurred by them in attending board meetings.
EMPLOYMENT AGREEMENTS
Effective June 2, 1997, the Company entered into a three-year employment
agreement with James H. Sanregret, Chief Financial Officer of the Company.
Under this agreement, Mr. Sanregret will receive an annual salary of $144,000
during the first year of the agreement, $184,000 during the second year and
$224,000 during the third year. He also received stock options to purchase
50,000 shares of the Company's Common Stock. The Company is also to provide a
$500,000 term life insurance policy for his benefit and pay him a $700 per month
car allowance. Mr. Sanregret has agreed to keep certain information confi-
dential and that for period of two years following the termination of his
employment agreement he will not serve in an executive capacity for any business
which is engaged in a similar business to the Company in its region without the
Company's consent.
<PAGE>
Effective July 8, 1997, the Company entered into a three-year employment
agreement with Timothy J. Beaulieu, Executive Vice President of the Company in
charge of all long-term care facility operations. Under this agreement, Mr.
Beaulieu will receive an annual salary of $175,000 during the first year of the
agreement, $200,000 during the second year and $225,000 during the third year.
He also received stock options to purchase 75,000 shares of the Company's Common
Stock in connection with the agreement, and he will be entitled to receive
additional stock options to purchase 50,000 shares of Common Stock on each
anniversary of the agreement at the then current price. The Company has also
agreed to provide a $500,000 term life insurance policy for his benefit. The
agreement may be terminated by the Company without notice and without cause. In
the event that the Company terminates the agreement due to Mr. Beaulieu's
disability, he will continue to receive his salary for a period of one year
following termination. Mr. Beaulieu has agreed to keep certain information
confidential and that for a period of one year following the termination of his
employment he will not serve in an executive capacity for any business which is
engaged in a similar business to the Company in its region without the Company's
consent.
Effective August 1, 1997, the Company entered into a three-year employment
agreement with Arthur Doloresco, President of the Company's NewCare Hospital
Corporation ("NCHC") subsidiary. Under this agreement, Mr. Doloresco will
receive an annual salary of $325,000 during the first year of the agreement,
$350,000 during the second year, and $375,000 during the third year. Mr.
Doloresco is also entitled to an annual bonus of $200,000 for any calendar year
in which NCHC's earnings before interest, taxes, depreciation, amortization and
rent ("EBITDAR") exceeds 20% of net revenues; $275,000 if EBITDAR exceeds 25% of
net revenues; and $350,000 if EBITDAR exceeds 30% of net revenues. He also
received stock options to purchase 50,000 shares of the Company's Common Stock
in connection with the agreement. The Company has also agreed to provide Mr.
Doloresco a $1,000,000 term life insurance policy for his benefit. The Company
also purchased his residence in Houston, Texas and paid for his moving expenses
to Atlanta, Georgia. Mr. Doloresco also received five shares of the Common
Stock of the Company's NewCare Hospital Corporation subsidiary ("NCHC"), which
represents 5% of NCHC's outstanding Common Stock. The shares of NCHC's stock
will vest one share at the end of each year of his employment, except that if
Mr. Doloresco's employment ends on July 31, 2000, all of the shares will then
be vested. The entire five shares will vest immediately in the event of a
termination of Mr. Doloresco's employment by the Company without cause or by
Mr. Doloresco with cause, or in the event of a merger or combination where NCHC
is not the surviving entity, or its board of directors does not control the
surviving entity. The agreement may be terminated immediately by the Company
with or without cause. Mr. Doloresco may terminate the agreement immediately
for cause or on twelve months notice without cause. In the event of termination
by the Company without cause or by Mr. Doloresco with cause, Mr. Doloresco will
be entitled to twelve months severance pay. The Company and Mr. Doloresco have
agreed to negotiate in good faith to review or extend the term of the agreement
not less than 180 days prior to the end of the term, and if no agreement is
reached, Mr. Doloresco will be entitled to up to six months base salary
following termination of his employment. Mr. Doloresco has agreed to keep
certain information confidential and that for a period of two years following
the termination of his employment he will not serve in an executive capacity
for any business which is engaged in a similar business to the Company in its
region without the Company's consent.
