SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended November 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the transition period from_____to______
Commission File Number 0-11781
HOSPITAL STAFFING SERVICES, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2150637
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6245 North Federal Highway, Suite 500
Fort Lauderdale, Florida 33308-1900
(Address of principal executive offices)
(954) 771 - 0500
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered
Common Stock $.001 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405
of Regulation S-K (ss. 229.405 of this Chapter) is not contained herein, and
will not 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-K/A or any amendment to this Form 10-K/A. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant at February 28, 1997 was $15,899,425.
As of February 28, 1997, 6,359,770 shares of common stock, par value
$.001 per share, were outstanding.
<PAGE>
<TABLE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information concerning directors and
executive officers of the Company:
<CAPTION>
Name Age Position with Company
- --------------------------------------------------------------------------------
<S> <C> <C>
Ronald A. Cass(3) 51 Chairman of the Board of Directors, Chief
Executive Officer, President and Treasurer
Lawrence W. Cappel 48 Director
Robert B. Fields(1,2,3) 59 Director
William F. McConnell(1) 56 Director
Hector L. Ziperovich, M.D.(2)42 Director
Jeffrey A. Barnhill 40 Senior Vice President, Health Services
Jay Gershberg 58 Senior Vice President, Sales and
Development
Ronald G. Huneycutt 53 Vice President, Finance and Chief
Financial Officer
Bobby L. Shields 41 Vice President, Legal Affairs and
Corporate Secretary
<FN>
- --------
(1) Member of the Audit Committee
(2) Member of the Compensation and Stock Option Committee
(3) Member of the Nominating Committee
</FN>
</TABLE>
2
<PAGE>
Directors are elected for a term that expires at the next annual
meeting of the Company's shareholders. Officers are elected by and serve at the
pleasure of the Board of Directors, subject to the terms of employment
contracts, if any, between the Company and any such officer. There are no family
relationships between any directors or executive officers of the Company.
Officers and Directors
Ronald A. Cass founded the Company in 1981 and has been Chairman of the
Board since March 1982, Chief Executive Officer from April 1989 to the present,
President from March 1982 to April 1989 and December 1992 to the present,
Secretary from December 1992 to May 1993, Chief Financial Officer from April
1986 to April 1989, Treasurer from November 1995 to the present and Acting Chief
Financial Officer from May 1995 through January 1996.
Lawrence W. Cappel was elected to the Company's Board of Directors in
December 1996. He is President of Community Health Network, a physician
management company with revenues in excess of $42 million, and is also President
and co-founder of Pacific Health Alliance, a PPO with over 400 hospitals and
25,000 doctors participating in eleven (11) states. Dr. Cappel holds a Ph.D. in
Community Health Services from the University of Utah, Salt Lake City, Utah, and
has held professorships at the Universities of Utah, Salt Lake City, Utah, and
Washington, Seattle, Washington.
Robert B. Fields was elected to the Company's Board of Directors
effective July 1995. He is President of Tradestar Ltd., a New York City based
financial and management consulting firm. Since November 1992, Mr. Fields has
been Chairman and Chief Executive Officer of Associates for Managed Care, Inc.,
a provider of cost containment and preventative social intervention services to
the managed care industry. From August 1991 through September 1992 Mr. Fields
served as a director of Flight International Group, Inc., a Newport News,
Virginia, aviation services company performing military training services using
specially modified aircraft. From September 1991 to November 1991, Mr. Fields
was President, Chief Executive Officer and a director of L'Express, Inc., an
interstate regional airline based in New Orleans. From January 1987 through June
1988, Mr. Fields was Executive Vice President of American Finance Group, Inc.,
an equipment leasing and asset management company headquartered in Boston. Mr.
Fields is on the Board of Directors of Printron, Inc., Albuquerque, NM, and an
advisory director of Quadra Interactive, Inc., of Carlsbad, CA.
William F. McConnell was elected to the Company's Board of Directors in
1986. Since 1994, Mr. McConnell has served as a Managing Partner of Emerald
Capital Services, Inc., a consulting firm offering management and financial
services to small public companies. From 1991 through 1993, Mr. McConnell was
Chairman of the Board, Chief Operating Officer and Vice President of Dollar Time
Group, Inc., a publicly-held national discount retail chain. On July 24, 1995,
Dollar Time Group, Inc. filed for bankruptcy protection under Chapter 11 of the
Federal Bankruptcy laws. From 1987 through 1992, Mr. McConnell was the President
of Travel Data & Marketing, Inc., an international travel research firm with
offices in Rome, Paris, London and Zurich.
