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
Filed by the registrant [ X ] Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [X] Definitive proxy statement. [ ] Definitive
additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12. [ ]
Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)).
UCI MEDICAL AFFILIATES, INC.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (check the appropriate box):
[X ] No fee required.
UCI MEDICAL AFFILIATES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, AUGUST 31, 2004
The 2004 annual meeting of stockholders of UCI Medical Affiliates, Inc.
will be held at the Adam's Mark Hotel, 1200 Hampton Street, Columbia, South
Carolina, on Tuesday, August 31, 2004, beginning at 10:00 a.m. eastern time, for
the following purposes:
(1) To elect three members to our Board of Directors;
(2) To ratify the appointment of Scott McElveen, L.L.P., Certified
Public Accountants, as our independent auditors for the fiscal
year ending September 30, 2004; and
(3) To transact any other business that properly comes before the annual
meeting or any adjournment of the meeting.
Only holders of record of our common stock at the close of business on
July 22, 2004 are entitled to notice of, and to vote at, the annual meeting or
any adjournment of the meeting.
You are cordially invited and urged to attend the annual meeting in
person, but if you are unable to do so, please date, sign, and promptly return
your proxy in the enclosed, self-addressed, postage-paid envelope. If you attend
the annual meeting and desire to revoke your proxy and vote in person, you may
do so. In any event, a proxy may be revoked at any time before it is exercised.
Each stockholder who attends the meeting may be asked to present valid
picture identification, such as a driver's license or passport. Stockholders
attending the meeting and holding stock in brokerage accounts ("street name"
holders) will need to bring a copy of a brokerage statement reflecting stock
ownership as of the record date.
By Order of the Board of Directors,
D. Michael Stout, M.D.
President and Chief
Executive Officer
Columbia, South Carolina
August 2, 2004
PROXY STATEMENT.....................................................................................................1
ABOUT THE MEETING...................................................................................................1
What is the purpose of the annual meeting?.................................................................1
Who is entitled to vote at the meeting?....................................................................1
What are the voting rights of the holders of our common stock?.............................................1
Who can attend the meeting?................................................................................1
What constitutes a quorum?.................................................................................1
How do I vote?.............................................................................................2
Can I change my vote after I return my proxy card?.........................................................2
What vote is required to approve each item?................................................................2
Who bears the cost of this proxy statement and who may solicit proxies?....................................3
ELECTION OF DIRECTORS...............................................................................................3
RATIFICATION OF APPOINTMENT OF AUDITORS.............................................................................4
OTHER BUSINESS......................................................................................................4
STOCK OWNERSHIP.....................................................................................................4
Who are the largest owners of our stock, and how much stock do our directors and executive
officers own?.....................................................................................4
Section 16(a) Beneficial Ownership Reporting Compliance....................................................5
GOVERNANCE OF THE COMPANY...........................................................................................6
Who are the current members of the Board?..................................................................6
Important Information Regarding Directors..................................................................6
What is the role of the Board's committees?................................................................8
How does the Board select nominees for the Board?..........................................................8
How often did the Board meet during fiscal year 2003?......................................................9
How are directors compensated?.............................................................................9
Does the company have a code of ethics?...................................................................10
How do stockholders communicate with the Board?...........................................................10
What related party transactions exist?....................................................................10
AUDIT COMMITTEE REPORT.............................................................................................13
FEES TO INDEPENDENT AUDITORS.......................................................................................14
EXECUTIVE COMPENSATION.............................................................................................15
Compensation Committee Report On Executive Compensation...................................................15
What is the role of the Compensation Committee?...........................................................15
What are the objectives of our executive compensation policies?...........................................16
How were base salaries for fiscal year 2003 determined for executive officers?............................16
How are cash bonuses and other compensation for executive officers determined?............................16
How is compensation for our Chief Executive Officer determined?...........................................16
Compensation Committee Interlocks and Insider Participation...............................................17
Employment Contracts......................................................................................17
Executive Compensation Summary Table......................................................................17
Option Grants.............................................................................................18
Equity Compensation Plan Information......................................................................18
COMPARISON OF CUMULATIVE TOTAL RETURNS.............................................................................19
ADVANCE NOTICE PROCEDURES..........................................................................................19
ANNUAL REPORT ON FORM 10-K.........................................................................................20
MISCELLANEOUS......................................................................................................21
21
UCI MEDICAL AFFILIATES, INC.
4416 Forrest Drive
Columbia, South Carolina 29206
PROXY STATEMENT
This proxy statement contains information related to the 2004 annual
meeting of our stockholders to be held at the Adam's Mark Hotel, 1200 Hampton
Street, Columbia, South Carolina, on Tuesday, August 31, 2004 at 10:00 a.m.
eastern time, and at any adjournment of the meeting. We are mailing this proxy
statement to stockholders on or about August 2, 2004.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At our annual meeting, stockholders will act upon the matters outlined
in the notice of meeting on the cover page of this proxy statement, including
the election of directors, and the ratification of our independent auditors. In
addition, management will report on our performance and respond to questions
from stockholders.
Who is entitled to vote at the meeting?
Only stockholders of record at the close of business on July 22, 2004,
the record date for the meeting, are entitled to receive notice of and to
participate in the annual meeting, or any adjournment of the meeting.
What are the voting rights of the holders of our common stock?
Cumulative voting for the election of directors is not available under
our Certificate of Incorporation. Consequently, each outstanding share of our
common stock is entitled to one vote on each matter to be voted upon at the
annual meeting.
Who can attend the meeting?
Subject to space availability, all stockholders as of the record date,
or their duly appointed proxies, may attend the meeting, and one guest may
accompany each stockholder. Because seating is limited, admission to the meeting
will be on a first-come, first-served basis. Registration and seating will begin
at 9:30 a.m. eastern time. If you attend, please note that you may be asked to
present valid picture identification, such as a driver's license or passport. If
you hold your shares in "street name" (that is, through a broker or other
nominee), you will need to bring a copy of a brokerage statement reflecting your
stock ownership as of the record date and check in at the registration desk at
the meeting. We will not permit cameras, recording devices, or other electronic
devices at the meeting.
What constitutes a quorum?
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of our common stock on the record date constitutes a
quorum, permitting the meeting, or any adjournment of the meeting, to take
place. As of the record date, approximately 305 stockholders held of record
9,740,472 issued and outstanding shares of our common stock. Consequently, the
presence of the holders of common stock representing at least 4,870,237 votes
will be required to establish a quorum.
We will consider directions to withhold authority to vote for
directors, abstentions, and broker non-votes to be present in person or by proxy
and entitled to vote. Therefore, we will count these shares for purposes of
determining whether a quorum is present at the annual meeting. (A broker
non-vote occurs when a broker or other nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because the
broker or nominee does not have the discretionary voting power and has not
received voting instructions from the beneficial owner.)
If a quorum is not present or represented at the annual meeting, the
stockholders entitled to vote, present in person or represented by proxy, have
the power to adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum is present or represented. Our
directors, officers, and regular employees may solicit proxies for the
reconvened meeting in person or by mail, telephone, or telegraph. At any
reconvened meeting at which a quorum is present or represented, any business may
be transacted that might have been transacted at the meeting as originally
scheduled.
How do I vote?
If you complete and properly sign the accompanying proxy card and
return it to us, the individuals designated by the Board of Directors on the
proxy card as proxy holders will vote it as you direct. If you are a holder of
record as of the record date and attend the meeting, you may deliver your
completed proxy card in person. "Street name" stockholders who wish to vote at
the meeting will need to obtain a proxy form from the institution that holds
their shares.
Unless you give other instructions on your proxy card, the designated
proxy holders will vote in accordance with the Board's recommendations set forth
below. With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board or, if no recommendation
is given, in their own discretion.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may revoke or change
your vote at any time before the proxy is exercised at the annual meeting by (i)
delivering to our Corporate Secretary a written notice, bearing a date later
than the proxy, stating that the proxy is revoked, (ii) signing and so
delivering a proxy relating to the same shares and bearing a later date prior to
the vote at the annual meeting, or (iii) attending the annual meeting and voting
in person. Please note that your attendance at the meeting will not
automatically revoke your proxy. You must specifically revoke your proxy.
Whether or not you plan to attend the annual meeting, you are urged to sign and
return the enclosed proxy.
What vote is required to approve each item?
Election of Directors. The three nominees receiving the greatest number
of votes cast (although not necessarily a majority of the votes cast) at the
annual meeting will be elected to the Board of Directors. Accordingly,
directions to withhold authority, abstentions, and broker non-votes will have no
effect on the outcome of the vote. You cannot vote, in person or by proxy, for a
greater number of persons than three, the number of nominees named in the proxy.
Other Items. For each other item, the affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled to
vote on the item will be required for approval.
Street Name. If you hold your shares in "street name" through a broker
or other nominee, your broker or nominee may not be permitted to exercise voting
discretion with respect to some of the matters to be acted upon. Thus, if you do
not give your broker or nominee specific instructions, your shares may not be
voted on those matters and will not be counted in determining the number of
shares necessary for approval.
Who bears the cost of this proxy statement and who may solicit proxies?
We will bear the cost of preparing, assembling, and mailing this proxy
statement and the form of proxy. Our directors, officers, and employees may also
solicit proxies personally or by mail, telephone, or telegram. No compensation
will be paid for these solicitations. In addition, we may request banking
institutions, brokerage firms, custodians, nominees, and fiduciaries to forward
our proxy solicitation materials to the beneficial owners of our common stock
held of record by these entities, and we will reimburse their reasonable
forwarding expenses.
PROPOSAL ONE
ELECTION OF DIRECTORS
Our Certificate of Incorporation provides for a classified Board of
Directors so that, as nearly as possible, one-third of the members of the Board
is elected at each annual meeting to serve until the third annual stockholders'
meeting after their election. At the commencement of the annual meeting, the
Board will consist of seven directorships divided into two classes of two and
one class of three. The Board proposes two individuals, Timothy L. Vaughn, CPA
and Jean E. Duke, CPA, as nominees to serve from the date of their election at
the annual meeting until the 2007 annual meeting of stockholders, or until their
successors shall have been earlier elected and qualified, and one individual,
Joseph A. Boyle, CPA, as a nominee to serve from the date of his election at the
annual meeting until the 2005 annual meeting of stockholders, or until his
successor shall have been earlier elected and qualified. The Board appointed
this latter nominee in connection with the expansion of the Board from six to
seven members, effective as of the date of the annual meeting.
