<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
UNITED AMERICAN HEALTHCARE CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
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(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
UNITED AMERICAN LOGO
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 13, 1997
To The Shareholders of United American Healthcare Corporation:
Please take notice that the 1997 Annual Meeting of Shareholders of United
American Healthcare Corporation will be held on Thursday, November 13, 1997 at
10:30 a.m. (eastern standard time) at the Crowne Plaza Hotel, Detroit, Michigan,
for the purpose of:
1. electing three directors to serve for three-year terms;
2. approving the appointment of Arthur Andersen LLP as independent
auditors of the Company for the 1998 fiscal year;
3. acting on such other business as may properly come before the
meeting.
You are cordially invited to attend the 1997 Annual Meeting.
Holders of Common Shares of record at the close of business on October 6,
1997, will be entitled to vote at the meeting. A list of such shareholders will
be available for inspection during normal business hours from November 3, 1997
through November 12, 1997 at the offices of Raymond & Walsh, P.C., 35055 West
Twelve Mile Road, Suite 114, Farmington Hills, Michigan 48331, and at the Crowne
Plaza Hotel on the date of the Annual Meeting.
A Proxy Statement, an Annual Report on Form 10-K, and a Proxy Card are
enclosed with this Notice. Each shareholder is urged to execute and return the
enclosed Proxy promptly. In the event a shareholder decides to attend the
meeting, he or she may, if so desired, revoke the Proxy and vote the shares in
person.
In order to help us plan for the meeting, please mark the appropriate box
on your Proxy Card telling us if you will be attending. Upon receipt of your
card, an admission card will be sent to you.
By Order of the Board of Directors
Anita C.R. Gorham, Secretary
Detroit, Michigan
October 22, 1997
<PAGE> 3
UNITED AMERICAN HEALTHCARE CORPORATION
1155 BREWERY PARK BOULEVARD, SUITE 200
DETROIT, MICHIGAN 48207
October 22, 1997
PROXY STATEMENT
This Proxy Statement is furnished by the Board of Directors of United
American Healthcare Corporation ("Company") in connection with its solicitation
of proxies for use at the 1997 Annual Meeting of Shareholders on November 13,
1997, and at any and all adjournments thereof. This Proxy Statement and
accompanying form of proxy are first being mailed on or about October 22, 1997.
The Company's Annual Report on Form 10-K (including audited financial
statements) for the fiscal year ended June 30, 1997 is enclosed with this Proxy
Statement.
If the proxy is properly executed and returned, the Common Shares it
represents will be voted at the 1997 Annual Meeting in accordance with the
instructions noted thereon. If no instructions are indicated, it will be voted:
(1) FOR the nominated directors; (2) FOR the appointment of auditors; and (3)
FOR or AGAINST such other matters as may properly come before the meeting in the
discretion of the proxy holders. The Board of Directors recommends a vote FOR
Items 1 and 2.
The Company's management knows of no matter to be brought before the
meeting which is not referred to in this Proxy Statement. If, however, any other
matter comes before the meeting, the proxy will be voted in accordance with the
judgment of the person or persons voting such proxy, unless the proxy contains
instructions to the contrary. Any shareholder executing a proxy has the power to
revoke it at any time before it is voted by submitting a duly executed proxy
bearing a later date, by delivering written notice of such revocation to the
Company's Secretary prior to the 1997 Annual Meeting or by attending the 1997
Annual Meeting and orally withdrawing the proxy. The cost of this solicitation
is being paid for by the Company.
The outstanding voting securities of the Company consist of no par value
common shares ("Common Shares"), of which 6,578,356 were issued and outstanding
at the close of business on October 6, 1997, the record date for determining
voting rights. The Company has no other class of voting securities outstanding.
Each share issued and outstanding on October 6, 1997, will be entitled to one
vote. Shareholders do not have cumulative voting rights.
The shareholder votes cast for all items considered at the meeting will be
calculated by an officer of Harris Trust and Savings Bank, the Company's
Registrar and Transfer Agent, as the Board designated Inspector of Election. The
Inspector of Election shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, hear and
determine challenges and questions arising in connection with the right to vote,
count and tabulate votes, determine the result, and do such acts as are proper
to conduct the election. Abstentions will neither be counted for nor against any
action for which cast.
ITEM 1 -- ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, with terms expiring
on three successive annual meeting dates. At the 1997 Annual Meeting to be held
on November 13, 1997, the following three persons are the nominees of the Board
of Directors for election as directors to serve for three-year terms expiring at
the annual meeting of shareholders in the year 2000, or until their successors
are duly elected and qualified: Emmett S. Moten, Jr., Louis J. Nicholas and
William B. Fitzgerald, Esq. The Common Shares represented by your proxy, unless
otherwise specified, will be voted FOR the election of these nominees. A vote of
a majority of the shares represented by proxy and in person is required to elect
each of the nominees to the Board of Directors for the term indicated.
