<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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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
October 13, 1998
Dear Shareholder:
You are cordially invited to United American Healthcare Corporation's 1998
Annual Meeting of Shareholders. This year's meeting will be held at the Atheneum
Suite Hotel, 1000 Brush Avenue, Detroit, Michigan on Thursday, November 12, 1998
at 10:30 a.m.
The formal notice of the meeting follows on the next page. Enclosed with
this proxy statement are your proxy card, a postage-paid envelope to return your
proxy card, and the Company's 1998 Annual Report.
Your vote is important, regardless of the number of shares you hold.
Whether you plan to attend the meeting or not, you are urged to sign, date and
mail the enclosed proxy card as soon as possible in the envelope provided. This
will not prevent you from voting your shares in person at the meeting before
voting closes, if you wish to do so.
We look forward to seeing you on November 12, 1998.
Sincerely,
/s/ Gregory H. Moses, Jr.
Gregory H. Moses, Jr.
President and Chief Executive Officer
<PAGE> 3
UNITED AMERICAN LOGO
NOTICE OF THE 1998 ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of United American Healthcare
Corporation (the "Company") will be held on Thursday, November 12, 1998 at 10:30
a.m., Eastern Standard Time, at the Atheneum Suite Hotel, 1000 Brush Avenue,
Detroit, Michigan, for the following purposes:
(1) To elect three Directors of the Company to serve until the Annual
Meeting of Shareholders in 2001.
(2) To vote on the approval of the appointment of KPMG Peat Marwick
LLP as independent auditors of the Company for the 1999 fiscal
year.
(3) To approve the Company's 1998 Stock Option Plan.
(4) To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on October 5, 1998
will be entitled to vote at the Annual Meeting.
Whether or not you plan to attend the meeting, we urge you to vote your
shares by signing, dating and mailing the enclosed proxy card in the envelope
provided.
By Order of the Board of Directors
/s/ Anita C.R. Gorham
Anita C.R. Gorham, Secretary
October 13, 1998
<PAGE> 4
UNITED AMERICAN HEALTHCARE CORPORATION
1155 BREWERY PARK BOULEVARD, SUITE 200
DETROIT, MICHIGAN 48207
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
To be Held November 12, 1998
GENERAL INFORMATION
This proxy statement contains information related to the Annual Meeting of
Shareholders of United American Healthcare Corporation (the "Company") to be
held at the Atheneum Suite Hotel, 1000 Brush Avenue, Detroit, Michigan, on
Thursday, November 12, 1998, at 10:30 a.m., Eastern Standard Time. The
approximate mailing date for this proxy statement and the proxy is October 13,
1998.
At the Company's Annual Meeting, shareholders will act upon the matters
outlined in the accompanying Notice of Annual Meeting, including the election of
three Directors, approval of the selection of independent auditors and approval
of the Company's 1998 Stock Option Plan. Neither the Company nor the members of
its Board of Directors intend to bring before the Annual Meeting any matters
other than those set forth in the Notice of Annual Meeting, and they have no
present knowledge that any other matters will be presented for action at the
meeting by others. However, if other matters properly come before the meeting,
it is the intention of the persons named in the enclosed form of proxy to vote
in accordance with their best judgment.
It is important that your shares be represented at the meeting. If it is
impossible for you to attend, please sign and date the enclosed proxy and return
it to the Company. The proxy is solicited by the Board of Directors of the
Company. The shares represented by valid proxies in the enclosed form will be
voted if received in time for the Annual Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only holders of record of shares of no par value common stock of the
Company ("Common Stock") at the close of business on October 5, 1998 are
entitled to notice of, and to vote at, the meeting or at any adjournment or
adjournments thereof, each share having one vote. On such record date, the
Company had issued and outstanding 6,578,356 shares of Common Stock.
Based on information filed with the Securities and Exchange Commission
("SEC"), or otherwise provided to the Company, as of September 11, 1998, (A)
Julius V. Combs, M.D., 200 Riverfront Park, #1711, Detroit, Michigan 48226,
beneficially owns 434,143 shares (6.6%) of the Company's outstanding Common
Stock, and (B) Richard M. Brown, D.O., 1200 Ardmoor, Bloomfield Hills, Michigan,
48301, beneficially owns 411,727 shares (6.3%) of the Company's outstanding
Common Stock. Management does not know of any other person who, at October 5,
1998, beneficially owns more than 5% of the Company's Common Stock.
The shareholder votes cast for all items considered at the meeting will be
calculated by an officer of Harris Trust & 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
and 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 not be counted either for or against
any action for which cast.
<PAGE> 5
I. ELECTION OF DIRECTORS
The Board of Directors proposes that Anita C.R. Gorham, Harcourt G. Harris,
M.D., and Ronald M. Horwitz, Ph.D., be elected as Directors of the Company, to
hold office until the Annual Meeting of Shareholders in 2001 or until their
successors are elected and qualified. The persons named in the accompanying
proxy intend to vote all valid proxies received by them for the election of the
nominees named above, unless such proxies are marked to the contrary. The three
nominees receiving the greatest number of votes cast at the meeting or its
adjournment shall be elected. Abstentions, withheld votes and broker non-votes
will not be deemed votes cast in determining which nominees receive the greatest
number of votes cast. In case any nominee is unable or declines to serve, which
is not anticipated, it is intended that the proxies be voted in accordance with
the best judgment of the proxy holders.
The following information is furnished with respect to each nominee for
election as a Director, each person whose term of office as a Director will
continue after the meeting and each Executive Officer of the Company as of June
30, 1998 named in the Summary Compensation Table herein. In general, "beneficial
ownership" includes those shares a Director or Executive Officer has the power
to vote, or the power to transfer. Except as otherwise noted, the persons named
in the table below have sole voting and investment power with respect to all
shares shown as beneficially owned by them. No one named in the table below has
any stock options for Common Stock of the Company that are currently exercisable
or become exercisable within 60 days.
[balance of this page intentionally left blank]
2
<PAGE> 6
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES TOTAL COMMON
OF COMMON STOCK OF THE
STOCK COMPANY
POSITIONS AND OFFICES BENEFICIALLY BENEFICIALLY TERM
NAME AND YEAR WITH THE COMPANY AND OTHER OWNED AS OF OWNED AS OF TO
FIRST BECAME A DIRECTOR AGE PRINCIPAL OCCUPATIONS SEPT. 11, 1998 SEPT. 11, 1998 EXPIRE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NOMINEES FOR ELECTION AS DIRECTORS FOR A
THREE-YEAR TERM
Anita C. R. Gorham(1984)....... 57 Secretary of the Company; Associate
Director of the Center for
Professional Excellence and faculty
member at Central Michigan
University.......................... 23,436(1) * 2001
Harcourt G. Harris,
M.D.(1985)................... 70 First Vice Chairman of the Board of
Directors of the Company; retired
physician........................... 30,907(1) * 2001
Ronald M. Horwitz,
Ph.D.(1997).................. 60 Professor of Finance at Oakland
University; Principal of Ronald M.
