FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 1995
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934 For the transition period from _________________ to
_________________
Commission File Number: 0-13265
UCI MEDICAL AFFILIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 59-2225346
(State or other jurisdiction of incorporation (IRS Employer Identification
or organization) Number)
6168 St. Andrews Road, Columbia, SC 29212
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 772-8840
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.05
par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days. Yes X No
Indicate by check mark if the disclosure of delinquent filers pursuant to
Item 405 of regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. ( X )
The registrant's revenue for the year ended September 30, 1995, the
registrant's most recent year end, was $17,987,147.
The aggregate market value of voting stock held by nonaffiliates of the
registrant on December 15, 1995, is approximately $4,166,000.*
The number of shares outstanding of the registrant's common stock, $.05 par
value was 3,794,916 at December 15, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
None
* Calculated by excluding all shares held by officers, directors and
controlling shareholder of registrant without conceding that all such persons
are "affiliates" of registrant for purposes of the federal securities laws.
Total number of pages, including the cover page, is 123 . Exhibit Index is
on page 41 .
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<PAGE>
UCI MEDICAL AFFILIATES, INC.
INDEX TO FORM 10-K
PAGE
PART I
Item 1 Business ..........................................................3
Item 2 Properties .........................................................5
Item 3 Legal Proceedings ..................................................6
Item 4 Submission of Matters to a Vote of Security Holders ............. 6
PART II
Item 5 Market for the Registrant's Common Stock and
Related Security Holder Matters ............................... 7
Item 6 Selected Financial Data ........................................ 8
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations .............................. 9
Item 8 Financial Statements and Supplementary Data .......................12
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ......................... 12
PART III
Item 10 Directors and Executive Officers of the Registrant ................12
Item 11 Executive Compensation ........................................... 14
Item 12 Security Ownership of Certain Beneficial Owners
and Management ................................................ 15
Item 13 Certain Relationships and Related Transactions ....................17
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K ...............................................19
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<PAGE>
PART I
Item 1. Business
Introduction
The consolidated financial statements of UCI Medical Affiliates, Inc.
include the accounts of UCI Medical Affiliates, Inc. ("UCI"), its wholly owned
subsidiary, UCI Medical Affiliates of SC, Inc. ("UCI-SC") and Doctor's Care, PA
(the "P.A."), collectively the "Company". The financial statements of the P.A.
are consolidated with UCI because UCI-SC has unilateral control over the assets
and operations of the P.A. and, notwithstanding the lack of technical majority
ownership, consolidation of the P.A. with UCI is necessary to present fairly the
financial position and results of operations of UCI. UCI-SC provides non-medical
management and administrative functions for 25 medical clinics, operating as
Doctor's Care (the "Centers"). All medical services at the Centers are provided
by or under the supervision of the P.A., which has contracted with UCI-SC to
provide the medical direction of the Centers. The medical directors operate the
Centers under the financial and operational control of UCI-SC. However, medical
supervision of the Centers is provided solely by the P.A. The P.A. remits to
UCI-SC all medical service revenues generated by the Centers, net of expenses
incurred by the P.A. This compensation is recorded in the accompanying financial
statements as revenue. Control of the P.A. is perpetual and other than temporary
because of the nature of this relationship and the management's agreements
between the entities. The net assets of the P.A. are not material for any period
presented and intercompany accounts and transactions have been eliminated. For
the fiscal year ended September 30, 1995, the Company has shown a substantial
increase in revenues and in medical centers under management. This growth is a
direct result of actions taken by management to increase marketing efforts, to
expand the state-wide network in South Carolina and to focus on the field of
occupational and industrial medicine.
General
UCI-SC provides nonmedical management and administrative services for
freestanding medical centers. The Company as of September 1995 owns a network of
medical centers consisting of 25 freestanding Centers located throughout South
Carolina.
In order to comply with prohibitions against corporations, other than
medical professional associations, providing medical care; all medical services
at the Centers are provided by or under the supervision of the P.A., a South
Carolina professional association.
The Centers are staffed by licensed physicians, other healthcare
providers and administrative support staff. The medical support staff includes
licensed nurses, certified medical assistants, laboratory technicians and x-ray
technicians.
The Centers typically are open for extended hours (weekends and
evenings) and out-patient care only. When hospitalization or specialty care is
needed, referrals to appropriate specialists are made.
The Company's Centers are broadly distributed throughout the state of
South Carolina. There are eleven primary care Centers in the Columbia region,
four in the Charleston region, four in the Myrtle Beach region and four in the
Greenville-Spartanburg region. In addition to these 23 Centers, the Company
operates a surgical practice and an orthopedic practice, both of which are
located in Columbia.
The Company's business, by its nature, is subject to various risks,
including, but not limited to, difficulties in controlling health care costs,
uncertainty of future expansion, availability of primary care physicians and
possible negative effects of government regulation.
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The health care industry is subject to extensive federal and state
regulation. Changes in healthcare legislation or reinterpretations of existing
regulations could significantly affect the business of the Company.
Medical Services Provided at the Centers
The Company's Centers offer reasonably priced out-patient medical care,
without appointment, for treatment of acute and episodic medical problems. The
Centers provide a broad range of medical services which would generally be
classified as within the scope of family practice and occupational medicine. The
medical services are provided by licensed physicians, nurses and auxiliary
support personnel. The services provided at the Centers include, but are not
limited to the following:
(bullet) Routine care of general medical problems, including colds, flu,
ear infections, hypertension, asthma, pneumonia and other
conditions typically treated by primary care providers;
(bullet) Treatment of injuries, such as simple fractures, dislocations,
sprains, bruises and cuts;
(bullet) Minor surgery, including suturing of lacerations and removal of
cysts and foreign bodies;
(bullet) Diagnostic tests, such as x-rays, electrocardiograms, complete
blood counts, urinalysis and various cultures; and,
(bullet) Occupational and industrial medical services, including drug
testing, worker's compensation and physical examinations.
At any of the Centers, a patient with a life-threatening condition
would be evaluated by the physician, stabilized and immediately transferred to a
nearby hospital.
Patient Charges and Payments
The fees charged to a patient are determined by the nature of medical
services rendered. Management of the Company believes that the charges at its
Centers are significantly lower than the charges of hospital emergency
departments and are generally competitive with the charges of local physicians
and other providers in the area.
The Company's Centers accept payment from a wide range of sources.
These include patient payments at time of service (by cash, check or credit
card), patient billing and assignment of insurance benefits (including Blue
Cross/Blue Shield, Medicare, Worker's Compensation and other private insurance).
Private pay billings represent the most significant source of revenues. The
Company also provides services for members of three of the largest health
maintenance organizations ("HMOs") operating in South Carolina - Companion
HealthCare Corporation, HealthSource South Carolina, Inc., and Maxicare South
Carolina (a division of Maxicare Southeast Health Plan, Inc.).
Medical services traditionally have been provided on a fee-for-service
basis with insurance companies assuming responsibility for paying all or a
portion of such fees. The increase in medical costs under traditional indemnity
health care plans has been caused by a number of factors. These factors include:
(i) the lack of incentives on the part of health care providers to deliver
cost-effective medical care; (ii) the absence of controls over the utilization
of costly specialty care physicians and hospitals; (iii) a growing and aging
population which requires increased health care expenditures; and (iv) the
expense involved with the introduction and use of advanced pharmaceuticals and
medical technology.
As a result of escalating health care costs, employers, insurers and
governmental entities all sought cost-effective approaches to the delivery of
and payment for quality health care services. HMOs and other managed health care
organizations have emerged as integral components in this effort. HMOs enroll
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members by entering into contracts with employer groups or directly with
individuals to provide a broad range of health care services for a capitation
payment, with minimal or no deductibles or co-payments required of the members.
HMOs, in turn, contract with health care providers like the Company to
administer medical care to HMO members. These contracts provide for payment to
the Company on either a discounted fee-for-service or through capitation
payments based on the number of members covered, regardless of the amount of
necessary medical care required within the covered benefit period.
Certain third party payors are studying various alternatives for
reducing medical costs, some of which, if implemented, could affect
reimbursement levels to the Company. The Company cannot predict whether changes
in present reimbursement methods or proposed future modifications in
reimbursement methods will affect payments for services provided by the Centers
and, if so, whether they will have an adverse impact upon the business of the
Company.
Competition and Marketing
All of the Company's Centers face competition, in varying degrees, from
hospital emergency rooms, private doctor's offices and other competing
freestanding medical centers. Some of these providers have financial resources
which are greater than those of the Company. In addition, traditional sources of
medical services, such as hospital emergency rooms and private physicians, have
had, in the past, a higher degree of recognition and acceptance by patients than
Centers such as those operated by the Company. The Company's Centers compete on
the basis of accessibility, including evening and weekend hours, a
no-appointment policy, the attractiveness of its state-wide network to large
employers and third party payors, and on a basis of a competitive fee schedule.
In an effort to offset the competition's community recognition, the Company has
substantially increased its marketing efforts. Regional marketing
representatives have been added, focused promotional material has been developed
and a newsletter for employers promoting the Company's activities has been
initiated.
Government Regulation
South Carolina prohibits the corporate practice of medicine. By virtue
of its relationship with the P.A., the Company believes that it is in full
compliance with this law.
The health care industry is highly regulated, and there can be no
assurance that the regulatory environment in which the Company operates will not
change significantly in the future. Generally, regulation of health care
companies is increasing.
Various proposals affecting federal and state regulation of the health
care industry, including limitations on Medicare and Medicaid payments, have
been introduced in the past, including provisions in legislation currently
pending.
Employees
As of September 30, 1995 and 1994, the Company had 301 and 202 employees,
respectively (270 and 170 , respectively, on a full-time equivalent basis).
Item 2. Properties
All but one of the Company's primary care Centers are leased. The
properties are generally located on well-traveled major highways, with easy
access. Each property offers free, off-street parking immediately adjacent to
the center. Four (4) Centers are leased from entities affiliated with the
Company's Chairman and one (1) center is leased directly from the Chairman.
Seven (7) Centers are leased from Companion HealthCare Corporation, a principal
shareholder of the Company. See additional information regarding these leases at
Item 13, "Certain Relationships and Related Transactions."
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Item 3. Legal Proceedings
The Company is party to various claims, legal activities and complaints
arising in the normal course of business. In the opinion of management and legal
counsel, there are no material pending legal proceedings to which the Company is
party.
Item 4. Submission of Matters to a Vote of Security Holders
On September 13, 1995, the annual meeting of the shareholders of the
Company was held and the following actions were taken:
1. The shares of Common Stock represented at the meeting were voted to
elect Charles M. Potok, Charles P. Cannon and Russell J. Froneberger to the
Board of Directors for terms expiring in 1997, 1998 and 1998, respectively, as
follows:
<TABLE>
<CAPTION>
Number Voting For Against Abstain
<S> <C> <C> <C> <C>
Charles M. Potok 2,804,675 2,665,941 - 138,734
Charles P. Cannon 2,804,675 2,665,941 - 138,734
Russell J. Froneberger 2,804,675 2,665,941 - 138,734
</TABLE>
Two other Directors, M.F. McFarland, III, M.D. and Harold H.
Adams, Jr., whose terms expire in 1997 and 1996,
respectively, continued to serve as elected.
2. The shares of Common Stock represented at the meeting were voted
to approve an amendment to the 1994 Incentive Stock Option Plan to
increase the number of shares of Common Stock that may be issued
under the Stock Option Plan from 50,000 shares to 750,000 shares
as follows:
Number Voting For Against Abstain
2,578,837 2,552,639 24,339 1,859
3. The shares of Common Stock represented at the meeting were voted
to ratify the appointment of Price Waterhouse LLP as independent
auditors for the Company as follows:
Number Voting For Against Abstain
2,804,675 2,803,922 446 337
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PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
The Common Stock of the Company is traded on the over-the-counter
market. The prices set forth below indicate the high and low bid prices. All
stock prices have been adjusted to reflect the Company's one for five reverse
stock split effected on July 27, 1994.
<TABLE>
<CAPTION>
Bid Price
Fiscal Year ended September 30, 1995 High Low
<S> <C> <C>
1st quarter (10/01/94 - 12/31/94) 3-1/8 1-1/2
2nd quarter (01/01/95 - 03/31/95) 3-1/4 1-1/2
3rd quarter (04/01/95 - 06/30/95) 3-3/8 2-1/4
4th quarter (07/01/95 - 09/30/95) 3-1/4 1-3/4
Bid Price
Fiscal Year ended September 30, 1994 High Low
1st quarter (10/01/93 - 12/31/93) 5/8 5/8
2nd quarter (01/01/94 - 03/31/94) 2-1/2 15/100
3rd quarter (04/01/94 - 06/30/94) 4-1/16 1-1/4
4th quarter (07/01/94 - 09/30/94) 3-6/10 1-1/4
</TABLE>
From October 1, 1992 through September 30, 1993, the Company's stock
had been quoted at 5/32.
The foregoing quotations reflect inter-dealer prices without retail
markup, markdown or commission and may not necessarily reflect actual
transactions.
As of September 30, 1995, there were 698 stockholders of record of the
Company's Common Stock, excluding individual participants in security position
listings.
The Company has not paid dividends on its Common Stock since inception
and has no plans to declare cash dividends in the foreseeable future.
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Item 6. Selected Financial Data (In thousands, except per share data)
The following selected financial data should be read in conjunction
with the Company's consolidated financial statements and the accompanying notes
presented elsewhere herein.
STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
For the year ended September 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Revenues ............................................... $ 17,987 $12,540 $9,799 $8,330 $ 8,542
Income (loss) before extraordinary items ............... (1,360) 644 268 3 (76)
Net income (loss) (1) .................................. (1,360) 644 407 3 (76)
Net income (loss) per share (2) ........................ (.43) .28 .21 -- (.04)
Weighted average number of
shares outstanding (2) ............................... 3,137 2,324 1,971 1,946 1,946
</TABLE>
BALANCE SHEET DATA
<TABLE>
<CAPTION>
September 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C>
Working capital ................................ (383) 763 (845) (921) (1,394)
Premises & equipment, net ...................... 2,795 1,098 487 268 404
Total assets ................................... 10,216 6,674 2,940 2,452 2,748
Long-term debt ................................. 4,366 2,838 667 634 473
Stockholders' equity ........................... 3,253 2,603 457 49 473
</TABLE>
(1) Effective October 1, 1993, the Company adopted Statement of Financial
Standards No. 109, "Accounting for Income Taxes." The effect of adopting
SFAS 109 was to reduce income tax expense for 1994 by approximately
$612,000 or $.26 per share.
(2) The net income (loss) per share and the weighted average number of shares
outstanding has been restated for all periods presented to reflect the one for
five reverse stock split effected on July 27, 1994.
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Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis provides information which the
Company believes is relevant to an assessment and understanding of the Company's
consolidated results of operations and financial condition. This discussion
should be read in conjunction with the consolidated financial statements and
notes thereto.
Results of Operations for the Year Ended September 30, 1995 Compared to
Year Ended September 30, 1994
For fiscal year 1995, revenues of $17,987,000 reflect an increase of
43% from the amount reported for fiscal year 1994. The following reflects
revenue trends from fiscal year 1991 through fiscal year 1995:
For the year ended September 30, (in thousands)
1995 1994 1993 1992 1991
Revenues $17,987 $12,540 $9,799 $8,330 $8,542
Operating Costs 18,180 11,881 9,133 8,004 8,232
Operating Margin (193) 660 666 326 310
The increase in revenue for fiscal year 1995 is attributable to a
number of factors. The Company engaged in a significant expansion, increasing
the number of primary care medical Centers from 19 to 25. The expansion included
the addition of two Centers each to the clusters in Columbia (bringing the total
to eleven plus two specialty practices in this region), Greenville (bringing the
total to four in this region) and Myrtle Beach (bringing the total to four in
this region).
The Company, in fiscal year 1995, increased its services provided to
members of HMOs. In these arrangements, the Company, through Doctor's Care,
P.A., acts as the designated primary caregiver for members of the HMO who have
selected Doctor's Care as their primary care provider. In fiscal year 1994, the
Company began participating in an HMO operated by Companion HealthCare
Corporation ("Companion"), a wholly owned subsidiary of Blue Cross Blue Shield
of South Carolina. With its arrangement with Companion, the Company now
participates in three HMOs and is the primary care "gatekeeper" for more than
11,000 capitated lives. While HMOs do not, at this time, have a significant
penetration into the South Carolina market, the Company believes that HMOs and
other managed care plans will experience a substantial increase in market share
in the next few years, and the Company is therefore positioning itself for this
possibility.
Increased revenues in fiscal year 1995 also reflect the Company's
heightened focus on occupational medicine and industrial health services.
Focused marketing materials, including quarterly newsletters for employers, were
developed to spotlight the Company's services for industry. The Company also
entered into an agreement with Companion Property and Casualty Insurance Company
wherein the Company acts as the primary care provider for injured workers of
firms insured through Companion Property and Casualty Insurance Company.
Companion Property and Casualty Insurance Company is wholly owned by Blue Cross
Blue Shield of South Carolina and is therefore affiliated with Companion
HealthCare Corporation, a primary shareholder of the Company. See additional
related information at Item 13, "Certain Relationships and Related
Transactions."
Patient encounters increased to 283,000 in fiscal 1995 from 216,000 in
fiscal 1994.
Even with the positive effects of the factors mentioned above, revenues
were short of goals for the year, due in part to the increased competition from
hospitals and other providers in Greenville, Sumter and Myrtle Beach and to
certain short-term disruptions related to the practices acquired during the
year.
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Operating losses of $193,000 were realized in fiscal 1995 as compared
to an operating margin of $660,000 in fiscal 1994. This is due, in part, to
start-up costs being incurred at the six Centers added in fiscal 1995. Operating
costs of $18,180,000 for fiscal 1995 exceeded management's budgets primarily in
the areas of personnel costs and medical supplies. Management has aggressively
addressed these areas, implementing significant cost cutting measures during the
latter part of the third quarter. These include very substantial and across the
board reductions in personnel costs, severe reductions in overtime and
aggressive negotiations with vendors to obtain more substantial discounts on
medical supplies.
Depreciation and amortization expense increased to $579,000 in fiscal
1995, up from $320,000 in fiscal 1994. This increase reflects higher
depreciation expense as a result of significant leasehold improvements and
equipment upgrades at a number of the Company's medical centers, as well as an
increase in amortization expense related to the intangible assets acquired from
the Company's purchase of existing practices in Surfside Beach, Columbia, and
Myrtle Beach. Interest expense increased from $164,000 in fiscal 1994 to
$505,000 in fiscal 1995 primarily as a result of the interest costs associated
with the indebtedness incurred in the Company's purchase of the Surfside Beach
Center and in the leasehold improvements.
In the latter part of fiscal year 1994, the Company converted to a
centralized computer system acquired from Companion Technologies. Companion
Technologies is wholly owned by Blue Cross Blue Shield of South Carolina and is
therefore affiliated with Companion HealthCare Corporation, a primary
shareholder of the Company. See additional related information at Item 13,
"Certain Relationships and Related Transactions." This conversion was
necessitated by the Company's expansion, the need for a centralized, specialized
billings and collections unit, and by the Company's recognition that increased
managed care participation required more exacting data. With billing done from a
centralized location rather than from each medical center, the Company believes
that both increased billing efficiency, and greater focus on collections, will
result. The new computer system will also cause a reduction in computer-related
expansion costs should the Company add additional Centers. In making this
conversion, the Company traded in its old computer equipment, giving rise to a
loss of approximately $69,000 in fiscal 1994.
Effective October 1, 1993, the Company adopted Statement of Financial
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109") which requires the
use of an asset and liability approach to accounting for income taxes. The
effect of adopting SFAS 109 was to reduce income tax expense for 1994 by
approximately $612,000 or $.26 per share. Financial statements presented for
1993 and prior years reflected income taxes recorded under the deferred method
previously required by previous accounting standards. As part of the adoption of
SFAS 109, the Company has recognized a deferred tax asset relating to net
operating loss carry forwards which are available to offset future taxable
income. Under certain circumstances, a significant change in the Company's
ownership could severely limit utilization of the Company's net operating loss
carry forwards.
Financial Condition at September 30, 1995
The Company grew significantly during the year ending September 30,
1995.
Cash and cash equivalents have decreased from $210,000 at September 30,
1994 to $77,000 at September 30, 1995. Cash was utilized mainly for working
capital needs and to fund the expansion previously discussed.
Accounts receivables increased notably from fiscal year 1994. This was
attributable to the opening of six additional primary care Centers and the
overall growth in patient visits to existing Centers.
The increase in property and equipment is attributable to the purchase
of the Donaldson Center, the equipment needs of new Centers and the up-grading
of equipment at established Centers. The excess of cost over the net assets of
acquired businesses (goodwill) totaled $3,578,000 at September 30, 1995 compared
to $2,651,000 at the end of the previous fiscal year and reflects the medical
practices acquired.
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The current portion of debt increased in fiscal year 1995 to $1,245,000
from $543,000 at the end of fiscal year 1994. Long-term debt also increased.
These increases are primarily the result of indebtedness incurred in the
purchases of the Donaldson Center, in the purchase of Summit Medical, and in the
utilization of an operating line of credit.
Accounts payable increased $1,186,000 during 1995 to $1,653,000 as a
result of the tight cash position of the Company and as a result of the
accelerated growth of the Company during this period. Overall, the Company's
current liabilities exceeded its current assets at September 30, 1995 by
$383,000; working capital needs were funded, in part, by the sale of stock to
Companion HealthCare (a private placement) for $600,000 on November 3, 1995 (see
Subsequent Events section below.)
Liquidity and Capital Resources
The Company requires capital principally to fund growth (acquire new
Centers), for working capital needs and for the retirement of indebtedness. The
Company's capital requirements and working capital needs have been funded
through a combination of external financing (including bank debt and proceeds
from the sale of common stock to Companion HealthCare Corporation), internally
generated funds and credit extended by suppliers.
Operating activities used $460,000 of cash during fiscal year 1995,
compared with $744,000 used during fiscal year 1994. The decrease in operating
cash used during fiscal 1995 is mainly the result of growth in accounts payable
and accrued expenses. Some of these payables were reduced via utilization of the
$600,000 from the November 3, 1995 common stock sale to Companion HealthCare
(see Subsequent Events section below).
Investing activities used $642,000 of cash during fiscal year 1995
compared with $120,000 in 1994 as a result of expansion efforts. Continued
growth is anticipated during 1996. (See "Subsequent Events" for acquisition
activity in the first quarter of fiscal year 1996.)
The Company received $1,240,000 during fiscal 1995 in cash resulting
from two private placements of stock with Companion HealthCare Corporation which
was used in part to manage the Company's rapid growth and in part to reduce
debt. Should additional needs arise, the Company may consider additional capital
sources to obtain funding. There is no assurance that any additional financing,
if required, will be available on terms acceptable to the Company.
Earnings and Balance Sheet Analysis for Fiscal Year 1994 Compared to 1993
Total revenues for fiscal year 1994 increased by 28% to $12,540,000
from $9,799,000 for fiscal year 1993. The Company expanded from 14 to 19 Centers
during this year and was able to hold gross profit margin at about $660,000 for
both years. Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" was adopted at the start of fiscal 1994 with the result of
reducing income tax expense for 1994 by approximately $612,000.
Subsequent Events
In January 1995, the Company entered into an acquisition agreement for
a medical practice in Myrtle Beach, South Carolina. The acquisition is expected
to become effective prior to December 31, 1995, after certain conditions
precedent occur.
On November 3, 1995, Companion purchased 218,180 shares of newly issued
common stock of the Company for $2.75 a share, or $599,995. Subsequent to the
transaction, Companion's ownership in the Company was approximately 45%.
Companion has the option to purchase as many shares as may be necessary for
Companion to maintain ownership of 47% of the outstanding common stock of the
Company in the event that the Company issues additional stock to other parties
(excluding shares issued to employees or directors of the Company).
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On December 1, 1995, the Company acquired a medical practice in
Greenville, South Carolina. The Company entered into an employment agreement
with the physician who had been the sole shareholder of the acquired medical
practice. The Company also entered into lease agreements for the facility
occupied by and the computer system used by the acquired medical practice.
Item 8. Financial Statements and Supplementary Data
Reference is made to the Index to Financial Statements on Page 20 .
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On July 27, 1995, the Company notified Scott and Holloway, LLP
(formerly Moore Kirkland Scott & Beauston) that it would not be retained as the
Company's independent accountants for the fiscal year ending September 30, 1995.
The Company's decision not to retain Scott and Holloway, LLP was approved by the
Board of Directors at a meeting held on July 26, 1995 and was not the result of
any prior, existing or expected disagreement with the Company. The reports of
Moore Kirkland Scott & Beauston on the financial statements of the Company for
the fiscal years ended September 30, 1994 and 1993 contained no adverse opinion
or disclaimer of opinion. The reports were modified because of an uncertainty as
to the Company's ability to continue as a going concern as a consequence of
losses incurred from continuing operations. This modification has been
subsequently rescended and an unqualified opinion for the fiscal years ended
September 30, 1994 and 1993 has been issued. In connection with its audits of
financial statements of the Company for the fiscal years ended September 30,
1994 and 1993, and the interim period through July 27, 1995, the Company had no
disagreement with Moore Kirkland Scott & Beauston on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreement, if not resolved to the satisfaction of Moore
Kirkland Scott & Beauston, would have caused them to make reference to the
subject matter of the disagreement in connection with their report on the
financial statements for such periods.
Scott and Holloway, LLP has furnished the Company with a letter
addressed to the SEC stating that they agree with the statements made by the
Company with respect to their dismissal.
On July 26, 1995, the Company engaged Price Waterhouse LLP as its
independent accountants to audit the Company's financial statements for the
fiscal year ending September 30, 1995. The decision to engage Price Waterhouse
LLP was approved by the Board of Directors of the Company at a meeting held on
July 26, 1995. During the Company's fiscal years ended September 30, 1994 and
1993, the Company did not consult with Price Waterhouse LLP regarding any
matters (a) which were, or should have been, subject to SAS 50, or (b)
concerning the subject matter of a disagreement or reportable event with the
Company's former independent accountants (as described in Regulation S-B, Item
304(a)(2)).
Item 10. Directors and Executive Officers of the Registrant
Directors
The Company's Restated Certificate of Incorporation provides for a
classified Board of Directors so that, as nearly possible, one-third of the
Company's Board of Directors is elected each year to serve a three-year term.
Currently, the Board of Directors consists of five directorships with staggered
terms expiring at the Annual Meetings of Shareholders in 1996, 1997 and 1998.
The Company's Bylaws provide the Board of Directors with the power and authority
to determine the number of directors constituting the entire Board of Directors.
At a meeting of the Board of Directors on July 26, 1995, the Board of Directors
voted to increase the size of the Board from three members to the current five
members, with such increase to be effective immediately prior to the election of
directors at the Annual Meeting, which was held September 13, 1995. To give
effect to such increase, the Board of Directors approved the addition of one
directorship to each of the classes of directors whose terms expire at the
Annual Meetings of Shareholders
-12-
<PAGE>
in 1997 and 1998. Set forth below is the certain
biographical information with respect to the directors of the Company.
M.F. McFarland, III, M.D., 47, has served as Chairman of the Board,
President and Chief Executive Officer of the Company since January 1987 and as a
director of the Company since September 1984. From September 1984 until January
1987, he served as Vice President of the Company. He served as Associate
Professional Director of the Emergency Department of Richland Memorial Hospital
in Columbia, South Carolina from 1978 to 1981 and was President of the South
Carolina Chapter of the American College of Emergency Physicians in 1979. Dr.
McFarland is currently a member of the Columbia Medical Society, the South
Carolina Medical Society and the American Medical Association. In November 1992,
a voluntary proceeding under Chapter 11 of the United States Bankruptcy Code was
filed with respect to Dr. McFarland.
Harold H. Adams, Jr., 48, has served as Director of the Company since
June 1994 and as President and owner of Adams and Associates, International,
Adams and Associates, and Southern Insurance Managers since June 1992, and
served as President of Adams Eaddy and Associates, an independent insurance
agency, from 1980 to 1992. Mr. Adams has been awarded the Chartered Property
Casualty Underwriter designation and is currently a member of the President's
Board of Visitors of Charleston Southern University in Charleston, South
Carolina. He has received numerous professional awards as the result of over 25
years of involvement in the insurance industry and is a member of many
professional and civic organizations.