Certain information concerning the nominees and directors (including
information furnished to the Company at its request as to securities
beneficially owned by such persons as of September 19, 1997) is set
<PAGE> 4
forth below. No nominee or director owns more than 6.6% of all outstanding
Common Shares, the only class of outstanding voting securities. All nominees are
presently serving as directors. Each of the nominees consented to be nominated
and agreed to serve if elected. If any nominee is unable to serve (an event
which is not anticipated), the proxies will be voted for a substitute nominee
designated by the Board of Directors.
NOMINEES FOR ELECTION AS DIRECTORS WITH TERMS EXPIRING IN 2000
(INCLUDING BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS)
EMMETT S. MOTEN, JR. (AGE 53)
Emmett S. Moten, Jr. has been a director of the Company since 1988. He is
Chairman of the Board's Audit Committee and a member of its Compensation and
Finance, Investment and Planning Committees. Since October 1996 Mr. Moten has
been the President of Moten Associates, a real estate development and accounting
firm. From July 1988 to October 1996, he was Vice President of Development for
Little Caesar Enterprises, Inc., a national fast food franchise concern. Prior
to assuming that position, Mr. Moten was Director of the Community & Economic
Development Department for the City of Detroit for almost ten years. Mr. Moten
does not own any Common Shares of the Company.
LOUIS J. NICHOLAS (AGE 58)
Louis J. Nicholas joined the Company in May 1993 as a Senior Vice President
and a director of the Company. Mr. Nicholas is a member of the Board's
Compensation Committee. He is also a Director, Chairman, President and CEO of
Corporate Healthcare Financing, Inc. ("CHF"), a wholly owned Subsidiary of the
Company. He was formerly the sole shareholder of CHF, Inc., the general partner
of CHF-HPM Limited Partnership. Mr. Nicholas beneficially owns directly and
indirectly 162,720 Common Shares.
WILLIAM B. FITZGERALD, ESQ. (AGE 55)
William B. Fitzgerald, Esq. was appointed to the Board of Directors in
April 1997. He is a member of the Board's Finance, Investment and Planning
Committee. From 1989 to present, Mr. Fitzgerald has been a principal of the Fund
Administration Services in Grosse Pointe Farms, Michigan, providing management
and consulting services to self-funded insurance programs. Since 1990, he has
also been an attorney at the law firm of Timmis and Inman in Detroit, Michigan.
Mr. Fitzgerald beneficially owns directly 33,346 Common Shares.
DIRECTORS WITH TERMS EXPIRING IN 1999
(INCLUDING BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS)
JULIUS V. COMBS, M.D. (AGE 66)
Julius V. Combs, M.D. has been the Company's Chairman of the Board and
Chief Executive Officer, as well as a director of the Company since its
inception. He is Chairman of the Board's Executive Committee and is a member of
the Board's Compensation and Finance, Investment and Planning Committees. Dr.
Combs is also a director and Chairman of UltraMedix, Chairman Emeritus of the
Board of Trustees of OmniCare Health Plan, Michigan ("OmniCare-MI"), and
President and director of OmniCare-TN. Dr. Combs was in private medical practice
from 1964 to 1995. Dr. Combs owns beneficially 434,143 Common Shares.
RONALD R. DOBBINS (AGE 62)
Ronald R. Dobbins has been President and Chief Operating Officer, as well
as a director, of the Company since 1984. Mr. Dobbins is Chairman of the Board's
Finance, Investment and Planning Committee and a member of the Board's Executive
and Compensation Committees. Mr. Dobbins is Chief Executive Officer and
President of OmniCare-MI, as well as a member of its Board of Trustees. He is
also a director of OmniCare-TN and UltraMedix. He is a member of the Board of
Directors of Michigan National Corporation/Michigan National Bank and a member
of the Board of Directors of Golden State Mutual Life Insurance Company. Mr.
Dobbins is also a member of the governing board of American Association of
Health Plans. Mr. Dobbins beneficially owns directly 264,405 Common Shares.
2
<PAGE> 5
WILLIAM C. BROOKS (AGE 67)
William C. Brooks was appointed to the Board of Directors in September
1997. He is a member of the Board's Finance, Investment and Planning Committee.
Mr. Brooks retired in 1997 from General Motors Corporation, Detroit, Michigan,
as a Vice President, Corporate Affairs, after serving in various executive
positions beginning in 1973. He is a member of the Board of Directors of
Louisiana-Pacific, DTE Energy Company and Detroit Edison Company, and Chairman
of Entech Human Resources Consulting Services, Inc. Mr. Brooks does not own any
Common Shares.
DIRECTORS WITH TERMS EXPIRING IN 1998
(INCLUDING BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS)
ANITA C.R. GORHAM (AGE 56)
Anita C.R. Gorham has been the Company's Secretary and a director since
1984. She is Chairwoman of the Board's Compensation Committee, and a member of
its Executive and Nominating Committees. Ms. Gorham is a member of the Board of
Trustees of OmniCare-MI. Ms. Gorham has been employed by Central Michigan
University, Troy, Michigan since 1987. She has served as Academic Advisor and
Regional Manager for Academic Services. She is currently Associate Director for
Professional Development and a faculty member. Ms. Gorham is also a faculty
member at Detroit College of Business. Ms. Gorham beneficially owns 23,436
common shares.
