<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
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 Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
America Service Group Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
<PAGE> 2
AMERICA SERVICE GROUP INC.
105 WESTPARK DRIVE
SUITE 300
BRENTWOOD, TENNESSEE 37027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
America Service Group Inc.:
The Annual Meeting of Stockholders of America Service Group Inc. (the
"Company") will be held at Bank of America Plaza, Third Floor, 414 Union Street,
Nashville, Tennessee, on Monday, June 5, 2000, at 10:00 a.m., local time, to
consider and vote on:
1. The election of directors for the ensuing year; and
2. Such other matters as may properly come before the meeting
or any adjournments thereof.
The close of business on April 12, 2000, has been fixed as the record
date for determination of stockholders entitled to notice of, and to vote at,
the Annual Meeting or any adjournments thereof. A list of stockholders entitled
to vote at the Annual Meeting will be maintained during the ten-day period
preceding the meeting at the offices of the Company in Brentwood, Tennessee.
Your attention is directed to the proxy statement accompanying this notice.
You are cordially invited to attend the Annual Meeting in person. EVEN
IF YOU PLAN TO ATTEND IN PERSON, YOU ARE REQUESTED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE. You may revoke your proxy at any
time prior to its use.
By Order of the Board of Directors,
/s/ Jean L. Byassee
-----------------------------------
JEAN L. BYASSEE
Secretary
Brentwood, Tennessee
May 3, 2000
<PAGE> 3
AMERICA SERVICE GROUP INC.
105 WESTPARK DRIVE
SUITE 300
BRENTWOOD, TENNESSEE 37027
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 2000
This Proxy Statement is furnished to the holders of shares of (i) the
$.01 par value per share Common Stock (the "Common Stock") of America Service
Group Inc. (the "Company") and (ii) the $.01 par value per share Series A
Convertible Preferred Stock of the Company (the "Preferred Stock") in connection
with the solicitation by the Company's Board of Directors of proxies for use at
the Annual Meeting of Stockholders to be held at Bank of America Plaza, Third
Floor, 414 Union Street, Nashville, Tennessee, on Monday, June 5, 2000, at 10:00
a.m. local time, and at any adjournments thereof (the "2000 Annual Meeting"). It
is anticipated that this Proxy Statement and accompanying form of proxy will be
first sent to stockholders on or about May 3, 2000.
The cost of this solicitation will be borne by the Company. In addition
to solicitation by mail, certain officers and employees of the Company, who will
receive no compensation for their services other than their regular salaries,
may solicit proxies in person, by telephone or otherwise. The Company may also
make arrangements with brokerage houses, custodians, nominees and other
fiduciaries to send proxy materials to their principals at the Company's
expense.
VOTING PROCEDURES
VOTING STOCK
Only holders of record of the Common and Preferred Stock, as of the
close of business on April 12, 2000 (the "Record Date"), will be entitled to
vote at the 2000 Annual Meeting. The Company had outstanding 3,729,572 shares of
Common Stock and 125,000 shares of Preferred Stock on the Record Date. Each
share of Common Stock entitles the holder thereof to one vote on each matter
submitted to the stockholders. Each share of Preferred Stock entitles the holder
thereof to a number of votes equal to the number of shares of Common Stock into
which such share of Preferred Stock could be converted as of the Record Date.
The holders of shares of Preferred Stock are entitled to vote together with the
holders of the Common Stock as a single class on all matters being submitted to
the Company's stockholders. As of the Record Date, the holders of the Preferred
Stock would be entitled to an aggregate of 1,322,752 votes.
Stockholders who do not expect to attend the 2000 Annual Meeting are
urged to execute and return the enclosed proxy card promptly. Any stockholder
signing and returning a proxy may revoke the same at any time prior to the
voting of the proxy by giving written notice to the Secretary of the Company or
by voting in person at the meeting. All properly executed proxy cards delivered
by stockholders and not revoked will be voted at the 2000 Annual Meeting in
accordance with the directions given. With respect to the proposal regarding
election of directors, stockholders may (a) vote in favor of all nominees, (b)
withhold their votes as to all nominees, or (c) withhold their votes as to
specific nominees by so indicating in the appropriate space on the enclosed
proxy card. With respect to each other proposal being submitted to the
stockholders for their consideration, stockholders may (i) vote "FOR" such
proposal, (ii) vote "AGAINST" such proposal, or (iii) abstain from voting on
such proposal. If no specific instructions are given with regard to the matters
to be voted upon, the shares represented by a signed proxy card will be voted
"FOR" the election of all nominees for director. Management knows of no other
matters that may come before the meeting for consideration by the stockholders.
However, a signed proxy card will confer authority on the persons named in the
enclosed proxy card (the "Proxies") to vote the shares represented thereby in
their discretion on any other matter that comes before the meeting. The shares
represented by a signed proxy card will be voted in accordance with the
instructions indicated thereon with respect to the proposals described in this
Proxy Statement and in the discretion of the Proxies on any other matter. If no
specific instructions are given with regard to the matters to be voted upon, the
shares represented by a signed proxy card will be voted as
<PAGE> 4
indicated above with respect to each of the proposals described in this Proxy
Statement and in the discretion of the Proxies on any other matter.
QUORUM AND VOTING REQUIREMENTS
A quorum at the 2000 Annual Meeting will consist of a majority of the
votes entitled to be cast by the holders of all shares of Common Stock and
Preferred Stock that are outstanding and entitled to vote. A plurality of the
votes entitled to be cast by the holders of all shares of Common Stock and
Preferred Stock that are present at the 2000 Annual Meeting and entitled to vote
will be necessary to elect the director-nominees listed herein. Abstentions and
proxies relating to "street name" shares for which brokers have not received
voting instructions from the beneficial owner ("Broker Non-Votes") are counted
in determining whether a quorum is present. With respect to all matters
submitted to the stockholders for their consideration, other than the election
of directors, abstentions will be counted as part of the total number of votes
cast on such proposals in determining whether the proposals have received the
requisite number of favorable votes, whereas Broker Non-Votes will not be
counted as part of the total number of votes cast on such proposals. Thus,
abstentions will have the same effect as votes against any given proposal,
whereas Broker Non-Votes will have no effect in determining whether any given
proposal has been approved by the stockholders. In the election of directors,
the nominees receiving the highest number of votes will be elected. Therefore,
withholding authority to vote for a director nominee will have no effect.
