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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e) (2) )
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
UNITED AMERICAN HEALTHCARE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person (s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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SEC 1913 (02-02)
[UNITED AMERICAN HEALTHCARE CORPORATION LOGO]
UNITED AMERICAN HEALTHCARE
CORPORATION
NOTICE OF THE 2004
ANNUAL MEETING OF SHAREHOLDERS
September 27, 2004
Dear Shareholder:
The Annual Meeting of Shareholders of United American Healthcare
Corporation will be held on Friday, November 5, 2004 at 10:30 a.m., Eastern
Standard Time, at the ATHENEUM SUITE HOTEL, 1000 BRUSH AVENUE, DETROIT,
MICHIGAN, for the following purposes:
(1) to elect three directors;
(2) to vote on the ratification of the appointment of Follmer Rudzewicz
PLC as our independent auditors for the 2005 fiscal year;
(3) to consider and act upon a proposal to approve amendments to the
United American Healthcare Corporation Amended and Restated 1998
Stock Option Plan to increase the number of common shares reserved
for issuance pursuant to the exercise of options granted under the
plan by 500,000 shares, from 1,000,000 to 1,500,000 shares; and
(4) to transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on September 14, 2004
will be entitled to vote at the Annual Meeting.
Enclosed with this proxy statement are your proxy card, a
postage-paid envelope to return your proxy card, and our Annual Report for the
fiscal year ended June 30, 2004 (with our Form 10-K report for that year
inserted inside its back cover). Your vote is important, regardless of the
number of shares you hold. Whether you plan to attend the meeting or not, to
vote by proxy sign, date and mail the enclosed proxy card as soon as possible in
the envelope provided. This will not prevent you from voting your shares in
person at the meeting before voting closes, if you wish to do so.
We look forward to seeing you on November 5, 2004.
Sincerely,
/s/ William C. Brooks,
-------------------------------------
William C. Brooks,
Chairman, President and Chief Executive Officer
[UNITED AMERICAN HEALTHCARE CORPORATION LOGO]
UNITED AMERICAN HEALTHCARE
CORPORATION
UNITED AMERICAN HEALTHCARE CORPORATION
300 RIVER PLACE, SUITE 4950
DETROIT, MICHIGAN 48207-4291
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
To be Held November 5, 2004
GENERAL INFORMATION
This proxy statement contains information related to the annual meeting of
shareholders of United American Healthcare Corporation (the "Company") to be
held at the Atheneum Suite Hotel, 1000 Brush Avenue, Detroit, Michigan, on
Friday, November 5, 2004, at 10:30 a.m., Eastern Standard Time. The approximate
mailing date for this proxy statement and the proxy is September 27, 2004.
At our annual meeting, shareholders will act upon the matters outlined in
the accompanying Notice of Annual Meeting, including the election of three
directors, ratification of the appointment of independent auditors and approval
of amendments to the Amended and Restated 1998 Stock Option Plan. Neither we nor
the members of our Board of Directors intend to bring before the annual meeting
any matters other than those set forth in the Notice of Annual Meeting, and we
have no present knowledge that any other matters will be presented for action at
the meeting by others. However, if other matters properly come before the
meeting it is the intention of the persons named in the enclosed form of proxy
to vote in accordance with their best judgment.
It is important that your shares be represented at the meeting. If it is
impossible for you to attend, please sign and date the enclosed proxy and return
it to us. The proxy is solicited on behalf of our Board of Directors. The shares
represented by valid proxies in the enclosed form will be voted if received in
time for the meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only holders of record of shares of our no par value common stock at the
close of business on September 14, 2004 are entitled to notice of, and to vote
at, the meeting or at any adjournment or adjournments thereof, each share having
one vote. On such record date, we had issued and outstanding 7,442,557 shares of
common stock.
The following table contains information with respect to the beneficial
ownership of our common shares as of September 14, 2004 by each person known by
us to beneficially own more than 5% of our common shares, our only outstanding
class of voting shares:
1
PERCENTAGE
AMOUNT AND NATURE OF OF COMMON
COMMON SHARES SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP* OWNED**
- ------------------------------------ --------------------- ---------
Roy L. Rogers 538,700 7.24%
3000 Sand Hill Road, Bldg. 1,
Suite 260
Menlo Park, CA 94025-7073
Robert W. Morey 448,898 6.03%
1660 Tiburon Boulevard, Suite D
Tiburon, CA 94920
Richard M. Brown, D.O. 388,247 5.22%
27774 Franklin Road
Southfield, Michigan 48034
- --------
* Not including 25,000 and 15,000 shares which Dr. Brown has the right to
acquire pursuant to currently exercisable stock options for a price of $5.08 and
$2.09, respectively, and also not including 15,000 shares which Dr. Brown will
have the right to acquire pursuant to granted, but not yet exercisable, stock
options for a price of $4.27 per share. ** Based on 7,442,557 common shares
outstanding as of September 14, 2004.
The shareholder votes cast for all items considered at the meeting will be
calculated by an officer of Computershare Investor Services, L.L.C., our
Registrar and Transfer Agent, as the Board-designated Inspector of Election. The
Inspector of Election will determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive votes, hear and
determine challenges and questions arising in connection with the right to vote,
count and tabulate votes, determine the result, and do such acts as are proper
to conduct the election. Abstentions will not be counted either for or against
any action for which cast.
I. ELECTION OF DIRECTORS
Our Board of Directors proposes that the three persons named below as
"nominees for election as directors for a three-year term" be elected as our
directors, each to hold office until our annual meeting of shareholders to be
held in 2007 and until his successor is elected and qualified. Messrs. Brown,
Hurst and Hall were last elected as directors at our 2001 annual meeting of
shareholders. They are all outside directors. If a quorum is present, the three
nominees receiving the greatest number of votes cast at the meeting or its
adjournment will be elected. Withheld votes and broker non-votes will not be
deemed votes cast in determining which nominees receive the greatest number of
votes cast, but will be counted for purposes of determining whether a quorum is
present. The persons named in the accompanying proxy intend to vote all valid
proxies received by them FOR the election of the nominees listed below unless
the person giving the proxy withholds authority to vote for these nominees. The
nominees listed below have consented to serve if elected. If any nominee is
unable or declines to serve, which we do not expect to happen, the proxy holders
intend to vote the proxies in accordance with their best judgment for another
qualified person.
Our Bylaws provide that the size of the Board of Directors shall be fixed,
and may be modified, from time to time by a resolution of the Board, but not to
less than 8 directors. The directors have adopted a resolution fixing the
present size of the Board at 8 members.
2
The following information is furnished as of September 14, 2004 with respect to
our nominees for election as directors, with respect to each person whose term
of office as one of our directors will continue after the meeting, with respect
to each of our executive officers who is named in the Summary Compensation Table
below, and with respect to all of our directors and executive officers as a
group:
AMOUNT AND
NATURE OF PERCENTAGE
COMMON OF COMMON PRESENT
NAME POSITION AND OFFICES SHARES SHARES TERM
(AND YEAR FIRST WITH US AND OTHER BENEFICIALLY BENEFICIALLY TO
BECAME A DIRECTOR) AGE PRINCIPAL OCCUPATION OWNED OWNED (1) EXPIRE
- ------------------ --- -------------------- ----- --------- ------
NOMINEES FOR ELECTION AS DIRECTORS FOR A THREE-YEAR TERM
Richard M. Brown, 69 President, Park 431,997 (2) 5.8% 2004
D.O. (2001) Family Health Care
Practicing physician
Ronald E. Hall, Sr. 61 President and Chief 67,139 (2) * 2004
(2001) Executive Officer of
Bridgewater
Interiors, LLC
Peter F. Hurst, 49 Chairman, President 67,139 (2) * 2004
Jr. (2001) and Chief Executive
Officer of Urban
Financial Group, Inc.
and The Community's
Bank
DIRECTORS CONTINUING IN OFFICE
William C. Brooks 71 Our Chairman of the 110,430 (2) 1.5% 2005
(1997) Board of Directors,
President and Chief
Executive Officer;
President of OmniCare
Health Plan, Inc., of
Tennessee
Darrel W. Francis 51 President of 22,560 (2) * 2006
(1998) Precision Industrial
Service
Tom A. Goss (2000) 58 Vice Chairman of our 65,750 (2) * 2006
Board of Directors;
Chairman of Goss LLC
Emmett S. Moten, 60 President of Moten 67,139 (2) * 2006
Jr. (1988) Associates
Osbie Howard (2003) 61 Our Senior Vice 83,196 (2) 1.1% 2005
President - Business
Development; CEO of
United American of
Tennessee, Inc. and
of OmniCare Health
Plan, Inc., of
Tennessee
OTHER EXECUTIVE OFFICER
Stephen D. Harris 32 Our Chief Financial 37,016 (2) *
(3) Officer and Treasurer
All directors and executive officers as a group 952,366 (2) 12.8%
(9 persons)
- ----------------------
* Less than 1%
(1) Based on 7,442,557 common shares outstanding as of September 14, 2004.
(2) Includes the following number of common shares which the individual has
the right to acquire pursuant to stock options that are exercisable
currently or become exercisable within 60 days after September 27, 2004:
Mr. Brooks, 37,500 shares; Dr. Brown, Mr. Hall, Mr. Hurst and Mr. Moten,
43,750 shares each; Mr. Francis 3,750; Mr. Goss, 18,750 shares; Mr.
Harris, 17,500 shares; and Mr. Howard, 60,000 shares.
(3) Mr. Harris joined us in the described offices on October 28, 2002. He is a
certified public accountant with experience in consulting, auditing and
accounting for major companies in the automotive manufacturing, energy,
and managed health care industries. Prior to joining us, he served as a
Manager for Deloitte (then called Deloitte Consulting) since 1994.
