<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended June 24, 1995.
OR
[___] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
Commission File Number: 0-08547
AMSERV HEALTHCARE INC.
(Exact name of registrant as specified in its charter)
Delaware 94-1627467
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer Identification No.)
3252 Holiday Court Suite #204 La Jolla, CA 92037
(Address of principal executive offices)
(619) 597-1000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Title of each class Name of each exchange on which registered
None None
- --------------------------------------- -----------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
</TABLE>
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
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. X YES NO
------- -------
Indicate 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. [ ]
---
As of October 2, 1995, there were outstanding 3,163,203 shares of the
Registrant's common stock, par value $.01 per share. As of that date, the
aggregate market value of the voting stock held by non-affiliates of the
Registrant was $7,908,007 based upon the closing sales price on October 2, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement relating to the Registrant's 1995 Annual Meeting
of Shareholders are incorporated by reference into Part III.
<PAGE>
PART I
------
ITEM 1. BUSINESS
AMSERV HEALTHCARE INC. (hereinafter the "Company" or "AMSERV") was originally
incorporated under the name of Phone-A-Gram System, Inc. in the State of
California on July 7, 1966, and was subsequently reincorporated under the laws
of the State of Delaware on September 29, 1983. On October 24, 1987, the
Company's name was changed to AMSERV, INC., and on August 24, 1992, the name was
again changed to AMSERV HEALTHCARE INC. to reflect the Company's new strategic
direction.
AMSERV operates in a one-industry segment as a healthcare services company.
During the fiscal year ended June 24, 1995, the Company provided home care
services to individuals from its six branch offices in New Jersey and Ohio.
Fiscal 1995 was the first full year of operations for its Ohio office, which was
acquired on June 10, 1994, by the purchase of substantially all of the assets
and property of North Central Personnel, Inc. ("North Central"). On November 9,
1994, the Company sold substantially all of the fixed and intangible assets of
its eight branch offices that provided primarily temporary nursing services. The
Company plans to invest the proceeds of the sale to expand its home care
business, which is a growing segment of the healthcare industry, and to look for
other opportunities in healthcare.
AMSERV receives payment for its home care services from several sources.
Revenues from Medicaid and other local government programs represented
approximately 75% of net sales from continuing operations in the fiscal year
ended June 24, 1995. The balance is paid to the Company from insurance
companies, private payors and others.
Home care services are marketed through referrals from public agencies,
hospitals, nursing homes and insurance companies. Both non-licensed and licensed
personnel provide services to individuals in their homes. Home care personnel
are recruited by the Company through newspaper advertisements and personal
referrals.
The healthcare industry is highly competitive. The Company competes with many
other companies which offer the same or similar services as those provided by
AMSERV. However, no one or two companies dominate the business. Although some of
the Company's competitors have greater capital resources than AMSERV, the
Company believes it can compete because of its responsiveness to the needs of
both clients and healthcare personnel through its emphasis on service.
At June 24, 1995, the Company and its subsidiaries employed approximately 48
full-time and 875 part-time persons for its continuing operations. The Company
strives to maintain good relations with its employees, considering them to be a
key to the Company's success. No employees are covered by a collective
bargaining agreement.
2
<PAGE>
ITEM 2. PROPERTIES
AMSERV leases seven office facilities, which are located in Edison, Elizabeth,
Fairlawn, South Orange and Union City, New Jersey; Mansfield, Ohio; and La
Jolla, California, for the continuing operations of the Company. These leases
expire at various dates through October 1999. AMSERV believes that these
facilities are adequate for its operations.
In connection with the sale of assets of AMSERV MEDICAL PRODUCTS, INC. the
Company has guaranteed that certain lease payments will be made by the
purchasers. These payments are payable through September 1998 (See Note 11 to
Consolidated Financial Statements).
ITEM 3. LEGAL PROCEEDINGS
On April 27, 1995, Stockbridge Investment Partners, Inc. ("Stockbridge")
commenced litigation in the Court of Chancery of the State of Delaware in and
for New Castle County (the "Delaware Litigation") against the Company and its
directors, Melvin L. Katten, Eugene J. Mora, Michael A. Robinton, George A.
Rogers and Ben L. Spinelli, seeking an order rescinding the transactions by
which the Company exchanged a promissory note held by North Central for 426,794
shares of preferred stock of the Company and financed the exercise by Mr. Mora
of stock options to acquire 177,562 shares of the Company's common stock, and
preliminarily and permanently enjoining the Company from recognizing such stock,
as well as any stock issued in connection with a letter of intent referred to in
the Company's April 13, 1995, press release, as validly issued for purposes of
voting or exercising rights to consent.
Following settlement discussions between Stockbridge and the Company, the
parties entered into a Standstill Agreement and a Settlement Agreement and
Release, both dated as of May 12, 1995, pursuant to which Stockbridge agreed,
among other things, to (i) revoke the consent delivered April 7, 1995, (ii)
suspend its solicitation of consents to remove a majority of the Company's Board
of Directors and (iii) dismiss with prejudice the Delaware Litigation. Under the
Standstill Agreement, which had a 30-day term, Stockbridge and the Company
agreed to continue good faith discussions and receive more detailed information
regarding a potential business combination involving the Company and a wholly-
owned subsidiary of Stockbridge, York Hannover Pharmaceuticals, Inc. ("York").
The parties further agreed that solely for purposes of Stockbridge's renewed
consent solicitation, subsequently initiated on June 16, 1995, the shares of
preferred stock will have no voting rights and will not be deemed as outstanding
voting securities. In addition, a voting agreement between the Company and North
Central with respect to the shares of preferred stock and a related irrevocable
proxy were rescinded. There are no voting or other restrictions on the preferred
stock with respect to any other consent solicitation, or with respect to any
annual or special meeting of the Company. The Standstill Agreement was
subsequently extended an additional 60 days and expired on August 10, 1995.
On August 23, 1995, the Delaware Court of Chancery ordered AMSERV to reimburse
Stockbridge for legal fees in the amount of $50,000 incurred in connection with
these legal proceedings, which the Company paid on September 1, 1995.
Discussions with respect to a potential business combination between AMSERV and
York continue.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted during the fourth quarter of the fiscal year to
a vote of security holders.
3
<PAGE>
ITEM 4.1 EXECUTIVE OFFICERS OF THE REGISTRANT
The following information concerns the executive officers of the Company as of
October 2, 1995:
Eugene J. Mora, age 60, joined the Company as Chairman of the Board, President,
and Chief Executive Officer in March 1987. He is also Chief Executive Officer of
the Company's subsidiaries. He has been a director of the Company since October
1986. Mr. Mora also serves as a director of Washington Scientific Industries,
Inc., a publicly held company. From July 1974 through February 1987, he was
President of Kidde Business Services, Inc.
Lori Anderson, age 34, joined AMSERV in November 1993 as Director of Financial
Planning, and in December 1994, was promoted to Controller and Treasurer of the
Company. From 1991 through 1993, Ms. Anderson was employed by TheraTx,
Incorporated, a provider of rehabilitation therapy services, as Accounting
Manager and Controller. Ms. Anderson received her CPA Certificate in 1985, while
with Vekich, Arkema & Co., Chartered, an independent accounting and management
advisory firm where she worked as an auditor and accounting supervisor from 1984
through 1990.
Leslie Hodge, age 42, joined the Company in September 1990 as Director of Human
Resources for AMSERV NURSES, INC., a subsidiary of the Company, and was promoted
to Vice President of Human Resources in July 1991. In June 1992, she was named
Vice President of Administration and Secretary of AMSERV. From 1981 through
1990, she was employed by PS Trading, Inc., a sister subsidiary of Pacific
Southwest Airlines, as Vice President of Administration.
The following information concerns certain significant employees of the Company
as of October 2, 1995:
Kenneth Freeman, age 58, joined the Company in March 1991 when AMSERV HEALTHCARE
OF NEW JERSEY, INC., a wholly-owned subsidiary of the Company, acquired Always
Care of New Jersey, Inc. ("Always Care"), a home care company. Mr. Freeman
founded Always Care in 1976. He continues as Regional Manager of the subsidiary
supervising five home care offices in New Jersey.
Diane Gurik, age 45, joined the Company in June 1994 in connection with the
acquisition of North Central by AMSERV HEALTHCARE OF OHIO INC. ("AHO"), a
wholly-owned subsidiary of the Company. Ms. Gurik founded North Central, a home
care company, in 1983. She continues as President of the North Central Personnel
division of AHO.
4
<PAGE>
PART II
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
(a) Market Information - The Company's common stock is traded on the NASDAQ
Stock Market under the symbol "AMSR". The table below presents the high and low
bid quotations as reported by NASDAQ:
<TABLE>
<CAPTION>
Fiscal 1995 Fiscal 1994
------------------ ------------------
High Low High Low
---- ----- ---- -----
<S> <C> <C> <C> <C>
First Quarter........... $ 1-3/8 $ 11/16 $ 1-1/2 $ 1
Second Quarter.......... $ 1-13/16 $ 7/8 $ 1-5/16 $ 13/16
Third Quarter........... $ 2-7/8 $ 1-9/16 $ 1-1/4 $ 13/16
Fourth Quarter.......... $ 3-1/4 $ 2-1/4 $ 1-1/2 $ 15/16
</TABLE>
(b) Approximate Number of Shareholders of Common Stock - The approximate number
of holders of record of Common Stock as of October 2, 1995 was 1,700.
(c) The Company paid no cash dividends during the last five years. The Company
currently anticipates that it will retain all available funds for use in the
operation and expansion of its business and does not anticipate paying any cash
dividends in the foreseeable future.
5
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Years Ended
-----------------------------------------------------
JUNE 24, June 30,
---------------------------------------
1995 1994 1993 1992 1991
------- ---------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Operating Revenue $11,342 $ 7,526 $ 6,049 $5,432 $1,362
Income (Loss) from
Continuing Operations 52 (63) (71) (48) (134)
Income (Loss) from
Discontinued Operations - (711) (359) 290 1,124
Gain (Loss) on Disposal of
Discontinued Operations 30 (1,168) - 1,405 -
Cumulative Effect of Change
in Accounting Principle 24 - - - -
Net Income (Loss) $ 106 $(1,942) $ (430) $1,647 $ 990
INCOME (LOSS) PER SHARE
Income (Loss) from
Continuing Operations $ .02 $ (.02) $ (.03) $ (.01) $ (.04)
Income (Loss) from
Discontinued Operations - (.24) (.12) .09 .35
Gain (Loss) on Disposal of
Discontinued Operations .01 (.40) - .45 -
Cumulative Effect of Change
in Accounting Principle - - - - -
Net Income (Loss) $ .03 $ (.66) $ (.15) $ .53 $ .31
Shares Used in Computing Per
Share Amounts 3,112 2,945 2,961 3,092 3,160
</TABLE>
<TABLE>
<CAPTION>
JUNE 24, June 30,
---------------------------------------
1995 1994 1993 1992 1991
------- ---------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working Capital $ 2,466 $ 2,569 $ 3,471 $ 4,792 $ 3,095
Total Assets 6,684 6,558 7,427 8,858 7,508
Total Long-Term Liabilities 31 832 115 745 1,064
Redeemable Preferred Stock 683 - - - -
Shareholders' Equity $ 4,657 $ 4,348 $ 6,290 $ 6,699 $ 5,016
Current Ratio 2.9 2.9 4.4 4.4 3.2
</TABLE>
6
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
Cash, cash equivalents, and short-term investments increased from $1,321,000 at
June 30, 1994 to $2,619,000 at June 24, 1995. This increase of $1,298,000 during
the fiscal year is the result of the proceeds from the sale of the temporary
nursing services business, the collection of related accounts receivable, the
receipt of a federal income tax refund offset by payments made for the reduction
of long-term debt, redemption of preferred shares, and an advance on an earnout
obligation, paid in connection with the June 1994 acquisition of the assets of
North Central. The Company's balance sheet remains strong with a current ratio
of 2.9 to 1. Working capital requirements consist primarily of the financing of
accounts receivable and payments due for the redemption of preferred stock. The
Company believes that with its strong working capital condition, it is well
positioned to meet its anticipated cash requirements for operations, and
continue its expansion in home care and other health care services.
Comparison of 1995 to 1994
Operating revenues from continuing operations increased 51%, from $7,526,000 in
fiscal 1994 to $11,342,000 in fiscal 1995. This increase resulted from overall
increases in the demand for home care services, as well as the expansion of
operations to Union City, New Jersey. Fiscal 1995 results also include a full
year of operations for North Central, which was acquired in June 1994.
Selling, general and administrative expenses increased $3,593,000, or 48%, in
fiscal 1995 compared to fiscal 1994. The increase is primarily associated with
the increase in direct variable costs due to the increase in operating revenues
for the year, a full year's expenses associated with North Central, and costs of
approximately $487,000 incurred in connection with a shareholder consent
solicitation.
Depreciation and amortization increased $42,000, or 11%, from $373,000 in fiscal
1994 to $415,000 in fiscal 1995 due primarily to the depreciation of equipment,
furniture and fixtures and amortization of intangible assets acquired in the
acquisition of the assets of North Central.
In 1995, interest income increased $5,000, or 6% over fiscal 1994 as a result of
an increase in cash, cash equivalents and short-term investments offset by the
effects of lower interest rates on invested funds.
Interest expense increased from $8,000 in fiscal 1994 to $52,000 in fiscal 1995
due to interest incurred on the promissory note issued in connection with the
acquisition of the assets of North Central.
The effective income tax rate on income from continuing operations in fiscal
1995 was 4% compared to 28% for fiscal 1994. The 1994 benefit was primarily the
result of the tax benefit from measuring cumulative temporary differences in
connection with the disposal of the temporary nursing services business which
have reversed in fiscal 1995.
During fiscal 1994, the Company discontinued operation of its temporary nursing
services business and recorded a loss from discontinued operations of $711,000
and an after-tax loss on the anticipated disposal of discontinued operations of
$1,168,000. During fiscal 1995, the temporary nursing services business was sold
and after recognizing the 1994 writedown, an after-tax gain of $30,302 was
recognized. The 1995 gain resulted from the difference between the actual and
estimated loss on the disposal. See Note 4 of the Notes to Consolidated
Financial Statements for additional details.
7
<PAGE>
In fiscal 1995, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". The cumulative effect of the change in accounting principle
resulted in an after-tax adjustment to earnings for unrealized losses of
$24,000.
Comparison of 1994 to 1993
Operating revenues from continuing operations increased from $6,049,000 in
fiscal 1993 to $7,526,000 in fiscal 1994, an increase of 24%. This increase
resulted from increases in the demand for home care services. Fiscal 1994 also
includes $174,000 in operating revenues for the month of June, 1994, resulting
from the acquisition of the assets of North Central in June 1994.
Selling, general and administrative expenses increased $1,414,000, or 24% in
fiscal 1994 compared to fiscal 1993. The increase is primarily associated with
the increase in direct variable costs due to the increase in operating revenue
for the year.
In 1994, depreciation and amortization increased $14,000 or 4% over fiscal 1993
due to the depreciation of equipment, furniture and fixtures and the
amortization of intangible assets acquired in the acquisition of the assets of
North Central.
Interest income decreased to $89,000 in fiscal 1994 from $111,000 in fiscal 1993
as a direct result of lower interest rates on funds invested in various money
market funds, and an overall decrease in the cash balance.
In fiscal 1993, the remaining long-term debt in connection with the acquisition
of the New Jersey home care services subsidiary was retired and this reduction
contributed to the decrease in interest expense of $16,000 during fiscal 1994.
The effective income tax rate on the loss from continuing operations for fiscal
1994 was 28% compared to 45% for fiscal 1993. The 1994 benefit in excess of the
statutory rate is primarily the result of the tax benefit from measuring
cumulative temporary differences that will continue to reverse in future years.
The operating losses from the Company's temporary nursing services business
prompted the decision to dispose of this segment of the business. Net losses
from discontinued operations totalled $711,000 in fiscal 1994 and $359,000 in
fiscal 1993. The after-tax loss on the anticipated disposal of the discontinued
operations for fiscal 1994 of $1,168,000 consists of assets associated with the
temporary nursing services business and transition expenses during the phase out
period in fiscal 1995. See Note 4 of the Notes to Consolidated Financial
Statements for additional details.
8
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data of the Company
required by this item are set forth at the pages indicated in Item 14 (a)(1).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Previously reported in the Company's Form 8-K dated March 21, 1995.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the Proxy Statement relating to the Company's
1995 Annual Meeting of Shareholders to be filed pursuant to General Instruction
G(3) to Form 10-K, except information concerning the executive officers of the
Company which is set forth in Item 4.1 hereof.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the Proxy Statement relating to the Company's
1995 Annual Meeting of Shareholders to be filed pursuant to General Instructions
G(3) to Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the Proxy Statement relating to the Company's
1995 Annual Meeting of Shareholders to be filed pursuant to General Instructions
G(3) to Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Proxy Statement relating to the Company's
1995 Annual Meeting of Shareholders to be filed pursuant to General Instructions
G(3) to Form 10-K.
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements.
--------------------
The financial statements required by this item are submitted in a
separate section beginning on Page F-1 of this report.
Report of Ernst & Young LLP, Independent Auditors F-1
Report of Deloitte & Touche LLP, Independent Auditors F-2
Consolidated Balance Sheets, June 24, 1995,
and June 30, 1994 F-3
Consolidated Statements of Operations, Years Ended June
24, 1995, and June 30, 1994 and 1993 F-4
Consolidated Statements of Shareholders' Equity, Years
Ended June 24, 1995, and June 30, 1994, and 1993 F-5
Consolidated Statements of Cash Flows, Years Ended June
24, 1995, and June 30, 1994 and 1993 F-6
Notes to Consolidated Financial Statements F-7
9
<PAGE>
2. Financial Statement Schedule.
----------------------------
Schedule II Consolidated Valuation and Qualifying Accounts,
June 24, 1995, and June 30, 1994 and 1993 F-15
All other schedules are omitted because they are not applicable or not required,
or because the information is included in the financial statements or notes
thereto.
3. Exhibits.
--------
The exhibits listed on the accompanying Exhibit Index are filed as
part of this Annual Report.
(b) Reports on Form 8-K.
-------------------
1. A Form 8-K dated March 6, 1995, was filed with the Securities and Exchange
Commission adopting an amendment to the Company's By-laws. The amendment
ensures (i) orderly procedures for determining which stockholders will be
able to take part in a written consent action; (ii) compliance with Rule
14a-13 of the Securities and Exchange Act of 1934; and (iii) that any
written consent action be efficiently and effectively undertaken without
disenfranchising any of the stockholders of the Company. The amendment was
filed as an exhibit to Form 8-K.
2. A Form 8-K dated March 21, 1995, was filed with the Securities and
Exchange Commission reporting a change in the Company's independent
auditors. The Company's decision to dismiss Deloitte & Touche LLP and
retain Ernst & Young LLP was approved by its Board of Directors at a
meeting held on March 21, 1995. A letter dated March 27, 1995, from
Deloitte & Touche LLP concerning dismissal as the Company's principal
accountant was filed as an exhibit to Form 8-K. A Form 8-K/A dated April
26, 1995, was subsequently filed, which amended the letter dated March 27,
1995 from Deloitte & Touche LLP. The amended letter dated April 25, 1995,
from Deloitte & Touche LLP was filed as an exhibit to Form 8-K/A.
