<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SPAN-AMERICA MEDICAL SYSTEMS, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
SPAN-AMERICA MEDICAL SYSTEMS, INC.
POST OFFICE BOX 5231
GREENVILLE, SOUTH CAROLINA 29606
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 1, 2001
----------------------------------------
TO THE SHAREHOLDERS OF SPAN-AMERICA MEDICAL SYSTEMS, INC.
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of Span-America Medical Systems, Inc., (the "Company") will be
held at the Company's headquarters at 70 Commerce Ctr., Greenville, South
Carolina, on February 1, 2001, at 9:00 a.m., for the purpose of considering and
acting upon the following matters:
(1) the election of three directors;
(2) a proposal to approve the 2000 Restricted Stock Plan; and
(3) the transaction of such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on December 15,
2000 as the record date for the determination of the shareholders entitled to
notice and to vote at the Annual Meeting.
YOU ARE REQUESTED TO COMPLETE AND SIGN THE ACCOMPANYING PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING IN PERSON. THE PROXY WILL BE RETURNED TO ANY SHAREHOLDER WHO IS PRESENT
IN PERSON AND REQUESTS SUCH RETURN.
By Order of the Board of Directors,
/s/ Richard C. Coggins
Richard C. Coggins
Secretary
December 27, 2000
Greenville, South Carolina
PLEASE RETURN THE ENCLOSED PROXY IMMEDIATELY
<PAGE> 3
SPAN-AMERICA MEDICAL SYSTEMS, INC.
POST OFFICE BOX 5231
GREENVILLE, SOUTH CAROLINA 29606
(864) 288-8877
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 1, 2001
SOLICITATION OF PROXIES
This Notice of Annual Meeting, Proxy Statement and Proxy (these "Proxy
Materials") are being furnished to shareholders in connection with the
solicitation of proxies by the Board of Directors ("the Board") of Span-America
Medical Systems, Inc. (the "Company") to be voted at the annual meeting of
shareholders (the "Annual Meeting") to be held at 9:00 a.m. on February 1, 2001
at the Company's headquarters at 70 Commerce Center, Greenville, South Carolina.
The approximate mailing date of these Proxy Materials is December 29, 2000.
VOTING AT THE ANNUAL MEETING
Shareholders of record at the close of business on December 15, 2000
will be entitled to notice of and to vote at the Annual Meeting. At the close of
business on such record date, there were outstanding 2,503,400 shares of the
Company's no par value common stock (the "Common Stock"). The Common Stock is
the only class of voting securities of the Company. Holders of shares of Common
Stock are entitled to one vote for each share held on December 15, 2000 (the
"Record Date") on all matters presented for action by the shareholders. The
presence, either in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock of the Company as of the Record Date is
necessary to constitute a quorum at the Annual Meeting. All shares represented
by valid proxies received prior to the Annual Meeting and not revoked before
they are exercised will be voted in accordance with specifications thereon. If
no contrary instructions are indicated, all shares represented by a proxy will
be voted FOR the election to the Board of Directors of the Nominees described
herein, FOR the proposal to approve the 2000 Restricted Stock Plan, and in the
discretion of the proxy holders as to all other matters that may properly come
before the Annual Meeting or any adjournment thereof.
Shares will be tabulated by inspectors of election appointed by the
Company, with the aid of the Company's transfer agent. The inspectors will not
be directors or nominees for director. The inspectors shall determine, among
other things, the number of shares represented at the Annual Meeting, the
existence of a quorum and the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, determine the result, and do such
acts as are proper to conduct the election and vote with fairness to all
shareholders. Directors are elected by a plurality of votes. Abstentions and
broker non-votes are each included in the determination of the number of shares
present and voting. In connection with the election of directors, broker
non-votes are not counted for purposes of determining the votes cast for
directors.
1
<PAGE> 4
REVOCATION OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by: (i)
filing with the secretary of the Company, at or before the Annual Meeting, a
written notice of revocation bearing a later date than the proxy; (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the secretary of the Company at or before the Annual Meeting; or (iii) attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not in and of itself constitute a revocation of a proxy). Any
written notice revoking a proxy should be sent to: Span-America Medical Systems,
Inc., Post Office Box 5231, Greenville, South Carolina 29606, Attention:
Secretary.
ELECTION OF DIRECTORS
The number of the Company's directors is currently set at nine persons
in accordance with the Company's Articles of Incorporation. As provided in the
Company's Articles of Incorporation, the Board is divided into three classes of
directors, with each class being comprised of three persons who serve three-year
terms. Accordingly, as set forth below, management has nominated Richard C.
Coggins, Robert H. Dick, and James D. Ferguson to serve as directors under terms
which will expire at the earlier of the 2004 annual meeting of shareholders or
when their successors are duly elected.
Unless authority to vote with respect to the election of one or more
nominees is "WITHHELD," it is the intention of the persons named in the
accompanying proxy to vote such proxy for the election of the nominees set forth
below. All of these nominees are United States citizens. In the event that any
of the nominees for director should become unavailable to serve as director,
which is not anticipated, the proxy holders named in the accompanying proxy will
vote for other persons in their places in accordance with their best judgment.
There are no family relationships among the directors and the executive officers
of the Company.
Directors will be elected by a plurality of votes cast at the Annual
Meeting. The Company's Articles of Incorporation provide that cumulative voting
is not available in the election of directors.
INFORMATION REGARDING NOMINEES FOR DIRECTOR AND CURRENT DIRECTORS
The following table sets forth the names and ages of the three nominees
for director and the directors who are continuing in office, the positions and
offices with the Company held by each such person, and the period that each such
person has served as a director of the Company.
DIRECTOR
NAME AGE POSITION OR OFFICE WITH THE COMPANY SINCE
---- --- ----------------------------------- --------
Nominees for Director with Terms Expiring in 2004
Richard C. Coggins 43 Director, Chief Financial Officer, 1993
VP - Finance and Secretary
Robert H. Dick 57 Director 1999
James D. Ferguson 43 Director, President and 1998
Chief Executive Officer
2
<PAGE> 5
DIRECTOR
NAME AGE POSITION OR OFFICE WITH THE COMPANY SINCE
---- --- ----------------------------------- --------
Continuing Directors with Terms Expiring in 2003
B. Kenneth Bolt 58 Director 2000
Thomas D. Henrion 58 Director 1996
Douglas E. Kennemore, M.D. 68 Director 1975
Continuing Directors with Terms Expiring in 2002
Thomas F. Grady, Jr. 58 Director 1975
J. Ernest Lathem, M.D. 67 Director 1996
James M. Shoemaker, Jr. 68 Director 1992
BUSINESS EXPERIENCE OF NOMINEES AND DIRECTORS
Mr. Coggins joined the Company as Controller in 1986. He was elected
Treasurer in January 1987, Vice President of Finance in January 1989, and
Secretary and Chief Financial Officer in January 1990. He currently serves as
the Company's Chief Financial Officer, Vice President - Finance and Secretary.
Mr. Coggins was previously employed by NCNB National Bank in Charlotte, North
Carolina from 1984 to 1986, where he served as Commercial Banking Officer and
Metropolitan Area Director.
Mr. Dick has served as president of R. H. Dick & Company, Inc., an
investment banking and management consulting firm based in Wellington, Florida,
since January 1998. From 1996 to early 1998, Mr. Dick was a partner with Boles,
Knop & Company, Inc., an investment banking firm in Middleburg, Virginia. Prior
to that, Mr. Dick served as President, Chief Executive Officer and Chief
Financial Officer of Biomagnetic Therapy Systems, Inc. (1995-1996) and Pharmx,
Inc. (1994-1995). Both companies were clients of Boles, Knop & Company. From
1982 until 1994, Mr. Dick served in various executive roles with Codman &
Shurtleff, Inc., a subsidiary of Johnson & Johnson and a manufacturer of
surgical instruments, implants, equipment, and other surgical products. Mr.
Dick's positions with Codman included Director, Vice President - New Business
Development, Vice President - U.S. Sales and Marketing, and Vice President -
International. Mr. Dick also serves on the board of Valley Forge Scientific
Corporation, which designs and manufactures bipolar electrosurgery equipment.
Mr. Ferguson joined the Company as Materials Manager in 1990. He was
promoted to Plant Manager of the Company's contract packaging business in 1992,
Director of Contract Packaging in 1994, and Vice President of Operations in
1995. Mr. Ferguson was named President and Chief Executive Officer of the
Company in 1996. From 1981 to 1990, Mr. Ferguson worked for C.B. Fleet in
Lynchburg, Virginia, where he served in various manufacturing management
positions, ending as Director of Manufacturing.
