SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB/A
(Mark One)
( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended: December 31, 1997
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( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from:_______________to_________________
Commission file number: 0-13265
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UCI MEDICAL AFFILIATES, INC,
----------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 59-2225346
- --------------------------------------------- --------------------------------
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
1901 Main Street, Suite 1200, Mail Code 1105, Columbia, SC 29201
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(803) 252-3661
- --------------------------------------------------------------------------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, address or fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. (X)Yes ( ) No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. ( )Yes ( ) No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
6,052,164 shares of $.05 common stock outstanding at December 31, 1997
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Transitional Small Business Disclosure Format (check one):( )Yes ( X ) No
<PAGE>
UCI MEDICAL AFFILIATES, INC.
INDEX
Page
Number
-------
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets - December 31, 1997
and September 30, 1997 3
Consolidated Statements of Operations for the quarters
ended December 31, 1997 and December 31, 1996 4
Consolidated Statements of Cash Flows for the quarters
ended December 31, 1997 and December 31, 1996 5
Notes to Consolidated Financial Statements 6-7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
PART II OTHER INFORMATION
Items 1-6 12
SIGNATURES 14
<PAGE>
UCI Medical Affiliates, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S> <C>
December 31, September 30,
1997 1997
------------- ------------
(unaudited) (audited)
Assets
Current assets
Cash and cash equivalents $ 0 $ 14,676
Accounts receivable, less allowance
for doubtful accounts
of $923,721 and $878,469 6,862,480 5,943,884
Inventory 538,396 502,888
Deferred taxes 334,945 334,945
Prepaid expenses and other current assets 629,653 579,217
------------- ------------
Total current assets 8,365,474 7,375,610
Property and equipment less accumulated
depreciation of $2,957,691
and $2,724,222 4,474,621 4,002,699
Deferred taxes 1,417,237 1,417,237
Excess of cost over fair value of assets
acquired, less accumulated amortization
of $1,821,679 and $1,664,739 8,437,440 7,801,607
Other assets 266,380 266,379
--------------- --------------
Total Assets $ 22,961,152 $ 20,863,532
=============== ==============
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt $ 916,411 $ 840,879
Current portion of long-term debt payable
to employee 201,518 177,445
Accounts payable 2,956,625 2,039,506
Accrued salaries and payroll taxes 676,107 959,068
Other accrued liabilities 371,630 437,667
--------------- -------------
Total current liabilities 5,122,291 4,454,565
Long-term debt, net of current portion 7,833,551 6,438,655
Long-term debt payable to employees, net of
current portion 564,782 481,815
--------------- -------------
Total Liabilities 13,520,624 11,375,035
--------------- -------------
Commitments and contingencies 0 0
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- 6,052,164
and 5,744,965 shares 302,608 287,248
Paid-in capital 16,249,546 15,435,535
Accumulated deficit (7,111,626) (6,234,286)
-------------- -------------
Total Stockholders' Equity 9,440,528 9,488,497
-------------- -------------
Total Liabilities and Stockholders' Equity $ 22,961,152 $ 20,863,532
============== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
UCI Medical Affiliates, Inc.
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
Three Months Ended December 31,
1997 1996
-------------- -------------
Revenues $ 8,077,876 $ 6,487,908
Operating costs 8,243,266 6,130,191
-------------- -------------
Operating margin (165,390) 357,717
General and administrative expenses 25,434 37,709
Depreciation and amortization 406,168 289,474
-------------- -------------
Income (loss) from operations (596,992) 30,534
Other income (expense)
Interest expense, net of interest income (279,351) (166,794)
Gain (loss) on disposal of equipment (439) 0
-------------- -------------
Other income (expense) (279,790) (166,794)
Income (loss) before benefit (provision) for
income taxes (876,782) (136,260)
Benefit (provision )for income taxes (558) 166,382
-------------- -------------
Net income (loss) $ (877,340) $ 30,122
============== =============
Basic earnings (loss) per share $ (.15) $ .01
============== =============
Basic weighted average common shares
outstanding 6,041,980 4,807,807
============== =============
Diluted earnings (loss) per share $ (.14) $ .01
============== =============
Diluted weighted average common shares
outstanding 6,061,945 4,819,491
============== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
UCI Medical Affiliates, Inc.