3. A Form 8-K dated July 6, 1995, was filed with the Securities and Exchange
Commission disclosing an Exchange Agreement with North Central. Pursuant
to this agreement, 341,435 shares of Class A Preferred Stock held by North
Central were exchanged for 260,141 shares of Class B Preferred Stock. A
copy of the Exchange Agreement and the Certificate of Designation setting
forth the designations, preferences and rights of the Class B Preferred
Stock were filed as exhibits to Form 8-K.
10
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
--------------------------------
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 its
behalf by the undersigned, thereunto duly authorized.
AMSERV HEALTHCARE INC.
/s/Eugene J. Mora
-----------------------------------
By: Eugene J. Mora
Chairman of the Board and President
Date: October 2, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated. Each person whose signature
appears below hereby authorizes each of Leslie Hodge and Melvin L. Katten, with
full power of substitution, to execute in the name of such person and to file
any amendment to this Annual Report making such changes in this Annual Report as
the Registrant deems appropriate, and appoints each of Leslie Hodge and Melvin
L. Katten, with full power of substitution, attorney-in-fact to sign and to file
any such amendment to this Annual Report.
<TABLE>
<CAPTION>
Name Capacity Date Signed
- ---------------------------- --------------------- -----------------
<S> <C> <C>
Principal Executive Officer:
/s/Eugene J.Mora
- ----------------------------
Eugene J. Mora Chairman of the Board October 2, 1995
and President
Principal Financial and
Accounting Officer:
/s/Lori Anderson
- ----------------------------
Lori Anderson Treasurer October 2, 1995
Directors:
/s/Melvin L. Katten
- ----------------------------
Melvin L. Katten Director October 2, 1995
/s/Michael A. Robinton
- ----------------------------
Michael A. Robinton Director October 2, 1995
/s/George A. Rogers
- ----------------------------
George A. Rogers Director October 2, 1995
/s/Ben L. Spinelli
- ----------------------------
Ben L. Spinelli Director October 2, 1995
</TABLE>
11
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Shareholders
AMSERV HEALTHCARE INC.
We have audited the accompanying consolidated balance sheet of AMSERV HEALTHCARE
INC. as of June 24, 1995, and the related consolidated statements of operations,
shareholders' equity, and cash flows for the year then ended. Our audit also
included the financial statement schedule as of June 24, 1995 listed in the
index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1995 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of AMSERV
HEALTHCARE INC. at June 24, 1995, and the consolidated results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
As discussed in Note 2 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities" in fiscal
1995.
ERNST & YOUNG LLP
San Diego, California
August 11, 1995
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AMSERV HEALTHCARE INC.:
We have audited the accompanying consolidated balance sheet of AMSERV HEALTHCARE
INC. and subsidiaries (the "Company") as of June 30, 1994, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the two years in the period ended June 30, 1994. Our audits also
included the consolidated financial statement schedule for the years ended June
30, 1994, and 1993 listed in the Index at Item 14(a)(2). These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of June 30, 1994,
and the results of their operations and their cash flows for each of the two
years in the period ended June 30, 1994 in conformity with generally accepted
accounting principles. Also, in our opinion, such 1994 and 1993 consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
October 7, 1994
F-2
<PAGE>
AMSERV HEALTHCARE INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 24, June 30,
1995 1994
-------- --------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents (Note 1) $ 1,226,448 $ 643,987
Short-term investments, net (Notes 1 and 2) 1,392,021 676,615
Accounts receivable, net of allowance for
doubtful accounts of $103,264 in 1995 and $237,687 in 1994 973,731 1,964,903
Federal income taxes refundable - 326,628
Other current assets 187,463 335,389
----------- -----------
Total current assets 3,779,663 3,947,522
Equipment, Furniture and Fixtures net of
accumulated depreciation of $196,069 in 1995 and $135,906 in 1994 387,821 252,234
Intangible Assets, net (Note 3) 2,203,113 2,047,540
Other Assets 313,888 311,090
----------- -----------
$ 6,684,485 $ 6,558,386
=========== ===========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 105,663 $ 70,735
Accrued payroll and related taxes 561,143 580,035
Net liabilities of discontinued operations (Note 4) 391,770 116,718
Other current liabilities 254,778 277,928
Current maturities of long-term debt (Notes 5 and 6) - 333,334
----------- -----------
Total current liabilities 1,313,354 1,378,750
----------- -----------
Long-Term Liabilities
Long-term debt net of current maturities (Notes 5 and 6) - 666,666
Other long-term liabilities 30,859 165,000
----------- -----------
Total long-term liabilities 30,859 831,666
----------- -----------
Redeemable Preferred Stock
Class A Redeemable preferred stock, $.01 par value;
authorized 3,000,000 shares; issued and outstanding
341,435 shares in 1995 and none in 1994 (Note 7) 3,414 -
Additional paid-in capital (Note 7) 679,456 -
----------- -----------
Total redeemable preferred stock 682,870 -
Commitments and Contingencies (Notes 6, 10 and 11)
Common Shareholders' Equity
Common stock, $.01 par value; authorized 15,000,000 shares;
3,295,356 shares outstanding in 1995 and 3,087,794 shares
outstanding in 1994 (Note 8) 32,953 30,877
Treasury stock, at cost, 143,268 shares (Note 8) (296,053) (296,053)
Additional paid-in capital 6,787,963 6,373,936
Note receivable from officer (Note 12) (198,440) -
Unrealized loss on short-term investments (Note 2) (14,564) -
Retained earnings (deficit) (1,654,457) (1,760,790)
----------- -----------
Total common shareholders' equity 4,657,402 4,347,970
----------- -----------
$ 6,684,485 $ 6,558,386
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
AMSERV HEALTHCARE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended Years ended June 30,
June 24, 1995 1994 1993
------------- ---------------------------
<S> <C> <C> <C>
Operating Revenues.................................. $ 11,341,609 $ 7,525,822 $ 6,048,748
------------ ------------ -----------
Operating Expenses
Selling, general and administrative................ 10,914,279 7,321,290 5,907,124
Depreciation and amortization (Note 1)............. 415,143 373,321 358,979
------------ ------------ -----------
Total operating expenses........................ 11,329,422 7,694,611 6,266,103
------------ ------------ -----------
Operating Income (Loss)............................. 12,187 (168,789) (217,355)
Interest Expense.................................... (51,543) (8,254) (24,471)
Interest Income..................................... 93,742 88,541 111,227
------------ ------------ -----------
Income (Loss) From Continuing Operations
Before Provision for Income Taxes.................. 54,386 (88,502) (130,599)
Income Tax Provision (Benefit) (Note 9)............. 2,038 (25,168) (59,207)
------------ ------------ -----------
Income (Loss) From Continuing Operations............ 52,348 (63,334) (71,392)
Discontinued Operations (Note 4)
Income (loss) from discontinued operations,
net of income taxes of ($282,401) in 1994
and ($297,793) in 1993........................... - (710,636) (359,076)
Gain (loss) on disposal of discontinued operations,
net of income taxes of $168,211 in 1995
and ($77,110) in 1994............................ 30,302 (1,167,949) -
Cumulative Effect to July 1, 1994 of
change in Accounting Principle,
net of income taxes of $12,752................... 23,683 - -
------------ ------------ -----------
Net Income (Loss)................................... $ 106,333 $ (1,941,919) $ (430,468)
============ ============ ===========
Income (Loss) Per Common Share (Note 1)
Income (loss) from continuing operations .......... $ .02 ($.02) ($.03)
Loss from discontinued operations.................. - (.24) (.12)
Gain (loss) on disposal of discontinued operations. .01 (.40) -
Cumulative Effect of change in accounting principle - - -
Net income (loss).................................. $ .03 ($.66) ($.15)
===== ====== ======
Shares Used in Computing Per Share Amounts.......... 3,111,527 2,944,526 2,960,647
========= ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
AMSERV HEALTHCARE INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Years ended June 24, 1995, June 30, 1994 and 1993
----------------------------------------------------------------------------
Additional Note Receivable
Common Stock Treasury Stock Paid-In from
------------------ ------------------
Shares Amount Shares Amount Capital Officer
------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Balances at June 30, 1992............... 2,917,794 $ 29,177 27,800 $ (62,800) $ 6,120,636 $ -
Shares issued in acquisition of
MED-PRO (Note 6).................... 170,000 1,700 - - 253,300 -
Treasury stock acquired
(Note 8)............................ - - 115,468 (233,253) - -
Net loss.............................. - - - - - -
--------- -------- ------- ---------- ----------- ------------
Balances at June 30, 1993............... 3,087,794 30,877 143,268 (296,053) 6,373,936 -
Net loss.............................. - - - - - -
--------- -------- ------- ---------- ----------- ------------
Balances at June 30, 1994............... 3,087,794 30,877 143,268 (296,053) 6,373,936 -
Stock Options exercised
including income tax
benefit (Note 12)................. 207,562 2,076 - - 414,027 (198,440)
Cumulative effect of change
in accounting principle (Note 2).... - - - - - -
Change in unrealized loss
on short-term investments........... - - - - - -
Net income............................ - - - - - -
--------- -------- ------- ---------- ----------- ------------
Balances at June 24, 1995............... 3,295,356 $ 32,953 143,268 $(296,053) $ 6,787,963 $ (198,440)
========= ======== ======= ========== =========== ============
<CAPTION>
Unrealized Retained
(Loss) on Earnings
Investments (Deficit) Total
----------- --------- -----
<S> <C> <C> <C>
Balances at June 30, 1992............... $ - $ 611,597 $ 6,698,610
Shares issued in acquisition of
MED-PRO (Note 6).................... - - 255,000
Treasury stock acquired
(Note 8)............................ - - (233,253)
Net loss.............................. - (430,468) (430,468)
----------- ------------ -----------
Balances at June 30, 1993............... - 181,129 6,289,889
Net loss.............................. - (1,941,919) (1,941,919)
----------- ------------ -----------
Balances at June 30, 1994............... - (1,760,790) 4,347,970
Stock Options exercised
including income tax
benefit (Note 12)................. - - 217,663
Cumulative effect of change
in accounting principle (Note 2).... (23,683) - (23,683)
Change in unrealized loss
on short-term investments........... 9,119 - 9,119
Net income............................ - 106,333 106,333
----------- ------------ -----------
Balances at June 24, 1995............... $ (14,564) $(1,654,457) $ 4,657,402
=========== ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
AMSERV HEALTHCARE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended Years ended June 30,
June 24, 1995 1994 1993
-------------- -------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).................................................. $ 106,333 $ (1,941,919) $ (430,468)
Noncash items included in net income (loss):
Deferred income taxes......................................... 5,235 - -
Cumulative effect of change in accounting principles.......... (23,683) - -
(Gain) loss on disposal of discontinued operations............ (30,302) 1,167,949 -
Depreciation and amortization................................. 415,143 548,749 579,342
Provision for doubtful accounts............................... (134,423) - 140,000
Write-off of intangibles...................................... - 137,616 -
Gain on stock acquired in legal settlement.................... - - (52,500)
Loss on disposal of equipment, furniture and fixtures......... 32,680 45,078 15,575
Changes in assets and liabilities:
Accounts receivable........................................... 1,125,595 99,776 202,763
Income taxes.................................................. 326,628 200,998 (133,221)
Other assets.................................................. 94,717 (30,360) (135,451)
Accounts payable.............................................. 34,928 23,094 (9,591)
Loss contracts and unfavorable leases......................... - (44,000) (206,000)
Other liabilities............................................. (87,816) (106,876) (230,953)
---------------- ---------------- --------------
Net cash provided by (used in) operating activities................ 1,865,035 100,105 (260,504)
INVESTING ACTIVITIES:
Proceeds from sale of discontinued operations................. 813,941 - -
Payment of costs related to discontinued operations........... (508,587) - (361,979)
Proceeds from sale of short-term investments.................. 880,000 268,750 2,503,309
Purchase of short-term investments............................ (1,586,285) (497,125) (2,064,191)
Purchase of equipment, furniture and fixtures................. (270,835) (25,965) (77,504)
Payments for acquisitions..................................... - (678,835) (871,897)
Cash received on notes receivable............................. 50,411 191,504 185,496
Issuance of note receivable .................................. - - (100,000)
Payment of earnout advance.................................... (500,000) - -
Proceeds from sale of equipment, furniture and fixtures....... 31,851 4,034 -
--------------- --------------- -------------
Net cash used in investing activities.............................. (1,089,504) (737,637) (786,766)
FINANCING ACTIVITIES:
Repayment of long-term debt................................... (166,666) - (666,666)
Purchase of treasury stock.................................... - - (180,753)
Issuance of note payable...................................... - 130,587 -
Repayment on note payable..................................... (73,349) (57,238) -
Redemption of class A preferred shares........................ (170,718) - -
Exercise of employee stock options............................ 217,663 - -
---------------- ---------------- --------------
Net cash provided by (used in) financing activities................ (193,070) 73,349 (847,419)
---------------- ---------------- --------------
Net increase (decrease) in cash and cash equivalents............... 582,461 (564,183) (1,894,689)
Cash and cash equivalents at beginning of year..................... 643,987 1,208,170 3,102,859
--------------- --------------- -------------
Cash and cash equivalents at end of year........................... $ 1,226,448 $ 643,987 $ 1,208,170
=============== =============== =============
NONCASH FINANCING AND INVESTING ACTIVITIES:
Transfer from accounts receivable to notes receivable.............. - 80,307 -
Issuance of common stock in the acquisition
of MED-PRO....................................................... - - 255,000
Issuance of Class A redeemable preferred stock
in exchange for note payable and related accrued interest..... 853,588 - -
Income tax paid.................................................... 145,784 5,294 28,347
Issuance of common stock upon exercise of options
in exchange for note receivable............................... 198,440 - -
Interest paid...................................................... 31,289 2,421 42,804
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1/ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of AMSERV HEALTHCARE
INC. and its wholly-owned subsidiaries (the "Company"). All significant
intercompany accounts and transactions have been eliminated. Certain prior
years' amounts have been reclassified to conform with current year presentation.
Fiscal Year
During fiscal 1995 the Company commenced utilizing a 52/53-week fiscal year
ending on the last Saturday in June. Monthly periods are accounted for in a
four-week, four-week, five-week sequence, with each quarter consisting of 13
weeks. All references to years relate to fiscal years rather than calendar
years.
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, cash equivalents
represent surplus cash invested in highly liquid investments on a short-term
basis, with maturities of three months or less at date of purchase, until such
cash is required for the continuing operations of the Company. At June 24, 1995,
a substantial portion of the Company's cash is deposited in two banks and one
brokerage company. The Company monitors the financial status of the banks and
the brokerage company and does not believe the deposits are subject to a
significant degree of risk.
Accounting for Investments in Debt and Equity Securities
In July 1994, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". The Company's management has classified its investment securities
as available-for-sale and has recorded unrealized holding gains and losses as a
separate component of shareholders' equity. The cumulative effect of the change
in accounting principle resulted in an after-tax increase to income for
unrealized losses of $23,683 at July 1, 1994 (Note 2).
Equipment, Furniture and Fixtures
Equipment, furniture and fixtures are stated at cost. Additions and major
improvements are capitalized. Depreciation is computed using the straight-line
method over the estimated useful lives of the various classes of assets which
range from three to seven years.
Intangible Assets
Excess of cost over acquired net assets is amortized on a straight-line basis
over periods ranging from 35 to 37 years. Other intangible assets are stated at
acquisition cost and are being amortized on a straight-line basis over their
estimated useful lives of five years.
Revenue Recognition and Accounts Receivable
Operating revenue is reported at net realizable amounts from third-party payors
and individual patients for services rendered in the period in which the
services are provided. The Company receives payment for services rendered to
patients from state government sponsored programs, private third-party insurance
and individual patients. Amounts due from private third-party insurance and
individual patients are subject to differing economic conditions, and do not
represent any concentrated credit risk to the Company. Management believes that
reserves are adequate to cover any anticipated losses.
Income Taxes
Effective July 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes". The adoption of SFAS 109
changed the Company's method of accounting for income taxes to an asset and
liability approach. Prior to July 1993, the Company accounted for income taxes
under SFAS No. 96.
F-7
<PAGE>
Earnings Per Share
Earnings per share are based on the weighted average number of common and common
equivalent shares outstanding. Certain stock options and warrants are not
included in the computation of earnings per share because their effect would be
antidilutive. Earnings per share assuming full dilution are the same as primary
earnings per share.
NOTE 2/SHORT-TERM INVESTMENTS
Short-term investments are recorded at estimated fair market value at June 24,
1995 and June 30, 1994, and consist primarily of tax exempt bonds and money
market non-government securities with maturities of more than three months, and
common and preferred stock. In July 1994, the Company classified all of its
investments as available-for-sale securities according to Statement of Financial
Accounting Standards No. 115. The following table summarizes available-for-sale
securities at June 24, 1995:
<TABLE>
<CAPTION>
Available-for-Sale Securities
-------------------------------------
Gross Estimated
Unrealized Fair
Cost Losses Value
-------------------------------------
<S> <C> <C> <C>
Money Market/Non-Govt Securities $ 453,903 $ 2,494 $ 451,409
Tax Exempt Government Bonds 605,020 158 604,862
Common Stock 110,000 23,000 87,000
Preferred Stock 250,000 1,250 248,750
----------- -------- -----------
Total $ 1,418,923 $ 26,902 $ 1,392,021
=========== ======== ===========
</TABLE>
As a result of the adoption of SFAS No. 115, the Company records net unrealized
holding gains and losses, net of income tax effects, as a separate component of
shareholders' equity. Previously, unrealized losses had been charged to
operations. The cumulative effect of this change in accounting principle
resulted in an after-tax adjustment to earnings of $23,683 at July 1, 1994.
A net realized gain on sales of available-for-sale securities of $2,413 was
recognized in fiscal 1995. A net realized loss of $11,250 was recognized in
fiscal 1994.