Charles P. Cannon, 45, has served as Director of the Company since
September 1995 and as Vice President, Corporate Controller and Assistant
Treasurer for Blue Cross Blue Shield of South Carolina ("Blue Cross") since
April 1988 and as Assistant Treasurer for its subsidiary, Companion HealthCare
Corporation, since April 1988. Prior to joining Blue Cross in April 1988, he was
a Senior Manager and consultant for Price Waterhouse LLP for eleven (11) years.
Mr. Cannon is a member of the American Institute of Certified Public
Accountants, the South Carolina Association of Certified Public Accountants, the
Institute of Management Accountants, and the Tennessee Society of Certified
Public Accountants.
Russell J. Froneberger, 50, has served as Director of the Company since
June 1994 and as President of Global Consulting, a multinational marketing and
financial consulting firm, since 1991. Mr. Froneberger has over twenty-eight
years of international corporate finance and marketing experience, having been
associated with Manufacturers Hanover Trust Company from 1967 to 1972, and South
Carolina National Bank, where he served as Senior Vice President of Marketing
and Corporate Development Relations from 1972 to 1991. He has lectured on
finance and capital formation at major universities and was the founder and
first Chairman of the Midlands International Trade Association in Columbia,
South Carolina.
Charles M. Potok, 46, has served as Director of the Company since
September 1995 and as Executive Vice President and Chief Operating Officer of
Companion Property and Casualty Insurance Company ("CPCIC") since March 1984.
Mr. Potok is an Associate of the Casualty Actuarial Society and a member of the
American Academy of Actuaries. Prior to joining CPCIC, Mr. Potok served as Chief
Property and Casualty Actuary and Director of the Property and Casualty Division
of the South Carolina Department of Insurance.
Executive Officers
The names of the executive officers, who are not also directors of the
Company, and certain other biographical information are as follows:
Stephen S. Seeling, 46, has served as Chief Operating Officer and
Counsel and Corporate Secretary of the Company since he joined the Company in
January 1994. Prior to that time, Mr. Seeling served as the Executive Director
of the South Carolina State Board of Medical Examiners from 1987 to
-13-
<PAGE>
January 1994, as the Assistant Attorney General for the South Carolina State
Board of Medical Examiners from 1983 to 1987, and as Assistant District
Attorney for Philadelphia, Pennsylvania from 1976 to 1981.
Jerry F. Wells, Jr., 33, has served as Chief Financial Officer of the
Company since he joined the Company in February 1995. Prior to that time, he
served as a Senior Manager and consultant for Price Waterhouse LLP from 1985
until February 1995. Mr. Wells is a certified public accountant and is a member
of the American Institute of Certified Public Accountants, the South Carolina
Association of Certified Public Accountants and the North Carolina CPA
Association.
D. Michael Stout, M.D., 50, has served as Vice President of Medical Affairs
of the Company since 1985. He is Board Certified in Emergency Medicine and is a
member of the American College of Emergency Physicians and the Columbia Medical
Society. Dr. Stout is also a member of the American College of Physician
Executives.
Jitendra S. Mehta, 44, has served as Vice President of Operations for the
Company since November 1993. Mr. Mehta has an extensive background in hospital
and medical personnel administration. He served as Business Director of
Multispecialty Clinic in Maryland from 1985 to 1989 and served as Vice President
and Partner of Citrus Diagnostic Center from 1990 to 1993. Mr. Mehta is
currently a member of American Registry for Radiological Technology and the
Nuclear Medicine Technologist Certification Board.
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and officers to file reports of holdings and transactions in
the Company's common stock with the Securities and Exchange Commission ("SEC").
Based on Company records and other information, the Company believes that all
SEC filing requirements applicable to its directors and officers were complied
with in respect to the Company's fiscal year ending September 30, 1995.
Item 11. Executive Compensation
Compensation of Directors
Directors are paid a fee of $500 for attendance at each meeting of the
Board of Directors. Directors of the Company are reimbursed by the Company for
all out-of-pocket expenses reasonably incurred by them in the discharge of their
duties as directors, including out-of-pocket expenses incurred in attending
meetings of the Board of Directors.
Compensation of Officers
During each of the Company's three prior fiscal years, M.F. McFarland,
III, M.D., the Company's Chief Executive Officer and President, and D. Michael
Stout, M.D., the Company's Vice President of Medical Affairs, served without
compensation from UCI-SC for their services in the executive offices they have
held with the Company during such periods. No other executive officer of the
Company earned compensation in excess of $100,000 for services provided to the
Company in any of the Company's three prior fiscal years.
During each of the Company's three prior fiscal years, Dr. McFarland
and Dr. Stout have received compensation for the services they performed for the
P.A. For services performed for the P.A. during each of the Company's fiscal
years ended September 30, 1995, 1994 and 1993, Dr. McFarland was paid aggregate
compensation, including bonuses, of $362,046, $343,500 and $253,603,
respectively. For services performed for the P.A. during each of the Company's
fiscal years ended September 30, 1995, 1994 and 1993, Dr. Stout was paid
aggregate compensation, including bonuses, of $189,600, $180,394 and $169,665,
respectively. See "Certain Transactions - Agreements with Doctor's Care."
-14-
<PAGE>
Effective October 1, 1995 and November 1, 1995, Dr. McFarland and Dr.
Stout, respectively, entered into new employment contracts with both the Company
and the P.A., with the following terms:
Dr. McFarland: Effective October 1, 1995, Dr. McFarland entered into a
five (5) year contract with UCI-SC that provides for annual
compensation of $157,500, the use of one automobile, and an incentive
bonus payable at the end of the Company's fiscal year subject to the
Board of Directors' determination and based upon net income and gross
revenue of the Company for the same year. Also, effective October 1,
1995, Dr. McFarland entered into a five (5) year contract with the P.A.
that provides for annual compensation of $157,500.
Dr. Stout: Effective November 1, 1995, Dr. Stout entered into a five
(5) year contract with UCI-SC that provides for annual compensation of
$50,000. Also, effective November 1, 1995, Dr. Stout entered into
a five (5) year contract with the P.A. that provides for annual
compensation of $160,000.
Existing Stock Option Plans
Pursuant to the Company's Incentive Stock Option Plan adopted in 1994,
(the "1994 Plan"), "incentive stock options", within the meaning of Section 422
of the Internal Revenue Code, may be granted to employees of the Company. The
1994 Plan provides for the granting of options for the purchase of 750,000
shares at 100% of the fair market value of the stock at the date of grant.
Options granted under the 1994 Plan vest at a rate of 33% in each of the three
years following the grant. Vested options become exercisable one year after the
date of grant and can be exercised within ten years of the date of grant,
subject to earlier termination upon cessation of employment. During the year
ended September 30, 1995, no options were exercised. At September 30, 1995,
there were stock options outstanding under the 1994 Plan for 242,000 shares, all
of which were granted in the year ended September 30, 1995.
The Incentive Stock Option Plan adopted in 1984 (the "1984 Plan")
expired under its terms in December 1993. During the year ended September 30,
1995, no options were exercised and 5,100 options expired. At September 30,
1995, there were stock options outstanding under the 1984 Plan for 15,500 shares
at $.25 per share, all of which were exercisable.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the common stock of the Company as of
September 30, 1995. Information is presented for (i) shareholders owning more
than five percent of the outstanding common stock, (ii) each director and
executive officer of the Company, individually, and (iii) all directors and
executive officers of the Company, as a group. Except as otherwise specified,
each of the shareholders named in the table has indicated to the Company that
such shareholder has sole voting and investment power with respect to all shares
of common stock beneficially owned by that shareholder. Beneficial ownership
reflected in the table below is determined in accordance with the rules and
regulations of the SEC and generally includes voting or investment power with
respect to securities. Shares of common stock issuable upon the exercise of
options currently exercisable or convertible, or exercisable or convertible
within sixty days, are deemed outstanding for computing the percentage ownership
of the person holding such options, but are not deemed outstanding for computing
the percentage ownership of any other person.
-15-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name Beneficially Owned Percentage
<S> <C> <C>
Companion HealthCare Corporation 1,460,991 41.65%
I-20 at Alpine Road
Columbia, SC 29219
M.F. McFarland, III, M.D. 521,844 14.88%
6168 St. Andrews Road
Columbia, SC 29212
D. Michael Stout, M.D. 240,360 6.85%
512 Sims Avenue
Columbia, SC 29205
Manufacturers Hanover Trust Co. 202,200 5.76%
350 Fifth Avenue, Suite 426
New York, NY 10118
Harold H. Adams, Jr. 2,000 -
6137 Hampton Ridge Road
Columbia, SC 29209
Charles P. Cannon - -
I-20 at Alpine Road
Columbia, SC 29219
Russell J. Froneberger - -
1201 Main Street, Suite 1980
Columbia, SC 29201
Jitendra S. Mehta - -
6168 St. Andrews Road
Columbia, SC 29212
Charles M. Potok - -
I-20 at Clemson Road
Columbia, SC 29219
Stephen S. Seeling - -
6168 St. Andrews Road
Columbia, SC 29212
Jerry F. Wells, Jr. - -
6168 St. Andrews Road
Columbia, SC 29212
All directors and executive officers 764,204 21.78%
as a group (7 persons)
</TABLE>
-16-
<PAGE>
Item 13. Certain Relationships and Related Transactions
Agreements with Doctor's Care
General. All of the Company's operations are conducted through its
wholly-owned subsidiary, UCI-SC, which operates a network of twenty-five
freestanding primary care medical Centers located throughout South Carolina, all
of which conduct business under the name "Doctor's Care." In order to comply
with prohibitions of providing medical care, all medical services at these
medical facilities are provided by or under the supervision of Doctor's Care,
P.A., a South Carolina professional association (the "P.A.").
Facilities Agreement. Pursuant to a Facilities Agreement between UCI-SC
and the P.A. (the "Facilities Agreement"), UCI-SC supplies to the P.A. the
facilities, equipment and assets of the Centers, as well as such non-medical
personnel as are reasonably required by the P.A. in the operation of the
Centers. In exchange, the P.A. provides the necessary staffing for the
performance of medical services at the Centers, including a physician to serve
as Executive Medical Director having overall responsibility for the operations
of the Centers. Pursuant to an employment agreement between M.F. McFarland, III,
M.D., President and Chief Executive Officer of the Company ("Dr. McFarland") and
the P.A., Dr. McFarland serves as Executive Medical Director of the Centers. In
September 1994, the Facilities Agreement was renewed for an additional five year
term. In January 1995, the Facilities Agreement was modified to provide UCI-SC
with certain rights to terminate the Facilities Agreement (a) upon the death of
Dr. McFarland, (b) upon Dr. McFarland ceasing to own, either directly or
indirectly, a controlling interest in the P.A., or (c) upon Dr. McFarland
becoming a "disqualified person" as defined by the South Carolina Business
Corporation Act of 1988, as amended.
Refund Agreement. Pursuant to a Facilities Fee Refund Agreement (the
"Refund Agreement"), entered into among UCI-SC and the P.A., the P.A. was
entitled to receive a refund of a portion of the fees payable to UCI-SC under
the Facilities Agreement with respect to certain Centers. This agreement was
terminated effective October 1, 1995. During the year ended September 30, 1995,
UCI-SC accrued total refunds payable to the P.A. under the Refund Agreement of
$177,000 and made payments of $200,000 against accumulated payables. During the
year ended September 30, 1994, UCI-SC accrued total refunds payable to the P.A.
under the Refund Agreement of $131,000 and made payments of $213,500 against
accumulated payables. At September 30, 1995 and 1994, UCI-SC had a refund
payable to the P.A. of approximately $276,000 and $299,000, respectively.
Facility Leases
UCI-SC leases seven Centers from Companion HealthCare Corporation under
operating leases with fifteen year terms expiring in 2008, 2009 and 2010. Each
of these leases has a five year renewal option, and a rent guarantee by the P.A.
One of the leases has a purchase option allowing UCI-SC to purchase the facility
at fair market value after February 1, 1995. Total lease payments made by UCI-SC
under these leases during the Company's fiscal years ended September 30, 1995,
1994 and 1993 were $271,100, $205,901 and zero, respectively.
Several of the Centers operated by UCI-SC are leased from entities owned or
controlled by certain principal shareholders and/or members of the Company's
management. The Doctor's Care-Northeast Center is leased from a partnership in
which Dr. McFarland is a general partner. The lease was renewed in October 1994
for a five year term. The lease has two five year renewal options and provides
UCI-SC with an option to purchase the facility at its fair market value after
October 1995. Total lease payments made by UCI-SC under the lease during the
Company's fiscal years ended September 30, 1995, 1994 and 1993 were $45,600,
$42,696 and $39,554, respectively, plus utilities and real estate taxes. During
the year ended September 30, 1995, the Doctor's Care-Lexington and the Doctor's
Care-Forest Acres Centers were leased from a general partnership in which Dr.
McFarland and Dr. Stout are general partners. The Doctor's Care-Lexington lease
was renewed in October 1994 for a five year term. In August 1995, the Doctor's
Care-
-17-
<PAGE>
Forest Acres facility was sold to an unrelated third
party who leases it to the Company. The Doctor's Care-Lexington lease has a five
year renewal option and provides UCI-SC with an option to purchase the property
at its fair market value at any time during the lease term. Total lease payments
made by UCI-SC under these two leases during the Company's fiscal years ended
September 30, 1995, 1994 and 1993 were $90,000, $75,166 and $78,012,
respectively, plus utilities and real estate taxes. The Doctor's Care-West
Columbia and the Doctor's Care-Beltline Centers are leased from a general
partnership in which Dr. McFarland and Dr. Stout are general partners. These two
leases expire in October 1998 and provide for a five year renewal option. Total
lease payments made by UCI-SC under these two leases during the Company's fiscal
years ended September 30, 1995, 1994 and 1993 were $84,000, $87,000 and $78,000,
respectively, plus utilities and real estate taxes. In connection with its
agreement to lease these two Centers, UCI-SC guaranteed the lessor's mortgage
debt relating to the two Centers. At September 30, 1995, 1994 and 1993, the
outstanding balance of such debt was $382,697, $386,110 and $395,000,
respectively. The Doctor's Care-West Wateree Center is leased directly from Dr.
McFarland. Total lease payments made by UCI-SC under this lease during the
Company's fiscal years ended September 30, 1995, 1994 and 1993, were $24,666,
$23,333 and $21,522, respectively.
Other Transactions with Related Companies
Blue Cross Blue Shield of South Carolina ("Blue Cross") owns 100% of
Companion HealthCare Corporation, which owns approximately 45% of the Company's
outstanding common stock. During the Company's fiscal year ended September 30,
1994, UCI-SC purchased a new billing and accounts receivable system from
Companion Technologies, Inc., a wholly-owned subsidiary of Blue Cross for an
aggregate purchase price of $504,000. The terms of the purchase agreement are
believed to have been no more or less favorable to UCI-SC than the terms that
would have been obtainable through arm's-length negotiations with unrelated
third parties for a similar billing and accounts receivable system, which
includes computer equipment. The Company has the option to purchase the
equipment at the end of the five year lease term for $1. The lease obligation
recorded at September 30, 1995 is $464,361 which includes lease addenda.
During the Company's fiscal year ended September 30, 1994, UCI-SC
entered into an agreement with Company Property and Casualty Insurance Company,
a wholly-owned subsidiary of Blue Cross, pursuant to which UCI-SC acts as the
primary care provider for injured workers of firms carrying worker's
compensation insurance through Companion Property and Casualty Insurance Company
("CP&C"). Additionally, during the Company's fiscal year ended September 30,
1995, UCI-SC entered into a financing arrangement with CP&C for the purchase of
the Doctor's Care-Donaldson facility, which consists of a note payable in
monthly installments of $4,546 (including 11% interest) from April 1, 1995 to
March 1, 2010, collateralized by certain accounts receivable. The terms of the
agreement with Companion Property and Casualty Insurance Company are believed to
be no more or less favorable to UCI-SC than those that would have been
obtainable through arm's-length negotiations with unrelated third parties for
similar arrangements.
During the Company's fiscal year ended September 30, 1994, UCI-SC began
providing services for a health maintenance organization ("HMO") operated by
Companion HealthCare Corporation, pursuant to which UCI-SC, through the P.A.,
acts as the designated primary care provider for members of the HMO who have
selected the P.A. as their primary care provider. The terms of the agreement
with Companion HealthCare Corporation are believed to be no more or less
favorable to UCI-SC than those that would have been obtainable through arm's
- -length negotiations with unrelated third parties for similar arrangements.
The employees of the Company are offered health, life, dental and
disability coverage at group rates from Blue Cross and its subsidiaries. The
group rates offered to the employees of the Company are believed to be no more
or less favorable to the Company than those that would have been obtainable
through arm's-length negotiations with unrelated third parties for similar
services.
-18-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) Reference is made to the Index to Financial Statements on
page 21 .
(2) A listing of the exhibits to the Form 10-KSB is set forth
on the Exhibit Index which immediately precedes such
exhibits in this Form 10-KSB.
(b) Reports on Form 8-K
The Company filed a Form 8-K during the quarter ended
September 30, 1995, which reported the acquisition of Summit Medical of
Greenville, South Carolina.
The Company filed a Form 8-K during July 1995 which reported a
change in the Company's independent accountants from Scott & Holloway, LLP to
Price Waterhouse LLP.
-19-
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page(s)
Reports of Independent Accountants ......................................22-23
Consolidated Balance Sheets at September 30, 1995 and 1994 ............ 24
Consolidated Statements of Operations for the three years
ended September 30, 1995 ................................... 25
Consolidated Statements of Changes in Stockholder's Equity
for the three years ended September 30, 1995 ......................26
Consolidated Statements of Cash Flows for the three years
ended September 30, 1995 ....................................... 27
Notes to Consolidated Financial Statements ............................. 28-39
All other schedules are omitted because they are not applicable or the required
information is included in the consolidated financial statements or notes
thereto.
-20-
<PAGE>
UCI MEDICAL AFFILIATES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994
-21-
<PAGE>
Report of Independent Accountants
November 21, 1995
To the Board of Directors and
Stockholders of UCI Medical Affiliates, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
UCI Medical Affiliates, Inc. at September 30, 1995, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above. The financial statements of
UCI Medical Affiliates, Inc. at September 30, 1994 and for each of the two years
in the period then ended were audited by other independent accountants whose
report dated January 26, 1995 expressed an unqualified opinion on those
statements with an explanatory paragraph that the Company prospectively changed
its method of accounting for income taxes for the year ended September 30, 1994.
This change is described in Notes 1 and 4 to the accompanying consolidated
financial statements.
/s/ Price Waterhouse LLP
ORIGINAL SIGNED OPINION ON PRICE WATERHOUSE LLP LETTERHEAD
IS ON FILE WITH
UCI MEDICAL AFFILIATES, INC.
-22-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
UCI Medical Affiliates, Inc.
We have audited the accompanying balance sheet of UCI Medical Affiliates, Inc.
as of September 30, 1994, and the related statements of income, retained
earnings, and cash flows for each of the two years in the period then ended that
appear in this annual report. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UCI Medical Affiliates, Inc. as
of September 30, 1994, and the results of its operations and its cash flows for
each of the two years in the period then ended in conformity with generally
accepted accounting principles.
/s/ Moore Kirkland Scott & Beauston
West Columbia, South Carolina
January 26, 1995
ORIGINAL SIGNED OPINION ON MOORE KIRKLAND SCOTT & BEAUSTON LETTERHEAD
IS ON FILE WITH
UCI MEDICAL AFFILIATES, INC.
-23-
<PAGE>
UCI Medical Affiliates, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30,
1995 1994
------------ -----------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents ................................. $ 76,513 $ 210,286
Accounts receivable, less allowance for doubtful accounts
of $608,792 and $1,061,987 ............................ 2,343,325 1,508,514
Inventory ................................................. 265,068 217,076
Deferred taxes ............................................ 491,543 491,543
Prepaid expenses and other current assets ................. 282,060 111,149
------------ -----------
Total current assets ......................................... 3,458,509 2,538,568
Property and equipment less accumulated depreciation of
$1,529,999 and $1,173,667 ................................. 2,795,384 1,098,310
Deferred taxes ............................................... 120,639 120,639
Excess of cost over fair value of assets acquired, less
accumulated amortization of $869,271 and
$532,763 3,578,371 2,651,245
Other assets ................................................. 262,768 265,531
------------ -----------
Total Assets ................................................. $ 10,215,671 $ 6,674,293
============ ===========
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt ......................... $ 1,244,603 $ 542,564
Accounts payable .......................................... 1,652,792 467,371
Accrued salaries and payroll taxes ........................ 498,791 307,612
Other accrued liabilities ................................. 445,362 458,782
------------ -----------
Total current liabilities .................................... 3,841,548 1,776,329
Long-term debt, net of current portion ....................... 3,121,098 2,295,197
------------ -----------
Total Liabilities ............................................ 6,962,646 4,071,526
------------ -----------
Commitments and contingencies
Stockholders' Equity
Preferred stock, par value $.01 per share:
Authorized shares - 10,000,000; none issued
0 0
Common stock, par value $.05 per share:
Authorized shares - 10,000,000
Issued and outstanding- 3,508,164 and 2,622,178
shares .............................................. 175,408 131,109
Paid-in capital ........................................... 9,694,256 7,728,554
Accumulated deficit ....................................... (6,616,639) (5,256,896)
------------ -----------
Total Stockholders' Equity ................................... 3,253,025 2,602,767
------------ -----------
Total Liabilities and Stockholders' Equity ................... $ 10,215,671 $ 6,674,293
============ ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-24-
<PAGE>
UCI Medical Affiliates, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended September 30,
1995 1994 1993
----------- ------------ ------------
<S> <C> <C> <C>
Revenues ........................................................... $ 17,987,147 $ 12,540,040 $ 9,799,387
Operating costs .................................................... 18,180,080 11,880,508 9,133,104
------------ ------------ ------------
Operating margin ................................................... (192,933) 659,532 666,283
General and administrative expenses ................................ 87,616 74,698 45,075
Depreciation and amortization ...................................... 579,224 319,554 161,149
------------ ------------ ------------
Income (loss) from operations ...................................... (859,773) 265,280 460,059
Other income (expenses)
Interest expense (net of interest income) ....................... (505,459) (164,182) (53,507)
Gain (loss) on disposal of equipment ............................ 5,493
(68,892) 0
------------ ------------ ------------
Other income (expense) ............................................. (499,966) (233,074) (53,507)
Income (loss) before benefit (provision )for
income taxes and extraordinary credit ........................... (1,359,739) 32,206 406,552
Benefit (provision )for income taxes ............................... 0 612,182 (138,228)
------------ ------------ ------------
Income before extraordinary credit ................................. (1,359,739) 644,388 268,324
Extraordinary credit, utilization of net
operating loss carryforward ..................................... 138,228
0 0
============ ============ ============
Net income (loss) .................................................. $ (1,359,739) $ 644,388 $ 406,552
============ ============ ============
Earnings (loss) per common and common equivalent share:
Income (loss) before extraordinary credit ....................... $ (.43) $ .28 $ .14
Extraordinary credit 0 0 .07
------------ ------------ ------------
Net Income (loss) per common equivalent share ...................... $ (.43) $ .28 $ .21
============ ============ ============
Weighted average common shares
outstanding ..................................................... 3,136,544 2,324,241 1,970,693
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-25-
<PAGE>
UCI Medical Affiliates, Inc.
Consolidated Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Common Stock Paid-In Accumulated
Shares Par Value Capital Deficit Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, September 30, 1992 ................ 1,945,988 $ 97,299 $ 6,259,940 $(6,307,836) $ 49,403
Net income (loss) ....................... -- -- -- 406,552 406,552
Exercise of stock options ............... 4,000 200 800 -- 1,000
Balance, September 30, 1993 ................ 1,949,988 97,499 6,260,740 (5,901,284) 456,955
Net income (loss) ....................... -- 644,388 644,388
-
Exercise of stock options ............... 5,700 285 1,139 1,424
-----------
-----------
Issuance of common stock ................ 666,666 33,333 1,466,667 1,500,000
-----------
-----------
Other ................................... (8)
(176) 8 -- --
----------- ----------- -----------
----------- -----------
Balance, September 30, 1994 ................ 2,622,178 131,109 7,728,554 (5,256,896) 2,602,767
Net income (loss) ....................... -- -- (1,359,739) (1,359,739)
-----------
Issuance of common stock ................ 885,888 44,294 1,975,706 2,020,000
-----------
Other ................................... 5 (10,004) (10,003)
98 (4)
=========== =========== =========== =========== ===========
Balance, September 30, 1995 ................ 3,508,164 $ 175,408 $ 9,694,256 $(6,616,639) $ 3,253,025
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
-26-
<PAGE>
UCI Medical Affiliates, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended September 30,
1995 1994 1993
----------- ----------- ---------
<S> <C> <C> <C>
Net income (loss) .................................................... $(1,359,739) $ 644,388 $ 406,552
Adjustments to reconcile net income (loss) to net
cash provided by (used-in) operating activities:
(Gain) loss on disposal of equipment ........................... (5,493) 68,892 0
Provision for losses on accounts receivable .................... 544,208 778,213 308,302
Depreciation and amortization .................................. 579,224 319,554 161,149
Common stock issued ............................................ 4,125 0 0
Deferred taxes ................................................. 0 (612,182) 0
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable ........................ (1,379,019) (1,318,998) (629,342)
(Increase) decrease in inventory .................................. (47,992) (4,531) (4,412)
(Increase) decrease in prepaid expenses and other
current assets ................................................. (158,536) (37,001) (261)
Increase (decrease) in accounts payable and accrued
expenses ....................................................... 1,363,180 (582,542) 47,663
----------- ----------- ---------
Cash provided by (used in) operating activities ...................... (460,042) (744,207) 289,651
----------- ----------- ---------
Investing activities:
Purchases of property and equipment .................................. (620,584) (226,362) (67,244)
Acquisitions of goodwill ............................................. (24,426) (50,000) 0
(Increase) decrease in other assets .................................. 2,760 (2,979) 26,380
----------- ----------- ---------
Cash provided by (used in) investing activities ...................... (642,250) (120,223) (199,982)
----------- ----------- ---------
Financing activities:
Issuance of common stock, net of redemptions ......................... 1,240,000 1,500,000
0
Proceeds from issuance of common stock under
stock option plan ................................................. 0 1,424 1,000
Increase in long-term debt ........................................... 475,000 0 106,608
Payments on long-term debt ........................................... (746,481) (450,589) (181,786)
----------- ----------- ---------
Cash provided by (used in) financing activities ...................... 968,519 1,050,835 (74,178)
----------- ----------- ---------
Increase (decrease) in cash and cash equivalents ..................... (133,773) 186,405 15,491
Cash and cash equivalents at beginning of year ....................... 210,286 23,881 8,390
----------- ----------- ---------
Cash and cash equivalents at end of year ............................. $ 76,513 $ 210,286 $ 23,881
=========== =========== =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-27-
<PAGE>
UCI Medical Affiliates, Inc.
Notes To Consolidated Financial Statements
September 30, 1995
1. Significant Accounting Policies
Basis of Presentation
The consolidated financial statements of UCI Medical Affiliates, Inc. include
the accounts of UCI Medical Affiliates, Inc. ("UCI"), its wholly owned
subsidiary, UCI Medical Affiliates of SC ("UCI-SC") and Doctor's Care, PA ("the
P.A."), collectively the "Company". The financial statements of the P.A. are
consolidated with UCI because UCI-SC has unilateral control over the assets and
operations of the P.A. and, notwithstanding the lack of technical majority
ownership, consolidation of the P.A. with UCI is necessary to present fairly the
financial position and results of operations of UCI. UCI-SC provides non-medical
management and administrative functions for 25 medical clinics, operating as
Doctor's Care (the "Centers"). All medical services at the Centers are provided
by or under the supervision of the P.A., which has contracted with UCI-SC to
provide the medical direction of the Centers. The medical directors operate the
Centers under the financial and operational control of UCI-SC. However, medical
supervision of the centers is provided solely by the P.A. The P.A. remits to
UCI-SC all medical service revenues generated by the Centers, net of expenses
incurred by the P.A. This compensation is recorded in the accompanying financial
statements as revenue. Control of the P.A. is perpetual and other than temporary
because of the nature of this relationship and the management agreements between
the entities. The net assets of the P.A. are not material for any period
presented and intercompany accounts and transactions have been eliminated.
Medical Supplies Inventory
The inventory of medical supplies and drugs is carried at the lower of average
cost or market.
Property and Equipment
Depreciation is provided principally by the straight-line method over the
estimated useful lives of the assets, ranging from three to twenty years.
Maintenance, repairs and minor renewals are charged to expense. Major renewals
or betterments, which prolong the life of the assets, are capitalized.