2
<PAGE> 5
INFORMATION AS TO DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
NOMINEES
The following table sets forth certain information with respect to each
nominee for election to the Board of Directors at the 2000 Annual Meeting. All
of the nominees are currently directors of the Company, other than Mr.
Einspruch, who was nominated for election by the Executive and Nominating
Committee of the Board of Directors. Mr. John W. Gildea will retire from the
Board as of the date of the 2000 Annual Meeting.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND AGE (BY THE COMPANY UNLESS OTHERWISE INDICATED) DIRECTOR SINCE
- ------------ ------------------------------------------- --------------
<S> <C> <C>
Michael Catalano, 48 President and Chief Executive Officer since September 1, 1998; 1998
Executive Vice President of Development, General Counsel and
Secretary of the Company from July 1996 to September 1, 1998; Senior
Vice President Planning and Development and Chief Legal Counsel of
Magellan Health Services, Inc. from 1989 through February 1996.
William D. Eberle, 76 Chairman of the Executive Committee of the Board of Directors since 1991
September 1, 1998; Chairman of the Board of Directors from March 1995
to September 1, 1998; Chairman, Manchester Associates, Ltd., an
international consulting company, since 1995; of counsel to Kaye
Scholer, Fierman, Hays & Handler, a law firm, since 1993; a director
of Ampco-Pittsburgh Corporation, Mitchell Energy & Development
Corporation, Konover Property Trust and Showscam Entertainment, Inc.
Burton C. Einspruch, M.D., 65 Consultant Physician, Parkland Hospital, Dallas, Texas, since 1966; N/A
Private Practice of Psychiatry, Dallas, Texas, since 1966; Senior
Attending Physician, Presbyterian Hospital, since 1966; Senior
Consultant, Timberlawn Psychiatric Hospital, Dallas, Texas, since
1966; Consultant, United States Government Department of Labor, since
1966; Consultant, Psychiatric Service, Dallas Home for the Jewish
Aged, since 1966; Consultant, Baylor University Hospital, since 1970;
Examiner, American Board of Psychiatry and Neurology, since 1975.
David A. Freeman, 38 Member of Ferrer Freeman Thompson & Co., which is the General Partner 1999(3)
of FFT Partners I, L.P. and FFT Executive Partners I, L.P., each of
which is a private investment partnership, since October 1995; member
of FFT GP II, LLC, which is the General Partner of FFT Partners II,
L.P., a private investment partnership, since October, 1999; Managing
Director of J.P. Morgan & Co., Inc., an investment banking firm, from
September 1983 through September 1995; a director of National
Specialty Hospitals, Inc., Physician WebLink, Inc. and Webmedx, Inc.
Carol R. Goldberg, 69 President, the AVCAR Group, Ltd., a management consulting firm since 1991
1989; President and Chief Operating Officer of The Stop & Shop
Companies, Inc., a retail store chain, from 1985 to 1989; a director
of The Gillette Company, The Forum Corporation and Selfcare, Inc.
</TABLE>
3
<PAGE> 6
<TABLE>
<S> <C> <C>
Jeffrey L. McWaters, 43 Chairman, President and Chief Executive Officer of Amerigroup 1999
Corporation (formerly Americaid, Inc.), a managed health care
company, since October 1994; President and Chief Executive Officer of
Options Mental Health, a managed mental health care company and a
subsidiary of First Hospital Corporation, from 1991 through September
1994.
Richard M. Mastaler, 54 Chairman and Chief Executive Officer of CCN Managed Care, Inc., a 1999
managed health care company, since August 1997; Executive Vice
President--Mergers and Acquisitions and Product Development of
Magellan Health Services, Inc., a managed behavioral health care
company, from September 1996 through August 1997; President and Chief
Executive Officer of Unilab Corporation, a clinical and pathological
laboratory, from April 1994 through March 1996.
Scott L. Mercy, 38 Chairman and Chief Executive Officer of LifePoint Hospitals, a 1996
hospital management company, since September 1, 1998; Chairman of the
Board of Directors since September 1, 1998; President and Chief
Executive Officer of the Company from April 1, 1996 through
September 1, 1998; Senior Vice President--Financial Operations of
Columbia/HCA Healthcare Corporation from 1994 through 1995; Vice
President--Financial Operations and Director--Financial Operations
Support of Hospital Corporation of America from 1987 through 1994.
Richard D. Wright, 54 Chairman, President and Chief Executive Officer of Covation LLC, a 1999
provider of software integration and data management services for
health care providers and organizations, since December 1998;
Co-Founder and Executive Vice President, Corporate Services of
PhyCor, Inc., a physician practice management company, from 1997
through December 1998; Executive Vice President of Operations of
PhyCor, Inc. from 1988 through 1997.
</TABLE>
EXECUTIVE OFFICERS
The Company's executive officers are Mr. Michael Catalano, the
President and Chief Executive Officer, Mr. Gerard F. Boyle, the Executive Vice
President and Chief Operating Officer, and Mr. Bruce A. Teal, the Executive Vice
President and Chief Financial Officer. Information regarding Mr. Catalano is set
forth above. Certain information with respect to Mr. Boyle and Mr. Teal is set
forth below.
Mr. Gerard F. Boyle, age 45, has served as Executive Vice President and
Chief Operating Officer of the Company since February 1998. Since February,
1998, Mr. Boyle has also served as President and Chief Executive Officer of
Prison Health Services, Inc., a wholly-owned subsidiary of the Company. Prior to
joining the Company in March 1998, he was Vice President of Operations of EMSA
Correctional Care, Inc., from September 1996 through February 1998 and Vice
President and Administrator of Sales for EMSA Correctional Care, Inc. from July
1994 through August 1996.
Bruce A. Teal, age 39, has served as Executive Vice President and
Chief Financial Officer of the Company since July 1999. He was Senior Vice
President and Chief Financial Officer of the Company from February 1998 through
June 1999 and Vice President, Controller and Treasurer of the Company from
December 1996 through February 1998. From October 1992 through November 1996, he
served as Vice President of Financial Operations of Vendell Healthcare, Inc.
