<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
GUEST SUPPLY, 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):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $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:
- --------------------------------------------------------------------------------
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:
- --------------------------------------------------------------------------------
[X] 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>
GUEST SUPPLY, INC.
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 6, 1996
---------------
North Brunswick, New Jersey
January 22, 1996
To the Holders of Common Stock
of GUEST SUPPLY, INC.:
The Annual Meeting of Shareholders (the "Meeting") of GUEST SUPPLY,
INC. (the "Company") will be held at the Marriott Hotel at 110 Davidson Avenue
in Somerset, New Jersey, on Wednesday, March 6, 1996 at 10:00 o'clock A.M.,
local time, for the following purposes, as more fully described in the
accompanying Proxy Statement:
Proposal 1. To elect three Class A directors of the Company for
the three ensuing years.
Proposal 2. To consider and take action upon a proposal to approve
the Company's 1996 Long Term Incentive Plan.
Proposal 3. To consider and take action upon a proposal to approve
an amendment to the Company's Amended and Restated Certificate of Incorporation
to increase the authorized number of shares of common stock, without par value,
from 10,000,000 to 20,000,000 shares.
Proposal 4. To consider and take action upon a proposal to ratify
the Board of Directors' selection of KPMG Peat Marwick LLP to serve as the
Company's independent auditors for the Company's fiscal year ending September
30, 1996.
Proposal 5. To transact such other business as may properly come
before the Meeting or any adjournment or adjournments thereof.
The close of business on January 9, 1996 has been fixed by the
Board of Directors as the record date for the determination of shareholders
entitled to notice of, and to vote at, the Meeting.
By Order of the Board of Directors,
Paul T. Xenis, Secretary
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. IF YOU
DO NOT EXPECT TO BE PRESENT, PLEASE MARK, SIGN AND DATE THE ENCLOSED FORM OF
PROXY AND MAIL IT IN THE ENCLOSED RETURN ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES, SO THAT YOUR VOTE CAN BE RECORDED.
<PAGE>
PROXY STATEMENT
This Proxy Statement, which will be mailed commencing on or about
January 22, 1996 to the persons entitled to receive the accompanying Notice of
Annual Meeting of Shareholders, is provided in connection with the solicitation
of Proxies on behalf of the Board of Directors of Guest Supply, Inc. (the
"Company") for use at the Annual Meeting of Shareholders (the "Meeting") to be
held on March 6, 1996, and at any adjournment or adjournments thereof, for the
purposes set forth in such Notice. The Company's executive office is located
at 720 U.S. Highway One, North Brunswick, New Jersey 08902.
Any Proxy may be revoked at any time before it is exercised by
written notice to the Secretary of the Meeting. The delivery of a subsequently
dated Proxy will have the effect of revoking an earlier Proxy. The casting of
a ballot at the Meeting by a shareholder who may theretofore have given a Proxy
will not have the effect of revoking the same unless the shareholder so
notifies the Secretary of the Meeting in writing at any time prior to the
voting of the shares represented by the Proxy.
At the close of business on January 9, 1996, the record date stated
in the accompanying Notice, the Company had outstanding 6,146,335 shares of
common stock, without par value (the "Common Stock"), each of which is entitled
to one vote with respect to each matter to be voted on at the Meeting. The
Company has no class or series of stock outstanding other than the Common
Stock. On October 24, 1995, the Company effected a three-for-two split of the
Common Stock in the form of a stock dividend. All per share, warrant and stock
option data contained in this Proxy Statement reflect such stock split.
A majority of the issued and outstanding shares of Common Stock
present in person or by proxy will constitute a quorum for the transaction of
business at the Meeting. Abstentions and broker non-votes (as hereinafter
defined) will be counted as present for the purpose of determining the presence
of a quorum.
Directors are elected by plurality vote. Adoption of proposal 3
will require the affirmative vote of a majority of the outstanding shares of
Common Stock. Adoption of proposals 2 and 4 will require the affirmative vote
of a majority of the Common Stock present and voting thereon at the Meeting.
For the purpose of determining the vote required for approval of matters to be
voted on at the Meeting, shares held by shareholders who abstain from voting
will be treated as "present" and "entitled to vote" on the matter and, thus, an
abstention has the same legal effect as a vote against the matter. However, in
the case of a broker non-vote or where a shareholder withholds authority from
his proxy to vote the proxy as to a particular matter, such shares will not be
treated as "present" and "entitled to vote" on the matter and, thus, a broker
non-vote or the withholding of a proxy's authority will have no effect on the
outcome of the vote on the matter. A "broker non-vote" refers to shares of
Common Stock represented at the Meeting in person or by proxy by a broker or
nominee where such broker or nominee (i) has not received voting instructions
on a
<PAGE>
-2-
particular matter from the beneficial owners or persons entitled to vote and
(ii) the broker or nominee does not have discretionary voting power on such
matter.
I. PROPOSAL ONE - ELECTION OF DIRECTORS
At the Meeting, shareholders will elect three directors,
denominated as Class A directors, to serve for a term of three years and until
a successor shall have been chosen and qualified. This is in accord with the
Company's Amended and Restated Certificate of Incorporation (the "Certificate
of Incorporation") which provides for the division of the Board of Directors
into three classes with the term of office of the Class A directors expiring at
the Meeting. Class B and Class C directors will be elected at the Annual
Meetings of Shareholders to be held in 1997 and 1998, respectively. If the
number of directors is increased, the increase will be apportioned among the
classes so as to make all classes as nearly equal in number as possible.
It is the intention of each of the persons named in the
accompanying form of Proxy to vote the shares represented thereby in favor of
the nominees listed in the table under "Certain Information Concerning Nominees
and Directors" below, unless otherwise instructed in such Proxy. Such nominees
are presently serving as directors. In case any of the nominees are unable or
decline to serve, such persons reserve the right to vote the shares represented
by such Proxy for another person duly nominated by the Board of Directors in
his stead. The Board of Directors has no reason to believe that any of the
nominees will be unable or will decline to serve.
CERTAIN INFORMATION CONCERNING NOMINEES AND DIRECTORS
- -----------------------------------------------------
Certain information concerning the nominees for election as Class A
directors and the other directors of the Company is set forth below. Such
information was furnished by them to the Company.
Shares of Common
Stock Owned Bene-
Name and Certain ficially as of Percent
Biographical Information December 15, 1995 (1) of Class
------------------------ --------------------- --------
Nominees for Election
- ---------------------
PETER L. RICHARD (Class A director), 9,000 (2) *
age 48; Managing Director, Quasar Corp.
(investment consultants) since May 1988;
Private investor from December 1987 to
May 1988; Senior Vice President, Moseley
Securities Corporation (formerly Moseley,
Hallgarten, Estabrook & Weeden Inc.)
(investment bankers) prior to December
1987; Director: New Paraho Corp. (oil
shale technology); Director of the
Company since August 1983.
<PAGE>
-3-
TERI E. UNSWORTH (Class A director), 220,249 (3) 3.5%
age 44; Vice President - Market
Development of the Company since May
1985; Group Product Director of Vidal
Sassoon, Inc. from 1983 to 1985; Product
Director of Vidal Sassoon, Inc. from 1981
to 1983; Director of Sales of Vidal
Sassoon, Inc. from 1979 to 1981; Director
of the Company since November 1989.
EDWARD J. WALSH (Class A director), 129,000 (4) 2.1%
age 63; President and Chief Executive
Officer, Sparta Group Ltd. (business
consultants) since 1987; President and
Chief Executive Officer, The Dial
Corporation (consumer products) from 1984
to 1987; President and Chief Executive
Officer, Armour International (consumer
products) prior to 1984; Director: The WD-
40 Company and Nortrust of Arizona
Holding Corporation; Director of the
Company since November 1987.
Other Directors Whose Term of Office Will
Continue After the Meeting
- -----------------------------------------
THOMAS M. HAYTHE (Class B 164,040 (5) 2.6%
director), age 56; Partner, Haythe &
Curley (attorneys) since February 1982;
Director: Novametrix Medical Systems Inc.
(manufacturer of electronic medical
instruments), Isomedix Inc. (provider of
sterilization services), Westerbeke
Corporation (manufacturer of marine
engine products), Ramsay Health Care,
Inc. (provider of psychiatric health care
services) and Ramsay Managed Care, Inc.
(provider of managed mental health care
services); Director of the Company since
June 1983.
CLIFFORD W. STANLEY (Class C 424,871 (6) 6.5%
director), age 50; President of the
Company since January 1988; Executive
Vice President, Chief Financial Officer,
Secretary and Treasurer of the Company
from April 1986 to January 1988; Vice
President - Finance of the Company from
August 1985 to April 1986; Vice President
and Chief Operating Officer, Transfer
Print Foils, Inc. (hot stamping foils)
from 1984 to August 1985; Vice President
of Finance, Permacel Division, Avery
International
<PAGE>
-4-
from 1982 to 1984; Vice President,
Johnson & Johnson from 1979 to 1982;
Director of the Company since January
1987.
GEORGE S. ZABRYCKI (Class B director), 34,500 (7) *
age 53; President, Milwaukee Seasonings
(manufacturer of food ingredients) since
May 1992; Vice President-Business
Planning, Best Foods Affiliate Group, a
Division of CPC International, Inc., from
November 1991 to May 1992; Consultant,
Aqua-Fab Industries, Inc. from March 1991
to November 1991; President and Chief
Executive Officer, Heldor Industries,
Inc. (manufacturer of swimming pools)
from March 1990 to March 1991; Director
of Strategic Development, Specialty
Chemicals Division, Union Carbide
Corporation from August 1989 to February
1990; President, Amerchol Corporation
(manufacturer of specialty chemicals)
from April 1981 to August 1989; Director
of the Company since November 1990.
- -------------------
* Less than one percent.
(1) Each of the nominee and the other directors of the Company has sole voting
and investment power with respect to all shares shown in the table as
beneficially owned by such person.