-28-
<PAGE>
1. Significant Accounting Policies (continued)
Upon disposal of depreciable property, the asset accounts are reduced by the
related cost and accumulated depreciation. The resulting gains and losses are
reflected in the consolidated statements of operations.
Intangible Assets
The excess of cost over fair value of assets acquired (goodwill) is amortized on
the straight-line method over periods from 15 to 30 years. Subsequent to an
acquisition, the Company continually evaluates whether later events and
circumstances have occurred that indicate that the remaining balance of goodwill
may not be recoverable or that the remaining useful life may warrant revision.
When external factors indicate that goodwill should be evaluated for possible
impairment, the Company uses an estimate of the related business segment's
discounted cash flows over the remaining life of the goodwill and compares it to
the business segment's goodwill balance to determine whether the goodwill is
recoverable or if impairment exists, in which case an adjustment is made to the
carrying value of the asset.
Revenue Recognition
Revenue is recognized at estimated net amounts to be received from employers,
third party payors, and others at the time the related services are rendered.
Capitation payments from payors are paid monthly and are recognized as revenue
during the period in which enrollees are entitled to receive services.
Earnings Per Share
The computation of income per common and common equivalent share is based on the
weighted average number of common shares outstanding during the period plus (in
periods in which they have a dilutive effect) the effect of common shares
issuable from stock options, using the treasury stock method.
Income Taxes
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), as of October 1,
1993. Under the liability method specified by SFAS 109, deferred tax assets and
liabilities are based on the difference between the financial statement and tax
bases of assets and liabilities as measured by the enacted tax rates which are
anticipated to be in effect when these differences reverse. The deferred tax
(benefit) provision is the result of the net change in the deferred tax assets
to amounts expected to be realized. Financial statements for the year ended
September 30,1993 reflect income taxes recorded under the deferred method
required under previous accounting standards.
-29-
<PAGE>
1. Significant Accounting Policies (continued)
Cash and Cash Equivalents
The Company considers all short-term deposits with a maturity of three months or
less at acquisition date to be cash equivalents.
Reclassifications
Certain 1994 and 1993 amounts have been reclassified to conform with the 1995
presentation.
2. Property and Equipment
Property and equipment consists of the following at September 30:
<TABLE>
<CAPTION>
1995 1994
----------------------- -----------------------
<S> <C> <C>
Leasehold improvements $ 382,659 $ 158,854
Property and equipment, including capitalized leases 3,942,724 2,113,123
----------------------- -----------------------
4,325,383 2,271,977
Less, accumulated depreciation and amortization (1,529,999) (1,173,667)
----------------------- -----------------------
$ 2,795,384 $ 1,098,310
======================= =======================
</TABLE>
At September 30, 1995 and 1994, capitalized leased equipment included above
amounted to approximately $1,651,000 and $647,000, net of accumulated
amortization of $203,000 and $18,000, respectively. Depreciation and
amortization expense equalled $384,638, $196,756 and $114,949 for the years
ended September 30, 1995, 1994 and 1993, respectively.
3. Business Combinations
In August 1995, the Company acquired the net assets of Summit Medical and
entered into an employment agreement with the physician owner of Summit Medical.
The acquisition has been accounted for as a purchase, and the financial activity
of Summit Medical has been included in the accompanying consolidated financial
statements since the date of the acquisition.
-30-
<PAGE>
3. Business Combinations (continued)
The pro forma results listed below are unaudited and reflect purchase price
accounting adjustments assuming the acquisition occurred at the beginning of
each fiscal year presented.
1995 1994
------------------ --------------
Revenue $ 18,393,000 $ 13,082,000
Net Income (loss) $ (1,358,624) $ 645,875
Net income (loss) per common and common
equivalent share $ (.43) $ .28
Certain other acquisition during fiscal year 1995 have not been included in this
pro forma disclosure as the relevant information is not readily available.
(Refer to note 12 for additional information provided on these acquisitions.)
4. Income Taxes
Effective October 1, 1993, the Company prospectively adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). As permitted under SFAS 109, prior years' financial
statements have not been restated. As of October 1, 1993, the Company had a net
deferred tax asset of $2,718,407, which was fully offset by a valuation
allowance.
The components of the (benefit) provision for income taxes for the years ended
September 30 are as follows:
1995 1994 1993
---------------------- ----------------- ----------------
Current:
Federal $ -- $ -- $ 16,694
State -- -- 2,584
---------------------- ----------------- -------------
-- -- 19,278
---------------------- ----------------- -------------
Deferred: --
Federal -- (530,120) 103,005
State -- (82,062) 15,945
---------------------- ----------------- -------------
-- (612,182) 118,950
---------------------- ----------------- -------------
Total (benefit)
provision
before
extraordinary
credit -- (612,182) 138,228
Extraordinary credit -- -- (138,228)
---------------------- ---------------- --------------
Total income tax benefit $ $ (612,182) $ --
====================== ================= ============
-31-
<PAGE>
4. Income Taxes (continued)
Deferred taxes result from temporary differences in the recognition of certain
items of income and expense, and the changes in the valuation allowance
attributable to deferred tax assets.
The principal sources of temporary differences and the related deferred tax
effects as of September 30, were as follows:
1995 1994
------------- ------------
Allowance for doubtful accounts $ (169,043) $ (155,852)
Related party accruals 7,673 46,812
Operating loss carryforwards 687,242 95,183
Accumulated depreciation (58,324) 69,650
------------- --------------
467,548 55,793
Changes in valuation allowance (467,548) (667,975)
============= ==============
$ -- $ (612,182)
============= ==============
The sources of significant timing differences for the year ended September 30,
1993 which gave rise to deferred taxes and their effects were as follows:
1993
-------------------
Allowance for doubtful accounts $ 137,686
Related party accruals (20,480)
Other 1,744
-------------------
$ 118,950
===================
At September 30, 1995 and 1994, the Company's deferred tax assets (liabilities)
and the related valuation allowances are as follows:
1995 1994
----------- -----------
Allowance for doubtful accounts $ $ 396,122
Related party accruals 227,079 95,421
Operating loss carryforwards 103,094 2,248,121
Accumulated depreciation 2,935,363
(135,374) (77,050)
----------- -----------
$ 3,130,162 $ 2,662,614
=========== ===========
Valuation allowance $ 2,517,980 $ 2,050,432
=========== ===========
-32-
<PAGE>
4. Income Taxes (continued)
The principal reasons for the differences between the consolidated income tax
benefit (expense) and the amount computed by applying the statutory federal
income tax rate of 34% were as follows for the years ended September 30:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Tax at federal statutory rate $(462,311) $ 10,950 $ 138,228
Effect on rate of:
Amortization of goodwill 15,708 15,708
15,708
Non deductible expenses 21,107 10,485 28,601
Life insurance premiums
3,044 3,862 754
Other net (45,096) 14,788 (45,063)
Change in valuation allowance 467,548 (667,975) --
--------- --------- ---------
(612,182) 138,228
---------
Extraordinary credit -- -- 138,228
--------- --------- ---------
$ -- $(612,182) $ --
========= ========= =========
</TABLE>
At September 30, 1995, the Company has net tax operating loss (NOL)
carryforwards expiring in the following years ending September 30,
2000 $ 1,347,851
2001 1,783,595
2002 1,802,220
2003 458,112
2005 470,006
2006 76,306
2010 1,931,517
---------------------
$ 7,869,607
=====================
Under certain circumstances, a significant change in the Company's ownership
could severely limit utilization of the net operating loss carryforwards.
The Company has $7,800 and $8,450 of investment tax credit carryforwards which
expire in 1999 and 2000, respectively.
-33-
<PAGE>
5. Long-Term Debt
Long-term debt consists of the following at September 30:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> ............................................................................................ <C> <C>
Note to Chemical Bank, monthly payments (including 6% interest) range from
$7,500 to $12,000 from December 30, 1992 to March 31, 1996 and $32,750 on
April 30,1996, collateralized by premises and equipment, accounts receivable
and stock
of UCI-SC and the guarantee of UCI-SC ....................................................... $ 97,921 $ 253,215
Note payable in monthly installments of $8,889 plus interest at
prime plus 6%, through February 1, 2009 collateralized by
certain accounts receivable and leasehold interests and the
guarantee of the P.A ........................................................................ 1,422,222 1,537,778
Note payable in monthly installments of $1,389 plus interest at
prime plus 2% , through February 1, 2009 collateralized by a
condominium ................................................................................. 222,222 240,278
Notes payable in monthly installments over three to
four years at interest rates ranging from 3.9% to 10.5%,
collateralized by related vehicles .......................................................... 90,569 106,547
Line of Credit in the amount of $500,000 dated March 10,
1995, bearing interest at a rate of prime plus 1.5%, for a
period of 12 months, secured by the personal guarantee of an
officer of the Company ...................................................................... 475,000
0
Note payable in monthly installments of $4,546 (including 11% interest) from
April 1, 1995 to March 1, 2010,
collateralized by certain accounts receivable ............................................... 393,670
0
Note payable in monthly installments (including 9% interest) of $25,000 from
July 15, 1995 to September 15, 1995, and $12,842 from October 15, 1995 to
September 15,
1997 ....................................................................................... 270,243
0
Capitalized lease obligations .................................................................. 1,384,172 678,259
Other .......................................................................................... 9,682 21,684
---------- ----------
4,365,701 2,837,761
Less, current portion .......................................................................... 1,244,603 542,564
---------- ----------
$3,121,098 $2,295,197
========== ==========
</TABLE>
-34-
<PAGE>
5. Long-Term Debt (continued)
Aggregate maturities of notes payable and capital leases in each of the five
years 1996 through 2000 are as follows:
Year ending September 30:
Notes Payable Capital Leases Total
------------------- ------------------ -----------------
1996 $ 878,399 $ 366,204 $ 1,244,603
1997 310,255 349,395 659,650
1998 145,207 340,483 485,690
1999 154,808 250,637 405,445
2000 141,678 67,862 209,540
Thereafter 1,351,182 9,591 1,360,773
=================== ================== =================
$ 2,981,529 $ 1,384,172 $ 4,365,701
=================== ================== =================
6. Employee Benefit Plans
Pursuant to the Company's incentive stock option plan adopted in 1994, (the
"1994 Plan"), "incentive stock options", within the meaning of Section 422 of
the Internal Revenue Code, may be granted to employees of the Company. The 1994
Plan provides for the granting of options for the purchase of 750,000 shares at
100% of the fair market value of the stock at the date of grant. Options granted
under the 1994 Plan vest at a rate of 33% in each of the three years following
the grant. Vested options become exercisable one year after the date of grant
and can be exercised within ten years of the date of grant, subject to earlier
termination upon cessation of employment. During the year ending September 30,
1995, no options were exercised. At September 30, 1995, there were stock options
outstanding under the 1994 plan for 242,000 shares, all of which were granted in
the year ended September 30,1995.
The incentive stock option plan adopted in 1984 (the "1984 Plan") expired under
its terms in December 1993. During the year ending September 30, 1995, no
options were exercised and 5,100 options expired. At September 30, 1995, there
were stock options outstanding under the 1984 Plan for 15,500 shares at $.25 per
share, all of which were exercisable.
The Company has an employee savings plan ( the "Savings Plan") that qualifies as
a deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
Under the Savings Plan, participating employees may defer a portion of their
pretax earnings, up to the Internal Revenue Service annual contribution limit.
Effective in June 1995, the Company discontinued its matching contribution.
Prior to that date, the company matched 50% of each employee's contributions up
to a maximum of 2.5% of the employee's earnings. The company's matching
contributions were $71,463, $50,805 and $35,788 in fiscal years 1995, 1994, and
1993, respectively.
-35-
<PAGE>
7. Stockholders' Equity
On June 30, 1994, the Company's shareholders approved an amendment to, and a
restatement of, the Restated Certificate of Incorporation to provide for a 1 for
5 reverse stock split. The Amended and Restated Certificate of Incorporation
increased the number of authorized shares of common stock from 4,000,000 to
10,000,000 ( as adjusted for the reverse stock split as discussed above) and
increased the par value per share of common stock from one cent ($.01) to five
cents ($.05). In addition, the Amended and Restated Certificate of Incorporation
authorized the Company to issue up to 10,000,000 shares of $.01 par value
preferred stock to be issued in one or more series. The Board of Directors is
authorized, without further action by the stockholders, to designate the rights,
preferences, limitations and restrictions of and upon shares of each series,
including dividend voting, redemption and conversion rights. All references in
the financial statements to average number of shares outstanding and related
prices, per share amounts, common stock and stock option plan data have been
restated to reflect the split .
At September 30, 1995, 257,500 shares of common stock were reserved for issuance
under the Company's incentive stock option plans.
8. Lease Commitments
UCI-SC leases office and medical center space under various operating lease
agreements. Certain operating leases provide for escalation payments, exclusive
of renewal options.
Future minimum lease payments under noncancellable operating leases with a
remaining term in excess of one year as of September 30, 1995, are as follows:
Operating
Leases
Year ending September 30:
1996 $ 1,053,794
1997 1,029,697
1998 1,020,409
1999 900,476
2000 742,169
Thereafter 5,420,154
-----------------
Total minimum lease payments $ 10,166,699
===================
Total rental expense under operating leases for 1995, 1994 and 1993 was
approximately $923,000, $714,000, and $775,000, respectively.
9. Related Party Transactions
Facility Leases
UCI-SC leases seven medical centers from Companion HealthCare Corporation under
operating leases with fifteen year terms expiring in 2008, 2009 and 2010. At
September 30,1995, Companion owned 1,460,991 shares or approximately 42% of the
Company's outstanding common stock. Each of these leases has a five year renewal
option, and a rent guarantee by Doctor's Care. One of the leases has a purchase
option allowing UCI-SC to purchase the center at fair market value after
February 1, 1995. Total lease payments made by UCI-SC under these leases during
the Company's fiscal years ended September 30, 1995,1994, and 1993 were
$271,100, $205,901, and zero, respectively.
-36-
<PAGE>
9. Related Party Transactions (continued)
Several of the medical centers operated by UCI-SC are leased from entities owned
or controlled by certain principal shareholders and/or members of the Company's
management. Total lease payments made by UCI-SC under these leases during the
fiscal years ended September 30,1995, 1994 and 1993 were $244,300, $228,200 and
$217,100, respectively.
Other Transactions with Related Companies
On December 10, 1993, Companion HealthCare Corporation ("Companion") acquired
333,333 shares of the Company's common stock for $500,000. On June 8, 1994,
Companion purchased an additional 333,333 shares for $1,000,000. On January 16,
1995, Companion purchased 470,588 shares for $1,000,000, and on May 24, 1995,
Companion purchased 117,647 shares for $250,000. Including shares purchased by
Companion from third parties, at September 30, 1995, Companion owned 1,460,991
shares, or approximately 42% of the Company's outstanding Common Stock.
Companion purchased additional shares in November 1995, as discussed in note 12.
The shares acquired by Companion from the Company were purchased pursuant to
stock purchase agreements and were not registered. Companion has the right to
require registration of the stock under certain circumstances as described in
the agreement.
Blue Cross Blue Shield of South Carolina ("Blue Cross") owns 100% of Companion
HealthCare Corporation. During the Company's fiscal year ended September 30,
1994, UCI-SC purchased a new billing and accounts receivable system from
Companion Technologies, Inc., a wholly-owned subsidiary of Blue Cross for an
aggregate purchase price of $504,000. The Company entered into a capital lease
agreement for this system, which includes computer equipment. The Company has
the option to purchase the equipment at the end of the five year lease term for
$1. The lease obligation recorded at September 30, 1995 is $464,361, which
includes lease addendums.
During the Company's fiscal year ended September 30, 1994, UCI-SC entered into
an agreement with Companion Property and Casualty Insurance Company ("CP&C"), a
wholly-owned subsidiary of Blue Cross, pursuant to which UCI-SC acts as the
primary care provider for injured workers of firms carrying worker's
compensation insurance through CP&C. Additionally, during the Company's fiscal
year ended September 30, 1995, UCI-SC entered into a financing arrangement with
CP&C for the purchase of the Doctor's Care - Donaldson facility, which consists
of a note payable in monthly installments of $4,546 (including 11% interest)
from April 1, 1995 to March 1, 2010, collateralized by certain accounts
receivable.
During the Company's fiscal year ended September 30, 1994, UCI-SC began
providing services for a health maintenance organization ("HMO") operated by
Companion HealthCare Corporation, pursuant to which UCI-SC, through Doctor's
Care, acts as the designated primary care provider for members of the HMO who
have selected Doctor's Care as their primary care provider.
The employees of the Company are offered health, life, dental and disability
coverage at group rates from Blue Cross and its subsidiaries.
10. Concentration of Credit Risk
In the normal course of providing health care services, the Company may extend
credit to patients without requiring collateral. Each individual's ability to
pay balances due the Company is assessed and reserves are established to provide
for management's estimate of uncollectible balances.
Future revenues of the Company are largely dependent on third-party payors and
private insurance companies, especially in instances where the Company accepts
assignment.
-37-
<PAGE>
11. Commitments and Contingencies
In the ordinary course of conducting its business, the Company becomes involved
in litigation, claims, and administrative proceedings. Certain litigation,
claims, and proceedings were pending at September 30, 1995, and management
intends to vigorously defend the Company in such matters. While the ultimate
results cannot be predicted with certainty, management does not expect these
matters to have a material adverse effect on the financial position or results
of operations of the Company.
12. Supplemental Cash Flow Information
Supplemental Disclosure of Cash Flow Information
The Company made interest payments of $448,311, $147,208, and $53,507 for the
years ended September 30, 1995, 1994, and 1993, respectively. There were no
amounts paid for income taxes during the three years ended September 30, 1995.
Supplemental Non-Cash Operating Activities
In July 1995, the Company paid for certain corporate expenses through an
issuance of 6,000 shares of common stock of the Company in the amount of
$16,500, of which $4,125 was expensed and the remainder classified as prepaid
expenses.
Supplemental Non-Cash Financing Activities
Capital lease obligations of $1,069,915 and $683,119 were incurred in 1995 and
1994. Additionally, in February 1995, the Company acquired property which was
financed through a note payable in the amount of $400,000.
Supplemental Non-Cash Investing Activities
In February 1993, the Company acquired a medical facility in Surfside Beach,
South Carolina for $1,697,000 including $50,000 in cash, a $1,600,000 note
payable to the seller and the assumption of approximately $47,000 of trade
accounts payable. Also, as part of the transaction the Company acquired a
condominium for $250,000, which was financed by the seller.
In February 1994, the Company entered into a management agreement with an
orthopedic practice and purchased the practice's accounts receivable and
inventory for $56,873 and $15,000, respectively with a note payable to the
seller.
In January 1995, the Company acquired certain assets of a medical practice in
West Columbia, South Carolina for $291,000, consisting of 145,500 shares of
common stock of the Company.
In May 1995, the Company acquired a medical practice in Cayce, South Carolina
for $150,000, consisting of 46,153 shares of common stock of the Company.
In August 1995, the Company acquired certain assets of a medical practice in
Greenville, South Carolina for $662,500, by financing $350,000 with the seller,
and issuing 100,000 shares of common stock of the Company.
-38-
<PAGE>
13. Subsequent Events
In January 1995, the Company entered into an acquisition agreement for a medical
practice in Myrtle Beach, South Carolina. The acquisition is expected to become
effective prior to December 31, 1995, after certain conditions precedent occur.
On November 3, 1995, Companion purchased 218,180 shares of newly issued common
stock of the Company for $2.75 a share, or $599,995. Subsequent to the
transaction, Companion's ownership in the Company was approximately 45%.
Companion has the option to purchase as many shares as may be necessary for
Companion to maintain ownership of 47% of the outstanding common stock of the
Company in the event that the Company issues additional stock to other parties
(excluding shares issued to employees or directors of the Company).
On December 1, 1995, the Company acquired a medical practice in Greenville,
South Carolina for $300,000. The Company entered into an employment agreement
with the physician who had been the sole shareholder of the acquired medical
practice. The Company also entered into lease agreements for the facility
occupied by and the computer system used by the acquired medical practice.
-39-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
UCI MEDICAL AFFILIATES, INC.
Date: December 27, 1995 By: /s/ M. F. McFarland
M.F. McFarland, III, M.D.
Chief Executive Officer
By: /s/ Jerry F. Wells, Jr.
Jerry F. Wells, Jr.
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Date: December 27, 1995 By: /s/ M.F. McFarland
M.F. McFarland, III, M.D.
Chairman of the Board
By: /s/ Harold H. Adams, Jr.
Harold H. Adams, Jr.
Director
By: /s/ Charles P. Cannon
Charles P. Cannon
Director
By: /s/ Russell J. Froneberger
Russell J. Froneberger
Director
By: /s/ Charles M. Potok
Charles M. Potok
Director
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UCI MEDICAL AFFILIATES, INC.
EXHIBIT INDEX
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NO. DESCRIPTION REFERENCE TO
3.1 Amended and Restated Certificate of Incorporation .. 42
3.2 Amended and Restated Bylaws ...................... 51
10.1 Facilities Agreement .................................... 61
10.2 Facilities Fee Refund Agreement .................... 66
10.3 Amendments to the Facilities Agreement and
the Facilities Fee Refund Agreement ................ 68
10.4 Employment Agreement Between
UCI Medical Affiliates of South Carolina, Inc. and
M.F. McFarland, III, M.D. ............................ 72
10.5 Employment Agreement Between
Doctor's Care, P.A. and M.F. McFarland, III, M.D. .. 80
10.6 Employment Agreement Between
UCI Medical Affiliates of South Carolina, Inc. and
D. Michael Stout, M.D. ................. 87
10.7 Employment Agreement Between
Doctor's Care, P.A. and D. Michael Stout, M.D. ..... 93
10.8 Lease and License Agreement with
Companion Technologies .......................... 102
10.9 UCI Medical Affiliates, Inc.
1994 Incentive Stock Option Plan ............... 112
10.10 Consent of Independent Accountants ................ 120
21 Subsidiaries of the Registrant ........... 122
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EXHIBIT NO. 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
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<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
UCI MEDICAL AFFILIATES, INC.
UCI MEDICAL AFFILIATES, INC., a corporation duly organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
1. The name of the corporation is UCI MEDICAL AFFILIATES, INC. The date
of filing its original Certificate of Incorporation with the Secretary of State
was August 25, 1982, and the original name of the corporation was UrgentCare,
Inc.
2. This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the original Restated Certificate of Incorporation
of this corporation filed on February 1, 1984, in the following manner:
The Article numbered FOURTH of the original Restated
Certificate of Incorporation is amended so as to read in its entirety
as follows:
"FOURTH: After giving effect to Section Seven herein, the
total number of shares of stock which the corporation shall have
authority to issue is as follows: Ten Million (10,000,000) shares of
Common Stock, having a par value of five cents ($.05) per share,
amounting in the aggregate to Five Hundred Thousand Dollars ($500,000),
and Ten Million (10,000,000) shares of Preferred Stock having a par
value of one cent ($.01) per share, amounting in the aggregate to One
Hundred Thousand Dollars ($100,000).
The following is a statement fixing certain of the
designations and powers, voting powers, preferences, and relative,
participating, optional or other rights of the Common Stock and
Preferred Stock of the corporation, and the qualifications, limitations
or restrictions thereof, and the authority with respect thereto
expressly granted to the Board of Directors of the corporation to fix
any such provisions not fixed by this Certificate:
I. Common Stock
Authority is hereby expressly granted to and vested
in the Board of Directors of this corporation to provide for
the issue of Common Stock. The holders of record of shares of
Common Stock shall be entitled to unlimited voting rights
equating to one (1) vote per outstanding share of Common Stock
on all matters upon which shareholders are entitled to vote.
Shares of Common Stock shall have distribution, dividend, and
liquidation rights granted by law or declared by resolution or
resolutions of the Board of Directors from time to time,
except that in the absence of the establishment of liquidation
rights for one or more series of Preferred Stock (either
preferentially to, or on a parity with, the Common Stock) as
provided below, the holders of record of shares of Common
Stock shall be entitled to receive the net assets of this
corporation upon dissolution. The distribution, dividend, and
liquidation rights associated with the shares of Common Stock
will be subordinated only to the comparable distribution,
dividend, or liquidation rights associated with shares of
certain series of Preferred Stock, if any, but only to the
extent such preferences, if any, are established for one or
more series of Preferred Stock by the Board of Directors in
its discretion as provided below.
II. Preferred Stock
The Board of Directors is hereby expressly vested
with the authority to adopt a resolution or resolutions
provided for the issue of authorized but unissued shares of
Preferred Stock, which shares may be issued from time to time
in one or more series and
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in such amounts as may be determined
by the Board of Directors in such resolution or resolutions.
The powers, voting powers, designations, preferences, and
relative, participating, operational or other rights, if any,
of each series of Preferred Stock and the qualifications,
limitations or restrictions, if any, of such preferences
and/or rights (collectively the "Series Terms"), shall be such
as are stated and expressed in a resolution or resolutions
provided for the creation or revision of such Series Terms (a
"Preferred Stock Series Resolution") adopted by the Board of
Directors or a committee of the Board of Directors to which
such responsibility is specifically and lawfully delegated.
The powers of the Board of Directors with respect to the
Series Terms of a particular series (any of which powers,
other than voting powers, may be resolution of the Board of
Directors be specifically delegated to one or more of its
committees, except as prohibited by law) shall include, but
not be limited to, determination of the following:
(1) The number of shares constituting that
series and the distinctive designation of that
series, or any increase or decrease (but not below
the number of shares thereof then outstanding) in
such number;
(2) The dividend rate of the shares of that
series, whether such dividends, if any, shall be
cumulative, and, if so, the date or dates from which
dividends payable on such shares shall accumulate,
and the relative rights of priority, if any, of
payment of dividends on shares of that series;
(3) Whether that series shall have voting
rights, in addition to the voting rights provided by
law, and, if so, the terms of such voting rights;
(4) Whether that series shall have
conversion privileges with respect to shares of any
other class or classes of stock or of any other
series of any class of stock, and, of so, the terms
and conditions of such conversion, including
provision for adjustment of the conversion rate upon
occurrence of such events as the Board of Directors
shall determine;
(5) Whether the shares of that series shall
be redeemable, and, if so, the terms and conditions
of such redemption, including their relative rights
of priority, if any, of redemption, the date or dates
upon or after which they shall be redeemable,
provisions regarding redemption notices, and the
amount per shares payable in case of redemption,
which amount may vary under different conditions and
at different redemption dates;
(6) Whether that series shall have a sinking
fund for the redemption or purchase of shares of that
series, and, if so, the terms and amount of such
sinking fund;
(7) The rights of the shares of that series
in the event of voluntary or involuntary liquidation,
dissolution, or winding up of the corporation, and
the relative rights of priority, if any, of payment
of shares of that series;
(8) The conditions or resolutions upon the
creation of indebtedness of the corporation or upon
the issuance of additional preferred stock or other
capital stock ranking on a parity therewith, or prior
thereto, with respect to dividends or distribution of
assets upon liquidation;
(9) The conditions or restrictions with
respect to the issuance of, payment of dividends
upon, or the making of other distributions to, or the
acquisition or redemption of, shares ranking junior
to the Preferred Stock or to
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any series thereof with
respect to dividends or distribution of assets upon
liquidation; and,
(10) Any other designations, powers,
preferences, and rights, including, without
limitation any qualifications, limitations, or
restrictions thereof.
Any of the Series Terms, including voting rights, of
any series may be made dependent upon facts ascertainable
outside the Amended and Restated Certificate of Incorporation
and the Preferred Stock Series Resolution, provided that the
manner in which such facts shall operate upon such Series
Terms is clearly and expressly set forth in the Amended and
Restated Certificate of Incorporation or in the Preferred
Stock Series Resolution,
Subject to the provisions of this Article Four,
shares of one or more series of Preferred Stock may be
authorized or issued from time to time as shall be determined
by and for such consideration as shall be fixed by the Board
of Directors or a designated committee thereof, in an
aggregate amount not exceeding the total number of shares of
Preferred Stock authorized by this Amended and Restated
Certificate of Incorporation. Except in respect of series
particulars fixed by the Board of Directors or its committee
as permitted thereby, all shares of Preferred Stock shall be
of equal rank and shall be identical. All shares of any one
series of Preferred Stock so designated by the Board of
Directors shall be alike in every particular, except that
shares of any one series issued at different times may differ
as to the dates from which dividends thereon shall be
cumulative."
