-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QjqibgV6GF/nFyoYrQDSLKFSV/ZmRQpABdZ7AChQTkj+klv2gi40tZc+fcccQzog 2bjFlFWqeHDCneXQzMcaKw== 0000897069-99-000015.txt : 19990113 0000897069-99-000015.hdr.sgml : 19990113 ACCESSION NUMBER: 0000897069-99-000015 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990128 FILED AS OF DATE: 19990112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUMED HOME HEALTH CARE INC CENTRAL INDEX KEY: 0000826743 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 341711764 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-12992 FILM NUMBER: 99505193 BUSINESS ADDRESS: STREET 1: 6505 ROCKSIDE RD STE 400 STREET 2: STE 700 CITY: INDEPENDENCE STATE: OH ZIP: 44131 BUSINESS PHONE: 2165736500 MAIL ADDRESS: STREET 1: 6505 ROCKSIDE RD, SUITE 400 CITY: INDEPENDENCE STATE: OH ZIP: 44131 DEF 14A 1 DEFINITIVE PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(A) of the Securities Exchange Act of 1934 Filed by the Registrant |X| Filed by a Party other than the Registrant |_| Check the appropriate box: |_| Preliminary Proxy Statement |_| Confidential, for use of the |X| Definitive Proxy Statement Commission only (as permitted |_| Definitive Additional Materials by Rule 14a-6(e)(2)). |_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12 NuMED HOME HEALTH CARE, INC. (Name of Registrant as Specified in its Charter) NuMED HOME HEALTH CARE, INC. (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): |X| No fee required. |_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: _______________________________________________________________ (2) Aggregate number of securities to which transaction applies: _______________________________________________________________ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): _______________________________________________________________ (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: _______________________________________________________________ |_| Fee previously paid with preliminary materials. |_| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount Previously Paid: ________________________________________________________________ (2) Form, Schedule or Registration Statement No.: ________________________________________________________________ (3) Filing Party: ________________________________________________________________ (4) Date Filed: ________________________________________________________________ NuMED HOME HEALTH CARE, INC. NOTICE OF THE 1998 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 28, 1999 Notice is hereby given that the 1998 Annual Meeting of Stockholders of NuMED HOME HEALTH CARE, INC.. (the "Company") will be held at the offices of Foley & Lardner, 100 North Tampa Street, Suite 2700, Tampa, Florida 33602, on Thursday, January 28, 1999 at 10:00 A.M., local time, for the following purposes: 1. To elect six (6) Directors to the Company's Board of Directors to serve a one-year term or until their respective successors are elected. 2. To consider and act upon matters incidental to the foregoing purpose and to transact such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors has selected the close of business on Tuesday, December 22, 1998, as the record date for the determination of Stockholders entitled to notice of and to vote at this Annual Meeting and any adjournment or postponement thereof. Enclosed is your copy of (i) the Company's Amended Annual Report on Form 10-KSB/A as filed with the Securities and Exchange Commission for the fiscal year ended March 31, 1998; and (ii) the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 1998. You are cordially invited to attend the meeting in person. Whether or not you expect to attend in person, you are urged to complete, date, sign and return the enclosed proxy card, which is solicited by the Board of Directors, in the self-addressed envelope enclosed for your convenience which requires no postage if mailed in the United States. You may revoke your proxy at any time before it is voted at the meeting by giving written notice to the secretary of the Company, by delivering to the secretary of the Company a duly executed proxy bearing a later date or by appearing at the meeting and voting by written ballot in person. By Order of the Board of Directors January 13, 1999 SUSAN J. CARMICHAEL Chief Executive Officer and President ----------------------------------------------------------------------------- Stockholders who do not expect to attend the meeting in person are urged to complete, date and sign the enclosed WHITE PROXY CARD and return it in the enclosed postage-paid envelope. ----------------------------------------------------------------------------- NuMED HOME HEALTH CARE, INC. -------------------- PROXY STATEMENT ------------------------- This Proxy Statement and the accompanying form of proxy are furnished in connection with the solicitation of proxies by the Board of Directors of NuMED Home Health Care, Inc., a Nevada corporation ("NuMED" or the "Company"), for the 1998 Annual Meeting of Stockholders to be held at the offices of Foley & Lardner, 100 North Tampa Street, Suite 2700, Tampa, Florida 33602, on Thursday, January 28, 1999 at 10:00 a.m., local time, and at any postponements or adjournments thereof (the "Meeting" or the "Annual Meeting"). The approximate date on which this Proxy Statement and the accompanying form of proxy will be first sent or given to Stockholders is January 13, 1999. The record date for determining Stockholders entitled to vote at the Meeting has been fixed as the close of business on Tuesday, December 22, 1998 (the "Record Date"). As of the Record Date, there were 5,857,901 shares of the Common Stock issued and outstanding. Each share of Common Stock entitles the holder to one vote, however, as noted under the heading "LEGAL PROCEEDINGS," in connection with the settlement reached with the Turkey Vulture Fund XIII, Ltd. ("Turkey Vulture Fund"), the former Chairman and Chief Executive Officer, Mr. Jugal K. Taneja, has agreed not to vote the 744,680 shares he received pursuant to a Termination, Noncompetition and Mutual Release Agreement he entered into with the Company. There is no other class of voting securities outstanding. Votes may not be cumulated in the election of directors. The presence, in person or by proxy, at the Meeting of the holders of a majority of the shares of Common