SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Critical Home Care, Inc.
(Name of Registrant as Specified In Its Charter)
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CRITICAL HOME CARE, INC.
762 Summa Avenue
Westbury, New York 11590
Notice of Annual Meeting of Stockholders
_________, 2004
To the Stockholders of
Critical Home Care, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of
Stockholders of Critical Home Care, Inc. (the "Company") will be held at
____________, on _________, ___________ _____, 2004, commencing at ______ a.m.
(local time), or at any adjournment thereof, for the following purposes:
1. To elect five persons to the Board of Directors of the Company, each
to serve until the next annual meeting of stockholders of the Company
or until such person shall resign, be removed or otherwise leave
office;
2. To consider and act upon a proposal to amend the Company's Articles of
Incorporation to amend the par value and increase the number of
authorized shares of the Company's common stock to 150,000,000, $.001
par value per share from 100,000,000, $.25 par value per share;
3. To consider and act upon a proposal to amend the Company's Articles of
Incorporation to authorize the issuance of serial preferred stock,
consisting of 5,000,000 shares, with authority vested in the Board of
Directors of the Company to prescribe the classes, series and number
of each class or series of the preferred stock of the Company and the
voting powers, designations, preferences, limitations, restrictions
and relative rights of each class or series of the preferred stock of
the Corporation;
4. To consider and act upon a proposal to amend the Company's Articles of
Incorporation to eliminate preemptive rights;
5. To consider and act upon a proposal to ratify the selection of Marcum
& Kliegman LLC as the independent certified public accountants of the
Company for the current fiscal year; and
6. To consider and act upon any other proposal as may properly come
before the Annual Meeting or any adjournment thereof.
The foregoing matters are more fully described in the Proxy Statement
accompanying this Notice to which your attention is directed.
Only stockholders of record on the books of the Company at the close of business
on March 29, 2004 will be entitled to vote at the Annual Meeting or at any
adjournment thereof. You are requested to sign, date and return the enclosed
proxy card at your earliest convenience in order that your shares may be voted
for you as specified.
By Order of the Board of Directors,
Bradley Smith, Secretary
_______ ___, 2004
Westbury, New York
[THIS PAGE INTENTIONALLY LEFT BLANK]
Critical Home Care, Inc.
762 Summa Avenue
Westbury, New York 11590
Proxy Statement
Annual Meeting Of Stockholders
___________ ____, 2004
The 2004 Annual Meeting of Stockholders of Critical Home Care, Inc., a Nevada
corporation, will be held on _________, ____________ ____, 2004, at ___________,
located at ____________, commencing at _____ a.m., local time, and any
adjournments and postponements thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. This proxy statement is
being furnished in connection with the solicitation of proxies by and on behalf
of our board of directors for use at the annual meeting, and at any adjournments
and postponements of the annual meeting. We will bear the entire costs of such
solicitation. The approximate date on which this proxy statement and the
enclosed proxy card are being first mailed to our stockholders is ______, 2004.
If the proxy card in the accompanying form is duly executed and returned, the
shares represented by such proxy card will be voted as specified, subject to any
applicable voting or irrevocable proxy agreements. Any person executing a proxy
card may revoke it prior to its use. You are directed to the section entitled
"Procedure for Voting by Proxy" for further information concerning a
stockholder's ability to vote by proxy and to revoke a proxy once given.
Throughout this proxy statement, the terms "we," "us," "our" and "our company"
refers to Critical Home Care, Inc. and, unless the context indicates otherwise,
our subsidiaries on a consolidated basis; and "you" and "your" refers to the
stockholders of our company.
Record Date
We have established March 29, 2004 as the record date for the annual meeting.
Only holders of record of our voting securities at the close of business on such
date will be eligible to vote at the annual meeting. Our common stock currently
is the only class of our securities entitled to be voted at the annual meeting.
A list of stockholders entitled to vote at the annual meeting will be available
for examination by any stockholder, for any purpose relating to the annual
meeting, at our executive offices during ordinary business hours for the ten
days immediately prior to the annual meeting. This list also will be available
for examination during the annual meeting.
Proposals to be Considered at the Meeting
You will be asked to consider and vote at the annual meeting on the matters
listed in the accompanying Notice of Annual Meeting of Stockholders and
described in this proxy statement.
We do not expect that any other matter will be brought before the annual
meeting. If, however, other matters are properly presented, the individuals
named on your proxy card will vote on these other matters in accordance with
their judgment and to the extent permitted by applicable law.
Vote Required to Approve the Proposals
Holders of our common stock are entitled to one vote per share on each of the
proposals scheduled for vote at the annual meeting. We had issued and
outstanding _______ shares of our common stock as of the record date.
Accordingly, there are ______ votes eligible to be cast at the annual meeting.
The election of directors (proposal number 1) is by a plurality of votes cast.
Authorization for the amendments to our articles of incorporation (proposal
numbers 2, 3 and 4) each require the affirmative vote of holders of a majority
of our outstanding voting securities. Approval of the ratification of
independent certified public accountants requires the affirmative vote of a
majority of the votes actually cast on such matter.
Abstentions will not be included in the vote totals and, in instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned a proxy card to the brokers, so called "broker
non-votes," those votes will not be included in the vote totals for purposes of
determining whether proposals have received the requisite number of affirmative
votes cast. Therefore, the effect of abstentions and broker non-votes is the
same as that of a vote "against" the amendments to our articles of incorporation
(proposals 2, 3 and 4), while abstentions and broker non-votes will have no
effect on the vote on all other proposals scheduled for vote at the annual
meeting. Abstentions, however, will be counted in the determination of whether a
quorum exists for the purposes of transacting business at the annual meeting.
Our directors, director-nominees and executive officers own, or are affiliates
of owners, as trustees of trusts or as an equity owner in a professional
corporation of, approximately _____% of the voting power entitled to be cast at
the annual meeting. We anticipate that these directors and executive officers
will cast all of their votes in favor of each of the proposals being considered
at the annual meeting.
Quorum
We must have a quorum in order to carry on business at the annual meeting. Under
our bylaws, as amended through the record date, we must have present, in person
or by proxy, holders of at least 51% of the entire issued and outstanding
capital stock in order for a quorum to exist. Accordingly, we must have present,
in person or by proxy, holders owning of record at least _______shares of our
common stock in order for any business to be conducted at the annual meeting.
Abstentions and broker non-votes will count for quorum purposes.
Procedure for Voting by Proxy
A form of proxy card is enclosed for your use. To vote without attending the
annual meeting in person, you should complete, sign, date and return the proxy
card in the accompanying envelope, which is postage-paid if mailed in the United
States.
If you properly fill in your proxy in the accompanying form and send it to us in
time to be voted, your shares will be voted as you have directed on the proxy.
If you sign the proxy, but do not make specific choices, the individuals named
on your proxy will vote your shares FOR approval of each of the proposals
scheduled for vote at the annual meeting.
You can still vote in person at the annual meeting, even if you have completed
and returned a proxy. You may revoke your proxy at any time before it is voted
by:
- submitting a new proxy with a later date;
- by voting in person at the annual meeting; or
- by filing with our corporate secretary a written revocation of the
proxy.
Attendance at the annual meeting will not of itself constitute revocation of a
proxy. You must note your appearance with the inspector(s) of election, tell the
inspector(s) that you previously granted a proxy with respect to the annual
meeting, which you are revoking and request a ballot in order to personally vote
at the annual meeting.
If you hold shares through a broker, you should contact your broker to determine
the procedures through which you can vote your shares in person.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Our common stock is the only class of our voting securities presently
outstanding.
The following table sets forth information with respect to the beneficial
ownership of shares of our common stock as of the date of this proxy statement
by:
- each person known by us to beneficially own 5% or more of the outstanding
shares of such class of stock, based on filings with the Securities and
Exchange Commission and certain other information,
- each of our "named executive officers" and directors, and
- all of our executive officers and directors as a group.
