<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required]
For the fiscal year ended July 31, 1998
-------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the transition period from _____________ to ____________.
Commission file number 1-14382
-------
SUNSTAR HEALTHCARE, INC.
(Name of small business issuer in its charter)
- --------------------------------------------------------------------------------
DELAWARE 59-3361076
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
300 International Parkway, Suite 230, Heathrow, Florida 32746
(Address of principal executive offices/Zip Code)
(407)304-1066
(Issuer's telephone number)
- --------------------------------------------------------------------------------
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock NASDAQ-Small-Cap Market and Boston
Stock Exchange
Securities registered under Section 12(g) of the Exchange Act:
Common Stock
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the 90 past days.
YES X NO
--- ---
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year $9,079,072
---------
The aggregate market value of voting stock of the Registrant held by non-
affiliates of the Registrant on October 30, 1998, was $ 6,649,613 (based on
------------
the average closing bid and asked prices of the Registrant's Common Stock on
October 30, 1998 of $3.50 and $4.00 respectively).
----
As of October 30, 1998, 2,919,330 shares of the Registrant's Common Stock
were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Transitional Small Business Disclosure Format (check one): YES NO X
--- ---
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<PAGE>
The undersigned registrant hereby amends and restates the following items
of its Annual Report on Form 10-KSB for the year ended July 31, 1998 as set
forth below:
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.
The directors, executive officers and significant employees of the Company
are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Warren D. Stowell 46 President, Chief Executive Officer and Chairman of Board of Directors
David A. Jesse 49 Executive Vice President, Chief Operating Officer, Secretary and Director
Jack W. Shields 39 Vice President and Chief Financial Officer
Robyn J. Stowell 43 Vice President of Medical Operations
Frederick H. Fialkow 66 Director
Steven Fialkow 38 Director
Bernard Levine, M.D. 69 Director
Richard Seidelman, M.D. 39 Director
Howard Silverman 63 Director
</TABLE>
All directors of the Company hold office until the next annual meeting
of the stockholders and until their successors have been elected and qualified.
The officers of the Company are elected by the Board of Directors at the first
meeting after each annual meeting of the Company's stockholders, and hold office
until their death, resignation or removal from office.
Warren D. Stowell has been President and Chief Executive Officer of
-----------------
the Company since December 1995, Chairman of the Board of Directors of the
Company since March 1996, and President and Chief Executive Officer of the
Company's wholly owned subsidiary, SunStar Health Plan, Inc. (formerly known as
Boro Medical Corp.) since November 1, 1995. From July 1993 through November
1995, Mr. Stowell served as Chief Operating Officer, Insurance Division, for
Ramsay HMO, Inc., an HMO, life and health insurance company and property and
casualty insurance company operating in the State of Florida. From June 1991
until July 1993, Mr. Stowell was President and Chief Executive Officer of Care
Florida, Inc. Mr. Stowell is the husband of Robyn J. Stowell.
David A. Jesse has been Executive Vice President, Chief Operating
--------------
Officer and a director of the Company since January 1996. Prior to his
association with the Company, Mr. Jesse had been a principal of Masters & Jesse
Co., LPA, a legal professional association, commencing in March 1993. From May
1992 to February 1993, he was Vice President and General Counsel of Care
Florida, Inc., a health maintenance organization based in Miami, Florida.
Jack W. Shields has been Vice President and Chief Financial Officer of
---------------
the Company since December 1996. From September 1996 to December 1996, Mr.
Shields was Vice President, Network Development for Capital Community Health
Plan in Washington, D.C. and from January 1996 to September 1996 he was Regional
Network Director of United Healthcare Corporation's Mid-Atlantic Region. Mr.
Shields was acting Chief Financial Officer for the MetraHealth Mid-Atlantic
Region from April 1995 to January 1996. From April 1992 to April 1995, Mr.
Shields was Director, Financial Controls for Metropolitan Life Insurance
Company's Group Department.