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
Three Months Ended December 31,
1997 1996
------------- ------------
Operating activities:
Net income (loss) $ (877,340) $ 30,122
Adjustments to reconcile net income (loss)
to net cash provided by (used-in)
operating activities:
(Gain) loss on disposal of equipment 439 0
Provision for losses on accounts receivable 244,613 130,720
Depreciation and amortization 406,168 289,474
Deferred Taxes 0 (175,000)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (899,080) (684,836)
(Increase) decrease in inventory (35,508) (4,776)
(Increase) decrease in prepaid expenses
and other current assets (50,435) (165,981)
Increase (decrease) in accounts payable and
accrued expenses 562,078 (164,782)
------------ ------------
Cash provided by (used in) operating activities (649,065) (745,059)
------------- ------------
Investing activities:
Purchases of property and equipment (289,260) (135,519)
Acquisitions of goodwill (106,863) (20,718)
(Increase) decrease in other assets 0 (377)
------------- ------------
Cash provided by (used in) investing activities (396,123) (156,614)
------------- ------------
Financing activities:
Net borrowings (payments) under line-of-credit
agreement (125,921) 1,355,760
Increase in long-term debt 1,500,000 269,400
Payments on long-term debt (343,567) (882,949)
------------- ------------
Cash provided by (used in) financing
activities 1,030,512 742,211
------------- ------------
Increase (decrease) in cash and
cash equivalents (14,676) (159,462)
Cash and cash equivalents at beginning
of period 14,676 237,684
------------- ------------
Cash and cash equivalents at end of period $ 0 $ 78,222
============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
UCI MEDICAL AFFILIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X of the Securities and Exchange Commission. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of those of a normal recurring
nature) considered necessary for a fair presentation have been included.
Operating results for the three month period ended December 31, 1997 are not
necessarily indicative of the results that may be expected for the fiscal year
ending September 30, 1998. For further information, refer to the audited
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended September 30, 1997.
The consolidated financial statements include the accounts of UCI Medical
Affiliates, Inc. ("UCI") and all wholly-owned and beneficially owned
subsidiaries (UCI Medical Affiliates of South Carolina, Inc. ("UCI-SC") and
Doctor's Care P.A. ("P.A.")). Because of the corporate practice of medicine
laws in the state in which the Company operates, the Company does not own
medical practices but instead enters into an exclusive long-term management
services agreement with the P.A. which operate the medical practices. In
addition, the Company has the contractual right to designate, in its sole
discretion and at any time, the licensed medical provider who is the owner of
the capital stock of the P. A. at a nominal cost ("nominee arrangements").
Through the Administrative Services Agreement, the Company has exclusive
authority over decision making relating to all major ongoing operations of the
underlying professional corporations with the exception of the professional
aspects of medical practice as required by state law. Under the Administrative
Services Agreement, the Company establishes annual operating and capital budgets
for the P. A. and compensation guidelines for the licensed medical
professionals. The Administrative Services Agreement has an initial term of
forty years. The method of computing the management fees are based on billings
of the affiliated practices less the amounts necessary to pay professional
compensation and other professional expenses. In all cases, these fees are meant
to compensate the Company for expenses incurred in providing covered services
plus a profit. These interest are unilaterally salable and transferable by the
Company and fluctuate based upon the actual performance of the operations of the
professional corporation.
Through the Administrative Services Agreement and the nominee arrangement, the
Company has a significant long-term financial interest in the affiliated
practices and, therefore, according to Emerging Issues Task Force Issue No.
97-2, "Application of FASB Statement No. 94, Consolidation of All Majority-Owned
Subsidiaries, and APB No. 16, Business Combinations, to Physician Practice
Management Entities and Certain Other Entities with Contractual management
Arrangements," may consolidate the results of the affiliated practices with
those of the Company. Because the Company must present consolidated financial
statements, net patient service revenues are presented in the accompanying
statement of operations. All significant intercompany accounts and transactions,
including management fees, have been eliminated.
The P.A. enters into employment agreements with physicians for terms ranging
from one to ten years. All employment agreements have clauses that allow for
early termination of the agreement if certain events occur such as the loss of a
medical license. Over 80% of the physicians employed by the P.A. are paid on an
hourly basis for time scheduled and worked at the medical centers while other
physicians are salaried. A few of the physicians have incentive compensation
arrangements which are contractually based upon factors such as productivity,
collections and quality.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and revenues
and expenses and the disclosure of contingent assets and liabilities. Actual
results could differ from those estimates and assumptions. Significant estimates
are discussed in these footnotes, as applicable.
<PAGE>
Procedurally, the management agreement calls for the P.A. to provide medical
services and charge a fee to the patient or to the patient's insurance carrier
or employer for such services. Physician salaries are paid out of these revenues
and all remaining revenues are passed to UCI-SC as a management fee. UCI-SC
provides all support personnel (nurses, technicians, receptionists), all
administrative functions (billing, collecting, vendor payment), and all
facilities, supplies and equipment. The consolidated accounts of the Company
include all revenue and all expenses (including physician salaries) of all three
entities.
The net assets of the P.A. are not material for any period presented and
intercompany accounts and transactions have been eliminated.
EARNINGS PER SHARE
The computation of basic earnings (loss) per share and diluted earnings (loss)
per share is in conformity with the provisions of Statement of Financial
Accounting Standards No. 128.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 2
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.