(2) Consists of 7,500 shares issuable upon the exercise of presently
exercisable stock options and 1,500 shares issuable pursuant to presently
exercisable warrants held by Mr. Richard.
(3) Includes 102,499 shares issuable upon the exercise of presently
exercisable stock options and 116,250 shares issuable pursuant to
presently exercisable warrants held by Ms. Unsworth.
(4) Includes 7,500 shares issuable upon the exercise of presently
exercisable stock options and 120,000 shares issuable pursuant to
presently exercisable warrants held by Mr. Walsh.
(5) Includes 7,500 shares issuable upon the exercise of presently
exercisable stock options and 127,500 shares issuable pursuant to
presently exercisable warrants held by Mr. Haythe.
(6) Includes 114,975 shares issuable upon the exercise of presently
exercisable stock options and 270,000 shares issuable pursuant to
presently exercisable warrants held by Mr. Stanley.
(7) Includes 7,500 shares issuable upon the exercise of presently
exercisable stock options and 25,500 shares issuable pursuant to
presently exercisable warrants held by Mr. Zabrycki.
<PAGE>
-5-
During the past fiscal year, the Board of Directors of the Company met
five times. Each of the persons named in the table above attended at least 75%
of the meetings of the Board of Directors and meetings of any committees of the
Board on which such person served which were held during the time that such
person served.
The committees of the Board of Directors include a Stock Option
Committee, whose members are Messrs. Haythe, Richard, Walsh and Zabrycki; a
Personnel and Compensation Committee, whose members are Messrs. Haythe,
Richard, Walsh and Zabrycki; an Audit Committee, whose members are Messrs.
Haythe, Richard, Walsh and Zabrycki; and a Nominating Committee, whose members
are Mr. Stanley and Ms. Unsworth. The Stock Option Committee administers the
Company's 1983 Stock Option Plan and the 1993 Stock Option Plan and determines
the persons who are eligible to receive options thereunder, the number of
shares to be subject to each option and the other terms and conditions upon
which options under such plans are granted and made exercisable. The Stock
Option Committee also administers the Company's 1983 Employee Stock Purchase
Plan and the 1993 Employee Stock Purchase Plan and will administer the
Company's 1996 Long Term Incentive Plan. The Personnel and Compensation
Committee administers the formulation and submission to the Board of Directors
of recommendations on all matters related to the salaries, bonuses, fringe
benefits or compensation of any kind of the executives of the Company. The
Audit Committee is authorized to meet and discuss with the representatives of
any firm of certified public accountants retained by the Company the scope of
the audit of such firm and question such representatives with respect thereto,
and to meet with and question employees of the Company with respect to
financial matters pertaining to the Company. The Audit Committee is authorized
to make periodic reports to the Board of Directors of the Company of its
actions and findings. The Nominating Committee is authorized to nominate
individuals to serve as directors of the Company. The Nominating Committee
will not consider nominees recommended by shareholders. The Audit Committee
and the Personnel and Compensation Committee each met once during the fiscal
year ended September 30, 1995. The Nominating Committee and the Stock Option
Committee did not meet during such fiscal year.
The directors and officers of the Company, other than Messrs. Haythe,
Richard, Walsh and Zabrycki, are active in its business on a day-to-day basis.
No family relationships exist between any of the directors and officers of the
Company.
The Company's Certificate of Incorporation contains a provision,
authorized by New Jersey law, which eliminates the personal liability of a
director of the Company to the Company or to any of its shareholders for
monetary damages for a breach of his fiduciary duty as a director, except in
the case where the director breached his duty of loyalty, failed to act in good
faith or knowingly violated a law, or obtained an improper personal benefit.
<PAGE>
-6-
EXECUTIVE COMPENSATION
- ----------------------
The following table sets forth information for the fiscal years ended
September 30, 1995, 1994 and 1993 concerning the compensation paid or awarded
to the Chief Executive Officer and the executive officers of the Company whose
total annual salary and bonus exceeded $100,000 during the fiscal year ended
September 30, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------- --------------
Fiscal
Year
Name and Principal Ended All Other
Position Sept. 30 Salary Bonus Options (#) Compensation (1)
- ---------------------- ----------- --------- -------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Clifford W. Stanley 1995 $217,977 $67,080 - $2,112
President, Chief 1994 208,577 64,500 75,000 2,249
Executive Officer 1993 198,005 61,500 150,000 1,944
and Director
James H. Riesenberg 1995 $170,326 $86,800 - $2,310
Vice President - 1994 162,769 85,000 37,500 2,249
Operations 1993 160,000 82,750 37,500 2,182
Teri E. Unsworth 1995 $152,077 $46,800 - $2,156
Vice President - 1994 145,096 45,000 37,500 2,080
Market Development 1993 137,558 42,750 37,500 1,437
and Director
Paul T. Xenis (2) 1995 $123,182 $37,908 - $1,467
Vice President - 1994 111,980 36,450 30,000 1,241
Finance
</TABLE>
__________________________
(1) Amounts under "All Other Compensation" are contributions made by the
Company on behalf of the executive officer to the Guest Supply, Inc. 401(k)
Plan and Trust.
(2) Mr. Xenis was appointed Vice President - Finance in May 1994.
The Company did not grant any stock options to the executive
officers named in the Summary Compensation Table during the fiscal year ended
September 30, 1995.
The following table sets forth the number and value of options and
warrants held at September 30, 1995, by the executive officers named in the
Summary Compensation Table. During the fiscal year ended September 30, 1995,
none of such executive officers exercised any options or warrants to purchase
shares of Common Stock.
<PAGE>
-7-
OPTION/WARRANT VALUES AT SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Options/Warrants at Options/Warrants at
Sept. 30, 1995 (#) Sept. 30, 1995 ($)(1)
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Clifford W. Stanley 354,975 140,025 $5,977,231 $1,970,269
James H. Riesenberg 211,250 47,500 $3,599,686 $ 626,876
Teri E. Unsworth 211,249 47,501 $3,599,674 $ 626,888
Paul T. Xenis 131,049 33,501 $2,225,952 $ 429,886
</TABLE>
_______________
(1) In-the-money options or warrants are those where the fair market value of
the underlying Common Stock exceeds the exercise price of such option or
warrant. The value of in-the-money options and warrants is determined in
accordance with regulations of the Securities and Exchange Commission by
subtracting the aggregate exercise price of such option or warrant from
the aggregate year-end value of the underlying Common Stock.
EMPLOYMENT AGREEMENTS
- ---------------------
The Company entered into employment agreements with each of
Clifford W. Stanley, James H. Riesenberg, Teri E. Unsworth and Paul T. Xenis at
annual salaries subject to increases at the discretion of the Board of
Directors. In March, 1995, the Board of Directors increased Mr. Stanley's
salary to $223,600, increased Mr. Riesenberg's salary to $174,720, increased
Ms. Unsworth's salary to $156,000 and increased Mr. Xenis' salary to $126,360.
Pursuant to the terms of the employment agreements, each agreement has been
automatically renewed through the period ending December 31, 1996. Mr. Stanley
is President, Chief Executive Officer and a director of the Company, Mr.
Riesenberg is Vice President-Operations, Ms. Unsworth is Vice President-Market
Development and a director of the Company and Mr. Xenis is Vice
President-Finance. Each agreement also provides for a cash payment of up to
three years' annual salary upon termination by the Company of the employee's
employment other than for cause and upon the employee's voluntary termination
within one year following certain change of control events involving the
Company.
COMPENSATION OF DIRECTORS
- -------------------------
The Company pays its directors an annual fee of $10,000 and $1,000
for attending each meeting of the Board of Directors of the Company.
<PAGE>
-8-
PERSONNEL AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -------------------------------------------------------------------------
Thomas M. Haythe, a director of the Company, a member of the
Personnel and Compensation Committee and a member of the Stock Option
Committee, is a partner of the law firm of Haythe & Curley, which firm acted as
legal counsel to the Company during the past fiscal year. It is expected that
Haythe & Curley will continue to render legal services to the Company in the
future.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
- --------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common
Stock. Officers, directors and greater than ten percent shareholders are
required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company and representations that no other
reports were required, during the fiscal year ended September 30, 1995 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent shareholders were complied with.
PERSONNEL AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
- --------------------------------
The report of the Personnel and Compensation Committee documents
the Committee's policies regarding executive officer compensation. The
Company's philosophy and objectives in setting compensation are:
. to offer levels of compensation which are competitive with
those offered by other companies in similar businesses;
. to compensate executives based on each executive's level of
responsibility and contribution to the Company's business
goals;
. to link compensation with the Company's financial
performance; and
. to align the interests of the Company's executives with the
interests of the Company's shareholders.
<PAGE>
-9-
There are three components to executive compensation at the
Company: base salary, bonus and stock options.
Base Salary
-----------
Base salary is determined by level of responsibility, individual
performance and Company performance, as well as by the need to provide a
competitive package that allows the Company to retain key executives. After
reviewing individual and Company performance and market studies on salaries at
other companies of similar size, the Chief Executive Officer makes
recommendations to the Personnel and Compensation Committee concerning
officers' salaries, other than his own. The Personnel and Compensation
Committee reviews and, with any changes it deems appropriate, approves these
recommendations. Using the same review process, the Personnel and Compensation
Committee makes decisions pertaining to the Chief Executive Officer's salary.
Executive Bonus Plan
--------------------
The Executive Bonus Plan provides the opportunity for participating
executive officers to earn additional compensation by achieving specific net
income goals. Under the Executive Bonus Plan, the Company will pay a
percentage of each participant's annual base salary as an annual bonus,
provided the Company achieves specific net income objectives. These objectives
are established by the Board of Directors at the beginning of each fiscal year
based on recommendations from the Chief Executive Officer. For the fiscal year
ended September 30, 1995, the following bonuses were earned under this plan:
Mr. Stanley - $67,080; Mr. Riesenberg - $46,800; Ms. Unsworth - $46,800; and
Mr. Xenis - $37,908.