Mr. Vaughn is currently a member of the Board, and all the nominees
were each recommended by our Nominating Committee. Each of these nominees has
consented to serve if elected. If any of them becomes unavailable to serve as a
director, the persons named as proxy holders on the attached proxy card may
designate a substitute nominee in accordance with their best judgment. In that
case, the proxy holders will vote for the substitute nominee. For additional
information on each of these nominees, see the information set forth later in
this proxy statement under the heading "Management - Directors."
Terms Expiring in 2007: Timothy L. Vaughn, CPA and Jean E. Duke, CPA.
Term Expiring in 2005: Joseph A. Boyle, CPA.
The Board recommends that stockholders vote "FOR" each of the persons
listed above.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Scott McElveen, L.L.P., as independent auditors for the fiscal year
ending September 30, 2004, subject to stockholder ratification. If the
stockholders do not ratify this appointment, the Board of Directors upon
recommendation of the Audit Committee will consider other certified public
accountants. We describe services of Scott McElveen, L.L.P., to us and our
subsidiaries below under the heading "Fees to Independent Auditors." We provide
additional information relating to our Audit Committee below under the heading
"Audit Committee Report."
We expect a representative of Scott McElveen, L.L.P., to be in
attendance at the annual meeting. The representative will have the opportunity
to make a statement and will be available to respond to appropriate questions.
The Board recommends that stockholders vote "for" the ratification of
Scott McElveen, L.L.P., as our independent auditors for fiscal year ending
September 30, 2004.
OTHER BUSINESS
As of the date of this proxy statement, our Board knows of no other
matter to come before the annual meeting. However, if any matter requiring a
vote of the stockholders should arise, the Board designees intend to vote the
proxy in accordance with the Board's recommendation, or in the absence of a
Board recommendation, in accordance with their best judgment.
STOCK OWNERSHIP
Who are the largest owners of our stock, and how much stock do our
directors and executive officers own?
The following table sets forth certain information known to us
regarding the beneficial ownership of our common stock as of July 22, 2004.
Information is presented for (i) stockholders owning more than five percent of
the outstanding common stock as indicated in their respective Schedule 13D
filings as filed with the Securities and Exchange Commission as of July 22,
2004, (ii) each of our directors, each nominee for director, and each of our
executive officers individually, and (iii) all of our directors and executive
officers, as a group. The percentages are calculated based on 9,740,472 shares
of common stock outstanding on July 22, 2004.
Shares
Name Beneficially Percentage
Owned (1)
- ------------------------------------------------------------------------- ---------------- -------------
Blue Cross and Blue Shield of South Carolina (2)...............................6,726,019 69.06
M.F. McFarland, III, M.D. (3)....................................................521,962 5.36
Harold H. Adams, Jr................................................................2,500 *
Ashby M. Jordan, M. D................................................................. 0 0
John M. Little, Jr., M.D...............................................................0 0
Louis M. McElveen, CPA.................................................................0 0
Charles M. Potok.......................................................................0 0
Timothy L. Vaughn, CPA.................................................................0 0
Joseph A. Boyle, CPA...................................................................0 0
Jean E. Duke, CPA......................................................................0 0
D. Michael Stout, M.D. (4).......................................................414,185 4.25
Jerry F. Wells, Jr. (5)..........................................................134,825 1.38
All current directors and executive officers
As a group (8 persons).......................................................551,510 5.66
* Amount represents less than 1.0 percent.
(1) Beneficial ownership reflected in the table is determined in accordance
with the rules and regulations of the SEC and generally includes voting
or investment power with respect to securities. Shares of common stock
issuable upon the exercise of options currently exercisable or
convertible, or exercisable or convertible within 60 days, are deemed
outstanding for computing the percentage ownership of the person
holding such options, but are not deemed outstanding for computing the
percentage ownership of any other person. Except as otherwise
specified, each of the stockholders named in the table has indicated to
us that such stockholder has sole voting and investment power with
respect to all shares of common stock beneficially owned by that
stockholder.
(2) The business address of the named beneficial owner is I-20 at Alpine
Road, Columbia, SC 29219. The shares reflected in the table are held of
record by Companion HealthCare Corporation (6,107,838 shares) and
Companion Property and Casualty (618,181 shares), each of which is a
wholly owned subsidiary of Blue Cross and Blue Shield of South
Carolina.
(3) The business address of the named beneficial owner is 1829 Senate
Street, Columbia, SC 29201. (4) Includes 109,825 shares issuable
pursuant to currently exercisable stock options. (5) All shares are
issuable pursuant to currently exercisable stock options.
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of filings with the Securities and Exchange
Commission and written representations that no other reports were required, we
believe that all of our directors and officers complied during our fiscal
year-ended September 30, 2003 with the filing requirements under Section 16(a)
of the 1934 Act, with the exception of a delayed Form 3 filings by Mr. McElveen
and Mr. Vaughn, after being elected as directors during 2003. Neither Mr.
McElveen nor Mr. Vaughn beneficially owns any shares of our common stock.
GOVERNANCE OF THE COMPANY
Who are the current members of the Board?
The following table identifies the names, ages, Board term expiration,
and committee memberships of our Board members as of the date of this proxy:
Name Age Term Audit Compensation Nominating
---- --- --------
Expiring In Committee Committee Committee
Timothy L. Vaughn, CPA 39 20041
Louis M. McElveen, CPA 42 2004 ** *
John M. Little, Jr., M.D. 54 2005 *
Ashby M. Jordan, M.D. 65 2005 *
Harold H. Adams, Jr. 56 2006 * **
Charles M. Potok 55 2006 **
1 This director is nominated for re-election at the 2004 annual meeting of stockholders for a term expiring at the
annual meeting expected to be held in 2007.
* Member
** Chairman
It is anticipated that upon election to the Board of Directors, Mr. Boyle
and Ms. Duke will serve as members of the Audit and Nominating Committees.
Important Information Regarding Directors
Director Nominees for Terms Expiring at the Annual Meeting Expected to be
Held in 2007:
Timothy L. Vaughn, CPA, has served as Chief Financial Officer of
Companion HealthCare since January, 2000. He serves as TRICARE Contracts Manager
for Blue Cross Blue Shield of South Carolina from 1997 to 2000. This federal
program provides health benefits administration for military dependents and
retirees across the nation. Mr. Vaughn is a Certified Public Accountant and has
been named a Fellow in both the Academy of Healthcare Management and Life
Management institute and is currently serving as Corporate Secretary and
Treasurer of EAP Alliance, Inc. in Columbia, South Carolina. He is a member of
numerous professional and civic organizations. Mr. Vaughn was most recently
elected as a director at the annual meeting of stockholders in 2003.
Jean E. Duke, CPA, 49, has served as Senior Vice President, Customer &
Information Services of Colonial Life & Accident Insurance Company since March
2004. Prior to that, Ms. Duke served as President and Chief Financial Officer of
Colonial since rejoining the company in August 2002. During the period from 1998
until 2002, Ms. Duke owned a consulting business providing services primarily
for insurance and financial organizations. Ms. Duke is a certified public
accountant. A graduate of Leadership Columbia, she was named the Financial
Executive of the Year by the Columbia chapter of the Institute of Management
Accountants, the Distinguished Young Alumni by the Moore School of Business, and
was honored with the Tribute to Women and Industry award by the Young Women's
Christian Association. Ms. Duke has held leadership and board positions with
many professional and business organizations as well as continuing to be active
in numerous community organizations.
Directors Whose Terms Expire at the Annual Meeting Expected to be Held in 2006:
Harold H. Adams, Jr., has served as one of our directors since June
1994 and as Chairman and owner of Adams and Associates, International and
Southern Insurance Managers since June 1992. He served as President of Adams
Eaddy and Associates, an independent insurance agency, from 1980 to 1992. Mr.
Adams has been awarded the Chartered Property Casualty Underwriter designation
and is currently a member of the President's Board of Visitors of Charleston
Southern University in Charleston, South Carolina. He has received numerous
professional awards as the result of over 32 years of involvement in the
insurance industry and is a member of many professional and civic organizations.
Mr. Adams was most recently reelected as a director at the annual meeting of
stockholders in 2003.
Charles M. Potok, has served as our Chairman of the Board since
February 2003, and has served as one of our directors since September 1995. He
has served as Executive Vice President and Chief Operating Officer of Companion
Property and Casualty Company, a wholly-owned subsidiary of Blue Cross and Blue
Shield of South Carolina, since March 1984; and, as President of Companion
Property and Casualty Company since April 2002. Mr. Potok is an Associate of the
Casualty Actuarial Society and a member of the American Academy of Actuaries.
Prior to joining Companion Property and Casualty Company, Mr. Potok served as
Chief Property and Casualty Actuary and Director of the Property and Casualty
Division of the South Carolina Department of Insurance. Mr. Potok was most
recently reelected as a director at the annual meeting of stockholders in 2003.
Directors Whose Terms Expire at the Annual Meeting Expected to be Held in 2005:
John M. Little, Jr., M.D., MBA, has served as one of our directors
since August 1998 and as Chief Medical Officer of Companion HealthCare
Corporation, a wholly-owned subsidiary of Blue Cross and Blue Shield of South
Carolina, since 1996. Additionally, he has served since 1994 as Medical Director
of Managed Care Services of Companion HealthCare Corporation, as Chairman of the
Quality Assurance Committee and the Pharmacy and Therapeutics Committee of
Companion HealthCare Corporation, and as a Co-Chair of the Managed Care
Oversight Committee of Companion HealthCare Corporation. Prior to joining
Companion HealthCare Corporation in 1994, Dr. Little served as Assistant
Chairman for Academic Affairs, Department of Family Practice, Carolinas Medical
Center, Charlotte, North Carolina from 1992 to 1994. Dr. Little was most
recently reelected as a director at the annual meeting of stockholders in 2003.
Ashby M. Jordan, M.D., has served as one of our directors since August
1996 and as Vice President of Medical Affairs of Blue Cross and Blue Shield of
South Carolina since December 1986. Prior to joining Blue Cross and Blue Shield
of South Carolina, Dr. Jordan was the Vice President of Medical Affairs for
CIGNA HealthPlan of South Florida, Inc. Dr. Jordan is Board Certified by the
American Board of Pediatrics. Dr. Jordan was most recently reelected as a
director at the annual meeting of stockholders in 2003.
