Schedule 14C
(Rule 14c-101)
INFORMATION REQUIRED IN THE INFORMATION STATEMENT
SCHEDULE 14c INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
[x] Definitive Information Statement
CAREADVANTAGE, INC.
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(Name of Registrant As Specified In Charter)
Payment of filing fee (Check the appropriate box):
[x] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth in the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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THIS INFORMATION STATEMENT IS BEING PROVIDED TO YOU BY THE
MANAGEMENT OF THE COMPANY
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
CareAdvantage, Inc.
485-C Route 1 South
Iselin, New Jersey 08830
INFORMATION STATEMENT
This Information Statement is furnished to holders of shares of common
stock, par value $.001 per share (the "Common Stock"), of CareAdvantage, Inc.
(the "Company"). The purpose of this Information Statement is to notify
stockholders that on November 30, 2000 the Company received written consent (the
"Written Consent") from certain of the principal stockholders of the Company
(identified in the Section entitled "Voting Securities and Principal Holders
Thereof") holding 75,234,840 shares of Common Stock, or more than 90% of the
total issued and outstanding shares of Common Stock of the Company, approving an
amendment to the Company's Certificate of Incorporation (the "Charter
Amendment") and an amendment to the Company's Amended and Restated Stock Option
Plan (the "Plan Amendment") (the Charter Amendment and the Plan Amendment are
sometimes collectively referred to herein as the "Amendments"). The Charter
Amendment increases the authorized capital stock of the Company, as described
below, and the Plan Amendment increases the number of shares authorized under
the Amended and Restated Stock Option Plan (the "Plan") from 18,648,000 shares
to 22,648,000 shares, and beginning January 1, 2002, increases the number of
shares authorized for issuance under the Plan pursuant to non-qualified options
by three percent (3%) annually.
The Board of Directors of the Company approved the Amendments on
November 30, 2000 and recommended that the Amendments be submitted to the
Company's stockholders for their approval. The Board of Directors believes that
the proposed increase in the authorized capital stock and increase in shares
authorized for issuance pursuant to the Plan is beneficial to the Company.
This Information Statement is being mailed on or about December 29,
2000 to stockholders of record on December 11, 2000 (the "Record Date"). The
Amendments will not become effective until 20 days after the mailing date.
Expenses in connection with the distribution of this Information Statement,
which are anticipated to be less than $25,000, will be paid by the Company. As
of the Record Date, 83,534,256 shares of Common Stock were issued and
outstanding.
AMENDMENT TO CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED CAPITAL STOCK
The Company is currently authorized to issue 103,600,000 shares of
Common Stock, of which 83,534,256 shares are issued and outstanding, and
10,000,000 shares of preferred stock, par value $.10 per share, of which no
shares are issued and outstanding. The Board of Directors believes that it is in
the best interests of both the Company and its stockholders to increase the
authorized Common Stock to 200,000,000 shares. This Charter Amendment has been
adopted by the Board of Directors and consented to in writing by stockholders
holding more than 90% of the outstanding shares of Common Stock. Neither the par
value of the Common Stock nor any rights presently accruing to holders of Common
Stock would be affected by this increase. The Board of Directors reserves the
right, notwithstanding stockholder approval and without further action by the
stockholders, not to proceed with the increase of the authorized capital stock
of the Company if, at any time prior to filing the amendment with the Secretary
of State of Delaware, the Board of Directors, in its sole discretion, determines
that the increase in the authorized capital stock of the Company is no longer in
the best interests of the Company and its stockholders.
Vote Required; Manner of Approval
Approval to increase the authorized capital stock under the Delaware
General Corporation Law (the "DGCL") requires the affirmative vote of the
holders of a majority of the outstanding shares of voting stock of the Company.
The Company has no class of voting stock outstanding other than the Common
Stock.
Section 228 of the DGCL provides in substance that, unless the
Company's certificate of incorporation provides otherwise, stockholders' may
take action without a meeting of stockholders and without prior notice if a
consent or consents in writing, setting forth the action so taken, is signed by
the holders of outstanding voting stock holding not less than the minimum number
of votes that would be necessary to approve such action at a stockholders
meeting. Under the applicable provisions of the DGCL, this action is effective
when written consents from holders of record of a majority of the outstanding
shares of voting stock are executed and delivered to the Company.
