UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14F-1
INFORMATION
STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
RULE 14f-1
THEREUNDER
Commission File
No. 001-33549
CARE
INVESTMENT TRUST INC.
(Exact
name of registrant as specified in its charter)
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MARYLAND
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38-3754322
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(State or other jurisdiction
of
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(I.R.S. Employer
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incorporation or
organization)
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Identification No.)
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505 Fifth Avenue, 6th Floor
New York, New York 10943
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10017
(Zip code)
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(Address of principal executive
offices)
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Registrants telephone number, including area code:
(212) 771-0505
TABLE OF CONTENTS
CARE
INVESTMENT TRUST INC.
505 Fifth Avenue, 6th
Floor
New York, New York 10017
(212) 771-0505
INFORMATION
STATEMENT PURSUANT TO SECTION 14(f) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND
RULE 14f-1
THEREUNDER
NOTICE OF ANTICIPATED CHANGE IN MAJORITY OF DIRECTORS
August 3,
2010
This Information Statement is being transmitted on
August 3, 2010, to the holders of shares of common stock,
par value $0.001 per share, of Care Investment Trust Inc.,
a Maryland corporation (the common stock and shares
thereof, the shares), in accordance with the
requirements of Section 14(f) of the Securities Exchange
Act of 1934, as amended (the Exchange Act), and
Rule 14f-1
promulgated thereunder. As used in this Information Statement,
the terms we, us, our, the
company and Care mean Care Investment
Trust Inc.
We are not asking you to take any action in this Information
Statement. You are receiving this Information Statement in
connection with the possible appointment of four (4) new
directors representing a majority of our Board of Directors (the
Board) in connection with the closing of the
transactions contemplated by the terms of the purchase and sale
agreement (the purchase and sale agreement), dated
as of March 16, 2010, between the company and Tiptree
Financial Partners, L.P., a Delaware limited partnership
(Tiptree). Because the directors so designated by
Tiptree pursuant to the purchase and sale agreement will have
been appointed by our Board, rather than at a meeting of our
stockholders, we are required by federal securities law to
provide this Information Statement to our stockholders. All
descriptions of the purchase and sale agreement in this
Information Statement are qualified in their entirety by
reference to the complete text of the purchase and sale
agreement.
As of August 3, 2010, there were 20,235,924 outstanding
shares of common stock. Each share is entitled to one vote on
each matter on which common stock is entitled to vote.
NO VOTE OR OTHER ACTION BY OUR STOCKHOLDERS IS REQUIRED IN
RESPONSE TO THIS INFORMATION STATEMENT. NO PROXIES ARE BEING
SOLICITED AND YOU ARE NOT BEING REQUESTED TO SEND A PROXY TO THE
COMPANY.
BACKGROUND
You are receiving this Information Statement in connection with
the possible election or appointment of four (4) new
directors to our Board, representing a majority of our Board, as
more fully described below.
On March 16, 2010, we entered into a purchase and sale
agreement with Tiptree providing for a combination of an equity
investment by Tiptree in newly issued common stock at $9.00 per
share and a cash tender offer by us for up to all of our issued
and outstanding shares of common stock at the same price, so
long as certain conditions to the issuance and tender offer are
satisfied or waived. The Tiptree equity investment and the
associated tender offer are together referred to as the
Tiptree Transaction.
Pursuant to the tender offer commenced by the company, and as
disclosed in the Tender Offer Statement on Schedule TO,
dated as of July 15, 2010 (as may be amended or
supplemented from time to time), the company has offered to
purchase up to all of its outstanding shares of common stock at
a price of $9.00 per share in cash upon the terms and subject to
the conditions set forth in the companys Offer to
Purchase, dated July 15, 2010 (as may be amended or
supplemented from time to time, the Offer to
Purchase). The tender offer is subject to conditions set
forth in the Offer to Purchase, including, among other things,
(i) a minimum of 10,300,000 shares of our common stock
shall have been validly tendered (and not withdrawn) prior to
the expiration of the tender offer (as it may be
extended as provided in the Offer to Purchase) and
(ii) Tiptree must have delivered $60,430,932 in cash to the
escrow agent, and Tiptree and the company shall have delivered a
joint written direction to the escrow agent to fund, in part,
Cares purchase of tendered shares.
Pursuant to the terms of the purchase and sale agreement, after
the closing of the tender offer, expected to occur on
August 13, 2010, Care will issue, and Tiptree will
purchase, a minimum of 4,445,000 newly issued shares of the
companys common stock, subject to upward adjustment
(a) if more than 18,000,000 shares are tendered (and
not withdrawn) in the tender offer, by a number of shares equal
to the difference between the actual number of shares tendered
in the tender offer (and not withdrawn) and 18,000,000 in order
to fund the purchase of shares by the company in the tender
offer, or (b) at the election of Tiptree, if fewer than
16,500,000 shares are tendered in the tender offer, in
order to give Tiptree ownership of up to 53.4% of the shares of
the companys common stock on a fully-diluted basis after
taking into account the shares tendered by the stockholders to
the company in the tender offer. For example, if
14,000,000 shares are tendered, Tiptree is required to
purchase 4,445,000 newly issued shares and has the option to
purchase up to an additional 2,735,500 newly issued shares, for
a total of 7,180,500 shares of our common stock, resulting
in Tiptree owning 53.4% of the company. If, however,
19,000,000 shares of our common stock are tendered (and not
withdrawn), Tiptree must purchase a total of 5,445,000 newly
issued shares, resulting in Tiptree owning 81.1% of the company
after consummation of the tender offer. Furthermore, pursuant to
the purchase and sale agreement, Cares stockholders have
been asked to vote at a special meeting to approve the issuance
of stock to Tiptree, in addition to several other proposals as
disclosed in the Schedule 14A Proxy Statement filed on
July 15, 2010.
As a result of the Tiptree Transaction, Tiptree will likely hold
a controlling interest in the company.
As a condition to the closing of the Tiptree Transaction, the
purchase and sale agreement requires us to cause three
(3) of the companys current five (5) directors
serving on our Board immediately prior to the closing of the
Tiptree Transaction (the Closing Date) to resign
from their positions on the companys Board of Directors,
effective as of the Closing Date, and to cause the resulting
vacancies on our Board to be filled by persons acceptable to
Tiptree. Accordingly, we anticipate that Gerald Bisbee, Karen
Robards and Steven Warden will resign from the Board of
Directors effective as of the Closing Date. We further
anticipate that the Care Board will, at the request of Tiptree,
take action to increase the size of the Care Board of Directors
to six members effective as of the closing of the Tiptree
Transaction and to appoint the following four
(4) individuals designated by Tiptree as directors of the
company to fill the vacancies caused by such resignations and
thereby fulfill the increase in the size of the Board: Michael
Barnes, Geoffrey Kauffman, Jonathan Ilany and William Houlihan
Two (2) persons currently serving as directors on our
Board, Flint Besecker and J. Rainer Twiford, are not expected to
resign in connection with the consummation of the Tiptree
Transaction. However, with the appointment of the four
(4) additional directors designated by Tiptree,
Tiptrees designees will comprise a majority of the Care
Board upon closing of the Tiptree Transaction.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of our
common stock, as of August 1, 2010, for (1) each
person known to us to be the beneficial owner of more than 5% of
our outstanding common stock, (2) each of our directors,
(3) each of our named executive officers (including
Mr. Kellman and Mr. McDugall who resigned on
December 4, 2009 and March 18, 2010, respectively, and
whose beneficial ownership figures are as of March 25,
2010) and (4) our directors and named executive
officers as a group. Except as otherwise described in the notes
below, the following beneficial owners have sole voting power
and sole investment power with respect to all shares of common
stock set forth opposite their respective names.
In accordance with SEC rules, each listed persons
beneficial ownership includes:
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all shares the investor actually owns beneficially or of record;
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all shares over which the investor has or shares voting or
dispositive control (such as in the capacity as a general
partner of an investment fund); and
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all shares the investor has the right to acquire within
60 days (such as upon exercise of options that are
currently vested or which are scheduled to vest within
60 days).
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Unless otherwise indicated, all shares are owned directly and
the indicated person has sole voting and investment power.
Unless otherwise indicated, the business address for each
beneficial owner listed below shall be
c/o Care
Investment Trust Inc., 505 Fifth Avenue,
6th Floor, New York, New York 10017.
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Amount and Nature
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of Beneficial
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Ownership of
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Percent of
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Name
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Common Stock
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Total(1)
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CIT Group Inc.(2)
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8,024,040
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38.82
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%
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505 5th Avenue,
6
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Floor
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New York, New York 10017
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GoldenTree Asset Management LP(3)
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2,741,676
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13.55
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%
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300 Park Avenue, 21st Floor
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New York, New York 10022
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Tyndall Capital Partners, L.P.(4)
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1,049,000
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5.18
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%
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599 Lexington Avenue, Suite 4100
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New York, New York 10022
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F. Scott Kellman(5)
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142,950
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*
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Flint D. Besecker(6)
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14,518
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*
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Michael P. McDugall(7)
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0
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*
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Salvatore (Torey) V. Riso Jr.(8)
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40
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*
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Paul F. Hughes(9)
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0
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*
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Gerald E. Bisbee, Jr. Ph.D.(10)
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23,678
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*
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Karen P. Robards(10)
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24,178
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*
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J. Rainer Twiford(10)
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2,844
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*
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Steven N. Warden(11)
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0
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*
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Michael Barnes
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0
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*
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Geoffrey Kauffman
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0
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*
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Jonathan Ilany
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0
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*
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William A. Houlihan
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0
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*
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All directors, nominees and executive officers as a group
(13 persons)
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208,208
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*
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*
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The percentage of shares beneficially owned does not exceed one
percent of the total shares of our common stock outstanding.
