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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.
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UCI MEDICAL AFFILIATES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MARCH 28, 2006
The 2006 annual meeting of stockholders of UCI Medical Affiliates, Inc.
will be held at The Capital City Club, 1201 Main Street, 25th Floor, Columbia,
South Carolina, on Tuesday, March 28, 2006, beginning at 10:00 a.m. eastern
time, for the following purposes:
(1) To elect two members to our Board of Directors;
(2) To ratify the appointment and engagement of Scott McElveen,
L.L.P., Certified Public Accountants, as our independent
auditors for the fiscal year ending September 30, 2006; 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
February 10, 2006 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
February 23, 2006
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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.............................................................................3
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...........................................................................................5
Who are the current members of the Board?..................................................................5
Important Information Regarding Directors..................................................................5
What is the role of the Board's committees?................................................................7
How does the Board select nominees for the Board?..........................................................7
How often did the Board meet during fiscal year 2005?......................................................8
How are directors compensated?.............................................................................8
Does the company have a code of ethics?....................................................................9
How do stockholders communicate with the Board?............................................................9
What related party transactions exist?.....................................................................9
AUDIT COMMITTEE REPORT.............................................................................................12
FEES TO INDEPENDENT AUDITORS.......................................................................................13
EXECUTIVE COMPENSATION.............................................................................................14
Compensation Committee Report On Executive Compensation...................................................14
Compensation Committee Interlocks and Insider Participation...............................................15
Employment Contracts......................................................................................15
Executive Compensation Summary Table......................................................................16
Fiscal Year End Option Values.............................................................................17
Securities Authorized for Issuance Under Equity Compensation Plan.........................................17
COMPARISON OF CUMULATIVE TOTAL RETURNS.............................................................................18
ADVANCE NOTICE PROCEDURES..........................................................................................18
ANNUAL REPORT ON FORM 10-K.........................................................................................20
MISCELLANEOUS......................................................................................................20
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UCI MEDICAL AFFILIATES, INC.
4416 Forrest Drive
Columbia, South Carolina 29206
PROXY STATEMENT
This proxy statement contains information related to the 2006 annual
meeting of our stockholders to be held at The Capital City Club, 1201 Main
Street, 25th Floor, Columbia, South Carolina, on Tuesday, March 28, 2006 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 February 23, 2006.
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 February 10,
2006, 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 256 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 two 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 two, 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
are elected at each annual meeting to serve until the third annual stockholders'
meeting after their election. The Board consists of seven directorships divided
into two classes of two and one class of three. The Board proposes two
individuals, Harold H. Adams, Jr. and Charles M. Potok, as nominees to serve
from the date of their election at the annual meeting until the 2009 annual
meeting of stockholders, or until their successors shall have been earlier
elected and qualified.
Each of the nominees is currently a member of the Board, and all the
nominees were 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 "Governance of the Company."
Terms Expiring in 2009: Harold H. Adams, Jr. and Charles M. Potok
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, 2006, 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, 2006.
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 does 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 February 10, 2006.
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 February 10,
2006, (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 February 10, 2006.
Shares
Beneficially
Name Owned (1) Percentage
- ------------------------------------------------------------------------- ----------------- -------------
Blue Cross Blue Shield of South Carolina (2)...................................6,726,019 69.05
Harold H. Adams, Jr. (3)...........................................................7,500 *
Joseph A. Boyle, CPA...................................................................0 0
Jean E. Duke, CPA..................................................................2,000 *
Thomas G. Faulds (4).............................................................. 5,000 *
John M. Little, Jr., M.D...............................................................0 0
Charles M. Potok (4)...............................................................5,000 *
Timothy L. Vaughn, CPA.................................................................0 0
D. Michael Stout, M.D. (5).......................................................393,985 4.04
Jerry F. Wells, Jr. (4)..........................................................109,825 1.13
All current directors and executive officers
As a group (9 persons).......................................................523,310 5.37
* 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 BlueChoiceHealthPlan ("BlueChoice") [formerly known as
Companion HealthCare Corporation `CHC'] 6,107,838 shares and Companion
Property & Casualty Corporation ("CP&C") 618,181 shares, wholly owned
subsidiaries of Blue Cross Blue Shield of South Carolina.
(3) Includes 5,000 shares issuable pursuant to currently exercisable stock
options.
(4) All shares are issuable pursuant to currently exercisable stock
options.
(5) Includes 89,825 shares issuable pursuant to currently exercisable stock
options and 10,000 shares held by Dr. Stout's spouse, Paulette J. Stout.
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, 2005 with the filing requirements under Section 16(a)
of the 1934 Act.