Mr. Bolt has served as President of Banyan Retirement Services, Inc.
(Banyan) since 1985. Banyan is a developer and manager of long-term care
communities in the Southeast. The company currently manages eight senior living
communities in three states and has two communities under development. Prior to
joining Banyan, Mr. Bolt was employed from 1975 to 1985 by Daniel International
and its successor, Fluor Corporation. While at Fluor, Mr. Bolt served in various
management positions, including VP - Sales, VP - Procurement, VP - Project
Support, and VP - Technical Services.
Mr. Henrion was named President of EquiSource, LLC in November 1999.
EquiSource is based in Louisville, Kentucky and provides group purchasing and
e-commerce services to the equine industry in the United States. EquiSource is
member of the UniStar group of companies. Mr. Henrion has also
3
<PAGE> 6
served as a consultant to Unified Foodservice Purchasing Co-op, LLC since March
1999. From 1980 to 1999, Mr. Henrion was President, Chief Executive Officer, and
Director of FoodService Purchasing Cooperative, Inc. ("FSPC") in Louisville,
Kentucky. FSPC provided equipment, food, packaging items, and financial services
to quick-service restaurant operators including KFC, Taco Bell, Dairy Queen, and
Pizza Hut. In March 1999, FSPC merged with the purchasing organization of Tricon
Global Restaurants, Inc. to form Unified Foodservice Purchasing Co-op. Mr.
Henrion also serves as a director for Brinly-Hardy Company, Inc.
Dr. Kennemore retired in 1999 after 35 years in the private practice of
neurosurgery in Greenville, South Carolina.
Mr. Grady joined Federal Paper Board Company, Inc. ("Federal") in 1971,
serving in various sales and marketing management positions. He served as Vice
President of Sales for Federal from 1990 to 1996 when Federal was acquired by
International Paper Company. Following the acquisition, Mr. Grady served as Vice
President of Sales with International Paper from 1996 until 2000. Mr. Grady
retired from International Paper in September 2000.
Dr. Lathem retired in 1993 after 28 years in the private practice of
urological surgery in Greenville, South Carolina. He is a director of Southern
National Corporation and one of its subsidiaries, BB&T of South Carolina. He has
also served as a director of several closely held corporations.
Mr. Shoemaker has been a member of the law firm of Wyche, Burgess,
Freeman & Parham, P.A., since 1965 and concentrates his practice in corporate
and securities law. Mr. Shoemaker also serves as a director of One Price
Clothing Stores, Inc., Palmetto Bancshares, Inc., and Ryan's Family Steak
Houses, Inc.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the 2000 fiscal year, the Board of Directors held seven
meetings. All directors attended at least 75% of the aggregate of (i) total
board meetings and (ii) total meetings of committees on which such director
served.
The Audit Committee is comprised of Messrs. Shoemaker, Grady, and Dick.
The Audit Committee met one time during the 2000 fiscal year. The Audit
Committee reviews the scope and results of the audit by the independent auditors
and the adequacy of the Company's system of internal accounting controls and
procedures, proposes the appointment of the independent auditors subject to
approval of the Board and approves the fees paid for services rendered by such
auditors.
The Compensation Committee is comprised of Messrs. Henrion, Grady,
Lathem, and Shoemaker. The Compensation Committee met one time during the 2000
fiscal year. The Compensation Committee reviews and approves the remuneration of
officers of the Company and reviews the overall compensation programs of the
Company. The Compensation Committee's report is included below under "Board
Compensation Committee Report on Executive Compensation."
The Board does not have a standing nominating committee. The functions
of the nominating committee are performed by the outside directors.
The Executive Committee is comprised of Messrs. Henrion, Grady, Lathem,
and Shoemaker. It met three times during fiscal year 2000. The Executive
Committee serves in an advisory capacity to the senior management of the
Company.
4
<PAGE> 7
EXECUTIVE OFFICERS
The following table sets forth all of the current executive officers of
the Company and their respective ages, Company positions and offices, and
periods during which they have served in such positions and offices. There are
no persons who have been selected by the Company to serve as its executive
officers who are not set forth in the following table.
Company
Name Age Company Offices Currently Held Officer Since
---- --- ------------------------------ -------------
James D. Ferguson 43 President and Chief Executive Officer 1995
Robert E. Ackley 46 Vice President of Operations 1995
Richard C. Coggins 43 Vice President of Finance, Secretary 1987
and Chief Financial Officer
Keith A. Mauldin 40 Vice President of Custom Products 1995
Clyde A. Shew 43 Vice President of Medical Sales
and Marketing 1996
Wanda J. Totton 45 Director of Quality / R&D 1995
The Company's executive officers are appointed by the Board of
Directors and serve at the pleasure of the Board.
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
Mr. Ferguson's business experience is set forth above under "Business
Experience of Nominees and Directors."
Mr. Ackley joined the Company as Materials Manager in 1987. He was
named Director of Consumer Sales in 1993, Vice President of Marketing in 1995,
Vice President of Consumer Sales in 1996, and Vice President of Operations in
1998. Prior to joining the Company, Mr. Ackley worked in various operations
management roles for Almay Cosmetics in North Carolina and C.B. Fleet in
Virginia.
Mr. Coggins' business experience is set forth above under "Business
Experience of Nominees and Directors."
Mr. Mauldin joined the Company as Sales Representative for the
Industrial Division in 1988. He became Director of Industrial Sales in 1995 and
Director of Custom Products in 1998. He was promoted to Vice President of Custom
Products in 2000. Prior to joining Span-America, Mr. Mauldin was a sales
representative for Isotec International in Atlanta, Georgia.
Mr. Shew joined the Company as Director of Corporate Accounts in May
1996. He was promoted to Vice President of Medical Sales in October 1996 and
Vice President of Medical Sales and Marketing in February 1998. From 1984 to
1996, Mr. Shew worked in various sales and marketing roles for Professional
Medical Products, Inc. in Greenwood, South Carolina. His final position there
was Director of Corporate Accounts, where he was responsible for contracting
with multi-facility health care organizations in the United States.
Ms. Totton joined the Company in 1987 as Quality Control Manager. She
became Production Manager of the Company's contract packaging business unit in
1990. She was promoted to Director of Quality in 1995 and was named Director of
Quality / R&D in 1998.
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth below is furnished as of December 15, 2000,
with respect to Common stock owned beneficially or of record by persons known to
the Company to be the beneficial owner of more than 5% of the Common Stock as of
the Record Date, each of the directors and nominees individually, the named
officers included in the compensation table, and all directors and executive
officers as a group. Unless otherwise noted, each person has sole voting and
investment power with respect to such person's shares owned. All share amounts
in the table include shares which are not outstanding but which are the subject
of options exercisable in the 60 days following the Record Date. All percentages
are calculated based on the total number of outstanding shares, plus the number
of shares for the particular person or group which are not outstanding but which
are the subject of options exercisable in the 60 days following the Record Date.
AMOUNT/NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ------------- --------
BENEFICIAL OWNERS OF MORE THAN 5% OF THE COMPANY'S COMMON STOCK
Douglas E. Kennemore, M.D. 208,876 (1) 8.3%
117 Rockingham Rd.
Greenville, SC 29607
Lawrence J. Goldstein 175,847 (2) 7.0%
Santa Monica Partners, LP
1865 Palmer Avenue
Larchmont, NY 10538
Dimensional Fund Advisors 173,200 (3) 6.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
DePrince, Race & Zollo, Inc. 153,805 (4) 6.1%
201 S. Orange Avenue, Suite 850
Orlando, FL 32801-3413
Synalloy Corporation and Affiliates 153,033 (5) 6.1%
2155 West Croft Circle
Spartanburg, SC 29302
Thomas D. Henrion 139,008 (6) 5.6%
1000 West Ormsby Avenue
Louisville, KY 40210
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<PAGE> 9
AMOUNT/NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ------------- --------
DIRECTORS AND NOMINEES
B. Kenneth Bolt 1,000 *
Richard C. Coggins 37,850 (7) 1.5%
Robert H. Dick 7,000 *
James D. Ferguson 40,451 (8) 1.6%
Thomas F. Grady, Jr. 33,595 (9) 1.3%
Thomas D. Henrion 139,008 (6) 5.6%
Douglas E. Kennemore, M.D. 208,876 (1) 8.3%
J. Ernest Lathem, M.D. 20,043 *
James M. Shoemaker, Jr. 29,000 (1) 1.2%
NAMED OFFICERS
James D. Ferguson 40,451 (8) 1.6%
Robert E. Ackley 30,388 (10) 1.2%
Richard C. Coggins 37,850 (7) 1.5%
Keith A. Mauldin 15,469 (11) *
Clyde A. Shew 15,400 (12) *
DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
All Directors and Executive 593,028 22.6%
Officers of the Company as a
Group (13 persons)
----------------------
(1) The shares shown as beneficially owned by Dr. Kennemore and Mr.