The term "named executive officers" is defined in the SEC rules as those
executive officers who are required to be listed in the Summary Compensation
Table provided in the discussion in this proxy statement concerning proposal
number 1.
Except as otherwise indicated in the notes to the following table,
- we believe that all shares are beneficially owned, and investment and
voting power is held by, the persons named as owners, and
- the address for each beneficial owner listed in the table, except where
otherwise noted, is Critical Home Care, Inc., 762 Summa Avenue, Westbury,
New York 11590.
Amount and Nature of Percentage of
Name and Address of Stockholder Beneficial Ownership (1) Outstanding Shares
David Bensol............................................ 6,111,768 (2) 24.95%
Bradley Smith........................................... 1,092,641 (3) 4.47
Eric S. Yonenson ....................................... 94,444 (4) 0.39
Mitchell Cooper......................................... 50,000 (5) 0.20
Barbara Levine.......................................... 100,000 (6) 0.41
Delbert Spurlock, Jr.................................... 100,000 (6) 0.41
Harbor View Fund, Inc (7)............................... 2,109,448 8.65
Allied International Fund, Inc. (8)..................... 1,812,774 7.43
Rubin Family Irrevocable Stock Trust (9)................ 2,783,065 11.41
Luigi Piccione (10)..................................... 1,750,000 7.17
All executive officers, directors and director-
nominees as a group (six persons).................. 7,548,853 30.30%
__________
(1) Calculated based on 24,393,026 shares issued and outstanding as of February
13 , 2004. Includes shares currently outstanding and, as to each person
named, those shares which are not outstanding but which such person has the
right to acquire within 60 days.
(2) Includes 100,000 shares of common stock issuable upon exercise of presently
exercisable stock options.
(3) Includes 75,000 shares of common stock issuable upon exercise of presently
exercisable stock options.
(4) Includes currently exercisable options to acquire 83,333 shares at
September 30, 2003, and 11,111 options which vested in the 60 days
subsequent to September 30, 2003.
(5) Includes 50,000 shares upon exercise of presently exercisable options.
(6) Includes currently exercisable options to acquire 100,000 shares at
September 30, 2003. But does not include the 50,000 shares issuable upon
exercise of options to be granted on each of the next three respective
anniversary dates of their joining the Board on September 26 of 2004, 2005
and 2006.
(7) The address of this entity is c/o Snow Becker Krauss P.C., 605 Third
Avenue, New York, New York 10158.
(8) The address for this entity is 488 Madison Avenue, New York, New York
10022.
(9) The address for this entity is 18 Pine Tree Drive, Great Neck, New York
11024.
(10) The address for this person is 15 Percy Williams Drive, East Islip, New
York 11730.
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
Five individuals are to be elected as directors of our company at the annual
meeting, each to hold office until the next annual meeting of shareholders,
unless he or she shall resign, become disqualified, disabled or shall otherwise
be removed from office. Our board of directors has nominated each of the
following persons for election as directors at the annual meeting:
David Bensol Bradley Smith
Mitchell Cooper Barbara Levine
Delbert Spurlock Jr.
Shares represented by executed proxy cards in the form enclosed will be voted,
if authority to do so is not withheld, for the election as directors of each of
the above-stated nominees, unless such nominee shall be unavailable, in which
case such shares will be voted for the substitute nominee designated by our
board of directors. Our board of directors has no reason to believe that any of
these nominees will be unavailable or, if elected, will decline to serve. Only a
plurality of votes cast are necessary for the election of the directors.
Information Concerning Director-Nominees and Executive Officers
Set forth below is a brief description of the background of each of the
director-nominees, based on information provided to us by them.
Name Age Principal Positions and Offices with our Company
David Bensol 48 Chief Executive Officer, President and Chairman of the Board of Directors
Bradley Smith 52 Executive Vice President, Secretary and a Director
Mitchell Cooper 49 Director
Barbara Levine 53 Director
Delbert Spurlock Jr. 61 Director
Set forth below is a brief description of the background of each of our
executive officers and directors-nominees, based on information provided to us
by them.
David Bensol has served as our Chief Executive Officer, President and Chairman
of our Board of Directors since September 26, 2002, after working in the
healthcare industry for over 25 years. He has served as the Chief Executive
Officer and a director of our subsidiary, Classic Healthcare, since its
formation in October 2000. From 1978 until March 1998, Mr. Bensol was the
President, Chief Executive Officer and sole owner of Newbridge Surgical
Supplies, Inc., a medical supplier for home medical equipment, acute care
pharmacies and specialty support surface providers throughout the five boroughs
of New York City and the suburban counties of Nassau and Suffolk. In March 1998,
Newbridge Surgical was acquired by Home Care Supply, Inc., another medical
supplier to the home medical equipment market for the New York City metropolitan
area. Upon Newbridge Surgical's acquisition by Home Care, Mr. Bensol became Home
Care's executive vice president, a position he retained through January 2000.
While at Home Care, he supervised Home Care's acquisition and subsequent
consolidation of two other medical suppliers to the home medical equipment
market for the New York City metropolitan area. From February 2000 to March
2001, Mr. Bensol served as the chief operating officer of American Prescription
Providers, Inc., a New York based mail order pharmacy.
Bradley Smith has served as our Executive Vice President, Secretary and a
director since September 26, 2002. He has over 25 years of experience in the
home medical equipment industry. He has served as Vice President - Director of
Clinical Services and a director of our subsidiary, Classic Healthcare, since he
co-founded the company with David Bensol in October 2000. From 1980 to 1995, Mr.
Smith was the President and sole owner of Levittown Surgical Supply, Inc., a
medical supplier to the home medical equipment market for Nassau and Suffolk
Counties. In February 1995, Levittown Surgical was acquired by Newbridge
Surgical Supplies, Inc., a medical supplier to the home medical equipment market
for the five boroughs of New York City and the suburban counties of Nassau and
Suffolk. In March 1998, Newbridge Surgical was acquired by Home Care Supply,
Inc., another medical supplier to the home medical equipment market for the New
York City metropolitan area. Mr. Smith directed the orthotics and prosthetic
programs at both Newbridge Surgical and Home Care Supply through August 2000.
Mitchell Cooper became a director of the Company on September 26, 2002. Mr.
Cooper has been a partner in the Mineola law firm of Spizz & Cooper, LLP, since
1983 where he specializes in tax matters. Mr. Cooper is a certified public
accountant and holds a Master of Laws in Taxation from New York University
School of Law. He is also a Special Professor of Law at Hofstra University Law
School and an Adjunct Professor of Law at Touro Law School, where he teaches
Finance and Accounting for Lawyers, Corporate Taxation, Advanced Corporate
Taxation, Estate and Gift Taxation and Estate Planning.
Barbara Levine, Ph.D. became a director of the Company on September 27, 2002.
She is the Co-Director of the Human Nutrition Program at The Rockefeller
University and the Director of Nutrition Information Center at The New York
Hospital-Weill Medical College of Cornell University. Dr. Levine holds numerous
professional memberships and is actively involved with local and national
committees related to diet, nutrition and health issues.
Delbert Spurlock, Jr. became a director of the Company on October 17, 2002.
Since May 1993, Mr. Spurlock has served as the Associate Publisher/Executive
Vice President of the Daily News L.P., New York Daily News. From 1991 until
January 1993, Mr. Spurlock was Deputy Secretary of Labor, U.S. Department of
Labor. Prior thereto, from 1981 to 1989 he was employed by the Department of the
Army, Pentagon, Washington, D.C. From 1981 to 1983, he was General Counsel and
from 1983 to 1989, he was Assistant Secretary of the Army. Mr. Spurlock has held
other government positions, had his own private law firm, and had numerous
presentations and publications.
