<PAGE>
( MEDIQ LOGO )
MEDIQ INCORPORATED
ONE MEDIQ PLAZA
PENNSAUKEN, NEW JERSEY 08110-1460
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 2, 1994
February 4, 1994
To The Shareholders:
The Annual Meeting of Shareholders of MEDIQ Incorporated will be held at
10:00 a.m. on Wednesday, March 2, 1994, at the Company's corporate headquarters,
One MEDIQ Plaza, Pennsauken, New Jersey, for the following purposes:
1. To elect a Board of eight Directors; and
2. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on January 21, 1994
are entitled to notice of, and to vote at, the meeting.
The Company's Annual Report for 1993 is enclosed.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING, BUT WHETHER OR NOT YOU
PLAN TO BE PRESENT, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ACCOMPANYING PROXY OR PROXIES IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
EUGENE M. SCHLOSS, JR.
Secretary
<PAGE>
( MEDIQ LOGO )
MEDIQ INCORPORATED
ONE MEDIQ PLAZA
PENNSAUKEN, NEW JERSEY 08110-1460
PROXY STATEMENT
The accompanying proxies are solicited by the Board of Directors of MEDIQ
Incorporated ('Company'). The person giving a proxy has the right to revoke it
at any time before it is voted by giving written notice of revocation to the
Secretary of the Company. The expense of this proxy solicitation will be paid by
the Company. This proxy statement and the accompanying forms of proxy are first
being mailed to shareholders on or about February 4, 1994. In addition to
solicitation by mail, employees of the Company may personally solicit proxies.
The Company had 17,416,011 shares of Common Stock, par value $1.00 per
share ('Common Stock'), and 6,427,563 shares of Series A Preferred Stock, par
value $.50 per share ('Preferred Stock'), outstanding and entitled to vote at
the close of business on January 21, 1994. Only shareholders of record on that
date will be entitled to vote.
The holders of shares of Common Stock are entitled to one vote per share.
The holders of shares of Preferred Stock are entitled to ten votes per share.
The Common Stock and Preferred Stock generally vote together as a single class,
except that the Company's Certificate of Incorporation provides that not less
than 25% of the total number of directors of the Company will consist of
individuals who are not officers or employees of the Company ('Outside
Directors'). The Certificate of Incorporation further provides that holders of
Preferred Stock will not have the right to elect Outside Directors, such Outside
Directors to be elected solely by the holders of Common Stock, voting as a
separate class. Accordingly, the holders of Preferred Stock will not have the
right to vote in the election of Outside Directors, and such directors will be
elected solely by the holders of Common Stock. The Outside Directors nominated
by the Board of Directors ('Board') for election are Lionel Felzer, Mark S.
Levitan, H. Scott Miller, Bessie G. Rotko and Jacob A. Shipon.
Members of the Board and the officers of the Company own in the aggregate
5,995,293 shares of Common Stock and 5,097,062 shares of Preferred Stock, or
approximately 34% and 79% of the outstanding Common Stock and Preferred Stock,
respectively (exclusive of stock options and securities convertible into common
stock). These holdings entitle the Board and officers to an aggregate of 70% of
the total outstanding votes on all matters scheduled to come before the meeting,
except the election of Outside Directors, who are elected by the holders of
Common Stock voting as a single class. In the election of Outside Directors, by
virtue of their ownership of Common Stock, members of the Board and officers of
the Company are entitled to cast an aggregate of 34% of the total outstanding
votes. Each director, nominee and officer has advised the Company of the
intention to vote his or her Common Stock for the election of those persons
nominated by the Board for reelection as Outside Directors, and his or her
Common Stock and Preferred Stock for the election of the persons nominated by
the Board for election as directors not considered to be Outside Directors.
It is intended that shares of stock represented by proxies in the
accompanying form, unless otherwise specified, will be voted for the election of
the persons nominated below. The votes will be tabulated by American Stock
Transfer & Trust Co., the Company's transfer agent. Abstentions and broker
non-votes will be treated in accordance with applicable provisions of Delaware
law and the Certificate of Incorporation and Bylaws of the Company.