Shoemaker include, for each, 3,000 shares which are currently not
outstanding but which are subject to options which are exercisable
within 60 days of the Record Date.
(2) The figure shown as beneficially owned by Lawrence J. Goldstein of
Santa Monica Partners, LP is based on current Securities and Exchange
Commission filings (through December 26, 2000), the most recent of
which was filed on April 21, 1998.
(3) The figure shown as beneficially owned by Dimensional Fund Advisors is
based on Securities and Exchange Commission filings and information
from the owner as of December 26, 2000.
(4) The figure shown as beneficially owned by DePrince, Race & Zollo, Inc.
is based on Securities and Exchange Commission filings and information
from the owner as of December 26, 2000.
(5) The figure shown as beneficially owned by Synalloy Corporation and
Affiliates is based on Securities and Exchange Commission filings as of
December 15, 2000.
(6) The shares shown as beneficially owned by Mr. Henrion include 12,500
shares owned by a trust for which Mr. Henrion is trustee.
7
<PAGE> 10
(7) The shares shown as beneficially owned by Mr. Coggins include 23,100
shares which are currently not outstanding but which are subject to
options held by Mr. Coggins which are exercisable within 60 days of the
Record Date.
(8) The shares shown as beneficially owned by Mr. Ferguson include 33,200
shares which are currently not outstanding but which are subject to
options held by Mr. Ferguson which are exercisable within 60 days of
the Record Date.
(9) The figure shown as beneficially owned by Mr. Grady excludes 7,109
shares owned by his adult children. Mr. Grady disclaims beneficial
ownership with respect to these shares. This figure also includes 3,000
shares which are currently not outstanding but which are subject to
options held by Mr. Grady which are exercisable within 60 days of the
Record Date.
(10) The shares shown as beneficially owned by Mr. Ackley include 20,500
shares which are not currently outstanding but which are subject to
options held by Mr. Ackley which are exercisable within 60 days of the
Record Date.
(11) The shares shown as beneficially owned by Mr. Mauldin include 13,000
shares which are not currently outstanding but which are subject to
options held by Mr. Mauldin which are exercisable within 60 days of the
Record Date.
(12) The shares shown as beneficially owned by Mr. Shew include 12,000
shares which are not currently outstanding but which are subject to
options held by Mr. Shew which are exercisable within 60 days of the
Record Date.
* Less than one percent.
8
<PAGE> 11
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the 2000, 1999, and 1998 fiscal years,
the cash compensation paid by the Company, as well as certain other compensation
paid or accrued for those years, to the Company's Chief Executive Officer and to
each of the four other most highly compensated officers during fiscal year 2000
(the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION OTHER ANNUAL OPTIONS/ COMPENSATION
DURING FISCAL 2000 YEAR SALARY ($) BONUS ($) COMPENSATION ($) SARS (#) ($)
--------------------------- ---- ---------- --------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
James D. Ferguson 2000 157,560 39,330 (1) 5,000 5,124(2)
President and CEO 1999 150,750 0 (1) 0 4,954
1998 131,250 0 (1) 10,000 4,743
Robert E. Ackley 2000 114,667 25,987 (1) 3,000 3,859(3)
VP of Operations 1999 109,750 0 (1) 0 3,736
1998 100,500 0 (1) 5,000 2,880
Richard C. Coggins 2000 118,583 29,891 (1) 4,000 3,814(4)
Chief Financial Officer 1999 112,750 0 (1) 0 3,668
VP of Finance and Secretary 1998 106,667 0 (1) 6,000 3,349
Keith A. Mauldin 2000 102,333 20,089 (1) 3,000 3,596(5)
VP of Custom Products 1999 98,500 0 (1) 0 3,500
1998 107,894 0 (1) 4,000 4,315
Clyde A. Shew 2000 122,156 30,081 (1) 3,000 4,269(6)
VP of Medical Sales and Marketing 1999 116,125 0 (1) 0 4,118
1998 102,000 0 (1) 5,000 4,285
</TABLE>
-----------------
(1) Certain amounts may have been expended by the Company, which may have
had value as a personal benefit to the Named Officers. However, the
total value of such benefits did not exceed the lesser of $50,000 or
10% of the annual salary and bonus for each person.
(2) This amount is comprised of (i) contributions of $3,939 to the
Company's 401(k) plan by the Company on behalf of Mr. Ferguson to match
pre-tax deferral contributions, all of which is vested, and (ii) $1,185
in annual premiums paid by the Company on behalf of Mr. Ferguson for
life insurance not generally available to all Company employees.
(3) This amount is comprised of (i) contributions of $2,867 to the
Company's 401(k) plan by the Company on behalf of Mr. Ackley to match
pre-tax deferral contributions, all of which is vested, and (ii) $992
in annual premiums paid by the Company on behalf of Mr. Ackley for life
insurance not generally available to all Company employees.
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<PAGE> 12
(4) This amount is comprised of (i) contributions of $2,965 to the
Company's 401(k) plan by the Company on behalf of Mr. Coggins to match
pre-tax deferral contributions, all of which is vested, and (ii) $849
in annual premiums paid by the Company on behalf of Mr. Coggins for
life insurance not generally available to all Company employees.
(5) This amount is comprised of (i) contributions of $2,558 to the
Company's 401(k) plan by the Company on behalf of Mr. Mauldin to match
pre-tax deferral contributions, all of which is vested, and (ii) $1,038
in annual premiums paid by the Company on behalf of Mr. Mauldin for
life insurance not generally available to all Company employees.
(6) This amount is comprised of (i) contributions of $3,054 to the
Company's 401(k) plan by the Company on behalf of Mr. Shew to match
pre-tax deferral contributions, all of which is vested, and (ii) $1,215
in annual premiums paid by the Company on behalf of Mr. Shew for life
insurance not generally available to all Company employees.
OPTION/SAR GRANTS IN FISCAL YEAR 2000
The following stock options were granted during fiscal year 2000 to the
Named Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS/SAR'S EXERCISE MARKET ASSUMED RATES OF STOCK PRICE
UNDERLYING GRANTED TO OR BASE PRICE ON APPRECIATION FOR OPTION TERM
OPTIONS/SAR'S EMPLOYEES IN PRICE GRANT EXPIRATION -----------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE(1) DATE 0%($) 5% ($) 10% ($)
---- ------------- ------------- -------- -------- ---------- ----- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James D. Ferguson 5,000 (2) 14% $3.55 $3.55 02/03/10 0 11,163 28,289
Robert E. Ackley 3,000 (2) 8% $3.55 $3.55 02/03/10 0 6,698 16,973
Richard C. Coggins 4,000 (2) 11% $3.55 $3.55 02/03/10 0 8,930 22,631
Keith A. Mauldin 3,000 (2) 8% $3.55 $3.55 02/03/10 0 6,698 16,973
Clyde A. Shew 3,000 (2) 8% $3.55 $3.55 02/03/10 0 6,698 16,973
</TABLE>
--------------------
(1) Based on the average of the high and low sales price per share on the
grant date.
(2) The options shown become exercisable at the greater of 1,000 shares per
year or 20% of the options granted per year, beginning July 1, 2000. In
addition, the Plan contains certain customary conditions for the early
expiration of the options.
10
<PAGE> 13
OPTION/SAR EXERCISES AND YEAR-END VALUES
The following table sets forth information with respect to the
Company's Named Officers concerning the exercise of options during the 2000
fiscal year and unexercised options held as of the end of the 2000 fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/SARS
SHARES YEAR-END (#) AT FISCAL YEAR-END ($)(1)
ACQUIRED ON VALUE --------------------------- --------------------------
NAME EXERCISE (#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James D. Ferguson 0 0 33,200 23,100 $325 $1,300
Robert E. Ackley 0 0 20,500 14,500 325 650
Richard C. Coggins 0 0 23,100 16,400 325 975
Keith A. Mauldin 0 0 13,000 11,500 325 650
Clyde A. Shew 0 0 12,000 15,500 325 650
</TABLE>
---------------
(1) The "value" of any option set forth in the table above is determined by
subtracting the amount which must be paid upon exercise of the options
from the market value of the underlying Common Stock as of the exercise
date or the fiscal year-end date as applicable.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions with respect to the compensation of the Company's Named
Officers are made by the four-member Compensation Committee of the Board
comprised of Messrs. Henrion, Grady, Lathem, and Shoemaker. Each member of the
Compensation Committee is a non-employee director. All decisions by the
Compensation Committee relating to the compensation of the Company's Named
Officers are reviewed by the full Board. Set forth below is a report submitted
by the Compensation Committee in its capacity as such addressing the Company's
compensation policies for fiscal 2000 with respect to the Named Officers of the
Company.