The consolidated financial statements include the accounts of UCI^ Medical
Affiliates, Inc. ("UCI") and all wholly-owned and beneficially owned
subsidiaries (UCI Medical Affiliates of South Carolina, Inc. ("UCI-SC") and
Doctor's Care of South Carolina, P.A. ("P.A.")). Because of corporate practice
of medicine laws in the state in which the Company operates, the Company does
not own medical practices but instead enters into an exclusive long-term
management services agreement with the P.A. which operates the medical
practices. In addition, the Company has the contractual right to designate, in
its sole discretion and at any time, the licensed medical provider who is the
owner of the capital stock of the P.A. at a nominal cost ("nominee
arrangement"). Through the Administrative Services Agreement, the Company has
exclusive authority over decision making relating to all major ongoing
operations of the underlying P.A. with the exception of the professional aspects
of medical practice as required by state law. Under the Administrative Services
Agreement, the Company establishes annual operating and capital budgets for the
P.A. and compensation guidelines for the licensed medical professionals. The
Administrative Services Agreement has an initial term of forty years. The method
of computing the management fees are based on billings of the affiliated
practices less the amounts necessary to pay professional compensation and other
professional expenses. In all cases, these fees are meant to compensate the
Company for expenses incurred in providing covered services plus a profit. These
interest are unilaterally salable and transferable by the Company and fluctuate
based upon the actual performance of the operations of the P.A.
Through the Administrative Services Agreement and the nominee arrangement, the
Company has a significant long-term financial interest in the affiliated
practices and, therefore, according to Emerging Issues Task Force Issue No.
97-2, "Application of FASB Statement No. 94, Consolidation of All Majority-Owned
Subsidiaries, and APB No. 16, Business Combinations, to Physician Practice
Management Entities and Certain Other Entities with Contractual management
Arrangements," must consolidate the results of the affiliated practices with
those of the Company. Because the Company must present consolidated financial
statements, net patient service revenues are presented in the accompanying
statement of operations. All significant intercompany accounts and transactions,
including management fees, have been eliminated.
The net assets of the P.A. are not material for any period presented and
intercompany accounts and transactions have been eliminated.
Results of Operations
- ---------------------
Revenues of $8,078,000 for the quarter ending December 31, 1997 reflect an
increase of 25% from those of the quarter ending December 31, 1996.
This increase in revenue is attributable to a number of factors. The Company
engaged in a significant expansion, increasing the number of medical centers
from 30 to 40. This expansion included Springwood Lake Family Practice, Woodhill
Family Practice and Midtown Family Practice, all of Columbia, South Carolina and
all acquired in August 1997; Doctor's Care - Camden acquired in September 1997;
three Progressive Therapy Services offices all located in Columbia, South
Carolina and all acquired in October 1997; Doctor's Care - New Ellenton acquired
in November 1997; a Physical Therapy practice in Columbia, South Carolina opened
in November 1997; and Ridgeview Family Practice of Columbia, South Carolina
opened in December 1997. Of the $1,590,000 in revenue growth for the first
quarter of fiscal 1997 to the first quarter of fiscal 1998, approximately
$1,080,000 or 68% of this growth was from the ten locations opened after
December 31, 1996.
<PAGE>
The Company has increased its services provided to members of Health Maintenance
Organizations (HMOs). In such 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. 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. The Company now acts as primary care provider for four HMOs, including
Companion and is the primary care "gatekeeper" for more than 23,000 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 that possibility.
Capitated revenue grew from approximately $705,000 in the first quarter of
fiscal 1997 to approximately $900,000 in the first quarter of fiscal 1998.
The Company negotiates contracts with HMOs for the P.A.'s physicians to provide
health care on a capitated reimbursement basis. Under these contracts, which
typically are automatically renewed on an annual basis, the P.A. physicians
provide virtually all covered primary care services and receive a fixed monthly
capitation payment from the HMOs for each member who chooses a P.A. physician as
his or her primary care physician. The capitation amount is fixed depending upon
the age and sex of the HMO enrollee. Contracts with HMOs accounted for
approximately 11% of the Company's net revenue in fiscal 1997 and in the first
quarter of fiscal 1998.
To the extent that enrollees require more care than is anticipated, aggregate
capitation payments may be insufficient to cover the costs associated with the
treatment of enrollees. No capitation contracts currently in place at the
Company have been determined to be insufficient to cover related costs of
treatment. Higher capitation rates are typically received for senior patients
because their medical needs are generally greater and consequently the cost of
covered care is higher.
Increased revenues 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 a
primary shareholder of the Company.
Patient encounters increased to 115,000 in the first quarter of fiscal 1998 from
96,000 in the first quarter of fiscal 1997.
Even with the positive effects of the factors mentioned above, revenues were
short of goals for the quarter, due in part to the increased competition from
hospitals and other providers in Columbia, Greenville, Sumter and Myrtle Beach.