Robyn J. Stowell has been Vice President of Medical Operations of the
----------------
Company since August 1996. Although Mrs. Stowell did not work from 1995 through
1996 while she waited for a non-compete agreement to expire, from 1990 to 1995
Mrs. Stowell was Vice President of Operations for Ramsay HMO, Inc. She is the
wife of Warren D. Stowell.
Frederick H. Fialkow has been a director of the Company since December
--------------------
of 1995. Since February 1988, Mr. Fialkow has been Chairman of the Board and
Chief Executive Officer of National Home Health Care Corp., a publicly held
Delaware corporation ("NHHC") and a principal shareholder of the Company. Mr.
Fialkow is the father of Steven Fialkow.
- 1 -
<PAGE>
Steven Fialkow has been a director of the Company since December 1995.
--------------
Mr. Fialkow has been the President and Chief Operating Officer of NHHC since
October 1997. He has also served as Secretary of NHHC since September 1995, as
Executive Vice President of New England Home Care, Inc. since August 1995 and as
a director of NHHC since December 1991. Prior thereto he served as Executive
Vice President of Health Acquisition Corp. from May 1994 to August 1995. He has
served as President of National HMO (New York), Inc. from April 1989 to April
1994. Mr. Fialkow is a certified public accountant. He is the son of Frederick
H. Fialkow.
Bernard Levine, M.D. has been a director of the Company since December
--------------------
1995. Dr. Levine is a private investor, primarily in the healthcare industry.
Since 1962, he has been a Professor of Internal Medicine at New York University
School of Medicine with a sub-specialty in allergy and immunology. Dr. Levine
also serves as a director of National and was a director of Cypros
Pharmaceutical Corp. until October 22, 1996.
Richard Seidelman, M.D. has been a director of the Company since
----------------------
February 1996. Since June 1989, Dr. Seidelman has been a pulmonary care
physician in private practice in South Florida. Dr. Seidelman is a graduate of
the University of Pennsylvania and received his M.D. degree from Hahnemann
University. He completed his residency in internal medicine at Georgetown
University/VA Medical Center and his fellowship in pulmonary medicine at George
Washington University.
Howard Silverman has been a director of the Company since July 1998.
----------------
Mr. Silverman has been retired since 1995 and previously served as the Chairman
of the Board of Directors, President and Chief Executive Officer of Gruntal
Financial Corporation, an investment banking firm. He has served as a Director
of Getty Petroleum, Work Wear Corporation and Cartaret Bank. He is currently a
trustee of Long Island University and The Chemotherapy Corporation.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock, to file with the SEC and NASDAQ initial
reports of beneficial ownership and reports of changes in beneficial ownership
of Common Stock of the Company. Such persons are also required by SEC
regulations to furnish the Company with copies of all such Section 16(a) forms
they file. Based solely on a review of the copies of such reports furnished to
the Company, or written representations that no Forms 5 were required, the
Company is not aware of any delinquencies in the filing of such reports.
- 2 -
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth information concerning the annual and long
term compensation during the Company's last three fiscal years of the Company's
Chief Executive Officer and other most highly compensated executive officers and
significant employees, whose salary and bonus for the 1998 fiscal
year exceeds $100,000 for services rendered in all capacities to the Company and
its subsidiaries:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------ --------------------------------------------------------------
Fiscal Securities
Year Underlying LTIP All other
Name and Position Ended Salary Bonus Options/ SARs (#) Payouts Compensation
- ------------------------ --------- ------------ ----------- ------------------------ ------------ ----------------------
<S> <C> <C> <C> <C> <C> <C>
Warren D. Stowell 1998 $153,462 $ -- -- $ -- --
President, Chief 1997 $129,904 -- -- -- --
Executive Officer(1) 1996 $ 95,193 -- 250,000(2) -- --
David A. Jesse 1998 $136,962 $ -- -- -- --
Executive Vice 1997 $106,576 $15,000 -- -- --
President and Chief 1996 $ 17,692 -- 75,000(4) -- 25,000(5)
Operating Officer(3)
Jack W. Shields 1998 $101,346 $ -- -- -- --
Vice President and 1997 $ 63,077 -- 25,000(7) -- --
Chief Financial 1996 -- -- -- -- --
Officer(6)
Robyn J. Stowell 1998 $105,995 $ -- -- -- --
Vice President of 1997 $ 72,403 $15,000 25,000(7) -- --
Medical Operations 1996 -- -- -- -- --
Robert Ley 1998 $100,385 $ -- 7,500(8) -- --
Director of Marketing 1997 $ 40,000 -- -- -- --
1996 -- -- -- -- --
</TABLE>
______________
(1) Mr. Stowell is President and Chief Executive Officer of SunStar Healthcare,
Inc., and its wholly owned subsidiary, SunStar Health Plan, Inc.