COMPENSATION COMMITTEE REPORT
General Compensation Policies with Respect to Named Officers
The Compensation Committee does not maintain formal, written executive
compensation policies. However, in general, the Committee has structured officer
compensation so as to provide competitive levels of compensation that integrate
pay with the Company's annual and long-term performance goals, reward
above-average corporate performance, recognize individual initiative,
responsibility and achievements, and assist the Company in attracting and
retaining qualified executives. The Compensation Committee also endorses the
position that stock ownership by management and stock-based performance
compensation arrangements are beneficial in aligning management's and
shareholders' interest in the enhancement of shareholder value.
The Named Officers' overall compensation is intended to be consistent
with the compensation paid to executives of companies similar in size and
character to the Company, provided that the Company's performance warrants the
compensation being paid. In determining the appropriate
11
<PAGE> 14
compensation, the Compensation Committee has utilized a combination of salary,
incentive cash compensation, Company stock ownership and benefits. The
Compensation Committee has also attempted to maintain an appropriate
relationship between the compensation among the Named Officers and their
relative levels of responsibility within the Company.
Compensation paid to the Company's Named Officers in fiscal year 2000,
as reflected in the foregoing compensation tables, consisted of the following
elements: base salary, bonus, matching contributions paid with respect to the
Company's 401(k) plan, and certain benefits. Payments under the Company's 401(k)
plan are made to all employees on a non-discriminatory basis.
Relationship of Performance to Executive Compensation
The Compensation Committee believes that a significant portion of the
Named Officers' compensation should be based on individual and corporate
performance. The principal means through which the Company ties compensation to
performance is through the Company's Management Bonus Plan (the "Bonus Plan").
Participants in the Bonus Plan include officers and members of the Company's
senior management team. Pursuant to the Bonus Plan, prior to the beginning of
each fiscal year the Board of Directors approves the Company's operating plan
which contains target earnings projections for the coming year. The target
earnings projections must provide a reasonable increase over the prior year's
earnings and must be consistent with the Company's long-term growth goals. The
Bonus Plan is structured so that each participant has an opportunity to earn
bonuses equal to approximately 30% of his or her base salary if the Company
reaches 100% of the target earnings performance. The percentage of salary
potentially earned by each participant under the Bonus Plan ranges from 0% if
the Company earnings are less than approximately 80% of the target earnings, to
approximately 50% if the Company's earnings exceed approximately 140% of target
earnings and if certain predefined individual goals are met. Approximately 40%
of each participant's bonus earnings is contingent on achievement of these
specific individual goals. These individual goals are determined by the chief
executive officer and reviewed by the Compensation Committee.
Options to purchase Company Common Stock are also granted periodically
by the Compensation Committee to officers and members of the senior management
team. The number of shares granted is based primarily on individual performance
and, secondarily, on Company performance relative to the Company's operating and
strategic plans.
Salaries, Cash Bonuses, Stock Option Grants, Incentive Payments
The 2000 salary levels of the Company's Named Officers were determined
on the anniversary date of the employee's last performance review and were based
generally on the criteria set forth above. Each employee of the Company,
including the Named Officers, is assigned a particular job grade level. The job
grade level is determined by a quantitative scoring system which considers
various factors under the major categories of job demands, knowledge, job
content, and level of responsibility. A salary range has been assigned to each
job grade level based on input from independent consultants and the Company's
management. The salary levels of the Named Officers were based primarily on
individual performance, overall Company performance and achievement of specific
individual and corporate goals for the prior fiscal year. The salary levels of
the Named Officers must fall within the designated salary ranges for the
appropriate job grade level, pursuant to the Company's salary administration
plan.
Compensation of the Chief Executive Officer During Fiscal 2000
Mr. Ferguson's compensation is determined by the Compensation Committee
using the same factors as those applied to other Company officers as described
above.
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<PAGE> 15
Other Compensation Plans
The Company has adopted certain broad-based employee benefit plans in
which the chief executive officer and the Named Officers have been permitted to
participate. The Company has also adopted certain executive officer life and
health insurance plans. The incremental cost to the Company of the chief
executive officer's and Named Officers' benefits provided under these plans
(which is not set forth in any of the tables) totaled less than 10% of their
cash compensation in fiscal year 2000. Benefits under these plans generally are
not directly or indirectly tied to Company performance.
Submitted by the Compensation Committee
Thomas D. Henrion
Thomas F. Grady, Jr.
J. Ernest Lathem, M.D.
James M. Shoemaker, Jr.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Each director of the Company who is not also an officer of the Company
receives an annual fee of 1,000 shares of unregistered Common Stock plus a per
diem fee of $1,000 for each Board meeting and committee meeting attended. In
addition, each non-officer director receives a fee of $500 for participating in
board or committee meetings held by telephone conference call. The Chairman of
the Board receives 2,000 shares of unregistered Common Stock plus the same per
diem and conference call fees described above. Including the value on the date
of receipt of the Common Stock received in January 2000, no director received
more than $20,000 in fiscal 2000 for his services as a director.
Directors who are also employees of the Company do not receive
compensation for their services as directors.
APPROVAL OF THE COMPANY'S
2000 RESTRICTED STOCK PLAN
(ITEM 2 ON THE PROXY)
The Board of Directors recommends that the shareholders approve
adoption by the Company of the 2000 Restricted Stock Plan (the "Plan"). The Plan
was created to encourage key management employees to purchase and own the
Company's stock and to provide them with an additional financial stake in the
future success of the Company. Subject to shareholder approval, a maximum of
100,000 shares of the Company's Common Stock will be available for issuance
under the Plan.
The Plan is summarized below. However, this summary is qualified in its
entirety by reference to the text of the Plan, a copy of which may be obtained,
without charge, by written request to the Company, Post Office Box 5231,
Greenville, South Carolina 29606, Attention: Richard Coggins.
ADMINISTRATION AND ELIGIBILITY. The Plan generally provides that a
committee of the Board (the "Committee") may select to participate in the Plan
any employee whose judgment, initiative and efforts contributed to or may be
expected to contribute to the Company's successful performance.
The Committee has sole discretionary authority to select participants
in the Plan.. The Company expects for approximately 25 persons to participate in
the Plan. These persons are expected to include
13
<PAGE> 16
non-executive officers, as well as executive officers of the Company or a
Company subsidiary. The Committee is also empowered to administer the Plan and
to take all such actions as may be necessary thereunder.
RESTRICTED STOCK. All stock to be granted under the Plan (the
"Restricted Stock") is Common Stock of the Company and is subject to certain
restrictions, including the imposition of a "restricted period" (the period
beginning on the award date and ending at the end of the Plan year (identical to
the Company's fiscal year) of grant for 25% of the granted stock and at the end
of the following three years for each additional 25% of the granted stock).
During this restricted period, granted shares are subject to forfeiture upon
termination of the Plan participant's employment or attempted transfer of the
stock forming the basis for the award. However, if there is a "change of
control" (as defined in the Plan), or if the Plan participant dies or becomes
totally disabled (as described in the Plan), then all restrictions will lapse.
In addition, the Committee is empowered to shorten or terminate the restricted
period or waive other conditions for the lapse of restrictions in its sole
discretion.
RESTRICTED STOCK AWARDS. Subject to shareholder approval, the Company
will grant to each Plan participant Restricted Stock equal to 50% of the shares
of Common Stock purchased by such participant on the open market during that
Plan year. For each Plan participant, the fair market value (as determined in
the Plan) of Restricted Stock granted in any one Plan year cannot exceed 5% of
the participant's annualized base salary plus annualized commissions for that
Plan year. The awards are to be evidenced by award agreements.
VESTING AND FORFEITURE. Awards of Restricted Stock vest as follows:
o 25% of the award vests at the end of the Plan year in which the
purchase was made; and
o 25% of the award vests at the end of the subsequent three Plan years.
As noted above, all restricted periods lapse and total vesting occurs upon a
change of control or upon the Plan participant's death or total disability.
Awards are subject to forfeiture upon the Plan participant's termination of
employment (except by death or total disability) or if the participant transfers
stock that formed the basis for an award (in which case the unvested portion of
the related award is forfeited).
ASSIGNABILITY. Awards under the Plan are assignable only in limited
instances in accordance with applicable law.
AMENDMENT. The Committee may suspend, terminate or amend the Plan in
its sole discretion, subject to any shareholder approval required by applicable
law, the Company's articles of incorporation, or the Bylaws of the National
Association of Securities Dealers (the "NASD").