The amortized cost and estimated fair value of short-term investments at June
24, 1995, by contractual maturity, are shown below. Expected maturities may
differ from contractual maturities because issuers of the securities may have
the right to prepay obligations without prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Fair
Cost Value
-------------------------
<S> <C> <C>
Due in one year or less $ 603,958 $ 601,410
Due after one year through
three years - -
Due after three years 454,965 454,861
Equity Securities 360,000 335,750
----------- -----------
Total $ 1,418,923 $ 1,392,021
----------- -----------
</TABLE>
F-8
<PAGE>
NOTE 3/INTANGIBLE ASSETS
Intangible assets acquired in acquisitions (Note 6) consist of the following:
<TABLE>
<CAPTION>
June 24, June 30,
1995 1994
--------- ---------
<S> <C> <C>
Excess of cost over acquired net assets.... $ 2,088,063 $ 1,588,063
Assembled workforce........................ 497,154 497,154
Accreditation and training programs........ 502,846 502,846
Covenant not to compete.................... 525,000 525,000
----------- -----------
3,613,063 3,113,063
Less: Accumulated amortization............ 1,409,950 1,065,523
----------- -----------
$ 2,203,113 $ 2,047,540
=========== ===========
</TABLE>
NOTE 4/DISCONTINUED OPERATIONS
On September 20, 1994, the Company signed a Letter of Intent to sell its
temporary nursing services business. As a result, the Company recorded a fiscal
1994 fourth quarter charge of $1,167,949 (after income tax benefit of $77,110)
to provide for a loss on the disposal of these discontinued operations and their
after-tax estimated operating losses of $149,627 until the estimated date of
disposal. On November 9, 1994, the Company completed this transaction, and sold
substantially all of the fixed and intangible assets of its temporary nursing
services business for $814,000 in cash. The related net liabilities for this
discontinued operation are included in the balance sheet under the caption "Net
liabilities of discontinued operations". The balance remaining unpaid at June
24, 1995, relates to various state and local tax and payroll issues that have
not been finalized and a remaining severance obligation. The consolidated
statements of operations for fiscal 1995, 1994, and 1993, exclude sales and
expenses for its temporary nursing services business from captions applicable to
continuing operations. Revenues from the discontinued operation during fiscal
1995 were $3,988,696. Operating results of the discontinued operation for fiscal
years 1994 and 1993 are summarized below:
<TABLE>
<CAPTION>
Fiscal Years ended June 30,
1994 1993
------------------------------
<S> <C> <C>
Net Sales....................... $12,022,618 $12,799,605
Loss Before Income Taxes........ (993,037) (656,869)
Income Tax Benefit.............. (282,401) (297,793)
Loss from Discontinued
Operations................... (710,636) (359,076)
</TABLE>
F-9
<PAGE>
NOTE 5/LONG-TERM DEBT
Long-term debt at June 30, 1994, consists of a $1,000,000 unsecured note payable
(less current maturities of $333,334) issued in the acquisition of the assets of
North Central Personnel, Inc. (Note 6). In April 1995, the Company exchanged
this note for redeemable preferred stock (Note 7).
NOTE 6/ACQUISITIONS
On June 10, 1994, the Company, through its wholly-owned subsidiary AMSERV
HEALTHCARE OF OHIO INC., acquired substantially all the assets and property of
North Central Personnel, Inc. ("North Central"). The acquisition, which was
accounted for as a purchase, had an initial purchase price of $1,553,835. The
Company paid $553,835 of the purchase price with cash, and the balance of
$1,000,000 was financed by a promissory note payable to the seller (Note 5). The
final purchase price is contingent on an earnout, of which $500,000 was advanced
on April 6, 1995. The remaining earnout will not exceed $500,000. The excess of
the purchase price over the valuation of tangible assets was assigned to
goodwill ($1,047,000) and a non-competition agreement ($25,000). The earnout
advance and all future earnout payments will be accounted for as additional
purchase price of North Central.
The consolidated statement of operations for fiscal 1994 included the operating
results of North Central from May 29, 1994. The following unaudited pro forma
results of continuing operations have been prepared assuming the acquisition had
occurred July 1, 1993. This pro forma information is for comparative purposes
only and does not purport to be indicative of results that would have occurred
if the acquisition had been made at the beginning of fiscal year 1994, and is
not intended to be a projection of results which may occur in the future.
<TABLE>
<CAPTION>
Year ended June 30,
1994
-------------------
<S> <C>
Net Sales............................ $ 9,639,076
Income from Continuing Operations.... $ 146,651
Income from Continuing Operations
Per Common Share................... $.05
</TABLE>
In July 1992, the Company acquired substantially all of the operating assets and
property of MED-PRO, Inc. ("MED-PRO"), a leading provider of supplemental
staffing to healthcare facilities with offices in Phoenix, San Diego and San
Francisco. The acquisition was accounted for as a purchase and, accordingly, the
results of operations of the acquired business were included in the Company's
fiscal 1993 operating results from July 21, 1992. The purchase price consisted
of cash of $872,000 and 170,000 restricted shares of AMSERV HEALTHCARE common
stock. The operations of MED-PRO were sold with the sale of the Company's
temporary nursing services business in November 1994 (Note 4).
F-10
<PAGE>
NOTE 7/REDEEMABLE PREFERRED STOCK
In April 1995, the Company issued 426,794 shares of its voting Class A
Redeemable Preferred Stock, which had a redemption value of $2.00 per share, in
exchange for the Company's promissory note payable to North Central (Note 6) and
related accrued interest which totalled $853,588 on the date of the exchange.
The preferred shares pay no dividends and may be redeemed at the option of the
holder, in specified installments for cash. On May 29, 1995, 85,359 shares were
redeemed for $170,718. Subsequently, on July 6, 1995, the remaining 341,435
Class A Redeemable Preferred Shares were exchanged for 260,141 Class B
Redeemable Preferred Shares, with a redemption price of $2.625 per share. These
remaining 260,141 shares with an aggregate redemption value of $682,870 at June
24, 1995, may be redeemed in installments of approximately 65,000 shares on
November 29, 1995, May 29, 1996, November 29, 1996, and May 29, 1997. All
outstanding Class B shares become redeemable in the event of default or change
of control.
Following is a summary of the aggregate redemption amounts of the Class B
shares:
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------
<S> <C>
1996 $ 341,434
1997 $ 341,436
</TABLE>
NOTE 8/COMMON STOCK
Treasury Stock
In March 1992, the Board of Directors authorized the Company to repurchase up to
ten percent of its common stock. During fiscal 1992, the Company purchased
27,800 shares at an average price of $2.26 per share. In fiscal 1993, 85,468
shares were purchased at an average price of $2.11 per share and 30,000 shares
with a value of $52,500 were acquired in a legal settlement. The Board voted to
discontinue the stock repurchase program in January 1993.
1991 Stock Option Plan
In November 1991 the shareholders of the Company approved the "1991 Stock Option
Plan" (the "Plan"), which replaced the 1982 Incentive Stock Option Plan and the
1987 Non-Qualified Stock Option plan. The purpose of the Plan is to promote the
overall financial objectives of the Company and its shareholders by motivating
those persons selected to participate in the Plan to achieve long-term growth in
shareholder equity in the Company and by retaining the association of those
individuals who are instrumental in achieving this growth. Options granted under
the Plan may be either Incentive Stock Options or Non-Qualified Stock Options.
The price per share is determined by the Stock Option Committee of the Board of
Directors at the time of the grant. The options are exercisable for a period of
ten years from the date of grant, subject to earlier termination as set forth in
the Plan. Options are exercisable according to vesting schedules as determined
by the Stock Option Committee. As of June 24, 1995, there were 1,201,677 shares
of common stock reserved for options.
F-11
<PAGE>
Following is a summary of option activity for fiscal years 1995, 1994 and 1993:
<TABLE>
<CAPTION>
Options Options Available
Exercisable Granted for Grant
----------- ------- ---------
<S> <C> <C> <C>
Outstanding, June 30, 1992
($1.81 to $6.38 per share).......... 501,993 596,922 812,317
Granted............................. - 135,800 (135,800)
Became exercisable.................. 53,169 - -
Canceled or expired................. (51,789) (84,229) 84,229
--------- --------- --------
Outstanding, June 30, 1993
($1.44 to $6.38 per share).......... 503,373 648,493 760,746
Granted............................. - 54,800 (54,800)
Became exercisable.................. 43,812 - -
Canceled or expired................. (7,250) (39,700) 39,700
--------- --------- --------
Outstanding, June 30, 1994
($1.00 to $6.38 per share).......... 539,935 663,593 745,646
Granted............................. - 15,200 (15,200)
Became exercisable.................. 52,763 - -
Options exercised................... (207,562) (207,562) -
Canceled or expired................. (73,374) (112,750) 112,750
--------- --------- --------
Outstanding, June 24, 1995
($1.00 to $6.38 per share).......... 311,762 358,481 843,196
========= ========= ========
</TABLE>
NOTE 9/INCOME TAXES
Effective July 1, 1993, the Company adopted SFAS 109 on a prospective basis. The
impact of adopting SFAS 109 was not material to the consolidated financial
statements.
Components of the provision (benefit) for income taxes from continuing
operations are as follows:
<TABLE>
<CAPTION>
June 24, 1995 June 30, 1994 June 30, 1993
------------- ------------- -------------
<S> <C> <C> <C>
Current:
Federal $ (53,219) $ (25,168) $ (59,207)
State 50,022 - -
----------- ----------- -----------
(3,197) (25,168) (59,207)
Deferred:
Federal 5,235 - -
State - - -
---------- ---------- -----------
5,235 - -
---------- ---------- -----------
Total Provision $ 2,038 $ (25,168) $ (59,207)
========== ========== ===========
</TABLE>
F-12
<PAGE>
Significant components of the Company's deferred tax assets and liabilities are
as follows:
<TABLE>
<CAPTION>
June 24, 1995 June 30, 1994
------------- -------------
<S> <C> <C>
Deferred tax assets:
Reserve for discontinued operations $ 157,249 $ 278,490
Bad debt reserve 41,448 95,403
Accrued expenses 102,190 176,983
Securities valuation 8,976 16,260
Tax credits 92,696 92,696
Net operating loss carryforward 9,060 13,288
State taxes 1,088 1,088
---------- ----------
Total deferred tax assets 412,707 674,208
---------- ----------
Deferred tax liabilities:
Depreciation and amortization (38,069) (146,555)
Prepaid expenses (38,874) (98,643)
----------- -----------
Total deferred tax liabilities (76,943) (245,198)
----------- -----------
Valuation allowance (335,764) (346,665)
----------- -----------
Net deferred tax asset $ - $ 82,345
=========== ===========
</TABLE>
The net deferred tax assets and liabilities at June 30, 1994, are reflected in
part in the "Net liabilities of discontinued operations" on the balance sheet at
June 30, 1994. In 1995, the valuation allowance was adjusted to fully reserve
for the net deferred tax assets as realization is not assured.
The Company has a California net operating loss carryforward of approximately
$135,000 which will begin to expire in 1997. In addition, the Company has
investment tax credits of $48,401 which will begin expiring in 1999. The Company
also has $44,295 of alternative minimum tax credits which may be carried forward
indefinitely. No benefits for the credit carryforwards has been recognized in
the financial statements.
A reconciliation between the amount computed by multiplying income from
continuing operations by the statutory federal rate and the amount of reported
income taxes is as follows:
<TABLE>
<CAPTION>
June 24, 1995 June 30, 1994 June 30, 1993
------------- ------------- -------------
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Taxes based on statutory rate of 35% $ 19,035 35.0 $ (30,975) 35.0 $ (44,403) 34.0
State taxes, net of federal benefit 33,015 60.7 - - - -
Surtax benefit (10,877) (20.0) 885 (1.0) - -
Items without tax benefit 38,552 70.9 - - - -
Valuation allowance (77,687) (142.8) 4,922 (5.5) (14,804) 11.3
----------- ------- ---------- ----- ----------- ----
Tax Provision $ 2,038 3.8 $ (25,168) 28.5 $ (59,207) 45.3
=========== === =========== ==== =========== ====
</TABLE>
F-13
<PAGE>
NOTE 10/LEASE COMMITMENTS
The Company leases seven office facilities for its continuing operations under
operating leases which expire on various dates through October 1999. The leases
generally provide that the Company pay the taxes, insurance, and maintenance
expenses related to the leased property and include early termination clauses
which allow cancellation with penalties. The following is a schedule by fiscal
year of future minimum rental payments for these leases as of June 24, 1995:
<TABLE>
<S> <C>
1996....................................... $ 202,068
1997....................................... 169,479
1998....................................... 125,344
1999....................................... 97,365
2000....................................... 6,872
----------
$ 601,128
==========
</TABLE>
Rental expense for continuing operations for fiscal 1995, 1994 and 1993 under
all operating leases amounted to $187,106, $141,037 and $132,657, respectively.
NOTE 11/CONTINGENCY
In connection with the sale of AMSERV MEDICAL PRODUCTS in 1992, the Company has
guaranteed certain lease payments will be made by the purchasers. The amount of
future lease payments guaranteed by the Company totalled $405,093 at June 24,
1995 and are payable through September 1998.
NOTE 12/ NOTE RECEIVABLE FROM OFFICER
On April 20, 1995, the Company accepted a non-recourse promissory note from the
Company's Chief Executive Officer, Eugene J. Mora, in the original principal
amount of $198,440, bearing interest at a rate of 10% per annum and maturing in
April 2000, and $1,100 in cash for the exercise of options for 110,000 shares of
the Company's common stock. The promissory note is secured by 177,562 shares of
the Company's common stock owned by Mr. Mora.
NOTE 13/RELATED PARTY TRANSACTIONS
A director of the Company, Melvin L. Katten, is a partner in a law firm which
provided certain legal services to the Company. The Company incurred legal fees
with such firm of $114,208, $39,272 and $20,996 for fiscal years 1995, 1994 and
1993, respectively.
NOTE 14/FOURTH QUARTER ADJUSTMENT
The fiscal 1995 results of operations include an adjustment in the fourth
quarter totalling approximately $138,000 that resulted from an increase in the
income tax provision related to the Company's previously reported discontinued
operation which should have been recorded in the second quarter of fiscal 1995.
F-14
<PAGE>
Schedule II
AMSERV HEALTHCARE INC.
Consolidated Valuation and Qualifying Accounts
For The Years Ended June 24, 1995, and June 30, 1994, and 1993
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
Balance At Charged To Balance At
Beginning Costs and End
Description Of Year Expenses Deductions Of Year
----------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
1995
- ----
Allowance for Doubtful
Accounts...................... $ 237,687 $ (25,000) \2\ $ 109,423 \1\ $ 103,264
1994
- ----
Allowance for Doubtful
Accounts...................... $ 261,337 $ - $ 23,650 \1\ $ 237,687
1993
- ----
Allowance for Doubtful
Accounts................... $ 229,782 $ 140,000 $ 108,445 \1\ $ 261,337
</TABLE>
1 Uncollectible receivables written off, net of recoveries
2 Reduction of reserve balance
F-15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
<S> <C> <C>
2.1 Asset Purchase Agreement dated March 22, 1991, by and
between Always Care of New Jersey, Inc., and AMSERV
NURSES OF NEW JERSEY, INC. incorporated herein by
reference from the Company's Form 8-K dated March 22,
1991. -
2.2 Asset Purchase Agreement dated March 31, 1992, by and
between MERX, Inc., AMSERV, Inc.,and AMSERV
MEDICAL PRODUCTS, INC. incorporated herein by
reference from the Company's Form 8-K dated March 31,
1992. -
2.3 Asset Purchase Agreement dated July 21, 1992, by and
between John Parker and AMSERV NURSES OF
WASHINGTON, INC. incorporated herein by reference from
the Company's Form 8-K dated July 21, 1992. -
2.4 Asset Purchase Agreement dated June 10, 1994, by and
between North Central Personnel, Inc. and AMSERV
HEALTHCARE OF OHIO INC. incorporated herein by
reference from the Company's Form 8-K dated June 10, 1994. -
2.5 Amendment No. 2 to Asset Purchase Agreement dated April 7,
1995, by and between North Central Personnel, Inc., Diane
Gurik and AMSERV HEALTHCARE OF OHIO
INC. incorporated herein by reference from the Company's
Form 10-Q dated May 10, 1995. -
3.1 Certificate of Incorporation of the Company, as amended. E-5
3.2 By-laws of the Company, as amended. E-12
4.1 Form of Common Stock Certificate incorporated herein by
reference from the Company's Registration Statement on Form
10, Exhibit 3, filed October 3, 1977. -
4.2 Certificate of Designation of Class A Preferred Stock, -
incorporated herein by reference from the Company's Form
10-Q dated May 10, 1995. -
4.3 Certificate of Designation of Class B Preferred Stock,
incorporated herein by reference from the Company's Form
8-K dated July 6, 1995. -
4.4 Exchange Agreement dated July 6, 1995, between the
Company and North Central Personnel, Inc. incorporated
herein by reference from the Company's Form 8-K dated July
6, 1995. -
</TABLE>
E-1
<PAGE>
<TABLE>
<S> <C> <C>
10.1 Company's 1982 Stock Option Plan incorporated herein by
reference from the Company's Registration Statement on Form
S-8 dated August 12, 1988. -
10.2 Employment Agreement dated February 27, 1987, and
amended August 8, 1989, by and between AMSERV
HEALTHCARE INC. and Eugene J. Mora, President. E-23
10.3 Non-Competition Agreement dated March 22, 1991, by and
between Kenneth Freeman and AMSERV NURSES OF NEW
JERSEY, INC. incorporated herein by reference from the
Company's Form 8-K dated March 22, 1991. -
10.4 Consulting Agreement dated August 23, 1990, and amended
August 15, 1991, by and between AMSERV HEALTHCARE
INC. and Eugene J. Mora, President. E-33
10.5 Non-Competition Agreement dated March 31, 1992, by and
between MERX, Inc., AMSERV, Inc. and AMSERV
MEDICAL PRODUCTS, INC. incorporated herein by
reference from the Company's Form 8-K dated March 31,
1992. -
10.6 Company's 1991 Stock Option Plan incorporated herein by
reference from the Company's Registration Statement on Form
S-8 dated April 16, 1992, as amended. -
10.7 Non-Competition Agreement dated July 21, 1992, by and
between John Parker and AMSERV NURSES OF
WASHINGTON, INC. incorporated herein by reference from
the Company's Form 8-K dated July 21, 1992. -
10.8 Non-Competition Agreement dated June 10, 1994, by and
between Diane Gurik and AMSERV HEALTHCARE OF
OHIO INC. incorporated herein by reference from the
Company's Form 8-K dated June 10, 1994. -
10.9 Promissory note dated June 10, 1994, by and between North
Central Personnel, Inc. and AMSERV HEALTHCARE OF
OHIO INC. incorporated herein by reference from the
Company's Form 8-K/A dated August 22, 1994. -
10.10 Employment Agreement dated March 21, 1995, by and
between AMSERV HEALTHCARE INC. and Leslie Hodge,
Vice President - Administration and Secretary. E-36
10.11 Employment Agreement dated March 21, 1995, by and
between AMSERV HEALTHCARE INC. and Lori Anderson,
Controller and Treasurer. E-45
10.12 Promissory note dated April 20, 1995, by and between Eugene
J. Mora and AMSERV HEALTHCARE INC. incorporated
herein by reference from Amendment No. 8 to Mr. Mora's
Schedule 13D, dated April 7, 1995. -
</TABLE>
E-2
<PAGE>
<TABLE>
<S> <C> <C>
10.13 Stock Pledge Agreement dated April 20, 1995, by and
between Eugene J. Mora and AMSERV HEALTHCARE
INC., incorporated herein by reference from Amendment No.
