<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to 14a-11(c) or 14a-12
AMSERV HEALTHCARE INC.
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(Name of Registrant as Specified in Its Charter)
STOCKBRIDGE INVESTMENT PARTNERS, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Item 22(a)(2) of Schedule 14A.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
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<PAGE>
AMSERV HEALTHCARE INC.
CONSENT STATEMENT OF STOCKBRIDGE INVESTMENT PARTNERS, INC.
To Our Fellow Stockholders:
This Consent Statement is being furnished by Stockbridge Investment
Partners, Inc. and the other members of its group (collectively "Stockbridge")
in connection with the solicitation by Stockbridge of written consents from the
holders of Common Stock, par value $.01 per share ("Common Stock"), of Amserv
Healthcare Inc. (the "Company" or "AMSERV") to take action without a
stockholders' meeting as permitted by Delaware law. The Stockbridge Group
consists of Stockbridge, its subsidiary York Hannover Pharmaceuticals, Inc.
("York Hannover") its principals Thomas M. Clarke and Lawrence B. Cummings and
Lenox Healthcare, Inc. ("Lenox"), a Massachusetts corporation jointly owned by
Mr. Clarke and his wife, Linda M. Clarke. The Stockbridge Group is the
beneficial owner of 202,844 shares of AMSERV Common Stock or 6.20% of the shares
outstanding.
Stockbridge is seeking to remove the five current members of the Board
of Directors of the Company (the "Board") and to elect five nominees to the
Board of Directors of AMSERV to fill the vacancies created by the removals who
will pursue Stockbridge's plan for increasing value for all holders of AMSERV
shares (the "Stockbridge Nominees").
Stockbridge believes AMSERV's operating performance and the price of the
Common Stock reflect mismanagement by the Board and that the Board has failed to
take the necessary steps to change the Company's management in light of its weak
performance. The proposed merger with Star Multi Care Services, Inc. ("Star")
announced by the Company on January 18, 1996 represents an unacceptable
alternative for AMSERV stockholders. The economics of the transaction are
unfavorable to AMSERV stockholders and the transaction allows Star, a small
public company, to raid AMSERV's cash reserves. Stockbridge believes that the
removal of the Board and the election of the Stockbridge Nominees is in the best
interests of the stockholders and will result in enhanced value for the
stockholders. The Stockbridge Nominees have developed a plan (the "Stockbridge
Plan") (please refer to the outline of the Stockbridge Plan on page 16) for the
Company which they believe will improve the financial performance of the Company
and enhance value for stockholders. The Stockbridge Plan is fully set forth in
this Consent Statement.
Pursuant to Section 213(b) of the Delaware General Corporation Law (the
"DGCL"), and for the purpose of setting a record date for this solicitation of
consents, York Hannover, a wholly owned subsidiary of Stockbridge and a
stockholder of the Company, executed a written consent to the proposed removal
of the Board and the election of the Stockbridge Nominees and delivered it to
the Company on January 8, 1996. At the time of delivery of York Hannover's
consent, the Company had outstanding 3,273,703 shares of Common Stock. On
January 8, 1996 pursuant to a provision of the By-Laws the Board of Directors
established January 29, 1996 as the record date (the "Record Date") for the
Consent. This Consent Statement and the enclosed BLUE consent are first being
mailed to stockholders of the Company on or about March 7, 1996.
<PAGE>
Only stockholders of record at the close of business on the Record Date are
entitled to vote by this Consent action. As of October 2,1995, the Company had
outstanding 3,163,203 shares of Common Stock. On January 16,1996, AMSERV's
Chairman Eugene J. Mora exercised his option to purchase 110,500 shares of the
Company's Common Stock. Stockbridge believes there are currently 3,273,703
shares of AMSERV Common Stock outstanding.
YOU ARE URGED TO CONSENT TO THE REMOVAL OF ALL MEMBERS OF THE BOARD AND THE
ELECTION OF THE STOCKBRIDGE NOMINEES BY SIGNING, DATING AND MAILING AS SOON AS
POSSIBLE PRIOR TO MARCH 14, 1996 THE ENCLOSED BLUE CONSENT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THE FAILURE TO EXECUTE A CONSENT WILL HAVE THE SAME
EFFECT AS WITHHOLDING A CONSENT.
THE PROPOSED ACTIONS WILL BECOME EFFECTIVE AT THE TIME, NOT LATER THAN
MARCH 30, 1996, THAT WRITTEN UNREVOKED CONSENTS OF THE HOLDERS OF A MAJORITY OF
THE COMMON STOCK OUTSTANDING AT THE CLOSE OF BUSINESS ON THE RECORD DATE ARE
DELIVERED TO THE COMPANY.
If you have any questions or need assistance in voting your shares, please
call Stockbridge directly:
Stockbridge Investment Partners, Inc.
The Berkshire Common
2 South Street, Suite 360
Pittsfield, MA 01201
Call (413) 448-2111 FAX (413) 448-2120
2
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REASONS FOR THIS SOLICITATION
Stockbridge's wholly owned subsidiary York Hannover directly owns 175,644
shares of AMSERV Common Stock, giving Stockbridge beneficial ownership of
175,644 shares. Lenox, a Massachusetts corporation jointly owned by Thomas M.
Clarke and his wife, Linda M. Clarke is the direct owner of 400 shares of the
Company's Common Stock. Mr. Clarke and Mrs. Clarke personally own 16,800 shares
of Common Stock. As President and Director of Stockbridge, York Hannover and
Lenox and Treasurer, Secretary and Director of Stockbridge, York Hannover and
Lenox respectively, Mr. and Mrs. Clarke are the beneficial owners of 192,844
shares of AMSERV Common Stock. Mr. Lawrence B. Cummings, Chief Executive
Officer and Director of Stockbridge and York Hannover is the direct owner of
10,000 shares of the Company's Common Stock and is considered to be the
beneficial owner of the 175,644 shares beneficially owned by Stockbridge.
On November 13, 1995, Stockbridge submitted to AMSERV its written proposal
to effect a business combination between York Hannover and AMSERV. The
proposal, which expired on December 4, 1995, stipulated that York Hannover would
receive 1,200,000 shares of AMSERV Common Stock or 32.2 percent of the Company's
outstanding shares. In addition, the proposal stated that two of the Company's
five Board members would be Stockbridge nominees. Mr. Clarke and Mr. Cummings
would enter into employment agreements with AMSERV.
Stockbridge now desires to replace all five incumbent members of the Board
with its nominees. Upon replacement of the Board, the new Board will consider
all opportunities to increase shareholder value including the recently announced
merger with Star and others, including Stockbridge's earlier proposal to merge
the Company with its subsidiary, York Hannover. Should the Board wish to
evaluate Stockbridge's merger proposal or any other between the Company and a
Stockbridge affiliate then Stockbridge would recommend that the Board elect an
independent committee to evaluate these transactions and, where appropriate the
transactions would be put to a vote of the Company's non-affiliated
stockholders. Applicable state and federal laws would dictate when transactions
involving entities owned or controlled by directors should be reviewed by an
independent committee. Independent committees formed to consider merger
proposals with entities owned or controlled by a director would be comprised of
all other directors not having an ownership or controlling interest in the
entity with which the transaction is proposed. In addition, at the discretion of
the independent committee, an outside financial advisor or investment banker
would be engaged to render a fairness opinion on such transactions. Ultimately,
transactions with Stockbridge, its affiliates or any entity owned or controlled
by a director would require the approval of a majority of all shareholders not
affiliated with the Company with which the merger is proposed.
3
<PAGE>
Stockbridge anticipates that significant savings can be achieved through
the consolidation of corporate overhead expenses between Stockbridge and AMSERV.
However, the only savings that Stockbridge is currently able to quantify are
those that relate to office rental expense. Stockbridge would be compensated
for such corporate overhead expense on the basis of market reasonable costs
which shall be determined at the sole discretion of the independent committee
appointed by the Board.
Stockbridge believes that AMSERV's success will be largely determined by
its ability to position itself to provide an expanded scope of services that
complement its current home health operations. Although Stockbridge has no
current plans to effect the Company's operations, Stockbridge intends to
evaluate each segment of the Company's operations and recommend to the Board a
plan that will optimize operations by increasing market share and increasing
earnings.
Stockbridge believes AMSERV's operating performance and the price of the
Common Stock reflect mismanagement by the Board. Stockbridge believes the Board
has failed to take the necessary steps to change the Company's management in
light of its weak performance. Instead of taking decisive actions to improve
operating results, the Board has chosen to permit the Chief Executive Officer to
conduct the Company's operations located in Ohio and New Jersey from plush
executive offices located thousands of miles away in affluent La Jolla,
California.
Stockbridge is concerned with the historical performance of the Company
and recent actions of the Board. Stockbridge believes that the Board has not
properly discharged its duties to stockholders because its actions have
consistently failed to improve the financial performance of the Company and
maximize the value of the stockholders' investment (as reflected by the price of
AMSERV's Common Stock) in the Company. Stockbridge believes that the Board's
performance in the following matters supports our belief that it has failed to
discharge properly its duty to stockholders:
. The poor performance of AMSERV's Common Stock over the last several
years prior to Stockbridge Group's initial acquisition of Common
Stock;
. The failure of the Board to focus the business of the Company and to
define a program to enhance value for stockholders;
. The Boards retention of Batchelder & Partners, Inc. ("Batchelder") in
an arrangement which provides for substantial fees to be paid to
Batchelder and the continuation of management's compensation and
severance arrangements at high levels despite deteriorating Common
Stock prices; and
4
<PAGE>
. The Board's announcement of the signing of a letter of intent to merge
with Star in a transaction in which each outstanding share of AMSERV's
Common Stock will be converted into .409 shares of Star's common
stock.
Stockbridge believes that the Board's performance in these matters
represents a failure to discharge properly the Board's duty to stockholders.
Stockbridge believes that the removal of Messrs. Eugene J. Mora, George A.
Rogers, Ben L. Spinelli, Michael A. Robinton and Melvin L. Katten and the
election of the Stockbridge Nominees is in the best interests of the
stockholders and will result in enhanced value for the stockholders.
Stockbridge measures shareholder value as the economic value (capital
appreciation and dividends) associated with holding AMSERV Common Stock as well
as actions taken by the Company which will ensure future increases in the
economic value of its common stock. Unlike the Company's current management,
Stockbridge's nominees will not enter into employment contracts with AMSERV.
Thomas M. Clarke and Lawrence B. Cummings will be hired by the Company as
employees at will who can be terminated by the Company at will. Mr. Clarke and
Mr. Cummings will each be hired at a salary not to exceed $100,000 per year plus
all usual and customary benefits of the Company. The Stockbridge Nominees
have developed a plan for the Company which they believe will improve the
financial performance of the Company and enhance value for all stockholders.
Although Stockbridge has no immediate plans to change the Company's operations,
each individual segment of AMSERV's operation will be evaluated and
recommendations will be made to the Company's Board. The Stockbridge Plan is
set forth in this Consent Statement.