EFFECTIVE DATE. Assuming shareholder approval is received at the Annual
Meeting, the effective date of the Plan is February 2, 2000. If such approval is
not received, the Plan will not go into effect.
VOTE REQUIRED. Approval of the amendment to the Plan by holders of a
majority of the total votes cast on the proposal is required under the Bylaws of
the NASD, to which the Company is subject because its Common Stock is traded on
the Nasdaq National Market. Abstentions and broker non-votes will not be
considered to be affirmative votes.
FEDERAL INCOME TAX CONSEQUENCES ASSOCIATED WITH THE PLAN. The following
discussion is intended only as a brief summary of the federal income tax rules
relevant to stock options and restricted stock awards. The laws governing the
tax aspects of awards are highly technical and such laws are subject to change.
14
<PAGE> 17
A Plan participant who is granted restricted stock may make an election
(a "Section 83(b) election") to have the grant taxed as compensation income at
the date of receipt, with the result that any future appreciation (or
depreciation) in the value of the shares of stock granted shall be taxed as
capital gain (or loss) upon a subsequent sale of the shares. Any such Section
83(b) election must be made and filed with the IRS within 30 days of receipt in
accordance with the regulations under Section 83(b) of the Internal Revenue Code
of 1986, as amended (the "Code"). If the participant does not make a Section
83(b) election, then the grant will be taxed as compensation income at the full
fair market value on the date that the restrictions imposed on the shares
expire. The Company is generally entitled to an income tax deduction for any
compensation income taxed to the participant, subject to the provisions of
Section 162(m) of the Code.
PLAN BENEFITS. Set forth below is information concerning restricted stock
grants to be made under the Plan, assuming shareholder approval and the granting
of restricted stock. The dollar value of these grants is not presently
determinable.
NEW PLAN BENEFITS
SPAN-AMERICA MEDICAL SYSTEMS, INC.
2000 RESTRICTED STOCK PLAN
NAME AND POSITION NUMBER OF SHARES (1)
----------------- --------------------
James D. Ferguson - President and CEO 1,000
Robert E. Ackley - VP of Operations 0
Richard C. Coggins - Chief Financial Officer 1,738
Keith A. Mauldin - VP of Custom Products 0
Clyde A. Shew - VP of Medical Sales and Marketing 1,200
Current Executive Officers as a Group 3,938
Non-Executive Director Group 0
All Employees, Excluding Executive Officers, as a Group 2,236
-------------------------
(1) Shown on a pro forma basis as of December 27, 2000.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2000 RESTRICTED
STOCK PLAN.
15
<PAGE> 18
PERFORMANCE GRAPH
The following graph sets forth the performance of the Company's Common
Stock for the five-year period from September 30, 1995 through September 30,
2000 as compared to the Russell 2000 Index and a peer group index. The peer
group index was prepared by an unaffiliated third party and is comprised of all
exchange-listed companies having the standard industry classification code 3842
(which relates to medical products and supplies). The companies included in the
peer group index are shown below. All stock prices reflect the investment of
cash dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG SPAN-AMERICA MEDICAL SYSTEMS, INC.,
A PEER GROUP, AND THE RUSSELL 2000 INDEX
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
-----------------------------------------------------------------------
COMPANY/INDEX/MARKET 9/29/1995 9/27/1996 9/26/1997 10/02/1998 10/01/1999 9/29/2000
<S> <C> <C> <C> <C> <C> <C>
Span Amer Med 100.00 99.25 133.34 118.96 74.61 88.16
Surgical Appliances
& Supplies 100.00 100.62 119.13 133.54 136.93 200.78
Russell 2000 Index 100.00 113.24 150.80 122.12 143.56 174.81
</TABLE>
COMPANIES INCLUDED IN PEER GROUP INDEX
STANDARD INDUSTRY CLASSIFICATION CODE 3842
<TABLE>
<S> <C> <C>
Allied Healthcare Products, Inc. Alpha Pro Tech, Ltd. American Medical Systems
ATS Medical, Inc. Bio-Vascular, Inc. Biomet, Inc.
Cardima, Inc. Chad Therapeutics, Inc. Dexterity Surgical, Inc.
Eclipse Surgical Tech, Inc. Exactech, Inc. Guardian Tech. Intnl., Inc.
Hanger Orthopedic Group Hymedix, Inc. Inamed Corporation
Intuitive Surgical, Inc. Invacare Corp. Isolyser Co., Inc.
Lakeland Industries, Inc. Langer Biomechanics Group Life Medical Sciences, Inc.
Lifestream Technologies Mammatech Corporation Med-Emerg International, Inc.
Medical Action Industries, Inc. Mentor Corporation Mine Safety Appliance Co.
Minimed, Inc. Orthofix International NV Possis Medical, Inc.
Respironics, Inc. Sharp Compliance, Inc. Smith & Nephew PLC ADS
Sonic Innovations, Inc. Span-America Med. Sys. Sparta Surgical Corp.
Spectrum Labs, Inc. Steris Corp. Sulzer Medica Ltd. ADS
Sunrise Medical, Inc. Symphonix Devices, Inc. Vital Images, Inc.
Worksafe Industries, Inc. Wyant Corp.
</TABLE>
16
<PAGE> 19
CERTAIN TRANSACTIONS
The law firm of Wyche, Burgess, Freeman & Parham, P.A., whose members
include Mr. Shoemaker, a director of the Company, serves as general counsel to
the Company. Fees paid to this law firm by the Company were less than one
percent of the law firm's gross revenues during the firm's last fiscal year. The
Company believes that the terms of its relationship with the law firm are at
least as favorable as could be obtained from a third party.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers, and persons who own more
than 10% of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Executive officers, directors and greater than 10% shareholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based on a review of
the copies of such reports furnished to the Company and representations that no
other reports were required during the 2000 fiscal year, all Section 16(a)
filing requirements applicable to its executive officers, directors and greater
than 10% beneficial owners were met.
AUDIT COMMITTEE INFORMATION
The Board of Directors adopted a written Audit Committee Charter on
June 7, 2000, a copy of which is included as APPENDIX A to this Proxy Statement.
All members of the Audit Committee are independent as defined in Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards.
The Audit Committee is responsible for the duties set forth in its charter
(which is attached to this proxy statement as Appendix A) but is not responsible
for either the preparation of the financial statements or the auditing of the
financial statements. The Company's management has the responsibility for
preparing the financial statements and implementing internal controls, and the
Company's independent accountants have the responsibility for auditing the
financial statements and monitoring the effectiveness of the internal controls.
The review of the financial statements by the Audit Committee is not the
equivalent of an audit.
NOTWITHSTANDING ANY STATEMENT IN ANY OF THE COMPANY'S PREVIOUS FILINGS
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, INCORPORATING FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THE AUDIT COMMITTEE INFORMATION ABOVE AND THE INFORMATION
IN APPENDIX A SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILING.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected Elliott, Davis & Company, LLP as
the independent certified public accountants for the Company for its 2001 fiscal
year. Representatives of Elliott, Davis & Company, LLP will be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions from
shareholders. Elliott,
17
<PAGE> 20
Davis & Company, LLP became the Company's independent auditors and tax advisors
in fiscal year 2000. Neither the firm nor any of its members has any relation
with the Company except in the firm's capacity as auditors and tax advisors.
SHAREHOLDER PROPOSALS
Proposals by shareholders for consideration at the 2002 Annual Meeting
of Shareholders must be received at the Company's offices at Post Office Box
5231, Greenville, South Carolina 29606 no later than August 31, 2001, if any
such proposal is to be eligible for inclusion in the Company's proxy materials
for its 2002 Annual Meeting of Shareholders. Under the regulations of the
Securities and Exchange Commission, the Company is not required to include
shareholder proposals in its proxy materials unless certain other conditions
specified in those regulations are satisfied.
PROXY SOLICITATION
COST OF SOLICITATION
The Company will bear the cost of this proxy solicitation, including
the cost of preparing, handling, printing and mailing these Proxy Materials.
Employees and officers will be reimbursed for the actual out-of-pocket expenses
incurred in connection with the solicitation. Proxies will be solicited
principally by mail but may also be solicited by telephone or through personal
solicitation conducted by regular employees of the Company without additional
compensation. The Company has also engaged Corporate Communications, Inc. in
Nashville, Tennessee to assist in investor relations activities, including
distributing shareholder information and contacting brokerage houses,
custodians, nominees and fiduciaries, for a fee of approximately $5,000 plus
reimbursement of reasonable out-of-pocket expenses.