(2) Granted pursuant to Mr. Stowell's employment agreement. Three-fourths of
the options are currently exercisable, and 62,500 options shall be
exercisable on January 28, 1999, subject to Mr. Stowell's employment by the
Company.
(3) Mr. Jesse is Executive Vice President and Chief Operating Officer of
SunStar Healthcare, Inc., and its wholly owned subsidiary, SunStar Health
Plan, Inc.
(4) Represents an option for 25,000 shares of Common Stock granted pursuant to
Mr. Jesse's employment agreement and an option for 50,000 shares of Common
Stock granted pursuant to the Company's 1996 Stock Option Plan. Options to
purchase 58,333 shares are currently exercisable, and options for the
remaining 16,667 shares shall be exercisable on December 16, 1999, subject
to Mr. Jesse's employment by the Company.
(5) Represents consulting fees paid to Mr. Jesse during the fiscal year ended
July 31, 1996 prior to receiving a salary from the Company.
(6) Mr. Shields is Vice President and Chief Financial Officer of SunStar
Healthcare, Inc., and its wholly owned subsidiary, SunStar Health Plan,
Inc.
(7) Represents an option for 25,000 shares of Common Stock granted pursuant to
the Company's 1996 Stock Option Plan. Options to purchase 16,667 shares are
currently exercisable, and options for the remaining 8,333 shares shall be
exercisable on December 16, 1999, subject to employment by the Company.
(8) Represents an option for 7,500 shares of Common Stock granted pursuant to
the Company's 1996 Stock Option Plan. Options to purchase 2,500 shares are
currently exercisable, and options for the remaining 5,000 shares will not
become exercisable due to Mr. Ley's termination of employment by the
Company.
- 3 -
<PAGE>
STOCK OPTIONS.
The following table sets forth information concerning options granted
during the fiscal year ended July 31, 1998 to those persons named in the
preceding Summary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Numbers of % of Total
Securities Options Granted
Underlying To Employees in Exercise Price Expiration
Name Options Granted Fiscal Year ($ per share) Date
- --------------------- ---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Robert Ley 7,500(1) 60% $3.50 12/25/98(2)
</TABLE>
(1) This represents a stock option granted pursuant to the Company's 1996 Stock
Option Plan. Options to purchase 2,500 shares are currently exercisable,
and options for the remaining 5,000 shares will not become exercisable due
to Mr. Ley's termination of employment by the Company.
(2) Original expiration date of December 15, 2007 was subject to conditions of
employment with the Company. Due to Mr. Ley's termination, the 2,500
options which are currently exercisable will expire on December 25, 1998.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
None of the options held by those individuals listed in the Summary
Compensation Table were exercised in fiscal 1998. The following table sets
forth information concerning the value of unexercised stock options at July 31,
1998 for those individuals named in the Summary Compensation Table:
AGGREGATED OPTIONS IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at Fiscal Year End at Fiscal Year End
Name Exercisable/Unexercisable Exercisable/Unexercisable(1)
- --------------------------------- ----------------------------------- -----------------------------------
<S> <C> <C>
Warren D. Stowell 187,500/62,500 $843,750/$281,250
David A. Jesse 58,333/16,667 $ 137,500/$12,500
Jack W. Shields 16,667/8,333 $ 12,500/$6,250
Robyn J. Stowell 16,667/8,333 $ 12,500/$6,250
Robert Ley 2,500/5,000 $ 3,125/$6,250
</TABLE>
_________________________
(1) The dollar values were calculated by determining the difference between the
fair market value at fiscal year-end of the Common Stock underlying the
options and the exercise price of the options. The last sale price of a
share of the Company's Common Stock on July 31, 1998 as reported by NASDAQ
was $4.75.