3
BIOGRAPHICAL INFORMATION
The following is a brief account of the business experience during the
past five years of each nominee for our Board of Directors and of each of our
directors whose term of office will continue after the meeting:
RICHARD M. BROWN, D.O. (SINCE 2001; PRESENT TERM ENDS 2004)
Richard M. Brown, D.O. is a practicing physician and has been President of
Park Family Health Care in Detroit, Michigan since 1995. From 1996 to 1999, he
also was Medical Director of Prime Care Medical Centers in Detroit, Michigan.
During his career, he has also served as Chief of Staff of the following
hospitals in Michigan: Michigan Health Center, Detroit Central Hospital,
Botsford General Hospital and Zeiger Osteopathic Hospital. Dr. Brown has been a
delegate to the American Osteopathic Association since 1989 and to the Michigan
Association of Osteopathic Physicians and Surgeons since 1986. He is a Board
member of the Barbara Ann Karmanos Cancer Institute and the University of
Osteopathic Medicine and Health Services in Des Moines, Iowa. Parkview
Counseling Center, a partnership in which Dr. Brown was a partner, filed a
voluntary petition under Chapter 11 of the U.S. Bankruptcy Code five years ago
and subsequently emerged successfully from such proceedings under a
court-approved plan of reorganization.
RONALD E. HALL, SR. (SINCE 2001; PRESENT TERM ENDS 2004)
Ronald E. Hall, Sr. has been President, Chief Executive Officer and
majority owner of Bridgewater Interiors, LLC in Detroit, Michigan since November
1998. Bridgewater Interiors is a major supplier of seating systems to the
automotive industry. He is also the President/CEO of Renaissance Capital
Alliance, an equipment leasing company and he is the Chairman/CEO of New Center
Stamping, an automotive service parts stamping facility. From 1992 to October
1998, Mr. Hall served as President of the Michigan Minority Business Development
Council.
PETER F. HURST, JR. (SINCE 2001; PRESENT TERM ENDS 2004)
Peter F. Hurst, Jr. has been Chairman, President and Chief Executive
Officer of the Urban Financial Group, Inc., a Bridgeport, Connecticut bank
holding company, and The Community's Bank, a Connecticut chartered commercial
bank, since March 2000. From March 1998 to March 2000, he served as President of
Hurst Capital Partners in New York, a financial advisory and merchant banking
firm. From 1994 to March 1998, he was Co-Chairman of Bahia Partners, Inc. and
Co-President and Managing Director of Bahia Advisors, both in New York. From
1988 to 1994, he was Senior Vice President in the Corporate Finance Group and
the Financial Institutions Group of Dean Witter Reynolds in New York.
WILLIAM C. BROOKS (SINCE 1997; PRESENT TERM ENDS 2005)
William C. Brooks has served the Company as a director since 1997, as
Chairman of our Board of Directors since January 1998, and additionally as
our President and CEO since November 22, 2002. He was Chairman of Brooks
Group International, Ltd., a holding company involved in human resources and
economic development, from January 1998 to June 2002. Mr. Brooks retired as
a Vice President of General Motors Corporation, Inc. in 1997. He is a
retired Air Force Officer, and was Assistant Secretary of the U.S. Department
of Labor from July 1989 to December 1990. He served as a member of the U. S.
Social Security Advisory Board from February 1996 to January 1998. He is a
retired member of the Boards of Directors of Louisiana-Pacific Corporation
(NYSE: LPX) and DTE Energy (NYSE: DTE). He is a Director
4
of Covansys Inc. (NASDAQ: CVCS) and Caraco Pharmaceutical Laboratories, Ltd.
(AMEX: CPD).
DARREL W. FRANCIS (SINCE 1998; PRESENT TERM ENDS 2006)
Darrel W. Francis has been President of Precision Industrial Service, a
floor covering installation company, since June 1999. He also has been President
of Metropolitan Facility Resources, an office furniture sales and design
company, since January 1997. From January 1996 to October 1998, he was President
of Advantage Pavilion, Inc., an office furniture sales and design company.
TOM A. GOSS (SINCE 2000; PRESENT TERM ENDS 2006)
Tom A. Goss is Vice Chairman of our Board of Directors. He has been
Chairman of Goss LLC, an insurance agency, since November 2000. He also has been
Chairman of The Goss Group, Inc., an insurance products and services company,
since November 2000, and earlier was a Partner/Advisor of that company since
March 1997. He has been a principal of GR Beyster Lumber LLC, a millwork and
lumber company that custom builds and distributes a variety of forestry
products, since July 2000. He also has been Chairman of Goss Steel & Processing
LLC, a steel processing center, since April 1, 2003. He served as Director of
Intercollegiate Athletics (AD) for The University of Michigan from September
1997 to April 2000.
OSBIE HOWARD (SINCE 2003; PRESENT TERM ENDS 2005)
Osbie Howard has been our Senior Vice President since 1995. He also has
been President and CEO of our wholly-owned subsidiary, United American of
Tennessee, Inc. and its wholly owned managed care organization in Tennessee,
OmniCare Health Plan, Inc. ("OmniCare-TN"), since June 1995.
EMMETT S. MOTEN, JR. (SINCE 1988; PRESENT TERM ENDS 2006)
Emmett S. Moten, Jr. has been the President of Moten Associates, a real
estate development firm, since October 1996. Mr. Moten also has been
Chairman and part owner of Twinpines Paper Corporation, a paper manufacturing
and conversion company in Canton, Michigan, since 2002. From July 1988 to
October 1996, he was Vice President of Development for Little Caesar
Enterprises, Inc., a national fast food franchise company. Prior to assuming
that position, Mr. Moten was Director of the Community & Economic Development
Department of the City of Detroit for almost ten years.
During the fiscal year ended June 30, 2004, our Board of Directors held
four meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
We have a standing Finance and Audit Committee. The current members of our
Finance and Audit Committee are Darrel W. Francis (Chairman), Ronald E. Hall,
Sr., Tom A. Goss and Peter F. Hurst, Jr. They are all outside directors and
"independent directors" (as defined in our Articles of Incorporation), as
required by our Bylaws. During fiscal year 2004, our Finance and Audit Committee
held four meetings. The purpose of our Finance and Audit Committee is to assist
our Board of Directors in fulfilling its oversight responsibilities relating to
the integrity of our financial statements, our compliance with legal and
regulatory requirements, our independent auditor's qualifications and
independence, the performance of our independent auditors, and the adequacy of
our accounting and internal control systems. The Committee's specific
5
responsibilities are set forth in its Charter (a copy of which was Appendix B in
our proxy statement dated October 6, 2003, pertaining to our 2003 annual meeting
of shareholders).
We have a standing Compensation Committee. The current members of our
Compensation Committee are Tom A. Goss (Chairman), Dr. Richard M. Brown, Ronald
E. Hall, Sr., Peter F. Hurst, Jr. and Emmett S. Moten, Jr. They are all outside
directors. During fiscal year 2004, the Compensation Committee held three
meetings. The duties of our Compensation Committee are to make recommendations
to our Board of Directors relating to the overall compensation arrangements for
our officers and staff, to make recommendations to our Board of Directors
pertaining to any compensation plans in which our officers and directors are
eligible to participate, and to administer and grant options under our Amended
and Restated 1998 Stock Option Plan.
We have a standing Executive Committee. The current members of our
Executive Committee are William C. Brooks (Chairman), Darrel W. Francis, Tom A.
Goss, Osbie Howard, and Emmett S. Moten, Jr. During fiscal year 2004, our
Executive Committee did not meet. The duties of our Executive Committee are to
exercise, in the intervals between the meetings of our Board of Directors, the
powers of our Board as they relate to the management of our business and
affairs, excluding powers expressly delegated by our Board to other standing
committees.
We have a standing Governance Committee. The current members of our
Governance Committee are Emmett S. Moten, Jr. (Chairman), Darrel W. Francis, Tom
A. Goss and Emmett S. Moten, Jr. They are all outside directors. In addition,
William C. Brooks, our Chairman of the Board, President and CEO, is an ex
officio member of our Governance Committee. During fiscal year 2004, our
Governance Committee held three meetings. The duties of our Governance Committee
are to present to our Board of Directors, whenever vacancies occur or terms are
expected to expire, names of individuals who would make suitable directors of
the Company and to advise our appropriate officers on matters relating to the
organization of our Board of Directors.
All of our directors attended at least 75% of the combined number of
meetings held during fiscal year 2004 by the Board and each Committee of which
she or he was then a member.
COMPENSATION OF DIRECTORS
Directors who are our employees receive no fees for their services as a
director or as a Committee member. Each of our directors who is not our employee
receives $1,000 for each Board of Directors meeting and each Board committee
meeting attended. Each committee chairperson receives a $2,500 annual stipend.
In addition, each non-employee director receives an annual stipend of $36,000,
payable in $27,000 of our common shares and $9,000 in cash, as compensation for
director services. Our directors are also entitled to reimbursement for
reasonable out-of-pocket expenses incurred in providing services to us in their
capacities as directors.
6
SUMMARY COMPENSATION TABLE
The following table sets forth information for each of the fiscal years
ended June 30, 2004, 2003 and 2002 concerning the compensation of our Chief
Executive Officer and our other executive officers as of June 30, 2004 whose
annual salary and bonus exceeded $100,000 (collectively, the "named Executive
Officers").
NAME AND FISCAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS ($) COMPENSATION ($) (1)
------------------ ---- --------- --------- --------------------
WILLIAM C. BROOKS................ 2004 306,000 126,759(2) --
Chief Executive and President
2003 184,505 Stock(3) --
OSBIE HOWARD..................... 2004 235,000 70,500(2) 4,000
Senior Vice President
2003 228,000 67,500 4,000
2002 228,000 34,000 1,822
STEPHEN D. HARRIS................ 2004 125,000 46,875(2) 2,394
Chief Financial Officer and Treasurer
(1) All amounts in this column represent our annual contribution to the 401(k)
Savings Plan; but other than that, for the years set forth in the table,
none of the named Executive Officers had any long-term compensation
(including restricted stock awards and long-term incentive plan payouts).