4
<PAGE> 7
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
Set forth below is information with respect to beneficial ownership of
the Common Stock as of April 12, 2000 by each director, certain executive
officers and all directors and executive officers as a group. Except as set
forth under the caption "Principal Stockholders--Preferred Stock" with respect
to Mr. David A. Freeman, none of such persons owned any shares of Preferred
Stock.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL
NAME NUMBER OF SHARES(1) OUTSTANDING
- ---- ------------------- -----------
<S> <C> <C>
Michael Catalano........................................ 103,782 2.7%
William D. Eberle....................................... 57,631 1.5%
David A. Freeman(2)..................................... 1,467,502 28.2%
John W. Gildea.......................................... 41,115 1.1%
Carol R. Goldberg....................................... 31,631 *
Jeffrey L. McWaters..................................... 6,000 *
Richard M. Mastaler..................................... 8,631 *
Scott L. Mercy(3)....................................... 351,000 9.0%
Richard D. Wright....................................... 7,842 *
Gerard F. Boyle......................................... 63,523 1.7%
Bruce A. Teal........................................... 53,818 1.4%
All directors and executive officers as a group......... 2,192,475 38.7%
</TABLE>
- -----------------------------
* Less than 1%
(1) Includes the following shares subject to options exercisable presently or
within 60 days: Mr. Catalano, 84,667 shares; Mr. Eberle, 29,000 shares;
Mr. Freeman, 149,750; Ms. Goldberg, 29,000 shares; Mr. McWaters, 6,000
shares; Mr. Mastaler, 6,000 shares; Mr. Mercy, 175,000 shares; Mr. Wright,
6000 shares; Mr. Boyle, 53,000 shares; Mr. Teal, 42,333 shares; and all
directors and executive officers as a group, 580,750 shares.
(2) Mr. Freeman is deemed to beneficially own the shares of Common Stock which
are issuable upon the exercise of the Warrants (as defined) and the
conversion of the 125,000 shares of Preferred Stock owned by FFT Partners
I, L.P. ("FFT Partners") and FFT Executive Partners I, L.P. ("Executive
Partners"). See "Certain Transactions." The Warrants entitle the holders
thereof to purchase 135,000 shares of Common Stock. The Preferred Stock is
convertible into 1,322,752 shares of Common Stock. Such shares of Common
Stock, together with the 135,000 shares of Common Stock issuable upon
exercise of the Warrants, would represent approximately 28.1% of the
outstanding shares of Common Stock. Consequently, including the 9,750
shares of Common Stock Mr. Freeman is entitled to receive pursuant to the
exercise of stock options, Mr. Freeman would be deemed to beneficially own
28.2% of the outstanding shares of Common Stock.
(3) Includes 146,000 shares of Common Stock purchased by Mr. Mercy from the
Company, 30,000 shares of Common Stock issued under the Old Mercy
Agreement (as defined), (which are presently held in the name of his
spouse and beneficial ownership of which he disclaims), and options to
purchase 175,000 shares of Common Stock. The shares of Common Stock
purchased by Mr. Mercy and the shares of Common Stock issued under the Old
Mercy Agreement are subject to certain repurchase rights in favor of the
Company and Mr. Mercy. See "Executive Compensation--Employment
Agreements."
5
<PAGE> 8
PRINCIPAL STOCKHOLDERS
COMMON STOCK
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock, as of April 12, 2000, by each person
who was known by the Company to own beneficially more than 5% of the Common
Stock as of such date, based on information furnished to the Company. Except as
otherwise indicated, each person has sole voting and dispositive power with
respect to the shares beneficially owned by such person.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY % OF SHARES
NAME AND ADDRESS OWNED OUTSTANDING
- ---------------- ----- -----------
A group comprised of FFT Partners I, L.P. <C> <C>
and FFT Executive Partners I, L.P............................................ 1,467,502(1) 28.2%
Value Partners, Ltd............................................................. 550,575(2) 14.7%
c/o Ewing & Partners
Suite 808
4514 Cole Avenue
Dallas, Texas 75205
A group comprised of J. Carlo Cannell D/B/A Cannell
Capital Management, Tonga Partners LP, Pleiades
Investment Partners, LP, The Cuttyhunk Fund Limited
and Anegada Fund, Ltd.(3).................................................... 405,500(4) 10.9%
Scott L. Mercy.................................................................. 351,000(5) 9.0%
LifePoint Hospitals
103 Powell Court, Suite 200
Brentwood, Tennessee 37027
Sirach Capital Management, Inc.................................................. 267,000(6) 7.2%
3323 One Union Square
Seattle, Washington 98101
Frontier Capital Management Company, Inc........................................ 194,670(7) 5.2%
99 Summer Street
Boston, Massachusetts 02110
A group comprised of Mark E. Brady, Robert J. Suttman, II,
Ronald L. Eubel, William Hazel, Bernie Holtgreive, Eubel Brady
& Suttman Asset Management, Inc.............................................. 250,820(8) 6.7%
777 Washington Village Drive
Suite 210
Dayton, Ohio 45459
A group comprised of Wachovia Corporation and Wachovia Bank,
N.A. (collectively, the "Wachovia Group").................................... 243,500(9) 6.5%
1100 North Main Street
Winston Salem, North Carolina 27104
Kennedy Capital Management, Inc................................................. 211,475(10) 5.7%
10829 Olive Boulevard
St. Louis, Missouri 63141
</TABLE>
- --------------------
(1) Includes shares of Common Stock issuable upon exercise of the Warrants and
the conversion of the Preferred Stock, which FFT Partners and
Executive Partners are deemed to beneficially own, and 9,750 shares
subject to options exercisable by David A. Freeman which FFT Partners
and Executive Partners are deemed to beneficially own. The Warrants
entitle FFT Partners and Executive Partners to purchase 135,000 shares
of Common Stock. The Preferred Stock is convertible into 1,322,752.
6
<PAGE> 9
(2) Based on Amendment No. 9 to a Schedule 13D filed with the SEC on February
28, 2000. According to such Schedule 13D, each of Ewing & Partners, as
general partner of Value Partners, Ltd., and Timothy G. Ewing, as managing
general partner of Ewing & Partners, may direct the vote and disposition
of the shares of Common Stock owned by Value Partners, Ltd. The business
address of Ewing & Partners and Timothy G. Ewing is Suite 808, 4514 Cole
Avenue, Dallas, Texas 75205.