The following addition is added to the original Restated
Certificate of Incorporation so as to read in its entirety as follows:
"SEVENTH: Pursuant to a 1 for 5 reverse stock split, the
amount of the total authorized Common Stock of this corporation is
decreased and the number and par value are by these means changed so
that the authorized Common Stock of this corporation, which, prior to
the filing of this amendment, was Twenty Million (20,000,000) shares of
Common Stock, having a par value of one cent ($.01) per share,
amounting in the aggregate to Two Hundred Thousand Dollars ($200,000),
shall be Four Million (4,000,000) shares of Common Stock, having a par
value of five cents ($.05) per share, amounting in the aggregate to Two
Hundred Thousand Dollars ($200,000) ; provided however, immediately
after the effectuation of such reverse stock split, the authorized
Common Stock of this corporation shall be increased so that the
authorized Common Stock of this corporation shall be Ten Million
(10,000,000) shares of Common Stock, having a par value of five cents
($.05) per share, amounting in the aggregate to Five Hundred Thousand
Dollars ($500,000).
At the time this amendment becomes effective, each five (5)
prior issued and outstanding shares of the Common Stock of this
corporation, par value one cent ($.01) per share, shall thereby and
thereupon be combined into one (1) share of validly issued, fully paid
and nonassessable shares of Common Stock of this corporation, par value
five cents ($.05) per share. Each person at that time holding of record
any issued and outstanding share of Common Stock of this corporation
shall receive upon surrender thereof to the corporation's authorized
agency a stock certificate or certificates to evidence and represent
the number of shares of post reverse stock split Common Stock of this
corporation to which he is entitled after this reverse split; provided,
however, that this corporation shall not issue fractional shares of
Common Stock in connection with this reverse stock split, but, in lieu
thereof, this corporation shall make a cash payment at the rate of
seventy cents ($.70) and for each share of prior Common Stock to the
holders thereof who would otherwise be entitled to receive fractional
shares except for the provisions hereof upon surrender of certificates
representing those shares to the corporation's authorized agent. The
ownership of such fractional interests shall not entitle the holder
thereof to any voting, dividend or other right except the right to
receive payment therefor as described above.
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EIGHTH: A director of the corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for such liability as is
expressly not subject to limitation under the General Corporation Law
of the State of Delaware, as the same exists or may hereafter be
amended to further limit or eliminate such liability.
NINTH: Notwithstanding any other provision of this Amended and
Restated Certificate of Incorporation or the Bylaws of this
corporation, the terms of the members of the Board of Directors shall
be staggered in the manner set forth in this Article Nine, in lieu of
electing the whole number of directors annually. Commencing on the
effective date of this Article Nine, the directors shall be divided by
the Board of Directors into three (3) classes, each class to be as
nearly equal in number as possible. The term of office of directors of
the first class shall expire at the first annual meeting of
shareholders after their election, that of the second class shall
expire at the second annual meeting after the election, and that of the
third class shall expire at the third annual meeting after their
election. At each annual meeting after such classification, the number
of directors equal to the number of the class whose terms expires at
the time of such meeting shall be elected to hold office until the
third such succeeding annual meeting. The provisions of this Article
Nine shall apply only when the Board of Directors consists of three or
more members; if the Board of Directors consists of less than three
members, the terms of each such member shall expire at the next annual
meeting of the shareholders of the corporation.
TENTH: To the fullest extent permitted by law, the Board of
Directors, when evaluating any offer by another party to (i) make a
tender or exchange offer for any equity security of this corporation
outside of the ordinary course of business, (ii) merge or consolidate
this corporation with any other corporation, (iii) purchase or
otherwise acquire all or substantially all of the properties and assets
of this corporation, or (iv) undertake any similar extraordinary
corporate transactions with this corporation, may be its discretion, in
connection with exercise of its judgment in determining what is in the
best interests of this corporation and its shareholders, give due
consideration to: (aa) all relevant factors, including without
limitation the social, legal, and economic effects on the employees,
customers, suppliers, and other constituencies of this corporation and
its subsidiaries, on the communities and geographical areas in which
this corporation and its subsidiaries operate or are located, and on
any of the businesses and properties of this corporation or any of its
subsidiaries, as well as such other factors as the directors deem
relevant; and (bb) all features of the consideration being offered, not
only in relation to the then current market price for the corporation's
outstanding shares of capital stock, but also in relation to the then
current value of the corporation in a freely negotiated transaction and
in relation to the Board of Director's estimate of the future value of
this corporation (including the unrealized value of its properties and
assets) as an independent going concern."
3. The text of the original Restated Certificate of Incorporation as
amended or supplemented heretofore is further amended hereby to read as herein
set forth in full:
"AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
UCI MEDICAL AFFILIATES, INC.
FIRST: The name of the corporation is: UCI MEDICAL
AFFILIATES, INC.
SECOND: The address of its registered office in the State of
Delaware is: Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, and the name of its registered agent
at such address is The Corporation Trust Company.
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<PAGE>
THIRD: The nature of the business or purposes to be conducted
or promoted is: the operation of an Emergency Care
Center and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law
of Delaware.
FOURTH: After giving effect to Section Seven herein, the total
number of shares of stock which the corporation shall have authority to
issue is as follows: Ten Million (10,000,000) shares of Common Stock,
having a par value of five cents ($.05) per share, amounting in the
aggregate to Five Hundred Thousand Dollars ($500,000), and Ten Million
(10,000,000) shares of Preferred Stock having a par value of one cent
($.01) per share, amounting in the aggregate to One Hundred Thousand
Dollars ($100,000).
The following is a statement of fixing certain of the
designations and powers, voting powers, preferences, and relative,
participating, optional or other rights of the Common Stock and
Preferred Stock of the corporation, and the qualifications, limitations
or restrictions thereof, and the authority with respect thereto
expressly granted to the Board of Directors of the corporation to fix
any such provisions not fixed by this Certificate:
I. Common Stock
Authority is hereby expressly granted to and vested
in the Board of Directors of this corporation to provide for
the issue of Common Stock. The holders of record of shares of
Common Stock shall be entitled to unlimited voting rights
equating to one (1) vote per outstanding share of Common Stock
on all matters upon which shareholders are entitled to vote.
Shares of Common Stock shall have distribution, dividend, and
liquidation rights granted by law or declared by resolution or
resolutions of the Board of Directors from time to time,
except that in the absence of the establishment of liquidation
rights for one or more series of Preferred Stock (either
preferentially to, or on a party with, the Common Stock) as
provided below, the holders of record of shares of Common
Stock shall be entitled to receive the net assets of this
corporation upon dissolution. The distribution, dividend, and
liquidation rights associated with the shares of Common Stock
will be subordinated only to the comparable distribution,
dividend, or liquidation rights associated with shares of
certain series of Preferred Stock, if any, but only to the
extent such preferences, if any, are established for one or
more series of Preferred Stock by the Board of Directors in
its discretion as provided below.
II. Preferred Stock
The Board of Directors is hereby expressly vested
with the authority to adopt a resolution or resolutions
providing for the issue of authorized but unissued shares of
Preferred Stock, which shares may be issued from time to time
in one or more series and in such amounts as may be determined
by the Board of Directors in such resolution or resolutions.
The powers, voting powers, designations, preferences, and
relative, participating, operational or other rights, if any,
of each series of Preferred Stock and the qualifications,
limitations or restrictions, if any, of such preferences
and/or rights (collectively the "Series Terms"), shall be such
as are stated and expressed in a resolution or resolutions
providing for the creation or revision of such Series Terms (a
"Preferred Stock Series Resolution") adopted by the Board of
Directors or a committee of the Board of Directors to which
such responsibility is specifically and lawfully delegated.
The powers of the Board of Directors with respect to the
Series Terms of a particular series (any of which powers,
other than voting powers, may be resolution of the Board of
Directors be specifically delegated to one or more of its
committees, except as prohibited by law) shall include, but
not be limited to, determination of the following:
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(1) The number of shares constituting that
series and the distinctive designation of that
series, or any increase or decrease (but not below
the number of shares thereof then outstanding) in
such number;
(2) The dividend rate of the shares of that
series, whether such dividends, if any, shall be
cumulative, and, if so, the date or dates from which
dividends payable on such shares shall accumulate,
and the relative rights of priority, if any, of
payment of dividends on shares of that series;
(3) Whether that series shall have voting
rights, in addition to the voting rights provided by
law, and, if so, the terms of such voting rights;
(4) Whether that series shall have
conversion privileges with respect to shares of any
other class or classes of stock or of any other
series of any class of stock, and, of so, the terms
and conditions of such conversion, including
provision for adjustment of the conversion rate upon
occurrence of such events as the Board of Directors
shall determine;
(5) Whether the shares of that series shall
be redeemable, and, if so, the terms and conditions
of such redemption, including their relative rights
of priority, if any, of redemption, the date or dates
upon or after which they shall be redeemable,
provisions regarding redemption notices, and the
amount per shares payable in case of redemption,
which amount may vary under different conditions and
at different redemption dates;
(6) Whether that series shall have a sinking
fund for the redemption or purchase of shares of that
series, and, if so, the terms and amount of such
sinking fund;
(7) The rights of the shares of that series
in the event of voluntary or involuntary liquidation,
dissolution, or winding up of the corporation, and
the relative rights of priority, if any, of payment
of shares of that series;
(8) The conditions or resolutions upon the
creation of indebtedness of the corporation or upon
the issuance of additional preferred stock or other
capital stock ranking on a parity therewith, or prior
thereto, with respect to dividends or distribution of
assets upon liquidation;
(9) The conditions or restrictions with
respect to the issuance of, payment of dividends
upon, or the making of other distributions to, or the
acquisition or redemption of, sharing ranking junior
to the Preferred Stock or to any series thereof with
respect to dividends or distribution of assets upon
liquidation; and,
(10) Any other designations, powers,
preferences, and rights, including, without
limitation any qualifications, limitations, or
restrictions thereof.
Any of the Series Terms, including voting rights, of
any series may be made dependent upon facts ascertainable
outside the Amended and Restated Certificate of Incorporation
and the Preferred Stock Series Resolution, provided that the
manner in which such facts shall operate upon such Series
Terms is clearly and expressly set forth in the Amended and
Restated Certificate of Incorporation or in the Preferred
Stock Series Resolution.
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Subject to the provisions of this Article Four,
shares of one or more series of Preferred Stock may be
authorized or issued from time to time as shall be determined
by and for such consideration as shall be fixed by the Board
of Directors or a designated committee thereof, in an
aggregate amount not exceeding the total number of shares of
Preferred Stock authorized by this Amended and Restated
Certificate of Incorporation. Except in respect of series
particulars fixed by the Board of Directors or its committee
as permitted thereby, all shares of Preferred Stock shall be
of equal rank and shall be identical. All shares of any one
series of Preferred Stock so designated by the Board of
Directors shall be alike in every particular, except that
shares of any one series issued at different times may differ
as to the dates from which dividends thereon shall be
cumulative.
FIFTH: The corporation shall have perpetual existence.
SIXTH: In furtherance and not in limitation of the powers
conferred by statute, the corporation's Board of
Directors is expressly authorized to adopt, amend, or
repeal by Bylaws of the corporation.
SEVENTH: Pursuant to a 1 for 5 reverse stock split, the amount
of the total authorized Common Stock of this corporation is decreased
and the number and par value are by these means changed so that the
authorized Common Stock of this corporation, which, prior to the filing
of this amendment, was Twenty Million (20,000,000) shares of Common
Stock, having a par value of one cent ($.01) per share, amounting in
the aggregate to Two Hundred Thousand Dollars ($200,000), shall be Four
Million (4,000,000) shares of Common Stock, having a par value of five
cents ($.05) per share, amounting in the aggregate to Two Hundred
Thousand Dollars ($200,000); provided however, immediately after the
effectuation of such reverse stock split, the authorized Common Stock
of this corporation shall be increased so that the authorized Common
Stock of this corporation shall be Ten Million (10,000,000) shares of
Common Stock, having a par value of five cents ($.05) per share,
amounting in the aggregate to Five Hundred Thousand Dollars ($500,000).
At the time this amendment becomes effective, each five (5)
prior issued and outstanding shares of the Common Stock of this
corporation, par value one cent ($.01) per share, shall thereby and
thereupon be combined into one (1) share of validly issued, fully paid
and nonassessable shares of Common Stock of this corporation, par value
five cents ($.05) per share. Each person at that time holding of record
any issued and outstanding share of Common Stock of this corporation
shall receive upon surrender thereof to the corporation's authorized
agency a stock certificate or certificates to evidence and represent
the number of shares of post reverse split; provided, however, that
this corporation shall not issue fractional shares of Common Stock in
connection with this reverse stock split, but, in lieu thereof, this
corporation shall make a cash payment at the rate of seventy cents
($.70) and for each share of prior Common Stock to the holders thereof
who would otherwise by entitled to receive fractional shares except for
the provisions hereof upon surrender of certificates representing those
shares to the corporation's authorized agent. The ownership of such
fractional interests shall not entitle the holder thereof to any
voting, dividend or other right except the right to receive payment
therefor as described above.
EIGHTH: A director of the corporation shall not be personally
liable to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for such liability as is
expressly not subject to limitation under the General Corporation Law
of the State of Delaware, as the same exists or may hereafter be
amended to further limit or eliminate such liability.
NINTH: Notwithstanding any other provision of this Amended and
Restated Certificate of Incorporation or the Bylaws of this
corporation, the terms of the members of the Board of Directors shall
be staggered in the manner set forth in this Article Nine, in lieu of
electing the whole number of directors annually. Commencing on the
effective date of this Article Nine, the
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directors shall be divided by
the Board of Directors into three (3) classes, each class to be as
nearly equal in number as possible. The term of office of directors of
the first class shall expire at the first annual meeting of
shareholders after their election, that of the second class shall
expire at the second annual meeting after the election, and that of the
third class shall expire at the third annual meeting after their
election. At each annual meeting after such classification, the number
of directors equal to the number of the class whose terms expires at
the time of such meeting shall be elected to hold office until the
third such succeeding annual meeting. The provisions of this Article
Nine shall apply only when the Board of Directors consists of three or
more members; if the Board of Directors consists of less than three
members, the term of each such member shall expire at the next annual
meeting of the shareholders of the corporation.
TENTH: To the fullest extent permitted by law, the Board of
Directors, when evaluating any offer by another party to (i) make a
tender or exchange offer for any equity security of this corporation
outside of the ordinary course of business, (ii) merge or consolidate
this corporation with any other corporation, (iii) purchase or
otherwise acquire all or substantially all of the properties and assets
of this corporation, or (iv) undertake any similar extraordinary
corporate transactions with this corporation, may in its discretion, in
connection with exercise of its judgment in determining what is in the
best interests of this corporation and its shareholders, give due
consideration to: (aa) all relevant factors, including without
limitation the social, legal, and economic effects on the employees,
customers, suppliers, and other constituencies of this corporation and
its subsidiaries, on the communities and geographical areas in which
this corporation and its subsidiaries operate or are located, and on
any of the businesses and properties of this corporation or any of its
subsidiaries, as well as such other factors as the directors deem
relevant; and (bb) all features of the consideration being offered, not
only in relation to the then current value of the corporation in a
freely negotiated transaction and in relation to the Board of
Director's estimate of the future value of this corporation (including
the unrealized value of its properties and assets) as an independent
going concern."
4. This Amended and Restated Certificate of Incorporation was duly
adopted by the stockholders in accordance with the applicable provisions of
Sections 242 and 245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, UCI Medical Affiliates, Inc. has caused this
certificate to be signed by M.F. McFarland, III, M.D., its Chairman of the Board
of Directors, and attested to by Jon R. Bright, its Assistant Secretary, this
30th day of June, 1994.
UCI MEDICAL AFFILIATES, INC.
By: /s/ M.F. McFarland, III, M.D.
M.F. McFarland, III, M.D.
Its: Chairman of the Board
(CORPORATE SEAL)
Attest:
By: /s/ Jon R. Bright
Jon R. Bright
Its: Assistant Secretary
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EXHIBIT NO. 3.2
AMENDED AND RESTATED BYLAWS
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<PAGE>
AMENDED AND RESTATED BYLAWS
OF
UCI MEDICAL AFFILIATES, INC.
November 23, 1993
ARTICLE I - GENERAL PROVISIONS
Section 1. Name. This Corporation shall be known as "UCI MEDICAL
AFFILIATES, INC.", or such other name as the stockholders or directors shall,
from time to time, deem advisable.
Section 2. Offices. The principal place of business of the Corporation
shall be located in the State of South Carolina or at such other place which the
officers or directors may designate from time to time.
ARTICLE II - STOCKHOLDERS
Section 1. Annual Meeting. An annual meeting of the stockholders shall
be held at such place on such date, and at such time as the Board of Directors
shall each year designate, which date shall be within thirteen (13) months
subsequent to the date of the last annual meeting of the stockholders. At such
meeting the stockholders shall elect, by a plurality vote, directors to succeed
those whose terms expire. The stockholders shall further transact such other
business as may properly come before the meeting.
Section 2. Special Meeting. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prohibited by law (meaning here and
hereinafter as required, the General Corporation Law of the State of Delaware or
the Certificate of Incorporation), may be called by the Chairman of the Board,
the President, or at the request in writing of a majority of the Board of
Directors, and shall be held at such place, on such date, at such time, and for
such purpose or purposes as the above designated officer or Board of Directors
shall fix in the prescribed notice of the meeting.
Section 3. Notice of Meetings. Written notice of the place, date and
time (and in the case of a special meeting, the purpose or purposes for which
the meeting is called) of all meetings of the stockholders shall be given to
those stockholders entitled to vote at such meeting, not less than ten (10) nor
more than sixty (60) days before the date on which the meeting is to be held, to
each stockholder entitled vote at such meetings, except as otherwise provided
herein or required by law.
When a meeting is adjourned to another time, place, or date, written
notice need not be given of the adjourned meeting if the time, place and date
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of adjourned meeting is more than thirty
(30) days after the date of the original meeting, or if a new record date is
fixed for the adjourned meeting, written notice of the place, date and time of
the adjourned meeting shall be given. Any business which might have been
transacted at the original meeting may be transacted at the adjourned meeting.
Section 4. Stock List. Subsequent to the record date of any meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting, arranged in alphabetical order for each class of stock with the address
of each such stockholder and the number of shares registered in the
stockholder's name, shall be prepared by the Secretary, the Assistant Secretary,
or such other agent of the Corporation as may be designated by the Board of
Directors, at least ten (10) days before such meeting, and shall be open to the
inspection of any such stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or at the principal
office of the Corporation.
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The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the identity
of the stockholders entitled to vote at the meeting and the number of shares
held by each.
Section 5. Quorum. At any meeting of the stockholders, the holders of a
majority of all of the outstanding shares of the stock entitled to vote, present
in person or by proxy, shall constitute a quorum for all purposes, unless or
except to the extent that the presence of a larger number is required by law.
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of the stock entitled to vote
who are present, in person or by proxy, may adjourn the meeting to another
place, date or time.
Section 6. Conduct of Business. The Chairman of the Board, or in his
absence or disability the president, or such other person as the Board of
Directors may have designated or, in the absence of such designation, the
highest ranking officer of the Corporation who is present, shall call to order
any meeting of the stockholders and act as chairman of the meeting. In the
absence of the Secretary of the Corporation, the secretary of the meeting shall
be such person as the chairman of the meeting appoints.
The chairman of any meeting of the stockholders shall determine the
order of business and the procedure at the meeting, including such regulation of
the manner of voting and the conduct of discussion as he deems appropriate.
Section 7. Voting and Proxies. At any meeting of the stockholders,
every stockholder entitled to vote may vote in person or by proxy authorized by
an instrument in writing executed by such stockholder and bearing a date not
more than three (3) years prior to said meeting, unless said instrument provides
for a longer period, filed in accordance with the procedure established for the
meeting.
Each stockholder shall have one (1) vote for every share of stock
entitled to vote which is registered in his name on the record date for the
meeting, except as otherwise provided herein or required by law.
All voting, except on the election of directors and where otherwise
required by law, may be by a voice vote. A stock vote shall be taken on the
election of directors. Every stock vote shall be taken by ballot, each of which
shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
Every vote taken by ballot shall be counted by an inspector or inspectors
appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law, all other matters shall be determined by a
majority of the votes cast.
Section 8. Record Date. The Board of Directors may fix a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of any meeting of the stockholders, nor more than sixty (60) days prior to
the time for the other action hereinafter described, as of which there shall be
determined the stockholders who are entitled: (a) to notice of or to vote at any
meeting of the stockholders or any adjournment thereof; (b) to express consent
to corporate action in writing without a meeting; (c) to receive payment of any
dividend or other distribution or allotment of any rights; or, (d) to exercise
any rights with respect to any change, conversion or exchange of stock or with
respect to any other lawful action.
Upon the designation of a record date, only such stockholders as shall
be stockholders of record on the date so fixed shall be entitled to the rights
and privileges enumerated above, notwithstanding any transfer of stock on the
books of the Corporation after the record date is fixed as aforesaid.
Section 9. Action in Lieu of Meeting. Any action required to be taken
at any annual or special meeting of the stockholders, or any action which may be
taken at such meeting, may be taken without a
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meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, is signed by the holders of the outstanding
voting stock having not less than the minimum number of votes that would be
necessary to authorize or to take such action at a meeting at which all shares
entitled to vote thereon were present and voted
Prompt notice of the taking of the corporate action without a meeting by
less than a unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III - BOARD OF DIRECTORS
Section 1. Number and Term of Office. The number of directors shall be
fixed by the Board of Directors from time to time. Each director shall serve
until his successor is elected and qualified, except as otherwise required by
law. Directors need not be stockholders.
Section 2. Vacancies. If the office of any director becomes vacant by
reason of death, resignation, retirement, disqualification, removal or other
cause, a majority of the directors remaining in office, although less than a
quorum, may elect a successor for the unexpired term or until the director's
successor is elected and qualified.
Section 3. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such place or places, on such date or dates and at such time or
times as shall have been established by the Chairman of the Board of Directors
or the Board of Directors and publicized among all directors. A notice of each
regular meeting shall not be required.
Section 4. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board of Directors, or, on the written
request of one-third of the directors then in office, by the Secretary. Notice
of the place, date, and time of each such special meeting shall be given each
director by whom it is not waived either personally, by mail or by telegram not
less than twenty-four (24) hours before the meeting. Unless otherwise indicated
in the notice thereof, any and all business may be transacted at a special
meeting.
Section 5. Quorum. At all meetings of the Board of Directors, one-third
of the total number of the whole Board of Directors shall constitute a quorum
for the transaction of business. The vote of the majority of directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors, unless otherwise provided by law.
Section 6. Meetings by Conference Telephone. Members of the Board of
Directors, or any committee thereof, may participate in a meeting of such Board
of Directors or committee by means of conference telephone or similar
communications equipment that enables all persons participating in the meeting
to hear each other. Such participation shall constitute presence in person at
such meeting.
Section 7. Conduct of Business. At any meeting of the Board of
Directors, business shall be transacted in such order as the Board of Directors
from time to time may determine. All matters shall be determined by the vote of
a majority of the directors present, except as otherwise provided herein or
required by law.
Section 8. Actions in Lieu of Meetings. Any action required or
permitted to be taken at any meeting of the Board of Directors, or any committee
thereof, may be taken without a meeting if all members of the Board of Directors
or committee, as the case may be, consent thereto in writing and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 9. Powers. The property and business of the Corporation shall
be managed by the Directors which may, except as otherwise required by law,
exercise all such powers and do all such acts and
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things as may be exercised or done by the Corporation, including, without
limiting the generality of the foregoing, the power to:
(a) Declare dividends from time to time in accordance with law;
(b) Purchase or otherwise acquire any property, rights or privileges on
such terms as it shall determine;
(c) Authorize the creation, making and issuance, in such form as it may
determine, of written obligations of every kind, negotiable or nonnegotiable,
secured or unsecured, and to do all things necessary in connection therewith;
(d) Remove any officer of the Corporation with or without cause, and
from time to time to devolve the powers and duties of any officer upon any other
person for the time being;
(e) Confer upon any officer of the Corporation the power to appoint,
remove and suspend subordinate officers and agents;
(f) Adopt from time to time such stock option, stock purchase, bonus or
other compensation plans for directors, officers, agents and employees of the
Corporation and its subsidiaries as it may determine;
(g) Adopt from time to time such insurance, retirement, and other
benefit plans for directors, officers, agents and employees of the Corporation
and its subsidiaries as it may determine; and,
(h) Adopt from time to time regulations, not inconsistent with these
Bylaws, for the management of the corporation's business and affairs.
Section 10. Compensation of Directors. The Board of Directors shall
have the authority, from time to time, to establish such reasonable compensation
to be paid as a retainer to the directors of this Corporation for their services
associated therewith, and to establish a fixed sum to compensate the directors
for their attendance at any regular or special meeting or any meeting of a duly
designated committee, and further to reimburse the directors for expenses
incurred in connection with their attendance at any regular or special meeting
or meeting of a committee; provided, that nothing contained herein shall be
construed as precluding any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 11. Advisory Directors. In addition to the regular Board of
Directors, this Corporation may have and establish, by appropriate resolutions
of the Board of Directors, one or more, but not exceeding three (3) Advisory
Directors who shall perform the following duties as designated by the Chairman
of the Board: (a) to render advice and counsel to the Board of Directors; (b) to
perform such other duties as may be mutually agreeable to the Chairman of the
Board and such Advisory Directors. Advisory Directors shall not vote at the
meetings of the Board of Directors, but shall be entitled to participate
therein. Advisory Directors shall, at the discretion of the Board of Directors,
be entitled to a retainer for their services associated therewith, to a fixed
sum to compensate Advisory Directors for attendance at any regular or special
meeting or meeting of a committee, and to reimbursement for expenses incurred in
connection with attendance at any regular or special meeting or meeting of a
committee.
ARTICLE IV - COMMITTEES
Section 1. Committees of the Board of Directors. The Board of
Directors, by a vote of the majority of all members of the Board of Directors,
may from time to time designate committees of the Board of Directors, each
committee to consist of two (2) or more of the directors, to serve at the
pleasure of the Board of Directors. Any committee so designated may exercise
such power and authority of the Board of Directors as the resolution so
designating the committee shall provide. In the absence or in the event of
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disqualification from voting of any member of any committee, the member or
members of the committee present at the meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may by
unanimous vote appoint another member of the Board of Directors to act at the
meeting in the place of the absent or disqualified member.
Such committee or committees shall have the name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
Section 2. Conduct of Business. Each committee may determine the
procedural rules for meeting and conducting business and shall act in accordance
therewith, except as otherwise provided herein or required by law. One-third of
the members shall constitute a quorum unless the committee shall consist of two
(2) members, in which event one (1) member shall constitute a quorum. All
matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceeding of such committee. All committees shall keep regular minutes of
their proceedings and report the same to the Board of Directors when required.
ARTICLE V - OFFICERS
Section 1. Offices in General. The officers of this Corporation shall
be chosen by the Board of Directors and shall consist of a Chairman of the Board
of Directors, a President, an Executive Vice President, one or more Vice
Presidents, a Secretary, a Treasurer, and such Assistant Secretaries, Assistant
Treasurers or other subordinate officers as may from time to time be appointed
by the Board of Directors. In addition, the Board of Directors may appoint a
Vice Chairman of the Board of Directors and a Chief Medical Officer. Each
officer shall hold his office until his successor is elected and qualified or
until his earlier resignation or removal. The officers will hold such titles and
have such duties as shall be hereafter stated, or hereafter designated by a
resolution of the Board of Directors which is not inconsistent with these
Bylaws. Any number of offices may be held by the same person.
Section 2. Chairman of the Board. The Chairman of the Board of
Directors shall be the chief executive officer of the Corporation. The Chairman
of the Board of Directors shall preside at all meetings of the stockholders and
directors at which he is present. He shall be an ex-officio member of all
standing committees and shall see that all orders and resolutions of the Board
of Directors are carried into effect. He shall perform all duties and have all
powers which are commonly incident to the office of chief executive or which are
delegated to him by the Board of Directors. He shall have the power to sign all
stock certificates, contracts, execute bonds, notes, mortgages and other
instruments on behalf of the Corporation. He shall have general supervision and
direction of all of the other officers and agents of the Corporation.
Section 3. President. Unless otherwise designated by the Board of
Directors, the President shall be the chief operating officer of the
Corporation. In the absence of a Chairman of the Board of Directors and unless
otherwise designated by the Board of Directors, the President shall be the chief
executive officer of the Corporation and he shall preside over the meetings of
the stockholders and carry on the other duties of the Chairman of the Board of
Directors. He shall have the power to sign all stock certificates, contracts and
execute bonds, notes, mortgages, and other instruments on behalf of the
Corporation. He shall perform such functions and duties as may be authorized by
the Board of Directors or delegated to him by the Chairman of the Board.