STOCKBRIDGE'S CONCERNS
Stockbridge believes the Board has failed to represent stockholder
interests in the following areas:
1. Poor Performance of AMSERV Common Stock
---------------------------------------
On June 30, 1989 the closing price of a share of Common Stock was $5.25; on
June 30, 1990 the closing price was $5.00; on June 30, 1991, the closing price
was $3.375; on June 30, 1992 the closing price was $2.125; on June 30, 1993 the
closing price was $1.25; on June 30, 1994, the closing price was $1.25 and on
November 11, 1994, (the business day before the Stockbridge Group commenced its
purchases of Common Stock) the closing price was $1.125. In the last six year
period beginning January 1, 1990 the Company has paid no cash dividends and
there have been no stock splits. On August 17, 1991, the Company distributed a
5.0 percent stock dividend to its stockholders.
The Company is not required under rules of the Securities and Exchange
Commission to provide in its proxy statements the graphic comparative cumulative
return
5
<PAGE>
to investor information required for larger companies. However, AMSERV's Common
Stock has underperformed both the Russell 3000 Index and the Bridge Health Care
Services Index ("Bridge Index") over the last six years. An initial investment
of $100.00 on July 1, 1989 in the Russell 3000 Index would have provided a
cumulative total return of approximately $130.81, $136.83, $135.10 and $180.47
respectively, as of June 30, 1994, September 30, 1994, December 31, 1994 and
December 31, 1995. A similar $100.00 investment in the Bridge Index on July 1,
1989 would have returned approximately $130.42, $149.48, $136.58 and $169.88,
respectively, as of such dates. By comparison, an investment of $100.00 in
AMSERV on July 1, 1989 would have a market value of approximately $25.64,
$21.80, $35.90 and $53.85 as of June 30, 1994, September 30, 1994, December 31,
1994 and December 31, 1995, in each case a significant decrease in the market
value of the initial $100.00 investment.
The Russell 3000, one of the three Russell (Frank) Indexes, is a well
known, broadly-based equity index. It is designed to be a comprehensive
representation of the investable U.S. equity market. Two thousand of the three
thousand companies in the Russell 3000 have small to mid-size market
capitalizations between $104,000,000 and $746,000,000.
The Bridge Health Care Services Index is a compilation of ninety two (92)
companies providing health care and related services and which Stockbridge
considers to be a reliable and fair representation of companies in these
industries. The smallest Company in this index has a market capitalization of
$11 million and the largest has a market capitalization of $7.5 billion.
AMSERV has a market capitalization of approximately $8.5 million. AMSERV's
Common Stock trades on the NASDAQ under the ticker symbol "AMSR."
While these Indexes are composed of companies which have different
capitalizations than AMSERV and may operate in different businesses, even within
the healthcare services arena, Stockbridge believes that the stock performance
comparison underscores the poor performance of the AMSERV from the perspective
of its stockholders.
Stockbridge believes that the current Board has failed to develop a
strategic plan designed to enhance stockholder value in light of the long-term
poor performance of the Common Stock.
2. Failure to Focus the Company's Business and to Define a Program to Enhance
--------------------------------------------------------------------------
Value for Stockholders.
-----------------------
Stockbridge believes that the current Board has failed to develop an
effective strategic plan designed to enhance stockholder value in light of the
long term poor
6
<PAGE>
performance of the Common Stock. Stockbridge believes that the following
chronology of AMSERV's operations between fiscal 1992 and fiscal 1995 support
our belief that the Board has failed to develop an effective strategic plan.
The Company has undergone several dramatic shifts of strategic direction
since September 29, 1983 when its California predecessor was reincorporated in
Delaware as Phone-A-Gram System, Inc. In October 1987, about seven months after
Mr. Eugene J. Mora became Chairman of the Board, Chief Executive Officer and
President of the Company, the Company's name was changed to AMSERV, INC. Less
than five years later, in August 1992, the Company's name was again changed to
AMSERV HEALTHCARE INC.
Often corporate name changes are of little significance but Stockbridge
believes that the changes of name correlate to an apparent lack of strategic
focus on stemming the precipitous decline in stockholder value over the last
five fiscal years.
The financial statements included in the Company's Annual Report for fiscal
year ended June 30, 1992 reported the following:
Fiscal Year Ended June 30
-------------------------
(in thousands)
--------------
<TABLE>
<CAPTION>
1992 1991 1990
-------- ------- ------
<S> <C> <C> <C>
Net Sales $15,134 $13,488 $8,702
Operating Income (Loss) (172) 151 93
Income (Loss) from (96) 213 132
Continuing Operations
Net Sales from 3,558 4,837 5,547
Discontinued Operations*
Income (Loss) from 338 777 1,363
Discontinued Operations
Gain (Loss) on Disposal
of Discontinued Operations,
Net of Income Tax 1,405 --- ---
Net Income (Loss) 1,647 990 1,495
</TABLE>
- ---------------------------------
* From Footnote 12 to financial statements
o Mr. Mora's September 1992 letter to Stockholders included in the 1992
Annual Report stated:
7
<PAGE>
"We are planning to build AMSERV HEALTHCARE into a much larger company
in the years ahead. We are in a huge industry. According to the
National Association for Home Care, home care spending has risen 10%
per year since 1987 and should exceed $16 billion annually in 1992.
This growth should continue, and perhaps accelerate, as the age of our
population increases and more and more healthcare is provided in the
home."
"At present, our industry is quite fragmented, with no one or two
companies dominating the business. Acquisition opportunities are in
good supply. This presents AMSERV's management team, which is
experienced in developing and managing a large company, with
outstanding opportunities to build AMSERV into a major healthcare
company. A good example is MED-PRO, Inc., a leading provider of
supplemental staffing to healthcare facilities, which we acquired in
July 1992. MED-PRO, with annualized sales of approximately $7
million, has offices in Phoenix, San Diego and San Francisco. This
acquisition and the opening of our new office in Chicago in May 1992
represent our initial investment of the proceeds from the sale of our
medical products business [referred to in Footnote 12], discussed
earlier."
"With the MED-PRO acquisition, we now have 15 offices in nine states
and are well on our way to building a national network of healthcare
offices. Our goal is to double sales [$15.1 million for fiscal year
ended June 30, 1992] in the next twelve to eighteen months by growing
in our existing markets, opening new offices and continuing to make
acquisitions. We are confident in our ability to achieve our goals
and, if the economy continues to improve, we should be able to return
to profitability in 1993 and establish a pattern of consistent
earnings growth going forward. As always, our primary objective is to
provide superior long-term investment returns for our shareholders."
o The 1992 Annual Report also referred to "the Company's strategy of
building a nationwide network of healthcare offices" and identified
existing offices in Arizona (Phoenix, Tucson), California (San Diego,
San Francisco), Illinois (Belleville, Chicago), Kentucky (Louisville),
Missouri (St. Louis), Nevada (Las Vegas), New Jersey (Elizabeth,
Fairlawn, Metuchen, South Orange), Oregon (Portland) and Washington
(Seattle).
o In addition to the discontinued medical products business and the MED-
PRO acquisition, the footnotes to the financial statements in the
Annual Report disclose the acquisition of substantially all the assets
of Always Care of New Jersey, Inc. in March 1991, and the 1990
acquisition of three temporary nursing services offices in Tucson,
Arizona, Seattle, Washington and Portland, Oregon.
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<PAGE>
For the fiscal year ended June 30, 1993, the Company's financial statements
included in its Annual Report to Stockholders reported the following results
from continuing operations:
Net Sales $18,848,000
Operating Income (Loss) (430,000)
Thus despite Mr. Mora's above articulated confidence in returning to
profitability in 1993, net loss from continuing operations quintupled
from $0.03 per share to $.15 per share.
o Mr. Mora's September 1993 letter to stockholders included in the 1993
Annual Report stated:
"The decline in sales from our temporary staffing services business
[MED-PRO acquired in July 1992] was the main reason for the Company's
net loss from continuing operations for fiscal 1993. Our analysis of
the cause of the significant reduction in the demand for temporary
nurses was confirmed by a recent article in The Wall Street Journal on
-----------------------
declining hospital employment, stating that the occupancy rates at
many hospitals have dropped 20 percent due to "initiatives in the
medical marketplace to reduce costs" and "conditions in the overall
economy", which appear to be discouraging hospital usage.
"While a decline in hospital usage reduces the demand for temporary
staffing services, it increases the demand for home care services.
Therefore, the Company is focusing its efforts to expand its home care
business through internal growth and acquisitions."
"Although our operating results are not projected to show improvement
until the second half of fiscal 1994 (contingent on increased demand
for temporary staffing services). I remain positive about our
Company's prospects. I am confident that we can build on the
accomplishments of the past year and take advantage of the
opportunities that exist in our industry to build a major healthcare
company while increasing shareholder value."
o Mr. Mora's letter also describes with great enthusiasm the Company's
June 1993 entry into a Letter of Intent pursuant to which the Company
proposed to acquire ALLIANCE Hospital Services, a third party provider
of comprehensive turnkey contracts to manage home care operations for
hospitals and other healthcare organizations, in a stock transaction.
The transaction was never consummated.
9
<PAGE>
The Company's financial statements included in its Annual Report to
Stockholders for the fiscal year ended June 30, 1994 reflecting the
disposition of the MED-PRO business acquired in 1992:
Fiscal Year Ended June 30
-------------------------
(in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net Sales $ 7,526 $ 6,049 $5,432
Operating Income (Loss) (169) (217) (116)
Income (Loss) from (63) (71) (48)
Continuing Operations
Net Sales from 12,022 12,800 9,802
Discontinued Operations*
Income (Loss) from
Discontinued Operations (711) (359) 290
Gain (Loss) on Disposal
of Discontinued Operations,
Net of Income Tax (1,168) --- 1,405
Net Income (Loss) (1,942) (430) 1,647
</TABLE>
- ---------------------------
From Footnote 12 to financial statements
Mr. Mora's undated letter to stockholders included in the 1994 Annual
Report attempts to put a favorable gloss on the fiscal 1994 results:
"Fiscal 1994 was a year of mixed results for AMSERV HEALTHCARE INC.
Our New Jersey home care subsidiary achieved record sales and profits,
and recently opened its fifth office, located in Union City, New
Jersey. In June 1994, AMSERV acquired North Central Personnel, a
leading provider of home care services in the greater Mansfield, Ohio,
market. This company was founded in 1983 by Diane Gurik, who
continues as its President. In addition to serving patients through
home care programs funded by the state, North Central Personnel
provides home care services to private pay patients and those covered
by insurance, as does our New Jersey home care subsidiary. Current
sales from home care services are approximately $11 million,
annualized."
"During the last two years, in anticipation of federally mandated
healthcare reform, hospitals have consolidated and implemented severe
cost reduction programs, leading to a greatly reduced demand for
temporary nursing
10
<PAGE>
personnel. The contraction of this industry contributed to the
substantial losses we sustained in this segment of our business. In
turn, the losses affected our plans to combine home care with our
temporary nursing services. For these reasons, the decision has been
made to discontinue this business. A nonbinding Letter of Intent to
sell the temporary nursing services business has been signed, and we
expect to complete this transaction by November 1994."
"The net loss for fiscal 1994, which includes results from our
discontinued temporary nursing services business, was $1,942,000 or 66
cents per share, compared with a net loss of $430,000, or 15 cents per
share for fiscal 1993. The net loss for the year includes an after-
tax loss of $1,168,000, or 40 cents per share, on the disposal of the
temporary nursing services business, as well as an after-tax loss of
$711,000, or 24 cents per share, for that business' operations."
