UNIVERSAL AMERICAN FINANCIAL CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 12, 1997
To the Stockholders of
UNIVERSAL AMERICAN FINANCIAL CORP.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of UNIVERSAL
AMERICAN FINANCIAL CORP. will be held at The Princeton Club, 15 West 43rd
Street, New York, New York 10036, at 10 A.M. on June 12, 1997, or at any
adjournment thereof (the "Annual Meeting"), for the following purposes:
1. To re-elect four Directors whose terms will expire in 2000;
2. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 29, 1997
will be entitled to vote at the Annual Meeting.
IF YOU DO NOT EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY IN ORDER THAT YOUR SHARES MAY BE VOTED FOR YOU AS SPECIFIED.
By Order of the Board of Directors
JOAN M. FERRARONE
Secretary
Dated: May 12, 1997
Brewster, New York
<PAGE>
UNIVERSAL AMERICAN FINANCIAL CORP.
Mt. Ebo Corporate Park, Route 22
Brewster, New York 10509-0023
__________________
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 12, 1997
__________________
The Annual Meeting of Stockholders of UNIVERSAL AMERICAN FINANCIAL CORP.
(the "Company") will be held at The Princeton Club, 15 West 43rd Street, New
York, New York 10036, at 10 A.M. on June 12, 1997 for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders. This statement
is furnished in connection with the solicitation by the Company of proxies to
be used at the Annual Meeting or at any and all adjournments of such meeting.
If a proxy in the accompanying form is duly executed and returned, the
shares represented by such proxy will be voted as specified. Any person
executing the proxy may revoke it prior to its exercise either by letter
directed to the Company at its principal executive office, P.O. Box 23,
Brewster, New York 10509 or in person at the Annual Meeting. The approximate
date on which this Proxy Statement and the accompanying proxy first will be sent
or given to stockholders is May 12, 1997.
VOTING RIGHTS
On April 29, 1997 (the "Record Date"), the Company had outstanding three
classes of voting securities, namely 7,214,210 shares of Common Stock, $.01 par
value, 400 shares of Series B Preferred Stock and 34,600 shares of Series C-1
Preferred Stock. Holders of the Common Stock are entitled to one vote for each
share registered in their names at the close of business on the Record Date.
Holders of the Series B Preferred Stock and the Series C-1 Preferred Stock are
each entitled (i) to elect one director voting as a class and (ii) to vote
together with the holders of the Common Stock on all other matters as if the
400 shares of Series B Preferred Stock had been converted into 1,777,777 shares
of Common Stock and as if the shares of Series C-1 Preferred Stock had been
converted into 1,456,842 shares of Common Stock
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 29, 1997 as
to the number of shares of Common Stock beneficially owned by (i) each person
known by the Company to own beneficially more than 5% of the Company's Common
Stock ("5% Holder"), (ii) each person who is a Director of the Company or a
nominee for election as such Director, and (iii) all persons as a group who are
Directors or a nominee for election as such Director and Officers of the
Company, and as to the percentage of outstanding shares held by them on that
date. Unless otherwise indicated, each such beneficial owner holds the sole
voting and investment power with respect to shares of Common Stock outstanding.
2
<PAGE>
The Company's Common Stock and its Series B and C-1 Preferred Stocks are the
only classes of voting securities outstanding. Wand/Universal Investment L.P. I
and Wand/Universal L.P. II own all of the issued and outstanding Series B
Preferred Stock. The Series C-1 Preferred Stock is owned as follows: UAFC,
L.P., 69%; Richard A. Barasch, his wife and children, 16%; other directors,
officers and consultants of the Company and its subsidiaries and members of
their families, 15%.
