<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
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee 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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[UNITED AMERICAN HEALTHCARE CORPORATION LOGO]
October 25, 1999
Dear Shareholder:
You are cordially invited to United American Healthcare Corporation's
1999 Annual Meeting of Shareholders. This year's meeting will be held at the
Atheneum Suite Hotel, 1000 Brush Avenue, Detroit, Michigan on Thursday, November
11, 1999 at 10:30 a.m. (EST).
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 1999 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 11, 1999.
Sincerely,
/s/ Gregory H. Moses, Jr.
-----------------------------------
Gregory H. Moses, Jr.
President and Chief Executive
Officer
<PAGE> 3
[UNITED AMERICAN HEALTHCARE CORPORATION LOGO]
---------------------------------------------------------
NOTICE OF THE 1999
ANNUAL MEETING OF SHAREHOLDERS
---------------------------------------------------------
The Annual Meeting of Shareholders of United American Healthcare
Corporation will be held on Thursday, November 11, 1999 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 four Directors;
(2) to vote on the ratification of the appointment of KPMG LLP as
our independent auditors for the 2000 fiscal year; and
(3) to transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on October 4, 1999
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 25, 1999
<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 11, 1999
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 11, 1999, at 10:30 a.m., Eastern Standard Time. The
approximate mailing date for this proxy statement and the proxy is October 25,
1999.
At the Company's Annual Meeting, shareholders will act upon the matters
outlined in the accompanying Notice of Annual Meeting, including the election of
four Directors and ratification of the appointment of independent auditors.
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 4, 1999 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 6,779,134 shares of Common Stock.
Based on information filed with the Securities and Exchange Commission
("SEC"), or otherwise provided to the Company, as of September 17, 1999, (A)
Richard M. Brown, D.O., 1200 Ardmoor, Bloomfield Hills, Michigan 48301,
beneficially owns 411,727 shares (6.1%) of the Company's outstanding Common
Stock, and (B) Julius V. Combs, M.D., 200 Riverfront Park, #1711, Detroit,
Michigan 48226, beneficially owns 390,811 shares (5.4%) of the Company's
outstanding Common Stock. Management does not know of any other person who, at
October 4, 1999, 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 William C. Brooks, Julius V.
Combs, M.D., Pearl M. Holforty and Gregory H. Moses, Jr., be elected as
Directors of the Company, to hold office until the Annual Meeting of
Shareholders in 2002 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 four 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, 1999 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.
[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 IF APPLICABLE, WITH THE COMPANY AND OTHER OWNED AS OF OWNED AS OF TO
YEAR FIRST BECAME A DIRECTOR) AGE PRINCIPAL OCCUPATIONS SEPT. 17, 1999 SEPT. 17, 1999 EXPIRE
- ----------------------------------------------------------------------------------------------------------------------------------
NOMINEES FOR ELECTION AS DIRECTORS FOR A THREE-YEAR TERM
--------------------------------------------------------
<S> <C> <C> <C> <C>
William C. Brooks (1997)..........66 Chairman of the Board of Directors of
the Company; Chairman of The Brooks
Group International, Ltd................. 110,000 (1) 1.5% 2002
Julius V. Combs, M.D. (1983)......68 Chairman of the Board and President
of National Healthcare Scholars
Foundation .............................. 390,811 (1)(2) (3) 5.4% 2002
Pearl M. Holforty (1998)..........70 President and Chief Executive Officer of
Liberty BIDCO Investment Corporation .... 30,000 (1) * 2002
Gregory H. Moses, Jr. (1998)......65 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.......... 107,000 (1)(2) 1.5% 2002
DIRECTORS CONTINUING IN OFFICE
------------------------------
Anita C. R. Gorham (1984).........58 Secretary of the Company; Associate
Director of Education and Professional
Development and faculty member at
Central Michigan University.............. 48,436 (1)(2) * 2001
Harcourt G. Harris, M.D. (1985)...71 First Vice Chairman of the Board of
Directors of the Company; Chairman
of the Board of Directors of OmniCare
Health Plan, of Michigan................. 59,307 (1)(2) * 2001
Ronald M. Horwitz, Ph.D. (1997)...61 Professor of Finance at Oakland
University; Principal of Ronald M.