In each of these areas, regional hospitals have acquired or opened new primary
care physician practices that compete directly with the Company for patients. In
each case, the hospital owner of our competition is believed to have
significantly greater resources than the Company. Management believes that such
competition will continue into the future and plans to compete on a basis of
quality service and accessibility.
An operating margin of $358,000 was earned during the first quarter of fiscal
1997 as compared to an operating deficit of $165,000 for the first quarter of
fiscal 1998.
Management believes that this margin deterioration is mainly the result of some
start-up costs being absorbed for the locations added since December 1996.
Start-up costs are mainly the result of personnel costs exceeding revenues at
centers that are not seeing patients at or near capacity. These costs are
expensed as incurred by the Company. Additionally, patient visits did not meet
budget for the first quarter of fiscal 1998, possibly due to the competition
factors discussed above. Management does not currently believe that this
negative trend is indicative of the results that may be expected for the fiscal
year 1998.
This margin deterioration is also attributable to increased cost-cutting
pressures being applied by managed care insurance payors that cover many of the
Company's patients. As managed care plans attempt to cut costs, they typically
increase the administrative burden of providers such as the Company by requiring
referral approvals and by requesting hard copies of medical records before they
will pay claims. The number of patients at the Company's Centers that are
covered by a managed care plan versus a traditional indemnity plan continues to
grow. Management expects this trend to continue.
<PAGE>
Depreciation and amortization expense increased to $406,000 in the first quarter
of fiscal 1998, up from $289,000 in the first quarter of fiscal 1997. 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 as
noted above. Interest expense increased from $167,000 in the first quarter of
fiscal 1997 to $279,000 in the first quarter of fiscal 1998 primarily as a
result of the interest costs associated with the indebtedness incurred in the
Company's purchase of these assets and centers and for the usage of the
operating line of credit.
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 the first quarter of
fiscal 1997 by $175,000. 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.
In determining that it was more likely than not that the recorded deferred tax
asset would be realized, management of the Company considered the following:
o The budgets and forecasts that management and the Board of Directors had
adopted for the next five fiscal years including plans for expansion.
o The ability to utilize NOL's prior to their expiration.
o The potential limitation of NOL utilization in the event of a change in
ownership.
o The generation of future taxable income in excess of income reported on
the consolidated financial statements.
Financial Condition at December 31, 1997
- ----------------------------------------
Cash and cash equivalents decreased by $15,000 during the quarter ended December
31, 1997 and were utilized mainly for working capital needs and to fund the
expansion previously discussed.
Accounts receivable increased 15% during the quarter, reflecting the addition of
the ten centers described above and the overall growth in patient visits to
existing centers.
The increase in goodwill attributable to the purchases of the eight practices
since December 31, 1996 was somewhat offset by the amortization recorded.
Long-term debt increased from $6,920,000 at September 30, 1997 to $8,398,000 at
December 31, 1997 primarily as a result of indebtedness incurred in capital
leases for Center upfits, the utilization of an operating line of credit, and
the debt incurred as a result of practice acquisitions. Management believes that
it will be able to fund debt service requirements out of cash generated through
operations.
On October 6, 1997, the Company completed a private placement of $1.5 million,
6.5% five-year convertible subordinated debenture with FPA Medical Management,
Inc., a national physician practice management company headquartered in San
Diego, California. The debentures are convertible to common stock at any time
within the five year period at a fixed price premium to the current stock price
and are subject to Rule 144 of the Securities and Exchange Commission when
converted.
Overall, the Company's current assets exceeded its current liabilities at
December 31, 1997 by $3,243,000.
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
<PAGE>
through a combination of external financing (including bank debt and proceeds
from the sale of common stock to Companion HealthCare Corporation and Companion
Property & Casualty Insurance Company), internally generated funds and credit
extended by suppliers.
Operating activities used $649,000 of cash during the first quarter of fiscal
1998. This reflects growth in the Company's accounts receivable as well as
prepaid expenses and a decrease in accounts payable and accrued expenses. The
growth in accounts receivable is the result of growth in the number of Centers,
patient visits and charges per patient visit. If the operating cash flow
shortages continue, 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.
Investing activities used $396,000 of cash during the quarter as a result of
expansion efforts. Continued growth is anticipated during the remainder of
fiscal 1998.
<PAGE>
PART II
OTHER INFORMATION
Item 1 Legal Proceedings
The Company is not a party to any pending litigation other than
routine litigation incidental to the business or that which is
immaterial in amount of damages sought.
Item 2 Changes in Securities
Recent Sales of Unregistered Securities
---------------------------------------
During the three months ended December 31, 1997, the
securities identified below were issued by the Company without
registration under the Securities Act of 1933. In each case, all of
the shares were issued pursuant to the exemption from registration
contained in Section 4(2) of the Securities Act of 1933 as a
transaction, not involving a general solicitation, in which the
purchaser was purchasing for investment. The Company believes that
each purchaser was given or had access to detailed financial and
other information with respect to the Company and possessed
requisite financial sophistication.