<PAGE>
1997 STOCK OPTION PLAN
In April 1997, the Company's Board of Directors approved the establishment
of a Stock Option Plan (the "1997 Plan") subject to approval of the Company's
shareholders. The Board of Directors believes that the 1997 Plan will advance
the interests of the Company by encouraging and providing for the acquisition of
an equity interest in the success of the Company by employees, officers,
directors and consultants, and by providing additional incentives and motivation
toward superior Company performance. The Board believes it also will enable the
Company to attract and retain the services of employees, officers, directors and
consultants, and by providing additional incentives and motivation toward
superior Company performance. The Board believes it also will enable the
Company to attract and retain the services of employees, officers, directors and
consultants upon whose judgment, interest and special effort the successful
conduct of its operations is largely dependent.
The 1997 Plan allows the Board to grant stock options from time to time to
employees, officers and directors of the Company and consultants to the Company.
The Board has the power to determine at the time the option is granted whether
the option will be an Incentive Stock Option (an option which qualifies under
Section 422 of the Internal Revenue Code of 1986) or an option which is not an
Incentive Stock Option. However, Incentive Stock Options will only be granted
to persons who are employees of the Company. Vesting provisions are determined
by the Board at the time options are granted. The total number of shares of
Common Stock subject to options under the 1997 Plan may not exceed 2,000,000,
subject to adjustment in the event of certain recapitalizations, reorganizations
and similar transactions. The option price may be satisfied by the payment of
cash, or where approved by the Board of Directors, in its sole discretion and
where permitted by law: (a) by cancellation of indebtedness of the Company to
the holder; (b) by surrender of shares of Common Stock of the Company having a
Fair Market Value equal to the exercise price of the option that have been
owned by holder for more than six months, or were obtained by the holder in the
open public market; (c) by waiver of compensation due or accrued to the holder
for services rendered; (d) provided that a public market for the Company's
stock exists, through a "same day sale" commitment from the holder and a
broker-dealer whereby the holder irrevocably elects to exercise the option and
to sell a portion of the shares so purchased to pay for the exercise price and
the broker-dealer irrevocably commits upon receipt of such shares to forward
the exercise price directly to the Company; (e) provided that a public market
for the Company's stock exists, through a "margin" commitment from the holder
and a broker-dealer whereby the holder irrevocably elects to exercise the
option and to pledge the shares so purchased to the broker-dealer in a margin
account, and the broker-dealer irrevocably commits upon receipt of such shares
to forward the exercise price directly to the Company; or (f) by any combina-
tion of the foregoing.
The Board of Directors may amend the 1997 Plan at any time, provided that
the Board may not amend the 1997 Plan to materially increase the number of
shares available under the 1997 Plan, materially increase the benefits accruing
to Participants under the 1997 Plan, or materially change the eligible class
of employees without shareholder approval.
To date, stock options have been granted under the 1997 Plan to four
employees to purchase an aggregate of 215,000 shares of Common Stock at prices
ranging from $2.25 to $4.85 per share, contingent on shareholder approval of the
1997 Plan. Of these, options to purchase 50,000 shares at $2.50 per share were
granted to Frank Camma, Vice President of Strategic Planning of the Company;
options to purchase 50,000 shares at $4.85 per share were granted to Arthur
Doloresco, President of the Company's NewCare Hospital Corporation subsidiary;
<PAGE>
and options to purchase 25,000 shares at $4.50 per share were granted to Timothy
Beaulieu, Executive Vice President.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors approved the formation of a Compensation Committee
on January 6, 1998. The Compensation Committee has responsibility to recommend
salaries and short- and long-term incentive compensation levels for all
executive officers. It will also make recommendations concerning bonuses and
other incentive compensation for Company personnel.
The Compensation Committee currently consists of two independent
non-employee director and the Company's President and Chief Executive Officer.
The Company's compensation program for executive officers is designed to
develop professional and experienced individuals to work for the long-term
success of the Company's shareholders, facility residents, and employees. The
Committee believes that an executive compensation program designed to focus
these individuals on the long-term goals and business strategy of the Company
will accomplish this objective.