(3) The address of J. Carlo Cannell D/B/A Cannell Capital Management and Tonga
Partners LP is 600 California Street, Floor 14, San Francisco, California
94108. The address of Pleiades Investment Partners, LP is 6022 West
Chester Pike, Newtown Square, Pennsylvania 19073. The address of The
Cuttyhunk Fund Limited is 73 Front Street, Hamilton, HM12, Bermuda. The
address of Anegada Fund, Ltd. is Harbour Centre, 2nd Floor, George Town,
Grand Cayman, Cayman Islands, B.W.I.
(4) Based on an amendment to Schedule 13G filed with the SEC on February 15,
2000, J. Carlo Cannell D/B/A Cannell Capital Management beneficially owns
405,000 shares of Common Stock, Tonga Partners, LP beneficially owns
202,700 shares of Common Stock, Pleiades Investment Partners beneficially
owns 46,600 shares of Common Stock, The Cuttyhunk Fund Limited
beneficially owns 146,200 shares of Common Stock and Anegada Fund, Ltd.
beneficially owns 36,700 shares of Common Stock.
(5) Includes 146,000 shares of Common Stock purchased by Mr. Mercy from the
Company, 30,000 shares of Common Stock issued under the Old Mercy
Agreement (which are presently held in the name of his spouse and
beneficial ownership of which he disclaims), and options to purchase
175,000 shares of Common Stock. The shares of Common Stock purchased by
Mr. Mercy and the shares of Common Stock issued under the Old Mercy
Agreement are subject to certain repurchase rights in favor of the Company
and Mr. Mercy. See "Executive Compensation--Employment Agreements."
(6) Based on a Schedule 13G filed with the SEC on February 2, 1999.
(7) Based on a Schedule 13G filed with the SEC on February 27, 1998.
(8) Based on Amendment No. 1 to a Schedule 13G filed with the SEC on February
15, 2000, Mark E. Brady, Robert J. Suttman, Ronald Eubel, William Hazel,
Bernie Holtgreive and Eubel Brady & Suttman Asset Management, Inc.
beneficially own 241,820 shares of Common Stock. Mark E. Brady, Robert J.
Suttman and Ronald Eubel beneficially own an additional 9,000 shares of
Common Stock.
(9) Based on Amendment No. 1 to a Schedule 13G filed with the SEC on February
14, 2000, Wachovia Corporation and Wachovia Bank, N.A. beneficially own
243,500 shares of Common Stock.
(10) Based on a Schedule 13G filed with the SEC on February 9, 2000.
PREFERRED STOCK
FFT Partners owns 120,000 shares of Preferred Stock, which represents
approximately 96% of the outstanding shares of Preferred Stock. Executive
Partners owns 5,000 shares of Preferred Stock, which represents approximately 4%
of the outstanding shares of Preferred Stock. The principal business address of
FFT Partners and Executive Partners is c/o Ferrer Freeman Thompson & Co. LLC,
The Mill, 10 Glenville Street, Greenwich, Connecticut 06831. The shares of
Preferred Stock owned by FFT Partners and Executive Partners constitute all of
the outstanding shares of Preferred Stock. The general partner of each of FFT
Partners and Executive Partners is Ferrer Freeman Thompson & Co ("FFT"). David
A. Freeman, a director of the Company, is a member of FFT and is thereby deemed
to beneficially own all of the Preferred Stock owned by FFT Partners and
Executive Partners.
7
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
of the Company's Chief Executive Officer and the two most highly compensated
executive officers other than the CEO (the "Named Executives") for each of the
years 1997 through 1999. The Company has no executive officers other than the
individuals named below.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- -----------------------
OTHER ANNUAL RESTRICTED STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK ($) OPTIONS (#) COMPENSATION (1)
- --------------------------- ---- ------ ----- ------------ --------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael Catalano (2)....... 1999 $270,192 $163,495 $ -- $ -- 37,347 $ --
President and Chief 1998 186,862 187,832 -- -- 62,000 3,454
Executive Officer 1997 165,500 -- 56,000(3) -- -- 13,384
Gerard F. Boyle (4)........ 1999 $233,538 $137,523 $ -- $ -- 29,454 $ --
Executive Vice 1998 162,413 71,445 29,068(3) -- 85,000 2,500
President and Chief 1997 -- -- -- -- -- --
Operating Officer
Bruce A. Teal (5).......... 1999 $182,500 $129,311 $ -- $ -- 39,454 $ --
Executive Vice 1998 159,259 160,643 -- -- 33,000 2,500
President and Chief 1997 115,000 -- -- -- -- 102
Financial Officer
</TABLE>
(1) Includes matching contributions by the Company to its 401(k) Profit
Sharing Plan and life and health insurance premiums paid by the Company on
behalf of the Named Executives.
(2) Mr. Catalano served as Executive Vice President of Development, General
Counsel and Secretary of the Company from July 12, 1996 through September
1, 1998. Mr. Catalano became President and Chief Executive Officer of the
Company on September 1, 1998.
(3) Represents reimbursement for relocation costs.
(4) Mr. Boyle became Executive Vice President and Chief Operating Officer of
the Company on February 12, 1998.
(5) Mr. Teal served as Vice President, Controller and Treasurer of the Company
from December 10, 1996 through February 20, 1998. Mr. Teal became Senior
Vice President and Chief Financial Officer of the Company on February 20,
1998 and Executive Vice President on July 20, 1999.
STOCK OPTION GRANTS AND VALUES
The following table sets forth certain information with respect to
stock options granted to the Named Executives during 1999 and the potential
realizable value of such options.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE
UNDERLYING OPTIONS/SARS APPRECIATION FOR
OPTIONS/ GRANTED TO EXERCISE OPTION TERM
SARS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -----------
NAME # FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---- ------------ ----------- ------ ---- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Michael Catalano
August 30, 1999........ 37,347 6.4% $14.25 August 30, 2009 363,432 939,702
Gerald Boyle
August 30, 1999........ 29,454 5.0% $14.25 August 30, 2009 286,624 741,103
Bruce Teal
January 22, 1999....... 10,000 1.7% $13.312 January 22, 2009 84,375 214,248
August 30, 1999........ 29,454 5.0% $14.25 August 30, 2009 286,624 741,103
</TABLE>
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUE TABLE
The following table sets forth certain information with respect to
option exercises by the Named Executives during 1999 and the value of options
owned by the Named Executives at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FY-END(#) AT FY-END($) (1)
SHARES ------------ ----------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Michael Catalano.......... -- -- 80,667/78,680 400,302/438,308
Gerard F. Boyle........... -- -- 28,333/86,121 218,460/517,919
Bruce A. Teal............. -- -- 28,000/61,454 211,131/278,760
</TABLE>
- ----------------------
(1) Based on the closing price of the Common Stock on the Nasdaq National
Market System on April 12, 2000 of $17.00 per share.