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
Harold H. Adams, Jr. 58 2006(1) * **
Joseph A. Boyle, CPA 51 2008 ** *
Jean E. Duke, CPA 50 2007 * *
Thomas G. Faulds 64 2008 *
John M. Little, Jr., M.D. 55 2008 *
Charles M. Potok 56 2006(1) **
Timothy L. Vaughn, CPA 41 2007 *
(1) This director is nominated for re-election at the 2006 annual meeting of
stockholders for a term expiring at the annual meeting expected to be held in
2009. * Member ** Chairman
Important Information Regarding Directors
Director Nominees for Terms Expiring at the Annual Meeting Expected to be
Held in 2009:
Harold H. Adams, Jr., 58, 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. Additionally, Mr. Adams is Chairman
and part owner of Custom Assurance Placements, Ltd., since its inception in
February 2005. 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 34 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, 56, 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 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 2008:
Joseph A. Boyle, CPA, 51, 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 January 2005 has served as Chief Operating
Officer of Community Resource Mortgage, Inc., a wholly owned subsidiary of
Community Bancshares, Inc. From April 2003 to August 2004, Mr. Boyle was 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. Mr. Boyle was most recently reelected as a
director at the annual meeting of stockholders in 2005.
Thomas G. Faulds, 64, has served as President and Chief Operating Officer
of the Blue Cross Blue Shield Division of Blue Cross and Blue Shield of South
Carolina ("BCBS") since 1998, and also serves as the senior officer responsible
for six subsidiaries: BlueChoiceHealthPlan, Planned Administrators, Inc.,
Companion Benefits Alternatives, Inc., Alpine Agency, Inc., Thomas H. Cooper &
Company and CIMR. He has been employed by BCBS since March, 1972. Mr. Faulds
previously served as a director for UCI Medical Affiliates, Inc. ("UCI") between
August 1996 and June 2003. On December 13, 2005, Ashby M. Jordan, M.D. resigned
from the Board of Directors of UCI, and the Board of Directors appointed Mr.
Faulds to UCI's Board of Directors as of December 13, 2005 to serve for Dr.
Jordan's unexpired term.
John M. Little, Jr., M.D., MBA, 55, has served as one of our directors
since August 1998 and is currently the Vice President for HealthCare Services
and Chief Medical Officer for Blue Cross Blue Shield of South Carolina. Dr.
Little also served in the same position at BlueChoiceHealthPlan (formerly known
as Companion HealthCare Corporation) from 1994 to 2000. Prior to joining
BlueChoiceHealthPlan (formerly known as 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 2005.
Directors Whose Terms Expire at the Annual Meeting Expected to be Held in 2007:
Jean E. Duke, CPA, 50, has owned a consulting business since December
2004 providing services primarily for insurance and financial organizations.
Prior to that, Ms. Duke was affiliated with Colonial Life & Accident Insurance
Company, serving in the roles of Senior Vice President, Customer & Information
Services, and President & Chief Financial Officer, from August 2002 to December
2004. 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. Ms. Duke was elected as a director at the annual meeting of
stockholders in 2004.
Timothy L. Vaughn, CPA, 41, has served as Chief Financial Officer of
BlueChoiceHealthPlan Plan (formerly known as Companion HealthCare Corporation)
since January 2000. He served as TRICARE Contracts Manager for Blue Cross Blue
Shield of South Carolina from 1997 to 2000. This federal program provided 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 2004.
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. All of the members of the Audit Committee are independent
within the meaning of SEC regulations. The Board of Directors has determined
that Mr. Boyle and Ms. Duke are financial experts, as that term is defined in
Item 401(h)(2) of Regulation S-K under the Exchange Act. The Audit Committee met
four times during the fiscal year ended September 30, 2005.
Compensation Committee. We describe the functions of the Compensation
Committee under the heading of "Report of Compensation Committee." The
Compensation Committee met one time during the fiscal year ended September 30,
2005.
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. The Nominating Committee met one time during
the fiscal year ended September 30, 2005.
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 2005?