Stock Options
-------------
The Company periodically grants stock options to its executive
officers and other key employees. The primary purpose of stock option grants
is to align the interests of the Company's executive officers more closely with
the interests of the Company's shareholders by offering the executives an
opportunity to benefit from increases in the market price of the Common Stock.
Stock options provide long-term incentives that have enabled the Company to
attract and retain key employees by encouraging their ownership of Common
Stock. The stock option plans are administered by the Stock Option Committee
of the Board of Directors, which determines the persons who are to receive
options and the number of shares to be subject to each option. In selecting
individuals for options and determining the terms thereof, the Stock Option
Committee may take into consideration any factors it deems relevant, including
present and potential contributions to the success of the Company.
Compensation of Executive Officers
----------------------------------
The Company has employment agreements with each of Clifford W.
Stanley, President and Chief Executive Officer, James H. Riesenberg, Vice
President - Operations, Teri E. Unsworth, Vice President - Market Development
and Paul T. Xenis, Vice President -
<PAGE>
-10-
Finance. Pursuant to these agreements, the annual base salary of each
executive is subject to increases at the discretion of the Board of Directors
based upon performance of the Company and performance of the executive. In
March 1995, the Board of Directors approved an increase of approximately 4% in
the base salary payable to each of Clifford W. Stanley, James H. Riesenberg,
Teri E. Unsworth and Paul T. Xenis. In addition, for fiscal year 1995, at Mr.
Stanley's recommendation, the Company granted James H. Riesenberg a bonus of
$40,000 based upon individual performance and contribution to the growth of the
Company. These salary increases and the bonus award were based on the
continued increases in sales, operating income, net income and earnings per
share of the Company during fiscal 1994 and 1995.
Personnel and Compensation Committee
Thomas M. Haythe
Peter L. Richard
Edward J. Walsh
George S. Zabrycki
<PAGE>
-11-
PERFORMANCE GRAPH
- -----------------
The following performance graph compares the cumulative total
shareholder return on the Common Stock to the NASDAQ Stock Market-US Index and
to the Standard and Poor's Hotel-Motel Index for the Company's last five fiscal
years. The graph assumes that $100 was invested in each of the Common Stock,
the NASDAQ Stock Market-US Index and the Standard and Poor's Hotel-Motel Index
on September 30, 1990 and that all dividends were reinvested.
FIVE YEAR CUMULATIVE TOTAL RETURN
COMPARISON GRAPH
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Cumulative Total Return
-----------------------
9/90 9/91 9/92 9/93 9/94 9/95
<S> <C> <C> <C> <C> <C> <C>
GUEST SUPPLY, INC. $100 $224 $152 $279 $522 $852
NASDAQ STOCK MRKT - US $100 $157 $176 $231 $233 $321
S&P HOTEL-MOTEL $100 $159 $192 $390 $363 $437
</TABLE>
<PAGE>
-12-
INFORMATION CONCERNING CERTAIN SHAREHOLDERS
- -------------------------------------------
The shareholders (including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) who, to the knowledge
of the Board of Directors of the Company, owned beneficially more than five
percent of any class of the outstanding voting securities of the Company as of
December 15, 1995, each director and each executive officer named in the
Summary Compensation Table of the Company who owned beneficially shares of
Common Stock and all directors and executive officers of the Company as a
group, and their respective shareholdings as of such date (according to
information furnished by them to the Company), are set forth in the following
table. Except as indicated in the footnotes to the table, all of such shares
are owned with sole voting and investment power.
Shares of
Common Stock
Name and Address Owned Beneficially of Class Percent
---------------- --------------------------- -------
Dimensional Fund Advisors Inc......... 307,350 (1) 5.0%
1299 Ocean Avenue
Santa Monica, California 90401
Fred Alger Management, Inc............ 449,347 (2) 7.3%
75 Maiden Lane
New York, New York 10038
RCM Capital Management................ 465,000 (3) 7.6%
Four Embarcadero Center, Suite 2900
San Francisco, California 94111
The Travelers Inc. ................... 482,250 (4) 7.8%
65 East 55th Street
New York, New York 10022
Thomas M. Haythe...................... 164,040 (5) 2.6%
237 Park Avenue
New York, New York 10017
Peter L. Richard...................... 9,000 (6) *
720 U.S. Highway One
North Brunswick,
New Jersey 08902
James H. Riesenberg................... 241,776 (7) 3.8%
720 U.S. Highway One
North Brunswick,
New Jersey 08902
<PAGE>
-13-
Clifford W. Stanley................... 424,871 (8) 6.5%
720 U.S. Highway One
North Brunswick,
New Jersey 08902
Teri E. Unsworth...................... 220,249 (9) 3.5%
720 U.S. Highway One
North Brunswick,
New Jersey 08902
Edward J. Walsh....................... 129,000 (10) 2.1%
720 U.S. Highway One
North Brunswick,
New Jersey 08902
Paul T. Xenis......................... 135,549 (11) 2.2%
720 U.S. Highway One
North Brunswick,
New Jersey 08902
George S. Zabrycki.................... 34,500 (12) *
720 U.S. Highway One
North Brunswick,
New Jersey 08902
All Directors and Officers
as a Group (eight persons).......... 1,358,985 (5)(6) 18.3%
(7)(8)
(9)(10)
(11)(12)
- -------------------------
* Less than one percent.
(1) Information as to the holdings of Dimensional Fund Advisors Inc., a
registered investment advisor ("Dimensional"), is based upon a report on
Schedule 13G filed with the Securities and Exchange Commission. Such
report indicates that 307,350 shares were owned with sole dispositive
power and 194,250 shares were owned with sole voting power. Such
report indicates that persons who are officers of Dimensional also serve
as officers of DFA Investment Dimensions Group Inc. (the "Fund") and The
DFA Investment Trust Company (the "Trust"), each an open-ended investment
company registered under the Investment Company Act of 1940 and in their
capacity as officers of the Fund and the Trust, such persons vote 107,100
shares owned by the Fund and 6,000 shares owned by the Trust. Dimensional
is deemed to have beneficial ownership of 307,350 shares, all of which are
held in portfolios of the Fund or the Trust, investment vehicles for
qualified employee benefit plans. Dimensional serves as investment
manager for the Fund and the Trust and, based upon information provided to
the Company, disclaims beneficial ownership of all such shares.
(2) Information as to these holdings is based upon a report on Schedule 13G
filed with the Securities and Exchange Commission by Fred Alger
Management, Inc., Fred Alger Asset Management, Inc. and Fred M. Alger III.
This report indicates that 449,347 shares were owned with sole dispositive
power, 1,147 shares were owned with sole voting power and 448,200
shares were owned with shared voting power.
<PAGE>
-14-
(3) Information as to these holdings is based upon a report on Schedule 13G
filed with the Securities and Exchange Commission by RCM Capital
Management, RCM Limited L.P. (the general partner of RCM Capital
Management) and RCM General Corporation (the general partner of RCM
Limited L.P.). This report indicates that 465,000 shares were owned with
sole dispositive power and 390,000 shares were owned with sole voting
power.
(4) Information as to these holdings is based upon a report on Schedule 13G
filed with the Securities and Exchange Commission by Smith Barney Inc.
("SB"), Smith Barney Holdings Inc. ("SB Holdings"), the sole common stock
holder of SB, and The Travelers Inc. ("Travelers"), the sole stockholder
of SB Holdings. This report indicates that 482,250 shares were owned with
shared voting power and shared dispositive power.
(5) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 127,500 shares issuable pursuant to presently
exercisable warrants held by Mr. Haythe.
(6) Consists of 7,500 shares issuable upon the exercise of presently
exercisable stock options and 1,500 shares issuable pursuant to
presently exercisable warrants held by Mr. Richard.
(7) Includes 218,750 shares issuable upon the exercise of presently
exercisable stock options held by Mr. Riesenberg.
(8) Includes 114,975 shares issuable upon the exercise of presently
exercisable stock options and 270,000 shares issuable pursuant to
presently exercisable warrants held by Mr. Stanley.
(9) Includes 102,499 shares issuable upon the exercise of presently
exercisable stock options and 116,250 shares issuable pursuant to
presently exercisable warrants held by Ms. Unsworth.
(10) Includes 7,500 shares issuable upon the exercise of presently
exercisable stock options and 120,000 shares issuable pursuant to
presently exercisable warrants held by Mr. Walsh.
(11) Consists of 135,549 shares issuable upon the exercise of presently
exercisable stock options held by Mr. Xenis.
(12) Includes 7,500 shares issuable upon the exercise of presently exercisable
stock options and 25,500 shares issuable pursuant to presently exercisable
warrants held by Mr. Zabrycki.
II. PROPOSAL TWO - APPROVAL OF THE GUEST SUPPLY, INC.
1996 LONG TERM INCENTIVE PLAN
The Company's Board of Directors believes that attracting and
retaining key employees and directors of high quality is essential to the
Company's growth and success. The Board of Directors also believes that
important advantages to the Company are gained by a comprehensive compensation
program which includes different types of incentives for motivating such
individuals and rewards for outstanding service. In this regard, stock options
and other stock-related awards have been and will continue to be an important
element of the Company's compensation program because such awards enable
employees and directors to acquire or increase their proprietary interest in
the Company, thereby promoting a close identity of interests between such
individuals and the Company's shareholders. Such awards
<PAGE>
-15-
also provide to employees and directors an increased incentive to expend their
maximum efforts for the success of the Company's business.
Accordingly, on January 8, 1996 the Company's Board of Directors
adopted, subject to shareholder approval at the Meeting, the Guest Supply, Inc.