Director Nominee for Term Expiring at the Annual Meeting Expected to be
Held in 2005:
Joseph A. Boyle, CPA, 50, has served as the President and Chief
Executive Officer of Affinity Technology Group, Inc. since January 2000 and as
its Chairman since March 2001. Mr. Boyle served as Affinity's Senior Vice
President and Chief Financial Officer from September 1996 until January 2000 and
as Chairman and Chief Executive Officer of Surety Mortgage, Inc., a wholly owned
subsidiary of Affinity, from December 1997 until December 2001. Mr. Boyle is a
certified public accountant and since April 2003 has been a partner in the
accounting firm of Elliott Davis, LLC. From June 1982 until August 1996, Mr.
Boyle was employed by Price Waterhouse, LLP and from 1993 until 1996 was a
partner in its Kansas City, Missouri office where he specialized in the
financial services industry.
What is the role of the Board's committees?
The Board has standing Audit, Compensation and Nominating Committees.
Audit Committee. We describe the functions of the Audit Committee under
the heading "Report of the Audit Committee." The Audit Committee operates under
a written Charter, which appears in this proxy statement as Appendix A. All of
the members of the Audit Committee are independent within the meaning of SEC
regulations. The Board of Directors has determined that Mr. McElveen is a
financial expert, as that term is defined in Item 401(h)(2) of Regulation S-K
under the Exchange Act. The Audit Committee met two times during the fiscal year
ended September 30, 2003.
Compensation Committee. We describe the functions of the Compensation
Committee under the heading of "Report of Compensation Committee." The
Compensation Committee met two times during the fiscal year ended September 30,
2003.
Nominating Committee. The Nominating Committee makes recommendations to
the Board with respect to the size and composition of the Board, reviews the
qualifications of potential candidates for election as director, and recommends
director nominees to the Board. All of the members of the Nominating Committee
are independent within the meaning of SEC regulations. The Nominating Committee
operates under a written Charter, which appears in this proxy statement as
Appendix B. As the Nominating Committee was not formed until June, 2004, the
Nominating Committee did not meet during the fiscal year ended September 30,
2003.
How does the Board select nominees for the Board?
The Nominating Committee considers candidates for Board membership
suggested by its members and other Board members, as well as management and
stockholders. A stockholder who wishes to recommend a prospective nominee for
the Board should notify our corporate Secretary in writing with whatever
supporting material the stockholder considers appropriate, as long as the
material includes at a minimum pertinent information concerning the nominee's
background and experience. The Nominating Committee will also consider whether
to nominate any person nominated by a stockholder pursuant to the provisions of
our Certificate relating to stockholder nominations as described below under the
heading "Advance Notice Provisions."
Once the Nominating Committee has identified a prospective nominee, the
Nominating Committee makes an initial determination as to whether to conduct a
full evaluation of the candidate. The Committee bases this initial determination
on whatever information is provided to the Committee with the recommendation of
the prospective candidate, as well as the Committee's own knowledge of the
prospective candidate, which may be supplemented by inquiries to the person
making the recommendation or others. The Committee also bases this initial
determination primarily on the need for additional Board members to fill
vacancies and the likelihood that the prospective nominee can satisfy the
evaluation factors described below.
If the Committee determines, in consultation with the Chairman of the
Board and other Board members as appropriate, that additional consideration is
warranted, it may gather additional information about the prospective nominee's
background and experience. The Committee then evaluates the prospective nominee
against the standards and qualifications set out in its Charter, including
without limitation independence, strength of character, business or financial
expertise, current or recent experience as an officer or leader of another
business, experience as a director of another public company, regulatory
compliance knowledge, industry trend knowledge, product/service expertise,
practical wisdom, mature judgment, time availability (including the number of
other boards he or she sits on in the context of the needs of the board and the
company and including time to develop and/or maintain sufficient knowledge of
the company and its industry), geography, age, and gender and ethnic diversity
on the board.
In connection with this evaluation, the Committee determines whether to
interview the prospective nominee, and if warranted, one or more members of the
Committee, and others as appropriate, interview prospective nominees in person
or by telephone. After completing this evaluation and interview, if warranted,
the Committee makes a recommendation to the Board as to the persons who should
be nominated by the Board. The Board determines the nominees after considering
the recommendation and report of the Committee.
How often did the Board meet during fiscal year 2003?
Our Board held a total of six meetings during our fiscal year ended
September 30, 2003. No directors attended fewer than seventy-five percent of the
aggregate of: (1) the total of these Board meetings; and (2) the total number of
meetings of the committees upon which the director served. All our current
directors, other than Timothy L. Vaughn, CPA, attended our 2003 annual
stockholder meeting. We expect our directors to dedicate sufficient time,
energy, and attention to ensure the diligent performance of his duties,
including attending our stockholder meetings and the meetings of the Board and
its Committees on which he serves.
How are directors compensated?
Currently, members of our Board receive the following retainer fees:
$6,000 per fiscal year for the Chairman, $5,000 per year for Committee Chairs,
and $4,000 per year for all other members of the Board. We also reimburse
directors for out-of-pocket expenses reasonably incurred by them in the
discharge of their duties as directors of our company.
During the fiscal year ended September 30, 1996, we adopted a
Non-Employee Director Stock Option Plan (the "1996 Non-Employee Plan"). The 1996
Non-Employee Plan provided for the granting of options to two non-employee
directors for the purchase of 10,000 shares of our common stock at the fair
market value as of the date of grant. Under this plan, we issued 5,000 options
to Harold H. Adams, Jr., CPCU and 5,000 options to Russell J. Froneberger. These
options are exercisable during the period commencing on March 20, 1999 and
ending on March 20, 2006. At September 30, 2003, stock options for 5,000 shares
were outstanding under the 1996 Non-Employee Plan, all of which were
exercisable.
During the fiscal year ended September 30, 1997, we adopted a
Non-Employee Director Stock Option Plan (the "1997 Non-Employee Plan"). The 1997
Non-Employee Plan provided for the granting of options to three non-employee
directors for the purchase of 20,000 shares of our common stock at the fair
market value as of the date of grant. Under this plan, we issued 5,000 options
each to Thomas G. Faulds, Ashby M. Jordan, M.D., and Charles M. Potok. These
options are exercisable during the period commencing on March 28, 2000 and
ending on March 28, 2007. At September 30, 2003, stock options for 10,000 shares
were outstanding under the 1997 Non-Employee Plan, all of which were
exercisable.
Does the company have a code of ethics?
We adopted a Code of Ethics that applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. We have filed a copy of
this code as an Exhibit to our annual report on Form 10-K.
How do stockholders communicate with the Board?
Stockholders and other parties interested in communicating directly
with the Board may do so by addressing correspondence to our Chairman of the
Board at the address indicated on page one of this proxy statement. Stockholders
and other parties interested in communicating directly with individual Board
members may do so by addressing correspondence to the individual Board member at
the address indicated on page one of this proxy statement. The corporate
Secretary or his designee will review all such correspondence and regularly
forward to the Board a summary of the correspondence and copies of the
correspondence that, in the opinion of the corporate Secretary, deals with the
functions of the Board or its committees or that he otherwise determines
requires their attention. Directors may at any time review a log of all
correspondence received by the company that is addressed to members of the Board
and request copies of such correspondence. Concerns relating to accounting,
internal controls, or auditing matters may be addressed to the attention of our
Audit Committee.
What related party transactions exist?
Administrative Services Agreements
As used in this proxy statement, the term UCI-SC refers to UCI Medical
Affiliates of South Carolina, Inc., one of our wholly-owned subsidiaries; the
term DC-SC refers to Doctor's Care P.A., a professional corporation affiliated
with us and UCI-SC; the term UCI-GA refers to UCI Medical Affiliates of Georgia,
Inc., one of our wholly-owned subsidiaries; and the term the P.A.s refers to
DC-SC and Doctor's Care of Tennessee, P.C., a professional corporation
affiliated with us
UCI-SC has entered into an Administrative Services Agreement with
DC-SC. UCI-GA has entered into Administrative Services Agreements with Doctors
Care of Tennessee, P.C. Under these Administrative Services Agreements, UCI-SC
and UCI-GA perform all non-medical management of the P.A.'s and have exclusive
authority over all aspects of the business of the P.A.'s (other than those
directly related to the provision of patient medical services or as otherwise
prohibited by state law). The non-medical management provided by UCI-SC and
UCI-GA includes, among other functions, treasury and capital planning, financial
reporting and accounting, pricing decisions, patient acceptance policies,
setting office hours, contracting with third party payors, and all
administrative services. UCI-SC and UCI-GA provide all of the resources
(systems, procedures and staffing) to bill third party payors or patients, and
provide all of the resources (systems, procedures and staffing) for cash
collection and management of accounts receivables, including custody of the
lockbox where cash receipts are deposited. From the cash receipts, UCI-SC and
UCI-GA pay all physician salaries, operating costs of the centers and of UCI-SC
and UCI-GA. UCI-SC and UCI-GA set compensation guidelines for the licensed
medical professionals at the P.A.'s establish guidelines for establishing,
selecting, hiring, and firing the licensed medical professionals. UCI-SC and
UCI-GA also negotiate and execute substantially all of the provider contracts
with third party payors, with the P.A.'s executing certain of the contracts at
the request of a minority of payors. Neither UCI-SC nor UCI-GA loans or
otherwise advances funds to any P.A. for any purposes.
During our fiscal years ended September 30, 2003 and 2002, the P.A.'s
received an aggregate of approximately $43,518,000 and $38,527,000,
respectively, in fees prior to deduction by the P.A.'s of their payroll and
other related deductible costs covered under the Administrative Services
Agreements and its predecessor agreement. For accounting purposes, we combine
the operations of the P.A.'s with our operations, as reflected in our
consolidated financial statements.
D. Michael Stout, M.D. is the sole shareholder and sole director of the
P.A.'s, and since November 1, 2002, has served as the President and Chief
Executive Officer of UCI, UCI-SC, UCI-GA, and the P.A.'s. Prior to November 1,
2002, Dr. Stout was the Executive Vice President of Medical Affairs for UCI,
UCI-SC, and UCI-GA, and was the President of the P.A.'s.
Medical Center Leases
A partnership in which M. F. McFarland III, MD., our former Chief
Executive Officer and Chairman of the Board, is a general partner leases to
UCI-SC the Doctors Care Northeast facility. We renewed the lease in October 1997
for a fifteen-year term. We believe the terms of this lease to be no more or
less favorable to UCI-SC than those that would have been obtainable through
arm's-length negotiations with unrelated third parties for similar arrangements.
Total lease payments made by UCI-SC under this lease during the fiscal years
ended September 30, 2003 and 2002 were $96,000 each year, plus utilities and
real estate taxes.
