AVESIS INC, SC 13D/A, 1997-12-18

AVESIS INC
SC 13D/A, 1997-12-18
BUSINESS SERVICES, NEC

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Schedule 13D

Under the Securities Exchange Act of 1934 (Amendment No. 3)

AVESIS INCORPORATED
-------------------
(Name of issuer)

COMMON STOCK
------------
(Title of Class of Securities)

053650107
---------
(CUSIP Number)

Kenneth L. Blum, Jr.
11460 Cronridge Drive, Suite 120, Owings Mills, MD 21117 (410) 265-6074
-----------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notes and Communications)

January 27, 1997
----------------
(Date of Event which Requires
Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(b)(3) or (4), check the following box [ ].

Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-l(a) for other parties to whom copies are to be
sent.

* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).

(Continued on following page(s))

Page 1 of 14
<PAGE>
CUSIP No. 053650107 Page 2 of 14 Pages
---------
<TABLE>
<CAPTION>

- -------------------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)
NATIONAL HEALTH ENTERPRISES, INC.
- -------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X]
(b) [ ]
- -------------------------------------------------------------------------------------------------------
3 SEC USE ONLY

- -------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
- -------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[ ]
- -------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
- -------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CUSIP No. 053650107 Page 3 of 14 Pages
---------
<TABLE>
<CAPTION>

- -------------------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSONS.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
KENNETH L. BLUM, JR.
- -------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X]
(b) [ ]
- -------------------------------------------------------------------------------------------------------
3 SEC USE ONLY

- -------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
N/A
- -------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- -------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- -------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of 1,839,750
Shares ----------------------------------------------------------------------------------
Beneficially 8 SHARED VOTING POWER
Owned by 50,000
Each ----------------------------------------------------------------------------------
Reporting 9 SOLE DISPOSITIVE POWER
Person 1,839,750
With ----------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
50,000
- -------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,889,750
- -------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[ ]
- -------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
31.8%
- -------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Item 1. Security and Issuer.

This Statement relates to Common Stock of Avesis Incorporated
(the "Issuer"). The principal executive offices of the Issuer are located at 100
West Clarendon Avenue, Suite 2300, Phoenix, Arizona 85013.

Item 2. Identity and Background.

(a) This statement is being filed by National Health
Enterprises, Inc., a Maryland corporation ("NHE") and Kenneth L. Blum, Jr.

(b) The address for NHE and Mr. Blum is 11460 Cronridge Drive,
Suite 120, Owings Mills, Maryland 21117.

(c) The principal business of NHE is providing management and
marketing services to companies engaged in the business of offering vision,
dental hearing and chiropractic benefit programs. Mr. Blum is the president and
sole owner of NHE; president of Rent-A-Wreck of America, Inc., a used vehicle
rental system franchisor; president of American Business Information Systems,
Inc., a high-volume laser printing company and National Computer Services, a
computer service bureau and division of American Business Information Systems,
Inc.; and a consultant to United Healthcare, Inc.

(d) During the last five years, the filing persons have not
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).

(e) During the last five years, the filing persons have not
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and are not subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.

(f) NHE is a Maryland corporation. Mr. Blum is a citizen of
the United States.

Item 3. Source and Amount of Funds or Other Consideration.

The funds used to purchase the 50,000 shares of Common Stock
as to which Mr. Blum has shared voting and dispositive power were obtained from
Mr. Blum's parents. The remaining shares reported as beneficially owned herein
underlie unexercised stock purchase options. No funds were expended in
connection with the acquisition or disposition of the options reported herein.

Page 4 of 14
<PAGE>
Item 4. Purpose of Transaction.

The options discussed in Item 5 were acquired for investment.
The options were originally issued by the Issuer to National Health Enterprises,
Inc. ("NHE") in connection with the retention by the Issuer of NHE to perform
management services for the Issuer pursuant to a management contract (the
"Management Agreement"). To that extent, the acquisition of the options relates
to a change in the management of the Issuer. NHE transferred all Issuer options
to Issuer's management as incentive. Such transfers are automatically rescinded
when a transferee ceases to perform substantial services for the Issuer. Such
automatic rescission and subsequent transfer of options was the nature of the
transaction requiring the filing of the amended Schedule 13D. See Item 5(c)
below.

All of the Issuer's shares held by Mr. Blum were acquired and
are held for investment purposes only. Except as described above, NHE and Mr.
Blum have no present plan or proposal that relates to or would result in any of
the actions described in clauses (a) through (j) of Item 4 of Schedule 13D,
although they may from time to time in the future acquire additional shares of
Common Stock or securities convertible into Common Stock. At present, NHE and
Mr. Blum contemplate that such additional shares, if any, would also be
purchased for investment purposes only.

Item 5. Interest In Securities of the Issuer.

(a) The aggregate number and percentage of Issuer Common Stock
beneficially owned by NHE is 0 and 0.0%, respectively. Mr. Blum beneficially
owns an aggregate of 1,839,750 shares of the Company's Common Stock pursuant to
options, and holds 50,000 shares of Common Stock with his spouse, representing
31.8% of the class.

