SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for use of the
|X| Definitive Proxy Statement Commission only (as permitted
|_| Definitive Additional Materials by Rule 14a-6(e)(2)).
|_| Soliciting Material Pursuant to
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.:
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(3) Filing Party:
________________________________________________________________
(4) Date Filed:
________________________________________________________________
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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 six (6) Directors to the Company's Board of Directors to
serve a one-year term 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.
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
January 13, 1999 SUSAN J. CARMICHAEL
Chief Executive Officer and President
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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.
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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 ("NuMED" or 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 January 13, 1999.
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 5,857,901 shares of the
Common Stock issued and outstanding. Each share of Common Stock entitles the
holder to one vote, however, as noted under the heading "LEGAL PROCEEDINGS," in
connection with the settlement reached with the Turkey Vulture Fund XIII, Ltd.
("Turkey Vulture Fund"), the former Chairman and Chief Executive Officer, Mr.
Jugal K. Taneja, has agreed not to vote the 744,680 shares he received pursuant
to a Termination, Noncompetition and Mutual Release Agreement he entered into
with the Company. 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 addition, the Company has retained the services of MacKenzie Partners, Inc.,
a proxy solicitation firm, to assist in the solicitation of proxies by the
Board. The Board currently estimates that the additional cost to retain
MacKenzie Partners, Inc. will total a minimum of $25,000 plus expenses. In
accordance with the regulations of the Securities and Exchange Commission (the
"SEC"), 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.
LEGAL PROCEEDINGS
On November 17, 1998, the Company filed a suit against Turkey Vulture
Fund in the United States District Court, Middle District of Florida, Tampa
Division. 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 Fund. In
the Complaint, the Company sought injunctive relief for Turkey Vulture Fund's
alleged violations of Section 13(d) of the Securities Exchange Act of 1934.
Specifically, the Company alleged that Turkey Vulture Fund failed to timely
amend 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
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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 sought (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 Fund from exercising voting rights and soliciting
proxies during the pendancy of this lawsuit, (iii) an appropriate "cooling off
period," to 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 Turkey Vulture
Fund's Verified Amended Answer and Counterclaim for Preliminary Injunction. In
its Answer, Turkey Vulture Fund denied the material allegations against it and
alleged that any violations of Section 13(d) were cured. In its Counterclaim,
Turkey Vulture Fund requested that the court (i) preliminarily and permanently
enjoin Mr. Taneja 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 Fund an updated stockholders' ledger. On December 29,
1998, the Company filed a Motion to Dismiss the Counterclaim.
On December 16, 1998, the Company was served with Turkey Vulture
Fund's Motion for Summary Judgment in which Turkey Vulture Fund alleged that it
cured the deficiencies in its Schedule 13D and that the Company's Complaint was
moot. The Company's response was filed on December 31, 1998.
On December 17, 1998, the Company was served with Turkey Vulture
Fund's 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 was held on December 30, 1998. Following the hearing, the Court
issued an Order finding that "it needs further information with respect to the
complex factual matters involved," and enjoining the Company from taking any
actions outside the ordinary course of business. Accordingly, the court
appointed an independent mediator with authority in the nature of a special
master. The mediator held hearings on January 4 though January 6, 1998.
On January 6, 1998, the Company and its Board of Directors reached an
agreement with Turkey Vulture Fund to settle all outstanding litigation and
present to NuMED's stockholders a combined slate of nominees to the Board of
Directors for this Meeting. Pursuant to the settlement agreement, Turkey Vulture
Fund agreed to cause the Committee for a New NuMED to withdraw its proxy
statement that had been filed in opposition to the Board of Directors' proxy
statement. In the settlement agreement, Turkey Vulture Fund and the Company
agreed to enter into a purchase agreement to purchase an additional 744,680
shares of NuMED Common Stock directly from the Company in exchange for $350,000
cash. Management agreed to recommend a slate consisting of the following six (6)
directors: Susan J. Carmichael, Thomas V. Chema, J. Michael Gorman, Richard M.
Osborne, Thomas J. Smith and Jugal K. Taneja. Additionally, all of the parties
agreed to vote all of their shares which are eligible to vote in favor of the
foregoing slate. However, Mr. Taneja, the Company's former Chairman and Chief
Executive Officer, is not eligible to vote the 744,680 shares of NuMED Common
Stock he received in connection with the entering into of his Termination
Noncompetition and Mutual Release Agreement at the Meeting. In addition, the
Board has agreed to reduce the number of Directors to six (6) and amend the
By-Laws to eliminate the staggered Board of Directors prior to the Meeting.
Finally, the parties from the settlement agreement agreed to enter into a
standstill agreement on proxy fights through the year 2000 Annual Stockholders
Meeting.
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THE HOME HEALTH INDUSTRY CLIMATE
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).