3
<PAGE>
Hector Luis Ziperovich, M.D. was elected to the Company's Board of
Directors in February 1992. Dr. Ziperovich was the Company's National Medical
Director from January 1993 through October 1996. From November 1990 to January
1992, Dr. Ziperovich was Medical Director of Mediflex Acute Staffing Services, a
home health agency, the assets of which were acquired by the Company in January
1992. Since 1987, Dr. Ziperovich has served as Medical Director of HLZ Acute
Dialysis Service and Clinica Medica del Pueblo (Multi-Specialty Clinic), both of
which are located in Montebello, California. Dr. Ziperovich is a licensed and
practicing physician in the State of California.
Jeffrey A. Barnhill has served as Senior Vice President, Health Services
since September 1995. Mr. Barnhill joined the Company in October 1994 as
Director of Reimbursement and was appointed Vice President, Operations in
February 1995. Mr. Barnhill has over sixteen (16) years experience in financial
and operations management in the health care field. From October 1992 until his
employment by the Company, Mr. Barnhill was a principal of O. P. Medical
Consultants, Inc., a health care financial and operations consulting firm. From
July 1990 to September 1992, Mr. Barnhill was Chief Financial Officer and Chief
Operating Officer for Omni Medical Management, Inc., which managed a 35 member
physician multi-specialty group, a home care company, a DME company and a
staffing company. From August 1989 to June 1990 Mr. Barnhill was the Director of
Reimbursement with Florida Medical Center, a 400 plus bed acute care and
rehabilitation facility. He was also the controller for Florida Medical Center's
affiliate companies. Mr. Barnhill earned his M.B.A. (Health Care Management)
from Nova University and his B.A.B.A. (Accounting) from Rollins College.
Jay Gershberg has served as the Company's Senior Vice President, Sales and
Development since February, 1997. Immediately prior thereto, he served as the
Company's Senior Vice President of Ancillary Services and President of Travel
Nurse Operations, Inc. Mr. Gershberg joined the Company in November 1984 as
President of HSS Associates, Inc., the Company's then executive search division.
In his over twelve (12) years of service to the Company, Mr. Gershberg has
served in several other key executive positions. From December 1980 until his
employment with the Company, Mr. Gershberg was Executive Vice President and a
minority-interest owner of Medical Recruiters of America, Inc. Prior thereto,
Mr. Gershberg was employed for approximately fifteen (15) years in various sales
and management positions with CIBA Geigy Pharmaceuticals, Inc. Mr. Gershberg
received his B.S. degree from Long Island University.
Ronald G. Huneycutt is a Certified Public Accountant and joined the Company
as Vice President, Finance and Chief Financial Officer in February 1996. Mr.
Huneycutt served as Vice President of Finance and Development for Neonatology
Certified, Inc., Plantation, Florida, since November 1993. Neonatology Certified
provides physician and neonatal nurse staffing for hospitals. From December 1991
through April 1993, Mr. Huneycutt held the position of Vice President of Finance
for SurgiCare America, Inc., which owned and managed outpatient surgery centers.
Mr. Huneycutt joined the auditing and consulting firm of Coopers & Lybrand, LLP,
in 1974 and was admitted to the partnership in 1982. He served as the
partner-in-charge of health care services for South Florida until his departure
in 1991. Mr. Huneycutt earned a B.S. in Commerce from the University of
Virginia.
4
<PAGE>
Bobby L. Shields, has served as Vice President, Legal Affairs since July
1996. Mr. Shields joined the Company as Director, Legal and Regulatory Affairs,
Corporate Counsel and Secretary in May 1995. Mr. Shields became the Company's
Corporate Counsel and Director of Legal and Regulatory Affairs in May 1995, its
Corporate Secretary in August 1995 and was named Vice President of Legal Affairs
in September 1996. Mr. Shields is a licensed member of The Florida Bar, and has
a diverse financial and legal background in corporate and health care matters.