Horwitz and Assoc., financial
consultants......................... 500(1) * 2001
DIRECTORS CONTINUING IN OFFICE
Darrel W. Francis(1998)........ 45 President of Metropolitan Facility
Resources, LLC; President of
Advantage Pavilion, Inc.; President
of Mid-West Ice Blast, Inc. ........ 0 * 2000
William B. Fitzgerald(1997).... 56 Second Vice Chairman of the Board of
Directors of the Company; Principal
and Chief Executive Officer of Fund
Administration Services; Of Counsel
to the law firm of Timmis & Inman... 33,346 * 2000
Emmett S. Moten, Jr.(1988)..... 54 President of Moten Associates....... 0 * 2000
William C. Brooks(1997)........ 65 Chairman of the Board of Directors
of the Company; Chairman of The
Brooks Group International, Ltd.;
Chairman and CEO of Diverse Steel
Company............................. 5,000 * 1999
Julius V. Combs, M.D.(1983).... 67 Chairman of the Board and President
of United American Healthcare
Foundation.......................... 434,143(1)(2) 6.6% 1999
Pearl M. Holforty(1998)........ 69 President and Chief Executive
Officer of Liberty BIDCO Investment
Corporation......................... 0 * 1999
Gregory H. Moses, Jr.(1998).... 64 President and Chief Executive
Officer of the Company; President
and Chief Executive Officer of
OmniCare Health Plan, of Michigan;
President of OmniCare Health Plan,
Inc., of Tennessee.................. 0 * 1999
OTHER EXECUTIVE OFFICERS
Ronald R. Dobbins.............. 63 Until May 1998, President and Chief
Operating Officer of the Company.... 123,905 1.9% --
Louis J. Nicholas.............. 59 Until August 1998, Senior Vice
President of the Company............ 162,720 2.5% --
William C. Sharp, M.D. ........ 49 Vice President, Medical Services of
the Company......................... 6,144 * --
All Directors and Executive Officers as a group (15 persons)............... 928,065 14.11%
</TABLE>
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* Less than 1%
(1) Includes shares of Common Stock with respect to which the following
Directors share voting and investment power with others: Ms. Gorham, 23,436
shares; Dr. Harris, 14,047 shares; Dr. Horwitz, 500 shares; Dr. Combs,
420,451 shares; Mr. Dobbins, 64,859 shares.
(2) Includes 13,692 shares of Common Stock held in trust for the benefit of
relatives with respect to which Dr. Combs disclaims any beneficial interest.
3
<PAGE> 7
OTHER INFORMATION RELATING TO NOMINEES AND DIRECTORS
Following each Director's name and the year in which she or he became a
Director is a brief account of the business experience of each nominee and
Director of the Company during the past five years.
WILLIAM C. BROOKS 1997
William C. Brooks retired in 1997 from General Motors Corporation as a
Vice-President. Since January 1998, he has served as Chairman of The Brooks
Group International, Ltd., which manages the Detroit Employment Connection,
providing human resources and work force development and business and economic
development resources to the southeastern Michigan business community. Since
March 1998, he has also served as Chairman and CEO of Diverse Steel Company, a
provider of rolled carbon steel products and services. Mr. Brooks also is a
Director of the following corporations: Louisiana-Pacific Corporation, DTE
Energy Company and Detroit Edison Company; Sigma Associates; and Complete
Business Solutions, Inc.
GREGORY H. MOSES, JR. 1998
Gregory H. Moses, Jr. has served as President and Chief Operating Officer
of the Company since May 11, 1998 and as its Chief Executive Officer since
August 6, 1998. Mr. Moses also has served as President and Chief Executive
Officer of Michigan Health Maintenance Organization Plans, Inc., d/b/a OmniCare
Health Plan ("OmniCare-MI"), one of the Company's managed HMOs, since May 11,
1998. In addition, he is President of OmniCare Health Plan, Inc., of Tennessee
("OmniCare-TN"), another of the Company's managed HMOs. From October 1996 to May
11, 1998, he was Chief Financial Officer of UltiMed, a health maintenance
organization in Michigan. Previously, he was retired from Coopers & Lybrand,
where he had been a partner from 1974 until October 1994, including serving as
partner-in-charge of its Healthcare Consulting Group in New York and New Jersey
for ten years and chairman of its National Healthcare Consulting Group for five
years. He is a member of the Board of Directors of Mercy Health Services.
JULIUS V. COMBS, M.D. 1983
Julius V. Combs, M.D. served since the Company's inception in 1983 as its
Chairman of the Board of Directors until January 12, 1998, and its Chief
Executive Officer until his retirement on August 6, 1998. Dr. Combs is Chairman
Emeritus of the Board of Trustees of OmniCare-MI, and Chairman of the Board and
President of United American Healthcare Foundation.
WILLIAM B. FITZGERALD 1997
William B. Fitzgerald is Second Vice Chairman of the Board of Directors of
the Company. He also is Vice Chairman of the Board of Trustees of OmniCare-MI,
one of the Company's managed HMOs. He has been a Principal and Chief Executive
Officer of Fund Administration Services in Grosse Pointe Farms, Michigan,
providing management and consulting services to self-funded insurance programs,
since 1989. An attorney since 1968, Mr. Fitzgerald has been Of Counsel to the
law firm of Timmis & Inman in Detroit, Michigan, since 1990. He also is a
Special Assistant Attorney General of the State of Michigan.
DARREL W. FRANCIS 1998
Darrel W. Francis is the President of both Metropolitan Facility Resources,
LLC, since January 1997, and Advantage Pavilion, Inc., since January 1996,
companies in the business of the sale and design of office furniture. He also
has been the President and Chairman of the Board of Directors of Mid-West Ice
Blast, Inc., an industrial cleaning company, since December 1996. From 1989 to
October 1996, Mr. Francis was General Manager of the United States, Canada and
South Africa dealer network of Milcare, Inc., a subsidiary of Herman Miller,
Inc., which manufactures hospital furniture systems for pharmacies, patient
rooms and laboratories.
4
<PAGE> 8
ANITA C.R. GORHAM 1984
Anita C.R. Gorham has been the Company's Secretary since 1984. Ms. Gorham
is a member of the Board of Trustees of OmniCare-MI, one of the Company's
managed HMOs. She has been employed since 1987 by Central Michigan University,
currently as Associate Director of the Center for Professional Excellence and a
faculty member, and previously as Academic Advisor and Regional Manager for
Academic Services. Ms. Gorham also is a faculty member at Detroit College of
Business.
HARCOURT G. HARRIS, M.D. 1985
Harcourt G. Harris, M.D., is First Vice Chairman of the Board of Directors
of the Company. He also has been Chairman of the Board of Trustees of
OmniCare-MI, one of the Company's managed HMOs, since December 1992. Dr. Harris,
now retired, was in the private practice of medicine for thirty years,
specializing in internal medicine.
PEARL M. HOLFORTY, C.P.A. 1998
Pearl M. Holforty, C.P.A., has served as President and Chief Executive
Officer of Liberty BIDCO Investment Corporation since its inception in 1989.
Liberty BIDCO is a privately-owned, non-bank financial institution which invests
subordinated debt or equity in small business. From 1970 to 1977, Ms. Holforty
was an accountant with Plante & Moran LLP and a partner in that firm from 1977
to 1991.
RONALD M. HORWITZ, PH.D. 1997
Ronald M. Horwitz, Ph.D., has been a Professor of Finance at Oakland
University since 1991, where he also served as Acting Vice President for
Academic Affairs in 1992-93 and as Dean of the School of Business Administration
from 1979 to 1990. Dr. Horwitz also is the Principal of Ronald M. Horwitz and
Assoc., Financial Consultants, and a director of Providence Hospital and Medical
Centers in Southfield, Michigan.
EMMETT S. MOTEN, JR. 1988
Emmett S. Moten, Jr. has been the President of Moten Associates, a real
estate development and accounting firm, since October 1996. 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 of the City of Detroit for almost ten years.
During the fiscal year ended June 30, 1998, the Company's Board of
Directors held 14 meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has a standing Executive Committee. The current members of the
Executive Committee are William C. Brooks (Chairman), Dr. Julius V. Combs,
William B. Fitzgerald, Anita C.R. Gorham, Dr. Harcourt G. Harris and Gregory H.
Moses, Jr. During fiscal year 1998, the Executive Committee held one meeting.
The duties of the Executive Committee are to exercise, in the intervals between
the meetings of the Board of Directors, the powers of the Board as they relate
to the management of the business and affairs of the Company.
The Company has a standing Audit Committee. 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). The current members of
the Audit Committee are Emmett S. Moten, Jr. (Chairman), Darrel W. Francis,
Pearl M. Holforty and Dr. Ronald M. Horwitz. During fiscal year 1998, the Audit
Committee held 13 meetings. The duties of the Audit Committee are to recommend
to the Board of Directors certified public accountants to conduct audits of the
accounts and affairs of the Company, to review accounting objectives and
procedures of the Company and findings and reports of the independent certified
public accountants, and to make such reports and recommendations to the Board of
Directors as it deems appropriate.