8 to Mr. Mora's Schedule 13D dated April 7, 1995. -
10.14 Voting Agreement and Proxy dated April 7, 1995, by and
between North Central Personnel, Inc. and
AMSERV HEALTHCARE INC., incorporated herein by
reference from Amendment No. 8 to Eugene J. Mora's
Schedule 13D dated April 7, 1995. -
10.15 Recission Agreement dated May 12, 1995, by and between
North Central Personnel, Inc. and AMSERV
HEALTHCARE INC., incorporated herein by reference from
Amendment No. 8 to Eugene J. Mora's Schedule 13D dated
April 7, 1995. -
10.16 Stock Purchase Agreement dated April 7, 1995, by and
between AMSERV HEALTHCARE INC. and North Central
Personnel, Inc. incorporated herein by reference from the
Company's Form 10-Q dated May 10, 1995. -
10.17 Standstill Agreement dated May 12, 1995, by and among
Stockbridge Investment Partners, Inc., and AMSERV
HEALTHCARE INC., and each of their affiliates, associates,
groups, directors, officers, representatives or agents,
incorporated herein by reference from Amendment No. 4 to
Stockbridge Investment Partners, Inc.'s Schedule 13D dated
May 15, 1995. -
10.18 Stipulation and Order of Settlement, Release of Claims and
Final Judgment dated May 12, 1995, by and between
Stockbridge Investment Partners, Inc., and AMSERV
HEALTHCARE INC. and its directors. E-54
10.19 Renewed Standstill Agreement dated June 9, 1995, by and
among Stockbridge Investment Partners, Inc., and AMSERV
HEALTHCARE INC., and each of their affiliates, associates,
groups, directors, officers, representatives or agents,
incorporated herein by reference from Amendment No. 5 to
Stockbridge Investment Partners, Inc.'s Schedule 13D dated
June 13, 1995. -
16.1 Letter dated March 27, 1995, from Deloitte & Touche LLP
regarding change in Company's principal accountant,
incorporated herein by reference from the Company's Form
8-K dated March 21, 1995. -
16.2 Letter dated April 25, 1995, from Deloitte & Touche LLP
amending previous letter regarding change in Company's
principal accountant, incorporated herein by reference from
the Company's Form 8-K/A dated April 26, 1995. -
21.1 Subsidiaries of AMSERV HEALTHCARE INC. E-58
</TABLE>
E-3
<PAGE>
<TABLE>
<S> <C> <C>
23.1 Consent of Ernst & Young LLP E-59
23.2 Consent of Deloitte & Touche LLP E-60
24.1 Power of Attorney (included on signature page hereto). -
27.1 Financial Data Schedule E-61
</TABLE>
E-4
<PAGE>
Exhibit 3.1 CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMSERV HEALTHCARE INC.
AMSERV HEALTHCARE INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "Act"), DOES
HEREBY CERTIFY THAT:
1. In accordance with the provisions of Sections 222 and 242 of the Act,
the Directors approved resolutions to amend the Amended and Restated
Certificate of Incorporation of this Corporation and has solicited and
received approval for said resolutions and amendment by a majority of the
Stockholders of this Corporation.
2. Said resolution amends the first paragraph of Article IV of the Amended
and Restated Certificate of Incorporation so that, as amended, said
paragraph reads, in its entirety, as follows:
The Corporation is authorized to issue two classes of shares of stock to
be designated, respectively, "Preferred Stock" and "Common Stock". The
total number of shares which the Corporation shall have authority to
issue is Eighteen Million (18,000,000) and the aggregate par value of
all shares of stock that are to have a par value shall be One Hundred,
Eighty Thousand Dollars ($180,000). The total number of shares of
Preferred Stock shall be Three Million (3,000,000) and the par value of
each share of such class shall be One Cent ($.01). The total number of
shares of Common Stock shall be Fifteen Million (15,000,000) and the par
value of each share of such class shall be One Cent ($.01).
IN WITNESS WHEREOF, AMSERV HEALTHCARE INC. has caused this Certificate of
Amendment to be signed and attested to this 20th day of December, 1993.
AMSERV HEALTHCARE INC.
By: /s/Eugene J. Mora
---------------------------------
Eugene J. Mora, President
Attest:
By: /s/Leslie Hodge
----------------------------
Leslie Hodge, Secretary
E-5
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
AMSERV NURSES, INC.
[Delaware Charter No. 21492-19]
and
AMSERV NURSES OF TUCSON, INC.
[Delaware Charter No. 21975-86]
and
AMSERV NURSES OF WASHINGTON, INC.
[Delaware Charter No. 22230-40]
INTO
AMSERV, INC.
[Delaware Charter No. 20181-12]
(Under (S)253 of the General Corporation
Law of the State of Delaware)
AMSERV, INC., a corporation organized and existing under the laws of
Delaware (the "Corporation"), does hereby certify:
FIRST: That the Corporation was incorporated on the 29th day of September,
1983, pursuant to the General Corporation Law of the State of
Delaware.
SECOND: That the Corporation owns all of the outstanding shares of each
class of AMSERV NURSES, INC. ("NURSES") a corporation incorporated
on 15th day of January, 1988, pursuant to the General Corporation
Law of the State of Delaware.
That the Corporation owns all of the outstanding shares of each class of
AMSERV NURSES OF TUCSON, INC. ("TUCSON"), a corporation incorporated on
the 26th day of May, 1989, pursuant to the General Corporation Law of
the State of Delaware.
That the Corporation owns all of the outstanding shares of each class of
AMSERV NURSES OF WASHINGTON, INC. ("WASHINGTON"), a corporation
incorporated on the 26th day of February, 1990, pursuant to the General
Corporation Law of the State of Delaware.
THIRD: That the Corporation, by the unanimous written consent of its Board
of Directors effective as of the 7th day of May, 1992, determined to
merge into itself NURSES, TUCSON and WASHINGTON pursuant to and in
the manner prescribed by (S)253 of the General Corporation Law of
the State of Delaware on the conditions set forth in such
resolutions:
RESOLVED, that the Corporation merge into itself its wholly-owned
subsidiaries, NURSES, TUCSON and WASHINGTON, and assume all of each said
subsidiaries' liabilities and obligations pursuant to and in the manner
prescribed by (S)253 of the General Corporation Law of the State of
Delaware;
E-6
<PAGE>
FURTHER RESOLVED, that the merger shall be effective as of August 4,
1992;
FURTHER RESOLVED, that Article I to the Restated Certificate of
Incorporation of the Corporation is deleted in its entirety and amended
to read as follows:
"1. The name of the Corporation is "AMSERV HEALTHCARE INC."
FURTHER RESOLVED, that the proper officers of this corporation be, and
they hereby are, directed to make, execute and acknowledge a Certificate
of Ownership and Merger setting forth a copy of the resolutions to merge
NURSES, TUCSON and WASHINGTON into this Corporation and to assume said
subsidiaries' liabilities and obligations, and the date of adoption
thereof, and to cause the same to be filed in the office of the
Secretary of State of the State of Delaware and a certified copy thereof
to be recorded in the office of the Recorder of Deeds of New Castle
County and to do all acts and things whatsoever, whether within or
without the State of Delaware, that may be necessary or proper to effect
said merger.
FOURTH: Anything herein or elsewhere to the contrary notwithstanding, this
merger may be amended or terminated and abandoned by the Board of
Directors of this Corporation at any time prior to the date of
filing the Certificate of Ownership and Merger with the Secretary
of State of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Ownership
and Merger to be signed by Eugene J. Mora, its President, and attested by Leslie
Hodge, its Secretary, this 3rd day of August, 1992.
AMSERV, INC.
By: /s/Eugene J. Mora
------------------------------
Eugene J. Mora
President
ATTEST:
By: /s/Leslie Hodge
-----------------------------
Leslie Hodge, Secretary
E-7
<PAGE>
CERTIFICATE OF CORRECTION OF
THE RESTATED CERTIFICATE OF INCORPORATION
OF Amserv, Inc.
It is hereby certified that:
1. The name of the corporation is Amserv, Inc. (the "Corporation").
2. The Restated Certificate of Incorporation of the Corporation, which was
filed with the Secretary of State of Delaware on October 26, 1987, is hereby
corrected.
3. The Certificate of Incorporation incorrectly set forth the name of the
corporation as Amserv, Inc.
4. The correction to be made to the Certificate of Incorporation is as
follows:
(a) Paragraph First, Article I is hereby corrected to read "The name of
the Corporation is AMSERV, INC."
Signed and attested to on January 15, 1988.
Amserv Inc.
By: /s/Eugene J. Mora
----------------------------
Gene Mora, its President
ATTEST:
/s/Sarah L. Hamilton
- -----------------------------
Sarah Hamilton, its Secretary
E-8
<PAGE>
RESTATED
CERTIFICATE OF INCORPORATION
OF PHONE-A-GRAM SYSTEM, INC.
----------------------------
Phone-A-Gram System, Inc., a Corporation duly incorporated on September 29,
1983, and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
FIRST: That the Board of Directors of said corporation adopted a
resolution proposing and declaring advisable the following amendments to and
restatement of the Amended and Restated Certificate of Incorporation of said
corporation; and
SECOND: That this Restated Certificate of Incorporation was duly adopted
in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware, that the stockholders of the
Corporation having approved this resolution by vote of a majority of the
outstanding shares, either by proxy or in person at the Annual Meeting of the
Shareholders held on October 24th, 1987, and that effective upon the filing of
this Restated Certificate of Incorporation, the Certificate of Incorporation of
the Corporation shall be amended and restated as follows:
ARTICLE I
---------
The name of the corporation is Amserv, Inc.
ARTICLE II
----------
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle,
and the name of the registered agent at that address is The Corporation Trust
Company.
ARTICLE III
-----------
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
----------
(a) The Corporation is authorized to issue two classes of shares of stock
to be designated, respectively, "Preferred Stock" and "Common Stock". The total
number of shares which the corporation shall have authority to issue is Nine
Million (9,000,000) and the aggregate par value of all shares of stock that are
to have a par value shall be Ninety Thousand Dollars ($90,000). The total number
of shares of Preferred Stock shall be Three Million (3,000,000) and the par
value of each share of such class shall be One Cent ($.01). The total number of
shares of Common Stock shall be Six Million (6,000,000) and the par value of
each share of such class shall be One Cent ($.01).
(b) The shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby authorized, by filing a
certificate pursuant to the applicable law of the State of Delaware
(hereinafter, a "Certificate of Designation"), to establish from time
E-9
<PAGE>
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof, including but not
limited to fixing the dividend rights, divided rate, conversion rights, voting
rights, rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, and the liquidation preferences of any wholly
unissued series of shares of Preferred Stock; and to increase or decrease the
number of shares of any series subsequent to the issue of the shares of that
series, but not below the number of shares of such series then outstanding. In
case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
ARTICLE V
---------
In furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized to make, repeal, alter, amend and
rescind any or all of the By-laws of the Corporation.
ARTICLE VI
----------
The number of directors of the Corporation shall be fixed from time to time
by a By-law or amendment thereof duly adopted by the Board of Directors or by
the stockholders.
ARTICLE VII
-----------
Elections of directors at an annual or special meeting of stockholders need
not be by written ballot unless the By-laws of the Corporation shall so provide.
ARTICLE VIII
------------
Meetings of stockholders may be held within or without the State of
Delaware, as the By-laws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-laws of the Corporation.
ARTICLE IX
----------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
thereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
ARTICLE X
---------
No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of a director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, or (iii)
under section 174 of the Delaware General Corporation law, or (iv) for any
transaction from which the director derived an improper personal benefit. If the
Delaware General Corporation law is hereafter amended to authorize, with the
approval of a corporation's stockholders, further reductions in the liability of
the Corporation's directors for breach of
E-10
<PAGE>
fiduciary duty, then a director of the Corporation shall not be liable for any
such breach to the fullest extent permitted by the Delaware General Corporation
Law as so amended. Any repeal or modification of the foregoing provisions of
this Article TEN by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
signed and attested by its duly elected officers this 24th day of October, 1987.
PHONE-A-GRAM SYSTEM, INC.
By /s/Eugene J. Mora
--------------------------
Its President
Attest:
/s/Sarah L. Hamilton
- --------------------------
Secretary
E-11
<PAGE>
Exhibit 3.2 BYLAWS
OF
AMSERV, INC.
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
---------
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
---------
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
---------
shall be held in the City of Reno, State of Nevada, at such place as may be
fixed from time to time by the Board of Directors, or at such other place either
within or without the State of Delaware as shall be designated from time to time
by the Board of Directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year 1988
---------
shall be held on the 4th Saturday of October in each year at 10:00 o'clock A.M.
of said day if not a legal holiday and, if a legal holiday, then on the next
secular day following, at 10:00 o'clock A.M. or at such other date and time as
shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting, at which they shall elect by a plurality vote a Board
of Directors, and transact such other business as may properly be brought before
the meeting.
Section 3. Written notice of the annual meeting stating the place, date,
---------
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten (10) nor more than sixty (60) days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
---------
corporation shall prepare and make, at least ten days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder,
such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
E-12
<PAGE>
Section 5. Special meetings of the stockholders, for any purpose or
---------
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
---------
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
---------
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
---------
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
---------
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation
----------
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
----------
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
E-13
<PAGE>
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
---------
shall not be less than four (4) nor more than nine (9). Thereafter, within the
limits above specified, the number of directors shall be determined by
resolution of the Board of Directors or by the stockholders at the annual
meeting of the stockholders, except as provided in Section 2 of this Article,
and each director elected shall hold office until his or her successor is
elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
---------
increase in the authorized number of directors elected by all of the
stockholders having a right to vote as a single class may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual election and until their successors are duly elected and qualified,
unless sooner removed.
Whenever the holders of any class or classes of stock or series thereof are
entitled to elect one or more directors by the provisions of the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole Board of Directors (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
of the total number of shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by or under
---------
the direction of its Board of Directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these Bylaws directed or required to
be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation may hold meetings,
---------
both regular and special either within or without the State of Delaware.
Section 5. The first meeting of each newly elected Board of Directors
---------
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
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<PAGE>
Section 6. Regular meetings of the Board of Directors may be held without
---------
notice at such time and at such place as shall from time to time be determined
by the Board of Directors.
Section 7. Special meetings of the Board of Directors may be called by the
---------
president on 48 hours notice to each director by mail or 24 hours notice to each
director either personally or by telegram; special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of two directors unless the Board of Directors consists of only one
director, in which case special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of the sole
director.
Section 8. At all meetings of the Board of Directors, a majority of the
---------
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by certificate of incorporation. If a
quorum shall not be present at the meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
---------
of these Bylaws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting if all members of the Board of Directors or committee thereof, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or committee thereof.
Section 10. Unless otherwise restricted by the certificate of incorporation
----------
or these Bylaws, members of the Board of Directors or any committee designated
by the Board of Directors, may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The Board of Directors may, by resolution passed by a majority
----------
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The Board of Directors may
designate one or more directors as alternate members of any committee who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it, but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
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agreement of merger or consolidation, recommending to the stockholders the sale,
lease, or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the Bylaws of the corporation, and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
Section 12. Each committee shall keep regular minutes of this meeting and
----------
report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of incorporation
----------
or these Bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation thereof. Members of
special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of incorporation
----------
or these Bylaws, the director or the entire Board of Directors may be removed,
with or without cause, by the holders of a majority of shares entitled to vote
at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
---------
certificate of incorporation or of these Bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
---------
provisions of the statutes or of the certificate of incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board of
---------
Directors and shall be a president and a secretary. The Board of Directors may
elect from among its members a Chairman of the Board and a Vice Chairman of the
Board. The Board of Directors may also choose one or more vice presidents,
assistant secretaries, treasurers, and assistant
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<PAGE>
treasurers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these Bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting after each annual
---------
meeting of stockholders shall choose a president and a secretary and may choose
a vice president and a treasurer.
Section 3. The Board of Directors may appoint such other officers and
---------
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
Section 4. The salaries of all officers and agents of the corporation
---------
shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office until their
---------
successors are duly elected and qualified. Any officer elected or appointed by
the Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
corporation shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board, if any, shall preside at all
---------
meetings of the Board of Directors and of the stockholders at which he shall be
present and shall have and may exercise such powers as are, from time to time,
assigned by the Board of Directors and as may be provided by law.
Section 7. In the absence of the Chairman of the Board of Directors, the
---------
Vice Chairman, if any, shall preside at all meetings of the Board of Directors
and of the stockholders at which he shall be present. The Vice Chairman shall
have and may exercise such powers as are, from time to time, assigned by the
Board of Directors and as may be provided by law.
THE PRESIDENT AND VICE PRESIDENT
Section 8. The president shall be the chief executive officer of the
---------
corporation, and in the absence of the Chairman and Vice Chairman of the Board
of Directors, shall preside at all meetings of the stockholders and the Board of
Directors. The president shall have general and active management of the
business of the corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect.
Section 9. The president shall execute bonds, mortgages, and other
---------
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation.
Section 10. In the absence of the president or in the event of his
----------
inability or refusal to act, the vice president, if any, (or in the event there
be more than one vice president, the vice presidents in the order designated by
the directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice presidents shall perform such other duties and have such
other powers as the Board of Directors
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<PAGE>
may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 11. The secretary shall attend all meetings of the stockholders
----------
and record all the proceedings of the meetings of the corporation and of the
Board of Directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. The secretary shall give or
cause to be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors and shall perform such other duties as may be
prescribed by the Board of Directors or president, under whose supervision he
shall be. The secretary shall have custody of the corporate seal of the
corporation, and the secretary or an assistant secretary shall have authority to
affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary. The
Board of Directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
Section 12. The assistant secretary, or if there be more than one, the
----------
assistant secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 13. The treasurer shall have the custody of the corporate funds and
----------
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
Section 14. The treasurer shall disburse the funds of the corporation as
----------
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 15. If required by the Board of Directors, the treasurer shall give
----------
the corporation a bond (which shall be renewed every six years) in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of his office and for the restoration
to the corporation, in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 16. The assistant treasurer, or if there shall be more than one,
----------
the assistant treasurers in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
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<PAGE>
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
---------
have a certificate, signed by, or in the name of the corporation by, the
Chairman or Vice Chairman of the Board of Directors, or the president or a vice
president and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
the share holder in the corporation.
Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid
shares, the total amount of the considerations to be paid thereof, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Any or all of the signatures on the certificate may be
---------
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate or
---------
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
---------
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new
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<PAGE>
certificate to the person entitled thereto, cancel the old certificates and
record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
---------
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting: provided, however,
that the Board of Directors may fix a new record for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
---------
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
---------
the provisions of the certificate of incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
---------
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
---------
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
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<PAGE>
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
---------
of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a corporate seal having
---------
inscribed thereon the name of the corporation, the year of its organization and
the words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 6. The Corporation shall indemnify its officers, directors,
---------
employees, and agents to the full extent permitted by the General Corporation
Law of Delaware. Expenses incurred by a director of the corporation in defending
a civil or criminal action, suit or proceeding by reason of the fact that he is
or was a director of the corporation (or was serving at the corporation's
request as a director or officer of another corporation) shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation as authorized by relevant sections of the
General Corporation Law of Delaware.
BOOKS AND RECORDS
Section 7. Any stockholder or any director shall have the right to inspect
---------
the books and records of the corporation to the full extent permitted by, and
subject to the terms and conditions of, the General Corporation Law of Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These Bylaws may be altered, amended or repealed or new Bylaws
---------
may be adopted by the stockholders or by the Board of Directors, when such power
is conferred upon the Board of Directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the Board of Directors or at any
special meeting of the stockholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new Bylaws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal Bylaws is
conferred upon the Board of Directors by the certificate of incorporation, it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal Bylaws.
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<PAGE>
AMENDMENT TO BYLAWS
OF
AMSERV HEALTHCARE INC.