1996 Long Term Incentive Plan (the "Incentive Plan"). In authorizing grants of
a wide range of awards, including options, stock appreciation rights ("SARs"),
restricted stock, performance awards and other stock-based awards, the
Incentive Plan is intended to give the Company greater flexibility to respond
to rapidly changing business, economic and regulatory requirements and
conditions. In addition, such flexibility will enhance the ability of the
Company to closely link compensation to performance. The Incentive Plan will
not become effective unless approved by the holders of a majority of the shares
of Common Stock present or represented and voting thereon at the Meeting. The
text of the Incentive Plan is set forth in Exhibit A hereto.
The following discussion of the material features of the Incentive
Plan is qualified by reference to the text of the Incentive Plan set forth in
Exhibit A hereto.
Shares Subject to the Plan. Under the Incentive Plan, 400,000
shares of Common Stock will be available for issuance of awards. Shares
distributed under the Incentive Plan may be either newly issued shares or
treasury shares. If any shares subject to an Incentive Plan award are forfeited
or the award is settled in cash or otherwise terminates without a distribution
of shares, the shares subject to such award will again be available for awards
under the Incentive Plan. Thus, for example, if an award is voluntarily
surrendered in exchange for a new award, the shares that were subject to the
surrendered award would be available for the new award (or other awards) under
the Incentive Plan. The maximum number of shares of Common Stock which may be
granted to any individual under the Incentive Plan in any two-year period shall
not exceed 100,000 shares, subject to the adjustments described in the next
paragraph.
The Incentive Plan provides that, in the event of changes in the
corporate structure of the Company affecting the Common Stock, the Stock Option
Committee may adjust (i) the number and kind of shares which may be issued in
connection with awards, (ii) the number and kind of shares issued or issuable
in respect of outstanding awards, and (iii) the exercise price, grant price, or
purchase price relating to any award, and the Stock Option Committee may also
provide for cash payments relating to awards. The Stock Option Committee may
also adjust performance conditions and other terms of awards in response to
these kinds of events or to changes in applicable laws, regulations or
accounting principles. The Incentive Plan provides that, in connection with
any merger or consolidation in which the Company is not the surviving
corporation or any sale or transfer by the Company of all or substantially all
its assets or any tender offer or exchange offer for or the acquisition,
directly or indirectly, by any person or group of all or a majority of the then
outstanding voting securities of the Company, all outstanding options under the
Incentive Plan will become exercisable in full on and after (i) 15 days prior
to the effective date of such merger,
<PAGE>
-16-
consolidation, sale, transfer or acquisition or (ii) the date of commencement
of such tender offer or exchange offer, as the case may be.
Eligibility. Any employee, including any officer or
employee-director, of the Company and its subsidiaries or affiliated companies
is eligible to receive awards under the Incentive Plan. Directors of the
Company who are not employees are eligible for grants of stock options under
the Incentive Plan.
Administration. The Incentive Plan will be administered by the
Stock Option Committee of the Board of Directors. Subject to the terms and
conditions of the Incentive Plan, the Stock Option Committee is authorized to
designate participants who are employees, directors or consultants of the
Company and its subsidiaries and affiliated companies, determine the type and
number of awards to be granted, set terms and conditions of such awards,
prescribe forms of award agreements, interpret the Incentive Plan, specify
rules and regulations relating to the Incentive Plan, and make all other
determinations which may be necessary or advisable for the administration of
the Incentive Plan.
The Incentive Plan provides that in the event that any member of
the Stock Option Committee is not a "disinterested person" as defined in Rule
16b-3 under the Securities Exchange Act of 1934, as in effect at April 30,
1991, the maximum number of shares of Common Stock which may be subject to
options granted to all directors is 300,000 and the maximum number of shares of
Common Stock which may be subject to options granted to each employee-director
is 100,000 and to each director who is not an employee of the Company is
20,000.
Stock Options and SARs. The Stock Option Committee is authorized
to grant stock options, including both incentive stock options ("ISOs"), which
can result in potentially favorable tax treatment to the participant, and
nonqualified stock options, and also to grant SARs entitling the participant to
receive the excess of the fair market value of a share on the date of exercise
or other specified date over the grant price of the SAR. The exercise price
per share of Common Stock subject to an option and the grant price of an SAR is
determined by the Stock Option Committee, provided that the exercise price may
not be less than the fair market value of the Common Stock on the date of
grant. The term of each such option or SAR, the times at which each such
option or SAR shall be exercisable, and provisions requiring forfeiture of
unexercised options at or following termination of employment, generally will
be fixed by the Stock Option Committee, except no ISO or SAR relating thereto
will have a term exceeding ten years. Options may be exercised by payment of
the exercise price in cash, or in stock, outstanding awards or other property
(including notes or obligations to make payment on a deferred basis, such as
through "cashless exercises") having a fair market value equal to the exercise
price, as the Stock Option Committee may determine from time to time. Methods
of exercise and settlement and other terms of the SARs will be determined by
the Stock Option Committee.
Restricted Stock. The Incentive Plan also authorizes the Stock
Option Committee to grant restricted stock. Restricted stock is an award of
shares which may not
<PAGE>
-17-
be disposed of by participants and which may be forfeited in the event of
certain terminations of employment prior to the end of a restriction period
established by the Stock Option Committee. Such an award would entitle the
participant to all of the rights of a shareholder of the Company, including the
right to vote the shares and the right to receive any dividends thereon, unless
otherwise determined by the Stock Option Committee.
Performance Awards. The Incentive Plan also authorizes the Stock
Option Committee to grant to eligible employees performance awards. A
performance award is an award which consists of a right (i) denominated or
payable in cash, Common Stock, other securities or other property (including,
without limitation, restricted securities), and (ii) which shall confer on the
holder thereof rights valued as determined by the Stock Option Committee and
payable to, or exercisable by, the holder of the performance award upon the
achievement of such performance goals during such performance periods as the
Stock Option Committee shall establish. Subject to the terms of the Incentive
Plan and any applicable award agreement, performance goals to be achieved
during any performance period, the length of any performance period, the amount
of any performance award granted and the amount of any payment or transfer to
be made pursuant to any performance award will be determined by the Stock
Option Committee and by the other terms and conditions of any performance
award.
Other Stock-Based Awards. In order to enable the Company to
respond to business, economic and regulatory developments, and to trends in
executive compensation practices, the Incentive Plan authorizes the Stock
Option Committee to grant awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to Common
Stock. The Stock Option Committee determines the terms and conditions of such
awards, including consideration to be paid to exercise awards in the nature of
purchase rights, the period during which awards will be outstanding, and
forfeiture conditions and restrictions on awards.
Other Terms of Awards. The flexible terms of the Incentive Plan
will permit the Stock Option Committee to impose performance conditions with
respect to any award. Such conditions may require that an award be forfeited,
in whole or in part, if performance objectives are not met, or require that the
time of exercisability or settlement of an award be linked to achievement of
performance conditions.
No awards may be granted under the Incentive Plan after December
31, 2005.
Awards may be settled in cash, stock, other awards or other
property, in the discretion of the Stock Option Committee. The Stock Option
Committee may condition the payment of an award on the withholding of taxes and
may provide that a portion of the Common Stock or other property to be
distributed will be withheld (or previously acquired Common Stock or other
property surrendered by the participant) to satisfy withholding and other tax
obligations. Awards granted under the Incentive Plan may not be pledged or
otherwise encumbered and are not transferable except by will or by the laws of
descent and distribution to a guardian or legal representative designated to
exercise such person's rights
<PAGE>
-18-
and receive distributions under the Incentive Plan upon such person's death, or
otherwise if permitted under Rule 16b-3 and by the Stock Option Committee.
Awards under the Incentive Plan are generally granted for no
consideration other than services. The Stock Option Committee may, however,
grant awards alone or in addition to, in tandem with or in substitution for any
other award under the Incentive Plan, other awards under other Company plans,
or other rights to payment from the Company. Awards granted in addition to or
in tandem with other awards may be granted either at the same time or at
different times. If an award is granted in substitution for another award, the
participant must surrender such other award in consideration for the grant of
the new award.
The Board may amend, modify or terminate the Incentive Plan at any
time provided that, unless required by law, (i) the number of shares of Common
Stock available under the Incentive Plan may not be amended without shareholder
approval (subject to certain provisions relating to adjustment as discussed
above) and (ii) no amendment or termination of the Incentive Plan may, without
a participant's consent, adversely affect any rights already accrued under the
Incentive Plan by the participant. In addition, no amendment or modification
shall, unless previously approved by the shareholders (where such approval is
necessary to satisfy then applicable requirements of federal securities laws,
the Internal Revenue Code of 1986, as amended (the "Code"), or rules of any
stock exchange on which the Common Stock is listed) (i) in any manner affect
the eligibility requirements of the Incentive Plan, (ii) increase the number of
shares of Common Stock subject to any option, (iii) change the purchase price
of the shares of Common Stock subject to any option, (iv) extend the period
during which awards may be granted under the Incentive Plan, or (v) materially
increase the benefits to participants under the Incentive Plan.
Unless earlier terminated by the Board of Directors, the Incentive
Plan will terminate when no shares remain available for issuance and the
Company has no further obligation with respect to any outstanding award.
Federal Income Tax Implications of the Plan. The following
description summarizes the material federal income tax consequences arising
with respect to the issuance and exercise of awards granted under the Incentive
Plan. The grant of an option or SAR (including a stock-based award in the
nature of a purchase right) will create no tax consequences for the participant
or the Company. A participant will not have taxable income upon exercising an
ISO (except that the alternative minimum tax may apply) and the Company will
receive no deduction at that time. Upon exercising an option other than an ISO
(including a stock-based award in the nature of a purchase right), the
participant must generally recognize ordinary income equal to the difference
between the exercise price and fair market value of the freely transferable and
nonforfeitable Common Stock acquired on the date of exercise, and upon
exercising an SAR, the participant must generally recognize ordinary income
equal to the cash or the fair market value of the freely transferable and
nonforfeitable Common Stock received. In each case, the Company will be
entitled to a deduction equal to the amount recognized as ordinary income by
the participant.
