US SERVIS, INC.
220 Davidson Avenue, 2nd Floor
Somerset, New Jersey 08873
(732) 764-9898
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD
AUGUST 20, 1997
To the Stockholders of US Servis, Inc.:
You are cordially invited to attend the Annual Meeting of Stockholders of US
Servis, Inc., a Delaware corporation (the "Company"), which will be held on
Wednesday, August 20, 1997, at 10:00 a.m., local time, at 220 Davidson Avenue,
2nd Floor, Somerset, New Jersey, for the following purposes:
1. To elect seven (7) directors to serve until the 1998 Annual Meeting of the
stockholders of the Company; and
2. To consider such other matters as may properly come before the meeting or any
adjournment thereof.
Only stockholders of record at the close of business on July 18, 1997 will be
entitled to notice of and to vote at the meeting and at any adjournment thereof.
Accompanying this notice is a Proxy Statement, a form of proxy and a copy of our
Annual Report on Form 10-K, as filed with the Securities and Exchange
Commission.
We hope you attend the meeting in person, but, if you cannot, please sign, date
and promptly return the enclosed proxy in the envelope provided so that your
shares may be voted at the meeting.
By Order of the Board of Directors
ROBERT E. VAN METRE
Secretary and Vice President, Accounting
and Finance
Somerset, New Jersey
July 25, 1997
<PAGE>
US Servis, Inc.
220 Davidson Avenue, 2nd Floor
Somerset, New Jersey 08873
PROXY STATEMENT
The Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of US Servis, Inc., a Delaware corporation (the
"Company"), to be voted at the Annual Meeting of Stockholders of the Company
referred to in the foregoing Notice. All proxies received pursuant to this
solicitation will be voted in accordance with the instructions indicated
thereon. A majority of the shares having voting power (4,425,342 shares)
represented at the meeting in person or by proxy will constitute a quorum for
the transaction of business. Stockholders who execute proxies may revoke them at
any time before they are voted by submitting a later dated proxy or by written
notice delivered to the Secretary of the Company. Personal attendance at the
meeting without submitting a later dated proxy or a written notice of revocation
to the Secretary shall not serve to revoke any proxy, unless the stockholder
attends and votes at the meeting.
The Company has appointed Registrar and Transfer Company, the Company's
registrar and transfer agent, as inspector of elections for the annual meeting
for the purpose of calculating the number of votes present in person or by proxy
at the annual meeting and tabulating the vote for proposals submitted to a vote
of stockholders at the annual meeting. Shares owned by stockholders who are
present in person, or which are represented by proxy, at the annual meeting will
determine whether or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as not voted for purposes of
determining the approval of any matter submitted to the stockholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will be
considered as present but not entitled to vote with respect to that matter. The
Company anticipates mailing of the proxy materials to stockholders will commence
on or about July 25, 1997.
The expenses of this solicitation will be borne by the Company. Solicitation
will be primarily by use of the mails. Executive officers and other employees of
the Company may solicit proxies, without extra compensation, personally and by
telephone and other means of communication. The Company will also reimburse
brokers and other persons holding Common Stock in their names or in the names of
their nominees for their reasonable expenses in forwarding proxies and proxy
materials to beneficial owners.
RECORD DATE OF VOTING SECURITIES
Only holders of the Company's Common Stock, Series A Convertible Preferred Stock
(the "Series A Shares") and Series B Convertible Preferred Stock (the "Series B
Shares") of record at the close of business on July 18, 1997 are entitled to
notice of and to vote at the meeting. On that date the Company had outstanding
and entitled to vote 6,350,683 shares of Common Stock, 1,500,000 Series A Shares
and 1,000,000 Series B Shares. Each outstanding share of Common Stock, each
<PAGE>
outstanding Series A Share and each outstanding Series B Share entitles the
record holder to one vote on each matter to be acted upon at the meeting.
The Certificate of Designation authorizing the Series A Shares provides that the
holders of the Series A Shares shall have the right to elect one director of the
Corporation. The Certificate of Designation authorizing the Series B Shares
provides that so long as (i) at least 200,000 Series B Shares are outstanding
and Frontenac VI Limited Partnership ("Frontenac VI") owns not less than a
majority of such shares, and (ii) the holders of Series A Shares are not
eligible to elect a director pursuant to the Certificate of Designation
authorizing the Series A Shares, the holders of the Series B Shares shall have
the right to elect one director of the Corporation. The remaining directors are
elected by a plurality of the votes cast in the election. The affirmative vote
of the holders of a majority of the shares voted with respect to any other
proposal presented at the meeting is required to approve such other proposal.