Under our Amended and Restated 1998 Stock Option Plan, stock options
expiring 10 years after their respective grant dates were granted as
follows: (A) to Mr. Brooks on December 4, 2003 and April 29, 2004 for
37,500 and 90,000 common shares and at exercise prices of $2.09 and $4.27
per share, respectively, which options granted on December 4, 2003 vest
(i) for 15,000 common shares six months after the grant date and (ii) for
22,500 common shares one year after the grant date, and which options
granted on April 29, 2004 vest in eight equal installments beginning on
October 29, 2004 and on the 29th day of each January, April, July and
October thereafter; (B) to Mr. Howard on March 13, 2002, May 8, 2003,
December 4, 2003 and April 29, 2004 for 5,000, 25,000, 30,000 and 70,000
common shares and at exercise prices of $5.28, $1.37, $2.09 and $4.27 per
share, respectively, which options granted on March 13, 2002 vest in four
equal installments on the first four anniversaries of the grant date,
which options granted on March 13, 2002, May 8, 2003 and December 4, 2003
vest six months after the grant date, and which options granted on April
29, 2004 vest in eight equal installments beginning on October 29, 2004
and on the 29th day of each January, April, July and October thereafter;
and (C) to Mr. Harris on December 4, 2003 and April 29, 2004 for 15,000
and 30,000 common shares and at exercise prices of $2.09 and $4.27 per
share, respectively, which options granted on December 4, 2003 vest one
year after the grant date, and which options granted on April 29, 2004
vest in eight equal installments beginning on October 29, 2004 and on the
29th day of each January, April, July and October thereafter.
(2) For fiscal year 2004, Mr. Brooks, Mr. Howard and Mr. Harris received 50%
of their bonus in restricted stock, in lieu of cash, based on the closing
stock price of $4.24 per share on August 24, 2004, the grant date.
(3) For fiscal year 2003, in lieu of a cash bonus Mr. Brooks received a
restricted stock award of 50,324 common shares, valued at $93,100 based on
the closing stock price of $1.85 per share on June 30, 2003.
7
OPTION FISCAL YEAR-END VALUES
The following table shows the aggregated numbers and value of unexercised
stock options held by the named Executive Officers at June 30, 2004.
NUMBER OF
COMMON SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
NAME FISCAL YEAR-END FISCAL-YEAR END (1)
---- --------------- -------------------
William C. Brooks 227,500 (2) 598,950
Osbie Howard 130,000 (3) 247,900
Stephen D. Harris 70,000 (4) 174,800
- -----------------
(1) Calculated based on the closing price of Company common stock on June 30,
2004 (the last business day of the fiscal year) of $5.15 less the option
exercise price. An option is in-the-money if the market value of the
common stock subject to the option is greater than the exercise price. All
of the described stock options remain unexercised at the date of this
proxy statement, at which date none of such unexercised stock options is
in-the-money.
(2) These options: (A) as to 100,000 shares, were granted March 1, 2003 and
will become fully vested and exercisable March 1, 2005; (B) as to 15,000
shares, were granted December 4, 2003 and are fully vested and
exercisable; (C) as to 22,500 shares, were granted December 4, 2003 and
will become fully vested and exercisable on the first anniversary of that
grant date; (D) as to 90,000 shares, were granted on April 29, 2004 and
will vest and become exercisable in eight equal quarterly installments
from that grant date.
(3) These options: (A) as to 5,000 shares, were granted on March 13, 2002 and
will vest and become exercisable in four equal installments on the first
four anniversaries of that grant date; (B) as to 25,000 shares, were
granted on May 8, 2003 and are fully vested and exercisable; (C) as to
15,000 shares, were granted December 4, 2003 and are fully vested and
exercisable; (D) as to 15,000 shares, were granted December 4, 2003 and
will become fully vested and exercisable on the first anniversary of that
grant date; (E) as to 70,000 shares, were granted on April 29, 2004 and
will vest and become exercisable in eight equal quarterly installments
from that grant date.
(4) These options: (A) as to 25,000 shares, were granted on October 28, 2002
and will vest and become exercisable in five equal installments on the
first five anniversaries of that grant date; (B) as to 15,000 shares, were
granted December 4, 2003 and will become fully vested and exercisable on
the first anniversary of that grant date; (C) as to 30,000 shares, were
granted on April 29, 2004 and will vest and become exercisable in eight
equal quarterly installments from that grant date.
STOCK OPTION PLANS; EMPLOYEE STOCK PURCHASE PLAN
We have an Amended and Restated 1998 Stock Option Plan, under which stock
options (nonqualified options and incentive stock options) may be granted to our
officers, directors and key employees or those of our subsidiaries. The maximum
number of common shares, which may be issued pursuant to stock options under the
plan is 1,000,000 (but see part III of this proxy statement, below), and no
participant can receive stock options for more than 300,000 shares over the term
of the plan.
The plan is administered by a committee designated by our Board of
Directors, currently our Compensation Committee. The selection of persons who
are eligible to participate in the plan and grants to those individuals are
determined by the committee, in its sole discretion. The only established
criterion to determine eligibility under the plan is that individuals must be
our officers, directors or key employees or those of any Subsidiary (as defined
in the plan) who, in the judgment of
8
the committee, are or will become responsible for the direction and financial
success of the Company or any Subsidiary.
An incentive stock option granted under the plan must have an exercise
price not less than 100% of the fair market value of the shares on the date such
option is granted. For an incentive stock option granted to a participant who
owns more than 10% of the total combined voting stock of the Company or of any
parent or subsidiary of the Company, the exercise price must be at least 110% of
the fair market value of the shares on the date such option is granted. A
nonqualified option granted under the plan must have an exercise price not less
than 75% of the fair market value of the shares on the date such option is
granted. Each stock option granted under the plan must expire not more than ten
years after the date of the grant; and an incentive stock option granted to an
individual who, at the time of the grant, owns more than 10% of the total
combined voting stock of all classes of stock of the Company or of any parent or
Subsidiary must expire not more than five years after the date of the grant.
Our Employee Stock Purchase Plan ("ESPP"), which became effective October
1996, enables all our eligible employees to subscribe for common shares on an
annual offering date at a purchase price which is the lesser of 85% of the fair
market value of the shares on the first day or the last day of the annual
period. There were contributions of $7,812 for the purchase of 5,930 ESPP shares
for fiscal 2004. 200,000 common shares were reserved for issuance under the
ESPP.
We have not granted any stock appreciation rights, and we did not grant
any awards under a long-term incentive plan during fiscal year 2003. On December
4, 2003 and April 29, 2004, we granted certain stock options under our Amended
and Restated 1998 Stock Option Plan.
401(k) SAVINGS PLAN
We sponsor a retirement plan intended to be qualified under Section 401(k)
of the Internal Revenue Code. All employees over age 21, other than non-resident
aliens, are eligible to participate in the retirement plan. Employees could
contribute to the retirement plan on a tax-deferred basis up to 15% of their
total salary through April 1, 2001 and 20% thereafter. Under the retirement
plan, we make matching contributions on each employee's behalf, up to a maximum
of 1% of each employee's total salary through January 1, 2001 and 2% thereafter.
As of June 30, 2004, 65 employees had elected to participate in the retirement
plan. For the fiscal year ended June 30, 2004, we contributed approximately
$41,912 to the retirement plan. See the "Summary Compensation Table" above for
additional information.
COMPENSATION COMMITTEE REPORT
Compensation for our key executives is determined by the Compensation
Committee. Salaries, bonuses and other compensation of our key executives are
based upon profitability, enrollment levels of our clients, including
OmniCare-TN, revenue growth, return on equity and market share. The Compensation
Committee also administers the Amended and Restated 1998 Stock Option Plan.
The Compensation Committee believes that compensation of our key
executives should be sufficient to attract and retain highly qualified personnel
and also provide meaningful incentives for measurable superior performance.
During fiscal year 2004, our executive compensation included a base salary and
bonus (stock and cash). Based upon available data, we believe the base salaries
of our executives were set at the levels of comparable companies in our line of
business.
The Compensation Committee is comprised of Tom A. Goss (Chairman), Dr.
Richard M. Brown, Ronald E. Hall, Sr., Peter F. Hurst, Jr. and Emmett S.
Moten, Jr., all outside directors.
9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The ownership, operation and management of the Company involve various
potential conflicts of interest, including the relationships and transactions
described below. Management of the Company believes that these agreements and
transactions have been on terms, which are as fair to the Company as could have
been obtained from unaffiliated parties.
MANAGEMENT AGREEMENT. Our management agreement with our managed plan,
OmniCare-TN, was negotiated between related entities. However, such management
agreements were reviewed, revised and approved by each plan's Board. OmniCare-TN
is an HMO, which is owned by us through our wholly-owned subsidiary, United
American of Tennessee, Inc.
COMMON OFFICERS AND DIRECTORS. As indicated in the chart below, during and
since fiscal year 2004, certain officers or directors of the Company were also
officers or members of the Board of Directors of OmniCare-TN (which is owned by
the Company through our wholly owned subsidiary, United American of Tennessee,
Inc.). Consequently, such individuals were or are likely to influence the
operation of the Company and negotiations and arrangements between the Company
and these entities, including the negotiation of and operation under the
OmniCare-TN management agreement. Conflicts of interest may arise relating to
matters that are presented to our Board of Directors for consideration and with
respect to which the Company and OmniCare-TN may have differing interests,
including matters relating to the management agreement.