Section 4. Executive Vice President. The Executive Vice President shall
have the power to sign all stock certificates and contracts and execute bonds,
notes, mortgages and other instruments on behalf of the Corporation. He shall
perform such functions and duties as may be authorized by the Board of Directors
or designated to him by the Chairman of the Board.
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Section 5. Vice Presidents. The Vice Presidents shall perform such
duties and be designated such areas of responsibility as the Board of Directors
or Chairman of the Board of Directors shall prescribe.
Section 6. Treasurer. The Treasurer or any Assistant Treasurer
designated by the Board of Directors shall have the custody of all corporate
funds and securities and shall keep accurate accounts of receipts and
disbursements. The Treasurer and any Assistant Treasurer shall make such
disbursements of the funds of the Corporation as are proper and shall render
from time to time an account of all such transactions of the financial condition
of the Corporation.
Section 7. Secretary. The Secretary or any Assistant Secretary shall
issue all authorized notices for and attend all meetings of the stockholders and
Board of Directors and shall keep minutes of such meetings and record all votes
therein. The Secretary or any Assistant Secretary shall keep the seal of the
Corporation and, when authorized by the Board of Directors, affix the same to
any instrument requiring it and, when so affixed, it shall be attested by his
signature.
Section 8. Delegation of Authority. The Board of Directors may from
time to time delegate the powers or duties of any office to any other officer or
agent, notwithstanding any provision hereof. In the absence or disability of the
Chairman of the Board of Directors, the President and the Executive Vice
President, their duties shall be performed and their powers shall be exercised
by such person or persons as shall be exercised by such person or persons as
shall be designated by the Board of Directors.
Section 9. Removal. Any officer of the Corporation may be removed at any
time, with or without cause, by a majority of
the Board of Directors.
Section 10. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the Chairman of the Board,
or in his absence or disability, the President shall have the power to vote and
otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of the stockholders or with respect to any action of stockholders of any
other corporation in which the Corporation may hold securities and otherwise to
exercise any and all rights and powers which the Corporation may possess by
reason of its ownership of securities in such other corporations.
ARTICLE VI - INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. General Indemnity. The Corporation shall indemnify any
person who was or is a party or who is threatened to be made a party to any
threatened, pending or completed action, suit or proceedings, whether civil,
criminal, administrative or investigative (including any action or suit by or in
the right of the Corporation) by reason of the fact that he is or was a director
or officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer or trustee of another corporation, or of a
partnership, joint venture, trust, employee benefit plan, or other enterprise,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
suit, action or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; provided, however, that in
the case of an action or suit by or in the right of the Corporation, such person
shall be indemnified only to the extent of his expenses (including attorney's
fees) actually and reasonably incurred by him in connection with the defense or
settlement thereof, and no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless, and only to the extent that, the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the court shall deem proper.
The termination of any action, suit or proceeding (other than an action
by or in the right of the Corporation) by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he
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reasonably believed to be in or not opposed to the best interest
of the Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. To the extent that a
director or officer of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in this
provision, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred by him in connection therewith.
Any indemnification hereunder (unless required by law or ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director or officer is proper
in the circumstances because he has met the applicable standard of conduct set
forth in this provision. Such determination shall be made by (a) the Board of
Directors, by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders of the Corporation.
The indemnification provided herein shall not be deemed exclusive of
any other rights to which a person indemnified may be entitled under any
statute, bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director or officer of this Corporation and shall inure
to the benefit of the heirs, executors and administrators of such a person.
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer or trustee of
another corporation, or of a partnership, joint venture, trust, employee benefit
plan, or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of the General Corporation Law of the State
of Delaware or of these Bylaws.
The Corporation's indemnity of any person who is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer or trustee of another corporation, or of a
partnership, joint venture, trust, employee benefit plan, or other enterprise,
shall be reduced by any amounts such person may collect as indemnification (a)
under any policy of insurance purchased and maintained on his behalf by the
Corporation or (b) from such other corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise.
ARTICLE VII - STOCK
Section 1. Certificates of Stock. Each stockholder shall be entitled to
a certificate signed by, or in the name of the Corporation by, the Chairman of
the Board of Directors and/or the President, and by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer, certifying the number of
shares owned by him. Any and all of the signatures on the certificate may be a
facsimile.
Section 2. Transfers of Stock. Transfers of stock shall be made only
upon the transfer books of the Corporation kept at an office of the Corporation
or by the transfer agent designated to transfer shares of the stock of the
Corporation. Except where a certificate is issued in accordance with Section 3
of this Article, an outstanding certificate for the number of shares involved
shall be surrendered for cancellation before a new certificate is issued
therefor. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the Corporation or its agent to issue a new certificate to the person
entitled thereto.
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Section 3. Lost, Stolen or Destroyed Certificates. In the event of the
loss, theft or destruction of any certificate of stock, another may be issued in
its place upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing the issuance
of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates to give the
Corporation a bond, with acceptable surety in such sum as it may direct, as
indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
ARTICLE VIII - NOTICES
Section 1. Notices. Whenever notice is required to be given to any
stockholders, director, officer, or agent, such requirements shall not be
construed to mean personal notice. Unless otherwise stated herein, such notice
may in every incident be effectively given by depositing a writing in the United
States Mail, in a prepaid envelope or by dispatching a prepaid telegram,
addressed to such stockholder, director, officer or agent at his or her address
as the same appears in the books of the Corporation.
The time when such notice is dispatched shall be the time of the giving of the
notice.
Section 2. Waiver. Whenever any notice is required to be given under
the provisions of the Certificate of Incorporation, these Bylaws, or otherwise
required by law, a written waiver thereof, signed by the stockholder, director,
officer or agent, whether before or after the time of the event for which notice
is to be given, shall be deemed equivalent to the notice required to be given to
such person. Neither the business nor the purpose of any meeting need be
specified in such a waiver.
ARTICLE IX - MISCELLANEOUS
Section 1. Facsimile Signatures. In addition to the provisions for the
use of facsimile signatures elsewhere specifically authorized in these Bylaws,
facsimile signatures of an officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof.
Section 2. Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation, which seal shall be in
charge of the Secretary or an Assistant Secretary. Duplicates of the seal may be
kept and used by persons so designated by the Board.
Section 3. Reliance Upon Books, Reports and Records. Each director,
each member of any committee designated by the Board of Directors, and each
officer of the Corporation shall, in the performance of his duties, be fully
protected in relying in good faith upon the books of account or other records of
the Corporation, including reports made to the Corporation by any of its
officers, by an independent certified public accountant, or by an appraiser
selected with reasonable care.
Section 4. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
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ARTICLE X - AMENDMENTS
Section 1. Amendments. These Bylaws may be amended or repealed by the
majority vote of the Board of Directors at any regular or special meeting
thereof or by a majority of the voting stockholders at any regular or special
meeting thereof at which a quorum is present, provided notice of the proposed
amendment or repeal is contained in the notice of such meeting.
The foregoing are certified to be the true and complete Amended and
Restated Bylaws of the UCI Medical Affiliates, Inc. as adopted by the Board of
Directors as of November 23, 1993.
/s/ M.F. McFarland
M.F. McFarland - Secretary
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EXHIBIT NO. 10.1
FACILITIES AGREEMENT
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21 June, 1985
FACILITIES AGREEMENT
8 May, 1984
Parties: Doctor's Care, P.A. (PA) and UCI Medical Affiliates of South
Carolina (UCI) for the use of UCI's facilities and equipment
by PA.
Term: The Agreement shall commence on the Closing Date of the Assets
Purchase Agreement and run for five years.
Additional Clinics: Upon the mutual agreement of UCI and PA, additional
clinics may be included in the Agreement and shall be listed
and initialed on an Exhibit attached to the Agreement.
Equitable Relief: Both UCI and PA shall be entitled to injunctive and/or
other equitable relief to prevent breach of the Agreement.
Waiver: The failure to enforce provisions or require performance under the
Agreement by either UCI or PA shall not be construed to be a waiver of that
provision or affect the validity of the Agreement.
Invalidity: The invalidity or unenforceability of any provisions of the
Agreement shall not affect the other provisions of the Agreement.
Governing Law: The Agreement shall be governed and interpreted in
accordance with the laws of the State of South Carolina.
Amendments: No modification, amendment or waiver of any provision of the
Agreement will be effective unless it is in writing and signed by both parties.
Entire Agreement: The Agreement shall constitute the entire agreement of
the parties.
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DUTIES AND RESPONSIBILITIES OF UCI
1. UCI shall make available the facilities, equipment and assets of the
Clinics to PA for PA's use.
2. UCI shall provide (at its own expense) additional equipment, secretarial,
bookkeeping, accounting and other non-medical personnel as required by PA
to operate the Clinics.
3. UCI shall provide PA with two Cadillac Sevilles (or comparable automobiles)
for use by PA's Professionals, and shall pay all operating expenses for
these automobiles. These automobiles shall be replaced at least every three
years, and PA shall have the right to purchase them at depreciated book
value. (NOTE, this provision has been superceded by the employment
agreements included as Exhibits 10.4 and 10.5.)
4. UCI may terminate the Agreement upon thirty (30) days written notice only
for "good cause" , i.e., failure by PA to provide the agreed operation of
the Clinics and/or to perform other duties or to willfully violate any
terms of the Agreement. UCI may also terminate within thirty (30) days
after the death of or loss of license of M.F. McFarland.
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DUTIES AND RESPONSIBILITIES OF PA
1. PA shall provide all medical and medically related services at UCI's
Clinics and shall:
a. approve, hire, supervise, evaluate and terminate all medically related
personnel;
b. purchase, control, prescribe and dispense all drugs;
c. select and approve all medically related supplies and equipment;
d. monitor the quality of medical care provided at the Clinics, and
assure that such care meets currently accepted standards of medical
competence according to currently approved methods and practices
(including peer review) in the medical profession; and,
e. establish fees for all services at the Clinics consistent with normal
charges rendered for such services in the community; PA shall also bill all
fees in PA's name.
2. PA shall provide a physician to serve as Executive Medical Director of
the Clinics who shall have overall responsibility for the operation of
the Clinics by PA, who shall be acceptable to UCI, and who shall
perform by devoting such time and effort to providing services to best
assure efficient operation and quality rendition of medical services to
the patients at the Clinics.
PA shall also provide a Professional to serve as Medical Director of
each individual Clinic, and Professionals to provide medical services
at the Clinics.
3. PA shall use best efforts to provide Professionals at the Clinics
during all regular hours of operation established by PA in consultation
with UCI.
PA shall be solely responsible for the work schedules of all medically
related personnel.
PA shall have full control over all activities relating to the practice
of medicine by the Professionals; UCI shall have no control over the
methods by which any medical or medically related services are to be
performed at the Clinics; UCI shall not interfere with freedom to
prescribe rules or control the manner in which services are to be
performed at the Clinics.
PA shall indemnify and hold harmless UCI for claims of medical
malpractice against PA's Professionals.
4. PA and/or the individual Professionals shall be solely responsible for
payment of unemployment and workmen's compensation insurance, pensions,
annuities or other benefits to the Professionals and other medically
related personnel at the Clinics.
5. Fees, Billing Etc.:
PA shall be solely responsible for billing and collecting all fees from
patients.
PA shall retain from total fees $200 per month, and an amount equal to
the cost of all narcotic drugs for the previous month, and an amount
sufficient to pay all payroll, and payroll costs, professional
liability insurance and reasonable disability and health insurance
relating to PA's Professionals and other non-physician medical
personnel.
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The excess shall be paid over to UCI by PA on a bi-weekly basis as
payment for the use of UCI's facilities, equipment and assets, and
other non-medical services provided to PA by UCI employees. UCI shall
have the right at least annually to have its certified public
accountants review PA's books.
Amendment of 24 September 1984: Should total fees collected by PA at
any time not be sufficient for PA to pay wages, salaries and other
compensation of Professionals and other medically related personnel
employed by or under contract with PA, UCI shall, within five days
written notice by PA of the amount of such insufficiency and
documentation reasonably required by UCI, pay over to PA an amount
sufficient to pay such wages, salaries and compensation.
6. Books, Office Equipment, Records, Etc.:
All professional instruments, books, office equipment, narcotic drugs
or medications requiring a prescription shall at all times remain PA's
property.
All patient records shall at all times remain PA's property except that
upon termination of the Agreement, PA shall provide any successor
professional association at the Clinics copies of such medical records
within 90 days after the termination upon request by the successor.
7. Non-Competition:
PA agrees that for seven years after the date of the Agreement neither
PA nor its stockholders shall:
a. induce or attempt to influence any person rendering medical or
management services at any UCI facility to cease rendering such services; or
b. engage in, enter the employ of, or be financially interested in any
corporation, partnership or professional association owning or
operating any primary care facility or substantially similar practice
(excluding hospital emergency rooms) within ten miles of any UCI
facility or any such facility which UCI has taken definite action to
acquire, construct or operate. PA and its stockholders are not
restricted from owning up to one (1%) percent of the corporate
securities of any competitor of UCI listed on any national securities
exchange or traded over-the-counter.
8. Non-Disclosure:
PA shall take reasonable precautions to assure confidentiality of all
books, records, documents, and materials relating to the Clinics, and
to reasonably maintain in confidence all information obtained from UCI
during the Agreement.
9. Termination:
After reasonable written notice, PA may terminate the Agreement upon
repeated failure by UCI to provide facilities, equipment or services
necessary for PA to operate Clinics as primary care facilities, or for
UCI's willful violation of any term of the Agreement.
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EXHIBIT NO. 10.2
FACILITIES FEE REFUND AGREEMENT
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NOTE: THIS AGREEMENT WAS TERMINATED ON OCTOBER 1, 1995.
21 June, 1985
FACILITIES FEE REFUND AGREEMENT
8 May, 1984
Parties: UCI Medical Affiliates, Inc. (UCI), UCI Medical Affiliates of
South Carolina, Inc. (UCISC) and Doctor's Care, P.A. (PA).
Fee Refund: UCISC shall refund to PA 25% of the annual pre-tax profits arising
directly out of the operations of the Northeast (NE) and Columbia East (CE)
Clinics from the fee paid to UCISC under the Facilities Agreement dated 8 May,
1984. In addition, PA shall receive a refund of 35% of the annual pre-tax
profits after a reduction of $82,000 for NE and $88,000 for CE. With respect to
NE, the additional 35% of pre-tax profit above $82,000 will not be effective
until five years after the merger of NE with UCISC.
UCISC shall also refund, from the fee paid to it under the Facilities Agreement,
35% of the annual pre-tax profits arising directly out of the operations of
Clinics other than NE and CE after a reduction of $180,000 for the Seven Oaks
Clinic (SO) and a 20% return on investment for any new Clinic (including the
cost of all assets acquired and working capital advanced until the Clinic can
fund its own operations).
These calculations shall be made annually within 120 days after the close of
UCISC's fiscal year, and shall be based on financial statements prepared by
UCISC's regularly employed CPA.
Payment of any facilities fee refund shall be made by UCISC within 30 days
following the annual determination of pre-tax profits of the respective Clinics.
For any period less than 12 months, the formula for determining annual pre-tax
profits and reductions before which PA becomes eligible for the additional 35%
refund, shall be prorated.
Amendment of 24 September, 1984: The refund amounts shall be paid to PA based on
the pre-tax profits of the respective Clinics regardless of the fee paid over to
UCISC under the Facilities Agreement. Billings generated by a particular clinic
will be used to the extent necessary to pay wages, salaries and other
compensation to Professionals and other medically related personnel employed at
existing clinics and clinics opened after the execution of this Agreement.
Term: The rights of PA under the Agreement shall continue for the duration of
the Facilities Agreement (five years from Closing Date of Assets Purchase
Agreement).
Notices: All notices, requests, demands and other communications shall be
in writing to be deemed duly given.
Assignment: The rights of PA under the Agreement are not assignable in
whole or in part without the reasonable written consent of UCISC.
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EXHIBIT NO. 10. 3
AMENDMENTS TO FACILITIES AGREEMENT
AND
FACILITIES FEE REFUND AGREEMENT
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NOTE: THIS AGREEMENT WAS TERMINATED ON OCTOBER 1, 1995.
AMENDMENT TO FACILITIES AGREEMENT
AND
FACILITIES FEE REFUND AGREEMENT
Agreement dated as of the 24th day of September, 1984, between UCI Medical
Affiliates of South Carolina, Inc. ("Company"), a South Carolina corporation and
a wholly owned subsidiary of UCI Medical Affiliates, Inc. ("UCI"), and Doctor's
Care, P.A. ("PA") of South Carolina.
It is agreed that all provisions of the 1984 and Amendment shall remain in place
and that the following new provisions shall be added to the agreement and by
signature, each party is indicating their acceptance and ratification of the new
changes and the original/amended agreements.
(A) Additional compensation
1. Whereas, the Company does acknowledge the effort provided by the
PA, the Company wishes to recognize the results and provide the
following plan for the payment of the additional compensation:
a) All "Doctor's Care" facilities shall show a return on the
investment before calculation of any additional compensation being
paid to PA.
BASE PERCENTAGE
Seven Oaks $135,000 35%
Northeast 60,000 35%
60,000 25%
Columbia East - 0 - 50%
Lexington 22,500 35%
Forest Acres - 0 - 35%
Sumter 12,000 35%
West Columbia - 0 - 35%
Beltline - 0 - 25%
West Wateree - 0 - 25%
West Ashley - 0 - 25%
Northwoods - 0 - 25%
Summerville - 0 - 25%
East Blackstock - 0 - 25%
Greenville - 0 - 25%
Upon the completion of the year end audit by the outside auditors,
the calculation shall be made for the amount of facility fee to be
due to PA.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date of October 1, 1989.
UCI MEDICAL AFFILIATES, INC.
WITNESS: /s/ John Bright /s/ M.F. McFarland
DOCTOR'S CARE, PA
WITNESS: /s/ John Bright /s/ M.F. McFarland
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AMENDMENT TO FACILITIES AGREEMENT
AND
FACILITIES FEE REFUND AGREEMENT
Agreement dated as of the 24th day of September, 1984, between UCI Medical
Affiliates of South Carolina, Inc. ("Company"), a South Carolina corporation and
a wholly owned subsidiary of UCI Medical Affiliates, Inc. ("UCI"), and Doctor's
Care, P.A. ("PA"), of South Carolina.
In consideration of the Agreement of PA to utilize facilities, equipment and
other assets of the Company in South Carolina pursuant to the Facilities
Agreement between PA and Company dated September 24, 1984 (the "Facilities
Agreement"), Company and PA agree as follows:
1. PA and Company shall contemporaneously herewith execute the Facilities
Agreement and Facilities Fee Refund Agreement.
2. Should total fees collected by PA pursuant to the Facilities Agreement at
any time not be sufficient for PA to pay wages, salaries and other
compensation, including withholding, etc., for Professionals and other
medically related personnel employed by or under contract with PA, Company
shall, within five (5) days of written notice by PA of the amount of such
insufficiency and such documentation as may be reasonably required by
Company, pay over to Company an amount sufficient to enable PA to pay such
wages, salaries and other compensation.
3. Company agrees that the amounts to be paid pursuant to paragraph 1 of the
Facilities Fee Refund Agreement shall be paid to PA based upon the pre-tax
profit of the respective clinics regardless of the fee actually paid over
to Company under the Facilities Agreement, it being understood and agreed
by the parties that billings generated by a particular clinic will be used
to be extent necessary to pay wages, salaries and other compensation
required to be paid to Professionals and other medically related personnel
employed at existing clinics and clinics opened subsequent to the execution
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Attest: UCI MEDICAL AFFILIATES, INC.
/s/ Jack Cheek By: /s/ Herbert Zlotnick
Secretary Its: Chairman of the Board
UCI MEDICAL AFFILIATES OF
SOUTH CAROLINA, INC.
/s/ Jack Cheek By: /s/ Herbert Zlotnick
Secretary Its: President
DOCTOR'S CARE, P.A.
/s/ Gerald A. Fishman By: /s/ M.F. McFarland
Secretary Its: President
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EXHIBIT 10. 4
EMPLOYMENT AGREEMENT BETWEEN
UCI MEDICAL AFFILIATES OF SOUTH CAROLINA, INC.
AND
M.F. MCFARLAND, III, M.D.
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EMPLOYMENT AGREEMENT
This Employment Agreement is made as of the 1st day of October, 1995, by
and between UCI Medical Affiliates of South Carolina, Inc., a South Carolina
Corporation (UCI), and M. F. McFarland, III, M. D. ("McFarland").
WHEREAS, UCI desires to employ McFarland, and McFarland desires to be
employed by UCI, in accordance with the terms and conditions hereinafter set
forth:
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be legally bound, agree
as follows:
1. Employment. UCI hereby agrees to employ McFarland to perform the duties
described in Section 3 below subject to and in accordance with the terms and
conditions hereof, and McFarland hereby accepts such employment.
2. Term. The employment shall commence on the date hereof, and shall
continue for a period of Five (5) years unless earlier terminated in accordance
with the provisions of Section 8 of this Agreement.
3. Duties of McFarland.
A. In accepting employment by UCI, McFarland shall undertake
and assume the responsibility of performing for and on behalf of UCI the duties
of the President and Chief Executive Officer of UCI in Columbia, South Carolina.
Except with his written consent, McFarland shall not be permanently assigned to
(i) any position of lower professional status, or (ii) a location outside of
Richland or Lexington Counties, South Carolina.
B. Other than McFarland's duties as an employee of Doctor's
Care, P.A., McFarland shall be a full-time employee of UCI, and shall devote his
full working time and efforts to his duties hereunder. McFarland shall perform
all of his duties hereunder to the best of his ability and shall not, directly
or indirectly, engage or participate in any activities in conflict with the best
interests of UCI. Without limiting the generality of the foregoing, McFarland
shall not engage in any activity for compensation or pecuniary gain other than
his employment hereunder, his association with Doctor's Care, P.A., and passive
investing for the account of himself or members of his household. McFarland
agrees that his total compensation for his service to UCI shall be described in
Section 4 of this Agreement.
McFarland has entered into a separate Employment Agreement with
respect to his association with Doctor's Care, P.A. His compensation for
services to Doctor's Care, P.A. is described in Section 4 of that Agreement.
McFarland agrees that his total compensation for his service to Doctor's Care,
P.A. is set forth in Section 4 of that Agreement.
4. Compensation. As compensation for the services to be rendered by
McFarland for UCI under this Agreement, McFarland shall be compensated by UCI on
the following basis:
A. Base Salary. During the term of this Agreement, McFarland shall receive
from UCI an annual salary of One Hundred Fifty-Seven Thousand Five Hundred and
No/100 ($157,500), payable in pay periods as determined by UCI, but in no event
less frequently than monthly, subject to an annual increase upon approval by the
Board of Directors.
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B. Dues. During the term of this Agreement, UCI shall pay all dues of
McFarland as a member of one private club not to exceed Five Hundred Dollars and
No/100 ($500.00) per month for the purpose of entertainment of UCI's clients in
connection with the performance of McFarland's duties.
C. Vacation. During the term of this Agreement, McFarland shall be
entitled to a total of thirty (30) business days of paid leave to attend
conventions and professional meetings and vacation time each calendar year.
Such vacation and leave days are to be taken at such time or times as
McFarland may reasonably request, subject to UCI's convenience and prior
approval, which approval shall not be unreasonably withheld. Vacation and leave
time may cumulate year-to-year up to a maximum of 60 days.
D. Automobile. During the term of this Agreement, UCI shall provide to
McFarland the use of one (1) automobile.
E. Reimbursement for Expenses. During the term of this Agreement, UCI
shall reimburse McFarland for all reasonable expenses in an aggregate amount
equal to, or less than Seven Thousand five hundred dollars and No/100
($7,500.00) per annum incurred by McFarland for the benefit of UCI in the
performance of his duties hereunder. Reimbursement for aggregate expenses each
calendar year in excess of such amount shall require the prior written approval
of the Board of Directors of UCI.
F. Other Benefits. During the term of McFarland's employment with UCI,
McFarland shall receive from UCI such other benefits (e.g. health insurance
coverage, life insurance coverage, participation in pension plans, and
participation in stock option plans, etc.) reasonably comparable to, and no
worse than, those benefits, if any, generally provided to other senior
executives of UCI. Additionally, during his employment with UCI, McFarland will
be provided at UCI's costs, with a term life insurance policy that at the time
of McFarland's death will pay One Million Dollars ($1,000,000) to his spouse or
other designated beneficiary(s).
G. Incentive Bonus. On or about the end of UCI's fiscal year, the Board
shall determine what, if any, Incentive Bonus payment shall be made to
McFarland. This Incentive Bonus payment, if any, shall be based on two
variables: UCI's Net Income (Loss) for the previous fiscal year and the Gross
Revenue for the same year, as set forth in Addendum A, which is attached hereto.
The attached Addendum specifies the total Incentive Bonus, if any, to be paid to
McFarland under differing scenarios based on UCI's Net Income (Loss) and Gross
Revenue for the previous year. The Board, in making its decision as to what, if
any, Incentive Bonus shall be paid to McFarland, shall be governed by Addendum
A, and shall have no authority to alter or deviate from the amount, if any, of
the Inventive Bonus payment mandated by the Net Income/Gross Revenues grid in
Addendum A. In the event UCI pays McFarland an Incentive Bonus, payment shall be
in the form of cash.
H. Discretionary Bonus. On or about the end of UCI's fiscal year, the
Board shall, in its sole discretion, determine whether or not McFarland is to
be awarded a discretionary bonus, not to exceed 10% of his annual base salary.
This Discretionary Bonus, if any, shall be in addition to, and distinct from
any other compensation or bonus payment to McFarland, provided, however,
nothing contained herein shall be construed in any way to obligate UCI to pay
a Discretionary Bonus to McFarland. The factors to be reviewed by the Board
in determining whether or not a Discretionary Bonus, if any, shall be paid to
McFarland shall include the following:
1. McFarland's ability and success in recruiting and retaining quality
physicians.
2. McFarland's ability and success in recruiting and retaining a quality
senior management team.
3. McFarland's ability and success in positioning UCI for implementation of
managed care.
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4. McFarland's ability and success in developing a long-term strategic plan
for UCI.
In the event UCI pays McFarland a Discretionary Bonus, payment shall be in the
form of cash.
5. Confidentiality and Secrecy. McFarland acknowledges that in and
as a result of his employment hereunder, he will be making use of, acquiring,
and/or adding to confidential information of a special and unique nature and
value relating to UCI business, including without limitation technological
know-how, copyrights, proprietary information, trade secrets, systems,
procedures, manuals, confidential reports, records, operational expertise, lists
of customers and projects, the nature and type of services rendered by UCI, the
equipment and methods used and preferred by UCI customers, and the fees paid by
inducement to UCI to enter into this Agreement and to pay to McFarland the
compensation stated in Section 4 herein, McFarland covenants and agrees that
during the term of his employment hereunder, and for five (5) years after the
termination thereof, he shall not, directly or indirectly, make use of, or
disclose to any person, any confidential information of UCI or its affiliates.
McFarland agrees that he will never disclose trade secrets of UCI and assigns
his rights to confidential information as "work made for hire" to UCI.
6. Covenants Against Competition. In view of the unique value to
UCI of the services of McFarland for which UCI has contracted hereunder, because
of the confidential information to be obtained by or disclosed to McFarland, as
herein above set forth, and because McFarland's employment hereunder will result
in McFarland's development of a unique relationship with customers, suppliers
and employees as a material inducement to UCI to enter into this Agreement and
to pay to McFarland the compensation stated in Section 4 hereof, McFarland
covenants and agrees as follows:
A. During McFarland's employment hereunder, and for a period
of two (2) years after the termination of McFarland's employment hereunder for
any reason, McFarland shall not directly or indirectly solicit or divert
employment of any employee of UCI's business or employ any person previously
employed by UCI or its affiliates.
B. During McFarland's employment hereunder, and for a period
of two (2) years after the termination of McFarland's employment whereunder for
any reason, McFarland shall not directly or indirectly solicit, divert, or
convert, or assist another person or entity to solicit, divert or convert, the
customers of UCI or its affiliates to any other company or entity.