BANKS, BROKERS AND OTHER CUSTODIANS
Banks, brokers and other custodians are requested to forward proxy
solicitation materials to their customers where appropriate, and the Company
will reimburse such banks, brokers and custodians for their reasonable
out-of-pocket expenses in sending the Proxy Materials to beneficial owners of
Common Stock.
FINANCIAL INFORMATION
The Company's 2000 Annual Report containing financial statements
reflecting the financial position and results of operations of the Company for
the fiscal year ended September 30, 2000, is being mailed to shareholders with
these Proxy Materials. THE COMPANY WILL ALSO PROVIDE WITHOUT CHARGE TO ANY
SHAREHOLDER OF RECORD AS OF DECEMBER 15, 2000, WHO SO REQUESTS IN WRITING, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR
ENDED SEPTEMBER 30, 2000, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY
SUCH REQUEST SHOULD BE DIRECTED TO SPAN-AMERICA MEDICAL SYSTEMS, INC., P.O. BOX
5231, GREENVILLE, SOUTH CAROLINA 29606 ATTENTION: RICHARD C. COGGINS.
18
<PAGE> 21
OTHER MATTERS
Management of the Company is not aware of any other matter to be
brought before the Annual Meeting. If other matters are duly presented for
action, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ Richard C. Coggins
Richard C. Coggins
Secretary
December 27, 2000
Greenville, South Carolina
19
<PAGE> 22
APPENDIX A
SPAN-AMERICA MEDICAL SYSTEMS, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
JUNE 7, 2000
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing: the financial reports
and other financial information provided by the Company to any governmental body
or the public; the Company's systems of internal controls regarding finance,
accounting, legal compliance and ethics that management and the Board have
established; and the Company's auditing, accounting and financial reporting
processes generally. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster adherence to, the
Company's policies, procedures and practices at all levels. The Audit
Committee's primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
o Review and appraise the audit efforts of the Company's independent
accountants and internal accounting staff.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board of
Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. A
director will not be considered "independent" if he or she has:
o been employed by the Company or its affiliates in the current or past
three years;
o accepted any compensation from the Company or its affiliates in excess
of $60,000 during the previous fiscal year (except for board service,
retirement plan benefits, or non-discretionary compensation);
o an immediate family member who is, or has been in the past three years,
employed by the Company or its affiliates as an executive officer;
o been a partner, controlling shareholder or an executive officer of any
for-profit business to which the Company made, or from which it
received, payments (other than those which arise solely from
investments in the corporation's securities) that exceed five percent
of the organization's consolidated gross revenues for that year, or
$200,000, whichever is more, in any of the past three years; or
o been employed as an executive of another entity where any of the
Company's executives serve on that entity's compensation committee.
All members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
20
<PAGE> 23
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.
III. MEETINGS
The Committee shall meet at least two times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of these groups believes should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review
rendered by the independent accountants.
3. Review with financial management and the independent accountants the
10-Q's and 10-K prior to their filing or prior to the release of
earnings. The Chair of the Committee may represent the entire Committee
for purposes of this review.
INDEPENDENT ACCOUNTANTS
4. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Company to determine the accountants' independence.
5. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
6. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.
FINANCIAL REPORTING PROCESSES
7. In consultation with the independent accountants and management, review
the integrity of the organization's financial reporting processes, both
internal and external.
8. Consider the independent accountants' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
9. Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or the internal auditing
department.
PROCESS IMPROVEMENT
10. Establish regular and separate systems of reporting to the Audit
Committee by each of management and the independent accountants,
regarding any significant judgments made in management's preparation of
the financial statements and the view of each as to appropriateness of
such judgments.
21
<PAGE> 24
11. Following completion of the annual audit, review separately with
management and the independent accountants any significant difficulties
encountered during the course of the audit, including any restrictions
on the scope of work or access to required information.
12. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the
financial statements.
13. Review with the independent accountants and management the extent to
which changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented. (This review
should be conducted at an appropriate of time subsequent to
implementation of changes or improvements, as decided by the
Committee.)
ETHICAL AND LEGAL COMPLIANCE
14. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
15. Review management's monitoring of the Company's compliance with the
organization's Ethical Code, and ensure that management has the proper
review system in place to ensure that Company's financial statements,
reports and other financial information disseminated to governmental
organizations, and the public satisfy legal requirements.
16. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
17. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
18. Perform any other activities consistent with this Charter, the
Company's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
22
<PAGE> 25
APPENDIX B
SPAN-AMERICA MEDICAL SYSTEMS, INC.
2000 RESTRICTED STOCK PLAN
The Span-America Medical Systems, Inc. 2000 Restricted Stock Plan (the
"Plan") was adopted by the Board of Directors of Span-America Medical Systems,
Inc. (the "Company"), effective as of February 2, 2000 and was approved by the
Board of Directors (the "Board") on February 2, 2000. The Plan shall remain in
effect through February 2, 2010. After the termination of the Plan, no further
Awards may be granted; however, outstanding Awards shall remain in effect in
accordance with their terms and the terms of the Plan.
1. Purpose
The purpose of the Plan is to encourage key management employees of the
Company to purchase and own the Company's stock and to provide such persons with
a additional proprietary interest in the Company through the granting of
restricted stock that will increase the interest of such persons in the
Company's welfare, furnish an incentive to such persons to continue their
services for the Company and provide a means through which the Company may
attract able persons as employees.
2. Definitions
"Award" means an award or grant made to a Participant under Section 7.
"Award Agreement" means the agreement provided in connection with an
Award under Section 13.
"Award Date" means the date that an Award is made, as specified in an
Award Agreement. Generally, this date shall be within thirty (30) days from the
date the Company files its Form 10-K with the Securities and Exchange
Commission.
"Board" means the Board of Directors of the Company.
"CEO" means the chief executive officer of the Company.
"Change of Control" means any of the following: (i) any consolidation,
merger or share exchange of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which the shares of Common
Stock would be converted into cash, securities or other property, other than a
consolidation, merger or share exchange of the Company in which the holders of
Common Stock immediately prior to such transaction have the same proportionate
ownership of Common Stock of the surviving corporation immediately after such
transaction; (ii) any sale, lease, exchange or other transfer (excluding
transfer by way of pledge or hypothecation) in one transaction or a series of
related transactions, of all or substantially all of the assets of the Company;
(iii) the stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; (iv) the cessation of control (by
virtue of their not constituting a majority of directors) of the Board by the
individuals (the "Continuing Directors") who (x) at the date of this Plan were
directors or (y) become directors after
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<PAGE> 26
the date of this Plan and whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then in office who were directors at the date of this Plan or whose
election or nomination for election was previously so approved; (v) the
acquisition of beneficial ownership (within the meaning of Rule 13d-3 under the
1934 Act) of an aggregate of 20% of the voting power of the Company's
outstanding voting securities by any person or group (as such term is used in
Rule 13d-5 under the 1934 Act) who beneficially owned less than 15% of the
voting power of the Company's outstanding voting securities on the date of this
Plan, provided, however, that notwithstanding the foregoing, an acquisition
shall not constitute a Change of Control hereunder if (x) the acquirer is a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company and acting in such capacity or (y) the acquirer is any other person
whose acquisition of shares of voting securities is approved in advance by a
majority of the Continuing Directors; or (vi) in a Title 11 bankruptcy
proceeding the appointment of a trustee or the conversion of a case involving
the Company to a case under Chapter 7.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor legislation.
"Committee" means the committee appointed or designated by the Board to
administer the Plan.
"Common Stock" means the common stock which the Company is currently
authorized to issue or may in the future be authorized to issue.
"Employee" means a common-law employee of the Company.
"Fair Market Value" of a share of Common Stock is the mean of the
highest and lowest prices per share on the Nasdaq National Market (as reported
by NASDAQ) on the appropriate date, or in the absence of reported sales on such
day, the most recent previous day for which sales were reported.
"1934 Act" means the Securities Exchange Act of 1934, as amended, or
any successor legislation.
"Participant" means an Employee or officer of the Company who has been
selected by the Committee to receive an Award under the Plan.
"Plan" means the Span-America Medical Systems, Inc. 2000 Restricted
Stock Plan, as amended from time to time.
"Plan year" means the fiscal year of the Company.
"Restricted Stock" means shares of Common Stock subject to restrictions
and conditions pursuant to Section 7.
"Retirement" means the Participant's termination of employment with the
Company at a time that is determined by the Committee to be retirement; and
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<PAGE> 27
"Total Disability" means the permanent inability of the Participant,
which is a result of accident or sickness, to perform such Participant's
occupation or employment for which the Participant is suited by reason of the
Participant's previous training, education and experience and which results in
the termination of the Participant's employment with the Company.
3. Plan Administration
(a) The Committee shall be responsible for administering the Plan.