Stock entitled to vote will constitute a quorum for purposes of the Meeting. If the proxy card accompanying this Proxy Statement is properly executed and returned, the shares of common stock, par value $.001 per share of the Company (the "Common Stock"), represented thereby will be voted as instructed on the proxy card, but if no instructions are given, such shares of Common Stock will be voted in favor of (i) the election to the Board of each of the nominees for directors of the Company, and (ii) any other matters incidental to the foregoing purpose and to transact such other business as may properly come before the Meeting. Any proxy given may, however, be revoked by the stockholder executing it at any time before it is voted by giving written notice to the Secretary of the Company, by delivering to the Secretary of the Company a duly executed proxy bearing a later date or by appearing at the Meeting and voting by written ballot in person. The cost of solicitation of proxies by the Board of Directors will be borne by the Company. Proxies may be solicited by mail, personal interview, telephone or telegraph and, in addition, directors, officers and employees of the Company may solicit proxies by such methods without additional remuneration. In addition, the Company has retained the services of MacKenzie Partners, Inc., a proxy solicitation firm, to assist in the solicitation of proxies by the Board. The Board currently estimates that the additional cost to retain MacKenzie Partners, Inc. will total a minimum of $25,000 plus expenses. In accordance with the regulations of the Securities and Exchange Commission (the "SEC"), the Company will reimburse, upon request, banks, brokers and other institutions, nominees and fiduciaries for their expenses incurred in sending proxies and proxy materials to the beneficial owners of the Company's Common Stock. LEGAL PROCEEDINGS On November 17, 1998, the Company filed a suit against Turkey Vulture Fund in the United States District Court, Middle District of Florida, Tampa Division. Although the suit was filed on November 17, 1998, it was not served until November 24, 1998, because certain directors of the Company were attempting to amicably resolve the disagreements with Turkey Vulture Fund. In the Complaint, the Company sought injunctive relief for Turkey Vulture Fund's alleged violations of Section 13(d) of the Securities Exchange Act of 1934. Specifically, the Company alleged that Turkey Vulture Fund failed to timely amend its Schedule 13D to (i) reflect its true intention, as stated in its November 12, 1998 Proxy Statement, to oust current management, gain control of the Company through a proxy fight, and eliminate the Company's staggered Board of Directors, and (ii) indicate its increased ownership of shares. As a result of these allegations, the Company sought (i) a temporary and permanent injunction requiring the Turkey Vulture Fund to file an amendment to the Schedule 13D, which will accurately reflect its true purpose, (ii) a temporary injunction enjoining Turkey Vulture Fund from exercising voting rights and soliciting proxies during the pendancy of this lawsuit, (iii) an appropriate "cooling off period," to permit the investing public a reasonable amount of time to digest any amendment to the Schedule 13D ordered by the Court, and (iv) a judgment in favor of the Company for the costs and attorneys' fees associated with bringing lawsuit. On December 16, 1998, the Company was served with Turkey Vulture Fund's Verified Amended Answer and Counterclaim for Preliminary Injunction. In its Answer, Turkey Vulture Fund denied the material allegations against it and alleged that any violations of Section 13(d) were cured. In its Counterclaim, Turkey Vulture Fund requested that the court (i) preliminarily and permanently enjoin Mr. Taneja from voting any of the 744,680 shares issued to him as part of his November 23, 1998 Termination, Noncompetition and Mutual Release Agreement; (ii) preliminarily and permanently enjoin the Company and its directors from (a) taking or authorizing any action outside of the ordinary course of business, and (b) taking any action that have the effect of bestowing a benefit upon the Company's directors, officers, or employees; (iii) preliminarily and permanently enjoin the Company from changing the date of the stockholders' meeting or advancing the record date of the meeting; and (iv) require the Company to provide Turkey Vulture Fund an updated stockholders' ledger. On December 29, 1998, the Company filed a Motion to Dismiss the Counterclaim. On December 16, 1998, the Company was served with Turkey Vulture Fund's Motion for Summary Judgment in which Turkey Vulture Fund alleged that it cured the deficiencies in its Schedule 13D and that the Company's Complaint was moot. The Company's response was filed on December 31, 1998. On December 17, 1998, the Company was served with Turkey Vulture Fund's Motion for Preliminary Injunction, which also named the individual directors that were previously named in the Counterclaim. The Company, together with the named directors, filed its Opposition to the Motion for Preliminary Injunction on December 29, 1998. A hearing on this Motion for Preliminary Injunction was held on December 30, 1998. Following the hearing, the Court issued an Order finding that "it needs further information with respect to the complex factual matters involved," and enjoining the Company from taking any actions outside the ordinary course of business. Accordingly, the court appointed an independent mediator with authority in the nature of a special master. The mediator held hearings on January 4 though January 6, 1998. On January 6, 1998, the Company and its Board of Directors reached an agreement with Turkey Vulture Fund to settle all outstanding litigation and present to NuMED's stockholders a combined slate of nominees to the Board of Directors for this Meeting. Pursuant to the settlement agreement, Turkey Vulture Fund agreed to cause the Committee for a New NuMED to withdraw its proxy statement that had been filed in opposition to the Board of Directors' proxy statement. In the settlement agreement, Turkey Vulture Fund and the Company agreed to enter into a purchase agreement to purchase an additional 744,680 shares of NuMED Common Stock directly from the Company in exchange for $350,000 cash. Management agreed to recommend a slate consisting of the following six (6) directors: Susan J. Carmichael, Thomas V. Chema, J. Michael Gorman, Richard M. Osborne, Thomas J. Smith and Jugal K. Taneja. Additionally, all of the parties agreed to vote all of their shares which are eligible to vote in favor of the foregoing slate. However, Mr. Taneja, the Company's former Chairman and Chief Executive Officer, is not eligible to vote the 744,680 shares of NuMED Common Stock he received in connection with the entering into of his Termination Noncompetition and Mutual Release Agreement at the Meeting. In addition, the Board has agreed to reduce the number of Directors to six (6) and amend the By-Laws to eliminate the staggered Board of Directors prior to the Meeting. Finally, the parties from the settlement agreement agreed to enter into a standstill agreement on proxy fights through the year 2000 Annual Stockholders Meeting. 