C. During McFarland's employment hereunder, and for a period
of two (2) years after the termination of McFarland's employment with UCI,
McFarland shall not within the geographic area specified below engage in any
business or perform any services, directly or indirectly, in competition with
the business of UCI or its affiliates or have any interest, whether as a
proprietor, partner, employee, stockholder (directly or beneficially),
principal, agent, consultant, director, officer or in any other capacity or
manner whatsoever, in any enterprise that shall so engage, except that McFarland
shall be permitted to own for investment purposes only, directly or
beneficially, up to (but not more than) 2% in the aggregate of the stock of a
competing corporation which is publicly-traded on a national stock exchange or
the NASDAQ National Market System, so long as McFarland is not a controlling
person of, or a member of a group that controls, such corporation and McFarland
is not otherwise affiliated in any capacity with such corporation. The
restrictions to this Section 6(C) shall apply everywhere within a five (5) mile
radius of (i) any primary or urgent care facility owned or operated by UCI or an
affiliate, and (ii) each other location where UCI or any affiliate maintains an
office, in existence as of the date of such termination.
7. Reasonableness, Enforceability and Remedies.
A. McFarland has carefully read and considered the provisions
of Section 5, 6 and 7, and, having done so, agrees that the restrictions set
forth in these Sections, including, but not limited to, the time period of
restriction and geographic limitations set forth in Section 6, are fair and
reasonable and are reasonably required for the protection of the interest of UCI
and its officers, directors, shareholders, employees, and affiliates.
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B. In the event that, notwithstanding the foregoing, any of
the provisions of Sections 5, 6 and 7 hereof or any parts thereof shall be held
to be invalid or unenforceable, the remaining provisions or parts thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable portions or parts had not been included therein. In the event that
any provision of Sections 5 and 6 hereof relating to the time period and/or
geographic restrictions and/or related aspects shall be declared by a court of
competent jurisdiction to exceed the maximum restrictiveness such court deems
reasonable and enforceable, the time period and/or geographic restrictions
and/or related aspects deemed reasonable and enforceable by the court shall
become and thereafter be the maximum restriction in such regard, and the
restriction shall remain enforceable to the fullest extent deemed reasonable by
such court.
C. McFarland acknowledges that the services he is to render
are of a special and unusual character with a unique value to UCI and its
affiliates, the loss of which cannot adequately be compensated by damages in an
action at law. In the event of a breach or threatened breach by McFarland of any
of the provisions of Section 5 or 6 hereof, UCI or its affiliates, in addition
to and not in limitation of, any other rights, remedies, or damages available to
UCI or its affiliates under this Agreement, shall be entitled to a permanent
injunction in order to prevent or restrain any such breach by McFarland or by
McFarland's partners, agents, representatives, servants, employees, consulting
clients, and/or any and all persons directly or indirectly acting for or with
him.
D. McFarland covenants and agrees that if he shall violate any
of his covenants or agreements under Section 5 or 6 hereof, UCI or its
affiliates shall be entitled to: (i) an accounting and repayment of all profits,
compensation, commissions, remuneration, or other benefits that McFarland
directly or indirectly has realized and/or may realize as a result of, growing
out of, or in connection with, any such violation; (ii) recover actual damages
incurred by UCI or its affiliates as a result of any such violation; (iii) any
injunctive relief to which UCI or its affiliates is or may be entitled by law,
in equity, or under this Agreement; and (iv) exercise its other rights
respecting a breach of this Agreement as set forth herein.
E. McFarland's obligations under Section 5 and 6 hereof shall survive any
termination of employment hereunder.
8. Termination
A. For Cause by UCI. Notwithstanding any other provisions
hereof, UCI may terminate McFarland's employment under this Agreement
immediately at any time for "cause". For purposes hereof the term "cause" shall
include, but not limited to, the commission of any of the following by
McFarland: dishonesty: theft; unethical business conduct; indictment for a
felony; incompetence in the performance of material duties on behalf of UCI;
violation of the terms and provisions of this Agreement; willful or recurring
insubordination; failure to attempt, in good faith, to comply with reasonable
instructions of UCI; if McFarland's license to practice medicine in the State of
South Carolina is revoked or otherwise terminated; or if McFarland fails to
follow accepted medical practices or is guilty of misconduct under the
principles of medical ethics of the American Medical Association. All
compensation (including without limitation the Base Salary, and all
prerequisites and fringe benefits) to which McFarland would otherwise be
entitled shall be discontinued and forfeited as of the effective date of such
termination.
B. Without Cause by UCI. UCI may terminate this Agreement
"without cause" at any time upon written notice to McFarland. In the event of
such termination, McFarland shall be paid a lump sum severance payment equal to
two (2) times his last 2 years of Base Salary plus Incentive and Discretionary
Bonuses. All other compensation (including without limitation any prerequisites
and fringe benefits, if any) to which McFarland would otherwise be entitled (for
periods after the effective date of such termination) shall be discontinued and
forfeited as of the effective date of such termination.
C. Termination by McFarland. McFarland may with or without cause terminate
this Agreement upon (60) days prior written notice to UCI. In the event of such
termination, all
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compensation (including without limitation the Base Salary and any
prerequisites and fringe benefits, if any) to which McFarland would otherwise be
entitled (for periods after the effective date of the termination) shall be
discontinued and forfeited as of the effective date of such termination.
D. Disability. In the event of McFarland's disability during
employment under this Agreement, then employment under this Agreement shall
terminate. For purposes of this Agreement, except as provided herein below,
"disability" shall mean the inability of McFarland, due to sickness or other
incapacity, to perform his duties under his Agreement for a period in excess of
one hundred and eighty (180) substantially consecutive days. Such termination
shall become effective at UCI's election upon the expiration of such one hundred
and eighty (180) day period of disability. Upon termination of employment under
this Agreement due to McFarland's disability, McFarland shall be entitled to
payment of his Base Salary up to the date of termination.
E. Death. In the event McFarland dies during this term of this Agreement,
this Agreement shall terminate and UCI shall pay to McFarland's estate all Base
Salary accrued but unpaid through the date of McFarland's death.
9. Burden of Benefit. This Agreement shall be binding upon, and shall inure
to the benefit of UCI, McFarland, UCI's affiliates, and their respective heirs,
personal and legal representatives, successors, and assigns.
10. Assignment. This Agreement and any rights hereunder are personal to
McFarland and shall not be assigned or otherwise transferred by McFarland.
11. Governing Law/Jurisdiction. The construction and interpretation of
this Agreement shall at all times and in all respects be governed by the laws
of the State of South Carolina. McFarland and UCI hereby (i) agree that any
litigation, action or proceeding arising out of or relating to this Agreement
may be instituted in a state or federal court in Columbia, South Carolina,
(ii) waives any objection which it might have now or hereafter to any
litigation, action or proceeding based upon improper venue or inconvenient
forum, and (iii) irrevocably submits to the jurisdiction of such courts in
any such litigation, action or proceeding. For all purposes of this Agreement,
McFarland and UCI hereby further agree that service of process upon McFarland
and UCI may be affected pursuant to United States mail.
12. Usage. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Terms such as "hereof", "herein",
and words of similar import shall refer to this Agreement in its entirety and
all references shall refer to specified portions of this Agreement, unless the
contest clearly requires otherwise.
13. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect validity and enforceability of the
other provisions.
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14. Notice. Any notice, request, approval, consent, demand or other
communication hereunder shall be effective if in writing and upon the first to
occur of the following: (i) upon receipt by the party to whom such notice,
request, approval, consent, demand or other communications being given; or (ii)
three (3) business days after being duly deposited in the U. S. Mail,
certified, return receipt requested, and addressed as follows:
McFarland M. F. McFarland, III, M. D.
6168 St. Andrews Road
Columbia, S. C. 29212
UCI: UCI Medical Affiliates of South Carolina, Inc.
6168 St. Andrews Road
Columbia, S. C. 29212
Attn: Stephen Seeling, Esquire
The parties hereto may change their respective addresses by notice in writing
given to the other parties of this Agreement.
15. Entire Agreement. This Agreement contains the entire agreement
and understanding by and between UCI and McFarland with respect to the
employment of McFarland, and no representations, promises, agreements, or
understandings, written or oral not contained herein shall be of any force or
effect. No change or modification of this Agreement shall be valid or binding
unless it is in writing and signed by the party intended to be bound. No waiver
of any provision of this Agreement shall be valid unless it is in writing and
signed by the party against whom the waiver is sought to be enforced. No valid
waiver of any provision of this Agreement at any time shall be deemed a waiver
of any other provision of this Agreement at such time or at any other time.
IN WITNESS WHEREOF, UCI and McFarland have duly executed this
Agreement under seal to be effective as of the day and year first above written.
IN THE PRESENCE OF: UCI:
/s/ Patricia J. Hammond UCI MEDICAL AFFILIATES OF SOUTH
Witness CAROLINA, INC. (SEAL)
/s/ Stephanie Davenport By: /s/ Stephen Seeling
Witness Its: Chief Operating Officer & Counsel
MCFARLAND:
/s/Patricia J. Hammond /s/ M.F. McFarland, III, M.D. (SEAL)
Witness M. F. McFarland, III, M.D.
/s/ Stephanie Davenport
Witness
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ADDENDUM A
BONUS GRID
<TABLE>
<CAPTION>
- ----------------------
REVENUE
- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
$40,000,000 $0 $110,000 $135,000 $160,000 $185,000 $210,000 $240,000 $270,000 $300,000
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
$35,000,000 $0 $85,000 $110,000 $135,000 $160,000 $185,000 $210,000 $250,000 $285,000
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
$30,000,000 $0 $0 $85,000 $110,000 $135,000 $160,000 $185,000 $230,000 $270,000
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
$25,000,000 $0 $0 $60,000 $85,000 $110,000 $135,000 $160,000 $210,000 $255,000
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
$20,000,000 $0 $0 $35,000 $60,000 $85,000 $110,000 $135,000 $185,000 $240,000
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET INC / (LOSS) ($500,000) $0 $250,000 $750,000 $1,250,000 $1,750,000 $2,250,000 $2,750,000 $3,250,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-79-
<PAGE>
EXHIBIT NO. 10.5
EMPLOYMENT AGREEMENT BETWEEN DOCTOR'S CARE, P.A.
AND
M.F. MCFARLAND, III, M.D.
-80-
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement is made as of the 1st day of October 1995, by and
between Doctor's Care, P.A., a South Carolina professional corporation
("Employer"), and M.F. McFarland, III, M.D. ("McFarland") .
WHEREAS, Employer is a South Carolina professional association and is
authorized to engage in the practice of medicine in South Carolina through
individuals so licensed in South Carolina; and
WHEREAS, Employer desires to employ McFarland, and McFarland desires to
be employed by Employer, in accordance with the terms and conditions hereinafter
set forth:
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be legally bound, agree
as follows:
1. Employment. Employer hereby agrees to employ McFarland to perform the
duties described in Section 3 below subject to and in accordance with the terms
and conditions hereof, and McFarland hereby accepts such employment.
2. Term. The employment shall commence on the date hereof, and shall
continue for a period of five ( 5 ) years unless earlier terminated in
accordance with the provisions of Section 8 of this Agreement.
3. Duties of McFarland.
A. In accepting employment by Employer, McFarland shall
undertake and assume the responsibility of performing for and on behalf of
Employer the duties of the President of Employer in Columbia, South Carolina.
Except with his written consent, McFarland shall not be permanently assigned to
(i) any position of lower professional status, or (ii) a location outside of
Richland or Lexington Counties, South Carolina.
B. Other than McFarland's duties as an employee of UCI Medical
Affiliates of South Carolina, Inc., during the term of this Agreement McFarland
shall be a full-time employee of Employer, and shall devote his full working
time and efforts to his duties hereunder. McFarland shall perform all of his
duties hereunder to the best of his ability and shall not, directly or
indirectly, engage or participate in any activities in conflict with the best
interests of Employer, and will conduct all activities in strict loyalty to
Employer. Without limiting the generality of the foregoing, McFarland shall not
engage in any activity for compensation or pecuniary gain other than his
employment hereunder, his employment with UCI Medical Affiliates of South
Carolina, Inc., and passive investing for the account of himself or members of
his household.
4. Compensation. As compensation for the services to be rendered by
McFarland for Employer under this Agreement, McFarland shall be compensated by
Employer on the following basis:
-81-
<PAGE>
A. Base Salary. During the term of this Agreement, McFarland shall receive
from Employer an annual salary of One Hundred Fifty-Seven Thousand Five Hundred
Dollars and No/100 ($157,500.00 ). Dollars payable in pay periods as determined
by the Employer, but in no event less frequently than monthly.
B. Vacation. During the term of this Agreement, McFarland
shall be entitled to a total of thirty (30) business days of paid leave to
attend conventions and professional meetings and vacation time each calendar
year. Such vacation and leave days are to be taken at such time or times as
McFarland may reasonably request, subject to the Employer's convenience and
prior approval, which approval shall not be unreasonably withheld. Vacation and
leave time may cumulate year to year up to a maximum of 60 days.
C. Other Benefits. During the term of this Agreement, McFarland shall
receive from Employer such other benefits (e.g., health insurance coverage, life
insurance coverage, participation in pension plans, and participation in stock
option plans, etc. ) reasonably comparable to, and no worse than, those
benefits, if any, generally provided to other senior executives of Employer.
The compensation stated above is intended to be the total compensation
paid to McFarland.
5. Confidentiality and Secrecy. McFarland acknowledges that in and as a
result of his employment hereunder, he will be making use of, acquiring, and/or
adding to confidential information of a special and unique nature and value
relating to Employer's business, including without limitation technological
knowhow, copyrights, proprietary information, trade secrets, systems,
procedures, manuals, confidential reports, records, operational expertise, lists
of customers and projects, the nature and type of services rendered by Employer,
the equipment and methods used and preferred by Employer's customers, and the
fees paid by them (all of which are deemed for all purposes confidential and
proprietary). As a material inducement to Employer to enter into this Agreement
and to pay to McFarland the compensation stated in Section 4 herein, McFarland
covenants and agrees that during the term of his employment hereunder, and for
five (5) years after the termination thereof, he shall not, directly or
indirectly, make use of, or disclose to any person, any confidential information
of Employer or its affiliates.
6. Covenants Against Competition. In view of the unique value to
Employer of the services of McFarland for which Employer has contracted
hereunder, because of the confidential information to be obtained by or
disclosed to McFarland, as hereinabove set forth, and because McFarland's
employment hereunder will result in McFarland's development of a unique
relationship with customers, suppliers and employees, as a material inducement
to Employer to enter into this Agreement and to pay to McFarland the
compensation stated in Section 4 hereof, McFarland covenants and agrees as
follows:
A. During McFarland's employment hereunder, and for a period
of two (2) years after the termination of McFarland's employment hereunder for
any reason, McFarland shall not directly or indirectly solicit or divert
employment of any employee of Employer's business or employ any person
previously employed by Employer or its affiliates.
B. During McFarland's employment hereunder, and for a period
of two (2) years after the termination of McFarland's employment hereunder for
any reason, McFarland
-82-
<PAGE>
shall not directly or indirectly solicit, divert, or convert, or assist
another person or entity to solicit, divert or convert, the customers of
Employer or its affiliates to any other company or entity.
C. During McFarland's employment hereunder, and for a period
of one (1) year after the termination of McFarland's employment with Employer
for any reason, McFarland shall not within the geographic area specified below
engage in any business or perform any services, directly or indirectly, in
competition with the business of Employer or its affiliates or have any
interest, whether as a proprietor, partner, employee, stockholder (directly or
beneficially), principal, agent, consultant, director, officer, or in any other
capacity or manner whatsoever, in any enterprise that shall so engage; except
that McFarland shall be permitted to own for investment purposes only, directly
or beneficially, up to (but not more than) 2% in the aggregate of the stock of a
competing corporation which is publicly-traded on a national stock exchange or
the NASDAQ National Market System, so long as McFarland is not a controlling
person of or a member of a group that controls, such corporation and McFarland
is not otherwise affiliated in any capacity with such corporation. The
restrictions of this Section 6(C) shall apply everywhere within a five (5) mile
radius of (i) any primary or urgent care facility owned or operated by Employer
or an affiliate, and (ii) each other location where Employer or any affiliate
maintains an office, in existence as of the date of such termination.
7. Reasonableness, Enforceability and Remedies.
A. McFarland has carefully read and considered the provisions
of Section 5,6, and 7, and , having done so, agrees that the restrictions set
forth in these Sections, including, but not limited to, the time period of
restriction and geographic limitations set forth in Section 6, are fair and
reasonable and are reasonably required for the protection of the interest of
Employer and its officers, directors, shareholders, employees, and affiliates.
B. In the event that, notwithstanding the foregoing, any of
the provisions of Sections 5, 6, or 7 hereof or any parts thereof shall be held
to be invalid or unenforceable, the remaining provisions or parts thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable portions or parts had not been included therein. In the event that
any provision of Sections 5 or 6 hereof relating to the time period and/or
geographic restrictions and/or related aspects shall be declared by a court of
competent jurisdiction to exceed the maximum restrictiveness such court deems
reasonable and enforceable, the time period and/or geographic restrictions
and/or related aspects deemed reasonable and enforceable by the court shall
become and thereafter be the maximum restriction in such regard, and the
restriction shall remain enforceable to the fullest extent deemed reasonable by
such court.
C. McFarland acknowledges that the services he is to render
are of a special and unusual character with a unique value to Employer and its
affiliates, the loss of which cannot adequately be compensated by damages in an
action at law. In the event of a breach or threatened breach by McFarland of any
of the provisions of Sections 5 or 6 hereof, Employer or its affiliates, in
addition to and not in limitation of, any other rights, remedies, or damages
available to Employer or its affiliates under this Agreement, shall be entitled
to a permanent injunction in order to prevent or restrain any such breach by
McFarland or by McFarland's partners, agents, representatives, servants,
employers, employees, consulting clients, and/or any and all persons directly or
indirectly acting for or with him.
-83-
<PAGE>
D. McFarland covenants and agrees that if he shall violate any
of his covenants or agreements under Section 5 or 6 hereof, Employer or its
affiliates shall be entitled to: (i) an accounting and repayment of all profits,
compensation, commissions, remuneration, or other benefits that McFarland
directly or indirectly has realized and/or may realize as a result of, growing
out of, or in connection with, any such violation; (ii) recover actual damages
incurred by Employer or its affiliates as a result of any such violation; (iii)
any injunctive relief to which Employer or its affiliates is or may be entitled
at law, in equity, or under this Agreement; and (iv) exercise its other rights
respecting a breach of this Agreement as set forth herein.
E. McFarland's obligations under Sections 5 and 6 hereof shall survive any
termination of employment hereunder.
8. Termination.
A. For Cause By Employer. Notwithstanding any other provision
hereof, Employer may terminate McFarland's employment under this Agreement
immediately at any time for "cause". For purposes hereof the term "cause"
shall include, but not be limited to, the commission of any of the following
by McFarland: dishonesty; theft; unethical business conduct; indictment for a
felony; incompetence in the performance of material duties on behalf of
Employer; violation of the terms and provisions of this Agreement; willful or
recurring insubordination; failure to attempt, in good faith, to comply with
reasonable instructions of Employer; McFarland's license to practice medicine
in the State of South Carolina is revoked or otherwise terminated; or
McFarland fails to follow accepted medical practices or is guilty of
misconduct under the principles of medical ethics of the American Medical
Association. All compensation (including without limitation the Base Salary,
and all perquisites and fringe benefits) to which McFarland would otherwise be
entitled shall be discontinued and forfeited as of the effective date of such
termination.
B. Termination By McFarland. McFarland may with or without
cause terminate this Agreement upon sixty(60) days prior written notice to
Employer. In the event of such termination, all compensation (including without
limitation the Base Salary and any perquisites and fringe benefits, if any) to
which McFarland would otherwise be entitled (for periods after the effective
date of the termination) shall be discontinued and forfeited as of the effective
date of such termination.
C. Disability. In the event of the McFarland's disability
during employment under this Agreement, then employment under this Agreement
shall terminate. For purposes of this Agreement, except as provided herein
below, "disability" shall mean the inability of McFarland, due to sickness or
other incapacity, to perform his duties under this Agreement for a period in
excess of one hundred eighty (180) substantially consecutive days. Such
termination shall become effective at Employer's election upon the expiration of
such one hundred eighty (180) day period of disability. Upon termination of
employment under this Agreement due to McFarland's disability, McFarland shall
be entitled to payment of his Base Salary up to the date of termination.
D. Death. In the event McFarland dies during the term of this Agreement,
this Agreement shall terminate and Employer shall pay to McFarland's estate all
Base Salary accrued but unpaid through the date of McFarland's death.
-84-
<PAGE>
9. Burden and Benefit. This Agreement shall be binding upon, and shall
inure to the benefit of Employer, McFarland, Employer's affiliates, and their
respective heirs, personal and legal representatives, successors, and assigns.
10. Patients and Records. Employer and McFarland agree that all patient
lists, records, and charts are the property of the Employer, and that upon
termination of this Agreement, McFarland shall not be entitled to receive any
patient lists, records, or charts.
11. Assignment. This Agreement and any rights hereunder are personal to
McFarland and shall not be assigned or otherwise transferred by McFarland.
12. Governing Law/Jurisdiction. The construction and interpretation of
this Agreement shall at all times and in all respects be governed by the laws of
the State of South Carolina. McFarland and Employer hereby (i) agree that any
litigation, action or proceeding arising out of or relating to this Agreement
may be instituted in a state or federal court in Columbia, South Carolina, (ii)
waives any objection which it might have now or hereafter to any such
litigation, action or proceeding based upon improper venue or inconvenient
forum, and (iii) irrevocably submits to the jurisdiction of such courts in any
such litigation, action or proceeding. For all purposes of this Agreement,
McFarland and Employer hereby further agree that service of process upon
McFarland and Employer may be effected pursuant to United States mail.
13. Usage. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Term such as "hereof", "hereunder",
"herein", and words of similar import shall refer to this Agreement in its
entirety and all references shall refer to specified portions of this Agreement,
unless the context clearly requires otherwise.
14. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect validity and enforceability of the
other provision.
15. Notice. Any notice, request, approval, consent, demand or other
communication hereunder shall be effective if in writing and upon the first to
occur of the following: (i) upon receipt by the party to whom such notice,
request, approval, consent, demand or other communications being given; or (ii)
three (3) business days after being duly deposited in the U.S. Mail, certified,
return receipt requested, and addressed as follows:
McFarland: M.F. McFarland, III, M.D.
6168 St. Andrews Road
Columbia, South Carolina 29212
Employer: Doctor's Care, P.A.
6168 St. Andrews Road
Columbia, South Carolina 29212
Attn: Stephen Seeling, Esquire
The parties hereto may change their respective addresses by notice in writing
given to the other parties this Agreement.
-85-
<PAGE>
16. Entire Agreement. This Agreement contains the entire agreement and
understanding by and between Employer and McFarland with respect to the
employment of McFarland, and no representations, promises, agreements, or
understandings, written or oral not contained herein shall be of any force or
effect. No change or modification of this Agreement shall be valid or binding
unless it is in writing and signed by the party intended to be bound. No waiver
of any provision of this Agreement shall be valid unless it is in writing and
signed by the party against whom the waiver is sought to be enforced. No valid
waiver of any provision of this Agreement at any time shall be deemed a waiver
of any other provision of this Agreement at such time or at any other time.
IN WITNESS WHEREOF, Employer and McFarland have duly executed this
Agreement under seal to be effective as of the day and year first above written.
IN THE PRESENCE OF: EMPLOYER:
/s/ Patricia J. Hammond DOCTOR'S CARE, P.A. (SEAL)
Witness
/s/ Stephanie Davenport By: /s/ M.F. McFarland
Witness Its: President
MCFARLAND:
/s/ Patricia J. Hammond /s/ M.F. McFarland, III (SEAL)
Witness M.F. McFarland, III, M.D.
/s/ Stephanie Davenport
Witness
-86-
<PAGE>
EXHIBIT 10.6
EMPLOYMENT AGREEMENT BETWEEN
UCI MEDICAL AFFILIATES OF SOUTH CAROLINA, INC.
AND
MICHAEL STOUT, M.D.
-87-
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement is made as of the 1st day of November, 1995, by
and between UCI Medical Affiliates of South Carolina, Inc., a South Carolina
Corporation (UCI), and Michael Stout, M. D. ("Stout").
WHEREAS, UCI desires to employ Stout, and Stout desires to be employed
by UCI, in accordance with the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be legally bond, agree
as follows:
1. Employment. UCI hereby agrees to employ Stout to perform the duties
described in Section 3 below subject to and in accordance with the terms and
conditions hereof, and Stout hereby accepts such employment.
2. Term. The employment shall commence on the date hereof, and shall
continue for a period of Five (5) years unless earlier terminated in accordance
with the provisions of Section 8 of this Agreement.
3. Duties of Stout.
A. In accepting employment by UCI, Stout shall undertake and
assume the responsibility of performing for and on behalf of UCI the duties of
Vice President of Medical Affairs of UCI in Columbia, South Carolina.
B. Other than Stout's duties as an employee of Doctor's Care,
P.A., Stout shall be a full-time employee of UCI, and shall devote his full
working time and efforts to his duties hereunder. Stout shall perform all of his
duties hereunder to the best of his ability and shall not, directly or
indirectly, engage or participate in any activities in conflict with the best
interests of UCI. Without limiting the generality of the foregoing, Stout shall
not engage in any activity for compensation or pecuniary gain other than his
employment hereunder, his association with Doctor's Care, P.A., and passive
investing for the account of himself or members of his household. Stout agrees
that his total compensation for his service to UCI shall be described in Section
4 of this Agreement.
Stout has entered into a separate Employment Agreement with
respect to his association with Doctor's Care, P.A. His compensation for
services to Doctor's Care, P.A. is described in Section 3 of that Agreement.
Stout agrees that his total compensation for his service to Doctor's Care, P.A.
is set forth in Section 4 of that Agreement.
4. Compensation. As compensation for the services to be rendered by Stout
for UCI under this Agreement, Stout shall be compensated by UCI on the following
basis:
A. Salary. During the term of this Agreement, Stout shall receive from UCI
an annual salary of Fifty Thousand and No/100 ($50,000), payable in pay periods
as determined by UCI, but in no event less frequently than monthly, subject to
an annual review.
B. Other Benefits. During the term of Stout's employment with UCI, Stout
shall receive from UCI such other benefits (e.g. health insurance coverage, life
insurance coverage, participation in pension plans, and participation in stock
option plans, etc.) reasonably comparable to, and no worse than, those benefits,
if any, generally provided to other senior executives of UCI.
-88-
<PAGE>
5. Confidentiality and Secrecy. Stout acknowledges that in and as
a result of his employment hereunder, he will be making use of, acquiring,
and/or adding to confidential information of a special and unique nature and
value relating to UCI business, including without limitation technological
know-how, copyrights, proprietary information, trade secrets, systems,
procedures, manuals, confidential reports, records, operational expertise, lists
of customers and projects, the nature and type of services rendered by UCI, the
equipment and methods used and preferred by UCI customers, and the fees paid by
inducement to UCI to enter into this Agreement and to pay to Stout the
compensation stated in Section 4 herein, Stout covenants and agrees that during
the term of his employment hereunder, and for five (5) years after the
termination thereof, he shall not, directly or indirectly, make use of, or
disclose to any person, any confidential information of UCI or its affiliates.
Stout agrees that he will never disclose trade secrets of UCI and assigns his
rights to confidential information as "work made for hire" to UCI.
6. Covenants Against Competition. In view of the unique value to
UCI of the services of Stout for which UCI has contracted hereunder, because of
the confidential information to be obtained by or disclosed to Stout, as herein
above set forth, and because Stout's employment hereunder will result in Stout's
development of a unique relationship with customers, suppliers and employees as
a material inducement to UCI to enter into this Agreement and to pay to Stout
the compensation stated in Section 4 hereof, Stout covenants and agrees as
follows:
A. during Stout's employment hereunder, and for a period of
two (2) years after the termination of Stout's employment hereunder for any
reason, Stout shall not directly or indirectly solicit or divert employment of
any employee of UCI's business or employ any person previously employed by UCI
or its affiliates.
B. During Stout's employment hereunder, and for a period of
two (2) years after the termination of Stout's employment whereunder for any
reason, Stout shall not directly or indirectly solicit, divert, or convert, or
assist another person or entity to solicit, divert or convert, the customers of
UCI or its affiliates to any other company or entity.
