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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
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(Name of Registrant as Specified In Its Charter)
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
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PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
651 EAST PARK DRIVE
HARRISBURG, PENNSYLVANIA 17111
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NOTICE OF SPECIAL MEETING OF CLASS A AND CLASS B SHAREHOLDERS
TO BE HELD DECEMBER 4, 1998
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NOTICE IS HEREBY GIVEN that a Special Meeting of Class A and Class B
Shareholders of Pennsylvania Physician Healthcare Plan, Inc. (the "Company")
DECEMBER,
will be held at the offices of the Company, 651 East Park Drive, Harrisburg, PA
on Friday, December 4, 1998, at 7:00 p.m. for the following purposes:
1. For the holders of the Class A and Class B Shares to approve the
Plan of Recapitalization and the Amended and Restated Articles of
Incorporation of the Company which will (a) create a new class of
voting common stock; (b) change the voting rights of the Class A
Shares; (c) provide for the conversion of the Class A and Class B
Shares into shares of a new class of common stock; (d) restrict the
transferability of the shares of the new class of common stock into
which the Class A and Class B Shares are converted if the conversion
occurs prior to January 1, 2000; and (e) authorize the issuance of a
new class of preferred stock by the Company, the terms of which will
be determined at a later date by the Board of Directors;
2. For the holders of the Class A Shares (only) to approve amendments
to Section 3.5 and Section 10.1 of the Company's bylaws which will
change the percentage shareholder vote required to (a) authorize the
sale of the Company and (b) further amend Section 3.5 of the bylaws;
3. For the holders of the Class A Shares (only) to approve a stock
option plan for officers and full-time employees of the Company; and
4. To consider and transact such other business as may properly come
before the meeting.
Class A and Class B Shareholders of record on October 3, 1998, are
entitled to notice of and to vote at the Special Meeting; however, Class B
Shareholders will be entitled to vote only with respect to the approval of the
Company's Plan of Recapitalization and the Amended and Restated Articles of
Incorporation and not on any other matter to be voted on at the meeting.
THE BOARD OF DIRECTORS HOPES THAT YOU WILL FIND IT CONVENIENT TO ATTEND
THE SPECIAL MEETING IN PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY TO ASSURE THAT YOUR SHARES ARE
REPRESENTED AT THE SPECIAL MEETING. RETURNING YOUR PROXY DOES NOT DEPRIVE YOU OF
YOUR RIGHT TO ATTEND THE SPECIAL MEETING AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors
Krista G. Maddigan, Secretary
October 21, 1998
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PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
651 EAST PARK DRIVE
HARRISBURG, PENNSYLVANIA 17111
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PROXY STATEMENT
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SPECIAL MEETING OF CLASS A AND CLASS B SHAREHOLDERS
TO BE HELD ON DECEMBER 4, 1998
Approximate Date of Mailing:
October 21, 1998
This Proxy Statement is being mailed by the Board of Directors (the
"Board") of the Company to shareholders to solicit proxies for use at a special
meeting of shareholders (the "Meeting") to be held on Friday, December 4, 1998,
at 7:00 p.m. local time, at the offices of the Company, 651 East Park Drive,
Harrisburg, Pennsylvania and at such other times and places to which the Meeting
may be adjourned.
All Class A Shares represented by valid Proxies, unless the shareholder
otherwise specifies, will be voted (i) FOR approval of a Plan of
Recapitalization and Amended and Restated Articles of Incorporation for the
Company; (ii) FOR approval of amendments to Sections 3.5 and 10.1 of the
Company's Bylaws; (iii) FOR approval of a Stock Option Plan for the officers and
full-time employees of the Company; and (iv) at the discretion of the
Proxyholders with regard to any other matters which may properly come before the
Meeting and any adjournment thereof.
All Class B Shares represented by valid Proxies, unless the shareholder
otherwise specifies, will be voted (i) FOR approval of the Plan of
Recapitalization and Amended and Restated Articles of Incorporation; and (ii) at
the discretion of the Proxyholders with regard to any other matters that may
properly come before the Meeting and any adjournment thereof on which the
holders of Class B shares are entitled to vote. Unless the shareholder otherwise
specifies, the Proxyholders will vote both the Class A and Class B Shares in
accordance with the authority granted in the Proxy for all shareholders who hold
both Class A and Class B Shares.