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(1)
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As of August 1, 2010, 20,235,924 shares of common
stock were issued and outstanding and entitled to vote. The
percent of total for all of the persons listed in the table
above is based on such 20,235,924 shares of common stock,
except for CIT Group Inc., whose percent of total is based on
20,670,924 shares of common stock, which includes a warrant
to purchase 435,000 shares of our common stock. CIT Group
Inc. is entitled to vote 7,589,040 shares.
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(2)
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In an amendment to Schedule 13D filed on October 2,
2008, CIT Real Estate Holding Corporation and CIT Healthcare
LLC, each located at 505 Fifth Avenue, 6th Floor, New York,
New York 10017, were deemed, pursuant to
Rule 13d-3
of the Exchange Act, to hold shared voting and dispositive power
over 6,981,350 and 1,042,690 shares of our common stock,
respectively. This amendment to Schedule 13D amended and
supplemented the Schedule 13D originally filed on
July 9, 2007 and was filed to report the grant to CIT
Healthcare LLC of warrants to purchase 435,000 shares of
our common stock pursuant to a warrant agreement by and between
CIT Group Inc. and the company, dated September 30, 2008.
By virtue of its 100% ownership of CIT Real Estate Holding
Corporation and CIT Healthcare LLC, CIT Group Inc. was deemed to
have shared voting and dispositive power over
8,024,040 shares of our common stock. On March 16,
2010, CIT Healthcare LLC entered into a warrant purchase
agreement with Tiptree, pursuant to which, CIT Healthcare LLC
will sell its warrant to purchase 435,000 shares of our
common stock to Tiptree on the Closing Date.
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(3)
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In an amendment to Schedule 13G filed on April 9,
2010, GoldenTree Asset Management LP was deemed, pursuant to
Rule 13d-3
of the Exchange Act, to hold shared voting and dispositive power
over 2,741,676 shares of our common stock. By virtue of
serving as the general partner of GoldenTree Asset Management
LP, GoldenTree Asset Management LLC was deemed to have shared
voting and dispositive power over the shares
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held by GoldenTree Asset Management LP. Likewise,
Mr. Steven A. Tananbaum, by virtue of serving as managing
member of GoldenTree Asset Management LLC, was deemed to have
shared voting and dispositive power over the shares held by
GoldenTree Asset Management LP. In a Schedule 13G filed on
March 4, 2009, GoldenTree Asset Management LP, GoldenTree
Asset Management LLC and Mr. Steven A. Tananbaum, together
with GT Asset Management LP and GT Asset Management LLC,
reported that they have ceased to be beneficial
owners of our common stock for purposes of
Section 16(a) of the Exchange Act.
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(4)
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In a Schedule 13G filed on February 5, 2010, Tyndall
Capital Partners, L.P., located at 599 Lexington Avenue,
Suite 4100, New York, New York 10022, was deemed, pursuant
to
Rule 13d-3
of the Exchange, to hold shared voting and dispositive power
over 1,049,000 shares of our common stock, due to its
position as general partner of Tyndall Partners, L.P. and
Tyndall Institutional Partners, L.P.
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(5)
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Mr. Kellman resigned as chief executive officer and
president of our company on December 4, 2009. All of
Mr. Kellmans unvested restricted stock and restricted
stock units vested upon his resignation. Additionally, all of
Mr. Kellmans performance share awards vested upon the
approval of the plan of liquidation by our stockholders on
January 28, 2010. The amount of shares beneficially owned
by Mr. Kellman in the table above is as of March 25,
2010.
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(6)
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All of Mr. Beseckers unvested restricted stock and
restricted stock units vested upon the approval of the plan of
liquidation by our stockholders on January 28, 2010.
Mr. Beseckers beneficial ownership figure does not
reflect the 10,000 shares issuable to him upon settlement
of the performance share award granted to him on
December 10, 2009.
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(7)
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Mr. McDugall resigned as chief investment officer of our
company on March 18, 2010. All of Mr. McDugalls
unvested restricted stock and restricted stock units vested upon
approval of the plan of liquidation by stockholders on
January 28, 2010. Mr. McDugalls beneficial
ownership figure does not reflect the performance share award
granted to him on December 10, 2009. The amount of shares
beneficially owned by Mr. McDugall in the table above is as
of March 25, 2010.
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(8)
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All of Mr. Risos unvested restricted stock units
vested upon the approval of the plan of liquidation by our
stockholders on January 28, 2010. Mr. Risos
beneficial ownership figure does not reflect the
10,000 shares issuable to him upon settlement of the
performance share award granted to him on December 10, 2009.
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(9)
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All of Mr. Hughes unvested restricted stock units
vested upon the approval of the plan of liquidation by our
stockholders on January 28, 2010. Mr. Hughes
beneficial ownership figure does not reflect the
6,000 shares issuable to him upon settlement of the
performance share award granted to him on December 10, 2009.
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(10)
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All of our directors unvested restricted stock vested upon the
approval of the plan of liquidation by our stockholders on
January 28, 2010.
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(11)
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All of Mr. Wardens unvested restricted stock units
vested upon the approval of the plan of liquidation by our
stockholders on January 28, 2010.
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SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who own more than 10% of a
registered class of our equity securities, to file reports of
ownership and changes in ownership with the SEC. Officers,
directors and persons who own more than 10% of a registered
class of our equity securities are required to furnish us with
copies of all Section 16(a) forms that they file. To our
knowledge, based solely on review of the copies of such reports
furnished to us, all Section 16(a) filing requirements
applicable to our executive officers, directors and persons who
own more than 10% of a registered class of our equity securities
were filed on a timely basis during 2009, except that
Mr. Besecker filed one (1) late report with respect to
one (1) transaction (shares purchased through the
reinvestment of dividends declared on our common stock).
4
LEGAL
PROCEEDINGS
On September 18, 2007, a class action complaint for
violations of federal securities laws was filed in the United
States District Court, Southern District of New York alleging
that the Registration Statement relating to the initial public
offering of shares of our common stock, filed on June 21,
2007, failed to disclose that certain of the assets in the
contributed portfolio were materially impaired and overvalued
and that we were experiencing increasing difficulty in securing
our warehouse financing lines. On January 18, 2008, the
court entered an order appointing co-lead plaintiffs and co-lead
counsel. On February 19, 2008, the co-lead plaintiffs filed
an amended complaint citing additional evidentiary support for
the allegations in the complaint. We believe the complaint and
allegations are without merit, and we intend to defend against
the complaint and allegations vigorously. We filed a motion to
dismiss the complaint on April 22, 2008. The plaintiffs
filed an opposition to our motion to dismiss on July 9,
2008, to which we filed our reply on September 10, 2008. On
March 4, 2009, the court denied our motion to dismiss. Care
filed its answer on April 15, 2009. At a conference held on
May 15, 2009, the Court ordered the parties to make a joint
submission (the Joint Statement) setting forth:
(i) the specific statements that Plaintiffs claim are false
and misleading; (ii) the facts on which Plaintiffs rely as
showing each alleged misstatement was false and misleading; and
(iii) the facts on which Defendants rely as showing those
statements were true. The parties filed the Joint Statement on
June 3, 2009. On July 31, 2009, the parties entered
into a stipulation that narrowed the scope of the proceeding to
the single issue of the warehouse financing disclosure in the
Registration Statement. Fact discovery closed on April 23,
2010.
The Court ordered the parties to file an abbreviated joint
pre-trial statement on June 9, 2010, and scheduled a
pre-trial conference for June 11, 2010. At the conclusion
of the pre-trial conference, the Court asked the parties to
agree on a summary judgment briefing schedule. Defendants filed
their motion for summary judgment on July 9, 2010.
Plaintiffs are to file their opposition on August 20, 2010
and Defendants are to file their reply on September 17,
2010. The outcome of this matter cannot currently be predicted
On November 25, 2009, we filed a lawsuit in the
U.S. District Court for the Northern District of Texas
against Cambridge Holdings and its affiliates, including its
chairman and chief executive officer (collectively, Saada
Parties), seeking declaratory judgments that (i) we
have the right to engage in a business combination transaction
involving our company or a sale of our wholly owned subsidiary
that serves as the general partner of the partnership that holds
the direct investment in the portfolio without the approval of
the Saada Parties, (ii) the contractual right of the Saada
Parties to put their interests in the Cambridge medical office
building portfolio has expired and (iii) the operating
partnership units held by the Saada Parties do not entitle them
to receive any special cash distributions made to our
stockholders. We also brought affirmative claims for tortious
interference by the Saada Parties with a prospective contract
and for their breach of the implied covenant of good faith and
fair dealing.
On January 27, 2010, the Saada Parties answered our
complaint, and simultaneously filed Counterclaims that named our
subsidiaries ERC Sub LLC and ERC Sub, L.P., external manager CIT
Healthcare LLC, and Board chairman Flint D. Besecker, as
additional third-party defendants. The Counterclaims seek four
(4) declaratory judgments construing certain contracts
among the parties that are largely the mirror image of our
declaratory judgment claims. In addition, the Counterclaims also
seek monetary damages for purported breaches of fiduciary duty
and the duty of good faith and fair dealing, as well as
fraudulent inducement, against us and the third-party defendants
jointly and severally.