ELECTION OF DIRECTORS
(ITEM #1 on the PROXY CARD)
A Board of Directors consisting of eight individuals is to be elected at the
Annual Meeting. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the nominees named below, other than Mr. Cowie. Mr.
Cowie has been nominated by the holders of a majority of the Series A Shares and
his nomination will be voted upon by the holders of Series A Shares. In the
event that any nominee of the Company is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
directorship. The term of office of each person elected as a director will
continue until the next annual meeting of stockholders or until his or her
successor has been elected and qualified.
The names of the nominees and certain information about them are set forth
below.
<TABLE>
<S> <C> <C>
Name Age Position
Graham O. King 57 Chairman of the Board and Chief Executive Officer
S.M. Caravetta 71 Vice Chairman of the Board
James A. Pesce 54 President and Director
Frederick R. Blume 55 Director
Stanford J. Goldblatt 58 Director
Robert E. King 61 Director
Robert C. Bowers 51 Director
James E. Cowie 42 Director
</TABLE>
2
<PAGE>
GRAHAM O. KING joined the Company on October 12, 1994 as the Company's Chief
Executive Officer. He was appointed Chairman of the Board of Directors at a
Board of Directors meeting held on October 28, 1994. He was formerly
with Shared Medical Systems, Inc., a healthcare information service company,
from October 1, 1986 until October 31, 1993, where he served as its President
from April 1987. From October 31, 1993 until joining the Company, he
was a partner with Salt Creek Ventures, a private investment company.
He is presently a director of ADAC Laboratories, Inc. and Optika Imaging
Systems, Inc. Mr. King and Mr. Robert E. King, another director of the
Company, are brothers.
S. M. CARAVETTA was the Chairman of the Board of Directors, and Chief Executive
Officer of the Company from its organization in 1976 through October 28, 1994.
He became Vice Chairman of the Board of Directors on October 28,1994.
Mr. Caravetta has been a director of the Company since 1976.
JAMES A. PESCE has been the President and a Director of the Company since 1982.
FREDERICK R. BLUME has been a director of the Company since 1993. He has been a
Managing Partner of Capital Health Venture Partners, a healthcare venture
capital firm, since June 1986. Prior to founding Capital Health, Mr. Blume was a
Managing Director of Paine Webber Group specializing in corporate healthcare
financing. He is presently a director of Cytyc Corporation and Washington
National Corporation.
STANFORD J. GOLDBLATT has been a director of the Company since April 20, 1995.
Since 1979, Mr. Goldblatt has been a partner in the law firm of
Hopkins & Sutter, counsel to the Company. Mr. Goldblatt has announced his
withdrawal as a partner of Hopkins & Sutter and his intention to become a
partner in the law firm of Winston & Strawn.
ROBERT E. KING has been a director of the Company since April 20, 1995.
Mr. King is a partner in Salt Creek Ventures, a private investment company,
and Chairman of the Executive Committee of COLLEGIS, Inc., an outsourcer
of information services for colleges and universities. For a twelve year
period prior to October 1994, Mr. King was a director and Chief Executive
Officer of CA Newtrend Inc., the general partner of Newtrend, L.P. (and its
partnership and corporate predecessors), a software, service and
outsourcing provider in the financial institutions market. He is presently
a director of DEVRY, Inc. Mr. King and Mr. Graham O. King are brothers.
3
<PAGE>
ROBERT C. BOWERS has been a director of the Company since April 20, 1995.
Since May 1996, Mr. Bowers has been Vice President and Chief Financial
Officer of COLLEGIS, Inc. Between June 1995 and May 1996, Mr. Bowers served
as Vice President and Chief Financial Officer of HTE, Inc., a software
service company in the state and local government market. From June 1985
through October 1994, Mr. Bowers was Senior Vice President and Chief Financial
Officer of CA Newtrend Inc., the general partner of Newtrend, L.P.
(and its partnership and corporate predecessors).
JAMES E. COWIE has been a director of the Company since July 18, 1995.
Mr. Cowie has been a general partner of Frontenac Company, a Delaware general
partnership that is the general partner of Frontenac VI Limited Partnership
("Frontenac VI") and other venture capital partnerships, since 1989. He also
serves on the boards of directors of PLATINUM technology, inc. and
3Com Corporation.