HARCOURT G. HARRIS, M.D. (AGE 69)
Harcourt G. Harris, M.D. has been a director of the Company since 1985. He
is Chairman of the Board's Nominating Committee and a member of its Executive
Committee. He is also Chairman of the Board of Trustees of OmniCare-MI. Dr.
Harris, now retired, has been involved in the private practice of medicine for
thirty years, specializing in internal medicine. Dr. Harris beneficially owns
directly and indirectly 30,907 Common Shares.(a)
VIVIAN L. CARPENTER, PH.D. (AGE 44)
Vivian L. Carpenter, Ph.D. was appointed to the Board of Directors in April
1997. She is a member of the Board's Audit, Executive and Nominating Committees.
Dr. Carpenter is Assistant Dean and Associate Professor of Accounting at Florida
A&M University's School of Business and Industry, Tallahassee, Florida, where
she has served in that capacity since June 1995. Prior to that, she had served
as Associate Professor and Director of Academic Programs at Florida A&M from
August 1992. Dr. Carpenter beneficially owns directly 10,000 Common Shares.
RONALD M. HORWITZ, PH.D. (AGE 59)
Ronald M. Horwitz, Ph.D. was appointed to the Board of Directors in April
1997. He is a member of the Board's Audit and Finance, Investment and Planning
Committees. Dr. Horwitz is a Professor of Finance at Oakland University School
of Business Administration, Rochester, Michigan where he has served in that
capacity since 1991. Dr. Horwitz is also the Principal of Ronald M. Horwitz and
Assoc., Financial Consultants, and a director of Providence Hospital and Medical
Centers. Dr. Horwitz beneficially owns indirectly 500 Common Shares.(b)
BOARD COMMITTEES, ATTENDANCE AND FEES
During the fiscal year ended June 30, 1997, the Company's Board of
Directors held nine (9) meetings. All directors attended 75% or more of the
aggregate number of meetings of the Board of Directors and
- ---------------
(a) Includes 27,421 Common Shares jointly held with spouse.
(b) The Common Shares are held of record in the name of his wife's trust, Carol
Horwitz Living Trust.
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<PAGE> 6
applicable committee meetings, except as specifically noted herein. The Board of
Directors has five (5) active standing committees which facilitate the carrying
out of its responsibilities.
The Executive Committee, which met four (4) times during the 1997 fiscal
year, is empowered to exercise, in the intervals between the meetings of the
Board of Directors, the powers of the Board as it relates to the management of
the business and affairs of the Company. Members of this Committee are Dr. Combs
(Chairman), Mr. Dobbins, Dr. Harris and Ms. Gorham.
The Audit Committee, which met six (6) times during the 1997 fiscal year,
is empowered to recommend to the Board of Directors certified public accountants
to conduct audits of the account and affairs of the Company, and to review
accounting objectives and procedures of the Company, findings and reports of the
independent certified public accountants, and make such reports and
recommendations to the Board of Directors as it deems appropriate. The Bylaws of
the Company require that the members of the Audit Committee all be "independent
directors" (as defined in the Company's Articles of Incorporation). Members of
this Committee are Mr. Moten (Chairman), Dr. Carpenter and Dr. Horwitz.
The Finance, Investment and Planning Committee, which met ten (10) times
during the 1997 fiscal year, is empowered to make recommendations to the Board
of Directors on financial matters, short and long term investments and business
planning matters. Members of the Committee are Mr. Dobbins (Chairman), Dr.
Combs, Mr. Moten, Dr. Horwitz, Mr. Fitzgerald and Mr. Brooks.
The Compensation Committee, which met three (3) times during the 1997
fiscal year, is empowered to make recommendations to the Board of Directors
relating to the overall compensation arrangements for officers and staff of the
Company, and to make recommendations to the Board of Directors pertaining to any
compensation plans in which officers and directors of the Company are eligible
to participate. Members of the Committee are Ms. Gorham (Chairwoman), Dr. Combs,
Mr. Dobbins and Mr. Nicholas. See also, "Executive Compensation, Compensation
Committee Report" as set forth herein.
The Nominating Committee, which met one (1) time during the 1997 fiscal
year, is empowered to present to the Board of Directors, whenever vacancies
occur or terms are expected to expire, names of individuals who would make
suitable directors of the Company and to advise appropriate officers of the
Company on matters relating to the organization of the Board of Directors.
