<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
(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
OUTSOURCE INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its 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
OUTSOURCE
INTERNATIONAL
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
April 19, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of OutSource International, Inc., which will be held on Friday, May 14, 1999, at
10:00 a.m., local time, at The Deerfield Beach/Boca Raton Hilton, 100 Fairway
Drive, Deerfield Beach, Florida.
The Notice of Annual Meeting and Proxy Statement on the following pages
contain information concerning the business to be considered at the Annual
Meeting. Please give these proxy materials your careful attention. It is
important that your shares be represented and voted at the Annual Meeting
regardless of the size of your holdings. Accordingly, whether or not you plan to
attend the Annual Meeting, please complete, sign, and return the accompanying
proxy card in the enclosed envelope in order to make sure your shares will be
represented at the Annual Meeting. Shareholders who attend the Annual Meeting
will have the opportunity to vote in person.
Please note that attendance at the Annual Meeting will be limited to
Shareholders of the Company as of the record date (or their authorized
representatives) and to guests of the Company. If your shares are registered in
your name and you plan to attend the Annual Meeting, please mark the appropriate
box on the enclosed proxy card and you will be pre-registered for the meeting
(if your shares are held of record by a broker, bank or other nominee and you
plan to attend the meeting, you must also pre-register by returning the
registration card forwarded to you by your bank or broker).
The continuing interest of the Shareholders in the business of the
Company is gratefully acknowledged. We hope many will attend the meeting.
Sincerely,
Paul M. Burrell
President
<PAGE> 3
OUTSOURCE INTERNATIONAL, INC.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 1999
----------------
The Annual Meeting of Shareholders (the "Annual Meeting") of OutSource
International, Inc., a Florida corporation (the "Company"), will be held on
Friday, May 14, 1999, at 10:00 a.m., local time, at The Deerfield Beach/Boca
Raton Hilton, 100 Fairway Drive, Deerfield Beach, Florida, for the following
purposes:
1. To elect two Class II Directors to serve for a term of
three years or until their respective successors are duly elected and
qualified;
2. To consider and vote upon an amendment to the Company's
Stock Option Plan to increase the maximum number of shares of Common
Stock subject to the Plan;
3. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 31,
1999; and
4. To transact such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on March 19,
1999 as the record date for the determination of Shareholders entitled to notice
of and to vote at the Annual Meeting. A list of the Shareholders entitled to
vote at the Annual Meeting may be examined by any Shareholder at the Company's
corporate offices at 1144 East Newport Center Drive, Deerfield Beach, Florida
33442.
The enclosed proxy is solicited by the Board of Directors of the
Company. Reference is made to the accompanying Proxy Statement for further
information with respect to the business to be transacted at the Annual Meeting.
The Board of Directors requests that you complete, sign, date and
return the enclosed proxy card promptly. You are cordially invited to attend the
Annual Meeting in person. The return of the enclosed proxy card will not affect
your right to revoke your proxy or to vote in person if you do attend the Annual
Meeting.
By Order of the Board of Directors,
BRIAN M. NUGENT
VICE PRESIDENT & SECRETARY
Deerfield Beach, Florida
April 19, 1999
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND
SIGN IT, AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE
COMPANY OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING YOUR PROXY
PROMPTLY.
<PAGE> 4
OUTSOURCE INTERNATIONAL, INC.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
---------------
PROXY STATEMENT
---------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of OutSource International, Inc., a Florida
corporation ("OutSource" or the "Company"), for use at the Company's 1999 Annual
Meeting of Shareholders (together with any and all adjournments and
postponements thereof, the "Annual Meeting") to be held Friday, May 14, 1999, at
10:00 a.m., local time, at The Deerfield Beach/Boca Raton Hilton, 100 Fairway
Drive, Deerfield Beach, Florida for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. This Proxy Statement, together with
the foregoing Notice and the enclosed proxy card, are being sent to Shareholders
on or about April 19, 1999.
The Board of Directors has fixed the close of business on March 19,
1999 as the record date for the determination of Shareholders entitled to notice
of and to vote at the Annual Meeting. On the record date, there were 8,657,913
shares of common stock of the Company, par value $.001 per share ("Common
Stock"), outstanding and entitled to vote. Each share of Common Stock is
entitled to one vote per share on each matter properly brought before the Annual
Meeting. Shares can be voted at the Annual Meeting only if the Shareholder is
present in person or is represented by proxy.
If the enclosed proxy card is properly executed and received by the
Company prior to the Annual Meeting, the shares represented thereby will be
voted in accordance with the instructions marked thereon. In the absence of
instructions, shares represented by executed proxies will be voted as
recommended by the Board of Directors. The Board of Directors recommends a vote
FOR the election of directors and the other proposals described in this Proxy
Statement. The Board of Directors knows of no matters which are to be brought
before the Annual Meeting other than those set forth in the accompanying Notice
of Annual Meeting of Shareholders. If any other matters properly come before the
Annual Meeting, the persons named in the enclosed proxy card, or their duly
appointed substitutes acting at the Annual Meeting, will be authorized to vote
or otherwise act thereon in accordance with their judgment on such matters.
Any proxy may be revoked at any time prior to its exercise by attending
the Annual Meeting and voting in person, by notifying the Secretary of the
Company of such revocation in writing or by delivering a duly executed proxy
bearing a later date, provided that such notice or proxy is actually received by
the Company prior to the Annual Meeting.
The presence, in person or by proxy, of at least a majority of the
total number of shares of Common Stock outstanding on the record date will
constitute a quorum for purposes of the Annual Meeting. Abstentions and broker
non-votes will be counted as shares present at the Meeting for purposes of
determining the presence of a quorum. A plurality of the votes cast by holders
of the Common Stock will be required for the election of Directors. Abstentions
and broker non-votes as to the election of Directors will not affect the
election of the candidates receiving a plurality of votes. The affirmative vote
of at least a majority of the shares of Common Stock present in person or
represented by proxy will be required to approve the other proposals to be
considered at the Meeting. Abstentions as to these proposals will have the same
effect as votes AGAINST such proposals, and broker non-votes as to these
proposals will not be included in calculating the number of votes necessary for
approval of such proposals.
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 19, 1999, information
regarding the beneficial ownership of the Company's Common Stock by: (i) each
Director of the Company; (ii) each of the Company's executive officers named in
the summary compensation table; (iii) each person known by the Company to
beneficially own more than 5% of the outstanding shares of the Company's Common
Stock; and (iv) all Directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENT
TOTAL SHARES BENEFICIALLY
NAME/ADDRESS (1) BENEFICIALLY OWNED OWNED
- ---------------- ------------------ ------------
<S> <C> <C>
Paul M. Burrell 4,741,197(2) 54.8
Richard J. Williams 4,200,411(3) 48.5
Alan E. Schubert 1,850,443(4) 21.4
Triumph-Connecticut Ltd. (5) 961,471(6) 11.1
Lawrence H. Schubert 943,015(7) 10.9
Nadya I. Schubert 943,015(8) 10.9
T. Rowe Price Associates, Inc.(9) 860,500(10) 9.9
Bachow Investment Partners III, L.P. (11) 717,942(12) 8.3
Estate of Louis A. Morelli 616,675(13) 7.1
Susan Burrell 438,112(14) 5.1
Robert A. Lefcort 185,903(15) 2.2
Scott R. Francis 33,750(16) *
James E. Money 34,483(17) *
Jay D. Seid 9,818(18) *
David S. Hershberg 12,545(19) *
Lawrence Chimerine, Ph.D 10,568(20) *
Brian M. Nugent 13,989(21) *
All Directors and executive officers
as a group (10 persons) 5,066,781(22) 58.5
</TABLE>
- ---------------
* Less than 1%
2
<PAGE> 6
(1) Unless otherwise noted, the business address for all Directors, officers and
5% Shareholders listed above is 1144 E. Newport Center Drive, Deerfield
Beach, Florida 33442. The address of Mr. Williams is Triumph Capital Group,
Inc., 60 State Street, 21st Floor, Boston, Massachusetts 02109. The address
of Mr. Seid is Bachow & Associates, Inc., 3 Bala Plaza East, Bala Cynwyd,
Pennsylvania 19004. The address of Mr. Hershberg is IBM Corporation, New
Orchard Road, Mail Drop 301, Armonk, New York 10504.
(2) Mr. Burrell shares voting and investment power with respect to 504,641
shares held of record by Mr. Burrell and his wife Susan Burrell individually
and as tenants by the entirety. Mr. Burrell shares voting and investment
power with respect to 4,190,593 shares held of record by Messrs. Burrell and
Williams as Trustees under a voting trust agreement dated as of February 21,
1997 (the "Voting Trust") (See "Proposal No.1 -- Election of Directors").
Includes currently exercisable options to purchase 45,963 shares. The table
above does not include 98,437 shares held of record by Scott T. Burrell as
Trustee of the Paul and Susan Burrell Family Trust.
(3) Mr. Williams shares voting and investment power over 4,190,593 shares held
of record by Messrs. Burrell and Williams as Trustees under the Voting Trust
(See "Proposal No.1 -- Election of Directors"). Includes currently
exercisable options to purchase 9,818 shares. Does not include 301,000
shares, plus immediately exercisable warrants to purchase 660,471 shares,
held of record by Triumph-Connecticut Ltd., a Limited Partnership, of which
Mr. Williams is a general partner of the general partner
(Triumph-Connecticut Advisors, L.P.) of Triumph-Connecticut Ltd., a Limited
Partnership, and as to which shares and warrants Mr. Williams disclaims
beneficial ownership.
(4) Mr. Alan Schubert shares investment power, but has no voting power, over the
following: (a) 1,327,438 shares held of record by Messrs. Burrell and
Williams as Trustees under the Voting Trust for Alan E. Schubert; (b)
323,003 shares held of record by Messrs. Burrell and Williams as Trustees
under the Voting Trust for Alan E. Schubert and Matthew B. Schubert as
Trustees of the Jason Schubert OutSource Trust; and (c) 200,002 shares held
of record by Messrs. Burrell and Williams as Trustees under the Voting Trust
for Alan E. Schubert and Jason Schubert as Trustees of the Matthew Schubert
OutSource Trust.
(5) An affiliate of Triumph Capital Group, Inc. Mr. Williams is a general
partner of the general partner (Triumph-Connecticut Advisors, L.P.) of
Triumph-Connecticut Ltd., a Limited Partnership.
(6) Represents 301,000 shares held of record and immediately exercisable
warrants to purchase 660,471 shares.
(7) Mr. Lawrence Schubert shares investment power, but has no voting power, over
the following: (a) 409,132 shares held of record by Messrs. Burrell and
Williams as Trustees under the Voting Trust for Lawrence H. Schubert as
Trustee of the Lawrence H. Schubert Revocable Trust; (b) 376,632 shares held
of record by Messrs. Burrell and Williams as Trustees under the Voting Trust
for Nadya I. Schubert, Mr. Schubert's wife, as Trustee of the Nadya I.
Schubert Revocable Trust; (c) 32,500 shares held of record by Messrs.