The Counterclaims further request indemnification by ERC Sub,
L.P., pursuant to a contract between the parties, and the
imposition of a constructive trust on our current
assets to be disposed as part of any future liquidation of Care,
including all proceeds from those assets. Although the
Counterclaims do not itemize their asserted damages, they assign
these damages a value of $100 million or more.
In addition, the Saada Parties filed a motion to dismiss our
tortious interference and breach of the implied covenant of good
faith and fair dealing claims on January 27, 2010. In
response to the Counterclaims, we filed, on March 5, 2010,
an omnibus motion to dismiss all of the Counterclaims.
On March 22, 2010, we received a letter from Cambridge
Holdings, which asserted that the transactions with Tiptree were
in violation of our agreements with the Saada Parties.
The Saada Parties filed their opposition to our omnibus motion
to dismiss on March 26, 2010, and we filed our response on
April 9, 2010.
5
On April 14, 2010, the Saada Parties motion to
dismiss was denied and our motion to dismiss was also denied.
On April 27, 2010, we filed an answer to the Saada
Parties third-party complaint. We continue to believe that
the arguments advanced by Cambridge Holdings lack merit.
On May 28, 2010, Cambridge Holdings filed a motion for
leave to amend its previously-asserted counterclaims and
third-party complaint to include a new claim for breach of
contract against Care. This proposed new claim asserts that
Cambridge Holdings and Care agreed, in October 2009, upon a sale
of ERC Sub, L.P.s 85% limited partnership interest in the
Cambridge properties back to Cambridge Holdings for
$20 million in cash plus certain other arrangements
involving the cancellation of partnership units and existing
escrow accounts. The proposed new claim further asserts that
Care reneged on this purported agreement after having previously
agreed to all of its material terms, thus breaching
the agreement. Further, the proposed new claim seeks specific
performance of the purported contract. Care denies that any
agreement of the sort alleged by Cambridge Holdings was ever
reached, and Care also believes that the proposed new claim
suffers from several deficiencies. Care filed its opposition on
June 18, 2010 and Cambridge Holdings replied on
July 1, 2010. In the meantime, on June 21, 2010, ERC
Sub sought leave to amend its complaint to assert a breach of
contract action against Cambridge Holdings. Cambridge Holdings
did not oppose ERC Subs motion. To date, the Court has not
acted on either of these pending motions for leave to amend.
We are not presently involved in any other material litigation
nor, to our knowledge, is any material litigation threatened
against us or our investments, other than routine litigation
arising in the ordinary course of business. Unless judgments are
rendered against the company in connection with the litigation
described above, management believes the costs, if any, incurred
by us related to litigation will not materially affect our
financial position, operating results or liquidity.
DIRECTORS
AND EXECUTIVE OFFICERS
Information
about Directors
Set forth below is the name, age, title and tenure of each
current director of the company, excluding Messrs. Bisbee
and Warden and Ms. Robards who are expected to resign their
positions from our Board of Directors effective as of the
closing of the Tiptree Transaction, followed by a summary of
each directors background and principal occupations.
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Name
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Age
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Director Since
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Flint D. Besecker (Chairman of the Board)
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44
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2007
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J. Rainer Twiford (Chair of the CNG Committee)
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57
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2007
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Flint D. Besecker
has been a member of our Board of
Directors since Care was formed in 2007 and serves as our
chairman. Mr. Besecker is a veteran of both the commercial
finance and healthcare industries and currently runs Firestone
Asset Management, a healthcare middle market private equity
business he founded in 2008. Firestone owns a variety of private
equity investments focused on early stage life science drug
development as well as specialty pharmaceutical companies. In
addition, Mr. Besecker was formerly a director and chairman
of the compensation committee of Allion Healthcare, a specialty
pharmaceutical company serving patients throughout the
U.S. Prior to founding Firestone Asset Management,
Mr. Besecker served as the president and founder of CIT
Healthcare LLC, our Manager, and also served as president of CIT
Commercial Real Estate. Prior to joining CIT in 2004,
Mr. Besecker held a variety of executive positions
including managing director of GE Healthcare Financial Services,
executive vice president and chief risk officer of Heller
Healthcare Finance and president and co-founder of Healthcare
Analysis Corporation. He also served as an officer of Healthcare
Financial Partners prior to its acquisition by Heller.
Mr. Besecker is treasurer and board member for the Center
of Hospice and Palliative Care of Western NY. He received a BS
in Accounting from Canisius College in 1988 and is a Certified
Public Accountant. Mr. Besecker was selected to serve as a
member and chairman of our Board of Directors because of his
significant achievements with, and intimate knowledge of, the
company and his extensive experience in healthcare and real
estate.
J. Rainer Twiford
has been a member of our Board of
Directors since the consummation of our initial public offering
in 2007. Since 1999, Mr. Twiford has been president of
Brookline Partners, Inc., an investment advisory
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company. Prior to joining Brookline Partners, Mr. Twiford
was partner of Trammell Crow Company from 1987 until 1991.
Mr. Twiford is currently a director of IPI, Inc., Smith of
Georgia and Tracon Pharmaceuticals, and previously served on the
board of a childrens behavioral health company.
Mr. Twiford received a BA and a Ph.D. from the University
of Mississippi, an MA from the University of Akron and a JD from
the University of Virginia. Mr. Twiford was selected to be
a member of our Board of Directors because of his extensive high
level experience in the financial industry.
Information
about Executive Officers
Our current executive officers are as follows:
Salvatore (Torey) V. Riso Jr.
, age 48, has served as
our president and chief executive officer since December 2009.
Mr. Riso formerly served as our secretary and chief
compliance officer from February 2008 and has been employed by
CIT Group since September 2005, serving as senior vice president
and chief counsel of CIT Corporate Finance since March 2007.
Prior to his current position at CIT Group, Mr. Riso served
as chief counsel for our Manager, CIT Healthcare, and other
business units of CIT Group. Between 1997 and 2005,
Mr. Riso was in private practice in the New York office of
Orrick Herrington & Sutcliffe LLP, where he worked in
Orricks global finance practice group. Mr. Riso
received a BA in economics and history cum laude from UCLA, as
well as a JD from the Loyola Law School of Los Angeles.
Paul F. Hughes
, age 55, has been our chief financial
officer and treasurer since March 2009 and has served as our
secretary and chief compliance officer since December 2009.
Mr. Hughes is senior vice president and chief financial
officer of the CIT Corporate Finance Unit. Mr. Hughes has
over 30 years of finance and accounting experience,
including 25 years with CIT. Mr. Hughes joined CIT in
1983 as a manager in the Internal Audit Department. He has held
a number of executive positions including a leadership position
in CIT Equipment Finance from 1986 to 2002 where he was
responsible for the financial operations and other management
roles with the business unit. Most recently, Mr. Hughes
served as Senior Vice President of Corporate Development from
2003 to 2009 where he handled all aspects of pricing, contract
negotiations and internal/external coordination for acquisitions
and dispositions of CIT businesses. Prior to joining CIT,
Mr. Hughes was an audit manager at Coopers and Lybrand.
Mr. Hughes is a graduate of Northeastern University in
Boston, MA, with a B.S. in Business Administration.
Mr. Hughes has also attended the Executive Management
Program at the Tuck School of Business at Dartmouth.
Mr. Hughes is a CPA, licensed in the State of New York.
7
INFORMATION
CONCERNING DESIGNEES TO OUR BOARD OF DIRECTORS
Effective upon the resignation of Messrs. Warden and Bisbee
and Ms. Robards, the Care Board is expected to appoint the
Tiptree designees listed below as directors. Set forth below is
the name and age of each designee for director of the company
followed by a summary of such persons background and
principal occupations. The information provided in this
Information Statement regarding Tiptrees designees for
director was provided to the company by Tiptree and has not been
independently verified by the company.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Biography
|
|
Michael Barnes
|
|
|
44
|
|
|
Mr. Barnes has served as the Chief Executive Officer and
Chairman of Tiptree since its inception in 2007 and is a
founding partner of Tricadia Holdings, L.P. and its affiliated
companies (Tricadia), which are privately held and
provide investment management services. Prior to the formation
of Tricadia in 2003, Mr. Barnes spent two years as Head of
Structured Credit Arbitrage within UBS Principal Finance LLC, a
wholly owned subsidiary of UBS Warburg, which conducts
proprietary trading on behalf of the firm. Mr. Barnes joined
UBS in 2000 as part of the merger between UBS and PaineWebber
Inc. Prior to joining UBS, Mr. Barnes was a Managing Director
and Global Head of the Structured Credit Products Group of
PaineWebber. Prior to joining PaineWebber in 1999, he spent
12 years at Bear, Stearns & Co. Inc., the last five of
which he was head of their Structured Transactions Group. Mr.
Barnes received his A.B. from Columbia College. Mr. Barnes was
selected by Tiptree to serve as a member of our Board of
Directors because of his extensive experience in asset
management, including the management of credit assets, real
estate, and for his experience in developing emerging and
transitional companies.
|
Geoffrey Kauffman
|
|
|
51
|
|
|
Mr. Kauffman has served as the President and Chief Operating
Officer of Tiptree since its inception in 2007 and has been a
Managing Director of Tricadia since 2005. Since joining Tricadia
in 2005, Mr. Kauffman has been overseeing a variety of strategic
acquisition opportunities and permanent capital projects,
including the development of Tiptree. Prior to joining Tricadia,
from 2002 to 2004, Mr. Kauffman was a partner with the Shidler
Group in a similar capacity, with his primary focus being the
development of a credit derivative products company (CDPC).
Before joining the Shidler Group, from 1997 to 2001, Mr.
