SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement |_| Confidential, for use
|_| Definitive Proxy Statement of the Commission only
|_| Definitive Additional Materials (as permitted by Rule
|_| Soliciting Material Pursuant to 14a-6(e)(2)).
ss.240.14a-11(c) or ss.240.14a-12
NuMED HOME HEALTH CARE, INC.
(Name of Registrant as Specified in its Charter)
NuMED HOME HEALTH CARE, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee previously paid with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
NuMED HOME HEALTH CARE, INC.
NOTICE OF THE 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 28, 1999
Notice is hereby given that the 1998 Annual Meeting of Stockholders of
NuMED HOME HEALTH CARE, INC.. (the "Company") will be held at the offices of
Foley & Lardner, 100 North Tampa Street, Suite 2700, Tampa, Florida 33602, on
Thursday, January 28, 1999 at 10:00 A.M., local time, for the following
purposes:
1. To elect Directors to the Company's Classified Board of Directors
to serve two or three-year terms, as applicable, or until their respective
successors are elected.
2. To consider and act upon matters incidental to the foregoing
purpose and to transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has selected the close of business on Tuesday,
December 22, 1998, as the record date for the determination of Stockholders
entitled to notice of and to vote at this Annual Meeting and any adjournment or
postponement thereof.
Enclosed is your copy of (i) the Company's Amended Annual Report on
Form 10-KSB/A as filed with the Securities and Exchange Commission for the
fiscal year ended March 31, 1998; and (ii) the Company's Quarterly Report on
Form 10-QSB for the quarter ended September 30, 1998.
- --------------------------------------------------------------------------------
CAUTION
As more fully described in the enclosed proxy statement, a committee
(the "Vulture Committee") has been formed by Mr. Richard M. Osborne, the
ultimate beneficial owner of Turkey Vulture Fund XIII, Ltd. which owns only
about ten percent (10%) of the Company's outstanding Common Stock. As disclosed
in its definitive proxy statement filed on December 4, 1998, the Vulture
Committee is seeking control of the Board of Directors of the Company even
though its total stockholdings represent only a small minority ownership
interest in the Company.
WE URGE YOU NOT TO SIGN ANY BLUE PROXY CARD SENT TO YOU BY THE VULTURE
COMMITTEE. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE THAT PROXY BY SIGNING AND
RETURNING THE ENCLOSED PROXY CARD TO US. WE URGE YOU TO SIGN THE ENCLOSED WHITE
PROXY CARD AND RETURN IT TO US. POSTAGE HAS BEEN PREPAID.
- --------------------------------------------------------------------------------
You are cordially invited to attend the meeting in person. Whether or
not you expect to attend in person, you are urged to complete, date, sign and
return the enclosed proxy card, which is solicited by the Board of Directors, in
the self-addressed envelope enclosed for your convenience which requires no
postage if mailed in the United States. You may revoke your proxy at any time
before it is voted at the meeting by giving written notice to the secretary of
the Company, by delivering to the secretary of the Company a duly executed proxy
bearing a later date or by appearing at the meeting and voting by written ballot
in person.
By Order of the Board of Directors
December 31, 1998 SUSAN J. CARMICHAEL
Chief Executive Officer and President
- --------------------------------------------------------------------------------
Stockholders who do not expect to attend the meeting in person are urged
to complete, date and sign the enclosed WHITE PROXY CARD and return it in
the enclosed postage-paid envelope.
- --------------------------------------------------------------------------------
<PAGE>
NuMED HOME HEALTH CARE, INC.
--------------------
PROXY STATEMENT
-------------------------
This Proxy Statement and the accompanying form of proxy are furnished
in connection with the solicitation of proxies by the Board of Directors of
NuMED Home Health Care, Inc., a Nevada corporation (the "Company"), for the 1998
Annual Meeting of Stockholders to be held at the offices of Foley & Lardner, 100
North Tampa Street, Suite 2700, Tampa, Florida 33602, on Thursday, January 28,
1999 at 10:00 a.m., local time, and at any postponements or adjournments thereof
(the "Meeting" or the "Annual Meeting"). The approximate date on which this
Proxy Statement and the accompanying form of proxy will be first sent or given
to Stockholders is December 31, 1998.
The record date for determining Stockholders entitled to vote at the
Meeting has been fixed as the close of business on Tuesday, December 22, 1998
(the "Record Date"). As of the Record Date, there were ___________ shares of the
Common Stock issued and outstanding. Each share of Common Stock entitles the
holder to one vote. There is no other class of voting securities outstanding.
Votes may not be cumulated in the election of directors. The presence, in person
or by proxy, at the Meeting of the holders of a majority of the shares of Common
Stock entitled to vote will constitute a quorum for purposes of the Meeting.
If the proxy card accompanying this Proxy Statement is properly
executed and returned, the shares of common stock, par value $.001 per share of
the Company (the "Common Stock"), represented thereby will be voted as
instructed on the proxy card, but if no instructions are given, such shares of
Common Stock will be voted in favor of (i) the election to the Board of each of
the nominees for directors of the Company, and (ii) any other matters incidental
to the foregoing purpose and to transact such other business as may properly
come before the Meeting. Any proxy given may, however, be revoked by the
stockholder executing it at any time before it is voted by giving written notice
to the Secretary of the Company, by delivering to the Secretary of the Company a
duly executed proxy bearing a later date or by appearing at the Meeting and
voting by written ballot in person.
The cost of solicitation of proxies by the Board of Directors will be
borne by the Company. Proxies may be solicited by mail, personal interview,
telephone or telegraph and, in addition, directors, officers and employees of
the Company may solicit proxies by such methods without additional remuneration.
In accordance with the regulations of the Securities and Exchange Commission,
the Company will reimburse, upon request, banks, brokers and other institutions,
nominees and fiduciaries for their expenses incurred in sending proxies and
proxy materials to the beneficial owners of the Company's Common Stock.
- --------------------------------------------------------------------------------
CAUTION
As more fully described in the enclosed proxy statement, a committee
(the "Vulture Committee") has been formed by Mr. Richard M. Osborne, the
ultimate beneficial owner of Turkey Vulture Fund XIII, Ltd. (the "Vulture Fund")
which owns only about ten percent (10%) of the Company's outstanding Common
Stock. As disclosed in its definitive proxy statement filed on December 4, 1998,
the Vulture Committee is seeking control of the Board of Directors of the
Company even though its total stockholdings represent only a small minority
ownership interest in the Company.
WE URGE YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY THE VULTURE
COMMITTEE. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE THAT PROXY BY SIGNING AND
RETURNING THE ENCLOSED PROXY CARD TO US. WE URGE YOU TO SIGN THE ENCLOSED WHITE
PROXY CARD AND RETURN IT TO US. POSTAGE HAS BEEN PREPAID.
- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
On November 17, 1998, the Company filed a suit against Turkey Vulture
Fund XIII, Ltd. ("Turkey Vulture"), in the United States District Court, Middle
District of Florida, Tampa Division. At such time, Turkey Vulture owned about
10.2% of the outstanding Common Stock of the Company. Although the suit was
filed on November 17, 1998, it was not served until November 24, 1998, because
certain directors of the Company were attempting to amicably resolve the
disagreements with Turkey Vulture. In the Complaint, the Company seeks
injunctive relief for Turkey Vulture's alleged violations of Section 13(d) of
the Securities Exchange Act of 1934. Specifically, the Company alleges that
Turkey Vulture failed to timely amend
<PAGE>
its Schedule 13D to (i) reflect its true intention, as stated in its November
12, 1998 Proxy Statement, to oust current management, gain control of the
Company through a proxy fight, and eliminate the Company's staggered Board of
Directors, and (ii) indicate its increased ownership of shares. As a result of
these allegations, the Company seeks (i) a temporary and permanent injunction
requiring the Turkey Vulture Fund to file an amendment to the Schedule 13D,
which will accurately reflect its true purpose, (ii) a temporary injunction
enjoining Turkey Vulture from exercising voting rights and soliciting proxies
during the pendancy of this lawsuit, (iii) an appropriate "cooling off period,"
which will permit the investing public a reasonable amount of time to digest any
amendment to the Schedule 13D ordered by the Court, and (iv) a judgment in favor
of the Company for the costs and attorneys' fees associated with bringing
lawsuit.
On December 16, 1998, the Company was served with a Verified Amended
Answer and Counterclaim for Preliminary Injunction. In its Answer, Turkey
Vulture denied the material allegations against it and alleged that any
violations of Section 13(d) were cured. In its Counterclaim, Turkey Vulture
requests that the court (i) preliminarily and permanently enjoin Teneja from
voting any of the 744,680 shares issued to him as part of his November 23, 1998
Termination, Noncompetition and Mutual Release Agreement; (ii) preliminarily and
permanently enjoin the Company and its directors from (a) taking or authorizing
any action outside of the ordinary course of business, and (b) taking any action
that have the effect of bestowing a benefit upon the Company's directors,
officers, or employees; (iii) preliminarily and permanently enjoin the Company
from changing the date of the stockholders' meeting or advancing the record date
of the meeting; and (iv) require the Company to provide Turkey Vulture an
updated stockholders' ledger. On December 29, 1998, the Company filed a Motion
to Dismiss the Counterclaim.
On December 17, 1998, the Company was served with a Motion for
Preliminary Injunction, which also named the individual directors that were
previously named in the Counterclaim. The Company, together with the named
directors, filed its Opposition to the Motion for Preliminary Injunction on
December 29, 1998. A hearing on this Motion for Preliminary Injunction is
scheduled for December 30, 1998.
On December 16, 1998, the Company was served with a Motion for Summary
Judgment in which Turkey Vulture alleged that it cured the deficiencies in its
Schedule 13D and that the Company's Complaint was moot. The Company's response
is due on December 31, 1998.
THE VULTURE PROXY STATEMENT
As previously noted, the Vulture Committee has filed a definitive
proxy statement (the "Vulture Proxy") with the Securities and Exchange
Commission. In its proxy statement, the Vulture Fund is seeking your support to
(i) elect five nominees to the Board so that it can gain control of the Board
even though it represents only a small minority interest in the Company, and
(ii) amend the Company's By-Laws to eliminate the Company's classified board.
Although the Board acknowledges that Company has not had an annual meeting since
the meeting held on March 29, 1996, the Board was simply attempting to save
costs by combining the agenda for the annual meeting with that of a special
meeting which would have been necessary to approve proposed business
combinations with third parties that were pending at the time. Those business
combinations were originally pursued in an effort to maximize shareholder value
in the rapidly changing regulatory environment faced by the Company.
Management and the Board also recognize that the Company and its stock
price have not performed as well as stockholders would like. However, with
forethought management and the Board did anticipate difficult times due to
anticipated changes in the regulatory climate. Thus, management and the Board
directed their energies toward increasing the size and scope of the Company by
exploring strategic mergers which had the potential to benefit the Company by
increasing its market share and by providing a capital infusion. Unfortunately,
for a variety of reasons the Company's efforts were unsuccessful.
The Board will not attempt to rebut the Vulture Committee's proxy
statement word by word. Rather, the Board deems it important to note that the
Board attempted to amicably resolve many of the concerns of the Vulture
Committee and Mr. Osborne. Such measures included (i) the negotiation of Mr.
Taneja's departure from the day to day management of the Company, (ii) the
offering of up to three nominee slots to the Vulture Fund on the Board's
proposed slate of Directors, and (iii) the appointment of Ms. Carmichael as the
new Chief Executive Officer in addition to her position as President. The
Board's attempt to address the concerns the Vulture Committee were completely
rebuffed and followed by a letter from counsel to the Vulture Committee which
made certain demands deemed completely unreasonable by the board including, but
not limited to (i) the demand that Mr. Taneja sever all ties with the Company
and resign as a director, (ii) that Mr. Taneja agree to a five year standstill
that would prohibit him from purchasing additional stock of the Company or
participating in any proxy contest, tender offer or other form of change of
control, (iii) that Mr. Taneja grant to Mr. Osborne an irrevocable proxy to vote
his stock until Mr. Taneja's beneficial ownership dropped below five percent
(5%) of the Company's stock, and (iv) for
2
<PAGE>
Mr. Taneja to grant to Mr. Osborne and the Company a right of first refusal on
any sale of Mr. Taneja's stock. It is important to note that the foregoing
demands really only apply to Mr. Taneja as an individual stockholder. Simply
put, the Vulture Committee was making demands on the Board which it could never
meet. Rather, such demands could only be met by Mr. Taneja personally.
We ask you, if you were the largest single stockholder of a company,
would you agree to the foregoing demands by a minority stockholder who owns only
about ten percent (10%) of the outstanding stock? WE THINK NOT! Accordingly, the
Board was left with no alternative. Given its fiduciary responsibility to ALL of
the Company's stockholders, the Board could not meet the unreasonable demands of
the Vulture Committee to give it control of the Board. Accordingly, the Board
sought qualified Board candidates and on December 1, 1998 the Board approved the
appointment of Messrs. LaGamba and Santostasi, and Ms. Loesch to fill existing
Board vacancies.
Moreover, as stated in the Vulture Proxy, the Vulture Committee
estimates that its solicitation will cost approximately $100,000. The Vulture
Committee intends to seek reimbursement for such costs without seeking
stockholder approval for such reimbursement unless such approval is required by
law.
We have prepared the following summary of the state of the Company and
the industry in which the Company operates and ask that you carefully consider
the following information in connection with your submission of your proxy.