- 4 -
<PAGE>
DIRECTOR COMPENSATION.
The Company's non-employee directors are paid a fee of $2,500 for each
meeting of the Board of Directors attended. All directors are reimbursed for
their reasonable out-of-pocket expenses incurred in connection with their
attendance at meetings of the Board of Directors and for other expenses incurred
in their capacity as directors of the Company. Under the Company's 1996 Stock
Option Plan, each non-employee director of the Company, upon becoming a
director, is entitled to receive a non-qualified stock option for 7,500 shares
of Common Stock exercisable at a price equal to the fair market value of the
Common Stock on the date of grant. In May 1996, each of the non-employee
directors on that date was granted a stock option exercisable for 7,500 shares
of Common Stock at $5.00 per share.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement, effective as of May 15,
1996, with Warren D. Stowell pursuant to which he is employed full-time as the
Company's President and Chief Executive Officer. The agreement expired on May
15, 1998. Mr. Stowell has continued to act as an officer and director of the
Company while he concludes negotiations with the Company for a new employment
agreement. The agreement also provided that for so long as Mr. Stowell remains
employed by the Company, he shall serve as a member of the Company's Board of
Directors and shall have the right to designate one additional member to the
Board of Directors. Mr. David A. Jesse is Mr. Stowell's current designee. The
agreement provided for an annual salary of $150,000 per annum as of May 15,
1997. Mr. Stowell's employment agreement contained confidentiality provisions
and a covenant not to compete with the Company for a period of six months
following termination of employment.
In addition, the Company granted to Mr. Stowell options to purchase an
aggregate of 250,000 shares of Common Stock at an exercise price equal to $.25
per share. The options are currently exercisable as to three-fourths of the
shares covered thereby, and the remaining 62,500 options shall be exercisable on
the third anniversary from January 28, 1996, provided that Mr. Stowell is
employed by the Company on such date. Commencing two years after May 15, 1996,
the Company has agreed to use its best efforts to file a registration statement
under the Securities Act to register the shares of Common Stock issuable to Mr.
Stowell pursuant to the exercise of such options. No options have been
exercised as of July 31, 1998.
The Company entered into an employment agreement, effective as of May 15,
1996, with David Jesse pursuant to which he is employed full-time as the
Company's Executive Vice President and Chief Operating Officer. The agreement
expired on May 15, 1998. Mr. Jesse has continued to act as an officer and
director of the Company while he concludes negotiations with the Company for a
new employment agreement. The agreement provided for an annual salary of
$135,000 per annum as of May 15, 1997. Mr. Jesse's employment agreement
contained confidentiality provisions and a covenant not to compete with the
Company for a period of six months following termination of employment.
In addition, the Company granted to Mr. Jesse options to purchase an
aggregate of 75,000 shares of Common Stock. Options to purchase 25,000 shares
of Common Stock were granted in connection with Mr. Jesse's employment
agreement, at an exercise price of $.25 per share and are currently exercisable.
The remaining 50,000 options, which were granted under the Company's 1996 Stock
Option Plan, have an exercise price of $4.00 per share, are exercisable as to
33,333 shares and shall be exercisable for the remainder on the third
anniversary of the date of May 15, 1996, provided that Mr. Jesse is employed by
the Company on such date. Commencing two years after May 15, 1996, the Company
has agreed to use its best efforts to file a registration statement under the
Securities Act to register the Common Stock issuable to Mr. Jesse pursuant to
the exercise of such options. No options have been exercised as of July 31,
1998.
STOCK OPTION PLAN.
In February 1996, the Board of Directors of the Company adopted, and
NHHC (the Company's sole stockholder at that time) approved, the Company's 1996
Stock Option Plan (the "Option Plan") pursuant to which 200,000 shares of Common
Stock currently are reserved for issuance upon the exercise of options
designated as either (i) options intended to constitute incentive stock options
("ISO'S") under the Internal Revenue Code of 1986, as amended (the "Code"), or
(ii) non-qualified options. ISOS may be granted under the Option Plan to
employees and officers of the Company. Non-qualified options may be granted to
consultants, directors (whether or not they are employees), employees or
officers of the Company.