Burrell and Williams as Trustees for Lawrence H. Schubert, Trustee of the
Nadya I. Schubert GRAT-1997, under a trust agreement dated May 16, 1997; (d)
59,751 shares held of record by Nadya I. Schubert as co-trustee of the
Robert A. Lefcort Irrevocable Trust; (e) 32,500 shares held of record by
Messrs. Burrell and Williams as Trustees under the Voting Trust for Lawrence
H. Schubert as Trustee of the Rachel Schubert Trust; and (f) 32,500 shares
held of record by Messrs. Burrell and Williams as Trustees under the Voting
Trust for Lawrence H. Schubert as Trustee of the Adam Pugh Trust.
(8) Mrs. Nadya Schubert shares investment power, but has no voting power, over
the following: (a) 376,632 shares held of record by Messrs. Burrell and
Williams as Trustees under the Voting Trust for Nadya I. Schubert as Trustee
of the Nadya I. Schubert Revocable Trust; (b) 409,132 shares held of record
by Messrs. Burrell and Williams as Trustees under the Voting Trust for
Lawrence H. Schubert, Mrs. Schubert's husband, as Trustee of the Lawrence H.
Schubert Revocable; (c) 32,500 shares held of record by Messrs. Burrell and
Williams as Trustees under the Voting Trust for Lawrence H. Schubert,
Trustee of the Nadya I. Schubert GRAT-1997, under a trust agreement dated
May 16, 997; (d) 59,751 shares held of record by Nadya I. Schubert and
Robert A. Lefcort as co-trustees of the Robert A. Lefcort Irrevocable Trust;
(e) 32,500 shares held of record by Messrs. Burrell and Williams as Trustees
under the Voting Trust for Lawrence H. Schubert as Trustee of the Rachel
Schubert Trust; and (f) 32,500 shares held of record by Messrs. Burrell and
Williams as Trustees under the Voting Trust for Lawrence H. Schubert as
Trustee of the Adam Pugh Trust.
3
<PAGE> 7
(9) The address of T. Rowe Price Associates, Inc. is 100 East Pratt Street,
Baltimore, Maryland 21202.
(10) As reported in its most recently filed Schedule 13G, T. Rowe Price
Associates, Inc. holds sole investment power over 860,500 shares and sole
voting power over 270,500 of those shares, and a related entity, T. Rowe
Price New Horizons Fund, Inc., holds sole voting power over the remaining
590,000 shares, but has no investment power over those shares.
(11) An affiliate of Bachow & Associates, Inc. Mr. Seid is a limited partner of
the general partner (Bala Equity Partners, L.P.) of Bachow Investment
Partners III, L.P.
(12) Represents 199,000 shares held of record and immediately exercisable
warrants to purchase 518,942 shares.
(13) The Estate of Louis A. Morelli shares investment power, but has no voting
power, over the following: (a) 500,221 shares held of record by Messrs.
Burrell and Williams as Trustees under the Voting Trust for Louis A.
Morelli; (b) 56,230 shares held of record by Messrs. Burrell and Williams
as Trustees under the Voting Trust for Louis A. Morelli as Trustee of the
Louis J. Morelli S-Stock Trust and immediately exercisable warrants to
purchase 1,845 shares held by the Louis J. Morelli S-Stock Trust; and (c)
56,516 shares held of record by Messrs. Burrell and Williams as Trustees
under the Voting Trust for Louis A. Morelli as Trustee of the Margaret Ann
Janisch S-Stock Trust and immediately exercisable warrants to purchase
1,863 shares held by the Margaret Ann Janisch S-Stock Trust.
(14) Does not include 98,437 shares held of record by Scott T. Burrell as
Trustee of the Paul and Susan Burrell Family Trust; 4,190,593 shares held
of record by Paul M. Burrell as Trustee under the Voting Trust; 66,529
shares held of record by Mr. Burrell individually, and options to purchase
45,693 shares currently exercisable by Mr. Burrell.
(15) Mr. Lefcort shares voting and investment power over 59,751 shares held of
record by Mr. Lefcort as Co-Trustee of the Robert A. Lefcort Irrevocable
Trust. Also includes currently exercisable options to purchase 5,980
shares.
(16) Includes currently exercisable options to purchase 18,750 shares.
(17) Represents currently exercisable options to purchase 34,483 shares.
(18) Represents currently exercisable options to purchase 9,818 shares. Does not
include 199,000 shares, plus immediately exercisable warrants to purchase
518,942 shares, held of record by Bachow Investment Partners III, L.P., of
which Mr. Seid is a limited partner of the general partner (Bala Equity
Partners, L.P.) of Bachow Investment Partners III, L.P., and as to which
shares and warrants Mr. Seid disclaims beneficial ownership.
(19) Includes currently exercisable options to purchase 9,545 shares.
(20) Includes currently exercisable options to purchase 9,818 shares.
(21) Includes currently exercisable options to purchase 11,889 shares.
(22) Includes currently exercisable options to purchase 168,774 shares.
4
<PAGE> 8
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
Company's Directors and executive officers:
<TABLE>
<CAPTION>
Name Age Position with Company
- ---- --- ---------------------
<S> <C> <C>
Paul M. Burrell 39 President, Chief Executive Officer and
Chairman of the Board of Directors
Scott R. Francis 41 Chief Financial Officer, Treasurer and Director
Robert A. Lefcort 53 President, Synadyne Division and Director
Robert J. Mitchell 60 President, Office Ours Division
Brian M. Nugent 39 Vice President, Secretary and General Counsel
Jay D. Seid 38 Director
Richard J. Williams 38 Director
David S. Hershberg 57 Director
Lawrence Chimerine, Ph.D. 58 Director
</TABLE>
PAUL M. BURRELL has been President, Chief Executive Officer and
Chairman of the Board of Directors of the Company since its formation on April
19, 1996. Since June 1988, Mr. Burrell has served in various officer capacities
with subsidiaries of the Company, including as Chief Financial Officer and
President. Prior to joining the Company, Mr. Burrell was a Certified Public
Accountant with the accounting firm of Deloitte Haskins & Sells, from 1983 until
1988. Mr. Burrell is a member of several associations including the American
Institute of Certified Public Accountants, the Florida Institute of Certified
Public Accountants, the National Association of Temporary and Staffing Services
and the National Association of Professional Employer Organizations. Mr. Burrell
is a Certified Professional Employer Specialist ("CPES"). Mr. Burrell is a
member of the Compensation and Stock Option Committee and the Nominating
Committee.
SCOTT R. FRANCIS has been Chief Financial Officer, Treasurer and
Director of the Company since May 1998. Previously, Mr. Francis served for
fifteen years in various capacities with Ryder System, Inc., most recently as
Vice President and Chief Financial Officer of Ryder's automotive carrier
division. He is a member of the Audit Committee.
ROBERT A. LEFCORT has been a Director of the Company since its
formation on April 19, 1996 and until July 1998 was Executive Vice President. On
July 29, 1998, Mr. Lefcort was appointed President of the Synadyne Division.
Since August 1990, Mr. Lefcort has served in various officer capacities with the
Subsidiaries, including as Chief Operating Officer and Director of Franchise
Development. Mr. Lefcort was the President of the Miami International
Merchandise Mart, the largest regional wholesale trade mart in the United
States, from October 1974 to September 1984.
ROBERT J. MITCHELL has been President of the Office Ours Division since
January 1996. From March 1995 to January 1996, Mr. Mitchell served as Senior
Vice President and General Manager of the Office Ours Division. From April 1993
to January 1995, Mr. Mitchell served as Vice President, Marketing for Homeowners
Marketing Services. From September 1988 to September 1992, Mr. Mitchell was
President of REDI Real Estate Information Services, a publisher of real property
data.
5
<PAGE> 9
BRIAN M. NUGENT has been Vice President and General Counsel of the
Company since March 1997. From 1989 to 1997, Mr. Nugent was with the law firm of
Katz, Kutter, Haigler, et al, where he represented numerous staffing companies
and PEOs and served as the Company's outside general counsel.
RICHARD J. WILLIAMS' biography is included under the heading "Proposal
No. 1: Election of Directors."
JAY D. SEID's biography is included under the heading "Proposal No. 1:
Election of Directors."
DAVID S. HERSHBERG has been a Director of the Company since October
1997. Mr. Hershberg is Vice President, Assistant General Counsel of the IBM
Corporation. Prior to joining IBM in October 1995, Mr. Hershberg was Executive
Vice President and director of Viatel, Inc., an international long-distance
telephone company, with responsibility for legal, administrative and certain
financial matters. From December 1991 to June 1993, he was an advisor to the
Board of Buckeye Communications, Inc. From 1984 to 1991, he was Vice Chairman,
General Counsel and director of Shearson Lehman Brothers. Prior to 1984, he was
Deputy General Counsel for American Express Company. Mr. Hershberg is an
advisory director of Bank Julius Baer, New York branch, a Swiss private bank. He
is a member of the Compensation Committee, the Audit Committee and the
Nominating Committee.
DR. LAWRENCE CHIMERINE has been a Director of the Company since
November 1998. Dr. Chimerine has been the managing director and chief economist
of the Economic Strategy Institute in Washington, DC since September 1993, and
serves as a senior economic advisor to the WEFA Group and as president of Radnor
International Consulting Services. Dr. Chimerine also serves as a director of
Bank United, Eastbrokers International and Sanchez Computer Associates.
The Board of Directors consists of seven members. Messrs. Francis and
Hershberg are Class I directors, Messrs. Seid and Williams are Class II
directors, and Messrs. Burrell, Lefcort and Chimerine are Class III directors.
The terms of the Class I directors expire in 2001, the terms of the Class II
directors expire in 1999, and the terms of the Class III directors expire in
2000.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
The Board of Directors has a Compensation and Stock Option Committee
(the "Compensation Committee"), an Audit Committee and a Nominating Committee.
The Compensation Committee consists of Messrs. Williams, Hershberg and
Burrell. Mr. Hershberg replaced Samuel Schwartz, who, until his resignation from
the Board in March 1999, had been a member of the Compensation Committee. The
Compensation Committee administers the OutSource International, Inc. Stock
Option Plan (the "Stock Option Plan" or "Plan") including, among other things,
determining the amount, exercise price and vesting schedule of stock options
awarded under the Plan. The Compensation Committee also administers the
Company's other compensation programs and performs such other duties as may from
time to time be determined by the Board. The Compensation Committee has the
authority to approve compensation and stock option awards for non-executive
officers and recommends for approval by the Board of Directors compensation and
stock option awards for executive officers. The Compensation Committee met twice
during 1998.
The Audit Committee consists of Messrs. Hershberg, Seid and Francis.
Mr. Seid replaced Samuel Schwartz, who, until his resignation from the Board in
March 1999, had been the chairman of the Audit Committee. The Audit Committee
reviews the scope and results of the annual audit of the Company's consolidated
financial statements conducted by the Company's independent accountants, the
scope of other services provided by the Company's independent accountants,
proposed changes in the Company's financial and accounting standards and
principles, and the Company's policies and procedures with respect to its
internal accounting, auditing and financing controls. The Audit Committee also
examines and considers other matters relating to the financial affairs and
accounting methods of the Company, including the selection and retention of the
Company's independent accountants. The Audit Committee met before each meeting
of the Board of Directors during 1998.