2 THE HOME HEALTH INDUSTRY CLIMATE Effective October 1, 1997 (signed August 5, 1997) Congress and the President enacted the Balanced Budget Act of 1997. The goal was to cut $115 billion from the Medicare budget in five years of which $16.2 billion would be cut from home care Medicare and $13 billion cut in Medicaid through systems termed Interim Payment System ("IPS") and Prospective Payment System ("PPS"). Both the home health and long term care facilities (thus contract rehabilitation companies like NuMED Rehabilitation) were critically affected. What It Meant to Home Care: 1. The major strategy was to cut home care dollars through the use of the IPS using data from three year old cost reports of 1994. Thus, revenue dramatically declined. 2. The cost limits per discipline (Nursing, Physical Therapy, Occupational Therapy, Speech/Language Therapy, Medical Social Work) were reduced about 15%. 3. Reimbursement is to be cut 20% in 1999. According to the National Association of Home Care, since 1/1/98 over 1000 agencies or 10% of the industry has been eliminated directly or indirectly as a result of this legislation. Remaining firms will be subjected to new demands for increased data collection, extended client assessments and statistical analysis through a federal project called OASIS that will begin in 1999. "Home health agencies and state governments are being squeezed by HCFA's failure to pay for the costs of OASIS." (Eli's Home Care Week 11/23/98, Volume VIII #45) OASIS will be expensive to home care. Costs will include increased technology, increased software, increased datamining vendor costs, and increased time to complete assessments thus decreasing employee productivity. Other problems home health incurred were Fiscal Intermediary Auditor tactics scaring off referrals. "All it takes is one call from an intermediary's auditor to frighten a physician who was an excellent referral source into ceasing home care referrals altogether . . . " (Eli's Home Care Week 11/23/98, Volume VIII #45). How Does NuMED Compare to Other Public Companies? As you can see from the following chart which was published by the Home Health Business Report, as of November 30, 1998 publicly held companies in the home health industry have generally seen their stock prices perform below Standard & Poor's 500 Index this past year. Company % of Change This Year - ------- --------------------- Amedisys Inc. -44.44 American HomePatient Inc. -90.96 Apria Healthcare Group Inc. -47.91 Caretenders HealthCorp. -59.82 Chemed Corp. -18.25 Columbia HCA Healthcare -16.88 Community Care Services -86.67 Coram Healthcare Corp. -44.44 Fresenius Medical Care -9.48 Graham-Field Health Products Inc. -81.27 Healthcor Holdings Inc. -93.55 Help at Home Inc. 7.14 Home Health Corp. -95.78 In Home Health Inc. -40.00 Infu-Tech Inc. -40.70 Integrated Health Services Inc. -64.13 Interwest 8.33 Invacare Corp. 10.06 Kelly Services Inc. -3.73 3 Lincare Holdings Inc. 21.05 Malinckrodt -14.97 Matria Healthcare -65.00 Mid Atlantic Medical Services -30.39 National HealthCare -73.10 National Home Health Care Corp. -2.56 New York Health Care Inc. -60.00 NuMED Home Health Care, Inc. -50.06 Olsten Corp. (The) -50.00 Option Care Inc. -61.36 Pediatric Services of America -79.08 Respironics Inc. -15.64 Sabratek -41.56 ServiceMaster L.P. 10.26 Staff Builders Inc. -76.12 Star MultiCare Services Inc. -75.00 Sunrise Medical Inc. -17.41 Transworld Home HealthCare Inc. -40.18 Several firms listed above are substantially larger in revenue and may provide products and services which NuMED does not provide such as durable medical equipment and respiratory therapy and equipment. NuMED provides in home nursing, Physical Therapy ("PT"), Occupational Therapy ("OT"), Speech/Language Therapy ("ST"), Medical Social Work, and in facility contract rehabilitation services through PT, OT, and ST. What Has NuMED Done to Deal with IPS and Prepare for PPS? x In the fall of '97 NuMED personnel attended seminars taught by or based on the seminar developed by Reingruber & Associates to explain IPS and PPS and explain cost cuts and work efficiencies expected. x To prevent loss of referral sources, physicians were made aware of the Medicare firm's visit utilization history and Fiscal Intermediary denial rate (in Florida) to aid in increasing their comfort in referring to the firm. x Several data tracking and trending systems were established to capture data as to specific diagnostic categories and numbers of visits per category. If the per beneficiary rate, for example at Total Professional Health Care was an average of $3,500 then an average of 60 visits per client could be reimbursed if justified. Ratios were then established as to the number of short term clients necessary in order to care for a long term client. x Since there was a reduction in the number of visits per patient and a reduction in total volume of services and in total revenue, specialty programs were established such as diabetes, orthopedics and congestive heart failure. Increased productivity was stressed with personnel. There was a change in clinical models to respond to external case management and to better manage quality and utilization internally. Greater emphasis was placed on strengthening existing referral sources and identifying new referral sources. x More emphasis was placed on protecting the agency as to fraud and abuse in billing, in service delivery, in eligibility and in recruitment of patients. Greater emphasis was placed on nursing and therapist education as to measuring clinical outcomes, measuring client satisfaction outcomes, and in measuring comparative diagnostic outcomes. What Else Was Done? * An intensive differentiated customer service program was created to strengthen referral sources. * Overtime for personnel was eliminated or significantly decreased. * Cuts in direct cost per visit to increase efficiency/productivity standards were established. 