On October 1, 1997, the Company issued 163,102 shares of its
common stock to L.D., P.A. (formerly Progressive Therapy Services,
P.A.) and 113,874 shares to L.D., Jr., P.C. (formerly Bar-Ed,
Professional Corporation) as part of the purchase prices in
connection with the Company's acquisition of substantially all the
assets of such entities' physical therapy practices.
On November 1, 1997, the Company issued 30,223 shares of its
common stock to Marvin Dees, M.D. as part of the purchase price in
connection with the Company's acquisition of substantially all the
assets of the medical practice of Dr. Dees.
Item 3 Defaults upon Senior Securities
This item is not applicable.
Item 4 Submission of Matters to a Vote of Security Holders
This item is not applicable.
Item 5 Other Information
This item is not applicable.
<PAGE>
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits. The exhibits included on the attached Exhibit Index
-------------
are filed as part of this report.
(b) Reports on Form 8-K. The Company filed a Form 8-K on October
------------------------
15, 1997 which reported the acquisition by UCI-SC of Progressive
Therapy Services, P.A. and Bar-Ed, Professional Corporation, each
of Columbia, South Carolina. Financial statements of the acquired
entity and pro forma financial information regarding the combined
entity were filed in a Form 8-K/A on December 11, 1997.
The Company filed a Form 8-K on November 5, 1997 which reported
the acquisition by UCI-SC of Marvin Dees, M.D. of New Ellenton,
South Carolina. Financial statements of the acquired entity and
pro forma financial information regarding the combined entity
were filed in a Form 8-K/A on January 7, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed on its behalf by the
undersigned hereunto duly authorized.
UCI Medical Affiliates, Inc.
(Registrant)
/s/ M.F. McFarland, III, M.D. /s/ Jerry F. Wells, Jr.
- ------------------------------ --------------------------------
Marion F. McFarland, III, M.D. Jerry F. Wells, Jr.
President, Chief Executive Officer, Executive Vice President of Finance,
and Chairman of the Board Chief Financial Officer and
Principal Accounting Officer
Date: August 19, 1998
<PAGE>
UCI MEDICAL AFFILIATES, INC.
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE NUMBER
- ----------- -------------------------------------- ------------
10.18 Employment Agreement dated January 23, 1997 16
between UCI Medical Affiliates of
South Carolina, Inc. and Jon G. Keith
21 Subsidiaries of the Registrant 28
27 Financial Data Schedule Filed separately
as Article Type 5
via Edgar
EXHIBIT 10.18
EMPLOYMENT AGREEMENT DATED JANUARY 23, 1997
BETWEEN UCI MEDICAL AFFILIATES OF SOUTH CAROLINA, INC.
AND JON G. KEITH
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 23rd day of January, 1997, by and
between UCI Medical Affiliates of South Carolina, Inc., a South Carolina
corporation (UCI), and Jon G. Keith ("Employee").
WHEREAS, UCI is a wholly-owned subsidiary of UCI Medical Affiliates, Inc.,
a Delaware Corporation ("Parent");
WHEREAS, Doctor's Care, P.A., a South Carolina corporation ("Doctor's
Care"), is an affiliate of UCI and shall benefit from this Agreement; and
WHEREAS, UCI desires to employ Employee and Employee 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 Employee to perform the duties
described in Section 3 below subject to and in accordance with the terms and
conditions hereof, and Employee hereby accepts such employment.
2. Term. Employee's employment shall commence on the 27th day of January,
1997, and shall continue for a period of three (3) years unless earlier
terminated in accordance with the provisions of Section 8 of this Agreement.
3. Duties of Employee.
A. In accepting employment by UCI, Employee shall undertake and
assume the responsibility of performing for and on behalf of UCI the duties of
the Chief Operating Officer of UCI in Columbia, South Carolina. Except with his
written consent, Employee shall not be assigned to any other position or
required to spend a significant amount of time assigned to any location(s)
outside of Richland or Lexington Counties, South Carolina.
B. During the term of this Agreement, Employee shall be a full-time
employee of UCI, and shall devote his full working time and efforts to his
duties hereunder. Employee 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, Employee shall not engage in any activity for
compensation or pecuniary gain other than his employment hereunder and passive
investing for the account of himself or members of his household. "Passive
investing" shall include, but not be limited to the owning and leasing of real
properties and the ownership of securities, partnership interests or other
investments which do not require active participation by Employee during
Employee's normal work day.