Nominations of persons as candidates for election as directors may be made by
any shareholder of the Company entitled to vote for the election of directors,
who complies with the notice provisions of the Company's Bylaws, summarized as
follows: Any shareholder entitled to vote in the election of directors generally
may nominate one or more persons for election as directors at a meeting only if
timely notice of such shareholder's intent to make such nomination or
nominations has been given in and received at the principal executive offices of
the Company not less than 90 days prior to the meeting; provided, however, that
in the event that less than 100 days notice or prior public disclosure of the
date of the meeting is given or made to shareholders, notice by the shareholder
to be timely must be so received not later than the close of business on the
tenth day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. Each such notice shall set forth: (a)
the name and address of both the shareholder who intends to make the nomination
and the person(s) to be nominated; (b) a representation that the shareholder is
a holder of record of stock of the Company entitled to vote for the election of
directors on the date of such notice and intends to appear in person or by proxy
at the meeting to nominate the person or person specified in the notice; (c) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the Board; and (e) the
consent of each nominee to serve as a director of the Company if so elected.
Members of the Committee are Dr. Harris (Chairman), Dr. Carpenter and Ms.
Gorham.
Each of the directors of the Company receives $250 for each Board of
Directors' meeting and each Board committee meeting attended. In addition, each
director who is not also an employee of the Company received an annual stipend
of $15,000 as compensation for director services. Directors are also entitled to
4
<PAGE> 7
reimbursement for reasonable out-of-pocket expenses incurred in providing
services to the Company in their capacities as directors.
ITEM 2 -- PROPOSAL TO RATIFY SELECTION OF INDEPENDENT ACCOUNTANTS
The Executive Committee of the Board of Directors of the Company, upon the
recommendation of the Board's Audit Committee, has recommended the appointment
of Arthur Andersen LLP as independent public accountants and auditors in
connection with the Company's accounting matters to include timely quarterly
reviews of the consolidated financial statements and an annual audit of the
accounts of the Company and its subsidiary companies, and such other audits of
the Company's related activities as may be required for the fiscal year ending
June 30, 1998. The Audit Committee initiated a Request for Proposal ("RFP")
process in July 1997, in order to select a single firm which would audit the
Company and its subsidiaries. Currently, the Company engages multiple audit
firms to audit the Company and its subsidiaries. In making its recommendation,
the Audit Committee gave consideration to the general reputation of those firms
which responded to the RFP and a review of each such firm's proposed terms of
engagement. A representative of Grant Thornton LLP is expected to be present at
the 1997 Annual Meeting to make a statement, if requested, and be available to
respond to questions with respect to the 1997 audit. A representative of Arthur
Andersen LLP is also expected to be present at the 1997 Annual Meeting to make a
statement, if requested, and be available to respond to questions with respect
to the 1998 audit.
In the event the proposal is defeated, the adverse vote will be considered
as a direction to the Board of Directors to select other independent accountants
for the 1999 fiscal year. However, because of the expense and difficulty of
making a substitution after the beginning of a fiscal year, it is planned that
the appointment for the 1998 fiscal year will be permitted to stand unless the
Board of Directors finds other reasons for making a change.
The Board of Directors considers Arthur Andersen LLP to be well qualified
to serve as the independent accountant for the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS FOR THE 1998 FISCAL
YEAR. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS OTHERWISE SPECIFY IN THEIR PROXIES.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
at the meeting. If other matters properly come before the meeting, the persons
named as proxy holders will vote on them in accordance with their best judgment.
The cost of this solicitation of proxies will be borne by the Company. In
addition to the use of the mail, some of the officers and regular employees of
the Company may solicit proxies by telephone and telegraph, and will request
brokerage houses and other custodians, nominees and fiduciaries to forward
soliciting materials to the beneficial owners of Common Shares held of record by
such persons and may verify the accuracy of marked proxies by contacting record
and beneficial owners of Common Shares. The cost of the foregoing solicitation
activities is expected to be nominal.
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<PAGE> 8
EXECUTIVE COMPENSATION
The following Summary Compensation Table set forth the annual salary, bonus
and all other compensation awarded to the Company's Chief Executive Officer and
its four most highly compensated executive officers whose respective salary and
bonus exceeded $100,000.00.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------------- -------------------------------
AWARDS PAYOUTS
--------------------- -------
RESTRICTED
NAME AND OTHER ANNUAL STOCK OPTIONS/ LTIP/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS SARS PAYOUTS COMPENSATION($)(1)
------------------ ---- --------- -------- --------------- ---------- -------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JULIUS V. COMBS, M.D.... 1997 327,957 -- -- -- -- -- 7,500
Chairman of the Board, 1996 295,392 176,800 -- -- -- -- 7,500
Chief Executive Officer 1995 292,712 -- -- -- -- -- 7,997
and Director
RONALD R. DOBBINS....... 1997 327,957 -- -- -- -- -- 7,500
President, Chief 1996 295,392 163,200 -- -- -- -- 7,500
Operating Officer 1995 292,712 -- -- -- -- -- 8,377
and Director
LOUIS J. NICHOLAS....... 1997 476,316 -- -- -- -- -- 7,500
Senior Vice President, 1996 426,556 -- -- -- -- -- 7,500
Chief Executive Officer, 1995 384,760 -- -- -- -- -- 7,500
CHF and Director
JAGANNATHAN VANAHARAM... 1997 197,134 -- -- -- -- -- 7,500
Senior Vice President, 1996 170,434 -- -- -- -- -- 7,500
Finance and Treasurer 1995 158,045 -- -- -- -- -- 7,233
WILLIAM C. SHARP,
M.D................... 1997 196,064 -- -- -- -- -- 7,500
Vice President, 1996 178,651 -- -- -- -- -- 7,500
Medical Services 1995 182,484 -- -- -- -- -- 4,375
</TABLE>
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(1) Represents the Company's annual contribution to the 401(K) Savings Plan.