AMENDMENT DATE VIA BOARD RESOLUTION: MARCH 6, 1995
1. In order to ensure (i) an orderly procedure for determining which
stockholders will be able to take part in a written consent action, (ii)
compliance with Rule 14a-13 of the Securities Exchange Act of 1934 and (iii)
that any written consent action be efficiently and effectively undertaken
without disenfranchising any of the stockholders of the Corporation, Article II
is amended to add a Section 12 that shall read as follows:
"Section 12. In order that the corporation may determine the
-----------
stockholders entitled to consent to corporate action in writing
without a meeting, the board of directors may fix a record date,
which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of
directors and which date shall not be more than ten (10) days after
the date upon which the resolution fixing the record date is adopted
by the board of directors. Any stockholder of record seeking to have
the stockholders authorize or take corporate action by written
consent shall, by written notice to the Secretary of the Corporation,
request the board of directors to fix a record date. The board of
directors shall promptly, but in all events within ten (10) days
after the date on which such a request is received, adopt a
resolution fixing the record date. If no record date has been fixed
by the board of directors within ten (10) days after the date on
which such a request is received, the record date shall be the first
date on which a signed written consent setting forth the action to be
taken or proposed to be taken is delivered to the corporation by
delivery to its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of
stockholders meetings are recorded, to the attention of the Secretary
of the corporation. Delivery shall be by hand or by certified or
registered mail, return receipt requested."
2. Other than as amended above, the Bylaws of the Corporation shall
remain in full force and effect.
IN WITNESS WHEREOF, this Amendment to Bylaws has been signed by its duly
elected president this 6th day of March, 1995.
AMSERVE HEALTHCARE INC.
/s/Eugene J. Mora
--------------------------------
Eugene J. Mora, President
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<PAGE>
Exhibit 10.2 EMPLOYMENT AGREEMENT
Agreement made this 27th day of February, 1987, by and between PHONE-A-GRAM
SYSTEMS, INC., a Delaware corporation (hereinafter referred to as the "Company")
and EUGENE J. MORA, of Wheeling, Illinois (hereinafter referred to as the
"Executive").
WHEREAS, the Company desires to employ the Executive and the Executive
desires to work for the Company upon the terms and conditions hereinafter
provided.
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive, and the Executive
----------
hereby accepts employment on the terms and conditions hereafter set forth, both
parties hereto expressly revoking any and all prior employment agreements to
which they may be mutually subject. The Executive represents and warrants to the
Company that he is free to accept employment hereunder and that he has no prior
or other obligations or commitments of any kind to anyone that would in any way
hinder or interfere with his acceptance of, or the full, uninhibited and
faithful performance of such employment. Executive agrees that during the term
hereof he shall devote his best efforts and full business time exclusively to
the business affairs of the Company and shall perform his duties faithfully and
efficiently subject to the direction of the Board of Directors of the Company;
provided, however, that Executive may become a director of other corporations
and engage in such other charitable, civic and similar pursuits to the extent
that such activities do not interfere with his devoting his best efforts to his
duties to the Company hereunder.
2. Duties.
------
a. The Company shall employ Executive as the Chief Executive Officer
of the Company. Executive shall devote his best efforts to the performance
and faithful discharge of his duties, including the performance of any and
all duties consistent with his position, in such a manner as to best promote
the interests and business of the Company.
b. Executive shall be required to devote all of his working time to the
business of the Company, in accordance with the instructions, direction and
control of the Company's Board of Directors. Executive shall not, during the
term of this Agreement, engage in business which is competitive with the
Company or own any equity securities in any business which competes with the
Company, except that Executive may own an equity interest of up to three
percent (3%) in a competing business, if such equity securities are publicly
traded. Executive's duties shall include without limitation, the
establishment and management of the business affairs of the Company, business
development and hiring and training of staff, managing the day to day
business operations, and being accountable for the profit and loss from
operations of the Company.
c. The Company shall use its best efforts to have Executive included
among management's nominees for election to the Company's Board of Directors
during the term hereof and to have the Board of Directors elect Executive as
Chairman of the Board and Chief Executive Officer. If, without cause (as
defined in Section 7 hereof), the Board of Directors of the Company
determines not to elect or reelect Executive as Chief Executive Officer or if
Executive is not elected as a Director of the Company, or the provisions of
the
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<PAGE>
Company's by-laws describing the relative duties and responsibilities of the
Chief Executive Officer or the Chairman of the Board as in effect this date
are changed without Executive's consent, then Executive may elect to treat
such event as a termination of his employment by the Company without cause
with the consequences provided in Section 7 hereof then becoming applicable.
Executive's right to so elect shall be exercised by notice to the Company
within thirty (30) days of the occurrence of the event which give rise
thereto.
d. Executive currently resides in the Chicago metropolitan area and
shall not be required to relocate his residence hereunder without Executive's
prior approval. In the event that Executive shall relocate, then the
provisions of Section 4(d) shall apply.
e. The Company, its principals and the Guarantors hereof hereby agree
to obtain, contribute or commit sufficient funds to enable the Company to
expand and diversify its business during the term hereof.
3. Term. The term of Executive's employment shall commence on March 2,
----
1987, and shall continue for a period of sixty (60) months thereafter.
4. Compensation.
------------
a. As compensation for all services rendered by Executive while
working for the Company hereunder, Executive shall receive an annual base
salary not less than ONE HUNDRED SEVENTY THOUSAND DOLLARS ($170,000.00),
payable in equal installments in accordance with the Company's payroll
periods. Such base salary may be increased thereafter at the discretion of
the Board of Directors of the Company. If such annual base salary is
increased at any time or from time to time during the term hereof, the new
annual base salary shall, without further action by the parties, be deemed
substituted for the salary set forth herein and this Agreement shall be
deemed to be amended accordingly.
b. The Company shall pay Executive an annual bonus of not less than
EIGHTY THOUSAND DOLLARS ($80,000.00) per year during the term hereof, payable
during the first month immediately following the end of each of the Company's
fiscal years during the term hereof. Such bonus shall be determined in
accordance with a bonus arrangement to be agreed upon between the Company and
Executive. The bonus payable to Executive for the initial period beginning on
the effective date hereof through the end of the Company's current fiscal
year shall be prorated effective as of January 1, 1987, through the end of
the Company's current fiscal year.
c. In addition to the Executive's compensation set forth above, the
Company shall also provide to or on behalf of Executive, the following fringe
benefits:
i. an automobile allowance of at least Four Hundred Fifty Dollars
($450.00) per month during the term hereof;
ii. one hundred percent (100%) reimbursement of medical expenses,
including health, hospitalization, dental, eyes, and prescriptions;
iii. long-term disability payments in an amount equal to at least two-
thirds (2/3) of the Executive's compensation set forth
in Sections 4(a) and (b) above; and
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<PAGE>
iv. the Company shall pay to Executive the cost of obtaining term life
insurance on Executive's life in the principal amount of Two Hundred
Sixty-Five Thousand Dollars ($265,000.00) for a five (5) year term.
d. The Company shall pay directly or reimburse Executive for all
moving expenses and costs of relocating his residence at the Company's
request, including:
i. all direct and indirect costs of selling Executive's residence,
including the commission upon sale of his residence (but not including
the commission upon sale of his Lake Forest, Illinois house);
ii. travel, meal and lodging expenses in moving from his old to his
new residence;
iii. travel, meal and lodging expenses in looking for a new
residence; and
iv. temporary housing expenses for up to six (6) months.
The Company shall also pay Executive an amount equal to the additional
federal income tax incurred by Executive as a result of the inclusion in
income by Executive of payments by the Company for Executive's moving
expenses which cannot be deducted by Executive in arriving at federal taxable
income.
e. The Company shall grant Executive the option to purchase two
hundred fifty-thousand (250,000) shares of stock of the Company at a price of
THREE DOLLARS ($3.00) per share, upon the terms and conditions more fully set
forth in the Stock Option Agreement executed simultaneously herewith .
5. Restrictive Covenant. Executive acknowledges that his services are of
--------------------
a special and unusual character with a unique value to the Company, the loss of
which cannot be adequately compensated by damages in an action at law. The
Company acknowledges that the restrictions on Executive's employment set forth
below may restrict Executive from earning a livelihood and, therefore, the
Company shall compensate Executive as set forth in Section 4 for the twelve (12)
month period following termination of employment. In lieu of compensating
Executive as set forth in Section 4 for said twelve (12) month period, the
Company may elect in writing delivered to Executive at any time prior to
termination to waive the provisions of this Section 5. The Executive covenants
and agrees that upon the termination of employment hereunder and for a period of
twelve (12) months thereafter, Executive shall not, in any county in which the
Company conducts its business as of the date of termination of employment,
directly or indirectly, either as an individual or on his own account, or as an
employee, agent, salesman, or member of any person, corporation, firm or
otherwise, provide services, call upon, solicit, enter into, or engage in the
business conducted by the Company on the date of termination of employment.
Executive shall not during the twelve (12) month period provided above, directly
or indirectly, (a) accept any order tendered to him by any account or
prospective account of the Company, or (b) solicit, direct, or take away,
directly or indirectly, any of the customers, business or patronage of the
business of the Company, (c) directly or indirectly induce or attempt to
influence an employee of the Company to terminate his employment herewith, or
(d) own any equity securities in any business which competes with the Company,
except that Executive may own an equity interest of up to three percent (3%) in
a competing business, if such equity securities are publicly traded.
E-25
<PAGE>
6. Vacations. The Executive shall be entitled, to four (4) weeks vacation
---------
time per year, or such greater amount as shall be agreed upon between the
parties, during which time Executive's compensation shall be paid in full.
7. Termination.
-----------
a. If (and only if) Executive is discharged by the Company prior to
termination of the term hereof, other than for cause (which for all purposes
of this Agreement shall be limited solely to action by Executive involving
willful malfeasance or gross negligence, or failure to act involving material
nonfeasance; provided that in the case of such gross negligence or material
nonfeasance it would at the time have a material adverse effect on the
Company), Executive shall receive each of the following from the Company:
i. The compensation provided for in each of the subsections a. through
e. of Section 4 hereof shall be payable to Executive for the balance of
the term hereof as if his employment continued through such date.
ii. Any individual life insurance contract(s) on Executive's life owned
by the Company at the date of termination shall be transferred to
Executive.
b. Executive may elect to treat any of the following events as a
termination of his employment by the Company without cause, with the
consequences provided in Section 7(a) hereof becoming applicable:
i. Without cause (as defined in Section 7(a) hereof, the Board of
Directors of the Company determines not to elect Executive to the offices
of the Chief Executive Officer and Chairman of the Board of Directors of
the Company.
ii. Executive is not elected as a director of the Company.
iii. The provisions of the Company's by-laws describing the relative
duties and responsibilities of the office of Chairman of the Board of
Chief Executive Officer as in effect on this date are changed without
Executive's consent.
iv. The assignment to Executive of any duties inconsistent with his
status as Chairman of the Board of Directors and Chief Executive Officer
of the Company or a substantial adverse alteration in the nature or
status of Executive's responsibilities from those in effect as of the
date hereof.
v. A reduction by the Company in Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to
time.
vi. The failure by the Company without Executive's consent, to pay to
Executive any portion of his current compensation, within seven (7) days
of the date such compensation is due.
viii. The failure by the Company, its principals or the Guarantors
hereof, to obtain, contribute or commit sufficient funds to enable the
Company to expand and diversify its business during the terms hereof.
E-26
<PAGE>
Executive's right to treat any of the foregoing events as a termination of
his employment shall be exercised by notice given to the Company within
thirty (30) days after the occurrence of such event.
8. Assignment. Neither this Agreement nor any of rights, duties or
----------
obligations of either party may be assigned or delegated by either party without
the prior written consent of the other party.
9. Construction. This Agreement shall be governed by, and be construed in
------------
accordance with, the laws of the State of Delaware, and, except as provided in
Section 8, shall be binding upon, and shall inure to the benefit of the heirs,
executors, assigns, transferees, and successors in interest of the parties
hereto .
10. Notices. Any notices required or permitted to be given hereunder shall
-------
be sufficient if in writing and if sent by registered mail to the Executive's
principal residence or to the Company's principal office, as the case may be.
11. Entire Agreement. This instrument contains the entire agreement of the
----------------
parties. It may not be changed orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
12. Guarantee. Payments due to Executive from the Company pursuant to this
---------
Agreement are hereby guaranteed, as hereinafter set forth, jointly and
severally, by RICHARD HANDLESMAN, MELVIN L. KATTEN, and JOHN WIMMER (said
individuals are collectively referred to herein as "Guarantors"), who shall
acknowledge such guarantee by affixing their signatures hereto. The Guarantors'
liability hereunder shall be limited to a maximum payment to Executive of Two
Hundred Fifty Thousand Dollars ($250,000.00) per year or pro rata if a portion
thereof, for the term of this Agreement. In the event that the Guarantors become
liable hereunder, then in such event, Executive's duties shall be expanded to
include the rendering of similar general management services as set forth herein
to the Guarantors. Notwithstanding the fact that the liability of the Guarantors
to Executive is joint and several, the Guarantors agree to allocate their
respective liability hereunder according to the following percentages:
<TABLE>
<CAPTION>
Guarantor Percent of Liability
--------- --------------------
<S> <C>
Richard Handlesman 59%
Melvin L. Katten 25%
John Wimmer 16%
</TABLE>
13. Miscellaneous. Wherever necessary or proper herein the singular imports
-------------
the plural, and the plural the singular, and masculine, feminine and neuter
expressions are interchangeable. Any reference to section numbers in this
Agreement shall be deemed to be of sections in this Agreement. The section
titles used herein are provided for informational purposes only and shall affect
neither the meaning of the terms nor the intent of the parties.
E-27
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
Executive: /s/Eugene J. Mora
--------------------------
Eugene J. Mora
Company: PHONE-A-GRAM SYSTEMS, INC.
By: /s/Melvin L. Katten
---------------------------------
GUARANTORS:
We hereby agree to the provisions of Section 12 hereof:
/s/Richard Handlesman
-------------------------------------
Richard Handlesman
/s/Melvin L. Katten
-------------------------------------
Melvin L. Katten
/s/John Wimmer
-------------------------------------
John Wimmer
E-28
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
This is an Amendment to an Employment Agreement entered into the 27th day of
February, 1987 ("Employment Agreement") by AMSERV, INC., a Delaware corporation
formerly known as PHONE-A-GRAM SYSTEMS, INC. (hereinafter referred to as the
"Company") and EUGENE J. MORA (hereinafter referred to as the "Executive") and
this Amendment is entered into as of August 8, 1989.
The parties hereto agree as follows:
1. Section 3 of the Employment Agreement is amended to read as follows:
"3. Term. The term of Executive's employment commenced on March 2, 1987
----
and shall continue until terminated by either party upon not less than 30
days' written notice."
2. Section 5 of the Employment Agreement is amended to read as follows:
"5. Restrictive Covenant. Executive acknowledges that his services are
--------------------
of a special and unusual character with a unique value to the Company,
the loss of which cannot be adequately compensated by damages in an
action at law. The Company acknowledges that the restrictions on
Executive's employment set forth below may restrict Executive from
earning a livelihood and, therefore, in the event Executive is not
otherwise entitled to compensation following termination of employment
pursuant to Section 7 hereof, the Company shall compensate Executive as
set forth in Section 4 for the 12-month period following termination of
employment. In lieu of compensating Executive as set forth in Section 4
for said 12-month period, the Company may elect, in writing delivered to
Executive at any time prior to termination, to waive the provisions of
this Section 5. The Executive covenants and agrees that, upon termination
of employment hereunder and for a period of 12 months thereafter,
Executive shall not, in any county in which the Company conducts its
business as of the date of termination of employment, directly or
indirectly, either as an individual or on his own account, or as an
employee, agent, salesman, or member of any person, corporation, firm or
otherwise, provide services, call upon, solicit, enter into, or engage in
the business conducted by the Company on the date of termination of
employment. Executive shall not, during the 12-month period provided
above, directly or indirectly, (a) accept any order tendered to him by
any account or prospective account of the Company; (b) solicit, direct or
take away, directly or indirectly, any of the customers, business or
patronage of the business of the Company; (c) directly or indirectly
induce or attempt to influence an employee of the Company to terminate
his employment therewith; or (d) own any equity securities in any
business which competes with the Company, except that Executive may own
an equity interest of up to 3% in a competing business if such equity
securities are publicly traded."
3. Section 7 of the Employment Agreement is amended to read as follows:
E-29
<PAGE>
"7. Termination.
-----------
(a) If (and only if) Executive's employment is terminated by the Company
other than for cause (which, for all purposes of this Agreement, shall be
limited solely to action by Executive involving willful malfeasance or
gross negligence or failure to act involving material nonfeasance,
provided that in the case of such gross negligence or material
nonfeasance, it would at the time have a material adverse effect on the
Company), Executive shall receive each of the following from the Company:
(i) The compensation provided for in each of the subsections a. through
e. of Section 4 hereof shall be payable to Executive for a period of five
years from the date of termination of employment as if his employment
continued for such five-year period.
(ii) Any individual life insurance contract(s) on Executive's life
owned by the Company at the date of termination shall be transferred to
Executive.
(b) Executive may elect to treat any of the following events as a
termination of his employment by the Company without cause, with the
benefits provided in this Section 7 becoming applicable:
(i) Without cause (as defined in Section 7(a) hereof), the Board of
Directors of the Company determines not to elect Executive to the offices
of the Chief Executive Officer and Chairman of the Board of Directors of
the Company.
(ii) Executive is not elected as a director of the Company.
(iii) The provisions of the Company's Bylaws describing the relative
duties and responsibilities of the office of Chairman of the Board or
Chief Executive Officer as in effect on this date are changed without
Executive's consent.
(iv) The assignment to Executive of any duties inconsistent with his
status as Chairman of the Board of Directors and Chief Executive Officer
of the Company or a substantial adverse alteration in the nature or
status of Executive's responsibilities from those in effect as of the
date hereof, including without limitation increasing in a substantial way
the amount of travel required by Executive.
(v) A reduction by the Company in Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to
time.
(vi) The failure by the Company without Executive's consent to pay to
Executive any portion of his current compensation within seven days of
the date such compensation is due.
(vii) The failure by the Company, its principals or the Guarantors
hereof to obtain, contribute or commit sufficient funds to enable the
Company to expand and diversify its business during the term hereof.
(viii) The failure by the Company to continue to provide Executive
with benefits at least as favorable to those enjoyed by Executive under
any of the Company's pension, life insurance, medical, health and
accident, disability, deferred compensation,
E-30
<PAGE>
incentive or bonus, incentive and other stock option, or savings plans in
which Executive was participating as of a date six months prior to the
giving of a notice of termination (including without limitation all
benefits described in Section 4 hereof), the taking of any action by the
Company which would, directly or indirectly, materially reduce any of
such benefits or deprive Executive of any such material fringe benefit,
or the failure by the Company to provide Executive with the number of
paid vacation days to which Executive is entitled; provided, however,
that the Company may amend any such plan or programs as long as such
amendments do not reduce any benefits to which Executive would be
entitled.
(ix) The failure of the Company to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement.
(x) The taking of any action by the Company that would materially
adversely affect the physical conditions in or under which Executive
performs his employment duties.