"Our strategy is to expand our home care business through acquisitions
and start-up offices and to look for other opportunities in the
healthcare field. The restructuring of our operations places the
Company in a position to increase shareholder value."
o In these three fiscal years AMSERV's net sales increased from
$15,234,000 in 1992 to $18,849,000 in fiscal 1993 to $19,548,000 in
fiscal 1994. However, net income decreased from $1,647,000 in fiscal
1992 to a net loss of $430,000 in fiscal 1993 to a net loss of
$1,942,000 in fiscal 1994. The price of a share of Common Stock had
gone from $3.375 on June 30, 1991 to $1.25 on June 30, 1994. During
this period Mr. Mora kept advising stockholders that the strategic
plan was to increase stockholder value.
As of the writing of this consent solicitation the Company has failed to
distribute its Annual Report for the fiscal year ended June 24, 1995. However,
the Company's Form 10-K for the fiscal year ended June 24, 1995 reports the
following comparative statement of operations for the years ended June 24, 1995,
June 30, 1994 and June 30, 1993 and its Form 10-QSB reports the following
statement of operations for the six month period ended December 23, 1995:
11
<PAGE>
Fiscal Year Ended June 24 and June 30
-------------------------------------
(in thousands)
<TABLE>
<CAPTION>
The Six Months
Ended
December 23,
1995 1995 1994 1993
-------------- ------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $5,995 $11,342 $ 7,526 $ 6,049
Operating Income (Loss) 329 52 (169) (217)
Income (Loss) from
Continuing Operations 252 52 (63) (71)
Net Sales from
Discontinued Operations* --- --- 12,022 12,800
Income (Loss) from
Discontinued Operations --- --- (711) (359)
Gain (Loss) on Disposal
of Discontinued Operations,
Net of Income Tax --- 30 (1,168) ---
Cumulative Effect of
Change in Accounting
Principal --- 24 --- ---
Net Income (Loss) 252 106 (1,942) (430)
</TABLE>
- ---------------------------
From Footnote 12 to financial statements
Given AMSERV's substantial increase in net sales from $7,526,000 in fiscal
1994 to $11,342,000 in fiscal 1995, We were disappointed that the
Company's net income was only $106,000. Net income from continuing
operations for the fiscal year ended June 24, 1995 was a minimal $52,000 or
approximately 2 cents per share.
Presently, AMSERV operates in only one segment of the healthcare services
industry, home health care. The majority of the Company's revenue is derived
from providing low tech, home health aide services to residents in the states of
Ohio and New Jersey. During a due diligence visit to the headquarters of
Amserv's New Jersey operations Stockbridge learned that approximately 75.0
percent of the Company's revenue is generated by its New Jersey operations. A
representative of the New Jersey headquarters disclosed that on average the
Company's New Jersey operation is reimbursed less than $15.00 per hour of home
health services it provides and approximately 80.0 percent of its net revenue is
paid by Medicaid and other government programs. In the Company's Annual Report
for the twelve months ended June 30, 1994,
12
<PAGE>
Mr. Mora commented, "Our strategy is to expand the home care business through
acquisitions and start-up offices and to look for other opportunities in the
healthcare field". Subsequent to this statement the Company has made no
acquisitions or opened any new offices.
The Stockbridge Plan, on the other hand, provides for the growth and
diversification of the Company through the creation of a critical mass of
businesses focused in a single related operation. The Plan would increase
AMSERV's revenue through diversification of services into more profitable
segments of the healthcare industry and would protect the Company from the risks
associated with its dependence on the Medicaid program. Stockbridge would
accomplish this by expanding into geographic markets not yet serviced by AMSERV
and by aligning itself with medical supply and pharmaceutical distributors,
therapy companies and other companies whose services complement those of AMSERV.
In addition to increasing revenue through the diversification of services, The
Stockbridge Plan advocates the evaluation of AMSERV's current operations to
ensure maximum operating efficiency. Stockbridge has no plans to effect the
Company's current operations. However, Stockbridge will closely evaluate each
segment of the Company's current operations and make appropriate recommendations
to the Board.
3. The Board has Continued the Chief Executive's Compensation at High Levels
-------------------------------------------------------------------------
Despite Deteriorating Common Stock Price.
-----------------------------------------
o The Chief Executive Officer has distanced himself from the business of
the Company literally and figuratively. The executive offices are
located in La Jolla, California, thousands of miles away from the
Company's only continuing operations located in New Jersey and Ohio.
Stockbridge believes that maintaining the executive offices in this
affluent suburb of San Diego, results in the incurrence of unnecessary
direct and indirect expenses associated with travel to the Company's
business. The Board may believe that Mr. Mora can be effective at
transcontinental management but the results of the last several years
provides Stockbridge with the basis of a contrary view.
o Stockbridge also believes the location of the Company's executive
offices in La Jolla results in significant unnecessary office rental
expense.
Based on its survey of the La Jolla, California rental market,
Stockbridge estimates that AMSERV pays between $13.00 and $15.00 per
square foot for its office space in La Jolla. Based on visual
inspection of the Company's La Jolla offices, Stockbridge believes
they comprise between 2,500 and 3,000 square feet. Stockbridge is
confident that AMSERV would require only 1,300 square feet of office
space if its corporate office was moved to Stockbridge's location in
Pittsfield, Massachusetts. Stockbridge
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would propose to lease a portion of its existing space to the Company
at $5.00 per square foot. This arrangement would yield annual savings
of $26,000 to $39,000 for AMSERV.
o Just prior to the death of John Wimmer, a long-time Director, the
Board filled a vacancy with Mr. Spinelli, a resident of West Orange,
New Jersey, who will apparently travel at Company expense to Board
meetings in La Jolla, California.
o Mr. Mora has been compensated at what Stockbridge believes to be a
high level while the Company's stock price performance and financial
condition have continued to deteriorate. Despite the Company's poor
operating performance and the dramatic decline in the per share price
of its Common Stock during the six fiscal years ended June 24, 1995,
Mr. Mora received direct compensation in excess of $300,000 annually.
Mr. Mora has been granted the use of a Company automobile (currently a
luxury vehicle). Mr. Mora is also entitled under his Employment
Agreement to receive payments for five years of the compensation
earned in his last year of employment following any termination
without cause and to receive any individual life insurance policies
owned by the Company. As regards the termination of Mr. Mora's
employment, the term "without cause" refers to a termination other
than for cause. Cause can be defined as 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. Mr.
Mora is also entitled to receive $129,200 per year as a consultant to
the Company following his retirement.
This level of executive compensation appears to Stockbridge to be
extravagant, particularly in light of the Company's performance which
as reported in Selected Financial Data in the 1995 Form 10-K shows net
income from continuing operations of $52,000 in fiscal 1995 and losses
------
from continuing operations of $63,000 in fiscal 1994, $71,000 in
--------------------------
fiscal year 1993, $48,000 in fiscal 1992 and $134,000 in fiscal 1991.
Mr. Mora's direct compensation of $300,000 for the twelve month period
ended June 24, 1995 equals 577.0 percent of AMSERV's net income from continuing
operations of $52,000. Stockbridge's survey of five publicly traded healthcare
companies revealed that, on average, the total compensation of these companies'
top executives equals 3.94 percent of the companies' net income from continuing
operations. The range for the average was a low of 1.97 percent and a high of
11.53 percent. While the correlation between compensation and net income is not
perfect, Stockbridge believes that maintaining Mr. Mora's salary at its current
level is inappropriate given the Company's net income and Common Stock price.
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4. The Proposed Merger with Star
-----------------------------
On January 18, 1996, AMSERV announced the signing of a letter of
intent to merge with Star. Star is a publicly traded company (NASDAQ-
SMCS) that provides temporary health care personnel to hospitals and
nursing homes, and temporary placement services to patients in private
homes, hospitals and nursing homes in the New York/New Jersey
metropolitan area and Southeastern Florida. For the fiscal year ended
May 31, 1995 Star reported revenue of $27 million. As of the market
close on March 1, 1996, Star's common stock traded at $6.750 per
share.
The terms of the proposed merger call for each outstanding share of
AMSERV's Common Stock to be converted into .409 shares of Star common,
representing a ratio of one share of Star's common stock for each
2.445 shares of AMSERV Common Stock. In the announcement of the
merger Mr. Mora commented, "After reviewing a number of proposals, we
believe that this strategic combination will enhance value for the
AMSERV shareholders".
Pursuant to the merger agreement, if the Star merger is not
consummated because AMSERV's Board determines that such termination is
necessary because of an agreement with a third party with respect to a
business combination or similar transaction, the Company is obligated
to pay Star a fee of $250,000 plus reasonable out-of-pocket fees and
expenses up to $200,000. AMSERV's reported cash and cash equivalents
and short-term investments are $1,268,000 and $1,200,000 respectively
as of December 23, 1995 as reported in AMSERV'S SEC Form 10-QSB. Based
on this level of cash and short-term investments, Amserv's potential
to generate substantial excess cash and Stockbridge's plan to reduce
overhead expense, Stockbridge does not believe that the payment of
these fees would have a significantly adverse effect on the Company's
operations.
o The transactions economics are unfavorable to AMSERV stockholders.
Star's closing price of $6.750 on March 1, 1996 would result in a
value of $2.76 per AMSERV share or 18.2 percent less than AMSERV's
stock price at its 52 week high of $3.375 per share on September 13,
1995.
o If the proposed merger is consummated, AMSERV stockholders (excluding
Mr. Mora) would own only 30.0 percent of the post-merger Star. Mr.
Mora and Star Chairman Stephen Sternbach would own 32.6 percent of the
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post-merger Star. This is based on outstanding shares of AMSERV of
3,273,703 outstanding shares of Star of 2,412,867, Mr Mora's ownership
of 476,127 shares of AMSERV and Mr. Sternbach's ownership of 43.9
percent of Star's shares outstanding.
o The transaction would enable Star, a small company with only $271,000
in available cash and an outstanding line of credit of $3,050,000 as
of November 30, 1995 to raid AMSERV's $2,467,000 of cash reserves as
of December 23, 1995 at great expense to AMSERV stockholders.
STOCKBRIDGE'S PLAN
Stockbridge believes that stockholder interests will be maximized and the
financial condition of AMSERV will be improved by adopting Stockbridge's
strategic plan for the elimination of duplicative and unnecessary overhead
costs. The Stockbridge Plan would immediately address (1) elimination of
duplicative and unnecessary overhead costs, including the relocation of the
Company's executive offices, (2) the selection of management personnel with a
demonstrated record of performance, and (3) the consideration of additional
steps to enhance long term stockholder value through increased earnings and
growth. Stockbridge believes that after the implementation of its plan, AMSERV
will be positioned to expand the scope of its operations through the selective
acquisitions and development of new opportunities.