Kauffman was involved in the launch of the CGA Group of
companies, which originated financial guarantee contracts. From
1997 through 1999, he was the President, Chief Underwriting
Officer and Principal Representative of CGA Bermuda, Ltd, the
CGA Groups Bermuda based insurance subsidiary. From 2000
to 2001, he was the President and Chief Executive Officer of CGA
Investment Management. Prior to joining CGA, Mr. Kauffman was at
AMBAC and the MBIA / AMBAC International joint venture in 1995
and 1996, where he helped develop their international structured
finance department. Prior to AMBAC, from 1989 to 1995, Mr.
Kauffman was with FGICs ABS group and helped establish
that business, focusing on CDOs, asset backed securities and
multi-seller conduit programs. Prior to FGIC, Mr. Kauffman
worked in the Investment Banking Division of Marine Midland Bank
(now HSBC), where he focused on middle market mergers and
acquisitions and structured finance. Mr. Kauffman holds a B.A.
(Psychology) from Vassar College and an M.B.A. (Finance) from
Carnegie Mellon University. Mr. Kauffman was selected by Tiptree
to serve as a member of our Board of Directors because of his
significant and diverse experience in financial transactions,
particularly credit transactions, and real estate, as well as
his experience in developing emerging and transitional
companies.
|
8
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Biography
|
|
Jonathan Ilany
|
|
|
57
|
|
|
Jonathan Ilany has been chairman of the board of directors of
Reliance First Capital, a privately owned mortgage company,
since 2008. Since 2005, Mr. Ilany has been a private investor
and passive partner at Mariner Investment Group. Mr. Ilany was a
partner at Mariner Investment Group from 2000-2005, responsible
for hiring and setting up new trading groups, overseeing risk
management, and he was a senior member of the investment
committee and management committee of the firm. From
1996-2000, Mr. Ilany was a private investor and also served as
interim Chief Executive Officer of Angiosonics, a start-up
medical device company, and as a director of various private
companies. From 1982-1995, Mr. Ilany was an employee of Bear
Stearns & Co. where he was a member of the Board of
Directors. At Bear Stearns, Mr. Ilany initiated and supervised
the Fixed Income Analytic and Structuring Group, started the
whole loan trading group and the conduit group, and in 1990
began EMC, a specialty mortgage company designed to deal with
all RTC liquidations. Mr. Ilany then further developed EMC as a
servicing and acquisition platform for distressed mortgage
product. He shared responsibility for the Financial Institution
Group, all asset-backed securities, and he oversaw the Forex,
Commodities and Energy Trading departments. From 1980-1982, Mr.
Ilany worked at Merrill Lynch. From 1971-1975, Mr. Ilany served
in the armored corps of the Israeli Defense Forces and he was
honorably discharged holding the rank of First Lieutenant. Mr.
Ilany was selected by Tiptree to serve as a member of our Board
of Directors because of his extensive experience in overseeing
risk management and serving on the investment committee and
management committee of a major investment firm, serving on the
board of directors of various companies and his experience with
investing in real estate and real estate-related assets.
|
9
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Biography
|
|
William A. Houlihan
|
|
|
55
|
|
|
Mr. Houlihan has more than 30 years of business and
financial experience. Since September 2009, he has served on the
Board of Directors and as the financial expert on the audit
committee of First Physicians Capital Group, Inc., a
publicly-traded company that owns ambulatory surgical centers
and small hospitals. Since November 2003, Mr. Houlihan has
served on the Board of Directors of SNL Financial, a
privately-held company that maintains database financial
information on financial institutions, REITs, energy, media and
other companies. During an eight-year period from 2001 through
2008, Mr. Houlihan was a private investor while he served as
transitional Chief Financial Officer for several distressed
companies: Sixth Gear, Inc. from October 2007 to November 2008,
Sedgwick Claims Management Services from August 2006 until
January 2007, Metris Companies from August 2004 to January 2006,
and Hudson United Bancorp from January 2001 to November 2003.
Mr. Houlihan also worked as an investment banker at UBS from
June 2007 to September 2007, J.P. Morgan Securities from
November 2003 to July 2004, KBW, Inc. from October 1996 to
January 2001, Bear, Stearns & Co., Inc. from April 1991 to
October 1996, and Goldman Sachs & Co. from June 1981 to
April 1991. He also held several auditing and accounting
positions from June 1977 through June 1981. Mr. Houlihan
received a Bachelor of Science, Magna Cum Laude in Accounting in
1977 from Manhattan College, became licensed as a Certified
Public Accountant in 1979, and received his Masters of Business
Administration in Finance in 1983 from New York University
Graduate School of Business. Mr. Houlihan was selected by
Tiptree to serve as a member of our Board of Directors because
of his diverse financial experience, including his service on
the boards of directors of several small capitalization,
high-growth companies, as chief financial officer of
transitional public and privately-held companies and his
extensive accounting background.
|
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
We have no employees. We are managed by CIT Healthcare LLC, our
Manager, pursuant to a management agreement between our Manager
and us. All of our named executive officers (Messrs. Riso
and Hughes) are, or in the case of Messrs. Kellman,
McDugall and Plenskofski, were, employees of our Manager or one
of its affiliates. We have not paid, and we do not intend to
pay, any cash compensation to our executive officers and we do
not currently intend to adopt any policies with respect thereto.
We do not have agreements with any of our executive officers or
any employees of our Manager or its affiliates with respect to
their cash compensation. Our Manager determines the levels of
base salary and cash incentive compensation that may be earned
by our executive officers, as our Manager determines is
appropriate. Our Manager also determines whether and to what
extent our executive officers are provided with pension,
deferred compensation and other employee benefits plans and
programs.
Cash compensation paid to our executive officers is paid by our
Manager or its affiliates in part from the fees paid by us to
our Manager under the management agreement. We do not control
how such fees are allocated by our Manager to its employees. In
addition, we understand that, because the services performed by
our Managers and its affiliates employees, including
our executive officers, are not performed exclusively for us,
our Manager is not able to segregate that portion of the cash
compensation paid to our executive officers by our Manager or
its affiliates that relates to their services to us.
10
Equity
Compensation
Our Compensation, Nominating and Governance Committee (CNG
Committee), may, from time to time, grant equity awards
designed to align the interests of our executive officers with
those of our stockholders, by allowing our executive officers to
share in the creation of value for our stockholders through
stock appreciation and dividends. The equity awards granted to
our executive officers are generally subject to time-based
vesting requirements designed to promote the retention of
management and to achieve strong performance for our company.
These awards further provide flexibility to us in our ability to
enable our Manager to attract, motivate and retain talented
individuals at our Manager. We have adopted the Care Investment
Trust Inc. 2007 Equity Plan, which provides for the
issuance of equity-based awards, including stock options, stock
appreciation rights, restricted stock, restricted stock units,
unrestricted stock awards and other awards based on our common
stock that may be made by us to our directors and officers and
to our advisors and consultants who are providing services to
the company (which may include employees of our Manager and its
affiliates) as of the date of the grant of the award. Shares of
common stock issued to our independent directors with respect to
their annual retainer fees are also issued under this plan.
Our Board of Directors has delegated its administrative
responsibilities under the 2007 Equity Plan to our CNG
Committee. In its capacity as plan administrator, the CNG
Committee has the authority to make awards to eligible
directors, officers, advisors and consultants, and to determine
what form the awards will take and the terms and conditions of
the awards. Grants of equity-based or other compensation to our
chief executive officer must also be approved by the independent
members of our Board.
Special
Equity Grant to Mr. Kellman
On March 13, 2009, our Board of Directors approved a
special grant of 21,440 restricted stock units to
Mr. Kellman. The award was structured to vest in four equal
installments beginning on the first anniversary of the grant
date (March 13, 2010). Our Board of Directors granted the
award to Mr. Kellman, which had a grant date fair value of
$124,995 based on our closing stock price on March 13, 2009
of $5.83 per share, to recognize his service as Chief Executive
Officer and President of the company. Mr. Kellman resigned
from the company on December 4, 2009. Pursuant to the terms
of his award, the 21,440 restricted stock units vested upon his
resignation.
Special
Equity Grant to Mr. Riso
On March 12, 2009, our Board of Directors approved a
special grant of 10,486 restricted stock units to Mr. Riso.
The award was structured to vest in four equal installments
beginning on the first anniversary of the grant date. Our Board
of Directors granted the award to Mr. Riso, which had a
grant date fair value of $62,497 based on our closing stock
price on March 12, 2009 of $5.96 per share, to recognize
Mr. Risos continued service to the company. These
shares vested on January 28, 2010, upon the approval of the
plan of liquidation by our stockholders.
Special
Equity Grant to Mr. Hughes
On May 7, 2009, our Board of Directors approved a special
grant of 13,333 restricted stock units to Mr. Hughes. The
award was structured to vest in four equal installments
beginning on the first anniversary of the grant date. Our Board
of Directors granted the award to Mr. Hughes, which had a
grant date fair market value of $66,265 based on our closing
stock price on May 7, 2009 of $4.97 per share, to recognize
Mr. Hughess service to our company as the new chief
financial officer and treasurer. These shares vested on
January 28, 2010, upon the approval of the plan of
liquidation by our stockholders.