Committees of our Board of Directors
Our board of directors has one standing committee -- an audit committee. We do
not currently have a nominating or compensation committee.
Our audit committee currently is composed of Mitchell Cooper, Barbara Levine and
Delbert Spurlock, Jr., with Mr. Cooper serving as its chairman. We believe that
each of these committee members is "independent," as such term is used in Item
7(d)(3)(iv)of Schedule 14A under the Exchange Act. The audit committee is
primarily concerned with the accuracy and effectiveness of the audits of our
financial statements by our internal audit staff and by our independent
auditors. Its duties include:
- selecting and retaining the independent auditors, as well as ascertaining
the auditors' independence;
- reviewing the scope of the audits to be conducted, as well as the results
of their audits;
- approving non-audit services provided to our company by the independent
auditors;
- reviewing the organization and scope of our internal system of audit,
financial and disclosure controls;
- appraising our financial reporting activities, including our Annual Report
on Form 10-KSB, and the accounting standards and principles followed; and
- conducting other reviews relating to compliance by employees with our
internal policies and applicable laws.
Audit Committee Charter
Our board of directors adopted a charter for its audit committee in October
2002. A copy of the charter is attached hereto as Appendix A to this Proxy
Statement.
Audit Committee Report
Review with Management
The Audit Committee has reviewed and discussed with management the Company's
audited financial statements as of and for the fiscal year ended September 30,
2003.
Review and Discussions with Independent Public Accountants
The Audit Committee has discussed with Marcum & Kliegman LLP, the Company's
independent accountants, the matters required to be discussed by SAS 61.
Receipt, Review and Discussions of Disclosures and Letter from the Independent
Public Accountants
The Committee has received all written disclosures and the letter of the
independent accountants required by Independence Standards Board Standard No. 1
and has discussed with the independent accountants their independence.
Recommendation of the Audit Committee
Based on the review and discussions referred to in this Audit Committee Report,
the Audit Committee recommended to the Board of Directors of the Company that
the Company's audited financial statements as of and for the fiscal year ended
September 30, 2003 be included in the Company's Annual Report on Form 10-KSB for
the fiscal year ended September 30, 2003 for filing with the Securities and
Exchange Commission.
Respectfully submitted,
The Audit Committee of the Board of Directors of Critical Home Care, Inc.
Mitchell Cooper, Chairman
Barbara Levine, Member
Delbert Spurlock, Jr., Member
Meetings of the Board of Directors and its Committees
Our board of directors held one formal meeting and took action by written
consent in lieu of a meeting on sixteen occasions during our fiscal year ended
September 30, 2003. Each member of our board of directors attended, in person or
telephonically, the one meeting of our board held during our 2003 fiscal year.
Our Audit Committee held one formal meeting and took action by written consent
in lieu of a meeting on two occasions during our fiscal year ended September 30,
2003. Each committee member attended, in person or telephonically, the one
meeting held by the Audit Committee during our 2003 fiscal year with the
exception of Mr. Cooper who did not attend the one meeting.
Director Compensation
Our directors who are officers or employees of the Company are not compensated
for service on our Board of Directors or any committee thereof. Our directors
who are not officers or employees have each been granted non-qualified stock
options and receive $1,000 for attendance at each board meeting and $500 for
each telephonic board meeting. These directors are also entitled to nominal
compensation to cover travel costs.
Executive Officers
The following person serves as an executive officer of our Company:
Eric S. Yonenson, 55, has served as our Chief Financial Officer since March 10,
2003. From June 1994 through October 1998 Mr. Yonenson was the Chief Financial
Officer of Newbridge Surgical Supplies, Inc., which was acquired by Home Care
Supply, Inc., another medical supplier to the home medical equipment market.
From November 1998 through August 2000, Mr. Yonenson was a supervisor with
Margolin Winer & Evens LLP, a certified public accounting firm. From September
2000 until March 2003 was the controller of Jac.Vandenberg, Inc. a national
fruit distributor. Mr. Yonenson is a certified public accountant, and is a
member of the American Institute of Certified Public Accountants and New York
State Society of Certified Public Accountants.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3, 4 and 5 and amendments to these forms
furnished to us, together with written representations received by us from
applicable parties that no Form 5 was required to be filed by such parties, all
parties subject to the reporting requirements of Section 16(a) of the Exchange
Act filed all such required reports during and with respect to our 2003 fiscal
year except David Bensol, Barbara Levine and Delbert Spurlock each filed one
late Form 4.
Executive Compensation
The following table sets forth all compensation awarded to, earned by, or paid
for all services rendered to us during the fiscal years ended September 30,
2003, 2002 and 2001, all compensation earned by each person who served as our
chief executive officer during our 2003 fiscal year and such other persons who
were serving as executive officers at the end of our 2003 fiscal year and whose
total annual salary and bonus earned during our 2003 fiscal year exceeded
$100,000.
Summary Compensation Table
Long-Term
Compensation
-------------
Annual Compensation Awards
------------------------------------------- -------------
Securities
Fiscal Restricted Underlying
Name and Principal Position(s) Year Salary Bonus Stock Awards Options
------------------------------ ---- ------ ----- ------------ -------
David Bensol, President, 2003 $ 113,654 (1) $ -- -- --
Chief Executive Officer and 2002 * 59,135 -- -- 100,000 (1)
Chairman of the Board 2001 -- -- -- --
Bradley Smith, Executive Vice 2003 $ 125,000 $ -- -- --
President, Secretary and a 2002 * 59,135 -- -- 75,000 (2)
Director 2001 -- -- -- --
Eric S. Yonenson, Chief Financial 2003 $ 65,019 (3) $ -- -- 250,000 (4)
Officer 2002 -- -- -- --
2001 -- -- -- --
___________
* Amount paid for the nine months ended September 30, 2002.
(1) Pursuant to Mr. Bensol's Employment Agreement, he received options to
purchase 100,000 shares which vested quarterly, commencing on December 31,
2002, and are exercisable for a five year period following the date of
grant provided Mr. Bensol remains an employee of the Company. Additionally
Mr. Bensol voluntarily amended his employment contract during the year to
reduce his annual compensation, by $36,000, during the period January 1,
2003 through June 30, 2003.
(2) Pursuant to Mr. Smith's Employment Agreement, he received options to
purchase 75,000 shares which vested quarterly, commencing on December 31,
2002, and are exercisable for a five year period following the date of
grant provided Mr. Smith remains an employee of the Company.
(3) Mr. Yonenson commenced his employment with the Company on March 10, 2003,
at an annual salary of $115,000 per year.
(4) Pursuant to Mr. Yonenson's Employment Agreement, he received options to
purchase 250,000 shares which 50,000 shares vested upon grant, and the
balance vests ratably on a monthly basis as of the last day of the month
for each of the first 36 months following the date of grant as long as Mr.
Yonenson remains an employee of the Company.
Option Grants in Last Fiscal Year
The following table contains information concerning the grant of stock options
to each of the named executive officers listed in the Summary Compensation Table
Contained in the "Executive Compensation" subsection of this Proxy Statement
during our fiscal year ended September 30, 2003.
Name Percent of Total
Number of Shares Options Granted to
Underlying Option Employees in Fiscal Exercise Price
Granted Year per share Expiration Date
---------------- ------------------- ------------------- ------------------ ------------------
David Bensol None -- -- --
Bradley Smith None -- -- --
Eric Yonenson 250,000 62% $0.17 March 17, 2008
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
None of the named executive officers listed in the Summary Compensation Table
contained in the "Executive Compensation" subsection of this Proxy Statement
exercised any of their options during our fiscal year ended September 30, 2003.