Other Transactions with Related Parties
On May 13, 2003, Companion Healthcare Corporation ("CHC"), a wholly
owned subsidiary of Blue Cross and Blue Shield of South Carolina ("BCBS"),
purchased 2,020,387 shares of our common stock from MainStreet Healthcare
Corporation and other shareholders for 40 cents ($0.40) per share for a total
purchase price of $808,155. On April 30, 2004, CHC purchased an additional
2,081,009 shares of our common stock from MainStreet Healthcare Corporation and
other shareholders for 50 cents ($0.50) per share for a total purchase price of
$1,040,504.50.
At July 22, 2004, CHC owned 6,107,838 shares of common stock and
Companion Property and Casualty Insurance Company ("CP&C"), another wholly owned
subsidiary of BCBS, owned 618,181 shares of our common stock, which combine to
approximately 69.06 percent of our outstanding common stock.
The following is a historical summary of purchases of our common stock
by BCBS subsidiaries directly from us.
Blue Cross and Blue Shield of South Price Total
Date Carolina Number per Purchase
Purchased Subsidiary of Shares Share Price
------------------- ------------------------------------- -------------- ------------ ------------------
12/10/93 Companion HealthCare Corporation 333,333 $1.50 $ 500,000
06/08/94 Companion HealthCare Corporation 333,333 3.00 1,000,000
01/16/95 Companion HealthCare Corporation 470,588 2.13 1,000,000
05/24/95 Companion HealthCare Corporation 117,647 2.13 250,000
11/03/95 Companion HealthCare Corporation 218,180 2.75 599,995
12/15/95 Companion HealthCare Corporation 218,180 2.75 599,995
03/01/96 Companion HealthCare Corporation 315,181 2.75 866,748
06/04/96 Companion Property and Casualty 218,181 2.75 599,998
06/23/97 Companion Property and Casualty 400,000 1.50 600,000
Our common stock acquired by CHC and CP&C directly from us was
purchased pursuant to exemptions from the registration requirements of federal
securities laws available under Section 4(2) of the 1933 Act. Consequently, the
ability of the holders to resell such shares in the public market is subject to
certain limitations and conditions. CHC and CP&C purchased these shares at share
prices below market value at the respective dates of purchase in part as a
consequence of the lower issuance costs incurred by us in the sale of these
unregistered securities and in part as consequence of the restricted nature of
the shares. CHC and CP&C have the right to require registration of the stock
under certain circumstances as described in the respective stock purchase
agreements.
These BCBS subsidiaries have the option to purchase as many shares from
us as may be necessary for BCBS and its subsidiaries in the aggregate to obtain
and maintain ownership of 48 percent of the outstanding common stock in the
event that we issue additional stock to other parties (excluding shares issued
to our employees or directors). To the extent either of these BCBS subsidiaries
exercises its right in conjunction with a sale of voting stock by us, the price
to be paid by such entity is the average price to be paid by the other
purchasers in that sale. Otherwise, the price is the average closing bid price
of our voting stock on the ten trading days immediately preceding the election
by a BCBS subsidiary to exercise its purchase rights. Consequently, to the
extent either of the BCBS subsidiaries elects to exercise any or a portion of
its rights under these anti-dilution agreements, the sale of shares of common
stock to a BCBS subsidiary will have the effect of reducing the percentage
voting interest in us represented by a share of the common stock.
During the fiscal year ended September 30, 1998, UCI-SC entered into a
capital lease purchase agreement with BCBS for a new billing and accounts
receivable system, which includes computer equipment, for an aggregate purchase
price of $1,253,000. UCI-SC has the option to purchase the equipment at the end
of the lease term for $1. The lease obligation recorded at September 30, 2003 is
$439,000, which includes lease addenda. We believe the terms of the lease
purchase agreement to be no more or less favorable to UCI-SC than the terms that
would have been obtainable through arm's-length negotiations with unrelated
third parties for a similar billing and accounts receivable system, which
includes computer equipment.
During the fiscal year ended September 30, 1994, UCI-SC entered into an
agreement with CP&C pursuant to which UCI-SC, through DC-SC, acts as the primary
care provider for injured workers of firms carrying worker's compensation
insurance through CP&C. Additionally, during the fiscal year ended September 30,
1995, UCI-SC executed a $400,000 note payable to CP&C payable in monthly
installments of $4,546 (including 11 percent interest) from April 1, 1995 to
March 1, 2010. We believe the terms of the agreement with CP&C to be no more or
less favorable to UCI-SC than those that would have been obtainable through
arm's-length negotiations with unrelated third parties for similar arrangements.
UCI-SC, through DC-SC, provides services to members of a health
maintenance organization operated by CHC who have selected DC-SC as their
primary care provider. We believe the terms of the agreement with CHC to be no
more or less favorable to UCI-SC than those that would have been obtainable
through arm's-length negotiations with unrelated third parties for similar
arrangements.
AUDIT COMMITTEE REPORT
The Audit Committee's charter, as revised as of June 30, 2004,
specifies that the purpose of the Committee is to oversee and monitor:
(1) the integrity of the company's accounting and financial reporting
process, including the financial reports and other financial
information provided by the company to the public,
(2) the independence and qualifications of the company's external
auditor, (3) the performance of the company's internal audit process
and its external auditor, (4) the company's system of internal
accounting and financial controls, (5) the company's system of public
and private disclosure controls, and
the company's compliance with laws, regulations, and the
company's Code of Ethics and any other code of ethics
applicable to the company.
The full text of the Charter is attached to this proxy statement as
Appendix A. In carrying out its responsibilities, the Audit Committee, among
other things
(1) monitors preparation of quarterly and annual financial reports by
our management; (2) supervises the relationship between us and our
independent auditors, including: having direct
responsibility for our auditor's appointment, compensation,
and retention; reviewing the scope of our auditor's audit
services; approving significant non-audit services; and
confirming the independence of our auditors; and
(3) oversees management's implementation and maintenance of
effective systems of internal and disclosure controls.
The Committee schedules its meetings with a view to ensuring that it
devotes appropriate attention to all of its tasks. The Committee's meetings
include, whenever appropriate, executive sessions with our independent auditors
and with our internal auditors.
As part of its oversight of our financial statements, the Committee
reviewed and discussed with both management and our independent auditors the
audited consolidated financial statements for the year ended September 30, 2003.
Management advised the Committee that these financial statements had been
prepared in accordance with generally accepted accounting principles. The
discussions with Scott McElveen, L.L.P. also included the matters required by
Statement on Auditing Standards No. 61 (Communication with Audit Committees) as
amended by Statement on Auditing Standards No. 90, including the quality of our
accounting principles, the reasonableness of significant judgments, and the
clarity of the disclosures in our financial statements. The Committee also
discussed with Scott McElveen, L.L.P. matters relating to Scott McElveen
L.L.P.'s independence, including a review of audit and non-audit fees and the
written disclosures and letter from Scott McElveen, L.L.P. to the Committee as
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees).
In addition, the Committee reviewed the effectiveness of our internal
and disclosure control structure. As part of this process, the Committee
monitored the scope and adequacy of our internal auditing program.
Based on the above-described discussions and reviews, the Audit
Committee recommended to the Board that the Board approve the inclusion of our
audited consolidated financial statements in our Annual Report on Form 10-K for
the year ended September 30, 2003 for filing with the Securities and Exchange
Commission.
Submitted by the Audit Committee of Board of Directors.
Louis M. McElveen, CPA
Harold H. Adams, Jr.
FEES TO INDEPENDENT AUDITORS
The following table presents for the fiscal years ending September 30,
2003 and 2002 under the heading: (1) "Audit Fees," the aggregate fees billed for
professional services rendered by Scott McElveen, L.L.P. for the audit of our
annual financial statements and review of financial statements included in our
Forms 10-Q and for services that are normally provided by Scott McElveen, L.L.P.
in connection with our statutory and regulatory filings or engagements; (2)
"Audit-Related Fees," the aggregate fees billed for assurance and related
services by Scott McElveen, L.L.P. that are reasonably related to the
performance of the audit or review of our financial statements; (3) "Tax Fees,"
the aggregate fees billed for professional services rendered by Scott McElveen,
L.L.P. for tax compliance, tax advice, and tax planning; and (4) "All Other
Fees," the aggregate fees billed for all other products and services provided by
Scott McElveen, L.L.P.
Fiscal Year 2003 Fiscal Year 2002
Audit Fees1 $74,000 $72,000
Audit Related Fees2 $ 7,000 $ 3,000
Tax Fees $12,000 $ 9,000
All Other Fees3 $ 5,000 $ 4,000
1 Includes primarily fees relating to the audit of the Company's annual
financial statements and for reviews of the financial statements included in
the Company's reports on Form 10-Q.
2 Audit related fees include fees related to the review of management's
discussion and analysis and Form 10-K. 3 Includes fees for services related to
the audit of the Company's 401(k) Plan and Form 5500 preparation.
The Audit Committee pre-approved all audit related services, tax
services, and other services and concluded that provision of these services was
compatible with maintaining Scott McElveen, L.L.P.'s independence in conducting
its audit services.
EXECUTIVE COMPENSATION
Executive Officers
The following individuals constitute our executive officers:
Name Age Offices Held
D. Michael Stout, M.D. 59 President and Chief Executive Officer Jerry F. Wells,
Jr., CPA 42 Executive Vice President, Chief Financial Officer
and Secretary
D. Michael Stout, M.D., has served as Executive Vice President of
Medical Affairs of UCI and DC-SC since 1985 and as President and Chief Executive
Officer of UCI, UCI-SC, UCI-GA and the P.A.s since November 1, 2002. He is Board
Certified in Emergency Medicine and is a member of the American College of
Emergency Physicians, the Columbia Medical Society, and the American College of
Physician Executives.
Jerry F. Wells, Jr., CPA, has served as our Executive Vice President
and Chief Financial Officer since he joined us in February 1995 and as our
Corporate Secretary since December 1996. He has served as Executive Vice
President of Finance, Chief Financial Officer and Corporate Secretary of UCI-SC
since December 1996, and of UCI-GA since its organization in February 1998, and
as Corporate Secretary of DC-SC since December 1996. Prior to joining us, he
served as a Senior Manager and consultant for PricewaterhouseCoopers LLP from
1985 until February 1995. Mr. Wells is a certified public accountant and is a
member of the American Institute of Certified Public Accountants, the South
Carolina Association of Certified Public Accountants, and the North Carolina CPA
Association.
