<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
* * * * *
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Soliciting material pursuant to Section 240.14a-11(c) or 240.14a-12
Rule 14a-11(c) or Rule 14a-12
GERIATRIC & MEDICAL COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
GERIATRIC & MEDICAL COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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(4) Proposed maximum aggregate value of transaction:
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* Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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 collecting 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
GERIATRIC & MEDICAL COMPANIES, INC.
5601 CHESTNUT STREET PHILADELPHIA, PENNSYLVANIA 19139
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF GERIATRIC & MEDICAL COMPANIES, INC.
Notice is hereby given that the 1994 Annual Meeting of Stockholders of
Geriatric & Medical Companies, Inc. will be held at Lacey Nursing and
Rehabilitation Center, 916 Lacey Road, Forked River, NJ 08731, on November 17,
1994 at 10:00 AM, local time for the following purposes:
1. To elect two directors in Class I for a three-year term expiring at
the Annual Meeting of Stockholders in 1997;
2. To approve the 1994 Stock Option and Restricted Stock Plan for
Directors; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on October 7, 1994, are
entitled to notice of and to vote at the meeting or any adjournments thereof.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. YOU ARE
CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON BUT, IF YOU DO NOT EXPECT TO
ATTEND IN PERSON, YOU ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING SELF-ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
Dated: October 20, 1994
By Order of the Board of
Directors
Arthur A. Carr, Jr.,
Secretary
<PAGE>
GERIATRIC & MEDICAL COMPANIES, INC.
PROXY STATEMENT
The solicitation of the accompanying Proxy is made by and on behalf of the
Board of Directors of Geriatric & Medical Companies, Inc., a Delaware
corporation (the 'Company'), whose principal executive offices are located at
5601 Chestnut Street, Philadelphia, Pennsylvania 19139, for use at the 1994
Annual Meeting of Stockholders to be held at Lacey Nursing and Rehabilitation
Center, 916 Lacey Road, Forked River, NJ 08731, on November 17, 1994 and at any
adjournments thereof. The approximate date on which this Proxy Statement and the
accompanying form of Proxy will be first sent or given to stockholders is
October 20, 1994.
The Company will bear the cost of the solicitation of Proxies. Proxies will
be solicited by mail, telephone and personal contact by certain officers and
regular employees of the Company. The Company is, upon the request of record
holders, required to pay the reasonable expenses incurred by record holders who
are brokers, dealers, banks or voting trustees, or their nominees, for mailing
proxy material and the Company's Annual Report to Stockholders to any beneficial
holder of the Common Stock they hold of record.
Any stockholder executing and delivering the accompanying Proxy has the
power to revoke the same by giving notice to the Secretary of the Company at any
time prior to its use. Unless revoked, all properly executed proxies will be
voted at the meeting in accordance with the instructions therein. In the absence
of specific instructions, a Proxy will be voted for the election of all nominees
named in the Proxy, for the adoption of the 1994 Stock Option and Restricted
Stock Plan for Directors ('1994 Plan') and in accordance with the
recommendations of the Board of Directors on any other matters properly brought
before the meeting, as described herein. No matter is expected to be considered
at the meeting other than the proposals set forth in the accompanying Notice of
Annual Meeting, but if any other matters are properly brought before the meeting
for action, it is intended that the persons named in the Proxy and acting
thereunder will vote in accordance with their discretion on such matters.
Only stockholders of record at the close of business on October 7, 1994 are
entitled to notice of and to vote at the meeting or any adjournments thereof. As
of October 7, 1994, the outstanding voting securities of the Company consisted
of 15,202,629 shares of Common Stock, $.10 par value (the 'Common Stock').
Stockholders are entitled to one vote per share of Common Stock on any matter
which may properly come before the meeting. The presence, in person or by proxy,
of the holders of a majority of the shares of Common Stock issued and
outstanding is necessary to constitute a quorum at the meeting. In order to be
elected a director, a nominee must receive a plurality of votes out of the total
number of shares of Common Stock voted at the meeting for the election of
directors. A majority of the shares voted must be cast in favor of the 1994 Plan
for approval. For the purpose of determining the number of votes cast, only
those cast 'for' or 'against' are counted. Abstentions and broker non-votes are
counted only for purposes of determining whether a quorum is present at the
meeting.
Under the Company's Bylaws, any stockholder who desires to place the name of
a person in nomination for election as a director to be elected at the 1994
Annual Meeting of Stockholders must submit such nomination in writing to the
Secretary of the Company not later
-1-
<PAGE>
than the close of business on November 7, 1994 together with the signed written
consent of the nominee to serve if elected.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of October 7, 1994, with
respect to the beneficial ownership of the Company's Common Stock by all persons
known to the Company to be the beneficial owner of more than five percent of its
outstanding Common Stock, by each Director of the Company, by each Executive
Officer of the Company, and by all Directors and Executive Officers of the
Company as a group. Unless otherwise indicated, each such person has sole voting
and dispositive power with respect to the shares listed opposite his/her name.
<TABLE>
<CAPTION>
APPROXIMATE
NUMBER OF SHARES PERCENTAGE
BENEFICIALLY OWNED OF CLASS
------------------- -----------------
<S> <C> <C>
Daniel Veloric.................................. 3,746,178 24.4%
5601 Chestnut Street
Philadelphia, PA 19139
Thomas J. Gorman................................ 1,018,946(1),(2) 6.6%
1608 Walnut Street
Philadelphia, PA 19103
Robert P. Krauss................................ 1,000,000(2) 6.5%
1735 Market Street
Philadelphia, PA 19103
Esther Ponnocks................................. 107,345(3) (10)
Gerald E. Bisbee, Jr............................ 16,603(4) (10)
Anthony C. Salvo................................ 118,035(5) (10)
Michael Veloric................................. 87,426(6) (10)
Arthur A. Carr, Jr.............................. 32,187(7) (10)
James J. Wankmiller............................. 23,563(8) (10)
James J. O'Malley............................... 9,297(8) (10)
All Directors and Executive Officers as a group
(9 persons)................................... 5,159,580(9) 33.6%
</TABLE>
- ------------------
<TABLE>
<S> <C>
(1) Includes 18,946 shares which may be purchased pursuant to options that are
immediately exercisable or will become exercisable within 60 days under the 1990
Stock Option Plan for Directors.
(2) Includes 1,000,000 shares held in Trusts of which Mr. Gorman and Mr. Krauss are
co-Trustees.
(3) Includes 69,688 shares which may be purchased pursuant to options that are
immediately exercisable or will become exercisable within 60 days under the
Company's 1982 and 1989 Stock Option Plans.
(4) Represents shares which may be purchased pursuant to options that are
immediately exercisable or will become exercisable within 60 days under the 1990
Stock Option Plans for Directors.
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
(5) Includes 18,947 shares which may be purchased pursuant to options that are
immediately exercisable or will become exercisable within 60 days under the 1990
Stock Option Plan for Directors.
(6) Includes 3,595 shares which may be purchased pursuant to options that are
immediately exercisable or will become exercisable within 60 days under the
Company's 1982 and 1989 Stock Option Plans.
(7) Includes 15,469 shares which may be purchased pursuant to options that are
immediately exercisable or will become exercisable within 60 days under the
Company's 1982 and 1989 Stock Option Plans. Does not include 1,000 shares owned
by Mr. Carr's wife, beneficial ownership of which he disclaims.
(8) Represents shares which may be purchased pursuant to options that are
immediately exercisable or will become exercisable within 60 days under the
Company's 1982 and 1989 Stock Option Plans.
(9) Includes 176,108 shares which may be purchased pursuant to options that are
immediately exercisable or will become exercisable within 60 days under the
Company's Stock Option Plans. Also, included is 1,000,000 shares held in Trusts
as noted in (2) above.
(10) Less than 1%.
</TABLE>
ELECTION OF DIRECTORS
The Bylaws of the Company, as amended, provide that the Company shall have a
Board of Directors consisting of six members, who shall be divided into three
Classes, with two members in each Class. At the present time, the members of the
Board are Anthony C. Salvo and Thomas J. Gorman in Class I, Gerald E. Bisbee,
Jr. and Michael Veloric in Class II, and Daniel Veloric and Esther Ponnocks in
Class III. All members of the Board of Directors were elected at the times, and
for the terms, indicated in the following paragraph or in the table below. At
the meeting, stockholders will elect two Class I directors for a three-year term
expiring at the Annual Meeting of Stockholders in 1997.
The Proxies solicited by the Board of Directors will be voted by the person
named therein as so indicated, or if no indication, for Anthony C. Salvo and
Thomas J. Gorman as the nominees for election to Class I for a three-year term
expiring at the Annual Meeting of Stockholders in 1997 or until his successor is
elected and qualified. If the nominees withdraw or otherwise become unable to
serve, which is not expected, the Proxies will be voted for a substitute nominee
who will be designated by the Board of Directors.