POSITION WITH POSITION WITH
NAME OUR COMPANY (1) OMNICARE-TN
---- --------------- -----------
William C. Brooks.......... Chairman of the Board, Director
President, CEO,
Director
Tom A. Goss................ Vice Chairman of the Chairman of the Board
Board, Director
Stephen D. Harris.......... Chief Financial Officer and Director
Treasurer
Osbie Howard............... Senior Vice President, President and CEO
Director
II. PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
Our Finance and Audit Committee has appointed Follmer Rudzewicz PLC as
independent auditors of the Company for our fiscal year ending June 30, 2005.
Our Board asks our shareholders to ratify the appointment of Follmer Rudzewicz
PLC.
Follmer Rudzewicz PLC has served as our independent auditors since March
3, 2003. A representative of Follmer Rudzewicz PLC is expected to be present at
our 2004 annual meeting to make a statement, if requested, and be available to
respond to questions with respect to the 2004 audit.
The Board of Directors considers Follmer Rudzewicz PLC to be well
qualified to serve as the independent auditors for the Company. If the
appointment of Follmer Rudzewicz PLC is not ratified by the shareholders, the
Board of Directors may appoint other independent auditors based upon the
recommendation of the Finance and Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF FOLLMER RUDZEWICZ PLC AS INDEPENDENT AUDITORS FOR THE 2004 FISCAL
YEAR. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS OTHERWISE SPECIFY IN THEIR PROXIES.
10
III. PROPOSAL TO APPROVE AMENDMENT TO THE UNITED AMERICAN HEALTHCARE
CORPORATION AMENDED AND RESTATED 1998 STOCK OPTION PLAN TO INCREASE
AUTHORIZED SHARES
GENERAL
We seek to increase the number of shares subject to the United American
Healthcare Corporation Amended and Restated 1998 Stock Option Plan. You are
being asked to consider and approve an amendment to the plan to increase the
number of common shares reserved for issuance upon the exercise of options
granted under the plan by 500,000 shares. Pursuant to the plan, 1,000,000 common
shares are currently reserved for issuance upon the exercise of options granted
or to be granted to participants in the plan. Our officers, directors and key
employees and those of any subsidiary in which we own more than 25% of the total
combined voting power of all classes of stock (50% in the case of an incentive
stock option granted to an employee of such subsidiary) -- below called a
"Subsidiary -- are eligible to participate in the plan. A committee designated
by our Board of Directors, currently our Compensation Committee, determines
which persons eligible to participate in the plan are actually granted options
under the plan.
Options granted under the plan may be incentive stock options,
nonqualified options, or both. Incentive stock options are options that meet the
requirements set forth in the plan, that are intended to be and qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code and the
related regulations. Nonqualified options are options that meet the requirements
set forth in the plan but are not intended to be incentive stock options, or do
not qualify as incentive stock options under Section 422. The plan contains
various provisions to ensure that incentive stock options comply with Section
422. Our Board of Directors adopted the plan on August 6, 1998, subject to
shareholder approval which was obtained on November 12, 1998, and approved the
amended and restated plan on August 26, 2003, subject to shareholder approval,
which was obtained on November 14, 2003.
The plan is our only stock option plan. As of September 14, 2004, we had
granted, and there remained outstanding, options independent of the plan to
purchase 125,000 common shares. As of September 14, 2004, (1) options to
purchase 650,000 common shares were outstanding under the plan, (2) options to
purchase 311,500 common shares granted under the plan had been exercised, and
(3) 38,500 common shares remained available for the grant of options under the
plan. The proposed amendments to the plan would increase the number of common
shares reserved for issuance upon the exercise of options granted or to be
granted under the plan by 500,000 common shares.
Our Board of Directors believes that it is in our best interests and in
the best interests of our shareholders to approve the proposed amendments to the
plan to allow us to continue to grant options in accordance with the plan.
The purpose of the plan is to provide our officers, directors and key
employees with an increased incentive to make significant and extraordinary
contributions to our long-term performance and growth, to join the interests of
our officers, directors and key employees with the interests of our shareholders
and to help us attract and retain officers, directors and key employees of
exceptional ability.
Persons deemed to be our affiliates (i.e., persons who directly or
indirectly through one or more intermediaries, control, are controlled by or are
under common control with us) must resell
11
shares acquired under the plan pursuant to a registration statement under the
Securities Act of 1933 and the related rules and regulations, Rule 144 under the
Securities Act or an applicable exemption under the Securities Act.
We are the issuer of the securities offered pursuant to the plan. The
common shares we issue upon exercise of stock options under the plan may be
either our authorized and unissued or reacquired common shares. The plan is not
subject to any provisions of the Employee Retirement Income Security Act of 1974
and is not qualified under Section 401(a) of the Internal Revenue Code.
APPROVAL OF THE PLAN AMENDMENTS
Shareholder approval of the proposed amendments to the plan requires the
approval by a majority of the votes cast by the holders of common shares at the
meeting and entitled to vote on the action. Abstentions, withheld votes and
broker non-votes will not be deemed votes cast in determining approval of this
proposal, but will be counted in determining the number of common shares present
or represented by proxy in determining whether a quorum is present. We do not
intend to place the proposed amendments to the plan into effect unless such
approval is obtained at the meeting, and such approval is sought, in part, to
exempt the granting of options under the plan from the provisions of Section
162(m) of the Internal Revenue Code and in order to comply with shareholder
approval requirements for securities traded on the Nasdaq SmallCap Market.
A FULL COPY OF THE PLAN, AS PROPOSED TO BE AMENDED, MARKED TO SHOW THE
PROPOSED CHANGES, IS ATTACHED AS APPENDIX A TO THIS PROXY STATEMENT. THE MAJOR
FEATURES OF THE PLAN, AS PROPOSED TO BE AMENDED, ARE SUMMARIZED BELOW, BUT THIS
IS ONLY A SUMMARY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE ACTUAL
TEXT. CAPITALIZED TERMS NOT OTHERWISE DEFINED IN THIS PROXY STATEMENT HAVE THE
MEANINGS GIVEN THEM IN THE PLAN. AS OF SEPTEMBER 14, 2004, THE CLOSING SALES
PRICE OF OUR COMMON SHARES WAS $4.90.
ADMINISTRATION
The plan is administered by a committee designated by our Board of
Directors, currently our Compensation Committee, to perform the duties of the
administrator under the plan. The administrator is referred to in the plan as
the "Committee." The Committee must be comprised of directors who meet the
standards of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, or any similar successor rule, and who would be deemed "outside
directors" under Section 162(m) of the Internal Revenue Code. Members of the
Committee serve at the pleasure of our Board of Directors and may be removed
or replaced by the Board at any time. The Committee currently consists of
Tom A. Goss (Chairman), Dr. Richard M. Brown, Ronald E. Hall, Sr., Peter F.
Hurst, Jr. and Emmett S. Moten, Jr.
Subject to the provisions of the plan, the Committee is authorized to
interpret the plan, to make, amend and rescind rules relating to the plan, and
to make all other determinations necessary or advisable for the plan's
administration. The Committee's interpretation of any provision of the plan is,
unless otherwise determined by our Board of Directors, final and conclusive.
Subject to the provisions of the plan, the Committee determines, from those
eligible to be participants under the plan, the persons to be granted stock
options, the amount of stock to be optioned to each such person and the terms
and conditions of any stock options. Under the plan, in exercising its
discretion, there is no requirement whatsoever that the Committee follow past
practices, act in a manner consistent with past practices, or treat an officer,
director or key employee in a manner consistent with the treatment afforded
other officers, directors or key employees with respect to the plan.
12
In addition to any other rights of indemnification they may have, we will
indemnify the members of the Committee in connection with any claim, action,
suit or proceeding relating to any action taken or failure to act under or in
connection with the plan or any option granted under the plan to the full extent
provided for under our bylaws with respect to indemnification of our directors.
PLAN PARTICIPANTS
The Committee, in its discretion, selects the persons who are eligible to
participate in the plan and determines the grants to those individuals. The only
established criterion to determine eligibility under the plan is that
individuals must be one of our officers, directors or key employees who, in the
judgment of the Committee, are or will become responsible for the direction and
financial success of the Company or any Subsidiary; provided that incentive
stock options may be granted only to our employees, as defined in the Internal
Revenue Code, to the extent required by Section 422 of the Internal Revenue
Code.
Approximately three key employees and nine directors are currently
eligible to participate in the plan, all of whom have been granted options under
or independent of the plan.
Subject to the adjustments described under the caption "Shares Subject to
Grant" below, no participant may be granted stock options to purchase more than
300,000 common shares in the aggregate over the term of the plan. In addition,
grants are subject to the maximum number of shares remaining available for the
grant of stock options under the plan. There are also limitations on the maximum
value of incentive stock options that may become first exercisable by any person
in any year. Each option grant under the plan must be evidenced by a written
agreement containing provisions approved by the Committee.
SHARES SUBJECT TO GRANT
The maximum number of common shares reserved for issuance upon the
exercise of stock options granted under the plan is currently 1,000,000 common
shares and is proposed to be amended to be 1,500,000 common shares. These common
shares may consist in whole or in part of authorized and unissued or reacquired
common shares. Unless the plan has terminated, shares covered by the unexercised
portion of canceled, expired or otherwise terminated options under the plan are
again available for option and sale.
The number and type of shares subject to each outstanding stock option,
the option price with respect to outstanding stock options, the aggregate number
and type of shares remaining available under the plan, and the maximum number
and type of shares that may be granted to any participant in any fiscal year are
subject to such adjustment as the Committee, in its discretion, deems
appropriate to reflect events such as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations of or by the
Company; provided that no fractional shares may be issued pursuant to the plan,
no rights may be granted under the plan with respect to fractional shares, and
any fractional shares resulting from such adjustments shall be eliminated from
any outstanding option.