OUR RESPONSE TO THE VULTURE COMMITTEE
Effective October 1, 1997 (signed August 5, 1997) Congress and the
President enacted the Balanced Budget Act of 1997. The goal was to cut $115
billion from the Medicare budget in five years of which $16.2 billion would be
cut from home care Medicare and $13 billion cut in Medicaid through systems
termed Interim Payment System ("IPS") and Prospective Payment System ("PPS").
Both the home health and long term care facilities (thus contract rehabilitation
companies like NuMED Rehabilitation) were critically affected.
What It Meant to Home Care:
1. The major strategy was to cut home care dollars through the use of the
IPS using data from three year old cost reports of 1994. Thus, revenue
dramatically declined.
2. The cost limits per discipline (Nursing, Physical Therapy, Occupational
Therapy, Speech/Language Therapy, Medical Social Work) were reduced
about 15%.
3. Reimbursement is to be cut 20% in 1999.
According to the National Association of Home Care, since 1/1/98 over
1000 agencies or 10% of the industry has been eliminated directly or indirectly
as a result of this legislation.
Remaining firms will be subjected to new demands for increased data
collection, extended client assessments and statistical analysis through a
federal project called OASIS that will begin in 1999. "Home health agencies and
state governments are being squeezed by HCFA's failure to pay for the costs of
OASIS." (Eli's Home Care Week 11/23/98, Volume VIII #45) OASIS will be expensive
to home care. Costs will include increased technology, increased software,
increased datamining vendor costs, and increased time to complete assessments
thus decreasing employee productivity.
Other problems home health incurred were Fiscal Intermediary Auditor
tactics scaring off referrals. "All it takes is one call from an intermediary's
auditor to frighten a physician who was an excellent referral source into
ceasing home care referrals altogether . . . " (Eli's Home Care Week 11/23/98,
Volume VIII #45).
We note that the Vulture Proxy includes a graph comparing the
Company's Common Stock performance with the performance of the Standard & Poor's
500 Index and the Standard & Poor's SmallCap 600 Index. Such a comparison graph
fails to compare the Company's Common Stock performance with the performance of
the stock of companies in its peer group. Accordingly, we offer you the
following peer group comparison which shows that the Company's Common Stock has
performed much better than the stock of most of its peers in the past year.
3
<PAGE>
How Does NuMED Compare to Like Companies?
Public companies in the Company's peer group saw their stocks continue
to plummet; as per 11/30/98 Home Health Business Report:
% of Change in The Year
Amedisys, Inc................................-44.44
Caretenders HealthCorp.......................-59.82
Home Health Corp.............................-95.78
In Home Health, Inc..........................-40.00
NuMED Home Health Care, Inc..................-50.06
Olsten Corp (The)............................-50.00
Staff Builders, Inc..........................-76.12
Star MultiCare, Inc..........................-75.00
The above peer group was selected because like the Company such
companies provide both in home health care services and temporary staff relief
services.
What Has NuMED Done to Deal with IPS and Prepare for PPS?
* In the fall of '97 NuMED personnel attended seminars taught by or based
on the seminar developed by Reingruber & Associates to explain IPS and PPS
and explain cost cuts and work efficiencies expected.
* To prevent loss of referral sources, physicians were made aware of the
Medicare firm's visit utilization history and Fiscal Intermediary denial
rate (in Florida) to aid in increasing their comfort in referring to the
firm.
* Several data tracking and trending systems were established to capture data
as to specific diagnostic categories and numbers of visits per category. If
the per beneficiary rate, for example at Total Professional Health Care was
an average of $3,500 then an average of 60 visits per client could be
reimbursed if justified. Ratios were then established as to the number of
short term clients necessary in order to care for a long term client.
* Since there was a reduction in the number of visits per patient and a
reduction in total volume of services and in total revenue, specialty
programs were established such as diabetes, orthopedics and congestive
heart failure. Increased productivity was stressed with personnel. There
was a change in clinical models to respond to external case management and
to better manage quality and utilization internally. Greater emphasis was
placed on strengthening existing referral sources and identifying new
referral sources.
* More emphasis was placed on protecting the agency as to fraud and abuse in
billing, in service delivery, in eligibility and in recruitment of
patients. Greater emphasis was placed on nursing and therapist education as
to measuring clinical outcomes, measuring client satisfaction outcomes, and
in measuring comparative diagnostic outcomes.
What Else Was Done?
* An intensive differentiated customer service program was created to
strengthen referral sources.
* Overtime for personnel was eliminated or significantly decreased.
* Cuts in direct cost per visit to increase efficiency/productivity
standards were established.
* A case management model was established. Internally personnel were
educated as to the IPS/Managed Care mindset so the nurse set the goals
with patient on the first visit - education -> oversight -> patient
demonstrates proficiency -> discharge.
* Tracking of service mix and cost by diagnostic codes was monitored.
* Most offices were consolidated
[ ] St. Petersburg offices of Florida Nursing Services shared
space with Total Professional Health Care.
[ ] Clearwater Total Professional Health Care and the Dunedin
Countryside Health Services, Inc. were consolidated into one
Northern Pinellas County office.
[ ] Consolidated four storage areas to one location with an
organized system to retrieve data as needed.
4
<PAGE>
[ ] NuMED Rehabilitation (Cincinnati) moved into the Parke Home
Health Care, Inc. offices to share overhead (NuMED
Rehabilitation in Ohio, Kentucky and the surrounding areas
will remain open and continue to contribute to revenues).
[ ] NuMED Rehabilitation (Horsham office) will be shut down
effective January 1, 1999.
* Human Resources Department was centralized for Florida. The Florida HR
Director became the health insurance and 401K Plan Administrator for
all of NuMED. All Workers Compensation monitoring for the entire
company was placed in that department.
What Kind of Board is Needed in Today's Climate?
The home health industry is facing enormous change. The amount of
resources consumed to provide adequate care of a patient at a reasonable cost
has become one of the most important challenges faced in health care today. It
will require an experienced Board and Management Team.
The Vulture Committee slate is slanted in experience in self-storage
units and retirement management. Though this is no doubt beneficial to these
other lines of business, NuMED Home Health Care, Inc. provides care to
individuals in need of a variety of health care needs such as low acuity care; a
bath and personal care to high acuity care; individuals requiring highly
skilled, expensive, and technically sophisticated interventions such as highly
caustic IVs requiring close monitoring, care of high risk babies and care of
individuals with chronic disease states.
There is a tendency by the Vulture Committee to oversimplify proposed
interventions for NuMED. In view of the strict accounting and service delivery
requirements in a highly regulated industry, this appears naive. The Vulture
Committee is proposing interventions to slash costs without due regard for the
consequences of such actions. That is an antiquated concept that has not
historically worked well with health care professionals or sick and needy
patients.
Instead, NuMED is reducing overhead costs and closing segments of the
business that are unprofitable. To capture greater market share, NuMED is
forming strategic alliances with like providers, horizontally integrating
service lines to improve and extend geographic coverage and building integrated
delivery networks with new product lines such as in home psychiatric/mental
health services.