-3-
<PAGE>
The following table sets forth information concerning the Company's
Directors and the nominees for Director:
<TABLE>
<CAPTION>
NAME (AGE) AND PRINCIPAL FIRST BECAME
OCCUPATION FOR THE PAST FIVE YEARS A DIRECTOR
- --------------------------------------------------------------------- -----------------
<S> <C>
Class I -- Nominees for election to serve until the
Annual Meeting in 1997:
Anthony C. Salvo (51) 1988
Vice President of Dillon, Read & Co., Inc., an investment
banking firm (1989 to date); President of ACS Holdings, Inc., a
diversified investment company (1989 to date).
Thomas J. Gorman (55) 1990
Chief Financial Officer and Treasurer of Carlino Financial
Corporation, a diversified holding company with interests in
various insurance, leasing and other entities (1984 to date).
Class II -- Directors elected in 1992 to serve until
the Annual Meeting in 1995:
Gerald E. Bisbee, Jr., Ph.D. (50) 1988
Chairman and Chief Executive Officer of Apache Medical Systems,
Inc., a provider of informational systems to the healthcare
industry (March 1990 to date); Chairman and Chief Executive
Officer of Hanger Orthopedic Group, Inc. (formerly Sequel
Corporation), an orthopedic products company (1988 and 1989);
Director of Cerner Corp. and Yamaichi Capital Management, Inc.
Michael Veloric (37) 1992
Vice President and Assistant Secretary of the Company. Vice
President of the Company since June 1987 and Assistant
Secretary since October 1984. Mr. Veloric (son of Daniel
Veloric), holds an MBA degree in Health Administration and has
been a member of the Company's management for over ten years.
Class III -- Directors elected in 1993 to serve until
the Annual Meeting in 1996:
Daniel Veloric (66) 1968
Chairman of the Board, President and Chief Executive Officer of
the Company for more than five years and an officer of the
Company for more than twenty-five years. Founder of the
Company.
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
NAME (AGE) AND PRINCIPAL FIRST BECAME
OCCUPATION FOR THE PAST FIVE YEARS A DIRECTOR
- --------------------------------------------------------------------- -----------------
<S> <C>
Esther Ponnocks (62) 1985
Senior Executive Vice President of the Company (October 1991 to
date); Executive Vice President -- LTC (Long-Term Care)
Operations of the Company (April 1990 to October 1991); Senior
Vice President -- Operations of the Company (1987 to April
1990); and a member of the Company's management for more than
twenty-five years.
</TABLE>
COMPENSATION COMMITTEE REPORT
The Company's executive officer compensation program is administered and
reviewed by the Compensation Committee of the Board of Directors (the
'Compensation Committee'). The Compensation Committee consists of three
independent, non-employee Directors of the Company. Except for the 1990 Stock
Option Plan Committee, no compensation committee interlocks nor insider
participation exists on the Compensation Committee.
POLICIES AND MISSION
The Compensation Committee has determined that compensation of executive
officers should include a mixture of short and long range compensation plans
which attract, motivate and retain competent executive personnel, increase
executive ownership interests in the Company and encourage increases in the
Company's productivity and profitability. As such, the Company's policy is that
executive compensation should be directly and materially related to the
short-term and long-term operating performance and objectives of the Company. To
achieve these ends, executive compensation, including base salary, bonuses,
restricted stock awards and stock option grants, is to a significant extent
dependent upon the Company's financial performance and the return on its Common
Stock. However, to ensure that the Company is strategically and competitively
positioned for the future, the Compensation Committee also attributes
significant weight to other factors in determining executive compensation, such
as maintaining competitiveness, implementing capital improvements, expanding
markets and achieving other long-range business and operating objectives.
COMPENSATION PLAN
In order to determine appropriate levels of executive compensation, the
Compensation Committee periodically reviews the executive compensation programs
and policies of the Company's competitors, in addition to a broader group of
companies in its marketplace, to ensure that the Company's plans and practices
are competitive and appropriate based on the Company's performance and
compensation philosophy. The Company also participates in compensation surveys
and solicits compensation pay data from various compensation consultants. An
executive officer's total compensation package is comprised of five components:
(1) base salary, (2) annual incentives, (3) stock options and restricted stock
awards, (4) deferred compensation, and (5) executive benefits package.
-5-
<PAGE>
BASE SALARY
It is the Company's policy to target executive's base salaries in the range
of the 60th to 80th percentile of similar employees in similar positions. In
setting base salary levels for individual executives, the Compensation Committee
considers such factors as the executive's scope of responsibility, current
performance, future potential and overall competitive positioning relative to
comparable positions at other companies. No increase in salary was provided for
Daniel Veloric, Chief Executive Officer during fiscal year 1994. The salaries
for Esther Ponnocks, Arthur A. Carr, Jr., James J. O'Malley and James J.
Wankmiller were adjusted in fiscal 1994 based upon merit and inflation.
ANNUAL INCENTIVES
The Company paid a discretionary bonus to certain officers in November 1993.
The Compensation Committee is considering the implementation of a Management
Incentive Bonus Program based primarily on performance. The payment of awards is
expected to be based on the achievement of predetermined annual goals to be
established by the Compensation Committee using the Company's overall business
plan, annual budget objectives, external marketplace conditions (e.g. economic
outlook) and return measures such as return on equity. Performance relative to
industry peers may also be considered in assessing year-end results and
determining award payout levels. The amount of the award may also be adjusted to
reflect each executive's individual performance and potential.
Pursuant to the Employment Agreement between Daniel Veloric and the Company,
Mr. Veloric is entitled to an annual incentive bonus equal to 5% of the amount
by which the Company's eligible net income (net income less the annual bonus and
any unusual or infrequent non-operating income items) for such year exceeds Base
Net Income (eligible net income for the preceding fiscal year, but not less than
$2,000,000). Mr. Veloric did not earn any incentive bonus under this plan for
the fiscal year ended May 31, 1994.
STOCK OPTIONS AND RESTRICTED STOCK AWARDS
Stock options are granted under the provisions of the Company's Stock Option
and Restricted Stock Plans. Stock options are granted to reinforce the
importance of improving stockholder value over the long-term, and to encourage
and facilitate executive stock ownership. Stock options are granted at not less
than 100% of the fair market value of the stock on the date of grant to ensure
that executives can only be rewarded for appreciation in the price of the Common
Stock where the Company's stockholders are similarly benefitted. The
Compensation Committee has established levels of participation for each approved
incentive stock option program based upon each executive's or other employee's
position in the Company. The number of share-options granted to each executive
is limited to this maximum level by position and is contingent on the individual
executive's performance, tenure and future potential. During fiscal year 1994,
3,000 Restricted Shares were issued to each of: James J. O'Malley, Michael
Veloric and James J. Wankmiller.
-6-
<PAGE>
INCENTIVE DEFERRED COMPENSATION PLAN
As a part of its Executive Compensation Plan the Company provides
retirement/deferred compensation to its key employees under one of several
different methods. Pursuant to the Employment Agreement between Daniel Veloric
and the Company, Mr. Veloric is entitled to the benefits of a long-term
incentive plan. Pursuant to this plan, he is entitled to receive 6,500 phantom
shares (each phantom share equivalent to one share of the Company's common
stock) for each 1/8th point increment by which the Company's average stock price
each fiscal year exceeds the base stock price (the average stock price for the
preceding fiscal year, but not less than $2.00 per share). Mr. Veloric received
13,000 phantom shares pursuant to this plan for the fiscal year ended May 31,
1994. The value of all phantom shares earned by Mr. Veloric pursuant to this
plan will be determined on the earlier of the termination of his Employment
Agreement or May 31, 1998 and paid over a period of 10 years with interest at
the lowest rate then permitted by the Internal Revenue Service on deferred
payments.
In accordance with the Employment Agreement entered into by the Company and
Esther Ponnocks on June 1, 1992, the Company has obtained an Annuity Program
that provides a defined benefit of payments for Miss Ponnocks, for her lifetime,
commencing at age 70. Contributions to this plan which include a one time charge
for the purchase of a single premium life insurance policy are included as
'Other Annual Compensation' in the Summary Compensation Table in this document.