5
<PAGE> 9
The Company has a standing Finance, Investment and Planning Committee. The
current members of the Finance, Investment and Planning Committee are William B.
Fitzgerald (Chairman), William C. Brooks, Darrel W. Francis, Pearl M. Holforty,
Dr. Ronald M. Horwitz, Gregory H. Moses, Jr. and Emmett S. Moten, Jr. During
fiscal year 1998, the Finance, Investment and Planning Committee held ten
meetings. The duties of the Finance, Investment and Planning Committee are to
make recommendations to the Board of Directors on financial matters, short and
long term investments and business planning matters.
The Company has a standing Compensation Committee. The current members of
the Compensation Committee are Anita C.R. Gorham (Chairwoman), William C.
Brooks, William B. Fitzgerald, Dr. Harcourt G. Harris and Emmett S. Moten, Jr.
During fiscal year 1998, the Compensation Committee held four meetings. The
duties of the Compensation Committee are to make recommendations to the Board of
Directors relating to the overall compensation arrangements for officers and
staff of the Company, 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, and to grant options under the Company's
1998 Stock Option Plan.
The Company has a standing Executive Compensation Committee. The current
members of the Executive Compensation Committee are Anita C.R. Gorham
(Chairwoman), William C. Brooks, William B. Fitzgerald, Dr. Harcourt G. Harris
and Emmett S. Moten, Jr. During fiscal year 1998, the Executive Compensation
Committee held one meeting. The duties of the Executive Compensation Committee
are to make recommendations to the Board of Directors relating to the
compensation arrangements for executive officers of the Company.
The Company has a standing Nominating Committee. The current members of the
Nominating Committee are Dr. Harcourt G. Harris (Chairman), William C. Brooks,
Dr. Julius V. Combs and Anita C.R. Gorham. During fiscal year 1998, the
Nominating Committee held six meetings. The duties of the Nominating Committee
are 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.
Each of the Directors except Mr. Moten attended at least 75% of the
aggregate number of meetings held during fiscal year 1998 by the Board and by
each Committee of which she or he was then a member.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no fees for their
services as a Director or as a Committee member. Each of the Directors who is
not an employee of the Company receives $200 for each Board of Directors meeting
and each Board committee meeting attended. In addition, each non-employee
Director receives an annual stipend of $15,000 as compensation for Director
services. Directors are also entitled to reimbursement for reasonable
out-of-pocket expenses incurred in providing services to the Company in their
capacities as Directors.
6
<PAGE> 10
SUMMARY COMPENSATION TABLE
The following table sets forth information for each of the fiscal years
ended June 30, 1998, 1997 and 1996 concerning the compensation of the Company's
Chief Executive Officer and each of the Company's four most highly compensated
Executive Officers as of June 30, 1998 (collectively, the "named Executive
Officers") whose annual salary and bonus exceeded $100,000.
<TABLE>
<CAPTION>
NAME AND ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JULIUS V. COMBS, M.D.(2).......................... 1998 331,118 -- --
Chief Executive Officer 1997 327,957 -- 7,500
1996 292,712 176,800 7,500
RONALD R. DOBBINS(3).............................. 1998 308,412 -- --
President and Chief 1997 327,957 -- 7,500
Operating Officer 1996 295,392 163,200 7,500
LOUIS J. NICHOLAS(4).............................. 1998 594,992 -- --
Senior Vice President; & Chief 1997 476,316 -- 7,500
Executive Officer of Corporate 1996 426,556 -- 7,500
Healthcare Financing, Inc.
WILLIAM C. SHARP, M.D............................. 1998 196,586 -- --
Vice President, Medical Services 1997 196,064 -- 7,500
1996 178,651 -- 7,500
JAGANNATHAN VANAHARAM(5).......................... 1998 174,995 -- --
Senior Vice President, Finance 1997 197,134 -- 7,500
and Treasurer 1996 170,434 -- 7,500
</TABLE>
- -------------------------
(1) This column represents the Company's annual contribution to the 401(k)
Savings Plan. For the years set forth in the table, none of the named
Executive Officers (i) had any annual compensation other than salary and
bonus shown in the table; (ii) were granted any stock options; or (iii) had
any long term compensation (including restricted stock awards, options/SARs
and LTIP payouts).
(2) Dr. Combs retired as an executive officer of the Company effective August 6,
1998.
(3) Mr. Dobbins resigned as an executive officer of the Company effective May
12, 1998.
(4) Mr. Nicholas resigned as an executive officer of the Company effective
August 31, 1998.
(5) Mr. Vanaharam's status as an executive officer of the Company ended
effective May 1, 1998.
EMPLOYMENT AGREEMENT
On May 11, 1998, the Company entered into an employment agreement with Mr.
Moses (the "Employment Agreement"), which expires on May 11, 2001 unless
terminated at any time with or without cause (i) by the Company, upon written
notice to Mr. Moses, or (ii) by Mr. Moses, upon three months' prior written
notice to the Company. The Employment Agreement provides that Mr. Moses shall
have the titles and perform the duties of President and Chief Operating Officer
of the Company, and Chief Executive Officer commencing not later than August 6,
1998, plus such additional titles and duties as the Board of Directors may
prescribe from time to time.
Under the Employment Agreement, Mr. Moses receives an annual base salary of
$225,000, plus an annual bonus to be based upon reasonable performance criteria
selected in the discretion of the Board of Directors of the Company; provided,
that his first bonus period ends December 31, 1998 and his bonus for such period
shall be $100,000, based upon achievement of reasonable performance criteria
mutually agreed upon by the Board of Directors of the Company and Mr. Moses. He
also receives generally the same fringe benefits provided by the Company to its
other senior executives. To induce Mr. Moses to enter into the Employment
Agreement, additionally, the Company granted him a nonqualified stock option to
purchase 100,000 shares of its Common Stock. Such option (i) was granted under
the Employment Agreement (and not pursuant to any plan) on May 11, 1998, at an
option price of $1.38 per share, (ii) is exercisable on or after
7
<PAGE> 11
May 11, 1999 for up to 77,000 shares, and in full commencing May 11, 2000, until
the earlier of May 11, 2003 or the date the Company terminates the Employment
Agreement for cause (as defined in the agreement), and (iii) has customary
anti-dilution adjustment provisions.
Under the Employment Agreement, if the Company terminates Mr. Moses's
employment without cause (as defined in the agreement) or he terminates the
Employment Agreement for cause (described below), he will (i) continue to
receive his base salary for 18 months after the termination date, (ii) receive
his bonus, prorated to the termination date, and (iii) continue to receive
agreed fringe benefits until the earlier of 18 months after the termination date
or his commencement of new employment or his receipt of an offer of comparable
new employment which he does not accept. The Employment Agreement provides that
any termination by Mr. Moses of his performance shall be "for cause" in the
event (a) there is a change of control or ownership (as defined in the
agreement) of the Company or of OmniCare-MI, (b) his duties are materially
changed without his consent or (c) the Company relocates its principal office
more than 45 miles from its present location.
In the event Mr. Moses terminates his employment without cause, or the
Company terminates his employment for cause, he will receive his salary, bonus
and fringe benefits accrued to the termination date. For this purpose, his
annual bonus shall be deemed accrued as if he had remained employed for an
entire year, prorated to the termination date.
In the event Mr. Moses's employment is terminated by death, his estate will
receive the net salary and any other payments owed to him for work performed to
his date of death.
Mr. Moses has agreed that for one year after the date of termination of the
Employment Agreement, he will not engage in any business competitive with the
business of the Company in any geographic area served by the Company at such
termination date, including specific non-competition covenants with respect to
selling or promoting, directly or indirectly, certain products or services.