4. Compensation. As compensation for the services to be rendered by
Employee for UCI under this Agreement, Employee shall be compensated by UCI on
the following basis:
A. Base Salary; Signing Bonus. During the term of this Agreement
Employee shall receive from UCI an annual salary of One Hundred Fifteen Thousand
Dollars ($115,000), payable in pay periods as determined by UCI, but in no event
less frequently than monthly (the "Base Salary"). In addition, Employee shall be
entitled to receive a "signing" bonus of Six Thousand Dollars ($6,000), payable
within 15 days after the commencement of his employment.
B. Dues. During the term of this Agreement, UCI shall pay the
initiation or initial membership
<PAGE>
fee and all dues of Employee as a member of one private dining/social club, so
long as the aggregate annualized cost for such fees and dues does not exceed Two
Hundred Dollars ($200) per month, for the purpose of entertainment of UCI's
clients in connection with the performance of the duties of Employee.
C. Vacation. During the term of this Agreement Employee shall be
entitled to a total of 10 business days of paid vacation during the first two
years of this Agreement and 15 business days during the third year and, if this
Agreement is extended by mutual agreement, thereafter. Such vacation days are to
be taken at such time or times as Employee may reasonably request, subject to
UCI's convenience and prior approval, which approval shall not be unreasonably
withheld. Vacation time may cumulate from year to year up to a maximum of 60
days.
D. Automobiles. During the term of this Agreement, UCI shall provide
to Employee the use of one automobile, at least comparable to a new Toyota
Avalon, with all gasoline, taxes, insurance, maintenance and repairs to be paid
by UCI.
E. Reimbursement For Expenses. During the term of this Agreement,
UCI shall reimburse Employee for all reasonable expenses incurred by Employee
for the benefit of UCI in the performance of his duties hereunder; provided,
however, reimbursement for aggregate expenses each calendar year in excess of
$7,500 shall require the prior written approval of the CEO of UCI.
F. Other Benefits. During the term of this Agreement, Employee shall
receive from UCI such other benefits (e.g., family health insurance coverage,
life insurance coverage, participation in pension plans, and participation in
stock option plans of Parent, etc.) reasonably comparable to, and no worse than,
those benefits, if any, generally provided to other senior executives of UCI.
Additionally, UCI will furnish to Employee, at UCI's expense, a term life
insurance policy that at the time of his death will pay to his spouse or other
designated beneficiary(s) a benefit of at least two times Employee's Base
Salary. The health insurance coverage shall begin immediately as of the
effective date of Employee's employment, but if the insurer requires a waiting
period prior to coverage, UCI shall reimburse Employee for the amount of
premiums payable by him for family coverage under the plan of his prior
employer, promptly upon presentation to UCI of the premium notice(s).
G. Incentive Bonus. During the term of this Agreement, annually on
or about the end of UCI's fiscal year, Employee shall be eligible to receive
from UCI an incentive bonus up to 20% of his Base Salary, provided that he has
met or exceeded the performance criteria set forth in Exhibit "A", to be
attached hereto. It is acknowledged that, upon the signing of this Agreement,
the final terms of Exhibit "A" have not been negotiated; however, UCI and
Employee agree to negotiate in good faith to reach mutual agreement on the
performance criteria to be incorporated into Exhibit "A", within forty-five (45)
days of the date of Employee's commencement of employment. Exhibit "A" will be
signed by UCI and Employee and may be amended by mutual written agreement from
time to time.
H. Stock Options. UCI hereby agrees to grant to Employee an option
to purchase 60,000 shares of common stock of Parent (the "Option Shares")
pursuant to the terms of the 1994 Incentive Stock Option Plan (the "Plan")
attached hereto as Exhibit "B". With respect to the plan and the Option Shares,
UCI represents and warrants to Employee as follows:
(i) The Plan was duly approved by Parent's shareholders and is
in full force and effect, and the Option Shares are available for issuance
thereunder to Employee, as an employee of UCI;
(ii) Parent has taken any actions necessary or appropriate to
reserve the Option Shares for issuance to Employee, and the Directors of
Parent and the Stock Option Committee have approved the execution by M. F.
McFarland, III, M.D., as CEO of UCI, of the Incentive Stock Option
Agreement attached hereto as Exhibit "C".
<PAGE>
(iii) The Plan and the Option Shares have been registered for
public sale pursuant to an S-8 Registration Statement No. 333-02943 dated
May 29, 1996; and
(iv) UCI acknowledges that the grant of the Incentive Stock
Options was a material factor in Employee's decision to accept employment with
UCI.
5. Confidentiality and Secrecy. Employee 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, Parent, and Doctor's Care's 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, Parent and Doctor's Care, the equipment and methods
used and preferred by UCI customers, and the fees paid by them (all of which are
deemed for all purposes confidential and proprietary). As a material inducement
to UCI to enter into this Agreement and to pay Employee the compensation stated
in Section 4 herein, Employee 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, Parent, and/or Doctor's Care.