(b) See Items 7 through 10 on the Cover Pages of this Schedule
13D.

(c) NHE effected the following transaction since 60 days prior
to the date of the event which requires filing of this statement:

(i) A total of 400,000 fully vested stock purchase
options, which were originally granted to NHE from the Issuer, automatically
reverted back to NHE on January 27, 1997 pursuant to the terms of the agreement
by which NHE transferred the options to Issuer's previous president. The options
were originally granted at an exercise price of $0.48 per share.

(ii) NHE transferred an aggregate of the 400,000
fully vested stock purchase options mentioned in Item 5(c)(i) on January 27,
1997 to consultants and employees of the Company. The options were transferred
at an exercise price of $0.48 per share, subject to the terms and conditions of
the originally granted shares to NHE by the Issuer.

(d) Mr. Blum shares voting and dispositive power as to 50,000
shares of the Company's Common Stock with his spouse.

Page 5 of 14
<PAGE>
(e) NHE ceased to be the beneficial owner of more than five
percent of the Common Stock of the Company as of January 27, 1997.

Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.

The shares reported herein are beneficially owned by virtue of
fully vested stock purchase options. Except as set forth above, there are no
other contracts, arrangements, understandings, or relationships among NHE and/or
Mr. Blum and any other person with respect to any securities of the Issuer.

Item 7. Material to be Filed as Exhibits.

1. Management Agreement dated March 18, 1993 between the
Issuer and NHE.*

2. Stock Option Grant to NHE dated March 18, 1993
relating to options for the purchase of 4,400,000
shares of the Issuer's Common Stock.*

3. Subordinated Promissory Note dated March 18, 1993 in
the amount of $80,000 payable by Issuer to Mr. and
Mrs. Blum.*

4. Registration Rights Agreement dated March 18, 1993
among NHE, Mr. Blum, and Alan S. Cohn.*

5. Marketing Agreement dated March 18, 1993 between the
Issuer and NHE.*

6. Option Transfer Document dated March 31, 1993**

7. Certification Regarding Joint Filing of Schedule 13D
Pursuant to Rule 13d-1(f).

8. Option transfer letter from NHE to Neal A. Kempler
effective January 27, 1997.

9. Option transfer letter from NHE to Michael Reamer
effective January 27, 1997.

10. Option transfer letter from NHE to Joe E. Johnson
effective January 27, 1997.

* Incorporated by reference from Schedule 13D dated
March 18, 1993 filed by NHE and Mr. and Mrs. Kenneth
L. Blum, Jr.

** Incorporated by reference from Amendment No. 2 to
Schedule 13D dated December 5, 1994 filed by Mr.
Frank C. Cappadora.

Page 6 of 14
<PAGE>
SIGNATURE

After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this statement is true,
complete and correct.

12/17 , 1997
- -----------------

/s/ Kenneth L. Blum, Jr.
---------------------------------
KENNETH L. BLUM, JR.

NATIONAL HEALTH ENTERPRISES, INC.

By; /s/ Kenneth L. Blum, Jr.
------------------------------
KENNETH L. BLUM, JR.
PRESIDENT

Page 7 of 14
<PAGE>
EXHIBIT 7

CERTIFICATION REGARDING JOINT FILING OF
---------------------------------------
SCHEDULE 13D PURSUANT TO RULE 13d-1(f)
--------------------------------------
OF THE SECURITIES AND EXCHANGE COMMISSION
-----------------------------------------

National Health Enterprises, Inc., a Maryland corporation and
Kenneth L. Blum, Jr. do hereby certify that the Schedule 13D to which this
certification is attached as Exhibit 7 is being filed with the Securities and
Exchange Commission on behalf of each of the undersigned.

Dated: 12/17 , 1997 NATIONAL HEALTH ENTERPRISES, INC.
-----------------

By: /s/ Kenneth L. Blum, Jr.
------------------------------
KENNETH L. BLUM, JR.
PRESIDENT

/s/ Kenneth L. Blum, Jr.
---------------------------------
KENNETH L. BLUM, JR.

Page 8 of 14
<PAGE>
EXHIBIT 8

NATIONAL HEALTH ENTERPRISES INC.
11460 Cronridge Drive
Suite 120
Owings Mills, Maryland 21117

Neal A. Kempler
c/o Avesis Incorporated
100 West Clarendon Avenue
Suite #2300
Phoenix, Arizona 85013

re: Option Transfer

Dear Neal:

Pursuant to a Stock Option Grant (the "Grant Letter") dated March 18,
1993, National Health Enterprises Inc., a Maryland corporation ("NHE") acquired
options (the "Options") to purchase up to 4,400,000 shares of the Common Stock
of Avesis Incorporated, a Delaware corporation (the "Company") subject to the
terms and conditions set forth in the Grant Letter. A copy of the Grant Letter
is attached hereto.

Pursuant to Section 4 of the Grant Letter, and in consideration for
services performed and to be performed on behalf of NHE in connection with the
Management Agreement dated March 18, 1993 between NHE and the Company, NHE
hereby transfers to you Options (the "Transferred Options") for the purchase of
200,000 shares of the Company's Common Stock. The terms and conditions of the
Transferred Options shall be identical to the terms and conditions set forth In
the Letter of Grant except as follows:

1. The options are fully vested as a result the Board of
Directors resolution included in the minutes of the December 5, 1994 meeting,
and are transferred as such to the optionee.