The Nominating Committee consists of Messrs. Williams, Hershberg and
Burrell. The Nominating Committee reviews and makes recommendations to the Board
of Directors concerning the qualifications and selection of Director nominee
candidates to fill vacancies on the Board, including any candidates proposed by
6
<PAGE> 10
Shareholders. In recommending candidates, the Nominating Committee seeks
individuals who possess broad training and experience in business, finance, law,
government, technology, education or administration and considers factors such
as personal attributes, geographic location and special expertise complementary
to the background and experience of the Board as a whole. Shareholders who wish
to suggest qualified candidates should write to the Secretary of the Company at
1144 East Newport Center Drive, Deerfield Beach, Florida 33442, stating in
detail the qualifications of such persons. The Nominating Committee met once in
1998.
During 1998, the Board of Directors held nine meetings. Each incumbent
Director attended all of the meetings of the Board of Directors and scheduled
meetings of the respective committees of which he is a member.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and Directors, and persons who own more than ten
percent of the Common Stock of the Company, to file, within specified monthly
and annual due dates, reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, Directors, and owners of more than
10% of the Company's Common Stock are required by the SEC regulations to furnish
the Company with copies of all Section 16(a) reports that they file. The Company
is required to describe in this Proxy Statement whether it has knowledge that
any person required to file such report may have failed to do so in a timely
manner. To the Company's knowledge, all such filing requirements of the
Company's Directors, officers and each beneficial owner of more than 10% of the
Common Stock were satisfied in full for 1998, except as described below.
On June 1, 1998, each of Paul Burrell, Robert Lefcort, Robert Mitchell,
James Money and Brian Nugent filed a Form 4 that was due on February 10, 1998.
On October 13, 1998, Robert Lefcort filed a Form 4 reporting
transactions that were due May 10, 1998 and September 10, 1998, Paul Burrell
filed a Form 4 that was due on May 10, 1998, and each of Louis A. Morelli and
Lawrence Schubert filed a Form 4 that was due on June 10, 1998.
On February 2, 1999, Dr. Lawrence Chimerine filed a Form 3 that was due
on December 10, 1998.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
Each non-employee Director of the Company receives a $1,000 quarterly
retainer and a $1,500 fee for attendance at each meeting of the Board of
Directors. In addition, directors receive $500 for attendance at committee
meetings of the Board of Directors. Directors are also reimbursed for travel
expenses.
Pursuant to the Stock Option Plan, each non-employee Director, upon
being elected as a Director, receives an option to purchase 9,818 shares of
Common Stock at an exercise price equal to the fair market value of the Common
Stock on the date of grant (the "Initial Grant"). Effective on each of the first
three anniversaries of the Initial Grant, if the non-employee Director owns
approximately 3,270 shares of Common Stock on the anniversary dates, the Company
shall automatically grant an option to such Director to purchase a like amount
of shares at an exercise price equal to the fair market value on the date of
grant.
7
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation paid or accrued by the Company during the fiscal years ended
December 31, 1998, 1997 and 1996, to the Company's Chief Executive Officer and
the four next highest paid executive officers of the Company whose annual salary
and bonus exceeded $100,000 during the fiscal year ended December 31, 1998
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1) LONG-TERM COMPENSATION
--------------------------- -----------------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY ($) BONUS ($) OPTIONS/SARs(#)
--------------------------- ----------- ---------- --------- ---------------------
<S> <C> <C> <C> <C>
Paul M. Burrell 1998 259,615 -- 102,500
President and Chief 1997 259,038 -- 8,746
Executive Officer 1996 368,208 -- 35,456
Robert A. Lefcort 1998 156,346 -- 50,980
Executive Vice President 1997 139,377 -- --
1996 128,077 9,574 --
Scott R. Francis (2) 1998 134,615 -- 110,000
Chief Financial Officer 1997 -- -- --
1996 -- --
James E. Money (3) 1998 208,477 -- 40,500
President, Tandem Division 1997 191,635 -- 8,260
1996 160,208 45,231 28,364
Brian M. Nugent (4) 1998 183,346 -- 44,390
Vice President, Secretary 1997 105,915 -- 16,250
and General Counsel 1996 -- -- --
</TABLE>
(1) Excludes any perquisites and other personal benefits received, the total
value of which did not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus for such Named Executive Officer.
(2) Mr. Francis joined the Company in May 1998.
(3) Mr. Money resigned his position effective February 22, 1999.
(4) Mr. Nugent joined the Company in March 1997.
8
<PAGE> 12
Option Grants in 1998
The following table shows all grants during 1998 of stock options to
the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
PERCENT POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
NUMBER OPTIONS ANNUAL RATES OF STOCK
OF GRANTED TO MARKET PRICE APPRECIATION FOR
SHARES EMPLOYEES EXERCISE PRICE ON OPTION TERM(1)
UNDERLYING IN FISCAL PRICE DATE OF EXPIRATION -------------------------
NAME OPTION YEAR ($/SH) GRANT DATE 5%($) 10%($)
---------------------------- ---------- ----------- ----------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul M. Burrell 37,500 4.29% $13.88 $13.88 1/23/08 327,340 829,543
65,000 7.44% $ 6.00 $ 6.00 11/9/08 245,269 621,560
Robert A. Lefcort 13,489 1.54% $13.88 $13.88 1/23/08 117,746 298,392
25,000 2.86% $ 7.25 $ 7.25 8/7/08 113,987 288,866
12,500 1.43% $ 6.00 $ 6.00 11/9/08 47,167 119,531
Scott R. Francis 25,000 2.86% $10.42 $ 7.25 8/7/08 163,827 415,170
25,000 2.86% $11.42 $ 7.25 8/7/08 179,549 455,013
25,000 2.86% $13.88 $ 7.25 8/7/08 218,226 553,029
35,000 4.00% $ 6.00 $ 6.00 11/9/08 132,068 334,686
James E. Money 20,500 2.35% $13.88 $13.88 1/23/08 178,946 453,483
20,000 2.29% $ 6.00 $ 6.00 11/9/08 75,467 191,249
Brian M. Nugent 9,390 1.07% $13.88 $13.88 1/23/08 81,966 207,718
35,000 4.00% $ 6.00 $ 6.00 11/9/08 132,068 334,686
</TABLE>
- ----------
(1) The potential realizable values are based upon assumed 5% and 10% annualized
stock price growth rates and are not intended to forecast future price
appreciation of the Company's Common Stock. Actual gains, if any, on stock
option exercises will depend on the amount, if any, by which the fair market
value exceeds the option exercise price on the date the option is exercised.
There is no assurance that the amounts reflected in this table will be
achieved.
9
<PAGE> 13
OPTION EXERCISES AND PERIOD-END VALUES
The following table provides information with respect to the number of
unexercised options held by the Named Executive Officers at December 31, 1998
and the value of the unexercised "in the money" options held by each of the
Named Executive Officers as of that date. None of the Named Executive Officers
exercised any options to purchase Common Stock during the fiscal year ended
December 31, 1998.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at Fiscal
Options at Fiscal Year-End(#) Year-End($)
----------------------------- ------------------------------
Exercisable(E)/ Exercisable/
Name Unexercisable(U) Unexercisable
---- ----------------------------- ------------------------------
<S> <C> <C>
Paul M. Burrell 27,412(E) $-0-(E)
119,288(U) $-0-(U)
Robert A. Lefcort 3,480(E) $-0-(E)
47,500(U) $-0-(U)
Scott R. Francis --(E) --(E)
110,000(U) $-0-(U)
James E. Money 21,796(E) $-0-(E)
55,377(U) $-0-(U)
Brian M. Nugent 5,952(E) $-0-(E)
54,688(U) $-0-(U)
</TABLE>
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT REMAINING
OPTIONS TIME OF TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
------------ -------------- --------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Scott R. Francis 8/7/98 25,000 $7.25 $19.50 $10.42 117 months
Scott R. Francis 8/7/98 25,000 $7.25 $19.50 $11.42 117 months
Scott R. Francis 8/7/98 25,000 $7.25 $19.50 $13.88 117 months
</TABLE>
Compensation and Stock Option Committee Report on Option Repricing
On August 7, 1998, the Compensation Committee of the Board of Directors
approved reductions in the exercise prices of certain outstanding options for
Scott R. Francis to be comparable with the exercise prices of options held by
the other Named Executive Officers. The reduction in the exercise price affected
options to purchase 75,000 shares of Common Stock with an exercise price of
$19.50. The Company granted these options to Mr. Francis in May 1998 shortly
after he commenced his employment with the Company.
As set forth in the Stock Option Plan, options are intended to provide
incentives to the Company's officers and employees. The Compensation Committee
believes that such equity incentives are a significant factor in the Company's
ability to attract, retain and motivate employees who are critical to the
Company's long-term success. The Compensation Committee believes that, at their
original exercise prices, the disparity between the exercise price of the
repriced options and the market price of the Company's Common Stock at the date
of repricing did not provide meaningful incentives to the employee holding these
options. The Compensation Committee approved the
10
<PAGE> 14
repricing of these options as a means of ensuring that the optionee will
continue to have meaningful equity incentives to work toward the success of the
Company. The Compensation Committee deemed the adjustment to be in the best
interest of the Company and its Shareholders.
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, Messrs. Burrell, Lefcort and Francis participated in
deliberations of the Board of Directors concerning executive officer
compensation. For a description of certain transactions between the Company and
its executive officers, Directors and principal Shareholders, see "Certain
Transactions" below.
THE FOLLOWING REPORT ON EXECUTIVE COMPENSATION AND THE PERFORMANCE GRAPH SHALL
NOT BE DEEMED FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND WILL NOT BE
DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY FILING UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES SUCH ITEMS BY REFERENCE INTO
SUCH A FILING.
REPORT ON EXECUTIVE COMPENSATION
During 1998, the Board of Directors took responsibility for setting and
approving the salaries, bonuses and other compensation for the Company's
executive officers, establishing compensation programs, and determining the
amounts and conditions of all grants of awards under the Stock Option Plan. Dr.
Chimerine and Jay Seid did not become Directors of the Company until November
1998 and March 1999, respectively, and consequently, did not participate in
executive compensation decisions of the Board of Directors in 1998.
COMPENSATION OBJECTIVES. The Board of Directors believes that the
objectives of executive compensation are to attract, motivate and retain the
highest quality executives, to align the interests of these executives with
those of the Company's Shareholders and to motivate the Company's executives to
increase shareholder value by improving corporate performance and profitability.
To meet these objectives, the Board of Directors seeks to provide competitive
salary levels and compensation incentives that attract and retain qualified
executives, to recognize individual performances and achievements as well as
performance of the Company relative to its peers, and to encourage ownership of
the Company's Common Stock.
EXECUTIVE SALARIES. Base salaries for executive officers are determined
initially by the Board of Directors by evaluating the responsibilities of the
position, the experience of the individual, internal comparability
considerations, as appropriate, the competition in the marketplace for
management talent, and the compensation practices among public companies of the
size of, or in businesses similar to, the Company. Salary adjustments are
determined and normally made at twelve-month intervals.