1
<PAGE>
ELECTION OF DIRECTORS
A Board of eight directors will be elected at the 1994 Annual Meeting. All
directors are elected annually, and if elected, will serve until the next Annual
Meeting and until the election and qualification of their successors.
Shareholders do not have cumulative voting rights in the election of directors.
NOMINEES FOR ELECTION AS DIRECTORS
Set forth below is information concerning the nominees for election as a
director. The Board has no reason to anticipate that any nominee will decline or
be unable to serve. In case any nominee does decline or is unable to serve,
proxies may be voted for the election of a substitute nominee, or the Board may
elect to reduce the number of directors.
<TABLE>
<CAPTION>
NAME AND OFFICES DIRECTOR PRINCIPAL OCCUPATION AND EXPERIENCE DURING
WITH THE COMPANY AGE SINCE THE PAST FIVE YEARS, OTHER THAN WITH THE COMPANY
<S> <C> <C> <C>
Michael J. Rotko 55 1965 Partner, Drinker, Biddle & Reath (legal services); formerly U.S.
Chairman of the Board Attorney, Eastern District of Pennsylvania; previously First Assistant
of Directors U.S. Attorney, Eastern District of Pennsylvania; previously Attorney in
private practice
Bernard J. Korman 62 1977 Chairman of the Board of Directors, NutraMax Products, Inc. (consumer
President, Chief healthcare products) and PCI Services, Inc. (pharmaceutical packaging
Executive Officer and services); Director, President and Chief Executive Officer, MEDIQ/PRN
Director Life Support Services, Inc. (life support and critical care equipment
rental services); Director, Mental Health Management, Inc. (behavioral
health management services), The New America High Income Fund (financial
services), The Pep Boys, Inc. (auto supplies), Today's Man, Inc. (retail
men's clothing sales) and Omega Healthcare Investors, Inc. (real estate
investment trust)
Lionel Felzer 70 1968 Retired; formerly Senior Vice President and Treasurer of the Company
Director
Mark S. Levitan 60 1981 Chairman of the Board of Directors of HOMECARE USA (home medical
Director equipment rentals); Vice President -- Consulting Division, MedQuist Inc.
(healthcare information services); previously Partner, Management
Partners, Inc. (healthcare consultants), which was acquired in January
1994 by MedQuist Inc.; previously Executive Vice President and Chief
Operating Officer of the Company
H. Scott Miller 44 1992 Partner, Pulsar Equity Partners (merchant banking); formerly Fixed
Director Income Portfolio Manager, Miller, Anderson & Sherrerd (financial
management services); previously Vice President, Investment Banking
Division, Goldman Sachs & Co. (investment banking services)
Bessie G. Rotko 83 1989
Director
Michael F. Sandler 48 Director and Vice President, MEDIQ/PRN Life Support Services, Inc.; Vice
Director Nominee, President and Chief Financial Officer, PCI Services, Inc. and Director,
Senior Vice President Vice President and Chief Financial Officer, NutraMax Products, Inc.;
-- Finance, Treasurer Director, Mental Health Management, Inc.
and Chief Financial
Officer
Jacob A. Shipon 55 1981 Physician
Director
</TABLE>
2
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held nineteen meetings during the fiscal year ended
September 30, 1993. Each director attended the meetings of the Board and of each
committee of which he or she was a member. The Board of Directors has a
Compensation Committee, a Stock Option Committee and an Audit Committee. The
Board serves as the Nominating Committee, and will consider nominees recommended
by shareholders in writing, addressed to the Secretary of the Company, not later
than September 30 of each year.
Messrs. Korman, Rotko, Dr. Shipon and Mrs. Rotko were members of the
Compensation Committee during the 1993 fiscal year. This Committee reviews
categories of compensation levels of the Company's employees and determines
guidelines for the future, including incentive compensation. This Committee held
one meeting during the fiscal year.
Mr. Rotko, Mrs. Rotko and Dr. Shipon served as members of the Stock Option
Committee during the 1993 fiscal year. This Committee is authorized to grant
options to officers and key employees of the Company pursuant to the Company's
Stock Option Plan. This Committee held one meeting during the fiscal year.