Any shareholder executing a Proxy retains the right to revoke it at any
time before it is exercised at the Meeting. A Proxy may be revoked by delivery
of written notice to the Secretary of the Company, by execution of a later Proxy
or by voting shares in person at the Meeting. If not revoked, all shares
represented by properly executed Proxies will be voted as directed therein.
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Securities Entitled to Vote
Class A and Class B shareholders of record on October 3, 1998 are
entitled to notice of and to vote at the Meetings. However, Class B shareholders
will be entitled to vote only with respect to the adoption of the Company's Plan
of Recapitalization and the Amended and Restated Articles of Incorporation and
not on any other matter to be voted on at the Meeting. On the record date, there
were 4,087 shares of Class A voting common stock (the "Class A Shares")
outstanding and 1,074 shares of Class B non-voting common stock (the "Class B
Shares") outstanding. Only holders of record of Class A and Class B Shares who
are practicing physicians (medical doctors or doctors of osteopathy),
podiatrists and oral surgeons (or their Qualified Retirement Plans) may vote on
any of the matters presented at the Meeting as to which a holder of such share
may be entitled to vote (see Exhibit "A" for certain "Definitions"). Each holder
of Class A Shares is entitled to only one vote, regardless of the number of
Class A Shares held.
The holders of shares entitled to cast not less than one-third of the
votes must be present in person or represented by proxy at the Meeting in order
to constitute a quorum for the transaction of business. All shares present in
person or represented by proxy and entitled to vote are counted for quorum
purposes. With respect to the approval of the Plan of Recapitalization and the
Amended and Restated Articles of Incorporation, the quorum requirement is
one-third of the Class A Shares entitled to vote and one-third of the Class B
Shares. For all matters other than the amendment of the Company's bylaws,
approval of the matters to be voted upon requires the affirmative vote of a
majority of the votes of shares present in person or by proxy and entitled to
vote on such matter. Approval of the amendment of the Company's bylaws requires
the affirmative vote of ninety percent (90%) of the votes entitled to be cast by
all Class A shareholders. Class B shareholders are not entitled to vote on the
amendment of the bylaws. Abstentions will be counted solely for the purpose of
determining whether a quorum is present.
Approval of Plan of Recapitalization and Amended and Restated Articles of
Incorporation
THE BOARD RECOMMENDS THAT THE HOLDERS OF THE CLASS A SHARES AND THE
CLASS B SHARES VOTE TO APPROVE THE ADOPTION OF A TAX-FREE PLAN OF
RECAPITALIZATION AND THE AMENDMENT AND RESTATEMENT OF THE COMPANY'S ARTICLES OF
INCORPORATION. The forms of the proposed Plan of Recapitalization (the "Plan")
and the Amended and Restated Articles of Incorporation (the "Restated Articles")
are attached to this Proxy Statement as Exhibits "B"and "C". In general, the
Plan and the Restated Articles will change the voting rights of the Class A
Shares, create new classes of both common and preferred stock, provide for the
conversion of the outstanding Class A and Class B Shares to shares of a new
class of voting common stock and simplify the shares of the Company by
eliminating the Class C and Class D common stock. These changes to the Articles
of Incorporation are described in more detail below.
1. Change in Voting Rights of Class A Shares. The rights of Class A
Shares will be modified to provide that, upon the issuance by the Company of any
shares of Common Stock, holders of Class A Shares will be entitled to cast 400
votes for each share of Class A common
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stock held on all matters presented to the shareholders for a vote. The holders
of Class A Shares currently have only one vote per person regardless of the
number of shares held. The purpose of this change is to simplify the voting
rights of the Class A Shares. The Plan does not provide for any change in the
voting rights of the Class B Shares, which are non-voting except where required
by law.
2. Conversion of Class A and Class B Shares. The Class A and Class B
Shares will be changed to permit the voluntary conversion of Class A Shares and
Class B Shares into shares of a new class of voting common stock to be called
the "Common Stock" on or after January 1, 1999 at the election of the holder and
to require conversion effective as of January 1, 2000. The conversion ratio will
be 400 shares of Common Stock for each Class A Share and 100 shares of Common
Stock for each Class B Share. The rights of holders of shares of Common Stock
are described below under the caption, "Common Stock". The Company believes the
conversion of shares will be a tax-free exchange under Section 368(a)(1)(E) of
the Internal Revenue Code of 1986, as amended, although it has not obtained a
ruling from the Internal Revenue Service to that effect. In such event, there
would be no taxable gain or loss to the holders of the Company's Class A and
Class B Shares as a result of the conversion of such shares into shares of the
Company's Common Stock.