Compensation Committee Report On Executive Compensation
The Compensation Committee furnishes the following report with respect
to certain compensation paid or awarded to our executive officers during the
fiscal year ended September 30, 2003.
What is the role of the Compensation Committee?
The Compensation Committee of the Board generally determines the
compensation of our executive officers. This committee reviews and recommends to
the Board the salaries and other compensation of all of our officers and
directors. The Compensation Committee also administers our Stock Incentive
Plans.
What are the objectives of our executive compensation policies?
We intend our compensation program to enable us to attract, motivate,
reward, and retain the management talent to achieve corporate objectives, and
thereby increase stockholder value. Our policy is to provide incentives to
senior management to achieve both short-term and long-term objectives. To attain
these objectives, our executive compensation program is composed of a base
salary, bonus, and stock options.
How were base salaries for fiscal year 2003 determined for executive officers?
In reviewing and approving the base salaries of executive officers, we
make a subjective assessment of the executive officer's performance in light of
the officer's responsibilities and position with us and our performance during
prior periods. In evaluating our overall performance, the primary focus is on
financial performance for the relevant annual period measured by operating
income. The Committee also considers the terms of any employment contracts, if
any; the recommendations of the Chief Executive Officer (except in the case of
his own compensation); to the extent available, the salary norms for persons in
comparable positions at comparable companies; and the person's experience. The
Committee reviews base salaries from time to time and adjusts them
appropriately.
How are cash bonuses and other compensation for executive officers determined?
The Compensation Committee determines cash bonuses for all executive
officers and awards the bonuses only if we, or any applicable subsidiary or
business unit, achieve performance objectives. We designed our long-term
incentive compensation for executive officers to focus management's attention on
our future. We provide long-term compensation through grants of stock options.
The number of stock options granted is based upon the executive's salary,
performance, and responsibilities. Each executive officer also receives
additional compensation through standard benefit plans available to all
employees, including but not limited to matching contributions pursuant to a
401(k) plan, paid vacation, and group health, life, and disability insurance.
The Compensation Committee believes each of these benefits is an integral part
of the overall compensation program that helps to ensure that our executive
officers receive competitive compensation.
How is compensation for our Chief Executive Officer determined
The Compensation Committee believes that D. Michael Stout, M.D.'s
dedication, commitment, and knowledge have been vitally important to our recent
success. Dr. Stout's overall compensation for the fiscal year ended September
30, 2003 consisted of base salary and a cash bonus. In determining Dr. Stout's
compensation, the Compensation Committee evaluated Dr. Stout's personal
performance, our performance, and Dr. Stout's long-term commitment to our
success.
Submitted by the Compensation Committee of the Board of Directors.
Charles M. Potok John M. Little, Jr., M.D. Ashby M. Jordan, M.D.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is or has been our
executive officer or employee or an executive officer or employee of any of our
subsidiaries. None of the members of the Compensation Committee is or has been a
member of the compensation committees of another entity. None of our executive
officers are or have been a member of the compensation committee, or a director,
of another entity.
Employment Contracts
We have not entered into employment agreements with our Executive
Officers.
Executive Compensation Summary Table
The following table summarizes for each of the indicated years the
compensation earned by our President and Chief Executive Officer and by each of
our other executive officers, as that term is defined by Securities and Exchange
Commission rules, whose annual compensation from us for all services provided to
us or our subsidiaries during any of the indicated years exceeded $100,000.
Summary Compensation Table
Long Term
Annual Awards
Compensation
Securities
Underlying All Other
Name and Principal Position Fiscal Year Salary (1) Bonus (1) Options Compensation (2)
--------------------------- ----------- ---------- --------- ------- ----------------
M. F. McFarland, III, M.D. 2003 $ 28,000 (3) $238,000 0 0
Former Chairman, President and 2002 325,000 (3) 155,500 0 9,272
Chief Executive Officer 2001 325,000 (3) 0 0 9,272
D. Michael Stout, M.D. 2003 $ 227,000 (4$ 88,000 0 0
President and Chief Executive 2002 210,000 (4) 58,000 0 0
Officer
2001 210,000 (4) 0 0 0
Jerry F. Wells, Jr., CPA 2003 $ 144,500 $ 39,000 0 0
Executive Vice President, 2002 138,000 38,000 0 0
Chief Financial Officer, 2001 112,000 0 0 0
and Corporate Secretary
(1) Amounts included under the heading "Salary" and "Bonus" include
compensation from both UCI-SC and DC-SC. The remuneration described in
the table above does not include our cost of benefits furnished to
certain officers that were extended in connection with the conduct of
our business. The amount of such benefits accrued for each of the named
executives in each of the years reflected in the table did not exceed
10% of the total annual salary and bonus reported for such executive in
such year.
(2) Amounts included under the heading "All Other Compensation" are
comprised of premiums for long-term disability and life insurance
provided by us for the benefit of Dr. McFarland.
(3) For services performed by Dr. McFarland for UCI-SC, Dr. McFarland
received an annual salary of $157,500 during each of the two fiscal
years ended September 30, 2002 and 2001. For services performed by Dr.
McFarland for DC-SC, an affiliated professional association which was
wholly owned by Dr. McFarland that contracts with UCI-SC to provide all
medical services at our medical facilities, Dr. McFarland received an
annual salary of $167,500 for each of the two fiscal years ended
September 30, 2002 and 2001. Dr. McFarland's employment with UCI-SC and
DC-SC terminated on November 1, 2002.
(4) For services performed by Dr. Stout for UCI-SC, Dr. Stout received an
annual salary of $50,000 in each of the three fiscal years ended
September 30, 2003, 2002, and 2001. For services performed by Dr. Stout
for DC-SC, Dr. Stout received an annual salary of $160,000 in each of
the two fiscal years ended September 30, 2002 and 2001. Dr. Stout has
served as the President and Chief Executive Officer of UCI, UCI-SC,
UCI-GA, and DC-SC since November 1, 2002.
Option Grants
The following table sets forth certain information with respect to
unexercised options to purchase our common stock held at September 30, 2003 by
the officers included in the Summary Compensation Table above. None of the named
executive officers exercised any options during the fiscal year ended September
30, 2003. Additionally, no options were granted to any officer or director
during the fiscal year ended September 30, 2003.
September 30, 2003 Option Values
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options Options at 9/30/03
at 9/30/03
Name Shares
Acquired Exercisable
Value Exercisable Unexercisable
On Exercise Unexercisable
Realized
M. F. McFarland, III, -0- -0- -0- -0- -0- -0-
M.D. (1)
D. Michael Stout, M.D. -0- -0- 109,825 -0- -0- -0-
Jerry F. Wells, Jr. -0- -0- 134,825 -0- -0- -0-
(1) Dr. McFarland's employment with UCI-SC and DC-SC terminated on November 1,
2002.
Equity Compensation Plan Information
The following table gives information about our common stock that may be issued
upon the exercise of options, warrants and rights under all of our existing
equity compensation plans as of September 30, 2003.
Number of securities
remaining available for
Number of securities future issuance under
to be issued upon Weighted-average equity compensation
exercise of exercise price of plans {excluding
outstanding options, outstanding options, securities reflected in
Plan category warrants and rights warrants and rights column (a)}
- ---------------------------------- ----------------------- ----------------------- -------------------------
- ---------------------------------- ----------------------- ----------------------- -------------------------
(a) (b) (c)
Equity compensation plans
approved by security holders 491,650 2.80 423,350
Equity compensation plans not
approved by security holders
0 0 0
----------------------- ----------------------- -------------------------
----------------------- ----------------------- -------------------------
Total 491,650 2.80 423,350
======================= ======================= =========================
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following graph compares cumulative total shareholder return of our
common stock over a five-year period with The Nasdaq Stock Market (US) Index and
with a Peer Group of companies for the same period. Total shareholder return
represents stock price changes and assumes the reinvestment of dividends. The
graph assumes the investment of $100 on September 30, 1998.
[Performance Graph will be reflected in the printed version.]
Fiscal Year Ended
-----------------------------------------------------------------------------------
09/30/98 09/30/99 09/30/00 09/30/01 09/30/02 09/30/03
----------- ---------- ----------- ---------- ---------- ----------
UCI Medical Affiliates, Inc. 45.00 22.50 16.25 12.40 10.40 105.78
Nasdaq Market Index 103.92 168.12 229.98 94.23 75.81 111.80
Peer Group 93.24 36.76 45.57 103.61 69.79 91.80
The members of the Peer Group are AmeriPath, Inc., Continucare
Corporation, IntegraMed America, Inc., Pediatrix Medical Group, Inc., and
Metropolitan Health Networks. The returns of each company in the Peer Group have
been weighted according to their respective stock market capitalization for
purposes of arriving at a Peer Group average. The prices of our common stock
used in computing the returns reflected above are the average of the high and
low bid prices reported for our common stock during the fiscal year ended on
such dates.
ADVANCE NOTICE PROCEDURES
Proposals Considered for Inclusion in 2005 Proxy Statement. If you
would like to have a proposal considered for inclusion in the proxy statement
for the 2005 annual meeting, we must receive your written proposal at the
address on the cover of this proxy statement, attention Corporate Secretary, no
later than April 4, 2005. Each stockholder submitting proposals for inclusion in
the proxy statement must comply with the proxy rules under the Securities
Exchange Act of 1934, as amended, including without limitation being the holder
of at least $2,000 in market value, or 1%, of the securities entitled to be
voted on the proposal at the annual meeting for at least one year by the date
the stockholder submits the proposal and continue to hold those securities
through the date of the 2005 annual meeting.