Messrs. Rotko and Felzer, Mrs. Rotko and Dr. Shipon were members of the
Audit Committee during the 1993 fiscal year. The primary responsibilities of
this Committee are to recommend annually the independent public accountants for
appointment by the Board as auditors for the Company, review the scope of the
audit made by the accountants, review the audit reports submitted by the
accountants, conduct such other reviews as the Committee deems appropriate and
make reports and recommendations to the Board within the scope of its functions.
This Committee held one meeting during the fiscal year.
OTHER EXECUTIVE OFFICER
In addition to the directors and executive officers listed above, the
Company's other executive officer is Donald M. Gleklen, 57, Senior Vice
President -- Corporate Development. Mr. Gleklen is also a Director of Gandalf
Technologies, Inc. (telecommunications equipment) and New West Eyeworks, Inc.
(retail eyewear stores).
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 1, 1994, the beneficial
ownership of shares of the Company's Common Stock, par value $1.00 per share,
and Series A Preferred Stock, par value $.50 per share, by each of the nominees
for director of the Company, each executive officer named in the Summary
Compensation Table (included elsewhere herein) and by all directors and officers
of the Company as a group.
<TABLE>
<CAPTION>
PERCENT PERCENT
NUMBER OF CLASS NUMBER OF CLASS
NAME OF SHARES(1) OUTSTANDING(2) OF SHARES(1) OUTSTANDING(2)
<S> <C> <C> <C> <C>
Michael J. Rotko 448,655(3) 2.6% 448,655(3) 7.0%
Bernard J. Korman(4)(5) 1,900,597(6) 10.5% 801,909(6) 12.5%
Lionel Felzer 390,813(7) 2.2% 490(7) *
Mark S. Levitan 4,895(8) *
H. Scott Miller 3,700(9) * 4,300(9) *
Bessie G. Rotko(5) 3,811,458(10) 21.9% 3,840,058(10) 59.7%
Michael F. Sandler(5) 175,539(11) *
Jacob A. Shipon(5) 1,650(12) * 1,650(12) *
Donald M. Gleklen(5) 254,167(13) 1.5% 25,465(13) *
All directors and officers as a group
(10 persons) 7,114,777(14) 38.4% 5,135,540(14) 79.4%
</TABLE>
* Less than one percent.
(1) Unless otherwise noted below, beneficial ownership is based on sole voting
and investment power with respect to the shares, and shares are held by the
person listed or members of his or her family.
(2) All percentages are rounded to the nearest tenth, and are based upon the
number of shares outstanding, including, as appropriate, the shares
referred to in the notes below.
(3) Michael J. Rotko is the son of Bessie G. Rotko. Includes 7,308 shares of
Common Stock and 7,308 shares of Preferred Stock, respectively, held as
custodian for children.
(4) The address of Mr. Korman is One MEDIQ Plaza, Pennsauken, NJ 08110-1460.
(5) The Company owns approximately 48% of the outstanding common stock of
NutraMax Products, Inc. ('NutraMax Stock'). Mr. Korman, Mrs. Rotko, Dr.
Shipon and Messrs. Sandler and Gleklen beneficially own 29,000, 3,600,
2,240, 11,600 and 27,000 shares, respectively, of NutraMax Stock, and all
of the directors and officers of the Company, as a group (10 persons)
beneficially own an aggregate of 75,440 shares of NutraMax Stock, which
aggregate amount represents less than one percent of the outstanding
shares. The Company owns 42% of the outstanding common stock of PCI
Services, Inc. ('PCI Stock'). Messrs. Korman and Felzer, Mrs. Rotko and
Messrs. Sandler and Gleklen beneficially own 79,000, 1,000, 3,000, 26,500
and 5,000 shares, respectively, of PCI Stock, and all of the directors and
officers of the Company as a group (10 persons) beneficially own an
aggregate of 117,500 shares of PCI Stock, which aggregate amount represents
less than two percent of the outstanding shares.