<TABLE>
<CAPTION>
Beneficial Percent of
Name and Address of Beneficial Owner Status Ownership(a) Class
- ------------------------------------ ------ ------------ -------
<S> <C> <C> <C>
Barasch Associates Limited Partnership ("BALP") 5% Holder 3,892,588(b)(c) 40.5%
P.O. Box 23
Brewster, NY 10509
Wand/Universal Investment L.P. I and 5% Holder 1,777,777(c)(d) 19.8%
Wand/Universal L.P. II (collectively, "WAND")
630 Fifth Avenue
New York, NY 10111
UAFC, L.P. 5% Holder 1,010,526(e) 12.3%
30 North LaSalle Street
Chicago, Illinois 60602
Midland National Life Insurance Company ("Midland") 5% Holder 671,807 9.3%
One Midland Plaza
Sioux Falls, SD 57193
Marvin Barasch Director 218,432(f) 3.0%
P.O. Box 23
Brewster, NY 10509
Michael Barasch Director 68,053(f) 1.0%
11 Park Place
New York, NY 10007
Richard A. Barasch Director 645,370(f) 8.5%
P.O. Box 23
Brewster, NY 10509
Stuart Becker Director 16,000 *
551 Madison Avenue
New York, NY 10022
David F. Bolger Director 503,000 7.0%
79 Chestnut Street
Ridgewood, NJ 07450
Mark M. Harmeling Director 11,000 *
108 Chestnut Street
North Reading, MA 01864
3
<PAGE>
Bertram Harnett Director 72,105(f) 1.0%
105 East Palmetto Park Road
Boca Raton, FL 33432
Walter L. Harris Director 13,000(f) *
320 West 57th Street
New York, NY 10019
Harry B. Henshel Director 96,500 1.3%
One Bulova Avenue
Woodside, NY 11377
Patrick J. McLaughlin Director 35,000 *
100 Chetwynd Drive
Rosemont, PA 19010
William E. Wehner 5% Holder 506,553 6.8%
P.O. Box 23
Brewster, NY 10509
Directors and Officers as a Group (13 persons) 6,593,452(g) 62.0%
______________________
* Percent of class is less than 1%
</TABLE>
(a) The Securities and Exchange Commission has defined "beneficial owner" of a
security to include any person who has or shares voting power or
investment power with respect to any such security or who has the right
to acquire beneficial ownership of any security within 60 days. The
percentages are therefore based on the 7,214,210 shares of Common Stock
outstanding as of April 29, 1997 plus common stock issuable with respect to
options and warrants presently exercisable and convertible preferred
stock presently convertible.
(b) Includes 389,560 Warrants registered under the Securities Exchange Act of
1934 (the Act"), and 2,015,760 of Warrants not registered under the Act
for the purchase of shares of the Company's Common Stock owned by BALP.
(c) BALP and Wand have entered into an agreement, under which as long as Wand
holds common stock issued from conversion of its Series B Convertible
Preferred Stock, BALP will vote its shares for the election of one
director nominated by Wand and Wand will vote its shares for BALP's
nominees for the balance of the Board positions.
(d) Represents the amount of common stock potentially issuable upon conversion
of the Series B Convertible Preferred Stock held by Wand.
(e) Represents the amount of common stock potentially issuable upon conversion
of the Series C-1 Preferred Stock held by UAFC, L.P.
(f) Does not include any indirect ownership through BALP by Marvin Barasch,
Michael A. Barasch, Richard A. Barasch, Bertram Harnett and Walter
Harris, each of whom owns an interest in BALP.
(g) Includes the 3,892,588 shares of common stock beneficially owned by BALP.
4
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
The By-Laws of the Company provide for a Board of Directors of not less than
three, classified into three classes with the Directors in each class serving
for three years, with the terms staggered by class so that one class is
elected at each annual meeting of stockholders for a full three year term.
The By-laws of the Company provide that the number of Directors shall be set
by the Board of Directors and that the number of directors in each class
shall be equal, or as nearly as practical. The Company's Board of Directors
now consists of eleven Directors, including four Directors whose terms expire
at the 1997 annual meeting of stockholders.
Management proposes to reelect the four directors whose terms expire in 1997
which will result in a board consisting of eleven directors.
<TABLE>
<CAPTION>
CLASS I CLASS II CLASS III
(To Serve Until the Annual (To Serve Until the Annual (To Serve Until the Annual
Meeting of Stockholders in 1999) Meeting of Stockholders in 2000) Meeting of Stockholders in 1998)
<S> <C> <C> <C>
Michael A. Barasch Richard A. Barasch Mark M. Harmeling
David F. Bolger Stuart Becker Marvin Barasch
Walter L. Harris Harry B. Henshel Bertram Harnett
Richard Veed (b) Patrick J. McLaughlin (a)
</TABLE>
(a) Elected by the holders of the Series B Preferred Stock.