1. Elimination of Duplicative and Unnecessary Overhead Costs.
---------------------------------------------------------
Stockbridge has reviewed the publicly available financial statements of the
Company. Stockbridge believes the Company has unnecessary corporate overhead
costs which could be eliminated under the Stockbridge Plan. Initially, the
Board will be presented with the opportunity to move the principal executive
offices to Stockbridge's facility in Pittsfield, Massachusetts, a location which
Stockbridge believes is better suited to the hands-on-management of operations
located in Ohio and New Jersey. Stockbridge believes that Pittsfield is a
superior location to La Jolla since it is in the same time zone as the Company's
operations in New Jersey and Ohio and is only a three-hour drive from New Jersey
and a two-hour plane ride from Ohio. Stockbridge and its affiliates currently
provide management and financial services (including Medicare Part B Billing)
for a varied group of affiliated healthcare entities from Pittsfield.
At this time, Stockbridge has not identified all of the costs which might
be incurred with such a relocation but anticipates that such costs would be
considered by the Board, together with the prospects for savings, in making any
decision to relocate. Stockbridge believes that through the consolidation of
certain corporate overhead functions a significant reduction in AMSERV's
overhead expense may be realized.
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Stockbridge and its affiliates perform the functions of billing, credit and
collections, accounts payable, and financial statement preparation for a
diversified group of nineteen health care entities from Stockbridge's principal
offices located in Pittsfield, Massachusetts. Such a consolidation would be
determined by the Board and would not be submitted to stockholders for approval.
Stockbridge believes that moving AMSERV's principal executive office to
Pittsfield into space presently occupied by Stockbridge will yield annual
savings of $26,000 to $39,000 on rental expense and substantial savings in
travel expense. The anticipated savings of up to $39,000 per year on rental
expense equals savings of approximately 1 cent per share of Common Stock
outstanding. Stockbridge is convinced that the economies of scale achievable by
combining AMSERV's corporate administrative functions with those in Pittsfield
will also result in considerable savings in wage and benefit expense and
expenditures for office and computer equipment. At present Stockbridge's
estimate of the savings associated with combining AMSERV's corporate office with
those of Stockbridge is limited to the savings associated with decreased rental
expense. Stockbridge believes the methodology it used to determine the
decreased rental expense is accurate but cannot fully guarantee that any of the
savings it envisions will be realized.
2. Selection of Management Personnel.
---------------------------------
Stockbridge intends to employ management personnel capable of successfully
managing the Company's business. Stockbridge believes the decline in both the
Company's operating performance and its stock price is a result of the failure
of the Board to employ a more effective Chief Executive Officer who is
responsible for the Company's day-to-day operations. Stockbridge expects that
its nominees would consider employing Mr. Clarke as the Company's President with
responsibility for day-to-day operations. It also expected that the Stockbridge
nominees would consider employing Mr. Cummings as AMSERV's Chief Executive
Officer. As directors and officers of AMSERV, Mr. Clarke and Mr. Cummings would
devote their time fully to the affairs of the Company. Mr. Clarke's and Mr.
Cummings' commitment of time to the operations of Stockbridge would be minimal.
Stockbridge's subsidiaries own skilled nursing facilities and an interest in a
partnership that distributes pharmaceutical and medical supplies. The nursing
facilities are managed by a third party manager and Stockbridge's partner
manages the pharmaceutical and medical supply distribution business.
Mr.Clarke and Mr. Cummings would each be paid a salary not to exceed
$100,000 plus the usual and customary benefits paid by the Company. Stockbridge
plans to evaluate existing management personnel at all AMSERV operations to
ensure key personnel are qualified for their current positions and to implement
the Stockbridge Plan. Stockbridge expects that its Nominees would consider
employing Mr. Clarke and/or Mr. Cummings as an executive officer on an interim
or permanent basis.
3. Consideration of Additional Steps to Enhance Stockholder Value.
--------------------------------------------------------------
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Stockbridge believes that over the long term, AMSERV has the potential to
achieve significant earnings and growth if it reaches a critical mass of related
businesses. Stockbridge currently has no plans to make changes to AMSERV's
operations. Stockbridge will evaluate each segment of the Company's operations
and recommend to the Board a plan to optimize the results of these operations.
To this end, Stockbridge will propose that the new Board consider the
acquisitions of businesses in the healthcare industry which offer functional and
geographical synergies with AMSERV's core businesses. Geographical synergies
refers to the benefits derived from aligning AMSERV's operations with those of
other healthcare organizations who provide their services in the same geographic
locations as AMSERV. As the industry consolidates, we believe home health care
providers will seek alliances with pharmaceutical and medical supply
distributors who provide services in their markets. These alliances will become
necessary for home health care providers wishing to maintain their existing
market share and eventually increase their market share.
State and federal law would dictate special consideration of any
transactions involving Stockbridge, its affiliates or any entity owned or
controlled by a director. In these instances, an independent committee of the
Stockbridge nominees would be formed to consider the proposal. This committee
would be comprised of all Stockbridge nominees not having an ownership or
control interest in the entity with which the merger is proposed. In any
instance in which a transaction involving Stockbridge is proposed, an
independent committee comprised of Dr. Stanley Evans, Mr. Thomas White and Mr.
Brian Lingard will evaluate the proposal. These three Stockbridge nominees have
no ownership interest, controlling interest, or other affiliation with
Stockbridge. In addition, at the discretion of the independent committee an
outside financial consultant or investment banker would be engaged to render a
fairness opinion on such transactions. Ultimately, transactions with
Stockbridge, its affiliates or any entity owned or controlled by a director
would require the approval of a majority of all shareholders not affiliated
with the company with which the merger is proposed.
Other than Stockbridge's proposal to merge its wholly owned subsidiary,
York Hannover with the Company, no other transactions with entities affiliated
with Stockbridge are contemplated under the Stockbridge Plan. Under the
Stockbridge Plan Stockbridge does not propose a merger between Stockbridge and
AMSERV. However, it is Stockbridge's hope that, if elected to AMSERV's Board,
The Stockbridge nominees will give fair consideration to Stockbridge's earlier
proposal to merge the Company with its wholly owned subsidiary, York Hannover.
This proposal, as originally presented to AMSERV's current Board expired on
December 4, 1995. It is possible that Stockbridge could revise the terms of the
Stockbridge proposal before submitting it to the Stockbridge nominees for their
consideration. Other than this, no other transactions with entities affiliated
with Stockbridge are contemplated under the Stockbridge Plan. The Stockbridge
Plan does not advocate the sale of any of the Company's assets nor have any non-
affiliated entities yet been identified as potential candidates for acquisition.
Stockbridge believes that as the healthcare industry continues to consolidate
and focus on reducing the costs of delivering services, AMSERV should position
itself to provide
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<PAGE>
an expanded scope of services. These services, which complement the Company's
existing home health business include pharmaceutical and medical supply
distribution, infusion therapy and other non-institutional medical services.
Consistent with this belief, the Stockbridge Plan would consider the acquisition
of existing businesses which provide for increased market share and earnings
potential.
The Stockbridge Nominees do not intend to adopt any special policies with
regard to conflicts of interest, but would allow the same to be governed under
applicable Delaware law.
STOCKBRIDGE'S ATTEMPTS TO WORK WITH THE BOARD AND MANAGEMENT
Stockbridge has been frustrated in its attempts to work with AMSERV's
management and Board. In January, 1995, Thomas M. Clarke and Lawrence B.
Cummings, principals of Stockbridge met with Mr. Mora in La Jolla, California,
and proposed that the Board consider the negotiation of a business combination
with York Hannover, a wholly-owned subsidiary of Stockbridge which distributes
pharmaceutical and other medical products in Florida, in which Stockbridge would
acquire a majority interest in AMSERV. The proposal for a majority interest
stipulated that AMSERV would be merged with York Hannover subsequent to York
Hannover's acquisition of four pharmaceutical distribution companies with which
York Hannover had signed letters of intent to acquire. Prior to the merger,
York Hannover would issue 4 million shares of Common Stock so that on a post-
merger basis York Hannover would own 57.6 percent of the total shares
outstanding in the merged Company. Following Mr. Mora's outright rejection of
such transaction, the proposal was revised to present for consideration by the
Board a transaction in which Stockbridge would receive a substantial minority
interest in AMSERV. The intention of this revised proposal was to merge only
York Hannover with AMSERV. Prior to the merger, York Hannover would issue
1,920,000 shares of Common Stock so that on a post merger basis York Hannover
would own 39.5 percent of the total shares outstanding in the new Company.
Subsequent to the merger York Hannover would assign its contracts to purchase
four pharmaceutical distributors to AMSERV so that all the Company's
stockholders would benefit equally from these acquisitions. On January 31,
1995, the Company requested additional information from Stockbridge and York.
On February 21, 1995, Stockbridge provided some, but not all of such information
on a preliminary and confidential basis. On March 2, 1995, Mr. Clarke, then
record holder of 5,000 shares of Common Stock, demanded to inspect and copy the
list of AMSERV stockholders. On March 30, 1995, the Company provided to Mr.
Clarke the stock ledger and list of registered stockholders of the Company
certified by the Company's transfer agent and transfer sheets showing changes in
the list of the stockholders of the Company. However, AMSERV failed to provide
the following information that Stockbridge had requested on January 31, 1995:
magnetic computer tape lists of the holders of the Company's Common Stock as of
the record date, non-
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objecting beneficial owner lists and other lists of beneficial owners not
identified on the stock ledger.
On April 5, 1995, Mr. Clarke received certain additional information
relating to the March 2, 1995 demand. However, Stockbridge began to believe
that Mr. Mora was taking action designed to entrench the Board, including the
newly-elected Mr. Spinelli, and to dilute the interests of existing
stockholders, and unilaterally withdrew its proposal of a business combination
between York Hannover and AMSERV. Despite the offer to Mr. Clarke contained in
Mr. Mora's April 5, 1995 letter to address the Board at an April 27, 1995
meeting in La Jolla, California, Mr. Clarke, on April 6, 1995 executed a written
consent calling for the removal of all incumbent directors (other than Mr.
Katten and Mr. Robinton) and the filling of the vacancies thereby created with
the Stockbridge nominees.
On April 13, 1995, the Company issued a press release announcing, among
other things, that the Board of Directors had acted on April 13, 1995 pursuant
to a provision of the By-Laws to establish April 21, 1995 as the record date
(the "Record Date") for the Consent and that on the April 6, 1995 the Company
had entered into an agreement with North Central Personnel, Inc., the holder of
the NCP Note (principal balance $833,334), to exchange the NCP Note for 426,794
shares of Class A Preferred Stock and other considerations. Stockbridge has
been advised by counsel for AMSERV that the Class A Preferred Stock has one vote
per share and votes with the Common Stock.
On April 18 and 20, 1995, Mr. Mora exercised some of the options granted to
him by the Company under his employment agreement and purchased an aggregate of
177,562 shares of Common Stock with $156,099 in cash and a non-recourse
promissory note in the amount of $198,440.
On April 18, 1995, Leslie Hodge, Secretary and Vice President of
Administration of AMSERV exercised options to purchase 8,750 shares of Common
Stock, and Diane Gurik, the president of AMSERV's Ohio subsidiary North Central
Personnel Division (and the sole stockholder of North Central Personnel, Inc.),
exercised options to purchase 20,000 shares of Common Stock.