The following table sets forth:
- the total number of unexercised options held, as of September 30, 2003, by
each of the named executive officers listed in the Summary Compensation
Table contained in the "Executive Compensation" subsection of this Proxy
Statement, separately identified between those exercisable and those not
exercisable, and
- the aggregate value of in-the-money, unexercised options held, as of
September 30, 2003, by each of the named executive officers, separately
identified between those exercisable and those not exercisable.
Number of Value of Unexercised
Unexercised Options In-the-Money Options
as of September 30, 2003 as of September 30, 2003
------------------------------- --------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
David Bensol 100,000 0 $ 0 $ 0
Bradley Smith 75,000 0 $ 0 $ 0
Eric Yonenson 83,333 166,667 $ 2,500 $ 5,000
__________
Employment Agreements
Employment Agreement with David Bensol
On September 26, 2002, we entered into an employment agreement with David
Bensol, whereby Mr. Bensol agreed to serve as our Chief Executive Officer,
President and Chairman of our Board of Directors for a term of three years. The
agreement shall be automatically extended for successive one year periods unless
we notify Mr. Bensol in advance in writing. The agreement provides Mr. Bensol
with an annual salary of $150,000, with an increase of 10% if our net income for
four quarters ending on the most recent December 31st is greater than our net
income for the four quarters ended on the preceding December 31st. Other than in
the year ending December 31, 2002, Mr. Bensol shall be entitled to an annual
bonus as is determined by our Board of Directors. Mr. Bensol's compensation also
includes options to purchase 100,000 shares of common stock of the company,
which vested quarterly commencing on December 31, 2002 and are exercisable at
$1.00 per share for a five year period following the date of the grant. Mr.
Bensol is entitled to participate in any pension, profit sharing, group
insurance, option plan, hospitalization and group health and benefit plans that
we make available to senior executives. Mr. Bensol also receives four weeks paid
vacation time. The agreement also contains a non-competition provision for 24
months subsequent to any termination of his employment. Additionally Mr. Bensol
voluntarily amended his employment contract to reduce his annual compensation,
by $ 36,000, during the period January 1, 2003 through June 30, 2003.
Employment Agreement with Bradley Smith
On September 26, 2002, we entered into an employment agreement with Bradley
Smith, whereby Mr. Smith agreed to serve as our Executive Vice President,
Secretary and a director for a term of three years. The agreement shall be
automatically extended for successive one year periods unless we notify Mr.
Smith in advance in writing. The agreement provides Mr. Smith with an annual
salary of $125,000, with an increase of 7% if our net income for four quarters
ending on the most recent December 31st is greater than our net income for the
four quarters ended on the preceding December 31st. Other than in the year ended
December 31, 2002, Mr. Smith shall be entitled to an annual bonus as is
determined by our Board of Directors. Mr. Smith's compensation also includes
options to purchase 75,000 shares of common stock of the company, which vested
quarterly commencing on December 31, 2002 and are exercisable at $1.00 per share
for a five-year period following the date of the grant. Mr. Smith is entitled to
participate in any pension, profit sharing, group insurance, option plan,
hospitalization and group health and benefit plans that we make available to
senior executives. Mr. Smith also receives four weeks paid vacation time. The
agreement contains a non-competition provision for 24 months subsequent to any
termination of his employment.
Employment Agreement with Eric Yonenson
On March 10, 2003, the Company entered into an employment agreement with Eric S.
Yonenson, whereby Mr. Yonenson agreed to serve as our Chief Financial Officer
for a term of three years. The agreement provides Mr. Yonenson with an annual
salary of $115,000, certain performance based increases and an annual bonus as
determined by our Board of Directors. Mr. Yonenson's compensation also includes
options to purchase 250,000 shares of common stock of the Company, 50,000 of
which vested immediately and the balance vest ratably on a monthly basis for the
36 months following the date of the grant. These options are exercisable at a
$0.17 per share for a five-year period following the date of the grant. Mr.
Yonenson is entitled to participate in any pension, profit sharing, group
insurance, option plan, hospitalization and group health and benefit plans that
we make available to senior executives. Mr. Yonenson also receives four weeks
paid vacation time.
Stock Plans
We have adopted the following stock plans:
- 2002 Employee Stock Incentive Plan;
Employees, salaried officers and other key persons employed or retained by our
Company or our subsidiaries are eligible to participate in our stock plan.
Directors who are not salaried officers or employees of our Company or our
subsidiaries are not eligible to participate in the plan. The plan is
administered by our board of directors or a committee composed of at least two
non-employee directors.
Options granted under the plans may be incentive stock options (as defined in
Section 422 of the Internal Revenue Code of 1986, as amended), or non-qualified
stock options. Non-qualified stock options may be granted in tandem with stock
appreciation rights. The exercise price of options may not be less than 100% of
the fair market value of the common stock as of the date of grant, except that
the exercise price of ISOs granted to an employee who owns more than ten percent
of the outstanding common stock may not be less than 110% of the fair market
value as of the date of grant. Options may not be exercised more than ten years
after the date of grant, or five years in the case of ISOs granted to an
employee who owns more than 10% of the outstanding shares of our common stock.
An option may be exercised by tendering payment of the purchase price to us or,
at the discretion of the administrator of the plans, by delivery of shares of
our common stock having a fair market value equal to the exercise price. The
number of shares that may be acquired upon exercise of an option and the
exercise price of an option are subject to adjustment in the event of a merger,
recapitalization, stock split or stock dividend.
The following table sets forth, as of September 30, 2003:
- the number of shares of our common stock issuable upon exercise of
outstanding options, warrants and rights, separately identified by those
granted under equity incentive plans approved by our stockholders and those
granted under plans, including individual compensation contracts, not
approved by our stockholders (column A),
- the weighted average exercise price of such options, warrants and rights,
also as separately identified (column B), and
- the number of shares remaining available for future issuance under such
plans, other than those shares issuable upon exercise of outstanding
options, warrants and rights (column C).
Equity Compensation Plan Information
Column A Column B Column C
Number of shares
Number of remaining available for
shares to be issued Weighted average future issuance under
upon exercise of exercise price of equity compensation
outstanding options, outstanding options plans (excluding shares
warrants and rights warrants and rights reflected in column A)
------------------- ------------------- ----------------------
Equity incentive plans
approved by stockholders None
Equity incentive plans not
approved by stockholders 1,013,100 $0.68 986,900
--------- ----- -------
Totals 1,013,100 $0.68 986,900
========= ===== =======
Certain Relationships and Related Transactions
The employment agreements we entered into with each of David Bensol, Bradley
Smith and Eric Yonenson are discussed in the "Employment Agreements" subsection
set forth previously in this Proxy Statement.
On September 26, 2002, in connection with his joining our board of directors,
Mitchell Cooper was granted a five-year non-qualified stock option to purchase
50,000 shares of common stock exercisable at $1.50 per share vested immediately.
On September 26, 2002, in connection with their joining our board of directors,
Dr. Barbara Levine and Delbert Spurlock, Jr. were each granted five-year
non-qualified stock options to purchase 50,000 shares of common stock at an
exercise price of $1.50 per share, all of which options vested immediately. In
addition, Dr. Levine and Mr. Spurlock were each awarded future grants of options
to purchase up to 200,000 shares of common stock based upon their continued
service to the Company. These options would be granted in 50,000 share
increments on each of the first four anniversary dates of their joining the
board of directors exercisable at the fair market value on the respective dates
of grant on the anniversary dates. Accordingly, on September 26, 2003, Dr.
Levine and Mr. Spurlock were each granted options to purchase 50,000 shares of
common stock at $0.23 per share, the fair market value on the date of grant, all
of which vested upon grant and are exercisable for five years. In the event of a
buyout of our company, their remaining future options shall be granted and will
vest immediately.