EMPLOYMENT AGREEMENTS
Scott L. Mercy was employed as President and Chief Executive Officer of
the Company from April 1, 1996 through September 1, 1998 pursuant to an
employment agreement, which was amended on June 30, 1997 (the "Old Mercy
Agreement"). The Old Mercy Agreement provided for a minimum annual base salary
of $190,000, an annual bonus based upon performance objectives, and such
additional compensation as determined by the Incentive Stock and Compensation
Committee from time to time. On September 1, 1998, Mr. Mercy and the Company
amended and restated the Old Mercy Agreement (the "New Mercy Agreement")
pursuant to which Mr. Mercy was appointed Chairman of the Board of Directors.
Pursuant to the New Mercy Agreement, Mr. Mercy was paid a base salary of $60,000
for his service as Chairman of the Board during 1998. For years after 1998, the
New Mercy Agreement establishes a minimum annual base salary of $24,000 and such
additional compensation as may be determined by the Incentive Stock and
Compensation Committee from time to time. Pursuant to the Old Mercy Agreement,
Mr. Mercy purchased 146,000 shares of Common Stock from the Company at $8.75 per
share, the mean between the high and low sale prices for the Common Stock on
April 1, 1996, received 40,000 shares as a restricted stock award under the
Company's Incentive Stock Plan, and was awarded options to purchase 175,000
additional shares of Common Stock, at $8.75 per share. Pursuant to the Old Mercy
Agreement the restricted stock and stock options were to vest in installments
over four years, or earlier in one-third installments when the closing price of
the Common Stock reached $12, $14 and $16, respectively. Mr. Mercy's restricted
stock and stock options vested in 1996 when the closing price of the Common
Stock exceeded $16 per share. Pursuant to the New Mercy Agreement, Mr. Mercy has
the right to require the Company to purchase (and the Company has the right to
require Mr. Mercy to sell), at a price not less than $9.90 per share, the
purchased shares and the award shares, but not the option shares, upon Mr.
Mercy's termination of employment. Mr. Mercy is subject to certain
non-competition and confidentiality agreements following termination. The New
Mercy Agreement provides for perpetual employment until terminated by 30 days
written notice by either party. The New Mercy Agreement also provides that the
Board of Directors shall take all necessary actions to ensure that Mr. Mercy is
slated as a management nominee to the Board and elected Chairman of the Board
during his employment. Pursuant to the New Mercy Agreement, Mr. Mercy may
terminate his position as Chairman of the Board, remain a director and otherwise
continue his employment under the New Mercy Agreement, unless it is otherwise
terminated.
Michael Catalano was employed as Executive Vice President of
Development, General Counsel and Secretary of the Company from July 12, 1996
through September 1, 1998 pursuant to an employment agreement (the "Old Catalano
Agreement") which established a minimum annual base salary of $160,000 and such
additional compensation as determined by the Incentive Stock and Compensation
Committee from time to time. On September 1, 1998, Mr. Catalano and the Company
amended and restated the Old Catalano Agreement (the "New Catalano Agreement")
pursuant to which Mr. Catalano was appointed President and Chief Executive
Officer of the Company. The New Catalano Agreement establishes a minimum annual
base salary of $190,000 and such additional compensation as may be determined by
the Incentive Stock and Compensation Committee from time to time. Pursuant to
the Old Catalano Agreement, on July 12, 1996, the Company awarded to Mr.
Catalano options to purchase 60,000 shares of Common Stock at an exercise price
of $13.125 per share under the Company's Amended Incentive Stock Plan. The stock
options vest ratably on each of the succeeding three anniversaries of the date
of the options and shall be exercisable for a period of ten years from the date
of the grant. Upon termination without cause or a change of control of the
9
<PAGE> 12
Company, all unexercised stock options granted to Mr. Catalano under the
Company's Amended Incentive Stock Plan shall accelerate and immediately vest.
Also, in the event of termination as a result of death or disability,
termination without cause or termination following a change in control of the
Company, Mr. Catalano or his estate is entitled to two-year's compensation plus
an amount equal to the incentive compensation that Mr. Catalano would have
earned in the year of termination, not to be less than 45% of Mr. Catalano's
annual base salary on the date of termination. Mr. Catalano is subject to
certain non-competition and confidentiality agreements following termination.
The New Catalano Agreement provides for perpetual employment until terminated by
appropriate written notice by either party. The New Catalano Agreement also
provides that the Board of Directors shall take all necessary actions to ensure
that Mr. Catalano is slated as a management nominee to the Board during his
employment.
On February 12, 1998, Gerard F. Boyle entered into an employment
agreement (the "Boyle Agreement") with the Company pursuant to which he was
appointed Executive Vice President and Chief Operating Officer of the Company.
The Boyle Agreement establishes a minimum annual salary of $180,000 and such
additional compensation as may be determined by the Incentive Stock and
Compensation Committee from time to time. The Boyle Agreement provides for
perpetual employment until terminated by either party upon thirty days notice.
If there is a change of control of the Company, all unexercised stock options
granted to Mr. Boyle under the Company's Amended Incentive Stock Plan shall
accelerate and immediately vest. Also, in the event of a termination without
cause, including termination following a change in control, Mr. Boyle's options
shall vest and his annual base salary as of the date of his termination shall be
continued for one year following such termination date. Mr. Boyle is subject to
certain non-competition and confidentiality agreements following termination.
On February 20, 1998, Bruce Teal entered into an employment agreement
(the "Teal Agreement") with the Company pursuant to which he was appointed
Senior Vice President and Chief Financial Officer of the Company. Mr. Teal had
been serving as Vice President, Controller and Treasurer of the Company since
December 1996; however, the Company and Mr. Teal had not entered into an
employment agreement for his service in that capacity. The Teal Agreement
establishes a minimum annual salary of $160,000 and such additional compensation
as may be determined by the Incentive Stock and Compensation Committee from time
to time. The Teal Agreement provides for perpetual employment until terminated
by either party upon thirty days notice. If there is a change of control of the
Company, all unexercised stock options granted to Mr. Teal under the Company's
Amended Incentive Stock Plan shall accelerate and immediately vest. Also, in the
event of a termination without cause, including termination following a change
in control, Mr. Teal's options shall vest and his annual base salary as of the
date of his termination shall be continued for one year following such
termination date. Mr. Teal is subject to certain non-competition and
confidentiality agreements following termination.