4 * A case management model was established. Internally personnel were educated as to the IPS/Managed Care mindset so the nurse set the goals with patient on the first visit - education -> oversight -> patient demonstrates proficiency -> discharge. * Tracking of service mix and cost by diagnostic codes was monitored. * Most offices were consolidated - St. Petersburg offices of Florida Nursing Services shared space with Total Professional Health Care. - Clearwater Total Professional Health Care and the Dunedin Countryside Health Services, Inc. were consolidated into one Northern Pinellas County office. - Consolidated four storage areas to one location with an organized system to retrieve data as needed. - NuMED Rehabilitation (Cincinnati) moved into the Parke Home Health Care, Inc. offices to share overhead (NuMED Rehabilitation in Ohio, Kentucky and the surrounding areas will remain open and continue to contribute to revenues). - NuMED Rehabilitation (Horsham office) will be shut down effective January 1, 1999. * Human Resources Department was centralized for Florida. The Florida HR Director became the health insurance and 401K Plan Administrator for all of NuMED. All Workers Compensation monitoring for the entire company was placed in that department. What Does the Future Hold for NuMED? Though management cannot make predictions for NuMED, it can say that in 1999 NuMED will be smaller but stronger and ready to grow in specific markets: * Though select revenues will be eliminated in NuMED Rehabilitation through closing the Horsham office, direct costs and corresponding G & A will also be eliminated allowing a plan toward a breakeven point in that Division in 1999. The focus for NuMED Rehabilitation will be on facilities in the Ohio Region. This also complements the Ohio Home Health agencies owned by NuMED. It is believed a stronger Rehab component can be developed as a result. * Centralization of all back office functions will be completed in 1999 to further streamline functions and free Ohio firm's management to have more community involvement and to effect quicker trending capabilities. * A Homemaker Program is being started in Western Florida as there appears to be a responsive market. Management believes the low acuity market is growing. * The In-Home Psych Program is being expanded and is expected to provide over 10% of Florida's Total Professional Health Care revenues. * Disease management Clinical Pathways are being developed for six key diagnostic categories to grow the business: > Disease State Management Program through Clinical Pathways is an integrated systematic approach of aggressive case management to provide proactive interventions, measurements and refinements along the continuum of care. - Benefits: Very attractive to managed care providers and Medicare providers as a method to decrease: utilization of hospitalization length of stay, the number of emergency department visits, and unnecessary physician office visits. > Disease State Management programs empower clients thus enhancing the client's quality of life and well being. Clinical Pathways provide the client with a highly organized, detailed standardized plan of care, delineating key care elements and typical interventions associated with a certain disease process. > Clinical Pathways guide clinicians to measure delivery of care outcomes for the client. Home Care specific educational tools focus on disease control and client self care management. > The use of these standardized teaching tools enhances patient understanding and management of all phases of their disease including prevention, acute occurrences, remissions and maintenance. Clinical pathways offer physicians compliance comfort since they will know the number of visits required for a specific diagnosis. Payor sources appreciate data supporting client outcome expectations within a specific number of visits. Management believes it can more efficiently plan client visits, costs and profitability with clinical pathways. 5 * NuMED Management is exploring the development of strategic alliances through horizontal integration to build service products, vertical integration to increase care/service delivery networks to improve geographic coverage and to affiliate with other providers by offering shared services such as back office which could allow a stronger position for payor source contract negotiation. With an experienced management team, strong new Board members, new client programs, technology capability for the statistical datamining now sought by payor sources, and a goal to provide quality service delivery, management believes it can deal with the challenges presented today. The matters discussed under this subsection may be considered forward-looking statements and may be subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The Company assumes no obligation to update the information in this subsection. PROPOSAL 1 ELECTION OF DIRECTORS As previously noted under the section titled "LEGAL PROCEEDINGS," the Board of Directors agreed to eliminate the staggered board provisions in the Company's By-Laws prior to the Meeting, and consequently, each of the nominees, if elected, will serve for a term of one (1) year, and until their successors are duly elected and qualified. If any nominee declines or is unable to serve, which the Board of Directors has no reason to expect, the persons named in the accompanying Proxy intend to vote for the balance of those nominees named, and, if they deem it advisable, for a substitute nominee. The following table sets forth information with respect to each nominee for election and for each continuing director of the Company. NOMINEES NAME AGE POSITION Susan J. Carmichael 50 Chief Executive Officer, President and Director Thomas V. Chema 52 Director J. Michael Gorman 46 Director Richard M. Osborne 53 Director Thomas J. Smith 54 Director Jugal K. Taneja 54 Director BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES Susan J. Carmichael has served as a Director of the Company since October 1991 and as President of the Company since September 1993. On November 23, 1998, the Board appointed Ms. Carmichael to the additional position of Chief Executive Officer. She held the position of President of Whole Person in PA and PA Medical Concepts (companies acquired by the Company in 1991) since 1985 and is responsible for the Company's overall operation and expansion. Ms. Carmichael also serves on the President's Council; American Lung Association. Ms. Carmichael previously served on the Erie County, Pennsylvania Mental Health and Mental Retardation Board by appointment of the Erie County Executive. Ms. Carmichael is a Doctoral Candidate at Pennsylvania State University. 