(6) Includes 21,204 shares of Common Stock and 21,204 shares of Preferred
Stock, respectively, held as custodian for children, 36,800 shares of
Common Stock owned by Mr. Korman's spouse, and 747,867 shares of Common
Stock and 879 shares of Preferred Stock, respectively, which may be
acquired upon exercise of stock options, acquired upon conversion of
outstanding convertible debentures, held in the Company's Employees'
Savings Plan for the account of Mr. Korman and/or held in Mr. Korman's
individual retirement account.
(7) Lionel Felzer is the brother-in-law of Bessie G. Rotko. Includes 42,526
shares of Common Stock which may be acquired upon exercise of stock options
and 490 shares of Preferred Stock held in Mr. Felzer's individual
retirement account.
(8) Includes 1,805 shares of Common Stock held in the Company's Employees'
Savings Plan for the account of Mr. Levitan.
(9) Mr. Miller provides financial advisory services to the Trust described in
note 10. Includes 3,600 shares of Common Stock and 2,700 shares of
Preferred Stock held in Mr. Miller's individual retirement account and
1,600 shares of Preferred Stock held by the estate of Mr. Miller's mother.
(Footnotes continued on next page)
4
<PAGE>
(10) Mrs. Rotko is the income beneficiary, during her lifetime, of a trust
created by her late husband, Bernard B. Rotko, M.D., who was the founder of
the Company. The trust holds 3,570,969 shares of Common Stock and 3,570,969
shares of Preferred Stock. The Trustees, Bessie G. Rotko, Michael J. Rotko,
Judith M. Shipon, Lionel Felzer and Provident National Bank, share voting
and investment power with respect to these shares, which are not included
in the amounts set forth as being beneficially owned by the other named
Trustees as individuals. The address of the Trustees is c/o Lionel Felzer,
MEDIQ Incorporated, One MEDIQ Plaza, Pennsauken, New Jersey 08110-1460.
(11) Includes 171,039 shares of Common Stock which may be acquired upon exercise
of stock options, acquired upon conversion of outstanding convertible
debentures, or held in the Company's Employees' Savings Plan for the
account of Mr. Sandler.
(12) Jacob A. Shipon is the son-in-law of Bessie G. Rotko. Excludes 459,007
shares of Common Stock and 458,757 shares of Preferred Stock, respectively,
which are owned beneficially by Mrs. Jacob Shipon, and as to which Jacob A.
Shipon disclaims beneficial ownership.
(13) Includes 178,886 shares of Common Stock and 25,465 shares of Preferred
Stock, respectively, which may be acquired upon exercise of stock options
or held in the Company's Employees' Savings Plan for the account of Mr.
Gleklen.
(14) Includes an aggregate of 28,512 shares of Common Stock and 28,512 shares of
Preferred Stock, respectively, held as custodian for children, 36,800
shares of Common Stock held by a spouse and an aggregate of 1,178,908
shares of Common Stock and 39,847 shares of Preferred Stock, respectively,
which may be acquired upon exercise of stock options, acquired upon
conversion of outstanding convertible debentures, held in the Company's
Employees' Savings Plan for the accounts of the directors and officers of
the Company and/or in an individual retirement account.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the last three fiscal years to the Company's Chief Executive
Officer and each of the Company's two other executive officers.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(1)
<S> <C> <C> <C> <C> <C>
Bernard J. Korman 1993 $395,000 500,000(2) $46,000
President and Chief 1992 395,000 $240,000
Executive Officer 1991 395,000 247,000
Michael F. Sandler 1993 236,000 165,000(2) 7,000
Senior Vice President -- 1992 215,000 120,000 125,000
Finance, Treasurer & Chief 1991 200,000 120,000
Financial Officer
Donald M. Gleklen 1993 236,000 166,075(2) 15,000
Senior Vice President -- 1992 225,000 111,000
Corporate Development 1991 207,000 124,000
</TABLE>
(1) Under transitional rules, amounts in the All Other Compensation column are
included only for 1993.
(2) Represents outstanding options to acquire shares of the Company's Common
Stock and/or Preferred Stock for which exercise prices were reduced in
August 1993.