Concerning the Board of Directors
Prior to October 1994, outside directors of the Company received up to $1,000
per meeting for their services to the Company in such capacity. Effective
October 1994, outside directors of the Company were granted stock options under
the Company's 1994 Non-Employee Director Stock Option Plan (the "1994 Plan") in
lieu of cash compensation. Under the 1994 Plan, the Board of Directors of the
Company is authorized to grant options to purchase up to 350,000 shares of
Common Stock to certain non-employee directors. Under the terms of the 1994
Plan, a non-employee director is granted options to purchase 50,000 shares of
Common Stock at the market price on the day he or she becomes a director or, in
the case of outside directors that were in office during October 1994, the date
of adoption of the 1994 Plan. The options vest at the rate of 10,000 shares per
year, expire if not exercised within ten years from the date of grant, and are
non-transferrable by option holders during an option holder's lifetime. Under
circumstances set forth in the 1994 Plan, the options may be exercised within
six months following termination of service to the Company, or within one year
in the event of death or total disability. In January 1995, each of Mr. Bowers
and Mr. Robert King, as consideration for his agreement to serve as a consultant
to the Company, was issued options under the Company's Amended 1993 Stock Option
Plan (the "1993 Plan"). Neither Mr. Bowers nor Mr. King received options under
the 1994 Plan upon his appointment as a director of the Company. Neither Mr.
Goldblatt nor Mr. Cowie, upon being appointed as a director of the Company,
accepted any options. On February 11, 1997, the Board of Directors cancelled the
options granted to Mr. Bowers and Mr. King under the 1993 Plan and granted
options for the same number of shares to Mr. Bowers and Mr. King under the 1994
Plan, such options having the same terms and conditions as those that were
cancelled. The option holdings of the directors are set forth under "Voting
Securities and Principal Holders Thereof" below. Directors are also reimbursed
for their reasonable travel expenses incurred in attending meetings.
4
<PAGE>
The Board of Directors met or took action without a meeting six times during the
fiscal year ended March 31, 1997. There is no present director nominated for
election who attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees of the Board of Directors on which he served.
The Board of Directors maintains an Executive Committee, an Audit Committee, an
Option Committee, a Nominating Committee and a Compensation Committee.
During the fiscal year ended March 31, 1997, the members of the Executive
Committee were Messrs. Graham King, Robert King, Bowers, Blume, Cowie and
Goldblatt. The Executive Committee met or took action without a meeting seven
times during fiscal 1997.
The Audit Committee discusses matters of concern to the independent auditor
resulting from the audit; reviews changes in accounting principles in the
financial statements; and reviews non-auditing services performed for the
Company by the independent auditor. During the fiscal year ended March 31, 1997,
the members of the Audit Committee were Messrs. Bowers, Goldblatt and Robert
King. The Audit Committee held meetings on May 3, 1996, July 2, 1996 and
November 11, 1996 to discuss (i) the scope and cost of the audit to be performed
for the fiscal year ended March 31, 1996, (ii) the results of such audit, and
(iii) the financial condition of the Company. The members of the Audit Committee
also met informally during the fiscal year ended March 31, 1997 to discuss the
selection of an independent auditor and the Company's financial statements in
connection with Executive Committee meetings.
The Option Committee administers the 1993 Plan. During the fiscal year ended
March 31, 1997, the members of the Option Committee were Messrs. Cowie and
Goldblatt. The Option Committee met or took action without a meeting twice
during fiscal 1997, and both members of the Option Committee participated in
such action.
During the fiscal year ended March 31, 1997, the members of the Compensation
Committee were Messrs. Blume and Cowie. The Compensation Committee took action
without a meeting once during fiscal 1997.
During the fiscal year ended March 31, 1997, the members of the Nominating
Committee were Messrs. Graham King, Caravetta and Blume. The Nominating
Committee met once during fiscal 1997, and all members of the Nominating
Committee were present at such meeting. The Nominating Committee will consider
director nominees submitted by the stockholders of the Company. Submissions
should be made in a writing addressed to the attention of the Nominating
Committee at the Company's principal executive offices.
5
<PAGE>
The Company has agreed with each director of the Company that the Company shall
indemnify the director against certain claims that may be asserted against him
by reason of serving on the Board of Directors.
Mr. Graham King is a party to an Employment Agreement with the Company that
extends from year to year unless terminated for cause or upon notice by either
party. This agreement and certain other terms of Mr. King's employment with the
Company are discussed under "Discussion of 1997 Executive Officer Compensation
and Employment Contracts" below.
Mr. King and Mr. Caravetta have signed an agreement to the effect that each
will vote for the other as a director of the Company. Mr. Caravetta has also
agreed, among other things, to vote in favor of the slate of directors
nominated by the Nominating Committee.