Messrs. Carr, O'Malley, M. Veloric and Wankmiller are covered under the
Company's Incentive Deferred Compensation Plan. Under the terms of this plan,
the Compensation Committee approves a discretionary award (generally in the form
of a percentage of salary) to each participant on an annual basis based upon the
financial performance of the Company and a performance evaluation of each
participant. Awards are subject to vesting over a period of time and the
benefits are unfunded, unsecured general obligations of the Company. During
fiscal 1994, the Company awarded $3,994 to Mr. Carr, $2,902 to Mr. O'Malley,
$2,716 to Mr. M. Veloric and $2,822 to Mr. Wankmiller.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
GERALD E. BISBEE, JR., ANTHONY C. SALVO, THOMAS J. GORMAN
-7-
<PAGE>
SUMMARY COMPENSATION TABLE
The Summary Compensation Table includes individual compensation information
on the Chief Executive Officer and the four most highly paid executive officers
of the Company whose salary and bonus exceeded $100,000, for services rendered
in all capacities during the fiscal years ended May 31, 1994, 1993 and 1992.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
-------------------------------------------------- ---------------------------------------------
NAME AND OTHER ANNUAL RESTRICTED(*) OPTIONS (IN ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (3) STOCK AWARDS SHARES) COMPENSATION
- ----------------------------- --------- --------- --------- ----------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel Veloric 1994 $ 450,008 -- $ 12,359 $( 115,126)(7) -- $ 34,125(5)
Chairman, President 1993 $ 450,008 -- $ 75,808 $ 16,500 -- --
and Chief Executive 1992 $ 447,592 -- $ 26,736 $ 56,250 -- --
Officer
Esther Ponnocks 1994 $ 166,425 $ 20,000 $ 46,902 $( 50,437)(7) -- $ 9,375(6)
Senior Executive 1993 $ 154,950 -- $ 120,079 $ 8,250 5,000 --
Vice President 1992 $ 138,847 $ 50,000(2) $ 14,093 $ 24,000 25,000 --
Arthur A. Carr, Jr. 1994 $ 156,600 $ 17,500 $ 14,519 $( 32,437)(7) -- $ 3,994(4)
Executive Vice 1993 $ 147,750 -- $ 32,964 $ 8,250 7,500 $ 7,250(4)
President & Secretary 1992 $ 140,537 -- $ 23,575 -- 15,625 --
James J. O'Malley (1) 1994 $ 115,050 $ 15,000 $ 12,996 $( 8,725)(7) -- $ 2,902(4)
Vice President and 1993 $ 105,219 -- $ 15,283 $ 5,500 10,000 $ 4,550(4)
Chief Executive Officer 1992 $ 89,603 $ 15,619 $ 11,234 $ 6,000 3,125 --
James J. Wankmiller 1994 $ 110,951 $ 15,000 $ 8,925 $( 12,787)(7) -- $ 2,822(4)
Esquire, Vice 1993 $ 102,850 -- $ 15,037 $ 4,125 10,406 $ 4,950(4)
President Legal & 1992 $ 97,216 -- $ 11,708 -- 6,250 --
Assistant Secretary
</TABLE>
(1) Promoted to current position in June 1992.
(2) Bonuses paid to employee with more than 20 years dedicated service to the
Company as an added incentive to Miss Ponnocks to continue her employment
(3) Includes all other compensation reported on IRS Form W-2
(4) Includes Company contribution relating to the Incentive Deferred
Compensation Plan
(5) Represents the value at May 31, 1994 of 13,000 phantom shares issued to his
Long Term Incentive Plan.
(6) Represents the value of 25,000 unregistered shares issued on December 16,
1993 in recognition of 25 years of service.
(7) Amount represents the forfeiture as of May 31, 1994 of restricted shares
previously granted.
(*) Other Annual Comp shows W-2 wages for release of restrictions. This is
estimated $ amount of award.
NOTE: During fiscal 1994, no executive officer received personal benefits from
the Company valued at more than 10% of total Annual Compensation or
$50,000, whichever is less.
-8-
<PAGE>
Effective June 1, 1993, the Company entered into an Employment Agreement
with Daniel Veloric, Chairman and President of the Company, which provides for
an annual base compensation of $450,000 per year and an original term of five
years (which, until terminated, extends one additional year each year). The
Agreement also provides for a death benefit of $1,000,000 as well as benefits
under the previously described short-term incentive plan and long-term incentive
plan for Daniel Veloric.
Effective June 1, 1992, the Company entered into an Employment Agreement
with Esther Ponnocks, Senior Executive Vice President, which provides for an
annual base compensation of $150,000 for an original term of three years, with
annual extensions through not later than May 31, 2002. If a person acquires more
than 20% of the outstanding voting stock of the Company without the prior
approval of the Company's Board of Directors, or if the Company materially
breaches the employment agreement or under certain other circumstances; the
Company will owe Ms. Ponnocks the remainder of the compensation due under the
agreement through as long as May 31, 2002.
COMPENSATION PURSUANT TO PLANS
The Company's Profit Sharing Plan was merged into a 401(k) Profit Sharing
Plan effective June 1, 1989. Under the 401(k) Plan, eligible employees may
contribute up to 15% of their total compensation on a tax-deferred basis subject
to maximum annual limitations. 'Highly Compensated Employees', as defined within
IRS Code Section 414(O) which included all executive officers of the Company,
are excluded from participation in the Plan. Pursuant to the terms of the plan,
the Company may make matching contributions at a percentage or amount determined
at the sole discretion of the Company. During the fiscal year ended May 31,
1994, no contribution was made by the Company to the plan.
The Company's 1989 Stock Option and Restricted Stock Plan ('the 1989 Plan')
provides that incentive and non-qualified stock options may be granted to key
employees of the Company and its subsidiaries. The 1989 plan is administered by
the Compensation Committee which has the discretion to determine those key
employees who will receive options and the amount of options to be granted to
said employees; to determine when options will be granted and the exercise price
of each option, which price cannot, however, be less than the fair market value
of the Common Stock on the date of grant; and to determine when each option can
be exercised and the term (up to ten years) of each option granted. All options
will expire within ten years from the date of grant and no options may be
granted after November 9, 1999. If an optionee is terminated other than for
wrongful conduct, the optionee may exercise his/her options within three months
(one year for an optionee who ceases to be employed because of permanent and
total disability) provided that his/her right to exercise said options has
vested at the date of termination and provided that the exercise of the option
is within ten years from the date it was granted (five years for an incentive
stock option granted to a 10% stockholder). If optionee dies while in the employ
of the Company or within three months (one year in the case of disability) after
the termination of employment, and provided that his/her options have vested at
the time of his/her death and the exercise of the options are within ten years
from the date of grant (five years for an incentive stock option granted to a
10% stockholder), then the optionee's personal representative may exercise said
options within one year after the optionee's death.
-9-
<PAGE>
The 1989 Plan also provided for the issuance of up to 281,250 shares of the
Company's Common Stock, subject to restriction ('Restricted Shares'), to
eligible employees of the Company, including the Chairman, President and Chief
Executive Officer, Senior Executive and Executive Vice Presidents, Senior Vice
Presidents, Vice Presidents, certain Division Presidents and other key
employees. The Restricted Shares were held by the Company pending the vesting of
such shares in whole or in part upon the achievement by the Company of the
following financial performance levels: (1) increases in revenues by 50% over
revenues reported for fiscal 1989; (2) earnings before capital gains or losses
and before income taxes reaching break-even or higher; (3) said earnings
exceeding $4,000,000 for any fiscal year; (4) a reduction in the ratio of
debt-to-total capital to 85-100 or less; and (5) an increase in the price of the
Company's Common Stock to $5 per share or higher based upon 1989 share level
(prior to the May 20, 1991 stock split) for any five days during a 30-day
period. As of May 31, 1994 255,353 shares were issued of which 67,616 shares
vested and 187,737 shares were forfeited.
In 1992, the Company implemented an Incentive Deferred Compensation Plan for
selected key employees. Under this Plan, the Company makes discretionary awards
to such executives, which amount, if any, can vary annually and by participant,
and is generally expressed as a percentage of salary. The amounts are credited
to a book-entry account established in such participant's name. Such account is
also credited with the equivalent of interest and such interest rate is
determined annually by the Company. Participants become vested in the amounts
credited to the deferred compensation account on a graduated basis. However,
full vesting cannot occur prior to attainment of age 65 while actively employed
by the Company. Upon retirement at age 65 or later, the vested deferred
compensation account is paid out as a 15 year annuity. Participants who
terminate employment prior to age 65 will receive a 10 year annuity at
retirement based on the vested account balance. In the event of the death of a
participant while actively employed, the plan provides to the participant's
survivor a continuation of 50% of the final salary for one year, followed by 25%
of final salary until the participant would have attained age 65, subject to a
minimum of 10 years of total payments. All benefits under the incentive Deferred
Compensation Plan are unfunded, unsecured general obligations of the Company.
The Company has purchased corporate owned life insurance on the participants
estimated to be sufficient to recover the distributions to be made under this
Plan.
-10-
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information, with respect to the named
executive officers, concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year, May 31,
1994. There are no outstanding stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AT FISCAL OPTIONS AT
SHARES YEAR END FISCAL YEAR-END
ACQUIRED VALUE -------------------------- ------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ ----------- --------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Daniel Veloric.... -- -- -- -- -- --
Esther Ponnocks... -- -- 69,688 8,750 $ 91,123 $ 1,250
Arthur A. Carr,
Jr............... 15,625 $ 32,125 15,469 7,656 $ 3,340 $ 2,363
James J.