STOCK OPTION PLANS; EMPLOYEE STOCK PURCHASE PLAN
The Company currently has an Incentive and Non-Incentive Stock Option Plan
(the "Old Plan"), under which 331,250 common shares are reserved for issuance
upon exercise of options granted thereunder. Under the Old 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 Old 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 Board of Directors adopted a new stock option plan on August 6, 1998,
subject to approval by the Company's shareholders, which is sought at the 1998
Annual Meeting of Shareholders to which this proxy statement relates. The Old
Plan would be terminated upon approval of such new stock option plan by the
Company's shareholders. (See "III. PROPOSAL TO ADOPT THE UNITED AMERICAN
HEALTHCARE CORPORATION 1998 STOCK OPTION PLAN" below.)
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 fiscal
year 1998 were approximately $9,500. 200,000 common shares were reserved for
issuance under the ESPP. Pursuant to the ESPP, 8,914 shares were issued
subsequent to year end for the period ended June 30, 1998.
The Company has not granted any stock options under the Old Plan or any
Stock Appreciation Rights, and it did not grant any awards under a long-term
incentive plan during fiscal year 1998. The Company on
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<PAGE> 12
September 9, 1998 granted certain stock options under the new stock option plan
which is referred to two paragraphs above, as described more fully under "III.
PROPOSAL TO ADOPT THE UNITED AMERICAN HEALTHCARE CORPORATION 1998 STOCK OPTION
PLAN -- Options Granted under the Plan" below.
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 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
through January 1, 1998 and 1% thereafter. As of June 30, 1998, 116 employees
had elected to participate in the plan. For the fiscal year ended June 30, 1998,
the Company contributed $400,000 to the plan. See the Summary Compensation Table
above for additional information.
COMPENSATION COMMITTEE REPORT
Compensation for the Company's key executives is determined by the
Executive Compensation Committee or the Compensation Committee, as applicable,
of the Board of Directors. Salaries, bonuses and other compensation of the
Company's key executives are based upon profitability, enrollment levels of the
Company's clients, including OmniCare-MI 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 fiscal
year 1998, the Company's executive compensation included a base salary and
bonus. 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 Executive Compensation Committee and the Compensation Committee both
are comprised of Ms. Gorham (Chairwoman), Mr. Brooks, Mr. Fitzgerald, Dr. Harris
and Mr. Moten (see also "Committees of the Board of Directors" above). Mr.
Brooks does not participate in Compensation Committee meetings during which his
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 its managed
plans, OmniCare-MI and OmniCare-TN, were negotiated between related entities.
However, such management agreements were reviewed, revised and approved by each
plan's Board. Future evaluation of the Company's activities under the
OmniCare-MI management agreement is made by a Management Review Committee
comprised of independent members of OmniCare-MI's 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 not a comparable committee which
reviews the Company's performance under the management agreement with
OmniCare-TN, an HMO which is 75%-owned by the Company through its wholly owned
subsidiary, United American of Tennessee, Inc.
COMMON OFFICERS AND DIRECTORS. As indicated in the chart below, certain
officers and Directors of the Company are also officers or members of the Board
of Trustees or Board of Directors of OmniCare-MI (which is not a subsidiary of
the Company) or OmniCare-TN (which is 75% owned by the Company through its
wholly owned subsidiary, United American of Tennessee, Inc.). Consequently, such
individuals are likely
9
<PAGE> 13
to influence the operation of the Company and negotiations and arrangements
between the Company and these entities, including the negotiation of and
operation under the 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 OmniCare-MI or
OmniCare-TN may have differing interests, including matters relating to the
management agreements.
<TABLE>
<CAPTION>
NAME COMPANY OMNICARE-MI OMNICARE-TN
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
William C. Brooks........... Chairman of the -- Director
Board, Director
Gregory H. Moses, Jr........ President, CEO, COO, President, CEO, Trustee President,
Director Director
Anita C.R. Gorham........... Secretary, Director Trustee --
Paul G. Samuels............. Treasurer, Interim -- Treasurer,
Chief Financial Director
Officer
Harcourt G. Harris, M.D..... First Vice Chairman Chairman of the Board, --
of the Board, Trustee
Director
William B. Fitzgerald....... Second Vice Chairman Vice Chairman of the Board, --
of the Board, Trustee
Director
Julius V. Combs, M.D........ Director Chairman Emeritus, Trustee --
</TABLE>
AFFILIATIONS WITH PRIMARY CARE PROVIDERS. Dr. William C. Sharp, Vice
President, Medical Services of the Company, also practices medicine with M.C.
Physician Association, P.C., a primary care provider that contracts with
OmniCare-MI.
HEALTH INSURANCE BENEFITS FOR COMPANY EMPLOYEES. Health care benefits for
some employees of the Company are provided through OmniCare-MI. For the fiscal
year ended June 30, 1998, the Company paid premiums of approximately $800,000
for such benefits.
CHARITABLE FOUNDATION. For the fiscal year ended June 30, 1998, 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.
II. PROPOSAL TO RATIFY SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of the
Board's Audit Committee, has recommended the appointment of KPMG Peat Marwick
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, 1999.
The Audit Committee initiated a Request for Proposal process in July 1997,
in order to select a firm which could audit the Company and its subsidiaries.
The result of such process was the selection of Arthur Andersen LLP to audit the
Company's financial statements for the fiscal year ending June 30, 1998, which
the Company's shareholders ratified at the 1997 Annual Meeting. Thereafter, the
Company engaged Arthur Andersen LLP to assist it in developing and implementing
a financial restructuring program for the Company, and the Company selected the
head of Arthur Andersen LLP's Corporate Recovery Services Group, in his
individual capacity, as the Company's Interim Chief Financial Officer. In view
of the consulting services to be provided to the Company by Arthur Andersen LLP
and the selection of such Interim Chief Financial Officer of the Company, Arthur
Andersen LLP no longer had the independence required to serve the Company in the
capacity of auditor. Therefore, on January 12, 1998, the Board of Directors of
the Company, upon the recommendation of its Audit Committee, (A) notified Arthur
Andersen LLP that the Company would not
10
<PAGE> 14
engage Arthur Andersen LLP to audit the Company's financial statements (there
were no disagreements with Arthur Andersen LLP during the Company's two most
recent fiscal years and the subsequent interim period preceding such dismissal
on any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure), and (B) engaged KPMG Peat Marwick
LLP as the Company's principal accountant to audit its financial statements for
the fiscal year ending June 30, 1998. Previously, the Company and most of its
subsidiaries had been audited by Grant Thornton LLP, while OmniCare-TN had been
audited by Ernst & Young LLP and the subsidiary, UltraMedix Healthcare System,
Inc., had been audited by KPMG Peat Marwick LLP.
A representative of KPMG Peat Marwick LLP is expected to be present at the
1998 Annual Meeting to make a statement, if requested, and be available to
respond to questions with respect to the 1998 audit. A representative of Grant
Thorton LLP is expected to be present at the 1998 Annual Meeting to make a
statement, if requested, and be available to respond to questions with respect
to the 1997 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 auditors
for the next 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 1999 fiscal year will be permitted to stand unless the
Board of Directors finds other reasons for making a change.
The Board of Directors considers KPMG Peat Marwick LLP to be well qualified
to serve as the independent auditors for the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE 1999 FISCAL
YEAR. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS OTHERWISE SPECIFY IN THEIR PROXIES.
III. PROPOSAL TO ADOPT THE UNITED AMERICAN HEALTHCARE CORPORATION
1998 STOCK OPTION PLAN
The Board of Directors proposes that the shareholders approve the United
American Healthcare Corporation 1998 Stock Option Plan (the "Plan"). Under the
Plan, stock options (both Nonqualified Options and Incentive Options, as defined
in the Plan) may be granted to officers, Directors and key employees
("Participants") of the Company or of any subsidiary in which the Company owns
more than 25% of the total combined voting power of all classes of stock (50% in
the case of an Incentive Option granted to an employee of such subsidiary). The
stock options to be granted under the Plan relate to shares of the Company's
Common Stock.