(i) Composition of the Committee. The Committee shall be
comprised of the entire Board or a committee of two or more members of the
Board, all of whom shall be "non-employee directors" as defined in Rule 16b-3.
(ii) Powers. The Committee shall have full and exclusive
discretionary power to interpret the Plan and to adopt such rules, regulations
and guidelines for administering the Plan as the Committee may deem necessary or
proper. Such power shall include, but not be limited to, establishing all Award
terms and conditions and, subject to Section 13, adopting modifications and
amendments to the Plan or any Award Agreement, including without limitation, any
that are necessary to comply with the laws of the countries in which the Company
or its affiliates operate.
(iii) Delegation. The Committee may delegate to one more of
its members or to one or more agents or advisors such non-discretionary
administrative duties as it may deem advisable, and the Committee or any person
to whom it has delegated duties as aforesaid may employ one or more persons to
render advice with respect to any responsibility the Committee or such persons
may have under the Plan.
(b) The Committee may employ attorneys, consultants, accountants and
other persons, and the Committee, the Company and its officers and directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon the Participants,
the Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination, or interpretation made in
good faith with respect to the Plan or Awards, and all members of the Committee
shall be fully protected by the Company, to the fullest extent permitted by
applicable law, in respect to any such action, determination and interpretation.
4. Eligibility
Notwithstanding anything contrary in the Plan, for purposes of
determining eligibility for participation in the Plan, the Board or the
Committee shall have full and exclusive discretionary power to determine
eligibility. The Board or Committee shall have the ability to delegate and to
take back the authority to determine eligibility to an executive officer of the
Company. However, if the Board or Committee delegates the ability to determine
eligibility, then with respect to the officer to whom authority has been
delegated, eligibility to participate in the Plan shall be determined by the
Board.
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<PAGE> 28
Any Employee whose judgment, initiative and efforts contributed or may
be expected to contribute to the successful performance of the Company is
eligible to participate in the Plan. The Committee, upon its own action, may
grant, but shall not be required to grant, an Award to any Employee. Awards may
be granted by the Committee at any time and from time to time to new
Participants, or then Participants, or to the greater or lesser number of
Participants, and may include or exclude previous Participants, as the Committee
shall determine. The Committee's determinations under the Plan (including
without limitation the form, amount and timing of such Awards, the terms and
provisions of such Awards and the Award Agreements evidencing the same) need not
be uniform and may be made by it selectively among Employees who receive, or are
eligible to receive, Awards under the Plan.
5. Authorized Awards; Limitations
(a) Except for adjustments pursuant to Section 6, the maximum number of
shares of Common Stock that shall be available for issuance under the Plan shall
be 100,000.
(b) If an Award expires unexercised or is forfeited, surrendered,
canceled, terminated or settled in cash in lieu of Common Stock, the shares of
Common Stock that were theretofore subject (or potentially subject) to such
Award may again be made subject to an Award Agreement.
6. Adjustments and Reorganizations
In the event of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, extraordinary
dividend, spin-off, split-off, rights offering, share combination, or other
change in the corporate structure of the Company affecting the Common Stock, the
number and kind of shares that may be delivered under the Plan shall be subject
to such adjustment as the Committee, in its sole discretion, may deem
appropriate, and the number and kind and price of shares subject to outstanding
Awards and any other terms of outstanding Awards shall be subject to such
adjustment as the Committee, in its sole discretion, may deem appropriate.
In the event of a Change in Control, then, notwithstanding any other
provision in this Plan to the contrary, all restriction periods applicable to
Awards of Restricted Stock shall automatically expire. The determination of the
Committee that any of the foregoing conditions has been met shall be binding and
conclusive on all parties.
7. Restricted Stock Awards.
(a) Restricted Stock. At the end of each Plan year, the Company will
make Awards of shares of Restricted Stock to each Participant equal to 50% of
the shares of Common Stock purchased by such Participant on the open market
during such Plan year (not including the exercise of stock options). This grant
is conditioned on the receipt of trade confirmations and brokerage statements
satisfactory to the Company and on confirmation of continued ownership of the
stock. If a Participant has purchased less
4
<PAGE> 29
than $1,000 of Common Stock during such Plan year, then the Company has no
obligation to make an Award of Restricted Stock.
(b) Individual Yearly Maximum. For any Plan year, the total amount of
Restricted Stock granted to any Participant for such year, calculated at its
Fair Market Value on the relevant purchase date(s), cannot equal more than 5% of
the annualized base salary plus annualized commissions, if any, for such
Participant for such Plan year.
(c) In addition to awards under clause (a), above, the Committee may
award Restricted Stock to any Participant. Awards of Restricted Stock shall be
subject to such conditions and restrictions as are established by the Committee
and set forth in the Award Agreement, which may include, but are not limited to,
continued service with the Company, achievement of specific business objectives,
and other measurements of individual or Company performance.
(d) The Committee may also, in its sole discretion, shorten or
terminate the restricted period or waive any other conditions for the lapse of
restrictions with respect to all or any portion of any Award.
8. Vesting.
(a) Whenever an Award is granted, the Participant will become vested in
25% of his Award at the end of the Plan year in which the purchase is made and
an additional 25% in each of the three Plan years following the date of grant.
This vesting is conditioned on confirmation of continued ownership of the Common
Stock forming the basis for the Restricted Stock Award.
(b) All restricted periods shall terminate and the Awards shall be
fully vested with respect to any Participant upon the Participant's death or
Total Disability or upon a Change of Control.
9. Forfeitures.
If a Participant terminates employment, except due to death or Total
Disability, prior to the end of the four year vesting period, such Participant
shall forfeit the non-vested portion of his Award. In addition, if a Participant
sells or otherwise transfers any Common Stock that formed the basis for a
Restricted Stock award, then the Participant will forfeit any unvested portion
of the related reward.
10. Deferrals and Settlements
Settlement of Awards may be in the form of cash, Common Stock, other
Awards, or in combinations thereof as the Committee shall determine, and with
such other restrictions as it may impose. The Committee may also require or
permit Participants to defer the issuance or vesting of shares or the settlement
of Awards under such rules and procedures as it may establish under the Plan.
The Committee may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts or the payment.
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<PAGE> 30
11. Transferability and Beneficiaries
No Awards under the Plan shall be assignable, alienable, saleable or
otherwise transferable other than by will or the laws of descent and
distribution, or pursuant to a qualified domestic relations order (as defined by
the Code) or Title I of the Employee Retirement Income Security Act, or the
rules thereunder, or to a trust or custodianship, all of the beneficiaries of
which are the Participant's spouse and/or children.
12. Award Agreements
Awards under the Plan shall be evidenced by Award Agreements that set
forth the details, conditions and limitations for each Award, which may include
the term of an Award and the provisions applicable in the event the
Participant's employment terminates.
13. Amendments; Compliance with Applicable Laws
The Committee may suspend, terminate, or amend the Plan as it deems
necessary or appropriate to better achieve the purposes of the Plan, except
that, if shareholder approval is necessary in order for any such amendment to
comply with any applicable tax or regulatory requirements, including for these
purposes, any approval requirement which is a prerequisite for exemptive relief
under Section 16b of the 1934 Act, no such amendment shall be made without the
approval of the Company's shareholders.
14. Tax Withholding
The Company shall have the right to (i) make deductions from any
settlement of an Award made under the Plan, including the delivery or vesting of
shares, or require shares or cash or both be withheld from any Award, in each
case in an amount sufficient to satisfy withholding of any federal, state or
local taxes required by law, or (ii) take such other action as may be necessary
or appropriate to satisfy any such withholding obligations. The Committee may
determine the manner in which such tax withholding may be satisfied, and may
permit shares of Common Stock (rounded up to the next whole number) to be used
to satisfy required tax withholding based on the Fair Market Value of any such
shares of Common Stock.
15. Other Company Benefit and Compensation Programs
Unless otherwise specifically determined by the Committee, settlements
of Awards received by a Participant under the Plan shall not be deemed a part of
the Participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan, severance program or
severance pay law of any country. Further, the Company may adopt other
compensation programs, plans or arrangements as it deems appropriate or
necessary.
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<PAGE> 31
16. Unfunded Plan
Unless otherwise determined by the Committee, the Plan shall be
unfunded and shall not create (or be construed to create) a trust or separate
fund or funds. The Plan shall not establish any fiduciary relationship between
the Company and any Participant or other person. To the extent any person holds
any rights by virtue of an Award granted under the Plan, such right (unless
otherwise determined by the Committee) shall be no greater than the right of an
unsecured general creditor of the Company.
