<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A1
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the year ended December 31, 1997
Commission File Number: 34-0-20400
UNIVERSAL STANDARD HEALTHCARE, INC.
(Exact name of Registrant as specified in its charter)
Michigan 38-2986640
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
26500 Northwestern Highway, Southfield, Michigan 48076
(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: (248) 386-5374
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
8.25% convertible subordinated debentures due 2006
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
Indicated by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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 or any amendment to this
Form 10-K. [X ]
The aggregate market value of the voting stock of the Registrant held by
non-affiliates (2,579,486 shares on March 4, 1998) was $5,481,408. For purposes
of this computation only, all directors, executive officers and owners of more
than 5% of the Registrant's voting stock are assumed to be affiliates.
<PAGE> 2
Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock as of the latest practicable date: 6,569,513 shares of Common Stock
outstanding as of March 4, 1998.
DOCUMENTS INCORPORATED BY REFERENCE: None
2
<PAGE> 3
Part III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The following sets forth information with respect to the members of the
Board of Directors regarding the individual's age, principal occupation, other
business experience, directorships in other publicly-held companies and term of
service with the Company.
DIRECTORS WHOSE TERMS EXPIRE IN 1998
EDUARDO BOHORQUEZ, PH.D, 51, Dr. Bohorquez has been a director of the
Company since its organization. He has been the President and Chief Executive
Officer of WestSphere Capital, Inc. ("WCI") and the Chief Executive Officer
of WestSphere Capital Associates, L.P. ("WCA") each an investment firm,
since their organization in 1989. From August 1986 to May 1989, he was employed
by Ehrlich Bober and Co., Inc., an investment banking company, as a Managing
Director, and from January 1980 to July 1986 he was employed by The Chase
Investment Bank, the investment banking subsidiary of The Chase Manhattan Bank,
N.A., as a Managing Director of the Corporate Finance Group. Dr. Bohorquez holds
a Ph.D in Finance from the University of Wisconsin.
JOSEPH J. VADAPALAS, 43, Mr. Vadapalas has been a director of the
Company since its organization. He has been an Executive Vice President of WCI
and a Managing Director of WCA since their organization in 1989. From August
1986 to May 1989, he was employed by Ehrlich Bober & Co., Inc. as a director.
From September 1982 to August 1986, he was employed by The Chase Investment
Bank, the investment banking subsidiary of The Chase Manhattan Bank, N.A., as a
director.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
ANTHONY A. BONELLI, 47, Mr. Bonelli has been a director of the Company
since June 1992. In January 1998, Mr. Bonelli was appointed Chief Operating
Officer of Vita Quest, International, Inc. ("Vita Quest"), a custom developer,
manufacturer and marketer of vitamins and nutritional supplements, and was
appointed President of Vita Quest's Garden State Nutritional Division and
President of Windmill Consumer Products Division. Previously, he served as
President and Chief Operating Officer of Neuman Distributors, Inc., a wholesale
distributor of pharmaceutical products, from August 1995 until December 1997.
Mr. Bonelli served as President and Chief Operating Officer for Copley
Pharmaceutical, Inc., a worldwide developer and manufacturer of off-patent
generic prescription and over the counter pharmaceuticals, from June 1993 until
November 1994. From September 1989 until June 1993, Mr. Bonelli was Vice
President, Institutional Health Care Strategic Business Unit, for Parke-Davis, a
division of the Warner-Lambert Company, a worldwide pharmaceutical and consumer
products corporation, and prior to that served as Director of Marketing of
Parke-Davis from August 1987 until September 1989. From February 1986 to August
1987, Mr. Bonelli held various positions with Schering-Plough Corporation, a
pharmaceutical manufacturer, including Director, Trade Development. Mr. Bonelli
holds a law degree from the University of San Francisco and an M.B.A. from
Rutgers University.
ROBERT P. DECRESCE, M.D., 48, Dr. DeCresce has been a director of the
Company since June 1992. He has been the Director of Clinical Laboratories for
Rush-Presbyterian/St. Luke's Medical Center in Chicago, Illinois since July
1991. From 1987 to 1991, he was the Chief of Pathology of Humana
Hospital-Michael Reese in Chicago, Illinois. From 1983 to 1987, he was Vice
President for MetPath Incorporated, a division of Corning, Inc. Dr. DeCresce
received an M.D. from Columbia University College of Physicians and Surgeons in
1975 and an M.B.A. from Columbia University in 1977.