On April 27, 1995, Stockbridge commenced an action in Delaware Chancery
Court, New Castle County, against AMSERV and each of its Directors, alleging
violation of Section 228 of the DGCL and breach of fiduciary duty in connection
with the actions of the Board (i) in establishing April 21, 1995 rather than the
April 7, 1995 as the Record Date, (ii) by entering into the exchange of the NCP
Note for the Class A Preferred Stock and (iii) by issuing shares of Common Stock
to Mr. Mora on the exercise of his options. Stockbridge sought equitable relief
alternatively by way of rescission of the complained of transaction or an
injunction against voting (or the counting thereof as outstanding for purposes
of the consent) of the Class A Preferred Stock the shares of Common Stock issued
to Mr. Mora upon exercise of his options.
20
<PAGE>
On April 28, 1995, the Delaware Chancery Court, scheduled a hearing on
Stockbridge's Motion for equitable relief for May 30, 1995 and established a
schedule of expedited document production and discovery. On May 12, 1995
Stockbridge entered into a standstill agreement with AMSERV for the purpose of
considering a merger between Stockbridge's subsidiary York Hannover and the
Company. The standstill agreement was signed in response to Stockbridge's
consent solicitation to replace a majority of the AMSERV Board. The agreement
provided for a 30 day period in which Stockbridge and AMSERV agreed to commence
negotiations with regard to a potential business combination and for due
diligence to be conducted by Batchelder. As part of the agreement, AMSERV and
Stockbridge settled pending litigation brought in Delaware Chancery Court
against AMSERV and its directors with respect to transactions undertaken by
AMSERV which involved the issuance in April, 1995 of additional shares of common
stock and voting preferred stock.
Pursuant to the terms of the Standstill Agreement, (the "Agreement") and
the previously executed Confidentiality Agreement, Stockbridge provided AMSERV
with certain confidential information concerning Stockbridge and York Hannover.
AMSERV'S Board established a meeting date of June 8, 1995 for the purpose of
discussing Stockbridge's proposed merger. Lawrence B. Cummings and Thomas M.
Clarke were invited to make a presentation at the Board meeting of June 8th in
La Jolla, CA.
Stockbridge maintained an ongoing dialogue with AMSERV'S financial advisor
Batchelder concerning the information to be presented to AMSERV'S Board at the
June 8, 1995 meeting.
Mr. Cummings and Mr. Clarke presented a written document to the Board at
its June 8 meeting and discussed the objectives of Stockbridge and its
principals to enhance stockholder value through the proposed merger between York
Hannover and AMSERV. In advance of the meeting on June 8, 1995 Batchelder
indicated that counsel to AMSERV had proposed the following guidelines for a
merger:
1. Stockbridge should receive no more than 40.0 percent of AMSERV'S post
merger outstanding stock.
2. Stockbridge would agree not to seek control of the Company for a specific
period of time.
3. Stockbridge would agree to limit the percentage of its shares that would
be voted in an effort to replace a majority of the Board or to gain control
of the Board.
4. The Board on a post-merger basis would consist of three members of the
existing AMSERV Board, two members of Stockbridge's Board and two outside
Directors selected by Stockbridge and approved by AMSERV'S existing Board.
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<PAGE>
Mr. Clarke and Mr. Cummings made a detailed presentation to the Board on
June 8, 1995. At the conclusion of the Board Meeting, Batchelder indicated to
Mr. Clarke and Mr. Cummings that the Board wished to proceed with a complete due
diligence of Stockbridge and its proposal with the intent of fully considering
Stockbridge's merger proposal. Stockbridge and AMSERV extended the Agreement
until August 10, 1995 and the Board meeting was scheduled for August 10, 1995 to
consider the merger.
Batchelder indicated to Stockbridge that it was authorized to conduct due
diligence and establish preliminary business merger valuations. Preceding the
August 10, 1995 Board meeting, Batchelder conducted on-site due diligence of
Stockbridge's headquarters in Pittsfield, Massachusetts and met with
Stockbridge's investment bankers, Triumph Capital Group, Inc.
Batchelder indicated that in order for the Board to act on the merger
proposal at its August 10, 1995 meeting it would be necessary to obtain audited
financial statements and a preliminary commitment for the financing of AMSERV on
a post-merger basis. Batchelder also indicated to Stockbridge that the Board
wanted to fully recognize the Employment Agreement between AMSERV and it
Chairman, Mr. Eugene J. Mora. Stockbridge agreed that it would not seek to
limit Mr. Mora's entitlements under his Employment Agreement. Batchelder also
indicated that Mr. Mora intended to resign from the Board of Directors and as an
officer of AMSERV on a post-merger basis.
Up to the August 10, 1995 Board meeting, Mr. Clarke had numerous
conversations with Batchelder in which Batchelder indicated that they and the
Board were working toward the presentation of a complete merger proposal for
consideration by the Board at its August 10, 1995 meeting. Stockbridge provided
its audited financial statements to Batchelder on August 9, 1995 and also
provided on that date a Preliminary Term Sheet for the financing of AMSERV on a
post-merger basis to be provided by IBJ Schroder Bank and Trust Company ("IBJ").
Stockbridge contacted Batchelder on August 9, 1995 to insure that
Batchelder was prepared for the Board meeting and had all of the necessary
information requested of Stockbridge. Batchelder indicated that Stockbridge had
satisfied all of the Board's informational requirements.
Batchelder indicated on August 11, 1995 that the Board was satisfied with
all aspects of the due diligence and that the only obstacle to the Board's
action on the merger proposal was the presentation of a firm financing
commitment by IBJ or other financial institutions. Batchelder also indicated
that the Board had received verbal expressions of interest from two third
parties with respect to a potential business combination with AMSERV.
22
<PAGE>
Mr. Clarke submitted a letter to the AMSERV Board outlining his
understanding of the steps necessary for the Board to act on Stockbridge's
merger proposal, and Mr. Clarke met with Batchelder in La Jolla, California on
August 15, 1995. At the meeting a schedule was negotiated to enable IBJ to
conduct its due diligence in order to issue a firm financing commitment.
Mr. Mora refused to let Mr. Cummings or Mr. Clarke participate in the due
diligence process indicating that IBJ would have to conduct its due diligence
independently. Mr. Clarke indicated to Batchelder that this was unacceptable
and Batchelder was successful in negotiating that Mr. Cummings could participate
in the due diligence with IBJ.
On August 29, 1995, Stockbridge announced that it had won a Fee Petition in
the Delaware Chancery Court in the amount of $50,000 to be paid by AMSERV. The
Fee Petition related to the litigation initiated by Stockbridge on April 27,
1995 in connection with Stockbridge's allegations of the Boards breach of
fiduciary duty. In the lawsuit, Stockbridge alleged that in response to its
announced filing of a consent solicitation to remove a majority of AMSERV's
directors, AMSERV undertook two transactions designed to thwart the
solicitation. An outstanding note in the amount of $1 million held by NCP was
exchanged for 426,794 shares of the Company's voting preferred stock. AMSERV
executed a voting agreement and irrevocable proxy in conjunction with the
exchange, giving Mr. Mora full power in a control contest to vote the shares
issued to NCP. In addition, the Company loaned Mr. Mora the money to purchase
177,562 shares of AMSERV Common Stock. These two transactions served to dilute
Stockbridge's voting power from 6.0 percent to 5.0 percent.
In awarding the $50,000 to Stockbridge, the Delaware Chancery Court
concluded that the disclosure of the reduction of the voting power and the
rescission of the proxy were significant benefits that all shareholders received
as a result of this lawsuit. The Court reasoned that in fairness, the Company
should pay a reasonable fee to the counsel that earned these benefits.
Mr. Clarke received a preliminary financing commitment from IBJ on
September 1, 1995 and Mr. Clarke indicated to Batchelder that if he received
written confirmation indicating the Board had scheduled a meeting for a date
during the week of September 25, 1995 for the purpose of considering the
Stockbridge merger proposal then it would be acceptable for the Board Meeting to
be scheduled as late as during the week of September 25, 1995.
The Board did not schedule a meeting to consider Stockbridge's proposal
despite its previous commitment to consider a financed merger proposal from
Stockbridge. In a letter dated September 18, 1995 to AMSERV'S Board Mr. Clarke
requested that the board establish a record date for his action by written
consent to remove and replace the Board. The letter stated that AMSERV had
breached its obligations under the June 12, 1995 standstill agreement as amended
by: seeking third party interest in a business
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combination, failing to advise Stockbridge of any inquiries from third parties
and failing to permit Stockbridge and IBJ to conduct appropriate due diligence.
Stockbridge and AMSERV entered into an agreement on October 18, 1995
stipulating that Stockbridge withdraw its written notice delivered to AMSERV on
September 18, 1995 indicating Stockbridge's intent to act by written consent and
requesting that AMSERV'S Board set a record date for such consent. Stockbridge
agreed not to commence any other consent solicitation with respect to AMSERV or
deliver any other such notice until the earlier of January 1, 1996 or the
conclusion of the process by which AMSERV'S Board will consider potential
business combinations from all qualified third parties involving AMSERV.
On November 6, 1995 Stockbridge signed a confidentiality agreement
pertaining to its treatment of due diligence material it had requested from
AMSERV. On November 9, 1995 Mr. Cummings and Mr. Christopher McLaughlin,
Stockbridge's Controller, met with Ms. Leslie Hodge and Mr. Kenneth Freeman at
the headquarters of AMSERV'S New Jersey Division in Edison, New Jersey. The
purpose of the trip was to perform due diligence of AMSERV'S New Jersey
Division. On October 8, 1995 Mr. Clarke met with Ms. Diane Gurik to conduct due
diligence of AMSERV's Ohio Division. The submission of due diligence
information between Stockbridge and AMSERV began on November 9, 1995.
Stockbridge submitted to AMSERV on November 13, 1995 its written proposal
to effect a business combination between York Hannover and AMSERV. The
following are the major provisions of the proposal:
1. AMSERV would be the surviving corporation upon merger with York Hannover.
2. Stockbridge, as sole stockholder of York Hannover would receive 1,200,000
shares of AMSERV Common Stock so that on a fully-diluted proforma basis,
Stockbridge and its affiliates will own 1,402,844 shares or 32.2 percent of
AMSERV.
3. Upon the merger, AMSERV'S Board would be comprised of five members, two
selected by Stockbridge, two incumbents of which one must be Mr. Mora and
one non-affiliated director to be selected by the other four.
4. Thomas M. Clarke and Lawrence B. Cummings would enter into employment
agreements with AMSERV.
5. As consideration for the merger, AMSERV would receive all of the
outstanding stock in York Hannover. York Hannover's primary asset is its
40.0 percent ownership interest in the York Hannover Partnership ("YHP").
YHP distributes pharmaceutical and medical supplies in the state
24
<PAGE>
of Florida. For the twelve month period ending December 31, 1996 YHP has
forecasted revenues of $8.6 million and pretax income of $940,000.
