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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. )
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RULE 14a-6(e)(2))
[x] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to Section 240.14a-12
United American Healthcare Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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SEC 1913 (02-02)
[UNITED AMERICAN HEALTHCARE CORPORATION LOGO]
NOTICE OF THE 2005
ANNUAL MEETING OF SHAREHOLDERS
October 3, 2005
Dear Shareholder:
The Annual Meeting of Shareholders of United American Healthcare
Corporation will be held on Friday, November 4, 2005 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 one director;
(2) to vote on the ratification of the appointment of UHY LLP as our
independent auditors for the 2006 fiscal year; and
(3) to transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on September 13, 2005
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, 2005 (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 4, 2005.
Sincerely,
/s/ William C. Brooks
William C. Brooks,
Chairman, President and Chief Executive Officer
[UNITED AMERICAN HEALTHCARE CORPORATION LOGO]
UNITED AMERICAN HEALTHCARE CORPORATION
300 RIVER PLACE, SUITE 4950
DETROIT, MICHIGAN 48207-5062
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
To be Held November 4, 2005
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 4, 2005, at 10:30 a.m., Eastern Standard Time. The approximate
mailing date for this proxy statement and the proxy is October 3, 2005.
At our annual meeting, shareholders will act upon the matters outlined in
the accompanying Notice of Annual Meeting, including the election of one
director and ratification of the appointment of independent auditors. 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.
All references in this proxy statement to "fiscal year 2005" are
references to our fiscal year ended June 30, 2005.
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 13, 2005 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 7,450,235 shares of
common stock.
The following table contains information with respect to the beneficial
ownership of our common shares as of as of September 13, 2005 by each person
known by us to beneficially own more than 5% of our common shares, our only
outstanding class of voting shares:
PERCENTAGE OF
AMOUNT AND NATURE OF COMMON
COMMON SHARES SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OWNED (1)
- --------------------------------------- -------------------- --------------
Robert W. Morey and Maura Morey (2) 600,278 8.1%
1660 Tiburon Boulevard, Suite E
Tiburon, CA 94920
Roy L. Rogers and Ruth Rogers (3) 520,000 7.0%
3000 Sand Hill Road, Bldg. 1, Suite 260
Menlo Park, CA 94025
Richard M. Brown, D.O. (4) 449,744 6.0%
27774 Franklin Road
Southfield, Michigan 48034
- ---------
(1) Based on 7,450,235 common shares outstanding as of September 13, 2005.
(2) Information obtained from Form SC 13G/A filed September 12, 2005.
(3) Information obtained from Form SC 13G (Amendment No. 2) filed January 21,
2005.
(4) Including 25,000, 15,000, 9,375, 3,750, and 4,250 shares which Dr. Brown
has the right to acquire pursuant to currently exercisable stock options
for a price of $5.08, $2.09, $4.27, $4.73 and $4.73, respectively, but not
including 5,625, 11,250, and 12,750 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, $4.73 and $4.73, respectively, per share.
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 one person named below as
"nominee for election as a director for a three-year term" be elected as our
director, to hold office until our annual meeting of shareholders to be held in
2008 and until his successor is elected and qualified. Mr. Brooks was last
elected as a director at our 2002 annual meeting of shareholders. He is not an
outside director. If a quorum is present, the nominee 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
nominee receives 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
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proxy intend to vote all valid proxies received by them FOR the election of the
nominee listed below unless the person giving the proxy withholds authority to
vote for this nominee. The nominee listed below has consented to serve if
elected. If this 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 6 directors. The directors have adopted a resolution fixing the
present size of the Board at 6 members.