Mr. Caravetta is a party to a Senior Consulting Agreement with the Company. This
agreement extends through April 1, 1998. On October 12, 1994, the Company
entered into a Senior Consulting Agreement with Mr. Caravetta. This agreement
was amended by letters dated November 11, 1994 and July 5, 1995. The Senior
Consulting Agreement replaced and superceded a prior employment agreement
between Mr. Caravetta and the Company. The agreement provides for a salary of
$275,000 per annum. An agreement to provide a split dollar life insurance policy
on the lives of Mr. and Mrs. Caravetta in the face amount of $2,000,000 through
April 1, 1998 was terminated by letter agreement dated July 5, 1995, and the
split dollar policy (with a cash value of approximately $60,000) was transferred
to Mr. and Mrs. Caravetta. Pursuant to the Senior Consulting Agreement, a stock
option for 150,000 common shares granted to Mr. Caravetta by the Company was
canceled.
Mr. Caravetta's Senior Consulting Agreement includes a change of control clause
that provides that, in the event of a change of control of the Company during
the term of Mr. Caravetta's agreement, the Company shall pay him an amount equal
to 2.0 times the average annual base compensation paid to him during the five
fiscal years of the Company immediately preceding the change of control; and, if
such change of control takes place between April 1, 1997 and March 31, 1998, the
Company shall pay him an amount equal to 1.5 times the average annual base
salary and incentive compensation. The aforesaid payment shall be made to him in
twelve or, at his election, in twenty-four, equal monthly installments,
commencing on the first day of the month following the change of control. Other
than the change of control payments, Mr. Caravetta shall not be entitled to any
other salary or consulting payments under the Senior Consulting Agreement after
a change of control. Mr. Caravetta has agreed that a change of control in favor
of Mr. King or persons affiliated with Mr. King shall not be deemed a change in
control for purposes of his Senior Consulting Agreement.
The Company has agreed to maintain a term life policy in the face amount of
$500,000 on the life of Mr. Caravetta through March 31, 1998. The Company has
designated Rosemarie Caravetta or her estate as the beneficiary of this policy.
After March 31, 1998, the Company will transfer the policy to Mr. Caravetta, and
he will be responsible for premiums required to keep the policy in force.
6
<PAGE>
Mr. Caravetta's agreement also contains clauses that provide for medical
insurance coverage for the remainder of his and his wife's life (at her expense
following his death). Throughout the fiscal year ended March 31, 1997, Mr.
Goldblatt was a partner in the law firm of Hopkins & Sutter. Hopkins & Sutter
received legal fees and reimbursement for disbursements from the Company for
legal services provided to the Company by Hopkins & Sutter during the fiscal
year ended March 31, 1997. The Company has continued to employ the services of
Hopkins & Sutter; no estimate of the legal fees for the 1998 fiscal year can be
made at this time. Mr. Goldblatt has announced his withdrawal as a partner of
Hopkins & Sutter and his intention to become a partner in the law firm of
Winston & Strawn.No estimate can be made at this time of the legal fees, if any,
that the Company will pay to Winston & Strawn in the 1998 fiscal year. Mr.
Goldblatt is also a member of the healthcare advisory committee of Frontenac
Company, a Delaware general partnership that is the general partner of Frontenac
VI. Frontenac VI holds equity representing approximately 29.2% of the Company.
Mr. Goldblatt is also a trustee of a trust established for the benefit of
members of Mr. Goldblatt's family, which trust is a limited partner in Frontenac
VI. Hopkins & Sutter provides legal services to Frontenac VI, Frontenac Company
and Robert E. King on a regular basis, although it has not provided legal
services to Frontenac VI, Frontenac Company or Mr. King with regard to any
transactions with the Company.
Mr.Cowie is a general partner of Frontenac Company, which is the general partner
of Frontenac VI. The Company maintains a directors and officers liability
insurance policy covering all directors of the Company.
EXECUTIVE COMPENSATION
The following table summarizes the annual and long-term compensation of certain
of the Company's executive officers for fiscal 1997, 1996 and 1995.
<TABLE>
<CAPTION>
Long-Term Comp. All Other
Annual Compensation Options (Shares) Comp.
Restricted Securities
Name/Position Age Year Salary Bonus (2) Stock Underlying
Awards (3) Options
<S> <C> <C> <C> <C> <C> <C> <C>
Graham O. King 57 1997 $239,000 $120,000 0 0 $8,968 (4)
Chairman and CEO (1) 1996 239,000 105,000 0 0 3,756 (4)
1995 100,197 56,427 1,050,000 1,000,000 939 (4)
</TABLE>
7
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Long-Term Comp. All Other
Annual Compensation Options (Shares) Comp.