From November 1992 until his employment by the Company, Mr. Shields pursued a
practice in corporate and health care law and commercial litigation. Prior to
becoming a licensed attorney, Mr. Shields was employed in financial and
operations management, most notably during a seven (7) year period from 1982
through 1989 with Coulter Electronics, Inc. Mr. Shields earned his J.D., M.B.A.
(Finance) and B.S.B.A. (Finance) degrees from the University of Florida.
No director, officer, affiliate, beneficial owner of more than 5% of
the Company's common stock or associate of any of the foregoing is a party
adverse or has a material interest adverse to the Company or its subsidiaries.
Committees of the Board of Directors;
Board and Committee Meetings
As permitted by the Bylaws of the Company, the Company has several
standing committees, including an Audit Committee, a Compensation and Stock
Option Committee and a Nominating Committee.
The Audit Committee consists of Robert B. Fields and William F.
McConnell. The Audit Committee's responsibilities are to (i) recommend and
appoint the Company's independent auditors; (ii) review the audit report and
management letter; (iii) consult with the Company's auditors regarding the
adequacy of internal controls; and (iv) review such other matters and member
committees as deemed appropriate. During fiscal 1996, the Audit Committee met
two (2) times, with all members in attendance at each meeting.
The Compensation and Stock Option Committee consists of Robert B.
Fields and Hector L. Ziperovich, M.D. The Committee's responsibilities are to
(i) approve compensation philosophy and guidelines for directors and executive
officers; and (ii) recommend to the full Board of Directors compensation for the
directors and executive officers, including determining bonus compensation,
awarding option grants and determining other benefits. The Compensation and
Stock Option Committee met one (1) time during fiscal 1996.
The Nominating Committee consists of Ronald A. Cass and Robert B.
Fields. The Nominating Committee has the power and authority to select a slate
of candidates for directorships with the Company. The Nominating Committee did
not meet during fiscal 1996. While the Nominating Committee will consider
shareholder nominees for directors, there are no formal procedures for making
such nominations.
5
<PAGE>
Compliance with Section 16 (a) of the Securities Exchange Act of 1934, As
Amended
Section 16 (a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities
(collectively "insiders"), to file with the Securities and Exchange Commission
and the New York Stock Exchange initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
These insiders are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16 (a) forms they file, including
Forms 3, 4 and 5.
Based solely on a review of copies of such reports furnished to the
Company or written representations that no such reports were required and on
other information that has come to the Company's attention, the Company believes
that, during fiscal year 1996, all filing requirements under Section 16(a) of
the Securities and Exchange Act of 1934 applicable to its officers, directors
and greater than 10% beneficial owners were complied with except as follows: Mr.
Cass received a stock option grant in February 1996 and did not timely report
this grant on a Form 4 or Form 5; Mr. Barnhill received a stock option grant in
February 1996 and did not timely report this grant on a Form 4 or Form 5. The
officers and directors identified by the Company in this paragraph as having
delinquent filings under Section16(a) have each filed a late Form 5 to report
any transaction for which he had a delinquent filing.
ITEM 11. EXECUTIVE COMPENSATION
The following tables summarize all compensation incurred by the Company
for the fiscal years ended November 30, 1994, 1995 and 1996 for (i) the
Company's Chief Executive Officer; (ii) the four most highly compensated
executive officers serving as such at November 30, 1996, and (iii) each
executive officer not serving as such at November 30, 1996, whose compensation
during fiscal 1996 placed such executive officer among the four most highly
compensated (collectively, the "named executive officers").
6
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Annual Compensation Compensation
Awards
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options (#) Compensation
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Cass 1996 $281,207 $ 30,000 $ 45,282(1) 12,500 $202,231(2)
Chief Executive Officer, ................ 1995 $206,447 $ 30,000 $ 48,705(1) - $479,725(2)
President and Treasurer ................. 1994 $357,483 -- $ 58,979(1) - --
Jeffrey A. Barnhill 1996 $138,138 $ 20,000 $ 16,163(3) 10,000 --
Senior Vice President, .................. 1995 $107,468 $ 25,000 $ 15,054(3) 7,000 --
Health Services ......................... 1994 -- -- -- - --
Jay Gershberg 1996 $170,719 -- $ 17,061(5) - --
Senior Vice President, .................. 1995 $146,881 $ 19,517(4) $ 16,639(5) 2,500 --
Sales and Development ................... 1994 $133,086 $ 7,500 $ 20,664(5) - --
Ronald G. Huneycutt 1996 $100,330 -- $ 11,519(6) 10,000 --
Vice President, Finance ................. 1995 -- -- -- - --
Chief Financial Officer ................. 1994 -- -- -- - --
<FN>
(1)Includes payment in lieu of vacation taken (1996 - $12,557; 1995 -
$16,919; 1994 - $29,531); automobile allowance and related insurance (1996 -
$18,000; 1995 - $18,000; 1994 - $18,000); health club benefits in 1996, 1995 and
1994; and various other types of insurance payments: health, disability and
life.