6. The proposal expired on December 4, 1995.
The November 13, Stockbridge proposal outlined above differs from The
Stockbridge Plan detailed in this consent solicitation. Unlike the business
combination proposal, The Stockbridge Plan does not advocate a merger and
exchange of stock between AMSERV and Stockbridge or one of Stockbridge's
affiliates nor does it advocate that only three of the five current directors be
replaced. The Stockbridge Plan calls for replacement of all five members of the
AMSERV Board with Stockbridge nominees, the reduction of unnecessary overhead
costs of the Company including the relocation of the Company's executive offices
to Stockbridge's headquarters in Pittsfield, Massachusetts and the consideration
of acquisitions of and alliances with companies whose operations complement
those of AMSERV. The Stockbridge Plan advocates that, pending approval by the
Board, Mr. Cummings and Mr. Clarke be hired as employees at will to serve as the
chief executive officer and president of AMSERV. Under the merger proposal Mr.
Cummings and Mr. Clarke would have entered into employment agreements with
AMSERV.
On Monday December 11, 1995 Mr. Clarke initiated a phone call to
Batchelder. Batchelder informed Mr. Clarke that in its meeting of December 8,
1995 AMSERV'S Board of Directors decided not to accept the Stockbridge proposal
at that time. The Board did not reject the proposal but instead decided to
evaluate the Stockbridge proposal against other merger proposals it receives
from third parties.
On January 18, 1996 Mr. Clarke was surprised to read AMSERV's press release
announcing the signing of a letter of intent to merge the Company with Star. No
representative of AMSERV or Batchelder had telephoned Mr. Clarke or written to
him regarding the Board's decision to consummate a merger with Star.
INFORMATION ABOUT STOCKBRIDGE AND THE STOCKBRIDGE GROUP
The Stockbridge Group consists of Stockbridge, York Hannover, its
principals, Thomas M. Clarke and Lawrence B. Cummings, and Lenox, a
Massachusetts corporation jointly owned by Mr. Clarke and his wife.
Stockbridge Investment Partners, Inc. is a Florida corporation with offices
located in Palm Beach, Florida and Pittsfield, Massachusetts which is engaged in
investing in businesses which provide healthcare products, services and
facilities. It was organized in December of 1993. Mr. Clarke and his wife
jointly own 50.0 percent of Stockbridge's
25
<PAGE>
equity and Mr. Cummings, and siblings own the remaining 50.0 percent of
Stockbridge's equity.
Lenox is a Massachusetts corporation with principal offices in Pittsfield,
Massachusetts which acts as financial advisor or principal in health care
investments and transactions. Lenox, organized in October of 1992, controls
together with Stockbridge, its partners and affiliates nineteen healthcare
properties representing 1,871 licensed beds, institutional pharmaceutical,
medical supply distributors and equity investments in health care related
companies.
The following individuals are Stockbridge's nominees for director:
------------------------------------------------------------------
Mr. Cummings, 40, is the Chief Executive Officer and a director of
Stockbridge and York Hannover.
Mr. Clarke, 40, is the President and a director of Stockbridge, York
Hannover and Lenox.
Dr. Stanley Evans, 59, maintains a private medical practice in Portland,
Maine and is the Medical Director of Recovery Center of Mercy Hospital in
Portland, Maine. Dr. Evans is not a director or officer of Stockbridge,
York Hannover or Lenox.
Thomas A. White, 50, is Chairman of the Board and Chief Executive Officer
of Sequoia Enterprises, Inc., a leveraged buyout company specializing in
the forest products industry. Mr. White is not a director or officer of
Stockbridge, York Hannover or Lenox.
Brian A. Lingard, 38, is President of Territorial Resources, Inc., a
publicity traded international oil and gas exploration company. Mr.
Lingard is also the President of Earnest Producing Corporation, a privately
held company which operates or owns interests in more than 200 oil wells in
Texas. Mr. Lingard is not a director or officer of Stockbridge, York
Hannover or Lenox.
York Hannover is the direct beneficial owner of 175,644 shares of AMSERV
Common Stock. During October and November of 1995 Stockbridge contributed all
of its shares of AMSERV to its wholly owned subsidiary, York Hannover. Lenox is
the direct beneficial owner of 400 shares of AMSERV's Common Stock. Mr. Clarke
is the direct beneficial owner of 16,800 shares of AMSERV Common Stock and may
be deemed to beneficially own all shares owned by York Hannover and Lenox. Mr.
Cummings is the direct and beneficial owner of 10,000 shares of AMSERV Common
Stock and may be deemed to beneficially own all shares owned by York Hannover.
Additional information about the directors, officers, members or the
management committee and "controlling persons" of Stockbridge is set forth in
Appendix A hereto.
26
<PAGE>
PROPOSED ELECTION OF THE STOCKBRIDGE NOMINEES
Stockbridge's nominees for director have expressed their willingness to
serve on the Board and have provided the information set forth below for
inclusion in this Consent Statement. Stockbridge proposes that the Stockbridge
Nominees be elected to hold office until AMSERV's 1996 Annual Meeting of
Stockholders or until successors are elected and qualified.
27
<PAGE>
<TABLE>
<CAPTION> Shares Beneficially
Name and Owned as of Percent
Business Address Age February 23, 1996 of Class*
- ---------------- --- ------------------- ----------
<S> <C> <C> <C>
Thomas M. Clarke 40 192,844 5.89%
Lenox Healthcare, Inc.
2 South Street, Suite 360
Pittsfield, MA 01201
Lawrence B. Cummings 40 185,644 5.67%
Stockbridge Investment Partners,
Inc.
250 Royal Palm Way, Suite 202
Palm Beach, FL 33480
Dr. Stanley J. Evans 59 0 0.00%
91-93 State Street
Portland, ME 04101
Thomas A. White 50 0 0.00%
147 Patricia Avenue
Dalton, MA 01226
Brian A. Lingard 38 0 0.00%
1300 Main Street
Suite 1840
Houston, TX 77002
</TABLE>
- ------------------------------
* Assumes 3,273,703 shares are outstanding.
Mr. Clarke is the President, a director and founder of each of Stockbridge
and Lenox. Previously, Mr. Clarke served for five years as the Treasurer and
Chief Financial Officer of Berkshire Health Systems, Inc., a diversified health
care company operating sixteen nursing homes and two hospitals. Prior to this,
Mr. Clarke spent four years with Hospital Corporation of America as the Chief
Financial Officer of two managed hospitals. During his sixteen years in the
health care field, he has arranged for financing for and developed and managed a
variety of health care facilities. Mr. Clarke is a Fellow in the Health Care
Financial Management Association and a Certified Member of the Patient
Accounting Association. Mr. Clarke is a frequent lecturer on a wide
28
<PAGE>
variety of regional and national health care topics and holds a Masters of
Science degree in Business from Husson College.
Mr. Cummings is the Chief Executive Officer of Stockbridge. Mr. Cummings
has over ten years of health care experience and is an active investor in the
health care industry. From June 1989 until March 1994, Mr. Cummings was
Chairman of the Board, Chief Executive Officer and President of Providence
Health Care, Inc. ("Providence"), a Cleveland, Ohio based public nursing home
management company which Mr. Cummings founded. In March 1994, Providence was
sold to The Multicare Companies, Inc., another publicly traded nursing home
chain. Prior to founding Providence, Mr. Cummings was President and Chief
Executive Officer of Common Goal Mortgage Company, the nation's only lender
dedicated exclusively to nursing care. Mr. Cummings holds a Masters of Business
Administration degree from Harvard Business School and a B.A. from Harvard
College.
Dr. Evans is engaged in the private practice of medicine and is Board
Certified in Addiction Medicine and Board Qualified in Internal Medicine. Dr.
Evans has established a network of practice sites with staff privileges and
professional affiliates at numerous facilities including Mercy Hospital, in
Portland, Maine where Dr. Evans is the Medical Director of the Recovery Center
of Mercy Hospital. Dr. Evans currently holds faculty positions as a clinical
assistant professor at the University of Vermont College of Medicine and the
Maine Medical Center Department of Psychiatry. In addition to his teaching and
clinical responsibilities, Dr. Evans served on the Board of Trustees at the
University of Maine system from 1975 to 1989 including nine years as the Vice
Chairman of the Board of Trustees. Dr. Evans was the Vice Chairman of the Board
of Governors of the Association of Governing Boards of Universities and Colleges
from 1986 through 1990. During the period from 1977 to 1986, Dr. Evans was a
member of the Board of Governors and a member of the Board of Directors of the
Public Broadcasting System in Washington, D.C. Dr. Evans is the author of
numerous published articles including contributions to the New England Journal
of Medicine. Dr. Evans is a frequent speaker on a variety of medical and social
topics including testimony to the Select Sub-Committee on Investigations of the
United States Senate.
Mr. White is presently Chairman of the Board and Chief Executive Officer of
Sequoia Enterprises, Inc., a leveraged buyout company specializing in the forest
products industry. For the previous eight years Mr. White served as President
and Chief Executive Officer of Crane & Company, Inc. ("Crane"), a maker of fine
writing papers and the paper of which all United States currency is printed.
Prior to that Mr. White served in various senior management positions with
Crane. Mr. White holds an undergraduate degree from Syracuse University and a
Master of Business Administration degree from Harvard University.
Mr. Lingard has served since November, 1994 as President of Territorial
Resources, Inc., a publicly traded international oil and gas exploration company
with a focus in Mongolia. Also, since 1993 he has served as President of
Earnest Producing
29
<PAGE>
Corporation, a privately held company which operates or owns interests in more
than 200 gas and oil wells in Texas. From 1982 to 1986 and from 1988 to present
Mr. Lingard also served as President of B.A. Lingard & Co., Inc., an investment
banking firm concentrating in restructuring, private placement and merger and
acquisition transactions. From 1987 to 1988, Mr. Lingard was employed by
Chemical Bank Investment Banking where he was responsible for developing
investment banking opportunities in the South Western United States. Mr.
Lingard received his Bachelor of Arts degree from the University of Rochester
and his Master of Business Administration degree from the University of
Rochester.
Appendix A hereto sets forth certain information about the directors,
officers, employees and "controlling persons" of Stockbridge and Lenox. Except
as set forth in this Consent Statement or in Appendix A hereto, to the best of
Stockbridge's knowledge, neither Stockbridge, its nominees for Director, any
other participant in Stockbridge's consent solicitation nor any director,
officer or "controlling person" of Stockbridge, (i) owns beneficially, directly
or indirectly, any securities of AMSERV, (ii) owns any securities of AMSERV of
record but not beneficially, (iii) has, to their knowledge, any associates who
own beneficially, directly or indirectly, any securities of AMSERV, (iv) within
the past two years, has purchased or sold any securities of AMSERV, (v) has
indebtedness for the purpose of acquiring or holding securities of AMSERV, (vi)
is or has been a party to any contract, arrangements or understandings with
respect to any securities of AMSERV within the past year, (vii) has had or will
have (or to their knowledge, has any associate or any member of their immediate
families who has had or will have) a direct or indirect material interest in any
transaction or series of similar transactions since the beginning of AMSERV's
last fiscal year, or in any currently proposed transaction or series of similar
transactions to which AMSERV or any of its subsidiaries was or is to be a party,
or (viii) has (or to their knowledge, has any associate who has) any arrangement
or understanding with any person with respect to future employment by AMSERV or
its affiliates or with respect to any future transactions to which AMSERV or its
affiliates will or may be a party.
Neither Mr. Clarke, Mr. Cummings, Dr. Evans, Mr. White nor Mr. Lingard or
any business or professional entity of which Mr. Clarke, Mr. Cummings, Dr.