<PAGE>
-19-
A participant's disposition of shares acquired upon the exercise of
an option, SAR or other stock-based award in the nature of a purchase right
generally will result in short-term or long-term capital gain or loss measured
by the difference between the sale price and the participant's tax basis in
such shares (or the exercise price of the option in the case of shares acquired
by exercise of an ISO and held for the applicable ISO holding periods).
Generally, there will be no tax consequences to the Company in connection with
a disposition of shares acquired under an option or other award, except that
the Company will be entitled to a deduction (and the participant will recognize
ordinary taxable income) if shares acquired upon exercise of an ISO are
disposed of before the applicable ISO holding periods have been satisfied.
With respect to other awards granted under the Incentive Plan that
may be settled either in cash or in Common Stock or other property that is
either not restricted as to transferability or not subject to a substantial
risk of forfeiture, the participant must generally recognize ordinary income
equal to the cash or the fair market value of Common Stock or other property
received. The Company will be entitled to a deduction for the same amount.
With respect to awards involving stock or other property that is restricted as
to transferability and subject to a substantial risk of forfeiture, the
participant must generally recognize ordinary income equal to the fair market
value of the shares or other property received at the first time the shares or
other property become transferable or not subject to a substantial risk of
forfeiture, whichever occurs earlier. The Company will be entitled to a
deduction in an amount equal to the ordinary income recognized by the
participant. A participant may elect under Section 83(b) of the Code to be
taxed at the time of receipt of shares or other property rather than upon lapse
of restrictions on transferability or the substantial risk of forfeiture, but
if the participant subsequently forfeits such shares or property he would not
be entitled to any tax deduction, including as a capital loss, for the value of
the shares or property on which he previously paid tax. Such election must be
made and filed with the Internal Revenue Service within thirty days of the
receipt of the shares or other property.
Section 162(m) of the Code limits deductibility of certain
compensation for each of the Chief Executive Officer of the Company and the
additional four executive officers who are highest paid and employed at year
end to $1 million per year, effective for tax years beginning on or after
January 1, 1994. The Company anticipates that action will be taken with
respect to awards under the Incentive Plan to ensure deductibility.
The Stock Option Committee may condition the payment of an award on
the withholding of taxes and may provide that a portion of the stock or other
property to be distributed will be withheld (or previously acquired stock or
other property surrendered by the participant) to satisfy withholding and other
tax obligations.
The foregoing summarizes the material federal income tax
consequences arising with respect to the issuance and exercise of awards
granted under the Incentive Plan. Different tax rules may apply with respect to
participants who are subject to Section 16 of the Exchange Act, when they
acquire stock in a transaction deemed to be a nonexempt purchase under that
statute or within six months of an exempt grant of a derivative security
<PAGE>
-20-
under the Incentive Plan. This summary does not address the effects of other
federal taxes or taxes imposed under state, local or foreign tax laws.
The Board of Directors recommends that the Company's shareholders
vote FOR approval of the Incentive Plan. It is the intention of the persons
named in the accompanying form of Proxy to vote the shares represented thereby
in favor of such approval unless otherwise instructed in such Proxy.
III. PROPOSAL THREE - APPROVAL OF AN AMENDMENT
TO THE CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED COMMON STOCK
On January 8, 1996, the Board of Directors approved an amendment to
Article THIRD of the Certificate of Incorporation of the Company to increase
the authorized Common Stock from 10,000,000 shares to 20,000,000 shares. The
text of the proposed amendment to the Certificate of Incorporation is set forth
in Exhibit B to this Proxy Statement.
As of January 9, 1996, 8,003,399 of the 10,000,000 presently
authorized shares of Common Stock were either outstanding or were reserved for
issuance pursuant to the exercise of warrants and the exercise of options
granted and to be granted under the 1983 Stock Option Plan and the 1993 Stock
Option Plan and pursuant to purchase under the 1983 Employee Stock Purchase Plan
and the 1993 Employee Stock Purchase Plan. The Board of Directors believes that
the Company has an insufficient number of shares of Common Stock available for
future corporate transactions.
The Company has no present plans, agreements or understandings for
the issuance of any shares of Common Stock (other than upon the exercise of
stock options and warrants). If the proposed amendment is adopted, the
additional shares of Common Stock to be authorized would thereafter be subject
to issuance from time to time by the Board of Directors without shareholder
approval, and without any preemptive purchase rights by the shareholders. The
issuance of such authorized shares of Common Stock may have a dilutive effect
on the equity interests of the Company's then existing shareholders.
The overall effect of an issuance of additional shares of Common
Stock and the existence of certain provisions contained in the Company's
Certificate of Incorporation and By-laws may be to render more difficult the
accomplishment of any attempted merger, takeover or other change in control
affecting the Company and/or the removal of the Company's incumbent Board of
Directors and management. However, the Board of Directors does not intend or
view the increase in Common Stock as an anti-takeover measure.
The Board of Directors of the Company believes that the proposed
increase in the number of authorized shares of Common Stock will be
advantageous to the Company and
<PAGE>
-21-
its shareholders by making available such securities for various corporate
purposes. The affirmative vote of a majority of the outstanding shares of
Common Stock is required to adopt this amendment increasing the number of
authorized shares. If approved by the shareholders, the amendment will become
effective upon the filing of the amendment with the Secretary of the State of
New Jersey. The Board of Directors recommends that the shareholders vote FOR
the adoption of such amendment. It is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby in favor of
adoption unless otherwise instructed therein.
IV. PROPOSAL FOUR - RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP to serve
as independent auditors for the Company for the fiscal year ending September
30, 1996. The Board of Directors considers KPMG Peat Marwick LLP to be
eminently qualified.
Although it is not required to do so, the Board of Directors is
submitting its selection of the Company's auditors for ratification at the
Meeting, in order to ascertain the views of shareholders regarding such
selection. If the selection is not ratified, the Board of Directors will
reconsider its selection.
The Board of Directors recommends that shareholders vote FOR
ratification of the selection of KPMG Peat Marwick LLP to examine the financial
statements of the Company for the Company's fiscal year ending September 30,
1996. It is the intention of the persons named in the accompanying form of
Proxy to vote the shares represented thereby in favor of such ratification
unless otherwise instructed therein.
A representative of KPMG Peat Marwick LLP will be present at the
Meeting with the opportunity to make a statement if such representative desires
to do so and will be available to respond to appropriate questions.
V. OTHER MATTERS
The Board of Directors of the Company does not know of any other
matters which may be brought before the Meeting. However, if any other matters
are properly presented for action, it is the intention of the persons named in
the accompanying form of Proxy to vote the shares represented thereby in
accordance with their judgment on such matters.
<PAGE>
-22-
VI. MISCELLANEOUS
If the accompanying form of Proxy is executed and returned, the
shares of Common Stock represented thereby will be voted in accordance with the
terms of the Proxy, unless the Proxy is revoked. If no directions are
indicated in such Proxy, the shares represented thereby will be voted FOR the
nominees proposed by the Board of Directors in the election of directors, FOR
the approval of the 1996 Long Term Incentive Plan, FOR the approval of the
amendment to the Certificate of Incorporation to increase the number of
authorized shares of Common Stock and FOR the ratification of the Board of
Directors' selection of independent accountants for the Company.
All costs relating to the solicitation of Proxies will be borne by
the Company. Proxies may be solicited by officers, directors and regular
employees of the Company and its subsidiaries personally, by mail or by
telephone or telegraph, and the Company may pay brokers and other persons
holding shares of stock in their names or those of their nominees for their
reasonable expenses in sending soliciting material to their principals.
It is important that Proxies be returned promptly. Shareholders
who do not expect to attend the Meeting in person are urged to mark, sign and
date the accompanying form of Proxy and mail it in the enclosed return
envelope, which requires no postage if mailed in the United States, so that
their votes can be recorded.
ANNUAL REPORT ON FORM 10-K
- --------------------------
A copy of the Company's Annual Report on Form 10-K, including the
financial statements and financial statement schedule for the fiscal year ended
September 30, 1995, which is required to be filed with the Securities and
Exchange Commission, will be sent without charge to shareholders to whom this
Proxy Statement is mailed, upon written request to the Secretary, Guest Supply,
Inc., 720 U.S. Highway One, North Brunswick, New Jersey 08902.
SHAREHOLDER PROPOSALS
- ---------------------
Shareholder proposals intended to be presented at the 1997 Annual
Meeting of Shareholders of the Company must be received by the Company by
September 20, 1996 in order to be considered for inclusion in the Company's
proxy statement relating to such meeting.
January 22, 1996
<PAGE>
EXHIBIT A
GUEST SUPPLY, INC.
1996 LONG TERM INCENTIVE PLAN
SECTION 1. Purpose. The purposes of this Guest Supply, Inc. 1996
Long Term Incentive Plan (the "Plan") are to encourage selected employees,
officers, directors and consultants of, and other individuals providing
services to, Guest Supply, Inc. (together with any successor thereto, the
"Company") and its Affiliates (as defined below) to acquire a proprietary
interest in the growth and performance of the Company, to generate an increased
incentive to contribute to the Company's future success and prosperity thus
enhancing the value of the Company for the benefit of its shareholders, and to
enhance the ability of the Company and its Affiliates to attract and retain
exceptionally qualified individuals upon whom, in large measure, the sustained
progress, growth and profitability of the Company depend.
SECTION 2. Definitions. As used in the Plan, the following terms
shall have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or through one
or more intermediaries, is controlled by the Company and (ii) any entity in
which the Company has a significant equity interest, as determined by the
Committee.
"Award" shall mean any Option, Stock Appreciation Right, Restricted
Security, Performance Award, or Other Stock-Based Award granted under the Plan.
"Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
"Board" shall mean the Board of Directors of the Company.