O'Malley......... -- -- 9,297 5,781 $ 6,045 $ 2,598
James J.
Wankmiller....... -- -- 23,563 4,812 $ 23,977 $ 1,820
</TABLE>
COMPENSATION OF DIRECTORS
Employees of the Company are not paid any fees for their services as
Directors of the Company. Other Directors are paid a fee of $12,000 per fiscal
year for their services as Directors, plus $1,000 for each meeting of the Board
they attend and $1,000 for each of the Audit, Compensation, or Executive
Committees of which they are a member.
The 1984 Stock Option Plan for Directors which provided for the grant of
options to Directors of the Company to purchase shares of the Company's Common
Stock, was terminated in fiscal 1994.
The 1990 Stock Option Plan for Directors, which was approved by the Board of
Directors on January 25, 1990, provides for the grant of options to purchase an
aggregate of 120,313 shares of Common Stock of the Company to Directors of the
Company who are not employees of the Company at the time the options are
granted. Such Options vest over a period of four years. The plan is administered
by the 1990 Stock Option Plan Committee (which presently consists of Daniel
Veloric and Arthur A. Carr, Jr.) which has discretion when options will be
granted and the exercise price of each option, which price cannot, however, be
less than the fair market value of the Common Stock on the date of grant; and to
determine when each option can be exercised. All options granted to date will
expire within five years from the date of grant and the plan provides that no
options may be granted after December 31, 1994. If an optionee's term as a
Director of the Company terminates, the options held by such optionee will
terminate immediately unless the termination is voluntary and with the consent
of the Board, in which case options subject to exercise on the date of
termination may be exercised within thirty (30) days following termination, or
if caused by the death of optionee, in which case options exercisable at death
may be exercised by the optionee's personal representative upon the earlier of
six (6) months after the date of death or the date the options expire in
accordance with the terms of the option agreement. In fiscal 1994, 5,000 options
at an exercise price of $2.25 per share were granted to Gerald E. Bisbee, Jr.,
Thomas J. Gorman, and Anthony C. Salvo. No Directors exercised options under
this plan in 1994.
-11-
<PAGE>
APPROVAL OF GERIATRIC & MEDICAL COMPANIES, INC.
1994 STOCK OPTION AND RESTRICTED STOCK PLAN FOR DIRECTORS
PARTICIPATION
A proposal will be presented at the meeting to approve the 1994 Stock Option
and Restricted Stock Plan for Directors ('1994 Plan'), which was adopted by the
Board of Directors on September 28, 1994, subject to stockholder approval.
The Company includes stock based incentives for Directors as part of its
compensation philosophy. Since no more options may be granted under the 1990
Stock Option Plan for Directors (the '1990 Plan') after December 31, 1994, a new
plan is needed to provide the Company with a sufficient number of shares and
sufficient flexibility of stock-based incentives for non-employee Directors.
In order to provide the Company with greater flexibility to adapt to
changing economic and competitive conditions, and to implement stock-based
compensation strategies which will attract and retain non-employee Directors who
are important to the long-term success of the Company, the Board, at its
September 28, 1994 meeting, adopted, subject to stockholder approval, the 1994
Plan. The 1994 Plan provides present and prospective non-employee Directors with
an opportunity to obtain an equity ownership interest in the Company through the
grant of options and restricted stock awards. Non-employee Directors also may
elect to forego all or a portion of their annual cash retainer and receive in
lieu thereof restricted shares or stock options equal to the value of the
foregone retainer. If approved by the stockholders, the 1994 Plan will become
effective as of November 17, 1994, and will continue for an indefinite period.
If the 1994 Plan is approved by stockholders, outstanding grants under the 1990
Plan will not be affected.
SHARES
The 1994 Plan will be authorized with a reserve of 250,000 shares of Company
Common Stock, a number equal to approximately 1.6% of the Company's Common Stock
outstanding as of October 7, 1994. Shares awarded under the 1994 Plan may be
composed of, in whole or in part, authorized and unissued shares or outstanding
shares purchased on the open market. If shares subject to an option under the
1994 Plan cease to be subject to such option, or if share grants made under the
1994 Plan are cancelled, forfeited, or an award under the 1994 Plan is otherwise
terminated without a payment being made to the participant in the form of the
Company Common Stock, such shares will again be available for future
distribution under the 1994 Plan. The market value of the Company Common Stock
on October 6, 1994 was $2.25.
1994 Plan awards may be made to Directors of the Company, who are not
employees of the Company or its subsidiaries. Currently there are three outside
Directors eligible to participate in the 1994 Plan.
ADMINISTRATION
The Board of Directors has determined that the 1994 Plan will be
administered by the 1994 Plan Committee (the 'Committee') (which presently
consists of Daniel Veloric and Arthur A. Carr, Jr.)
-12-
<PAGE>
The Committee shall designate those non-employee Directors to whom grants
will be made, the form and amount of grants, and the terms and conditions of
grants.
AWARDS UNDER THE 1994 PLAN
The Committee will have the authority to grant the following type of awards
to non-employee Directors under the 1994 Plan: (1) Stock Options; (2) Restricted
Stock; and (3) Other Stock-Based Awards.
1. DIRECTOR STOCK OPTIONS. Non-qualified stock options may be granted for
such number of shares as the Committee shall determine and may be granted alone,
in conjunction with, or in tandem with, other awards under the 1994 Plan.
A stock option will become exercisable no less than 6 months following date
of grant and may be exercisable at such times and subject to such terms and
conditions as the Committee shall determine and over a term to be determined by
the Committee. The option price for any option granted to a non-employee
Director of the Company or its subsidiaries will not be less than 100% of the
fair market value of Company Common Stock as of the date of grant. Payment of
the option price may be in cash or in stock of the Company which has a fair
market value equal to the option price and has been held for more than six
months. Options may be exercised in cashless transactions.
Unless otherwise determined by the Committee (1) upon failure to be
re-elected or if a non-employee Director voluntarily resigns, stock options will
be exercisable for three months following the failure to be re-elected or
resignation or until the end of the option period, whichever is shorter; (2) on
the disability or retirement of a non-employee Director, stock options will be
exercisable within the lesser of the remainder of the option period or three
years from the date of disability or retirement; (3) upon death of a
non-employee Director, stock options will be exercisable by the deceased
Director's representative within the lesser of the remainder of the option
period or one year from the date of the Director's death; (4) only options which
are exercisable on the date of termination, death, disability, retirement, or
non-reelection may be subsequently exercised; and (5) stock options will be
transferable to family members, but not otherwise transferable.
2. RESTRICTED STOCK GRANTS. Beginning on January 1, 1995 outside Directors
will become eligible to receive grants of shares of restricted stock. Typically,
restricted shares will be granted at no purchase price, although the Committee
may elect to require the grantee to pay some de minimis purchase price which may
be less than the fair market value of such shares on the date of issuance.
Restricted shares are merely shares of the Company's Common Stock which the
grantee is not entitled to sell or otherwise transfer until ownership of the
shares vest. The minimum vesting period is one year. The vesting schedule of
restricted shares is determined by the Committee upon grant.
During the restriction period, certificates are held by the Company.
Generally, if a Director terminates service because of death, disability, or
retirement from the board at age 70 or later, all shares are delivered to him,
or his designated beneficiary, free of restrictions, or under such terms as
determined by the Committee from time to time. Commencing on the date of grant,
each Director has the right to vote all of the shares. Dividends paid on the
shares are reinvested
-13-
<PAGE>
in additional shares of Common Stock and subject to the same restriction
schedule as the initial grant.
3. DIRECTOR STOCK OPTIONS OR RESTRICTED STOCK IN LIEU OF RETAINER. A
Director who is not an employee of the Company or its subsidiaries may elect to
forego all or a portion of his annual cash retainer and receive in lieu thereof
stock options or restricted stock equal to the value of the foregone retainer.
Directors who elect to receive stock options in lieu of retainer will pay
100% of the fair market value of the Company Common Stock when the foregone
compensation is added to the exercise price. Directors who elect to receive
restricted stock in lieu of retainer will receive shares of restricted stock
equal to the foregone compensation divided by the fair market value of such
stock. An election to receive stock options or restricted stock in lieu of
retainers must be made by a Director at least six months prior to the beginning
of a fiscal year. Options first become exercisable six months following the date
of grant. Restricted stock shall be subject to restrictions of not less than six
months in length.
4. OTHER STOCK-BASED AWARDS. The Committee may also grant other types of
awards that are valued, in whole or in part, by reference to or otherwise based
on the Common Stock. These awards may be granted alone, in addition to, or in
tandem with stock options, restricted stock, and cash awards outside of the 1994
Plan. Such awards will be made upon terms and conditions as the Committee in its
discretion provides.