(xi) Any material breach of this Agreement by the Company.
Executive's right to treat any of the foregoing events as a termination
of his employment shall be exercised by notice given to the Company
within 30 days after the occurrence of such event.
(c) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 7 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in
this Section 7 be reduced by any compensation earned by Executive as the
result of employment by another employer or by retirement benefits after
the date of termination, or otherwise except as specifically provided in
this Section 7.
(d) If, within ten days after any notice of termination is given, the
party receiving such notice of termination notifies the other party that
a dispute exists concerning the termination, the date of termination
shall be the date on which the dispute is finally determined, either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
the time for appeal therefrom having expired and no appeal having been
perfected); provided, that the date of termination shall be extended by a
notice of dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence. Any litigation or other proceeding to resolve such
dispute shall be conducted in the jurisdiction where Executive resides at
the date the notice of termination is given. Notwithstanding the pendency
of any such dispute, the Company shall continue to pay Executive full
compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, base salary) and continue Executive
as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the
dispute was given until the dispute is finally resolved in accordance
with this subsection. The Company shall also pay to Executive all legal
fees and expenses incurred by Executive in connection with any such
dispute. Amounts paid under this subsection are in addition to all other
amounts due under this Agreement and shall not be offset against or
reduce any other amounts under this Agreement.
E-31
<PAGE>
(e) In order to assure the performance by the Company or its successor
of its obligations under this Agreement, the Company may deposit in trust
an amount equal to the maximum payment that will be due the Executive
under the terms hereof. Under a written trust instrument, the Trustee
shall be instructed to pay to the Executive (or the Executive's legal
representative, as the case may be) the amount to which the Executive
shall be entitled under the terms hereof, and the balance, if any, of the
trust not so paid or reserved for payment shall be repaid to the Company.
If the Company deposits funds in trust, payment shall be made by the
Trustee to the Executive in accordance with the provisions of this
Agreement. If and to the extent there are not amounts in trust sufficient
to pay Executive under this Agreement, the Company shall remain liable
for any and all payments due to Executive. In accordance with the terms
of such trust, at all times during the term of this Agreement, Executive
shall have no rights, other than as an unsecured general creditor of the
Company, to any amounts held in trust and all trust assets shall be
general assets of the Company and subject to the claims of creditors of
the Company."
4. Except as provided in this Amendment, the Employment Agreement shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first above written.
Executive: /s/Eugene J. Mora
---------------------------------
Eugene J. Mora
Company: AMSERV, INC.
---------------------------------
BY:/s/Melvin L. Katten
------------------------------
ITS:Director
-----------------------------
E-32
<PAGE>
Exhibit 10.4 CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is entered into the 23rd day of August, 1990, by
and between AMSERV, INC., (the "Company") and EUGENE J. MORA ("Mora").
W I T N E S S E T H:
In consideration of the covenants and agreements herein set forth and of the
mutual benefits accruing to Company and to Mora from the consulting relationship
to be established between the parties by the terms of this Agreement, Company
and Mora agree as follows:
1. Consulting Relationship. As of the first day of the first month
-----------------------
following Mora's termination of employment with the Company, whether voluntary
or involuntary (except in the event of death), Company will retain Mora and Mora
will be retained by Company, as an independent consultant and not as an
employee, on the terms and conditions described herein. The consulting
arrangement shall continue for a period of one year.
2. Consulting Services. During the term of this Agreement Mora will:
-------------------
(a) Perform such duties and execute the policies of Company as
reasonably requested by its Board of Directors; provided, that said duties and
policies will not be inconsistent with the nature of the duties performed by
Mora during his active service with Company as an officer, director and employee
thereof; and provided further that such duties shall not be such as would
interfere with the performance of other full or part-time employment or self
employment by Mora, whether or not Mora is engaged in such employment or self
employment.
(b) Exercise a reasonable degree of skill and care in performing the
services referred to in paragraph (a) above.
3. Compensation. The Company will pay Mora for his services performed
------------
under this Agreement annual compensation of $102,500 for two years, payable in
equal installments not less frequently than monthly.
4. Funding of Payments. In order to assure the performance by Company
-------------------
or its successor of its obligations under this Agreement, the Company may
deposit in trust an amount equal to the maximum payment that will be due Mora
under the terms hereof. Under a written trust instrument, the Trustee shall be
instructed to pay to Mora the amount to which Mora shall be entitled under the
terms hereof, and the balance, if any, of the trust not so paid or reserved for
payment shall be repaid to the Company. If and to the extent there are not
amounts in trust sufficient to pay Mora under this Agreement, the Company shall
remain liable for any and all payments due to Mora. In accordance with the terms
of such trust, at all times during the term of this Agreement Mora shall have no
rights, other than as unsecured general creditors of the Company, to any amounts
held in trust and all trust assets shall be general assets of the Company and
subject to the claims of creditors of the Company.
5. Construction. This agreement represents the complete Agreement
------------
between Company and Mora concerning the subject matter hereof and supersedes all
prior agreements or understandings, written or oral. No attempted modification
or waiver of any of the provisions
E-33
<PAGE>
hereof shall be binding on either party unless in writing and signed by both
Mora and Company.
6. Notices. Any notice required or permitted to be given hereunder shall
-------
be sufficient if in writing and if sent by registered mail to Mora's principal
residence or to the Company's principal office, as the case may be.
7. Assignment. Neither this Agreement nor any of the rights, duties or
----------
obligations of either party may be assigned or delegated by either party without
the prior written consent of the other party.
8. Other Agreements. This Agreement is supplemental and in addition to
----------------
other agreements and arrangements between Company and Mora, including without
limitation an Employment Agreement and various benefit programs, and is not
intended to modify or replace any such agreements, arrangements, or benefits now
existing or hereafter arising.
9. Applicable Law. It is the intention of the parties hereto that all
--------------
questions with respect to the construction and performance of this Agreement and
the rights and liabilities of the parties hereto shall be determined in
accordance with the laws of the State of Delaware.
AMSERV, INC.
By: /s/Melvin L. Katten
--------------------------------------
Its Director
----------------------------
/s/Eugene J. Mora
----------------------------------------
Eugene J. Mora
E-34
<PAGE>
AMENDMENT TO CONSULTING AGREEMENT
This is an Amendment to a Consulting Agreement entered into the 23rd day of
August, 1990, ("Consulting Agreement") by and between AMSERV, INC., a Delaware
corporation known since August 4, 1992, as AMSERV HEALTHCARE INC. (the
"Company") and EUGENE J. MORA ("Mora").
The parties hereto agree as follows:
1. Section 1 of the Consulting Agreement is amended to read as follows:
"1. Consulting Relationship. As of the first day of the first month
-----------------------
following Mora's termination of employment with the Company, whether
voluntary or involuntary (except in the event of death), Company will retain
Mora and Mora will be retained by Company, as an independent consultant and
not as an employee, on the terms and conditions described herein. The
consulting arrangement shall continue for a period of two years."
2. Section 3 of the Consulting Agreement is amended to read as follows:
"3. Compensation. The Company will pay Mora for his services performed
under this Consulting Agreement annual compensation of $129,200 per year for
two years, payable in equal installments not less frequently than monthly."
IN WITNESS WHEREOF, the parties have executed this Amendment as of August
15, 1991.
AMSERV HEALTHCARE INC.
By: /s/George A. Rogers
-------------------------------------
Its Director
----------------------------
/s/Eugene J. Mora
----------------------------------
Eugene J. Mora
E-35
<PAGE>
Exhibit 10.10
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
This EXECUTIVE EMPLOYMENT AGREEMENT (this "AGREEMENT") is made as of March
21, 1995 by and between Leslie Hodge ("EXECUTIVE") and AMSERV HEALTHCARE INC., a
Delaware corporation (the "COMPANY").
PRELIMINARY RECITALS
--------------------
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, as Vice President - Administration and Secretary of
the Company on the terms and conditions set forth in this Agreement.
WHEREAS, the Company is engaged in the business of providing home care
services to individuals and temporary nursing services to healthcare
institutions (the "BUSINESS").
NOW, THEREFORE, in consideration of the mutual covenants in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
are acknowledged, the Company and Executive agree as follows:
1. Employment of Executive. The Company hereby employs Executive as the
-----------------------
Company's Vice President - Administration and Secretary, and Executive hereby
accepts such employment and agrees to act as Vice President - Administration and
Secretary of the Company, all in accordance with the terms and conditions of
this Agreement.
2. Term of Employment. Executive's employment under this Agreement will
------------------
begin on the date of this Agreement and will continue until the fourth (4th)
anniversary of the date of this Agreement (the "EMPLOYMENT PERIOD"); provided
that any rights of the Executive arising as a result of a termination of
Employment during the Employment Period shall survive the termination of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Employment Period is subject to termination at any time pursuant to SECTION 8.
3. Offices and Duties. Subject to SECTION 8, during the Employment
------------------
Period, Executive will perform the normal duties of Vice President -
Administration of the Company and duties of Secretary as described in the
Company's Bylaws and such other duties as the Company's Chief Executive Officer
("CEO") or Board of Directors may prescribe from time to time. Executive agrees
that during the Employment Period, she will devote substantially all of her
business time and attention to fulfill her duties under this Agreement.
4. Compensation
------------
(a) Base Salary. During the Employment Period, the Company
-----------
will pay Executive a base salary (the "BASE SALARY") in accordance with the
Company's normal payroll practices for executive officers. The Base Salary
during the Employment Period will be determined in the sole discretion of
the Company's Board of Directors.
E-36
<PAGE>
(b) Bonuses. Executive will be eligible for, but is not guaranteed
-------
to receive, additional compensation ("BONUS PAYMENTS") as determined from
time to time in the sole discretion of the Company's Board of Directors.
(c) Benefits. Executive will be entitled to participate in group
--------
life and medical insurance plans, profit-sharing and similar plans, and
other "fringe benefits" (collectively, "Benefits"), comparable to those made
available by the Company to its other senior executive employees, in
accordance with the terms of such plans.
(d) Withholding. All compensation payable to Executive under this
-----------
Agreement is stated in gross amount and will be subject to all applicable
withholding taxes, other normal payroll deductions, and any other amounts
required by law to be withheld.
(e) Expenses. The Company, in accordance with its policies and past
--------
practices, will pay or reimburse Executive for all expenses (including
travel and entertainment expenses) reasonably incurred by Executive during
the Employment Period in connection with the performance of Executive's
duties under this Agreement, provided that Executive, if so requested by the
Company's CEO or Board of Directors, must provide to the Company
documentation or evidence of expenses for which Executive seeks
reimbursement.
5. Covenant Not to Compete.
-----------------------
5.1 Executive's Acknowledgment. Executive agrees and acknowledges
--------------------------
that in order to assure the Company that it will retain its value and that of
the Business as a going concern, it is necessary that Executive undertake not to
utilize her special knowledge of the Business and her relationships with
customers and suppliers to compete with the Company. Executive further
acknowledges that:
(a) the Company is currently engaged in the Business;
(b) Executive has occupied a position of trust and confidence with
the Company prior to the date of this Agreement and will continue to acquire
an intimate knowledge of all proprietary and confidential information
concerning the Business;
(c) the agreements and covenants contained in this SECTION 5 are
essential to protect the Company and the goodwill of the Business;
(d) the Company would be irreparably damaged if Executive were to
provide services to any person or entity in violation of the provisions of
this Agreement;
(e) the scope and duration of the Restrictive Covenants are
reasonably designed to protect a protectible interest of the Company and are
not excessive in light of the circumstances; and
(f) Executive has a means to support herself and her dependents other
than by engaging in the Business, and the provisions of this SECTION 5 will
not impair such ability.
E-37
<PAGE>
5.2 Non-Compete. The "RESTRICTED PERIOD" for purposes of this
-----------
Agreement shall be the period of time commencing on the date hereof and ending
on the date one (1) year after termination of Executive's employment for any
reason, provided that, if a Change in Control occurs and, following the
effective date of the Change in Control, the Executive's employment with the
Company is terminated by the Executive for Good Reason or by the Company without
Cause, then the "Restricted Period" shall end on the effective date of the
termination of Executive's employment. Executive hereby agrees that at all times
during the Restricted Period, Executive shall not, directly or indirectly, as
employee, agent, consultant, stockholder, director, co-partner or in any other
individual or representative capacity, own, operate, manage, control, engage in,
invest in or participate in any manner in, act as a consultant or advisor to,
render services for (alone or in association with any person, firm, corporation
or entity), or otherwise assist any person or entity that engages in or owns,
invests in, operates, manages or controls any venture or enterprise that
directly or indirectly engages or proposes to engage in the Business anywhere
within thirty (30) miles of any office of the Company (the "TERRITORY");
provided, however, that nothing contained herein shall be construed to prevent
Executive from investing in the stock of any competing corporation listed on a
national securities exchange or traded in the over-the-counter market, but only
if Executive is not involved in the business of said corporation and if
Executive and her associates (as such term is defined in Regulation 14(A)
promulgated under the Securities Exchange Act of 1934, as in effect on the date
hereof), collectively, do not own more than an aggregate of two percent of the
stock of such corporation.
5.3 Non-Solicitation. Without limiting the generality of the
----------------
provisions of SECTION 5.2 above, Executive hereby agrees that during the
Restricted Period Executive will not, directly or indirectly, solicit, or
participate as employee, agent, consultant, stockholder, director, partner or in
any other individual or representative capacity in any business which solicits,
business from (i) any Person which is or was a customer of the Business during
the Restricted Period, or from any successor in interest to any such Person, for
the purpose of marketing, selling or providing any such Person any services or
products offered by or available from the Company, or encouraging any such
Person to terminate or otherwise alter his, her or its relationship with the
Company, or (ii) any Person who is or was a "PROSPECTIVE CUSTOMER" of the
Business, for the purpose of marketing, selling or providing any such Person any
services offered by or available from the Company or encouraging any such Person
to terminate or otherwise alter his, her or its relationship with the Company.
For purposes of this Agreement, "PROSPECTIVE CUSTOMER" shall mean any Person who
the Company has contacted (orally or in writing) during the one year period
prior to the earlier of (i) the date of determination or (ii) the effective date
of the termination of Executive's employment with the Company, for the purpose
of developing a relationship relating to the Business.
5.4 Interference with Employee Relationships. During the
----------------------------------------
Restricted Period, Executive shall not, directly or indirectly, as employee,
agent, consultant, stockholder, director, co-partner or in any other individual
or representative capacity, without the prior written consent of the Company,
employ or engage, recruit or solicit for employment or engagement, any person
who is or becomes employed or engaged by the Company (during the Employment
Period or the Restricted Period), or otherwise seek to influence or alter any
such person's relationship with the Company.
5.5 Blue-Pencil. If any court of competent jurisdiction shall at
-----------
any time deem the
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<PAGE>
term of this Agreement or any particular Restrictive Covenant too lengthy or the
Territory too extensive, the other provisions of this Section 5 shall
nevertheless stand, and the Restricted Period shall be deemed to be the longest
period permissible by law under the circumstances and the Territory shall be
deemed to comprise the largest territory permissible by law under the
circumstances. The court in each case shall reduce the Restricted Period and/or
the Territory to permissible duration or size.
6. Severance Payments. Following a Change in Control of the Company, if,
------------------
during the thirty-six (36) months following such Change in Control, (i)
Executive is terminated by the Company without Cause or (ii) Executive
terminates employment with the Company (or its successor or assigns) for Good
Reason, the Company shall pay and provide Executive each of the following:
(a) Within five (5) business days after the effective date of any such
termination of employment (the "Effective Date"), the Company (or its
successor or assigns) will pay Executive a lump sum cash payment equal to
three (3) times the average annual compensation that was includible in
Executive's gross income during each of the lesser of (i) the five (5) full
fiscal years immediately prior to the Effective Date and (ii) the number of
years Executive was employed by the Company immediately prior to the
Effective Date.
(b) Executive and her dependents shall continue to be covered for
thirty-six (36) months after the Effective Date by all survivor rights,
insurance and benefit programs of the Company (or its successor or assigns)
in type and amount at least equivalent to that provided to she and her
dependents by the Company immediately prior to the Change of Control;
provided that if participation in any one or more of such arrangements is
not possible under the terms thereof, the Company (or its successor or
assigns) will provide substantially identical benefits outside of the
programs. The cost of this coverage will be paid by the Company (or its
successor or assigns).
(c) If all or any portion of the amounts payable to Executive under
this Agreement, either alone or together with other payments which Executive
has the right to receive from the Company, constitute "excess parachute
payments" (within the meaning of Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"), that are subject to the excise tax imposed
by Section 4999 of the Code (or similar tax and/or assessment), the Company
(or its successor or assigns) shall increase the amounts payable pursuant to
Section 6(a) above to the extent necessary to place Executive in the same
after-tax position as she would have been in had no such excise tax been
imposed on the payments hereunder. The determination of the amount of any
such excise taxes shall initially be made by the independent accounting firm
employed by the Company immediately prior to the Change in Control. If, at a
later date, it is determined that the amount of excise taxes payable by
Executive is greater than the amount initially so determined, then the
Company (or its successor or assigns) shall pay Executive an amount equal to
the sum of (i) such additional excise taxes, (ii) any interest, fines and
penalties resulting from such underpayment, plus (iii) an amount necessary
to reimburse Executive for any income, excise or other taxes payable by
Executive with respect to the amount specified in (i) and (ii) above, and
the reimbursement provided by this (iii).
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<PAGE>
Upon the occurrence of a Change in Control of the Company, if, during the
six (6) months following such Change in Control, Executive terminates employment
with the Company (or its successor or assigns) without Good Reason, then within
five (5) business days after the Effective Date, the Company shall pay to
Executive an amount equal to thirty percent (30%) of the amount described in
Section 6(a) above.
7. Confidential Information. During the term of this Agreement and
------------------------
thereafter, Executive shall keep secret and retain in strictest confidence, and
shall not, without the prior written consent of the Company, furnish, make
available or disclose to any third party or use for the benefit of himself or
any third party, any Confidential Information, except to the extent reasonably
necessary to carry out Executive's duties and responsibilities to the Company.
As used in this SECTION 7, "CONFIDENTIAL INFORMATION" shall mean any information
relating to the Business or affairs of the Company, including but not limited to
information relating to financial statements, business plans, forecasts,
purchasing plans, customer identities, potential customers, employees,
suppliers, equipment, programs, strategies and information, analyses, profit
margins or other proprietary information used by the Company in connection with
the Business of the Company; provided, however, that Confidential Information
shall not include any information which is in the public domain or becomes known
in the industry through no wrongful act on the part of Executive. Executive
acknowledges that the Confidential Information is vital, sensitive, confidential
and proprietary to the Company.
8. Termination
-----------
(a) The Company may terminate the Executive's employment hereunder at
any time, without Cause (as defined in SECTION 9), for any reason, upon not
less than six (6) months notice to the Executive.
(b) The Company may terminate Executive's employment hereunder at any
time for Cause by providing to Executive written notice of termination
stating the grounds for termination for Cause. Upon notice of termination of
employment for Cause, the Employment Period will immediately end and
Executive will not be entitled to receive any further compensation (whether
in the form of Base Salary, Bonus Payments, Benefits or otherwise) other
than accrued but unpaid Base Salary.