Our Board held a total of four meetings during our fiscal year ended
September 30, 2005. 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 Harold H. Adams, Jr. and Timothy L. Vaughn, CPA attended
our 2005 annual stockholder meeting. Dr. Ashby M. Jordan, who served on our
Board at the time of our 2005 annual stockholder meeting, was also absent. 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 or she 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 members,
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 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. 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. On February 10, 2006, these stock options were outstanding and
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 four 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., Charles P. Cannon, and Charles
M. Potok. These options are exercisable during the period commencing on March
28, 2000 and ending on March 28, 2007. On February 10, 2006, these stock options
were outstanding and 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., our wholly-owned subsidiary; the term DC-SC
refers to Doctors Care P.A., a professional corporation affiliated with us; the
term DC-TN refers to Doctor's Care of Tennessee, P.C., a professional
corporation affiliated with us; the term PPT refers to Progressive Physical
Therapy, P.A., a professional corporation affiliated with us; the term COSM
refers to Carolina Orthopedic & Sports Medicine, P.A., a professional
corporation affiliated with us; and the term P.A. refers collectively to DC-SC,
DC-TN, PPT and COSM.
UCI-SC has entered into Administrative Services Agreements with each of
the P.A. Under these Administrative Services Agreements, which have an initial
term of forty years, UCI-SC performs all non-medical management for the P.A. and
has exclusive authority over all aspects of the business of the P.A. (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 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 provides all of the resources (systems,
procedures and staffing) to bill third party payors or patients, and provides
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 pays all physician and
physical therapist salaries, and all other operating costs of the centers and of
UCI-SC. UCI-SC sets compensation guidelines for the licensed medical
professionals at the P.A. and establishes guidelines for establishing,
selecting, hiring, and firing of the licensed medical professionals. UCI-SC also
negotiates and executes substantially all of the provider contracts with third
party payors, with the P.A. executing certain of the contracts at the request of
a minority of payors. UCI-SC does not loan or otherwise advance funds to any
P.A. for any purpose.
During our fiscal years ended September 30, 2005 and 2004, the P.A.
received an aggregate of approximately $56,642,000 and $47,474,000,
respectively, in fees prior to deduction by the P.A. of their payroll and other
related deductible costs covered under the Administrative Services Agreements.
For accounting purposes, we combine the operations of the P.A. with our
operations, as reflected in our consolidated financial statements.
D. Michael Stout, M.D. is the sole shareholder of DC-SC, DC-TN and
COSM, and since November 1, 2002, has served as the President and Chief
Executive Officer of UCI, UCI-SC, DC-SC and DC-TN. Since its incorporation on
April 1, 2005, Dr. Stout has served as the President of COSM. Prior to November
1, 2002, Dr. Stout was the Executive Vice President of Medical Affairs for UCI
and UCI-SC, and was the President of DC-SC and DC-TN. Barry E. Fitch, P.T. is
the sole shareholder of PPT and has served as its President since the
incorporation of PPT on April 5, 2005.
Other Transactions with Related Parties
As of February 10, 2006, BlueChoiceHealthPlan ("BlueChoice") [formerly
known as Companion Healthcare Corporation `CHC'], a wholly owned subsidiary of
Blue Cross Blue Shield of South Carolina ("BCBS"), owns 6,107,838 shares of our
common stock and Companion Property and Casualty Insurance Company ("CP&C"),
another wholly owned subsidiary of BCBS, owns 618,181 shares of our common
stock, which combine to approximately 69.05 percent of our outstanding common
stock. The following is a historical summary of purchases of our common stock by
BCBS subsidiaries from us.
Date Blue Cross Blue Shield of South Price Total
Purchased Carolina Number per Purchase
Subsidiary of Shares Share Price
------------------- ------------------------------------- -------------- ------------ ------------------
BlueChoiceHealthPlan
12/10/93 * 333,333 $1.50 $ 500,000
BlueChoiceHealthPlan
06/08/94 * 333,333 3.00 1,000,000
BlueChoiceHealthPlan
01/16/95 * 470,588 2.13 1,000,000
BlueChoiceHealthPlan
05/24/95 * 117,647 2.13 250,000
BlueChoiceHealthPlan
11/03/95 * 218,180 2.75 599,995
BlueChoiceHealthPlan
12/15/95 * 218,180 2.75 599,995
BlueChoiceHealthPlan
03/01/96 * 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
*BlueChoiceHealthPlan ("BlueChoice") [formerly known as Companion
HealthCare Corporation `CHC'].
Our common stock acquired by BlueChoice and CP&C 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. BlueChoice 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. BlueChoice and CP&C have the right to require registration of the
stock under certain circumstances as described in the respective stock purchase
agreements.
From time to time, BlueChoice has purchased additional shares of our
common stock directly from other stockholders of the company. We were not a
party to those transactions.
BlueChoice and CP&C 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. 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, 2005 is
$95,200, 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.
UCI-SC, through DC-SC, provides services to members of a health
maintenance organization operated by BlueChoice who have selected DC-SC as their
primary care provider. We believe the terms of the agreement with BlueChoice 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, revised as of June 9, 2005, 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 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 was previously filed with the Securities
and Exchange Commission. 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, 2005.