To this end, the Company has structured the executive compensation program
to:
* Provide the Company the ability to attract and retain highly
qualified individuals by offering a competitive compensation
package;
* Focus the Company's executives on achieving aggressive goals,
both operational and financial, linked to the Company's objec-
tives;
* Merge the long-term interests of the Company's executives to
those of its stockholders by having stock-based compensation
comprise a significant portion of total pay potential; and
* Have a portion of total pay, including cash and stock based
rewards, at risk by tying it to performance results achieved.
Mr. Ashok Dalal has served as Chief Executive Officer of NewCare Health
Corporation since the resignation of Robert W. Bell, Sr. on January 3, 1997. At
the time of Mr. Bell's resignation, the Board appointed Mr. Dalal to his current
position and granted him a salary commensurate with the understanding that his
tenure would be limited to the time period leading up to the merger between
Retirement Care Associates, Inc. and Sun HealthCare Group, Inc. Once this event
occurs, Mr. Chris Brogdon will stand for election as Chief Executive Officer of
the Company.
Compensation Committee: Harlan Mathews
William McBride, III
Ashok Dalal
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The performance graph shown below was prepared using data prepared by Carl
Thompson & Associates, Inc. As required by applicable rules of the SEC, the
graph was prepared based upon the following assumptions:
<PAGE>
1. $100 was invested in Common Stock, the S&P 500 Composite Index and the
Peer Group (as defined below) on March 13, 1995 (the date that the Company
became registered under Section 12(g) of the Securities Exchange Act of 1934).
2. Peer Group investment is weighted based on the market capitalization of
each individual company within the Peer Group at the beginning of each year.
3. Dividends are reinvested on the ex-dividend dates.
The companies that comprise the Company's Peer Group are as follows:
Advocat, Inc.; Beverly Enterprises, Inc.; Centennial Health Care; Genesis Health
Ventures, Inc.; Health Care & Retirement Corp.; Integrated Health Services,
Inc.; and Vencor, Inc.
NEWCARE HEALTH CORPORATION
COMPARATIVE CUMULATIVE TOTAL RETURNS
NEWCARE HEALTH CORPORATION
S&P 500 INDEX AND PEER GROUP
(Performance results through December 31,1997)
[STOCK PERFORMANCE GRAPH INSERTED HERE]
3/13/95 12/31/95 12/31/96 12/31/97
NewCare Health
Corporation $100.00 $______ $______ $______
Peer Group $100.00 $______ $______ $______
S&P 500 $100.00 $______ $______ $______
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RESIGNATION OF ROBERT W. BELL, SR.
During January 1997, Robert W. Bell, Sr., the Company's Chairman and
President, resigned from all of his positions with the Company. In connection
with his resignation, the Company purchased from him and members of his family
a total of 869,978 shares of the Company's common stock for a price of $1.20 per
share, or a total consideration of $1,043,973.60. These shares were then resold
to Chris Brogdon and his designees. (See "Letter of Understanding with Chris
Brogdon", below.)
LETTER OF UNDERSTANDING WITH CHRIS BROGDON
On February 19, 1997, the Company's Board of Directors ratified and
approved a Letter of Understanding (the "Letter") between the Company and Chris
Brogdon which was executed on January 31, 1997. Pursuant to this Letter, the
Company agreed to add Chris Brogdon and Harlan Mathews to the Company's Board of
Directors, and these two persons were in fact added on February 19, 1997. Chris
Brogdon currently serves as President and a director of Retirement Care
Associates, Inc. ("RCA"), and Harlan Mathews currently serves as a director of
RCA.
<PAGE>
The Letter further provides for and contemplates that Chris Brogdon and
other individuals he selects will become actively involved in the management of
the Company once RCA's proposed merger with Sun HealthCare Group, Inc. is
closed.
Pursuant to the Letter, Chris Brogdon and his designees purchased from the
Company, for a price of $1.20 per share, the 869,978 restricted shares of the
Company's common stock which the Company purchased from Robert W. Bell, Sr. and
members of his family.