The Board of Directors adopted the Plan on August 6, 1998, subject to
approval by the Company's shareholders. The Board of Directors believes that it
is in the best interests of the Company and its shareholders to approve the Plan
to allow the Company to be able to grant stock options to Participants in
accordance with the terms of the Plan in order to provide increased incentives
for such Participants to make significant and extraordinary contributions to the
long-term performance and growth of the Company and its subsidiaries, to join
the interests of officers, Directors and key employees with the interests of the
shareholders of the Company, and to help the Company and its subsidiaries
attract and retain officers, Directors and key employees of exceptional ability.
The Company's current Incentive and Non-Incentive Stock Option Plan, under
which no stock options have been granted, would be terminated upon approval of
the Plan by the Company's shareholders.
In order to obtain shareholder approval of the Plan, a majority of the
votes cast by shareholders present, in person or by proxy, at the Annual Meeting
of Shareholders must be cast in favor of the Plan.
A FULL COPY OF THE PLAN IS ATTACHED AS APPENDIX A TO THIS PROXY STATEMENT.
THE MAJOR FEATURES OF THE PLAN ARE SUMMARIZED BELOW, BUT THIS IS ONLY A SUMMARY
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE ACTUAL TEXT OF THE PLAN.
CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN HAVE THE MEANINGS GIVEN TO THEM
IN THE PLAN.
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<PAGE> 15
ADMINISTRATION
The Plan will be administered by a committee (the "Committee") specified by
the Board of Directors. For this purpose, the Board of Directors has designated
its Compensation Committee to perform the duties of the Committee under the
Plan. The Committee will be comprised of outside Directors who meet the
standards of Rule 16b-3 under the Securities Act of 1934, as amended, or any
similar successor rule and would be deemed "outside directors" under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). Subject to
the provisions of the Plan, the Committee will determine, from those eligible to
be Participants under the Plan, the persons to be granted stock options, the
amount of stock to be optioned to each such person, and the terms and conditions
of any stock options. In addition, the Committee is authorized to interpret the
Plan, to make, amend and rescind rules and regulations relating to the Plan and
to make all other determinations necessary or advisable for its administration,
all subject to the provisions of the Plan.
PLAN PARTICIPANTS
The selection of persons who are eligible to participate in the Plan and
grants to those individuals are determined by the Committee, in its sole
discretion. The only established criterion to determine eligibility under the
Plan is that individuals must be officers, Directors or key employees of the
Company or any Subsidiary who, in the judgment of the Committee, are or will
become responsible for the direction and financial success of the Company or any
Subsidiary. Each grant under the Plan is to be evidenced by a written agreement
which will contain such provisions as may be approved by the Committee.
SHARES SUBJECT TO GRANT
In general, the Plan limits the maximum number of shares of stock which may
be issued pursuant to stock options under the Plan to 500,000 shares. In
addition, no Participant can receive stock options for more than 300,000 shares
over the term of the Plan.
The number of shares subject to each outstanding stock option, the option
price with respect to outstanding stock options, the aggregate number of shares
remaining available at any time under the Plan and the
300,000-share-per-Participant limitation will be subject to adjustment by the
Committee to reflect events such as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations of or by the
Company.
AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors may, without shareholder approval, terminate or
amend the Plan at any time, provided that the Board may not, without shareholder
approval, amend the Plan so as to increase the maximum number of shares which
are subject to the Plan, modify the requirements as to eligibility for
participation under the Plan or materially increase the benefits accruing to
Participants under the Plan, and the Board may not, without consent of the
holder of a stock option, change the stock option price or alter any stock
option which has been previously granted under the Plan.
Unless sooner terminated by the Board of Directors, the Plan will terminate
on August 5, 2008, which is ten years after its adoption by the Board of
Directors. The termination of the Plan will not affect the validity of any stock
option outstanding on the date of termination.
GRANT AND EXERCISE OF STOCK OPTIONS
Both Incentive Options and Nonqualified Options may be granted under the
Plan. An Incentive Option is intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Code. Any Incentive Option granted
under the Plan will have an exercise price of not less than 100% of the fair
market value of the shares on the date on which such option is granted. With
respect to an Incentive Option granted to a Participant who owns more than 10%
of the total combined voting stock of the Company or of any parent or subsidiary
of the Company, the exercise price for such option must be at least 110% of the
fair market value of the shares subject to the option on the date the option is
granted. A Nonqualified Option granted under the
12
<PAGE> 16
Plan (being an option which does not meet the Code's requirements for Incentive
Options) must have an exercise price of not less than 75% of the fair market
value of the shares subject to the option on the date on which the option is
granted. The Plan contains various provisions to ensure that Incentive Options
comply with Section 422.
The Committee is to specify in its grants of stock options the time or
times at which such options will be exercisable. At the time of exercise of any
option granted pursuant to the Plan, the Participant must pay the full option
price of all shares purchased in cash or, with the consent of the Committee, in
Common Stock of the Company or in such other manner as the Committee determines
is appropriate, in its sole discretion. The fair market value of stock with
respect to which Incentive Options are first exercisable in any one year by a
Participant under the Plan cannot exceed $100,000.
No stock option granted may be exercised prior to the expiration of six
months from the date of grant unless the Participant dies or becomes disabled
prior thereto.
TERM OF STOCK OPTIONS
No stock option granted under the Plan may remain outstanding for more than
ten years from the date of grant. With respect to an Incentive Option granted to
a Participant who, at the time of the grant, owns more than 10% of the total
combined voting stock of all classes of stock of the Company or of any parent or
Subsidiary, such option will, however, expire not more than five years after the
date of the grant.
CONTINUATION OF EMPLOYMENT
The Committee in its discretion may, but is not required to, require that
any Participant to whom a stock option is granted shall agree in writing as a
condition of the granting of such option to remain in the employ of the Company
or a Subsidiary for a designated minimum period from the date of the grant.
Unless the Committee in its discretion determines otherwise, stock options
granted under the Plan may be exercised only while a Participant is an employee
of the Company or a Subsidiary (or an outside Director). If the Participant's
employment is terminated, the Committee may, in its discretion and on certain
terms and conditions specified in the Plan, extend the period of time in which a
stock option may be exercised. Nevertheless, no stock option is to be
exercisable after its expiration date, and, unless the Committee in its
discretion determines otherwise, a stock option may only be exercised after
termination of a Participant's employment (or of an outsider Director's service
as a Director) to the extent that it would have been exercisable on the date of
termination of the Participant's employment (or of an outsider Director's
service as a Director). Nothing in the Plan or any grant confers any right to
continued employment.
NON-TRANSFERABILITY OF STOCK OPTIONS
No stock option granted under the Plan is permitted to be transferred by a
Participant other than by will or by the laws of descent and distribution. Every
stock option granted under the Plan may be exercised, during the lifetime of the
Participant, only by the Participant.
FEDERAL INCOME TAX CONSEQUENCES
The rules governing the tax treatment of stock options and shares acquired
upon the exercise of stock options are quite technical. Therefore, the
description of federal income tax consequences set forth below is necessarily
general in nature and does not purport to be complete. Moreover, statutory
provisions are subject to change, as are their interpretations, and their
application may vary in individual circumstances. Finally, the tax consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
INCENTIVE OPTIONS
If a Participant makes no disposition of the shares acquired pursuant to
exercise of an Incentive Option within one year after the transfer of the shares
to such Participant and within two years after the grant of the
13
<PAGE> 17
option, such Participant will realize no taxable income as a result of the grant
or exercise of such option, and any gain or loss that is subsequently realized
may be treated as long-term capital gain or loss, as the case may be. Under
these circumstances, the Company will not be entitled to a deduction for federal
income tax purposes with respect to either the issuance of such Incentive
Options or the transfer of shares upon their exercise.
If shares acquired upon exercise of Incentive Options are disposed of prior
to the expiration of the above time periods, the Participant will recognize
ordinary income in the year in which the disqualifying disposition occurs, the
amount of which will generally be the lesser of (i) the excess of the market
value of the shares on the date of exercise over the option price, or (ii) the
gain recognized on such disposition. Such amount will ordinarily be deductible
by the Company for federal income tax purposes in the same year, provided that
the amount constitutes reasonable compensation and that the Company satisfies
certain federal income tax withholding requirements. In addition, the excess, if
any, of the amount realized on a disqualifying disposition over the market value
of the shares on the date of exercise will be treated as capital gain to the
Participant.