COMPENSATION OF DIRECTORS
During 1999, the Company granted each non-employee Director options to
purchase 6,000 shares of Common Stock at an exercise price of $14.813 per share
for serving on the Board and its committees. The Chairman of the Board of
Directors of the Company, Mr. Scott L. Mercy, was also paid $24,000 for services
which he provided to the Company during 1999. Directors who are also employees
of the Company receive no additional compensation from the Company for
attendance at Board or committee meetings. Under the terms of the Company's
Amended Incentive Stock Plan, any person who is not an employee or independent
contractor of the Company and who becomes a Director will receive an option to
purchase 15,000 shares of the Common Stock at an exercise price equal to the
fair market value of the Common Stock on the date such person becomes a
Director. Such options will vest with respect to 25% of the shares covered
thereby on each successive anniversary of the date of grant.
CERTAIN TRANSACTIONS
David A. Freeman, a director of the Company, is a member of FFT. On
January 26, 1999, the Company entered into a Securities Purchase Agreement and
certain other agreements with Health Care Capital Partners, L.P. (now known as
FFT Partners) and Health Care Executive Partners, L.P. (now known as Executive
Partners), private investment partnerships whose general partner is FFT,
pursuant to which the Company issued to such entities (i) $15.0 million
aggregate principal amount of the Company's 12% Subordinated Convertible Bridge
Notes due January 26, 2000 (the "Notes") with two detachable Warrants (the
"Warrants") to purchase an aggregate of 135,000 shares of Common Stock and (ii)
50,000 shares of Preferred Stock for aggregate consideration of $20.0 million.
Pursuant to the Securities Purchase Agreement, the Company paid FFT an advisory
fee of $1,000,000 in connection with the Company's acquisition of EMSA
Governmental Services, Inc. during 1999. On July 2, 1999,
10
<PAGE> 13
the Company redeemed $7.5 million aggregate principal amount of the Notes. On
August 30, 1999, the Company converted the remaining Notes outstanding into
75,000 shares of Preferred Stock. FFT Partners and Executive Partners currently
own 100% of the outstanding shares of the Preferred Stock and the Warrants. Mr.
Freeman is deemed to beneficially own the shares of Preferred Stock and Warrants
currently owned by FFT Partners and Executive Partners.
On the January 26, 1999, the Board of Directors appointed Mr. Freeman
to the Board of Directors, pursuant to a provision of the Securities Purchase
Agreement which obligated the Company to appoint a designee of FFT Partners and
Executive Partners to the Board of Directors on the date of the closing of the
Securities Purchase Agreement. Pursuant to the Securities Purchase Agreement,
the Company increased the number of members of the Board of Directors to nine
and nominated designees of FFT Partners and Executive Partners to three of the
nine directorships. FFT Partners and Executive Partners designated Mr. Freeman,
Richard D. Wright and Jeffrey L. McWaters as its nominees. Messrs. Freeman,
Wright and McWaters were elected to the Board of Directors by the Company's
Stockholders at the Company's 1999 Annual Meeting. FFT has a 17.3% ownership
interest in Amerigroup Corporation of which Mr. McWaters is Chairman, President
and Chief Executive Officer. Scott L. Mercy, Chairman of the Board of Directors,
is a limited partner of Executive Partners. His interest in Executive Partners
represents 1.5% of Executive Partners' capital.
The Company's 1999 Incentive Stock Plan includes a share purchase
program pursuant to which the Company's Incentive Stock and Compensation
Committee may offer a key employee or non-employee director the right to
purchase shares of Common Stock at fair market value on the date of purchase.
The 1999 Incentive Stock Plan also permits the Incentive Stock and Compensation
Committee to grant options to purchase shares of Common Stock to persons who are
permitted to purchase shares of Common Stock. The Incentive Stock and
Compensation Committee may grant options to purchase not less than two times the
number of shares of Common Stock purchased and not more than three times the
number of shares purchased. The exercise price for options awarded to
participants in the share purchase program may not be less than the greater of
the fair market value of a share of Common Stock on the date the option is
granted and $9.45. The options awarded to participants in the share purchase
program are subject to vesting requirements and to forfeiture under the
circumstances described in the 1999 Incentive Stock Plan.
Pursuant to the 1999 Incentive Stock Plan, the Incentive Stock and
Compensation Committee may cause the Company to extend a loan to a key employee
or non-employee director to permit the key employee or non-employee director to
purchase shares of Common Stock under the Plan. Any such loan must have a
principal amount that is no less than $7,500 and no more than $150,000 for key
employees and $37,500 for outside directors. The term of any such loan shall be
fixed and shall be set by the Incentive Stock and Compensation Committee acting
in its absolute discretion. The loans bear interest at a published rate
specified in the Plan. No share of Common Stock purchased with the proceeds of a
loan extended pursuant to the Plan may be transferred by the key employee or the
non-employee director until the principal amount of and any accrued interest on
such loan is repaid in full; provided, however, that such shares may be sold to
repay the loan, as determined by the Incentive Stock and Compensation Committee
acting in its discretion. The aggregate principal amount of all loans
outstanding under the 1999 Incentive Stock Plan to key employees and
non-employee directors on any date shall not exceed $1,300,000. Upon the
termination of the key employee's employment for any reason or upon the
termination of director's service as such for any reason, such loan shall become
due and payable in full within six months following the date of his or her
termination.
During 1999, the executive officers and directors of the Company named
in the table below purchased shares of stock from the Company with loans
extended by the Company pursuant to the 1999 Incentive Stock Plan. The loans
bear interest at 5.98% per annum, have a five-year term and are secured by the
shares of Common Stock purchased with the proceeds of the loan. The options
issued to the executive officers and directors who purchased shares of Common
Stock are set forth in the table below. The options have an exercise price of
$14.25.