The following information is furnished as of September 13, 2005 with
respect to our nominee for election as a director, 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:
4
AMOUNT AND NATURE PERCENTAGE OF PRESENT
NAME POSITION AND OFFICES OF COMMON SHARES COMMON SHARES TERM
(AND YEAR FIRST WITH US AND OTHER BENEFICIALLY BENEFICIALLY TO
BECAME A DIRECTOR) AGE PRINCIPAL OCCUPATION OWNED OWNED (1) EXPIRE
NOMINEE FOR ELECTION AS A DIRECTOR FOR A THREE-YEAR TERM
William C. Brooks (1997) 72 Our Chairman of the Board of 283,597 (2) 3.8% 2005
Directors, President and Chief
Executive Officer
DIRECTORS CONTINUING IN OFFICE
Richard M. Brown, D.O. (2001) 70 President, Park Family Health Care 454,229 (2) 6.1% 2007
Practicing physician
Darrel W. Francis (1998) 52 President of Precision Industrial 44,849 (2) * 2006
Service
Tom A. Goss (2000) 59 Vice Chairman of our Board of 75,167 (2) 1.0% 2006
Directors; Chairman of Goss LLC
Ronald E. Hall, Sr. (2001) 62 President and Chief Executive Officer 103,178 (2) 1.4% 2007
of Bridgewater Interiors, LLC
Emmett S. Moten, Jr. (1988) 61 President of Moten Associates 92,749 (2) 1.2% 2006
OTHER EXECUTIVE OFFICERS
Stephen D. Harris (3) 33 Our Chief Financial Officer and 62,683 (2) *
Treasurer
Stephanie Dowell (4) 42 Chief Executive Officer of UAHC Health 5,000 (2)
Plan of Tennessee, Inc. *
All directors and executive officers as a group (8 persons) 1,121,450 (2) 15.1%
- -------------------
* Less than 1%
(1) Based on 7,450,235 common shares outstanding as of September 13, 2005.
(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 October 3, 2005: Mr.
Brooks, 209,250 shares; Dr. Brown, Mr. Hall and Mr. Moten, 74,250 shares
each; Mr. Francis 30,500; Mr. Goss, 45,500 shares; Mr. Harris, 41,750
shares; and Ms. Dowell, 5,000 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.
(4) Ms. Dowell joined us in June 2001 as the Director of Provider Services of
our subsidiary, UAHC Health Plan of Tennessee, Inc. (then called OmniCare
Health Plan, Inc.). In April 2002, she became that subsidiary's Chief
Operating Officer and Senior Vice President, and on April 15, 2005, she
became its Chief Executive Officer. Previously, Ms. Dowell served from
1996 to 2001 as Director of Legislative Affairs & Public Policy for
Methodist LeBonheur Healthcare, then the largest multi-hospital and
healthcare system in western Tennessee. Ms. Dowell's spouse, Stanley
Dowell, M.D., is a one-third owner of a physicians' internal medicine
practice that has a contract with UAHC Health Plan of Tennessee, Inc. to
provide primary care services to certain of its members on a capitated
basis, for a government-regulated per member per month fee. UAHC Health
Plan of Tennessee, Inc. paid $500,412.71 to that practice in the past
twelve months.
5
BIOGRAPHICAL INFORMATION
The following is a brief account of the business experience during the
past five years of the nominee for our Board of Directors and of each of our
directors whose term of office will continue after the meeting:
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 of Covansys Inc. (NASDAQ: CVCS).
RICHARD M. BROWN, D.O. (SINCE 2001; PRESENT TERM ENDS 2007)
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.
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
Athletics for The University of Michigan from September 1997 to April 2000.
6
RONALD E. HALL, SR. (SINCE 2001; PRESENT TERM ENDS 2007)
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 and overhead 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, a privately funded, nonprofit, business development organization.
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, 2005, our Board of Directors held
five meetings. The Board of Directors has determined that each of Dr. Richard M.
Brown, Darrel W. Francis, Tom A Goss, Ronald E. Hall, Sr. and Emmett S. Moten,
Jr. are independent as independence is defined in Nasdaq's listing standards, as
those standards have been modified or supplemented.
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), Dr. Richard M.
Brown, Tom A. Goss and Ronald E. Hall, Sr. The Board of Directors has determined
that each of these members is independent as independence is defined in Nasdaq's
listing standards, as those standards have been modified or supplemented. During
fiscal year 2005, 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 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).
