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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________ to_____________
Commission file number
UNIVERSAL SELF CARE, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-4228470
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11585 Farmington Road.
Livonia, Michigan 48150
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (313) 261-2988
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0001 par value
(Title of Class)
Check 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, and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
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The number of shares outstanding of the registrant's Common Stock, $.0001
Par Value, as of September 30, 1996 was 7,888,006 shares.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
it's behalf by the undersigned, thereunto duly authorized.
UNIVERSAL SELF CARE, INC.
BY:
BRIAN BOOKMEIER
PRESIDENT
Date: November 22, 1996
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EXHIBIT INDEX
Exhibit No. Description
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10.1 Amendment No. 1 to Loan
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AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
DATED AS OF AUGUST 15, 1996
by and among
UNIVERSAL SELF CARE, INC.
DIABETES SELF CARE, INC.
PCS, INC.- WEST
PHYSICIANS SUPPORT SERVICES, INC.
(collectively, the "Borrower")
and
HEALTHPARTNERS FUNDING, L.P.
(the "Lender")
November 4, 1996
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AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
made as of this 4th day of November, 1996, by and among UNIVERSAL SELF CARE,
INC., a Delaware corporation, DIABETES SELF CARE, INC., a Virginia corporation,
PCS, INC. - WEST, a Michigan corporation, and PHYSICIANS SUPPORT SERVICES, INC.,
a California corporation (collectively, the "Borrower") , and HEALTHPARTNERS
FUNDING, L.P., a Delaware limited partnership ("Lender").
RECITALS
A. Pursuant to that certain Loan and Security Agreement dated as of August
15, 1996 by and between Borrower and Lender (the "Loan Agreement"), the parties
have established certain financing arrangements that allow Borrower to borrow
funds from Lender in accordance with the terms and conditions set forth in the
Loan Agreement.
B. The parties now desire to amend the Loan Agreement in accordance with
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender and Borrower
have agreed to the following amendments to the Loan Agreement. Capitalized
terms defined in the Loan Agreement which are used herein shall have the same
meanings set forth in the Loan Agreement unless otherwise specified herein.
1. AMENDMENT TO LOAN AGREEMENT. Effective as of the date of this
Amendment, and subject to the satisfaction of each of the conditions precedent
set forth in Section 2 below, the Loan Agreement is hereby amended as follows:
1.01. Section 1.5 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
"SECTION 1.5. BASE RATE. "Base Rate" means a rate of interest equal to
two and two-tenths percent (2.20%) above the "Prime Rate of Interest".
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1.02. Section 1.45 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
"SECTION 1.45. RESERVE. "Reserve" means the sum of One Hundred Thousand
and No/100 Dollars ($100,000.00), subject to reduction equal to the excess, if
applicable, of (x) $100,000.00, over (y) the amount that is finally determined
(whether by a court or administrative body or as a result of a binding
settlement between Borrower and the California Department of Health Services) to
be due and owing by Borrower with respect to the California Proceeding involving
allegations of two-tier pricing in violation of Medi-Cal regulations, which
final determination shall be demonstrated by court orders or other documentation
reasonably satisfactory to Lender."
1.03. Section 2.1(a) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"SECTION 2.1. TERMS.
(a) The maximum aggregate principal amount of credit extended by
Lender to Borrower hereunder (the "Loan") that will be outstanding at any time
shall be (x) Four Million Five Hundred Thousand and No/100 Dollars
($4,500,000.00), LESS (y) the Reserve (the "Maximum Loan Amount").
1.04. Consistent with the terms of Section 2.4(a) of the Loan Agreement
and the $1,400,000.00 reduction of the Reserve pursuant to this Amendment,
Borrower shall pay to Lender, simultaneously with the execution and delivery of
this Amendment, an additional Commitment Fee for the supplemental financing to
be provided pursuant to this Amendment in the amount of Ten Thousand Five
Hundred and No/100 Dollars ($10,500.00).
1.05. Section 2.6 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:
"SECTION 2.6. USE OF PROCEEDS. The proceeds of Lender's advances under
the Loan shall be used solely for (i) repayment of outstanding indebtedness of
Borrower to Daiwa Healthco-1, Inc., (ii) repayment of indebtedness of Borrower
to Fred Kassner and ffiliates of Borrower (provided that Borrower covenants and
agrees that, exclusive of payments made on scheduled payment dates for principal
and/or interest under such indebtedness, such payments to Fred Kassner and the
officers and Affiliates will not aggregate more than Five Hundred Thousand and
No/100 Dollars ($500,000.00) from and after November 1, 1996 unless Borrower has
obtained Lender's prior written consent, which consent may be
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withheld in Lender's sole discretion), (iii) the funding of the formation and
development of Newco (as defined in Section 6.23), (iv) payments under or in
respect of the California Proceedings, and (v) working capital and for other
costs of Borrower arising in the ordinary course of Borrower's business."
1.06. Section 6.22 of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"SECTION 6.22. RETENTION OF KEY OFFICERS. Absent death or disability,
Brian D. Bookmeier and Edward T. Buchholz shall serve without interruption as
President and Chief Executive Officer, and Vice President, respectively, of
Universal Self Care, Inc."