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<PAGE>
The Option Plan is intended to qualify under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Option
Plan may be administered by the Board of Directors or a committee appointed by
the Board and the Option Plan is currently administered by the Company's
Compensation Committee comprised of independent directors. The Compensation
Committee, within the limitations of the Option Plan, determines the persons to
whom options will be granted, the number of shares to be covered by each option,
whether the options granted are intended to be ISOs, the duration and rate of
exercise of each option, the exercise price per share and the manner of exercise
and the time, manner and form of payment upon exercise of an option. Unless
sooner terminated, the Option Plan will expire on February 13, 2006.
ISOs granted under the Option Plan may not be granted at a price less than
the fair market value of the Common Stock on the date of grant (or 110% of fair
market value in the case of persons holding 10% or more of the voting stock of
the Company). The aggregate fair market value of shares for which ISOs granted
to any employee exercisable for the first time by such employee during any
calendar year (under all stock option plans of the Company) may not exceed
$100,000 and options to purchase no more than 50,000 shares may be granted under
the Option Plan to any single optionee in any calendar year. Non-qualified
options granted under the Option Plan may not be granted at a price less than
90% of the fair market value of the Common Stock on the date of grant. Options
granted under the Option Plan will expire not more than ten years from the date
of grant (five years in the case of ISOs granted to persons holding 10% or more
of the voting stock of the Company). All options granted under the Option Plan
are not transferable during an optionee's lifetime but are transferable at death
by will or by the laws of descent and distribution. In general, upon
termination of employment of an optionee, all options granted to such person
which are not exercisable on the date of such termination immediately terminate,
and any options that are exercisable terminate ninety days following the
termination of employment.
The Option Plan contains anti-dilution provisions authorizing
appropriate adjustments in certain circumstances. Shares of Common Stock
subject to options which expire without being exercised or which are canceled as
a result of cessation of employment are available for further grants. No shares
of Common Stock may be issued to any optionee until the full exercise price has
been paid. The Board of Directors or the committee, as the case may be, may
grant individual options under the Option Plan with more stringent provisions
than those specified in the Option Plan.
The Option Plan provides that each non-employee director automatically
receives, upon first becoming a non-employee director, a grant of an option to
purchase 7,500 shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock. Each non-employee director option expires
five years from the date of grant.
The Company has granted options to purchase an aggregate of 112,500
shares under the Option Plan, exclusive of non-employee director options to
purchase an additional 30,000 shares, none of which options has been exercised.
- 6 -
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information as of October 30,
1998, regarding beneficial ownership of the Company's Common Stock by: (i) each
director and named executive officer of the Company, (ii) all directors and
named executive officers as a group, and (iii) all persons known by the Company
to be the beneficial owner of more than 5% of the outstanding Common Stock.
Unless otherwise noted, all persons named in the table have the sole voting and
dispositive power with respect to Common Stock beneficially owned.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF
BENEFICIAL OWNERS(1) AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OUTSTANDING SHARES OWNED(2)
- ---------------------------------------- ----------------------------------------- ---------------------------
SOLE VOTING POWER SHARED VOTING POWER
------------------------------------------
<S> <C> <S> <C>
National Home Health Care Corp. 890,000 30.5%
700 White Plains Rd.,
Scarsdale, NY 10583
Warren D. Stowell 192,500 (3) 474,330 (4) 21.5%
Bernard Levine, M.D. 208,600 (5) 7.1%
David A. Jesse 58,333 (6) 474,330 (4) 17.9%
Frederick H. Fialkow 42,500 (5) 1.5%
Jack W. Shields 25,000 (7) *
Robyn J. Stowell 25,000 (7) *
Richard Seidelman, M.D. 12,500 (5) *
Steven Fialkow 7,500 (5) *
Howard Silverman - - -
All directors and executive officers as 571,933 (3)-(7) 474,330 (4) 32.2%
a group (9 persons)
</TABLE>
_____________
* Less than 1%
(1) Unless otherwise indicated, the address of each of these persons is SunStar
Healthcare, Inc., 300 International Parkway, Suite 230, Heathrow, Florida
32746.