Recommendation of Our Board of Directors
Our board of directors recommends that stockholders vote FOR the election as
directors of each of the board's nominees as listed above.
PROPOSAL NUMBER 2
AMENDMENT TO OUR ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
AND CHANGE THE PAR VALUE OF OUR COMMON STOCK
Our articles of incorporation currently provides that the number of shares of
common stock which we are authorized to issue is 100,000,000, par value $.25 per
share. Our board of directors has determined that it is advisable to amend our
articles of incorporation to increase the number of authorized shares of our
common stock to 150,000,000, and to decrease the par value to $.001 per share. A
copy of the Amended and Restated Articles of Incorporation is attached hereto as
Appendix B to this Proxy Statement.
If proposal number 2 is approved by you, the additional shares of our common
stock so authorized, as well as shares of our common stock currently authorized
but not issued or outstanding, may be issued from time to time upon
authorization of our board of directors, without further approval by our
stockholders, unless otherwise required by applicable law, and for such
consideration as our board may determine and as may be permitted by applicable
law. Our board believes the increase in the authorized shares of our common
stock is necessary to provide us with the flexibility to act in the future with
respect to financing programs, acquisitions, forward stock splits and other
corporate purposes without the delay and expense associated with obtaining
special stockholder approval each time an opportunity requiring the issuance of
shares of our common stock may arise. Such a delay might deny us the flexibility
that our board views as important in facilitating the effective use of the
securities of our company.
The following table illustrates the effect of the increase in the number of
authorized shares of our common stock.
Before the After the
Amendment Amendment
Authorized........................... 100,000,000 150,000,000
Outstanding.......................... 24,393,026 24,393,026
Reserved............................. 2,687,500 2,687,500
Available for future issuance........ 72,919,474 122,919,474
________________
We currently have approximately 73 million shares available for future issuance
prior to the proposed amendment. However, the market price for our Common Stock
was only approximately $.46 per share on March 8, 2004. Therefore, the market
capitalization of all 72,919,474 million shares available for issuance is
approximately $33,543,000. While there can be no assurance we will be able to
complete the transaction described in the following paragraph, if we were able
to do so at current market price there would be few, if any, shares available
for future issuance after the completion of such transaction.
The Company has signed a non-binding letter of intent with certain unaffiliated
persons to acquire their company which has an agreement to purchase all of the
capital stock of a privately held company ("Target") engaged in the healthcare
industry. Our letter of intent for this potential acquisition is contingent upon
our arranging adequate financing, completion of due diligence, obtaining a
fairness opinion, audited financial statements of Target, execution of a
definitive merger agreement, execution of employment agreements of senior
management of Target and approval of our respective Boards of Directors. The
proposed purchase price is approximately 20 million shares of Common Stock. Up
to 8 million additional shares are issuable upon the exercise of stock options
to be granted as bonus compensation. The proposed financing would be for up to
$11 million of our shares of Common Stock at $.25 per share, or 44 million
shares plus 10% warrant coverage. In the event that we enter into any definitive
agreements concerning this or any other transaction prior to the Meeting, we
will supplement these proxy materials and/or adjourn the Meeting.
The increase in authorized shares is not being proposed as a means of preventing
or dissuading a change in control or takeover of our company. However, use of
these shares for such a purpose is possible. Shares of our authorized but
unissued common stock, as well as shares of our authorized but unissued serial
preferred stock, if authorized by the approval of proposal number 3 below, for
example, could be issued in an effort to dilute the stock ownership and voting
power of persons seeking to obtain control of our company or could be issued to
purchasers who would support our board of directors in opposing a takeover
proposal. In addition, the increase in authorized shares, if approved, may have
the effect of discouraging a challenge for control or making it less likely that
such a challenge, if attempted, would be successful.
The proposed amendment would also change the par value of the authorized shares
of common stock. The reduction in the par value of the common stock will help
the Company to ensure that all issued and outstanding shares of common stock are
designated as fully-paid and non-assessable, since for accounting purposes the
required consideration for such designation will be reduced from $.25 to $.001.
We believe that the proposed decrease in par value is desirable to provide us
with flexibility in managing corporate funds. The adoption of the proposal will
substantially decrease our required stated capital which must be added to our
liabilities in determining any surplus available for dividends, distributions
and other corporate purposes. The amendment, if adopted, will not change or
affect the number of shares held by any stockholder. The change in par value
will cause technical changes in the balance sheet as to the amounts shown as
"stated value" and "capital surplus." In addition, certain states base the
amount of franchise taxes and filing fees payable by a corporation on the par
value of its authorized shares. Nevada recently adopted such a provision. The
decrease in par value will decrease our franchise tax payments and our filing
fees within the State of Nevada.
Other than the changes described in this proposal 2 and those set forth in
proposals 3 and 4, the additional shares of our common stock for which
authorization is sought will have the same voting rights, the same rights to
dividends and distributions and will be identical in all other respects to the
shares of our common stock now authorized. Adoption of the proposed amendment to
our articles of incorporation would not affect the rights of the holders of
currently outstanding shares of our common stock.
The authorization of additional shares of our common stock pursuant to this
proposal will have no dilutive effect upon the proportionate voting power of our
present stockholders. However, to the extent that shares are subsequently issued
to persons other than our current stockholders and/or in proportions other than
the proportion that presently exists, such issuance could have a substantial
dilutive effect on our current stockholders.
As of the record date for the annual meeting, we had ___________ shares of our
common stock outstanding and _______ shares of our common stock reserved for
issuance pursuant to various outstanding options and warrants to purchase our
common stock.
Interest of Our Management in the Proposal
None of our directors nor executive officers has any financial or other personal
interest in the amendment to our articles of incorporation pursuant to this
proposal.
Vote Required
The affirmative vote of the holders of a majority of the shares of our common
stock issued and outstanding on the record date for the annual meeting will be
required to approve this amendment to our articles of incorporation.
Recommendation of Our Board of Directors
Our Board of Directors recommends a vote FOR approval of this amendment to our
articles of incorporation.
PROPOSAL NUMBER 3
AMENDMENT TO OUR ARTICLES OF INCORPORATION TO AUTHORIZE
A CLASS OF "BLANK CHECK" PREFERRED STOCK
CONSISTING OF 5,000,000 AUTHORIZED SHARES
Our articles of incorporation currently provides that we are authorized to issue
5,000,000 shares of preferred stock, $.25 par value. Our board of directors has
determined that it is advisable to amend our articles of incorporation to
authorize us to issue up to 5,000,000 shares of preferred stock, in one or more
series with each series having such rights and preferences as our board may
determine when authorizing such series. This type of class of securities is
commonly referred to as "blank check" serial preferred stock. A copy of the
Amended and Restated Articles of Incorporation is attached hereto as Appendix B
to this Proxy Statement.
If proposal number 3 is approved by you, shares of our serial preferred stock
will be available for issuance from time to time for such purposes and
consideration as our board of directors may approve. No further vote of our
stockholders will be required in connection with the authorization of a series
of preferred stock or the issuance of shares of such series, unless otherwise
required by applicable law.
We have no present plans to authorize any series of preferred stock or to issue
any shares within a series of preferred stock.
In the event that our board of directors does authorize, designate and issue
shares of serial preferred stock, our board may exercise its discretion in
establishing the terms of such serial preferred stock. In the exercise of such
discretion, our board may determine the voting rights, if any, of the series of
serial preferred stock being issued, which could include the right to vote
separately or as a single class with our common stock and/or other series of
serial preferred stock; to have more or less voting power per share than that
possessed by our common stock or other series of serial preferred stock, and to
vote on certain specified matters presented to our stockholders or on all of
such matters or upon the occurrence of any specified event or condition. On our
liquidation, dissolution or winding up, the holders of serial preferred stock
may be entitled to receive preferential cash distributions fixed by our board
when creating the particular series of preferred stock before the holders of our
common stock are entitled to receive anything. Serial preferred stock authorized
by our board could be redeemable or convertible into shares of any other class
or series of our capital stock.