1.07. A new Section 6.23 of the Loan Agreement is hereby added to read
as follows:
SECTION 6.23. FORMATION OF NEW OPERATING ENTITY. On or prior to November
30, 1996, Universal Self Care, Inc. ("Universal") will form or designate a
wholly-owned subsidiary ("Newco") that will be entirely responsible for
Borrower's existing and future business operated under managed care contracts
(including, without limitation, the agreements with Black & Decker and
Motorola), and whose business activities will initially be limited to such
matters. In connection with the formation and commencement of Newco's
operations, Lender or one of its Affiliates selected by Lender shall be granted
a warrant to acquire five percent (5%) of the outstanding common stock of Newco
for nominal consideration (the "Newco Warrant"). The Newco Warrant will be
issued no later than November 30, 1996, and will (i) contain customary
anti-dilution provisions in respect of stock dividends, additional share
issuance at less than fair market value, stock splits, combinations of shares,
recaptalizations and other such events, (ii) provide for piggyback registration
rights in favor of the holder subject to customary "cutback" provisions, and
(iii) provide for the right, commencing six months after the date of issuance of
the Newco Warrant, to sell to Newco or Universal the stock subject to the Newco
Warrant based on an appraised value of Newco determined by a Big 6 accounting
firm or other appraiser selected by Lender in its reasonable discretion and
reasonably acceptable to Universal and Newco (and the costs of whom shall be
shared by Lender and Borrower). Certain key officers of Newco will also be
granted warrants to acquire Newco's common stock. Upon its formation or
designation, Newco will execute an amendment to the
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Loan Agreement and such other documents deemed appropriate by Lender to add
Newco as an additional Borrower for all purposes of the Loan Agreement and
the other Loan Documents, with the amendment to provide that Newco's books
and records will be audited separately by an accounting firm that is
reasonably acceptable to Lender.
1.08. A new Section 6.24 of the Loan Agreement is hereby added to read
as follows:
SECTION 6.24. ISSUANCE OF WARRANT BY UNIVERSAL. In partial consideration
for the supplemental $1.4 million financing to be provided by Lender pursuant to
this Amendment, Universal will issue to Lender, no later than November 30, 1996,
a warrant to acquire Three Hundred Seventy-Five Thousand (375,000) shares of
Universal's common stock, at an exercise price per share equal to the lowest
closing bid price for such common stock during the 30-day period immediately
preceding the issuance of such warrant. The warrant to be issued by Universal
shall contain customary terms that are no less favorable to Lender than the
terms of the existing private warrants previously issued by Universal.
1.09. A new Section 6.25 of the Loan Agreement is hereby added to read
as follows:
SECTION 6.25. RE-COMPOSITION OF BOARD OF DIRECTORS.
No later than January 31, 1997, Robert M. Rubin and Damon Testaverde shall have
resigned or otherwise been replaced as directors of Universal, and following
such date neither such individual shall serve on the board of directors of any
entity comprising Borrower, including, without limitation, Newco.
2. CONDITIONS TO EFFECTIVENESS. The obligation of Lender to enter into
and perform this Amendment is subject to the following conditions precedent:
(a) Lender shall have received two (2) originals of this Amendment.
(b) Borrower shall have complied and shall then be in compliance with
all the terms, covenants and conditions of the Loan Documents.
(c) There shall not be continuing any Event of Default or any event
which, with the giving of notice or the lapse of time, or both, could constitute
such an Event of Default.
(e) Lender shall have received copies of all corporate action taken by
Borrower to authorize the execution, delivery and performance of this Amendment,
as well as the names and
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signatures of the officers of Borrower authorized to execute documents on its
behalf in connection herewith, all as also certified as of the date hereof by
Borrower's Secretary, and such other papers as Lender may require.
3. REPRESENTATIONS AND WARRANTIES OF BORROWER. The Borrower represents
and warrants as follows:
(a) This Amendment constitutes the legal, valid and binding
obligation of Borrower and is enforceable against Borrower in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency and other laws affecting creditors'
rights generally, and by general limitations on the availability of
equitable remedies.
(b) Upon the effectiveness of this Amendment, Borrower hereby
reaffirms all covenants, representations and warranties made in the
Loan Agreement and agrees that all such covenants, representations and
warranties shall be deemed to have been remade as of the effective
date of this Amendment.
4. REFERENCE TO THE EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of Section 1 hereof, on and after the date
hereof, each reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of similar import shall mean and be a reference to
the Loan Agreement as amended hereby.
(b) Except as specifically amended above, the Loan Agreement, and all
other Loan Documents, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of Lender, nor constitute a waiver of any provision of the Loan
Agreement, or any other documents, instruments and agreements executed or
delivered in connection therewith.
5. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Maryland.
6. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
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7. COUNTERPARTS. This Amendment may be executed in counterparts, and all
counterparts taken together shall be deemed to constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have caused this AMENDMENT NO. 1 TO
LOAN AND SECURITY AGREEMENT to be executed as of the date first written above.
ATTEST: HEALTHPARTNERS FUNDING, L.P.
(Seal)
By: HealthCare Financial
Partners, Inc.
By:________________________ By:__________________________
Name: Name:
Title: Title:
ATTEST: UNIVERSAL SELF CARE, INC.,
(Seal) a Delaware corporation
By:________________________ By:________________________________
Name: Name:
Title: Title:
ATTEST: DIABETES SELF CARE, INC.
(Seal) a Virginia corporation
By:________________________ By:________________________________
Name: Name:
Title: Title:
ATTEST: PCS, INC.-WEST,
(Seal) a Michigan corporation
By:________________________ By:________________________________
Name: Name:
Title: Title:
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ATTEST: PHYSICIANS SUPPORT SERVICES, INC.
(Seal) a California corporation
By:________________________ By:________________________________
Name: Name:
Title: Title:
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