The Letter further provided that Chris Brogdon and his designees would
purchase from the Company 1,200,000 shares of common stock for a price of $1.50
per share, contingent upon the Company receiving these shares from the Carroll
Group. These shares were transferred to persons who paid a total of $1,800,000
to the Carroll Group.
The Letter further provided that the Company was to grant to Chris Brogdon
and his designees options to purchase a total of 1,500,000 shares of common
stock at a price of $2.20 per share. These options were granted in
consideration for Mr. Brogdon's agreement to take over management of the
Company. In the event that the Company's common stock does not reach an
average price of at least $5.00 for any 30 consecutive days during the 12
month period following Mr. Brogdon's election as Chief Executive Officer,
all unexercised options will be canceled.
LOANS TO PURCHASE STOCK
In June 1997, the Company loaned an aggregate of $990,000 to five
individuals to allow them to purchase shares of the Company's Common Stock from
Matthew Carroll and certain other shareholders. The loans are due on June 30,
1998, and bear interest at 10% per annum. Included in these loans are loans to
Chris Brogdon, Chairman of the Board and a principal shareholder of the Company,
in the principal amount of $487,500, and to Timothy Beaulieu, Executive Vice
President of the Company, in the principal amount of $75,000. In addition, the
Company made loans to the following persons who are employed by Retirement Care
Associates, Inc. in the principal amounts shown: Edward E. Lane - $277,500;
Philip Rees - $75,000; and Robert Lancaster - $75,000.
AGREEMENTS WITH RENAISSANCE SENIOR LIVING, INC.
On February 17, 1997, the Company entered into a Management Agreement with
Renaissance Senior Living, Inc. ("Renaissance"), pursuant to which Renaissance
agreed to manage all of the Company's long-term care facilities and assisted
living/independent living facilities. Renaissance was to be paid a monthly fee
for each facility equal to 25% of the increase in profit (a decrease in loss) at
the facility as compared to the profit (or loss) at the facility as of December
31, 1996, but the fee was not to exceed 6% of the gross operating revenues of
the facility for that month. The agreement terminated on December 31, 1997,
and this arrangement ended. During the year ended December 31, 1997,
Renaissance earned no fees under this agreement because none of the facilities
had the requisite improvement. Renaissance is owned by Chris Brogdon (20%),
Edward E. Lane (20%), Darrell Tucker (17%) and other officers and employees of
Retirement Care Associates, Inc. Chris Brogdon, a director of the Company,
is also a director of Renaissance.
In December 1997, Renaissance formed Conyers Retirement Care, L.P., a
Georgia limited partnership for the purpose of constructing a senior living
community on a 10 acre tract of raw land in Conyers, Georgia. Renaissance
serves as General Partner of the partnership and holds 99% of the interest in
the partnership, and the Company is the sole limited partner and holds 1% of
the interest in the partnership for which it contributed $1.00. Since the
formation of the partnership, the Company has also contributed approximately
$300,000 and guaranteed $9 million in the Development Authority of Rockdale
County First Mortgage Revenue Bonds (Conyers Retirement, L.P. Project), the
net proceeds of which were loaned to the partnership to finance the
construction of a 132 unit senior living community on the site. The Company
has agreed to enter into an agreement to manage the facility for which it will
receive a fee of 5% of the facility's gross revenues. As part of the
management agreement the Company will agree to make non-interest bearing
advances to Conyers Care, L.P. to the extent that revenues generated by
the facility are not sufficient to pay its current expenses and required
principal and interest under the bonds. The facility is expected to be
completed in the Fall of 1998.
TRANSACTIONS WITH KAREN HAGAN
The Company leased office space from Cimerron Properties, Inc., a company
owned by Karen Hagan, a principal shareholder of the Company, under an operating
lease that was to expire on December 31, 1999. Annual rental payments under the
lease were approximately $45,600. Pursuant to a settlement agreement with Karen
Hagan and others, effective April 15, 1997, this lease was terminated early in
exchange for a cash payment of $65,000.