Restricted Securities
Name/Position Age Year Salary Bonus (2) Stock Underly
Awards (3) Options
James A. Pesce 54 1997 $189,000 $50,000 0 17,000 $10,798 (5)
President 1996 189,000 30,000 0 0 10,798 (5)
1995 180,000 0 0 133,000 11,041 (5)
Michael B. Loscalzo 52 1997 $175,000 $50,000 0 35,000 None
Treasurer and Vice 1996 175,000 37,500 0 10,000 None
President (6) 1995 10,096 0 0 125,000 None
Robert E. Van Metre 56 1997 $130,000 $40,000 0 0 None
Secretary and Vice 1996 100,000 22,500 0 50,000 None
President, Accounting 1995 N/A N/A N/A N/A N/A
and Finance (7)
</TABLE>
- ------------------------------------
(1)Mr.King joined the Company as its Chief Executive Officer on October 12,1994.
(2)Includes amounts paid in subsequent fiscal year applicable to previous
fiscal year.
(3)The amounts shown in the table represent the market price on the date of
grant of awards of restricted stock.
(4)Represents the premium on term life insurance maintained for Mr. King by the
Company.
(5)$9,600 represents an automobile allowance, with the balance representing
premiums on term life insurance maintained by the Company. The Company has
agreed that if Mr. Pesce dies while employed by the Company, the Company shall
pay to his irrevocably designated beneficiary $100,000 per annum for a period of
ten (10) years thereafter, payable in equal monthly installments, commencing on
the first day of the month following death. The Company maintains a term life
policy in the face amount of $500,000 on the life of Mr. Pesce, which the
Company believes when considering tax effects will be sufficient to cover this
plan.
(6)Mr.Loscalzo joined the Company in 1995. Mr. Loscalzo has informed the Company
that he intends to leave the employment of the Company in the near future. As of
this Report, he remains in the position indicated above. From 1993 to 1995, Mr.
Loscalzo was a Senior Vice President of Cain Brothers & Company, a New York
based health care investment banking firm. Mr. Loscalzo was a co-founder and,
from 1988 to 1992, Managing Director of The Hunter Group, a health care workout
firm. Between 1988 and 1991, he served as either CEO or CFO for workout clients
in Seattle, Washington; St. Paul, Minnesota; Miami, Florida; and San Francisco,
California. Prior to the formation of The Hunter Group, Mr. Loscalzo served as
Senior Vice President of Finance for a Philadelphia teaching hospital. From 1978
to 1985, he was a manager in Arthur Andersen & Co.'s Philadelphia health care
audit practice.
(7)Mr. Van Metre joined the Company in 1995. From 1987 through 1994,
Mr. Van Metre held several senior management positions with Integrated
Resources Life Companies, Inc. including, Senior Vice President-Chief
Financial Officer, Executive Vice President, and President. From 1982
through 1987, Mr. Van Metre was Executive Vice President-Chief Financial
Officer for the Daseke Group, Inc. Mr. Van Metre held a variety of senior
management positions with Household International (HFC) from 1973 to 1982.
Prior to joining HFC, he was Administrator of Finance for the Illinois State
Toll Highway Authority. Mr. Van Metre's compensation amounts do not include
consulting payments paid to Mr. Van Metre by the Company prior to his employment
with the Company.
8
<PAGE>
Discussion of 1997 Executive Officer Compensation
and Employment Contracts
Mr. Graham O. King joined the Company as Chief Executive Officer on October 12,
1994. He became Chairman of the Board of Directors effective October 28, 1994.
Mr. King is a party to an Employment Agreement that has been extended through
March 31, 1997. Unless either party elects not to extend the agreement, it
automatically extends for one year terms thereafter. Neither party made such an
election for the year ended March 31, 1998. The agreement provides for a salary
of $239,000 per year with a performance bonus not to exceed fifty percent (50%)
of salary. Mr. King's salary can be increased at the discretion of the Board of
Directors. The agreement provides for one year severance unless there is
termination for cause or a voluntary resignation without good reason as defined
in his Employment Agreement. Mr. King was issued 300,000 shares of Common Stock
of the Company in lieu of a cash signing bonus. Mr. King has agreed with the
Company not to sell more than 33,333 of these shares plus any shortfall from
previous fiscal quarters in any fiscal quarter during Mr. King's employment.
Mr. King was granted stock options to acquire 1,000,000 shares of Common Stock
of the Company at the market price ($3.50/share) on the date of the commencement
of his employment. Options for 400,000 shares vested on October 12, 1995 and
options for 600,000 shares vest on October 12, 2002, unless they have previously
become exercisable. Alternatively, these stock options vest whenever the stock
has traded at or above $5.00 on at least 30 of the 40 prior business days, or
upon a change of control. These options contain anti-dilution provisions
authorizing adjustments under certain circumstances. Mr. King's shares,
including those underlying options, are subject to a registration rights
agreement. The Company has also agreed to reimburse Mr. King for the cost of a
term life insurance policy for $2,000,000 on Mr. King's life for his benefit.