Performance
Share Awards to Mr. Riso and Mr. Hughes
On December 10, 2009, our Board of Directors awarded
Mr. Riso and Mr. Hughes performance share awards with
target levels of 5,000 and 3,000, respectively. These awards
were amended and restated on February 23, 2010, such that
the awards are triggered upon the execution, during 2010, of one
or more of the following transactions that results in a return
of liquidity to our stockholders within the parameters expressed
in the agreement: (i) a merger or other business
combination resulting in the disposition of all of the issued
and outstanding equity securities of the company, (ii) a
tender offer made directly to our stockholders either by us or a
third party for at least a majority of
11
our issued and outstanding common stock, or (iii) the
declaration of aggregate distributions by the our Board equal to
or exceeding $8.00 per share. If the net proceeds are less than
$7.50 per share, each individual will receive 50% of their
respective target awards. If the net proceeds are greater than
or equal to $7.50 per share and less than or equal to $7.99 per
share, each individual will receive his respective target award.
If the net proceeds are equal to or exceed $8.00 per share, each
individual will receive 200% of his respective target award.
Each performance share award will accrue any distributions
declared during the award period without duplication. If any of
these individuals is terminated or removed during the award
period for cause, they will automatically forfeit their
performance share award. If any of these individuals is
terminated or removed during the award period for any other
reason, then they will receive a prorated award at the end of
the award period based on the number of days during the award
period that they were with the company. Upon a change in control
of the company, other than a liquidity event, during the award
period, the award period will automatically be deemed completed
and payouts will be made to each individual at their respective
target levels.
Mr. Riso will be entitled to receive 10,000 performance
shares in connection with the Tiptree Transaction, which will
represent $90,000 in value if the tender offer to be conducted
as part of the Tiptree Transaction is completed.
Mr. Hughes will be entitled to receive 6,000 performance
shares in connection with the Tiptree Transaction, which will
represent $54,000 in value if the tender offer to be conducted
as part of the Tiptree Transaction is completed.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table sets forth information regarding the
compensation paid to our named executive officers by us in 2009,
2008 and 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
Awards(1)
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
Salvatore (Torey) V. Riso Jr.(2)
|
|
|
2008
|
|
|
$
|
18,058
|
|
|
$
|
18,058
|
|
Chief Executive Officer, President
|
|
|
2009
|
|
|
$
|
149,933
|
|
|
$
|
149,933
|
|
Paul F. Hughes(3)
|
|
|
2009
|
|
|
$
|
110,131
|
|
|
$
|
110,131
|
|
Chief Financial Officer, Treasurer, Secretary &
Chief Compliance Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
F. Scott Kellman(4)
|
|
|
2007
|
|
|
$
|
75,719
|
|
|
$
|
75,719
|
|
Chief Executive Officer, President
|
|
|
2008
|
|
|
$
|
256,881
|
|
|
$
|
256,881
|
|
|
|
|
2009
|
|
|
$
|
966,734
|
|
|
$
|
966,734
|
|
Frank E. Plenskofski(5)
|
|
|
2008
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Chief Financial Officer, Treasurer
|
|
|
2009
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
(1)
|
|
Amounts recognized by the company for financial statement
reporting purposes in the fiscal years ended December 31,
2007, December 31, 2008 and December 31, 2009 in
accordance with Accounting Standards Codification
718
Compensation Stock
Compensation
. See Footnote 10 to our Consolidated Financial
Statements in our Annual Report on
Form 10-K
for the year ended December 31, 2007 and Footnote 14 to our
Consolidated Financial Statements in our Annual Report on
Form 10-K
for each of the years ended December 31, 2009 and 2008. In
accordance with SEC rules, estimates of forfeitures related to
service-based conditions have been disregarded.
|
|
(2)
|
|
Mr. Riso was not an executive officer in 2007. On
December 10, 2009, Mr. Riso was awarded a performance
share award with a threshold, target and maximum award of 2,500,
5,000 and 10,000 shares, respectively. The grant date fair
value of the award assuming the achievement of the highest level
of performance is $79,800. On February 23, 2010, our Board
amended the performance share awards. See Compensation
Discussion and Analysis Performance Share Awards to
Mr. Riso and Mr. Hughes for more information on
the amendment. The grant date fair value of the award on
February 23, 2010 for the highest level of performance is
$83,200.
|
12
|
|
|
(3)
|
|
Mr. Hughes was not an executive officer in 2007 and 2008.
On December 10, 2009, Mr. Hughes was awarded a
performance share award with a threshold, target and maximum
award of 1,500, 3,000 and 6,000 shares, respectively. The
grant date fair value of the award assuming the highest level of
performance is $47,880. On February 23, 2010, our Board
amended the performance share awards. See Compensation
Discussion and Analysis Performance Share Awards to
Mr. Riso and Mr. Hughes for more information on
the amendment. The grant date fair value of the award on
February 23, 2010 for the highest level of performance is
$49,920.
|
|
(4)
|
|
On December 4, 2009, Mr. Kellman resigned as Chief
Executive Officer and President of the company. Pursuant to the
terms of Mr. Kellmans restricted stock and RSU
awards, the restricted stock and RSU awards vested upon his
resignation. In addition, upon Mr. Kellmans
resignation, we agreed that, notwithstanding the terms of his
performance share award, when the determination of the payout
percentage is made by our compensation committee at the end of
the award period, the performance goals under the award shall be
deemed to have been attained at target level
performance, or 23,255 shares of common stock. Under the
terms of the performance share award and our equity plan,
stockholder approval of the plan of liquidation on
January 28, 2010, resulted in the acceleration of the award
period and the 23,255 shares vested.
|
|
(5)
|
|
Mr. Plenskofski resigned as Chief Financial Officer and
Treasurer of the company on March 16, 2009. In connection
with his resignation, Mr. Plenskofski forfeited his RSU
award.
|
Grants of
Plan-Based Awards
The following table sets forth information about awards granted
to our named executive officers by us during the fiscal year
ended December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market
|
|
|
Value of
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Shares of
|
|
|
Price on
|
|
|
Stock and
|
|
|
|
|
|
|
Equity Incentive Plan Awards
|
|
|
Stock or
|
|
|
Grant
|
|
|
Option
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Date
|
|
|
Awards
|
|
Name
|
|
Grant Date
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
|
Salvatore (Torey) V. Riso, Jr.
|
|
|
3/12/2009(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,486
|
|
|
$
|
5.96
|
|
|
$
|
62,497
|
|
|
|
|
12/10/2009(1
|
)
|
|
|
2,500
|
|
|
|
5,000
|
|
|
|
10,000
|
|
|
|
|
|
|
$
|
7.98
|
|
|
$
|
79,800
|
|
Paul F. Hughes
|
|
|
5/7/2009(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,333
|
|
|
$
|
4.97
|
|
|
$
|
66,265
|
|
|
|
|
12/10/2009(1
|
)
|
|
|
1,500
|
|
|
|
3,000
|
|
|
|
6,000
|
|
|
|
|
|
|
$
|
7.98
|
|
|
$
|
47,880
|
|
Scott F. Kellman
|
|
|
3/13/2009(3
|
)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
21,440
|
|
|
$
|
5.83
|
|
|
$
|
124,995
|
|
Frank E. Plenskofski
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(1)
|
|
Award under the Amended and Restated Performance Share Award
Agreement granted on December 10, 2009 and amended and
restated on February 23, 2010. The stock award in the table
above represents the maximum opportunity for Mr. Riso and
Mr. Hughes, respectively, expressed as a number of RSUs.
The fair value of the grants made to Mr. Riso and
Mr. Hughes as of the amendment date of February 23,
2010 for highest level of performance is $83,200 and $49,920,
respectively.
|
|
(2)
|
|
RSU awards that were structured to vest ratably over the four
period from the grant date, beginning on March 12, 2010 and
May 7, 2010 for Mr. Riso and Mr. Hughes,
respectively.
|
|
(3)
|
|
Mr. Kellman resigned from the company on December 4,
2009. Pursuant to the terms of his award, these RSUs vested upon
his resignation.
|
|
(4)
|
|
Mr. Plenskofski did not receive any equity awards in 2009.
|
13
Outstanding
Equity Awards at Fiscal Year End
The following table sets forth certain information with respect
to all outstanding Care equity awards held by each named
executive officer at the end of the fiscal year ended
December 31, 2009.
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Equity
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Market
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Incentive
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Number of
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Value of
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Plan Awards:
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Shares
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Shares or
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Number of
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or Units
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Units of
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Unearned Shares,
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of Stock
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Stock
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Units or Other
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That Have
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That Have
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Rights
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Not Vested
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Not Vested
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That Have
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Name
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(#)
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($)(1)
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Not Vested
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Salvatore (Torey) V. Riso, Jr.
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12,210
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(2)
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$
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94,994
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(6)
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10,486
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(2)
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$
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81,581
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(6)
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5,000
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(7)
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Paul F. Hughes
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13,333
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(3)
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$
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103,731
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(6)
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3,000
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(8)
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Scott Kellman
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0
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(4)
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$
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0
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(4)
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23,255
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(9)
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Frank E. Plenskofski
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0
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(5)
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$
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0
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(5)
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(1)
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Based on the closing price of our common stock on the last
business day of the fiscal year ended December 31, 2009 of
$7.78.
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(2)
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RSU awards granted on May 12, 2008 and March 12, 2009,
that were structured to vest in four equal installments on the
anniversaries of the grant date. Number represents portion of
RSUs not yet vested as of December 31, 2009.
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(3)
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RSU award granted on May 7, 2009, that were structured to
vest in four equal installments on the anniversaries of the
grant date.
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(4)
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Mr. Kellman resigned from the company on December 4,
2009. In connection with his resignation,
Mr. Kellmans 40,000 restricted shares and 73,882 RSUs
vested, including the 21,440 RSUs granted to Mr. Kellman on
March 13, 2009. In connection with the approval of the plan
of liquidation by our stockholders on January 28, 2010,
Mr. Kellmans 23,255 performance shares vested.