What Does the Future Hold for NuMED?
Though management cannot make predictions for NuMED, it can
say that in 1999 NuMED will be smaller but stronger and ready to grow in
specific markets:
* Though select revenues will be eliminated in NuMED Rehabilitation through
closing the Horsham office, direct costs and corresponding G & A will also
be eliminated allowing a plan toward a breakeven point in that Division in
1999. The focus for NuMED Rehabilitation will be on facilities in the Ohio
Region. This also complements the Ohio Home Health agencies owned by NuMED.
It is believed a stronger Rehab component can be developed as a result.
* Centralization of all back office functions will be completed in 1999 to
further streamline functions and free Ohio firm's management to have more
community involvement and to effect quicker trending capabilities.
* A Homemaker Program is being started in Western Florida as there appears to
be a responsive market. Management believes the low acuity market is
growing.
* The In-Home Psych Program is being expanded and is expected to provide over
10% of Florida's Total Professional Health Care revenues.
* Disease management Clinical Pathways are being developed for six key
diagnostic categories to grow the business:
> Disease State Management Program through Clinical Pathways
is an integrated systematic approach of aggressive case
management to provide proactive interventions, measurements
and refinements along the continuum of care.
|_| Benefits: Very attractive to managed care
providers and Medicare providers as a method to
decrease: utilization of hospitalization length of
stay, the number of emergency department visits,
and unnecessary physician office visits.
> Disease State Management programs empower clients thus
enhancing the client's quality of life and well being.
Clinical Pathways provide the client with a highly
organized, detailed standardized plan of care, delineating
key care elements and typical interventions associated with
a certain disease process.
> Clinical Pathways guide clinicians to measure delivery of
care outcomes for the client. Home Care specific educational
tools focus on disease control and client self care
management.
> The use of these standardized teaching tools enhances
patient understanding and management of all phases of their
disease including prevention, acute occurrences, remissions
and maintenance.
5
<PAGE>
Clinical pathways offer physicians compliance comfort since they will
know the number of visits required for a specific diagnosis. Payor sources
appreciate data supporting client outcome expectations within a specific number
of visits. Management believes it can more efficiently plan client visits, costs
and profitability with clinical pathways.
* NuMED Management is exploring the development of strategic alliances
through horizontal integration to build service products, vertical
integration to increase care/service delivery networks to improve
geographic coverage and to affiliate with other providers by offering
shared services such as back office which could allow a stronger position
for payor source contract negotiation.
With an experienced management team, new client
programs, technology capability for the statistical datamining
now sought by payor sources, and a goal to provide quality
service delivery, management believes it can deal with the
challenges presented today.
PROPOSAL 1 ELECTION OF DIRECTORS
Pursuant to Article X of the Company's By-Laws, on January 20, 1996,
the Board of Directors amended the By-Laws to classify the members of the Board
of Directors into three groups of not less than two nor more than three
Directors each. The amendment to the By-Laws also provided that the term of
office of the first class shall expire at the first annual meeting after their
initial election and when their successors are elected and qualified, the term
of office of the second class shall expire at the second annual meeting after
their initial election and when their successors are elected and qualified, and
the term of office of the third class shall expire at the third annual meeting
after their initial election and when their successors are elected and
qualified. At the Annual meeting held on March 29, 1996, the following Directors
were elected for the terms indicated.
TERM TO EXPIRE IN 1997
NAME
Michael J. Diroff
Nayan S. Shah, Ph.D
TERM TO EXPIRE IN 1998
NAME
Thomas V. Chema
Judi M. Kelly
TERM TO EXPIRE IN 1999
NAME
Jugal K. Taneja
Susan J. Carmichael
Robert P. Ottman
Since the March 29, 1996 Annual Meeting, Mr. Shah resigned and was
replaced by Mark E. Rowland. Additionally, Messrs. Diroff and Rowland, and Ms.
Kelly resigned creating three vacancies on the Board. On December 1, 1998, the
Board appointed William L. LaGamba to fill Mr. Rowland's vacant seat (which was
originally Mr. Shah's seat), Paul A. Santostasi to fill Mr. Diroff's vacant
seat, and Peggy A. Loesch to fill Ms. Kelly's vacant seat.
Although the Board acknowledges that Company has not had an annual
meeting since the meeting held on March 29, 1996, the Board was simply
attempting to save costs by combining the agenda for the annual meeting with
that of a special meeting which would have been necessary to approve proposed
business combinations with third parties that were pending at the time. Those
business combinations were originally pursued in an effort to maximize
shareholder value in the rapidly changing regulatory environment faced by the
Company
Although the Board acknowledges that no Annual Meeting of Stockholders
was held in 1997 and that the 1998 Annual meeting has been delayed longer than
anticipated, the Board was simply attempting to save costs by combining the
agenda for the annual meeting with that of a special meeting which would have
been necessary to approve proposed business combinations with third parties that
were then pending. Those business combinations were originally pursued in an
effort to maximize shareholder value in the rapidly changing regulatory
environment faced by the Company. In order to put the terms of each class of
directors back on schedule, Directors whose terms were originally set to expire
in both 1997 and 1998 will be
6
<PAGE>
elected at the 1998 Annual Meeting. As a result, Mr. LaGamba and Mr. Santostasi
(or their successors) who filled vacancies for Directors whose terms were
originally set to expire at the 1997 Annual Meeting, will be nominated for a
two-year term while Mr. Chema and Ms. Loesch (or their successors) will be
nominated for a three-year term, or until the election of their successors.
Due to some confusion which has resulted over the Company's use of
March 31 as its fiscal year, the Company's Form 10-KSB has been amended to more
clearly reflect the fact that two classes of directors will be elected at this
Annual Meeting. Moreover, although this Annual meeting is being held on January
28, 1999, this is technically the 1998 Annual Meeting which was unfortunately
delayed until early 1999 in order comply with Securities and Exchange Commission
("SEC") Rule 14a-13 which requires that the mailing date for broker and nominee
search cards take place at least 20 days prior to the record date. Although the
Company attempted to hold the 1998 Annual Meeting during calendar 1998 upon the
realization that a Special Meeting to approve the potential business combination
would not be held, that goal was not achievable due to a combination of (i) the
timing of the failure of the last transaction, and (ii) the requirement to meet
all applicable notification periods.
Pursuant to Article III, Section 1 of the Amended By-Laws, the 1999
Annual meeting will be held as soon as practicable following the close of the
fiscal year on March 31, 1999. Presently, the Board intends to hold the 1998
Annual meeting as soon as practicable following the filing of the Company's Form
10-KSB for the fiscal year ended March 31, 1999 which is due on or before June
29, 1999. In order to comply with all SEC procedural requirements, the 1999
Annual Meeting will be held in late July or early August of 1999. Messrs. Taneja
and Ottman and Ms. Carmichael (or their successors) will be nominated for a
three-year term at the 1999 Annual Meeting.