On June 14, 1995, the Company agreed to loan Mr. Graham King $157,800 in order
to allow Mr. King to pay the income taxes due in connection with a portion of
the restricted stock he received. The terms of the note evidencing the loan
provide that the loan is interest-free until 120 days after the Company
registers Mr. King's restricted stock for sale, that the loan bears interest at
a rate equal to the rate of return achieved by the Company on its cash reserves
plus 1% after such date, and that the Company may demand repayment at any time
after the note begins to accrue interest. As of March 31, 1997, the balance of
this loan was $40,950.
All officers hold office until their successors are duly elected or appointed
and qualified, or until their earlier resignation or removal.
OPTION YEAR-END VALUE TABLE
The following table sets forth information concerning the value at March 31,
1997 of option grants during the year to each named executive officer. Options
vest as determined at the time of the grant and expire after ten years from the
date of grant. Vesting is contingent on continuing employment with the Company.
9
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1997
Potential Realizable Value
Individual Grants at Assumed Annual Rates
of Stock Price Appreciation
for Option Term (1)
(a) (b) (c) (d) (e) (f) (g)
Percent of Total
Options Granted Exercise
Options to Employees in or Base Expiration
Name Granted Fiscal Year Price Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Graham O. King 0 --- --- --- --- ---
James A. Pesce 17,000 6.0% $3.000 12/5/06 $32,073 $81,281
Michael B. Loscalzo 35,000 12.3% $4.125 8/14/06 $90,797 $230,097
Robert E. Van Metre 0 --- --- --- --- ---
</TABLE>
(1)Amounts reported in these columns represent amounts that may be realized upon
exercise of the options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) of the
Company's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange Commission
and do not reflect the Company's estimate of future stock price increases.
Actual gains, if any, on stock option exercises and Common Stock holdings are
dependent on the timing of such exercise and the future performance of the
Company's Common Stock. There can be no assurance that the rates of appreciation
assumed in this table can be achieved or that the amounts reflected will be
received by the individuals.
The following table sets forth information with respect to options exercised and
held by the named executive officers as of March 31, 1997:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1997
AND MARCH 31, 1997 OPTION VALUES
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Shares Unexercised In-The-Money
Acquired on Value Options at Options at
Name Exercise Realized March 31,1996 March 31, 1997 (1)
<S> <C> <C> <C> <C>
Graham O. King 0 --- 1,000,000 $0
James A. Pesce 0 --- 150,000 $18,750
Michael B. Loscalzo 0 --- 170,000 $0
Robert E. Van Metre 0 --- 50,000 $0
</TABLE>
(1)The value of options reflects the increase in market value of the Company's
Common Stock from the date of grant through March 31, 1997 (when the closing
price of Company Common Stock was $3.125 per share). The table includes both
options that are vested and options that are not vested. Value actually realized
by the executive officers will depend on the value of the Company's Common Stock
at the time of exercise.
10
<PAGE>
COMPENSATION COMMITTEE INTERLOCK AND INSIDER PARTICIPANTS
Mr. Blume and Mr. Cowie comprise the Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation policies adopted by the Company are designed to (i) attract and
retain valued employees capable of leading the Company to meet its business
objectives, (ii) motivate the Company's executives to enhance long-term
stockholder value and (iii) reward the Company's valued employees for prior
service to the Company. The executive compensation program has been administered
by the Compensation Committee without resort to particular standards other than
an overall review of the performance of the Company and the individual officers.
The annual compensation of the Company's executive officers including the
Company's Chief Executive Officer, consists of a combination of cash salary,
cash bonuses and stock options and grants. The Compensation Committee reviews
individual executive officer compensation in light of various information,
including Company performance, individual performance and comparative market
data. In general, the Company intends to set base compensation for executive
officers within a range which is believed to be comparable to the range of
compensation set by companies of comparable size in similar industries.
In addition to the general standards set forth above, one of the executive
officers of the Company is compensated pursuant to an existing compensation
agreement. This agreement, covering Mr. Graham King, is discussed at "Discussion
of 1997 Executive Officer Compensation and Employment Contracts" above. As
discussed above, Mr. King's Employment Agreement provided for the issuance to
Mr. King of 300,000 shares in lieu of a signing bonus. During the fiscal year
ended March 31, 1996, the Compensation Committee authorized an amendment to the
Employment Agreement waiving certain of the Company's forfeiture rights with
respect to these shares.