In September 1995, the Company exercised an option to purchase the Emory
Nursing Center in exchange for $300,000 in cash and the assumption of
approximately $500,000 in debt. The $300,000 was raised by borrowing the money
from Karen Hagan. The $300,000 loan bears interest at 10% and is payable in
monthly payments of interest only through September 15, 1998, when all principal
and any accrued interest is due. The $500,000 note payable matured in February
1996, and was refinanced with a loan from Retirement Care Associates, Inc.
bearing interest at 9%. Accrued interest and principal were due in February
1997. This note has been converted to a demand note. Two of the Company's
directors are also directors of Retirement Care Associates, Inc.
In October 1995, the Company borrowed $600,000 from Karen Hagan to purchase
Suncoast Nursing Home. The promissory note bears interest at 10% per annum and
is payable interest only until April 15, 1998, when it is due. The note is
secured by a mortgage on Suncoast Nursing Home.
In August 1995, the Company borrowed $225,000 from Karen Hagan to purchase
real estate adjacent to the Emory Nursing Center. Thirty thousand dollars
($30,000) was repaid during January 1997. A $195,000 note bears interest at 10%
and is payable in monthly installments of interest only through August 1998,
when all principal and any accrued interest is due. The note is collateralized
by the real estate.
In July 1996, the Company borrowed $80,000 from Karen Hagan to pay
outstanding payroll taxes. The note bore interest at 12% and was payable in
twelve monthly installments of $7,467 with the final payment due July 1, 1997.
The note was repaid as scheduled.
SETTLEMENT WITH ROBERT HAGAN AND KAREN HAGAN
Effective April 15, 1997, the Company entered into and closed a Settlement
Agreement with Karen and Robert Hagan (the "Hagans") and Chris Brogdon
("Brogdon"). This agreement provides for, among other things, the following:
1. At the closing, the Company paid Robert Hagan $150,000 for the
termination of his employment agreement dated May 22, 1995.
<PAGE>
2. At the closing, the Company paid Cimerron Properties, Inc., a company
owned by the Hagans, $65,000 for termination of a commercial real estate lease
for office space occupied by the Company in Roswell, Georgia, which was
scheduled to terminate on December 31, 1997.
3. Brogdon will purchase a total of 714,000 shares from Karen Hagan over
a two year period commencing April 15, 1997. The transaction is structured such
that Karen Hagan will sell to Brogdon four options for 178,500 shares each. The
options will be exercisable in six month intervals at an exercise price of $3.00
per share, with the first option exercisable at any time on or before October
15, 1997. Brogdon must pay $21,420 for the first option (which expires October
15, 1997); $42,820 for the second option; $64,260 for the third option; and
$85,860 for the fourth option. The purchase price for each option will be
payable in monthly installments of $3,570 each beginning on May 15, 1997, and
continuing monthly thereafter until such time as the option has been exercised
by Brogdon or until it lapses.
Brogdon has also granted to Karen Hagan four put options which essentially
provide that during the 10 day periods following each of the four option periods
Karen Hagan can force Brogdon to purchase any shares that he doesn't purchase
under the prior six month option. The purchase price for the put options is
$2.95 per share.
4. At the closing, the Company delivered to the Hagans title to a 1994
Ford Ranger pickup.
5. At the closing, Robert Hagan, Karen Hagan and Richard Vanderberg
tendered his or her resignation as an officer and/or director of the Company and
any of its subsidiaries.
6. The Company agreed to continue to employ Richard Vanderberg according
to his employment agreement as the Chief Financial Officer of Cimerron Health
Care, Inc., until October 1, 1997. At that time, the Company paid Vanderberg
$116,250 to terminate his employment agreement which otherwise would have
continued until May 22, 2000.
On April 15, 1997, Robert Hagan and Chris Brogdon were both directors of
the Company, and Robert Hagan was a principal shareholder by virtue of the
714,287 shares owned by his wife. Robert Hagan resigned as a director
effective on April 15, 1997.
LOAN FROM RETIREMENT CARE ASSOCIATES, INC.