5
<PAGE>
STOCK OPTIONS
The following table summarizes stock option activity during fiscal 1993 for
the Company's executive officers. All options included in the table represent
options which were outstanding at August 1993, when the exercise prices for such
options were reduced in connection with the distribution to the Company's
stockholders of the stock of Mental Health Management, Inc. Pursuant to the
rules of the Securities and Exchange Commission, these options are reported as
new grants for fiscal 1993.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
OPTIONS OF STOCK PRICE APPRECIATION
GRANTED TO MARKET PRICE FOR OPTION TERM (000'S)
OPTIONS EMPLOYEES IN EXERCISE AT DATE EXPIRATION
NAME GRANTED(1) FISCAL YEAR PRICE OF REPRICING DATE 0% 5%(2) 10%(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard J. Korman 500,000 44.6% $2.839 $4.3125 4/5/1999 $737 $1,441 $2,372
Michael F. Sandler 125,000 11.2% 3.057 4.3125 6/7/2001 157 376 682
15,000 1.3% 3.494 4.3125 2/17/2000 12 37 71
25,000 2.2% 3.166 4.3125 11/18/1998 29 61 103
Donald M. Gleklen 71,429 6.4% 3.057 4.3125 6/7/2001 90 215 390
15,000 1.3% 3.494 4.3125 2/17/2000 12 37 71
28,716 2.6% 2.729 4.3125 10/10/1998 45 82 129
9,675 .9% 4.513 4.3125 1/15/1995 1 4
15,790 1.4% 4.149 4.3125 9/27/1994 3 6 10
9,675(3) 14.3% (3) 4.487 4.125 1/15/1995 3
15,790(3) 23.3% (3) 4.125 4.125 9/27/1994 4 7
</TABLE>
(1) Unless otherwise indicated, options are to purchase shares of the Company's
Common Stock.
(2) The information in these columns illustrates the value that might be
realized upon exercise of the options assuming the specified compound rates
of appreciation of the Company's Common Stock and/or Preferred Stock over
the term of the options. The potential realizable value columns do not take
into account amounts required to be paid for federal or state income taxes
or option provisions regarding termination of the option following
termination of employment or nontransferability requirements. These amounts
were calculated based on requirements of the Securities and Exchange
Commission and do not necessarily reflect the Company's estimate of future
stock price growth.
(3) Represents options to purchase shares of the Company's Preferred Stock.
The following table provides information relating to the value of
unexercised options held by the above-named executive officers at the end of
fiscal 1993. No stock options were exercised during fiscal 1993 by such
executive officers.
UNEXERCISED STOCK OPTIONS AT FISCAL YEAR END
<TABLE>
<CAPTION>
TOTAL NUMBER OF VESTED
UNEXERCISED VALUE OF VESTED UNEXERCISED
NAME OPTIONS(#)(1) IN-THE-MONEY OPTIONS AT YEAR END(2)
<S> <C> <C>
Bernard J. Korman 500,000 $893,000
Michael F. Sandler 165,000 249,440
Donald M. Gleklen 166,075(3) 195,960
</TABLE>
(1) Unless otherwise noted, options are to acquire shares of the Company's
Common Stock.
(2) Based upon the closing prices at September 30, 1993.
(3) Includes options to acquire 25,465 shares of the Company's Preferred Stock.
6
<PAGE>
RETIREMENT PLAN
The following table shows the estimated annual pension benefits payable
upon retirement to participants of the Company's noncontributory defined benefit
pension plan (the 'Pension Plan') for various salary levels and years of
service:
<TABLE>
<CAPTION>
AVERAGE ANNUAL ESTIMATED ANNUAL BENEFITS
COMPENSATION DURING PAYABLE AT AGE 65 FOR VARIOUS
PLAN MEMBERSHIP YEARS OF PLAN MEMBERSHIP
10 20 30 40
<S> <C> <C> <C> <C>
$500,000 $31,399 $61,832 $92,148 $100,222
400,000 31,399 61,832 92,148 100,222
300,000 31,399 61,832 92,148 100,222
200,000 26,381 51,797 77,095 89,936
100,000 12,381 23,797 35,095 40,936
</TABLE>
Average annual compensation is based upon the participant's annual
compensation (including bonuses and similar special pay), as more fully defined
in the Pension Plan, over the number of years of participation up to a maximum
of 35 years. For Pension Plan purposes, the highest annual compensation paid to
any participant for fiscal 1993 was $395,000. During fiscal 1993, the maximum
amount of annual compensation which may be included for Pension Plan purposes is
$235,840. The figures shown above apply under the Pension Plan as of December
31, 1993. Estimated annual benefits are determined in part by the average Social
Security wage base during the 35 years ending in the year of Social Security
Normal Retirement Age. The benefit amounts listed are not subject to any
deduction for Social Security or other offset amounts. As a result of
limitations imposed under Federal income tax law, the maximum annual benefit
payable under the Pension Plan is $115,641, although the amount will be
actuarially adjusted in accordance with Federal income tax regulations if
payments commence prior to or following the date that unreduced Social Security
benefits become payable. As of December 31, 1993, Messrs. Korman, Gleklen and
Sandler had 17, 9 and 5 years of service credited, respectively, under the
Pension Plan.