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section
162(m)") limits to $1,000,000 the amount of compensation and benefits (other
than compensation and benefits that are performance based) that can be deducted
for federal income tax purposes in any fiscal year. The Company does not expect
to pay its executive officers compensation in excess of the Section 162(m)
deductibility limit. The Committee intends to take such further steps as it
deems advisable to allow the Company to deduct future compensation amounts paid
to its executive officers to the extent it may do so without compromising the
Company's ability to motivate and reward excellent performance. The Board of
Directors and the Committee will retain discretion to authorize the payment of
compensation that does not qualify for income tax deductibility under Section
162(m).
Respectfully submitted,
Frederick R. Blume James E. Cowie
11
<PAGE>
PERFORMANCE GRAPH
The following chart shows the Company's cumulative total stockholder return for
the last five years compared to the Total Return Index for The Nasdaq Stock
Market (U.S. Companies) and the Nasdaq Computer and Data Processing Service
Stocks as prepared for Nasdaq by the Center for Research in Security Prices at
the University of Chicago.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
MARCH 31:
1992 1993 1994 1995 1996 1997
US SERVIS, INC. 100 75.7 31.4 22.9 22.1 17.9
NASDAQ STOCK MARKET (US) 100 115.0 124.1 138.0 187.4 208.3
NASDAQ COMP & DATA PROC. STOCKS 100 111.8 114.5 154.3 218.6 239.3
[CHART OMITTED]
</TABLE>
Prepared by the Center for Research in Security Prices
Produced on 06/30/97 including data to 03/31/97
12
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information, as provided by the holders to the
Company, concerning beneficial ownership of Common Stock as of July 10, 1997, by
(i) all persons known by the Company to be the beneficial owners of five percent
or more of the issued and outstanding Common Stock of the Company, (ii) each of
the directors and named executive officers and (iii) the directors and executive
officers of the Company as a group. Except as noted, all addresses are 220
Davidson Avenue, 2nd Floor, Somerset, New Jersey 08873.
<TABLE>
No. of Shares Percentage of
Name of Beneficial Owner Beneficially Owned Ownership
<S> <C> <C>
S.M. Caravetta (1) 1,088,128 17.1 %
Frederick R. Blume (2) 505,812 7.8 %
c/o American Healthcare Fund
122 S. Michigan Ave.
Chicago, IL 60603
Graham O. King (3) 600,000 8.9 %
James A. Pesce (4) 223,000 3.4 %
Michael B. Loscalzo (5) 52,000 Less than 1 %
Robert E. Van Metre (6) 35,333 Less than 1 %
Stanford J. Goldblatt 0 Less than 1 %
Robert E. King (7,8) 227,500 3.5 %
Robert C. Bowers (7) 20,000 Less than 1 %
James E. Cowie (9) 2,615,000 29.2%
c/o Frontenac VI Limited Partnership
135 S. LaSalle Street
Chicago, IL 60603
Stephen G. Sullivan (10) 403,116 6.3 %
22 Heath Drive
Bridgewater, NJ 08807
David K. Vanco (11) 525,000 8.2 %
1 South Piermont Drive
North Barrington, IL 60010
All Executive Officers and Directors(1-10)
as a Group (11 persons) 5,366,773 53.9 %
</TABLE>
(1)Includes 116,000 shares of Common Stock owned by the children of
Mr. Caravetta. Mr. Caravetta disclaims beneficial ownership of such shares.
Includes 212,128 shares of Common Stock owned by trusts, of which the
children of Mr. Caravetta are the beneficiaries and Mr. Stephen J. Feinberg
and the wife of Mr. Caravetta are trustees. Mr. Caravetta disclaims
beneficial ownership of such shares. Mr. Caravetta may be deemed to be the
promoter or founder of the Company as such term is defined under the federal
securities laws.
(2)Shares which are owned by American Healthcare Fund, L.P.,of which Mr.Blume is
an affiliate and as to which Mr. Blume disclaims beneficial ownership. Does not
include options to purchase 30,000 shares which might be issued upon exercise of
stock options which have not yet vested. Includes 35,000 shares issuable upon
exercise of vested stock options. Includes 125,000 shares issuable upon
conversion of Series B Convertible Preferred Shares. Mr. Blume's "Percentage of
Ownership" is calculated assuming that the 125,000 shares of common stock
issuable upon conversion of the Series B Convertible Preferred Stock are issued
and outstanding.
13
<PAGE>
(3)Includes 400,000 shares issuable upon exercise of vested stock options.
Does not include 600,000 shares issuable upon exercise of stock options which
are not currently exercisable. (See "Discussion of 1996 Executive Officer
Compensation and Employment Agreements.")