In accordance with the DGCL, the Company received the affirmative vote
on the Charter Amendment of more than a majority of the outstanding shares of
Common Stock. As a result, no vote or proxy is required by the stockholders to
implement the Charter Amendment.
Under Rule 14c-2 promulgated under the Securities Exchange Act of 1934,
the Charter Amendment cannot take effect until 20 days after this Information
Statement is sent to the Company's stockholders. The Charter Amendment will
become effective upon its filing with the Secretary of State of Delaware on or
about January 19, 2001, 20 days after the mailing of this Information Statement.
Reasons for Increase in Authorized Capital Stock
The Board of Directors considers the proposed increase to be in the
best interests of the Company and its stockholders. The proposed increase
ensures that a sufficient number of shares of Common Stock will be available for
possible future transactions, including, among others, acquisitions, stock
splits, stock dividends, employee benefit plans, stock bonus and award plans,
satisfaction of debt, and other general corporate purposes. The Company
presently has 18,648,000 shares of Common Stock authorized for issuance under
the Company's Amended and Restated Stock Option Plan (subject to the increase
pursuant to the Plan Amendment discussed below) and 2,072,000 shares of Common
Stock authorized for issuance under the Company's Amended and Restated
Directors' Stock Option Plan. Therefore, there are very few shares of Common
Stock available for other issuances. The Company has no present plans for any
such issuances, except for the issuance of shares of Common Stock in
satisfaction of corporate debt, as described below.
If additional shares are issued, the percentage ownership interests of
existing stockholders will be reduced. It is possible that shares of Common
Stock may be issued at a time and under circumstances that may increase or
decrease earnings per share and increase or decrease the book value per share of
shares presently held.
Although the Company's Board of Directors believes that the proposed
changes to the present Certificate of Incorporation are beneficial to
stockholders, the provisions may have the effect of rendering the Company less
attractive to potential hostile acquirors. Therefore, the action may have the
effect of discouraging future takeover attempts from which stockholders may, or
may not, obtain a premium for their shares over current market prices. The
provisions also render the removal of the incumbent Board of Directors more
difficult. The Board of Directors believes, however, that the potential benefits
outweigh these possible disadvantages. Moreover, because BCBS and Healthcare, in
the aggregate, own more than 90% of the outstanding Common Stock, the
possibility of any potential attempted hostile change in control is unlikely.
As noted above, one of the purposes for the increase is to enable the
Company to issue shares of its Common Stock in satisfaction of corporate debt.
The Company and its subsidiaries are indebted to Horizon Blue Cross and Blue
Shield of New Jersey ("BCBS") and its wholly owned subsidiary, Horizon
Healthcare of New Jersey, Inc. ("Healthcare") in the aggregate amount of
$1,577,740. The debt owed to BCBS is pursuant to a promissory note of the
Company in the face amount of $1,862,823 having an unpaid principal balance of
$692,571 and accrued and unpaid interest of $40,139 as of November 1, 2000 (the
"Promissory Note"). The obligation to Healthcare in the amount of $839,000 plus
accrued and unpaid interest of $6,030 as of November 1, 2000 arises from the
settlement described in the Company's Form 10-KSB for the fiscal year ended
December 31, 1999 among the Company, Allied Specialty Care Services, Inc. and
Healthcare (see Settlement Agreement filed as an Exhibit to the Company's Form
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10-QSB for the quarter ending September 30, 2000). The Company, BCBS and
Healthcare have entered into a Satisfaction of Debt Agreement whereby the
Company has agreed to issue shares of its Common Stock in full payment and
satisfaction of both the Promissory Note and the settlement. The number of
shares to be issued will be equal to the sum of (A) the amount of the obligation
divided by the greater of (i) the average mean between the closing bid and asked
price per share of Common Stock for the 20 trading days ending of the fifth
business day preceding the closing of the settlement, or (ii) twelve cents
($.12), plus (B) that number of additional shares of Common Stock equal to 20%
of the number of shares specified in clause (A). The satisfaction of these
obligations by the issuance of Common Stock preserves the Company's available
cash for operations. The Board of Directors believes that the issuance of shares
in satisfaction of this debt is in the best interests of the Company.