ANNUAL BONUSES. Although the Company did not pay bonuses to executives
in 1998 and 1997, it has historically paid bonuses to executives whom the Board
of Directors determines have contributed materially to the Company's success.
The bonuses are intended to enable the Company's executives to participate in
the Company's success as well as to provide incentives for future performance.
Bonus compensation has typically been determined as a percentage of the
executive's salary based upon the pre-tax net income of the Company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The compensation of Paul
Burrell, who serves as President and Chief Executive Officer of the Company, is
fixed pursuant to an employment agreement (see "Executive Employment
Agreements"). Mr. Burrell's total 1998 compensation was approved by the Board of
Directors by applying the principles outlined above in the same manner as they
were applied to the other executives of the Company. In addition, the Board of
Directors reviewed the compensation paid to chief executive officers of
comparable companies and considered those compensation levels in determining Mr.
Burrell's compensation.
STOCK OPTIONS. The Board of Directors may grant to certain employees of
the Company long-term incentives consisting of non-qualified stock options and
incentive stock options. During 1998, the Board of Directors approved grants of
incentive stock options to the Named Executive Officers of the Company. See
"Compensation--Option Grants in 1998".
BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS: Paul M. Burrell
David S. Hershberg
Richard J. Williams
11
<PAGE> 15
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company entered into employment agreements, respectively, with Mr.
Burrell on February 21, 1997, Messrs. Lefcort and Mitchell on March 3, 1997, Mr.
Nugent on March 11, 1997 and Mr. Francis on April 8, 1998. These employment
agreements were approved by the Board of Directors. Except as described below,
these agreements generally contain the same terms and provide for a base salary,
which is reviewed annually and may be increased by the Board of Directors or any
committee designated by the Board of Directors to review such salary.
Mr. Burrell's employment agreement is for successive one year periods,
unless either Mr. Burrell or the Company terminates the agreement upon giving 90
days notice prior to any renewal date. The other employment agreements may be
terminated by either party at any time and continue in effect until terminated
by either party in accordance with the terms thereof. In the event Mr. Burrell
or another executive officer resigns without "good reason" or is terminated for
"cause," compensation under such employment agreement will end. In the event
that the Company terminates Mr. Burrell or another executive officer without
cause or such officer resigns for good reason, the terminated officer will
receive, among other things, severance compensation, including a multiple of the
officer's annual base salary and bonus. In addition, all options and stock
appreciation rights become immediately exercisable upon termination of
employment and certain other unpaid awards made previously under any of the
Company's compensation plans or programs immediately vest on the date of such
termination.
Severance provisions also apply if an executive officer is terminated
within two years (three years in the case of Mr. Burrell) after the occurrence
of a "change of control." A change of control includes: (i) the acquisition by
an individual, group or entity of 15% or more of the then outstanding shares of
capital stock or voting securities of the Company; (ii) incumbent members of the
Board of Directors and individuals whose election to the Board of Directors was
approved by a vote of the incumbent Directors cease to constitute a majority of
the Board; (iii) a reorganization, merger or consolidation in which all holders
of then outstanding shares of capital stock and voting securities immediately
prior to such event do not, following such event, own 60% of the outstanding
shares of capital stock or voting securities; (iv) a complete liquidation or
dissolution of the Company; or (v) a sale of substantially all of the assets of
the Company to an unaffiliated third party.
In the event the Company terminates an executive officer for any reason
within two years (three years in the case of Mr. Burrell) following the
occurrence of a change in control, or during such two or three-year period an
executive officer resigns for good reason, such executive officer shall be
entitled to receive on the date of such termination an amount equal to, among
other things, a multiple of such executive officer's base salary and target
bonus under the Company's bonus program, as well as any other benefits to which
any such employee would be entitled where termination was without cause or with
good reason. In addition, the employment agreements contain confidentiality,
noncompetition and nonsolicitation covenants during the period ending one year
immediately following termination of a Named Executive Officer. In connection
with the resignation of James E. Money as President of the Company's Tandem
division on February 17, 1999, the Company agreed to pay Mr. Money a severance
payment equal to his base salary through March 18, 2000 and to extend the date
on which he can exercise his stock options until February 17, 2000.
12
<PAGE> 16
CERTAIN TRANSACTIONS
SENIOR NOTES AND WARRANTS
On February 21, 1997, in connection with the issuance of senior
subordinated promissory notes (the "Senior Notes") in the principal amounts of
$14,000,000 and $11,000,000 to Triumph Capital Group, Inc. ("Triumph") and
Bachow & Associates, Inc. ("Bachow") (collectively, the "Senior Note Holders"),
the Company issued 786,517 warrants to the Senior Note Holders and placed
573,787 warrants in escrow, pending release to either the original shareholders
of the Company on such date (the "Existing Shareholders") or the Senior Note
Holders, based upon the achievement by the Company of certain specified
performance criteria. Of the 573,787 warrants, 180,891 warrants were released
from escrow and distributed to the Existing Shareholders in April 1997. The
balance of the warrants, totaling 392,896, are available to be released from
escrow and distributed to the Senior Note Holders. The warrants are exercisable
at an exercise price of $.015 per share and expire on February 20, 2002.
Mr. Williams, a Director of the Company, serves as a Managing Director
of Triumph and Mr. Seid, a Director of the Company, serves as a Managing
Director of Bachow. Mr. Seid recently replaced Samuel Schwartz on the Board of
Directors following Mr. Schwartz's resignations from the Board of Directors of
the Company and as a Vice President of Bachow.
FRANCHISE PURCHASES AND TERMINATIONS
In February 1998, the Company purchased the franchise rights of LM
Investors, Inc., an entity owned by Messrs. Matthew Schubert, the son of
Lawrence H. Schubert, and Louis J. Morelli, the son of the late Louis A.
Morelli. The purchase consisted of four flexible staffing locations in the
Chicago, Illinois area, which offices were converted into Company-owned
locations. The total purchase price of $6.9 million was paid $5.0 million paid
in cash at closing, the issuance of a note for $1.7 million bearing interest at
7.25% per annum and payable quarterly over three years, with the remaining $0.2
million of purchase price consisting of the Company's assumption of
approximately $0.1 million of the seller's liabilities under certain employment
contracts and the Company's agreement to reduce by approximately $0.1 million
the seller's obligation to the Company in connection with the termination of the
existing franchise agreements with the Company. In connection with this
purchase, the Company granted to Louis J. Morelli the exclusive option to
purchase franchise rights in five specifically identified geographic areas.
These options expire at various times from 12 to 42 months after the February
1998 acquisition date. Effective February 1, 1999, the note was renegotiated so
that the remaining principal balance of the note, totaling $1.3 million, would
bear interest at 8.5% per annum and would be payable in monthly installments
totaling $0.3 million in the first year and $0.6 million in the second year,
plus a $0.4 million payment at the end of the two year term.
Effective August 31, 1998, the Company entered into a franchise buyout
agreement with Temp Aid, Inc., an entity substantially owned by Matthew Schubert
and Louis J. Morelli. This early termination of the franchise relationship with
Temp Aid, Inc. and the payment terms negotiated by the parties, comprising an
initial payment at closing of $587,000 and monthly payments over two years based
on a percentage of gross revenues generated by the business of the former
franchisee, are generally consistent with the terms of previous buyout
agreements between the Company and unrelated third parties. In addition to the
termination amount of $587,000, the Company accrued approximately $702,000 in
franchise royalties and post-termination payments during 1998, of which $0.1
million was due and owing as of December 31, 1998. Effective March 31, 1999,
Temp-Aid, Inc. paid the Company $275,000 in consideration of the elimination of
the last five months of post-termination payments.
As of January 1, 1998, the Company remained indebted under a promissory
note to Payray, Inc. and Tri-Temps, Inc. (entities principally owned by Raymond
S. Morelli, the son of the late Louis A. Morelli) in connection with the
Company's acquisition in 1996 of certain franchise rights owned by those
parties. The remaining amount owed on the note, amounting to $0.1 million, was
repaid in March 1998.
13
<PAGE> 17
REAL ESTATE
A portion of a warehouse and a staffing office location are leased from
TMT Properties, Inc., a company controlled by Paul Burrell. The warehouse lease,
which is on a month-to-month basis, and the staffing office lease, which expires
in February 2002, each have rental obligations of approximately $2,000 per
month. The rental obligations on these two leases are consistent with the rental
rates of comparable locations in the areas in which these premises are leased.
LEGAL FEES
Louis J. Morelli, Esq. received legal fees for services rendered to the
Company during 1998 of approximately $38,000.
14
<PAGE> 18
STOCK PERFORMANCE
The following performance graph compares the cumulative total return on
the Company's Common Stock with the cumulative total return of the companies in
the NASDAQ Index and the NASDAQ Non-Financial Index. The cumulative total return
for each of the periods shown in the performance graph is measured assuming an
initial investment of $100 on October 24, 1997. No dividends have been paid on
the Company's Common Stock.
CUMULATIVE TOTAL RETURN
-----------------------
10/24/97 12/97 12/98
OUTSOURCE INTERNATIONAL, INC. 100 81 33
NASDAQ STOCK MARKET 100 94 132
NASDAQ NON-FINANCIAL 100 91 133
15
<PAGE> 19
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Existing Shareholders of the Company have deposited 4,190,593
shares of Common Stock in a Voting Trust, of which Messrs. Burrell and Williams
are Trustees. The Voting Trust terminates in February 2007. Pursuant to its
terms, the Trustees have sole and exclusive right to vote the shares of Common
Stock deposited in the Voting Trust. The shares of Common Stock deposited into
the Voting Trust constitute approximately 48.4% of the issued and outstanding
shares of Common Stock. Accordingly, the Trustees will retain sufficient voting
power to control the election of the Board of Directors for the foreseeable
future.
Effective February 21, 1997, the Existing Shareholders agreed for a
period of ten years to vote in favor of a Board of Directors comprised of three
persons (the "Management Directors") designated by the Chief Executive Officer
of the Company (the current designees are Messrs. Burrell, Lefcort and Francis),
one person (the "Investor Directors") selected by each of Triumph and Bachow
(the current designees are Messrs. Williams and Seid) and two directors selected
by the Management Directors and the Investor Directors (the current designees
are Mr. Hershberg and Dr. Chimerine). Pursuant to agreement, Triumph and Bachow
have the right to designate up to two additional members of the Board of
Directors.
On October 22, 1997, the Company amended its Articles of Incorporation
to classify the Board of Directors into three equal classes. The Board of
Directors is currently comprised of seven members, two of which are nominees for
reelection for a three-year term expiring at the 2002 Annual Meeting of
Shareholders. In the election, the two persons who receive the highest number of
votes actually cast will be elected. Information with regard to each of the
nominees is set forth below. The proxies named in the proxy card intend to vote
for the election of the nominees unless otherwise instructed. If a holder does
not wish his or her shares to be voted for a particular nominee, the holder must
identify the exception in the appropriate space provided on the proxy card, in
which event the shares will be voted for the other listed nominees. If any
nominee becomes unable to serve, the proxies may vote for another person
designated by the Board of Directors. The Company has no reason to believe that
any nominee will be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES FOR
DIRECTOR LISTED BELOW.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
---- --- -------- --------------
<S> <C> <C> <C>
Richard J. Williams 38 Director September 1997
Jay D. Seid 38 Director March 1999
</TABLE>
RICHARD J. WILLIAMS has been a Director of the Company since February
1997. Since March 1990, Mr. Williams has been a Managing Director of Triumph
Capital Group, Inc., a private equity investment firm based in Boston,
Massachusetts. Mr. Williams also serves on the board of directors of Clarity
Telecom, Inc., Hatten Communications, Inc., International Computer Graphics,
Inc., Longview Group, Inc. and United Natural Foods, Inc. He is a member of the
Compensation Committee and the Nominating Committee.