6 Thomas V. Chema has been a Director of the Company since April 1994. Mr. Chema has been a partner with the law firm of Arter & Hadden, Cleveland, Ohio from 1979 to 1983 and from 1989 to the present. He served as Executive Director of the Ohio Lottery Commission and the Public Utilities Commission at various times between 1983 and 1989. He also served as the Executive Director of the Gateway Economics Development Corporation of Greater Cleveland, which managed the financing and construction of the Jacobs Field and Gund Arena sporting venues. J. Michael Gorman is the President and Chief Executive Officer of Harmony Laboratories, Inc., which develops and distributes over-the-counter pharmaceuticals and health and beauty aids. From 1990 through 1995, Mr. Gorman was President of Knox International, Inc., a company that produces and distributes medical gases and equipment. Prior to that time, Mr. Gorman served as President of GPI, Inc., a producer of custom plastic devices for the medical industry. Richard M. Osborne is President and Chief Executive Officer of OsAir, Inc., a company he founded in 1963. OsAir is a manufacturer of industrial gases for pipeline delivery and a real property developer. Mr. Osborne is the Manager of Turkey Vulture Fund XIII, Ltd., which began operations in January 1995. Turkey Vulture Fund acquires, holds, sells or otherwise invests in all types of securities and other instruments. Mr. Osborne is a director of TIS Mortgage Investment Company, a publicly-held real estate investment trust, a trustee and Chairman of the Board of Trustees of Meridian Point Realty Trust ?83, a publicly-held real estate investment trust, a director of Central Reserve Life Corporation, a publicly-held insurance holding company, a director and Chairman of the Board of Pacific Gateway Properties, Inc., a publicly-held real estate company, and a director and Vice Chairman of the Board of GLB Bancorp, Inc., a bank holding company. Thomas J. Smith has been the President of Retirement Management Company, which manages assisted living and retirement facilities, since 1992. Since April 1996, Mr. Smith has served as the Executive Operating Manager of Liberty Self-Stor, Ltd., which owns and operates 13 self-storage facilities. Mr. Osborne controls both Retirement Management and Liberty Self-Stor. Mr. Smith is also a director of GLB Bancorp, a bank holding company, and a trustee of Meridian Point Realty Trust ?83, a publicly-held real estate investment trust. Jugal K. Taneja was Chairman of the Board, Chief Executive Officer and a Director of the Company from October of 1991 until November 23, 1998 when he entered into a Termination, Noncompetition and Mutual Release Agreement pursuant to which Mr. Taneja relinquished his duties as Chairman and Chief Executive Officer. Mr. Taneja remains a Director of NuMED. Mr. Taneja is currently Chairman of Dynamic Health Products, Inc. (a 1934 Exchange Act Reporting Company). Mr. Taneja also served as a Director and as Chief Executive Officer of National Diagnostics, Inc. until he resigned in January of 1998. Mr. Taneja also served as a director and Chairman of NuWave Health Care Products, Inc. the parent company of DRx, Inc., and the Chairman of DRx, Inc. Mr. Taneja is also Chairman of Netriceutical.com. Vote Required for Approval Nominees for directors who receive a plurality of the votes cast by the holders of the shares of Common Stock in person or by proxy at the Meeting shall be elected. Abstentions, broker nonvotes and withheld votes are not counted in determining the number of votes cast for any nominee for director. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE NOMINEES FOR ELECTION AS DIRECTORS OF THE COMPANY. BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the beneficial ownership of Common Stock as of January 8, 1999 with respect to: (i) each of the Company's directors and the executive officers named in the Summary Compensation Table and each of the nominees; (ii) all directors and executive officers of the Company as a group; and (iii) each person known by the Company to own beneficially more than 5% of the Common Stock. An asterisk indicates beneficial ownership of less than 1% of the outstanding Common Stock. Except as 7 otherwise indicated, each of the shareholders listed below has sole voting and investment power over the shares beneficially owned. Shares Beneficially Owned Beneficial Owner Number Percent Susan J. Carmichael (1)...................495,000 7.8% 5770 Roosevelt Boulevard, Suite 700 Clearwater, Florida 33760 Thomas V. Chema (2)........................29,120 * 1100 Huntington Building 925 Euclid Avenue Cleveland, Ohio 44115 J. Michael Gorman ..............................0 * 1109 S. Main Street Landis, North Carolina 28088 William LaGamba ..............................500 * 6950 Bryan Dairy Road Largo, Florida 33777 Peggy Loesch ..............................44,423 * 5770 Roosevelt Boulevard, Suite 700 Clearwater, Florida 33760 Richard M. Osborne (3)....................583,500 9.9% 7001 Center Street Mentor, Ohio 44060 Robert P. Ottman (2) (4) ..................44,306 * 3939 West Ridge Road Erie, Pennsylvania 16506 Paul Santostasi ................................0 * 6950 Bryan Dairy Road Largo, Florida 33777 Thomas J. Smith.................................0 * 8500 Station Street Suite 100 Mentor, Ohio 44060 Jugal K. Taneja (5) ....................2,301,954 34.0% 5770 Roosevelt Boulevard, Suite 700 Clearwater, Florida 33760 Turkey Vulture Fund XIII, Ltd (3)........ 