AMENDMENT TO STOCK OPTION PLAN TO
INCREASE AUTHORIZED SHARES AVAILABLE
The Plan Amendment will not affect any provision of the Plan except as
set forth below. On November 30, 2000, the Board of Directors approved and
recommended the adoption of an amendment to the Plan to increase the number of
shares of Common Stock which may be issued upon the exercise of options granted
through the Plan, from 18,648,000 shares to 22,648,000 shares, and beginning
January 1, 2002, to increase by three percent (3%) annually the number of shares
authorized for issuance under the Plan pursuant to non-qualified options. The
Plan Amendment amends Section 2 of the Plan as follows:
An aggregate of 22,648,000 shares of the Company's authorized
common stock, $.001 par value ("Common Stock") subject,
however, to adjustment or change pursuant to paragraph 12
hereof, shall be reserved for issuance upon the exercise of
options which may be granted from time to time in accordance
with the Plan ("Options"). Commencing January 1, 2002, and on
each subsequent January 1, the number of shares reserved for
issuance pursuant to the foregoing sentence shall be increased
by three (3%) percent; provided, however, that no shares
authorized pursuant to this sentence shall be issued with
respect to Incentive Stock Options.
The purpose of the increase is to provide sufficient shares for option
grants to employees, officers and other persons. The Board of Directors has
determined that by allowing additional options to be granted, the Plan will work
to increase the employees', consultants' and officers' proprietary interest in
the Company and to align more closely their interests with the interests of the
Company's shareholders. The Plan will also maintain the Company's ability to
attract and retain the services of experienced and highly qualified employees
and officers.
Set forth below is a summary of certain significant portions of the
Plan.
Terms of the Plan
The Board of Directors initially adopted the Plan on June 6, 1996, and
the stockholders approved the plan on August 23, 1996. Effective January 8, 1999
and January 26, 1999, the Board of Directors approved amendments to the Plan to
update the Plan and to increase the number of shares and certain other benefits
available under the Plan. The stockholders approved the amendments to the Plan
on July 7, 1999.
The Plan is administered by a Committee of the Board of Directors
consisting of at least two members who are "outside directors" as defined in
Section 162(m) of the Internal Revenue Code who are also "disinterested persons"
as defined in regulations under the Securities and Exchange Act of 1934.
Employees, officers, and other persons selected by the Committee are eligible to
receive options under the Plan.
Under the Plan, as amended, the Company has reserved an aggregate of
22,648,000 shares of Common Stock for issuance pursuant to options granted under
the Plan. Beginning on January 1, 2002, and on each subsequent January 1, the
number of shares reserved for issuance under the Plan shall be increased by
three percent (3%), provided, however, that no shares authorized pursuant to
such annual increase shall be issued with respect to incentive stock options.
Prior to the Plan Amendment, the Plan reserved an aggregate of 18,648,000 of the
Company's authorized common stock for issuance under the Plan.
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Pursuant to the terms of the Plan, the Committee will select the
persons to be granted options and will determine: (i) whether to grant a
non-qualified stock option and/or an incentive stock option; (ii) the number of
shares of the Company's Common Stock that may be purchased upon the exercise of
such option; (iii) the time or times when the option becomes exercisable; (iv)
the exercise price, which cannot be less than 100% of the fair market value of
the Common Stock on the date of grant for incentive stock options (110% of such
fair market value for incentive options granted to a person who owns or who is
considered to own stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company); (v) the duration of the option,
which cannot exceed ten (10) years; and (vi) the terms and provisions of option
agreements, which may differ among recipients, and which, unless the Committee
otherwise determines, shall be substantially in the forms attached as exhibits
to the Plan. Incentive stock options may only be granted to employees (including
officers) of the Company and/or any of its subsidiaries. Non-qualified stock
options may be granted to any employees (including employees who have been
granted incentive stock options) and other persons who the Committee may select.
The Committee may issue non-qualified stock options with an exercise price less
than 100% of fair market value of the Common Stock.
All options granted under the Plan are exercisable during the option
grantee's lifetime only by the option holder (or his or her legal
representative) and generally only while such option grantee is in the Company's
employ. Unless the Committee otherwise provides, in the event an option
grantee's employment is terminated other than by death or disability, such
person shall have three months from the date of termination to exercise such
option to the extent the option was exercisable at such date, but in no event
subsequent to the option's expiration date. Unless the Committee otherwise
provides, in the event of termination of employment due to death or disability
of the option grantee, such person (or such person's legal representative) shall
have 12 months from such date to exercise such option to the extent the option
was exercisable at the date of termination, but in no event subsequent to the
option's expiration date. An optionee may exercise an option by payment of the
exercise price via any lawful method authorized by the Committee
The Plan contains anti-dilution provisions which provide that, in the
event of any change in the Company's outstanding capital stock by reason of a
stock dividend, recapitalization, stock split, combination, exchange of shares
or merger or consolidation, the Committee or the Board shall proportionately
adjust the number of shares covered by each option granted and the exercise
price per share. The Committee's or Board's determinations in these matters
shall be conclusive.