Horwitz and Assoc., financial
consultants ............................. 25,500 (1)(2) * 2001
Darrel W. Francis (1998)..........46 President of Metropolitan Facility
Resources;
President of Ice Blast Mid-West, Inc.;
President of Precision Industrial
Service.................................. 26,890 (1) * 2000
William B. Fitzgerald (1997)......57 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 ....... 58,346 (1) * 2000
Emmett S. Moten, Jr. (1988).......55 President of Moten Associates............ 25,000 (1) * 2000
OTHER EXECUTIVE OFFICERS
------------------------
William C. Sharp, M.D. ...........50 Senior Vice President, Medical Services
of the Company........................... 6,144 *
Osbie Howard......................56 Senior Vice President of United American
of Tennessee, Inc; Executive Director of
OmniCare Health Plan, Inc., of Tennessee. 11,282 *
Gloria J. Larkins.................43 Chief Operating Officer of OmniCare
Health Plan, of Michigan................. 0 *
Paul G. Samuels...................39 Treasurer and Chief Financial Officer of
the Company.............................. 848 *
All Directors and Executive officers as a group (14 persons) .................... 899,564 (1) 12.5%
</TABLE>
- ----------------------
* Less than 1%
(1) Includes the following number of shares of Common Stock which the
individual has the right to acquire pursuant to stock options that are
exercisable currently or become exercisable within 60 days after September
17, 1999: Mr. Brooks, 100,000 shares; Mr. Moses, 102,000 shares; and Dr.
Combs, Ms. Holforty, Ms. Gorham, Dr. Harris, Dr. Horwitz, Mr. Francis, Mr.
Fitzgerald and Mr. Moten, 25,000 shares each.
(2) Includes shares of Common Stock with respect to which the following
Directors share voting and investment power with others: Dr. Combs, 377,119
shares; Mr. Moses, 5,000 shares; Ms. Gorham, 23,436 shares; Dr. Harris,
14,047 shares; and Dr. Horwitz, 500 shares.
(3) Includes 13,692 shares of Common Stock held in trust for the benefit of
relatives as 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. 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.
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 National Healthcare Scholars 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 has been President of Metropolitan Facility
Resources, an office furniture sales and design company, since January 1997. He
has been the President and Chairman of the Board of Directors of Ice Blast
Mid-West, Inc., an industrial cleaning company, since December 1996, and
President of Precision Industrial Service, a floor covering installation
company, since June 1999. From January 1996 to October 1998, he was President of
Advantage Pavilion, Inc., an office furniture sales and design company. 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.
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
4
<PAGE> 8
Central Michigan University, currently as Associate Director of Education and
Professional Development 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. She is a director of Auto Club Trust, FSB, a federal savings bank.
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.
EMMETT S. MOTEN, JR. (1988)
Emmett S. Moten, Jr. has been the President of Moten Associates, a real
estate 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, 1999, the Company's Board of
Directors held seven meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
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 Darrel W. Francis (Chairman), Pearl M. Holforty, Dr.
Ronald M. Horwitz and Emmett S. Moten, Jr. During fiscal year 1999, the Audit
Committee held seven 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.
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 1999, 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, Julius V. Combs, M.D., William B. Fitzgerald, Dr. Harcourt G. Harris and
Emmett S. Moten, Jr. During fiscal year 1999, the Compensation Committee held
six meetings. The duties of the Compensation Committee are to make
recommendations to the Board of
5
<PAGE> 9
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 Nominating Committee. The current members of
the Nominating Committee are Dr. Harcourt G. Harris (Chairman), William C.
Brooks and Anita C. R. Gorham. During fiscal year 1999, the Nominating Committee
held one meeting. 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.
The Company previously had a standing Executive Committee, which the
Board of Directors eliminated in August 1999. The Executive Committee did not
meet in fiscal year 1999.