NONQUALIFIED OPTIONS
A Participant who acquires shares by exercise of a Nonqualified Option
generally realizes as taxable ordinary income, at the time of exercise, the
difference between the exercise price and the fair market value of the shares on
the date of exercise. Such amount will ordinarily be deductible by the Company
in the same year, provided that the amount constitutes reasonable compensation
and that the Company satisfies certain federal income tax withholding
requirements. Subsequent appreciation or decline in the value of the shares on
the sale or other disposition of the shares will generally be treated as a
capital gain or loss.
WITHHOLDING PAYMENTS
If, upon exercise of a Nonqualified Option, or upon a disqualifying
disposition of shares acquired upon exercise of an Incentive Option, the Company
or any Subsidiary must pay amounts for income tax withholding, then in the
Committee's sole discretion, either the Company will appropriately reduce the
amount of stock to be delivered to the Participant or the Participant must pay
such amount to the Company to reimburse the Company for such payment. The
Committee may permit a Participant to satisfy such withholding obligations by
electing to reduce the number of shares of the Common Stock delivered or
deliverable to the Participant upon exercise of a stock option, or by electing
to tender an appropriate number of shares of the Common Stock back to the
Company subsequent to exercise of a stock option (with such restrictions as the
Committee may adopt).
OPTIONS GRANTED UNDER THE PLAN
The Company, through the Committee, has granted Nonqualified Options
pursuant to the Plan to William C. Brooks, the Company's Chairman of the Board,
to purchase 100,000 common shares, to Gregory H. Moses, Jr., the Company's
President and Chief Executive Officer, to purchase 25,000 common shares and to
each of the eight other non-employee Directors of the Company, to each purchase
25,000 common shares, subject to shareholder approval of the Plan. All of such
options were granted on September 9, 1998 at an option price of $1.625 per
share, are exercisable in full beginning on March 10, 1999 until their
expiration on September 9, 2008, and are not affected by any Director's ceasing
to serve as a Director or any officer's ceasing to hold such office or to
continue as an employee of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1998 STOCK
OPTION PLAN, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
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<PAGE> 18
IV. OTHER INFORMATION
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Due to an administrative oversight, Ronald R. Dobbins, who was an officer
and Director of the Company during part of fiscal year 1998, failed to file two
Forms 4 on a timely basis during such year with the Securities and Exchange
Commission to report seven transactions in which he disposed of 79,800 aggregate
shares of Common Stock. The required forms were filed upon discovery of the
oversight.
EXPENSES OF SOLICITATION
The cost of this solicitation of proxies will be borne by the Company and
may include requests by mail and personal contact by its Directors, officers and
employees. In addition, the Company has retained Corporate Investor
Communications, Inc., 111 Commerce Road, Carlstadt, New Jersey 07072-2586, to
aid in the solicitation of proxies from brokers, banks, other nominees and
institutional holders at a fee not to exceed $5,000 plus out-of-pocket expenses.
The Company will reimburse brokers or other nominees and institutional holders
for their expenses in forwarding proxy materials to principals. Any person
giving a proxy has the power to revoke it at any time before it is voted.
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&P 500 and the
S&P Health Care - Diversified.
COMPARISON OF CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH]
<TABLE>
1993 1994 1995 1996 1997 1998
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UNITED AMERICAN $100.00 $192.86 $200.00 $120.00 $ 68.57 $ 13.58
S & P 500 $100.00 $101.41 $127.84 $161.08 $216.98 $282.42
S & P Health Care- $100.00 $102.95 $151.30 $208.03 $319.48 $429.43
Diversified
</TABLE>
(Assumes initial investment of $100 and reinvestment of dividends)
15
<PAGE> 19
1999 ANNUAL MEETING
A shareholder proposal which is intended to be presented at the 1999 Annual
Meeting of the Shareholders must be received by the Company at its principal
executive offices by July 11, 1999.
By Order of the Board of Directors
/s/ Anita C.R. Gorham
Anita C.R. Gorham, Secretary
Dated: October 13, 1998
16
<PAGE> 20
APPENDIX A
UNITED AMERICAN HEALTHCARE CORPORATION
1998 STOCK OPTION PLAN
1. DEFINITIONS: As used herein, the following definitions shall apply:
(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation.
(b) "COMMITTEE" shall mean the Compensation Committee designated by
the Board of Directors of the Corporation, or such other committee as shall
be specified by the Board of Directors to perform the functions and duties
of the Committee under the Plan; provided, however, that the Committee
shall comply with the applicable requirements of (i) Rule 16b-3 of the
Rules and Regulations under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), and (ii) Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "CODE"), and the regulations thereunder.
(c) "CORPORATION" shall mean United American Healthcare Corporation.,
a Michigan corporation, or any successor thereof.
(d) "DISCRETION" shall mean the sole discretion of the Committee, with
no requirement whatsoever that the Committee follow past practices, act in
a manner consistent with past practices, or treat an officer, director or
key employee in a manner consistent with the treatment afforded other
officers, directors or key employees with respect to the Plan.
(e) "INCENTIVE OPTION" shall mean an option to purchase Common Stock
of the Corporation which meets the requirements set forth in the Plan and
also meets the definition of an incentive stock option within the meaning
of Section 422 of the Code. The stock option agreement for an Incentive
Option shall state that the option is intended to be an Incentive Option.
(f) "NONQUALIFIED OPTION" shall mean an option to purchase Common
Stock of the Corporation which meets the requirements set forth in the Plan
but does not meet the definition of an incentive stock option within the
meaning of Section 422 of the Code. The stock option agreement for a
Nonqualified Option shall state that the option is intended to be a
Nonqualified Option.
(g) "PARTICIPANT" shall mean any individual designated by the
Committee under Paragraph 6 for participation in the Plan.
(h) "PLAN" shall mean the United American Healthcare Corporation 1998
Stock Option Plan.
(i) "SUBSIDIARY" shall mean any corporation or similar entity in which
the Corporation owns, directly or indirectly, stock or other equity
interest ("STOCK") possessing more than 25% of the combined voting power of
all classes of Stock; provided, however, that an Incentive Option may be
granted to an employee of a Subsidiary only if the Subsidiary is a
corporation and the Corporation owns, directly or indirectly, 50% or more
of the total combined voting power of all classes of Stock of the
Subsidiary.
2. PURPOSE OF PLAN: The purpose of the Plan is to provide officers,
directors and key employees of the Corporation and its Subsidiaries with an
increased incentive to make significant and extraordinary contributions to the
long-term performance and growth of the Corporation and its Subsidiaries, to
join the interests of officers, directors and key employees with the interests
of the shareholders of the Corporation, and to facilitate attracting and
retaining officers, directors and key employees of exceptional ability.
3. ADMINISTRATION: The Plan shall be administered by the Committee. Subject
to the provisions of the Plan, the Committee shall determine, from those
eligible to be Participants under the Plan, the persons to be granted stock
options, the amount of stock to be optioned to each such person, and the terms
and conditions of any stock options. Subject to the provisions of the Plan, the
Committee is authorized to interpret the Plan, to make, amend and rescind rules
and regulations relating to the Plan and to make all other determinations
necessary or advisable for the Plan's administration. Interpretation and
construction of any provision of the Plan by the Committee shall, unless
otherwise determined by the Board of Directors of the Corporation, be
17
<PAGE> 21
final and conclusive. A majority of the Committee shall constitute a quorum, and
the acts approved by a majority of the members of the Committee present at any
meeting at which a quorum is present, or acts approved in writing by a majority
of the Committee, shall be the acts of the Committee.
4. INDEMNIFICATION OF COMMITTEE MEMBERS: In addition to such other rights
of indemnification as they may have, the members of the Committee shall be
indemnified by the Corporation in connection with any claim, action, suit or
proceeding relating to any action taken or failure to act under or in connection
with the Plan or any option granted hereunder to the full extent provided for
under the Corporation's Bylaws with respect to indemnification of directors of
the Corporation.
5. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN: The maximum number of shares
with respect to which stock options may be granted under the Plan shall be
500,000 shares in the aggregate of Common Stock of the Corporation. If a stock
option expires or terminates for any reason without having been fully exercised,
the number of shares with respect to which the stock option was not exercised at
the time of its expiration or termination shall again become available for the
grant of stock options under the Plan, unless the Plan shall have been
terminated.
Notwithstanding any other provision in this Plan, no officer, director or
employee of the Corporation or a Subsidiary may receive options for more than
300,000 shares of Common Stock of the Corporation over the term of the Plan, as
provided in Paragraph 22. For purposes of this 300,000 share per-Participant
limitation, there shall be taken into account all shares covered by stock
options granted to an individual regardless of whether such stock options expire
or terminate without being fully exercised.
The number of shares subject to each outstanding stock option, the option
price with respect to outstanding stock options, the aggregate number of shares
remaining available under the Plan and the 300,000 share per-Participant
limitation shall be subject to such adjustment as the Committee, in its
Discretion, deems appropriate to reflect such events as stock dividends, stock
splits, recapitalizations, mergers, consolidations or reorganizations of or by
the Corporation; provided, however, that no fractional shares shall be issued
pursuant to the Plan, no rights may be granted under the Plan with respect to
fractional shares, and any fractional shares resulting from such adjustments
shall be eliminated from any outstanding stock option.
6. PARTICIPANTS: The Committee shall determine and designate from time to
time, in its Discretion, those officers, directors and key employees of the
Corporation or any Subsidiary to receive stock options who, in the judgment of
the Committee, are or will become responsible for the direction and financial
success of the Corporation or any Subsidiary; provided, however, that Incentive
Options may be granted to officers, directors and key employees of a Subsidiary
only if (i) the Corporation owns, directly or indirectly, 50% or more of the
total combined voting power of all classes of Stock of the Subsidiary and (ii)
the Subsidiary is a corporation.
7. WRITTEN AGREEMENT: Each stock option shall be evidenced by a written
agreement (each a "CORPORATION-PARTICIPANT AGREEMENT") containing such
provisions as may be approved by the Committee. Each such
Corporation-Participant Agreement shall constitute a binding contract between
the Corporation and the Participant and every Participant, upon acceptance of
such Agreement, shall be bound by the terms and restrictions of the Plan and of
such Agreement. The terms of each such Corporation-Participant Agreement shall
be in accordance with the Plan, but each Agreement may include such additional
provisions and restrictions determined by the Committee, in its Discretion,
provided that such additional provisions and restrictions are not inconsistent
with the terms of the Plan.
8. ALLOTMENT OF SHARES: The Committee shall determine and fix, in its
Discretion, the number of shares of Common Stock with respect to which a
Participant may be granted stock options under the Plan; provided, however, that
no Incentive Option may be granted under the Plan to any one Participant which
would result in the aggregate fair market value, determined as of the date the
option is granted, of underlying stock with respect to which incentive stock
options are exercisable for the first time by such Participant during any
calendar year under any plan maintained by the Corporation (or any parent or
subsidiary corporation of the Corporation) exceeding $100,000.
9. STOCK OPTIONS: Subject to the terms of the Plan, the Committee, in its
Discretion, may grant to Participants either Incentive Options or Nonqualified
Options or any combination thereof; provided, that
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<PAGE> 22
directors of the Corporation or a Subsidiary who are not employees of the
Corporation or Subsidiary shall be eligible for only Nonqualified Options. Each
option granted under the Plan shall designate the number of shares covered
thereby, if any, with respect to which the option is an Incentive Option, and
the number of shares covered thereby, if any, with respect to which the option
is a Nonqualified Option.
10. STOCK OPTION PRICE: Subject to the rules set forth in this Paragraph
10, at the time any stock option is granted, the Committee, in its Discretion,
shall establish the price per share for which the shares covered by the option
may be purchased. With respect to an Incentive Option, such option price shall
not be less than 100% of the fair market value of the stock on the date on which
such option is granted; provided, however, that with respect to an Incentive
Option granted to an employee who at the time of the grant owns (after applying
the attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting stock of the Corporation or of any parent or subsidiary, the
option price shall not be less than 110% of the fair market value of the stock
on the date such option is granted. With respect to a Nonqualified Option, the
option price shall not be less than 75% of the fair market value of the stock on
the date upon which such option is granted. Fair market value of a share shall
be determined by the Committee and may be determined by taking the mean between
the highest and lowest quoted selling prices of the Corporation's Common Stock
on any exchange or other market on which the shares of Common Stock of the
Corporation shall be traded on such date, or if there are no sales on such date,
on the next following day on which there are sales. The option price shall be
subject to adjustment in accordance with the provisions of Paragraph 5.
11. PAYMENT OF STOCK OPTION PRICE: To exercise in whole or in part any
stock option granted hereunder, payment of the option price in full in cash
shall be made by the Participant for all shares so purchased. In the Discretion
of and subject to such conditions as may be established by the Committee,
payment of the option price may also be made by the Corporation retaining from
the shares to be delivered upon exercise of the stock option that number of
shares having a fair market value on the date of exercise equal to the option
price of the number of shares with respect to which the Participant exercises
the stock option. Such payment may also be made in such other manner as the
Committee determines is appropriate, in its Discretion. No Participant shall
have any of the rights of a shareholder of the Corporation under any stock
option until the actual issuance of shares to such Participant, and prior to
such issuance no adjustment shall be made for dividends, distributions or other
rights in respect of such shares, except as provided in Paragraph 5.
12. GRANTING AND EXERCISING OF STOCK OPTIONS: Subject to the provisions of
this Paragraph 12, each stock option granted hereunder shall be exercisable at
any such time or times or in any such installments as may be determined by the
Committee at the time of the grant; provided, however, that no stock option may
be exercisable prior to the expiration of six months from the date of grant
unless the Participant dies or becomes disabled prior thereto. In addition, the
aggregate fair market value (determined at the time the option is granted) of
the Common Stock with respect to which Incentive Options are exercisable for the
first time by a Participant during any calendar year shall not exceed $100,000.
A Participant may exercise a stock option, if then exercisable, in whole or
in part by delivery to the Corporation of written notice of the exercise, in
such form as the Committee may prescribe, accompanied (i) by payment for the
shares with respect to which the stock option is exercised in accordance with
Paragraph 11, or (ii) in the Discretion of the Committee, irrevocable
instructions to a stock broker to promptly deliver to the Corporation full
payment for the shares with respect to which the stock option is exercised from
the proceeds of the stock broker's sale of or loan against the shares. Except as
provided in Paragraph 16, stock options granted to a Participant may be
exercised only while the Participant is an officer, director or employee of the
Corporation or a Subsidiary.
Successive stock options may be granted to the same Participant, whether or
not the stock option(s) previously granted to such Participant remain
unexercised. A Participant may exercise a stock option, if then exercisable,
notwithstanding that stock options previously granted to such Participant remain
unexercised.
13. NON-TRANSFERABILITY OF STOCK OPTIONS: No stock option granted under the
Plan to a Participant shall be transferable by such Participant otherwise than
by will or by the laws of descent and distribution, and stock options shall be
exercisable, during the lifetime of the Participant, only by the Participant.
19
<PAGE> 23
14. TERM OF STOCK OPTIONS: If not sooner terminated, each stock option
granted hereunder shall expire not more than ten (10) years from the date of the
granting thereof; provided, however, that with respect to an Incentive Option
granted to a Participant who, at the time of the grant, owns (after applying the
attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting stock of all classes of stock of the Corporation or of any
parent or subsidiary, such option shall expire not more than five (5) years
after the date of the granting thereof.
15. CONTINUATION OF EMPLOYMENT: The Committee may require, in its
Discretion, that any Participant under the Plan to whom a stock option shall be
granted shall agree in writing as a condition of the granting of such stock
option to remain in the employ of the Corporation or a Subsidiary for a
designated minimum period from the date of the granting of such stock option as
shall be fixed by the Committee.