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(5)
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Mr. Plenskofski resigned from the company on March 16,
2009. He forfeited his grants in connection with his resignation.
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(6)
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All RSU awards granted vested on January 28, 2010.
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(7)
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On December 10, 2009, Mr. Riso was awarded a
performance share award with a target level of
5,000 shares. On February 23, 2010, our Board amended
the performance share award. See Compensation Discussion
and Analysis Performance Share Awards to
Mr. Riso and Mr. Hughes for more information on
the award.
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(8)
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On December 10, 2009, Mr. Hughes was awarded a
performance share award with a target level of
3,000 shares. On February 23, 2010, our Board amended
the performance share award. See Compensation Discussion
and Analysis Performance Share Awards to
Mr. Riso and Mr. Hughes for more information on
the award.
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(9)
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In May 2008, Mr. Kellman was granted a performance share
award to cover the performance period from January 1, 2008
through December 31, 2010. Upon Mr. Kellmans
resignation on December 4, 2009, we agreed that,
notwithstanding the terms of his performance share award, when
the determination of the payout percentage is made by our
compensation committee at the end of the award period, the
performance goals under the award shall be deemed to have been
attained at target level performance, or
23,255 shares of common stock. Under the terms of the
performance share award and our equity plan, stockholder
approval of the plan of liquidation on January 28, 2010,
resulted in the acceleration of the award period and the
23,255 shares vested.
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14
Option
Exercises and Stock Vested
We have not granted any stock options. The 40,000 shares of
restricted stock granted to Mr. Kellman at the time of our
initial public offering vested due to his termination from our
Manager (after he had resigned from Care) without cause. Apart
from Mr. Kellman, no other named executives
restricted shares vested during the fiscal year ended
December 31, 2009.
Pension
Benefits
Our named executive officers received no benefits in fiscal year
2009 from us under defined pension or defined contribution plans.
Nonqualified
Deferred Compensation
Our company does not have a nonqualified deferred compensation
plan that provides for deferral of compensation on a basis that
is not tax-qualified for our named executive officers.
Potential
Payments Upon Termination or Change in Control
Our named executive officers are employees of our Manager or its
affiliates and therefore we generally have no obligation to pay
them any form of cash compensation upon their termination of
employment, except with respect to the restricted stock award
agreements, RSU agreements and performance share award
agreements.
On January 28, 2010, our stockholders approved a plan of
liquidation, which was filed as Exhibit A to our definitive
proxy statement filed on December 28, 2009. Pursuant to the
terms of the restricted stock and RSU grant instruments and our
Equity Plan, stockholder approval of the plan of liquidation
resulted in the accelerated vesting of restricted stock and
RSUs. Therefore, our directors and executive
officers outstanding restricted stock and RSUs vested on
January 28, 2010.
On May 12, 2008, Mr. Kellman, our former chief
executive officer, was granted a performance share award to
cover the performance period from January 1, 2008 through
December 31, 2010. In connection with
Mr. Kellmans resignation as our chief executive
officer, we agreed that, notwithstanding the terms of his
performance share award, when the determination of the payout
percentage is made by our compensation committee at the end of
the award period, the performance goals under the award shall be
deemed to have been attained at target level
performance, or 23,255 shares of common stock. Under the
terms of the performance share award and our Equity Plan,
stockholder approval of the plan of liquidation on
January 28, 2010, resulted in the acceleration of the award
period and the 23,255 shares vested.
Messrs. Riso and Hughes were awarded performance share
awards on December 10, 2009, as amended on
February 23, 2010. If Messrs. Riso or Hughes are
terminated for cause, as defined in their Amended
and Restated Performance Share Award Agreements, prior to
December 31, 2010, all performance shares awarded to them
under the performance share award agreements would be
automatically forfeited. If Messrs. Riso or Hughes are
terminated for any reason other than for cause prior
to December 31, 2010, the individual will receive a
pro-rata percentage of the performance shares that would
otherwise be payable if he had not been terminated.
If we experienced a change in control as of
December 31, 2009, other than a liquidity event, the
performance period would have been deemed to have completed as
of such date, and the company would have been deemed to have
achieved target level performance, resulting in an award of
5,000 shares of common stock to Mr. Riso and
3,000 shares of common stock to Mr. Hughes, which
would have had a fair market value as of December 31, 2009
of $38,900 and $23,340, respectively, based on our closing stock
price on December 31, 2009 of $7.78 per share.
15
Director
Compensation
The following table sets forth information regarding the
compensation paid to, and the compensation expense we
recognized, with respect to our Board of Directors during the
fiscal year ended December 31, 2009:
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Fees Earned or
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Paid in
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Stock
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Cash
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Awards
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Total
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Name
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($)
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($)(1)
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($)
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Flint D. Besecker(2)
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$
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51,974
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$
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49,983
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$
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101,956
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Gerald E. Bisbee, Jr., Ph.D.
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$
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57,517
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$
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49,983
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$
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107,500
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Kirk E. Gorman(3)
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$
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45,012
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$
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37,488
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$
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82,500
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Alexandra Lebenthal(4)
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$
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50,017
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$
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49,983
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$
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100,000
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Karen P. Robards
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$
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57,017
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$
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49,983
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$
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107,000
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J. Rainer Twiford
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$
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55,017
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$
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49,983
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$
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105,000
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Steven N. Warden(5)
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$
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0
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$
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123,900
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$
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123,900
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(1)
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Amounts recognized by the company for financial statement
reporting purposes in the fiscal year ended December 31,
2009 in accordance with Accounting Standards Codification
718
Compensation Stock
Compensation
. See Footnote 14 to our Consolidated Financial
Statements in our Annual Report on
Form 10-K.
In accordance with SEC rules, estimates of forfeitures related
to service-based conditions have been disregarded. As discussed
below, each director, except for Mr. Warden, receives an
annual retainer payable half in cash and half in unrestricted
shares of our common stock. These unrestricted shares are
granted in approximately equal amounts per quarter in arrears
and are based on the closing price of our common stock on the
last business day of each quarter. The grant date fair market
value of our common stock as of the ends of each of the fiscal
quarters in 2009 were $7.78, $7.67, $5.20 and $5.46,
respectively.
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(2)
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Mr. Besecker was granted 10,000 RSUs on November 5,
2009 that were structured to vest in four equal installments
beginning on the first anniversary of the grant date. In
addition, on December 10, 2009, Mr. Besecker was
awarded a performance share award with a threshold, target and
maximum award of 2,500, 5,000, and 10,000 shares,
respectively. The grant date fair value of the award assuming
the achievement of the highest level of performance is $79,800.
On February 23, 2010, our Board amended the performance
share awards. See Performance Share Award to
Mr. Besecker below for more information on the
amendment. The grant date fair value of the award on
February 23, 2010 for the highest level of performance is
$83,200.
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(3)
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Mr. Gorman resigned from the Board of Directors on
October 19, 2009.
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(4)
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Ms. Lebenthal resigned from the Board of Directors on
January 28, 2010.
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(5)
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Mr. Warden was granted 15,000 RSUs on May 7, 2009 that
were structured to vest in four equal installments beginning on
the first anniversary of the grant date.
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Each independent director receives an annual retainer of
$100,000. The annual retainer payable to our independent
directors is payable quarterly in arrears, half in cash and half
in unrestricted stock. Any portion of the annual retainer that
an independent director receives in stock is granted pursuant to
our 2007 Equity Plan.
The Chairman of our Board of Directors is entitled to receive an
additional annual retainer of $10,000. The Chairs of our Audit
Committee and our former NCGIO Committee are each entitled to
receive an additional annual retainer of $7,500. The Chairman of
our former Compensation Committee is entitled to receive an
additional annual retainer of $5,000. Effective January 28,
2010, the Compensation Committee and NCGIO Committee were
combined into the CNG Committee. The Chair of our CNG Committee
is entitled to receive an additional annual retainer of $7,000.
These additional retainer amounts paid to our Board and
committee chairs are payable in cash. In addition, we reimburse
all directors for reasonable
out-of-pocket
expenses incurred in connection with their services on our Board
of Directors.
16
Performance
Share Award to Mr. Besecker
On December 10, 2009, our Board of Directors awarded
Mr. Besecker a performance share award with a target share
award of 5,000 shares of our common stock. This award was
amended and restated on February 23, 2010, such that the
award is triggered upon the execution, during 2010, of one or
more of the following transactions that results in a return of
liquidity to our stockholders within the parameters expressed in
the agreement: (i) a merger or other business combination
resulting in the disposition of all of the issued and
outstanding equity securities of the company, (ii) a tender
offer made directly to our stockholders either by us or a third
party for at least a majority of our issued and outstanding
common stock, or (iii) the declaration of aggregate
distributions by the our Board equal to or exceeding $8.00 per
share.
Mr. Besecker will be entitled to receive 10,000 performance
shares in connection with the Tiptree Transaction, which will
represent $90,000 in value if the tender offer to be conducted
as part of the Tiptree Transaction is completed.
Compensation
Committee Interlocks and Insider Participation
The Compensation Committee of our Board is responsible for
determining executive compensation. Messrs. Bisbee and
Twiford and Ms. Lebenthal were the members of the
Compensation Committee during fiscal 2009. None of the
Compensation Committee members were at any time during fiscal
2009, or at any other time, an officer or employee of Care or
any of our subsidiaries. No member on the Compensation Committee
serves as a member of the Board or Compensation Committee of any
entity that has one or more executive officers serving as a
member of our Board or Compensation Committee.