The Board of Directors has the authority to terminate the Plan as well
as to make changes in and additions to such plans. The Plan will terminate on
June 6, 2006, unless previously terminated by the Board. However, unless
approved by the stockholders of the Company, the Board may not change the
aggregate number of shares subject to the Plan, materially modify the
requirements of eligibility to such Plan or materially increase the benefits
accruing to participants under such Plan.
Federal Income Tax Aspects of the Plan
Upon the grant of an incentive stock option under the Plan, and upon
the exercise of such option, the grantee does not recognize taxable income and
the Company will not be entitled to any deduction. If the shares acquired upon
exercise are not disposed of within the one-year period beginning on the date of
the transfer of the shares to the grantee, nor within the two-year period from
the date of the grant of the option, any gain or loss realized by the grantee
upon the disposition of such shares will be taxed as long-term capital gain or
loss. In such event, the Company will not be entitled to a deduction. If the
shares are disposed of within the one year or two-year periods referred to
above, the excess of the fair market value of the shares on the date of exercise
(or, if less, the fair market value on the date of disposition) over the
exercise price will be taxable as ordinary income to the grantee at the time of
disposition, and the Company will be entitled to a corresponding deduction.
Upon the grant of a non-qualified stock option under the Plan, no
income will be realized by the grantee and the Company will not be entitled to
any deduction. Upon the exercise of such option, the difference between the
exercise price and the fair market value of the shares on the date of exercise
will be ordinary income to the grantee and will be allowed as a deduction for
federal income tax purposes to the Company. When a grantee disposes of shares
acquired by the exercise of the option, any amount received in excess of the
fair market value of the shares on the date of exercise will be treated as long
or short term capital gain, depending upon the holding period of the shares,
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which commences upon exercise of the option. If the amount received is less than
the fair market value of the shares on the date of exercise, the loss will be
treated as long or short term capital loss, depending upon the holding period of
the shares.
To the extent that a grantee pays all or part of the exercise price by
tendering shares owned by the grantee, the normal rules described above apply
except that a number of shares received upon such exercise equal to the number
of shares surrendered as payment of the option price will have the same tax
basis and tax holding period as the shares surrendered.
New Plan Benefits Table.
The amounts, if any, of stock options to be awarded to key employees,
officers and others is not presently determinable
Vote required; Manner of Approval.
Pursuant to Section 13 of the Plan, approval of the stockholders of the
Company is required to increase the aggregate number of shares subject to the
Plan. In accordance with the DGCL, the Company received the affirmative vote on
the Plan Amendment of more than a majority of the outstanding shares of Common
Stock. As a result, no vote or proxy is required by the stockholders to
implement the Plan Amendment. Under Rule 14c-2 promulgated under the Securities
Exchange Act of 1934, the Plan Amendment cannot take effect until 20 days after
this Information Statement is sent to the Company's stockholders. The Company
plans to put the Plan Amendment into effect on or about January 19, 2001, 20
days after the mailing of this Information Statement.
COMPENSATION OF DIRECTORS
Generally
No member of the Board of Directors of the Company presently receives
annual remuneration for acting in that capacity, except disinterested Directors
who are neither officers nor associated with stockholders. Disinterested
Directors are paid $1,000 for each meeting of the Board they attend and are
eligible for the grants of options under the Amended and Restated Directors
Stock Option Plan, discussed below (the "Director Plan"). Directors are also
reimbursed their reasonable out-of-pocket expenses for each attended meeting of
the Board or any committee thereof. As of the Record Date, Mr. McDonnell is the
only director that has been granted any options pursuant to the Director Plan.
Mr. McDonnell was awarded as of January 26, 1999, an option to purchase 300,000
shares of the Company's Common Stock. The option may be exercised at $.08 per
share, and becomes exercisable as follows: (a) 100,000 of such shares were
immediately exercisable; (b) 66,666 of such shares became exercisable on January
26, 2000; and (c) the remaining 133,334 of such shares become exercisable in 24
equal monthly amounts commencing on February 26, 2000 and on the 26th day of the
following 23 months. The market price of the Common Stock on January 26, 1999,
the date the option was granted, was $.08 per share.