Evans, Mr. White or Mr. Lingard is an executive officer, partner or equity
owner, any member of their immediate families nor any trust or other estate in
which they have a substantial beneficial interest or serve as a trustee, has had
any business relationship with, or has been indebted to, AMSERV during AMSERV's
last fiscal year, or proposes to have any business relationship with during
AMSERV's current fiscal year, other than as set forth in this Consent Statement
or in Appendix A hereto.
The Board is currently comprised of five members. Stockbridge is proposing
that Messrs. Mora, Rogers, Spinelli, Robinton and Katten be removed and that the
Stockbridge Nominees be elected. The Bylaws of the Company allow the Board of
Directors to set the number of directors constituting the Board of Directors,
but in no event shall such number be less than four nor more than seven. The
Bylaws may be
30
<PAGE>
amended by a majority of the Board of Directors. Upon the successful election
of the Stockbridge Nominees, Stockbridge intends to propose that the Board of
Directors amend the Bylaws to provide for a five member Board of Directors.
CERTAIN ARRANGEMENTS
Stockbridge, York Hannover, Lenox, Mr. Clarke, and Mr. Cummings (the
"Stockbridge Group") have entered into a written agreement (the "Group
Agreement") relating to their shares of AMSERV Common Stock. The Stockbridge
Group is the beneficial owner of 202,844 shares of AMSERV's Common Stock or
6.20% of total shares outstanding. Under the Group Agreement, the members of
the Group have given Mr. Clarke power of attorney with respect to filings with
the Securities and Exchange Commission on behalf of the Group and have granted
mutual limited rights of first refusal as to shares of AMSERV Common Stock
owned.
EFFECTS OF CHANGE-OF-CONTROL
----------------------------
According to the Company's Proxy Statement dated October 14, 1994, Mr.
Mora's Employment Agreement provides that "if Mr. Mora is terminated without
cause, [AMSERV] shall pay to Mr. Mora the compensation he earned in the final
year of his employment in each of the immediately following five years and shall
transfer to Mr. Mora any individual life insurance policies owned by [AMSERV]."
Stockbridge would anticipate that any termination of Mr. Mora would be "for
cause" or would otherwise be negotiated to avoid the payment of the maximum
amounts to which he might otherwise claim under such arrangement.
Under the Company's 1991 Stock Options Plan, upon a "Change of Control"
(which would appear to include the circumstances under which the Stockbridge
Nominees would have replaced the incumbent Directors pursuant to this Consent
Solicitation), all options thereunder become exercisable in full and exercisable
options may be purchased by the Company. Stockbridge does not believe that such
acceleration would have material adverse effect on the Company. Based on
information supplied by the Company, there were 311,762 options exercisable as
of June 24, 1995. The Company also reported that on January 16, 1996, it
accepted a recourse promissory note from Mr. Mora in the amount of $199,342 as
partial payment for 110,500 shares of Common Stock acquired upon the exercise of
stock options held by Mr. Mora. Based on this information, it is Stockbridge's
belief that if Stockbridge is successful in its consent solicitation to replace
the AMSERV Board there will be 201,262 options that will become exercisable in
full and may be purchased by the Company. Stockbridge does not believe that
such acceleration of the options will have an adverse effect on the Company
because the number of exercisable options is relatively small and the option
price is at or near the current market price of AMSERV Common Stock.
31
<PAGE>
According to Note 4 to the Company's financial statements for the fiscal
year ended June 30, 1994, the NCP Note which was purported exchanged for the
Class A Preferred Stock contained a provision which called for an acceleration
of the indebtedness ($833,334 at April 6, 1995) in the event that Mr. Mora
ceased to be employed by the Company on a full-time basis. Since Stockbridge is
seeking rescission of the transaction pursuant to which the NCP Note was
exchanged for Class A Preferred Stock if Stockbridge is successful, the NCP Note
would be in effect and this provision could apply. In addition, the Class A
Preferred Stock provides that a "Change of Control" (which would appear to
include the circumstances under which the Stockbridge Nominees would have
replaced the incumbent Directors pursuant to this Consent Solicitation) and the
termination of Mr. Mora's employment constitute Events of Default which permit
an acceleration of scheduled redemption which otherwise would be 20% on each of
May 29, 1995, November 29, 1995, May 29, 1996, November 29, 1996 and May 29,
1997.
Other than the foregoing, Stockbridge is not aware of any other obligations
of AMSERV that may be affected by a Change-in-Control.
THE CONSENT PROCEDURE
Section 228 of the DGCL states that, unless otherwise provided in the
certificate of incorporation, any action that may be taken at any annual or
special meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if consents 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, and those consents are delivered to the corporation by delivery to
its registered office in Delaware, its principal place of business or an officer
or agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. In the case of this Consent
Solicitation, written, unrevoked consents of the holders of a majority of the
outstanding shares of Common Stock as of the Record Date must be delivered to
the Company as described above to effect the actions as to which consents are
being solicited hereunder. Section 228 of the DGCL further provides that no
written consent shall be effective to take the corporate action referred to
therein unless, within 60 days of the earliest dated consent delivered in the
manner required by Section 228, written consents signed by a sufficient number
of holders to take such action are delivered to the corporation in the manner
required by Section 228.
IT IS CURRENTLY THE INTENTION OF STOCKBRIDGE TO CEASE THE SOLICITATION OF
CONSENTS ONCE STOCKBRIDGE HAS DETERMINED THAT VALID AND UNREVOKED CONSENTS
REPRESENTING A MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK AS
OF THE RECORD DATE HAVE BEEN OBTAINED AND TO DELIVER SUCH CONSENTS TO THE
COMPANY IN THE MANNER REQUIRED BY SECTION 228
32
<PAGE>
OF THE DGCL AS SOON AS PRACTICABLE THEREAFTER. WHEN CONSENTS FOR A MAJORITY OF
THE COMPANY'S COMMON STOCK HAVE BEEN OBTAINED AND DELIVERED TO THE COMPANY, A
SHAREHOLDER WILL BE UNABLE TO REVOKE HIS OR HER CONSENT. IF STOCKBRIDGE HAS NOT
RECEIVED CONSENTS SUFFICIENT TO TAKE THE ACTIONS PROPOSED HEREIN BY THE CLOSE OF
BUSINESS ON MARCH 30, 1996, STOCKBRIDGE WILL CEASE THE SOLICITATION OF CONSENTS
PURSUANT TO THIS CONSENT SOLICITATION AND WILL NOT DELIVER TO THE COMPANY THE
CONSENTS THAT STOCKBRIDGE HAS RECEIVED.
Section 213(b) of the DGCL provides that the record date for a consent
solicitation shall be as established by the board of directors of the
corporation or, if no record date is so established, shall be the first date on
which a signed written consent is delivered to the corporation. York Hannover
delivered a signed written consent to the proposed actions herein to the Company
on January 8, 1996.
If the actions described herein are taken, Stockbridge will promptly notify
the stockholders who have not consented to the actions taken as required by the
DGCL.
Consents may only be executed by stockholders of record at the close of
business on the Record Date. As of January 16, 1996, the Company had
outstanding 3,273,703 shares of Common Stock. The number of votes necessary to
effect the proposals is 1,636,852 (a majority of 3,273,703).
Based on its review of publicly available information, Stockbridge is not
aware of any other material change since January 16, 1996, in the number of
outstanding shares of Common Stock. Each share of Common Stock entitles the
record holder thereof to cast one vote. The Company's Certificate of
Incorporation and Bylaws do not provide for cumulative voting.
With respect to this solicitation, broker non-votes and directions to
withhold authority to consent are counted for purposes of establishing a quorum
though are not counted for purposes of determining whether a proposal has been
approved. Since Stockbridge must receive consents from a majority of the
Company's outstanding shares in order for the Proposals to be adopted, a broker
non-vote or direction to withhold authority to vote on the blue card will have
the same effect as a "no" vote with respect to Stockbridge's solicitation.
BROKER NON VOTES, DIRECTION TO WITHHOLD AUTHORITY TO CONSENT OR NOT
RETURNING A SIGNED CONSENT WILL HAVE THE SAME EFFECT AS WITHHOLDING CONSENT TO
THE PROPOSED ACTIONS. STOCKBRIDGE URGES EACH STOCKHOLDER TO ENSURE THAT THE
RECORD HOLDER OF HIS OR HER SHARES MARKS, SIGNS, DATES AND RETURNS THE ENCLOSED
CONSENT AS SOON AS POSSIBLE.
33
<PAGE>
VOTING; COSTS OF CONSENT SOLICITATION
Consents will be solicited by mail, telephone, telegram and/or personal
solicitation, by officers and employees of Stockbridge. No such persons shall
receive additional compensation for such solicitation. In addition, Stockbridge
has retained MacKenzie Partners, Inc. ("MacKenzie") to act as an advisor in the
submission of this Consent Solicitation. Stockbridge has agreed to pay
MacKenzie a fee estimated not to exceed $50,000.00 plus reasonable out-of-pocket
expenses.
If your shares are registered in your own name, you may mail or fax your
consent to Stockbridge Investment Partners, Inc. at the address or fax number
listed below.
If your shares are held in "street name" - held by your brokerage firm or
bank-immediately instruct your broker or bank representative to sign
Stockbridge's BLUE consent and mail to Stockbridge and we will promptly deliver
it. Please be certain to include the name of your brokerage firm or bank. If you
have additional questions, please call:
STOCKBRIDGE INVESTMENT PARTNERS, INC.
The Berkshire Common
2 South Street, Suite 360
Pittsfield, MA 01201
CALL: (413) 448-2111
FAX: (413) 448-2120
Stockbridge anticipates that a total of approximately $250,000 will be
spent in connection with the solicitation. Actual expenditures may vary
materially from the estimate, however, as many of the expenditures cannot be
readily predicted. To date, expenses of approximately $50,000 have been incurred
in connection with the solicitation. The entire expense of preparing,
assembling, printing and mailing this Consent Statement and any other consent
soliciting materials and the cost of soliciting consents will initially be borne
by Stockbridge. If Stockbridge's nominees are elected, Stockbridge intends to
request reimbursement from AMSERV for these expenses. This request will not be
submitted to a vote of AMSERV stockholders. Banks, brokerage houses and other
custodians, nominees and fiduciaries may be requested to forward Stockbridge's
solicitation material to the beneficial owners of the shares they hold of
record, and Stockbridge will reimburse them for their reasonable out-of-pocket
expenses.
A consent executed by a stockholder may be revoked at any time before its
exercise by submitting (i) a written, dated revocation of such consent or (ii) a
later dated consent covering the same shares. A revocation may be in any
written form validly signed by the record holder as long as it clearly states
that the consent previously given is no longer effective and must be executed
and delivered prior to the time that the action authorized by the executed
consent is taken. The revocation may be delivered either to Stockbridge
Investment Partners, Inc., The Berkshire Common, 2 South St., Suite 360,
34
<PAGE>
Pittsfield, MA 01201, Attn: Corporate Secretary, or to AMSERV Healthcare Inc.,
3252 Holiday Court, LaJolla, CA 92037 Attn: Leslie Hodge, Corporate Secretary.
Although a revocation or later dated consent delivered only to the Company will
be effective to revoke a previously executed consent, Stockbridge requests that
if a revocation or later dated consent is delivered to the Company, a photocopy
of the revocation or later dated consent also be delivered to Stockbridge, at
the address set forth above, so that Stockbridge will be aware of such
revocation.