BOARD OF
DIRECTORS AND GOVERNANCE
Director
Attendance at Annual Meetings
During 2009, our Board of Directors held 14 meetings (telephonic
and in-person), our Compensation Committee held three
(3) meetings, and our Nominating and Governance Committee
held three (3) meetings. None of our current directors
attended less than 75% of the Board and committee meetings that
he or she was required to attend.
Cares directors are expected to attend Cares annual
meeting of stockholders. All but one of our directors at the
time attended the 2009 annual meeting.
Director
Independence
Our Board of Directors has previously determined that J. Rainer
Twiford is independent under the independence criteria
established by the New York Stock Exchange (NYSE).
We expect that our Board of Directors will determine, at the
time they are nominated, that Jonathan Ilany and William
Houlihan are independent and that Flint Besecker is also now
independent, in each case under the independence criteria
established by the NYSE.
Audit
Committee
Our Board of Directors has established an audit committee that
meets the definition provided by Section 3(a)(58)(A) of the
Exchange Act. The Audit Committee is currently comprised of
Mr. Bisbee, serving as chairperson, Mr. Twiford and
Ms. Robards, all independent directors within the
definition of independence imposed by
Rule 10A-3
under the Exchange Act. Mr. Bisbee qualifies as an
audit committee financial expert as that term is
defined in the Exchange Act. We have not yet determined the
composition of our Audit Committee following the closing of the
Tiptree Transaction.
17
The Audit Committee operates under an Audit Committee Charter
adopted by our Board. The Audit Committee assists the Board of
Directors in overseeing:
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our accounting and financial reporting processes;
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the integrity and audits of our consolidated financial
statements;
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our compliance with legal and regulatory requirements;
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the qualifications and independence of our independent
auditors; and
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the performance of our independent auditors and any internal
auditors.
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The Audit Committee is also responsible for engaging the
independent auditors, reviewing with the independent auditors
the plans and results of the audit engagement, approving
professional services provided by the independent auditors and
considering the range of audit and non-audit fees.
Compensation,
Nominating and Governance Committee
On January 28, 2010, we combined our Compensation Committee
and our Nominating and Corporate Governance Committee into a
single committee. The Compensation, Nominating and Governance
Committee (the CNG Committee) is comprised of our
three (3) current independent directors: Ms. Robards
and Messrs. Bisbee, and Twiford. We have not yet determined
the composition of our CNG Committee following the closing of
the Tiptree Transaction.
The CNG Committee operates under a Compensation, Nominating and
Governance Committee Charter adopted by our Board. The principal
functions of the CNG Committee are to:
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evaluate the performance of and compensation paid by us, if any,
to our chief executive officer;
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evaluate the performance of our Manager;
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review the compensation and fees payable to our Manager under
our management agreement;
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administer our incentive plans; and
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produce a report on executive compensation required to be
included in our proxy statement for our annual meetings.
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identifying, recruiting and recommending to the full Board of
Directors qualified candidates for election as directors and
recommending a slate of nominees for election as directors at
the annual meeting of stockholders;
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developing and recommending to the Board of Directors corporate
governance guidelines, including the committees selection
criteria for director nominees;
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reviewing and making recommendations on matters involving
general operations of the Board of Directors and our corporate
governance;
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recommending to the Board of Directors nominees for each
committee of the Board of Directors;
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annually facilitating the assessment of the Board of
Directors performance as a whole and of the individual
directors and reports thereon to the Board of Directors; and
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reviewing and, if appropriate, approving certain investment
opportunities.
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Identification
of Director Candidates
Our CNG Committee assists our Board of Directors in identifying
and reviewing director candidates to determine whether they
qualify for membership on the Board of Directors and for
recommending to the Board the director nominees to be considered
for election at our annual meetings of stockholders.
18
In making recommendations to our Board, our CNG Committee
considers such factors as it deems appropriate. The Board seeks
diversity in its members with respect to background, skills and
expertise, industry knowledge and experience. The CNG Committee
uses the following general criteria for identifying director
candidates:
1. Directors should possess senior level management and
decision-making experience;
2. Directors should have a reputation for integrity and
abiding by exemplary standards of business and professional
conduct;
3. In selecting director nominees, the Board should seek
candidates with the commitment and ability to devote the time
and attention necessary to fulfill their duties and
responsibilities to Care and its stockholders;
4. Directors should be highly accomplished in their
respective field, with leadership experience in corporations or
other complex organizations, including government, educational
and military institutions;
5. In addition to satisfying the independence criteria
described in the Corporate Governance Guidelines, non-management
directors should be able to represent all stockholders of Care;
6. Directors who are expected to serve on a Committee of
the Board shall satisfy the New York Stock Exchange and legal
criteria for members of the applicable Committee;
7. Directors should have the ability to exercise sound
business judgment to provide advice and guidance to the Chief
Executive Officer with candor; and
8. The Boards assessment of a director
candidates qualifications includes consideration of
diversity, age, skills and experience in the context of the
needs of the Board.
The foregoing general criteria apply equally to the evaluation
of all potential, non-management director nominees, including
those individuals recommended by stockholders.
Care does not have a formal policy with regard to its
consideration of diversity when considering candidates for
election as directors but believes that diversity is an
important factor in determining the composition of the Board.
Thus, the CNG Committee strives to nominate directors with
diverse experience and background that complement each other so
that, as a group, the Board will possess the appropriate talent,
skills, depth of experience, and expertise to manage Cares
business. In considering whether to recommend any candidate for
inclusion in the Boards director nominees, including those
submitted by stockholders, the CNG Committee will apply the
selection criteria set forth in the Companys Corporate
Governance Guidelines. These criteria include a nominees
background, skills, expertise, industry knowledge and experience.
Our CNG Committee may solicit and consider suggestions of our
directors, our Manager or our management regarding possible
nominees. Our CNG Committee may also procure the services of
outside sources or third parties to assist in the identification
of director candidates.
Our CNG Committee may consider director candidates recommended
by our stockholders. Our CNG Committee will apply the same
standards in considering candidates submitted by stockholders as
it does in evaluating candidates submitted by members of our
Board. Any recommendations by stockholders should follow the
procedures outlined in our Corporate Governance Guidelines and
should also provide the reasons supporting a candidates
recommendation, the candidates qualifications and the
candidates written consent to being considered as a
director nominee. In addition, any stockholder recommending a
director candidate should submit information demonstrating the
number of shares of common stock that he or she owns.
19
Code of
Business Conduct, Code of Ethical Conduct and Board Committee
Charters
Our Board of Directors has adopted a Code of Business Conduct
and a Code of Ethical Conduct as required by the listing
standards of the NYSE that applies to our directors, executive
officers and employees of our Manager and its affiliates. The
Code of Business Conduct and Code of Ethical Conduct were
designed to assist our directors, executive officers and
employees of our Manager and its affiliates in complying with
the law, resolving moral and ethical issues that may arise and
in complying with our policies and procedures. Among the areas
addressed by the Code of Business Conduct and Code of Ethical
Conduct are compliance with applicable laws, conflicts of
interest, use and protection of our companys assets,
confidentiality, communications with the public, accounting
matters, records retention and discrimination and harassment.
Corporate
Governance Documents Available at Our Website
We are committed to operating our business under strong and
accountable corporate governance practices. You are encouraged
to visit the corporate governance section of our corporate
website at
http://www.carereit.com
to view or to obtain copies of the respective charters of
our Audit Committee and Compensation, Nominating and Governance
Committee, our Code of Business Conduct, Code of Ethical Conduct
and Corporate Governance Guidelines.
Executive
Sessions of Independent Directors
In accordance with our Corporate Governance Guidelines, the
independent directors serving on our Board of Directors
generally meet in executive session during each regularly
scheduled Board meeting without the presence of any
non-independent directors or other persons who are part of our
management. The executive sessions regularly are chaired by
Ms. Robards, the Lead Director elected by a majority of the
independent directors. Interested parties may communicate
directly with the presiding director or non-management directors
as a group through the process set forth above under
Communications with our Board of Directors.
Current
Board Leadership Structure.
Our Board is led by a non-executive Chairman. Flint Besecker
became our Chairman in October 2009 when Mr. Kirk Gorman,
our then Chairman resigned. Mr. Besecker formerly served as
president of CIT Healthcare LLC. As Chairman, Mr. Besecker
performs many important duties on behalf of the Board, including
reviewing and approving the Board agenda and presiding at all
Board meetings, acting as the principal contact for the Chief
Executive Officer and other members of the Board and management.
The Board decided to elect a non-executive Chairman and separate
the positions of Chief Executive Officer and Chairman of the
Board because it believes that this structure is appropriate
given the fact that Mr. Besecker is a former chief
executive officer of CIT Healthcare, our Manager, and can bring
this experience to bear in assisting the company in realizing
its strategic objectives.
To help ensure that the Board carries out its oversight
responsibilities, our Governance Guidelines require the Board as
a whole to maintain a substantial degree of independence from
management. Pursuant to the Governance Guidelines, a substantial
majority of the Board must be independent under the independence
criteria established by the NYSE. As of the date hereof, three
(3) of our current five (5) directors have been
determined to be independent, and we expect that the Care Board
will determine, prior to closing of the Tiptree Transaction,
that Mr. Besecker satisfies the independence criteria
established by the NYSE.