STOCK OPTION PLANS
The Company has adopted a stock option plan (the "Plan"), under which
331,250 common shares are presently reserved for issuance upon exercise of
options granted under the Plan. No options have been granted under the Plan.
Under the Plan, incentive stock options may be granted to employees, and
non-incentive stock options may be granted to employees, directors and such
other persons as the Board of Directors (or a committee appointed by the Board)
determines will contribute to the Company's success, at exercise prices equal to
at least 100% of the fair market value of the common shares on the date of
grant. In addition to administering the Plan, the Board (or the committee)
determines the number of common shares subject to each option, the term of each
non-incentive stock option, and the time or times when the non-incentive stock
option becomes exercisable, though in no event may the option be exercisable
prior to one year after the date of grant. Incentive stock options are granted
for a term of five years, and are exercisable cumulatively at the rate of 25%
per year commencing one year after the date of grant.
The Company's Employee Stock Purchase Plan ("ESPP"), which became effective
October 1996, enables all eligible employees of the Company to subscribe for
shares of common stock on an annual offering date at a purchase price which is
the lesser of 85% of the fair market value of the shares on the first day or the
last day of the annual period. Employee contributions to the ESPP for 1997 were
approximately $.2 million. 200,000 common shares were reserved for issuance.
Pursuant to the ESPP, 42,415 shares were issued subsequent to year end for the
period ended June 30, 1997.
The Company has not granted any stock options under its Stock Option Plan,
or any Stock Appreciation Rights, nor did it grant any awards under a long-term
incentive plan during fiscal year 1997.
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<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MEMBERS OF MANAGEMENT
Under Section 13(d) of the Exchange Act, a beneficial owner of a security
is any person who directly or indirectly has or shares voting control or
investment power over such security. The following are the only holders which
are known by the Company to own beneficially more than 5% of its Common Shares
as of September 19, 1997.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS NUMBER OF COMMON SHARES OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON SHARES
- -------------------------------------------------------- ----------------------- -------------
<S> <C> <C>
**Julius V. Combs, M.D.(1)(2)........................... 434,143 6.6%
Richard M. Brown, D.O.(3)(4).......................... 411,727 6.3%
</TABLE>
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** Director of the Company
(1) The address for Dr. Combs is 1155 Brewery Park Boulevard, Suite 200,
Detroit, Michigan 48207.
(2) All Common Shares are held with spouse or other person as joint tenants.
(3) Dr. Brown's address is 1200 Ardmoor, Birmingham, Michigan 48010.
(4) All Common Shares are held in the name of a trust.
The following table sets forth the Common Shares held by the Chief
Executive Officer and the four most highly compensated executive officers of the
Corporation:
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS* NUMBER OF COMMON SHARES OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON SHARES
- -------------------------------------------------------- ----------------------- -------------
<S> <C> <C>
Julius V. Combs, M.D. .................................. See Above See Above
Ronald R. Dobbins....................................... 264,405 4.0%
Louis J. Nicholas....................................... 162,720 2.5%
Jagu Vanaharam.......................................... 107,777 1.6%
William C. Sharp, M.D. ................................. 6,185 **
</TABLE>
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* See table below for addresses.
** Percentage of Common Shares beneficially owned does not exceed 1%.
The following table sets forth certain information, as of September 19,
1997, concerning the beneficial ownership of Common Shares held by (i) each
shareholder known by the Company to own more than 5% of the Common Shares, (ii)
each director of the Company, (iii) each principal officer of the Company, and
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<PAGE> 10
(iv) all directors and officers as a group. Except as otherwise noted, each of
the persons named below possess sole voting and investment power with respect to
all shares set forth opposite his or her name.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS NUMBER OF COMMON SHARES OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON SHARES
- -------------------------------------------------------- ----------------------- -------------
<S> <C> <C>
Julius V. Combs, M.D.(3)(5)(8).......................... 434,143 6.6%
Ronald R. Dobbins(3)(5)................................. 264,405 4.0%
Louis J. Nicholas(3)(5)(7).............................. 162,720 2.5%
Harcourt G. Harris, M.D.(1)............................. 30,907 *
William B. Fitzgerald(1)................................ 33,346 *
Anita C. R. Gorham(3)................................... 23,436 *
Vivian L. Carpenter, Ph.D.(1)........................... 10,000 *
Ronald M. Horwitz, Ph.D.(1)............................. 500 *
Jagannathan Vanaharam(2)(9)............................. 107,777 1.6%
John S. Zaleskie(2)..................................... 4,668 *
William C. Sharp, M.D.(2)............................... 6,185 *
Osbie Howard(2)......................................... 1,918 *
Danny H. McNeal(2)(9)................................... 462 *
Francisco Ramos(2)(9)................................... 407 *
All directors and officers as a group (17 persons)...... 1,080,874 16.4%
Richard M. Brown, D.O.(4)(6)............................ 411,727 6.3%
</TABLE>
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* Percentage of common shares beneficially owned does not exceed 1% of the
total common shares outstanding.