GRANTS AND AWARDS
If the 1994 Plan is approved by stockholders, there will be three outside
Directors currently eligible to receive grants and awards under the 1994 Plan.
Since no grants and awards under the 1994 Plan have been determined and since
such grants and awards are at the discretion of the Committee, the actual dollar
value of grants and awards to non-employee Directors is not determinable. The
actual dollar value for each non-employee Director, and for all non-employee
Directors as a group, will vary depending upon the amount of grants and awards,
the number of non-employee Directors (the current Bylaws of the Company limit
the total number of Directors to six) and the then-current market price of the
Company's Common Stock.
AMENDMENT
The 1994 Plan may be amended by the Board, except that the Board may not,
(i) without the approval of stockholders, increase the number of shares
available for distribution or extend the term of any option award or otherwise
materially increase the benefits to participants under the 1994 Plan. The Board
may also amend the 1994 Plan if the amendment is in material compliance with all
laws governing such matters, including the Federal Securities laws and Rule
16b-3 promulgated under the Securities Exchange Act of 1934 (or any successor
rule thereto).
-14-
<PAGE>
FEDERAL INCOME TAX ASPECTS
The following is a brief summary of the Federal income tax aspects made
under the 1994 Plan based upon Federal income tax laws in effect on the date
hereof. This summary is not intended to be exhaustive and does not describe
state or local tax consequences.
1. NON-QUALIFIED STOCK OPTIONS. Except as noted below, with respect to
non-qualified stock options (a) no income is realized by the participant at the
time the option is granted (b) generally upon exercise of the option, the
participant realizes ordinary income in an amount equal to the difference
between the option price paid for the shares and the fair market value of the
shares on the date of exercise and the Company will be entitled to tax deduction
in the same amount; and (c) at disposition, any appreciation (or depreciation)
after date of exercise is treated as short-term or long-term capital gain or
loss, depending upon the length of time that the participant has held the
shares. SEE 'Special Rule Applicable to Corporate Insiders.' SEE ALSO
'Restricted Stock' for tax rules applicable where the spread value is settled in
an award of restricted stock.
2. RESTRICTED STOCK. A participant receiving restricted stock generally
will recognize ordinary income in the amount of the fair market value of the
restricted stock at the time the stock is no longer subject to forfeiture, less
the consideration paid for the stock, if any. However, a participant may elect,
under Section 83(b) of the Internal Revenue Code, within 30 days of the grant of
the stock, to recognize taxable ordinary income on the date of grant to the
extent of the excess of the fair market value of the shares of restricted stock
(determined without regard to the restrictions) over the purchase price of the
restricted stock. Thereafter, if the shares are forfeited, the participant will
be entitled to a deduction, refund or loss for tax purposes only in an amount
equal to the purchase price of the forfeited shares regardless of whether he
made a Section 83(b) election. With respect to the sale of shares after the
forfeiture period has expired the holding period to determine whether the
participant has long-term or short-term capital gain or loss, generally begins
when the restriction period expires and the tax basis for such shares will
generally be based on the fair market value of such shares on such date.
However, if the participant makes an election under Section 83(b), the holding
period will commence on the date of grant, the tax basis will be equal to the
fair market value of shares on such date (determined without regard to
restrictions), and the Company generally will be entitled to a deduction equal
to the amount that is taxable as ordinary income to the participant in the year
that such income is taxable.
3. SPECIAL RULES APPLICABLE TO CORPORATE INSIDERS. Generally, an individual
subject to Section 16(b) of the Securities Exchange Act of 1934 is not taxed
until six months after the exercise of a non-qualified stock option. At that
time, the individual recognizes the excess of the fair market value of the stock
over the option purchase price determined as of the end of the six-month period
as ordinary income, and the holding period for treating any subsequent gain (or
loss) as long-term capital gain (or loss) begins at the end of such period.
However, an individual subject to Section 16(b) who makes an election under
Section 83(b) on a timely basis (SEE discussion above under 'Restricted Stock')
will instead be taxed on the basis of the excess of the fair market value over
the purchase price at exercise, with the holding period beginning on such date.
Depending on their individual circumstances, individuals subject to Section
16(b) who receive restricted stock awards may not be subject to tax at the times
discussed above under
-15-
<PAGE>
'Restricted Stock,' but may have the amount of income calculated (and
recognized) based on the fair market value of the Common Stock at a later date.
4. OTHER STOCK BASED AWARDS. The federal income tax treatment of other
stock-based awards will depend on the nature of any such award and the
restrictions applicable to such award. Such an award, may, depending on the
condition applicable to the award, be taxable as an option or an award of
restricted stock.
5. DIVIDENDS. Dividends paid on restricted stock generally will not be
treated as compensation that is taxable as ordinary income to the participant,
and will be deductible by the Company. If, however, the participant makes
Section 83(b) election, the dividends will be taxable as ordinary income to the
participant but will not be deducted by the Company.
COMPLIANCE WITH RULE 16B-3
It is the intention of the Company that the 1994 Plan comply in all respects
with Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act
1934 and that 1994 Plan participants remain disinterested persons for purposes
of administering other employee benefit plans of the Company and having such
other plans be exempt from Section 16(b) of the Securities Exchange Act of 1934.
Therefore, if any 1994 Plan provision is later found not to be in compliance
with Rule 16b-3 or if any 1994 Plan provision would disqualify 1994 Plan
participants from remaining disinterested persons, that provision shall be
deemed amended to conform to the provisions of Rule 16b-3, and in all events the
1994 Plan be construed in favor of its meeting the requirements of Rule 16b-3.
EFFECTIVE DATE AND DURATION OF THE 1994 PLAN
The 1994 Plan shall be dated as of November 17, 1994 and shall be effective
upon approval by the holders of a majority of all votes present, or represented,
and entitled to vote at the 1994 Annual Meeting. The 1994 Plan shall continue in
effect until it is terminated by action of the Board or the Company's
stockholders, but such termination shall not affect the then outstanding terms
of any option or restricted stock awards.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE GERIATRIC &
MEDICAL COMPANIES, INC. 1994 STOCK OPTION AND RESTRICTED STOCK PLAN FOR
DIRECTORS.
INFORMATION CONCERNING
THE BOARD OF DIRECTORS
During the fiscal year ended May 31, 1994, five meetings of the Board of
Directors were held. During such fiscal year, each Director attended over 75% of
the meetings of the Board of Directors and the committees of the Board on which
he/she served that were held during the period he/she served.
Committees of the Board of Directors include: the Executive Committee (which
acts for the Board of Directors in situations requiring prompt action when a
full meeting of the Board of Directors is not feasible, or implements specific
action for the Board of Directors where directed to do so); the Incentive Stock
Option and Compensation Committee (the 'Compensation
-16-
<PAGE>
Committee') (which has the authority to review the performance and compensation
of the officers of the Company, to review the benefit plans of the Company and
make recommendations on such matters to the Board of Directors and to grant
options and other awards pursuant to the 1989 Stock Option and Restricted Stock
Plan); the Audit Committee (which has the authority to approve the selection and
engagement of the Company's independent accountants, and the scope of the audit
to be performed thereby, and to review the Company's accounting principles,
financial and operating policies, review the reports and actions of the internal
audit department, and review the reports submitted by the Company's independent
accountants); the Special Committee (which was appointed to review and consider
potential transactions involving properties owned by the Company and Tomahawk
Capital Investments, Inc. (or its affiliates) which is owned/controlled by
Daniel Veloric, Chairman of the Board for the Company; and the Quality Review
Committee (which monitors and reports to the Board of Directors on compliance
with the Company's Quality Assurance Programs). The Company does not maintain a
Nominating Committee.
Daniel Veloric and Gerald E. Bisbee, Jr. are members of the Executive
Committee. Gerald E. Bisbee, Jr., Thomas J. Gorman and Anthony C. Salvo are
members of the Compensation Committee. The Audit Committee consists of Thomas J.
Gorman, Gerald E. Bisbee, Jr., and Anthony C. Salvo. Gerald E. Bisbee, Jr.,
Thomas J. Gorman and Anthony C. Salvo are members of the Special Committee.
Gerald E. Bisbee, Jr., Michael Veloric and others who are not Directors are
members of the Quality Review Committee. During the fiscal year ended May 31,
1994, the Executive Committee did not meet and acted by unanimous consent on two
occasions, the Compensation Committee met on four occasions, the Audit Committee
met on two occasions and the Quality Review Committee met on four occasions.