How Does NuMED Compare to Other Public Companies?
As you can see from the following chart which was published by the
Home Health Business Report, as of November 30, 1998 publicly held companies in
the home health industry have generally seen their stock prices perform below
Standard & Poor's 500 Index this past year.
Company % of Change This Year
- ------- ---------------------
Amedisys Inc. -44.44
American HomePatient Inc. -90.96
Apria Healthcare Group Inc. -47.91
Caretenders HealthCorp. -59.82
Chemed Corp. -18.25
Columbia HCA Healthcare -16.88
Community Care Services -86.67
Coram Healthcare Corp. -44.44
Fresenius Medical Care -9.48
Graham-Field Health Products Inc. -81.27
Healthcor Holdings Inc. -93.55
Help at Home Inc. 7.14
Home Health Corp. -95.78
In Home Health Inc. -40.00
Infu-Tech Inc. -40.70
Integrated Health Services Inc. -64.13
Interwest 8.33
Invacare Corp. 10.06
Kelly Services Inc. -3.73
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Lincare Holdings Inc. 21.05
Malinckrodt -14.97
Matria Healthcare -65.00
Mid Atlantic Medical Services -30.39
National HealthCare -73.10
National Home Health Care Corp. -2.56
New York Health Care Inc. -60.00
NuMED Home Health Care, Inc. -50.06
Olsten Corp. (The) -50.00
Option Care Inc. -61.36
Pediatric Services of America -79.08
Respironics Inc. -15.64
Sabratek -41.56
ServiceMaster L.P. 10.26
Staff Builders Inc. -76.12
Star MultiCare Services Inc. -75.00
Sunrise Medical Inc. -17.41
Transworld Home HealthCare Inc. -40.18
Several firms listed above are substantially larger in revenue and may
provide products and services which NuMED does not provide such as durable
medical equipment and respiratory therapy and equipment. NuMED provides in home
nursing, Physical Therapy ("PT"), Occupational Therapy ("OT"), Speech/Language
Therapy ("ST"), Medical Social Work, and in facility contract rehabilitation
services through PT, OT, and ST.
What Has NuMED Done to Deal with IPS and Prepare for PPS?
x 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.
x 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.
x 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.
x 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.
x 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.
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* 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.
- 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 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.
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.
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* 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, strong new Board members, 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.
The matters discussed under this subsection may be considered
forward-looking statements and may be subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected. The
Company assumes no obligation to update the information in this subsection.
PROPOSAL 1 ELECTION OF DIRECTORS
As previously noted under the section titled "LEGAL PROCEEDINGS," the Board
of Directors agreed to eliminate the staggered board provisions in the Company's
By-Laws prior to the Meeting, and consequently, each of the nominees, if
elected, will serve for a term of one (1) year, and until their successors are
duly elected and qualified.
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
NAME AGE POSITION
Susan J. Carmichael 50 Chief Executive Officer,
President and Director
Thomas V. Chema 52 Director
J. Michael Gorman 46 Director
Richard M. Osborne 53 Director
Thomas J. Smith 54 Director
Jugal K. Taneja 54 Director
BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES
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.
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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.
J. Michael Gorman is the President and Chief Executive Officer of Harmony
Laboratories, Inc., which develops and distributes over-the-counter
pharmaceuticals and health and beauty aids. From 1990 through 1995, Mr. Gorman
was President of Knox International, Inc., a company that produces and
distributes medical gases and equipment. Prior to that time, Mr. Gorman served
as President of GPI, Inc., a producer of custom plastic devices for the medical
industry.
Richard M. Osborne is President and Chief Executive Officer of OsAir, Inc.,
a company he founded in 1963. OsAir is a manufacturer of industrial gases for
pipeline delivery and a real property developer. Mr. Osborne is the Manager of
Turkey Vulture Fund XIII, Ltd., which began operations in January 1995. Turkey
Vulture Fund acquires, holds, sells or otherwise invests in all types of
securities and other instruments. Mr. Osborne is a director of TIS Mortgage
Investment Company, a publicly-held real estate investment trust, a trustee and
Chairman of the Board of Trustees of Meridian Point Realty Trust ?83, a
publicly-held real estate investment trust, a director of Central Reserve Life
Corporation, a publicly-held insurance holding company, a director and Chairman
of the Board of Pacific Gateway Properties, Inc., a publicly-held real estate
company, and a director and Vice Chairman of the Board of GLB Bancorp, Inc., a
bank holding company.
Thomas J. Smith has been the President of Retirement Management Company,
which manages assisted living and retirement facilities, since 1992. Since April
1996, Mr. Smith has served as the Executive Operating Manager of Liberty
Self-Stor, Ltd., which owns and operates 13 self-storage facilities. Mr. Osborne
controls both Retirement Management and Liberty Self-Stor. Mr. Smith is also a
director of GLB Bancorp, a bank holding company, and a trustee of Meridian Point
Realty Trust ?83, a publicly-held real estate investment trust.