The purposes for converting the Class A and Class B Shares to shares of
Common Stock are: to simplify the Company's share structure; to increase the
liquidity of the shares in the capital markets; to enhance the marketability of
the Company's shares and its ability to raise capital; to expand the pool of
potential investors who are eligible to purchase the Company's shares to include
other licensed or retired health professionals who are not physicians and their
practice groups and retirement plans; to increase the transferability of the
Company's shares to other health professionals; to allow the Company's employees
to acquire and retain shares of the Company; and to provide option shares to be
awarded to management and full-time employees of the Company and its
subsidiaries as a performance incentive.
Subject to adjustment of the conversion ratio, as set forth in
Subsection 3(d)(iii) of the Plan, holders of Class A Shares will have the
option, from and after January 1, 1999 and until and including December 31,
1999, to convert each Class A Share into 400 shares of Common Stock and holders
of Class B Shares will have the option, from and after January 1, 1999 and until
and including December 31, 1999, to convert each Class B Share into 100 shares
of Common Stock. Holders of Class A and Class B Shares who elect to convert
their shares must convert all of their Class A or Class B Shares to Common
Stock.
All Class A and Class B Shares which have not already been converted to
Common Stock by the holder during the optional period for conversion will
automatically convert to shares of Common Stock at 11:59 p.m.on December 31,
1999. All Class A and Class B Shares will also automatically convert to shares
of Common Stock on the day before the occurrence of any of the following events:
(a) a reclassification or change of the outstanding Common Stock (except a stock
split or a combination of shares); (b) a consolidation or merger of the Company
(except a merger in which the Company survives without a reclassification or
change of the Company's Common Stock except a split or combination of shares);
or (c) the sale or conveyance (except if the sale or conveyance is for cash
followed by the immediate distribution of such cash to the shareholders of the
Company) to another corporation of all or substantially all or substantially all
of the Company's property.
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After the conversion, the only outstanding shares of the Company's
stock will be the shares of the Company's Common Stock. There are no shares
outstanding of the Company's Class C or Class D common stock, and, upon the
effective date of the Restated Articles, the Company's Class C and Class D
common stock will be eliminated in their entirety. Shareholders who convert
their Class A or Class B Shares to shares of Common Stock prior to January 1,
2000 may not sell or transfer their shares of Common Stock until January 1, 2000
except in limited circumstances arising by operation of law, for example, the
shareholder's death, bankruptcy or insolvency.
3. New Common Stock. The Board proposes to authorize 20,000,000 shares
of an additional class of common stock with a par value of $.01 per share, which
will be called the " Common Stock". All shares of the Common Stock will have the
same voting, dividend and liquidation rights. Holders of Common Stock will have
no preemptive rights. Except as otherwise provided by law, the holders of Common
Stock and the holders of Class A Shares shall vote as a class. The holders of
Common Stock will have non-cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors if they choose to do so. In such event, the holders
of the remaining shares voting at such election will not be able to elect any of
the directors. The Company intends to register the Common Stock under the
Securities Exchange Act of 1934, as amended.
Holders of shares of Common Stock will be entitled to one vote per
share but will only be entitled to vote their shares if the holder meets the
shareholder eligibility requirements (described below) under the Restated
Articles. Shares of Common Stock may not be transferred until January 1, 2000
except in limited circumstances arising by operation of law. After January 1,
2000, holders of Common Stock will be permitted to transfer their shares only to
persons who meet the shareholder eligibility requirements and to no other
persons except for gifts or in limited circumstances arising by operation of
law.
To meet the shareholder eligibility requirements under the Restated
Articles, a holder of shares of Common Stock must be one of the following: (1) a
"health professional" licensed in Pennsylvania or elsewhere; (2) a retired, but
formerly licensed, "health professional"; (3) a professional corporation (or
other legally constituted professional practice group) of "health
professionals"; (4) an individual retirement account or other retirement plan
established by a person eligible to be a shareholder or in which such person is
a participant; (5) an employee or former employee of the Company; or (6) a
person or entity registered as a broker or dealer under Section 15 of the
Securities Exchange Act of 1934, as amended, who or which is engaged in making a
market in the Common Stock. The term "health professional" means and includes
physicians, podiatrists, dentists, oral surgeons, optometrists, pharmacists,
chiropractors, nurses, nurse practitioners, physical or occupational therapists
and physicians' assistants, and other similar licensed professional persons. If
a transferee of shares of Common Stock does not fall within the definition of an
eligible shareholder under the Restated Articles, such person shall have no
right to vote the shares except as otherwise provided by law.
In contrast to the voting rights of holders of shares of Common Stock,
holders of Class A Shares currently have only one vote regardless of the number
of shares held and are entitled to vote only if the holder is a physician
(medical doctor or doctor of osteopathy) engaged in the practice of medicine,
podiatrist or oral surgeon
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or their Qualified Retirement Plans. Class B Shares are non-voting, except as
otherwise provided by law. Holders of Class A and Class B Shares may only
transfer their shares to persons eligible to hold Class A Shares.
During the year 1999, and assuming no event occurs which would have the
effect of changing the conversion ratio for the Class A or Class B Shares, the
Company will issue 1,634,800 shares of Common Stock to holders of Class A Shares
in exchange for the conversion of their Class A Shares and 107,400 shares of
Common Stock to holders of Class B Shares in exchange for the conversion of
their Class B Shares. The balance of 18,257,000 shares of Common Stock will be
available for future issuance by the Company. The Company expects to issue
options for the purchase of shares of Common Stock to officers of the Company
and full-time employees of the Company and its subsidiaries under the terms of a
stock option plan which is described below in this Proxy Statement under the
caption "Stock Option Plan" if the plan is approved by shareholders at the
Meeting.
4. New Preferred Stock. The Company proposes to authorize 2,000,000
shares of preferred stock with a par value of $.01 per share. The preferred
stock may be issued in one or more classes and in one or more series within a
class. The dividend, conversion, voting, redemption and liquidation rights and
all other rights, preferences, qualifications and restrictions pertaining to
each class or series of preferred stock will be determined by the Board of
Directors by resolution at the time of issuance of the shares of any class or
series. No sale or issuance of shares of preferred stock is contemplated by the
Board at this time.
The Board of Directors has the right to terminate the Plan at any time
prior to its effective date. Shareholders should read Exhibits "B" and "C"to
this Proxy Statement for the full text of the Plan and the Restated Articles.
Approval of Amendments to the Bylaws
THE BOARD RECOMMENDS THAT THE HOLDERS OF THE CLASS A SHARES VOTE TO
APPROVE THE ADOPTION OF AMENDMENTS TO SECTION 3.5 AND SECTION 10.1 OF THE
COMPANY'S BYLAWS. The holders of Class B Shares are not entitled to vote on
this matter. As proposed, Section 3.5 will be amended to require the affirmative
vote of 2/3 of the votes cast by all shareholders entitled to vote
in order to approve the acquisition of substantially the entire business of the
Company by another person through a merger, sale or other disposition by the
Company of all or substantially all of its assets. Section 3.5 currently
requires the affirmative vote of 90% of the votes cast by all shareholders
entitled to vote. Approval of the amendment to Section 3.5 of the Company's
Bylaws will remove the onerous 90% voting requirement to approve the sale or
transfer of the Company's business, but will require a supermajority vote of 2/3
of the Company's shareholders in those circumstances.
As proposed, Section 10.1 will be amended to require the affirmative
vote of 2/3 of the votes cast by all shareholders entitled to vote in order to
amend Section 3.5 of the Bylaws. Section 10.1 currently requires the affirmative
vote of 90% of the votes cast by all shareholders entitled to vote to amend
Section 3.5. Approval of the amendment to Section 10.1 will remove the
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onerous 90% voting requirement to amend Section 3.5 of the Bylaws, but will
require a supermajority vote of 2/3 of the Company's shareholders to amend this
section. Holders of Class A Shares should read Exhibit "D" to this Proxy
Statement for the full text of the amendments to Sections 3.5 and 10.1 of the
Company's Bylaws.
Approval of Stock Option Plan
THE BOARD RECOMMENDS THAT THE HOLDERS OF THE CLASS A SHARES VOTE TO
APPROVE THE ADOPTION OF A STOCK OPTION PLAN (THE "STOCK OPTION PLAN") IN THE
FORM ATTACHED TO THIS PROXY STATEMENT AS EXHIBIT "E". The holders of Class B
Shares are not entitled to vote on this matter. Under the Stock Option Plan, the
Board may award a maximum of 200,000 stock options (the "Options") to the
Company's officers and full-time employees of the Company and its subsidiaries
under terms to be set by the Board at a future date. Each of the Options granted
will entitle the holder to purchase one share of the Company's Common Stock upon
payment of an exercise price to be determined at the time of the grant of the
options. No consideration will be paid by officers and employees in exchange for
receiving the Options. Options granted under the Stock Option Plan will expire
no later than ten years after the date of the grant. If any Option expires or
terminates under the Stock Option Plan without having been exercised, the Board
will have the authority to issue new Options covering those shares. A committee
of the Board will be appointed to administer the Stock Option Plan and recommend
the grant of Options. However, the Board must approve the issuance of Options
and the terms of each. The Company currently has three officers and the Company
and its subsidiaries have 48 full-time employees who will be eligible to
participate in the Stock Option Plan. The Board has not yet decided which
officers and employees will receive Options or how many Options each will
receive. The sale of shares of Common Stock which will be issued upon the
exercise of the Options will be exempt from registration under Section 5 of the
Securities Act of 1933, as amended (the "Securities Act") and will be restricted
as to transfer in the same manner as all other shares of the Company's Common
Stock. The Company has no current plans to register shares of Common Stock which
will be subject to Options under the Securities Act.
The Stock Option Plan provides for the grant of Options which are
intended by the Company to qualify for advantageous tax treatment as "incentive
stock options" under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Approval of the Stock Option Plan by the holders of the
Class A Shares is required in order to qualify the Options for special treatment
under the Code. There will be no federal income tax consequence to either the
Company or to the recipient of any Options as a result of the grant of incentive
stock Options by the Company or the exercise of those Options by the recipient.
The terms of the Stock Option Plan may be changed at any time by the
Board without shareholder approval except for a change in the number of shares
of Common Stock as to which Options may be granted under the Stock Option Plan
or any other changes requiring shareholder approval under Section 162(m) of the
Code. Shareholder approval requires the affirmative vote of a majority of the
votes present in person or by proxy at a meeting and entitled to vote. The Stock
Option Plan will terminate on December 14, 2008 unless it is terminated on an
earlier date by the Board or it is extended by the Board with the approval of
the Company's shareholders entitled to
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vote on such matter. The Stock Option Plan also permits the issuance of
non-qualified stock options or options which are a combination of incentive and
non-qualified options to officers and employees of the Company and its
subsidiaries.
Holders of Class A Shares should read Exhibit "E" to this Proxy
Statement for the full text of the Stock Option Plan.
Security Ownership of Management and Certain Security Holders
The following table lists certain information with respect to the Class
A Shares and Class B Shares beneficially owned as of October 3, 1998, by each of
the three highest paid persons who are current officers of the Company, as well
as the number of shares beneficially owned by all officers and directors as a
group on such date. This information has been furnished by such persons.
Officers Class A Shares Class B Shares
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Richard A. Felice, 0 0
President and Chief Executive Officer
651 East Park Drive
Harrisburg, PA 17111
T. Clark Phillip, 0 0
Treasurer and Chief Financial Officer
651 East Park Drive
Harrisburg, PA 17111
Krista G. Maddigan 0 0
Secretary
651 East Park Drive
Harrisburg, PA 17111
All directors and officers as a group 28(1) 21(2)
To the knowledge of management, no person beneficially owns more than
10% of any class of the Company's securities. The Company has not granted any
options, warrants or rights to purchase any of its securities; however, the
Company expects to adopt a stock option plan for its officers and full-time
employees of the Company and its subsidiaries. The terms of this plan are
described above under the caption, "Stock Option Plan." The directors of the
Company may be regarded as the "parents" of the Company, as that term is defined
under the Securities Act.
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(1) The percentage of Class A Shares beneficially owned by any director
or by all directors and officers as a group was less than 1%.
(2) The percentage of Class B Shares beneficially owned by any director
or by all directors and officers as a group was less than 2%.