16. TERMINATION OF EMPLOYMENT: If the employment of a Participant by the
Corporation or a Subsidiary shall terminate, the Committee may, in its
Discretion, permit the exercise of Incentive Options granted to such Participant
(i) for a period not to exceed three months following termination of employment
if termination of employment is not due to death or permanent disability of the
Participant, and (ii) for a period not to exceed one year following termination
of employment if termination of employment is due to the death or permanent
disability of the Participant. With respect to Nonqualified Options, the
Committee may, in its Discretion, permit the exercise of such stock options
granted to a director of the Corporation or a Subsidiary who ceases to be such a
director (regardless of whether he or she is or was also an officer or director
of the Corporation or Subsidiary) for a period not to extend beyond the
expiration date of the Nonqualified Options. In no event, however, shall a stock
option be exercisable subsequent to its expiration date and, furthermore, unless
the Committee in its Discretion determines otherwise, a stock option may only be
exercised after termination of a Participant's employment, or of a Participant's
status as a non-employee director, to the extent exercisable on the date of
termination of such employment or status or to the extent exercisable as a
result of the reason for termination of such employment or status. The period of
time, if any, a Participant shall have to exercise stock options upon
termination of employment, or of status as a non-employee director, shall be set
forth in the Corporation -- Participant Agreement, subject to extension of such
time period by the Committee in its Discretion.
17. INVESTMENT PURPOSE: If the Committee in its Discretion determines that
as a matter of law such procedure is or may be desirable, it may require a
Participant, upon any acquisition of Common Stock hereunder by reason of the
exercise of stock options, and as a condition to the Corporation's obligation to
issue or deliver certificates representing such shares, to execute and deliver
to the Corporation a written statement, in form satisfactory to the Committee,
representing and warranting that the Participant's acquisition of shares of
stock shall be for such person's own account, for investment and not with a view
to the resale or distribution thereof and that any subsequent offer for sale or
sale of any such shares shall be made either pursuant to (a) a registration
statement on an appropriate form under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), which registration statement has become effective and is
current with respect to the shares being offered and sold, or (b) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption the Participant shall, prior to any offer for sale or
sale of such shares, obtain a favorable written opinion from counsel for or
approved by the Corporation as to the availability of such exemption. The
Corporation may endorse an appropriate legend referring to the foregoing
restriction upon the certificate or certificates representing any shares issued
or transferred to a Participant under the Plan.
18. RIGHTS TO CONTINUED EMPLOYMENT: Nothing contained in the Plan or in any
stock option granted pursuant to the Plan, nor any action taken by the Committee
hereunder, shall confer upon any Participant any right with respect to
continuation of employment by the Corporation or a Subsidiary nor interfere in
any way with the right of the Corporation or a Subsidiary to terminate such
person's employment at any time.
19. WITHHOLDING PAYMENTS: If upon the exercise of a Nonqualified Option, or
upon a disqualifying disposition (within the meaning of Section 422 of the Code)
of shares acquired upon exercise of an Incentive Option, there shall be payable
by the Corporation or a Subsidiary any amount for income tax withholding, in the
Committee's Discretion, either the Corporation shall appropriately reduce the
amount of Common Stock or cash to be delivered or paid to the Participant or the
Participant shall pay such amount to the Corporation
20
<PAGE> 24
or Subsidiary to reimburse it for such income tax withholding. The Committee
may, in its Discretion, permit Participants to satisfy such withholding
obligations, in whole or in part, by electing to have the amount of Common Stock
delivered or deliverable by the Corporation upon exercise of a stock option
appropriately reduced, or by electing to tender Common Stock back to the
Corporation subsequent to exercise of a stock option, to reimburse the
Corporation or a Subsidiary for such income tax withholding (any such election
being irrevocable), subject to such rules and regulations as the Committee may
adopt, including such rules as it determines appropriate with respect to
Participants subject to the reporting requirements of Section 16(a) of the
Exchange Act of 1934 to effect such tax withholding in compliance with the Rules
established by the Securities and Exchange Commission (the "COMMISSION") under
Section 16 to the Exchange Act and the positions of the staff of the Commission
thereunder expressed in no-action letters exempting such tax withholding from
liability under Section 16(b) of the Exchange Act. The Committee may make such
other arrangements with respect to income tax withholding as it shall determine.
20. EFFECTIVENESS OF PLAN: The Plan shall be effective on the date the
Board of Directors of the Corporation adopts the Plan, provided that the
shareholders of the Corporation approve the Plan within 12 months of its
adoption by the Board of Directors. Stock options may be granted prior to
shareholder approval of the Plan, but each such stock option grant shall be
subject to shareholder approval of the Plan. No stock option may be exercised
prior to shareholder approval.
21. TERMINATION, DURATION AND AMENDMENTS OF PLAN: The Plan may be abandoned
or terminated at any time by the Board of Directors of the Corporation. Unless
sooner terminated, the Plan shall terminate on the date ten (10) years after its
adoption by the Board of Directors, and no stock options may be granted
thereafter. The termination of the Plan shall not affect the validity of any
stock option outstanding on the date of termination.
For the purpose of conforming to any changes in applicable law or
governmental regulations, or for any other lawful purpose, the Board of
Directors shall have the right, with or without approval of the shareholders of
the Corporation, to amend or revise the terms of the Plan at any time; provided,
however, that no such amendment or revision shall (i) without approval or
ratification of the shareholders of the Corporation (A) increase the maximum
number of shares in the aggregate which are subject to the Plan (subject,
however, to the provisions of Paragraph 5), (B) increase the maximum number of
shares for which any Participant may be granted stock options under the Plan
(except as contemplated by Paragraph 5), (C) change the class of persons
eligible to be Participants under the Plan, or (D) materially increase the
benefits accruing to Participants under the Plan, or (ii) without the consent of
the holder thereof, change the stock option price (except as contemplated by
Paragraph 5)) or alter or impair any stock option which shall have been
previously granted under the Plan.
As adopted by the Board of Directors on August 6, 1998.
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<PAGE> 25
[PROXY FORM; FRONT SIDE]
UNITED AMERICAN HEALTHCARE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF UNITED AMERICAN
HEALTHCARE CORPORATION.
The undersigned hereby appoints Gregory H. Moses, Jr. and William C.
Brooks, and each of them, with full power of substitution, to vote all shares
of common stock of United American Healthcare Corporation (the "Company") which
the undersigned is entitled to vote at the Annual Meeting of Shareholders of
the Company to be held on November 12, 1998 and at any and all adjournments
thereof:
IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED FOR THE ELECTION
OF DIRECTORS NAMED ON THE REVERSE SIDE, FOR APPROVAL OF THE APPOINTMENT OF
INDEPENDENT AUDITORS AND FOR APPROVAL OF THE 1998 STOCK OPTION PLAN EXCEPT AS
SPECIFIED TO THE CONTRARY. THE UNDERSIGNED AUTHORIZES THE PROXIES TO EXERCISE
THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING.
(Continued and to be Signed on Reverse Side)
----------------------------------------------------------------
[PROXY FORM; REVERSE SIDE]
UNITED AMERICAN HEALTHCARE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S><C>
[ ]
1. For Withhold For all
ELECTION OF 3 DIRECTORS All All (Except nominees(s)written below)
Nominees: Anita C.R. Gorham / / / / / /
Harcourt G. Harris, M.D. --------------------------
Ronald M. Horwitz, Ph.D.
For Against Abstain
2. APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS: / / / / / /
For Against Abstain
3. APPROVAL OF 1998 STOCK OPTION PLAN: / / / / / /
</TABLE>
Dated: , 1998
-------------------------
Signature
----------------------------------------
Signature
----------------------------------------
Please sign exactly as your name appears hereon. When signing as attorney,
executor, personal representative, administrator or guardian, please give your
full title as such. If shares are held in the name of more than one person,
each person must sign the Proxy. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