(2)Includes principal and interest paid to Mr.Cass during fiscal 1996 and
1995 on a note issued to Mr.Cass in settlement of certain severance obligations,
plus offsets against the note due him for the purchase of the Company's Broward
County, Florida, home care operations, and the liquidation of his employee loans
(see "Employment and Other Agreements").
(3)Includes payment in lieu of vacation taken (1996 - $5,912; 1995 -
$3,097); automobile benefits (1996 - $6,000; 1995 - $5,558); and various other
types of insurance payments: health, disability and life.
(4)Represents deferred bonuses from prior years.
(5)Includes payment in lieu of vacation taken (1996 - $2,769; 1995 -
$2,769; 1994 - $7,730); difference between fair market value and purchase price
of Company automobile (1993 - $11,900); automobile benefits (1996 - $9,000; 1995
- - $9,000; 1994 - $9,000); health club benefits in 1995 and 1994; and various
other types of insurance payments: health, disability and life.
(6)Includes automobile allowance of $5,000 in 1996 and various insurance
payments: health, disability and life.
</FN>
</TABLE>
7
<PAGE>
<TABLE>
Stock Option/Grants
The following table sets forth certain information concerning grants of
stock options for each named executive officer in fiscal 1996:
<CAPTION>
Option Grants in Fiscal 1996
Number % of Total
of Shares Options Exercise Potential Realizable Value
underlying Granted to or Base at Assumed Annual Rate of
Options Employees in Price Per Expiration Stock Price Appreciation
Granted Fiscal 1996 Share Date for Option Term
------- ----------- -------- ------- ---------------
Name 5% 10%
- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Cass, CEO ................. 12,500 29% $ 3.00 2/11/01 $ 2,384 $12,828
Jeffrey A. Barnhill ................. 10,000 24% $ 2.38 2/11/01 $ 8,157 $16,513
Ronald G. Huneycutt ................. 10,000 24% $ 3.00 2/11/01 $ 1,907 $10,262
</TABLE>
<TABLE>
The following table sets forth information with respect to the named
executive officers, concerning the exercise of options during fiscal 1996 and
unexercised options held as of the end of the fiscal year:
<CAPTION>
Aggregated option exercises in fiscal 1996
and 1996 fiscal year-end option values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options at November 30, 1996 Options at November 30, 1996(1)
---------------------------- ----------------------------
Acquired
Name on Exercise Value Realized Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Ronald A. Cass, CEO - - 242,500 / - - / -
Jeffrey A. Barnhill 10,000 $35,000 7,000 / - - / -
Jay Gershberg - - 10,000 / - - / -
Ronald G. Huneycutt - - 10,000 / - - / -
<FN>
(1)Value is calculated by subtracting the exercise price per share from the
closing price per share on the New York Stock Exchange on November 30, 1996, and
multiplying the number of shares subject to the option.
</FN>
</TABLE>
8
<PAGE>
Employment and Other Agreements
The Company has agreements with its named executive officers and others
which provide for severance and other benefits in the case of termination of
employment under various circumstances. The agreements in place with the
Company's named executive officers and others are as follows:
Ronald A. Cass entered into a Termination and Benefits Agreement (the
"1991 Agreement") with the Company in 1991 which was modified by the terms of a
Settlement Agreement between the Company and Mr. Cass dated December 30, 1994
(the "Modification Agreement"). The 1991 Agreement entitled Mr. Cass to
severance benefits ranging from two to five years and to the acceleration of
vesting of options in the event of his termination or a change in control of the
Company. The actual severance period varied depending on whether the termination
was voluntary or involuntary, whether it was for cause or without cause and
whether it was in connection with a change of control.
To eliminate the severance obligations of the Company in the 1991
Agreement, the Company and Mr. Cass entered into the Modification Agreement that
provided for the payment to Mr. Cass of $1.0 million and a reduction in Mr.