The Company also previously had an Executive Compensation Committee,
which the Board of Directors eliminated in August 1999, transferring its duties
to the standing Compensation Committee. During fiscal year 1999, the members of
the Executive Compensation Committee were Anita C. R. Gorham (Chairwoman),
William C. Brooks, William B. Fitzgerald, Dr. Harcourt G. Harris and Emmett S.
Moten, Jr., and the Executive Compensation Committee held three meetings. The
duties of the Executive Compensation Committee were to make recommendations to
the Board of Directors relating to the compensation for executive officers of
the Company.
All of the Directors attended all, or one less than all, of the seven
Board meetings held during fiscal 1999, except Mr. Moten, who attended a
majority of those Board meetings. All of the Directors except Mr. Francis, Ms.
Holforty and Mr Moten attended at least 75% of the combined number of meetings
held during fiscal year 1999 by the Board and 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.
[balance of this page intentionally left blank]
6
<PAGE> 10
SUMMARY COMPENSATION TABLE
The following table sets forth information for each of the fiscal years
ended June 30, 1999, 1998 and 1997 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, 1999 (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>
GREGORY H. MOSES, JR. (2) . . . . . . . . . . . . . .1999 225,000 100,000 --
Chief Executive Officer, President 1998 30,288 -- --
and Chief Operating Officer 1997 -- -- --
JULIUS V. COMBS, M.D. (3) . . . . . . . . . . . . . .1999 45,410 -- --
Chief Executive Officer 1998 331,118 -- --
1997 327,957 -- 7,500
WILLIAM C. SHARP, M.D. . . . . . . . . . . . . . . . 1999 195,212 -- --
Senior Vice President, Medical Services 1998 196,586 -- --
1997 196,064 -- 7,500
OSBIE HOWARD . . . . . . . . . . . . . . . . . . . . 1999 150,202 30,000 --
Senior Vice President of 1998 146,363 -- --
United American of Tennessee, Inc. 1997 154,000 -- --
GLORIA J. LARKINS (4) . . . . . . . . . . . . . . . .1999 120,000 -- --
Chief Operating Officer of 1998 (6) -- -- --
OmniCare-MI 1997 (6) -- -- --
PAUL G. SAMUELS (5) . . . . . . . . . . . . . . .. . 1999 107,980 -- --
Chief Financial Officer 1998 (6) -- -- --
and Treasurer 1997 (6) -- -- --
</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 had any long-term compensation (including restricted
stock awards and LTIP payouts). Stock options granted during fiscal year
1999 are shown in the stock option table on the next page; none were
granted during fiscal years 1998 and 1997 (other than as described under
"Employment Agreement" below).
(2) Mr. Moses joined the Company as President and Chief Operating Officer on
May 11, 1998, and became Chief Executive Officer effective August 6, 1998.
(3) Dr. Combs retired as Chief Executive Officer, and as an executive officer,
of the Company effective August 6, 1998.
(4) Ms. Larkins joined the Company December 15, 1997 and became Chief Operating
Officer of OmniCare-MI on July 1, 1998.
(5) Mr. Samuels was Corporate Controller of the Company prior to becoming
Treasurer of the Company on August 6, 1998.
(6) Not an executive officer prior to fiscal year 1999.
7
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows information on stock options granted to the
named Executive Officers in fiscal year 1999.
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS GRANTED GRANT DATE
COMMON SHARES TO EMPLOYEES IN EXERCISE PRESENT
UNDERLYING FISCAL YEAR 1999 PRICE EXPIRATION VALUE
NAME OPTIONS GRANTED (%) ($/SHARE) (3) DATE (4) ($)
- ---------------------------- ----------------- ------------------ --------------- -------------- -------------------
<S> <C> <C> <C> <C> <C>
Gregory H. Moses, Jr. 25,000 (1) 7.04 1.625 9/9/08 30,500 (5)
- ---------------------------- ----------------- ------------------ --------------- -------------- -------------------
Julius V. Combs, M.D. 25,000 (1) 7.04 1.625 9/9/08 30,500 (5)
- ---------------------------- ----------------- ------------------ --------------- -------------- -------------------
Osbie Howard 4,000 (2) 1.13 1.25 12/15/08 3,760 (6)
- ---------------------------- ----------------- ------------------ --------------- -------------- -------------------
Gloria J. Larkins 4,000 (2) 1.13 1.25 12/15/08 3,760 (6)
- ---------------------------- ----------------- ------------------ --------------- -------------- -------------------
Paul G. Samuels 4,000 (2) 1.13 1.25 12/15/08 3,760 (6)
- ---------------------------- ----------------- ------------------ --------------- -------------- -------------------
William C. Sharp, M.D. 4,000 (2) 1.13 1.25 12/15/08 3,760 (6)
- ---------------------------- ----------------- ------------------ --------------- -------------- -------------------
</TABLE>
- -------------
(1) 100% vested upon grant date.