As previously noted, The Vulture Committee's proxy statement currently
is seeking your support to (i) elect five nominees to the Board so that it can
gain control of the Board even though it represents only a small minority
interest in the Company, and (ii) amend the Company's By-Laws to eliminate the
Company's classified board which provides for staggered terms lasting three
years for each elected Director. The Vulture Committee's proxy statement
currently provides for the election of nominees in different classes than the
nominees in the Company's proxy statement. This may have resulted because the
Committee may not have understood which nominees were subject to election at
this time because the Form 10-KSB was unclear in this regard. We regret any
confusion that may have been caused by the Form 10-KSB disclosure. Accordingly,
the Board of Directors proposes that, if the Vulture Committee does not revise
its proxy statement and its nominees are elected by a plurality of the votes,
then the Vulture Committee can either name the highest four vote recipients to
the vacant seats, or alternatively the Board of Directors could be expanded by
one (1) member immediately following the Annual Meeting and the newly created
seat could be filled by the Committee's fifth nominee.
If any nominee declines or is unable to serve, which the Board of
Directors has no reason to expect, the persons named in the accompanying Proxy
intend to vote for the balance of those nominees named, and, if they deem it
advisable, for a substitute nominee. The following table sets forth information
with respect to each nominee for election and for each continuing director of
the Company.
NOMINEES FOR THE TERM TO EXPIRE IN 2000
NAME AGE POSITION
Mr. William L. LaGamba 39 Director
Paul A. Santostasi 63 Director
NOMINEES FOR THE TERM TO EXPIRE IN 2001
NAME AGE POSITION
Thomas V. Chema 52 Director
Peggy A. Loesch 46 Director
7
<PAGE>
DIRECTORS CONTINUING IN OFFICE - TERMS EXPIRE IN 1999
NAME AGE POSITION
Jugal K. Taneja 54 Director
Susan J. Carmichael 50 Chief Executive Officer,
President and Director
Robert P. Ottman 55 Director
BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES
DIRECTORS NOT UP FOR RE-ELECTION
Jugal K. Taneja was Chairman of the Board, Chief Executive Officer and
a Director of the Company from October of 1991 until November 23, 1998 when he
entered into a Termination, Noncompetition and Mutual Release Agreement pursuant
to which Mr. Taneja relinquished his duties as Chairman and Chief Executive
Officer. As the Company's largest stockholder, Mr. Taneja remains a Director.
Mr. Taneja is currently Chairman of Dynamic Health Products, Inc. (a 1934
Exchange Act Reporting Company). Mr. Taneja also served as a Director and as
Chief Executive Officer of National Diagnostics, Inc. until he resigned in
January of 1998. Mr. Taneja also served as a director and Chairman of NuWave
Health Care Products, Inc. the parent company of DRx, Inc., and the Chairman of
DRx, Inc. Mr. Taneja is also Chairman of Netriceutical.com.
Susan J. Carmichael has served as a Director of the Company since
October 1991 and as President of the Company since September 1993. On November
23, 1998, the Board appointed Ms. Carmichael to the additional position of Chief
Executive Officer. She held the position of President of Whole Person in PA and
PA Medical Concepts (companies acquired by the Company in 1991) since 1985 and
is responsible for the Company's overall operation and expansion. Ms. Carmichael
also serves on the President's Council; American Lung Association. Ms.
Carmichael previously served on the Erie County, Pennsylvania Mental Health and
Mental Retardation Board by appointment of the Erie County Executive. Ms.
Carmichael is a Doctoral Candidate at Pennsylvania State University.
Robert P. Ottman has served as a Director of the Company since 1991.
Mr. Ottman formed R. Ottman & Co. in 1989, a strategic management consulting
firm. Prior to forming R. Ottman & Co., Mr. Ottman held six positions each of
increasing responsibility over the five years he was employed at AMSCO. His last
position was Vice President of Planning and Development. Mr. Ottman served as
Executive Vice President of Champion Bolt Corporation, Erie, Pennsylvania from
1994 to 1998. Mr. Ottman is presently the Director of the Small Business
Development Center of Gannon University in Erie Pennsylvania.
NOMINEES FOR RE-ELECTION
Thomas V. Chema has been a Director of the Company since April 1994.
Mr. Chema has been a partner with the law firm of Arter & Hadden, Cleveland,
Ohio from 1979 to 1983 and from 1989 to the present. He served as Executive
Director of the Ohio Lottery Commission and the Public Utilities Commission at
various times between 1983 and 1989. He also served as the Executive Director of
the Gateway Economics Development Corporation of Greater Cleveland, which
managed the financing and construction of the Jacobs Field and Gund Arena
sporting venues.
William L. LaGamba has been the Chief Executive Officer of Dynamic
Health products, Inc. (a 1934 Exchange Act Reporting Company controlled by
members of Mr. Taneja's family) from June 1998 through the present and has been
involved in the distribution, sales, and marketing of pharmaceuticals, health
and beauty products, and over-the-counter products for the past 15 years. From
June 1997 to June 1998, Mr. LaGamba was President of Becan Distributors, Inc.
Becan Distributors, Inc. is a niche wholesaler of Pharmaceuticals, Health and
Beauty Care Products, Generics and brand products. From September 1996 through
January 1998, Mr. LaGamba was Vice President of Retail Sales for McKesson Drug
Company, a Fortune 100 company. McKesson Drug Company is the largest wholesaler
of Pharmaceuticals, Generics and Health and Beauty products in the U.S. From
1992 to September 1996, Mr. LaGamba was the Director of Retail Sales for
Foxmeyer Drug Company. Mr.
8
<PAGE>
LaGamba has also held positions in the Pharmaceutical industry as a Director of
Institutional and Alternative Care sales throughout the country.
Paul Santostasi has been the Chairman and Chief Executive Officer of
Diversified Technologies , Inc. from June 1989 through the Present. From June
1998 to the present he has also been the Vice Chairman and a Director of Dynamic
Health Products, Inc. (a 1934 Exchange Act Reporting Company controlled by
members of Mr. Taneja's family). Mr. Santostasi was Chairman and Chief Executive
Officer of Sun Coast Plastics, Inc. from 1978 through 1989. Mr. Santostasi was a
founder of this once publicly held company which used to trade on the New York
Stock Exchange but has since become a privately held company. In 1983 he
introduced a new packaging product to the food industry which grew to a $14
million a year business for Sun Coast Plastics by 1988. From 1976 to 1977, Mr.
Santostasi was General Manager of the Plastics Division for Tropicana Products.
From 1957 through 1976, Mr. Santostasi worked as General Manager for Bundy
Corporation where he was responsible for product development and implementation
of plastic molding, metal fabrication and harness assemblies. He currently holds
six major product patents and two machine patents in the USA and the common
market in Europe and is responsible for the development of over a dozen other
patented products.