Cass' annual base salary from $330,000 per year to $175,000 per year. The $1.0
million payment was made by issuing Mr. Cass a note, payable in 55 monthly
installments of $13,000 plus interest at a rate equal to prime rate. The
remaining balance of $285,000 was satisfied by (i) setting off $100,000 owed to
the Company by Mr. Cass for advances made in prior years and (ii) setting off
the purchase price of $185,000 owed by Mr. Cass to the Company for the purchase
by Mr. Cass of the Company's Broward County private duty home health agency in
January 1995 (see "Certain Relationships and Related Transactions"). The promis-
sory note provides for acceleration of the balance due to be immediately pay-
able to Mr. Cass upon the Company's default of a scheduled monthly payment
or upon a change in control of the Company, as defined.
The Modification Agreement provides that Mr. Cass shall continue as an
at-will employee and be entitled 90 days' notice of termination or, to the
extent such notice is not given, payment of his base salary for up to 90 days.
In addition, upon termination of Mr. Cass' employment for any reason he shall be
entitled to receive, for one year, all health, disability and life insurance
benefits that he was receiving at the time of termination. The Modification
Agreement also provides that in the event of Mr. Cass' death or disability, Mr.
Cass' spouse and/or dependents are entitled to receive health benefits for up to
one (1) year following such death or disability and in the event of termination
as a result of Mr. Cass' death, his estate shall receive Mr. Cass' base salary
for a 90 day period. Mr. Cass also agreed to remain bound by the non-compete and
confidentially provisions of the 1991 Agreement.
Effective December 1, 1995 the Board of Directors agreed to increase
Mr. Cass' annual base salary to $250,000.
9
<PAGE>
Pursuant to an agreement between the Company and its former Chief
Financial and Administrative Officer, Warren A. Marmorstein, dated as of March
31, 1995, Mr. Marmorstein agreed to resign as an officer and employee of the
Company effective May 1, 1995 and agreed to a severance payment of $630,000
payable in 24 monthly installments through April 30, 1997 (the "1995
Agreement"). The 1995 Agreement was a modification to a Termination and Benefit
Agreement between Mr. Marmorstein and the Company dated November 1, 1993 (the
"1993 Agreement") pursuant to which Mr. Marmorstein was entitled to two year
severance payments (including bonuses) if he was terminated without cause and
one year severance payments (including bonuses) if he was terminated for cause
or he resigned voluntarily. As a result of the 1995 Agreement, Mr. Marmorstein's
unvested options relating to 16,667 shares of common stock became fully vested.
As a result, Mr. Marmorstein had fully vested options to purchase 100,000 shares
of common stock at the time of his resignation. The 1995 Agreement provided that
the period of time for exercising such options be extended in accordance with
the following schedule:
50,000 options expire on November 28, 1997
16,667 options expire on October 6, 1998
16,667 options expire on October 6, 1999
16,667 options expire on October 6, 2000
The 1995 Agreement required Mr. Marmorstein to agree to a one (1) year
non-competition provision and to maintain the confidentiality of trade secrets
of the Company.
Messrs. Jay L. Gershberg, Jeffrey A. Barnhill and Ronald G. Huneycutt
(collectively, the "Employees") each have entered into Employment Agreements
with the Company providing for a twelve (12) month term, and automatically
renewable annually unless the Employee's employment is terminated as provided in
the Employment Agreements. Each of the Employment Agreements for Messrs.
Gershberg and Barnhill provide that, subject to the Employee complying with
certain non-competition provisions, in the event the Employee is terminated
"without cause" (as defined) he shall be entitled to one (1) full year's base
salary plus all earned, but unused, vacation or if the Employee voluntarily
terminates employment within one (1) year following a "change-in-control" (as
defined) he shall be entitled to (i) one (1) full year's base salary plus all
earned, but unused, vacation, (ii) a pro rata share of a performance bonus for
that year and (iii) an auto allowance and all benefits existing at the date of
termination for one (1) year. The Employment Agreement for Mr. Gershberg also
provides for a death benefit equal to 90 days of the Employee's base salary at
the time of death and for short term disability payments to the Employee equal
to 180 days of base salary. Mr. Huneycutt's Employment Agreement provides for
three (3) months severance under the same terms and conditions stated above and
provides additionally for the grant of options to acquire 10,000 shares of the
Company's Common Stock at $3.00 per share, which was higher than the fair market
value of a share of Common Stock at the date of this Agreement.