(2) Based upon 2,919,330 shares outstanding on October 30, 1998, and with
respect to each holder of options exercisable within 60 days, the shares
represented by such options.
(3) Includes 187,500 shares issuable under currently exercisable options.
Excludes 62,500 shares subject to options not exercisable within the next
60 days.
(4) Includes 474,330 shares sold pursuant to the Private Placement on July 16,
1998 for which subscription agreements were entered into whereby each
stockholder agreed to vote its shares as directed by Mr. Stowell or Mr.
Jesse, as officers and directors of the Company, and granted its
irrevocable proxy to Messrs. Stowell or Jesse in connection with such
voting agreement. Either of Messrs. Stowell and Jesse has the right to
vote, in their sole and exclusive discretion, such shares with respect to
any proposal upon which the Company's stockholders may vote. These
stockholder voting agreements and irrevocable proxies, which are applicable
only to the present holders of these shares, terminate on July 16, 1999.
These voting rights will not be enforced against subsequent holders of
these shares.
(5) Includes 7,500 shares of Common Stock issuable pursuant to immediately
exercisable stock options.
(6) Consists of shares issuable under currently exercisable stock options.
Excludes 16,667 shares subject to options that are not exercisable within
the next 60 days.
(7) Represents shares of Common Stock issuable pursuant to currently
exercisable stock options and options exercisable within the next 60 days.
- 7 -
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
NHHC currently owns 30.5% of the outstanding Common Stock of the Company.
Certain directors of the Company are also officers, directors and/or principal
stockholders of NHHC and, consequently, may be able, through NHHC, to direct the
election of the Company's directors, effect significant corporate events and
generally direct the affairs of the Company. The Company does not intend to
enter into any transactions with NHHC or its affiliates unless approved by a
majority of the independent and disinterested members of the Board of Directors
and, to the extent deemed necessary or appropriate by the Board of Directors,
the Company will obtain a fairness opinion and stockholder approval in
connection with any such transaction.
The Company has granted to Mr. Warren D. Stowell (the President, Chief
Executive Officer and Chairman of the Board) and Mr. David A. Jesse (the
Executive Vice President, Chief Operating Officer and a director of the Company)
options to purchase 250,000 and 25,000 shares, respectively, of Common Stock at
an exercise price per share of $.25 in connection with their respective
employment by the Company. Mr. Stowell's options are currently exercisable as
to three-fourths of the shares covered thereby and the remainder shall be
exercisable on the third anniversary of January 28, 1996, provided that
Mr. Stowell is employed by the Company on such date. Mr. Jesse's options are
currently exercisable. Commencing two years after May 15, 1996, the Company has
agreed to use its best efforts to file a registration statement under the
Securities Act to register the shares of Common Stock issuable to Mr. Stowell
and Mr. Jesse pursuant to exercise of such options.
The Company has agreed to use its best efforts to include 83,000 shares of
Common Stock held by NHHC in a registration statement to be filed under the
Securities Act two years after May 15, 1996.
Ms. Robyn J. Stowell has been employed by the Company since August 1996 as
Vice President of Medical Operations and received $72,403 and $105,995 in salary
in fiscal 1997 and 1998, respectively. Ms. Stowell also received a $15,000
bonus in fiscal 1997. During fiscal 1997, Ms. Stowell was also granted a stock
option under the Company's Stock Option Plan for 25,000 shares of Common Stock
with an exercise price of $4.00 per share. The option vests in three equal
annual installments commencing December 16, 1996 and terminates on December 15,
2006. Ms. Stowell is the spouse of Mr. Warren D. Stowell, the Company's
President, Chief Executive Officer and Chairman of the Board.
- 8 -
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUNSTAR HEALTHCARE, INC.
By: /s/ Jack W. Shields
------------------------------------------
Jack W. Shields
Vice President and Chief Financial Officer
Dated: November 30, 1998
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