11
<PAGE> 14
<TABLE>
<CAPTION>
NAME SHARES PURCHASED LOAN AMOUNT OPTIONS GRANTED
- ---- ---------------- ----------- ---------------
<S> <C> <C> <C>
Michael Catalano 10,526 $149,995.50 37,347
William D. Eberle 2,631 -- 7,893
Carol R. Goldberg 2,631 37,491.75 7,893
Richard M. Mastaler 2,631 37,491.75 7,893
Richard D. Wright 1,842 26,248.50 4,605
Gerard F. Boyle 7,895 112,503.75 29,454
Bruce A. Teal 7,895 112,503.75 29,454
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
The Incentive Stock and Compensation Committee (the "Committee") of
the Board of Directors consists of three non-employee members of the Board of
Directors. Ms. Carol R. Goldberg serves as Chair of the Compensation Committee.
The other members are Messrs. Wright and Gildea. Mr. Gildea will retire from the
Board of Directors on the date of the 2000 Annual Meeting.
EXECUTIVE COMPENSATION POLICIES
Generally, the Company's executive compensation program is designed to
be competitive with that offered by other companies against which the Company
competes for executive resources. At the same time, the Company links a
significant portion of executive compensation to the achievement of the
Company's short- and long-term financial and strategic objectives and to the
performance of the Common Stock. The Company's executive compensation program
consists of three primary elements: base salary, annual incentive bonuses and
stock options or other stock benefits. Base salary is intended to be competitive
in the marketplace. However, although the Committee considers competitive data,
salaries are determined subjectively by the Committee rather than by reference
to any specific target group of companies. Base salary is reviewed at a minimum
annually and adjusted based on changes in competitive pay levels, the
executive's performance as measured against individual, business group, and
Company-wide goals, as well as changes in the executive's role in the Company.
The Committee awards incentive bonuses to the Named Executives based on the
achievement of certain targets and objectives which are set at the beginning of
each year. The Company does not make annual stock option or other stock benefit
grants to all executives. Rather, the Committee determines each year which, if
any, executives will receive benefits, based on individual performance and each
executive's existing stock option position.
EXECUTIVE OFFICER COMPENSATION
On September 1, 1998, the Company promoted Michael Catalano from
Executive Vice President of Development and General Counsel to President and
Chief Executive Officer of the Company. During February 1998, the Company
recruited Gerard F. Boyle to become Executive Vice President and Chief Operating
Officer of the Company and the Company promoted Bruce A. Teal from Vice
President, Controller and Treasurer to Executive Vice President and Chief
Financial Officer of the Company. The base compensation, incentive bonus and
stock option agreements entered into by the Company with such individuals were
determined by arm's-length negotiations between the Committee and other members
of the Board of Directors and such individuals. The Committee believes that the
specific base compensation, incentive bonus and stock option arrangements were
necessary to attract and retain management of the caliber sought by the Board.
Future adjustments of such arrangements will be made in accordance with the
general principles outlined above.
Pursuant to the Company's 1999 incentive compensation plan, the
Committee established bonus pool ranges based on semiannual goals for income
from operations, cash flow from operations, overhead as a percentage of
healthcare revenue and certain subjective factors, including the amount of new
business obtained, success in maintaining existing business and client
satisfaction. The Company's executives were entitled to earn up to 17% of their
annual base salary if the Company achieved all goals established for the first
half of 1999 and up to an additional 33% of their annual base salary if the
Company achieved all goals established for the second half of 1999. Furthermore,
if the Company exceeded its goal for income from operations, 25% of the income
in excess of the target was to be allocated to the executive bonus pool. During
1999, the Company exceeded the performance goals. Accordingly, the Company's
executive officers, including Messrs. Catalano, Boyle and Teal, were paid
bonuses in an amount equal to 50% of their annual base salaries in effect at the
time of payment
12
<PAGE> 15
plus an additional amount attributable to income from operations in excess of
the target. The amounts of such bonuses paid to Messrs. Catalano, Boyle and Teal
were $163,495, $137,523 and $129,311, respectively.
COMPENSATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER
Michael Catalano has served as President and Chief Executive Officer of
the Company since September 1, 1998 pursuant to the New Catalano Agreement. See
"Executive Compensation--Employment Agreements." The terms of the agreement were
approved by the Committee. During 1999, the Company paid Mr. Catalano an
incentive bonus of $163,495, equal to 61% of his base annual compensation, based
upon the Company achieving the performance objectives set forth in the 1999
incentive compensation plan. The Committee believes that the incentive bonuses
awarded to Mr. Catalano created an appropriate relationship between Mr.
Catalano's level of compensation and the Company's performance.
This report by the Committee shall not be deemed to be incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 and shall not otherwise be deemed filed under such Acts.
Respectfully submitted by
The Incentive Stock and Compensation
Committee:
CAROL R. GOLDBERG, Chair
RICHARD D. WRIGHT
JOHN W. GILDEA
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee at any time during
the last fiscal year served as an officer of, or was employed by, the Company.
Furthermore, none of the executive officers of the Company currently serves as a
director or member of the compensation committee of any other entity or any
other committee of the board of directors of another entity performing similar
functions.
13
<PAGE> 16
PERFORMANCE GRAPH
The following graph sets forth the total return (stock price plus
dividends) on a $100 investment in each of (i) the Company's Common Stock, (ii)
the Wilshire 5000 Index and (iii) the NASDAQ Health Care Services Index, from
December 31, 1994 through December 31, 1999.
AMERICA SERVICE GROUP INC.
STOCK PERFORMANCE GRAPH
[GRAPH]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
DEC-94 DEC-95 DEC-96 DEC-97 DEC-98 DEC-99
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
America Service Group Inc. $100 $153 $205 $301 $260 $300
- ---------------------------------------------------------------------------------------
Wilshire 5000 $100 $136 $165 $217 $268 $331
- ---------------------------------------------------------------------------------------
Nasdaq Health Services Index $100 $127 $127 $129 $109 $ 90
- ---------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 17
ELECTION OF DIRECTORS
("PROPOSAL NO. 1")
The Board has nominated the nine nominees listed above to serve as a
directors until the next annual meeting of stockholders in 2001 or until their
successors are elected and qualified. Each of the nominees other than Dr.