Directors Stock Option Plan
The Company adopted the Director Plan on June 6, 1996, and amended it
on July 24, 1996. Effective January 26, 1999, the Board of Directors approved
amendments to the Director Plan to update the plan and to increase the number of
shares and certain other benefits available under the Director Plan. The
stockholders approved the amendments to the Director Plan on July 7, 1999.
Pursuant to the terms of the Director Plan, the Board of Directors may
grant non-qualified stock options to non-employee directors (other than
directors appointed by CW Venture Partners, III, L.P. or BCBS) and will
determine: (i) the number of shares of the Company's Common Stock that may be
purchased upon the exercise of such option; (ii) the time or times when the
option becomes exercisable; (iii) the exercise price, and (iv) the duration of
the option, which cannot exceed ten (10) years. Under the Director Plan, an
aggregate of 2% of the Company's authorized number of shares of Common Stock
(equal to 2,072,000 shares of Common Stock) is reserved for issuance.
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All options granted under the Director Plan are exercisable during the
option grantee's lifetime only by the option grantee (or his or her legal
representative). In the event of termination of an option grantee's
directorship, such person shall have three months from such date to exercise
such option to the extent the option was exercisable as at the date of
termination, but in no event subsequent to the option's expiration date. In the
event of termination of an option grantee's directorship due to death, such
person's legal representative shall have 12 months from such date to exercise
such option to the extent the option was exercisable at the date of death, but
in no event subsequent to the option's expiration date.
The Director Plan contains anti-dilution provisions which provide that
in the event of any change in the Company's outstanding capital stock by reason
of stock dividend, recapitalization, stock split, combination, exchange of
shares or merger or consolidation, the Board shall equitably adjust the
aggregate number and kind of shares reserved for issuance, and for outstanding
options, the number of shares covered by each option and the exercise prices per
share.
The Board of Directors has the authority to terminate the Director Plan
with respect to any shares of Common Stock not at the time subject to an option
as well as to make changes in and additions to such plans. The plan will
terminate on June 6, 2006, unless previously terminated by the Board. However,
the Board may not, unless approved by the stockholders of the Company, change
the aggregate number of shares subject to the Director Plan, materially change
the requirements of eligibility to such plan or materially increase the benefits
accruing to participants under such plan.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid or accrued by the Company for each of the three fiscal calendar years ended
December 31, 1999, to the individual performing the function of Chief Executive
Officer and each of the next four most highly compensated executive officers
with compensation in excess of $100,000, during such periods.
Summary Compensation Table
- ----------------------------- -------------- ------------------------------------------------- ------------------ -----------------
Long Term
Annual Compensation Compensation
- ----------------------------- -------------- ------------------------------------------------- ------------------ -----------------
Securities All Other
Name and Principal Year Ended Salary Bonus Other Annual Underlying Compensation
Position December 31, Compensation(2) Options/SARSs (#)
- ----------------------------- -------------- ---------------- -------------- ----------------- ------------------ -----------------
David G. Noone 1999 $295,385 $-0- $-0- 3,600,000 $4,800 (1)
Chief Executive Officer 1998 $-0- $-0- $-0- -0- $-0-
1997 $-0- $-0- $-0- -0- $-0-
- ----------------------------- -------------- ---------------- -------------- ----------------- ------------------ -----------------
Richard W. Freeman, M.D.(3) 1999 $275,009 $55,723 $-0- 2,541,000 $4,800 (1)
President & 1998 $270,162 $-0- $-0- -0- $4,917 (1)
Chief Operating Officer 1997 $261,000 $35,000 $25,000 -0- $4,750 (1)
- ----------------------------- -------------- ---------------- -------------- ----------------- ------------------ -----------------
Dennis Mouras 1999 $155,769 $-0- $41,538 500,000 $-0-
Executive Vice President, 1998 $-0- $-0- $-0- -0- $-0-
Marketing & Sales 1997 $-0- $-0- $-0- -0- $-0-
- ----------------------------- -------------- ---------------- -------------- ----------------- ------------------ -----------------
David DeBoskey(4) 1999 $107,269 $-0- $-0- 610,000 $2,718 (1)
Senior Vice President 1998 $ 87,654 $25,000 $-0- -0- $2,608 (1)
Finance & Accounting 1997 $ 75,769 $12,500 $-0- -0- $1,894 (1)
- ----------------------------- -------------- ---------------- -------------- ----------------- ------------------ -----------------
Stephen D. Deutsch, M.D.(5) 1999 $300,000 $20,000 $22,937 813,000 $-0-
Senior Vice President and 1998 $300,000 $-0- $-0- -0- $-0-
National Director of CAHS 1997 $267,000 $92,308 $-0- -0- $-0-
- ----------------------------- -------------- ---------------- -------------- ----------------- ------------------ -----------------
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(1) Represents Company matching contributions to a 401(k) profit sharing/savings plan.