C. During Stout's employment hereunder, and for a period of
two (2) years after the termination of Stout's employment with UCI, Stout shall
not within the geographic area specified below engage in any business or perform
any services, directly or indirectly, in competition with the business of UCI or
its affiliates or have any interest, whether as a proprietor, partner, employee,
stockholder (directly or beneficially), principal, agent, consultant, director,
officer or in any other capacity or manner whatsoever, in any enterprise that
shall so engage, except that Stout shall be permitted to own for investment
purposes only, directly or beneficially, up to (but not more than) 2% in the
aggregate of the stock of a competing corporation which is publicly-traded on a
national stock exchange or the NASDAQ National Market System, so long as Stout
is not a controlling person of, or a member of a group that controls, such
corporation and Stout is not otherwise affiliated in any capacity with such
corporation. The restrictions to this Section 6(C) shall apply everywhere within
a five (5) mile radius of (i) any primary or urgent care facility owned or
operated by UCI or an affiliate, and (ii) each other location where UCI or any
affiliate maintains an office, in existence as of the date of such termination.
7. Reasonableness, Enforceability and Remedies.
A. Stout has carefully read and considered the provisions of
Section 5, 6 and 7, and, having done so, agrees that the restrictions set forth
in these Sections, including, but not limited to, the time period of restriction
and geographic limitations set forth in Section 6, are fair and reasonable and
are reasonably required for the protection of the interest of UCI and its
officers, directors, shareholders, employees, and affiliates.
B. In the event that, notwithstanding the foregoing, any of the provisions
of Sections 5, 6 and 7 hereof or any parts thereof shall beheld to be invalid or
unenforceable, the remaining provisions or parts thereof shall nevertheless
continue to be valid and enforceable as though the invalid or unenforceable
portions or parts had not been included therein. In the event that any provision
of Sections 5 and 6 hereof
-89-
<PAGE>
relating to the time period and/or geographic restrictions and/or related
aspects shall be declared by a court of competent jurisdiction to exceed the
maximum restrictiveness such court deems reasonable and enforceable, the time
period and/or geographic restrictions and/or related aspects deemed reasonable
and enforceable by the court shall become and thereafter be the maximum
restriction in such regard, and the restriction shall remain enforceable to the
fullest extent deemed reasonable by such court.
C. Stout acknowledges that the services he is to render are of a special
and unusual character with a unique value to UCI and its affiliates, the loss of
which cannot adequately be compensated by damages in an action at law. In the
event of a breach or threatened breach by Stout of any of the provisions of
Section 5 or 6 hereof, UCI or its affiliates, in addition to and not in
limitation of, any other rights, remedies, or damages available to UCI or its
affiliates under this Agreement, shall be entitled to a permanent injunction in
order to prevent or restrain any such breach by Stout or by Stout's partners,
agents, representatives, servants, employees, consulting clients, and/or any and
all persons directly or indirectly acting for or with him.
D. Stout covenants and agrees that if he shall violate any of
his covenants or agreements under Section 5 or 6 hereof, UCI or its affiliates
shall be entitled to: (I) an accounting and repayment of all profits,
compensation, commissions, remuneration, or other benefits that Stout directly
or indirectly has realized and/or may realize as a result of, growing out of, or
in connection with, any such violation; (ii) recover actual damages incurred by
UCI or its affiliates as a result of any such violation; (iii) any injunctive
relief to which UCI or its affiliates is or may be entitled by law, in equity,
or under this Agreement; and (iv) exercise its other rights respecting a breach
of this Agreement as set forth herein.
E. Stout's obligations under Section 5 and 6 hereof shall survive any
termination of employment hereunder.
8. Termination
A. For Cause by UCI. Notwithstanding any other provisions
hereof, UCI may terminate Stout's employment under this Agreement immediately at
any time for "cause". For purposes hereof the term "cause" shall include, but
not limited to, the commission of any of the following by Stout: dishonesty:
theft; unethical business conduct; indictment for a felony; incompetence in the
performance of material duties on behalf of UCI; violation of the terms and
provisions of this Agreement; willful or recurring insubordination; failure to
attempt, in good faith, to comply with reasonable instructions of UCI; if
Stout's license to practice medicine in the State of South Carolina is revoked
or otherwise terminated; or if Stout fails to follow accepted medical practices
or is guilty of misconduct under the principles of medical ethics of the
American Medical Association. All compensation (including without limitation the
Base Salary, and all prerequisites and fringe benefits) to which Stout would
otherwise be entitled shall be discontinued and forfeited as of the effective
date of such termination.
B. Disability. In the event of Stout's disability during
employment under this Agreement, then employment under this Agreement shall
terminate. For purposes of this Agreement, except as provided herein below,
"disability" shall mean the inability of Stout, due to sickness or other
incapacity, to perform his duties under his Agreement for a period in excess of
ninety (90) substantially consecutive days. Such termination shall become
effective at UCI's election upon the expiration of such ninety (90) day period
of disability. Upon termination of employment under this Agreement due to
Stout's disability, Stout shall be entitled to payment of his Salary up to the
date of termination.
C. Death. In the event Stout dies during this term of this Agreement, this
Agreement shall terminate and UCI shall pay to Stout's estate all Base Salary
accrued but unpaid through the date of Stout's death.
9. Burden of Benefit. This Agreement shall be binding upon, and shall inure
to the benefit of UCI, Stout, UCI's affiliates, and their respective heirs,
personal and legal representatives, successors, and assigns.
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<PAGE>
10. Assignment. This Agreement and any rights hereunder are personal to
Stout and shall not be assigned or otherwise transferred by Stout.
11. Governing Law/Jurisdiction. The construction and
interpretation of this Agreement shall at all times and in all respects be
governed by the laws of the State of South Carolina. Stout and UCI hereby (I)
agree that any litigation, action or proceeding arising out of or relating to
this Agreement may be instituted in a state or federal court in Columbia, South
Carolina, (ii) waives any objection which it might have now or hereafter to any
litigation, action or proceeding based upon improper venue or inconvenient
forum, and (iii) irrevocably submits to the jurisdiction of such courts in any
such litigation, action or proceeding. For all purposes of this Agreement, Stout
and UCI hereby further agree that service of process upon Stout and UCI may be
affected pursuant to United States mail.
12. Usage. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Term such as "hereof", "herein",
and words of similar import shall refer to this Agreement in its entirety and
all references shall refer to specified portions of this Agreement, unless the
contest clearly requires otherwise.
13. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect validity and enforceability of the
other provisions.
14. Notice. Any notice, request, approval, consent, demand or
other communication hereunder shall be effective if in writing and upon the
first to occur of the following: (I) upon receipt by the party to whom such
notice, request, approval, consent, demand or other communications being given;
or (ii) three (3) business days after being duly deposited in the U. S. Mail,
certified, return receipt requested, and addressed as follows:
Stout Michael Stout, M. D.
511 Beltline Blvd.
Columbia, S. C. 29205
UCI: UCI Medical Affiliates of South Carolina, Inc.
6168 St. Andrews Road
Columbia, S. C. 29212
Attn. Stephen Seeling, Esquire
The parties hereto may change their respective addresses by notice in writing
given to the other parties of this Agreement.
15. Entire Agreement. This Agreement contains the entire agreement
and understanding by and between UCI and Stout with respect to the employment of
Stout, and no representations, promises, agreements, or understandings, written
or oral not contained herein shall be of any force or effect. No change or
modification of this Agreement shall be valid or binding unless it is in writing
and signed by the party intended to be bound. No waiver of any provision of this
Agreement shall be valid unless it is in writing and signed by the party against
whom the waiver is sought to be enforced. No valid waiver of any provision of
this Agreement at any time shall be deemed a waiver of any other provision of
this Agreement at such time or at any other time.
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IN WITNESS WHEREOF, UCI and Stout have duly executed this
Agreement under seal to be effective as of the day and year first above written.
IN THE PRESENCE OF: UCI:
UCI MEDICAL AFFILIATES OF SOUTH
Witness CAROLINA, INC. (SEAL)
By: /s/ M.F. McFarland, III, M.D.
Witness Its: President
STOUT:
__________________________________ /s/ Michael Stout, M.D. (SEAL)
Witness Michael Stout, M.D.
- ----------------------------------
Witness
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EXHIBIT 10.7
EMPLOYMENT AGREEMENT BETWEEN DOCTOR'S CARE, P.A.
AND
MICHAEL STOUT, M.D.
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STATE OF SOUTH CAROLINA )
) EMPLOYMENT AGREEMENT
COUNTY OF LEXINGTON )
THIS AGREEMENT made and entered into this 1st. day of November, 19 1995,
between Doctor's Care, P. A. (hereinafter "Employer"), a South Carolina
Professional Association with its principal office in Columbia, South Carolina,
and Michael Stout, (hereinafter "Employee").
WHEREAS, Employer is a South Carolina Professional Association and wishes
to employ the Employee to render services for it; and,
WHEREAS, Employee is a licensed physician in South Carolina and desires and
is willing to become a professional employee of Employer, in accordance with the
following terms, conditions, and provisions:
NOW, THEREFORE, for and in consideration of the promises herein and other
valuable consideration, it is agreed that:
(1) Employment Term. Subject to the provisions for termination as
hereinafter provided, the term of this Agreement shall be five
(5) year beginning November 1, 19 95 . After the initial five
(5) year term, this Agreement shall be renewable from year to
year upon the mutual agreement of both parties.
(2) Duties.
A. Other than Employee's duties as an Employee of UCI Medical
Affiliates of South Carolina, Inc., Employee shall devote
his full-time professional skill and attention to the
performance of services in the practice for the benefit of
Employer at Doctor's Care Beltline or such other clinic
within the Columbia, South Carolina area as shall be
reasonably assigned by Employer. Employee's duty schedule
shall be determined by Employer and Employee shall provide
such emergency evening and weekend coverage as shall be
needed and be reasonably assigned to Employee by Employer.
B. Employee shall not engage in any outside professional
activities involving the personal services of Employee and
yielding a financial return without Employer's prior
written consent. However, nothing stated herein shall
restrict or prevent employee from personally and on
Employee's own account, investing in stocks, bond
securities, commodities, real estate, or other forms of
investments.
C. Employee will actively and industriously pursue his
profession in Employer's interest, will faithfully adhere
to the principles and ethics of the profession, and will
carefully avoid any and all personal acts, habits and
usages which might injure in any way, directly or
indirectly,
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Employee's professional reputation or that of
any other Employee of Employer, or which might otherwise
be detrimental to any interest of Employer.
D. Employee hereby agrees that all fees received or collected
as a result of professional services rendered by Employee,
together with all other emolument, e.g., witness fees,
report fees, speaker feets, etc., shall be the property of
Employer. Accordingly, Employee acknowledges that
Employee's employment renders him an agent and servant of
Employer and does not confer upon Employee any ownership
interest in or professional claim upon any fees charged by
Employer for Employee's services, whether said fees are
collected during Employee's employment or after
termination thereof.
(3) Compensation.
(A) Regular Compensation. For all services rendered under
this Agreement, Employer shall pay the Employee an
initial salary of One Hundred Sixty Thousand Dollars
($ 160,000.00) per year, payable bi-weekly.
(B) Changes in Compensation. From time to time, increases
in the Employee's salary may be made, said increases
to be reflected on the "Schedule of Compensation"
attached hereto and made a part hereof.
(C) Bonuses. Employer may from time to time review
Employee's compensation arrangement with respect to
the payment of a bonus for superior performance;
provided however that the decision to make bonus
payments, if any, shall be at the sole discretion of
Employer.
(4) Fringe Benefits. As further consideration for the performance
by Employee of the services set forth herein, Employee shall
be eligible on a non-discriminatory basis for participation in
any tax qualified deferred compensation plan maintained by
Employer and also for inclusion in any group-term life
insurance plan maintained by Employer. However, Employee
understands that the decision to maintain any such plans shall
be in sole discretion of Employer.
(A) Health Insurance Coverage. Employer, shall provide for
Employee such health coverage as provided to other employees
of Doctor's Care, P. A. Family coverage is available on
the same basis as is provided to other senior
executives of Employer or UCI Medical Affiliates, Inc.
(B) Group Term Life Insurance & Group Disability
Insurance. Employer, at its cost, shall furnish such
life and disability insurance for Employee as it,
from time to time, may provide to other Employees.
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(5) Vacation and Professional Meetings. Employee shall be entitled
to four weeks paid vacation. All above leave shall be taken on
reasonable prior notice and at such time or times as shall be
agreed to by Employer and that does not interfere with proper
operation of the Practice. In addition, Employee is entitled
to one week of paid leave for Continuing Medical Education.
(6) Inability to Perform Essential Services. If Employee is unable
to perform the essential professional services contemplated by
this agreement as a result of illness or incapacity, Employee
shall continue to receive those benefits which become payable
to Employee under contracts, if any, provided for Employee by
Employer. Anything to the contrary contained herein
notwithstanding if Employee is not able to resume the
performance of such essential professional duties within
ninety (90) days of the date Employee was first unable to
perform such duties, Employee may be deemed, at the sole
discretion of the Employer, to have terminated this Agreement
and Employer shall have the right to pursue all remedies set
forth herein related to such a termination.
(7) Equipment and Expenses.
(A) Facilities. Employer shall provide and pay for
suitable office space and facilities, furniture,
fixtures, equipment, supplies, employees and
assistants necessary and appropriate for the proper
performance of the duties of Employee.
(B) Professional Liability Insurance. Employer shall either pay or, upon
proof of payment by the Employee, reimburse the Employee for the cost of
Professional Liability (malpractice) Insurance covering the Employee for
services provided hereinunder for claims as follows: the first One Hundred
Thousand Dollars ($100,000) in coverage shall be through the South Carolina
Medical Malpractice Joint Underwriters Association ("JUA"); the excess coverage
shall be provided through the South Carolina Patients' Compensation Fund
("PCF"). Employee understands that the amount of coverage provided by JUA and
PCF may not be adequate to protect Employee against all claims and that the
responsibility of securing additional insurance coverage, if any, is solely that
of Employee.
(C) License Fees, Memberships and Dues. Employer shall either pay or, upon
proof of payment by the Employee, reimburse up to $300, to Employee for the cost
of professional license fees, and the cost of reasonable professional membership
and dues.
(D) Documentation. Employee agrees to submit to Employer
the documentation as may be necessary to substantiate
the deductibility of the foregoing expenses for
income tax purposes.
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(8) Employee Death. If Employee dies while this Agreement is in
full force and effect, Employer shall pay to Employee's named
beneficiary, or in default of the named beneficiary to
Employee's estate, all salary accrued but unpaid through the
pay period which includes the date of Employee's death.
(9) Patients and Records. Employer and Employee agree that all
patient lists, records, and charts are the property of
Employer, and that upon termination of this Agreement,
Employee shall not be entitled to receive any patient lists,
records, or charts whether or not the Employee shall have seen
or attended any patient with which such terms are covered;
provided however, that record keeping for patients treated by
Employee shall be the sole responsibility of Employee, and
Employee shall complete all such charts and records for such
patients in accordance with professional standards.
(10) Policy Decisions. It is understood that Employer shall have
the sole and exclusive right of management over the practice,
including without limitation, the determination of the
professional standards to be observed, the determination of
the fees to be charged, and the determination of the office
hours to be maintained.
(11) Conditions of Termination. Physician understands and agrees that cause
for termination of employment includes, but
is not limited to the following:
(A) At any time by mutual agreement in writing between
Employer and Employee.
(B) At the loss or the suspension of the right to conduct
the practice of medicine by Employee, or the loss, or
suspension of any right or privilege necessary or
incident thereto, or the loss, suspension, or
limitation of Employee's Controlled Substance
license, or if Employee performs any negligent or
intentional act which directly or indirectly damages
the reputation or property of Employer.
(C) At the death of Employee, provided however, that the
provisions of this Agreement regarding Employee's
death shall be performed by the Employer.
(D) At the option of the Employer, upon thirty (30) days
prior written notice for "good cause", which shall
mean failure of Employee to provide the agreed duties
hereunder or willful violation by Employee of any of
the terms of this Agreement.
(E) Upon a party hereto failing to perform any covenant
or condition hereunder within thirty (30) days after
written notice and demand, the non-defaulting party
may terminate this Agreement.
(F) Upon the bankruptcy, insolvency or assignment for the
benefit of the creditors of Employer, or any other
type of voluntary or
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involuntary creditors proceeding
involving the property of Employer.
(G) Upon Employee's failure to satisfactorily comply with
accepted standards of medical practice and
professional conduct.
(H) If Employee engages in the abuse of drugs,
intoxicants or other mood-altering substances or if
Employee treats or attempts to treat a patient while
under the influence of drugs, intoxicants or other
mood-altering substances.
(I) Upon thirty days notice, at the option of the
Employer if Employee does not satisfy the
credentialing requirements of the managed care and
other plans with which Employer participate.
(12) First Year. For a period of twelve (12) months after execution
of this Agreement, either party shall have the right to
terminate the Agreement for any reason or for no reason upon
sixty day written notice of the other party. In the event the
Employer exercises its rights under this provision, the
restrictive covenants set forth in paragraphs 13B, 13C and 13D
shall be null and void.
(13) Non-Disclosure of Information. Employee shall not, at any time
after the date hereof, directly or indirectly, divulge or
disclose for any purpose whatsoever any confidential
information that has been developed or obtained by, or
disclosed to, Employee by Employer at any time or after the
date hereof (exclusive of such information as is in the public
domain). Employee acknowledges that such confidential
information is of a special and unique nature and value
relating to matters of Employer's business, including, without
limitation, Employer's patents, copyrights, proprietary
information, trade secrets, trademarks, systems, procedures,
manuals, confidential reports, records, operational expertise,
locations and lists of clients and potential clients, pricing
information and lists, marketing materials and methods, the
nature and type of services rendered by Employer, the methods
used and preferred by Employer's clients, and the fees paid by
them (all of which are deemed for all purposes to be
confidential, proprietary, and trade secrets of Employer). Any
confidential information in Employee's possession shall be
returned to Employer upon any termination or expiration of
this Agreement.
(14) Covenants Against Competition.
A. Exclusivity. For the period of Employee's retention
by Employer, Employee will not, directly or
indirectly, plan, operate, organize or otherwise be
involved in any primary or urgent care facility of a
type similar to those operated by Employer other than
on behalf of Employer. Employee further agrees that
so long as this Agreement is in effect, Employee will
not undertake the planning or organizing of any
business activity competitive with the work Employee
performs for Employer.
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B. Restrictive Covenant. In addition to (but not in limitation of) the
restrictions of Section 14 (A), for the period of Employee's retention by
Employer plus a period of two (2) years after termination of this Agreement,
Employee shall not, directly or indirectly engage in, or assist another person
or entity to engage in, any sales of products and services furnished (or similar
business operated) by Employer in competition with Employer within a five (5)
mile radius of the primary Clinic maintained, managed or otherwise controlled by
Employer at which Employee performed services during the term of Employee's
retention by Employer (collectively, the "Territory").
C. Ownership. In addition to (but not in limitation of) the restrictions of
Sections 14 ^A and B, for the period of Employee's retention by Employer,
Employee shall not, directly or indirectly, own an equity interest (other than
as the holder for investment purposes only of up to 2% of the outstanding
capital stock of any corporation which is publicly traded on a national stock
exchange or the NASDAQ National Market System, so long as Employee is not a
controlling person of, or a member of a group that controls, such corporation
and Employee is not otherwise affiliated in any capacity with such corporation)
in any entity or enterprise conducting operations in the Territory which is
competitive with Employer's business activities.
D. Employees. In addition to (but not in limitation of) the restrictions of
(Sections A, B and C), for the period of Employee's retention by Employer, plus
a period of two years after termination of this Agreement, Employee shall not,
directly or indirectly, solicit or in any manner attempt to solicit or induce
any person employed by, or an agent of, Employer to terminate such person's
association or contract of employment or agency, as the case may be, with
Employer.
(15) Remedy for Violation. Employer and Employee agree that
remedies at law are inadequate and that Employer may seek
injunctive relief in the event of violation of this covenant.
In addition, it is agreed that the actual damages occasioned
by any breach of the covenants by Employee not to solicit
and/or perform services except as provided above will not be
susceptible to exact determination and Employer shall be
entitled to liquidated damages in an amount equal to three (3)
times the gross fees billed by Employer to any such patients
solicited or treated in violation of this covenant during the
two (2) year (twenty four (24) month) period immediately
preceding the violation of this covenant.
(16) Binding Agreement. This Agreement shall be binding on the parties,
their distributees, legal representatives, successors and assigns.
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(17) Notices. All notices under this Agreement shall be in writing
and shall be served by personal service or registered mail,
return receipt requested. Notice by mail shall be addressed to
each party at such party's last known address.
(18) Cost of Enforcement. Employer and Employee each hereby agree
that should they default in any of the obligations contained
herein, the defaulting party shall pay all costs and expenses,
including a reasonable attorney's fee which may arise or
accrue from enforcing this Agreement or in pursuing any remedy
provided by the statues of the State of South Carolina,
whether such remedy is pursued by filing a suit or otherwise.
(19) Captions. Captions and paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in
construing it.
(20) Governing Law. This Agreement shall be governed by the Laws of the
State of South Carolina.
(21) Waiver. Waiver by either party of a breach or violation of any
provision of this Agreement shall not operate as or be
constrained as a waiver of any subsequent breach thereof.
(22) Severability. If any provision of this Agreement, or portion
thereof, shall be declared invalid or unforceable, the
remainder of this Agreement shall continue in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
set forth above.
DOCTOR'S CARE, P. A.
EMPLOYER: By: /s/ M.F. McFarland, III, M.D.
M. F. McFarland, III,
Its: President
EMPLOYEE: /s/ Michael Stout, M.D.
Michael Stout, MD
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SCHEDULE OF COMPENSATION
Date Change Effective New Annual Salary Employer Employee
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EXHIBIT NO. 10. 8
LEASE AND LICENSE AGREEMENT
WITH
COMPANION TECHNOLOGIES
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COMPANION TECHNOLOGIES
Division of Blue Cross Blue Shield of South Carolina
LEASE AND LICENSE AGREEMENT
Customer Name: Doctor's Care - Central Acct #:
Term #:
Address: 6168 St. Andrews Road Business:
Columbia, SC 29212 Rep.:
Attn: Mr. Mehta
(803) 772-8840
This Agreement between the Customer named hereinbelow and Companion Technologies
Division of Blue Cross Blue Shield of South Carolina (the Corporation) shall
commence on October 1, 1994.
The Corporation agrees to provide and the Customer agrees to lease and license
the following for business use in South Carolina:
1. LEASE OF HARDWARE AND PERIPHERALS
Quantity Type/Model Serial #
Refer to Attachment A.
II. LICENSE OF STANDARD SYSTEM SOFTWARE PROGRAMS
Refer to Attachment A.
III. PASS THROUGH LICENSE OF OPTIONAL SOFTWARE PROGRAMS
Refer to Attachment A.
IV. TERM
The term of this Agreement shall be from the date of installation,
unless it is terminated by either party in accordance with the
Termination section set forth below.
V. PAYMENTS
Payment of $ ( Refer to Attachment B ) is due from the Customer on the
date this Agreement is signed. Then $ (See Selected Payment Option
Below), for as long as this contract remains in force.
Payment Option Payment Term Payment Amount
( ) A Month-to-Month Lease $
( ) B Annual Lease (Paid Annually) $
( ) C Annual Lease (Paid Monthly) $
( ) D Term of 60 Months $14,924.85*
*Ownership of equipment will transfer to Doctor's Care at the
end of 60 months' payments for an additional payment of $1.00.
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Charges for Month-to-Month Leases (Option A) can be increased upon thirty
(30) days prior written notice by the Corporation to the Customer.
Charges for Term Leases (Options B, C and D) cannot be increased during
the initial contract period. Term Leases will revert to Month-to-Month
Leases after the initial contract period.
The above charges do not include the fee for access to the PAID TM
Network for transmission and receipt of data between the provider and
the Corporation's Data Center.
VI. PARTIES' RESPONSIBILITIES
The Customer agrees it will:
(bullet) Pay the Corporation the full rent and service fee in advance by
the first of each month if a Monthly Payment Option is selected at V. above.
(bullet) Pay the full rent and service fee on or before the termination of
this lease and agreement.
(bullet) Not hold the Corporation liable for injuries caused by the misuse
of, or malfunction in, their service, software, hardware or equipment.
(bullet) ONLY use the PAID TM system software as designated and instructed
by the Corporation's user manuals and personnel. Other uses of such material
must be approved, in writing, by the Corporation. The provider may use the
equipment to run other software.
(bullet) Make no alterations in or additions to the equipment.
(bullet) Obtain the written authorization of the Corporation prior to any
movement of the equipment.
(bullet) Pay for repairs or replacements not covered by the maintenance
agreement.
(bullet) Pay interest on any delinquent payments at the rate of 18% per
annum.
(bullet) Maintain insurance to indemnify the Corporation in the event the
system is lost, damaged, stolen or destroyed.
(bullet) Keep the system free and clear of all liens and encumbrances.
(bullet) Return the system (hardware and software) to the Corporation under
termination of this Agreement in good repair, ordinary wear and tear from proper
use alone excepted, and return all manuals and other materials related to the
system.
(bullet) Hold the information contained in the software program material,
changes, additions, and enhancements in confidence and not disclose, or permit
its employees to disclose, such information to any other party.
(bullet) Use the system solely at its own location in South Carolina and
that it will not copy, reproduce, assign, or otherwise transfer the system or
any part thereof.
(bullet) Allow the Corporation to inspect and observe the system during
normal business hours.
(bullet) Sign a statement attesting that the system belongs to the
Corporation for filing with the Secretary of State.
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The Corporation and the Customer understand and agree as follows:
(bullet) Charges and fees are exclusive of all federal, state, municipal,
or other government, excise, sales, use, occupational, or like taxes now in
force or enacted in the future and, therefore, charges are subject to an
increase equal in amount to any tax the Corporation may be required to collect
or pay upon the delivery of items leased or licensed.
(bullet) The system is personal property of the Corporation and shall not
be affixed or attached to any building or other real property.
(bullet) The equipment is and remains the sole and exclusive property of
the Corporation and the Corporation's identification must remain affixed to the
equipment.
(bullet) In the event of default by the provider, the Corporation can take
possession of the system (hardware and software), declare the entire amount of
the rent due and payable without notice or demand, terminate the lease, sue to
recover all rents and other payments and pursue any other remedy. These remedies
are cumulative and may be exercised concurrently or separately.
THE CORPORATION MAKES NO WARRANTIES EITHER EXPRESS OR IMPLIED, AS TO
ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE CONDITION OF
THE EQUIPMENT OR SOFTWARE, ITS MERCHANTABILITY OR ITS FITNESS FOR ANY
PARTICULAR PURPOSE. THE CORPORATION SHALL HAVE NO LIABILITY TO CUSTOMER
FOR ANY CLAIM, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY,
INDIRECTLY, INCIDENTALLY OR CONSEQUENTIALLY BY THE EQUIPMENT OR
SOFTWARE, BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN, BY
ANY INCIDENT WHATSOEVER IN CONNECTION THEREWITH, ARISING IN CONTRACT,
STRICT LIABILITY, NEGLIGENCE OR OTHERWISE, OR IN ANY WAY RELATED TO OR
ARISING OUT OF THIS AGREEMENT, OR USE PERFORMANCE OF THE SYSTEM.
VII. PAID TM SERVICES
The Corporation agrees to deliver the following to the Customer:
(1) PAID TM Manual; (2) Access to the help desk for questions
and problems connected with software, hardware, and
maintenance; and, (3) Initial training of the Customer's
personnel in the use of the equipment by representatives of
the Corporation. (Continued requests by the Customer for
retraining will be subject to a fee by the Corporation.)
Charges for these items can be assessed or increased upon
thirty (30) days prior written notice by the Corporation to
the Customer.
This software enables you to utilize the Corporation's PAID System for
patient injury, electronic mail with the Corporation, and filing of
claims electronically.
VIII. SOFTWARE AND HARDWARE MAINTENANCE
Improvements: During the term of this Agreement, the Corporation will
supply the Customer with any improvements or modifications to the software which
are not charged for as options.
Coverage: Except as stated otherwise herein, during the term of this
Agreement, the Corporation will correct or replace software and
hardware and/or provide services necessary to remedy any programming
error or problem which is attributed to the Corporation and which
significantly
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affects use of the software. The Corporation may provide
preventative and remedial maintenance to the hardware, including labor
and parts required for good operating condition when such labor and
parts are required because of normal wear and tear. Exchanged parts
removed from the system become the property of the Corporation. Such
correction, replacement or services will be promptly accomplished after
the Customer has identified and notified the Corporation of any such
error in accordance with the Corporation's reporting procedures. The
maintenance services shall be performed during normal working hours
which are defined as 8:00 am to 5:00 pm Monday through Friday,
exclusive of the Corporation's observed holidays.