Peggy Loesch, RN, BSN, is currently Vice President of Operations for
the Home Health Division of NuMED Home Health Care, Inc., and was promoted to
this position in April 1995. In 1985, Ms. Loesch became the Director of Clinical
Services for Whole Person Home Health Care, a Medicare-Medicaid certified agency
as well as a Pennsylvania Medical Concepts, a state licensed agency providing
private duty and facility staff relief. As Vice President of Operations, she has
implemented a Corporate Performance Improvement Program encompassing all
agencies. Ms. Loesch served as a Board Director from October 1993 to August 1995
for Erie Center on Health and Aging, a thirty-site preventive health program.
Vote Required for Approval
Nominees for directors who receive a plurality of the votes cast by
the holders of the shares of Common Stock in person or by proxy at the Meeting
shall be elected. Abstentions, broker nonvotes and withheld votes are not
counted in determining the number of votes cast for any nominee for director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE
NOMINEES FOR ELECTION AS DIRECTORS OF THE COMPANY.
PROPOSAL 2 -REJECTION OF THE VULTURE COMMITTEE'S PROPOSAL TO AMEND THE
COMPANY'S BY-LAWS TO ELIMINATE THE STAGGERED BOARD
As previously noted, The Vulture Committee also proposes to amend the
Company's By-Laws to eliminate the Company's classified board which provides for
staggered terms lasting three years for each elected Director.. The Vulture
Committee's proxy statement indicates that they propose to eliminate the
classified Board in order to enable a potential buyer to replace the entire
Board at one time, if the buyer oiwned enough shares or had adequate stockholder
support. When originally adopting the staggered Board, the board wanted to
ensure that the Directors have sufficient time to review any proxy contest or
any tender or exchange offer as well as any available alternatives to such a
proposal and act in what the Board believes to be in the best interests of the
stockholders. Those same reasons hold true today. Therefore, if you want to
enable the Board to have sufficient time to consider whether any potential
future transaction is in the best interests of the stockholders, you should
check the against box on the enclosed White proxy card.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE
PROPOSAL TO AMEND THE COMPANY'S BY-LAWS TO ELIMINATE THE STAGGERED BOARD
PROVISIONS.
Vote Required for Approval
Approval of the Vulture Committee's proposed amendment to the By-Laws
requires the affirmative vote of a majority of the outstanding shares of NuMED
common stock. Abstentions and broker non-votes will have the effect of a "no
vote" to the Vulture Committee's proposal. However, if you are opposed to the
Vulture Committee's proposed amendment, we still encourage you to check the box
against the proposal on the enclosed WHITE proxy card and return it to us.
9
<PAGE>
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of December 15, 1998 with respect to:
(i) each of the Company's directors and the executive officers named in the
Summary Compensation Table; (ii) all directors and executive officers of the
Company as a group; and (iii) each person known by the Company to own
beneficially more than 5% of the Common Stock. An asterisk indicates beneficial
ownership of less than 1% of the outstanding Common Stock. Except as otherwise
indicated, each of the shareholders listed below has sole voting and investment
power over the shares beneficially owned.
Shares Beneficially Owned
Beneficial Owner Number Percent
Jugal K. Taneja (1) ............................ 2,301,954 34.7%
5770 Roosevelt Boulevard, Suite 700
Clearwater, Florida 33760
Susan J. Carmichael (2)......................... 495,000 8.0%
5770 Roosevelt Boulevard, Suite 700
Clearwater, Florida 33760
Robert P. Ottman (3) (4)........................ 44,306 *
3939 West Ridge Road
Erie, Pennsylvania 16506
Thomas V. Chema (3)............................. 29,120 *
1100 Huntington Building
925 Euclid Avenue
Cleveland, Ohio 44115
William L. LaGamba ............................. 500 *
6950 Bryan Dairy Road
Largo, Florida 33777
Paul Santostasi ................................. -0- *
6950 Bryan Dairy Road
Largo, Florida 33777
Peggy Loesch..................................... 4,863 *
5770 Roosevelt Boulevard, Suite 700
Clearwater, Florida 33760
Turkey Vulture Fund XIII Limited................. 578,500 10.1%
7001 Center Street
Mentor, Ohio 44060
Executive Officers and Directors as
a Group (7 Persons) (5).......................... 2,875,743 40.6%
* Less than one percent.
(1) Includes beneficial ownership of (i) 182,578 shares of Common Stock
owned by First Delhi Trust, a trust for Mr. Taneja's children over
which he exercises voting rights, (ii) 328,300 shares of Common Stock
and 540,000 currently exercisable Common Stock Purchase Warrants owned
by Twenty-First Century Healthcare Fund, L.L.D., a limited liability
company controlled by Mr. Taneja and his family members, and (iii)
380,000 shares issuable under currently exercisable stock options.
Excludes 209,820
10
<PAGE>
shares beneficially owned by his wife, Manju Taneja, as to which Mr.
Taneja exercises no voting or disposition rights.
(2) Includes (i) 190,000 shares issuable under currently exercisable stock
options, and (ii) 270,000 currently exercisable Common Stock Purchase
Warrants.
(3) Includes shares issuable under 12,060 currently exercisable stock
options granted to each of Messrs. Ottman and Chema pursuant to the
Outside Director and Advisory Board Member Stock Option Plan.
(4) Includes 10,000 shares issuable under currently exercisable common
stock purchase warrants.
(5) Includes 1,404,120 shares issuable under common stock purchase warrants
and/or stock options that are currently exercisable.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During fiscal 1998, the following persons were required to file Forms
3,4, and 5 with the Securities and Exchange Commission pursuant to Section 16(a)
of the Securities Exchange Act of 1934 (the "Act") because such person was a
director, officer, or beneficial owner of more than 10% of the Company's Common
Stock: Jugal K. Taneja, Susan J. Carmichael, Thomas V. Chema, Robert P. Ottman,
and Turkey Vulture Fund XIII, Ltd. ("Turkey Vulture Fund"). Based solely upon a
review of Forms 3,4, and 5 furnished to the Company pursuant to Rule 16-3 (e) of
the Act, no transactions were reported on an untimely basis and no person failed
to file a Form 3, Form 4 or Form 5 as required by Section 16(a) of the Act.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the cash
and noncash compensation for the last three fiscal years earned by or awarded to
the Company's Former Chief Executive Officer and the President. No other
executive officer of the Company earned salary and bonus in excess of $100,000
for the fiscal year ended March 31, 1998.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
Other
Annual Restricted All Other
Compen- Stock Options/ LTIP Compen-
Fiscal Salary Bonus sation Award(s) SARs Payouts sation
Name and Principal Position Year_ ($)_____ ($) ($) ($)______ (#)_____ ($)_____ ($) ______
- --------------------------- ------ --------- --- --- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jugal K. Taneja 1998 $160,000 $ -0- $44,000(1) - -
Chairman of the Board and Chief 1997 $160,000 $ 17,877 $30,000(2) - 640,000(5)
Executive Officer 1996 $160,000 $116,381 $30,000(2) - 120,000
Susan J. Carmichael 1998 $130,000 $ -0- $ 9,000(3) - -
President 1997 $130,000 $16,677 $35,075(4) - 350,000(5)
1996 $130,000 $ 99,34(8) $ -0- - 80,000
</TABLE>
FOOTNOTES:
1 Represents meal and lodging expenses of $2,000 per month paid to Mr. Taneja
for nine months during fiscal year 1998, a monthly automobile expense allowance
of $500 per month, and moving expenses totaling $20,000 paid during fiscal 1998.