(2) Other Annual Compensation includes taxable fringe benefits and unused
accrued vacation days, and, in the case of Mr. Mouras, advance commissions
that were paid.
(3) Mr. Freeman resigned his employment with the Company effective October 2, 2000.
(4) Mr. DeBoskey resigned his employment with the Company effective March 23, 2000.
(5) Dr. Deutsch's employment with the Company was terminated without cause on October 15, 1999.
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Stock Options
The Company maintains an Amended and Restated Stock Option Plan,
pursuant to which incentive and non-qualified options have been granted in the
past and are expected to be granted in the future. For a discussion of the Plan,
see "Amendment to Stock Option Plan to Increase Authorized Shares Available."
Option Grants in Last Fiscal Year
-------------------------------- ------------- --------------- --------------- ---------------------
% of Total
Options
Granted to
Options Employees in Exercise Expiration Date
Name Granted Fiscal Year Price per
Share
-------------------------------- ------------- --------------- --------------- ---------------------
David G. Noone 3,600,000 24.03% $0.03 January 07, 2009
-------------------------------- ------------- --------------- --------------- ---------------------
Richard W. Freeman, M.D. 2,541,000 16.96% $0.08 January 26, 2009
-------------------------------- ------------- --------------- --------------- ---------------------
Dennis Mouras 500,000 3.34% $0.08 January 26, 2009
-------------------------------- ------------- --------------- --------------- ---------------------
David G. DeBoskey, CPA 610,000 4.07% $0.08 January 26, 2009
-------------------------------- ------------- --------------- --------------- ---------------------
Stephan D. Deutsch 813,000 5.43% $0.08 January 26, 2009
-------------------------------- ------------- --------------- --------------- ---------------------
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Value of
Shares Underlying Unexercised In-the-Money
Name Unexercised Options at Options at
---- December 31, 1999 December 31, 1999
Exercisable/Unexercisable Exercisable/Unexercisable
------------------------- -------------------------
David G. Noone 1,200,000/2,400,000 $187,560/$375,120
Richard W. Freeman, M.D. 166,667/2,624,333 $26,050/$410,183
Dennis Mouras 0/500,000 $0/$78,150
David G. DeBoskey, CPA 0/610,000 $0/$95,343
Stephan D. Deutsch 166,667/896,333 $26,050/$140,097
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Calculated on the basis of the closing Bid price on the OTC Bulletin Board of
the Company's Common Stock of $0.1563 on December 31, 1999.
Employment Agreements and Board Appointments
Noone Employment Agreement
Effective as of January 8, 1999 the Company entered into an Employment
Agreement and Confidentiality, Invention and Non-Compete Agreement of even date
therewith with David Noone, its current Chief Executive Officer (collectively,
the "Noone Agreements"). The Noone Agreements provide for a one-year term
commencing January 8, 1999, with annual compensation of $300,000 per annum. The
Company will pay Mr. Noone a severance payment equal to six-month salary if he
is terminated upon a "change of control" (as defined below). In addition, Mr.
Noone is subject to a non-compete restriction during the term of employment plus
two years thereafter. The Noone Agreements further provide for the issuance of
stock options as of the commencement date providing Mr. Noone with an option to
purchase Common Stock in an amount equal to four (4%) of the Company's
capitalization on such date, upon the terms and conditions set forth therein.
These options are subject to accelerated vesting, if: (a) the Company's Common
Stock reaches certain target levels or (b) either of the Company's two largest
shareholders, BCBS and CW Ventures II, L.P. sells or transfers its shares of
Common Stock to a non-affiliated party ("Change of Control") for a price at
least 300% higher than the average sales price of the Company's Common Stock,
during the thirty (30) days prior to his employment with the Company, as
reported by Bloomberg Business Services. For this purpose, BCBS and CW Ventures
II, L.P. shall not be considered affiliated with each other.