Our board of directors believes the authorization of serial preferred stock is
necessary to provide us with the flexibility to act in the future with respect
to financing programs, acquisitions, stock splits and other corporate purposes
(although no such specific activities currently are contemplated, except for the
possible acquisition of an unaffiliated third party described in proposal 2
above) without the delay and expense associated with obtaining special
stockholder approval each time an opportunity requiring the issuance of shares
of preferred stock may arise. Such a delay might deny us the flexibility that
our board views as important in facilitating the effective use of the securities
of our company.
The authorization of the serial preferred stock is not being proposed as a means
of preventing or dissuading a change in control or takeover of our company.
However, use of shares of serial preferred stock for such a purpose is possible.
Shares of our authorized serial preferred stock, as well as shares of our
authorized but unissued common stock, for example, could be issued in an effort
to dilute the stock ownership and voting power of persons seeking to obtain
control of our company or could be issued to purchasers who would support our
board of directors in opposing a takeover proposal. In addition, the existence
of authority to issue serial preferred stock, as well as the issuance of a
series of our preferred stock, if approved, may have the effect of discouraging
a challenge for control or making it less likely that such a challenge, if
attempted, would be successful.
The authorization of serial preferred stock pursuant to this proposal will have
no dilutive effect upon the proportionate voting power of our present
stockholders. However, to the extent that shares of our serial preferred stock
having voting rights are subsequently issued to persons other than our current
stockholders and/or in proportions other than the proportion that presently
exists, such issuance could have a substantial dilutive effect on our current
stockholders.
Interest of Our Management in the Proposal
None of our directors nor executive officers has any financial or other personal
interest in the authorization of serial preferred stock pursuant to this
proposal.
Vote Required
The affirmative vote of the holders of a majority of the shares of our common
stock issued and outstanding on the record date for the annual meeting will be
required to approve this amendment to our articles of incorporation.
Recommendation of Our Board of Directors
Our Board of Directors recommends a vote FOR approval of this amendment to our
articles of incorporation.
PROPOSAL NUMBER 4
AMENDMENT TO OUR ARTICLES OF INCORPORATION
TO ELIMINATE PREEMPTIVE RIGHTS
Our board of directors has proposed that our articles of incorporation be
amended to eliminate preemptive rights. Preemptive rights are the rights of
existing stockholders, subject to various exceptions, to subscribe for new
shares of capital stock to be issued by a company increasing its issued shares,
in preference to persons who are not stockholders. The effect of approving this
amendment to our articles of incorporation would be to make it clear that none
of our stockholders have preemptive rights. A copy of the Amended and Restated
Articles of Incorporation is attached hereto as Appendix B to this Proxy
Statement.
Our company was originally incorporated in Nevada in 1994 under the name "Mojave
Southern, Inc." In the articles of incorporation it was provided that our
shareholders were entitled to preemptive rights. In granting this right, the
articles referred to section 78.265 of the Nevada Revised Statutes. This section
provided that for all companies formed before 1991, unless the articles of
incorporation so provide, preemptive rights do exist. In 1991, Nevada reversed
this by adopting section 78.267 and changed the law to provide that for
companies incorporated after 1991, stockholders do not have preemptive rights
unless the articles of incorporation so provide.
In connection with current management's recent review of our charter documents,
it was discovered that the wrong Nevada section was referred to. Because Mojave
Southern was formed after 1991, section 78.267 should apply and our stockholders
should not have preemptive rights. Therefore, our board believes it is in our
best interest to adopt an amendment to our articles of incorporation to
expressly eliminate preemptive rights.
Because our current stockholders may have preemptive rights, since we merged
with New York Medical (previously known as Mojave Southern) in September 2002,
we may be liable to these stockholders for not offering them the right to
purchase shares of our Company in connection with various issuances of shares of
our common stock. These issuances include an aggregate of 8,497,000 shares which
have been issued since September 2002 consisting of: 668,000 shares issued upon
conversion of promissory notes issued in the Company's private placement in
November 2002; 1,750,000 shares issued in connection with the Company's
acquisition of assets of All Care Medical Products; 5,725,000 shares issued in
the Company's reverse acquisition of New York Medical, Inc.; 100,000 shares
issued as payment of interest and 254,000 shares issued in settlement of amounts
due to an affiliate. Any claims made by the stockholders will be subject to the
applicable statute of limitations provisions. Thus, the Company has reserved for
issuance up to an additional 8,497,000 shares of common stock issuable upon the
same terms as those previously issued since September 2002, as well as the
shares issuable under Proposal 2 above.
We have no current plans or intentions to engage in any transaction other than
the Target acquisition described in Proposal 2 above that would otherwise give
rise to preemptive rights if such rights existed. We think it is appropriate to
remove any question about the existence of such rights at this time, so that
later resolution of the issue would not delay our ability to take advantage of
opportunities for equity financings that could become available in the future.
Interest of Our Management in the Proposal
None of our directors nor executive officers has any financial or other personal
interest in the amendment to our articles of incorporation pursuant to this
proposal.
Vote Required
The affirmative vote of the holders of a majority of the shares of our common
stock issued and outstanding on the record date for the annual meeting will be
required to approve this amendment to our articles of incorporation.
Recommendation of Our Board of Directors
Our Board of Directors recommends a vote FOR approval of this amendment to our
articles of incorporation.
PROPOSAL NUMBER 5
RATIFICATION OF SELECTION OF AUDITORS
Introduction
The firm of Marcum & Kliegman LLP has been appointed as the firm of certified
public accountants to audit our books and records for our fiscal year ending
September 30, 2004. This appointment was made by our board of directors. Under
this proposal, we are asking our stockholders to ratify this appointment.
Stockholder ratification in not required. If our stockholders do not approve
this proposal, our board of directors may, but is not required to, reconsider
the appointment.
Change in Certifying Accountants
Grassi & Co., CPA's, P.C. served as our auditor through the fiscal year ended
September 30, 2002. Our board determined not to renew the engagement of Grassi &
Co.. CPA's, P.C. on May 2, 2003 and selected Marcum & Kliegman LLP as our new
auditors.
The reports of Grassi & Co.,CPA's, P.C. on the consolidated financial statements
of our company as of September 30, 2002 and December 31, 2001 for the nine
months and year ended respectively contained no adverse opinion or disclaimer of
opinion and were not otherwise qualified or modified as to uncertainty, audit
scope or accounting principal. Through the date of our determination not to
renew the engagement of Grassi & Co., CPA's, P.C. , we had no disagreements with
Grassi & Co., CPA's, P.C. on any matters relating to accounting principles or
practices, financial statement disclosure or auditing scope or procedures, which
disagreement(s), if not resolved to the satisfaction of Grassi & Co., CPA's,
P.C. , would have cause Grassi & Co., CPA's, P.C. to make reference to the
subject matter of the disagreement(s) in connection with Grassi & Co., CPA's,
P.C.'s audit report for either or both of such last two fiscal years. In
addition, during our two most recent fiscal years and through the date of our
determination not to renew the engagement of Grassi & Co., CPA's, P.C. , neither
we nor anyone acting on our behalf consulted with Marcum & Kliegman LLP on
matters regarding the application of accounting principles to a specific
completed or contemplated transaction, or the type of audit opinion that might
be rendered for our financial statements.
We requested that Grassi & Co., CPA's, P.C. furnish a letter addressed to the
SEC stating that it agreed with the above statements relating to Grassi & Co.,
CPA's, P.C. A copy of such letter, dated May 5, 2003, was filed as exhibit 16.0
to our Current Report on Form 8-K (Date of Report: May 2, 2003), filed with the
SEC on May 7, 2003.