13
STOCK OPTIONS
Grant of Stock Options
Both incentive stock options and nonqualified options may be granted under
the plan. An incentive stock option is intended to be and to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code. Any
incentive stock option granted under the plan must have an exercise price that
is not less than 100% of the fair market value of the stock on the date on which
the option is granted. An incentive stock option granted to a participant who
owns more than 10% of our total combined voting shares must have an exercise
price not less than 110% of the fair market value of stock on the date the
option is granted. A nonqualified option granted under the plan must have an
exercise price not less than 75% of the fair market value of the stock on the
date the option is granted.
At the time any option granted under the plan is exercised, the
participant must pay the full option price for all shares purchased:
- - in cash, or
- - with the consent of the Committee, in its discretion:
- - subject to any conditions established by the Committee, by having us
retain from the shares to be delivered upon exercise of the stock option
that number of shares having a fair market value on the date of exercise
equal to the option price, or
- - in such other manner as the Committee determines is appropriate, in its
discretion.
The fair market value, determined as of the date the option is granted, of stock
with respect to which incentive stock options are first exercisable in any
calendar year by a participant under the plan cannot exceed $100,000.
Term of Stock Options
If not sooner terminated, each stock option granted under the plan must
expire not more than ten years from the date of grant, except that an incentive
stock option granted to a participant who at the time of the grant owns more
than 10% of our total combined voting stock must expire not more than five years
after the date of the grant.
Continuation of Employment
The Committee in its discretion may, but need not, require that any
participant to whom a stock option is granted shall agree in writing as a
condition of the granting of such option to remain in the employ of the Company
or a Subsidiary for a designated minimum period from the date of the grant.
Unless the Committee in its discretion determines otherwise, stock options
granted under the plan may be exercised only while a participant is a employed
by us or a Subsidiary (or is an outside director). If the participant's
employment is terminated, the Committee may, in its discretion and on certain
terms and conditions specified in the plan, extend the period of time in which a
stock option may be exercised. Nevertheless, no stock option is to be
exercisable after its expiration date and, unless the Committee in its
discretion determines otherwise, a stock option may only be exercised after
termination of a participant's employment (or an outside director's service as a
director) to the extent it would have been exercisable on the date of
termination of the participant's employment (or of an outside director's service
as a director). Nothing in the plan or in any grant confers any right to
continued employment.
14
Sequential Exercise
We may grant additional stock options to the same participant even if
options previously granted to that participant remain unexercised. A participant
may exercise any option granted under the plan, if then exercisable, even if
options previously granted to that participant remain unexercised.
Non-Transferability of Stock Options
No stock option granted under the plan is permitted to be transferred by a
participant other than by will or by the laws of descent and distribution. Every
stock option granted under the plan is exercisable, during the lifetime of the
participant, only by the participant.
Shareholder Rights
No participant in the plan has any of the rights of our shareholders under
any option granted under the plan until the actual issuance of shares to the
participant. Before such issuance, no adjustment will be made for dividends,
distributions or other rights in respect of such shares, except as described
under the caption "Shares Subject to Grant" above.
FEDERAL INCOME TAX CONSEQUENCES
The rules governing the tax treatment of options and shares acquired upon
the exercise of options are quite technical. Therefore, the description of
federal income tax consequences set forth below is necessarily general in nature
and does not purport to be complete. Moreover, statutory provisions are subject
to change, as are their interpretations, and their application may vary in
individual circumstances. Finally, the tax consequences under applicable state
and local income tax laws may not be the same as under the federal income tax
laws.
Incentive Stock Options
Incentive stock options granted under the plan are intended to qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code. If the
participant does not dispose of the shares acquired upon exercise of an
incentive stock option within one year after the transfer of the shares to the
participant and within two years from grant of the option, the participant will
realize no taxable income as a result of the grant or exercise of such option,
and any gain or loss that is subsequently realized upon a sale or other
disposition of the shares may be treated as long-term capital gain or loss, as
the case may be. Under these circumstances, we will not be entitled to a
deduction for federal income tax purposes with respect to either the issuance of
the incentive stock options or the transfer of shares upon their exercise.
If the participant disposes of the shares acquired upon exercise of
incentive stock options before the above time periods expire, the participant
will recognize ordinary income in the year in which the disqualifying
disposition occurs, the amount of which will generally be the lesser of (1) the
excess of the market value of the shares on the date of exercise over the option
price, or (2) the gain recognized on such disposition. Such amount will
ordinarily be deductible by us for federal income tax purposes in the same year,
provided that the amount constitutes reasonable compensation and that we satisfy
certain federal income tax withholding requirements. In addition, the excess, if
any, of the amount realized on a disqualifying disposition over the market value
of the shares on the date of exercise will be treated as capital gain.
15
Nonqualified Options
A participant who acquires shares by exercise of a nonqualified option
generally realizes taxable ordinary income at the time of exercise equal to the
difference between the exercise price and the fair market value of the shares on
the date of exercise. Such amount ordinarily will be deductible by us in the
same year, if the amount constitutes reasonable compensation and that we satisfy
certain federal income tax withholding requirements. Subsequent appreciation or
decline in the value of the shares will generally be treated as capital gain or
loss on the sale or other disposition of the shares.
Capital Gains Rates
If a participant recognizes capital gain upon the sale or other
disposition of shares acquired upon exercise of options, the tax rate applicable
to such gain will depend on a number of factors, including the date the options
are granted, the date the options are exercised, the date the shares are sold or
otherwise disposed of, the length of time the participant holds the shares, and
the participant's marginal tax bracket. Participants should consult their own
tax advisors concerning the impact to them of the long-term capital gain tax
rates, as well as the other tax consequences of participation in the plan.
Withholding Payments
If upon the exercise of any nonqualified option or a disqualifying
disposition, within the meaning of Section 422 of the Internal Revenue Code, of
shares acquired upon exercise of an incentive stock option, we must pay any
amount for income tax withholding, then in the Committee's discretion either the
participant shall pay such amount to us, or the amount of common shares we
deliver to the participant will be appropriately reduced, to reimburse us for
such payment.
The Committee may, in its discretion, permit participants to satisfy such
withholding obligations, in whole or in part, by electing to have the amount of
common shares delivered or deliverable by us upon exercise of a stock option
appropriately reduced, or by electing to tender common shares back to us after
exercise of a stock option to reimburse us for such income tax withholding,
subject to such rules and regulations, if any, as the Committee may adopt. The
Committee may make such other arrangements with respect to income tax
withholding as it shall determine.
Limitation on Compensation Deduction
Publicly-held corporations may not deduct compensation paid to some of
their executive officers in excess of $1 million. The employees covered by the
$1 million compensation deduction limitation are the chief executive officer and
those employees whose annual compensation is required to be reported to the
Securities and Exchange Commission because they are one of our four highest
compensated employees for the taxable year (other than the chief executive
officer). Ordinary income attributable to stock options generally is included in
an employee's compensation for purposes of the $1 million limitation on
deductibility of compensation.
There is an exception to the $1 million compensation deduction limitation
for compensation paid pursuant to a qualified performance-based compensation
plan. Compensation attributable to a stock option satisfies the qualified
performance-based compensation exception if the following conditions are met:
16
- - the grant is made by a compensation committee comprised of outside
directors,
- - the plan under which the options may be granted states the maximum number
of shares with respect to which options may be granted during a specified
period to any employee,
- - under the terms of the option, the amount of compensation the employee
would receive is based solely on an increase in the value of the shares
after the date of the grant, for example, the option is granted at an
exercise price equal to or greater than fair market value as of the date
of the grant, and
- - the individuals eligible to receive grants, the maximum number of shares
for which grants may be made to any employee, the exercise price of the
options and other disclosures required by SEC proxy rules are disclosed to
shareholders and subsequently approved by them.
If the amount of compensation a covered employee may receive under the
grant is not based solely on an increase in the value of the shares after the
date of the grant (for example, an option is granted with an exercise price less
than the fair market value of the underlying common shares as of the date of the
grant), none of the compensation attributable to the grant is qualified
performance-based compensation unless the grant is made subject to reaching a
performance goal that has been previously established and approved by our
shareholders and otherwise qualifies under Section 162(m) of the Internal
Revenue Code. We have not established any performance goals for grants under the
plan that meet the requirements of the performance-based compensation standard
required by such Section 162(m). The grant of options by the Board of Directors
or by a committee not meeting the requirements of Section 162(m) will not
qualify for the performance-based compensation exception to the $1 million
compensation deduction limitation. Our Compensation Committee currently meets
the requirements of Section 162(m).
ACCOUNTING TREATMENT
Generally, under current accounting rules applicable to us, neither the
grant nor the exercise of an incentive stock option or a nonqualified option
under the plan requires any charge against earnings, if the exercise price of
the option is equal to the fair market value of the shares on the date of grant.
Footnote disclosure of the value of such options, however, is required. If the
exercise price is below the fair market value of the shares on the date of
grant, an earnings charge equal to the difference will be required either at the
date of grant or possibly over the term of the option. If the optionee is
allowed to pay the exercise price of an option with shares held less than six
months (or possibly, if such price is paid by our withholding shares issuable
upon exercise of the option), we will recognize an earnings charge equal to the
difference between the fair market value of the shares issuable upon exercise of
the option and the exercise price. In addition, if we make some changes to
outstanding options, such as extending their exercisability after termination of
employment, a new grant date might occur, resulting in an earnings charge equal
to the difference between the fair market value of the shares issuable upon
exercise of the option and the exercise price on the date of the change.