17. Future Rights
No person shall have any claim or right to be granted an Award under
the Plan, and no Participant shall have any right under the Plan to be retained
in the employment of the Company or its affiliates.
18. Governing Law
The validity, construction and effect of the Plan, and any actions
taken or relating to the Plan, shall be determined in accordance with the laws
of the State of South Carolina and applicable federal law.
19. Successors and Assigns
The Plan shall be binding on all successors and assigns of a
Participant, including, without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant's creditors.
20. Custodial Accounts
Notwithstanding anything to the contrary in this Plan, Participants
will be credited with ownership (for purposes of Awards under Section 7 and
vesting under Section 8) of Common Stock that is held in custodial accounts for
the benefit of such Participant's spouse and/or children.
21. Section 16b
No Award or other transaction shall be permitted under this Plan which
would have the effect of imposing liability on a Participant under Section 16 of
the 1934 Act. Irrespective of any other provision of this Plan or an Award
Agreement, any such Award or other transaction purportedly made under or
pursuant to this Plan shall be void, ab initio.
22. Certificate.
The Company will distribute certificates to Participants for shares of
Restricted Stock that have vested pursuant to Section 8.
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<PAGE> 32
The following legend shall be inserted on each certificate evidencing
Common Stock issued under the Plan if the shares were not issued in a
transaction registered under the applicable federal and state securities laws:
"Shares of stock represented by this certificate have been acquired by
the holder for investment and not for resale, transfer or distribution,
have been issued pursuant to exemptions from the registration
requirements of applicable state and federal securities laws, and may
not be offered for sale, sold or transferred other than pursuant to
effective registration under such laws, or in transactions otherwise in
compliance with such laws, and upon evidence satisfactory to the
Company of compliance with such laws, as to which the Company may rely
upon an opinion of counsel satisfactory to the Company."
A copy of this Plan shall be kept on file in the principal executive
offices of the Company in Greenville, South Carolina.
IN WITNESS WHEREOF, the Company has caused the Plan to be executed on
its behalf by its respective officers thereunder duly authorized, on this day
and year set forth below.
SPAN-AMERICA MEDICAL SYSTEMS, INC.
By:
---------------------------------------
Its:
---------------------------------------
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<PAGE> 33
SPAN-AMERICA MEDICAL SYSTEMS, INC. 2000 RESTRICTED STOCK PLAN
Restricted Stock Award Agreement
---------------------------
Participant
Pursuant to the provisions of the Span-America Medical Systems, Inc.
2000 Restricted Stock Plan (the "Plan"), you were granted an Award (as that term
is defined in the Plan) of ________ shares of Common Stock (as that term is
defined in the Plan) of Span-America Medical Systems, Inc. (the "Restricted
Shares"), on _________________, ______ (the "Award Date") by Span-America
Medical Systems, Inc. (the "Company"). Terms not defined in this Agreement have
the definitions specified in the Plan.
As used in this Award Agreement, "Restricted Period" means the period
that begins on the Award Date and ends as follows: for 25% of each Award at the
end of the Plan year in which the purchase forming the basis for the Award is
made and an additional 25% in each of the three Plan years following the date of
grant. This ending of the Restricted Period is conditioned on confirmation of
continued ownership of the stock forming the basis for the Award.
During the Restricted Period, and until all conditions imposed on the
shares are satisfied, the Award of shares are restricted in that they will be
held by the Company and may not be sold, transferred, pledged or otherwise
encumbered, tendered or exchanged, or disposed of, by you unless otherwise
provided by the Plan. If you remain employed by the Company throughout the
Restricted Period and all conditions are satisfied, or if there is a Change of
Control or if your employment terminates before the expiration of the Restricted
Period as a result of your death or Total Disability, the restrictions will
lapse, and the Award of shares will be delivered to you (or your beneficiary),
subject to withholding for taxes.
If you terminate your employment, except due to death or Total
Disability, prior to the end of the four year vesting period, you will forfeit
the non-vested portion of your Award. In addition, if you sell or transfer any
of the stock that formed the basis for your Award, then you will forfeit any
unvested portion of the related reward.
You agree that the term "Restricted Shares" includes any shares or
other securities which you may receive or be entitled to receive as a result of
the ownership of the original Restricted Shares, whether they are issued as a
result of a share split, share dividend, recapitalization, or other subdivision
or consolidation of shares effected without receipt of consideration by the
Company or the result of the merger or consolidation of the Company, or sale of
assets of the Company.
You will generally be taxed on the value of the Award of shares on the
date the restrictions lapse. However, as an alternative, you may elect under
Internal Revenue Code Section 83(b) to be taxed on the value of the Award of
shares on the Award Date, identified above. Whether it is beneficial for you to
make this election should be
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<PAGE> 34
determined after consultation with your personal tax advisor. If you make this
election, the value of the Award of shares will be taxable to you in the year of
the Award Date, rather than in the year that the restrictions lapse. If you
choose to make this election, you must so notify the Company in writing, file
the election with the Internal Revenue Service within thirty (30) days after the
Award Date, and promptly pay the Company the amount it determines is needed to
satisfy tax withholding requirements. You hereby agree that the Restricted
Shares shall be held by the Company during the Restricted Period.
The Company has the right to deduct from any Award under the Plan,
shares or cash sufficient to satisfy any withholdings required by law, as
provided in the Plan.
As a condition of this Award, you are required to execute the
acknowledgment at the bottom of the enclosed copy of this Award notice and
return the acknowledged copy of this Award notice to the Company not later than
thirty (30) days from the Award Date. Also enclosed is a form by which you may
designate a beneficiary in the event of your death. This Award is subject to all
of the definitions, terms and conditions of the Plan, a copy of which is
enclosed. In the event of any discrepancy between the provisions of the Plan and
this or any other communication regarding the Plan, the provisions of the Plan
control.
ATTEST: SPAN-AMERICA MEDICAL SYSTEMS, INC.
ACCEPTED:
__________________________ Date: ______________
Participant
-------------------------------------
Social Security Number or National ID
-------------------------------------
Address
-------------------------------------
City/State/ZIP/Country
2
<PAGE> 35
APPENDIX C
PLEASE SIGN, DATE AND MAIL YOUR
PROXY CARD AS SOON AS POSSIBLE.
ANNUAL MEETING OF SHAREHOLDERS
SPAN-AMERICA MEDICAL SYSTEMS, INC.
FEBRUARY 1, 2001
Please Detach and Mail in the Envelope Provided
Please mark your
A [ X ] votes as in this
example.
FOR ALL
NOMINEES WITHHELD
1. Election of [ ] [ ] Nominees:
Directors as
set forth in Richard C. Coggins
the accompanying Proxy Statement (except as Robert H. Dick
marked to the contrary at right). James D. Ferguson
NOTE: If you do not wish your shares voted
"For" a particular nominee, strike a line through
the name(s) of the nominee(s). Your shares
will be voted for the remaining nominee(s).
FOR AGAINST ABSTAIN
2. Approval of the 2000 Restricted Stock [ ] [ ] [ ]
Plan.
3. At their discretion upon such matters as may properly come before the
meeting.
Mark box at right if an address change or comment [ ]
has been noted on the reverse side of this card.
<TABLE>
<S> <C> <C>
Shareholder sign here Co-owner sign here Date
--------------------- -------------------- ---------------------
</TABLE>
NOTE: Please be sure to sign and date this Proxy.
<PAGE> 36
SPAN-AMERICA MEDICAL SYSTEMS, INC.
ANNUAL MEETING, FEBRUARY 1, 2001
The undersigned shareholder of Span-America Medical Systems, Inc. (the
"Company"), hereby revoking all previous proxies, hereby appoints THOMAS D.
HENRION and JAMES M. SHOEMAKER, JR., and each of them, the attorney of the
undersigned with power of substitution, to vote all stock of the Company
standing in the name of the undersigned upon all matters at the Company's Annual
Meeting to be held at the Company's headquarters at 70 Commerce Center,
Greenville, South Carolina, on Thursday, February 1, 2001, at 9:00 a.m. and at
any adjournments thereof, with all powers the undersigned would possess if
personally present, and without limiting the general authorization and power
hereby given, directs said attorneys or either of them to cast the undersigned's
vote as specified on the reverse side.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SPAN-AMERICA
MEDICAL SYSTEMS, INC. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED IN
FAVOR OF THE NOMINEES LISTED ON THE REVERSE SIDE AND FOR PROPOSAL 2.
--------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Please sign this Proxy as your name or names appear hereon. If stock is held
jointly, signatures should appear for both names. When signing as attorney,
administrator, trustee, guardian or agent, please indicate the capacity in which
you are acting. If stock is held by a corporation, please sign in full corporate
name by authorized officer and give title of office.
--------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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