(2) These options vest in four equal installments on the first four
anniversaries of the grant date.
(3) All exercise prices equal the closing price of the Company's Common Stock on
the grant date.
(4) All options expire 10 years after the grant date.
(5) $1.22 per share valuation using the Black-Scholes pricing model based on
these assumptions: (A) expected volatility: 62.67%; (B) risk-free interest
rate: 4.95%; (C) dividend yield: 0%; (D) time of exercise: immediately
preceding expiration date.
(6) $0.94 per share valuation using the Black-Scholes pricing model based on
these assumptions: (A) expected volatility: 65.26%; (B) risk-free interest
rate: 4.62%; (C) dividend yield: 0%; (D) time of exercise: immediately
preceding expiration date.
None of the named Executive Officers exercised any stock options during
the last fiscal year.
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 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
8
<PAGE> 12
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 has a 1998 Stock Option Plan (the "Plan"), under which
stock options (Nonqualified Options and Incentive Options, as defined in the
Plan) may be granted to officers, Directors and key employees of the Company or
its subsidiaries. The maximum number of shares of common stock which may be
issued pursuant to stock options under the Plan is 500,000, and no Participant
can receive stock options for more than 300,000 shares over the term of the
Plan.
The Plan is administered by a committee (the "Committee") specified by
the Board of Directors, currently its Compensation Committee. 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 (as defined in the Plan) who, in the judgment of the Committee, are
or will become responsible for the direction and financial success of the
Company or any Subsidiary.
An Incentive Option granted under the Plan must have an exercise price
not less than 100% of the fair market value of the shares on the date such
option is granted. For 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 must be at least 110% of the
fair market value of the shares on the date such option is granted. A
Nonqualified Option granted under the Plan must have an exercise price not less
than 75% of the fair market value of the shares on the date such option is
granted. Each stock option granted under the Plan must expire not more than ten
years after the date of the grant; and an Incentive Option granted to an
individual 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 must expire not more than five years after the date of the 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 fiscal year 1999 were approximately $53,000. 200,000 common shares were
reserved for issuance under the ESPP. Pursuant to the ESPP, for the year ended
June 30, 1999: (A) 5,667 shares were issued on June 30, 1999 and (B) 68,551
additional shares were issued subsequent to year-end.
The Company has not granted any Stock Appreciation Rights, and it did
not grant any awards under a long-term incentive plan during fiscal year 1999.
The Company on September 9, 1998, December 15, 1998 and February 3, 1999 granted
certain stock options under the Plan.
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
9
<PAGE> 13
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, 1999, 111 employees had elected to participate in the plan. For the fiscal
year ended June 30, 1999, the Company contributed $25,000 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
Compensation Committee 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 1999, 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 Compensation Committee is comprised of Ms. Gorham (Chairwoman), Mr.
Brooks, Dr. Combs, 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 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.
10
<PAGE> 14
<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, -- Treasurer,
Chief Financial Officer Director
Harcourt G. Harris, M.D. . . . .. First Vice Chairman Chairman of the Board, --
of the Board, Director Trustee
William B. Fitzgerald . . . . . . Second Vice Chairman Vice Chairman of the Board, --
of the Board, Director Trustee
Julius V. Combs, M.D. . . . . . . Director Chairman Emeritus, Trustee --
</TABLE>
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, 1999, the Company paid premiums of approximately
$400,000 for such benefits.