(1) Beneficial owner is a director of the Company.
(2) Beneficial owner is an officer of the Company.
(3) Beneficial owner is a director and an officer of the Company.
(4) Dr. Brown's address is 1200 Ardmoor, Birmingham, Michigan 48010.
(5) The address for the listed person is 1155 Brewery Park Boulevard, Suite 200,
Detroit, Michigan 48207.
(6) Reflects all shares held of record in the name of a trust having as its
Trustee the shareholder indicated.
(7) 47,545 Common Shares are held of record in the name of CHF-HPM Limited
Partnership, a Maryland limited partnership, of which Phase V, Inc. a
Maryland corporation, is the General Partner. Louis J. Nicholas is the sole
shareholder of Phase V, Inc. Mr. Nicholas disclaims beneficial ownership in
such common shares for purposes of Section 16 under the Exchange Act. The
remaining 115,175 shares are held by Mr. Nicholas directly.
(8) 13,692 Common Shares are held in the name of a trust having Dr. Combs as its
Trustee.
(9) Not a reporting person for the purposes of Section 16 of the Securities
Exchange Act of 1934.
Based solely upon a review of Form 4 -- Statement of Changes in Beneficial
Ownership, and amendments thereto, furnished to the Company pursuant to Rule
16A-3(e), as promulgated under the Securities Exchange Act of 1934, as amended,
the Company believes that all of its officers and directors timely filed their
Form 4s, as required, with the Securities and Exchange Commission in compliance
with Section 16 of the Securities Exchange Section of 1934, as amended, except
for the following individuals during the periods indicated: Dr. Julius V. Combs
(October 1996 and May 1997), Ronald R. Dobbins (January 1997), William B.
Fitzgerald (April 1997) and Emmett S. Moten, Jr. (October 1996). All the
foregoing directors subsequently filed the appropriate form with the SEC for the
periods indicated.
EMPLOYMENT AGREEMENTS
The Company has entered into five-year employment agreements with Dr. Combs
and Mr. Dobbins, respectively, initially expiring March 1996, subject to
automatic renewal for successive one-year terms, unless
8
<PAGE> 11
terminated by the Company or the executive upon 90 days notice prior to the end
of the initial term or the renewal terms, as the case may be. The Agreements
have been renewed through March 1998. Under their respective employment
agreements, Dr. Combs and Mr. Dobbins each currently receives an annual base
salary of $327,957, plus an annual bonus to be based upon specific performance
specifications and/or goals to be agreed upon by the Company and the executive,
with the bonus payable to Dr. Combs for any year of employment to be not less
than 30%, nor more than 60%, of his base salary for such year. No bonus is
payable to the executive for any year in which he is employed by the Company for
fewer than six months and any bonus will be pro-rated to the extent the
executive is employed less than the full year. Dr. Combs and Mr. Dobbins have
waived any bonus for the fiscal year ended June 30, 1997.
Under each employment agreement, the executive may, upon giving 30 days
written notice, terminate the agreement in the event there is a change of
control or ownership (as defined in the employment agreement) of the Company and
the executive's powers and duties significantly change or the executive has good
reason (as defined in the employment agreement) to terminate or, as a result of
the change of control or ownership, the executive is unable to exercise or
perform his powers, functions and duties. In the event of such termination, the
executive will receive (i) all monies earned under any Company long-term
incentive plan, (ii) a lump sum severance payment equal to his base salary for
36 months at the rate payable at the time notice of termination was given, and
(iii) the bonus which he would otherwise be entitled to for the year in which
his employment is terminated. Based upon the executive's current base salary,
the Company estimates that the lump sum severance payment payable to each Dr.
Combs and Mr. Dobbins under this provision would be approximately $1.1 million
for the present fiscal year.
In the event the executive terminates his employment due to a breach of his
employment agreement by the Company, he will receive earned and unpaid salary
accrued to the date of termination together with any bonus which would otherwise
be payable to him for the year in which the agreement is terminated.
In the event the executive's employment is terminated without cause by the
Company, the executive will receive his base salary until the last day of the
24th full calendar month immediately following such termination, but in no event
will the executive be entitled to such payments following his normal retirement
date, defined as the August 31st nearest to the date on which the executive
attains the age of 65.