Other Proposals for Consideration at the 2005 Annual Meeting. If you
wish to submit a proposal for consideration at the 2005 annual meeting, but
which will not be included in the proxy statement for the meeting, we must
receive your proposal in accordance with our bylaws, as amended. Our bylaws
require timely advance written notice of any proposals to be presented at an
annual meeting of stockholders. For a notice to be timely, it must be received
at our principal offices at the address on the cover of this proxy statement
sixty days, but not more than ninety days, prior to the anniversary date of the
immediately preceding annual meeting of stockholders. In other words, proposals
for the 2005 annual meeting must be received by at least July 2, 2005, but not
prior to June 2, 2005. However, if the 2005 annual meeting is not held within
thirty days before or after August 31, 2005, then for the notice by the
stockholder to be timely, it must be received at our principal offices at the
address on the cover of this proxy statement not later than the close of
business on the tenth day following the date on which the notice of the 2005
annual meeting was actually mailed. The notice must give: (a) a brief
description of the business desired to be brought before the 2005 annual meeting
(including the specific proposal(s) to be presented) and the reasons for
conducting the business at the 2005 annual meeting; (b) the name and address, as
they appear on our books, of the stockholder(s) proposing the business; (c) the
class and number of shares that are held beneficially, but not held of record,
by the proposing stockholder(s) as of the record date for the 2005 annual
meeting, if the date has been made publicly available, or as of a date within
ten days of the effective date of the notice by the proposing stockholder(s) if
the record date has not been made publicly available, and (d) any interest of
the proposing stockholder(s) in the business. Stockholders desiring to make
proposals to be presented at the 2005 annual meeting are directed to these
requirements as more specifically set forth in our bylaws, as amended, a copy of
which is available upon request to our Corporate Secretary at the address listed
on the cover of this proxy statement. The chairman of the 2005 annual meeting
may exclude from the meeting any matters that are not properly presented in
accordance with these bylaw requirements.
ANNUAL REPORT ON FORM 10-K
A copy of our Annual Report on Form 10-K for the fiscal year ended
September 30, 2003, which was filed with the Securities and Exchange Commission
on December 4, 2003, accompanies this proxy statement. Stockholders to whom this
proxy statement is mailed who desire an additional copy of the Form 10-K may
obtain one without charge by making written request to Jerry F. Wells, Jr.,
Chief Financial Officer, 4416 Forest Drive, Columbia, South Carolina 29206.
MISCELLANEOUS
The information referred to under the captions "Compensation Committee
Report on Executive Compensation", "Performance Graph" and "Audit Committee
Report" (to the extent permitted under the Securities Exchange Act of 1934): (i)
shall not be deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission or subject to Regulation 14A or the
liabilities of Section 18 of the Securities Exchange Act of 1934, and (ii)
notwithstanding anything to the contrary that may be contained in any filing by
us under the Securities Exchange Act of 1934 or the Securities Act of 1933,
shall not be deemed to be incorporated by reference in any such filing.
By Order of the Board of Directors,
D. Michael Stout, M.D.
President and Chief
Executive Officer
Columbia, South Carolina
August 2, 2004
5
Appendix A
UCI Medical Affiliates, Inc.
Audit Committee Charter
Last Revised June 30, 2004
1. PURPOSE
The board of directors of UCI Medical Affiliates, Inc. (referred to
herein as the "company") appoints the company's Audit Committee (the
"Committee") to assist the company's board of directors (referred to herein as
the "board") in fulfilling its oversight responsibilities for the company's
accounting and financial reporting processes, the audits of the company's
financial statements, and compliance by the company and its personnel with
applicable legal, regulatory, and ethics programs of the company. In undertaking
these activities, the Committee shall oversee and monitor:
(a) the integrity of the company's accounting and financial reporting process,
including the financial reports and other financial information provided by the
company to the public,
(b) the independence and qualifications of the company's external auditor,
(c) the performance of the company's internal audit process and its external
auditor,
(d) the company's system of internal accounting and financial controls,
(e) the company's system of public and private disclosure controls, and
(f) the company's compliance with laws, regulations, and the company's Senior
Financial Officer Code of Ethics and any other code of ethics applicable to the
company.
2. AUTHORITY
(a) Scope. The Committee has authority to conduct or authorize examinations into
any matters within its scope of responsibility. It has sole authority to:
(i) Engage External Auditor and Oversee Internal Audit: Appoint, compensate,
retain, and directly oversee the work of the company's external auditor (subject
to stockholder approval, if applicable) and oversee the company's internal audit
function.
(ii) Approve Audit and Non-Audit Services: Pre-approve all audit services and
permitted non-audit services provided to the company by its external auditor
(subject to the de minimis exceptions for permitted non-audit services described
in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), which are approved by the Committee prior to completion of the
audit).
In this connection, the Committee also has authority to:
(1) retain outside advisors, including counsel, as it determines necessary to
carry out its duties.
(2) when appropriate, form and delegate to subcommittees consisting of one or
more independent members, the authority to grant pre-approvals of audit services
and permitted non-audit services, provided that decisions of the subcommittee to
grant pre-approvals shall be presented to the full Committee at its next
scheduled meeting.
(3) establish detailed pre-approval policies for permitted non-audit services.
(4) meet with company officers, external auditors, or outside counsel, as
necessary.
(5) seek any information it requires from external parties or from employees of
the company, each of whom is directed to cooperate with the Committee's
requests.
(iii) Resolve Reporting Disagreements: Resolve any disagreements between
management and the external auditor regarding financial reporting.
(iv) Address Accounting and Auditing Complaints: Receive and address all
complaints received by the company regarding accounting, internal accounting
controls, and auditing matters and concerns regarding questionable accounting or
auditing matters.
(b) Funding of Activities. The company shall provide appropriate funding, as
determined by the Committee, for payment of: (i) compensation to any registered
public accounting firm engaged for the purpose of rendering or issuing an audit
report or related work or performing other audit, review, or attest services for
the company; (ii) compensation to any advisors employed by the Committee; and
(iii) ordinary administrative expenses of the Committee that are necessary or
appropriate in carrying out its duties.
3. COMPOSITION
(a) Appointment. The board will appoint Committee members and the Committee
chairman. The Board may replace any or all Committee members.
(b) Number of Members. The Committee will consist of at least two members of the
board.
(c) Eligibility Requirements of Regulatory Authorities. In addition to any other
eligibility requirements for members of the Committee set forth in this Audit
Committee Charter, each Committee member shall meet the independence and
experience requirements of:
(i) Section 10A(m)(3) of the Exchange Act, including Rule 10A-3 of the Exchange
Act;
(ii) the Sarbanes-Oxley Act of 2002; and
(iii) the other rules and regulations of the Securities Exchange Commission (the
"Commission").
(d) Independence of Each Member.
(i) Generally. Except as stated in Section 3(d)(iii) below, each Committee
member shall be independent. To be independent, a member of the Committee may
not, other than in his or her capacity as a member of the Committee, the board,
or any other board committee:
(1) accept, directly or indirectly, any consulting , advisory, or other
compensatory fees from the company; or
(2) be an affiliated person of the company or its affiliates.
Prohibited indirect acceptance of fees includes acceptance by
a: (i) spouse; (ii) a minor child or stepchild; (iii) a child or stepchild
sharing a home with the Committee member; or (iv) an entity in which such member
is a partner, member, or an executive officer or managing director and which
provides accounting, consulting, legal, investment banking, or financial
advisory services to the company or its subsidiaries. Prohibited compensatory
fees do NOT include the receipt of fixed amounts of compensation under a
retirement plan (including deferred compensation) for prior services with the
listed issuer (provided that such compensation is not contingent in any way on
continued service).
Committee members that also sit on the board of directors of
an affiliate of the company are exempt from 3(d)(i)(2) if the members, except
for being a director on each of such boards, otherwise meet the independence
requirements for each entity.
(ii) Persons NOT Independent. The following persons shall not be considered
independent:1
(1) A director who is, or during the past three years was, employed by the
company or any of its affiliates.
(2) A director who accepts, or has an immediate family member who accepts, any
payments from the company or any of its affiliates in excess of $60,000 during
the current or any of the past three fiscal years, other than compensation for
board service, payments arising solely from investments in the company's
securities, compensation paid to an immediate family member who is a
non-executive employee of the company or its affiliates, compensation received
for former services as an interim chairman or chief executive officer, benefits
under a tax-qualified retirement plan, non-discretionary compensation, or loans
permitted under section 13(k) of the Exchange Act.
(3) A director who is an immediate family member of an individual who is, or has
been in any of the past three years, employed by the company or any of its
affiliates as an executive officer.
(4) A director who is, or has an immediate family member who is, a partner in,
or a controlling stockholder or an executive officer of, any organization to
which the company made, or from which the company received, payments (other than
those arising solely from investments in the company's securities or payments
under non-discretionary charitable contribution matching programs) that exceed
5% of the organization's consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the most recent three fiscal years.
(5) A director of the company who is, or has an immediate family member who is,
employed as an executive officer of another entity where at any time during the
most recent three fiscal years any of the company's executives serve on that
entity's compensation committee.
(6) A director who is, or has an immediate family member who is, a current
partner of the company's outside auditor, or was a partner or employee of the
company's outside auditor who worked on the company's audit at any time during
any of the past three years.
"Immediate family member" includes a person's spouse, parents, children,
siblings, mother-in-law, father-in-law, brother-in-law, sister-in-law,
son-in-law, daughter-in-law, and anyone who resides in such person's home (other
than domestic employees).
(iii) Limited Exceptions. Notwithstanding the
requirement that every member of the
Committee be independent, as long as three members serve on the Committee, one
director who is not independent as set forth in Section 121(A) of the American
Stock Exchange listing requirements, but who satisfies the requirements of Rule
10A-3 under the Securities Exchange Act of 1934, and who is not a current
officer or employee of the company or an immediate family member of a current
officer or employee, may be appointed as a new member to the Committee if:
(1) the board, under exceptional and limited circumstances, determines that
membership on the Committee by the individual is required by the best interests
of the company and its stockholders, and
(2) the board discloses, in the next annual proxy statement of the company
subsequent to such determination, the nature of the relationship that makes the
individual not independent and the reasons for the board's determination that
membership on the Committee by the individual is required by the best interests
of the company and its stockholders.
A director appointed to the Committee pursuant to this limited
exception may not serve for in excess of two consecutive years and may not chair
the Committee. Additionally, if a Committee member ceases to be independent for
reasons outside the member's reasonable control, that person may remain a
Committee member until the earlier of the next annual stockholders meeting or
one year from the occurrence of the event that caused the member to be no longer
independent.
(iv) Financial Expert. At least one member of the Committee shall satisfy the
definition of, and be designated as, a "financial expert", as defined by the
Commission in Regulation S-K, Item 401(h).
(e) Service on Other Audit Committees. The Committee shall direct the company to
include appropriate disclosures in its Commission filings with regard to service
by Committee members on the audit committees of other public companies as
required by Commission rules and regulations then in effect.