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Executive Compensation
The following table shows the aggregate annual remuneration from the
Company and its subsidiaries of each of the three highest paid persons who were
officers or directors of the Company during 1997, and for all officers and
directors as a group. Each officer commenced employment in the Fall of 1996.
Name and Principal Aggregate
Position Remuneration
------------------ ------------
Richard A. Felice, President $251,079
T. Clark Phillip, Treasurer $122,292
Wendy C. Bass, Secretary(3) $ 66,144
All officers and directors as a group $439,515(4)
Mr. Felice is employed under an agreement dated as of September 3,
1996, as amended as of September 2, 1997 (the "Agreement"), at an annual salary
of $235,000. After the initial contract term of one year, the Agreement
automatically renews for additional periods of one year, unless terminated by
either party at least 60 days prior to the end of the then current term. The
Agreement provided for reimbursement of Mr. Felice's moving expenses when he
relocated to the Harrisburg, Pennsylvania area. It includes an annual bonus of
up to 20% of base compensation, based on mutually agreed upon performance
criteria. Mr. Felice is entitled to one year's compensation if the Company fails
to renew the Agreement during the first five years. In the event the Company is
restructured so that Mr. Felice is no longer Chief Executive Officer, or if he
declines to accept the position offered following such a restructuring or
reorganization, he has the right to terminate the Agreement and receive a
severance payment of $400,000. Under the Agreement he will not, for a period of
one year after termination, regardless of the cause of termination, engage in
any conduct which is competitive with the Company in any geographic area in
which the Company is then doing business, is licensed, or has a license
application pending.
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(3) Ms. Bass served as Secretary of the Company until August 7, 1998.
Krista G. Maddigan was elected as Secretary of the Company on October 3, 1998 at
an annual salary of $52,500.
(4) In addition, directors are reimbursed for reasonable travel
expenses to Board and committee meetings.
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Cost of Solicitation
The cost of solicitation of proxies from shareholders will be borne by
the Company. In addition to the use of mails, proxies may be solicited by
telephone by officers, directors and employees of the Company who will not be
specially compensated for such services. The Company expects to retain
ChaseMellon Shareholder Services or another proxy solicitation service to aid in
the solicitation of proxies. If retained, ChaseMellon (or other solicitor)
would solicit proxies by mail, telephone, telecopier and personal interview. For
those services, it would be paid fees not to exceed $12,500 and would be
reimbursed for its expenses.
Financial Statements and Other Information
The Company's annual financial statements for the fiscal years ended
December 31, 1996 and December 31, 1997, respectively, are incorporated by
reference in this Proxy Statement to the Company's Annual Report on Form 10-KSB
filed by the Company with the Securities and Exchange Commission for the fiscal
years ended December 31, 1996 and December 31, 1997. The Company's Consolidated
Balance Sheet and accompanying notes to consolidated financial statements for
the second quarter of 1998 are incorporated by reference to Item 1, Part I of
the Company's Quarterly Report on Form 10-QSB filed with the Securities and
Exchange Commission for the quarterly period ended June 30, 1998. The Company's
Consolidated Statements of Operations and Consolidated Statements of Cash Flows
and accompanying notes to consolidated financial statements for the second
quarter of 1998 and the second quarter of 1997 are incorporated by reference to
Item 1, Part I of the Company's Quarterly Report on Form 10-QSB filed for the
quarterly periods ended June 30, 1998 and June 30, 1997. Item 6 of Part I of the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1997 is also incorporated by reference in this Proxy Statement.
The Company will provide, upon request to each shareholder by first
class mail without charge, a copy of the Company's financial statements and
other information described above which has been incorporated by reference in
this Proxy Statement. Shareholders should make their requests in writing or by
telephone to Krista G. Maddigan, Secretary, Pennsylvania Physician Healthcare
Plan, Inc., 651 East Park Drive, Harrisburg, Pennsylvania 17111, telephone (717)
561-7890.
Other Matters
The Board of Directors is not aware of any matters not set forth herein
which may come before the Meeting. If, however, any such matter properly comes
before the Meeting, the persons named in the Proxies will vote the shares
represented thereby in accordance with their judgment.