(b) Designated to represent the holders of the Series C-1 Preferred Stock.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive a fee of $500 for each
meeting of the Board or Committee meeting attended, unless such Committee
meeting is held immediately prior to or after a Board meeting, in which case a
$250 fee is received for the Committee Meeting.
In addition, in 1996 each director (other than Mr. Harnett and Mr. Veed) was
eligible to be granted options under the Stock Option Plan for Directors adopted
at the 1992 Annual Meeting of Stockholders. On June 30, 1996, each eligible
director was granted options to purchase 1,000 shares of Common Stock at an
exercise price of $2.50 for a total of 7,000 options granted.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, a Transaction Committee, a
Compensation Committee and an Executive Committee. The Audit Committee is
empowered to consult with the Company's independent auditors with respect to
their audit plans and to review their audit report and the accompanying
management letters. The Transaction Committee reviews and recommends to the
Board on certain capital transactions entertained by the Company. The
Compensation Committee reviews and determines compensation, including
incentive stock option grants, of officers of the Company. The Executive
Committee has the authority to act between Board meetings on behalf of the
Board, on all matters allowed by law.
During the fiscal year ended December 31, 1996, there were four meetings of
the Board of Directors, three meetings of the Audit Committee and one meeting
of each of the Compensation and Transaction Committees. Each incumbent
director attended more than 75% of the aggregate of the total number of
meetings of the Board of Directors and of the meetings of each Committee of
which he was a member.
5
<PAGE>
LISTING OF DIRECTORS
The following table sets forth certain information concerning the directors of
the Company and the nominee for election as such director.
<TABLE>
<CAPTION>
Position with the Company, Present Principal Occupation
Name Age or Employment and the Past Five-Year Employment History
- ---- --- -------------------------------------------------------
<S> <C> <C>
Marvin Barasch 74 Chairman of the Board of the Company since July 1988, Chairman of
American Progressive since June 1996 (Vice-Chairman of American
Progressive (John Adams) from July 1988 to June 1996) and a director
of American Pioneer since May 1993. Mr. Barasch was Chief Executive
Officer of the Company from July 1988 to June 15, 1995. He has been
in the insurance business as an agent and broker for over 40 years.
Term as a Director expires in 1998.
Michael A. Barasch 41 Director of the Company since July, 1988 and American Progressive (and its
predecessor, John Adams) from July, 1988 to June, 1995. Since February 1995,
Mr. Barasch has been a member of the law firm of Barasch and McGarry. He
was a member of the law firm of Altier and Barasch from February 1989 to
February 1995. Term as a Director expires in 1999.
Richard A. Barasch 43 Director, President and Chief Executive Officer of the Company;
Director and President of American Progressive; and Chairman of the
Board of American Pioneer and WorldNet. Mr. Barasch has been a
director and executive officer of the Company since July 1988,
President since April 1991 and Chief Executive Officer since June
15, 1995. He has held his positions with the Company's subsidiaries
since their acquisition or organization by the Company. Term as a
Director expires in 1997.
Stuart Becker, C.P.A. 53 Director of the Company since July 1990. A partner in the
accounting firm of Becker & Company, LLC and predecessors, since
1990. Mr. Becker has more than 30 years experience as a certified
public accountant. Term as a Director expires in 1997.
David F. Bolger 64 Director of the Company since December, 1992. Since 1966, Mr. Bolger has been
Chief Executive Officer of Bolger & Co., Inc., an investment banking firm.
Term as a Director expires in 1999.
Mark M. Harmeling 44 Director of the Company since July 1990 and Director of American Progressive
since December, 1992. Mr. Harmeling has been President of Bay State Realty
Advisors since January 1994 and previously President of Intercontinental Real
Estate Corporation, a real estate management and development company for more
than the past five years. Mr. Harmeling is also a Director of the following
companies: Rochester Shoetree Corporation (since 1988) and Applied Extrusion
Technologies (since 1987). Term as a Director expires in 1998.
Bertram Harnett 73 Elected director of the Company and American Pioneer in June 1996 and had
been a director of the Company previously (July 29, 1988 to February 9, 1989).