4. MEETINGS
The Committee may establish its own rules of procedure and will meet as
often as such rules or the Committee otherwise determines is appropriate, but
not less frequently than quarterly. The chairman of the Committee shall preside
at each Committee meeting. In the absence of the appointed chairman during any
Committee meeting, the Committee may designate a chairman pro tempore. All
Committee members are expected to attend each meeting, in person or via
telephone or videoconference. A majority of the Committee shall constitute a
quorum for the conduct of business at any Committee meeting. The Committee shall
act only on the affirmative vote of a majority of members at a meeting at which
a quorum is present or by unanimous written consent. The Committee periodically
will hold private meetings with management, the internal auditor(s), and the
external auditor. The Committee may invite any officer or employee of the
company, the external auditor, the company's outside legal counsel, the
Committee's outside legal counsel, or others to attend meetings and provide
pertinent information. The Committee chairperson will prepare agendas and
provide the agendas in advance to members, along with appropriate briefing
materials. A member of the Committee or a person designated by the Committee
will keep minutes.
5. RESPONSIBILITIES
The Committee's job is one of oversight. The company's management is
responsible for preparing the company's financial statements and for developing
and maintaining systems of internal accounting and financial control, and the
external auditor is responsible for auditing those financial statements and
reviewing the internal controls. Additionally, the Committee recognizes that
financial management, including the internal accounting staff, as well as the
external auditors, has more time and knowledge and more detailed information
concerning the company than do Committee members. Consequently, in carrying out
its responsibilities, the Committee is not providing any expert or special
assurance as to the company's financial statements or any professional
certificate as to the external auditor's work. The Committee does not plan or
conduct audits or determine whether the company's financial statements are
complete, accurate, or in accordance with generally accepted accounting
principles.
The Committee will carry out the following responsibilities. These
responsibilities are set forth as a guide, with the understanding that the
Committee may diverge from this guide as appropriate upon advice of advisors to
the Committee given any particular circumstances:
(a) Financial Statements and Company Reports.
(i) Significant Accounting Issues. Review and discuss with management and the
external auditor significant accounting and financial reporting issues,
including complex or unusual transactions and judgments concerning significant
estimates or significant changes in the company's selection or application of
accounting principles, and recent professional, accounting, and regulatory
pronouncements and initiatives, and understand their impact on the company's
financial statements.
(ii) Results of the Audit. Review and discuss with management and the external
auditor the results of the audit, including any difficulties encountered in the
course of the audit work, any restrictions on the scope of activities or access
to requested information, and any significant disagreements with management.
(iii) Annual Financials Included in Form 10-K. Review and discuss with
management and the external auditor the annual financial statements, along with
any off-balance sheet structures, including disclosures made in management's
discussion and analysis of financial condition and results of operations, and
recommend to the board whether such disclosures should be included in the
company's Annual Report on Form 10-K filed with the Commission or other
applicable regulatory filings with regulators.
(iv) Interim Financial Statements. Understand how management prepares interim
financial information and the nature and extent of internal and external auditor
involvement. Review and discuss with management and the external auditor any
interim financial statements, including the results of the external auditor's
review of the company's quarterly financial statements, before filing the
company's Quarterly Report on Form 10-Q with the Commission or other applicable
regulatory filings with regulators.
(v) CEO and CFO Internal Control Disclosures. Review disclosures made to the
Committee by the company's Chief Executive Officer and Chief Financial Officer
during their certification process for the company's Annual Report on Form 10-K
and the company's Quarterly Reports on Forms 10-Q about any significant
deficiencies in the design or operation of internal controls or material
weaknesses therein and any fraud involving management or other employees who
have a significant role in the company's internal controls.
(vi) Disclosure Controls. As required by Section 302 of the Sarbanes-Oxley Act
of 2002, review and discuss with management and the external auditor and the
internal auditors the company's disclosure controls and procedures, any
deficiencies in such disclosure controls and procedures, and any fraud.
(vii) External Auditor's Reports. At least annually prior to the filing of the
audit report with the Commission (and more frequently if appropriate), review
and discuss reports from the external auditor on:
(1) all critical accounting policies and practices to be used,
(2) all alternative treatments of financial information within GAAP that have
been discussed with management, including ramifications of the use of such
alternative disclosures and treatments and the treatment preferred by the
external auditor, and
(3) other material written communications between the external auditor and
management, such as any management letter or schedules of unadjusted
differences.
(viii) SAS Nos. 61 & 90. Review and discuss with management and the external
auditor all matters required to be communicated to the Committee under generally
accepted auditing standards, including matters required to be discussed by
Statement on Auditing Standards No. 61 relating to conduct of the audit, as
amended by Statement on Auditing Standards No. 90.
(ix) Earnings Disclosure. Discuss with management the company's earnings press
releases, including the use of "pro forma" or "adjusted" non-GAAP information,
as well as financial information and earnings guidance provided to analysts and
rating agencies. Such discussion may be done generally (consisting of discussing
the types of information to be disclosed and the types of presentations to be
made).
(x) Audit Committee Report. Prepare the report required by the rules of the
Commission (including without limitation Rule 14a-101, Item 7(d)(3) and
Regulation S-K, Item 306) to be included in the company's annual proxy
statement.
(b) Internal Controls and Risk Management.
(i) Review of Controls. Understand the scope of the internal auditor's and the
external auditor's reviews of internal control over financial reporting, and
obtain reports from the external auditor on significant findings and
recommendations, together with management's responses.
(ii) Effectiveness of Internal Controls. Consider the effectiveness of the
company's internal control systems, including information technology security
and control. Beginning with fiscal year 2005 or such later date as the
Commission deems appropriate, review management's report on the company's
internal control over financial reporting and the related attestation report of
the external auditor.
(iii) Financial Risk Exposure. Meet with management to review the company's
major financial risk exposures and the steps management has taken to monitor and
control such exposures, including the company's risk assessment and risk
management policies.
(c) Review of External Auditor.
(i) Direct Reporting. Have the external auditor report directly to the
Committee.
(ii) Auditor Accountability. Consider the external auditor's ultimate
accountability to the Committee and the board, as representatives of the
stockholders, when evaluating, and, where appropriate, replacing the external
auditor (and in nominating the external auditor to be proposed for stockholder
approval in any proxy statement).
(iii) Auditor Quality Control Review. Obtain and review a report from the
external auditor regarding its quality control procedures, and material issues
raised by the most recent internal quality control review, or peer review, of
the external auditor or by any inquiry or investigation by governmental or
professional authorities within the preceding five years respecting one or more
of the independent audits carried out by the external auditor, and any steps
taken to deal with any such issues and all relationships between the external
auditor and the company.
(iv) Auditor Independence Review. Take, or recommend to the board the taking of,
appropriate action to oversee the independence of the external auditor,
including actively engaging in a dialogue with the external auditor with respect
to any disclosed relationships or services that may impact the objectivity and
independence of the external auditor.
(v) ISBS No. 1. Obtain and review a formal written statement from the external
auditor delineating all relationships between the external auditor and the
company, consistent with Independence Standards Board Standard 1.
(vi) Pre-Approval of Audit and Non-Audit Services. Pre-approve all audit and
permissible non-audit services to be provided by external auditors (subject to
the de minimis exceptions for permitted non-audit services described in Section
10A(i)(1)(B) of the Exchange Act). Consider the appropriateness of the related
fees and whether the provision of any services by the independent auditors not
related to the audit of the annual financial statements and the review of the
interim financial statements included in the Company's Forms 10-Q for such year
is compatible with maintaining the auditor's independence. The external auditor
shall not provide any non-audit services unless:
(1) the non-audit services are not prohibited non-audit services, as set forth
in section 201 of the Sarbanes-Oxley Act of 2002 and the rules and regulations
of the Commission thereunder;
(2) the Committee approves in advance the provision of permissible non-audit
services, as required by the Sarbanes-Oxley Act of 2002 and rules and
regulations of the Commission thereunder, and
(3) the company makes complete and adequate disclosure of the services and the
approval.
(vii) Auditor Evaluation. Taking into account the opinions of management and the
internal auditors, evaluate and present to the board the conclusions of the
Committee regarding the qualifications, performance, and independence of the
external auditor, including considering whether the auditor's quality controls
are adequate and whether permitted non-audit services are compatible with
maintaining the auditor's independence.
(viii) Audit Partner Rotation. Ensure the rotation of the audit partners as
required by law (including without limitation section 203 of the Sarbanes-Oxley
Act of 2002 and the rules promulgated thereunder) and consider whether in order
to assure continuing auditor independence it is appropriate to adopt a policy of
rotating the external audit firm on a regular basis.
(ix) Hiring of Auditor Personnel. Establish policies concerning the company's
hiring of employees or former employees of the external auditor, as required by
law (including without limitation section 203 of the Sarbanes-Oxley Act of 2002
and the rules promulgated thereunder) and by applicable listing standards.
(x) Private Meetings. On a regular basis, meet separately with the external
auditor to discuss any matters that the Committee or external auditor believes
should be discussed privately.
(d) Conduct of Audit.
(i) Pre-Audit Meeting. Meet with the external auditor to discuss the external
auditor's proposed audit planning, scope, staffing, and approach, including
coordination of its effort with internal audit.
(ii) Management Letter and Audit Issues. Review with the external auditor any
problems or difficulties the auditor may have encountered and any management
letter provided by the auditor and the company's response to that letter. Such
review should cover any difficulties encountered in the course of the audit
work, including any restrictions on the scope of activities or access to
required information.
(iii) Response to Auditor Discovery of Illegal Acts. Obtain from the external
auditor assurance that Section 10A(b) of the Exchange Act has not been
implicated. (e) Compliance.
(i) Review Legal Compliance System. Review the effectiveness of the system for
monitoring compliance with laws and regulations. The results of management's
investigation and follow-up (including disciplinary action) of any instances of
noncompliance should also be reviewed.
(ii) Code of Ethics and Business Conduct. Advise the board with respect to the
company's policies and procedures regarding compliance with applicable laws and
regulations and with the company's Senior Financial Officer Code of Ethics and
any other applicable code of ethics, including review of the process for
monitoring compliance and for communicating the Senior Financial Officer Code of
Ethics or other applicable code of ethics to company personnel.
(iii) Handling of Complaints. Review and monitor procedures for:
(1) the receipt, retention, and treatment of complaints received by the company
from external sources regarding accounting, internal accounting controls, or
auditing matters; and
(2) the confidential, anonymous submission by the company's employees of
concerns regarding questionable accounting or auditing matters.
(iv) Assess Impact of Third Party Observations. Review and discuss with
management and the external auditor any correspondence with, or the findings of
any examinations by, regulatory agencies, published reports, or auditor
observations that raise significant issues regarding the company's financial
statements or accounting policies.
(v) Compliance Updates from Management and Counsel. Obtain regular updates from
management and company counsel regarding compliance matters and legal matters
that may have a significant impact on the financial statements or the company's
compliance policies.