In the event the executive's employment is terminated for cause, death or
disability, the executive (or his estate) will receive earned and unpaid salary
accrued to the date of termination but shall not be entitled to any bonus which
might otherwise be payable to the executive for the year in which his employment
is terminated.
Dr. Combs and Mr. Dobbins have each agreed that for the longer of (i) 12
months from the date of termination of his employment agreement, or (ii) the
period during which the executive receives payments under his employment
agreement, plus the 12 months immediately following expiration of such period,
he will not engage in the development of a managed health care product or
service nor render services similar or related to those which he rendered as an
employee of the Company in any county in which the Company provides any managed
health care product or service or within any contiguous county.
The Company is also party to an Employment Agreement by and between CHF and
Louis J. Nicholas (the "Executive") dated as of May 7, 1993, pursuant to which
it agreed to: (i) refrain from impeding the Executive's ability to operate CHF
in a prudent manner consistent with maximizing a return for purposes of the
Contingent Promissory Note; (ii) elect the Executive to its Board of Directors
and as a Senior Vice President; (iii) pay liquidated damages if the Executive is
terminated without good cause or good reason, as those terms are defined
therein; and (iv) provide Board review of a termination of the Executive for
good cause by CHF. In addition, the Employment Agreement provides the Company
with the right to cease payments due under the Contingent Promissory Note in the
event of a material breach of the agreement by the Executive.
401(K) SAVINGS PLAN
The Company sponsors a retirement plan intended to be qualified under
section 401(k) of the Internal Revenue Code of 1986, as amended. All employees
over age 21, other than non-resident aliens, are eligible to
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<PAGE> 12
participate in the plan. Employees may contribute to the plan on a tax-deferred
basis up to 15% of their total salary. Under the plan, the Company makes
matching contributions on each employee's behalf, up to a maximum of 5% of each
employee's total salary. As of June 30, 1997, 227 employees had elected to
participate in the plan. For the fiscal year ended June 30, 1997, the Company
contributed $0.6 million to the plan. See the Summary Compensation Table
contained herein for additional information.
COMPENSATION COMMITTEE REPORT
Compensation for the Company's key executives is determined by the
Compensation Committee of the Board of Directors. Salaries, bonuses and other
compensation of the Company's key executives, including Dr. Combs, are based
upon profitability, enrollment levels of the Company's clients, including
OmniCare-MI, UltraMedix and OmniCare-TN, revenue growth, return on equity and
market share.
The Committee believes that compensation of the Company's key executives
should be sufficient to attract and retain highly qualified personnel and also
provide meaningful incentives for measurable superior performance. During the
1997 fiscal year, the Company's executive compensation included a base salary
only. Based upon available data, the Company believes the base salaries of its
executives were set at the levels of comparable companies in its line of
business.
The Company's Compensation Committee is comprised of Ms. Gorham
(Chairwoman), Dr. Combs, Mr. Dobbins, Mr. Moten and Mr. Nicholas (see also
"Meetings and Committees of the Board of Directors"). Dr. Combs and Mr. Dobbins
do not participate in Compensation Committee meetings during which their own
compensation is considered.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The ownership, operation and management of the Company involve various
potential conflicts of interest, including the relationships and transactions
described below. Management of the Company believes that these agreements and
transactions have been on terms which are as fair to the Company as could have
been obtained from unaffiliated parties.
MANAGEMENT AGREEMENTS. The Company's management agreements with the managed
plans, including OmniCare-MI, OmniCare-TN and UltraMedix, were negotiated
between related entities. However, the management agreements were reviewed,
revised and approved by the respective Plan's full Board. Future evaluation of
the Company's activities under the OmniCare-MI management agreement is made by
the Management Review Committee comprised of independent members of the
OmniCare-MI Board. No Board member of OmniCare-MI with any interest in the
Company is permitted to sit on the Management Review Committee. There presently
is no comparable committee which reviews the Company's performance under the
management agreements with the other Plans.
COMMON OFFICERS AND DIRECTORS. As indicated in the chart below, certain
officers and directors of the Company are also members of the Board of
Trustees/Directors and officers of OmniCare-MI, UltraMedix and OmniCare-TN.
Consequently, such individuals are likely to influence the operation of the
Company and negotiations and arrangements between the Company and these
entities, including the negotiation and operation under respective management
agreements. Conflicts of interest may arise relating to matters that are
presented to the Company's Board of Directors for consideration and with respect
to which the Company and
10
<PAGE> 13
OmniCare-MI, UltraMedix and OmniCare-TN may have differing interests, including
matters relating to the management agreements.