The Corporation shall not be responsible for maintaining Customer
modified portions of the software or hardware or for maintaining
portions of the software or hardware affected by Customer modified
portions of the software or hardware.
Corrections for difficulties or defect traceable to Customer errors or
system changes will be billed at the Corporation's standard time and
material rates.
EXCLUSIONS AND CONDITIONS OF SERVICE: The Corporation shall be under no
obligation to furnish maintenance service should repair be required
because of (1) improper use or misuse; (2) natural disasters such as
flood or earthquake; (3) strikes, riots or acts of war or nuclear
disaster; (4) repairs, maintenance, modifications or relocation and
reinstallation made by other than the Corporation's personnel or
without the Corporation's supervision and approval; (5) unusual shock
or electrical damage, accident, fire or water damage, neglect, air
conditioning failure, damage during transportation by Customer or other
causes other than ordinary use; or (6) overhaul or refurbishment of the
equipment due to age or prolong use. If maintenance service is required
as a result of the causes stated above, such service shall be offered
at the Corporation's published rates for labor, travel and material in
effect at the time of service.
The Corporation's maintenance service does not include operating
supplies and consumables; refinishing the products or furnishing
materials for that purpose; electrical work external to the products;
maintenance of accessories, attachments or products not specified in
this Agreement; and equipment calibrations.
RESPONSIBILITIES OF THE CUSTOMER: The Customer agrees (1) to provide
the Corporation access to the software and hardware to perform
maintenance; (2) to provide adequate working space and facilities close
to the software and hardware for use by the Corporation; (3) to provide
access to and use of all information and facilities determined
necessary by the Corporation to maintain the software and hardware;
(Insofar as these items may contain propriety or classified
information, the Customer shall assume full responsibility for
safeguards and protection for wrongful use): (4) to provide routine
operator maintenance as specified in the Corporation's Operating
Instructions for the software and hardware; and, (5) to provide
operating supplies and consumables.
LIMITATIONS OF REMEDIES: THE CORPORATION'S LIABILITY TO THE CUSTOMER,
WHETHER IN CONTRACT, TORT, NEGLIGENCE, OR STRICT LIABILITY OR OTHERWISE
SHALL NOT EXCEED THE TOTAL CHARGES PAID OR PAYABLE DURING ONE YEAR
UNDER THIS AGREEMENT. IN NO EVENT SHALL THE CORPORATION BE LIABLE FOR
LOST PROFITS, DATA OR ANY INDIRECT OR CONSEQUENTIAL DAMAGES.
DISCLAIMER: THE CORPORATION DISCLAIMS ALL WARRANTIES, INCLUDING IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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TERMINATION: Either party may terminate a month-to-month agreement at
any time by giving 30 days prior written notice to the other party.
Either party may terminate a yearly agreement at any time after the
term of the Agreement by giving 30 days prior written notice to the
other party.
The Corporation may terminate this Agreement in the event of default by
the Customer, which includes, but is not limited to, Customer's failure
to make timely payments under this Agreement. If termination occurs for
any reason, the Corporation has the right to take possession of all
hardware indicated in Section I and Software indicated in Section II
and retain all payments previously made by the Customer under this
Agreement. Upon termination of this Agreement, the Customer shall
return the hardware and software to the Corporation in good repair,
ordinary wear and tear from proper use alone excepted.
IX. GENERAL PROVISIONS
The Provider agrees it will not hold the Corporation liable for any
damages caused by the misuse of, or malfunction of, any software,
hardware or services.
This Agreement shall constitute the entire agreement between the
Provider and the Corporation for the leased equipment, software and
services described in the Agreement and may only be amended by a
separate writing signed by both parties.
This Agreement is not assignable without the prior written consent of
the Corporation. Any attempt by the Customer to assign any of the
rights, duties or obligations of the Agreement without such consent is
void.
No action, regardless of form, arising out of this Agreement may be
brought by either party more than two years after the cause of action
has arisen, or, in the case of non-payment, more than two years from
the date of the last payment. In any action for enforcement of any
provision of this Agreement, the Corporation shall be entitled to
reasonable attorney fees, the cost of the action, and prejudgement
interest.
Doctor's Care - Central
(Customer Name)
/s/ M.F. McFarland President 03/30/94
By: Title Date Signed
This Agreement is not enforceable until accepted by an officer of the
Corporation in Columbia, South Carolina and will be governed by the laws of the
State of South Carolina.
Accepted By:
/s/ Curtis Oliver Senior Director 03/30/94
Companion Technologies Title Date Signed
Division of Blue Cross Blue Shield of SC
in Columbia, South Carolina
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ATTACHMENT A
BUSINESS PROPOSAL TO
CONSOLIDATE DOCTOR'S CARE FACILITIES
Submitted By: Curtis Oliver
March 28, 1994
Hardware
1 RISC/6000 990, 4 Gigabyte Hard Disk, 5.0 Gigabyte Tape
Backup Unit, 1.44 Megabyte Diskette Drive, 10 Backup
Tapes ................................................ $ 124,500.00
1 3270 Connection Adapter .............................. 618.00
1 256 Megabyte Memory Select ........................... 26,200.00
1 256 Port Async Controller ............................ 2,590.00
1 256 Port Async 4.5M Controller Cabling ............... 120.00
14 256 Port Async 23CM Controller Cabling ............... 560.00
16 16 Port Concentrators ................................ 23,920.00
64 RJ-45 to DB-25 Converters ............................ 7,680.00
1 Power GT31 ........................................... 1,855.00
1 Power Display, Keyboard, Mouse (3 button) ............ 2,760.00
2 Data Products LM815 Line Printer (600 LPM) ........... 19,700.00
1 Clary Online UPS 800 Watt w/Oneac Line Conditioner ... 1,710.00
38 Wyse 60 Terminals .................................... 22,762.00
34 Eight port multiplexer with CSU/DSU .................. 67,660.00
Hardware Total ....................................... $ 302,635.00
NOTE: Current desktop or TI880 printers will be supplied by the site for
remote locations.
Software
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- AIX - 64 User License $ 14,610.00
- AIX Windows
- AIX 3270 Host Connect
- AIX Load
- PAID IV Plus (a private label of the Medical Manager TM)
accounts receivable and billing system 55,900.00
- Standard Management Reports
- Data Merge Language
- 77 Terminal Serialization
- Refund Check Writer
- Lab Interface (one company)
- Prescription Writer
- Facet Term (8 users)
- Contract Module
- Electronic Data Interface (one company)
- Chart Tracking
- Delinquent Report Module
- Company Insurance Reporting
- Location Reporting
- Electronic Claim Module, Blue Cross, Medicaid,
Medicare, CHAMPUS, Commercial
- Collections Module 2,500.00
- Report Writer - Allows center the capability to produce
custom reports 2,495.00
- Automated conversion ($2,000.00 each) 20,400.00
Software Total $ 95,905.00
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
Installation $ 22,000.00
- Complete installation and wiring to connect equipment
to RISC/6000
- Bring all sites to production
- Testing all remote locations
- Testing Communications
Training $ 16,100.00
- (2) 40 hour group sessions (regional)
- (1) 40 hour group session (central)
- 6 hours at each location follow-up
Custom Programming/Consulting (200 Hours) $ 24,000.00
- Used to identify and code corporate financial reports
- Time will be reported to Doctor's Care on all activity
related to the corporate reports
NOTE!!! If 200 hours of programming/consulting time is
attained prior to the completion of all corporate
reports, additional hours will be billed at $80.00
per hour.
TOTAL SYSTEM PRICE $460,640.00
</TABLE>
Monthly Maintenance Fees
Hardware (above only) $3,531.00
Telephone and Software Support 1,170.00
Electronic Claims 65.00
Accepted By: /s/ M.F. McFarland Accepted By: /s/ Curtis Oliver
Doctor's Care Companion Technologies
Date: 03/30/94 Date: 03/30/94
* * *Proposal Valid Until April 25, 1994* * *
C O N F I D E N T I A L
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<PAGE>
ATTACHMENT B
DOCTOR'S CARE
FINANCIAL SUMMARY
MARCH 14, 1994
Downpayment = PPI, Inc. Software Cost - Plus $ 2,225.00
12,600.00
480.00
700.00
950.00
= Automated Conversions 10,200.00
= Installation 11,000.00
= Training 8,050.00
------------
$ 46,205.00
Total Trade-In (17,723.00)
------------
Total Downpayment Due $ 28,482.00
May Be Paid as Follows:
Pay $9,461.00 upon time of initial installment
Pay $9,461.00 August
Pay $9,461.00 October
System Price $460,640.00
Plus Payoff 89,700.00
Less Downpayment (46,205.00)
-----------
Balance to be Financed $504,135.00 @ 8% for 60 months = $10,223.85
per month installment beginning
October 1, 1994
NOTE!!! Doctor's Care will continue payment current fees until system is
completely installed and will begin above payment schedule on October 1, 1994.
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<PAGE>
DOCTOR'S CARE
ITEMS TO BE TRADED-IN
8 APC 450 Watt ............ @ $125 ea. $ 1,000.00
1 TSI UPS ................. @ $100 ea. 100.00
6 Clary UPS ............... @ $350 ea. 2,100.00
15 ALTOS 1000 CPU's ........ @ $800 ea. 12,000.00
Tape backup, 440 hard disk
33 Terminals - ALTOS ....... @ $ 50 ea. 1,650.00
15 2400 Baud Modem ......... @ $ 75 ea. 1,125.00
-------------
Subtotal 17,975.00
Less: Shipping (252.00)
-------------
Total $ 17,723.00
-111-
<PAGE>
EXHIBIT NO. 10. 9
UCI MEDICAL AFFILIATES, INC.
1994 INCENTIVE STOCK OPTION PLAN
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<PAGE>
UCI MEDICAL AFFILIATES, INC.
1994 INCENTIVE STOCK OPTION PLAN
1. Purpose. The purposes of this 1994 Incentive Stock Option Plan (the
"Plan") are to: (1) closely associate the interests of the employees of UCI
Medical Affiliates, Inc. and its subsidiaries (collectively, the "Company") with
the shareholders of the Company by reinforcing the relationship between
employees' rewards and shareholder gains; (2) provide selected employees,
officers and directors with an equity ownership in the Company commensurate with
Company performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels; and, (4) provide an incentive to employees for
continuous employment with the Company. The stock options granted under the Plan
are intended to qualify as incentive stock options within the meaning of
Internal Revenue Code Section 422.
2. Amount of Stock. The total number of shares of Common Stock to be
subject to options granted on and after April 20, 1994 pursuant to the Plan
shall not exceed 250,000 shares of the Company's Common Stock, par value $.01
per share. In the event that options granted under this Plan shall lapse without
being exercised in whole or in part, other options may be granted covering the
shares not purchased under such lapsed options.
3. Stock Option Committee. The Board of Directors shall from time to time
appoint a Committee (the "Committee"), which may also be the Compensation
Committee of the Board of Directors, to serve under this Plan. The Committee
shall consist of two or more directors.
4. Eligibility and Participation. Options may be granted pursuant to
the Plan to any officer or employee of the Company. From time to time the
Committee shall select the officers and employees to whom options may be granted
by the Board of Directors and shall determine the number of shares to be covered
by each option so granted. Future as well as present officers and employees
(including officers and employees who are directors but who are not members of
the Committee) shall be eligible to participate in the Plan. Directors who are
members of the Committee or who are not officers or employees of the Company are
not eligible to participate in the Plan. No option may be granted under the Plan
after April 20, 2004.
5. Option Agreement. The terms and provisions of options granted
pursuant to the Plan shall be set forth in an agreement, herein called Option
Agreement, between the Company and the grantee receiving the same. The Options
may be in such form, not inconsistent with the terms of this Plan, as shall be
approved by the Board of Directors and may include provisions regarding the
timing of the exercisability of the Options.
6. Price. The purchase price per share of Common Stock purchasable
under options granted pursuant to the Plan shall not be less than 100 percent of
the fair market value at the time the options are granted. The purchase price
per share of Common Stock purchasable under options granted pursuant to this
Plan to a person who owns more than 10 percent of the voting power of the
Company's voting stock shall not be less than 110 percent of the fair market
value of such shares, at the time the options are granted. For the purposes of
the preceding sentence (a) the optionee shall be considered as owning the stock
owned directly or indirectly by or for himself, the stock which the optionee may
purchase under outstanding options and the stock owned, directly or indirectly,
by or for his brothers and sisters (whether of the whole or half blood), spouse,
ancestors, and lineal descendants and (b) stock owned directly or indirectly, by
or for a corporation, partnership, estate, or trust shall be considered as being
owned proportionately by or for its shareholders, partners, or beneficiaries.
For all purposes of this Plan, the fair market value of the Common Stock of the
Company shall be determined in good faith at the time of the grant of any option
by decision of the Stock Option Committee. In making such determination, the
Stock Option Committee shall not take into account the effect of any
restrictions on the Common Stock other than restrictions which, by their terms,
will never lapse. The full purchase price of shares purchased shall be paid upon
exercise of the option. Under certain circumstances such purchase price per
share shall be subject to adjustment as referred to in Section 10 of this Plan.
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<PAGE>
7. Option Period. No option granted pursuant to the Plan shall be
exercisable after the expiration of ten years from the date the option is first
granted. No option granted pursuant to the Plan to a person then owning more
than 10 percent of the voting power of the Company's voting stock shall be
exercisable after the expiration of five years from the date the option is first
granted. For the purposes of the preceding sentence (a)the optionee shall be
considered as owning the stock owned directly or indirectly by or for himself,
the stock which the optionee may purchase under outstanding options and the
stock owned, directly or indirectly, by or for his brothers and sisters (whether
of the whole or half blood), spouse, ancestors, and lineal descendants and (b)
stock owned directly or indirectly, by or for a corporation, partnership,
estate, or trust shall be considered as being owned proportionately by or for
its shareholders, partners, or beneficiaries. The expiration date stated in the
Option Agreement is hereafter called the Expiration Date.
8. Termination of Employment. The Option Agreement shall provide that
upon the occurrence of the optionee ceasing for any reason to be employed by the
Company (such occurrence being a "termination of employment"), any unexercised
option shall terminate and become null and void immediately upon such
termination of employment, except in a case where the termination of employment
is by reason of retirement, disability or death. Upon a termination of
employment by reason of retirement, disability or death, the Option Agreement
shall provide that an outstanding and unexercised option may be exercised during
a time not exceeding the following periods:
(a) the one-year period following the date of such termination of the
employee's employment in the case of a disability (within the meaning of Section
22(e)(3) of the Code),
(b) the one-year period following the date of an employee's death, and
(c) the three-month period following the date of such termination in
the case of retirement on or after attainment of age 65, or in the case
of disability other than as described in (a) above.
In no event, however, shall any such period extend beyond the Expiration Date.
9. Assignability. The Option Agreement shall provide that the option
granted thereby shall not be transferable or assignable by the optionee
otherwise than by will or by the laws of descent and distribution or pursuant to
a qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income Security Act, or
the Rules thereunder. During the lifetime of the optionee, the option granted
shall be exercisable only by the optionee.
10. Adjustment in Case of Stock Splits, Stock Dividends, etc. The
Option Agreement may contain such provisions as the Board of Directors may
approve as equitable concerning the effect upon options granted and the option
price due to (a) stock dividends upon, or subdivisions, split-ups, combinations,
consolidations or reclassifications of, the securities purchasable under the
option, or (b) proposals to merge or consolidate the Company or to sell all or
substantially all of its assets, or to liquidate or dissolve the Company.
11. Stock for Investment. The Option Agreement shall provide that the
optionee shall upon each exercise of a part or all of the option granted
represent and warrant this his purchase of stock pursuant to such option is for
investment only, and not with a view to distribution involving a public
offering. At any time the Board of Directors of the Company may waive the
requirement of such a provision in any Option Agreement entered into under this
Stock Option Plan of the Company. The Option Agreement may also provide such
additional restrictions and requirements concerning the exercise of options and
issuance of shares as the Company determines in its discretion are necessary to
meet all applicable laws, rules, and regulations, and to obtain such approvals
as may be required by any governmental agencies, including state and Federal
securities agencies and national securities exchanges.
-114-
<PAGE>
12. Amendment of the Plan. The Board of Directors of the Company may
from time to time alter, amend, suspend or discontinue the Plan and make rules
for its administration, except that the Board of Directors shall not amend the
Plan in any manner which would have the effect of preventing options issued
under the Plan from being "incentive stock options" as defined in Section 422 of
the Internal Revenue Code of 1986. However, nothing in this Plan shall be deemed
to prevent the Board of Directors from issuing non-qualified stock options to
any officer or employee.
13. Options Discretionary. The granting of options under the Plan shall be
entirely discretionary with the Stock Option Committee and nothing in the Plan
shall be deemed to give any officer or employee any right to participate in the
Plan or to receive options.
14. Limitation as to Amount. No person to whom options are granted
hereunder shall receive options, first exercisable during any single calendar
year, for shares, the fair market value of which (determined at the time of
grant of the options) exceeds $100,000. Accordingly, no optionee shall be
entitled to exercise options in any single calendar year, for shares of Common
Stock the value of which (determined at the time of grant of the options)
exceeds $100,000.
15. Stockholder Approval. The Plan will be submitted to the
stockholders of the Company for approval by the holders of a majority of the
outstanding shares of stock of the Company. If the Plan is not approved by the
holders of a majority of the outstanding shares of stock of the Company by April
20, 1995, then the Plan shall terminate and any options granted hereunder shall
be void and of no further force or effect.
-115-
<PAGE>
UCI MEDICAL AFFILIATES, INC.
INCENTIVE STOCK OPTION AGREEMENT
GRANT OF INCENTIVE STOCK OPTION
Date of Grant: ____________, 19 ___
THIS GRANT, dated as of the date of grant first stated above (the "Date
of Grant"), is delivered to UCI Medical Affiliates, Inc., a Delaware corporation
(the "Company"), to __________________________ (the "Grantee"), who is an
officer or employee of the Company or a subsidiary of the Company.
WHEREAS, the Board of Directors of the Company (the "Board") has
adopted, subject to shareholder approval, the UCI Medical Affiliates, Inc. 1994
Incentive Stock Option Plan (the "Plan"); and,
WHEREAS, the Plan provides for the granting of incentive stock options
by the Board to officers and employees of the Company and its subsidiaries to
purchase shares of the Common Stock of the Company (the "Stock"), in accordance
with the terms and provisions thereof; and,
WHEREAS, the Board considers the Grantee to be a person who is eligible
for a grant of incentive stock options under the Plan, and has determined that
it would be in the best interest of the Company to grant the incentive stock
options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Grant of Option. Subject to the terms and conditions hereinafter set forth,
the Company, with the approval and at the direction of the Board, hereby grants
to the Grantee, as of the Date of Grant, an option to purchase up to _____
shares of Stock at a price of $______ per share, the fair market value on the
date hereof. Such option is hereinafter referred to as the "Option" and the
shares of Stock purchasable upon exercise of the Option are hereinafter
sometimes referred to as the "Option Shares". The Option is intended by the
parties hereto to be, and shall be treated as, an incentive stock option (as
such term is defined under Section 422 of the Internal Revenue Code of 1986 (the
"Code")).
2. Installment Exercise. Subject to such further limitations as are provided
herein, the Option shall become exercisable in three (3) installments, the
Grantee having the right hereunder to purchase from the Company the following
number of Option Shares upon exercise of the Option, on and after the following
dates, in cumulative fashion:
(a) on and after the first anniversary of the Date of Grant, up to
one-third (ignoring fractional shares) of the total
number of Option Shares;
(b) on and after the second anniversary of the Date of Grant, up to an
additional one-third (ignoring fractional shares) of the total number of Option
Shares; and,
(c) on and after the third anniversary of the Date of Grant, the remaining
Option Shares.
3. Termination of Option.
(a) The Option and all rights hereunder with respect thereto, to the
extent such rights shall not have been exercised, shall terminate and become
null and void after the expiration of ten (10) years from the Date of Grant (the
"Expiration Date").
(b) Upon the occurrence of the Grantee's ceasing for any reason to be
employed by the Company (such occurrence being a "termination of the Grantee's
employment"), the Option, to the extent not previously exercised, shall
terminate and become null and void immediately upon such termination of the
-116-
<PAGE>
Grantee's employment, except in a case where the termination of the Grantee's
employment is by reason of retirement, disability or death, the Option may be
exercised during the following periods, but only to the extent that the Option
was outstanding and exercisable on any such date of retirement, disability or
death:
(i) the one-year period following the date of such termination of the
Grantees employment in the case of a disability (within the meaning of
Section 22(e)(3) of the Code),
(ii) the six-month period following the date of issuance of letters
testamentary or letters of administration to the executor or
administrator of a deceased Grantee, in the case of the Grantee's death
during his employment by the Company, but not later than one year after
the Grantee's death, and
(iii) the three-month period following the date of such termination in
the case of retirement on or after attainment of age 65, or in the case
of disability other than as described in (i) above.
In no event, however, shall any such period extend beyond the Expiration Date.
(c) In the event of the death of the Grantee, the Option may be
exercised by the Grantee's legal representative(s), but only to the extent that
the Option would otherwise have been exercisable by the Grantee.
(d) A transfer of the Grantee's employment between the Company and any
subsidiary of the Company, or between any subsidiaries of the Company, shall not
be deemed to be a termination of the Grantee's employment.
(e) Notwithstanding any other provisions set forth herein or in the
Plan, if the Grantee shall (i) commit any act of malfeasance or wrongdoing
affecting the Company, (ii) breach any covenant not to compete or employment
contract with the Company, or (iii) engage in conduct that would warrant the
Grantee's discharge for cause (excluding general dissatisfaction with the
performance of the Grantee's duties, but including any act of disloyalty or any
conduct clearly tending to bring discredit upon the Company), any unexercised
portion of the Option shall immediately terminate and be void.
4. Exercise of Options.
(a) Subject to such further limitations as are provided herein, the
Option shall be exercisable at any time and from time to time during the period
commencing one (1) year from the Date of Grant and ending ten (10) years (five
(5) years for 10 percent shareholders as described in the Plan) from the Date of
Grant. The Grantee may exercise the Option with respect to all or any part of
the number of Option Shares then exercisable hereunder by giving the Secretary
of the Company written notice of intent to exercise. The notice of exercise
shall specify the number of Option Shares as to which the Option is to be
exercised and the date of exercise thereof, which date shall be at least five
days after the giving of such notice unless an earlier time shall have been
mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Grantee of the option price
for the Option Shares purchased shall be made on or before the exercise date
specified in the notice of exercise in cash, or, with the prior written consent
of the Secretary, in whole or in part through the surrender of previously
acquired shares of Stock at their fair market value on the exercise date.
On the exercise date specified in the Grantee's notice or as soon
thereafter as is practicable, the Company shall cause to be delivered to the
Grantee, a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued Stock or reacquired Stock, as the Company
may elect) upon full payment of such Option Shares. The Grantee shall upon each
exercise of a part or all of the option granted represent and warrant that his
purchase of stock pursuant to such option is for investment only, and not with a
view to distribution involving a public offering. The obligation of the Company
to deliver Stock shall, however, be subject to the condition that if at any time
the Board shall determine in its discretion that
-117-
<PAGE>
the listing, registration or qualification of the Option or the Option
Shares upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the Option or the issuance
or purchase of Stock thereunder, the Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board.
(c) If the Grantee fails to pay for any of the Option Shares specified
in such notice or fails to accept delivery thereof, the Grantee's right to
purchase such Option Shares may be terminated by the Company. The date specified
in the Grantee's notice as the date of exercise shall be deemed the date of
exercise of the Option, provided that payment in full for the Option Shares to
be purchased upon such exercise shall have been received by such date.
5. Adjustment of and Changes in Stock of the Company. In the event of a
reorganization, recapitalization, change of shares, stock split, spin-off, stock
dividend, reclassification, subdivision, consolidation or combination of
shares,, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of capital stock of the Company, the Board may
make such adjustment as it deems appropriate in the number and kind of shares of
Stock subject to the Option or in the option price; provided, however, that no
such adjustment shall give the Grantee any additional benefits under the Option.
6. No Rights of Stockholders. Neither the Grantee nor any personal
representative shall be, or shall have any of the rights and privileges of, a
stockholder of the Company with respect to any shares of Stock purchasable or
usable upon the exercise of the Option, in whole or in part, prior to the date
of exercise of the Option.
7. Non-Transferability of Option. During the Grantee's lifetime, the Option
hereunder shall be exercisable only by the Grantee or any guardian or legal
representative of the Grantee, and the Option shall not be transferable except,
in case of the death of the Grantee, by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code of 1986, as amended, or Title I of the Employee
Retirement Income Security Act, or the Rules thereunder, nor shall the Option be
subject to attachment, execution or other similar process. In the event of (a)
any attempt by the Grantee to alienate, assign, pledge, hypothecate or otherwise
dispose of the Option, except as provided for herein, or (b) the levy of any
attachment, execution or similar process upon the rights or interest hereby
conferred, the Company may terminate the Option by notice to the Grantee and it
shall thereupon become null and void.
8. Employment Not Affected. Neither the granting of the Option nor its exercise
shall be construed as granting to the Grantee any right with respect to
continuance of employment with the Company or any of its subsidiaries. Except as
may otherwise be limited by a written agreement between the Company and the
Grantee, the right of the Company or any subsidiary of the Company to terminate
at will the Grantee's employment with it at any time (whether by dismissal,
discharge, retirement or otherwise) is specifically reserved by the Company or
any subsidiary of the Company, as the employer, and is acknowledged by the
Grantee.
9. Amendment of Option. The Option may be amended by the Board or the Committee
at any time (i) if the Board or the Stock Option Committee determines, in its
sole discretion, that amendment is necessary or advisable in the light of any
addition to or change in the Internal Revenue Code of 1986 or in the regulations
issued thereunder, or any federal or state securities law or other law or
regulation, which change occurs after the Date of Grant and by its terms applies
to the Option; or (ii) other than in the circumstances described in clause (i),
with the consent of the Grantee.
10. Notice. Any notice to the Company provided for in this instrument shall be
addressed to it in care of its Secretary at its executive offices at 6168 St.
Andrews Road, Columbia, South Carolina 29212, and any notice to the Grantee
shall be addressed to the Grantee at the current address shown on the payroll
-118-
<PAGE>
records of the Company. Any notice shall be deemed to be duly given if and when
properly addressed and posted by registered or certified mail, postage prepaid.
11. Incorporation of Plan by Reference. The Option is granted pursuant to the
terms of the Plan, the terms of which are incorporated herein by reference, and
the Option shall in all respects be interpreted in accordance with the Plan. The
Stock Option Committee shall interpret and construe the Plan and this
instrument, and its interpretations and determinations shall be conclusive and
binding on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder.
12. Governing Law. The validity, construction, interpretation and effect of
this instrument shall exclusively be governed by and determined in accordance
with the law of the State of South Carolina, except to the extent preempted by
federal law, which shall to such extent govern.
IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute and attest this Grant of Incentive Stock Option, and the Grantee has
placed his or her signature hereon, effective as of the Date of Grant.
UCI MEDICAL AFFILIATES, INC.
By: _________________________
Its:
ACCEPTED AND AGREED TO:
By: _________________________
Grantee
-119-
<PAGE>
EXHIBIT NO. 10.10
CONSENT OF INDEPENDENT ACCOUNTANT
-120-
<PAGE>
ACCOUNTANT'S CONSENT
We consent to the incorporation by reference in this annual report on Form 10-K
of our report dated January 26, 1995 on our audit of the consolidated financial
statements of UCI Medical Affiliates, Inc. as of September 30, 1994, and for the
two years in the period ended September 30, 1994.
/s/ Moore Kirkland Scott & Beauston
West Columbia, South Carolina
December 22, 1995
ORIGINAL SIGNED ACCOUNTANT'S CONSENT
ON MOORE KIRKLAND SCOTT & BEAUSTON LETTERHEAD
IS ON FILE WITH
UCI MEDICAL AFFILIATES, INC.
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<PAGE>
EXHIBIT NO. 21
SUBSIDIARIES OF THE REGISTRANT
-122-
<PAGE>
SUBSIDIARIES OF UCI MEDICAL AFFILIATES, INC.
Name Under Which
State of Jurisdiction Subsidiary Does
Name of Subsidiary of Incorporation Business
UCI Medical Affiliates
of South Carolina, Inc. South Carolina Doctor's Care
-123-