2 Represents meal and lodging expenses of $2,000 per month paid to Mr.Taneja and
a monthly automobile expense allowance of $500 per month paid to Mr. Taneja
during fiscal years 1997 and 1998.
3 Represents lodging expenses of $500 per month for nine months and a monthly
automobile allowance of $500 per month for nine months paid during fiscal 1998.
11
<PAGE>
4 Represents accumulated vacation of $29,075 and lodging expenses of $500 per
month paid during fiscal 1997.
5 Includes 540,00 warrants issued to Mr. Taneja and 270,000 warrants issued to
Ms. Carmichael in exchange for the elimination of certain "put provisions" in
their respective employment agreements with the Company. As of 9/30/96, section
7.7 of their employment agreements, "if the executive is terminated without just
cause, or his or her duties are reduced such that his or her position is
ineffective in directing the business or operations of the Company, each
executive has the right to put all securities of the Company owned by the
executive and the executive's affiliates to the Company at a per share price
calculated at the greater of (i) $6.00 per share, (ii) the average of the
current bid and ask price, (iii) book value per share, or (iv) the appraised
value per share, and the Company is required to purchase all such securities for
the applicable price" was deleted.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
THE COMPANY DID NOT MAKE ANY GRANTS OF OPTIONS OR SAR'S DURING FISCAL YEAR 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Shares Unexercised Value of Unexercised
Acquired Value Options/SARs In-the-Money Options/SARs at
on Realized at FY-End (#) FY-End ($)*
Name____________ Exercise ($)_____ Exercisable Unexercisable Exercisable Unexercisable
- ---------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Jugal K. Taneja 0 920,000 -0- $27,600 -0-
Susan J. Carmichael 0 460,000 -0- $22,400 -0-
</TABLE>
*Based on the closing price of the Company's Common Stock on March 31,
1998 as quoted on The Nasdaq Stock Market.
Committees, Meetings, and Compensation of the Board of Directors
The Board of Directors held 6 meetings during fiscal 1998. In addition
to formal meetings of the Board of Directors and its committees, the directors
have frequent informal communications among themselves and with other executives
regarding Board and Committee issues.
The Board of Directors has established standing Audit, Compensation,
Capital, Executive and Nominating Committees. In addition, the Company has three
committees to administer each of the Company's stock plans described below.
The Audit Committee recommends the engagement, continuation and
discharge of the Company's independent auditors, reviews the scope and timing of
the audit of the Company's financial statements, approves the fee arrangement
with the Company's independent auditors, reviews the Company's financial
statements and the independent auditors' report, reviews the activities and
recommendations of the Company's independent auditors, considers recommendations
made by the Company's independent auditors regarding the Company's internal
control structure, and reviews the Company's internal accounting procedures and
controls with the Company's financial and accounting staff. The members of the
Audit Committee are Messrs. Chema and Ottman. The Audit Committee did not meet
during fiscal year 1998.
The Compensation Committee establishes the Company's executive
compensation policy, including the recommendation of compensation arrangements
for the Company's executive officers and directors. The members of the
Compensation Committee are Messrs. Chema and Ottman.* The Compensation Committee
met once during fiscal year 1998.
The Capital Committee reviews and oversees the Company's investment
policy. The members of the Capital Committee are Ms. Carmichael and Messrs.
Ottman and Taneja. The Capital Committee did not meet during fiscal year 1998.
The Executive Committee consists of Ms. Carmichael* and Mr. Taneja and
the Nominating Committee consists of Messrs. Taneja, Ottman and Chema. The
Executive Committee did not meet during fiscal year 1998.
12
<PAGE>
The Outside Director and Advisory Board Member Stock Option Plan
Administration Committee consists of Messrs. Taneja and Ms. Carmichael. The 1994
Employee Stock Option Plan Administration Committee consists of Messrs. Ottman
plus a vacant seat created by the resignation of Mr. Mark A. Rowland. The
Employee Stock Purchase Plan Administration Committee consists of Messrs. Taneja
and Chema plus a vacant seat created by the resignation of Mr. Diroff. None of
the Stock Plan committees met during fiscal 1998.
Director Compensation
Each outside director of the Company receives $500, plus reimbursement
for actual travel expenses, for each board meeting and $100 for each committee
meeting attended, if held on the same day as a board meeting, or $250 for each
committee meeting, if held on a day other than the date of a board meeting.
Outside directors receive a minimum of $3,000 annually if five meetings are
attended. Directors who are also employees of the Company receive no fees for
meetings attended. Additionally, outside directors receive options to purchase
Common Stock under the Outside Director and Advisory Board Member Stock Option
Plan, and directors of the Company who are executive officers have previously
received, and may receive in the future additional options.
Employment agreements
Effective November 23, 1998, the Company entered into a new one-year
employment agreement with Susan J. Carmichael, the Company's newly appointed
Chief Executive Officer and President. Pursuant to the agreement, Ms. Carmichael
receives $175,000 in base salary per year and a bonus at the discretion of the
Board. Additionally, Ms. Carmichael received 200,000 options in connection with
the replacement of her prior three-year employment agreement with the new
one-year agreement.
On November 23, 1998, the Company and Mr. Taneja entered into a
Termination, Noncompetition and Mutual Release Agreement (the "Departure
Agreement") superseding the terms of his employment agreement. Under the terms
of the Departure Agreement, Mr. Taneja's employment as Chief Executive Officer
of the Company was terminated effective November 23, 1998. Upon termination, Mr.
Taneja received 744,680 shares of the Company's Common Stock and the right to
receive $250,000 cash upon receipt by the Company of a certain cash receivable,
and the terms of all of his existing options and warrants were extended until
November 23, 2001.
Prior to November 23, 1998, Ms. Carmichael and Mr. Taneja had
employment agreements which were originally entered into on September 1, 1995
(the Superseded Employment Agreements). The Superseded Employment Agreements
with Ms. Carmichael and Mr. Taneja were originally for three-year terms, but had
been renewed annually such that the remaining term following each such renewal
was for three additional years. The Superseded Employment Agreements were
substantially similar providing Mr. Taneja with an annual base salary of
$200,000 and Ms. Carmichael with an annual base salary of $150,000. For a
complete discussion of the Superseded Employment Agreements see the copy of the
Company's Annual Report on Form 10-KSB as filed with the Securities and Exchange
Commission for the fiscal year ended March 31, 1998 which accompanies this Proxy
Statement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's equity offering in February, 1995
(the "Offering"), the Company engaged A.T. Brod & Co., Inc. ("Brod") for the
purpose of offering and selling the Company's units on a firm commitment basis.