(c) Notwithstanding anything to the contrary in this Agreement, the
Employment Period will terminate upon the death or Disability of Executive.
In the case of termination by the Executive for Good Reason or Disability,
termination shall be effective upon the date of service of notice by either
the Executive or the Company. In the case of death, termination shall become
effective immediately upon the death of Executive. Upon termination by the
Company without Cause, termination by the Executive for Good Reason, death
or Disability, Executive will be entitled to receive (i) all accrued but
unpaid Base Salary as of the date of such termination, (ii) a pro rata
portion of the Bonus Payments (if any) for the year in which such
termination occurs, (iii) any other accrued benefits as of the date of such
termination in accordance with the policies and practices of the Company,
including without limitation, any accrued vacation pay and (iv) any amounts
payable pursuant to SECTION 6(a) above, but all other obligations of the
Company to pay Executive any further compensation, whether in the form of
Base Salary, Bonus Payments, Benefits
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<PAGE>
(other than death and Disability benefits, if any) or otherwise, will
terminate.
9. Definitions. As used in this Agreement:
-----------
"AFFILIATE" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated association or other entity (other
than the Company) that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company, including without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.
"CAUSE" means (a) an act of fraud or dishonesty by Executive that results in
gain or personal enrichment of Executive at the Company's expense, (b)
Executive's conviction of a felony-class crime or any act involving moral
turpitude, (c) any material breach by Executive of any provision of this
Agreement that has not been cured by Executive within thirty days of written
notice of such breach from the Company, (d) the Executive's willful engaging in
gross misconduct materially injurious to the Company that has not been cured by
Executive within thirty days of written notice from the Company specifying the
alleged willful gross misconduct and material injury, or (e) any intentional act
or gross negligence that has a material, detrimental effect on the reputation or
Business of the Company. The decision to terminate Executive's employment for
Cause, to take other action or to take no action in response to such occurrence
shall be in the sole and exclusive discretion of the Company.
"CHANGE IN CONTROL" means the happening of any of the following events:
(a) During the term of this Agreement, (i) any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a "Person") acquires beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of greater than 50% of the then
outstanding shares of common stock of the Company or (ii) the stockholders
of the Company approve a reorganization, merger, consolidation, complete
liquidation or dissolution of the Company, the sale or disposition of all or
substantially all of the assets of the Company or similar corporate
transaction, unless such acquisition (as described in clause (i) above) or
such transaction (as described in clause (ii) above) is approved prior
thereto by the Company's Board of Directors in accordance with the Company's
Bylaws.
(b) A change in the composition of the Board such that the individuals
who, as of the date of this Agreement, constitute the Board (such Board
shall be hereinafter referred to as the "INCUMBENT BOARD") cease for any
reason to constitute at least a majority of the Board; provided, however,
for purposes of this SECTION 9(b), that any individual who becomes a member
of the Board subsequent to the date of this Agreement whose election, or
nomination for election by the Company's stockholders, was approved by a
vote of at least a majority of those individuals who are members of the
Board and who were also members of the Incumbent Board (or deemed to be such
pursuant to this provision) shall be considered as though such individual
were a member of the Incumbent Board; but, provided, further, that any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual
or threatened solicitation of
E-41
<PAGE>
proxies or consents by or on behalf of a Person other than the Board shall
not be so considered as a member of the Incumbent Board.
"DISABILITY" will be deemed to have occurred whenever the Executive has
suffered physical or mental illness, injury, or infirmity that prevents
Executive from fulfilling her duties under this Agreement for a period of ninety
(90) consecutive days in the manner ordinarily required of him as an officer of
the Company and precludes him from actively participating in the management of
the Business of the Company.
"GOOD REASON" means the occurrence of any of the following events, unless
(i) such event occurs with the Executive's express prior written consent, (ii)
the event is an isolated, insubstantial or inadvertent action or failure to act
which was not in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive, or (iii) the event occurs in
connection with the termination of the Executive's employment for Cause,
Disability or death:
(a) the assignment to the Executive by the Company of any duties which
are inconsistent with, a diminution of or an adverse change in the
Executive's position, duty, title, office, responsibility or status with the
Company, including without limitation, any diminution of the Executive's
position or responsibility in the decision or management processes of the
Company, reporting relationships, job description, duties, responsibilities,
any removal of the Executive from, any failure to reelect the Executive to,
such position or increasing in a substantial way the amount of travel
required by Executive;
(b) a relocation of the Company's principal executive office to any
place other than the metropolitan area in which it was located immediately
prior to the corresponding "Change in Control" or the assignment of the
Executive by the Company to any office other than the Company's principal
executive office;
(c) a reduction by the Company in the Executive's rate of Base Salary
during the Employment Period;
(d) any failure to either continue in effect any material Benefits or
to substitute and continue other plans, policies, programs or arrangements
providing the Executive with substantially similar benefits, or the taking
of any action which would substantially and adversely affect the Executive's
participation in or materially reduce the Executive's Benefits or
compensation;
(e) any failure by any successor or assignee of the Company to
continue this Agreement in full force and effect or any breach of this
Agreement by the Company (or any successor or assignee of the Company),
unless such breach is cured within thirty (30) days of receiving written
notice of the breach from the Executive;
(f) the failure by the Company without Executive's consent to pay to
Executive any portion of her current compensation within seven days of the
date such compensation is due; or
E-42
<PAGE>
(g) the taking of any action by the Company that would materially
adversely affect the physical conditions in or under which Executive
performs her duties.
"PERSON" means any individual, corporation, trust, proprietorship,
association, governmental body, agency or subdivision or other entity.
10. Remedies. Executive acknowledges and agrees that the covenants set
--------
forth in SECTIONS 5 AND 7 of this Agreement (collectively, the "RESTRICTIVE
COVENANTS") are reasonable and necessary for the protection of the Company's
business interests, that irreparable injury will result to the Company if
Executive breaches any of the terms of the Restrictive Covenants, and that in
the event of Executive's actual or threatened breach of any such Restrictive
Covenants, the Company will have no adequate remedy at law. Executive
accordingly agrees that in the event of any actual or threatened breach by him
of any of the Restrictive Covenants, the Company shall be entitled to immediate
temporary injunctive and other equitable relief, without bond and without the
necessity of showing actual monetary damages, subject to hearing as soon
thereafter as possible. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of any damages which it
is able to prove.
11. Miscellaneous
-------------
(a) Notices. All notices and other communication between the parties
pursuant to this Agreement must be in writing and will be deemed given when
delivered in person, one (1) business day after being dispatched by a
nationally recognized overnight courier service, three (3) business days
after being deposited in the U.S. Mail, registered or certified mail, return
receipt requested, or one (1) business day after being sent by facsimile
(with receipt acknowledged), to the Company at the address of its principal
office in the La Jolla, California metropolitan area and to Executive (or
her representatives) at her address as shown on the Company's records.
Executive (or her representatives) may change her address for notice
purposes by delivering notice to the Company in accordance with this SECTION
11(a). All notices sent to the Company shall also be delivered to Katten
Muchin & Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661-
3693, Attention: Melvin L. Katten, Esq., Facsimile No.: (312-902-1061).
(b) Governing Law. This Agreement will be subject to and governed by
-------------
the laws of the State of Delaware, without regard to principles of conflicts
of laws.
(c) Binding Effect. This Agreement will be binding upon and the
--------------
parties and their respective heirs, legal representatives, executors,
administrators, successors, and assigns, subject to the limitations on
assignment in SECTION 11(h).
(d) Entire Agreement. This Agreement constitutes the entire
----------------
Agreement between the parties with respect to the subject matter of this
Agreement and supersedes any other agreements, whether oral or written,
between the parties with respect to the subject matter of this Agreement.
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<PAGE>
(e) Modification. No change or modification of this Agreement will
------------
be valid unless it is in writing and signed by both of the parties. No
waiver of any provision of this Agreement will be valid unless in writing
and signed by the person or party to be charged.
(f) Severability. If any provision of this Agreement is, for any
------------
reason, invalid or unenforceable, the remaining provisions of this Agreement
will nevertheless be valid and enforceable and will remain in full force and
effect. Any provision of this Agreement that is held invalid or
unenforceable by a court of competent jurisdiction will be deemed modified
to the extent necessary to make it valid and enforceable and as so modified
will remain in full force and effect.
(g) Headings. The headings in this Agreement are inserted for
--------
convenience only and are not to be considered in the interpretation of
construction of the provisions of this Agreement.
(h) Assignability. This Agreement may not be assigned by either
-------------
party without the prior written consent of the other party, except that the
Company may assign its rights to, and cause its obligations under this
Agreement to be assumed by, any person or entity to whom or to which the
Company simultaneously transfers by sale, merger, or otherwise all or
substantially all of its assets.
(i) No Strict Construction. The language used in this Agreement will
----------------------
be deemed to be the language chosen by Executive and the Company to express
their mutual intent, and no rule of strict construction will be applied
against Executive or the Company.
IN WITNESS WHEREOF, the parties have executed this Executive Employment
Agreement as of the date first above written.
AMSERV HEALTHCARE INC.
By: ____________________________________________________
Its: ____________________________________________________
EXECUTIVE:
_________________________________________________________
Leslie Hodge
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<PAGE>
Exhibit 10.11
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
This EXECUTIVE EMPLOYMENT AGREEMENT (this "AGREEMENT") is made as of March
21, 1995 by and between Lori Anderson ("EXECUTIVE") and AMSERV HEALTHCARE INC.,
a Delaware corporation (the "COMPANY").
PRELIMINARY RECITALS
--------------------
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, as Controller and Treasurer of the Company on the
terms and conditions set forth in this Agreement.
WHEREAS, the Company is engaged in the business of providing home care
services to individuals and temporary nursing services to healthcare
institutions (the "BUSINESS").
NOW, THEREFORE, in consideration of the mutual covenants in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
are acknowledged, the Company and Executive agree as follows:
1. Employment of Executive. The Company hereby employs Executive as the
-----------------------
Company's Controller and Treasurer, and Executive hereby accepts such employment
and agrees to act as Controller and Treasurer of the Company, all in accordance
with the terms and conditions of this Agreement.
2. Term of Employment. Executive's employment under this Agreement will
------------------
begin on the date of this Agreement and will continue until the fourth (4th)
anniversary of the date of this Agreement (the "EMPLOYMENT PERIOD"); provided
that any rights of the Executive arising as a result of a termination of
Employment during the Employment Period shall survive the termination of this
Agreement. Notwithstanding anything to the contrary contained herein, the
Employment Period is subject to termination at any time pursuant to SECTION 8.
3. Offices and Duties. Subject to SECTION 8, during the Employment
------------------
Period, Executive will perform the normal duties of Controller of the Company
and duties of the Treasurer as described in the Company's Bylaws and such other
duties as the Company's Chief Executive Officer ("CEO") or Board of Directors
may prescribe from time to time. Executive agrees that during the Employment
Period, she will devote substantially all of her business time and attention to
fulfill her duties under this Agreement.
4. Compensation
------------
(a) Base Salary. During the Employment Period, the Company will
-----------
pay Executive a base salary (the "BASE SALARY") in accordance with the
Company's normal payroll
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<PAGE>
practices for executive officers. The Base Salary during the Employment
Period will be determined in the sole discretion of the Company's Board of
Directors.
(b) Bonuses. Executive will be eligible for, but is not guaranteed to
-------
receive, additional compensation ("BONUS PAYMENTS") as determined from time
to time in the sole discretion of the Company's Board of Directors.
(c) Benefits. Executive will be entitled to participate in group life
--------
and medical insurance plans, profit-sharing and similar plans, and other
"fringe benefits" (collectively, "BENEFITS"), comparable to those made
available by the Company to its other senior executive employees, in
accordance with the terms of such plans.
(d) Withholding. All compensation payable to Executive under this
-----------
Agreement is stated in gross amount and will be subject to all applicable
withholding taxes, other normal payroll deductions, and any other amounts
required by law to be withheld.
(e) Expenses. The Company, in accordance with its policies and past
--------
practices, will pay or reimburse Executive for all expenses (including
travel and entertainment expenses) reasonably incurred by Executive during
the Employment Period in connection with the performance of Executive's
duties under this Agreement, provided that Executive, if so requested by the
Company's CEO or Board of Directors, must provide to the Company
documentation or evidence of expenses for which Executive seeks
reimbursement.
5. Covenant Not to Compete.
-----------------------
5.1 Executive's Acknowledgment. Executive agrees and acknowledges
--------------------------
that in order to assure the Company that it will retain its value and that of
the Business as a going concern, it is necessary that Executive undertake not to
utilize her special knowledge of the Business and her relationships with
customers and suppliers to compete with the Company. Executive further
acknowledges that:
(a) the Company is currently engaged in the Business;
(b) Executive has occupied a position of trust and confidence with the
Company prior to the date of this Agreement and will continue to acquire an
intimate knowledge of all proprietary and confidential information
concerning the Business;
(c) the agreements and covenants contained in this SECTION 5 are
essential to protect the Company and the goodwill of the Business;
(d) the Company would be irreparably damaged if Executive were to
provide services to any person or entity in violation of the provisions of
this Agreement;
(e) the scope and duration of the Restrictive Covenants are reasonably
designed to protect a protectible interest of the Company and are not
excessive in light of the circumstances; and
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<PAGE>
(f) Executive has a means to support herself and her dependents other
than by engaging in the Business, and the provisions of this SECTION 5 will
not impair such ability.
5.2 Non-Compete. The "RESTRICTED PERIOD" for purposes of this
-----------
Agreement shall be the period of time commencing on the date hereof and ending
on the date one (1) year after termination of Executive's employment for any
reason, provided that, if a Change in Control occurs and, following the
effective date of the Change in Control, the Executive's employment with the
Company is terminated by the Executive for Good Reason or by the Company without
Cause, then the "Restricted Period" shall end on the effective date of the
termination of Executive's employment. Executive hereby agrees that at all times
during the Restricted Period, Executive shall not, directly or indirectly, as
employee, agent, consultant, stockholder, director, co-partner or in any other
individual or representative capacity, own, operate, manage, control, engage in,
invest in or participate in any manner in, act as a consultant or advisor to,
render services for (alone or in association with any person, firm, corporation
or entity), or otherwise assist any person or entity that engages in or owns,
invests in, operates, manages or controls any venture or enterprise that
directly or indirectly engages or proposes to engage in the Business anywhere
within thirty (30) miles of any office of the Company (the "TERRITORY");
provided, however, that nothing contained herein shall be construed to prevent
Executive from investing in the stock of any competing corporation listed on a
national securities exchange or traded in the over-the-counter market, but only
if Executive is not involved in the business of said corporation and if
Executive and her associates (as such term is defined in Regulation 14(A)
promulgated under the Securities Exchange Act of 1934, as in effect on the date
hereof), collectively, do not own more than an aggregate of two percent of the
stock of such corporation.
5.3 Non-Solicitation. Without limiting the generality of the
----------------
provisions of SECTION 5.2 above, Executive hereby agrees that during the
Restricted Period Executive will not, directly or indirectly, solicit, or
participate as employee, agent, consultant, stockholder, director, partner or in
any other individual or representative capacity in any business which solicits,
business from (i) any Person which is or was a customer of the Business during
the Restricted Period, or from any successor in interest to any such Person, for
the purpose of marketing, selling or providing any such Person any services or
products offered by or available from the Company, or encouraging any such
Person to terminate or otherwise alter his, her or its relationship with the
Company, or (ii) any Person who is or was a "PROSPECTIVE CUSTOMER" of the
Business, for the purpose of marketing, selling or providing any such Person any
services offered by or available from the Company or encouraging any such Person
to terminate or otherwise alter his, her or its relationship with the Company.
For purposes of this Agreement, "PROSPECTIVE CUSTOMER" shall mean any Person who
the Company has contacted (orally or in writing) during the one year period
prior to the earlier of (i) the date of determination or (ii) the effective date
of the termination of Executive's employment with the Company, for the purpose
of developing a relationship relating to the Business.
5.4 Interference with Employee Relationships. During the Restricted
----------------------------------------
Period, Executive shall not, directly or indirectly, as employee, agent,
consultant, stockholder, director, co-partner or in any other individual or
representative capacity, without the prior written consent of the Company,
employ or engage, recruit or solicit for employment or engagement, any person
who is or becomes employed or engaged by the Company (during the Employment
Period or the Restricted Period), or otherwise seek to influence or alter any
such person's relationship with
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<PAGE>
the Company.
5.5 Blue-Pencil. If any court of competent jurisdiction shall at
-----------
any time deem the term of this Agreement or any particular Restrictive Covenant
too lengthy or the Territory too extensive, the other provisions of this SECTION
5 shall nevertheless stand, and the Restricted Period shall be deemed to be the
longest period permissible by law under the circumstances and the Territory
shall be deemed to comprise the largest territory permissible by law under the
circumstances. The court in each case shall reduce the Restricted Period and/or
the Territory to permissible duration or size.
6. Severance Payments. Following a Change in Control of the Company, if,
------------------
during the thirty-six (36) months following such Change in Control, (i)
Executive is terminated by the Company without Cause or (ii) Executive
terminates employment with the Company (or its successor or assigns) for Good
Reason, the Company shall pay and provide Executive each of the following:
(a) Within five (5) business days after the effective date of any
such termination of employment (the "Effective Date"), the Company (or its
successor or assigns) will pay Executive a lump sum cash payment equal to
one (1) times the average annual compensation that was includible in
Executive's gross income during each of the lesser of (i) the five (5) full
fiscal years immediately prior to the Effective Date and (ii) the number of
years Executive was employed by the Company immediately prior to the
Effective Date.
(b) Executive and her dependents shall continue to be covered for
twelve (12) months after the Effective Date by all survivor rights,
insurance and benefit programs of the Company (or its successor or assigns)
in type and amount at least equivalent to that provided to she and her
dependents by the Company immediately prior to the Change of Control;
provided that if participation in any one or more of such arrangements is
not possible under the terms thereof, the Company (or its successor or
assigns) will provide substantially identical benefits outside of the
programs. The cost of this coverage will be paid by the Company (or its
successor or assigns).
(c) If all or any portion of the amounts payable to Executive under
this Agreement, either alone or together with other payments which Executive
has the right to receive from the Company, constitute "excess parachute
payments" (within the meaning of Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"), that are subject to the excise tax imposed
by Section 4999 of the Code (or similar tax and/or assessment), the Company
(or its successor or assigns) shall increase the amounts payable pursuant to
Section 6(a) above to the extent necessary to place Executive in the same
after-tax position as she would have been in had no such excise tax been
imposed on the payments hereunder. The determination of the amount of any
such excise taxes shall initially be made by the independent accounting firm
employed by the Company immediately prior to the Change in Control. If, at a
later date, it is determined that the amount of excise taxes payable by
Executive is greater than the amount initially so determined, then the
Company (or its successor or assigns) shall pay Executive an amount equal to
the sum of (i) such additional excise taxes, (ii) any interest, fines and
penalties resulting from such underpayment, plus (iii) an amount necessary
to reimburse Executive for any income, excise or other taxes
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<PAGE>
payable by Executive with respect to the amount specified in (i) and (ii)
above, and the reimbursement provided by this (iii).