A representative of Marcum & Kliegman LLP is expected to be present at the
annual meeting and to answer any questions asked of them.
Information Concerning Fees
In May 2003, we first engaged Marcum & Kliegman LLP to audit our consolidated
financial statements and to perform certain other non-audit services on our
behalf. Fees billed to us by Marcum & Kliegman for services rendered with
respect to our 2003 fiscal year were as follows:
- Audit fees: $81,000;
- Audit-Related Fees: $0;
- Tax fees: $10,000; and
- All other fees: $0.
Other fees relate to federal, state and local tax return preparation.
Audit Committee Administration of Engagement
Prior to the engagement of Marcum & Kliegman LLP, our audit committee considered
whether the provision of the financial information systems design and
implementation and all other non-audit services was compatible with maintaining
the accounting firm's independence. Our audit committee has recommended to our
board of directors that Marcum & Kliegman be engaged to audit our consolidated
financial statements for our fiscal year ended September 30, 2004.
Vote Required
The affirmative vote of the holders of a majority of the shares of our common
stock actually cast at the annual meeting on this proposal number 5 will be
required to approve the ratification of our selection of Marcum & Kliegman LLP
as the firm of certified public accountants to audit our books and records for
our fiscal year ending September 30, 2004.
Recommendation of Our Board of Directors
Our board of directors recommends that our stockholders vote FOR the
ratification of the appointment of Marcum & Kliegman LLP as our independent
auditor for the year ending September 30, 2004.
OTHER MATTERS
Our board of directors is not aware of any business to be presented at the
annual meeting, other than the matters set forth in the notice of annual meeting
and described in this proxy statement. If any other business does lawfully come
before the annual meeting, it is the intention of the persons named in the
enclosed proxy card to vote on such other business in accordance with their
judgment.
EXPENSES OF SOLICITATION
We will pay the cost of soliciting proxies for the annual meeting. In addition
to soliciting by mail, our directors, officers and other employees may solicit
proxies in person, or by telephone, facsimile transmission or other means of
electronic communication. We also will pay brokers, nominees, fiduciaries and
other custodians their reasonable fees and expenses for sending proxy materials
to beneficial owners and obtaining their voting instructions.
STOCKHOLDER PROPOSALS
Stockholder Proposals for Inclusion in Next Year's Proxy Statement
To be considered for inclusion in our next year's proxy statement, stockholder
proposals must be received at our principal's executive offices no later than
the close of business on ______, 2005. Proposals should be addressed to Bradley
Smith, Secretary, Critical Home Care, Inc., 762 Summa Avenue, Westbury, New York
11590.
Other Stockholder Proposals for Presentation at Next Year's Annual Meeting
For any proposal that is not submitted for inclusion in our next year's proxy
statement, but is instead sought to be presented directly at the 2005 annual
meeting, SEC rules will permit management to vote proxies in its discretion if
we:
- receive notice of the proposal before the close of business on _____
__, 2005 and advise our stockholders in our 2005 proxy statement about
the nature of the matter and how management intends to vote on such
matter, or
- do not receive notice of the proposal prior to the close of business
on _______ ___, 2004.
Notices of intention to present proposals at the 2004 annual meeting should be
addressed to Bradley Smith, Secretary, Critical Home Care, Inc., 762 Summa
Avenue, Westbury, New York 11590.
AVAILABILITY OF OUR FORM 10-KSB
Copies of our Annual Report on Form 10-KSB are being provided with this proxy
statement. Copies of exhibits to our Annual Report are available upon written
request delivered to Bradley Smith, Secretary, Critical Home Care, Inc., 762
Summa Avenue, Westbury, New York 11590.
By order of the Board of Directors,
Bradley Smith, Secretary
Westbury, New York
________ ___, 2004
APPENDIX A
Critical Home Care, Inc.
Audit Committee Charter
Adopted October 18, 2002
1. MEMBERSHIP. The membership of the Audit Committee (the "Committee") of
Critical Home Care, Inc. (the "Company") will consist of no less than two
members of the Board of Directors, of which a majority of whom are independent
from management, financially literate, and at least one of whom has accounting
or related financial management expertise.
2. MEETINGS. The Committee shall meet prior to the release and filing of
annual and quarterly financial reports with the Company's financial management
and its independent auditors to review and discuss such reports. Meetings also
may be called by the Chairman or a majority of members of the Committee and
shall be held during normal business hours and at a mutually agreeable location.
Meetings may be held by conference telephone or similar methods by means of
which all persons participating in the meeting can hear and speak to each other.
3. VACANCIES. The Board of Directors shall designate members of the Board
who meet the requirements set forth in Section 1, above, to fill vacancies.
4. DUTIES AND RESPONSIBILITIES. In the interest of proper financial
management and in compliance with applicable rules and regulations of the
Securities and Exchange Commission, American Stock Exchange and similar
entities, the Committee will:
a. Recommend the selection of an independent auditor to be approved by
the Board of Directors and the shareholders, after reviewing the amount of
non-audit services provided in the prior year, and require the selected
auditor to confirm its independence from management consistent with
Independence Standards Board 1;
b. Consult with the independent auditor with respect to the scope of
the Audit Plan and review the Plan's effectiveness after completion of the
audit;
c. Review, in combination with the independent auditor, the report of
audit, or proposed report of audit, and the accompanying management letter
or other statement to be included in the Annual Report to Shareholders;
d. Consult with the independent auditor with regard to the adequacy of
internal controls;
e. Evaluate the financial and accounting functions of the Company,
including personnel, systems, controls, and overall organization;
f. Provide communication links between the Board of Directors and the
independent auditors;
g. Review the programs the Company has put in place to insure meeting
the key objectives and provide appropriate comments and suggestions to the
responsible management;
h. Ensure that the Company has adequate controls, policies, and
procedures in place to assure compliance with applicable laws, regulations
and company policy;
i. Inform the Board of Directors on a quarterly basis (and as needed)
of any significant situations that could have an important impact on the
business;
j. Review all important policies as outlined above and insure
compliance by appropriate reports from the responsible management;
k. Review the applicability and effectiveness of this Charter and
annually recommend to the Board of Directors its renewal or amendment; and
l. In all of the above, act in an advisory role to management, in an
information role to the full Board of Directors, and in a direct role with
regard to the audit and reporting functions of the external auditors.
APPENDIX B
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
of
CRITICAL HOME CARE, INC.
(Pursuant to Section 78.385, 78.390 and 78.403 of the Nevada General Corporation
Law)
The undersigned, President of Critical Home Care, Inc.(the "Corporation"),
does hereby certify as follows:
1. The name of the Corporation is: Critical Home Care, Inc.
2. The Articles of Incorporation of the Corporation have been amended (the
"Amendments") by amending Article 4 to change the par value and increase
the number of authorized shares of the Company's common stock to
150,000,000, $.001 par value per share, from 100,000,000, $.25 par value
per share, and authorize the issuance of serial preferred stock, consisting
of 5,000,000 shares, with authority vested in the Board of Directors of the
Company to prescribe the classes, series and number of each class or series
of the preferred stock of the Company and the voting powers, designations,
preferences, limitations, restrictions and relative rights of each class or
series of the preferred stock of the Corporation and by deleting Article 12
in its entirety.
3. The Board of Directors of the Corporation adopted a resolution setting
forth the Amendment and declaring its advisability.
4. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a
vote by classes or series, or as may be required by the provisions of the
articles of incorporation have voted in favor of the amendment is:
_________%.
5. The text of the Articles of Incorporation as amended or supplemented is
restated to read in its entirety as follows:
1. The name of this corporation is: Critical Home Care, Inc.
2. Offices for the transaction of any business of the Corporation,
and where meetings of the Board of Directors and of Stockholders
may be held, may be established and maintained in any part of the
State of Nevada, or in any other state, territory, or possession
of the United States.