During February 1996, Retirement Care Associates, Inc. ("RCA") loaned the
Company $500,000 pursuant to a one-year promissory note with 9% interest secured
by an interest in the Emory Nursing facility. The note was converted to a
30-day demand note with interest payable monthly and was paid in full during
August 1997. Chris Brogdon and Harlan Mathews, directors of the Company, are
also directors of RCA, and Chris Brogdon is President and a principal share-
holder of RCA.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The independent accounting firm of Laney, Boteler & Killinger audited the
financial statements of the Company for the year ended December 31, 1997, and
has been selected in such capacity for the current fiscal year. At the
direction of the Board of Directors, this appointment is being presented to
the shareholders for ratification or rejection at the Annual Meeting of
Shareholders. If the shareholders do not ratify the appointment of Laney,
Boteler & Killinger, the appointment of auditors will be reconsidered by the
Board of Directors.
It is expected that representatives of Laney, Boteler & Killinger, will be
present at the meeting and will be given an opportunity to make a statement if
they desire to do so. It is also expected that the representatives will be
available to respond to appropriate questions from shareholders.
AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION
TO AUTHORIZE PREFERRED STOCK
DESCRIPTION OF PROPOSED AMENDMENTS
The Company's Board of Directors has proposed an amendment to the Company's
Articles of Incorporation which would authorize the Company to issue up to
10,000,000 shares of $.01 par value preferred stock (the "Preferred Stock"). If
the proposed amendment is approved, the Board of Directors would be empowered,
without the necessity of further action or authorization by the Company's
stockholders (unless required in a specific case by applicable laws or
regulations or stock exchange rules), to authorize the issuance of the Preferred
Stock from time to time in one or more series, and to fix by resolution or
resolutions, designations, preferences, limitations and relative rights of each
of such series. Each series of Preferred Stock could, as determined by the Board
of Directors at the time of issuance, rank, with respect to dividends and
redemption and liquidation rights, senior to the Company's common stock. No
preferred stock is presently authorized by the Company's Articles of
Incorporation.
The amendment would authorize the Board of Directors to determine, among
other things, with respect to each series of Preferred Stock which may be
issued: (a) the distinctive designation and number of shares constituting such
series; (b) the dividend rates, if any, on the shares of that series and whether
dividends would be payable in cash, property, rights or securities; (c) whether
dividends would be non-cumulative, cumulative to the extent earned, partially
cumulative or cumulative and, if cumulative, the date from which dividends on
the series would accumulate; (d) whether, and upon what terms and conditions,
the shares of that series would be convertible into or exchangeable for other
securities or cash or other property or rights; (e) whether, and upon what terms
and conditions, the shares of that series would be redeemable; (f) the rights
and the preferences, if any, to which the shares of that series would be
entitled in the event of voluntary or involuntary dissolution or liquidation of
the Company; (g) whether a sinking fund would be provided for the redemption of
the series and, if so, the terms of and amounts payable into such sinking fund;
(h) whether the holders of such securities would have voting rights and the
extent of those voting rights; (i) whether the issuance of any additional shares
of such series, or of any other series, shall be subject to restrictions as to
issuance or as to the powers, preferences or rights of any such other series;
and (j) any other preferences, privileges and relative rights of such series as
the Board of Directors may deem advisable. Holders of the Company's common stock
have no preemptive right to purchase or otherwise acquire any Preferred Stock
that may be issued in the future. The proposed amendment would not change the
number of shares of common stock currently authorized (50,000,000 shares), of
which 12,128,525 shares were outstanding on June 23, 1998.
REASONS FOR AND POSSIBLE EFFECTS OF PROPOSED AMENDMENT
The Board of Directors recommends the authorization of Preferred Stock to
increase the Company's financial flexibility. The Board believes that the
complexity of modern business financing and acquisition transactions requires
greater flexibility in the Company's capital structure than now exists. The
Preferred Stock would be available for issuance from time to time as determined
by the Board of Directors for any proper corporate purpose. Such purposes might
include, without limitation, issuance in public or private sales for cash as a
means of obtaining additional capital for use in the Company's business and
operations, and issuance as part of all of the consideration required to be paid
by the Company for acquisitions of other businesses or properties. The Company
is currently negotiating a transaction for the acquisition of additional
retirement care and assisted living facilities in which preferred stock would be
used as part of the consideration to be paid; however, no agreements,
understandings or arrangements have been reached to issue any shares of
Preferred Stock in this or any other transaction.