2. The limited transfer right set forth in Section 4 of the
Letter of Grant is not available to you.

3. Any rights you may have under the Transferred Options shall
terminate, and the Transferred Options shall once again be exercisable (if at
all) solely by NHE, within 90 days after you cease performing substantial
services for or on behalf of the Company, provided that your rights under the
Transferred Options shall terminate immediately if the cessation is for

Page 9 of 14
<PAGE>
cause, and further provided that this clause shall not extend the exercise
period set forth in the Letter of Grant.

4. You acknowledge that the Company has advised you that all
transactions associated with the Transferred Options have complex and material
tax consequences, the effect of which can vary according to your personal
circumstances, and that the Company has advised you to obtain independent tax
advice as to all matters relating to the Transferred Options.

5. You acknowledge and agree to all of the terms and
conditions of the attached Letter of Grant, as Modified by the above terms and
conditions.

6. This Transfer shall be effective as of January 27, 1997.

Please indicate your acknowledgment and acceptance of the foregoing by
executing this letter in the space indicated below.

Sincerely,

NATIONAL HEALTH ENTERPRISES, INC.

By: /s/ Kenneth L. Blum, Jr.
----------------------------
Kenneth L. Blum, Jr., President

Acknowledged and accepted:

/s/ Neal A. Kempler
- -------------------------
Neal A. Kempler

Page 10 of 14
<PAGE>
EXHIBIT 9

NATIONAL HEALTH ENTERPRISES INC.
11460 Cronridge Drive
Suite 120
Owings Mills, Maryland 21117

Michael Reamer
c/o Avesis Incorporated
100 West Clarendon Avenue
Suite #2300
Phoenix, Arizona 85013

re: Option Transfer

Dear Michael:

Pursuant to Section 4 of the Grant Letter, and in consideration for
services performed and to be performed on behalf of NHE in connection with the
Management Agreement dated March 18, 1993 between NHE and the Company, NHE
hereby transfers to you Options (the "Transferred Options") for the purchase of
100,000 shares of the Company's Common Stock. The terms and conditions of the
Transferred Options shall be identical to the terms and conditions set forth In
the Letter of Grant except as follows:

1. The options are fully vested as a result the Board of
Directors resolution included in the minutes of the December 5, 1994 meeting,
and are transferred as such to the optionee.

2. The limited transfer right set forth in Section 4 of the
Letter of Grant is not available to you.

Page 11 of 14
<PAGE>
cause, and further provided that this clause shall not extend the exercise
period set forth in the Letter of Grant.

5. You acknowledge and agree to all of the terms and
conditions of the attached Letter of Grant, as Modified by the above terms and
conditions.

6. This Transfer shall be effective as of January 27, 1997.

Please indicate your acknowledgment and acceptance of the foregoing by
executing this letter in the space indicated below.

Sincerely,

NATIONAL HEALTH ENTERPRISES, INC.

By: /s/ Kenneth L. Blum Jr.
------------------------------
Kenneth L. Blum, Jr., President

Acknowledged and accepted:

/s/ Michael Reamer
- ---------------------
Michael Reamer

Page 12 of 14
<PAGE>
EXHIBIT 10

NATIONAL HEALTH ENTERPRISES INC.
11460 Cronridge Drive
Suite 120
Owings Mills, Maryland 21117

Joe E. Johnson
c/o Avesis Incorporated
100 West Clarendon Avenue
Suite #2300
Phoenix, Arizona 85013

re: Option Transfer

Dear Joe:

Pursuant to Section 4 of the Grant Letter, and in consideration for
services performed and to be performed on behalf of NHE in connection with the
Management Agreement dated March 18, 1993 between NHE and the Company, NHE
hereby transfers to you Options (the "Transferred Options") for the purchase of
100,000 shares of the Company's Common Stock. The terms and conditions of the
Transferred Options shall be identical to the terms and conditions set forth In
the Letter of Grant except as follows:

1. The options are fully vested as a result the Board of
Directors resolution included in the minutes of the December 5, 1994 meeting,
and are transferred as such to the optionee.

2. The limited transfer right set forth in Section 4 of the
Letter of Grant is not available to you.

Page 13 of 14
<PAGE>
further provided that this clause shall not extend the exercise period set forth
in the Letter of Grant.

5. You acknowledge and agree to all of the terms and
conditions of the attached Letter of Grant, as Modified by the above terms and
conditions.

6. This Transfer shall be effective as of January 27, 1997.

Please indicate your acknowledgment and acceptance of the foregoing by
executing this letter in the space indicated below.

Sincerely,

NATIONAL HEALTH ENTERPRISES, INC.

By: /s/ Kenneth L. Blum, Jr.
-----------------------------
Kenneth L. Blum, Jr., President

Acknowledged and accepted:

/s/ Joe E. Johnson
- ----------------------
Joe E. Johnson

Page 14 of 14