OPTION GRANTS UNDER THE PLAN AND INDEPENDENT OF THE PLAN
Options may be granted under the plan at the Committee's discretion,
subject to shareholder approval of the proposed amendments to the plan if
options are granted in excess of the 1,000,000 common shares currently
authorized and before such approval. The following table sets forth, as to
William C. Brooks, Osbie Howard and Stephen D. Harris, all current executive
officers as a group, all current directors who are not executive officers as a
group, and all key
17
employees who are not executive officers as a group, the options granted both
under the plan and independent of the plan during the fiscal year ended June 30,
2004:
United American Healthcare Corporation
Stock Options Granted Both Under
the Amended and Restated 1998 Stock Option Plan
and
Independent of the Amended and Restated 1998 Stock Option Plan
Number of Common
Shares Subject to Options
Granted in the
Fiscal Year Ended
Name and Position June 30, 2004
----------------- -------------
William C. Brooks, President and Chief
Executive Officer ................................................. 127,500
Osbie Howard, Senior Vice President .................................. 100,000
Stephen D. Harris, Chief Financial Officer
and Treasurer ..................................................... 45,000
All current executive officers as a group (3 persons) ............... 272,500
All current directors who are not executive
officers as a group (6 persons) ..................................... 180,000
All key employees who are not executive officers
as a group (6 persons) ............................................ 21,500
All other consultants and advisors as a group ........................ -
The dollar values of these options cannot be determined because they
depend on the market value of the underlying shares on the date of exercise. No
associate of any director, nominee or executive officer has been granted options
under or independent of the plan. In addition, no person not named above has
received five percent or more of the options authorized under or independent of
the plan, in the aggregate.
Our Board of Directors has had an established policy to grant every new
director, upon his or her first joining the Board, a 10-year option under the
plan to purchase 25,000 common shares, exercisable at the fair market value of
the common shares on the date of grant, and vesting six months after the grant
date. On May 10, 2004, our Board of Directors modified that policy to thereafter
grant 10-year options under the plan (i) to every new director at the start of
his or her term to purchase 25,000 shares, and (ii) to every re-elected director
at the start of his or her new term to purchase 15,000 shares, vesting quarterly
over a three-year period beginning six months after the grant date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENTS TO THE PLAN, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY
OTHERWISE.
IV. REPORT OF THE FINANCE AND AUDIT COMMITTEE
This report of our Finance and Audit Committee describes the actions of
the Committee for the fiscal year ended June 30, 2004. This report shall not be
deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission or subject to Regulation 14A or 14C or to the liabilities of
Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be
incorporated by reference into any future filing under such Securities Exchange
Act or the Securities Act of 1933, as amended, except to the extent that we
specifically request that such information be treated as soliciting material or
specifically incorporate it by reference into such filing.
The Finance and Audit Committee (the "Committee") is made up of the
following members: Darrel W. Francis (Chairman), Tom A. Goss, Ronald E. Hall,
Peter F. Hurst, Jr. The Committee operates pursuant to a written Charter (a copy
of which was Appendix B in our proxy statement
18
dated October 6, 2003, pertaining to our 2003 annual meeting of shareholders).
In accordance with the Charter, all of the members of the Committee are
independent (as defined in the rules of the New York Stock Exchange) and
financially literate and at least one member of the Committee has accounting or
related financial management expertise.
Management is responsible for our internal controls and the financial
reporting process. Our independent auditors are responsible for performing an
independent audit of our consolidated financial statements in accordance with
generally accepted auditing standards and for expressing an opinion on the
conformity of our audited consolidated financial statements with accounting
principles generally accepted in the United States of America. As provided in
its Charter, the Committee's responsibilities include monitoring and oversight
of these processes.
In this context and in accordance with its Charter, the Committee has met
and held discussions with management and the current independent auditors.
Management represented to the Committee that our audited consolidated
financial statements for the fiscal year ended June 30, 2004 (the "Financial
Statements") were prepared in accordance with generally accepted accounting
principles, and the Committee has reviewed and discussed the Financial
Statements with management and the independent auditors. The Committee also
discussed with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Committee) and
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
In addition, the Committee has discussed with the independent auditors the
independent auditors' independence from management and the Company, including
the matters in the written disclosures from the independent auditors required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). In concluding that the independent auditors are independent, the
Committee considered, among other factors, whether the non-audit services
provided by the independent auditors (principally tax services) were compatible
with their independence. The Sarbanes-Oxley Act of 2003 requires the Committee
to pre-approve all audit and non-audit services, subject to a narrow de minimis
exception.
In fulfilling its oversight responsibility of reviewing the services
performed by our independent auditors, the Committee carefully reviews the
policies and procedures for the engagement of the independent auditors. The
Committee also met with the independent auditors, with and without management
present, to discuss the results of their examinations, the evaluations of our
internal controls, and the overall quality of our financial reporting. The
Committee also reviewed and discussed with the independent auditors the fees
paid to the independent auditors; these fees are described under "Fees Paid to
Independent Auditors" following this report.
Based on the Committee's review and discussions of the matters referred to
above, the Committee recommended to the Board that the Financial Statements be
included in our Annual Report on Form 10-K for the fiscal year ended June 30,
2004, for filing with the SEC. The Committee also recommended that the Board
select Follmer Rudzewicz PLC to serve as our independent auditors for fiscal
year 2005.
Finance and Audit Committee
Darrel W. Francis, Chairman,
Tom A. Goss, Ronald E. Hall, and Peter F. Hurst, Jr.
19
AUDIT FEES
The following is a summary of fees billed by Follmer Rudzewicz PLC for
audit and other professional services during the fiscal year ended June 30,
2004:
Audit Fees, including services rendered in reviewing quarterly financial
information and auditing our annual consolidated $ financial statements for
fiscal year 2004 ................................................................. $155,000
Tax Fees ........................................................................... $ 25,000
The Finance and Audit Committee, after a review and discussion with
Follmer Rudzewicz PLC, determined that the provision of these services was
compatible with maintaining their respective independence.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Finance and Audit Committee's Charter affirms its responsibility to
approve in advance audit and non-audit services to be performed by our
independent auditor. The Committee anticipates adopting pre-approval policies
and procedures for such audit and non-audit services at a future meeting and
disclosing the same in our next annual proxy statement.
V. OTHER INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than 10% of a registered class of our
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Officers, directors and greater than 10%
shareholders are required by SEC regulation to provide us copies of Section
16(a) reports they file. Based solely on review of the copies of such reports
provided to us for fiscal 2004, or written representations that no Forms 5 were
required, we believe that during the fiscal year ended June 30, 2004 all Section
16(a) filing requirements applicable to our officers, directors and greater than
10% beneficial owners were complied with, except late filed reports as follows:
one by each director and Stephen D. Harris for stock options granted to each of
them on the same date; one by William C. Brooks for four transactions; two
(concurrently) by Darrel W. Francis for three transactions; one by Tom A. Goss
for four transactions; one by Peter F. Hurst, Jr. for one transaction; and one
report by Mr. Harris, delayed until he was issued an identification number to
distinguish him from a filer with the same name.
EXPENSES OF SOLICITATION
The cost of this solicitation of proxies will be borne by the Company and
may include requests by mail and personal contact by its Directors, officers and
employees. In addition, the Company has retained Georgeson Shareholder to aid in
the solicitation of proxies from brokers, banks, other nominees and
institutional holders at a fee not to exceed $8,000 plus out-of-pocket expenses.
The Company will reimburse brokers or other nominees and institutional holders
for their expenses in forwarding proxy materials to principals. Any person
giving a proxy has the power to revoke it at any time before it is voted.
20
STOCK PERFORMANCE CHART
The following graph compares the cumulative total return for the previous
five fiscal years on a $100 investment on June 30, 2000 in each of our Common
Stock, the Standard & Poor's 500 Stock Index and peer group indices (the Old
Peer Group is the same as in the comparable graph in our last proxy statement;
the New Peer Group reflects the substitution of some peers more similar to us
currently). The graph assumes reinvestment of dividends, if any.
[LINE GRAPH]
1999 2000 2001 2002 2003 2004
-------- -------- -------- -------- -------- --------
UAHC Cum $ $ 100.00 $ 38.10 $ 116.59 $ 372.62 $ 140.96 $ 392.40
S&P 500 Index Cum $ $ 100.00 $ 107.25 $ 91.35 $ 74.92 $ 76.14 $ 90.68
S&P Small Cap 600 Index Cum $ $ 100.00 $ 115.99 $ 128.89 $ 129.25 $ 124.63 $ 168.54
Peer Group Cum $ $ 100.00 $ 129.74 $ 181.50 $ 262.03 $ 291.38 $ 375.92
2005 ANNUAL MEETING
A shareholder proposal which is intended to be presented at our 2005
annual meeting of shareholders must be received by the Company at its principal
executive offices by July 10, 2005.
Dated: September 27, 2004
21
APPENDIX A
UNITED AMERICAN HEALTHCARE CORPORATION
AMENDED AND RESTATED
1998 STOCK OPTION PLAN
(PARAGRAPH 5 AS AMENDED AUGUST 24, 2004, SUBJECT TO SHAREHOLDER
APPROVAL AT THE ANNUAL MEETING OF SHAREHOLDERS ON NOVEMBER 5, 2004)
[DELETION DENOTED BY BOLD AND STRIKE-THROUGH.
ADDITION DENOTED BY BOLD AND DOUBLE UNDERLINE.]
1. DEFINITIONS: As used herein, the following definitions shall apply:
(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation.
(b) "COMMITTEE" shall mean the Compensation Committee designated
by the Board of Directors of the Corporation, or such other committee as
shall be specified by the Board of Directors to perform the functions and
duties of the Committee under the Plan; provided, however, that the
Committee shall comply with the applicable requirements of (i) Rule 16b-3
of the Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and (ii) Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "CODE"), and the regulations
thereunder.
(c) "CORPORATION" shall mean United American Healthcare
Corporation., a Michigan corporation, or any successor thereof.
(d) "DISCRETION" shall mean the sole discretion of the Committee,
with no requirement whatsoever that the Committee follow past practices,
act in a manner consistent with past practices, or treat an officer,
director or key employee in a manner consistent with the treatment
afforded other officers, directors or key employees with respect to the
Plan.