JAY D. SEID has been a Director of the Company since March 1999. Since
September 1997, Mr. Seid has been a Managing Director of Bachow & Associates,
Inc., a Bala Cynwyd, PA based investment firm. Previously, he was a Vice
President of Bachow & Associates, Inc. Prior to joining Bachow & Associates,
Inc. in December 1992, Mr. Seid was President and General Counsel to Judicate,
Inc., and before that, he was an attorney at the Philadelphia, PA law firm of
Wolf, Block, Schorr and Solis-Cohen. Mr. Seid is Chairman of the Board of Vista
Information Solutions, Inc. and is a member of the board of directors of Berger
Holdings, Ltd. He is a member of the Audit Committee.
16
<PAGE> 20
PROPOSAL NO. 2: AMENDMENT TO STOCK OPTION PLAN
The Stock Option Plan is intended to provide incentives to, and rewards
for, certain eligible employees and non-employee Directors of the Company who
have contributed and will continue to contribute to the success of the Company.
The Plan was initially adopted in December 1995 by the Board of Directors of
OutSource International, Inc., an Illinois corporation ("OI"), which was merged
with and into OutSource International of America, Inc., a Florida corporation, a
wholly owned subsidiary of the Company. The Board of Directors amended the Plan
in February 1997, and the Shareholders approved that amendment in April 1997. In
January 1998, the Board of Directors adopted an amendment to the Plan to provide
for formula grants of stock options to non-employee Directors of the Company and
the Shareholders approved that amendment in May 1998. At a meeting held in April
1999, the Board of Directors, subject to the approval of the Shareholders,
adopted a resolution amending the Plan to increase by a total of 960,000 shares
the maximum number of shares of Common Stock available for issuance pursuant to
stock options granted under the Plan from 1,040,000 shares to 2,000,000 Shares
(the "Amendment").
A SUMMARY OF THE PRINCIPAL FEATURES OF THE PLAN IS PROVIDED BELOW, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE PLAN WHICH IS
INCLUDED AS EXHIBIT A TO THIS PROXY STATEMENT.
SUMMARY DESCRIPTION OF THE PLAN.
GENERAL. Awards granted under the Plan consist of options to purchase
a specified number of shares of the Common Stock of the Company ("Shares") at a
stated price per Share ("Options"). Options granted under the Plan may be
Options that qualify as "incentive stock options" ("ISOs") pursuant to Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
nonqualified stock options ("NSOs"), except that ISOs may not be granted to any
person who is not a current employee of the Company. Generally, the exercise
price per Share of an ISO may not be less than the mean between the high and low
sales prices for a Share on the Nasdaq Stock Market's National Market on the
date the Option is granted. The Board of Directors may amend the Plan at any
time, although the Board of Directors may condition any amendment on the
approval of the Shareholders of the Company if such approval is necessary or
advisable with respect to tax, securities or other applicable laws. Upon
exercise of any Option, payment for Shares as to which the Option is exercised
shall be made in cash, by check, wholly or partially in the form of Shares
having a fair market value equal to the exercise price, or by delivery of a
notice instructing the Company to deliver the Shares being purchased to a broker
subject to the broker's delivery of cash to the Company.
ADMINISTRATION. The Plan is administered by the Compensation Committee
of the Board of Directors, consisting solely of two or more non-employee
Directors of the Company. If the Board of Directors does not appoint a
Compensation Committee, the Board of Directors is the Compensation Committee.
The Compensation Committee selects the recipients of Options, determines the
terms and conditions and number of Shares subject to each Option, and makes any
other determinations necessary or advisable for the administration of the Plan.
FORMULA GRANTS TO NON-EMPLOYEE DIRECTORS. Each non-employee Director of
the Company is entitled to receive NSOs in accordance with certain formula
provisions set forth in the Plan. Under the formula provisions, upon initial
election or appointment to the Board of Directors, a non-employee Director shall
receive Options to purchases 9,818 shares (the "Initial Option"). Upon the first
three anniversaries of the date of grant of the Initial Option, if such Director
has owned a certain number of Shares prior to such anniversary date, then the
Director shall automatically receive on each such anniversary, options to
purchase 3,273 Shares for the first two anniversaries and 3,272 Shares for the
third anniversary (collectively, the "Anniversary Options"). The exercise price
of each Option granted as the Initial Option and the Anniversary Options shall
be equal to the fair market value of the Shares on the date of grant. One third
of each Initial Option shall expire on each of the first three anniversaries of
the date of grant of the Initial Option. The duration of each of the Anniversary
Options is three years from the date of grant or such shorter period as may
result from the death, disability or termination of the recipient's services as
a Director. The recipient may generally exercise an Initial Option or
Anniversary Option within a period of ninety days after the recipient's services
as a Director terminates. Upon termination of a recipient's employment by reason
of death or disability, an unexercised Initial Option or Anniversary Option
shall expire within 12 months of the date of such termination.
DISCRETIONARY GRANTS. The Compensation Committee is authorized to grant
in its discretion an ISO or NSO under the Plan to any person who performs or has
in the past performed services for the Company or its subsidiaries,
17
<PAGE> 21
whether as an employee, director, officer, consultant or other independent
contractor ("Discretionary Options") except that ISO's may not be granted to any
person who is not a current employee of the Company. A Discretionary Option
becomes vested and exercisable in accordance with the schedule specified by the
Compensation Committee at the time of grant. The duration of a Discretionary
Option is ten years from the date of grant, or such shorter period as may be
determined by the Compensation Committee at the time of grant, or as may result
from the death, disability, or termination of the employment of the employee to
whom the Option is granted. The recipient may generally exercise a Discretionary
Option within a period of ninety days after the date the recipient's employment
or other affiliation with the Company terminates. If a Discretionary Option
recipient's employment is terminated for cause, any Option granted to the
recipient shall expire no later than the date his/her employment terminates.
Upon termination of a recipient's employment by reason of death or disability,
an unexercised Discretionary Option shall expire within 12 months of the date of
such termination.
TRANSFERABILITY. All ISOs granted under the Plan will be
nontransferable and nonassignable except by will or by the laws of descent and
distribution. To the extent permitted by applicable laws, a recipient of an NSO
may transfer the NSO to the recipient's spouse, child, grandchild or parent
(collectively, "Family Members"), or a trust for the benefit of a Family Member
of recipient, or a partnership whose partners consist solely of Family Members
of the recipient.
FEDERAL INCOME TAX CONSEQUENCES.
INCENTIVE STOCK OPTIONS. An ISO results in no taxable income to the
Option recipient or deduction to the Company at the time it is granted or
exercised. If the Option recipient retains the stock received as a result of the
exercise of an ISO for at least two years from the date of the grant and one
year from the date of exercise, then any gain on the sale of such stock will be
treated as long-term capital gain. If the Shares are disposed of during this
period, the Option recipient realizes taxable ordinary income equal to the
lesser of (i) the gain realized by the Option recipient upon such disposition or
(ii) the difference between the exercise price and the fair market value of the
Shares on the date of exercise. The Company receives a tax deduction only if the
Shares are disposed of during such period. The deduction is equal to the amount
of taxable ordinary income to the Option recipient. To the extent that the
aggregate exercise price of the Shares subject to ISOs granted to a key employee
under all plans of the Company and any parent or subsidiary of the Company, and
that become exercisable for the first time during any calendar year, exceeds
$100,000, such ISOs shall be treated as NSOs.
NON-QUALIFIED STOCK OPTIONS. An NSO results in no taxable income to the
Option recipient or deduction to the Company at the time it is granted. Upon
exercising such an Option, the Option recipient will realize taxable ordinary
income in the amount of the difference between the Option exercise price and the
then fair market value of the Shares. Subject to the applicable provisions of
the Code, a deduction for federal income tax purposes will be allowable to the
Company in the year of exercise in an amount equal to the taxable ordinary
income realized by the Option recipient.
THE PROPOSED AMENDMENT.
If the proposed amendment to the Plan is approved and implemented,
2,000,000 shares of Common Stock will become available for granting under the
Plan (an increase of 960,000 shares above the number currently available),
representing approximately 18.7% of the currently outstanding shares of Common
Stock (after giving effect to the issuance of such shares). Based on the closing
price of $3.75 per share of the Common Stock on March 19, 1999, the aggregate
value of 2,000,000 shares reserved for issuance under the Plan is $7.5 million.
Subject to the continued availability of Shares for the granting of Options
under the Plan, authority to grant Options under the Plan will continue until
December 22, 2005, unless the Plan is terminated prior to such date by the Board
of Directors of the Company.
Approval of the Amendment requires the affirmative vote of the holders
of a majority of the shares present in person or represented by proxy at the
Annual Meeting. Unless authority to so vote is withheld, the persons named in
the proxy card intend to vote shares as to which proxies are received in favor
of the Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE STOCK OPTION PLAN.
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PROPOSAL NO. 3: RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP to serve as
the Company's principal independent certified public accountants for 1999. In
the event the appointment of Deloitte & Touche LLP for 1999 is ratified, it is
expected that Deloitte & Touche LLP will also audit the books and accounts of
certain of the Company's subsidiaries at the close of their current fiscal
years. Although the Board is not required to do so, it is submitting its
selection of the Company's independent certified public accountants for
ratification at the Annual Meeting in order to ascertain the views of its
Shareholders. The Board will not be bound by the vote of the Shareholders;
however, if the selection is not ratified, the Board would reconsider its
selection. A representative of Deloitte & Touche LLP will be present at the
Annual Meeting and will have the opportunity to make a statement, if such person
desires to do so, and to respond to appropriate questions.
The proposal to ratify the appointment of Deloitte & Touche LLP will be
approved by the Shareholders if it receives the affirmative vote of a majority
of the votes cast by Shareholders entitled to vote on the proposal. If a proxy
card is specifically marked as abstaining from voting on the proposal, the
shares represented thereby will not be counted as having been voted for or
against the proposal. Unless otherwise instructed, the persons named on the
proxy card intend to vote shares as to which a proxy is received in favor of the
proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
OTHER MATTERS
SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, Shareholders may present proper proposals for inclusion in the
Company's proxy statement and for consideration at the next Annual Meeting of
Shareholders by submitting such proposals to the Company in a timely manner. In
order to be so included for the 2000 Annual Meeting, Shareholder proposals must
be received by the Company no later than December 14, 1999 and must otherwise
comply with the requirements of Rule 14a-8.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies for use at the Annual Meeting will
be borne by the Company. Solicitations will be made primarily by mail or by
facsimile, but regular employees of the Company may solicit proxies personally
or by telephone.