Mr. Gershberg's and Mr. Barnhill's Employment Agreements were effective
as of September 1, 1995 and Mr. Huneycutt's was effective as of February 1,
1996. The annual base salary provided for in each of the Employment Agreements
during the first twelve month term is $141,750, $130,000 and $117,500 for
Messrs. Gershberg, Barnhill and Huneycutt, respectively, plus an annual cash
payment for retirement benefits equal to 8% of their respective base salaries
and other benefits, including an automobile allowance and $100,000 of life
insurance.
10
<PAGE>
Director Compensation
During fiscal 1996, each of the Company's non-employee directors
received compensation of $18,000. Directors are also reimbursed for their travel
expenses in connection with such meetings. The total cash compensation paid to
directors for meetings in 1996 was approximately $38,700.
1983 Stock Option Plan
The Company's 1983 Incentive Stock Option Plan, as amended (the "1983
Plan"), provided for the grant of options to purchase up to 300,000 shares of
Common Stock at an exercise price of not less than 100% of the fair market value
of the Company's Common Stock on the date of grant (110% of fair market value in
the case of an optionee who is the owner of greater than 10% of the outstanding
shares).
During the fiscal year ended November 30, 1996 no options were granted
or exercised under the 1983 Plan and none expired. At November 30, 1996, options
to purchase 15,000 shares were outstanding at an exercise price of $5.875 per
share. These options are exercisable for up to ten years from the date of grant.
No options will be granted under the 1983 Plan in the future.
1990 Stock Option Plan
In 1989, the Company adopted the 1990 Stock Option Plan (the "1990
Plan") which provides that options may be granted to purchase up to 770,000
shares of Common Stock. Options granted under the 1990 Plan are in the form of
either an incentive stock option ("ISO") qualified under Section 422 of the
Internal Revenue Code, a non-qualified stock option ("NSO") or a reload option
(a newly issued option to purchase shares of Common Stock equal in number to the
shares of Common Stock which may be tendered, in lieu of cash, to pay for the
exercise of options previously granted). The Company's Compensation and Stock
Option Committee determines which employees are awarded options under the 1990
Plan and the terms and vesting provisions of such options.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth Common Stock ownership information,
based on 6,359,770 shares of common stock outstanding as of February 28, 1997,
with respect to (i) each person known to the Company to be the beneficial owner
of more than 5% of the Company's Common Stock; (ii) each director and named
executive officer of the Company; and (iii) all directors and officers of the
Company as a group. This information as to beneficial ownership was furnished to
the Company by or on behalf of the persons named. Unless otherwise indicated,
the business address of each person listed is 6245 North Federal Highway, Suite
500, Fort Lauderdale, Florida 33308.
11
<PAGE>
<TABLE>
<CAPTION>
Shares Percent
Beneficially of
Owned(1) Class(2)
<S> <C> <C>
Lawrence W. Cappel 10,000(3) *(4)
Director
Ronald A. Cass 610,788(5) 9%
Chairman of the Board,
Chief Executive Officer,
President and Treasurer
Robert B. Fields 24,740(6) *(4)
Director
William F. McConnell 15,000(7) *(4)
Director
Hector Luis Ziperovich, M.D. 45,400(8) *(4)
Director
Jeffrey A. Barnhill 7,200(9) *(4)
Senior Vice President, Health Services
Jay L. Gershberg 12,500(10) *(4)
Senior Vice President, Sales and Development
Ronald G. Huneycutt 12,000(11) *(4)
Vice President, Finance,
Chief Financial Officer
Bobby L. Shields 12,500(12) *(4)
Vice President, Legal Affairs,
Corporate Counsel,
Secretary
All officers and directors 750,128(13) 12%
as a group (9 individuals)
Heartland Advisors, Inc. 1,251,200(14) 20%
790 Milwaukee Street
Milwaukee, WI 53202
</TABLE>
12
<PAGE>
(1)Beneficial ownership has been determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended ("Rule 13d-3") and unless
otherwise indicated, represents shares for which the beneficial owner has sole
voting and investment power, as of the date hereof. Stock options included are
presently exercisable or will be exercisable within 60 days.