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).
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, 2005 for filing with the Securities and Exchange
Commission.
Submitted by the Audit Committee of the Board of Directors.
Joseph A. Boyle, CPA, Chairman
Harold H. Adams, Jr.
Jean E. Duke, CPA
FEES TO INDEPENDENT AUDITORS
The following table presents for the fiscal years ending September 30,
2005 and 2004 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; and, (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.
Fiscal Fiscal
Year 2005 Year 2004
----------- -----------
----------- -----------
Audit Fees(1) $81,000 $66,125
Audit Related Fees(2) 8,000 $ 7,350
Tax Fees(3) 14,000 $16,500
(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) Includes fees for services related to the audit of the Company's 401(k)
Plan and Form 5500 preparation.
3 Includes fees related to tax compliance, and tax advice.
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. 60 President and Chief Executive Officer Jerry F. Wells,
Jr., CPA 43 Executive Vice President, Chief Financial Officer
and Secretary
D. Michael Stout, M.D., 60, has served as Executive Vice President of
Medical Affairs of UCI and Doctors Care, P.A. ("DC-SC") since 1985 and as
President and Chief Executive Officer of UCI, UCI-SC, DC-SC and Doctors Care of
Tennessee, P.C. since November 1, 2002, and of COSM since April 5, 2005. 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. He graduated from Brown University Medical School in 1980
and practiced medicine for Doctors Care since 1983. Recently, he was elected as
a member of the Board of Directors of the South Carolina Campaign to Prevent
Teen Pregnancy.
Jerry F. Wells, Jr., CPA, 43, 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, the Corporate Secretary of DC-SC since December 1996, and
the Corporate Secretary of COSM and PPT since April 5, 2005. 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 of the Board of Directors 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. The following report is being furnished with respect to certain
compensation paid or awarded to our executive officers during the fiscal year
ended September 30, 2005.
General Policies. Our compensation program is intended to enable us to
attract, motivate, reward, and retain the management talent to achieve corporate
objectives and thereby increase shareholder 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, incentive compensation and stock options.
Base Salary. Base salaries for Dr. Stout and Mr. Wells were determined
by 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 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.
Incentive Compensation. 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.
Stock Options. Executive compensation includes the grant of stock
options in order to more closely align the interests of the executive with the
long-term interests of the shareholders.
Submitted by the Compensation Committee of the Board of Directors.
Charles M. Potok, Chairman
John M. Little, Jr., M.D.
Timothy L. Vaughn, CPA
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 each of our 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 Compensation Compensation
Securities
Underlying All Other
Name and Principal Position Fiscal Year Salary (1) Bonus (1) Options Compensation
- --------------------------- ----------- ---------- --------- ------- ------------
D. Michael Stout, M.D. 2005 $278,100 0 0
$94,000
President and 2004 261,000 81,000 0 0
(2)
Chief Executive Officer 2003 227,000 88,000 0 0
(2)
Jerry F. Wells, Jr., CPA 2005 $183,900 0 0
$70,000
Executive Vice President, 2004 166,100 59,000 0 0
Chief Financial Officer, 2003 144,500 39,000 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) 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, 2005, 2004, and 2003. For services performed by Dr. Stout
for DC-SC, Dr. Stout received an annual salary of $228,000, $211,000,
and $177,000 in the fiscal years ended September 30, 2005, 2004 and
2003. Dr. Stout has served as the President and Chief Executive Officer
of UCI, UCI-SC, and DC-SC since November 1, 2002.
Fiscal Year End Option Values
The following table sets forth certain information with respect to unexercised
options to purchase our common stock held at September 30, 2005. None of the
named executive officers exercised any options during the fiscal year ended
September 30, 2005. Additionally, no options were granted to any officer or
director during the fiscal year ended September 30, 2005.
2005 Fiscal Year End
Option Values
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money
Fiscal Year End Options at Fiscal Year End
------------------------------------------ ---------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------- ---------------------- -------------------- -------------------
89,825 0 0 0
D. Michael Stout, M.D.
President and
Chief Executive Officer
109,825 0 0 0
Jerry F. Wells, Jr., CPA
Executive Vice President,
Chief Financial Officer, and
Corporate Secretary
Securities Authorized for Issuance Under Equity Compensation Plan
The following table provides information about our common stock
authorized for issuance under all of our existing equity compensation plans as
of September 30, 2005.