Mr. Harnett is President of the law firm of Harnett Lesnick & Ripps P.A.,
Boca Raton, Florida, and its predecessors since 1988, and a practicing lawyer
since 1948. He is the author of treatises on insurance law and is a former
Justice of New York State Supreme Court. Term as a director expires in 1998.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
Walter L. Harris 45 Director of the Company since July 1993 and of American Progressive (and its
predecessor, John Adams) since July 1988. Since 1979, Mr. Harris has been
President of Tanenbaum-Harber Company, Inc., a general insurance brokerage
firm. Term as a Director expires in 1999.
Harry B. Henshel 78 Director of the Company since June 1992. Mr. Henshel has been Vice Chairman
of the Board of the Bulova Corporation, a manufacturer of timepieces located
in New York City, for more than the past five years. Mr. Henshel is also a
Director of Ponce Hotel Corporation (since 1973) and Ampal Industries, Inc.
(since 1983). Term as a Director expires in 1997.
Patrick J. McLaughlin 38 Director of the Company since January 1995. Mr. McLaughlin has been a
Managing Director of Emerald Capital Group, Ltd., an asset management and
consulting firm specializing in the insurance industry, since April 1993.
Prior to that he was an Executive Vice President and Chief Investment
Officer of Life Partners Group, Inc. (April 1990 to April 1993), Managing
Director of Conning & Company (August 1989 to April 1990) and Senior Vice
President and Chief Investment Officer of ICH Corporation (March 1987 to
August 1989). Term as a Director expires in 1997 .
Richard Veed 45 Director of the Company since April 25, 1997. Mr. Veed has been a Managing
Partner of AAM Investment Banking Group, Ltd. since October, 1993. Prior
to that he was President of Guaranty Reassurance Corp. from September, 1992
to May, 1993 and a Partner at Arthur Anderson & Co. from 1987 to August,
1992. He is also a Director of HomeVest Financial Group, Inc. Term as a
Director expires in 1999.
</TABLE>
Richard Barasch is Marvin Barasch's nephew. Michael Barasch is Marvin
Barasch's son.
All of the Company's officers are elected annually. The Company's Directors
are elected for three year staggered terms. All such officers and directors
hold office until their successors are duly elected and qualified.
EXECUTIVE COMPENSATION, RELATED PARTY TRANSACTIONS
AND OTHER INFORMATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors reviews and approves the
compensation of the Company's executive officers (including the named executive
officers listed in the management section below). The objective of the
Company's compensation program is to provide a total compensation package that
will enable the Company to attract, motivate and retain outstanding individuals,
to align the financial interests of such individuals with the interests of the
Company's shareholders and to reward such individuals for increasing levels of
profit and shareholder value. The Compensation Committee is composed of three
independent, non-employee members of the Board.
In conformance with this philosophy, the Committee establishes a competitive
and appropriate total compensation package for each executive officer,
consisting primarily of base salary, annual bonus, stock options and restricted
stock awards. These compensation components which comprise Universal's
Executive Compensation Program are designed to support the success of the
Company's performance, reward successful performance, align the executive
officers' interests with the success of the Company and encourage management's
stake in the long-term performance and success of the Company. Compensation
levels are reviewed annually by the Committee relative to other life insurance
companies and companies of similar size in the financial industry.
7
<PAGE>
The Committee establishes base salaries each year at a level intended to be
within the competitive market range of comparable companies. Other factors
considered in determining base salary include the responsibilities of the
executive officer, experience, length of service and individual performance.
During fiscal year 1996, base salaries of the executive officer group increased
an average of 4.4%. The Committee believes that the base salaries of the
current executive officers are within or below the competitive market range of
comparable companies.
The Committee awards cash bonuses to the executive officers and the criteria
used to determine cash bonus levels include among other things, operating
profits, new business production and expenses relative to pre-determined
budgets. The executive officer group's fiscal year 1996 cash bonus was 1.8% of
the group's annual base salary.
An important component of the Company's Executive Compensation Program is the
award of stock options and restricted stock. The primary purpose of this
component is to assist the Company in aligning the interests of the executive
officers with the interests of the Company. The Committee feels this component
motivates the executive officers to remain focused on the overall long-term
performance of the Company. The award of a stock option creates no financial
benefit to the executive unless there is appreciation in the price of the
Company's stock after the award date. The financial benefit of an award of
restricted stock can not be realized by the executive officer until the
restriction can be lifted from the stock, generally a minimum of two years.