-17-
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
OF COMPANY, PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
----------------------------------------------------------------
COMPANY 1989 1990 1991 1992 1993 1994
- ------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Geriatric & Medical Companies, Inc. $ 100.00 $ 157.14 $ 178.57 $ 245.54 $ 167.41 $ 234.38
Peer Group $ 100.00 $ 55.91 $ 114.22 $ 85.28 $ 141.37 $ 177.64
Broad Market $ 100.00 $ 104.71 $ 104.53 $ 111.28 $ 133.17 $ 146.04
</TABLE>
THE BROAD MARKET INDEX CHOSEN WAS:
NASDAQ Market Index
THE PEER GROUP CHOSEN WAS:
Customer Selected Stock List
THE PEER GROUP IS MADE UP OF THE FOLLOWING SECURITIES:
Beverly Enterprises, Inc.
Evergreen Healthcare
Horizon Healthcare CP
__________
* Assumes $100 invested on June 1, 1988
Assumes Dividend Reinvested
Fiscal Year Ending May 31, 1994
The above graph compares the performance of Geriatric & Medical Companies,
Inc. with that of the NASDAQ Market Index and a peer group of health care
providers. The health care providers in the peer group are: Beverly Enterprises,
Inc., Evergreen Healthcare and Horizon Healthcare Company.
-18-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 31, 1993, the Company sold its Mount Laurel Convalescent Center and
Laurelview Manor facilities in Mount Laurel, New Jersey to Tomahawk Capital
Investments, Inc. ('Tomahawk'), a company which is controlled by the Chairman of
the Board of the Company, for a purchase price of $8.5 million, the fair market
value as established by an independent appraisal. The Company received $2.5
million in cash and a $6.0 million note bearing interest at nine percent (9%)
per annum. The note is payable based on a 25-year amortization with a balloon
payment due June of 2005. This resulted in the recognition of a $4,678,000
nonoperating gain on the sale of these facilities. Tomahawk prepaid $1,000,000
of this note in January, 1994.
In conjunction with the sale to Tomahawk, the Company entered into various
contracts to provide certain services, priced at or above projected cost, to the
Tomahawk facilities. These services including staffing, dietary, environmental,
financial and management and consulting services generated $6,754,000 of
revenues for the Company during 1994. At May 31, 1994, the Company had a
receivable of $2,255,000 due from Tomahawk for these services.
The Company receives additional revenues of approximately $1,500,000 related
to its provision of ancillary services at the Tomahawk facilities. These
services, including provision of ambulance transportation, diagnostics,
rehabilitation, pharmacy and medical supplies are provided at market rates.
During the fiscal year ended May 31, 1994, various operating subsidiaries
and divisions of the Company had business transactions with Community Care and
Development Corporation ('CCDC') and/or its related organization, Dedicated
Staffing Services, Inc. ('DSSI'), both of which are Pennsylvania non-profit
corporations. The Board of Directors and officers of CCDC and DSSI included
Daniel Veloric, Esther Ponnocks and Michael Veloric, who are also directors and
officers of the Company. CCDC and DSSI paid Esther Ponnocks and Michael Veloric
$55,500 and $12,000 respectively for consulting services in fiscal 1994. No
payments were made to Daniel Veloric in fiscal 1994.
During fiscal 1994, the Company purchased from DSSI approximately $6,809,000
of staffing services, including the provision of registered nurses, licensed
practical nurses, nursing assistants and other personnel on a temporary
employment basis. DSSI has agreed to charge the Company at cost for the
services, which the Company believes to be at or below the fair market value for
the services rendered. The Company leases office space to DSSI in Pennsauken,
New Jersey at the current rate of $5,162 per month and received $61,944 in rent
for the fiscal year ended May 31, 1994. The Company also leased-back certain
properties previously sold at fair market value to CCDC. The Company paid rent
to CCDC at the rate of $5,167 per month, approximately $62,000 for the fiscal
year ended May 31, 1994. The Company believes its transactions with CCDC and
DSSI have been on terms at least as favorable to the Company as those which
would have been available in the general marketplace.
-19-
<PAGE>
INDEPENDENT ACCOUNTANTS
The firm of Coopers & Lybrand acted as independent accountants for the
Company, for its fiscal year ended May 31, 1994. It is anticipated that a
representative or representatives of Coopers & Lybrand will be present at the
Annual Meeting to make a statement if they desire to do so and to respond to
appropriate questions. Although the Company's independent accountants for its
fiscal year ending 1995 may continue to be Coopers & Lybrand, the Company wishes
to maintain its discretion during the year as to selection of its independent
accountants. Accordingly, no selection has been made and the Board of Directors
has reserved the right to consider the appointment of another firm.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 1995 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices by not later than June 22, 1995 to be considered for inclusion
in management's proxy statement and form of proxy for that meeting.
OTHER MATTERS
Management does not know of any other matters (other than procedural
matters) to be presented at the meeting. If any other matters do properly come
before the meeting, the persons named in the accompanying Proxy will vote on
such matters in accordance with their best judgment.
A form of proxy is enclosed for your use. Please complete, date, sign and
return the proxy at your earliest convenience in the enclosed envelope, which
requires no postage if mailed in the United States. A prompt return of your
proxy will be appreciated.
By Order of the
Board of Directors,
Arthur A. Carr, Jr., Secretary
Philadelphia, Pennsylvania
October 20, 1994
-20-
<PAGE>
GERIATRIC & MEDICAL COMPANIES, INC.
1994 STOCK OPTION AND RESTRICTED STOCK PLAN
FOR DIRECTORS
SECTION 1. Purpose; Definitions.
The purpose of Geriatric & Medical Companies, Inc. 1994
Stock Option and Restricted Stock Plan for Directors (the "Plan')
is to enable Geriatric & Medical Companies, Inc. (the "Company")
to provide present and prospective Outside Directors with an
opportunity to obtain an equity ownership interest in the Company
through the grant of Stock Options and Restricted Stock awards.
In addition, under the Plan, Outside Directors may elect to
forego all or a portion of their annual cash retainer and receive
in lieu thereof Stock Options and/or Restricted Stock equal to
the value of the foregone retainer.
For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Board" means the members of the Board of
Directors of the Company.
(b) "Book Value" means, as of any given date, on a per
share basis (i) the stockholders' equity in the Company as of the
end of the immediately preceding fiscal year as reflected in the
Company's consolidated balance sheet, subject to such adjustments
as the Board shall specify at or after grant, divided by (ii) the
number of the then outstanding shares of Stock as of such year-
end date (as adjusted by the Board for subsequent events).
(c) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(d) "Committee" means the Plan committee, as appointed
by the Board.
(e) "Company" means Geriatric & Medical Companies,
Inc., a corporation organized under the laws of the State of
Delaware, or any successor corporation.
(f) "Disinterested Person" shall have the meaning set
in Rule 16(b)-3(d)(3) as promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, or
any successor definition adopted by the Commission.
(g) "Fair Market Value" means, as of any given date,
unless otherwise determined by the Committee in good faith, the
mean between the highest and lowest quoted selling price, regular
way, of the Stock on the NASDAQ or, if no such sale of Stock
occurs on the NASDAQ on such date, or in the case of Restricted
Stock, the fair market value of the Stock as determined by the
Committee in good faith.
(h) "Other Stock-Based Award" means an award under
Section 8 below that is valued in whole or in part by reference
to, or is otherwise based on, Stock.
(i) "Outside Director" means a Director of the Company
who is not and in the previous one year has not been an employee
of the Company or any of its subsidiaries and is classified as a
disinterested person pursuant to Rule 16b-3 under the Securities
Exchange Act of 1934, as amended.
(j) "Plan" means the Geriatric & Medical Companies,
Inc. 1994 Stock Option and Restricted Stock Plan for Directors,
as hereinafter amended from time to time.
(k) "Restricted Stock" means an award of shares of
Stock that is subject to restrictions under Section 6 below.
(l) "Stock" means the common stock, $.10 par value, of
the Company.
(m) "Stock Option" or "Option" means any option to
purchase shares of Stock (including Restricted Stock, if the
Committee so determines) granted pursuant to Section 5 below.
(n) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing 50% of
more of the total combined voting power of all classes of stock
in one of the other corporations in the chain.
SECTION 2. Administration
The administrator of the Plan shall be the Committee.
Subject to the terms of the Plan, the Committee shall have the
power to construe the provisions of the Plan, to determine all
questions arising thereunder and to adopt and amend such rules
and regulations for the administration of the Plan as it may deem
desirable.
SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and
available for distribution under the Plan shall be 250,000
shares. Such shares may consist, in whole or in part, of (i)
authorized and unissued shares or (ii) shares issued and
thereafter acquired by the Company. No fractional shares shall
be issued under the Plan. If, under any provisions of the Plan
which requires a computation of the number of shares of Common
Stock subject to a Stock Option, Restricted Stock award or Other
Stock-Based Award, the number so computed is not a whole number
of shares of Stock, such number of shares of Stock shall be
rounded down to the next whole lower number.