CHARITABLE FOUNDATION. For the fiscal year ended June 30, 1999, the
Company made $1,000 in contributions to National Healthcare Scholars Foundation
(formerly United American Healthcare Foundation), a Michigan non-profit
corporation which assists minority organizations involved in the promotion of
health and education. Dr. Combs, a Director of the Company, is a director of the
Foundation.
II. PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of the
Board's Audit Committee, has appointed KPMG LLP as independent auditors of the
Company for its fiscal year ending June 30, 2000. The Board seeks to have the
shareholders ratify the appointment of KPMG LLP.
KPMG LLP (formerly known as KPMG Peat Marwick LLP) has served as
independent auditors of the Company since January 12, 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 LLP is expected to be present at the 1999 Annual Meeting
to make a statement, if requested, and be available to respond to questions with
respect to the 1999 audit.
The Board of Directors considers KPMG LLP to be well qualified to serve
as the independent auditors for the Company. If the appointment of KPMG LLP is
not ratified by the shareholders, the Board of Directors may appoint other
independent auditors based upon the recommendation of the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY
THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE 2000 FISCAL YEAR.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS
OTHERWISE SPECIFY IN THEIR PROXIES.
11
<PAGE> 15
III. OTHER INFORMATION
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During fiscal year 1999, due to an administrative oversight, Julius V.
Combs, M.D. failed to timely file two Forms 4 with the SEC to report five
transactions in which he disposed of Common Stock by gift or sale. 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 $5,000 plus out-of-pocket expenses.
The Company will reimburse brokers or other nominees and institutional holders
for their expenses in forwarding proxy materials to principals. Any person
giving a proxy has the power to revoke it at any time before it is voted.
STOCK PERFORMANCE CHART
The Stock Performance Chart graphs the Company's performance during the
previous five (5) fiscal years in comparison to returns on the S&P 500 and the
S&P Health Care - Diversified.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
STARTING
BASIS
DESCRIPTION 1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Company (%) 3.70 - 40.00 - 42.86 - 80.20 10.44
Company ($) $100.00 $103.70 $ 62.22 $ 35.56 $ 7.04 $ 7.77
S & P 500 (%) 26.07 26.00 34.70 30.16 22.76
S & P 500 ($) $100.00 $126.07 $158.85 $213.97 $278.50 $341.88
PEER GROUP ONLY (%) 1.18 23.21 15.18 - 8.62 - 12.64
PEER GROUP ONLY ($) $100.00 $101.18 $124.67 $143.59 $131.22 $114.63
PEERS + YOUR COMPANY (%) 1.20 22.68 14.96 - 8.73 - 12.63
PEERS + YOUR COMPANY ($) $100.00 $101.20 $124.16 $142.73 $130.26 $113.81
</TABLE>
(Assumes initial investment of $100 and reinvestment of dividends)
2000 ANNUAL MEETING
A shareholder proposal which is intended to be presented at the 2000
Annual Meeting of the Shareholders must be received by the Company at its
principal executive offices by July 10, 2000.
By Order of the Board of Directors
/s/ Anita C. R. Gorham
-----------------------------------
Anita C. R. Gorham, Secretary
Dated: October 25, 1999
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<PAGE> 16
UNITED AMERICAN HEALTHCARE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF UNITED AMERICAN
HEALTHCARE CORPORATION
The undersigned hereby appoints Anita C. R. Gorham and Paul G. Samuels,
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 November 11, 1999 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 AND FOR APPROVAL OF THE APPOINTMENT OF
INDEPENDENT AUDITORS. AND 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.)
<PAGE> 17
UNITED AMERICAN HEALTHCARE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<CAPTION>
<S><C>
1. For Withhold For All
ELECTION OF 4 DIRECTORS: All All (Except nominee(s) written below)
Nominees: [ ] [ ] [ ]
01 William C. Brooks, --------------------------------------------------------------
02 Julius V. Combs, M.D., For Against Abstain
03 Pearl M. Holforty,
04 Gregory H. Moses, Jr. 2. Approval of Appointment of [ ] [ ] [ ]
Independent Auditors.
Dated , 1999
-------------------------
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.
</TABLE>