Einspruch is currently a member of the Board of Directors. Each nominee has
consented to serve on the Board until the next annual meeting of stockholders or
until his or her successor is duly elected and qualified. If any of the nominees
should be unable to serve for any reason (which management has no reason to
anticipate at this time), the Board of Directors may designate a substitute
nominee or nominees (in which case the persons named as proxies in the enclosed
proxy card will vote all valid proxy cards for the election of such substitute
nominee or nominees), allow the vacancy or vacancies to remain open until a
suitable candidate or candidates are located, or eliminate the vacancy. The
affirmative vote of a plurality of votes entitled to be cast by the holders of
all shares of Common and Preferred Stock that are present in person or by proxy
and entitled to vote at the 2000 Annual Meeting is required to elect the persons
nominated.
Mr. Catalano, the President and Chief Executive Officer of the Company,
has entered into the New Catalano Agreement which provides, among other things,
that the Board shall, during the term of such employment agreement, take all
necessary steps to ensure that Mr. Catalano is slated as a management nominee to
the Board. See "Executive Compensation--Employment Agreements."
Mr. Mercy, the Chairman of the Board of Directors of the Company, has
entered into the New Mercy Agreement which provides, among other things, that
the Board shall, during the term of such employment agreement, take all
necessary steps to ensure that Mr. Mercy is slated as a management nominee to
the Board and is appointed Chairman of the Board. See "Executive
Compensation--Employment Agreements."
The Board of Directors recommends a vote FOR each nominee for director.
15
<PAGE> 18
ADDITIONAL INFORMATION
PROPOSALS FOR 2000 MEETING
The Company anticipates that its 2001 Annual Meeting will be held
during May 2001. Accordingly, any proposal of stockholders that is intended to
be presented at the Company's 2001 Annual Meeting of Stockholders must be
received at the Company's principal executive offices no later than December 31,
2000 and must comply with all other applicable legal requirements in order to be
included in the Company's proxy statement and form of proxy for that meeting.
The Company will have the right to confer upon the persons named in its proxy
cards for the Company's 2001 Annual Meeting discretionary authority to vote on
any stockholder proposal that is not received at the Company's principal
executive offices by March 16, 2001.
COMMITTEE AND MEETINGS
The Board of Directors of the Company held ten meetings during the year
ended December 31, 1999. The Audit Committee, which consists of Messrs. Freeman,
Eberle and Ms. Goldberg, held two meetings during 1999. The functions of the
Audit Committee are (i) to recommend the appointment of the Company's
independent accountants, (ii) to meet periodically with the Company's management
and its independent accountants on matters relating to the annual audit,
internal controls, and accounting principles of the Company, and the Company's
financial reporting and (iii) to review potential conflict of interest
situations, where appropriate. The Incentive Stock and Compensation Committee,
which during 1999 consisted of Ms. Goldberg and Messrs. Wright and Gildea, held
two meetings during 1999. The functions of the Incentive Stock and Compensation
Committee are (i) to monitor compensation of all management staff; (ii) to
review and approve compensation of the Chief Executive Officer and to offer
advice and guidance concerning the compensation of other senior management; and
(iii) to administer the Company's Amended Incentive Stock Plan and the Employee
Stock Purchase Plan. The Executive and Nominating Committee, which consists of
Messrs. Eberle, Mercy and Freeman, held two meetings during 1999. The function
of the Executive and Nominating Committee is to exercise all powers and
authority of the Board of Directors in the management of the business and
affairs of the Company except as may be limited by the Delaware General
Corporation Law and to nominate individuals for election to the Board of
Directors. During 1999, each director, except Mr. McWaters, attended more than
75% of all meetings of the Board of Directors and the committees on which he or
she served. Mr. McWaters attended two of the four meetings of the Board and the
committees on which he serves that were held after the date of his election to
the Board. He was prevented from attending the meeting of the Board held
immediately after the 1999 Annual Meeting due to a schedule conflict. He was
prevented from attending another meeting of the Board by weather conditions.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission.
Officers, directors and greater than ten percent shareholders are required by
law to furnish the Company copies of all Forms 3, 4 and 5 they file. Based
solely on the Company's review of the copies of such forms it has received and
representations from certain reporting persons that they were not required to
file Forms 5 for specified fiscal years, the Company believes that its officers,
directors and greater than ten percent beneficial owners complied with all
filing requirements applicable to them with respect to transactions during 1999.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's audited financial statements, supplementary financial
information, management's discussion and analysis of financial condition and
results of operations and quantitative and qualitative disclosures about market
risk are incorporated herein by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1999, a copy of which is being mailed with
this Proxy Statement.
16
<PAGE> 19
AMERICA SERVICE GROUP INC.
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON JUNE 5, 2000
The undersigned hereby appoints MICHAEL CATALANO and JEAN L. BYASSEE and
each of them, proxies, with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of stock of America
Service Group Inc. (the "Company"), which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders to be held on
Monday, June 5, 2000, at 10:00 a.m., local time, at Bank of America Plaza, 414
Union Street, Third Floor, Nashville, Tennessee, and at any adjournment
thereof, upon the matters described in the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement, receipt of which is hereby
acknowledged, and upon any other business that may properly come before the
meeting or any adjournment thereof. Said proxies are directed to vote on the
matters described in the Notice of Annual Meeting and Proxy Statement as
follows, and otherwise in their discretion upon such other business as may
properly come before the meeting or any adjournment thereof.
(CONTINUED, AND TO BE SIGNED, ON THE OTHER SIDE)
- FOLD AND DETACH HERE -
Please mark
your votes as
indicated in
this example [X]
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED,
THE PROXY WILL BE VOTED FOR THE PROPOSALS.
1. To elect nine (9) directors: Michael Catalano, William D. Eberle,
Burton C. Einspruch, M.D., David A. Freeman,
Carol R. Goldberg, Jeffrey L. McWaters,
Richard M. Mastaler, Scott L. Mercy, Richard
D. Wright
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE
LIST ABOVE.)
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to to vote for all nominees
the contrary) listed to right
[ ] [ ]
2. In the discretion of the proxies, on any matter that may properly come
before the meeting or any adjournment thereof.
Date: _____________________________,2000
_________________________________________
Signature(s) of Shareholder(s)
Please sign exactly as your name or
names appear hereon. Where more than one
owner is shown above, each should sign.
When signing in a fiduciary or
representative capacity, please give full
title. If this proxy is submitted by a
corporation, it should be executed in the
full corporate name by a duly authorized
officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING. IF YOU ATTEND
THE MEETING, YOU MAY VOTE IN PERSON IF
YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY.
- FOLD AND DETACH HERE -