COMPENSATION OF DIRECTORS
Directors who are officers of the Company or of any subsidiary of the
Company receive no additional compensation for their service as directors or as
members of committees of the Board. Non-officer directors received an annual
director's fee of $15,000 for their services in such capacity during fiscal
1993.
7
<PAGE>
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The compensation arrangements of the Company reflect the philosophy of the
Compensation Committee and Stock Option Committee of the Company's Board of
Directors, and the Board of Directors as a whole, that a significant portion of
the annual compensation of the Company's Chief Executive Officer and the
Company's other executive officers should be linked to the Company's
performance. The Company's compensation programs are designed to provide
competitive financial rewards for successfully meeting the Company's strategic
and operating objectives, with the purposes of retaining personnel and
supporting a performance-oriented environment.
The compensation of the Company's Chief Executive Officer and other
executive officers is comprised of annual salary and cash and stock incentives
based on annual and long-term results of the Company. Annual salaries for
Messrs. Sandler and Gleklen are based on employment agreements, which commenced
in 1988 and 1984, respectively, with annual increases based on individual
performance, level of responsibilities and the Company's overall performance.
Mr. Korman's base salary has not increased since 1989. Changes in Mr.
Korman's annual salary, if any, would be determined by the Compensation
Committee based upon an analysis of his performance during the year and the
Company's overall performance. In particular, the Committee would evaluate Mr.
Korman's leadership of the Company during a very challenging period in the
Company's operations -- the implementation of the Company's strategic plan to
reduce debt, clarify corporate focus, enhance shareholder value and increase
market liquidity. Mr. Korman does not participate in deliberations concerning
his compensation.
The Company has an incentive compensation plan which rewards executive
officers based upon individual performance and the Company's achievement of its
internal financial objectives. The plan provides for annual cash bonuses for the
Company's executive officers ranging from 10% to 60% of base salary, with each
executive officer becoming entitled to receive a percentage of the bonus
potential based upon the percentage achievement of the Company's internal
operating objectives. Through this plan, a significant portion of each executive
officer's annual total compensation is placed at risk in order to provide an
incentive toward sustained high performance. For Messrs. Korman, Sandler and
Gleklen, the bonus potential is entirely dependent upon the Company's operating
performance, without regard to individual achievements. For fiscal 1993, the
Company did not meet its projected financial goals and, as a result, Messrs.
Korman, Sandler and Gleklen did not receive any bonus payments under this plan.
In addition, it is the policy of the Stock Option Committee and the Board
of Directors to utilize stock options to provide a link between compensation and
the market performance of the Company's stock, and to focus attention of
management on the enhancement of shareholder value. Since the adoption of the
Company's stock option plans in 1981 and 1987, the Company's executive officers
have all been granted options to acquire shares of the Company's stock. If the
efforts of the executive officers create additional value for the Company's
shareholders, evidenced by increases in the Company's stock price, the officers
will also benefit through appreciation of the potential value of outstanding
stock options. The Stock Option Committee believes that the long-term nature of
stock options also encourages executive officers to remain in the employ of the
Company. In August 1993, the Board of Directors lowered the exercise price of
outstanding options held by active employees, including the Company's executive
officers. The Board of Directors believes that repricing the options to reflect,
in part, the adjustment of the Company's stock prices resulting from the
distribution to the Company's shareholders of the shares of Mental Health
Management, Inc. maintained the parity of interests between the Company's
management and shareholders.