If any shares of Stock that have been optioned cease to
be subject to a Stock, Option, or if any such shares of Stock
that are subject to any Restricted Stock Award or Other Stock-
Based Award granted hereunder are forfeitured or any such award
otherwise terminates without a payment being made to the
participant in the form of Stock, such shares shall again be
available for distribution in connection with future awards under
the Plan.
In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or
other change in corporate structure affecting the Stock, such
substitution or adjustment shall be made in the aggregate number
of shares reserved for issuance under the Plan, in the number and
option price of shares subject to outstanding Options granted
under the Plan, and in the number of shares subject to other
outstanding awards granted under the Plan as may be determined to
be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a
whole number.
SECTION 4. Eligibility.
Each Director of the Company who is not an officer or
employee of the Company or any of its subsidiaries (an "Outside
Director") shall be eligible for awards under the Plan. An
Outside Director will be eligible to be granted awards of Stock
Options, Restricted Stock and Other Stock-Based Awards and Stock
Options and/or Restricted Stock in lieu of retainer.
SECTION 5. Stock Options.
Non-qualified stock options may be granted for such
number of shares as the Committee shall determine and may be
granted alone, in conjunction with, or in tandem with, other
awards under the Plan.
Each Option granted to an Outside Director under the Plan
and the issuance of Stock thereunder shall be subject to the
following terms:
(A) Option Agreement. Each option granted under the Plan
shall be evidenced by an option agreement (an "Agreement") duly
executed on behalf of the Company. Each Agreement shall comply
with and be subject to the terms and conditions of the Plan. Any
Agreement may contain such other terms, provisions and conditions
not inconsistent with the Plan as may be determined by the
Committee.
(B) Option Price. The option price per share of Stock
purchasable under a Stock Option shall be determined by the
Committee at the time of grant but shall not be less than 100% of
the Fair Market Value of the Stock at grant.
(C) Term of Options. Each Option shall be subject to
earlier termination as follows:
Unless otherwise determined by the Committee (1) upon
failure to be re-elected or if a non-employee Director
voluntarily resigns, stock options will be exercisable for three
months following the failure to be re-elected or resignation or
until the end of the option period, whichever is shorter; (2) on
the disability or retirement of a non-employee Director, stock
options will be exercisable within the lesser of the remainder of
the option period or three years from the date of disability or
retirement; (3) upon death of a non-employee Director, stock
options will be exercisable by the deceased Director's
representative within the lesser of the remainder of the option
period or one year from the date of the Director's death; (4)
only options which are exercisable on the date of termination,
death, disability, retirement, or non-reelection may be
subsequently exercised; and (5) stock options will be
transferable to family members, but not otherwise transferable.
(D) Option Term. The term of each Stock Option shall be
fixed by the Committee.
(E) Exercisability. Stock Options shall be exercisable at
such time or times and subject to such terms and conditions as
shall be determined by the Committee at or after grant; provided,
however, that, except as provided in Section 5(C) and Section 8,
unless otherwise determined by the Committee at or after grant,
no Stock Options may be exercised until six months after the date
of grant. If the Committee provides, in its sole discretion,
that any Stock Option is exercisable only in installments, the
Committee may waive such installment exercise provisions at any
time at or after grant in whole or in part, based on such factors
as the Committee shall determine, in its sole discretion.
(F) Method of Exercise. Subject to whatever
installment exercise provisions apply under Section 5(E), Stock
Options may be exercised in whole or in part at any time during
the option period, by giving written notice of exercise to the
Company specifying the number of shares to be purchased.
Such notice shall be accompanied by payment in full of the
purchase price, either by check, note or such other instrument as
the Committee may accept. As determined by the Committee, in its
sole discretion, at or after grant, payment in full or in part
also may be made in the form of (i) unrestricted Stock held for
more than six months by the optionee (based on the Fair Market
Value of the Stock on the date the Option is exercised); or (ii)
in the case of the exercise of a Stock Option, Restricted Stock
subject to an award hereunder (based, in each case, on the Fair
Market Value of the Stock on the date the option is exercised, as
determined by the Committee). Options may be exercised in
cashless transactions.
If payment of the option exercise price of a Stock Option is
made in whole or in part in the form of Restricted Stock, such
Restricted Stock (and any replacement shares relating thereto)
shall remain (or be) restricted or deferred, as the case may be,
in accordance with the original terms of the Restricted Stock
award in question, and any additional Stock received upon the
exercise shall be subject to the same forfeiture restrictions or
deferral limitations, unless otherwise determined by the
Committee in its sole discretion, at or after grant.
No shares of Stock shall be issued until full payment
therefor has been made. An optionee shall generally have the
rights to dividends or other rights of a stockholder with respect
to shares subject to the Option when the optionee has given
written notice of exercise, has paid in full for such shares,
and, if requested, has given the representation described in
Section 10(A).
(G) Transferability. During an optionee's lifetime, an
option may be exercised only by the optionee. Options granted
under the Plan and the rights and privileges conferred thereby
shall not be subject to execution, attachment or similar process
and may not be transferred, assigned, pledged or hypothecated in
any manner (whether by operation of law or otherwise) other than
by will or the applicable laws of descent and distribution,
except that, to the extent permitted by applicable law and Rule
16b-3 promulgated under Section 16(b) of the Securities Exchange
Act of 1934, as amended, the Committee may permit a recipient of
an Option to designate in writing during the optionee's lifetime
a beneficiary to receive and exercise options in the event of the
optionee's death (as provided in Section 4(C)). Any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any
option under the Plan or of any right or privilege conferred
thereby, contrary to the provisions of the Plan, or the sale or
levy or any attachment or similar process upon the rights and
privileges conferred thereby, shall be null and void.
(H) Holding Period. Shares of Stock obtained upon the
exercise of any option granted under the Plan may not be sold by
persons subject to Section 16 of the Securities Exchange Act of
1934, as amended until six (6) months after the date the Option
was granted.
(I) Participant's or Successor's Rights as Stockholder.
Neither the recipient of an Option under the Plan nor the
optionee's successor(s) in interest shall have any rights as a
stockholder of the Company with respect to any Stock subject to
an Option granted to such person until such person becomes a
holder of record of such Stock.
(J) Limitation as to Directorship. Neither the Plan nor
the granting of an Option nor any other action taken pursuant to
the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that an optionee has a right
to continue as a Director for any period of time or at any
particular rate of compensation.
(K) Regulatory Approval and Compliance. The Company shall
not be required to issue any certificate or certificates for
Stock upon the exercise of an Option granted under the Plan, or
record as a holder of record of the Stock the name of the
individual exercising an Option under the Plan, without obtaining
to the complete satisfaction of the Committee the approval of all
regulatory bodies deemed necessary by the Committee, and without
complying, to the Committee's complete satisfaction, with all
rules and regulations under federal, state or local law deemed
applicable by the Committee.
(L) Buyout Provisions. The Committee may at any time offer
to buy out for a payment in cash, Stock or Restricted Stock an
Option previously granted, based on such terms and conditions as
the Committee shall establish and communicate to the optionee at
the time that such offer is made.
SECTION 6. Grants of Restricted Stock to Outside Directors.
(A) Beginning on January 1, 1995 Outside Directors
will become eligible to receive grants of shares of restricted
stock. Typically, restricted shares will be granted at no
purchase price, although the Committee may elect to require the
grantee to pay some de minimis purchase price which may be less
than the fair market value of such shares on the date of
issuance. Restricted shares are merely shares of the Company's
Common Stock which the grantee is not entitled to sell or
otherwise transfer until ownership of the shares vest. The
minimum vesting period is one year. The vesting schedule of
restricted shares is determined by the Committee upon grant.
During the restriction period, certificates are held by
the Company. Generally, if a Director terminates service because
of death, disability, or retirement from the board at age 70 or
later, all shares are delivered to him, or his designated
beneficiary, free of restrictions, or under such terms as
determined by the Committee from time to time. Commencing on the
date of grant, each Director has the right to vote all of the
shares. Dividends paid on the shares are reinvested in
additional shares of Common Stock and subject to the same
restriction schedule as the initial grant.
(B) Notwithstanding the provisions of paragraph (A)
above, such restrictions shall expire as to all shares of
Restricted Stock granted to any Outside Director upon the first
to occur of the following events:
(i) Such Outside Director shall cease to be an
Outside Director as a result of retirement from the Board in
accordance with the retirement policy then applicable to Outside
Directors;
(ii) Such Outside Director shall cease to be
Outside Director by reason of a physical or mental impairment
which the Board has determined to have rendered him or her
substantially unable to function as an Outside Director; or
(iii) Such Outside Director shall cease to be an
Outside Director by reason of death.