6. Covenants Against Competition. In view of the unique value to UCI of
the services of Employee for which UCI has contracted hereunder, because of the
confidential information to be obtained by or disclosed to Employee, as
hereinabove set forth, and because of the employment of Employee hereunder will
result in Employee'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 Employee the compensation stated in Section 4 hereof,
Employee covenants and agrees as follows:
A. During the employment of Employee hereunder, and for a period of
two (2) years after the termination of the employment of Employee hereunder for
any reason, Employee shall not directly or indirectly solicit or divert
employment of any employee of UCI, Parent, or Doctor Care's business or employ
any person employed by UCI, Parent and/or Doctor's Care during the term of
Employee employment by UCI.
B. During the employment of Employee hereunder, and for a period of
two (2) years after the termination of Employee hereunder for any reason,
Employee shall not directly or indirectly solicit, divert, or convert, or assist
another person or entity to solicit, divert or convert, the customers of UCI,
Parent, and/or Doctor's Care to any other company or entity.
C. During the employment of Employee hereunder, and for a period of
one (1) year after the termination of Employee's employment with UCI for any
reason other than UCI's termination of Employee "without cause" as defined in
Section 8 hereof, Employee 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, Parent and/or Doctor's Care 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 consultant, director, officer, or in any
other capacity or manner whatsoever, in any enterprise that shall so engage;
except that Employee 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 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.
The restrictions of this Section 6(c) shall apply everywhere within a five (5)
mile radius of (1) any primary or urgent care facility owned or operated by UCI,
Parent, or Doctor's Care, and (iii) each other location where UCI, Parent, or
Doctor's Care maintains an office which is in existence as of the date of such
termination.
<PAGE>
7. Reasonableness, Enforceability and Remedies.
A. Employee has carefully read and considered the provisions of
Sections 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, Parent and Doctor's Care and their respective officers, directors,
shareholders and employees.
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. Employee acknowledges that the services he is to render are of a
special and unusual character with a unique value to UCI, Parent, and Doctor's
Care, 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 Employee of any
provision of Sections 5 or 6 hereof, UCI, Parent, and Doctor's Care, in addition
to and not in limitation of, any other rights, remedies, or damages available to
UCI, Parent, and Doctor's Care under this Agreement, shall be entitled to a
permanent injunction in order to prevent or restrain any such breach by Employee
and/or any person or entity directly or indirectly acting for or with Employee.
D. Employee covenants and agrees that if he shall violate any of his
covenants or agreements under Sections 5 or 6 hereof, UCI, Parent, and Doctor's
Care shall be entitled to: (1) an accounting and repayment of all profits,
compensation, commissions, remuneration, or other benefits that Employee
directly or indirectly has realized and/or is likely to realize as a result of,
growing out of, or in connection with any such violation; (ii) recover actual
damages incurred by UCI, Parent and Doctor's Care as a result of any such
violation; (iii) any injunctive relief to which UCI, Parent and Doctor's Care
are or may be entitled at law or in equity or under this Agreement; and (iv)
exercise its other rights respecting a breach of this Agreement as set forth
herein.
E. The obligations of Employee under Sections 5 and 6 hereof shall
survive any termination of employment hereunder, except that the provisions of
Section 6(c) shall not apply in the event of a termination by UCI of Employee's
employment without cause pursuant to Section 8(B) below.
8. Termination.
A. For Cause by UCI. Notwithstanding any other provision hereof, UCI
may terminate the employment of Employee under this Agreement immediately at any
time for "cause", upon written notice to Employee. For purposes hereof, the term
"cause" shall be defined as the commission of any of the following by Employee:
embezzlement; theft; fraudulent breach of trust; indictment of a felony or a
misdemeanor involving moral turpitude; drug or alcohol addiction; repeated
incompetence in the performance of material duties on behalf of UCI; gross
negligence or willful misconduct detrimental to UCI's business; violation of the
terms and provisions of this Agreement; or willful or recurring refusal to
comply with reasonable, good faith instructions of UCI or Parent. All
compensation (including without limitation the Base Salary, and all perquisites
and fringe benefits) to which Employee would otherwise be entitled, shall be
discontinued and forfeited as of the effective date of such termination.
<PAGE>
B. Without Cause by UCI. UCI may terminate this Agreement "without
cause" at anytime upon sixty (60) days prior written notice to Employee. In the
event of such termination, Employee shall be paid: a lump sum severance payment
equal to two times Employee's Base Salary for the remaining term of this
Agreement. All other compensation (including without limitation any perquisites
and fringe benefits, if any) to which Employee 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 Employee. Employee may with or without cause
terminate this Agreement upon 90 days prior written notice to UCI. In the event
of such termination, all compensation (including without limitation the Base
Salary and any perquisites and fringe benefits, if any) to which Employee 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 the disability (as defined below) of
Employee during the term of his employment with UCI, Employee's employment under
this Agreement shall terminate. For purposes of this Agreement, "disability"
shall mean the inability of Employee, 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 upon the expiration of such one hundred eighty (180) day period. Upon
termination of employment under this Agreement due to the disability of
Employee, then Employee shall be entitled to payment of his Base Salary and
other benefits up to the date of termination.