3
<PAGE> 4
THOMAS W. GORMAN, 38, Mr. Gorman has been a director of the Company
since November 1992. He has been a senior investment manager at Signal Capital
Corporation, a Massachusetts-based investment firm since April 1991. Mr. Gorman
also served as an investment manager at Signal from January 1990 to April 1991
and as Assistant Treasurer at Signal from May 1988 to January 1990. From June
1987 to May 1988, Mr. Gorman served as Manager, Corporate Finance, at General
Motors Corporation.
WCI and its affiliates and certain of the Company's other shareholders
have agreed to vote their shares for the election of Mr. Gorman at the request
of Signal Capital Corporation pursuant to a certain Stockholders Agreement dated
June 28, 1991. Such right of Signal Capital Corporation expires upon the earlier
to occur of June 27, 2001 and the date on which Signal Capital Corporation no
longer holds at least 5% of the Common Stock.
DIRECTORS WHOSE TERMS EXPIRE IN 2000
THOMAS R. DONAHUE, 36, Mr. Donahue has been a director of the Company
since its organization. He has been a principal of WCA since November 1992 and
was a director of WCA from the time of its organization in 1989 until November
1992. Mr. Donahue has served as Executive Vice President of WestSphere Equity
Investors, L.P., an affiliate of WCA, since January 1996. From July 1988 to May
1989, he was employed by Ehrlich Bober & Co. Inc., an investment banking firm,
as a Senior Associate.
P. THOMAS HIRSCH, 47, Mr. Hirsch has been a director of the Company
since October 1994. Mr. Hirsch has served as President and Chief Executive
Officer of Path Lab, Inc., a New England hospital-based clinical laboratory
company, since June 1984. From October 1985 until June 1994, Mr. Hirsch was also
the President and Chief Executive Officer of Diagnostic Laboratory Services,
Inc., a clinical laboratory company based in Hawaii. Mr. Hirsch has over 18
years of managerial experience in the health care industry.
EUGENE E. JENNINGS, 44, Mr. Jennings has been Chairman of the Board,
President and Chief Executive Officer since April 1996. From November 1991 to
March 1996, Mr. Jennings served in various managerial capacities for AMSCO
International, Inc., a manufacturer of medical and industrial infection control
and surgical care equipment and provider of biomedical services, and most
recently as Corporate Vice President - International and Bio-Technology and
Pharmaceutical Businesses. Mr. Jennings served as Vice President and General
Manager of Stryker Corporation, a manufacturer of endoscopic medical devices,
during 1990 and 1991 and has more than 16 years of senior executive managerial
experience in the health care industry.
EXECUTIVE OFFICERS
The executive officers of the Company as of April 29, 1998 are listed
and described below. Executive officers serve at the discretion of the Board of
Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Eugene E. Jennings 44 Chairman of the Board, President, Chief Executive Officer and
Director
Robert J. Helbling 52 Vice President and Chief Operating Officer of Universal Diagnostics
Alan S. Ker 46 Vice President, Finance, Chief Financial Officer, Treasurer and
Assistant Secretary
Perry C. McClung 61 Executive Vice President and President of Universal Standard
Healthcare of Delaware, Inc.
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
Imtiaz H. Sattaur 35 Vice President - Chief Information Officer
</TABLE>
Mr. Jennings' business experience is described under "Directors Whose
Terms Expire in 2000."
Mr. Helbling has been Vice President and Chief Operating Officer of
Universal Diagnostics, the Company's laboratory division, since February 1998.
Prior to joining the Company, Mr. Helbling served as Vice President,
Distribution, of St. Jude Medical, Inc., a medical device company, from January
1996 to December 1997 and as President of Cardiac Assist, a division of St. Jude
Medical, Inc., from May 1992 to December 1995. Mr. Helbling was employed by
Surgitek, a division of Bristol-Myers Squibb, as President from 1986 to 1992 and
as Vice President of Operations from 1984 to 1986. Surgitek sells implantable
surgical devices to urologists and plastic surgeons.
Mr. Ker has served as Vice President, Finance, and Chief Financial
Officer of the Company since July 1991 and was appointed Assistant Secretary in
March 1995. Mr. Ker was appointed Treasurer of the Company in June 1992. Prior
to joining the Company, Mr. Ker had been the Western Regional Controller of
Damon Corporation, a nationally-based clinical laboratory, since January 1985.
From 1980 through December 1984, Mr. Ker was the Controller for the United
States operations of MDS Health Group, Inc., a worldwide clinical laboratory.
Mr. McClung has been Executive Vice President of the Company and
President of the Company's principal managed care subsidiary since June 1991.
Prior to joining the Company, Mr. McClung served as Vice President of Marketing
of MML, Inc., the Company's Predecessor, from 1984 to May 1991. From 1968 to
1983, Mr. McClung served in various positions, including Vice President of Auto
National Marketing, with Michigan Blue Cross/Blue Shield.
Mr. Sattaur has been Vice President - Chief Information Officer of the
Company since joining the Company in May 1997. Prior to joining the Company, Mr.
Sattaur was employed by RiskAlert, Inc, a national risk/quality software and
information consulting company and a subsidiary of the Aon Corporation, an
insurance brokerage company, as President, from January 1993 to January 1997 and
as Vice President/ National Director from February 1991 through January 1993.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of the copies of such forms
received by it since January 1, 1997, or written representations from certain
reporting persons that no Form 5 reports were required for those persons, the
Company believes that all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with during 1997,
except as previously reported.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND CERTAIN TRANSACTIONS
Joseph Vadapalas, Eduardo Bohorquez, Robert DeCresce and Thomas Hirsch
served on the Compensation Committee of the Board of Directors of the Company
during 1997. None of these individuals was an employee of the Company during
1997.
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<PAGE> 6
Pursuant to the terms of a management advisory and consulting agreement
between WCA and the Company which terminated in December 1992, the Company has
an outstanding obligation to WCA in the amount of approximately $395,000. In
addition, in March 1998, 219,175 shares of Common Stock beneficially owned by
affiliates of WCA and WCI were pledged to a bank as security for the Company's
bank line of credit in connection with an amendment of the bank line of credit
agreement. WCA is a 5% Owner and is controlled by WCI. Dr. Bohorquez is the
chief executive officer of WCA and Mr. Vadapalas is a managing director of WCA.
EXECUTIVE COMPENSATION
Summary
The following table provides summary information for the periods
indicated concerning compensation paid or accrued by the Company and its
subsidiaries to the Company's Chief Executive Officer and its three other
executive officers serving as such as of December 31, 1997 who earned more than
$100,000 in salary and bonus during 1997 (the "Named Officers").
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------
Annual Compensation Securities
------------------- Underlying All Other
Name and Salary Bonus Options/SARs Compensation
Principal Position Year ($) ($) (#) $(a)
- ------------------ ---- ------ ----- ------------- ------------
<S> <C> <C> <C> <C> <C>
Eugene Jennings 1997 $256,450 $ - 75,000 $ 88,643
Chairman of the 1996 174,452 93,750 300,000 17,930
Board, President
and Chief Executive
Officer (b)
Perry McClung 1997 156,197 - 40,000 75,854
Executive 1996 145,455 - 85,000 (c) 842
Vice President 1995 133,890 - 10,000 540
Alan Ker 1997 141,911 - 20,000 553
Vice President, 1996 133,600 - 120,000(c) 548
Finance, Treasurer, 1995 130,703 - 10,000 122
Chief Financial
Officer
Lou Gorga 1997 127,026 - - 489
Former Vice President 1996 123,273 - 80,000(c) 321
and Chief Operating 1995 46,406 60,000 13,000
Officer(d)
</TABLE>
(a) Amounts in 1997 represent premiums paid by the Company for term life
insurance policies purchased for such officers. Mr. Jennings' amount
also includes $87,948 in reimbursements for temporary housing, real
estate commissions, moving expenses and the loss on the sale of his
former home incurred in connection with his relocation to Michigan.
In addition, Mr. McClung received a payment of $75,000 in connection
with a covenant not to compete contained in his June 1996 employment
agreement and continued in his June 1997 employment agreement.
(b) Mr. Jennings joined the Company as Chairman of the Board, President and
Chief Executive Officer in April 1996.
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<PAGE> 7
(c) Amounts include 40,000, 85,000 and 80,000 options held by Messrs.
Gorga, McClung and Ker, respectively, granted prior to 1996 and
repriced during 1996.
(d) No longer an executive officer of the Company effective January 19,
1998.
The following table sets forth information concerning stock option
grants during 1997 to the Named Officers.
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<PAGE> 8
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants Value at Assumed
----------------- Annual Rates of
Number of % of Total Stock Price
Securities Options/SARs Exercise Appreciation for
Underlying Granted to or Base Option Term (a)
Options/SARs Employees in Price Expiration ---------------
Name Granted (#) Fiscal Year ($/sh) Date 5% 10%
- ---- ----------- ----------- ------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Eugene Jennings 75,000(b) 31% 3.94 3/12/07 481,338 766,451
Perry McClung 40,000(c) 17% 3.14 5/14/07 204, 589 325,774
Alan Ker 20,000(d) 8% 3.10 11/11/07 100,991 160,812
Lou Gorga - - - - - -
</TABLE>
(a) Represents the value of such option at the end of its 10 year term
(without discounting to present value), assuming the market price of
the Common Stock appreciates from the exercise price beginning on the
grant date at an annually compounded rate of 5% or 10%. These amounts
represent assumed rates of appreciation only. Actual gains, if any,
will be dependent on overall market conditions and on the future
performance of the Common Stock. There can be no assurance that the
amount reflected in this table will be achieved. On April 1, 1998, the
closing market price of the Common Stock was $2.50 which was below the
respective prices of all the options indicated in the table. Hence, if
exercised as of April 1, 1998, none of such options would have any
value.
(b) These options were granted under the 1992 Stock Option Plan and become
exercisable in cumulative annual installments of 25% on each of the
first four anniversaries of the grant date, subject to Mr. Jennings'
continued employment with the Company.
(c) One half of the options were Turn-Around Incentive Options and one half
were High Growth Incentive Options. The terms of the Turn-Around
Incentive Options were as follows: one-third were to vest based upon
the achievement of corporate goals, one-third upon achievement of
divisional goals and one-third upon achievement of individual goals,
provided that none would vest if the optionee did not achieve his
individual goals, unless the Stock Option Committee otherwise approved
of such vesting. The terms of the High Growth Incentive Options were as
follows: The High Growth Incentive Options would have vested December
31, 1997 if the Company achieved the 1997 operating plan approved by
the Board of Directors as follows: the number of High Growth Incentive
Options equal to the number of Turn-Around Incentive Options which
vested June 30, 1997 would vest, or if no Turn-Around Incentive Options
vested because the optionee failed to achieve his individual goals by
June 30, 1997, then one-half of the High Growth Incentive Options would
vest if the optionee had met his individual goals by December 31, 1997.
Vested options would have become exercisable in four equal annual
installments beginning one year from their vesting date. Six thousand
of the Turn-Around Incentive Options vested June 30, 1997 and are
exercisable in annual increments of 25% beginning June 30, 1998. The
remaining 34,000 options expired in 1997.
(d) These options, which were granted November 11, 1997, vest and become
exercisable in four equal annual installments beginning one year from
the grant date, subject to Mr. Ker's continued employment with the
Company.
8
<PAGE> 9
The following table provides information with respect to unexercised
options held as of the end of 1997 by the Named Officers. There were no options
exercised by the Named Officers during 1997.
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs
Fiscal Year-End(#) at Fiscal Year-End ($)(a)
------------------ -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Eugene Jennings 75,000 300,000 0 0
Perry McClung 37,500 43,500 0 0
Alan Ker 47,713 63,500 0 0
Lou Gorga 30,000 30,000 0 0
</TABLE>
(a) Represents the total gain which would have been realized if all options
were exercised at December 31, 1997. The closing market price at
December 31, 1997 was $2.13.
Employment Agreements
The Company has employment agreements with each of the Named Officers.
These agreements are described below.
The employment agreement of Mr. Jennings expires on March 12, 1999 and
provides for an annual salary (subject to adjustment for inflation) of $250,000.
In connection with the commencement of his employment, the Company also agreed
to reimburse Mr. Jennings for certain costs and expenses relating to his
relocation to the State of Michigan, including temporary housing, travel, moving
expenses, real estate commission and real estate closing costs, and for taxes
imposed on such reimbursements. Mr. Jennings' employment agreement also provides
for a performance bonus plan for the years 1996 through 1998. Under the 1998
performance bonus plan, Mr. Jennings will be eligible to earn up to 100% of his
base salary for each such year as a bonus upon the achievement of certain
performance objectives for 1998. The potential bonus earned under the bonus plan
for 1998 is a direct function of the percentage of the Company's operating plan
achieved during the plan year. The operating plan for 1998 is the Company's
operating plan for such year as mutually agreed upon by the Board of
Directors and Mr. Jennings. The term of the Employment Agreement will extend
automatically for successive terms of one year unless, at least six months prior
to the then current expiration date, the Company gives notice of its intent not
to extend the term. Upon termination of employment by the Company without cause,
Mr. Jennings generally will be entitled to receive his salary and certain
benefits for a period of twelve months. Upon termination of employment by the
Company for cause or as a result of Mr. Jennings' death, incapacity or
violation of the terms of the agreement, the Company's obligation to pay Mr.
Jennings' salary will cease.
The employment agreement of Mr. Gorga was to expire on December 31,
1998 and provided for an annual salary (subject to adjustment for inflation) of
$125,000. Upon commencement of his employment in September 1995, Mr. Gorga also
received a payment of $13,000 in connection with his relocation to the State of
Michigan. The contract term was to extend automatically for successive terms of
one year unless, at least six months prior to the then current expiration date,
the Company gave notice of its intent not to extend the term. Upon termination
of employment by the Company without cause, Mr. Gorga generally would have been
entitled to receive his salary and certain benefits for a period of the lesser
of six months following the date of his termination or the remaining
term of the employment agreement at the rate in effect as of the date of
termination. Upon termination of employment by the Company for cause or as a
result of Mr. Gorga's death, incapacity or violation of the terms of the
agreement, the Company's obligation to pay Mr. Gorga's salary would have ceased.
Mr. Gorga's employment terminated on
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<PAGE> 10
January 19, 1998, and Mr. Gorga will be paid six months of salary and certain
benefits.
The employment agreement of Mr. McClung expires no later than December
31, 2000 and provides that during the first year of the employment period, which
began June 28, 1997 and ended December 31, 1997, Mr. McClung would receive a pro
rata portion of an annual salary equal to $159,000; during 1998, Mr. McClung
will receive an annual salary of $159,000; during 1999, Mr. McClung will receive
an annual salary of $134,000; and during 2000, Mr. McClung will receive a
mutually agreed upon annual salary. If the Company and Mr. McClung are unable to
agree on Mr. McClung's salary during 2000, Mr. McClung's employment with the
Company shall terminate, effective January 1, 2000, and Mr. McClung shall
instead serve as a consultant to the Company during 2000 and shall receive a
monthly consulting fee based upon managed care revenue which will not exceed
$6,222. During the employment period (but not the consulting period), Mr.
McClung is eligible to participate in the same benefit plans as other executive
officers. Mr. McClung participated in the Executive and Key Manager Compensation
Plan for 1997 and is eligible to receive a one-time bonus during the employment
period if managed care revenue from certain accounts exceeds stated thresholds.
In addition, as consideration for his covenant not to compete with the Company
for five years after termination of employment, Mr. McClung will receive
$125,000 (part of which was paid in January 1997 and the remainder of which was
due on or before January 1, 1998 but has not been paid). Upon termination of
employment without cause during the employment period, Mr. McClung, is entitled
to receive his salary (reduced by earnings from subsequent employment or
otherwise) for nine months after termination of employment or until the end of
the employment period, whichever is less. Except for the bonus and non-compete
payment, the Company has no obligation to make further payments if employment is
terminated for cause or due to death, disability or resignation.
The employment agreement of Mr. Ker expires on December 31, 1999 and
provides for an annual salary (subject to adjustment for inflation) of $153,000.
Mr. Ker is eligible to participate in the same benefit and bonus plans as other
executive officers. Upon termination of employment by the Company without cause,
Mr. Ker generally will be entitled to receive his salary and benefits for a
period of nine months. Upon termination of employment by the Company for cause
or as a result of Mr. Ker's death, incapacity or violation of the terms of the
agreement, the Company's obligation to pay Mr. Ker's salary will cease.
In addition, the stock option agreements with Messrs. Jennings,
McClung, Ker and Gorga provide that such options become immediately exercisable
in full upon a change of control of the Company and, in certain cases, upon
termination without cause.
Director Compensation
During 1997, the non-employee directors were not paid any cash
compensation for their services as members of the Company's Board of Directors
and were only reimbursed for travel and related expenses.
The Directors Stock Option Plan (the "Directors Plan") provides for the
making of stock option grants to directors who are not employees of the Company
or its subsidiaries and who are not 5% Owners or employees, officers or
affiliates of a 5% Owner. Eligible directors who are first elected to the Board
after March 1995 will receive an initial grant of an option to purchase 15,000
shares in addition to annual grants during the term of the Directors Plan at an
exercise price equal to the fair market value per share of the Common Stock on
the grant date (as calculated under the Directors Plan). In addition, on the
date of each annual meeting during the term of the Directors Plan, each eligible
director will receive an option to purchase 10,000 shares at a price equal to
the fair market value per share of the Common Stock on the grant date (as
calculated under the Directors Plan). Messrs. Bonelli and Hirsch and Dr.
DeCresce each received an option to purchase 10,000 shares at $3.61 per share
during 1997 under the Directors Plan. All options granted under the Directors
Plan become exercisable in equal annual installments on each of the first four
anniversaries of the grant date or immediately upon a "change of control" or
"involuntary removal" from the Board of Directors (as such terms are defined in
Directors Plan).
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<PAGE> 11
ITEM 12. SECURITIES OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table set forth information as of April 1, 1998, unless
otherwise indicated, with respect to the beneficial ownership of Common Stock by
each director and nominee, each executive officer named in the Summary
Compensation Table under "Item 11 - Executive Compensation," all current
directors and executive officers as a group and all other persons known by the
Company to beneficially own more than 5% of the outstanding shares of Common
Stock (each, a "5% Owner").
<TABLE>
<CAPTION>
Number Percent
Name(a) of Shares(b) of Class(c)
------------ -----------
<S> <C> <C>
Eduardo Bohorquez 2,480,515 (d) 37.3
Anthony A. Bonelli 37,747 (e) *
Robert P. DeCresce 45,747 (f) *
Thomas R. Donahue 0 -
Thomas W. Gorman 584,899 (g) 8.9
P. Thomas Hirsch 25,000 (h) *
Eugene E. Jennings 173,750 (i) 2.6
Joseph J. Vadapalas 2,480,515 (d) 37.3
Lou Gorga 30,000 (j) *
Alan S. Ker 55,078 (k) *
Perry C. McClung 139,863 (l) 2.1
Anixter Corporation 774,899 (m) 11.8
The Kaufmann Fund, Inc. 1,842,857 (n) 23.9
Portfolio Investment Company Limited 2,178,223 (o) 33.2
WestSphere Capital, Inc 2,480,515 (d) 37.3
WestSphere Capital Associates, L.P. 2,480,515 (d) 37.3
All current directors and executive officers as a group
(12 persons) 3,547,599 (p) 50.6
</TABLE>
- ------------
* Less than one percent
(a) The address of each of WestSphere Capital Associates, L.P. ("WCA"), 55
E. 59th Street, 13th Floor, New York, New York 10017, WestSphere
Capital, Inc. ("WCI") and Messrs. Bohorquez, Vadapalas and Donahue is
c/o WCA, 55 E. 59th Street, 13th Floor, New York, New York 10017. The
address of Portfolio Investment Company Limited ("PICL") is P.O. Box
309, 63 SMB, Grand Cayman, Cayman Islands, B.W.I. The address of Mr.
Gorman and Signal Capital Corporation is 55 Ferncroft Road, Danvers,
Massachusetts 01923. The address of Anixter Corporation is Two North
Riverside Plaza, Chicago, Illinois 60606. The address of The Kaufmann
Fund, Inc. is 140 E. 45th Street, 43rd Floor, New York, New York 10017.
(b) The column sets forth shares of Common Stock which are deemed to be
"beneficially owned" by the persons named in the table under Rule l3d-3
of the Securities and Exchange Commission ("SEC"), including shares
issuable under options or warrants exercisable currently or within 60
days of April 1, 1998 or upon conversion of the Company's 8.25%
Convertible Subordinated Debentures Due 2006 ("Debentures"). Each of
the persons named in the table has sole voting and investment power
with respect to all shares beneficially owned by them, except as
described in the following footnotes.
(c) For purposes of calculating the percentage of Common Stock beneficially
owned, the shares issuable to such person under stock options or
warrants exercisable currently or within 60 days of April 1, 1998 or
upon conversion of Debentures owned by such person are considered
outstanding and added to the shares of Common Stock actually
outstanding.
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<PAGE> 12
(d) Information is based on a Schedule 13D filed by PICL and certain
related entities on September 30, 1996. Amount includes 2,178,223
shares owned by PICL, as well as 219,175 shares and a currently
exercisable warrant for 83,117 shares which shares and warrants are
owned by certain other affiliates of WCA and WCL. Pursuant to certain
management agreements, WCA has the authority to direct the voting power
of the shares of the Company owned by these entities. WCI is the
general partner of WCA and therefore may also be deemed to be the
beneficial owner of such shares. WCA and WCI disclaim this beneficial
ownership. Messrs. Bohorquez and Vadapalas are principals of WCA and
directors of WCI and therefore may be deemed to be beneficial owners of
such shares. Messrs. Bohorquez, Donahue and Vadapalas disclaim
beneficial ownership of these shares. A pledge of 219,175 of these
shares was made to a bank as security for the Company's line of credit.
(e) Includes 37,747 shares which may be acquired pursuant to stock options.
(f) Includes 42,747 shares which may be acquired pursuant to stock options
and 3,000 shares owned by Dr. DeCresce's minor sons as to which shares
Dr. DeCresce disclaims beneficial ownership.
(g) Includes 584,899 shares owned by Signal Capital Corporation for which
Mr. Gorman is a senior investment manager. Excludes 190,000 shares
owned by Anixter International Inc., the parent corporation of Signal
Capital Corporation. Mr. Gorman disclaims beneficial ownership of all
such shares. See note (m).
(h) Includes 25,000 shares which may be acquired pursuant to stock options.
(i) Includes 168,750 shares which may be acquired pursuant to stock
options.
(j) Includes 30,000 shares which may be acquired pursuant to stock options.
All such options have since expired due to Mr. Gorga's termination of
employment.
(k) Includes 47,713 shares which may be acquired pursuant to stock options
and 7,365 shares as to which Mr. Ker shares beneficial ownership with
his spouse.
(l) Includes 37,500 shares which may be acquired pursuant to stock options.
(m) Information regarding Anixter Corporation is based on the Schedule 13D
filed by Anixter Corporation on or about January 31, 1995. Amount
includes 190,000 shares owned directly and 584,899 shares owned by its
subsidiary, Signal Capital Corporation.
(n) Information regarding The Kaufmann Fund is based on the Schedule 13G
filed by the Fund as of December 31, 1995. Includes 1,142,857 shares
which may be acquired upon conversion of Debentures.
(o) Such shares are subject to a management agreement with WCA. See note
(d). All of such shares are also pledged to secure certain obligations
of PICL.
(p) Includes a total of 447,574 shares which may be acquired pursuant to
options and warrants. See also footnotes (d) through (l) above. None of
the directors or executive officers beneficially own any Debentures.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Item 11 Executive Compensation -- Compensation Committee
Interlocks and Certain Transactions".
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<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
UNIVERSAL STANDARD HEALTHCARE, INC.
By: /s/ ALAN S. KER
- -------------------------------------
Alan S. Ker
Vice President Finance, Treasurer and Chief Financial Officer
Dated: April 29, 1998
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