583,500 9.9% 7001 Center Street Mentor, Ohio 44060 Executive Officers and Directors as a Group (10 Persons) (6).............3,498,803 47.9% * Less than one percent. 8 (1) Includes (i) 190,000 shares issuable under currently exercisable stock options, and (ii) 270,000 currently exercisable Common Stock Purchase Warrants. (2) Includes shares issuable under 12,060 currently exercisable stock options granted to each of Messrs. Ottman and Chema pursuant to the Outside Director and Advisory Board Member Stock Option Plan. (3) Includes beneficial ownership of 583,500 shares owned by Turkey Vulture Fund, of which Mr. Osborne is the sole Manager. (4) Includes 10,000 shares issuable under currently exercisable common stock purchase warrants. (5) Includes beneficial ownership of (i) 182,578 shares of Common Stock owned by First Delhi Trust, a trust for Mr. Taneja's children over which he exercises voting rights, (ii) 328,300 shares of Common Stock and 540,000 currently exercisable Common Stock Purchase Warrants owned by Twenty-First Century Healthcare Fund, L.L.D., a limited liability company controlled by Mr. Taneja and his family members, (iii) 380,000 shares issuable under currently exercisable stock options, and (iv) the 744,680 shares Mr. Taneja is not eligible to vote at the meeting which he received in connection with the entering into of his Termination, Noncompetition and Mutual Release Agreement. Excludes 209,820 shares beneficially owned by his wife, Manju Taneja, as to which Mr. Taneja exercises no voting or disposition rights. (6) Includes 1,449,120 shares issuable under common stock purchase warrants and/or stock options that are currently exercisable. SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE During fiscal 1998, the following persons were required to file Forms 3, 4, and 5 with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934 (the "Act") because such person was a director, officer, or beneficial owner of more than 10% of the Company's Common Stock: Jugal K. Taneja, Susan J. Carmichael, Thomas V. Chema, Robert P. Ottman, and Turkey Vulture Fund. Based solely upon a review of Forms 3, 4, and 5 furnished to the Company pursuant to Rule 16-3 (e) of the Act, no transactions were reported on an untimely basis and no person failed to file a Form 3, Form 4 or Form 5 as required by Section 16(a) of the Act. 9 EXECUTIVE COMPENSATION The following table sets forth information with respect to the cash and noncash compensation for the last three fiscal years earned by or awarded to the Company's Former Chief Executive Officer and the President. No other executive officer of the Company earned salary and bonus in excess of $100,000 for the fiscal year ended March 31, 1998. SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation Awards Payouts Other Annual Restricted All Other Compen- Stock Options/ LTIP Compen- Fiscal Salary Bonus sation Award(s) SARs Payouts sation Name and Principal Position Year ($) ($) ($) ($) (#) ($) ($) - --------------------------- ----- --------- --------- -------- --------- --------- --------- ---- Jugal K. Taneja 1998 $160,000 $ -0- $44,000(1) Chairman of the Board and Chief 1997 $160,000 $ 17,877 $30,000(2) 640,000(5) Executive Officer 1996 $160,000 $116,381 $30,000(2) 120,000 Susan J. Carmichael 1998 $130,000 $ -0- $ 9,000(3) President 1997 $130,000 $16,677 $35,075(4) 350,000(5) 1996 $130,000 $99,348 $ -0- 80,000
FOOTNOTES: (1)Represents meal and lodging expenses of $2,000 per month paid to Mr. Taneja for nine months during fiscal year 1998, a monthly automobile expense allowance of $500 per month, and moving expenses totaling $20,000 paid during fiscal 1998. (2)Represents meal and lodging expenses of $2,000 per month paid to Mr. Taneja and a monthly automobile expense allowance of $500 per month paid to Mr. Taneja during fiscal years 1997 and 1998. (3) Represents lodging expenses of $500 per month for nine months and a monthly automobile allowance of $500 per month for nine months paid during fiscal 1998. (4) Represents accumulated vacation of $29,075 and lodging expenses of $500 per month paid during fiscal 1997. (5) Includes 540,00 warrants issued to Mr. Taneja and 270,000 warrants issued to Ms. Carmichael in exchange for the elimination of certain "put provisions" in their respective employment agreements with the Company. As of 9/30/96, section 7.7 of their employment agreements, "if the executive is terminated without just cause, or his or her duties are reduced such that his or her position is ineffective in directing the business or operations of the Company, each executive has the right to put all securities of the Company owned by the executive and the executive's affiliates to the Company at a per share price calculated at the greater of (i) $6.00 per share, (ii) the average of the current bid and ask price, (iii) book value per share, or (iv) the appraised value per share, and the Company is required to purchase all such securities for the applicable price" was deleted. 10 OPTION/SAR GRANTS IN LAST FISCAL YEAR THE COMPANY DID NOT MAKE ANY GRANTS OF OPTIONS OR SAR'S DURING FISCAL YEAR 1998. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Shares Unexercised Value of Unexercised Acquired Value Options/SARs In-the-Money Options/SARs on Exercise Realized at FY-End (#) at FY-End ($)* Name ($) Exercisable Unexercisable Exercisable Unexercisable - ------------------ ----------- --------- ----------- ------------- ----------- ------------- Jugal K. Taneja 0 920,000 -0- $27,600 -0- Susan J. Carmichael 0 460,000 -0- $22,400 -0-