(e) "INCENTIVE OPTION" shall mean an option to purchase Common
Stock of the Corporation which meets the requirements set forth in the
Plan and also meets the definition of an incentive stock option within the
meaning of Section 422 of the Code. The stock option agreement for an
Incentive Option shall state that the option is intended to be an
Incentive Option.
(f) "NONQUALIFIED OPTION" shall mean an option to purchase Common
Stock of the Corporation which meets the requirements set forth in the
Plan but does not meet the definition of an incentive stock option within
the meaning of Section 422 of the Code. The stock option agreement for a
Nonqualified Option shall state that the option is intended to be a
Nonqualified Option.
(g) "PARTICIPANT" shall mean any individual designated by the
Committee under Paragraph 6 for participation in the Plan.
Appendix A - Page 1
(h) "PLAN" shall mean the United American Healthcare Corporation
1998 Stock Option Plan.
(i) "SUBSIDIARY" shall mean any corporation or similar entity in
which the Corporation owns, directly or indirectly, stock or other equity
interest ("STOCK") possessing more than 25% of the combined voting power
of all classes of Stock; provided, however, that an Incentive Option may
be granted to an employee of a Subsidiary only if the Subsidiary is a
corporation and the Corporation owns, directly or indirectly, 50% or more
of the total combined voting power of all classes of Stock of the
Subsidiary.
2. PURPOSE OF PLAN: The purpose of the Plan is to provide officers,
directors and key employees of the Corporation and its Subsidiaries with an
increased incentive to make significant and extraordinary contributions to the
long-term performance and growth of the Corporation and its Subsidiaries, to
join the interests of officers, directors and key employees with the interests
of the shareholders of the Corporation, and to facilitate attracting and
retaining officers, directors and key employees of exceptional ability.
3. ADMINISTRATION: The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee shall determine, from those
eligible to be Participants under the Plan, the persons to be granted stock
options, the amount of stock to be optioned to each such person, and the terms
and conditions of any stock options. Subject to the provisions of the Plan, the
Committee is authorized to interpret the Plan, to make, amend and rescind rules
and regulations relating to the Plan and to make all other determinations
necessary or advisable for the Plan's administration. Interpretation and
construction of any provision of the Plan by the Committee shall, unless
otherwise determined by the Board of Directors of the Corporation, be final and
conclusive. A majority of the Committee shall constitute a quorum, and the acts
approved by a majority of the members of the Committee present at any meeting at
which a quorum is present, or acts approved in writing by a majority of the
Committee, shall be the acts of the Committee.
4. INDEMNIFICATION OF COMMITTEE MEMBERS: In addition to such other
rights of indemnification as they may have, the members of the Committee shall
be indemnified by the Corporation in connection with any claim, action, suit or
proceeding relating to any action taken or failure to act under or in connection
with the Plan or any option granted hereunder to the full extent provided for
under the Corporation's Bylaws with respect to indemnification of directors of
the Corporation.
5. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN: The maximum number of
shares with respect to which stock options may be granted under the Plan shall
be 1,500,000 shares in the aggregate of Common Stock of the Corporation. If a
stock option expires or terminates for any reason without having been fully
exercised, the number of shares with respect to which the stock option was not
exercised at the time of its expiration or termination shall again become
available for the grant of stock options under the Plan, unless the Plan shall
have been terminated.
Notwithstanding any other provision in this Plan, no officer, director or
employee of the Corporation or a Subsidiary may receive options for more than
300,000 shares of Common Stock of the Corporation over the term of the Plan, as
provided in Paragraph 21. For purposes of this 300,000 share per-Participant
limitation, there shall be taken into account all shares covered by stock
options granted to an individual regardless of whether such stock options expire
or terminate without being fully exercised.
Appendix A - Page 2
The number of shares subject to each outstanding stock option, the option
price with respect to outstanding stock options, the aggregate number of shares
remaining available under the Plan and the 300,000 share per-Participant
limitation shall be subject to such adjustment as the Committee, in its
Discretion, deems appropriate to reflect such events as stock dividends, stock
splits, recapitalizations, mergers, consolidations or reorganizations of or by
the Corporation; provided, however, that no fractional shares shall be issued
pursuant to the Plan, no rights may be granted under the Plan with respect to
fractional shares, and any fractional shares resulting from such adjustments
shall be eliminated from any outstanding stock option.
6. PARTICIPANTS: The Committee shall determine and designate from time
to time, in its Discretion, those officers, directors and key employees of the
Corporation or any Subsidiary to receive stock options who, in the judgment of
the Committee, are or will become responsible for the direction and financial
success of the Corporation or any Subsidiary; provided, however, that Incentive
Options may be granted to officers, directors and key employees of a Subsidiary
only if (i) the Corporation owns, directly or indirectly, 50% or more of the
total combined voting power of all classes of Stock of the Subsidiary and (ii)
the Subsidiary is a corporation.
7. WRITTEN AGREEMENT: Each stock option shall be evidenced by a written
agreement (each a "CORPORATION-PARTICIPANT AGREEMENT") containing such
provisions as may be approved by the Committee. Each such
Corporation-Participant Agreement shall constitute a binding contract between
the Corporation and the Participant and every Participant, upon acceptance of
such Agreement, shall be bound by the terms and restrictions of the Plan and of
such Agreement. The terms of each such Corporation-Participant Agreement shall
be in accordance with the Plan, but each Agreement may include such additional
provisions and restrictions determined by the Committee, in its Discretion,
provided that such additional provisions and restrictions are not inconsistent
with the terms of the Plan.
8. ALLOTMENT OF SHARES: The Committee shall determine and fix, in its
Discretion, the number of shares of Common Stock with respect to which a
Participant may be granted stock options under the Plan; provided, however, that
no Incentive Option may be granted under the Plan to any one Participant which
would result in the aggregate fair market value, determined as of the date the
option is granted, of underlying stock with respect to which incentive stock
options are exercisable for the first time by such Participant during any
calendar year under any plan maintained by the Corporation (or any parent or
subsidiary corporation of the Corporation) exceeding $100,000.
9. STOCK OPTIONS: Subject to the terms of the Plan, the Committee, in
its Discretion, may grant to Participants either Incentive Options or
Nonqualified Options or any combination thereof; provided, that directors of the
Corporation or a Subsidiary who are not employees of the Corporation or
Subsidiary shall be eligible for only Nonqualified Options. Each option granted
under the Plan shall designate the number of shares covered thereby, if any,
with respect to which the option is an Incentive Option, and the number of
shares covered thereby, if any, with respect to which the option is a
Nonqualified Option.
10. STOCK OPTION PRICE: Subject to the rules set forth in this Paragraph
10, at the time any stock option is granted, the Committee, in its Discretion,
shall establish the price per share for which the shares covered by the option
may be purchased. With respect to an Incentive Option, such option price shall
not be less than 100% of the fair market value of the stock on the date on which
such option is granted; provided, however, that with respect to an Incentive
Option granted to an
Appendix A - Page 3
employee who at the time of the grant owns (after applying the attribution rules
of Section 424(d) of the Code) more than 10% of the total combined voting stock
of the Corporation or of any parent or subsidiary, the option price shall not be
less than 110% of the fair market value of the stock on the date such option is
granted. With respect to a Nonqualified Option, the option price shall not be
less than 75% of the fair market value of the stock on the date upon which such
option is granted. Fair market value of a share shall be determined by the
Committee and may be determined by taking the mean between the highest and
lowest quoted selling prices of the Corporation's Common Stock on any exchange
or other market on which the shares of Common Stock of the Corporation shall be
traded on such date, or if there are no sales on such date, on the next
following day on which there are sales. The option price shall be subject to
adjustment in accordance with the provisions of Paragraph 5.
11. PAYMENT OF STOCK OPTION PRICE: To exercise in whole or in part any
stock option granted hereunder, payment of the option price in full in cash
shall be made by the Participant for all shares so purchased. In the Discretion
of and subject to such conditions as may be established by the Committee,
payment of the option price may also be made by the Corporation retaining from
the shares to be delivered upon exercise of the stock option that number of
shares having a fair market value on the date of exercise equal to the option
price of the number of shares with respect to which the Participant exercises
the stock option. Such payment may also be made in such other manner as the
Committee determines is appropriate, in its Discretion. No Participant shall
have any of the rights of a shareholder of the Corporation under any stock
option until the actual issuance of shares to such Participant, and prior to
such issuance no adjustment shall be made for dividends, distributions or other
rights in respect of such shares, except as provided in Paragraph 5.
12. GRANTING AND EXERCISING OF STOCK OPTIONS: Subject to the provisions
of this Paragraph 12, each stock option granted hereunder shall be exercisable
at any such time or times or in any such installments as may be determined by
the Committee at the time of the grant; provided, however, that no stock option
may be exercisable prior to the expiration of six months from the date of grant
unless the Participant dies or becomes disabled prior thereto. In addition, the
aggregate fair market value (determined at the time the option is granted) of
the Common Stock with respect to which Incentive Options are exercisable for the
first time by a Participant during any calendar year shall not exceed $100,000.
A Participant may exercise a stock option, if then exercisable, in whole
or in part by delivery to the Corporation of written notice of the exercise, in
such form as the Committee may prescribe, accompanied (i) by payment for the
shares with respect to which the stock option is exercised in accordance with
Paragraph 11, or (ii) in the Discretion of the Committee, irrevocable
instructions to a stock broker to promptly deliver to the Corporation full
payment for the shares with respect to which the stock option is exercised from
the proceeds of the stock broker's sale of or loan against the shares. Except as
provided in Paragraph 16, stock options granted to a Participant may be
exercised only while the Participant is an officer, director or employee of the
Corporation or a Subsidiary.
Successive stock options may be granted to the same Participant, whether
or not the stock option(s) previously granted to such Participant remain
unexercised. A Participant may exercise a stock option, if then exercisable,
notwithstanding that stock options previously granted to such Participant remain
unexercised.