Total number of restricted stock and stock options awarded to the executive
officer group during fiscal year 1996 amounted to 17,500 and 130,000,
respectively, or 0.3% and 1.9%, respectively, of the average outstanding shares
of the Company during 1996.
The Compensation Committee
Mark Harmeling, Chairman
Stuart Becker
Walter Harris
PERFORMANCE GRAPH
The Performance Graph compares the Company's cumulative total shareholder
return on its Common Stock for the five year period between December 31, 1991 to
December 31, 1996, with the cumulative total returns of The Nasdaq Stock Market
("NSM") and the Nasdaq Insurance Stocks ("NIS"). The comparison for each period
assumes that $100 was invested on December 31, 1991 in each of the Company's
Common Stock, the stocks included in The Nasdaq Stock Market Total Return Index
and the stocks included in the Nasdaq Insurance Stocks Total Return Index.
(The graph referred to above is available upon request)
8
<PAGE>
MANAGEMENT
The following table sets forth aggregate compensation paid by the Company and
its subsidiaries for services rendered in all capacities to the Company and its
subsidiaries for the fiscal years ended December 31, 1996, 1995 and 1994 to the
Company's Chief Executive Officer and the three most highly compensated
executive officers of the Company and its subsidiaries:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------------- -------------------------
Other Annual Restricted Stock All Other
Name, Age and Principal Position Year Salary Bonus Compensation Stock $ (1) Options Compensation(2)
- -------------------------------- ---- ------ ----- ------------ ----------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard A. Barasch (43) 1996 $312,000 $ 5,000 0 $14,000 40,000 $2,350
President & Chief Executive 1995 300,000 5,000 0 15,750 20,000 2,310
Officer ("CEO") 1994 250,000 20,000 0 26,250 20,000 2,248
Gary W. Bryant (47) 1996 203,000 3,000 0 7,000 30,000 2,030
Senior Vice President of the 1995 195,000 3,000 0 7,875 10,000 1,731
Company and President of 1994 179,731 10,000 0 43,125 15,000 1,797
American Pioneer
William E. Wehner (53) 1996 140,000 3,000 0 7,000 30,000 1,400
Exec. Vice President & 1995 132,000 5,000 0 15,750 10,000 1,155
Chief Operating Officer, 1994 120,000 10,000 0 28,125 15,000 1,200
of American Progressive
Robert A. Waegelein (36) 1996 135,500 3,000 0 7,000 30,000 1,355
Sr. Vice President & 1995 130,000 3,000 0 7,875 10,000 1,322
Chief Financial Officer 1994 117,500 10,000 0 28,125 15,000 1,317
</TABLE>
____________________
(1) The executive officers were awarded shares of Restricted Stock of
the Company on various dates. These shares are shown at the fair market
value of the Company's Common Stock on the date of the award.
(2) The amounts in this column represent the value of common stock of the
Company contributed by the Company under the 401(k) plan to match
contributions to the plan on behalf of the executive officer.
9
<PAGE>
OPTIONS GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to options to purchase
Common Stock granted to the executive officers named in the Summary Compensation
Table during 1996:
% of Total
Options
Granted to Exercise
Options Employees Price Expiration
Name Granted # in 1996 ($/Share) Date
------------------- --------- ---------- --------- ----------
Richard A. Barasch 40,000 28.37% 2.20 12/10/06
Gary W. Bryant 30,000 21.28% 2.00 12/10/06
William E. Wehner 30,000 21.28% 2.00 12/10/06
Robert A. Waegelein 30,000 21.28% 2.00 12/14/06
AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS VALUES
The following table sets forth information with respect to options to purchase
Common Stock exercised by the executive officers named in the Summary
Compensation Table and the number and value of options held on December 31,
1996:
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised Options at
Shares Options at Fiscal Year-End Fiscal Year-End( $)(2)
Acquired on Value --------------------------- -------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Barasch 35,000 50,750(1) 110,000 40,000 51,100 2,000
Gary W. Bryant 0 0 75,000 30,000 40,500 7,500
William E. Wehner 40,000 60,000(1) 65,000 30,000 36,200 7,500
Robert A. Waegelein 15,000 22,500(1) 65,000 30,000 36,200 7,500
</TABLE>
____________________
(1) Based on a closing price of $2.00 for the Company's common stock on the
exercise date, November 14, 1996.