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 240,650 2.27 438,250
Equity compensation plans not
approved by security holders
-- -- --
----------------------- ----------------------- -------------------------
----------------------- ----------------------- -------------------------
Total 240,650 2.27 438,250
======================= ======================= =========================
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following graph compares cumulative total shareholder return of
UCI's 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, 2000.
Insert Performance Graph Here
Fiscal Year Ended
-----------------------------------------------------------------------------------
09/30/00 09/30/01 09/30/02 09/30/03 09/30/04 09/30/05
----------- ---------- ----------- ---------- ---------- ----------
UCI Medical Affiliates, Inc. 100.00 77.50 65.00 297.50 297.50 717.50
Peer Group 100.00 263.40 192.17 288.74 359.84 521.08
NASDAQ Market Index 100.00 40.97 32.96 50.52 53.56 60.93
The members of the Peer Group are 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 UCI's common stock used in computing the returns
reflected above are the average of the high and low bid prices reported for
UCI's common stock during the fiscal year ended on such dates.
ADVANCE NOTICE PROCEDURES
Proposals Considered for Inclusion in 2007 Proxy Statement. If you
would like to have a proposal considered for inclusion in the proxy statement
for the 2007 annual meeting, we must receive your written proposal at the
address on the cover of this proxy statement, attention Corporate Secretary, no
later than October 27, 2006. 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 2007 annual meeting.
Other Proposals for Consideration at the 2007 Annual Meeting. If you
wish to submit a proposal for consideration at the 2007 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 2007 annual meeting must be received by at least January 30, 2007, but
not prior to December 28, 2006. However, if the 2007 annual meeting is not held
within thirty days before or after March 28, 2007, 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 2007
annual meeting was actually mailed. The notice must give: (a) a brief
description of the business desired to be brought before the 2007 annual meeting
(including the specific proposal(s) to be presented) and the reasons for
conducting the business at the 2007 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 2007 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 2007 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 2007 annual meeting
may exclude from the meeting any matters that are not properly presented in
accordance with these bylaw requirements.
Notification of Nominations for Election to the Board of Directors.
Notwithstanding the foregoing, our Bylaws state that nominations for the
election of Directors may be made by the Board of Directors or by any
stockholder entitled to vote for the election of Directors. As set forth in our
Bylaws, any stockholder entitled to vote for the election of Directors at an
annual meeting of stockholders may nominate persons for election as Directors
only if written notice of such stockholder's intent to make such nomination is
given, by certified mail, postage prepaid, to the Secretary of the Corporation
and received at the principal offices of the Corporation at the address on the
cover of this proxy statement not less than sixty days nor more than ninety days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders. In other words, such nominations for the 2007 annual meeting must
be received by at least January 30, 2007, but not prior to December 28, 2006.
However, if the 2007 annual meeting is not held within thirty days before or
after March 28, 2007, then for the notice by the stockholder to be timely, it
must be received by our Secretary of 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 2007 annual meeting was
actually mailed. As set forth in our Bylaws, any stockholder entitled to vote
for the election of Directors may nominate persons for election of Directors to
be held at a special meeting of stockholders only if written notice of such
stockholder's intent to make such nomination is given, by certified mail,
postage prepaid, to the Secretary of the Corporation and received at the
principal offices of the Corporation at the address on the cover of this proxy
statement not less than ten days following the date on which notice of such
special meeting of stockholders is first given to the stockholders. Each such
notice shall set forth: (a) the name and address of the stockholder who intends
to make the nomination, as they appear on our books, (b) the class and number of
shares beneficially owned by such stockholder, (c) a representation that such
stockholder is a holder of record of our stock entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice, (d) a description of all arrangements
or understandings between such stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by such stockholder, (e) with respect to each
nominee, (i) the nominee's name and age, (ii) the nominee's occupation and
business address and telephone number, (iii) the nominee's residence address and
telephone number, (iv) the number of shares of each class of our stock held
directly or beneficially by the nominee, and (v) any other information relating
to such person that is required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, and (e)
the consent of each nominee to serve as a Director of the Corporation if
elected. At the request of the Board of Directors, any person nominated by the
Board of Directors for election as a Director shall furnish to our Secretary
that information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. No person shall be eligible for
election as a Director of the Corporation unless nominated in accordance with
the procedures set forth in our Bylaws. The chairman of the meeting shall, if
the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedures prescribed by the Bylaws, and should
he or she so determine, he or she shall so declare to the meeting and the
defective nomination shall be disregarded.
ANNUAL REPORT ON FORM 10-K
A copy of our Annual Report on Form 10-K for the fiscal year ended
September 30, 2005, which was filed with the Securities and Exchange Commission
on December 12, 2005, 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
February 23, 2006