*Based on the closing price of the Company's Common Stock on March 31, 1998 as quoted on The Nasdaq Stock Market. Committees, Meetings, and Compensation of the Board of Directors The Board of Directors held 6 meetings during fiscal 1998. In addition to formal meetings of the Board of Directors and its committees, the directors have frequent informal communications among themselves and with other executives regarding Board and Committee issues. The Board of Directors has established standing Audit, Compensation, Capital, Executive and Nominating Committees. In addition, the Company has three committees to administer each of the Company's stock plans described below. The Audit Committee recommends the engagement, continuation and discharge of the Company's independent auditors, reviews the scope and timing of the audit of the Company's financial statements, approves the fee arrangement with the Company's independent auditors, reviews the Company's financial statements and the independent auditors' report, reviews the activities and recommendations of the Company's independent auditors, considers recommendations made by the Company's independent auditors regarding the Company's internal control structure, and reviews the Company's internal accounting procedures and controls with the Company's financial and accounting staff. The members of the Audit Committee are Messrs. Chema and Ottman. The Audit Committee did not meet during fiscal year 1998. The Compensation Committee establishes the Company's executive compensation policy, including the recommendation of compensation arrangements for the Company's executive officers and directors. The members of the Compensation Committee are Messrs. Chema and Ottman. The Compensation Committee met once during fiscal year 1998. The Capital Committee reviews and oversees the Company's investment policy. The members of the Capital Committee are Ms. Carmichael and Messrs. Ottman and Taneja. The Capital Committee did not meet during fiscal year 1998. The Executive Committee consists of Ms. Carmichael and Mr. Taneja and the Nominating Committee consists of Messrs. Taneja, Ottman and Chema. The Executive Committee did not meet during fiscal year 1998. The Outside Director and Advisory Board Member Stock Option Plan Administration Committee consists of Messrs. Taneja and Ms. Carmichael. The 1994 Employee Stock Option Plan Administration Committee consists of Messrs. Ottman plus a vacant seat created by the resignation of Mr. Mark A. Rowland. The Employee Stock Purchase Plan Administration Committee consists of Messrs. Taneja and Chema plus a vacant seat created by the resignation of Mr. Diroff. None of the Stock Plan committees met during fiscal 1998. 11 Director Compensation Each outside director of the Company receives $500, plus reimbursement for actual travel expenses, for each board meeting and $100 for each committee meeting attended, if held on the same day as a board meeting, or $250 for each committee meeting, if held on a day other than the date of a board meeting. Outside directors receive a minimum of $3,000 annually if five meetings are attended. Directors who are also employees of the Company receive no fees for meetings attended. Additionally, outside directors receive options to purchase Common Stock under the Outside Director and Advisory Board Member Stock Option Plan, and directors of the Company who are executive officers have previously received, and may receive in the future additional options. Employment Agreements Effective November 23, 1998, the Company entered into a new one-year employment agreement with Susan J. Carmichael, the Company's newly appointed Chief Executive Officer and President. Pursuant to the agreement, Ms. Carmichael receives $175,000 in base salary per year and a bonus at the discretion of the Board. Additionally, Ms. Carmichael received 200,000 options in connection with the replacement of her prior three-year employment agreement with the new one-year agreement. On November 23, 1998, the Company and Mr. Taneja entered into a Termination, Noncompetition and Mutual Release Agreement (the "Departure Agreement") superseding the terms of his employment agreement. Under the terms of the Departure Agreement, Mr. Taneja's employment as Chief Executive Officer of the Company was terminated effective November 23, 1998. Upon termination, Mr. Taneja received 744,680 shares of the Company's Common Stock and the right to receive $250,000 cash upon receipt by the Company of a certain cash receivable, and the terms of all of his existing options and warrants were extended until November 23, 2001. Prior to November 23, 1998, Ms. Carmichael and Mr. Taneja had employment agreements which were originally entered into on September 1, 1995 (the Superseded Employment Agreements). The Superseded Employment Agreements with Ms. Carmichael and Mr. Taneja were originally for three-year terms, but had been renewed annually such that the remaining term following each such renewal was for three additional years. The Superseded Employment Agreements were substantially similar providing Mr. Taneja with an annual base salary of $200,000 and Ms. Carmichael with an annual base salary of $150,000. For a complete discussion of the Superseded Employment Agreements see the copy of the Company's Annual Report on Form 10-KSB as filed with the Securities and Exchange Commission for the fiscal year ended March 31, 1998 which accompanies this Proxy Statement. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In connection with the Company's equity offering in February, 1995 (the "Offering"), the Company engaged A.T. Brod & Co., Inc. ("Brod") for the purpose of offering and selling the Company's units on a firm commitment basis. Brod was a wholly-owned subsidiary of Bancapital Financial Corporation, of which Mr. Taneja was the Chief Executive Officer and owner of a majority of its issued and outstanding shares of capital stock. Pursuant to the terms of the Underwriting Agreement entered into between the Company and A. T. Brod, Brod received in connection with the Offering various fees, commissions and underwriting discounts totaling approximately $1.3 million. The Company granted Brod an option to purchase 100,000 units as the underwriters. The exercise price of the units purchased pursuant to the option was $11.96 per unit. In April of 1997, the Company exchanged one share of common stock for each unit. During fiscal 1998 and 1997, the Company leased certain office furniture and equipment from Bancapital for a total cost of $28,000 per year. Bancapital also held the lease for the Company's Cleveland financial office. The lease was terminated March 31, 1997 when operations were moved to Florida. All material affiliated transactions will be made or entered into on terms no less favorable to the Company than those that can be obtained from unaffiliated third parties, and all material affiliated transactions 12 must be approved by a majority of the independent outside members of the Board of Directors of the Company who do not have an interest in the transactions. SELECTION OF INDEPENDENT AUDITORS The firm of Ernst & Young LLP served as independent public accountants for the Company for its most recently completed fiscal year. On