"Cause", as used in connection with the termination of a
Participant's employment, shall mean (i) with respect to any Participant
employed under a written employment agreement with the Company or an Affiliate
of the Company which agreement includes a definition of "cause," "cause" as
defined in such agreement or, if such agreement contains no such definition, a
material breach by the Participant of such agreement, or (ii) with respect to
any other Participant, the failure to perform adequately in carrying out such
Participant's employment responsibilities, including any directives from the
Board, or engaging in such behavior in his personal or business life as to lead
the Committee in its reasonable judgment to determine that it is in the best
interests of the Company to terminate his employment.
"Common Stock" shall mean the common stock of the Company, without
par value.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated thereunder.
"Committee" shall mean the Stock Option Committee or any other
committee of the Board designated by the Board to administer the Plan and
composed of not less than three outside directors, as described in Section
162(m) of the Code, each of whom, to the extent necessary to comply with Rule
16b-3 only, is a "disinterested person" within the meaning of Rule 16b-3 as in
effect at April 30, 1991.
<PAGE>
<PAGE>
A-2
"Common Shares" shall mean any or all, as applicable, of the Common
Stock and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4(b) of the Plan and any other securities of the Company or any
Affiliate or any successor that may be so designated by the Committee.
"Employee" shall mean any employee of the Company or of any
Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean (A) with respect to any property
other than the Common Shares, the fair market value of such property determined
by such methods or procedures as shall be established from time to time by the
Committee; and (B) with respect to the Common Shares, the last sale price
regular way on the date of reference, or, in case no sale takes place on such
date, the average of the high bid and low asked prices, in either case on the
principal national securities exchange on which the Common Shares are listed or
admitted to trading, or if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last sale price reported on
the National Market System of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on such date, or the average of the
closing high bid and low asked prices in the over-the-counter market reported
on NASDAQ on such date, whichever is applicable, or if there are no such prices
reported on NASDAQ on such date, as furnished to the Committee by any New York
Stock Exchange member selected from time to time by the Committee for such
purpose. If there is no bid or asked price reported on any such date, the Fair
Market Value shall be determined by the Committee in accordance with the
regulations promulgated under Section 2031 of the Code, or by any other
appropriate method selected by the Committee.
"Good Reason", as used in connection with the termination of a
Participant's employment, shall mean (i) with respect to any Participant
employed under a written employment agreement with the Company or an Affiliate
of the Company, "good reason" as defined in such written agreement or, if such
agreement contains no such definition, a material breach by the Company of such
agreement, or (ii) with respect to any other Participant, a failure by the
Company to pay such Participant any amount otherwise vested and due and a
continuation of such failure for 30 business days following notice to the
Company thereof.
"Incentive Stock Option" shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of
the Code or any successor provision thereto.
"Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
Any stock option granted by the Committee which is not designated an Incentive
Stock Option shall be deemed a Non-Qualified Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
"Other Stock-Based Award" shall mean any right granted under
Section 6(e) of the Plan.
"Participant" shall mean any individual granted an Award under the
Plan.
"Performance Award" shall mean any right granted under Section 6(d)
of the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
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"Released Securities" shall mean securities that were Restricted
Securities but with respect to which all applicable restrictions have expired,
lapsed or been waived in accordance with the terms of the Plan or the
applicable Award Agreement.
"Restricted Securities" shall mean any Common Shares granted under
Section 6(c) of the Plan, any right granted under Section 6(c) of the Plan that
is denominated in Common Shares or any other Award under which issued and
outstanding Common Shares are held subject to certain restrictions.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
SECTION 3. Administration. The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the Committee
by the Plan, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be
granted to an eligible Employee or other individual under the Plan; (iii)
determine the number and classification of Common Shares to be covered by (or
with respect to which payments, rights or other matters are to be calculated in
connection with) Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, Common Shares, other securities, other Awards
or other property, or canceled, forfeited or suspended, and the method or
methods by which Awards may be settled, exercised, canceled, forfeited or
suspended; (vi) determine requirements for the vesting of Awards or performance
criteria to be achieved in order for Awards to vest; (vii) determine whether,
to what extent and under what circumstances cash, Common Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award under the Plan shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (viii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (ix) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (x) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations and other decisions under or
with respect to the Plan or any Award shall be within the sole discretion of
the Committee, may be made at any time and shall be final, conclusive and
binding upon all Persons, including the Company, any Affiliate, any
Participant, any holder or beneficiary of any Award, any shareholder and any
Employee. Notwithstanding the foregoing, the maximum number of Awards which may
be granted to any one Participant under this Plan in any two-year period shall
not exceed 100,000 Common Shares, subject to the adjustments provided in Section
4(b) hereof and no Awards under this Plan shall be granted after December 31,
2005.
SECTION 4. Common Shares Available for Awards.
(a) Common Shares Available. Subject to adjustment as provided
in Section 4(b):
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(i) Calculation of Number of Common Shares Available. The
number of Common Shares available for granting Awards under the Plan
shall be 400,000, any or all of which may be or may be based on Common
Stock, any other security which becomes the subject of Awards, or any
combination thereof. Initially 400,000 shares of Common Stock shall be
reserved for Awards hereunder. Further, if, after the effective date of
the Plan, any Common Shares covered by an Award granted under the Plan or
to which such an Award relates, are forfeited, or if an Award otherwise
terminates or is canceled without the delivery of Shares or of other
consideration, then the Common Shares covered by such Award or to which
such Award relates, or the number of Common Shares otherwise counted
against the aggregate number of Common Shares available under the Plan
with respect to such Award, to the extent of any such forfeiture,
termination or cancellation, shall again be, or shall become, available
for granting Awards under the Plan.
(ii) Accounting for Awards. For purposes of this Section 4,
(A) if an Award is denominated in or based upon Common
Shares, the number of Common Shares covered by such Award or to
which such Award relates shall be counted on the date of grant of
such Award against the aggregate number of Common Shares available
for granting Awards under the Plan and against the maximum number
of Awards available to any Participant; and
(B) Awards not denominated in Common Shares may be counted
against the aggregate number of Common Shares available for
granting Awards under the Plan and against the maximum number of
Awards available to any participant in such amount and at such time
as the Committee shall determine under procedures adopted by the
Committee consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether
granted simultaneously with or at a different time from), or that are
substituted for, other Awards may be counted or not counted under
procedures adopted by the Committee in order to avoid double counting.
Any Common Shares that are delivered by the Company, and any Awards that
are granted by, or become obligations of, the Company, through the
assumption by the Company or an Affiliate of, or in substitution for,
outstanding awards previously granted by an acquired company shall, in
the case of Awards granted to Participants who are officers or directors
of the Company for purposes of Section 16 of the Exchange Act, be counted
against the Common Shares available for granting Awards under the Plan.
(iii) Sources of Common Shares Deliverable Under Awards. Any
Common Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized and unissued Common Shares or of treasury Common
Shares.
(b) Adjustments. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash, Common
Shares, other securities or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Common Shares or other securities of the
Company, issuance of warrants or other rights to purchase Common Shares or
other securities of the Company, or other similar corporate transaction or
event affects the Common Shares such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any
or all of (i) the number and kind of Common Shares (or other securities or
property) which thereafter may be made the subject of
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Awards, (ii) the number and kind of Common Shares (or other securities or
property) subject to outstanding Awards, and (iii) the grant or exercise price
with respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, that the
number of Common Shares subject to any Award denominated in Common Shares shall
always be a whole number.
In connection with any merger or consolidation in which the Company
is not the surviving corporation and which results in the holders of the
outstanding voting securities of the Company (determined immediately prior to
such merger or consolidation) owning less than a majority of the outstanding
voting securities of the surviving corporation (determined immediately
following such merger or consolidation), or any sale or transfer by the Company
of all or substantially all its assets or any tender offer or exchange offer
for or the acquisition, directly or indirectly, by any person or group of all
or a majority of the then outstanding voting securities of the Company, all
outstanding Options under the Plan shall become exercisable in full,
notwithstanding any other provision of the Plan or of any outstanding Options
granted thereunder, on and after (i) the fifteenth day prior to the effective
date of such merger, consolidation, sale, transfer or acquisition or (ii) the
date of commencement of such tender offer or exchange offer, as the case may
be. The provisions of the foregoing sentence shall apply to any outstanding
Options which are Incentive Stock Options to the extent permitted by Section
422(d) of the Code and such outstanding Options in excess thereof shall,
immediately upon the occurrence of the event described in clause (i) or (ii) of
the foregoing sentence, be treated for all purposes of the Plan as
Non-Qualified Stock Options and shall be immediately exercisable as such as
provided in the foregoing sentence.
SECTION 5. Eligibility. Any Employee, including any officer or
employee-director of the Company or of any Affiliate, and any consultant of, or
other individual providing services to, the Company or any Affiliate shall be
eligible to be designated a Participant. A non-employee director shall be
eligible to receive Non-Qualified Stock Options under the Plan.
SECTION 6. Awards.
(a) Options. The Committee is hereby authorized to grant to
eligible individuals options to purchase Common Shares (each, an "Option")
which shall contain the following terms and conditions and with such additional
terms and conditions, in either case not inconsistent with the provisions of
the Plan, as the Committee shall determine:
(i) Exercise Price. The purchase price per Common Share
purchasable under an Option shall be determined by the Committee;
provided, however, that such purchase price shall not be less than one
hundred percent (100%) of the Fair Market Value of a Common Share on the
date of grant of such Option, or such other price as required under
Subsection 6(a)(iv) hereof.
(ii) Time and Method of Exercise. Subject to the terms of
Section 6(a)(iii), the Committee shall determine the time or times at
which an Option may be exercised in whole or in part, and the method or
methods by which, and the form or forms (including, without limitation,
cash, Common Shares, outstanding Awards, or other property, or any
combination thereof, having a Fair Market Value on the exercise date
equal to the relevant exercise price) in which, payment of the exercise
price with respect thereto may be made or deemed to have been made.