Brod was a wholly-owned subsidiary of Bancapital Financial Corporation, of which
Mr. Taneja was the Chief Executive Officer and owner of a majority of its issued
and outstanding shares of capital stock. Pursuant to the terms of the
Underwriting Agreement entered into between the Company and A. T. Brod, Brod
received in connection with the Offering various fees, commissions and
underwriting discounts totaling approximately $1.3 million. The Company granted
Brod an option to purchase 100,000 units as the underwriters. The exercise price
of the units purchased pursuant to the option was $11.96 per unit. In April of
1997, the Company exchanged one share of common stock for each unit.
During fiscal 1998 and 1997, the Company leased certain office
furniture and equipment from Bancapital for a total cost of $28,000 per year.
Bancapital also held the lease for the Company's Cleveland financial office. The
lease was terminated March 31, 1997 when operations were moved to Florida.
All material affiliated transactions will be made or entered into on
terms no less favorable to the Company than those that can be obtained from
unaffiliated third parties, and all material affiliated transactions must be
approved by a majority of the independent outside members of the Board of
Directors of the Company who do not have an interest in the transactions.
13
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as independent public accountants
for the Company for its most recently completed fiscal year. On December 1,
1998, the Company and Ernst & Young LLP, its auditors, ceased their
relationship. Ernst & Young had no disagreements or reportable events during the
Company's two most recent fiscal years, nor for the current fiscal year through
the date of termination on December 1, 1998.
Neither Ernst & Young's report dated June 29, 1998 on the Company's
financial Statements for the fiscal year ended March 31, 1998 nor its report
dated June 20, 1997 for the fiscal year ended March 31, 1997 contained an
adverse opinion or a disclaimer of opinion and neither report was qualified or
modified as to uncertainty, audit scope or accounting principles.
Furthermore, there were no disagreements with Ernst & Young, whether
or not resolved, on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved to
Ernst & Young's satisfaction, would have caused it to make reference to the
subject matter of the disagreement in connection with its report.
The decision to cease relations with Ernst & Young and engage a new
auditor was mutual due to distance and economics. The decision was approved by
the Board of Directors and was based on the fact that Ernst & Young was sending
a team from Cleveland, Ohio because the Company once maintained its financial
office in Cleveland. Now that the Company has relocated financial operations to
Florida, it will seek auditors in the Tampa Bay Region in an effort to reduce
fees.
STOCKHOLDER PROPOSALS
The deadline for submission of shareholder proposals pursuant to Rule
14a-8 under the Securities Exchange Act of 1934, as amended ("Rule 14a-8"), for
inclusion in the Company's proxy statement for its 1999 Annual Meeting of
Shareholders is March 31, 1999. Notice to the Company of a shareholder proposal
submitted other than pursuant to Rule 14a-8 will be considered untimely, and may
not be properly brought before the 1999 Annual Meeting by a shareholder, if
received by the Company after March 31, 1999.
OTHER MATTERS
The solicitation of proxies is made by and on behalf of the Board. The
cost of the solicitation will be borne by the Company, including the reasonable
expenses of brokerage firms or other nominees for forwarding proxy materials to
beneficial owners. In addition to solicitation by mail, proxies may be solicited
by telephone, telegraph or personally. Proxies may be solicited by directors,
officers and employees of the Company without additional compensation.
If the enclosed proxy is executed and returned, the shares represented
thereby will be voted in accordance with any specifications made by the
stockholder. In the absence of any such specification, they will be voted "FOR"
the election of each of the nominees for director as set forth in Proposal 1
above. Pursuant to the Company's Articles of Incorporation and applicable law,
broker nonvotes and abstaining votes will not be counted in favor of or against
the election of any nominee for director or any of the proposals to be presented
at the meeting.
The presence of a stockholder at the meeting will not operate to
revoke his proxy. A proxy may be revoked at any time insofar as it has not been
exercised by giving written notice to the Company.
If any other matters shall come before the meeting, the persons named
in the proxy, or their substitutes, will vote thereon in accordance with their
judgment. The Board does not know of any other matters which will be presented
for action at the meeting.
By Order of the Board of Directors
December 31, 1998 SUSAN J. CARMICHAEL
Chief Executive Officer and President
14
<PAGE>
PROXY
NuMED HOME HEALTH CARE, INC.
1998 ANNUAL MEETING OF STOCKHOLDERS
JANUARY 28, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominates and appoints Thomas V. Chema and
Susan J. Carmichael, or either of them, as proxies of the undersigned, with
power of substitution to each, to vote all shares of stock of NuMED HOME HEALTH
CARE, INC. (the "Company") which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at the offices of Foley
& Lardner located at 100 North Tampa Street, Tampa, Florida, on Thursday,
January 28, 1999 at 10:00 A.M., local time, and at any adjournment or
adjournments thereof with authority to vote said stock on the following matters:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ALL OF THE NOMINEES IN PROPOSAL 1:
(1) The election of the following directors:
NOMINEES FOR THE TERM TO EXPIRE IN 2000
Mr. William L. LaGamba
Mr. Paul A. Santostasi
NOMINEES FOR THE TERM TO EXPIRE IN 2001
Mr. Thomas V. Chema
Ms. Peggy A. Loesch
/ / VOTE FOR all nominees listed above, with the following exceptions:
Exceptions:_____________________________________________________________________
/ / WITHHOLD AUTHORITY to vote for all nominees listed above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THE PROPOSED BY-LAWS AMENDMENT IN PROPOSAL 2:
(2) Denial of the proposal to amend the By-Laws of the Company
to eliminate the classified board of directors and to
provide that all directors are elected annually for one year
terms.
|_| AGAINST |_| FOR |_| ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED,
WILL BE VOTED "AGAINST" THE PROPOSAL TO AMEND THE BY-LAWS.
Should any other matters requiring a vote of the stockholders arise,
including matters incident to the conduct of the meeting, the above named
proxies are authorized to vote the same in accordance with their best judgment
in the interest of the Company. The Board of Directors is not aware of any
matter which is to be presented for action at the meeting other than the matters
set forth herein.
15
<PAGE>
NOTE: Please sign and return promptly in the envelope provided. No
postage is required if mailed in the United States.
Date: January ___, 1999 ________________________
Signature
-------------------------
Signature
Please sign exactly as your name
appears. When signing as attorney,
executor, administrator, trustee or
guardian, please set forth your full
title. If signer is a corporation,
please sign the full corporation name by
a duly authorized officer. Joint
Stockholders should each sign.