It is not possible to state the precise effect of the authorization of the
Preferred Stock upon the rights of holders of the Company's common stock until
the Board of Directors determines the respective preferences, limitations and
relative rights of the holders of one or more series of the Preferred Stock.
However, such effect might include: (a) reduction in the amount otherwise
available for payment of dividends on common stock, to the extent dividends are
payable on any issued shares of Preferred Stock and restrictions on dividends on
common stock if dividends on the Preferred Stock are in arrears; (b) dilution of
the voting power of the common stock to the extent that the Preferred Stock has
voting rights; and (c) the holders of common stock not being entitled to share
in the Company's assets upon liquidation until satisfaction of any liquidation
preference granted to the Preferred Stock.
The amendment may be viewed as having the effect of discouraging an
unsolicited attempt by another person or entity to acquire control of the
Company. Issuance of authorized preferred shares can be implemented, and have
been implemented by some companies in recent years, with voting or conversion
privileges intended to make acquisition of a company more difficult or more
costly. Such an issuance could discourage or limit stockholders' participation
in certain types of transactions that might be proposed (such as a tender
offer), whether or not such transactions were favored by the majority of the
stockholders, and could enhance the ability of officers and directors to retain
their positions.
VOTE REQUIRED AND BOARD RECOMMENDATION
The affirmative vote of a majority of the shares of the Company's Common
Stock outstanding will be required to approve the proposed amendment to the
Articles of Incorporation.
The Board of Directors recommends a vote FOR the proposed amendment to the
Articles of Incorporation.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not
aware of any other matter to be presented at the Meeting other than as set forth
herein. However, if any other matters are properly brought before the Meeting,
the shares represented by valid proxies will be voted with respect to such
matters in accordance with the judgment of the persons voting them. A majority
vote of the shares represented at the meeting is necessary to approve any such
matters.
ANNUAL REPORT
The Company's Annual Report for the year ending December 31, 1997,
accompanies this Proxy Statement. The Annual Report is not incorporated into
this Proxy Statement and is not to be considered part of the solicitation
material.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN JULY 1999
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in July 1999 must be received at the
offices of the Company, 6000 Lake Forrest Drive, #315, Atlanta, Georgia 30328,
no later than February 23, 1999, in order to be included in the Company's proxy
statement and proxy relating to that meeting.
CHRIS BROGDON, CHAIRMAN OF THE BOARD
Atlanta, Georgia
June 23, 1998
<PAGE>
P R O X Y PRELIMINARY COPY
NEWCARE HEALTH CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Chris Brogdon, with the power to appoint a
substitute, and hereby authorizes him to represent and to vote as designated
below, all the shares of common stock of NewCare Health Corporation held of
record by the undersigned on June 23, 1998, at the Annual Meeting of
Shareholders to be held on July 9, 1998, or any adjournment thereof.
1. Election of Directors:
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] WITHHOLD authority to vote for all the nominees listed below:
Ashok Dalal Darrell C. Tucker
Chris Brogdon Jeff M. Moore
Dr. Kishor Karia Mark P. Clein
Harlan Mathews
[INSTRUCTION: To withhold authority to vote for any individual nominee, cross
out that nominee's name above.]
2. The ratification of the appointment of Laney, Boteler & Killinger, as
the Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The approval of an amendment to the Company's Articles of Incorporation
to authorize the issuance of up to 10,000,000 shares of $.01 par value Preferred
Stock in such amounts, in one or more series, and with such designations,
preferences, limitations and relative rights for each series as the Board of
Directors shall determine.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To transact such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders, Proxy Statement and Annual Report.
Dated: _____________, 1998.
________________________________________
________________________________________
Signature(s) of Shareholder(s)
<PAGE>
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians and attorneys should indicate when signing.
Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NEWCARE
HEALTH CORPORATION. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED
PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.