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(iii) Exercisability Upon Death, Retirement and Termination
of Employment. Subject to the condition that no Option may be exercised
in whole or in part after the expiration of the Option period specified
in the applicable Award Agreement:
(A) Subject to the terms of paragraph (D) below, upon the
death of a Participant while employed or within 3 months of
retirement or disability as defined in paragraph (B) below, the
Person or Persons to whom such Participant's rights with respect to
any Option held by such Participant are transferred by will or the
laws of descent and distribution may, prior to the expiration of
the earlier of: (1) the outside exercise date determined by the
Committee at the time of granting the Option, or (2) nine months
after such Participant's death, purchase any or all of the Common
Shares with respect to which such Participant was entitled to
exercise such Option immediately prior to such Participant's death,
and any Options not so exercisable will lapse on the date of such
Participant's death;
(B) Subject to the terms of paragraph (D) below, upon
termination of a Participant's employment with the Company (x) as a
result of retirement pursuant to a retirement plan of the Company
or an Affiliate or disability (as determined by the Committee) of
such Participant, (y) by the Company other than for Cause, or (z)
by the Participant with Good Reason, such Participant may, prior to
the expiration of the earlier of: (1) the outside exercise date
determined by the Committee at the time of granting the Option, or
(2) three months after the date of such termination, purchase any
or all of the Common Shares with respect to which such Participant
was entitled to exercise any Options immediately prior to such
termination, and any Options not so exercisable will lapse on such
date of termination;
(C) Subject to the terms of paragraph (D) below, upon
termination of a Participant's employment with the Company under
any circumstances not described in paragraphs (A) or (B) above,
such Participant's Options shall be canceled to the extent not
theretofore exercised;
(D) Upon (i) the death of the Participant, or (ii)
termination of the Participant's employment with the Company (x) by
the Company other than for Cause (y) by the Participant with Good
Reason or (z) as a result of retirement or disability as defined in
paragraph (B) above, the Company shall have the right to cancel all
of the Options such Participant was entitled to exercise at the
time of such death or termination (subject to the terms of
paragraphs (A) or (B) above) for a payment in cash equal to the
excess, if any, of the Fair Market Value of one Common Share on the
date of death or termination over the exercise price of such Option
for one Common Share times the number of Common Shares subject to
the Option and exercisable at the time of such death or
termination; and
(E) Upon expiration of the respective periods set forth in
each of paragraphs (A) through (C) above, the Options of a
Participant who has died or whose employment has been terminated
shall be canceled to the extent not theretofore canceled or
exercised.
(F) For purposes of paragraphs (A) through (D) above, the
period of service of an individual as a director or consultant of
the Company or an Affiliate shall be deemed the period of
employment.
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(iv) Incentive Stock Options. The following provisions
shall apply only to Incentive Stock Options granted under the Plan:
(A) No Incentive Stock Option shall be granted to any
eligible Employee who, at the time such Option is granted, owns
securities possessing more than ten percent (10%) of the total
combined voting power of all classes of securities of the Company
or of any Affiliate, except that such an Option may be granted to
such an Employee if at the time the Option is granted the option
price is at least one hundred ten percent (110%) of the Fair Market
Value of the Common Shares (determined in accordance with Section
2) subject to the Option, and the Option by its terms is not
exercisable after the expiration of five (5) years from the date
the Option is granted; and
(B) To the extent that the aggregate Fair Market Value of
the Common Shares with respect to which Incentive Stock Options
(without regard to this subsection) are exercisable for the first
time by any individual during any calendar year (under all plans of
the Company and its Affiliates) exceeds $100,000, such Options
shall be treated as Non-Qualified Stock Options. This subsection
shall be applied by taking Options into account in the order in
which they were granted. If some but not all Options granted on
any one day are subject to this subsection, then such Options shall
be apportioned between Incentive Stock Option and Non-Qualified
Stock Option treatment in such manner as the Committee shall
determine. For purposes of this subsection, the Fair Market Value
of any Common Shares shall be determined, in accordance with
Section 2, as of the date the Option with respect to such Common
Shares is granted.
(v) Terms and Conditions of Options Granted to Directors.
Notwithstanding any provision contained in the Plan to the contrary,
during any period when any member of the Committee shall not be a
"disinterested person" as defined in Rule 16b-3, as such Rule was in
effect at April 30, 1991, then, the terms and conditions of Options
granted under the Plan to any director of the Company during such period
shall be as follows:
(A) The price at which each Common Share subject to an
option may be purchased shall, subject to any adjustments which may
be made pursuant to Section 4, in no event be less than the Fair
Market Value of a Common Share on the date of grant, and provided
further that in the event the option is intended to be an Incentive
Stock Option and the optionee owns on the date of grant securities
possessing more than ten percent (10%) of the total combined voting
power of all classes of securities of the Company or of any
Affiliate, the price per share shall not be less than one hundred
ten percent (110%) of the Fair Market Value per Common Share on the
date of grant.
(B) The Option may be exercised to purchase Common Shares
covered by the Option not sooner than six (6) months following the
date of grant. The Option shall terminate and no Common Shares may
be purchased thereunder more than ten (10) years after the date of
grant, provided that if the Option is intended to be an Incentive
Stock Option and the Optionee owns on the date of grant securities
possessing more than ten percent (10%) of the total combined voting
power of all classes of securities of the Company or of any
Affiliate, the Option shall terminate and no Common Shares may be
purchased thereunder more than five (5) years after the date of
grant.
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(C) The maximum number of Common Shares which may be
subject to options granted to all directors pursuant to this
Section 6(a)(v) shall be 300,000 shares in the aggregate. The
maximum number of Common Shares which may be subject to options
granted to any director of the Company who is an Employee shall be
100,000 shares and the maximum number of Common Shares which may
be subject to options granted to any director of the Company who is
not an Employee shall be 20,000 shares.
(b) Stock Appreciation Rights. The Committee is hereby
authorized to grant to eligible Employees "Stock Appreciation Rights." Each
Stock Appreciation Right shall consist of a right to receive the excess of (i)
the Fair Market Value of one Common Share on the date of exercise or, if the
Committee shall so determine in the case of any such right other than one
related to any Incentive Stock Option, at any time during a specified period
before or after the date of exercise over (ii) the grant price of the right as
specified by the Committee, which shall not be less than one hundred percent
(100%) of the Fair Market Value of one Common Share on the date of grant of the
Stock Appreciation Right (or, if the Committee so determines, in the case of
any Stock Appreciation Right retroactively granted in tandem with or in
substitution for another Award, on the date of grant of such other Award).
Subject to the terms of the Plan and any applicable Award Agreement, the grant
price, term, methods of exercise, methods of settlement, and any other terms
and conditions of any Stock Appreciation Right granted under the Plan shall be
as determined by the Committee. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it may deem
appropriate.
(c) Restricted Securities.
(i) Issuance. The Committee is hereby authorized to grant
to eligible Employees "Restricted Securities" which shall consist of the
right to receive, by purchase or otherwise, Common Shares which are
subject to such restrictions as the Committee may impose (including,
without limitation, any limitation on the right to vote such Common
Shares or the right to receive any dividend or other right or property),
which restrictions may lapse separately or in combination at such time or
times, in such installments or otherwise, as the Committee may deem
appropriate.
(ii) Registration. Restricted Securities granted under the
Plan may be evidenced in such manner as the Committee may deem
appropriate, including, without limitation, book-entry registration or
issuance of a stock certificates or certificates. In the event any stock
certificate is issued in respect of Restricted Securities granted under
the Plan, such certificate shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Securities.
(iii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of a Participant's employment for any reason
during the applicable restriction period, all of such Participant's
Restricted Securities which had not become Released Securities by the
date of termination of employment shall be forfeited and reacquired by
the Company; provided, however, that the Committee may, when it finds
that a waiver would be in the best interests of the Company, waive in
whole or in part any or all remaining restrictions with respect to such
Participant's Restricted Securities. Unrestricted Common Shares,
evidenced in such manner as the Committee shall deem appropriate, shall
be issued to the holder of Restricted Securities promptly after such
Restricted Securities become Released Securities.
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(d) Performance Awards. The Committee is hereby authorized to
grant to eligible Employees "Performance Awards." Each Performance Award shall
consist of a right, (i) denominated or payable in cash, Common Shares, other
securities or other property (including, without limitation, Restricted
Securities), and (ii) which shall confer on the holder thereof rights valued as
determined by the Committee and payable to, or exercisable by, the holder of
the Performance Award, in whole or in part, upon the achievement of such
performance goals during such performance periods as the Committee shall
establish. Subject to the terms of the Plan and any applicable Award
Agreement, the performance goals to be achieved during any performance period,
the length of any performance period, the amount of any Performance Award
granted, the termination of a Participant's employment and the amount of any
payment or transfer to be made pursuant to any Performance Award shall be
determined by the Committee and by the other terms and conditions of any
Performance Award. The Committee shall issue performance goals prior to the
commencement of the performance period to which such performance goals pertain.
(e) Other Stock-Based Awards. The Committee is hereby authorized
to grant to eligible Employees "Other Stock-Based Awards." Each Other
Stock-Based Award shall consist of a right (i) which is other than an Award or
right described in Section 6(a), (b), (c) or (d) above and (ii) which is
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Common Shares (including, without limitation,
securities convertible into Common Shares) as are deemed by the Committee to be
consistent with the purposes of the Plan; provided, however, that such right
shall comply, to the extent deemed desirable by the Committee, with Rule 16b-3
and applicable law. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of Other
Stock-Based Awards. Common Shares or other securities delivered pursuant to a
purchase right granted under this Section 6(e) shall be purchased for such
consideration, which may be paid by such method or methods and in such form or
forms, including, without limitation, cash, Common Shares, other securities,
other Awards, other property, or any combination thereof, as the Committee
shall determine.
(f) General.