(2) Calculated using the market price on December 31, 1996 of $2.25 per share
and exercise prices ranging between $0.50 and $3.33 for exercisable options
and ranging between $2.00 and $2.20 for unexercisable options.
INCENTIVE STOCK OPTION PLAN.
The Incentive Stock Option Plan (the "Option Plan"), which was approved by the
shareholders in April 1983 and amended in May 1987, June 1989, June 1994 and
June 1995, covers 1,000,000 shares of Common Stock and is intended to provide
an additional means of providing incentive to executives and other "key
salaried employees" of the Company (which is defined under section 422A of the
Internal Revenue Code as employees of the Company and its subsidiaries).
Within the limits of the Option Plan, the Company's Board of Directors, in its
discretion, determines the participants under the Option Plan, the number of
options to be granted under the Option Plan and the purchase price and terms of
each option. The price for the shares covered by each option is required to be
10
<PAGE>
not less than 100% of the fair market value at the date of grant. Options
expire five years from the date of grant or termination and become exercisable
in installments as determined by the Board of Directors commencing one year
after date of grant.
During the year ended December 31, 1996, 141,000 Incentive Stock Options were
granted at exercise prices ranging between $2.00 and $2.20. Incentive Stock
Options to purchase 47,000 shares of Common Stock at exercise prices ranging
between $2.87 and $3.12 were canceled or expired. Incentive Stock Options to
purchase 135,000 shares of common stock were exercised at prices ranging
between $0.50 - $1.35. As of May 12, 1997, Incentive Stock Options to purchase
429,000 shares were exercisable, none of which have since been exercised.
401(K) PLAN
The executives named in the Summary Compensation Table, as well as substantially
all full-time employees of the Company and its subsidiaries, are eligible to
participate in the Universal American Financial Corp. 401(k) Savings Plan
("Savings Plan"). The Savings Plan is a voluntary contributory plan under which
employees may elect to defer compensation for federal income tax purposes under
Section 401(k) of the Internal Revenue Code of 1986. The employee is entitled
to participate in the Savings Plan by contributing through payroll deductions up
to 20% of the employee's compensation. The Company may match the employee's
contribution up to 25% of the first 4% of the employee's compensation which
contribution will be made with Company common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Wand Partners, Inc., an affiliate of Wand, entered into a
financial advisory agreement, under which such Wand affiliate is to render
advisory services to the Company and is to be paid a fee of $100,000 per year
for such services as long as Wand owns 500,000 shares of Common Stock, or common
stock equivalent, reduced by any directors' fees paid to the director designated
by Wand.
The Company paid $120,000 to AAM Capital Partners, Inc., an affiliate of UAFC,
L.P., in fees for its structuring of the Series C Preferred Stock offering.
(Intentionally Left Blank)
11
<PAGE>
ADDITIONAL INFORMATION
The Board of Directors does not intend to present to the meeting any matters not
referred to in the form of Proxy. If any proposal not set forth in the Proxy
Statement would be presented for action at the meeting, it is intended that the
shares represented by proxies will vote with respect to such matters in
accordance with the judgment of the persons voting them.
The Company's independent auditors for the fiscal year ended December 31, 1996
were Ernst & Young LLP. Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting with the opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate questions.
Stockholder proposals with respect to the Company's next Annual Meeting of
Stockholders must be received by the Company no later than February 1, 1998 to
be considered for inclusion in the Company's next Proxy Statement.
The cost of soliciting proxies in the accompanying form has been or will be paid
by the Company. In addition to solicitation by mail, arrangements may be made
with brokerage houses and other custodians, nominees and fiduciaries to send
proxy material to their principals, and the Company may reimburse them for their
expenses in so doing. To the extent necessary in order to assure sufficient
representation, officers and regular employees of the Company may engage
(without additional compensation) in the solicitation of proxies personally, by
telephone or telegram.
A copy of the Annual Report has been mailed to every stockholder as of the
Record Date. The Annual Report is not to be considered proxy soliciting
material.
By Order of the Board of Directors
JOAN M. FERRARONE
Secretary
Dated: May 12, 1997
Brewster, New York
12