(4)Includes 133,000 shares issuable upon exercise of vested stock options. Does
not include 17,000 shares which might be issued upon exercise of a stock option
which has not yet vested.
(5)Represents vested stock options. Does not include 118,000 shares which might
be issued upon exercise of a stock option which has not yet vested.
(6)Includes 33,333 shares issuable upon exercise of vested stock options. Does
not include 16,667 shares which might be issued upon exercise of a stock
option which has not yet vested.
(7)Does not include 30,000 shares which might be issued upon exercise of a stock
option which has not yet vested. Includes 20,000 shares issuable upon exercise
of vested stock options.
(8)Includes 18,000 shares issued, and 49,000 shares issuable upon exercise of
warrants, and 125,000 shares issuable upon conversion of Series A Convertible
Preferred Shares, all held in trust for the benefit of Mr. King's children. Mr.
King disclaims beneficial ownership of all such shares. Mr. King's "Percentage
of Ownership" is calculated assuming that the 174,000 shares of common stock
issuable upon exercise of the warrants and conversion of the Series A
Convertible Preferred Stock are issued and outstanding.
(9)Shares owned by Frontenac VI Limited Partnership. Mr. Cowie disclaims
beneficial ownership of such shares. Includes 490,000 shares issuable upon
exercise of warrants, 1,250,000 shares issuable upon conversion of Series A
Convertible Preferred Shares and 875,000 shares issuable upon conversion of
Series B Convertible Preferred Shares. Mr. Cowie's "Percentage of Ownership" is
calculated assuming that the 2,615,000 shares of common stock issuable upon
exercise of the warrant, conversion of the Series A Convertible Preferred Stock
and conversion of the Series B Convertible Preferred Stock are issued and
outstanding.
(10)Includes 75,000 shares issuable upon exercise of vested stock options, and
559 shares held by Mr. Sullivan's wife.
(11)Includes 25,000 shares issuable upon exercise of vested stock options.
INDEPENDENT PUBLIC ACCOUNTANTS
Wiss & Company, LLP completed the audits of the financial statements of the
Company for the fiscal year ended March 31, 1997. Representatives of Wiss &
Company, LLP are expected to be present at the meeting and will have the
opportunity to make a statement (if they so desire) and to be available to
respond to appropriate questions.
The Audit Committee is considering independent public accountants (including
Wiss & Company, LLP) to conduct an audit for the fiscal year ended March 31,
1998, and will make a recommendation to the Board of Directors when its
deliberations are completed.
Wiss & Company, LLP issued unqualified reports on the Company's financial
statements for the fiscal years ended March 31, 1996 and March 31, 1997, and to
date the Company has had no disagreements with Wiss & Company, LLP on any
matters of accounting principles or practices, financial statement disclosures,
or auditing scope or procedures.
14
<PAGE>
SECTION 16 FILINGS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own beneficially more than ten
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of such securities of the Company. Directors,
executive officers and greater than ten percent stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations that no other reports were
required, except as set forth in the following sentence, all Section 16(a)
filing requirements applicable to its directors, executive officers and greater
than ten percent beneficial owners were complied with during the 1997 fiscal
year. Frederick R. Blume, on behalf of American Healthcare Fund, L.P., filed a
Form 5 with the SEC in February, 1997, disclosing certain information that
should have been properly reported on a Form 4 for October, 1996.
STOCKHOLDERS PROPOSALS
Any proposals by stockholders of the Company intended to be included in the
Company's 1998 Annual Meeting of the Stockholders must be in writing and
received at the Company, at its principal office, no later than March 12, 1998.
FINANCIAL AND OTHER INFORMATION
The Company's Audited Financial Statements for the fiscal years ended March 31,
1997 and March 31, 1996 are included in the Company's Annual Report on Form 10-K
for the Fiscal Year ended March 31, 1997, and are incorporated herein by
reference.
Management's discussion and analysis of the financial condition and results of
operations of the Company is included in the Company's Annual Report on Form
10-K for the Fiscal Year ended March 31, 1997 under the heading "Management's
Discussion of Financial Results," and is incorporated herein by reference.
A copy of the Annual Report on Form 10-K is being delivered with this Proxy
Statement.
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to Certain Relationships and Related Transactions is
included herein under the headings "Concerning the Board of Directors" and
"Executive Compensation."
GENERAL
Management of the Company does not know of any matters other than the foregoing
that will be presented for consideration at the meeting. However, if other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote thereon in accordance with their judgment.
By Order of the Board of Directors,
Robert E. Van Metre
July 25, 1997 Secretary and Vice President, Accounting and Finance
16
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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 Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
US SERVIS, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 paid previously 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:
