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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A NO. 1
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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 No. 0-26568
USA DETERGENTS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
Delaware 11-2935430
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
1735 Jersey Avenue
North Brunswick, New Jersey 08902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 828-1800
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Securities registered pursuant to Section 12(b) of the Act: Name of each exchange
Title of each class on which registered
None Not Applicable
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X (1) No
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Indicate by a 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 the 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. [ ]
The number of shares outstanding of the Registrant's Common Stock, as of April
9, 1998, was 13,825,227 shares. The aggregate market value of the Registrant's
Common Stock held by non-affiliates of the Registrant (based upon the closing
price of such stock on the Nasdaq National Market on April 9, 1998 and the
assumption for this computation only that all directors and executive officers
are affiliates) was $145,580,693.
Documents Incorporated by Reference: None.
(1) The Company was delinquent in filing its report on Form 10-Q for the
quarter ended June 30, 1997, which report has since been filed.
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The Annual Report on Form 10-K for the fiscal year ended December 31,
1997 (File No. 0-26568) of USA Detergents, Inc. (the "Company") as filed with
the Commission on March 31, 1998 is hereby amended by adding thereto the
following Part III.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors, their respective ages, the year in which each first
became a director of the Company and their principal occupations or employment
during the past five years are as follows:
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YEAR
FIRST
BECAME
DIRECTOR AGE DIRECTOR PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
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Uri Evan 62 1989 Chairman of the Board of the Company since 1989, Chief
Executive Officer since 1993. Since 1993, Mr. Evan has
been Vice Chairman and Chief Executive Officer of
American Value Brands Inc., a food marketing company of
which he was a co-founder. In addition, Mr. Evan is
Chairman of Net Grocer Inc., a nationwide, low-cost
interactive grocery shopping service on the Internet. Mr.
Evan is a co-founder of Net Grocer Inc. From 1991 to
1992, he served as Chairman and Chief Executive Officer
of I. Rokeach & Sons Inc., a kosher food manufacturing
and marketing company. From 1988 to 1990, Mr. Evan was
Chairman and Chief Executive Officer of Newrock
Development Inc., a real estate development company.
Daniel Bergman 40 1988 Co-founder of the Company and a Vice President of the
Company since June 1995. Mr. Bergman also has been
Director of New York Metro Sales, Secretary and a
director of the Company since 1988. Between 1987 and
1991, Mr. Bergman was President of Carnegie International
Inc., a retail and export electronics company.
Frederick R. Adler 72 1993 Director of the Company since 1993. Mr. Adler is
Managing Director of Adler & Company, a venture capital
management firm he organized in 1968, and a general
partner of its related investment funds. Since January 1,
1996, Mr. Adler has been of counsel to the law firm of
Fulbright & Jaworski L.L.P. and, for more than five years
prior thereto, was a senior partner in the firm. Mr. Adler
is also Chairman of the Executive Committee and a
director of Data General Corporation, Chairman and
a director of Shells Seafood Restaurants, Inc., a restaurant
chain, and a director of Prime Cellular, Inc., and of various
private companies.
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YEAR
FIRST
BECAME
DIRECTOR AGE DIRECTOR PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
Richard A. Mandell 55 1995 Director of the Company since August 1995. From
January 1996 to February 1998, he was a Vice
President--Private Investments at Clariden Asset
Management (New York) Inc., a subsidiary of Clariden
Bank, a private Swiss bank. From 1982 to June 1995, he
was a Managing Director of Investment Banking for
Prudential Securities Incorporated. Mr. Mandell is also a
director of Sbarro, Inc., a food service company, and
Trend-Lines, Inc., a specialty retailer of woodworking tools
and accessories and golf equipment and supplies.
</TABLE>
For information on the Company's executive officers, see the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 as filed with the
Commission on March 31, 1998.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
To the Company's knowledge, the Company's directors, executive
officers and beneficial owners of more than ten percent of the Company's Common
Stock are in compliance with the reporting requirements of Section 16(a) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Company is aware that during 1997, each of Frank Corella, Frank Valdez and
Giulio Perillo failed to timely report one transaction on Form 4, which
transactions were subsequently reported.
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ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning all cash and
non-cash compensation awarded to, earned by or paid to the Company's chief
executive officer and each of the four most highly compensated executive
officers of the Company during the fiscal year ended December 31, 1997 for
services in all capacities to the Company and its subsidiaries whose total
annual compensation for such year exceeded $100,000.
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LONG-TERM
ANNUAL COMPENSATION COMPENSATION
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SECURITIES
UNDERLYING
OTHER ANNUAL STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(1)
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<S> <C> <C> <C> <C> <C>
Uri Evan(2) 1997 $200,000 $ -- $22,605 --
Chairman of the Board and Chief 1996 200,000 -- 22,020 --
Executive Officer 1995 118,308 -- 21,491 --
Richard D. Coslow 1997 111,111 -- -- 30,000
Chief Financial Officer and Senior Vice 1996 -- -- -- --
President 1995 -- -- -- --
Frank Corella 1997 175,000 200,000(3) 20,000 5,000
Vice President of Sales and Marketing 1996 175,000 150,000(3) 12,933 15,000
1995 150,000 273,750(3) 20,000 --
Daniel Bergman(2) 1997 125,000 -- 2,800 --
Vice President 1996 125,000 42,367 5,600 --
1995 88,538 30,144 7,877 --
</TABLE>
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(1) Amounts reflected have been adjusted for the three-for-two stock split
of the Company's Common Stock in the form of a stock dividend paid on
February 9, 1996 (the "Stock Split").
(2) Dollar amounts reflected do not include S corporation distributions
made by the Company in 1995, prior to the Company's initial public
offering of stock in August 1995 (the "1995 IPO").
(3) Represents sales commissions and bonuses. See "--Employment
Agreements."
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The following table sets forth information on option grants in the
fiscal year ended December 31, 1997 to the persons named in the Summary
Compensation Table. All amounts have been adjusted to reflect the Stock Split.
OPTION GRANTS IN LAST FISCAL YEAR
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POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
NUMBER OF % OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR(1) PER SHARE DATE 5% 10%
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<S> <C> <C> <C> <C> <C> <C>
Uri Evan -- -- -- -- -- --
Richard D. Coslow 15,000 3.72% $24.50(3) 4/15/07 $81,927 $207,745
15,000 3.72% 11.63(3) 10/7/07 81,927 207,745
Frank Corella 5,000 1.24% 21.50(3) 3/31/07 27,326 69,248
Daniel Bergman -- -- -- -- -- --
</TABLE>
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(1) Options vest over three years in installments of 25%, 25% and 50%.
(2) Amounts reflected in these columns represent hypothetical values that may
be realized upon exercise of the options immediately prior to the
expiration of their term, assuming the specified annually compounded rates
of appreciation 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. 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.
(3) Exercise price subsequently repriced on December 19, 1997 to $8.69 per
share (the closing price of the Common Stock on that date on the Nasdaq
Stock Market).
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The following table sets forth information with respect to (i)
exercises of stock options during fiscal 1997 and (ii) unexercised stock
options held at December 31, 1997 by the persons named in the Summary
Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
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NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
OPTION EXERCISES HELD AT FISCAL YEAR END AT FISCAL YEAR END($)(2)
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SHARES ACQUIRED VALUE
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
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<S> <C> <C> <C> <C> <C> <C>
Uri Evan -- -- -- -- -- --
Richard D. Coslow -- -- 0 30,000 $0 $0
Frank Corella 29,786 $610,613 49,786 29,787 199,268 199,275
Daniel Bergman -- -- -- --
</TABLE>
(1) The "value realized" represents the difference between the exercise
price of the option and the closing price of the Common Stock on The
Nasdaq National Market on the date of exercise.
(2) The value for an "in-the-money" option represents the difference
between the exercise price of the option and the closing price of the
Common Stock on The Nasdaq National Market on December 31, 1997 of
$8.125.
EMPLOYMENT AGREEMENTS
In January 1996, the Company entered into an amended employment
agreement with Mr. Evan which provides for an annual base salary of $200,000,
as well as such bonuses as may be authorized from time to time by the Board of
Directors. The agreement expires in June 1999, with automatic extensions of one
year unless terminated, and a covenant not to compete for a period of up to
twenty-four months following the termination of employment. Mr. Evan has agreed
to devote approximately 80% of his working time to the business and affairs of
the Company. If the Company terminates the agreement other than for cause, Mr.
Evan will be entitled to continue to receive his base salary through the end of
the term. The agreement also provides that in the event of a Change of Control
(as defined in the agreement) during the term of the agreement or during the
twenty-four months thereafter, Mr. Evan shall receive a payment equal to 2.5%
of the increase in the Market Capitalization of the Company (as defined in the
agreement) between the Company's 1995 IPO and such Change of Control.
Mr. Bergman has entered into an employment agreement with the Company
that provides for an annual base salary of $125,000, the right to receive 8% of
the OGM Pool (as defined below) and such other bonuses as may be authorized
from time to time by the Board of Directors. See "--Profit Sharing Plan." The
agreement has a term of three years expiring in 1998, with automatic extensions
of one year unless terminated, and a covenant not to compete for a period of up
to twenty-four months following the
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termination of employment. The agreement requires the executive to devote his
full time, attention and efforts to the business and affairs of the Company. If
the Company terminates the agreement other than for cause, Mr. Bergman will be
entitled to continue to receive his base salary through the end of the term.
Mr. Corella has entered into an employment agreement with the Company
that provides for an annual base salary of $175,000. The agreement has a term
of five years expiring in 2000, with automatic extensions of one year unless
terminated, and a covenant not to compete for a period of up to twenty-four
months following the termination of employment. Mr. Corella is also expected to
be able to earn sales commissions and, pursuant to the terms of his employment
agreement, is entitled to receive an additional $125,000 in bonuses in the
event the Company's net sales exceed $100,000,000 for the year. If the Company
terminates the agreement other than for cause, he will be entitled to receive
his base salary through the end of the term.
In March 1997, the Company entered into an employment agreement with
Richard D. Coslow to serve as the Company's Chief Financial Officer beginning
April 14, 1997. The agreement provides for an annual base salary of $156,000
plus such bonuses as may be authorized from time to time by the Board of
Directors, the right to receive 8% of the OGM Pool and the right to receive an
option to purchase 15,000 shares of Common Stock pursuant to the Company's 1995
Stock Option Plan. The agreement has an initial three year term, with automatic
extensions of one year unless terminated. If the Company terminates the
agreement other than for cause or the permanent disability or death of Mr.
Coslow, he will be entitled to continue to receive his base salary for a period
of six months from the date of such termination (or one year in the event such
termination occurs within the first year of his employment).
In July 1997, the Company entered into an employment agreement with
Giulio Perillo to serve as the Company's President and Chief Operating Officer
beginning August 4, 1997. Mr. Perillo resigned from his position as President
and Chief Operating Office effective February 25, 1998. The agreement provided
for an annual base salary of $190,000 plus such bonuses as authorized from time
to time by the Board of Directors.
Each of Frederick J. Horowitz and Harold Macsata, both former officers
of the Company, entered into consulting arrangements during 1997 which provided
for, among other things, each of them to continue to provide services to the
Company until November 5, 1997 in the case of Mr. Macsata and December 31, 1997
in the case of Mr. Horowitz. Under his agreement, Mr. Macsata is entitled,
among other things, to continued vesting of his stock options through March 1,
1999 and a severance payment of $62,500 to the extent he performs
satisfactorily under his agreement, as determined in the sole reasonable
discretion of the Company.
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PROFIT SHARING PLAN
The Company has a profit sharing plan (the "OGM Plan") based on the
amount by which the Company's OGM exceeds 10% in a given year. OGM is equal to
the percentage of gross sales represented by the Company's income from
operations plus general and administrative expenses. If the Company's OGM
exceeds 10%, a percentage of that excess is placed in a bonus pool (the "OGM
Pool"). The percentage added to the OGM Pool varies between 5% and 22% of OGM
in excess of 10%, except that the total amount available for distribution does
not include amounts calculated based on annual net sales in excess of $200
million. Of the OGM Pool, 16% currently is allocated for distribution to senior
executives with Messrs. Bergman and Coslow each to receive 8%. Of the remainder
of the OGM Pool, no participant currently can receive a distribution greater
than 50% of his or her base salary. Amounts not allocated for distribution
under the OGM Pool will not be distributed. For 1995, 1996 and 1997, the
Company made payments aggregating approximately $231,000, $410,000 and $0,
respectively, under the OGM Plan. No distributions were made under the OGM Plan
for periods prior to 1995.
COMPENSATION OF DIRECTORS
During 1997, each non-employee director of the Company receives (i) an
annual fee of $15,000 and (ii) $1,500 per day for each Board of Directors or
committee meeting attended but not more than $1,500 for any single day,
regardless of the number of meetings of the Board of Directors or any committee
thereof attended during that day. The annual fee for 1998, has been increased
to $30,000 and Mr. Adler has waived payment of his annual fee starting in
February 1998. In addition, directors who are not employees of the Company are
compensated through stock options. See "--Non-Employee Directors' Plan."
1995 STOCK OPTION PLAN
Effective in August 1995, the Company adopted the USA Detergents, Inc.
1995 Stock Option Plan (the "Plan") pursuant to which options to purchase an
aggregate of 388,935 shares of Common Stock may be granted to key employees and
consultants of the Company and any of its subsidiaries. In July 1997, the
maximum number of shares of Common Stock authorized to be granted under the
Plan was increased to 1,000,000, subject to approval of the Company's
stockholders. The Plan was adopted for the purpose of securing for the Company
and its stockholders the benefits of common stock ownership of the Company by
key personnel of the Company and its subsidiaries. The Board of Directors
believes that the granting of options under the Plan will foster the Company's
ability to attract, retain and motivate those individuals who will be largely
responsible for the profitability and long-term future growth of the Company.
The Plan authorizes the Board to issue incentive stock options
("ISO's"), as defined in Section 422(b) of the Internal Revenue Code (the
"Code"), and stock options that do not conform to the requirements of that Code
section ("Non-ISO's"). The
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exercise price of each ISO may not be less than 100% of the fair market value
of the Common Stock at the time of grant, except that in the case of a grant to
an employee who owns (within the meaning of Code Section 422(b)(6)) 10% or more
of the outstanding stock of the Company or any subsidiary (a "10%
Stockholder"), the exercise price may not be less than 110% of such fair market
value. The exercise price of each Non-ISO may not be less than the par value of
the Common Stock. Generally, options will vest over a three to five year
period, subject to acceleration in the event of a Change in Control (as
hereinafter defined), and may not be exercised after the tenth anniversary
(fifth anniversary in the case of an ISO granted to a 10% Stockholder) of their
grant. Options may not be transferred during the lifetime of an optionholder.
No stock options may be granted under the Plan after August 2005.
The Plan is administered by the Stock Option Committee (the
"Committee") of the Board of Directors. Subject to the provisions of the Plan,
the Committee has the authority to, among other things, determine the
individuals to whom the stock options are to be granted, the number of shares
to be covered by each option, the option price, the type of option, the option
period, the restrictions, if any, on the exercise of the option and the terms
for the payment of the option price, interpret the provisions of the Plan, fix
and interpret the provisions of option agreements made under the Plan,
supervise the administration of the Plan, and take such other action as may be
necessary or desirable in order to carry out the provisions of the Plan. Each
grant of options is to be evidenced by a stock option agreement executed by the
Company and the optionee at the time of grant in accordance with the terms and
conditions of the Plan.
No option granted under the Plan will become exercisable unless the
person to whom the option is granted remains in the continuous employ or
service of the Company or one of its subsidiaries for at least six months (or
for such longer period as the Committee may designate) from the date the option
is granted. Unless extended by the Committee, if an optionee ceases to be
employed by or to perform services for the Company or one of its subsidiaries
for any reason other than death or disability, then each outstanding option
granted to him or her under the Plan will terminate on the date three months
after the date of such termination of employment or service, of, if earlier,
the date specified in the option agreement. If an optionee's employment or
service is terminated by reason of the optionee's death or disability (or if
the optionee's employment or service is terminated by reason of his or her
disability and the optionee dies within one year after such termination of
employment or service), then, unless extended by the Committee, each
outstanding option granted to the optionee under the Plan will terminate on the
date one year after the date of such termination of employment or service (or
one year after the later death of a disabled optionee) or, if earlier, the date
specified in the option agreement.
If any event constituting a "Change in Control of the Company" shall
occur, all options granted under the Plan which are outstanding at the time a
Change in Control of the Company occurs will immediately become exercisable. A
"Change in Control of the Company" will be deemed to occur if (i) there is
consummated (x) any consolidation
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or merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company's Common Stock
would be converted into cash, securities or other property, other than a merger
of the Company in which the holders of the Company's Common Stock immediately
prior to the merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger, or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company, or
(ii) the stockholders of the Company approve any plan or proposal for
liquidation or dissolution of the Company, or (iii) any person (as such term is
used in Section 13(d) and 14(d)(2) of the Exchange Act) becomes the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of 40% or more
of the Company's outstanding Common Stock other than pursuant to a plan or
arrangement entered into by such person and the Company, or (iv) during any
period of two consecutive years, individuals who at the beginning of such
period constitute the entire Board of Directors cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
The Board of Directors may amend or terminate the Plan. Except as
otherwise provided in the Plan with respect to equity changes, any amendment
which would increase the aggregate number of shares of Common Stock as to which
options may be granted under the Plan, materially increase the benefits under
the Plan, or modify the class of persons eligible to receive options under the
Plan is subject to the approval of the Company's stockholders. No amendment or
termination may affect adversely any outstanding option without the written
consent of the optionee.
FEDERAL INCOME TAX CONSEQUENCES
An optionee will not realize taxable income upon the grant of an
option. In general, the holder of a Non-ISO will realize ordinary income when
the option is exercised equal to the excess of the value of the stock over the
exercise price (i.e., the option spread), and the Company receives a
corresponding deduction in the same amount, subject to the deduction limits of
Section 162(m) of the Code. (If an optionee is subject to the six month
restrictions on sale of Common Stock under Section 16(b) of the Exchange Act,
ordinary income recognition generally will be postponed until the date the
restrictions lapse, unless an early income recognition election is made.) Upon
a later sale of the stock, an optionee will realize capital gain or loss equal
to the difference between the selling price and the value of the stock at the
time the option was exercised (or, if later, the time the ordinary income is
recognized with respect to the shares received upon exercise).
The holder of an ISO will not realize taxable income upon the exercise
of the option (although the option spread is an adjustment to taxable income
that may result in alternative minimum tax (the adjustment, if any, is also
added to the basis of the shares for purposes of determining adjusted gain or
loss under the alternative minimum
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tax when the shares are sold)). If the stock acquired upon exercise of the ISO
is sold or otherwise disposed of within two years from the option grant date or
within one year from the exercise date, then, in general, gain realized on the
sale is treated as ordinary income to the extent of the option spread at the
exercise date, and the Company receives a corresponding deduction in the same
amount, subject to the limitations of Section 162(m) of the Code. Any remaining
gain is treated as short-term or long-term capital gain depending on the
holding period. If the stock is held for at least two years from the grant date
and one year from the exercise date, then gain or loss realized upon the sale
will be capital gain or loss and the Company will not be entitled to a
deduction.
NON-EMPLOYEE DIRECTORS' PLAN
Effective August 1995, the Company adopted a Stock Option Plan for
Non-Employee Directors (the "Directors' Plan"), pursuant to which options to
acquire an aggregate of 75,000 shares of Common Stock may be granted to
non-employee directors. The Directors' Plan provides for the automatic grant to
each of the Company's non-employee directors of (1) an option to purchase 4,500
shares of Common Stock on the later of the date of such director's initial
election or appointment to the Board of Directors or the date of adoption of
the Directors' Plan, and (2) an option to purchase 4,500 shares of Common Stock
on each annual anniversary of such election or appointment, provided that such
individual is on that anniversary date a non-employee director. The options
will have an exercise price of 100% of the fair market value of the Common
Stock on the date of grant, have a ten-year term and become exercisable in four
equal quarterly installments commencing on the date which is three months after
the date of the grant thereof, subject to acceleration in the event of a change
of control (as defined in the Directors' Plan). The options may be exercised by
payment in cash, check or shares of Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Uri Evan, Chief Executive Officer, Chairman of the Board and a
principal stockholder of the Company, is also a director, officer and
stockholder of American Value Brands Inc. and Net Grocer Inc. and Frederick R.
Adler, a director and principal stockholder of the Company, is also a director
and principal stockholder of American Value Brands Inc. and Net Grocer Inc.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information as of April 9, 1998
regarding the beneficial ownership of the Company's Common Stock of: (i) each
person known by the Company to own beneficially more than five percent of the
outstanding Common Stock; (ii) each director and nominee for director of the
Company; (iii) each executive officer named in the Summary Compensation Table
(see "Executive Compensation" above); and (iv) all directors and executive
officers of the Company as a group. Except as otherwise specified, the named
beneficial owner has the sole voting and investment power over the shares
listed.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) COMMON STOCK (2) COMMON STOCK
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<S> <C> <C>
Uri Evan (3).............................................. 984,505 7.12%
Dinah Evan (3)............................................ 984,505 7.12
Daniel Bergman (4)........................................ 857,503 6.20
Bergman Family Limited Partnership (5)
1961 East 1st Street
Brooklyn, New York 11223............................... 850,003 6.15
Frederick R. Adler (5)
1520 South Ocean Boulevard
Palm Beach, Florida 33480.............................. 2,113,058 14.89
Richard A. Mandell (6)
245 East 19th Street
New York, New York 10003............................... 16,875 *
Frederick J. Horowitz
c/o American Value Brands Inc.
333 Seventh Avenue
New York, New York 10001.............................. 765,413 5.54
Joseph S. Cohen (7)
1585 East 10th Street
Brooklyn, New York 11230............................... 900,003 6.51
Mark Antebi (8)
1435 East 9th Street
Brooklyn, New York 11230............................... 900,003 6.51
Rachamim Anatian (9)
1323 President Street
Brooklyn, New York 11230............................... 1,208,300 8.74
The Capital Group Companies, Inc. and
Capital Guardian Trust(10)
333 South Hope Street
Los Angeles, California 90071.......................... 1,370,100 9.91
Richard D. Coslow......................................... 500 *
Frank Corella (11)........................................ 41,134 *
All directors and executive officers as
a group (6 persons).................................... 4,013,575 28.21%
</TABLE>
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* Indicates less than one percent.
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(1) Except as otherwise noted, the address of the named stockholder is c/o
USA Detergents, Inc., 1735 Jersey Avenue, North Brunswick, New Jersey
08902.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") which generally
attribute beneficial ownership of securities to persons who possess
sole or shared voting power and/or investment power with respect to
those securities.
(3) Amounts reflected for Uri Evan and Dinah Evan, who are married to one
another, consist of (i) an aggregate of 386,430 shares held by Dinah
Evan, (ii) 312,130 shares held by Uri Evan and (iii) 285,945 shares of
Common Stock held by a trust for the benefit of a child of Mr. Evan.
Mr. and Mrs. Evan may each be deemed to beneficially own the shares of
Common Stock held by the other and the shares of Common Stock held by
each trust. Each of Mr. and Mrs. Evan disclaims beneficial ownership
of all shares other than those held in his or her name.
(4) Daniel Bergman may be deemed to be the beneficial owner of the 850,003
shares of Common Stock beneficially owned by the Bergman Family
Limited Partnership, a Nevada partnership of which Mr. Bergman is the
general partner. Mr. Bergman disclaims beneficial ownership of all
shares other than those held in his name.
(5) Includes options to purchase 12,375 shares of Common Stock,
exercisable within 60 days, and a warrant to purchase 350,000 shares
of Common Stock.
(6) Includes options to purchase 12,375 shares of Common Stock,
exercisable within 60 days.
(7) Includes 238,290 shares of Common Stock held by the children of Mr.
Cohen. Mr. Cohen disclaims beneficial ownership of all shares other
than those held in his name.
(8) Includes 211,813 shares of Common Stock held by the children of Mr.
Antebi. Mr. Antebi disclaims beneficial ownership of all shares other
than those held in his name.
(9) Information is as of February 7, 1997 and is derived solely from the
Schedule 13D, as amended, dated February 7, 1997, filed with the
Securities and Exchange Commission by Mr. Anatian.
(10) Information is as of February 10, 1998 and is derived solely from the
Schedule 13G, dated February 10, 1998, filed with the Securities and
Exchange Commission. The Capital Group Companies, Inc. is the parent
holding company of a group of investment management companies, which
include (i) a "bank" as defined in Section 3(a)(6) of the Securities
Exchange Act of 1934 (the "Act"), and (ii) several investment advisers
registered under Section 203 of the Investment Advisers Act of 1940,
which provide investment advisory and management services for their
respective clients which include registered investment companies and
institutional accounts. Capital Guardian Trust Company, a "bank" as
defined in Section 3(a)(6) of the Act and a wholly owned subsidiary of
The Capital Group Companies, Inc., is reported to be the beneficial
owner of such shares as a result of its serving as the investment
manager of various institutional accounts.
(11) Includes options to purchase 29,787 shares of Common Stock,
exercisable within 60 days.
-12-
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1995, Mr. Adler and Mr. Blair Effron were granted rights to
"piggyback" on any registration statement filed by the Company, subject to
certain restrictions. The registration rights agreement relating to such
"piggyback" rights covers all Common Stock held by Messrs. Adler and Effron.
Mr. Adler has been of counsel to the law firm of Fulbright & Jaworski L.L.P.
since January 1, 1996, which firm was retained to provide legal services to the
Company during 1997.
On December 26, 1997, the Company granted a warrant to purchase
350,000 shares of Common Stock to Mr. Adler, a director of the Company, in
consideration of the sum of $175,000 and investment banking services to be
rendered by Mr. Adler during the three year period commencing January 1, 1998.
The warrant is exercisable beginning December 2000 or, if earlier, upon the
occurrence of an "Accelerating Event" as defined in the warrant, at an exercise
price of $7.875 per share of Common Stock (the market price of the Common Stock
on the grant date). The Company valued the warrant at approximately $375,000,
the amount specified by an independent banking and valuation firm engaged by
the Company. The value of the warrant, net of consideration to be received,
will be deferred and amortized over the three year consulting period.
As part of the refinancing of the Company's indebtedness with PNC
Bank, National Association ("PNC"), $4 million was loaned to the Company by 101
Realty Associates L.L.C. ("101 Realty") at a rate of 9.5% per annum. 101 Realty
is a New Jersey limited liability company owned by Mr. Evan, the Company's
Chairman and Chief Executive Officer, Mr. Evan's wife, Dinah Evan, and
Frederick J. Horowitz, Daniel Bergman, Joseph Cohen and Mark Antebi, each of
whom is known to beneficially own more than 5% of the Company's outstanding
Common Stock. Such loan is due in July 1999 and is secured by a second mortgage
on one of the Company's properties for the amount of the loan, subject to a
first mortgage held by PNC in the amount of $5 million. Each of Messrs. Evan,
Horowitz, Bergman, Cohen and Antebi additionally have jointly and severally
guaranteed the repayment of an additional $5 million of the Company's
indebtedness to PNC. PNC is obligated to release such guarantees in the event
the Company repays the guaranteed amount to PNC by June 25, 1997. As part of
the arrangement, the Company has agreed to engage an independent investment
banking firm to recommend appropriate additional consideration to be received
by 101 Realty (or its underlying owners) in connection with the extension of
the loan and the entry into of the guarantees.
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<PAGE>
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
No. 1 to its Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.
USA DETERGENTS, INC.
Dated: April 29, 1998 By: /s/ Uri Evan
------------
Name: Title
Title: Chief Executive Officer and
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act
of 1 34, this Amendment to No. 1 to the Registrant's Report on Form 10-K has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Uri Evan Chief Executive Officer and April 29, 1998
- ------------------------- Chairman of the Board of
Uri Evan Directors (Principal Executive
Officer)
/s/ Richard Coslow Senior Vice President and April 29, 1998
- ------------------------- Chief Financial Officer
Richard Coslow (Principal Financial Officer
and Principal Accounting
Officer)
/s/ Daniel Bergman Director April 29, 1998
- -------------------------
Daniel Bergman
/s/ Frederick R. Adler Director April 29, 1998
- -------------------------
Frederick R. Adler
/s/ Richard A. Mandell Director April 29, 1998
- -------------------------
Richard A. Mandell
</TABLE>
-14-