Sincerely,
Stockbridge Investment Partners, Inc.
March 7, 1996
YOUR CONSENT IS IMPORTANT. NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN,
PLEASE CONSENT TO THE REMOVAL OF THE BOARD AND THE ELECTION OF THE STOCKBRIDGE
NOMINEES BY SIGNING, DATING AND MAILING THE ENCLOSED BLUE CONSENT PROMPTLY.
ONLY YOUR LATEST DATED CONSENT COUNTS. EVEN IF YOU HAVE ALREADY RETURNED THE
BOARD'S CONSENT, YOU HAVE EVERY LEGAL RIGHT TO REVOKE IT BY SIGNING, DATING AND
MAILING THE ENCLOSED BLUE CONSENT.
35
<PAGE>
APPENDIX A
The names, business addresses, principal occupations and number of shares of
common stock beneficially owned by York Hannover, its Management Committee and
York Hannover's executive officers who are participants, and of all other
participants, in this solicitation are set forth below:
<TABLE>
<CAPTION>
Number of
Shares
Name and Principal Beneficially
Business Address Occupation Owned
- ---------------- ---------- -----
<S> <C> <C>
Stockbridge Investment
Partners, Inc. N/A 175,644(1)
The Berkshire Common
2 South Street, Suite 360
Pittsfield, MA 01201
</TABLE>
Purchase (Sales and Transfers in brackets) by Stockbridge within the last two
years:
<TABLE>
<CAPTION>
Dates Number of Shares
----- ----------------
<S> <C>
12/19/94 4,000
12/27/94 4,500
12/28/94 2,000
12/29/94 3,000
12/30/94 14,100
01/09/95 (5,000)
01/09/95 2,000
01/10/95 10,000
01/11/95 4,000
01/12/95 11,800
01/13/95 4,000
01/16/95 13,500
01/17/95 11,000
02/02/95 4,000
02/03/95 23,350
02/06/95 18,650
03/10/95 7,500
03/15/95 2,000
03/22/95 19,000
04/07/95 1,800
04/24/95 2,000
08/18/95 (3,000)
08/22/95 (3,000)
08/23/95 (3,000)
08/30/95 (3,000)
10/06/95 (145,200) Transferred to York Hannover
----------
Total 0
</TABLE>
(1) Stockbridge is deemed to be the beneficial owner of all of the shares owned
by its wholly owned subsidiary, York Hannover.
36
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares
Name and Principal Beneficially
Business Address Occupation Owned
- ---------------- ---------- -----
<S> <C> <C>
Lenox Healthcare, Inc. N/A 400
2 South Street, Suite 360
Pittsfield, MA 01201
</TABLE>
Purchases (Transfers in brackets) by Lenox within last two years:
<TABLE>
<CAPTION>
Dates Number of Shares
----- ----------------
<S> <C>
11/14/94 2,000
11/25/94 1,000
10/12/95 (3,000) Transferred to York Hannover
10/30/95 100
10/31/95 200
11/02/95 100
----------
Total 400
</TABLE>
<TABLE>
<S> <C> <C>
York Hannover Pharmaceuticals, Inc. N/A 175,644
The Berkshire Common
2 South Street, Suite 360
Pittsfield, MA 01201
</TABLE>
Purchase and shares transferred to York Hannover within last two years:
<TABLE>
<CAPTION>
Dates Number of Shares
----- ----------------
<S> <C>
09/18/95 500
09/19/95 944
10/02/95 20,000
10/05/95 500
10/06/95 145,200 Transferred from Stockbridge
10/12/95 5,000 Transferred from Thomas M. Clarke
10/12/95 3,000 Transferred from Lenox
10/24/95 300
10/30/95 200
--------
Total 175,644
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares
Name and Principal Beneficially
Business Address Occupation Owned
- ---------------- ---------- -----
<S> <C> <C>
Thomas M. Clarke President, Director of Stockbridge, 192,844(2)
York Hannover and Lenox
Linda M. Clarke Treasurer, Clerk, Director of Lenox
The Berkshire Common Treasurer, Secretary and Director
2 South Street, Suite 360 of Stockbridge and York Hannover
Pittsfield, MA 01201
</TABLE>
Purchases (Transfers shown in brackets) made by The Clarkes within the last two
years:
<TABLE>
<CAPTION>
Dates Number of Shares
----- ----------------
<S> <C>
01/05/95 1,000
01/09/95 4,000
01/10/95 3,000
01/10/95 5,000
01/10/95 5,000
01/12/95 2,100
03/02/95 900
03/07/95 800
10/12/95 (5,000) Transferred to York Hannover
------
Total 16,800
</TABLE>
(2) Mr. Clarke and Mrs. Clarke jointly own all of the outstanding capital stock
of Lenox and 50.0 percent of the outstanding capital stock of Stockbridge. All
shares purchased by Mr. Clarke (other than 5,000 shares purchased on January 10,
1995 individually) were for his Individual Retirement Account, of which Mrs.
Clarke is the beneficiary. For purposes of this Consent Solicitation, Mrs.
Clarke may be deemed to beneficially own all of the shares of AMSERV common
stock beneficially owned by Mr. Clarke.
38
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares
Name and Principal Beneficially
Business Address Occupation Owned
- ---------------- ---------- -----
<S> <C> <C>
Lawrence B. Cummings Chief Executive Officer and 185,644(3)
Stockbridge Investment Director
Partners, Inc. of Stockbridge and York Hannover
250 Royal Palm Way, Suite 205
Palm Beach, FL 33480
</TABLE>
Purchases made by Mr. Cummings within the last two years:
<TABLE>
<CAPTION>
Dates Number of Shares
- ------ ----------------
<S> <C>
10/02/95 5,000
10/10/95 5,000
-----------
Total 10,000
</TABLE>
<TABLE>
<S> <C> <C>
Dr. Stanley J. Evans Private Medical Practice Portland, ME 0
91-93 State Street Medical Director of Recovery Center of
Portland, ME 04101 Mercy Hospital, Portland, ME
Thomas A. White Chairman of the Board and Chief 0
147 Patricia Avenue Executive Officer of Sequoia
Dalton, MA 01226 Enterprises, Inc.
Brian A. Lingard President of Territorial Resources, 0
1300 Main Street Inc. and President of Earnest
Suite 1840 Producing Corporation
Houston, TX 77002
</TABLE>
- -----------------------------------
(3) Mr. Cummings together with his brothers, Amory Cummings, an attorney 311
South Wacker Drive; Chicago, Illinois, 60606, and Ogden E. Cummings, a private
investor, 146 Sunset Drive, Palm Beach, Florida 33480 and his sister, Lillian
Stevenson a private school administrator, Le Chatelant, Lex Avants, Sur
Montreux, CH1833 Switzerland, own the remaining 50.0 percent of the equity of
Stockbridge. Amory Cummings is also a director of Stockbridge and York Hannover.
Mr. Clarke and Mr. Lawrence Cummings are each deemed to beneficially own all
shares of AMSERV common stock owned by York Hannover.
39
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YOUR VOTE IS EXTREMELY IMPORTANT
1. Please SIGN, MARK, DATE and MAIL your BLUE consent in the enclosed postage-
paid envelope as soon as possible before March 14, 1996. If you wish to
consent to the removal of the Board and the election of the Stockbridge
Nominees, you must submit the enclosed consent, even if you have already
submitted the Company's consent card.
2. If your shares are held for you by a bank or brokerage firm, only your bank
or broker can vote your shares and only after receiving your instructions.
Please call your bank or broker and instruct your representative to consent
to the removal of the Board and the election of the Stockbridge Nominees on
the BLUE consent.
3. Time is short. Please vote today!
If you have questions or need assistance in voting your shares or in
changing your vote please contact Stockbridge Investment Partners, Inc. at
the number listed below:
2 South Street, Suite 360
Pittsfield, MA 01201
(413) 448-2111
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AMSERV HEALTHCARE INC.
CONSENT OF STOCKHOLDERS TO ACTION WITHOUT A MEETING
THIS CONSENT IS SOLICITED BY
STOCKBRIDGE INVESTMENT PARTNERS, INC.
The undersigned, a stockholder of record of AMSERV HEALTHCARE INC. (the
"Company"), hereby consents pursuant to Section 228 of the Delaware General
Corporation Law, with respect to the number of shares of Common Stock, par value
$.01 per share, of the Company held by the undersigned, to each of the following
actions without a prior notice and without a vote as more fully described in
Stockbridge Investment Partner, Inc's consent statement (receipt thereof is
hereby acknowledged).
STOCKBRIDGE INVESTMENT PARTNERS, INC. STRONGLY RECOMMENDS THAT STOCKHOLDERS
CONSENT TO THE FOLLOWING PROPOSALS:
1. Proposal One: The removal of incumbent directors of the Company.
All of the present members of the Board of Directors of the Company and any
person or persons elected or appointed to the Board of Directors prior to
the effective date of the proposed actions are hereby removed without cause
as directors of the Company.
Eugene J. Mora Benjamin L. Spinelli Melvin L. Katten
George A. Rogers Michael A. Robinton
To withhold consent to the removal of any director(s) write the name(s) of
such candidate(s) in the following space:
[_] CONSENT [_] CONSENT WITHHELD
If no box is marked above with respect to Proposal One, the undersigned
will be deemed to consent to such proposed action.
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2. Proposal Two: The election of new directors of the Company to fill the
vacancies on the Board of Directors, each to serve until his successor
is duly elected and qualified. Proposal Two is contingent upon
stockholder consent to Proposal One, the removal of the incumbent
directors of the Company. In the event that one or more of the
Stockbridge nominees does not receive a majority of stockholder
consents, Stockbridge will propose new nominees to be voted on by the
stockholders.
Thomas M. Clarke Lawrence B. Cummings Dr. Stanley J. Evans
Thomas A. White Brian A. Lingard
[_] CONSENT [_] CONSENT WITHHELD
To withhold consent to the election of any candidate(s), write the name(s)
of such candidate(s) in the following space:
If no box is marked with respect to Proposal Two, the undersigned will be
deemed to consent to such proposed action except that the undersigned will not
be deemed to consent to the election of any candidate whose name is written in
the space provided above. PLEASE ACT PROMPTLY. IMPORTANT: THIS CONSENT MUST
BE SIGNED AND DATED TO BE VALID.
Dated______________________, 1996
Signature:_______________________
Signature
(if held jointly):_______________
Title or authority
(if applicable):_________________
Please sign exactly as name appears hereon. If shares are registered in more
than one name, the signature of all such persons should be provided. A
corporation should sign in its full corporate name by a duly authorized officer,
stating his title. Trustees, guardians, executors, and administrators should
sign in their official capacity, giving their full title as such. If a
partnership, please sign in the partnership name by authorized persons. The
consent card votes all shares in all capacities.
PLEASE MARK, SIGN AND DATE THIS CONSENT BEFORE MAILING THIS CONSENT IN THE
ENCLOSED ENVELOPE.