December 1, 1998, the Company and Ernst & Young LLP, its auditors, ceased their relationship. Ernst & Young had no disagreements or reportable events during the Company's two most recent fiscal years, nor for the current fiscal year through the date of termination on December 1, 1998. Neither Ernst & Young's report dated June 29, 1998 on the Company's financial Statements for the fiscal year ended March 31, 1998 nor its report dated June 20, 1997 for the fiscal year ended March 31, 1997 contained an adverse opinion or a disclaimer of opinion and neither report was qualified or modified as to uncertainty, audit scope or accounting principles. Furthermore, there were no disagreements with Ernst & Young, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Ernst & Young's satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its report. The decision to cease relations with Ernst & Young and engage a new auditor was mutual due to distance and economics. The decision was approved by the Board of Directors and was based on the fact that Ernst & Young was sending a team from Cleveland, Ohio because the Company once maintained its financial office in Cleveland. Now that the Company has relocated financial operations to Florida, it will seek auditors in the Tampa Bay Region in an effort to reduce fees. STOCKHOLDER PROPOSALS The deadline for submission of shareholder proposals pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended ("Rule 14a-8"), for inclusion in the Company's proxy statement for its 1999 Annual Meeting of Shareholders is March 31, 1999. Notice to the Company of a shareholder proposal submitted other than pursuant to Rule 14a-8 will be considered untimely, and may not be properly brought before the 1999 Annual Meeting by a shareholder, if received by the Company after March 31, 1999. OTHER MATTERS The solicitation of proxies is made by and on behalf of the Board. The cost of the solicitation will be borne by the Company, including the reasonable expenses of brokerage firms or other nominees for forwarding proxy materials to beneficial owners. In addition to solicitation by mail, proxies may be solicited by telephone, telegraph or personally. Proxies may be solicited by directors, officers and employees of the Company without additional compensation. In addition, the Company has retained the services of MacKenzie Partners, Inc., a proxy solicitation firm, to assist in the solicitation of proxies by the Board. The Board currently estimates that the additional cost to retain MacKenzie Partners, Inc. will total a minimum of $25,000 plus expenses. In accordance with the regulations of the Securities and Exchange Commission, the Company will reimburse, upon request, banks, brokers and other institutions, nominees and fiduciaries for their expenses incurred in sending proxies and proxy materials to the beneficial owners of the Company's Common Stock. If the enclosed proxy is executed and returned, the shares represented thereby will be voted in accordance with any specifications made by the stockholder. In the absence of any such specification, they will be voted "FOR" the election of each of the nominees for director as set forth in Proposal 1 above. Pursuant to the Company's Articles of Incorporation and applicable law, broker nonvotes and abstaining votes will not be counted in favor of or against the election of any nominee for director or any of the proposals to be presented at the meeting. 13 The presence of a stockholder at the meeting will not operate to revoke his proxy. A proxy may be revoked at any time insofar as it has not been exercised by giving written notice to the Company. If any other matters shall come before the meeting, the persons named in the proxy, or their substitutes, will vote thereon in accordance with their judgment. The Board does not know of any other matters which will be presented for action at the meeting. By Order of the Board of Directors January 13, 1999 SUSAN J. CARMICHAEL Chief Executive Officer and President 14 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS NuMED HOME HEALTH CARE, INC. 1998 ANNUAL MEETING OF STOCKHOLDERS JANUARY 28, 1999 The undersigned hereby nominates and appoints Thomas V. Chema and Susan J. Carmichael, or either of them, as proxies of the undersigned, and revokes all prior proxies with respect to the matters covered by this proxy, with power of substitution to each, to vote all shares of stock of NuMED HOME HEALTH CARE, INC. (the "Company") which the undersigned may be entitled to vote at the Annual Meeting of Stockholders of the Company to be held at the offices of Foley & Lardner located at 100 North Tampa Street, Tampa, Florida, on Thursday, January 28, 1999 at 10:00 A.M., local time, and at any adjournment or postponements thereof, with authority to vote said stock on the following matters: THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES IN PROPOSAL 1: (1) The election of the following directors: Ms. Susan J. Carmichael Mr. Thomas V. Chema Mr. J. Michael Gorman Mr. Richard M. Osborne Mr. Thomas J. Smith Mr. Jugal K. Taneja |_| VOTE FOR all nominees listed above, |_| WITHHOLD AUTHORITY with the following exceptions: to vote for all nominees listed above Exceptions:___________________________________________________________________ (Continued and to be signed and dated on the reverse side) 15 THIS PROXY REVOKES ALL PRIOR PROXIES AND VOTING INSTRUCTIONS. Should any other matters requiring a vote of the stockholders arise, including matters incident to the conduct of the meeting, the above named proxies are authorized to vote the same in accordance with their best judgment in the interest of the Company. The Board of Directors is not aware of any matter which is to be presented for action at the meeting other than the matters set forth herein. NOTE: Please sign and return promptly in the envelope provided. No postage is required if mailed in the United States. Date: January ___, 1999 ___________________________________________ Signature ------------------------------------------- Signature Please sign exactly as your name appears. When signing as attorney, executor, administrator, trustee or guardian, please set forth your full title. If signer is a corporation, please sign the full corporation name by a duly authorized officer. Joint Stockholders should each sign. 16 -----END PRIVACY-ENHANCED MESSAGE-----