3. The nature of the business is to engage in any lawful activity.
4. The number of shares of common stock the Corporation is
authorized to issue is 150,000,000 shares of Common Stock, $.001
par value. The number of shares of preferred stock the
Corporation is authorized to issue is 5,000,000, all of which are
of a par value of $.001 each (the "Preferred Stock"). Shares of
Preferred Stock may be issued from time to time in one or more
series as may be determined by the Board of Directors. Each
series shall be distinctly designated. All shares of any one
series of the Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends
thereon, if any, shall be cumulative, if made cumulative. The
powers, preferences, participating, optional, and other rights of
each such series and the qualifications, limitations, or
restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. Except as hereinafter
provided, the Board of Directors is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to
the issuance of any shares of each particular series of Preferred
Stock, the designation, powers, preferences, and relative
participating, optional, and other rights, and the
qualifications, limitations, and restrictions thereof, if any, of
such series, including, without limiting the generality of the
foregoing, the following:
(i) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute, each series,
which number may be increased (except as otherwise fixed by
the board of directors) or decreased (but not below the
number of shares thereof outstanding) from time to time by
action of the Board of Directors;
(ii) The rate and times at which, and the terms and
conditions upon which dividends, if any, on shares of the
series shall be paid, the extent of preferences or
relations, if any, of such dividends to the dividends
payable on any other class or classes of stock of the
Corporation or on any series of Preferred Stock and whether
such dividends shall be cumulative or non-cumulative.
(iii) The right, if any, of the holders of shares of the
same series to convert the same into, or exchange the same
for any other class or classes of the Corporation and the
terms and conditions of such conversion or exchange;
(iv) Whether shares of the series shall be subject to
redemption, and the redemption price or prices including,
without limitation, a redemption price or prices payable in
shares of any class or classes of stock of the Corporation,
cash or other property and the time or times at which, and
the terms and conditions on which, shares of the series may
be redeemed;
(v) The rights, if any, of the holders of shares of the
series upon voluntary or involuntary liquidation, merger,
consolidation, distribution, or sale of assets, dissolution,
or winding up of the Corporation;
(vi) The terms of any sinking fund or redemption or purchase
account, if any, to be provided for shares of the series;
and
(vii) The voting powers, if any, of the holders of shares of
the series which may, without limiting the generality of the
foregoing, include (A) the right to more or less than one
vote per share on any or all matters voted on by the
stockholders, and (B) the right to vote as a series by
itself or together with other series of Preferred Stock or
together with all series of Preferred Stock as a class, on
such matters, under such circumstances, and on such
conditions as the Board of Directors may fix, including,
without limitation, the right, voting as a series by itself
or together with other series of Preferred Stock or together
with all series of Preferred Stock as a class, to elect one
or more Directors of the Corporation in the event there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such other
circumstances and on such conditions as the Board of
Directors may determine.
No holder of any of the shares of any class of the
Corporation shall be entitled as of right to subscribe for,
purchase, or otherwise acquire any shares of any class of
the Corporation which the Corporation proposes to issue or
any rights or options which the Corporation proposes to
grant for the purchase of shares of any class of the
Corporation or for the purchase of any shares, bonds,
securities, or obligations of the Corporation which are
convertible into or exchangeable for, or which carry any
rights, to subscribe for, purchase, or otherwise acquire
shares of any class of the Corporation; and any and all of
such shares, bonds, securities, or obligations of the
Corporation, whether now or hereafter authorized or created,
may be issued, or may be reissued or transferred if the same
have been reacquired and have treasury status, and any and
all of such rights and options may be granted by the Board
of Directors to such persons, firms, corporations, and
associations, and for such lawful consideration, and on such
terms, as the Board of Directors in its discretion may
determine, without first offering the same, or any thereof,
to any said holder.
5. The members of the governing board of the Corporation shall be
styled directors, of which there shall be no less than 1.
6. This Corporation shall have perpetual existence.
7. This Corporation shall have a president, a secretary, a
treasurer, and a resident agent, to be chosen by the Board of
Directors, any person may hold two or more offices.
8. The Capital Stock of the Corporation, after the fixed
consideration thereof has been paid or performed, shall not be
subject to assessment, and the individual liable for the debts
and liabilities of the Corporation, and the Articles of
Incorporation shall never be amended as the aforesaid provisions.
9. No director or officer of the Corporation shall be personally
liable to the Corporation or any of its stockholders for damages
for breach of fiduciary duty as a director or officer involving
any act or omission of any such director or officer provided,
however, that the foregoing provision shall not eliminate or
limit the liability of a director or officer for acts or
omissions which involve intentional misconduct, fraud or a
knowing violation of law, or the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article of the Stockholders of the
Corporation shall be prospective only, and shall not adversely
affect any limitation on the personal liability of a director of
officer of the Corporation for acts or omissions prior to such
repeal or modification.
Dated: _______, 2004
________________________
David Bensol, President
CRITICAL HOME CARE, INC.
The undersigned hereby appoints David Bensol and Eric Yonenson, or either of
them, attorneys and proxies with full power of substitution in each of them, in
the name and stead of the undersigned, to vote as proxy all the shares of the
undersigned in Critical Home Care, Inc., a Nevada corporation (the
"Corporation"), at the 2004 Annual Meeting of the Stockholders of the
Corporation, scheduled to be held on ________ ___, 2004, and any adjournments or
postponements thereof, as follows:
This proxy is being solicited on behalf of the Board of Directors of the
Corporation. The board recommends a vote FOR each of the following proposals.
1. Election of the following nominees to the Board of Directors of the
Corporation:
David Bensol Bradley Smith Mitchell Cooper
Barbara Levine Delbert Spurlock, Jr.
|_| FOR the nominees listed above
|_| WITHHOLD authority to vote for all nominees
|_| Withhold authority to vote for the following individual nominees:
[Print Name(s)]
2. To amend the Corporation's Articles of Incorporation to increase the number
of authorized shares of the Corporation's common stock and change the par
value to 150,000,000 shares, $.001 par value per share from 100,000,000
shares, $.25 par value per share:
|_| FOR |_| AGAINST |_| ABSTAIN
3. To amend the Corporation's Articles of Incorporation to authorize the
issuance of serial preferred stock:
|_| FOR |_| AGAINST |_| ABSTAIN
4. To amend the Corporation's Articles of Incorporation to eliminate
preemptive rights:
|_| FOR |_| AGAINST |_| ABSTAIN
5. To ratify the selection of Marcum & Kliegman LLC as the independent
certified public accountants of the Corporation for the current fiscal
year:
|_| FOR |_| AGAINST |_| ABSTAIN
6. Upon such other business as may properly come before the meeting or any
adjournment thereof.
|_| FOR |_| AGAINST |_| ABSTAIN
THE SHARES REPRESENTED HEREBY SHALL BE VOTED BY THE PROXIES, OR EITHER OF THEM,
AS SPECIFIED AND, IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED
FOR THE ABOVE-LISTED DIRECTOR-NOMINEES AND FOR PROPOSALS 2 THROUGH 6, AS SET
FORTH ON THE REVERSE HEREOF. RECEIPT OF THE CORPORATION'S PROXY STATEMENT, DATED
_______ ____, 2004, IS HEREBY ACKNOWLEDGED.
Dated:_____________________________ , 2004
[L.S.]
[L.S.]
(Note: Please sign exactly as your name appears hereon. Executors,
administrators, trustees, etc. should so indicate when signing, giving full
title as such. If signer is a corporation, execute in full corporate name by
authorized officer. If shares are held in the name of two or more persons, all
should sign.)
PLEASE MARK, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING ENVELOPE