Our Board of Directors has determined that Ronald E. Hall, Sr. is an audit
committee financial expert, as defined by the Securities and Exchange
Commission, and is a financially sophisticated audit committee member for
purposes of Nasdaq's Marketplace Rules. A member of the Finance and Audit
Committee, Mr. Hall qualifies as a financial expert because he has (a) an
understanding of generally accepted accounting principles and financial
statements, (b) the ability to assess the general application of such principles
in connection with the accounting for estimates, accruals and reserves, (c)
experience preparing, auditing, analyzing or evaluating financial statements
that present a breadth and level of complexity of accounting issues that are
generally comparable to the breadth and complexity of issues that can reasonably
be expected to be raised by the Company's financial statements, or experience
actively supervising one or more persons engaged in such activities, (d) an
understanding of internal control over financial reporting, and (e) an
understanding of audit committee functions. Mr. Hall obtained such experience
both through education and work
7
experience. Mr. Hall has a B.S. from Western Michigan University (major in
Mathematics) and an M.B.A. from Wayne State University. For over 25 years, Mr.
Hall has worked in the corporate and business field as a chief executive officer
or other senior officer with financial oversight responsibilities. Also see his
"Biographical Information" above.
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., and Emmett S. Moten, Jr. They are all outside directors. During
fiscal year 2005, the Compensation Committee held two 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), Tom A. Goss and Emmett S.
Moten, Jr. During fiscal year 2005, 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 and
Tom A. Goss. 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 2005, our Governance Committee held two
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 2005 by the Board and each Committee of which
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.
SUMMARY COMPENSATION TABLE
The following table sets forth information for each of the fiscal years
ended June 30, 2005, 2004 and 2003 concerning the compensation of our Chief
Executive Officer and our other executive officers as of June 30, 2005 whose
annual salary and bonus exceeded $100,000 (collectively, the "named Executive
Officers").
8
NAME AND FISCAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) (1)
------------------ ----- ---------- ---------- --------------------
WILLIAM C. BROOKS ........... ............. 2005 306,000 130,000 --
Chief Executive and President
2004 306,000 126,759 (2) --
2003 184,505 Stock (3) --
STEPHEN D. HARRIS............ ............. 2005 132,000 70,000 3,235
Chief Financial Officer and Treasurer
2004 125,000 46,875 (2) 2,394
STEPHANIE DOWELL (4)............ .......... 2005 115,000 60,000 2,283
President and Chief Executive Officer,
UAHC Health Plan of Tennessee, Inc.
OSBIE HOWARD (4).................. ........ 2005 235,000 -- 4,100
Senior Vice President
2004 235,000 70,500 (2) 4,000
2003 228,000 67,500 4,000
(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, April 29, 2004, and
December 2, 2004 for 37,500, 90,000, and 17,000 common shares and at
exercise prices of $2.09, $4.27 and $4.73 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, 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 options granted on
December 2, 2004 vest in twelve equal installments beginning on June 2,
2005 and on the 2nd day of each September, December, March and June
thereafter; and (B) to Mr. Harris on December 4, 2003, April 29, 2004 and
December 2, 2004 for 15,000, 30,000 and 17,000 common shares and at
exercise prices of $2.09, $4.27 and $4.73 per share, respectively, which
options granted on December 4, 2003 vest one year after the grant date,
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 options granted on December 2, 2004 vest
in twelve equal installments beginning on June 2, 2005 and on the 2nd day
of each September, December, March and June 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 September 24, 2005, 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.
(4) On April 15, 2005, Ms. Dowell became a named Executive Officer, and Mr.
Howard ceased to be a named Executive Officer and employee, of the
Company. The fiscal year 2005 information shown for them in this table is
for that entire fiscal year.
9
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, 2005.
NUMBER OF
COMMON SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME FISCAL YEAR-END FISCAL-YEAR END (1)
- ------------------- ----------------------- -----------------------
William C. Brooks 244,500 (2) $ 114,125
Stephen D. Harris 87,000 (3) $ 30,400
Stephanie M. Dowell 5,000 (4) $ 550
Osbie Howard 74,250 (5) $ 22,400
- --------------
(1) Calculated based on the closing price of Company common stock on June 30,
2005 (the last business day of the fiscal year) of $2.20 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
are fully vested and exercisable; (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; (E) as to 17,000 shares, were
granted on December 2, 2004 and will vest and become exercisable in twelve
equal quarterly installments from that grant date.