OTHER INFORMATION
The Company's Annual Report on Form 10-K for fiscal year 1998 and all
subsequent Quarterly Reports on Form 10-Q filed before the date of the Annual
Meeting are incorporated by reference in this Proxy Statement. The Company will
provide to any Shareholder, upon written request and without charge, a copy
(without exhibits) of all information incorporated by reference in this proxy
statement. Requests should be addressed to Investor Relations, OutSource
International, Inc., 1144 E. Newport Center Drive, Deerfield Beach, Florida
33442.
Deerfield Beach, Florida
April 19, 1999
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<PAGE> 23
EXHIBIT A
OUTSOURCE INTERNATIONAL, INC.
STOCK OPTION PLAN
As Amended and Restated Effective April 12, 1999
1. Purpose. The purpose of this Plan is to further the interests of OutSource
International, Inc., a Florida corporation, its subsidiaries and its
shareholders by providing incentives in the form of grants of stock
options to key Employees, Non-Employee Directors and other persons who
contribute materially to the success and profitability of the Company. The
grants will recognize and reward outstanding individual performances and
contributions and will give such persons a proprietary interest in the
Company, thus enhancing their personal interest in the Company's continued
success and progress. This program will also assist the Company and its
subsidiaries in attracting and retaining key persons. This Plan is a
continuation, in the form of an amendment and restatement, of an existing
plan.
2. Definitions. The following definitions shall apply to this Plan:
a. "Board" means the board of directors of the Company.
b. "Change of Control" occurs when (i) any person, including a "group"
as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, becomes the beneficial owner of thirty percent or
more of the total number of shares entitled to vote in the election
of directors of the Board, (ii) the Company is merged into any other
company or substantially all of its assets are acquired by any other
company, or (iii) three or more directors nominated by the Board to
serve as a director, each having agreed to serve in such capacity,
fail to be elected in a contested election of directors; provided,
however, that a Change of Control shall not occur as a result of the
financing provided by Triumph - Connecticut Limited Partnership and
Bachow Investment Partners III, L.P.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Committee" means the Stock Option Committee consisting solely of
two or more Non-Employee Directors appointed by the Board. In the
event that the Board does not appoint a Stock Option Committee,
"Committee" means the Board.
e. "Common Stock" means the Common Stock of the Company, or such other
class of shares or securities as to which the Plan may be applicable
pursuant to Section 15 herein.
f. "Company" means OutSource International, Inc., and any wholly-owned
subsidiary of OutSource International, Inc.
g. "Date of Grant" means the date specified in the resolution of the
Committee authorizing the grant of the Option.
h. "Eligible Person" means any person who performs or has in the past
performed services for the Company or any direct or indirect
partially or wholly owned subsidiary thereof, whether as a director,
officer, Employee, consultant or other independent contractor, and
any person who performs services relating to the Company in his or
her capacity as an employee or independent contractor of a
corporation or other entity that provides services for the Company.
i. "Employee" means any person employed as a core employee of the
Company, excluding (i) any fee-for-service employee of the Company
and (ii) any leased or temporary employee of the Company who would
be cost of sales for financial reporting purposes.
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<PAGE> 24
j. "Fair Market Value" means the fair market value of the Common Stock.
If the Common Stock is not publicly traded on the date as of which
fair market value is being determined, the Board shall determine the
fair market value of the Shares, using such factors as the Board
considers relevant, such as the price at which recent sales have
been made, the book value of the Common Stock, and the Company's
current and projected earnings. If the Common Stock is publicly
traded on the date as of which fair market value is being
determined, the fair market value is the mean between the high and
low sales prices of the Common Stock as reported by The Nasdaq Stock
Market on that date or, if the Common Stock is listed on a stock
exchange, the mean between the high and low sales prices of the
stock on that date, as reported in THE WALL STREET JOURNAL. If
trading in the stock or a price quotation does not occur on the date
as of which fair market value is being determined, the next
preceding date on which the stock was traded or a price was quoted
will determine the fair market value.
k. "Incentive Stock Option" means a stock option granted pursuant to
either this Plan or any other plan of the Company that satisfies the
requirements of Section 422 of the Code and that entitles the
Recipient to purchase stock of the Company or in a corporation that
at the time of grant of the option was a parent or subsidiary of the
Company or a predecessor corporation of any such corporation.
l. "Non-Employee Director" means a member of the Board who is not
employed on an hourly or salaried full-time basis by the Company or
any parent or Subsidiary of the Company that now exists or hereafter
is organized or acquires the Company.
m. "Nonqualified Stock Option" means a stock option granted pursuant to
the Plan that is not an Incentive Stock Option and that entitles the
Recipient to purchase stock of the Company or in a corporation that
at the time of grant of the option was a parent or subsidiary of the
Company or a predecessor corporation of any such corporation.
n. "Open Market Share" shall mean (i) each Share acquired on the open
market or through any method other than the exercise of an Option,
and (ii) each warrant, issued in connection with the Company's
issuance of senior subordinated promissory notes on February 21,
1997, to purchase Shares. For purposes of Sections 5.b., 5.c., and
5.d. of the Plan, a Non-Employee Director shall be deemed to own any
Open Market Shares either acquired and held by such Non-Employee
Director, or by any Corporation that employs such Non-Employee
Director, or by any Partnership in which such Non-Employee Director
is a partner, or by any investment fund managed by any Corporation
that employs such Non-Employee Director, or by any investment fund
managed by any Partnership in which such Non-Employee Director is a
partner.
o. "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted pursuant to the Plan.
p. "Option Agreement" means a written agreement entered into between
the Company and a Recipient which sets out the terms and
restrictions of an Option granted to the Recipient.
q. "Option Shareholder" shall mean an Employee who has exercised his or
her Option.
r. "Option Shares" means Shares issued upon exercise of an Option.
s. "Plan" means this OutSource International, Inc. Stock Option Plan,
as amended and restated.
t. "Recipient" means an individual who receives an Option.
u. "Share" means a share of the Common Stock, as adjusted in accordance
with Section 10 of the Plan.
v. "Subsidiary" means any corporation 50 percent or more of the voting
securities of which are owned directly or indirectly by the Company
at any time during the existence of this Plan.
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<PAGE> 25
3. Administration. This Plan will be administered by the Committee. The
Committee has the exclusive power to select the Recipients of Options
pursuant to this Plan, to establish the terms of the Options granted to
each Recipient, and to make all other determinations necessary or
advisable under the Plan. The Committee has the sole and absolute
discretion to determine whether the performance of an Eligible Person
warrants an Option under this Plan, and to determine the size and type of
the Option. The Committee has full and exclusive power to construe and
interpret this Plan, to prescribe, amend, and rescind rules and
regulations relating to this Plan, and to take all actions necessary or
advisable for the Plan's administration. The Committee, in the exercise of
its powers, may correct any defect or supply any omission, or reconcile
any inconsistency in the Plan, or in any Option Agreement, in the manner
and to the extent it shall deem necessary or expedient to make the Plan
fully effective. In exercising this power, the Committee may retain
counsel at the expense of the Company. The Committee shall also have the
power to determine the duration and purposes of leaves of absence which
may be granted to a Recipient without constituting a termination of the
Recipient's employment for purposes of the Plan. Any determinations made
by the Committee will be final and binding on all persons. A member of the
Committee will not be liable for performing any act or making any
determination in good faith. Notwithstanding the foregoing, the Committee
shall have no discretion with respect to the Options granted to
Non-Employee Directors pursuant to Section 5 of the Plan.
4. Shares Subject to Plan. Subject to the provisions of Section 15 of the
Plan, the maximum aggregate number of Shares that may be subject to
Options under the Plan shall be 2,000,000. If an Option should expire or
become unexercisable for any reason without having been exercised, the
unpurchased Shares that were subject to such Option shall, unless the Plan
has then terminated, be available for other Options under the Plan.
5. Non-Employee Directors' Grants. Each Non-Employee Director shall receive
Options as determined under this Section 5 without further action by the
Board.
a. Initial Options. Effective on the Date of Grant described below for
each category of Non-Employee Director, the Company shall grant to
each Non-Employee Director an Option to purchase 9,818 Shares
("Initial Option"):
i. for a Non-Employee Director serving on the Board on September
2, 1997, the Date of Grant of the Initial Option shall be
September 2, 1997.
ii. for a Non-Employee Director elected by the shareholders of the
Company subsequent to September 2, 1997, the Date of Grant of
the Initial Option shall be the earlier of the date of such
Non-Employee Director's election to the Board or the date on
which such Non-Employee Director executes a written commitment
to become a member of the Board;
iii. for a Non-Employee Director appointed by the Board subsequent
to September 2, 1997, the Date of Grant of the Initial Option
shall be the earlier of the date such Non-Employee Director's
appointment to the Board becomes effective or the date on
which such Non-Employee Director executes a written commitment
to become a member of the Board.
The exercise price of each Initial Option shall be 100 percent of
the Fair Market Value of the Common Stock on the Date of Grant of
the Initial Option; provided, however, that if the Date of Grant of
an Initial Option occurs prior to the completion of an initial
public offering of the Common Stock, the exercise price of such
Initial Option shall be the Fair Market Value of the Common Stock on
the date the initial public offering begins.
b. First Anniversary Options. Effective on the first anniversary of the
Date of Grant of the Initial Option received by a Non-Employee
Director, the Company shall automatically grant to such Non-Employee
Director an Option to purchase 3,273 Shares ("First Anniversary
Option") if such Non-Employee Director owns at least 3,273 Option
Shares or Open Market Shares on the first anniversary of the Date of
Grant of the Initial Option. The exercise price of each First
Anniversary Option shall be 100 percent of the Fair Market Value of
the Common Stock on the Date of Grant of the First Anniversary
Option.