(f) Other Responsibilities.
(i) Regularly report to the board about Committee activities, issues, and
related recommendations.
(ii) Provide an open avenue of communication between internal audit, the
external auditor, and the board.
(iii) Institute and oversee special investigations as needed.
(iv) Review and evaluate any related party transactions, make appropriate
recommendations to the board, and review any related disclosures to the
Commission.
(v) Annually review and assess the adequacy of this Audit Committee Charter,
requesting board approval for proposed changes, and ensure appropriate
disclosure as may be required by law or regulation.
(vi) Annually review the Committee's own performance.
(vii) Review any other reports the company issues that relate to Committee
responsibilities.
(viii) Perform other activities related to this Audit Committee Charter as
requested by the board.
Appendix B
UCI Medical Affiliates, Inc.
Nominating Committee Charter
June 30, 2004
1. PURPOSE
The board of directors of UCI Medical Affiliates, Inc. (referred to
herein as the "company") appoints the company's Nominating Committee (the
"Committee") to assist the company's board of directors (referred to herein as
the "board"):
a. on an annual basis, by identifying individuals
qualified to become board members and recommending to
the board the director nominees for the next annual
meeting of stockholders;
b. by identifying individuals qualified to become board
members in the event of a vacancy and recommending to
the board qualified individuals to fill any such
vacancy; and
c. on an annual basis, recommending to the board
director nominees for each board committee.
2. AUTHORITY
a. Scope. The Committee has authority to undertake the specific
responsibilities itemized under Section 5 below and to address other similar
matters that may be referred to the Committee from time to time by the full
board or the Chairman of the Board or which the Committee raises on its own
initiative or as a result of changes in applicable law or the rules of any
applicable stock exchange. The Committee may from time to time engage advisors
and consultants, including attorneys and accountants, and may seek advice from
the company's outside counsel as deemed necessary by the Committee. The
Committee shall have sole authority to retain and terminate any consultant or
search firm used to identify director candidates, including sole authority to
approve the consultant or search firm's fees and other retention terms.
b. Funding. The company shall provide appropriate
funding, as determined by the Committee, for payment
of: (i) compensation to any consulting or search firm
or other advisors retained by the Committee; and (ii)
ordinary administrative expenses of the Committee
that are necessary or appropriate in carrying out its
duties.
3. COMPOSITION
a. Appointment. The board will appoint Committee members
and the Committee chairman. The Board may replace any
or all Committee members.
b. Number of Members. The Committee will consist of at
least two members of the board.
c. Eligibility Requirements of Regulatory and Exchange
Authorities. In addition to any other eligibility
requirements for members of the Committee set forth
in this Nominating Committee Charter, each Committee
member shall meet the requirements of:
i. the Sarbanes-Oxley Act of 2002; and
ii. the rules and regulations of the Securities Exchange
Commission.
d. Independence of Each Member.
i. Generally. Except as stated in Section 3(d)(iii)
below, each Committee member shall be independent. To
be independent, a member of the Committee may not,
other than in his or her capacity as a member of the
Committee, the board, or any other board committee:
1. accept, directly or indirectly, any consulting ,
advisory, or other compensatory fees from the
company; or
2. be an affiliated person of the company or its
affiliates.
Prohibited indirect acceptance of fees includes acceptance by
a: (i) spouse; (ii) a minor child or stepchild; (iii) a child or stepchild
sharing a home with the Committee member; or (iv) an entity in which such member
is a partner, member, or an executive officer or managing director and which
provides accounting, consulting, legal, investment banking, or financial
advisory services to the company or its subsidiaries. Prohibited compensatory
fees do NOT include the receipt of fixed amounts of compensation under a
retirement plan (including deferred compensation) for prior services with the
listed issuer (provided that such compensation is not contingent in any way on
continued service).
Committee members that also sit on the board of directors of
an affiliate of the company are exempt from 3(d)(i)(2) if the members, except
for being a director on each of such boards, otherwise meet the independence
requirements for each entity.
ii. Persons NOT Independent. The following
persons shall not be considered
independent:2
1. A director who is, or during the past three
years was, employed by the company or any of
its affiliates.
2. A director who accepts, or has an immediate family member who accepts,
any payments from the company or any of its affiliates in excess of $60,000
during the current or any of the past three fiscal years, other than
compensation for board service, payments arising solely from investments in the
company's securities, compensation paid to an immediate family member who is a
non-executive employee of the company or its affiliates, compensation received
for former services as an interim chairman or chief executive officer, benefits
under a tax-qualified retirement plan, non-discretionary compensation, or loans
permitted under section 13(k) of the Exchange Act.
3. A director who is an immediate family member
of an individual who is, or has been in any
of the past three years, employed by the
company or any of its affiliates as an
executive officer.
4. A director who is, or has an immediate family member who is, a partner
in, or a controlling stockholder or an executive officer of, any organization to
which the company made, or from which the company received, payments (other than
those arising solely from investments in the company's securities or payments
under non-discretionary charitable contribution matching programs) that exceed
5% of the organization's consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the most recent three fiscal years.
5. A director of the company who is, or has an
immediate family member who is, employed as
an executive officer of another entity where
at any time during the most recent three
fiscal years any of the company's executives
serve on that entity's compensation
committee.
6. A director who is, or has an immediate
family member who is, a current partner of
the company's outside auditor, or was a
partner or employee of the company's outside
auditor who worked on the company's audit at
any time during any of the past three years.
"Immediate family member" includes a person's spouse, parents, children,
siblings, mother-in-law, father-in-law, brother-in-law, sister-in-law,
son-in-law, daughter-in-law, and anyone who resides in such person's home (other
than domestic employees).
iii. Limited Exceptions. Notwithstanding the
requirement that every member of the
Committee be independent, as long as three
members serve on the Committee, one director
who is not independent as set forth in
Section 121(A) of the American Stock
Exchange listing requirements and who is not
a current officer or employee of the company
or an immediate family member of a current
officer or employee, may be appointed as a
new member to the Committee if:
1. the board, under exceptional and limited
circumstances, determines that membership on
the Committee by the individual is required
by the best interests of the company and its
stockholders, and
2. the board discloses, in the next annual
proxy statement of the company subsequent to
such determination, the nature of the
relationship that makes the individual not
independent and the reasons for the board's
determination that membership on the
Committee by the individual is required by
the best interests of the company and its
stockholders.
A director appointed to the Committee pursuant to this limited
exception may not serve for in excess of two consecutive years and may not chair
the Committee.
4. MEETINGS
The Committee may establish its own rules of procedure and will meet as
often as such rules or the Committee otherwise determines is appropriate, but
not less frequently than annually. The chairman of the Committee shall preside
at each Committee meeting. In the absence of the appointed chairman during any
Committee meeting, the Committee may designate a chairman pro tempore. All
Committee members are expected to attend each meeting, in person or via
telephone or videoconference. A majority of the members of the Committee shall
constitute a quorum for the conduct of business at any Committee meeting. The
Committee shall act only on the affirmative vote of a majority of members at a
meeting at which a quorum is present or by unanimous written consent. The
Committee may invite any officer or employee of the company, the company's
outside legal counsel, the Committee's outside legal counsel, or others to
attend meetings and provide pertinent information. The Committee chairperson
will prepare agendas and provide the agendas in advance to members, along with
appropriate briefing materials. A member of the Committee or a person designated
by the Committee will keep minutes.
5. RESPONSIBILITIES
The Committee will carry out the following responsibilities. These
responsibilities are set forth as a guide, with the understanding that the
Committee may diverge from this guide as appropriate upon advice of advisors to
the Committee given any particular circumstances:
a. Board and Committee Membership.
i. On an annual basis, identify individuals qualified to
become board members and recommend to the board the
director nominees for the next annual meeting of
stockholders.
ii. Identify individuals qualified to become board
members in the event of a vacancy and recommend to
the board qualified individuals to fill any such
vacancy.
iii. On an annual basis, review the composition of each
board committee and recommend to the board director
nominees for each board committee.
iv. Consider any nominations of director candidates
validly made by stockholders.
v. Develop and recommend criteria for the selection of new directors to the
board, including without limitation independence, strength of character,
business or financial expertise, current or recent experience as an officer or
leader of another business, experience as a director of another public company,
regulatory compliance knowledge, industry trend knowledge, product/service
expertise, practical wisdom, mature judgment, time availability (including the
number of other boards he or she sits on in the context of the needs of the
board and the company and including time to develop and/or maintain sufficient
knowledge of the company and its industry), geography, age, gender and ethnic
diversity on the board, and other criteria as the Committee determines to be
appropriate or relevant at the time.
vi. Act as a forum to hear special concerns regarding the
director nomination process.
vii. Institute and oversee special investigations as
needed.
b. Nominating Committee Reports and Documentation.
i. Prepare the report required by the rules of the
Commission to be included in the company's annual
proxy statement, including without limitation Rule
14a-101, Item 7(d).
ii. Regularly report to the board about Committee
activities, issues, and related recommendations.
iii. Annually review and assess the adequacy of this
Nominating Committee Charter, requesting board
approval for proposed changes, and ensure appropriate
disclosure as may be required by law or regulation.
iv. Review any other reports the company issues that
relate to Committee responsibilities.
c. Other Responsibilities.
i. Annually review the Committee's own performance.
ii. Perform other activities related to this Nominating
Committee Charter as requested by the board.
In discharging its responsibilities, the Committee, and each member of
the Committee in his or her capacities as such, shall be entitled to rely, in
good faith, on information, opinions, reports or statements, or other
information prepared or presented to them by (i) officers and other employees of
the company, whom such member believes to be reliable and competent in the
matters presented and (ii) counsel, public accountants, or other persons as to
matters which the member believes to be within the professional competence of
such person.
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1 In accordance with Rule 14a-101, Item 7(d)(3)(iv)(B), we are selecting the
definition of independence that is found in the American Stock Exchange Rule
121A. From the date of this charter until December 1, 2004, the three-year look
back period referenced in Sections (3)(ii)(1)-(6) above shall be only a one-year
look back period, as permitted by the American Stock Exchange Rule 121A.
2 In accordance with Rule 14a-101, Item 7(d)(2)(ii)(D), we are selecting the
definition of independence that is found in the American Stock Exchange Rule
121A. From the date of this charter until December 1, 2004, the three-year look
back period referenced in Sections (3)(ii)(1)-(6) above shall be only a one-year
look back period, as permitted by the American Stock Exchange Rule 121A.