(3) 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 are fully vested and exercisable; (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;
(D) as to 17,000 shares, were granted on December 2, 2004 and will vest
and become exercisable in twelve equal quarterly installments from that
grant date.
(4) These options were granted December 4, 2003 and are fully vested and
exercisable.
(5) Mr. Howard ceased to be an executive officer and employee of the Company,
effective April 15, 2005. These options: (A) as to 3,750 shares, were
granted on March 13, 2002 and are fully vested and exercisable; (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 26,250 shares, were granted on
April 29, 2004 and are fully vested and exercisable; (E) as to17,000
shares, were granted on December 2, 2004, are fully vested and exercisable
with respect to 4,240 of such shares, and will vest and become exercisable
with respect to the remainder of such shares in nine approximately equal
quarterly installments beginning on the first anniversary of the 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 1,500,000, and no participant can receive stock options for more than
300,000 shares over the term of the plan.
The plan is administered by a committee 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
10
or those of any Subsidiary (as defined in the plan) who, in the judgment of the
committee, are or will become responsible for the direction and financial
success of the Company or any Subsidiary.
An incentive 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 no contributions for the purchase of ESPP shares for fiscal
year 2005. 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
2, 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 can
contribute to the retirement plan on a tax-deferred basis up to 20% of their
total salary. Under the retirement plan, we make matching contributions on each
employee's behalf, up to a maximum of 2% of each employee's total salary. As of
June 30, 2005, 71 employees had elected to participate in the retirement plan.
For the fiscal year ended June 30, 2005, we contributed approximately $49,976 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 UAHC
Health Plan of Tennessee, Inc., 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 2005, 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. and Emmett S. Moten, Jr., all outside
directors.
11
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, UAHC
Health Plan of Tennessee, Inc. (the "Health Plan"), was negotiated between
related entities. However, such management agreements were reviewed, revised and
approved by each plan's Board. The Health Plan 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 2005, certain officers or directors of the Company were also
officers or members of the Board of Directors of the Health Plan (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
Health Plan 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 the Health Plan may have differing interests,
including matters relating to the management agreement.
POSITION WITH POSITION WITH
NAME OUR COMPANY THE HEALTH PLAN
- ------------------------- ------------------------------- -----------------
William C. Brooks......... Chairman of the Board, Director
President, CEO,
Director
Tom A. Goss............... Vice Chairman of the Board, Chairman of the Board
Director
Stephen D. Harris......... Chief Financial Officer and Director
Treasurer
Stephanie Dowell.......... CEO, United American of President and CEO
Tennessee, Inc.
Osbie Howard*............. Senior Vice President, President and CEO
Director
- ------------
* Mr. Howard ceased to hold all these positions on April 15, 2005.
II. PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
UHY LLP has served as our independent auditors since November 22, 2004. A
representative of UHY LLP is expected to be present at our 2005 annual meeting
to make a statement, if requested, and be available to respond to questions with
respect to the 2005 audit.
Prior to our engaging UHY LLP as our independent auditors on November 22,
2004, Follmer Rudzewicz PLC had served as our independent auditors since March
3, 2003. On November 19, 2004, the partners of Follmer Rudzewicz PLC notified us
that they were joining UHY LLP, a newly-formed New York limited liability
partnership comprised of the partners of four previous accounting firms with
offices
12
in eight states, effective as of August 1, 2004. Our sole reason for changing
auditors was Follmer Rudzewicz PLC's partners' own decision to join UHY LLP and
Follmer Rudzewicz PLC's consequent resignation as the independent accountant who
was previously engaged as the principal accountant to audit our financial
statements. The decision to thus change accountants was approved by the Finance
and Audit Committee of our Board of Directors.