(C) Forfeiture of Grant. All of the shares of
Restricted Stock granted to any Outside Director as to which the
restrictions shall not therefore have expired shall be
forfeitured, and all rights of such Outside Director to such
shares shall terminate without further obligation on the part of
the Company, if the Outside Director shall cease to be a member
of the Board for any reason other than as set forth in paragraph
(B) of this Section 6; provided, however, that a majority of the
Board may grant a waiver of such forfeiture to any Outside
Director who ceases to be an Outside Director at least six months
following the date of the grant of the shares which otherwise
would be forfeited, whereupon all restrictions shall forthwith
expire as to both shares. Any waiver by the Board under this
Section 6 shall be granted without participation by the affected
Outside Director.
SECTION 7. Outside Director Stock Options and Restricted Stock
in Lieu of Retainer.
A Director who is not an employee of the Company or its
subsidiaries may elect to forego all or a portion of his annual
cash retainer and receive in lieu thereof stock options or
restricted stock equal to the value of the foregone retainer.
Stock Options and/or Restricted Stock shall be granted
automatically on June 1 (or, if June 1 is not a business day, on
the next succeeding business day) of any year to any Outside
Director who, least six months prior to June 1, files with the
Secretary of the Company at an irrevocable election to receive
Stock Options and/or Restricted Stock in lieu of all or a portion
of the Annual Retainer to be earned in the following fiscal year.
"Annual Retainer" shall mean the amount to which the Outside
Director will be entitled to receive for serving as a Director in
the relevant fiscal year, but shall not include fees associated
with attendance at any meeting of the Board or a committee
thereof nor with any other services to be provided to the
Company.
SECTION 8. Other Stock-Based Awards.
(A) Other awards of Stock and other awards that are
valued to whole or in part by reference to, or otherwise based
on, Stock ("Other Stock-Based Awards"), may be granted either
alone or in addition to or in tandem with Stock Options and
Restricted Stock granted to Outside Directors under the Plan.
Subject to the provisions of the Plan, the Committee
shall have the authority to determine the Outside Directors to
whom and the times or time at which such awards shall be made,
the number of shares of Stock to be awarded pursuant to such
awards, and all other conditions of the awards.
The provisions of Other Stock-Based Awards need not be
the same with respect to each recipient.
(B) Other Stock-Based Awards made pursuant to this
Section 8 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan,
shares subject to awards made under this Section 8 may not be
sold, assigned, transferred, pledged or otherwise encumbered
prior to the date of which the shares are issued, or, if later,
the date or which any applicable restriction, performance or
deferral period lapses.
(ii) Subject to the provisions of this Plan unless
otherwise determined by the Committee at grant, the Outside
Director of an award under this Section 8 shall be entitled to
receive, currently or on a deferred basis, interest or dividends
or interest with respect to the number of shares covered by the
award, as determined at the time of the award by the Committee,
in its sold discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in
additional Stock or otherwise reinvested.
(iii) Any award under this Section 8 and any
stock covered by any such award shall vest or be forfeited to the
extent so provided in the award Agreement, as determined by the
Committee, in its sole discretion.
(iv) In the event of the Outside Director's
retirement, disability or death, or in cases of special
circumstances, the Committee may, in its sole discretion, waive
in whole or in part any or all of the remaining limitations
imposed hereunder (if any) with respect to any or all of an award
under this Section 8.
(v) Stock (including securities convertible into
stock) issued on a bonus basis under this Section 8 may be issued
for no cash consideration. Stock (including securities
convertible into Stock) purchased pursuant to a purchase right
awarded under this Section 8 shall be priced in an amount equal
to the Fair Market Value of the Stock on the date of award.
SECTION 9. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which
would impair the rights of participant under a Stock Option,
Restricted Stock award, or Other Stock-Based Award theretofore
granted, without the participant's consent, or which, without the
approval of the Company's stockholders, would increase the number
of shares available for distribution or extend the term of any
option award or otherwise materially increase the benefits to
participants under the 1994 Plan. The Board may also amend the
1994 Plan if the amendment is in material compliance with all
laws governing such matters, including the Federal Securities
laws and Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended (or any successor rule thereto).
The Board may not amend any provisions of the Plan more than
once every six months, other than to comport with changes
required by the Internal Revenue Code.
The Committee may amend the terms of any Stock Option or
other award theretofore granted, prospectively or retroactively,
but, subject to Section 3 above, no such amendment shall impair
the rights of any holder without the holder's consent. The
Committee may also substitute new Stock Options for previously
granted Stock Options (on a one for one or other basis),
including previously granted Stock Options having higher option
exercise prices.
Subject to the above provisions, the Committee shall have
broad authority to amend the Plan to take into account changes in
applicable securities and tax laws and accounting rules, as well
as other developments.
SECTION 10. General Provisions.
(A) The Committee may require each person purchasing shares
pursuant to a Stock Option or other award under the Plan to
represent to and agree with the Company in writing that the
shares are being acquired without a view to distribution. The
certificate for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on
transfer, or the Committee may require such person to execute a
document.
All certificates for shares of Stock or other securities
delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which
the Stock is then listed, and any applicable federal or state
securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference
to such restrictions.
(B) Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and
such arrangements may be either generally applicable or
applicable only in specific areas.
(C) No later than the date as of which an amount first
becomes includable in the gross income of the participant for
federal income tax purposes with respect to any award under the
Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Committee regarding the payment
of, any federal, state, or local taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise
determined by the Committee, withholding obligations may be
settled with Stock, including Stock that is part of the award
that gives rise to the withholding requirement. The obligations
of the Company under the Plan shall be conditional on such
payment or arrangements and the Company and its Subsidiaries
shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the
participant.
(D) The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with
the laws of the State of Delaware except to the extent preempted
by Federal law.
SECTION 11. Regulatory Matters.
The Plan is intended to be construed so that participation
in the Plan will be exempt from Section 16(b) of the Securities
Exchange Act of 1934, as amended, pursuant to Rule 16b-3 as
promulgated thereunder, as may be further amended or interpreted
by the Securities and Exchange Commission and that Plan
participants remain disinterested persons for purposes of
administering other employee benefit plans of the Company and
having such other plans be exempt from Section 16(b) of the
Securities Exchange Act of 1934, as amended. In the event that
any provision of the Plan shall be deemed not to be in compliance
with the Rules, in order to enjoy the exemption from the Act or
if any Plan provision would disqualify Plan participants from
remaining disinterested persons, such provision shall be deemed
amended to conform to the provisions of Rule 16b-3 and the
remaining provisions of the Plan shall remain in effect.
SECTION 12. Term of Plan.
The Plan shall become effective as of the date it is
approved by the holders of a majority of the shares of Stock
present, or represented, and entitled to vote at a meeting held
for such purpose. The Plan shall continue in effect until it is
terminated by action of the Board or the Company's stockholders,
but such termination shall not affect the then outstanding terms
of any Option or Restricted Stock awards.
Adopted by the Board on September 28, 1994.
<PAGE>
[ PROXY CARD ]
GERIATRIC & MEDICAL COMPANIES, INC.
5601 Chestnut Street
Philadelphia, PA 19139
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Daniel Veloric and Arthur A. Carr, Jr. and each
of them (or if only one is present, then the one present), proxies of the
undersigned, to attend the 1994 Annual Meeting of Stockholders of Geriatric &
Medical Companies, Inc. to be held at Lacey Nursing and Rehabilitation Center,
916 Lacey Road, Forked River, New Jersey 08731 at 10 o'clock A.M., local time,
on Thursday, November 17, 1994, or any adjournment thereof, and with all the
powers the undersigned would possess if present to vote:
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR EACH OF THE NOMINEES NAMED HEREIN (OR SUCH SUBSTITUTE NOMINEE(S) AS
MAY BE DESIGNATED BY THE BOARD OF DIRECTORS) AND FOR THE APPROVAL OF THE 1994
STOCK OPTION AND RESTRICTED STOCK PLAN FOR DIRECTORS.
(Continued on reverse side)
<PAGE>
<TABLE>
<S> <C>
________ [ X ] Please mark your vote as this
COMMON
1. Election of two Class I Directors. 2. Approval of the 1994 Stock Option and Restricted
Stock Plan for Directors.
FOR both nominees WITHHOLD AUTHORITY
(except as indicated) for both nominees FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ]
Anthony C. Salvo 3. In their discretion, upon such other matters as may
Thomas J. Gorman properly come before the meeting or any adjournment
thereof.
Withhold authority to vote for the following nominee(s)
_______________________________________________________ The undersigned hereby acknowledges receipt of the
Notice of 1994 Annual Meeting of Stockholders, the Proxy
Statement with respect to said meeting and the Company's
Annual Report for the fiscal year ended May 31, 1994.
Note: Signatures should be exactly as name or names
appear on this Proxy. When signing in a fiduciary
capacity, please give title as such. Co-fiduciaries and
joint owners should each sign.
Date: ____________________________________________, 1994
________________________________________________________
Signature
________________________________________________________
Signature
</TABLE>