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. Mr. Taneja remains a Director of NuMED. 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.
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.
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of January 8, 1999 with respect to: (i) each of the
Company's directors and the executive officers named in the Summary Compensation
Table and each of the nominees; (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
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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
Susan J. Carmichael (1)...................495,000 7.8%
5770 Roosevelt Boulevard, Suite 700
Clearwater, Florida 33760
Thomas V. Chema (2)........................29,120 *
1100 Huntington Building
925 Euclid Avenue
Cleveland, Ohio 44115
J. Michael Gorman ..............................0 *
1109 S. Main Street
Landis, North Carolina 28088
William LaGamba ..............................500 *
6950 Bryan Dairy Road
Largo, Florida 33777
Peggy Loesch ..............................44,423 *
5770 Roosevelt Boulevard, Suite 700
Clearwater, Florida 33760
Richard M. Osborne (3)....................583,500 9.9%
7001 Center Street
Mentor, Ohio 44060
Robert P. Ottman (2) (4) ..................44,306 *
3939 West Ridge Road
Erie, Pennsylvania 16506
Paul Santostasi ................................0 *
6950 Bryan Dairy Road
Largo, Florida 33777
Thomas J. Smith.................................0 *
8500 Station Street
Suite 100
Mentor, Ohio 44060
Jugal K. Taneja (5) ....................2,301,954 34.0%
5770 Roosevelt Boulevard, Suite 700
Clearwater, Florida 33760
Turkey Vulture Fund XIII, Ltd (3)........ 583,500 9.9%
7001 Center Street
Mentor, Ohio 44060
Executive Officers and Directors
as a Group (10 Persons) (6).............3,498,803 47.9%
* Less than one percent.
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(1) Includes (i) 190,000 shares issuable under currently exercisable stock
options, and (ii) 270,000 currently exercisable Common Stock Purchase
Warrants.
(2) 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.
(3) Includes beneficial ownership of 583,500 shares owned by Turkey Vulture
Fund, of which Mr. Osborne is the sole Manager.
(4) Includes 10,000 shares issuable under currently exercisable common stock
purchase warrants.
(5) 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, (iii) 380,000
shares issuable under currently exercisable stock options, and (iv) the
744,680 shares Mr. Taneja is not eligible to vote at the meeting which
he received in connection with the entering into of his Termination,
Noncompetition and Mutual Release Agreement. Excludes 209,820 shares
beneficially owned by his wife, Manju Taneja, as to which Mr. Taneja
exercises no voting or disposition rights.
(6) Includes 1,449,120 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. 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.
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<PAGE>
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> <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 $99,348 $ -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.
(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) $6.00 per share, (ii) the average of the
current bid and ask price, (iii) book value per share, or (iv) the appraised
value per share, and the Company is required to purchase all such securities for
the applicable price" was deleted.
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<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
THE COMPANY DID NOT MAKE ANY GRANTS OF OPTIONS OR SAR'S DURING FISCAL YEAR 1998.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<CAPTION>
Number of
Shares Unexercised Value of Unexercised
Acquired Value Options/SARs In-the-Money Options/SARs
on Exercise Realized at FY-End (#) at FY-End ($)*
Name ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------ ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <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.
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.
11
<PAGE>
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
12
<PAGE>
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.
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. In
addition, the Company has retained the services of MacKenzie Partners, Inc., a
proxy solicitation firm, to assist in the solicitation of proxies by the Board.
The Board currently estimates that the additional cost to retain MacKenzie
Partners, Inc. will total a minimum of $25,000 plus expenses. 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.
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.
13
<PAGE>
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
January 13, 1999 SUSAN J. CARMICHAEL
Chief Executive Officer and President
14
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NuMED HOME HEALTH CARE, INC.
1998 ANNUAL MEETING OF STOCKHOLDERS
JANUARY 28, 1999
The undersigned hereby nominates and appoints Thomas V. Chema and Susan J.
Carmichael, or either of them, as proxies of the undersigned, and revokes all
prior proxies with respect to the matters covered by this proxy, 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 postponements
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:
Ms. Susan J. Carmichael Mr. Thomas V. Chema Mr. J. Michael Gorman
Mr. Richard M. Osborne Mr. Thomas J. Smith Mr. Jugal K. Taneja
|_| VOTE FOR all nominees listed above, |_| WITHHOLD AUTHORITY
with the following exceptions: to vote for all nominees
listed above
Exceptions:___________________________________________________________________
(Continued and to be signed and dated on the reverse side)
15
<PAGE>
THIS PROXY REVOKES ALL PRIOR PROXIES AND VOTING INSTRUCTIONS.
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.
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.
16