8
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
<S> <C>
Bernard J. Korman
Bessie G. Rotko Bessie G. Rotko
Michael J. Rotko Michael J. Rotko
Jacob A. Shipon Jacob A. Shipon
</TABLE>
STOCK PERFORMANCE CHART
The following chart compares the percentage change in the cumulative total
shareholder return on the Company's Common Stock, the Standard & Poors 500 Index
and the Standard & Poors Medical Products and Supplies Index.
( insert stock performance chart here )
<TABLE>
<CAPTION>
MEDIQ Incorporated S & P 500 Index S & P MEDICAL PROD & SUPL
<S> <C> <C> <C>
9/88 100 100 100
9/89 147 133 125
9/90 73 121 134
9/91 115 158 210
9/92 143 176 204
9/93 150 199 155
</TABLE>
$100 invested on 9/30/88 in Stock and Indices --
including reinvestment of dividends. Fiscal years ended September 30.
9
<PAGE>
CERTAIN TRANSACTIONS
NUTRAMAX PRODUCTS, INC.
The Company owns approximately 48% of the common stock of NutraMax. Messrs.
Korman, Sandler and Gleklen, Mrs. Rotko and Dr. Shipon are shareholders of
NutraMax, and Mr. Korman is Chairman of the Board of Directors of NutraMax.
Messrs. Gleklen and Sandler are directors of NutraMax, and Messrs. Korman and
Sandler are officers of NutraMax. For the fiscal year ended September 30, 1993,
the Company was paid $100,000 by NutraMax pursuant to a services agreement for
accounting, legal, tax and other services. The Company and NutraMax have a tax
allocation/sharing agreement, which provides that NutraMax will reimburse the
Company for any future tax assessment against the Company resulting from
NutraMax's operations, and the Company will reimburse NutraMax for any future
tax benefit resulting from NutraMax's operations, for periods of time during
which NutraMax was a member of the Company's consolidated federal tax group.
NutraMax was included in the Company's consolidated group until August 1991.
NutraMax obtains certain of its insurance through MEDIQ's insurance programs.
For the fiscal year ended September 30, 1993, NutraMax paid $213,000 of
insurance expense under these programs.
PCI SERVICES, INC.
The Company owns 42% of the common stock of PCI. Messrs. Korman, Felzer,
Sandler and Gleklen and Mrs. Rotko are shareholders of PCI, Mr. Korman is
Chairman of the Board of Directors of PCI and Mr. Sandler is Vice President and
Chief Financial Officer of PCI. For the fiscal year ended September 30, 1993,
the Company was paid $100,000 by PCI pursuant to a services agreement for
accounting, legal, tax and other services. The Company and PCI have a tax
allocation/sharing agreement, which provides that PCI will reimburse the Company
for any future tax assessment against the Company resulting from PCI's
operations, and the Company will reimburse PCI for any future tax benefits
resulting from PCI's operations, for periods of time during which PCI was a
member of the Company's consolidated federal tax group. PCI was included in the
Company's consolidated group until January 1992. Pursuant to an agreement with
the Company, PCI was responsible for the principal and interest payments related
to the debt service on PCI's Pennsauken, New Jersey facility and the costs
related to ownership and operation of the facility during fiscal 1993. For the
fiscal year ended September 30, 1993, PCI paid $444,000 for such operating
expenses, including interest, and $207,500 of principal repayment. As of
September 30, 1993, the remaining principal amount of the mortgage was
$2,559,000. It is anticipated that this facility will be transferred to PCI in
the immediate future. PCI obtains certain of its insurance coverages through the
Company's insurance programs. For the fiscal year ended September 30, 1993, PCI
paid $182,000 of insurance expense under these programs. Effective January 1,
1993, PCI acquired PCI/Virginia, which operates a pharmaceutical packaging
facility in Virginia, from the Company for aggregate consideration of
approximately $2,300,000, which approximated the fair market value of
PCI/Virginia. PCI had previously transferred by dividend all of the capital
stock of PCI/Virginia to the Company, effective October 1, 1991, in order to
obtain relief from losses and continued funding requirements relating to such
operations. In connection with such transfer, PCI provided senior management
services to PCI/Virginia and received therefor management fees equal to five
percent of the annual net revenue of PCI/Virginia. In the fiscal year ended
September 30, 1993, PCI/Virginia paid $97,000 to PCI for management fees. In
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July 1990, in order to facilitate the financing of the commencement of packaging
operations by PCI/Virginia, Messrs. Korman and Rotko and Dr. Shipon formed and
are the sole stockholders of P.C. Realty, Inc. ('Realty'), a Delaware
corporation. Realty acquired certain equipment and real estate which were then
leased to PCI/Virginia to commence its pharmaceutical packaging operations. For
the fiscal year ended September 30, 1993, PCI/Virginia made aggregate lease
payments to Realty, based on Realty's actual costs, of approximately $639,000.