(2)The percentage of class is calculated in accordance with Rule 13d-3 and
assumes that the beneficial owner has exercised any options or other rights to
subscribe which are currently exercisable within sixty (60) days and that no
other options or rights to subscribe have been exercised by anyone else.
(3)Represents options to purchase 10,000 shares of Common Stock.
(4)Represents less than 1%.
(5)The total amount includes 361,288 shares of Common Stock held jointly by Mr.
Cass and his wife, 7,000 shares held solely by Mr. Cass, and options to purchase
242,500 shares of Common Stock held solely by Mr. Cass.
(6)Includes options to purchase 20,000 shares of Common Stock.
(7)Represents options to purchase 15,000 shares of Common Stock.
(8)Includes options to purchase 15,000 shares of Common Stock and warrants to
purchase 10,000 shares of Common Stock.
(9)Includes options to purchase 7,000 shares of Common Stock.
(10)Represents options to purchase 12,500 shares of Common Stock.
(11)Includes options to purchase 10,000 shares of Common Stock.
(12)Includes options to purchase 7,500 shares of Common Stock.
(13)Includes options to purchase 339,500 shares of Common Stock and warrants to
purchase 10,000 shares of Common Stock.
(14)As per Schedule 13G filed with the Securities Exchange Commission by
Heartland Advisors, Inc. on February 12, 1997.
13
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company had outstanding loans to Warren A. Marmorstein, the
Company's former Chief Financial Officer, of approximately $53,000, which
accrued interest at rates ranging from 6.5% to 8.0% per annum. All funds
advanced were for personal, non-business related purposes. These loans were
repaid under a promissory note during 1996.
In 1992, the Company made a loan to William F. McConnell, an outside
director of the Company, of approximately $72,200, which accrues interest at the
rate of 8.0% per annum. All funds advanced were for personal, non-business
related purposes. Mr. McConnell is repaying his obligation to the Company in
installments of approximately $4,900 monthly. At February 28, 1997, the unpaid
balance due the Company was approximately $30,800.
In 1994, the Company began utilizing the services of Mr. McConnell as a
consultant. Such services included shareholder relations, evaluation of
strategic alternatives for the Company and other duties as assigned by the Chief
Executive Officer. The fees for such services were approximately $6,000 in
fiscal 1996.
In 1995, the Company began utilizing the services of Dr. Hector L.
Ziperovich, M.D., an outside director of the Company, as its National Medical
Director, and in July 1995, entered into a written contractual arrangement. Such
services include utilization review, quality assurance, medical guidance, and
compliance with all relevant Federal and State clinical regulations. This
contract was terminated on October 31, 1996. For fiscal 1996, the fees for such
services were approximately $30,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
As referenced above, during 1996 and 1995, Dr. Hector L. Ziperovich
served as National Medical Director for the Company.
14
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Hospital Staffing Services, Inc. has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
HOSPITAL STAFFING SERVICES, INC.
Ronald A. Cass, Chairman of the Board, Chief
Executive Officer, President and Treasurer
By: /s/Ronald A. Cass Date: March 31, 1997
15
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
Exhibit
No.
10.11 Employment Agreement with Jay Gershberg dated September 1, 1995
(Incorporated by reference to Exhibit 10.11 filed with the Registrant's
Annual Report on Form 10-K/A for the fiscal year ended November 30,
1995).
10.12 Employment Agreement with Jeffrey A. Barnhill dated September 1, 1995
(Incorporated by reference to Exhibit 10.12 filed with the Registrant's
Annual Report on Form 10-K/A for the fiscal year ended November 30,
1995).
10.13 Employment Agreement with Ronald Huneycutt dated February 1, 1996
(Incorporated by reference to Exhibit 10.13 filed with the Registrant's
Annual Report on Form 10-K/A for the fiscal year ended November 30,
1995).
10.19 Termination and Benefits Agreement with Ronald A. Cass dated June 1,
1991 (Incorporated by reference to Exhibit 10.15 to Registrant's
Registration Statement on From S-1 (No. 33-42640)).
10.20 Termination and Benefits Agreement with Warren Marmorstein dated
November 1, 1993. (Incorporated by reference to Exhibit 10.25 filed
with the Registrant's Annual Report on Form 10-K for the fiscal year
ended November 30, 1993).
16
<PAGE>