Upon the occurrence of a Change in Control of the Company, if, during the
six (6) months following such Change in Control, Executive terminates employment
with the Company (or its successor or assigns) without Good Reason, then within
five (5) business days after the Effective Date, the Company shall pay to
Executive an amount equal to thirty percent (30%) of the amount described in
Section 6(a) above.
7. Confidential Information. During the term of this Agreement and
------------------------
thereafter, Executive shall keep secret and retain in strictest confidence, and
shall not, without the prior written consent of the Company, furnish, make
available or disclose to any third party or use for the benefit of himself or
any third party, any Confidential Information, except to the extent reasonably
necessary to carry out Executive's duties and responsibilities to the Company.
As used in this SECTION 7, "CONFIDENTIAL INFORMATION" shall mean any information
relating to the Business or affairs of the Company, including but not limited to
information relating to financial statements, business plans, forecasts,
purchasing plans, customer identities, potential customers, employees,
suppliers, equipment, programs, strategies and information, analyses, profit
margins or other proprietary information used by the Company in connection with
the Business of the Company; provided, however, that Confidential Information
shall not include any information which is in the public domain or becomes known
in the industry through no wrongful act on the part of Executive. Executive
acknowledges that the Confidential Information is vital, sensitive, confidential
and proprietary to the Company.
8. Termination
-----------
(a) The Company may terminate the Executive's employment hereunder at
any time, without Cause (as defined in SECTION 9), for any reason, upon not
less than sixty (60) days notice to the Executive.
(b) The Company may terminate Executive's employment hereunder at any
time for Cause by providing to Executive written notice of termination
stating the grounds for termination for Cause. Upon notice of termination of
employment for Cause, the Employment Period will immediately end and
Executive will not be entitled to receive any further compensation (whether
in the form of Base Salary, Bonus Payments, Benefits or otherwise) other
than accrued but unpaid Base Salary.
(c) Notwithstanding anything to the contrary in this Agreement, the
Employment Period will terminate upon the death or Disability of Executive.
In the case of termination by the Executive for Good Reason or Disability,
termination shall be effective upon the date of service of notice by either
the Executive or the Company. In the case of death, termination shall become
effective immediately upon the death of Executive. Upon termination by the
Company without Cause, termination by the Executive for Good Reason, death
or Disability, Executive will be entitled to receive (i) all accrued but
unpaid Base Salary as of the date of such termination, (ii) a pro rata
portion of the Bonus Payments (if any) for the year in which such
termination occurs, (iii) any other accrued benefits as of the date of such
termination in accordance with the policies and practices of the Company,
E-49
<PAGE>
including without limitation, any accrued vacation pay and (iv) any amounts
payable pursuant to SECTION 6(a) above, but all other obligations of the
Company to pay Executive any further compensation, whether in the form of
Base Salary, Bonus Payments, Benefits (other than death and Disability
benefits, if any) or otherwise, will terminate.
9. Definitions. As used in this Agreement:
-----------
"AFFILIATE" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated association or other entity (other
than the Company) that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company, including without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.
"CAUSE" means (a) an act of fraud or dishonesty by Executive that results in
gain or personal enrichment of Executive at the Company's expense, (b)
Executive's conviction of a felony-class crime or any act involving moral
turpitude, (c) any material breach by Executive of any provision of this
Agreement that has not been cured by Executive within thirty days of written
notice of such breach from the Company, (d) the Executive's willful engaging in
gross misconduct materially injurious to the Company that has not been cured by
Executive within thirty days of written notice from the Company specifying the
alleged willful gross misconduct and material injury, or (e) any intentional act
or gross negligence that has a material, detrimental effect on the reputation or
Business of the Company. The decision to terminate Executive's employment for
Cause, to take other action or to take no action in response to such occurrence
shall be in the sole and exclusive discretion of the Company.
"CHANGE IN CONTROL" means the happening of any of the following events:
(a) During the term of this Agreement, (i) any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a "Person") acquires beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of greater than 50% of the then
outstanding shares of common stock of the Company or (ii) the stockholders
of the Company approve a reorganization, merger, consolidation, complete
liquidation or dissolution of the Company, the sale or disposition of all or
substantially all of the assets of the Company or similar corporate
transaction, unless such acquisition (as described in clause (i) above) or
such transaction (as described in clause (ii) above) is approved prior
thereto by the Company's Board of Directors in accordance with the Company's
Bylaws.
(b) A change in the composition of the Board such that the individuals
who, as of the date of this Agreement, constitute the Board (such Board
shall be hereinafter referred to as the "INCUMBENT BOARD") cease for any
reason to constitute at least a majority of the Board; provided, however,
for purposes of this SECTION 9(b), that any individual who becomes a member
of the Board subsequent to the date of this Agreement whose election, or
nomination for election by the Company's stockholders, was approved by a
vote of at least a majority of those individuals who are members of the
Board and who were also members of the Incumbent Board (or deemed to be such
pursuant to this provision) shall be considered as though such individual
were a member of the Incumbent Board; but, provided, further,
E-50
<PAGE>
that any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so considered as a
member of the Incumbent Board.
"DISABILITY" will be deemed to have occurred whenever the Executive has
suffered physical or mental illness, injury, or infirmity that prevents
Executive from fulfilling her duties under this Agreement for a period of ninety
(90) consecutive days in the manner ordinarily required of him as an officer of
the Company and precludes him from actively participating in the management of
the Business of the Company.
"GOOD REASON" means the occurrence of any of the following events, unless
(i) such event occurs with the Executive's express prior written consent, (ii)
the event is an isolated, insubstantial or inadvertent action or failure to act
which was not in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive, or (iii) the event occurs in
connection with the termination of the Executive's employment for Cause,
Disability or death:
(a) the assignment to the Executive by the Company of any duties which
are inconsistent with, a diminution of or an adverse change in the
Executive's position, duty, title, office, responsibility or status with the
Company, including without limitation, any diminution of the Executive's
position or responsibility in the decision or management processes of the
Company, reporting relationships, job description, duties, responsibilities,
any removal of the Executive from, any failure to reelect the Executive to,
such position or increasing in a substantial way the amount of travel
required by Executive;
(b) a relocation of the Company's principal executive office to any
place other than the metropolitan area in which it was located immediately
prior to the corresponding "Change in Control" or the assignment of the
Executive by the Company to any office other than the Company's principal
executive office;
(c) a reduction by the Company in the Executive's rate of Base Salary
during the Employment Period;
(d) any failure to either continue in effect any material Benefits or
to substitute and continue other plans, policies, programs or arrangements
providing the Executive with substantially similar benefits, or the taking
of any action which would substantially and adversely affect the Executive's
participation in or materially reduce the Executive's Benefits or
compensation;
(e) any failure by any successor or assignee of the Company to continue
this Agreement in full force and effect or any breach of this Agreement by
the Company (or any successor or assignee of the Company), unless such
breach is cured within thirty (30) days of receiving written notice of the
breach from the Executive;
(f) the failure by the Company without Executive's consent to pay to
Executive any
E-51
<PAGE>
portion of her current compensation within seven days of the date such
compensation is due; or
(g) the taking of any action by the Company that would materially
adversely affect the physical conditions in or under which Executive
performs her duties.
"PERSON" means any individual, corporation, trust, proprietorship,
association, governmental body, agency or subdivision or other entity.
10. Remedies. Executive acknowledges and agrees that the covenants set
--------
forth in SECTIONS 5 AND 7 of this Agreement (collectively, the "RESTRICTIVE
COVENANTS") are reasonable and necessary for the protection of the Company's
business interests, that irreparable injury will result to the Company if
Executive breaches any of the terms of the Restrictive Covenants, and that in
the event of Executive's actual or threatened breach of any such Restrictive
Covenants, the Company will have no adequate remedy at law. Executive
accordingly agrees that in the event of any actual or threatened breach by him
of any of the Restrictive Covenants, the Company shall be entitled to immediate
temporary injunctive and other equitable relief, without bond and without the
necessity of showing actual monetary damages, subject to hearing as soon
thereafter as possible. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of any damages which it
is able to prove.
11. Miscellaneous
-------------
(a) Notices. All notices and other communication between the parties
-------
pursuant to this Agreement must be in writing and will be deemed given when
delivered in person, one (1) business day after being dispatched by a
nationally recognized overnight courier service, three (3) business days
after being deposited in the U.S. Mail, registered or certified mail, return
receipt requested, or one (1) business day after being sent by facsimile
(with receipt acknowledged), to the Company at the address of its principal
office in the La Jolla, California metropolitan area and to Executive (or
her representatives) at her address as shown on the Company's records.
Executive (or her representatives) may change her address for notice
purposes by delivering notice to the Company in accordance with this SECTION
11(a). All notices sent to the Company shall also be delivered to Katten
Muchin & Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661-
3693, Attention: Melvin L. Katten, Esq., Facsimile No.: (312-902-1061).
(b) Governing Law. This Agreement will be subject to and governed by
-------------
the laws of the State of Delaware, without regard to principles of conflicts
of laws.
(c) Binding Effect. This Agreement will be binding upon and inure
--------------
to the benefit of the parties and their respective heirs, legal
representatives, executors, administrators, successors, and assigns, subject
to the limitations on assignment in SECTION 11(h).
E-52
<PAGE>
(d) Entire Agreement. This Agreement constitutes the entire
----------------
Agreement between the parties with respect to the subject matter of this
Agreement and supersedes any other agreements, whether oral or written,
between the parties with respect to the subject matter of this Agreement.
(e) Modification. No change or modification of this Agreement will
------------
be valid unless it is in writing and signed by both of the parties. No
waiver of any provision of this Agreement will be valid unless in writing
and signed by the person or party to be charged.
(f) Severability. If any provision of this Agreement is, for any
------------
reason, invalid or unenforceable, the remaining provisions of this Agreement
will nevertheless be valid and enforceable and will remain in full force and
effect. Any provision of this Agreement that is held invalid or
unenforceable by a court of competent jurisdiction will be deemed modified
to the extent necessary to make it valid and enforceable and as so modified
will remain in full force and effect.
(g) Headings. The headings in this Agreement are inserted for
--------
convenience only and are not to be considered in the interpretation of
construction of the provisions of this Agreement.
(h) Assignability. This Agreement may not be assigned by either
-------------
party without the prior written consent of the other party, except that the
Company may assign its rights to, and cause its obligations under this
Agreement to be assumed by, any person or entity to whom or to which the
Company simultaneously transfers by sale, merger, or otherwise all or
substantially all of its assets.
(i) No Strict Construction. The language used in this Agreement
----------------------
will be deemed to be the language chosen by Executive and the Company to
express their mutual intent, and no rule of strict construction will be
applied against Executive or the Company.
IN WITNESS WHEREOF, the parties have executed this Executive Employment
Agreement as of the date first above written.
AMSERV HEALTHCARE INC.
By: _______________________________________
Its: _______________________________________
EXECUTIVE:
____________________________________________
Lori Anderson
E-53
<PAGE>
Exhibit 10.18
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
STOCKBRIDGE INVESTMENT )
PARTNERS, INC., a Florida )
corporation, )
)
Plaintiff, )
)
v. ) Case No. 14253
)
AMSERV HEALTHCARE INC., a Delaware )
corporation, MELVIN L. KATTEN, )
EUGENE J. MORA, MICHAEL A. )
ROBINTON, GEORGE A. ROGERS )
and BEN L. SPINELLI, )
)
Defendants. )
STIPULATION AND ORDER
OF SETTLEMENT, RELEASE OF CLAIMS AND FINAL JUDGMENT
---------------------------------------------------
This Settlement Agreement and Release ("Agreement") is made and entered
into as of the 12th day of May, 1995, subject to the approval of the Court of
Chancery of the State of Delaware in and for New Castle County (the "Court"), by
and between Stockbridge Investment Partners, Inc., a Florida corporation
("Stockbridge"), and AMSERV Healthcare, Inc., a Delaware corporation ("AMSERV"),
Melvin L. Katten, Eugene J. Mora, Michael A. Robinton, George A. Rogers and Ben
L. Spinelli (Collectively, the "Parties").
WHEREAS, the above captioned action (the "Litigation") challenges, inter
alia, the agreements between AMSERV and North Central Personnel, Inc., ("NCP"),
dated as of April 7, 1995, to exchange a purchase money promissory note held by
NCP (Principal balance $833,334) (the "Note") for 426,794 shares of Class A
Redeemable Preferred Stock (the "Preferred Stock") of AMSERV and other
consideration;
WHEREAS, the Parties desire to resolve the issues and to make a full and
final settlement of any claims raised in the Litigation, whether asserted or
unasserted, contingent or mature, without any admission in respect of any such
claim or potential claim and without the cost and expense of further litigation;
NOW, THEREFORE, in consideration of the promises and covenants contained
herein, the Parties (collectively, the "Undersigned") hereto agree as follows:
E-54
<PAGE>
1. Pursuant to the agreement attached as Exhibit A hereto, AMSERV and
NCP have rescinded the Voting Agreement and Irrevocable Proxy to Vote the
Preferred Stock, both dated as of April 7, 1995 (copies of which are attached as
Exhibits B and C hereto).
2. In connection with a Renewed Consent Solicitation (as defined in
the Standstill Agreement of even date) only, and pursuant to the agreement
attached as Exhibit A hereto, the Preferred Stock issued to NCP shall not be
considered to be outstanding voting securities.
3. Notwithstanding any other provision of this Agreement, Stockbridge
reserves the right to apply to the Court for an award of expenses and attorneys'
fees reasonably incurred in connection with the commencement and prosecution of
the Litigation, subject to a cap of $50,000 for such award. The defendants
expressly reserve their right to oppose such award.
4. The Undersigned agree to execute and deliver all instruments and
take all other actions as may be required to consummate the settlement embodied
in this Agreement in a prompt fashion. The Undersigned hereby agree to cooperate
fully with each other and with their respective counsel in connection with any
steps required to be taken as part of their respective obligations under this
Agreement.
5. The Undersigned represent and warrant by signing this Agreement
that: (a) they are represented by counsel; (b) they have carefully read this
Agreement; and (c) they have executed the Agreement and/or its exhibits only
after consulting with counsel of their choice.
6. This Agreement shall not in any event be construed or deemed to be
a concession on the part of any of the Undersigned to the truth of any of the
allegations, claims, or defenses made by any of the Parties in Litigation, or of
any liability of wrongdoing of any of the Parties or NCP.
7. This Agreement and the Standstill Agreement constitute the entire
agreement among the Undersigned with respect to the subject matter hereof, and
supersedes any prior agreements or understandings, both written and oral, among
the Undersigned with respect thereto. This Agreement may not be amended nor any
of its provisions waived except by a writing executed by each of the
Undersigned.
8. This Agreement is binding upon and shall inure to the benefit of
the Undersigned and their respective legal representatives, heirs, transferees,
successors in interest and assigns and upon any corporation, partnership or
other entity into or with which AMSERV, Stockbridge or NCP may merge or
consolidate.
9. This Agreement and any disputes arising under it shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
giving effect to any rules governing conflicts of law.
E-55
<PAGE>
10. Other than the specific retention of jurisdiction provided for
above, the Court has determined pursuant to Chancery Court Rule 54(b) that there
is no just reason for delay and directs entry of this final judgment dismissing
the Litigation with prejudice on the terms provided herein.
IN WITNESS WHEREOF, the Undersigned have executed this Agreement as of the
date first written above.
STOCKBRIDGE INVESTMENT PARTNERS, INC.
/s/Thomas M. Clarke
-----------------------------
By: Thomas M. Clarke
Title: President
AMSERV HEALTHCARE INC.
/s/Eugene J. Mora
-----------------------------
By: Eugene J. Mora
Title: President
MELVIN L. KATTEN
/s/Melvin L. Katten
-----------------------------
EUGENE J. MORA
/s/Eugene J. Mora
-----------------------------
MICHAEL A. ROBINTON
/s/Michael A. Robinton
-----------------------------
GEORGE A. ROGERS
/s/George A. Rogers
-----------------------------
BEN L. SPINELLI
/s/Ben L. Spinelli
-----------------------------
E-56
<PAGE>
Consented to:
/s/Joel E. Friedlander
--------------------------------
Stephen P. Lamb
Joel E. Friedlander
THE LAW OFFICES OF STEPHEN P. LAMB
One Rodney Square
P.O. Box 29
Wilmington, Delaware 19899
Telephone: (302) 984-2495
Attorneys for Plaintiff
/s/Daniel A. Dreisbach
--------------------------------
R. Franklin Balotti
Daniel A. Dreisbach
RICHARDS, LAYTON & FINGER
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Telephone: (302) 658-6541
Attorneys for Defendants
Amserv Healthcare Inc., Melvin L. Katten,
Eugene J. Mora, Michael A. Robinton,
George A. Rogers and Ben L. Spinelli
So Ordered this___day of May, 1995.
___________________________
Chancellor
E-57
<PAGE>
EXHIBIT 21.1
Subsidiaries of
AMSERV HEALTHCARE INC.
<TABLE>
<CAPTION>
Subsidiaries State of Incorporation
------------ ----------------------
<S> <C>
AMSERV HEALTHCARE OF NEW JERSEY, INC. Delaware
AMSERV HEALTHCARE OF OHIO INC. Delaware
AMSERV MEDICAL PRODUCTS, INC. Delaware
</TABLE>
E-58
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-23703) pertaining to the 1982 Incentive Stock Option Plan of AMSERV
HEALTHCARE INC., of our report dated August 11, 1995, with respect to the
financial statements of AMSERV HEALTHCARE INC., included in the Annual Report
(Form 10-K) of AMSERV HEALTHCARE INC. for the year ended June 24, 1995.
ERNST & YOUNG LLP
San Diego, California
October 2, 1995
E-59
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
AMSERV HEALTHCARE INC.
We consent to the incorporation by reference in Registration Statement No. 33-
23703 of AMSERV HEALTHCARE INC. on Form S-8 of our report dated October 7, 1994,
appearing in this Annual Report on Form 10-K of AMSERV HEALTHCARE INC. for the
fiscal year ended June 24, 1995.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
October 2, 1995
E-60
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
Consolidated Balance Sheets as of June 24, 1995 and June 30, 1994; and
- ----------------------------------------------------------------------
Consolidated Statements of Operations for the years ended June 24, 1995 and June
- --------------------------------------------------------------------------------
30, 1994 and 1993.
- -----------------
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-24-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-24-1995
<CASH> 1,226,448
<SECURITIES> 1,392,021
<RECEIVABLES> 1,076,995
<ALLOWANCES> 103,264
<INVENTORY> 0
<CURRENT-ASSETS> 3,779,663
<PP&E> 583,890
<DEPRECIATION> 196,069
<TOTAL-ASSETS> 6,684,485
<CURRENT-LIABILITIES> 1,313,354
<BONDS> 0
<COMMON> 32,953
682,870
0
<OTHER-SE> 4,624,449
<TOTAL-LIABILITY-AND-EQUITY> 6,684,485
<SALES> 0
<TOTAL-REVENUES> 11,341,609
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (25,000)
<INTEREST-EXPENSE> 51,543
<INCOME-PRETAX> 54,386
<INCOME-TAX> 2,038
<INCOME-CONTINUING> 52,348
<DISCONTINUED> 30,302
<EXTRAORDINARY> 0
<CHANGES> 23,683
<NET-INCOME> 106,333
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