<TABLE>
<CAPTION>
NAME UAHC OMNICARE-MI OMNICARE-TN ULTRAMEDIX
---- ---- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Julius V. Combs, M.D. ........... Chairman, CEO Chairman Emeritus, President, Chairman,
Director Trustee Director Director
Ronald R. Dobbins................ President, COO President, Trustee Director Director
Director
Harcourt G. Harris, M.D. ........ Director Chairman, Trustee -- --
Anita C.R. Gorham................ Secretary, Trustee -- --
Director
Jagannathan Vanaharam............ Senior Vice -- Director, Director,
President Treasurer Treasurer
</TABLE>
AFFILIATION WITH PRIMARY CARE PROVIDER. Dr. Sharp, Vice President, Medical
Services and an officer of the Company, is also affiliated with M.C. Physician
Association, P.C., a Primary Care Provider contracting with OmniCare-MI.
HEALTH INSURANCE BENEFITS FOR COMPANY EMPLOYEES. Health care benefits for
some employees of the Company are provided through OmniCare-MI, UltraMedix and,
formerly, PPC. For the fiscal year ended June 30, 1997, the Company paid
premiums of approximately $1.6 million for such benefits.
CHARITABLE FOUNDATION. For the fiscal year ended June 30, 1997, the Company
made $150,000 in contributions to United American Healthcare Foundation, a
Michigan non-profit corporation which assists minority organizations involved in
the promotion of health and education. Dr. Combs, Mr. Dobbins, Dr. Francis
Kornegay and Mr. Milton Watson, shareholders of the Company, are directors of
the Foundation.
11
<PAGE> 14
STOCK PERFORMANCE CHART
The Stock Performance Chart graphs the Company's performance during the
previous five (5) fiscal years in comparison to returns on the S&P500 and the
S&P Health Diversified.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P HEALTH CARE -
(FISCAL YEAR COVERED) UNITED AMERICAN S&P 500 DIVERSIFIED
<S> <C> <C> <C>
1992 100 100 100
1993 175 113.63 94.60
1994 337.50 115.23 97.38
1995 350.00 145.27 143.12
1996 210.00 183.04 196.79
1997 120 246.32 302.21
</TABLE>
(Assumes initial investment of $100 and reinvestment of dividends)
1998 ANNUAL MEETING
Shareholders may present proposals to be considered for inclusion in the
Proxy Statement for the 1998 Annual Meeting of the Shareholders provided such
proposals are received by the Company no later than July 12, 1998.
Anita C.R. Gorham, Secretary
Detroit, Michigan
October 22, 1997
12
<PAGE> 15
PROXY
SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF
UNITED AMERICAN HEALTHCARE CORPORATION
[ ]
The undersigned shareholder hereby appoints Julius V. Combs, M.D. and Ronald
R. Dobbins, and each of them, with full power of substitution, as true and
lawful attorneys and proxies of the undersigned to represent and vote
the Common Shares owned by the undersigned in United American Healthcare
Corporation at the Annual Meeting of Shareholders to be held November 13, 1997
at 10:30 a.m. (eastern standard time) at the Crowne Plaza Hotel in Detroit,
Michigan, and at any adjournment thereof, with like effect and as if the
undersigned was personally present and voting, upon all business that may
properly come before the meeting, including the business identified (and in the
manner indicated) on this proxy and described in the Notice of Meeting and
Proxy Statement furnished herewith (the receipt of which is hereby
acknowledged).
The undersigned hereby revokes any proxy or proxies heretofore given by the
undersigned to any person or persons with respect to such Common Shares and
ratifies any and all actions taken by the above-named proxies hereunder.
Set forth on the reverse side are the number of Common Shares held of record by
you as of October 6, 1997. You are asked to vote on the business identified
on the reverse side.
(CHANGE OF ADDRESS/COMMENTS)
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
(If you have written in the above
space, please mark the corresponding box
on the reverse side of this card.)
[SEE REVERSE SIDE]
(To be signed and dated on the reverse side)
- --------------------------------------------------------------------------------
UNITED AMERICAN HEALTHCARE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
<TABLE>
<S><C>
For Withheld For All
All All Except Vote Withheld from the following nominee(s)
1. ELECTION OF DIRECTORS / / / / / /
Nominees: Emmett S. Moten, Jr., Louis J. Nicholas, ---------------------------------
William Fitzgerald, Esq.
For Against Abstain IF YOU PLAN TO ATTEND
2. Approve Selection of Independent Accountants / / / / / / THE MEETING IN PERSON, / /
PLEASE CHECK BOX:
Change of Address / /
Date
------------------------------- ------
Signature of Shareholder
Date
------------------------------- ------
Signature(s) of Joint Owner(s)
Please sign exactly as your name(s)
is imprinted on this proxy. If your shares
are held in a joint account, each joint
owner should sign. If you are signing for
a corporation or partnership or as agent,
attorney, executor, administrator, trustee,
guardian or other fiduciary, indicate the
capacity in which you are signing.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY WHICH RECOMMENDS VOTING FOR ALL ITEMS. IT WILL BE VOTED
AS SPECIFIED. IF NOT SPECIFIED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH ITEM LISTED ABOVE, AND FOR OR AGAINST
ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING AT THE DISCRETION OF THE PROXY HOLDER.
</TABLE>
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-FOLD AND DETACH HERE-