Pursuant to unanimous written consents of each of the Compensation
Committee of the Board of Directors and the Board of Directors of the Company,
dated January 8, 1999, David Noone was appointed a "management director" of the
Board of Directors effective as of January 8, 1999, filling a vacancy on the
Board.
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Mr. Noone's employment agreement was renewed for a one-year term on the
same terms and conditions, except the Agreement was amended to increase from six
months to one year the amount of compensation that Mr. Noone would receive in
the event that his employment was terminated after a change in control of the
Company.
Freeman Employment Agreement
The Company entered into an Amended and Restated Employment Agreement,
dated as of September 29, 1998, with Richard Freeman, M.D., the former President
and Chief Operating Officer of the Company and CAHS (the "Freeman Employment
Agreement"). The term of the Freeman Employment Agreement commenced on October
30, 1998 and continues for a two-year period, with an additional one-year
renewal. Dr. Freeman is entitled to an annual salary of $275,000, plus other
benefits set forth therein. The Freeman Employment Agreement provides for a cash
bonus in the amount of $95,000 in the event of a "Change in Control of the
Company" (as defined therein). The Freeman Employment Agreement also contains a
non-compete restriction during the term of Dr. Freeman's employment plus two
years thereafter. Dr. Freeman resigned his employment as of October 2, 2000.
Mouras Employment Agreement
As of October 25, 2000, the Company entered into an Employment
Agreement with Dennis Mouras (the "Mouras Employment Agreement"), the current
President and Chief Operating Officer. The Mouras Employment Agreement replaces
an earlier agreement between Mr. Mouras and the Company during the time that Mr.
Mouras served as the Company's Executive Vice President of Marketing and Sales.
The Mouras Employment Agreement continues for a one-year term, after which it
renews automatically for successive one-year terms unless terminated by either
party on at least sixty days notice prior to an anniversary date. Under the
Mouras Employment Agreement, Mr. Mouras is entitled to (a) an annual salary of
$285,000, (b) a grant of incentive stock options pursuant to the Company's Stock
Option Plan for 2,500,000 shares, and (c) other benefits set forth therein.
Under the Mouras Employment Agreement, Mr. Mouras waived unpaid sales
commissions to which he was otherwise entitled under his prior agreement. The
Mouras Employment Agreement also contains a non-solicitation restriction for one
year after Mr. Mouras's employment.
Minor Employment Agreement
Effective as of April 17, 2000, the Company entered into an Employment
Agreement with R. Christopher Minor, its current Senior Vice President and Chief
Financial Officer (the "Minor Agreement"). The term of the Minor Agreement
commenced April 19, 2000, and continues for a one-year term, after which it
renews automatically for successive one-year terms unless otherwise terminated
in accordance with its terms. Under the Minor Agreement, Mr. Minor is entitled
to (a) an annual salary of $210,000, (b) an incentive stock option to purchase
500,000 shares of the Company's Common Stock, and (c) other benefits set forth
therein. Mr. Minor is subject to a non-compete restriction during the term of
his employment and for a period of one year thereafter.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The stockholders executing the Written Consent were BCBS and CW
Ventures II, L.P. On the Record Date, BCBS and CW Ventures II, L.P beneficially
owned the number of shares of Common Stock set forth below.
The following table sets forth certain information, as of the Record
Date, with respect to the beneficial ownership of the outstanding Common Stock
by (i) any holder of more than five (5%) percent; (ii) each of the Company's
officers and directors; and (iii) the directors and officers of the Company as a
group:
Number of Shares
Name of Beneficial Owner Beneficially Owned(1) Percent of Ownership(2)
------------------------ --------------------- -----------------------
Principal Holders:
Horizon Blue Cross and Blue Shield of
New Jersey (3)(4)(5) 37,617,420 45.03%
CW Ventures II, L.P.(5)(6)(7) 37,784,087 45.14%
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Number of Shares
Name of Beneficial Owner Beneficially Owned(1) Percent of Ownership(2)
------------------------ --------------------- -----------------------
Management:
William J. Marino(3) 334 *
Robert J. Pures(3) 0 0%
Walter Channing, Jr.(5)(6)(7)(8) 37,784,087 45.14%
Charles Hartman(5)(6)(7)(8) 37,784,087 45.14%
Barry Weinberg(5)(6)(7)(8) 37,784,087 45.14%
David J. McDonnell(9)(11) 233,336 *
David Noone(10)(11) 1,900,000 2.25%
Dennis Mouras(10)(11) 277,778 *
R. Christopher Minor (10)(11) 0 *
All Directors and executive officers as
a Group (8 persons) (8)(10)(11) 40,195,201 47.25%
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* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting or
investment power with respect to those securities. Beneficial ownership includes
outstanding shares and shares subject to options exercisable within 60 days.