On September 30, 1993, the capital stock of Realty was contributed to PCI.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche, Certified Public
Accountants, to audit the financial statements of the Company and its
subsidiaries for the fiscal year ending September 30, 1994. A representative of
Deloitte & Touche will be present at the meeting, and will be available to
respond to appropriate questions from shareholders.
OTHER BUSINESS
The Board is not aware of any business to be presented for action at the
meeting, other than the election of directors. However, should any other matter
requiring a vote of shareholders arise, the agents named in the Company's
proxies will vote in accordance with their own best judgment.
SHAREHOLDER PROPOSALS
In order for proposals of shareholders to be considered for inclusion in
the proxy materials for the 1995 Annual Meeting, such proposals must be received
by the Secretary of the Company not later than October 1, 1994.
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<PAGE>
COMMON STOCK PROXY
MEDIQ Incorporated
One MEDIQ Plaza
Pennsauken, New Jersey 08110
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Michael J. Rotko and Benard J. Korman as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below, all the shares of Common
Stock of MEDIQ Incorporated held of record by the undersigned on January 21,
1994, at the annual meeting of shareholders to be held on March 2, 1994, or any
adjournment(s) thereof.
1. ELECTION OF DIRECTORS / /
The nominees for election as Directors are: M. Rotko, B. Korman, L. Felzer,
M. Levitan, H.S. Miller, B. Rotko, M. Sandler and J. Shipon.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment(s) thereof.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted FOR the election of all nominees for election as Directors and FOR
proposal 2.
(Continued and to be signed on reverse side)
12
<PAGE>
/x/ Please mark your
votes as in this
example.
FOR WITHHELD
1. Election of / / / /
Directors -
For, except
vote withheld from the following nominee(s):
Please sign exactly as name appears below. When
shares are held by joint tenants, both should
sign. When signing as attorney, or as executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please
sign in full Corporate name by President or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
Signature
Signature if held jointly
Dated: , 1994
Please promptly mark, sign, date and return the
proxy card using the enclosed envelope.
13
<PAGE>
PREFERRED STOCK PROXY
MEDIQ Incorporated
One MEDIQ Plaza
Pennsauken, New Jersey 08110
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints Michael J. Rotko and Benard J. Korman as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below, all the shares of Preferred
Stock of MEDIQ Incorporated held of record by the undersigned on January 21,
1994, at the annual meeting of shareholders to be held on March 2, 1994, or any
adjournment(s) thereof.
1. ELECTION OF DIRECTORS
The nominees for election as Directors are: M. Rotko, B. Korman, and M. Sandler.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment(s) thereof.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted FOR the election of all nominees tor election as Directors and FOR
proposal 2.
(Continued and to be signed on reverse side.)
14
<PAGE>
/x/ Please mark your
votes as in this
example.
FOR WITHHELD
1. Election of \ \ \ \
Directors -
For, except
vote withheld from the following nominee(s):
Please sign exactly as name appears below. When
shares are held by joint tenants, both should
sign. When signing as attorney, or as executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please
sign in full Corporate name by President or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
Signature
Signature if held jointly
Dated: , 1994
Please promptly mark, sign, date and return the
proxy card using the enclosed envelope.
15