The Board of Directors considers UHY LLP to be well qualified to serve as
the independent auditors for the Company. If the appointment of UHY LLP 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 UHY LLP AS INDEPENDENT AUDITORS FOR THE 2006 FISCAL YEAR. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS
OTHERWISE SPECIFY IN THEIR PROXIES.
III. 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, 2005. 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), Dr. Richard M. Brown, Tom A.
Goss, Ronald E. Hall, Sr. The Committee operates pursuant to a written Charter
(a copy of which was Appendix B in our proxy statement 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, 2005 (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
13
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 nonaudit 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,
2005, for filing with the SEC. The Committee also recommended that the Board
select UHY LLP to serve as our independent auditors for fiscal year 2006.
Finance and Audit Committee
Darrel W. Francis, Chairman,
Dr. Richard M. Brown, Tom A. Goss and Ronald E. Hall, Sr.
AUDIT FEES
The following is a summary of fees billed by UHY LLP (together with its
predecessor, Follmer Rudzewicz PLC), for audit and other professional services
during the fiscal year ended June 30, 2005:
Audit Fees, including services rendered in reviewing quarterly financial
information and auditing our annual consolidated financial statements for
fiscal year 2004............................................................ $ 175,713
Tax Fees ....................................................................... $ 28,000
The Finance and Audit Committee, after a review and discussion with UHY
LLP, 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.
IV. 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
14
for fiscal year 2005, or written representations that no Forms 5 were required,
we believe that during the fiscal year ended June 30, 2005 all Section 16(a)
filing requirements applicable to our officers, directors and greater than 10%
beneficial owners were complied with, except for reports by Darrel W. Francis
for five transactions, by Tom A Goss for one transaction and by Emmett S. Moten,
Jr. for two transactions that were delayed until their EDGAR passwords were
renewed; except late filed reports by Mr. Francis for another transaction, by
Mr. Goss for two other transactions and by Mr. Moten for another transaction;
and except that Richard M. Brown and Ronald E. Hall, Sr. each did not timely
report one transaction because his EDGAR password had not yet been renewed.
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 $6,000 plus out-of-pocket expenses.
The Company will reimburse brokers or other nominees and institutional holders
for their expenses in forwarding proxy materials to principals. Any person
giving a proxy has the power to revoke it at any time before it is voted.
STOCK PERFORMANCE CHART
The following graph compares the cumulative total return for the previous five
fiscal years on a $100 investment on June 30, 2001 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.
[PERFORMANCE GRAPH]
2006 ANNUAL MEETING
A shareholder proposal which is intended to be presented at our 2006
annual meeting of shareholders must be received by the Company at its principal
executive offices by July 10, 2006.
Dated: October 3, 2005
15
[BARCODE]
[UNITED AMERICAN HEALTHCARE CORPORATION LOGO] MMMMMMMMMMMM
000000000.000 ext
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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
[BARCODE]
[ ] 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 DIRECTOR
1. The Board of Directors recommends a vote FOR the listed nominee.
FOR WITHHOLD
01 - William C. Brooks [ ] [ ]
B ISSUES
The Board of Directors recommends a vote FOR the following proposals.
FOR AGAINST ABSTAIN
2. Ratification of appointment of independent auditors. [ ] [ ] [ ]
3. 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 within the box Signature 2 - Please keep signature within the box Date (mm/dd/yyyy)
- -------------------------------------------------- -------------------------------------------------- --------------------------
[ ][ ]/[ ][ ]/[ ][ ][ ][ ]
- -------------------------------------------------- -------------------------------------------------- --------------------------
[ ] 1UPX HHH PPPP 006524 +
</Table>
- --------------------------------------------------------------------------------
PROXY - UNITED AMERICAN HEALTHCARE CORPORATION
- --------------------------------------------------------------------------------
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 4, 2005
The undersigned appoints Emmett S. Moten, Jr. 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 4, 2005, 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 one Director for a term of 3 years. The nominee is: William
C. Brooks
2. Ratification of the appointment of UHY PLC as independent auditors for
the current fiscal year.
3. 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 and 2.
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)