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<PAGE> 26
c. Second Anniversary Options. Effective on the first anniversary of
the Date of Grant of the First Anniversary Option received by a
Non-Employee Director, the Company shall automatically grant to such
Non-Employee Director an Option to purchase 3,273 Shares ("Second
Anniversary Option") if such Non-Employee Director has owned at
least 3,273 Option Shares or Open Market Shares during the entire
12-month period ending on the first anniversary of the Date of Grant
of the First Anniversary Option. The exercise price of each Second
Anniversary Option shall be 100 percent of the Fair Market Value of
the Common Stock on the Date of Grant of the Second Anniversary
Option.
d. Third Anniversary Options. Effective on the first anniversary of the
Date of Grant of the Second Anniversary Option received by a
Non-Employee Director, the Company shall automatically grant to such
Non-Employee Director an Option to purchase 3,272 Shares ("Third
Anniversary Option") if such Non-Employee Director has owned at
least 3,272 Option Shares or Open Market Shares during the entire
12-month period ending on the first anniversary of the Date of Grant
of the Second Anniversary Option. The exercise price of each Third
Anniversary Option shall be 100 percent of the Fair Market Value of
the Common Stock on the Date of Grant of the Third Anniversary
Option.
e. Option Requirements. Each Option granted to a Non-Employee Director
pursuant to this Section 5 will satisfy the following requirements:
i. Written Agreement. Each Option will be evidenced by an Option
Agreement. The Option Agreement shall include a description of
the substance of each of the requirements in this Section 5
and shall state that the Option is a Nonqualified Stock
Option.
ii. Duration of Option. One-third of each Initial Option shall
expire on each of the first three anniversaries of the Date of
Grant of the Initial Option. Each First Anniversary Option,
Second Anniversary Option and Third Anniversary Option shall
expire on the third anniversary of its Date of Grant. If the
Recipient's services as a director of the Company terminate
before the third anniversary of the Date of Grant of an
Initial Option granted to such Recipient, the unexpired and
unexercised portion of the Initial Option granted to such
Recipient shall expire on the earlier of the date stated in
this Section 5.e.ii. or the date stated in the applicable
Section 5.e.iv, 5.e.v., or 5.e.vi of the Plan. If the
Recipient's services as a director of the Company terminate
for any reason before the third anniversary of the Date of
Grant of a First Anniversary Option, Second Anniversary Option
or Third Anniversary Option granted to such Recipient, the
unexercised portion of such First Anniversary Option, Second
Anniversary Option or Third Anniversary Option granted to such
Recipient shall expire on the earlier of the date stated in
this Section 5.e.ii. or the date stated in the applicable
Section 5.e.iv., 5.e.v., or 5.e.vi. of the Plan.
iii. Vesting of Option. Each Option shall be 100 percent vested on
the Date of Grant of the Option.
iv. Death. In the case of the death of a Recipient prior to the
termination of the Recipient's services as a director of the
Company, the unexpired and unexercised portion of an Option
granted to the Recipient shall expire on the one-year
anniversary of the Recipient's death, or if earlier, the date
specified in Section 5.e.ii. above.
v. Disability. In the case of the total and permanent disability
of a Recipient and a resulting termination of the Recipient's
services as a director of the Company, the unexpired and
unexercised portion of an Option granted to the Recipient
shall expire on the one-year anniversary of the Recipient's
last day of service as a director of the Company, or, if
earlier, the date specified in Section 5.e.ii. above.
vi. Termination of Service as a Director. If a Recipient's
services as a director of the Company are terminated for any
reason other than death or disability, the unexpired and
unexercised portion of an Option granted to the Recipient
shall expire 90 days after
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<PAGE> 27
termination of the Recipient's services as a director of the
Company, or, if earlier, the date specified in Section 5.e.ii.
above.
6. Discretionary Grants. Any Eligible Person that the Committee in its sole
discretion designates is eligible to receive an Option under this Plan.
The Committee's grant of an Option to a Recipient in any year does not
require the Committee to grant an Option such Recipient in any other year.
Furthermore, the Committee may grant different Options to different
Recipients and has full discretion to choose whether to grant Options to
any Eligible Person. The Committee may consider such factors as it deems
pertinent in selecting Recipients and in determining the types and sizes
of their Options. Recipients may include persons to whom stock, stock
options, stock appreciation rights, or other benefits previously were
granted under this or another plan of the Company or any Subsidiary,
whether or not the previously granted benefits have been fully exercised
or vested. Each Option granted to a Recipient under the Plan shall contain
such provisions as the Committee at the Date of Grant shall deem
appropriate. A Recipient's right, if any, to continue to serve the Company
and its Subsidiaries as an officer, Employee, or otherwise will not be
enlarged or otherwise affected by his designation as a Recipient under
this Plan, and such designation will not in any way restrict the right of
the Company or any Subsidiary, as the case may be, to terminate at any
time the employment of any Recipient. Each Option granted to a Recipient
pursuant to this Section 6 will satisfy the following requirements:
a. Written Agreement. Each Option will be evidenced by an Option
Agreement. The terms of the Option Agreement need not be identical
for different Recipients. The Option Agreement shall include a
description of the substance of each of the requirements in this
Section 6 with respect to that particular Option.
b. Number of Shares. Each Option Agreement shall specify the number of
Shares that may be purchased by exercise of the Option.
c. Exercise Price. Except as provided in Section 6.j., the exercise
price of each Share subject to an Incentive Stock Option shall equal
the exercise price designated by the Committee on the Date of Grant,
but shall not be less than the Fair Market Value of the Share on the
Incentive Stock Option's Date of Grant. The exercise price of each
Share subject to a Nonqualified Stock Option shall equal the
exercise price designated by the Committee on the Date of Grant.
d. Duration of Option. Except as provided in Section 6.j., an Incentive
Stock Option granted to an Employee shall expire on the tenth
anniversary of its Date of Grant or, at such earlier date as is set
by the Committee in establishing the terms of the Incentive Stock
Option at grant. Except as provided in Section 6.j., a Nonqualified
Stock Option granted to an Employee shall expire on the tenth
anniversary of its Date of Grant or, at such earlier or later date
as is set by the Committee in establishing the terms of the
Nonqualified Stock Option at grant. If the Recipient's employment
with the Company terminates before the expiration date of an Option
granted to the Recipient, the Option shall expire on the earlier of
the date stated in this subsection or the date stated in following
subsections of this Section 6.
e. Vesting of Option. Each Option Agreement shall specify the vesting
schedule applicable to the Option. The Committee, in its sole and
absolute discretion, may accelerate the vesting of any Option at any
time.
f. Death. In the case of the death of a Recipient, an Incentive Stock
Option granted to the Recipient shall expire on the one-year
anniversary of the Recipient's death, or if earlier, the date
specified in Section 6.d. above. During the one-year period
following the Recipient's death, the Incentive Stock Option may be
exercised to the extent it could have been exercised at the time the
Recipient died, subject to any adjustment under Section 15 herein.
In the case of the death of a Recipient, a Nonqualified Stock Option
granted to the Recipient shall expire on the one-year anniversary of
the Recipient's death, or if earlier, the date specified in Section
6.d. above, unless the Committee sets an earlier or later expiration
date in establishing the terms of the Nonqualified Stock Option at
grant or a later expiration date subsequent to the Date of Grant but
prior to the one-year anniversary of the Recipient's death. During
the period beginning on the date of the Recipient's death and ending
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<PAGE> 28
on the date the Nonqualified Stock Option expires, the Nonqualified
Stock Option may be exercised to the extent it could have been
exercised at the time the Recipient died, subject to any adjustment
under Section 15 herein.
g. Disability. In the case of the total and permanent disability of a
Recipient and a resulting termination of employment or affiliation
with the Company, an Incentive Stock Option granted to the Recipient
shall expire on the oneAyear anniversary of the Recipient's last day
of employment, or, if earlier, the date specified in Section 6.d.
above. During the one-year period following the Recipient's
termination of employment or affiliation by reason of disability,
the Incentive Stock Option may be exercised as to the number of
Shares for which it could have been exercised at the time the
Recipient became disabled, subject to any adjustments under Section
15 herein.
In the case of the total and permanent disability of a Recipient and
a resulting termination of employment or affiliation with the
Company, a Nonqualified Stock Option granted to the Recipient shall
expire on the oneAyear anniversary of the Recipient's last day of
employment, or, if earlier, the date specified in Section 6.d.
above, unless the Committee sets an earlier or later expiration date
in establishing the terms of the Nonqualified Stock Option at grant
or a later expiration date subsequent to the Date of Grant but prior
to the one-year anniversary of the Recipient's last day of
employment or affiliation with the Company. During the period
beginning on the date of the Recipient's termination of employment
or affiliation by reason of disability and ending on the date the
Nonqualified Stock Option expires, the Nonqualified Stock Option may
be exercised as to the number of Shares for which it could have been
exercised at the time the Recipient became disabled, subject to any
adjustments under Section 15 herein.
h. Retirement. If the Recipient's employment with the Company
terminates by reason of normal retirement under the Company's normal
retirement policies, an Incentive Stock Option granted to the
Recipient shall expire 90 days after the last day of employment, or,
if earlier, on the date specified in Section 6.d. above. During the
90Aday period following the Recipient's normal retirement, the
Incentive Stock Option may be exercised as to the number of Shares
for which it could have been exercised on the retirement date,
subject to any adjustment under Section 15 herein.
If the Recipient's employment with the Company terminates by reason
of normal retirement under the Company's normal retirement policies,
a Nonqualified Stock Option granted to the Recipient shall expire 90
days after the last day of employment, or, if earlier, on the date
specified in Section 6.d. above, unless the Committee sets an
earlier or later expiration date in establishing the terms of the
Nonqualified Stock Option at grant or a later expiration date
subsequent to the Date of Grant but prior to the end of the 90-day
period following the Recipient's normal retirement. During the
period beginning on the date of the Recipient's normal retirement
and ending on the date the Nonqualified Stock Option expires, the
Nonqualified Stock Option may be exercised as to the number of
Shares for which it could have been exercised on the retirement
date, subject to any adjustment under Section 15 herein.
i. Termination of Service. If the Recipient ceases employment or
affiliation with the Company for any reason other than death,
disability, or retirement (as described above), an Incentive Stock
Option granted to the Recipient shall expire 90 days after the
Recipient's last day of employment or affiliation with the Company,
or, if earlier, on the date specified in Section 6.d. above, unless
the Committee sets an earlier or later expiration date in
establishing the terms of the Incentive Stock Option at grant or a
later expiration date subsequent to the Date of Grant but prior to
the end of the 90-day period following the Recipient's last day of
employment or affiliation with the Company. During the period
following the termination of the Recipient's employment or
affiliation with the Company, the Incentive Stock Option may be
exercised as to the number of Shares for which it could have been
exercised on the date of termination, subject to any adjustment
under Section 15 herein.
If the Recipient ceases employment or affiliation with the Company
for any reason other than death, disability, or retirement (as
described above), a Nonqualified Stock Option granted to the
Recipient shall expire 90 days after the Recipient's last day of
employment or affiliation with the Company,
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<PAGE> 29
or, if earlier, on the date specified in Section 6.d. above, unless
the Committee sets an earlier or later expiration date in
establishing the terms of the Nonqualified Stock Option at grant or
a later expiration date subsequent to the Date of Grant but prior to
the end of the 90-day period following the Recipient's last day of
employment or affiliation with the Company. During the period
following the termination of the Recipient's employment or
affiliation with the Company, the Nonqualified Stock Option may be
exercised as to the number of Shares for which it could have been
exercised on the date of termination, subject to any adjustment
under Section 15 herein.
Notwithstanding any provisions set forth herein or in the Plan, if
the Recipient shall (i) commit any act of malfeasance or wrongdoing
affecting the Company or any parent or subsidiary, (ii) breach any
covenant not to compete or employment agreement with the Company or
any parent or Subsidiary, or (iii) engage in conduct that would
warrant the Recipient's discharge for cause, any unexercised part of
the Option shall lapse immediately upon the earlier of the
occurrence of such event or the last day the Recipient is employed
by the Company.
j. Ten Percent Shareholders. An Incentive Stock Option granted to an
individual who, on the Date of Grant, owns stock possessing more
than 10 percent of the total combined voting power of all classes of
stock of either the Company or any parent or Subsidiary, shall be
granted at an exercise price of 110 percent of Fair Market Value on
the Date of Grant and shall be exercisable only during the five-year
period immediately following the Date of Grant. In calculating stock
ownership of any person, the attribution rules of Code Section
424(d) will apply. Furthermore, in calculating stock ownership, any
stock that the individual may purchase under outstanding options
will not be considered.
k. Maximum Option Grants. The aggregate Fair Market Value, determined
on the Date of Grant, of stock in the Company with respect to which
any Incentive Stock Options under the Plan and all other plans of
the Company or its Subsidiaries (within the meaning of Section
422(b) of the Code) may become exercisable by any individual for the
first time in any calendar year shall not exceed $100,000.