E. Death. In the event Employee dies during the term of this
Agreement, this Agreement shall terminate and UCI shall pay to the estate of
Employee all Base Salary accrued but unpaid through the date of the death of
Employee, together with any incentive bonus amounts which have accrued but are
unpaid at the time of his death.
9. Burden and Benefit. This Agreement shall be binding upon, and shall
inure to the benefit of UCI, Parent, Doctor's Care, and Employee, and their
respective heirs, personal and legal representatives, successors, and assigns.
10. Assignment. This Agreement and any rights hereunder are personal to
Employee and shall not be assigned or otherwise transferred by Employee.
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. Employee and UCI hereby (1) 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)
waive any objection which they might have now or hereafter to any such
litigation, action or proceeding based upon improper venue or inconvenient
forum, and (iii) irrevocably submit to the jurisdiction of such courts in any
such litigation, action or proceeding. For all purposes of this Agreement,
Employee and UCI hereby further agree that service of process upon either party
may be effected 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', "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
context 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 any
other provision.
<PAGE>
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 (1) 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:
To Employee: Jon G. Keith
320 Post Oak Way
Columbia, SC 29212
To UCI: UCI Medical Affiliates of South Carolina, Inc.
1901 Main Street, Suite 1200
Mail Code 1105
Columbia, SC 29201
Attention: M. F. McFarland, III, MD
The parties hereto may change their respective addresses by notice in writing
given to the other parties within this Agreement.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding by and between UCI and Employee with respect to the employment of
Employee 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 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.
16. Litigation Expenses. If either party should institute litigation
against the other party to enforce its rights under this Agreement, the
prevailing party in such action shall be entitled to recover its litigation
costs and expenses, including without limitation, reasonable attorneys fees.
IN WITNESS WHEREOF, UCI and Employee have duly executed this Agreement
under seal to be effective as of the day and year first above written.
IN THE PRESENCE OF:
UCI MEDICAL AFFILIATES OF
SOUTH CAROLINA, INC.
/s/ Elaine H. Fowler
/s/ Patricia J. Hammond By: /s/ M.F. McFarland, III, M.D. (SEAL)
----------------------------------------
M. F. McFarland, III, M.D.
Chief Executive Officer
/s/ Elaine H. Fowler
/s/ Pat Paschal /s/ Jon G. Keith (SEAL)
----------------------------
Jon G. Keith
<PAGE>
EXHIBIT A
UCI Medical Affiliates, Inc.
Executive Bonus Plan for Jon G. Keith
Bonus Potential - 20%
<TABLE>
<CAPTION>
<S> <C>
Percentage of
Bonus Earned
---------------
1. Site Development Develop feasibility plan for new facilities and begin 10%
implementation within six months of commencement of
employment
2. Diagnostic Service Develop plan and proforma for diagnostic 5%
facility concept within twelve months and be prepared to
implement within eighteen months of commencement of
employment
3. Clinic Organization Develop a standardization plan for all clinic sites 25%
that attempts to bring consistency to the organization
and operation of each site within nine months of
commencement of employment
4. Business Planning Develop and begin implementation of 20%
comprehensive bussiness plan that includes all 29
facilities within twelve months of commencement of
employment
5. Budget Attain budgeted net income for the UCI (less 25%
extraordinary items not within Employee's control),
annually
6. Specialty
Integration Develop, plan and initiate dialog with local 15%
hospitals that may lead to acquisitions, mergers or
cooperative ventures
</TABLE>
<PAGE>
EXHIBIT B
UCI MEDICAL AFFILIATES, INC.
INCENTIVE STOCK OPTION AGREEMENT
GRANT OF INCENTIVE STOCK OPTION
Date of Grant: January 27, 1997
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 Jon G. Keith,(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 60,000
shares of Stock at a price of $2.75 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.
<PAGE>
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
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.
<PAGE>
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 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 1901 Main
Street, Suite 1200, Mail Code 1105, Columbia, South Carolina 29201,
<PAGE>
and any notice to the Grantee shall be addressed to the Grantee at the current
address shown on the payroll 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: /s/ Jerry F. Wells, Jr.
--------------------------------------
Its: EVP of Finance and Chief
Financial Officer
ACCEPTED AND AGREED TO:
By: /s/ Jon G. Keith
-----------------------------------
Jon G. Keith, Grantee
EXHIBIT NO. 21
SUBSIDIARIES OF THE REGISTRANT
<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
UCI Medical Affiliates
of Georgia, Inc. South Carolina Doctor's Care