(2) The percent beneficially owned by any person or group who held options
exercisable within 60 days has been calculated assuming all such options have
been exercised in full and adding the number of shares subject to such options
to the total number of shares issued and outstanding.
(3) The business address of Horizon Blue Cross and Blue Shield of New Jersey,
Mr. Marino, Chairman of the Board of Directors of the Company, and Mr. Pures,
Directors of the Company, is 3 Penn Plaza East, Newark, New Jersey 07105.
(4) In the event that the Services Agreement between the Company and BCBS is
terminated by BCBS, CW Ventures II, L.P. ("CW Ventures") will have the right to
purchase BCBS's shares in accordance with the terms of the Stockholders
Agreement between BCBS and CW Ventures, Inc.
(5) BCBS may be deemed a member of a "group," as such term is used in Section
13(d) of the Exchange Act, with CW Ventures, CW Partners III, L.P., the general
partner of CW Ventures ("CW Partners"), and Walter Channing, Charles Hartman and
Barry Weinberg, the general partners of CW Partners. BCBS on the one hand, and
CW Ventures, CW Partners and Messrs. Channing, Hartman and Weinberg, on the
other, disclaim membership in a group for the purpose of Section 13(d) of the
Exchange Act or for any other purpose.
(6) The business address of Messrs. Channing and Weinberg, Directors of the
Company, and Mr. Hartman is 1041 Third Avenue, New York, New York 10021.
(7) Includes shares of Common Stock issuable upon exercise of the warrants
issued to CW Ventures to purchase 166,667 shares of the Company's Common Stock
(the "CW Warrants"). CW Ventures has sole voting and disposition power over
shares owned by it.
(8) Includes 37,617,420 shares directly owned by CW Ventures and 166,667 shares
of Common Stock issuable upon exercise of the CW Warrants. Messrs. Channing,
Hartman and Weinberg are the general partners of CW Partners, and as such may be
deemed to beneficially own such shares and to have shared voting and disposition
power over such shares. Messrs. Channing, Hartman and Weinberg disclaim
beneficial ownership of such shares except to the extent of their respective
direct and indirect partnership interests in CW Ventures.
(9) The business address of Mr. McDonnell, a Director of the Company, is 301
Aqua Court, Naples, Florida 34102.
(10) The business address of Messrs. Mouras and Minor, officers of the Company,
and Mr. Noone, Director and Chief Executive Officer of the Company, is 485-C
Route 1 South, Iselin, New Jersey 08830.
(11) 233,336 of Mr. McDonnell's shares of Common Stock, 850,000 of Mr. Noone's
shares of Common Stock, 277,778 of Mr. Mouras' shares of Common Stock and
1,361,114 of the shares of Common Stock of all directors and executive officers
as a group are issuable upon the exercise of stock options to purchase shares of
Common Stock that are exercisable on December 11, 2000 or that will be
exercisable within 60 days of such date.
INTEREST OF CERTAIN PERSONS IN OR IN
OPPOSITION TO MATTERS TO BE ACTED UPON MATTERS
No director, executive officer, associate of any director or executive
officer, or any other person has any substantial interest, direct or indirect,
by security holdings or otherwise, in the proposed Amendments which is not
shared by all other stockholders, except with respect to the Debt Satisfaction
Agreement discussed above and to the extent that executive officers (along with
all other employees of the Company) are eligible to receive options granted
pursuant to the Plan.
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OTHER MATTERS
The Board of Directors knows of no other matters other than those
described in this Information Statement which have been approved or considered
by the holders of a majority of the shares of the Company's voting stock.
IF YOU HAVE ANY QUESTIONS REGARDING THIS INFORMATION STATEMENT
AND/OR THE AMENDMENTS, PLEASE CONTACT:
CareAdvantage, Inc.
485-C Route 1 South
Iselin, New Jersey 08830
(732) 602-7000
By order of the Board of
Directors of CareAdvantage,
Inc.
David Noone, Chief Executive Officer
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