The company requires that there be a Lead Director should the
Chairman of the Board be an employee or former employee of the
company. Karen Robards currently serves as the Companys
Lead Director and provides the following services to the
company: review and provide input with respect to Board meeting
agendas, preside at executive sessions or at meetings of the
Board when the Chairman is not present, and coordinate
communications between the Board and the Chief Executive
Officer. In accordance with the Governance Guidelines,
independent
20
directors meet in regularly scheduled executive sessions at such
times and for such reasons as they desire and set. At this time,
Ms. Robards as Lead Director presides at such executive
sessions.
Boards
Role in Risk Oversight.
Our Board oversees our business in general, including risk
management and performance of the Chief Executive Officer and
other members of senior management, to assure that the long-term
interests of the stockholders are being served. Each committee
of our Board is also responsible for reviewing the risk exposure
related to such committees areas of responsibility and
providing input to senior management on such risks.
Management and our Board have a process to identify, analyze,
manage and report all significant risks facing us. Our Chief
Executive Officer and other members of senior management
regularly report to the Board on significant risks facing us,
including legal, financial, operational and strategic risks. The
Audit Committee reviews with senior management significant risks
related to the company and periodically reports to the Board on
such risks.
In addition, pursuant to its charter, the Audit Committee is
responsible for reviewing and discussing the companys
business risk management process, including the quality and
integrity of Cares financial statements, and accounting
and reporting processes; Cares compliance with legal and
regulatory requirements; the independent auditors
qualifications and independence; and the performance of
Cares internal audit and credit audit functions.
Furthermore, the Audit Committee evaluates key financial
statement issues and risks, their impact or potential effect on
reported financial information and the process used by
management to address such matters. At each Audit Committee
meeting, management briefs the committee on the current business
and financial position of the company, as well as such items as
internal audits and independent audits.
COMMUNICATIONS
WITH OUR BOARD OF DIRECTORS
We have a process by which stockholders
and/or
other
parties may communicate with our Board of Directors, our
independent directors as a group or our individual directors.
Any such communications may be sent to our Board by
U.S. mail or overnight delivery and should be directed to
the Board of Directors, a Committee, the independent directors
as a group, or an individual director,
c/o Paul
Hughes, Chief Financial Officer, Treasurer, Secretary and Chief
Compliance Officer, at Care Investment Trust Inc.,
505 Fifth Avenue, 9th Floor, New York, New York 10017,
who will forward such communications on to the intended
recipient. Any such communications may be made anonymously. In
addition, stockholder communications can be directed to the
Board by calling the Care hotline listed on our website.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Policies
and Procedures With Respect to Related Party
Transactions
It is the policy of our Board of Directors that all related
party transactions (generally, transactions involving amounts
exceeding $120,000 in which a related party (directors and
executive officers or their immediate family members, or
stockholders owning 5% of more of our outstanding stock) had or
will have a direct or indirect material interest) shall be
subject to approval or ratification by the Audit Committee in
accordance with the following procedures.
Each party to a potential related party transaction is
responsible for notifying our Managers legal department of
the potential related person transaction in which such person or
any immediate family member of such person may be directly or
indirectly involved as soon as he or she becomes aware of such
transaction. Our Managers legal department will determine
whether the transaction should be submitted to the Audit
Committee for consideration. The Audit Committee will then
review the material facts of the transaction and either approve
or disapprove of the entry into such transaction.
21
Transactions
with Related Persons
Management
Agreement
In connection with our initial public offering, we entered into
a Management Agreement with our Manager, which describes the
services to be provided by our Manager and its compensation for
those services. On September 30, 2008, we amended (the
Amendment) the Management Agreement between
ourselves and the Manager, and on January 15, 2010 we
further amended and restated (the Amendment and
Restatement) the Management Agreement. In consideration of
the Amendment and for the Managers continued and future
services to us, we granted the Manager warrants to purchase
435,000 shares of our common stock at $17.00 per share
under the 2007 Manager Equity Plan. See Transactions with
Related Persons Warrant below.
Under the Amendment and Restatement, our Manager, subject to the
oversight of our board of directors, is required to conduct our
business affairs in conformity with the policies and the
investment guidelines that are approved by our Board of
Directors. The Amendment and Restatement continues in effect,
unless earlier terminated, until December 31, 2011.
The Amendment and Restatement reduces the base management fee to
a monthly amount equal to (i) $125,000 from
February 1, 2010 until the earlier of
(x) June 30, 2010 and (y) the date on which four
of our six existing investments have been sold; then from such
date (ii) $100,000 until the earlier of
(x) December 31, 2010 and (y) the date on which
five of our six existing investments have been sold; then from
such date (iii) $75,000 until the effective date of
expiration or earlier termination of the Amendment and
Restatement by either of us or the Manager; provided, however,
that notwithstanding the foregoing, the base management fee will
remain at $125,000 per month until the later of: (a) ninety
(90) days after the filing by us of a Form 15 with the
SEC; and (b) the date that the we are no longer subject to
the reporting requirements of the Exchange Act.
In addition, pursuant to the Amendment and Restatement, we will
pay the Manager a Buyout Payment of $7.5 million, payable
as follows: (i) $2.5 million on the Effective Date;
(ii) $2.5 million upon the earlier of
(a) April 1, 2010 and (b) the effective date of
the termination of the Amendment and Restatement by either of us
or the Manager; and (iii) $2.5 million upon the
earlier of (a) June 30, 2011 and (b) the
effective date of the termination of the Amendment and
Restatement by either us or the Manager. The termination fee
that is operative under the original Management Agreement was
replaced by the Buyout Payments under the Amendment and
Restatement. On January 29, 2010 and April 1, 2010, we
paid our Manager $2.5 million and $2.5 million,
respectively, pursuant to the Buyout Payments under the
Amendment and Restatement.
The Manager is also eligible for an incentive fee of
$1.5 million if (i) at any time prior to
December 31, 2011, the aggregate cash dividends paid to our
stockholders since the Effective Date equal or exceed $9.25 per
share or (ii) as of December 31, 2011, the sum of
(x) the aggregate cash dividends paid to our stockholders
since the Effective Date and (y) the companys cash
and cash equivalents on hand less cash flows and expenses and
other obligations of the company, including the incentive fee,
equals or exceeds $9.25 per share. If the Manager would be
eligible for the incentive fee but for the impact of the payment
of the $1.5 million incentive fee, we will pay the Manager
a reduced incentive fee up to the amount that allows the company
to satisfy such $9.25 per share eligibility requirement.
Both parties can terminate the Amendment and Restatement without
cause under certain circumstances, and we can terminate the
Amendment and Restatement with cause.
For the year ended December 31, 2009, we recognized
$2.2 million in management fee expense related to the base
management fee, and our Manager was not eligible for an
incentive fee.
Mortgage
Purchase Agreement
On September 30, 2008, we entered into a Mortgage Purchase
Agreement (the MPA) with our Manager in order to
secure a potential additional source of liquidity. The MPA
expired on September 30, 2009. Pursuant to the MPA, we had
the right, but not the obligation, to cause the Manager to
purchase our current senior mortgage assets at their
then-current fair market value, as determined by a third party
appraiser. However, the MPA provided that in no event shall the
Manager be obligated to purchase any mortgage asset if
(a) the Manager has already purchased
22
mortgage assets with an aggregate sale price of
$125.0 million pursuant to the MPA or (b) the
third-party appraiser determines that the fair market value of
such mortgage asset is greater than 105% of the then outstanding
principal balance of such mortgage asset. We had the right to
exercise our rights under the MPA with respect to any or all of
the mortgage assets identified in the MPA at any time or from
time to time until the MPA expired on September 30, 2009.
Pursuant to the MPA, we sold loans made to four
(4) borrowers with carrying amounts of $24.8 million,
$22.5 million, $2.9 million and $18.7 million for
total proceeds of $65.2 million. The sale of the first loan
closed in November of 2008 and the company recorded a loss on
the sale of $2.4 million in the consolidated statement of
operations for the year ended December 31, 2008. The second
loan closed in February of 2009 at a loss of $4.5 million,
the third loan closed in August 2009 at its approximate net
carrying value and the fourth loan closed in September 2009 at a
loss of $1.3 million. In consideration of the Amendment and
Restatement, we agreed to terminate the MPA and rescind all
outstanding put notices under the MPA.
Warrant
In consideration of the Amendment and for the Managers
continued and future services to the Company, the Company
granted the Manager warrants to purchase 435,000 shares of
the Companys common stock at $17.00 per share (the
Warrant) under the 2007 Manager Equity Plan. The
Warrant, which is immediately exercisable, expires on
September 30, 2018. On March 16, 2010, our Manager
entered into a warrant purchase agreement with Tiptree, pursuant
to which our Manager will sell the Warrant to Tiptree on the
closing of the Tiptree Transaction.
Purchase
and Sale Agreement
Subject to their appointment to our Board, Michael Barnes and
Geoffrey Kauffman, may be deemed to have an indirect material
interest in the purchase and sale agreement, pursuant to which
Care will issue, and Tiptree will purchase, a minimum of
4,445,000 newly issued shares of the companys common
stock, and may purchase additional shares depending on the
number of shares tendered in the tender offer, for a purchase
price of $9.00 per share. In that purchase and sale agreement,
we agreed to use the proceeds from the issuance of common stock
to Tiptree to fund the tender offer for up to all of our
outstanding common stock at a fixed price of $9.00 per share. If
the tender offer is fully subscribed, Tiptree is expected to own
100% of the issued and outstanding shares of the companys
common stock.
23
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Information Statement
to be signed on its behalf by the undersigned hereunto duly
authorized.
CARE INVESTMENT TRUST INC.
(Registrant)
Name:
Paul F. Hughes
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Title:
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Chief Compliance Officer and Secretary
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Dated: August 3, 2010
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