13. NON-TRANSFERABILITY OF STOCK OPTIONS: No stock option granted under
the Plan to a Participant shall be transferable by such Participant otherwise
than by will or by the laws of descent
Appendix A - Page 4
and distribution, and stock options shall be exercisable, during the lifetime of
the Participant, only by the Participant.
14. TERM OF STOCK OPTIONS: If not sooner terminated, each stock option
granted hereunder shall expire not more than ten (10) years from the date of the
granting thereof; provided, however, that with respect to an Incentive Option
granted to a Participant who, at the time of the grant, owns (after applying the
attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting stock of all classes of stock of the Corporation or of any
parent or subsidiary, such option shall expire not more than five (5) years
after the date of the granting thereof.
15. CONTINUATION OF EMPLOYMENT: The Committee may require, in its
Discretion, that any Participant under the Plan to whom a stock option shall be
granted shall agree in writing as a condition of the granting of such stock
option to remain in the employ of the Corporation or a Subsidiary for a
designated minimum period from the date of the granting of such stock option as
shall be fixed by the Committee.
16. TERMINATION OF EMPLOYMENT: If the employment of a Participant by the
Corporation or a Subsidiary shall terminate, the Committee may, in its
Discretion, permit the exercise of Incentive Options granted to such Participant
(i) for a period not to exceed three months following termination of employment
if termination of employment is not due to death or permanent disability of the
Participant, and (ii) for a period not to exceed one year following termination
of employment if termination of employment is due to the death or permanent
disability of the Participant. With respect to Nonqualified Options, the
Committee may, in its Discretion, permit the exercise of such stock options
granted to a director of the Corporation or a Subsidiary who ceases to be such a
director (regardless of whether he or she is or was also an officer or director
of the Corporation or Subsidiary) for a period not to extend beyond the
expiration date of the Nonqualified Options. In no event, however, shall a stock
option be exercisable subsequent to its expiration date and, furthermore, unless
the Committee in its Discretion determines otherwise, a stock option may only be
exercised after termination of a Participant's employment, or of a Participant's
status as a non-employee director, to the extent exercisable on the date of
termination of such employment or status or to the extent exercisable as a
result of the reason for termination of such employment or status. The period of
time, if any, a Participant shall have to exercise stock options upon
termination of employment, or of status as a non-employee director, shall be set
forth in the Corporation-Participant Agreement, subject to extension of such
time period by the Committee in its Discretion.
17. INVESTMENT PURPOSE: If the Committee in its Discretion determines
that as a matter of law such procedure is or may be desirable, it may require a
Participant, upon any acquisition of Common Stock hereunder by reason of the
exercise of stock options, and as a condition to the Corporation's obligation to
issue or deliver certificates representing such shares, to execute and deliver
to the Corporation a written statement, in form satisfactory to the Committee,
representing and warranting that the Participant's acquisition of shares of
stock shall be for such person's own account, for investment and not with a view
to the resale or distribution thereof and that any subsequent offer for sale or
sale of any such shares shall be made either pursuant to (a) a registration
statement on an appropriate form under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), which registration statement has become effective and is
current with respect to the shares being offered and sold, or (b) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption the Participant shall, prior to any offer for sale or
sale of such shares, obtain a favorable written opinion from counsel for or
approved by the Corporation as to the availability of such exemption. The
Corporation may endorse an appropriate legend referring
Appendix A - Page 5
to the foregoing restriction upon the certificate or certificates representing
any shares issued or transferred to a Participant under the Plan.
18. RIGHTS TO CONTINUED EMPLOYMENT: Nothing contained in the Plan or in
any stock option granted pursuant to the Plan, nor any action taken by the
Committee hereunder, shall confer upon any Participant any right with respect to
continuation of employment by the Corporation or a Subsidiary nor interfere in
any way with the right of the Corporation or a Subsidiary to terminate such
person's employment at any time.
19. WITHHOLDING PAYMENTS: If upon the exercise of a Nonqualified Option,
or upon a disqualifying disposition (within the meaning of Section 422 of the
Code) of shares acquired upon exercise of an Incentive Option, there shall be
payable by the Corporation or a Subsidiary any amount for income tax
withholding, in the Committee's Discretion, either the Corporation shall
appropriately reduce the amount of Common Stock or cash to be delivered or paid
to the Participant or the Participant shall pay such amount to the Corporation
or Subsidiary to reimburse it for such income tax withholding. The Committee
may, in its Discretion, permit Participants to satisfy such withholding
obligations, in whole or in part, by electing to have the amount of Common Stock
delivered or deliverable by the Corporation upon exercise of a stock option
appropriately reduced, or by electing to tender Common Stock back to the
Corporation subsequent to exercise of a stock option, to reimburse the
Corporation or a Subsidiary for such income tax withholding (any such election
being irrevocable), subject to such rules and regulations as the Committee may
adopt, including such rules as it determines appropriate with respect to
Participants subject to the reporting requirements of Section 16(a) of the
Exchange Act of 1934 to effect such tax withholding in compliance with the Rules
established by the Securities and Exchange Commission (the "COMMISSION") under
Section 16 to the Exchange Act and the positions of the staff of the Commission
thereunder expressed in no-action letters exempting such tax withholding from
liability under Section 16(b) of the Exchange Act. The Committee may make such
other arrangements with respect to income tax withholding as it shall determine.
20. EFFECTIVENESS OF PLAN: The Plan shall be effective on the date the
Board of Directors of the Corporation adopts the Plan, provided that the
shareholders of the Corporation approve the Plan within 12 months of its
adoption by the Board of Directors. Stock options may be granted prior to
shareholder approval of the Plan, but each such stock option grant shall be
subject to shareholder approval of the Plan. No stock option may be exercised
prior to shareholder approval.
21. TERMINATION, DURATION AND AMENDMENTS OF PLAN: The Plan may be
abandoned or terminated at any time by the Board of Directors of the
Corporation. Unless sooner terminated, the Plan shall terminate on the date
fifteen (15) years after its adoption by the Board of Directors, and no stock
options may be granted thereafter. The termination of the Plan shall not affect
the validity of any stock option outstanding on the date of termination.
For the purpose of conforming to any changes in applicable law or
governmental regulations, or for any other lawful purpose, the Board of
Directors shall have the right, with or without approval of the shareholders of
the Corporation, to amend or revise the terms of the Plan at any time; provided,
however, that no such amendment or revision shall (i) without approval or
ratification of the shareholders of the Corporation (A) increase the maximum
number of shares in the aggregate which are subject to the Plan (subject,
however, to the provisions of Paragraph 5), (B) increase the maximum number of
shares for which any Participant may be granted stock options under the Plan
(except as contemplated by Paragraph 5), (C) change the class of persons
eligible to be Participants
Appendix A - Page 6
under the Plan, or (D) materially increase the benefits accruing to Participants
under the Plan, or (ii) without the consent of the holder thereof, change the
stock option price (except as contemplated by Paragraph 5) or alter or impair
any stock option which shall have been previously granted under the Plan.
As adopted by the Board of Directors on August 6, 1998 and
approved by the Shareholders of the Corporation on November
12, 1998, and thereafter amended and restated by the Board of
Directors on August 26, 2003 and approved by the Shareholders
of the Corporation on November 14, 2003.
Highlighted amendment above approved by the Board of
Directors on August 24, 2004, subject to approval by the
Shareholders of the Corporation sought on November 5, 2004.
Appendix A - Page 7
[UNITED AMERICAN HEALTHCARE CORPORATION LOGO] +
UNITED AMERICAN 000000 0000000000 0 0000
HEALTHCARE CORPORATION
000000000.000 ext
000000000.000 ext
000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1 000000000.000 ext
ADD 2 000000000.000 ext
ADD 3
ADD 4
ADD 5
ADD 6
C 1234567890 J N T
[SCALE] [BAR CODE]
[ ] Mark this box with an X if you
have made changes to your name
or address details above.
ANNUAL MEETING PROXY CARD
A ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD
01 - Richard M. Brown, D.O. [ ] [ ]
02 - Ronald E. Hall, Sr. [ ] [ ]
03 - Peter F. Hurst, Jr. [ ] [ ]
B ISSUES
The Board of Directors recommends a vote FOR following proposals.
FOR AGAINST ABSTAIN
2. Ratification of appointment of independent auditors. [ ] [ ] [ ]
3. Approval of one amendment to Amended and Restated
1998 Stock Option Plan.
[ ] [ ] [ ]
4. In their discretion, the Proxies are authorized
to vote on such other business as may properly
come before the meeting.
[ ] [ ] [ ]
C AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
Note: Please sign exactly as name appears on this card. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title.
Signature 1 - Please keep Signature 2 - Please keep
signature within the box signature within the box Date (mm/dd/yyyy)
[ ] [ ] [ / / ]
1 U P X H H H P P P P 004181 +
PROXY - UNITED AMERICAN HEALTHCARE CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 5, 2004
The undersigned appoints William C. Brooks and Tom A. Goss and each of them, as
Proxies, with full power of substitution, to attend the Annual Meeting of
Shareholders of United American Healthcare Corporation on November 5, 2004, and
any adjournments, and to represent and vote the shares which the undersigned is
entitled to vote on the following matters as directed on the reverse side:
1. Election of three Directors for a term of 3 years. The nominees are: Richard
M. Brown, D.O., Ronald E. Hall, Sr. and Peter F. Hurst, Jr.
2. Ratification of the appointment of Follmer Rudzewicz PLC as independent
auditors for the current fiscal year.
3. Approval of one amendment to Amended and Restated 1998 Stock Option Plan.
4. In their discretion, the Proxies are authorized to vote on such other
business as may properly come before the meeting.
When properly executed, these instructions will be voted in the manner directed
on the reverse side of this card; if you do not provide direction, this proxy
will be voted FOR Items 1, 2 and 3.
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)