7. [Reserved]
8. Change of Control. If a Change of Control occurs, the Board may vote to
immediately terminate all Options outstanding under the Plan as of the
date of the Change of Control or may vote to accelerate the expiration of
the Options to the tenth day after the effective date of the Change of
Control. If the Board votes to immediately terminate the Options, it shall
make a cash payment to the Recipient equal to the difference between the
Exercise Price and the Fair Market Value of the Shares that would have
been subject to the terminated Option on the date of the Change of
Control.
9. Conditions Required for Exercise. Options granted to Recipients under the
Plan shall be exercisable only to the extent they are vested according to
the terms of the Option Agreement. Furthermore, Options granted to
Employees under the Plan shall be exercisable only if the issuance of
Shares pursuant to the exercise would be in compliance with applicable
securities laws, as contemplated by Section 14 of the Plan. Each Option
Agreement shall specify any additional conditions required for the
exercise of the Option.
10. Method of Exercise. An Option granted under this Plan shall be deemed
exercised when the person entitled to exercise the Option (i) delivers
written notice to the President of the Company (or his delegate, in his
absence) of the decision to exercise, (ii) concurrently tenders to the
Company full payment for the Shares to be purchased pursuant to the
exercise, and (iii) complies with such other reasonable requirements as
the Committee establishes pursuant to Section 14 of the Plan. Payment for
Shares with respect to which an Option is exercised may be made in cash,
or by certified check, or wholly or partially in the form of Common Stock
having a Fair Market Value equal to the exercise price, or by delivery of
a notice instructing the Company to deliver the shares being purchased to
a broker subject to the broker's delivery of cash to the Company equal to
the purchase price. No person will have the rights of a shareholder with
respect to Shares subject to an Option granted under this Plan until a
certificate or certificates for the Shares have been delivered to him. A
partial exercise of an Option will not affect the holder's right to
exercise the Option from time to time in accordance with this Plan as to
the remaining Shares subject to the Option.
26
<PAGE> 30
11. Loan from Company to Exercise Option. The Committee may, in its discretion
and subject to the requirements of applicable law, recommend to the
Company that it lend the Recipient the funds needed by the Recipient to
exercise an Option. The Recipient shall make application to the Company
for the loan, completing the forms and providing the information required
by the Company. The loan shall be secured by such collateral and be
subject to such repayment terms and interest rate as the Company may
require, subject to its underwriting requirements and the requirements of
applicable law. The Recipient shall execute a Promissory Note and any
other documents deemed necessary by the Committee.
12. Designation of Beneficiary. Each Recipient shall designate, in the Option
Agreement he executes, a beneficiary to receive Options awarded hereunder
in the event of his death prior to full exercise of such Options;
provided, that if no such beneficiary is designated or if the beneficiary
so designated does not survive the Recipient, the estate of such Recipient
shall be deemed to be his beneficiary. Recipients may, by written notice
to the Committee, change the beneficiary designated in any outstanding
Option Agreements.
13. Transferability of Option.
a. Nonqualified Stock Option. To the extent permitted by tax,
securities or other applicable laws to which the Company, the Plan,
Recipients or Eligible Persons are subject, a Recipient of a
Nonqualified Stock Option may transfer such Option to (i) the
Recipient's spouse, child, grandchild or parent, (ii) a trust for
the benefit of the Recipient's spouse, child, grandchild or parent,
or (iii) a partnership whose partners consist solely of the
Recipient's spouse, child, grandchild or parent, unless provided
otherwise by the Committee in establishing the terms of such Option
at the Date of Grant.
b. Incentive Stock Option. An Incentive Stock Option granted under this
Plan is not transferable except by will or the laws of descent and
distribution. During the lifetime of the Recipient, all rights of
the Incentive Stock Option are exercisable only by the Recipient.
This Section 13.b. shall apply to an Incentive Stock Option granted
under the Plan only so long as Code Section 422 (or a successor Code
provision) requires application of this restriction on
transferability. In the event that this Section 13.b. no longer
applies to an Incentive Stock Option granted under this Plan, such
Option shall be subject to Section 13.a. of the Plan.
14. Taxes; Compliance with Law; Approval of Regulatory Bodies; Legends. The
Company shall have the right to withhold from payments otherwise due and
owing to the Recipient (or his beneficiary) or to require the Recipient
(or his beneficiary) to remit to the Company in cash upon demand an amount
sufficient to satisfy any federal (including FICA and FUTA amounts),
state, and/or local withholding tax requirements at the time the Recipient
(or his beneficiary) recognizes income for federal, state, and/or local
tax purposes with respect to any Option under this Plan.
Options can be granted, and Shares can be delivered under this Plan, only
in compliance with all applicable federal and state laws and regulations
and the rules of all stock exchanges on which the Company's stock is
listed at any time. An Option is exercisable only if either (i) a
registration statement pertaining to the Shares to be issued upon exercise
of the Option has been filed with and declared effective by the Securities
and Exchange Commission and remains effective on the date of exercise, or
(ii) an exemption from the registration requirements of applicable
securities laws is available. This Plan does not require the Company,
however, to file such a registration statement or to assure the
availability of such exemptions. Any certificate issued to evidence Shares
issued under the Plan may bear such legends and statements, and shall be
subject to such transfer restrictions, as the Committee deems advisable to
assure compliance with federal and state laws and regulations and with the
requirements of this Section. No Option may be exercised, and Shares may
not be issued under this Plan, until the Company has obtained the consent
or approval of every regulatory body, federal or state, having
jurisdiction over such matters as the Committee deems advisable.
Each person who acquires the right to exercise an Option may be required
by the Committee to furnish reasonable evidence of ownership of the Option
as a condition to his exercise of the Option. In addition, the Committee
may require such consents and releases of taxing authorities as the
Committee deems advisable.
27
<PAGE> 31
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 ("1934 Act"), transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 under the 1934 Act, as
such Rule may be amended from time to time, or its successor under the
1934 Act. To the extent any provision of the Plan or action by the Plan
administrators fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Plan
administrators.
15. Adjustment Upon Change of Shares. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange
of shares, stock split, stock dividend, rights offering, or other
expansion or contraction of the Common Stock of the Company occurs, the
number and class of Shares for which Options are authorized to be granted
under this Plan, the number and class of Shares then subject to Options
previously granted to Employees under this Plan, and the price per Share
payable upon exercise of each Option outstanding under this Plan shall be
equitably adjusted by the Committee to reflect such changes. To the extent
deemed equitable and appropriate by the Board, subject to any required
action by shareholders, in any merger, consolidation, reorganization,
liquidation or dissolution, any Option granted under the Plan shall
pertain to the securities and other property to which a holder of the
number of Shares of stock covered by the Option would have been entitled
to receive in connection with such event.
16. Liability of the Company. The Company, its parent and any Subsidiary that
is in existence or hereafter comes into existence shall not be liable to
any person for any tax consequences incurred by a Recipient or other
person with respect to an Option.
17. Amendment and Termination of Plan. The Board may alter, amend, or
terminate this Plan from time to time without approval of the shareholders
of the Company. The Board may, however, condition any amendment on the
approval of the shareholders of the Company if such approval is necessary
or advisable with respect to tax, securities or other applicable laws to
which the Company, the Plan, Recipients or Eligible Persons are subject.
Any amendment, whether with or without the approval of shareholders of the
Company, that alters the terms or provisions of an Option granted before
the amendment (unless the alteration is expressly permitted under this
Plan) will be effective only with the consent of the Recipient to whom the
Option was granted or the holder currently entitled to exercise it.
18. Expenses of Plan. The Company shall bear the expenses of administering the
Plan.
19. Duration of Plan. Options may be granted under this Plan only during the
10-year period ending December 22, 2005.
20. Applicable Law. The validity, interpretation, and enforcement of this Plan
are governed in all respects by the laws of Florida and the United States
of America.
21. Effective Date. Except as otherwise provided in this Section 21, the
effective date of this Plan, as amended and restated, shall be April 12,
1999. Section 7 of this Plan, as amended and restated, shall be effective
October 24, 1997, and the corresponding prior provision of the Plan shall
apply before October 24, 1997. Section 5 of this Plan, as amended and
restated, was effective as of May 9, 1998.
Adopted by the Board on April 12, 1999 (original Plan adopted by the Board on
December 22, 1995; amendments adopted by the Board on February 18, 1997, January
23, 1998, August 7, 1998 and April 12, 1999).
Approved by the Shareholders on May 9, 1998 (original Plan approved by the
Shareholders on December 22, 1995; amendments approved by the Shareholders on
April 15, 1997 and May 9, 1998).
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<PAGE> 32
PROXY
OUTSOURCE INTERNATIONAL, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 14, 1999
The undersigned shareholder hereby appoints Robert E. Tomlinson, Joseph
C. Wasch and David H. Hinze or any of them, attorneys and proxies for the
undersigned with power of substitution in each to act for and to vote, as
designated on the reverse side, with the same force and effect as the
undersigned, all shares of OutSource International, Inc. Common Stock standing
in the name of the undersigned at the Annual Meeting of Shareholders to be held
at The Deerfield Beach/Boca Raton Hilton, 100 Fairway Drive, Deerfield Beach,
Florida at 10:00 a.m. on Friday, May 14, 1999 and at any adjournments thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
GRANT AUTHORITY TO THE PROXY HOLDERS TO VOTE ON BEHALF OF THE UNDERSIGNED
SHAREHOLDER AND WILL BE VOTED "FOR" THE OTHER PROPOSALS.
IN THEIR DISCRETION, THE PROXY HOLDERS ARE AUTHORIZED TO VOTE ON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF. THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE PROXY HOLDERS' BEST
JUDGMENT AS TO ANY OTHER MATTER.
[SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE REVERSE
SIDE] SIDE]
<PAGE> 33
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS: 2. APPROVAL OF AMENDMENT TO
Nominees: Jay D. Seid and Richard J. Williams STOCK OPTION PLAN [ ] [ ] [ ]
FOR WITHHELD
[ ] [ ] 3. RATIFY DELOTTE & TOUCHE LLP
AS INDEPENDENT AUDITORS FOR
FISCAL YEAR 1999. [ ] [ ] [ ]
[ ] MARK HERE IF YOU PLAN TO ATTEND THE MEETING. [ ]
---------------------------------------
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT. [ ]
IMPORTANT: Please mark, date and sign exactly as your name
appears hereon, joint owners should each sign. If the signer
is a corporation, please sign in full corporate name by a duly
authorized officer. Executors, administrators, trustees, etc.,
should give full title as such.
Signature:____________________ Date:________ Signature:____________________ Date:_________
</TABLE>