By Order of the Board of Directors
Krista G. Maddigan, Secretary
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PROXY
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
This Proxy is Being Solicited by the Board Of Directors
in connection with a Special Meeting of
Class A and Class B Shareholders to be held December 4, 1998
The undersigned hereby appoints Gary C. Brown and Edward W. Gerner, and
each of them, Proxies for the undersigned with power of substitution, to vote as
designated below all the shares of the undersigned at the Special Meeting of
Class A and Class B Shareholders of Pennsylvania Physician Healthcare Plan, Inc.
to be held at 651 East Park Drive, Harrisburg, Pennsylvania on December 4,
1998, at 7:00 p.m., or any adjournment thereof, all as more fully described in
the Notice of Special Meeting and Proxy Statement, receipt of which is hereby
acknowledged.
1. Approval of the Plan of Recapitalization and the Amended and
Restated Articles of Incorporation (Class A and Class B Shares
each vote separately as a class on this matter):
[ ] FOR APPROVAL OF [ ] WITHHOLD [ ] ABSTAIN
PLAN OF AUTHORITY TO
RECAPITALIZATION VOTE FOR
AND AMENDED AND APPROVAL OF PLAN
RESTATED ARTICLES OF RECAPITALI-
OF INCORPORATION ZATION AND
AMENDED AND
RESTATED
ARTICLES OF
INCORPORATION
2. Approval of Amendments to Sections 3.5 and 10.1 of the Bylaws
(only Class A Shares vote on this matter):
[ ] FOR ADOPTION OF [ ] WITHHOLD [ ] ABSTAIN
THE AMENDMENTS TO AUTHORITY TO
THE BYLAWS VOTE FOR
ADOPTION OF THE
AMENDMENTS TO
THE BYLAWS
<PAGE>
3. Approval of the Stock Option Plan (only Class A Shares vote
on this matter):
[ ] FOR ADOPTION OF [ ] WITHHOLD [ ] ABSTAIN
THE STOCK OPTION AUTHORITY TO
PLAN VOTE FOR
ADOPTION OF THE
STOCK OPTION
PLAN
4. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
The undersigned revokes all proxies heretofore given with respect to
said meeting and approves all that the Proxies or their substitutes shall do by
virtue hereof.
This Proxy, when properly executed, will be voted as directed herein,
but if no direction is given, this Proxy will be voted as to Class A Shares FOR
Approval of the Plan of Recapitalization and the Amended and Restated Articles
of Incorporation, FOR Adoption of the Amendment of the Bylaws and FOR Adoption
of the Stock Option Plan; and this Proxy will be voted as to Class B Shares FOR
Approval of the Plan of Recapitalization and the Amended and Restated Articles
of Incorporation.
The undersigned, intending that the Company will rely thereon,
certifies that the undersigned is a Pennsylvania practicing physician (medical
doctor or doctor of osteopathy), podiatrist or oral surgeon, or a Qualified
Retirement Plan, and is voting only one Class A Share and, if applicable, all
Class B Shares. Unless otherwise indicated by the undersigned, if the
undersigned is a holder of both Class A and Class B Shares, this Proxy shall
grant authority to vote the shares of both classes.
Dated:_________________, 1998
------------------------------------
Signature of Shareholder
------------------------------------
Signature of Shareholder
(Please sign exactly as your name
appears hereon. Executors,
administrators or trustees should so
indicate when signing. If Shares are
held by more than one person, all must
sign.)
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY
2
<PAGE>
- - --------------------------------------------------------------------------------
WE REQUEST
YOUR IMMEDIATE ATTENTION
TO THE ENCLOSED MATERIALS.
PLEASE REVIEW THE PROXY STATEMENT AND SIGN, DATE AND RETURN THE PROXY CARD IN
THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE TO ENABLE US TO MEET THE QUORUM AND
VOTING REQUIREMENTS FOR THE SPECIAL MEETING ON DECEMBER 4, 1998.
- - --------------------------------------------------------------------------------
<PAGE>
PENNSYLVANIA PHYSICIAN HEALTHCARE PLAN, INC.
INDEX TO EXHIBITS TO PROXY STATEMENT
Exhibit
No. Description of Exhibit*
- - ------- -----------------------
A Definitions
B Plan of Recapitalization
C Amended and Restated Articles of Incorporation of
Pennsylvania Physician Healthcare Plan, Inc.
D Amendments to Bylaws
E Pennsylvania Physician Healthcare Plan, Inc. Stock
Option Plan
- - ----------
* Copies of these Exhibits were previously filed with the Commission on October
9, 1998.