(i) No Cash Consideration for Awards. Awards may be
granted for no cash consideration or for such minimal cash consideration
as may be required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards
may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for any other Award,
except that in no event shall an Incentive Stock Option be granted
together with a Non-Qualified Stock Option in such a manner that the
exercise of one Option affects the right to exercise the other. Awards
granted in addition to or in tandem with other Awards may be granted
either at the same time as or at a different time from the grant of such
other awards.
(iii) Forms of Payment Under Awards. Subject to the terms of
the Plan and of any applicable Award Agreement, payments or transfers to
be made by the Company or an Affiliate upon the grant, exercise or
payment of an Award may be made in such form or forms as the Committee
shall determine, including, without limitation, cash, Common Shares,
other securities, other Awards, or other property, or any combination
thereof, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case in accordance with
rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments. In
accordance with the above, the
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Committee may elect (i) to pay a Participant (or such Participant's
permitted transferee) upon the exercise of an Option in whole or in part,
in lieu of the exercise thereof and the delivery of Common Shares
thereunder, an amount of cash equal to the excess, if any, of the Fair
Market Value of one Common Share on the date of such exercise over the
exercise price of such Option for one Common Share times the number of
Common Shares subject to the Option or portion thereof so exercised or
(ii) to settle other stock denominated Awards in cash.
(iv) Limits on Transfer of Awards.
(A) No award (other than Released Securities), and no right
under any such Award, may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or by the laws of descent and
distribution (or, in the case of Restricted Securities, to the
Company) and any such purported assignment, alienation, pledge,
attachment, sale or other transfer or encumbrance shall be void and
unenforceable against the Company or any Affiliate.
(B) Each award, and each right under any Award, shall be
exercisable, during the Participant's lifetime only by the
Participant or if permissible under applicable law, by the
Participant's guardian or legal representative.
(v) Terms of Awards. The term of each Award shall be for
such period as may be determined by the Committee; provided, however,
that in no event shall the term of any Option exceed a period of ten
years from the date of its grant.
(vi) Rule 16b-3 Six-Month Limitations. To the extent
required in order to maintain the exemption provided under Rule 16b-3
only, any equity security offered pursuant to the Plan must be held for
at least six months after the date of grant, and with respect to any
derivative security issued pursuant to the Plan, at least six months must
elapse from the date of acquisition of such derivative security to the
date of disposition of the derivative security (other than upon exercise
or conversion) or its underlying equity security. Terms used in the
preceding sentence shall, for the purposes of such sentence only, have
the meanings, if any, assigned or attributed to them under Rule 16b-3.
(vii) Common Share Certificates. All certificates for Common
Shares delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Common Shares are then
listed, and any applicable Federal or state securities laws, and the
Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(viii) Delivery of Common Shares or Other Securities and
Payment by Participant of Consideration. No Common Shares or other
securities shall be delivered pursuant to any Award until payment in full
of any amount required to be paid pursuant to the Plan or the applicable
Award Agreement is received by the Company. Such payment may be made by
such method or methods and in such form or forms as the Committee shall
determine, including, without limitation, cash, Common Shares, other
securities, other Awards or other property, or any combination thereof;
provided that the combined value, as determined by the Committee, of all
cash and cash equivalents and the Fair Market Value of any such Common
Shares or other property so tendered to the Company, as of the date of
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such tender, is at least equal to the full amount required to be paid
pursuant to the Plan or the applicable Award Agreement to the Company.
SECTION 7. Amendments; Adjustments and Termination. Except to the
extent prohibited by applicable law and unless otherwise expressly provided in
an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of any shareholder,
Participant, other holder or beneficiary of an Award, or other Person;
provided, however, that, subject to the Company's rights to adjust Awards under
Sections 7(c) and (d), any amendment, alteration, suspension, discontinuation,
or termination that would impair the rights of any Participant, or any other
holder or beneficiary of any Award theretofore granted, shall not to that
extent be effective without the consent of such Participant, other holder or
beneficiary of an Award, as the case may be; and provided further, however,
that notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the shareholders of the Company no such amendment,
alteration, suspension, discontinuation, or termination shall be made that
would:
(i) increase the total number of Common Shares available
for Awards under the Plan, except as provided in Section 4 hereof; or
(ii) otherwise cause the Plan to cease to comply with any
tax or regulatory requirement, including for these purposes any approval
or other requirement which is or would be a prerequisite for exemptive
relief from Section 16(b) of the Exchange Act.
(b) Amendments to Awards. The Committee may waive any conditions
or rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Award theretofore granted, prospectively or retroactively;
provided, however, that, subject to the Company's rights to adjust Awards under
Sections 7(c) and (d), any amendment, alteration, suspension, discontinuation,
cancellation or termination that would impair the rights of any Participant or
holder or beneficiary of any Award theretofore granted, shall not to that
extent be effective without the consent of such Participant or holder or
beneficiary of an Award, as the case may be.
(c) Adjustment of Awards Upon Certain Acquisitions. In the event
the Company or any Affiliate shall assume outstanding employee awards or the
right or obligation to make future such awards in connection with the
acquisition of another business or another corporation or business entity, the
Committee may make such adjustments, not inconsistent with the terms of the
Plan, in the terms of Awards as it shall deem appropriate in order to achieve
reasonable comparability or other equitable relationship between the assumed
awards and the Awards granted under the Plan as so adjusted.
(d) Adjustments of Awards Upon the Occurrence of Certain Unusual
or Non- recurring Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or non-recurring events (including, without
limitation, the events described in Section 4(b) hereof) affecting the Company,
any Affiliate, or the financial statements of the Company or any Affiliate, or
of changes in applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan.
SECTION 8. General Provisions.
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(a) No Right to Awards. No Employee or other Person shall have
any claim to be granted any Award under the Plan, and there is no obligation
for uniformity of treatment of Employees, or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards need not be the same with
respect to each recipient.
(b) Delegation. Subject to the terms of the Plan and applicable
law, the Committee may delegate to one or more officers or managers of the
Company or any Affiliate, or to a committee of such officers or managers, the
authority, subject to such terms and limitations as the Committee shall
determine, to grant Awards to, or to cancel, modify, waive rights with respect
to, alter, discontinue, suspend, or terminate Awards; provided, however, that,
no such delegation shall be permitted with respect to Awards held by Employees
who are officers or directors of the Company for purposes of Section 16 of the
Exchange Act, or any successor section thereto or who are otherwise subject to
such Section.
(c) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
(d) Withholding. The Company or any Affiliate shall be
authorized to withhold from any Award granted, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other amount
owing to a Participant the amount (in cash, Common Shares, other securities,
other Awards, or other property) of withholding taxes due in respect of an
Award, its exercise, or any payment or transfer under such Award or under the
Plan and to take such other action as may be necessary in the opinion of the
Company or Affiliate to satisfy all obligations for the payment of such taxes.
(e) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(f) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability, or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.
(g) Governing Law. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of New Jersey and applicable Federal law.
(h) Severability. If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any Person or Award under any law deemed applicable by
the Committee, such provision shall be construed or deemed amended to conform
to applicable laws, or if it cannot be construed or deemed amended without, in
the determination of the Committee, materially altering the intent of the Plan
or the Award, such provision shall be stricken as to such jurisdiction, Person
or Award and the remainder of the Plan and any such Award shall remain in full
force and effect.
(i) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or
a fiduciary relationship between the
<PAGE>
A-13
Company or any Affiliate and a Participant or any other Person. To the extent
that any Person acquires a right to receive payments from the Company or any
Affiliate pursuant to an Award, such right shall be no greater than the right
of any unsecured general creditor of the Company or any Affiliate.
(j) No Fractional Common Shares. No fractional Common Shares
shall be issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash, other securities, or other property
shall be paid or transferred in lieu of any fractional Common Shares or whether
such fractional Common Shares or any rights thereto shall be canceled,
terminated, or otherwise eliminated.
(k) Headings. Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 9. Adoption, Approval and Effective Date of the Plan. The
Plan shall be considered adopted and shall become effective on the date the
Plan is approved by the Board; provided, however, that the Plan and any Awards
granted under the Plan shall be void, if the shareholders of the Company shall
not have approved the adoption of the Plan within twelve (12) months after the
effective date, by a majority of votes cast thereon at a meeting of
shareholders duly called and held for such purpose.
<PAGE>
Exhibit B
CERTIFICATE OF AMENDMENT
OF THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GUEST SUPPLY, INC.
The undersigned, being the President of Guest Supply, Inc. (the
"Corporation") hereby certifies that:
FIRST: The name of the Corporation is Guest Supply, Inc.
SECOND: Article THIRD of the Amended and Restated Certificate of
Incorporation of the Corporation, which sets forth the authorized capital stock
of the Corporation, is hereby amended to increase the authorized common stock
from 10,000,000 to 20,000,000 shares, without par value. To effect such
amendment, the first sentence of Article THIRD in its present form is hereby
deleted and a new first sentence of Article THIRD is hereby substituted therefor
as follows:
"THIRD: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000,000 shares of
Preferred Stock, without par value ("Preferred Stock"), and 20,000,000
shares of Common Stock, without par value ("Common Stock")."
THIRD: The amendment to Article THIRD of the Amended and Restated
Certificate of Incorporation was adopted by the shareholders of the Corporation
on March 6, 1996.
FOURTH: The number of shares entitled to vote on the amendment to
Article THIRD was 6,146,335.
FIFTH: The number of shares that approved the amendment to Article THIRD
was _________. The number of shares that voted against the amendment to Article
THIRD was ______.
IN WITNESS WHEREOF, the Corporation has caused the corporate seal to be
hereunto affixed and this Certificate of Amendment to the Amended and Restated
Certificate of Incorporation to be signed by Clifford W. Stanley, its President
and attested by Paul T. Xenis, its Secretary, this ____ day of March, 1996.
GUEST SUPPLY, INC.
By:____________________________
Clifford W. Stanley
[Corporate Seal] President
ATTEST:
- -------------------------
Paul T. Xenis
Secretary
<PAGE>
GUEST SUPPLY, INC.
PROXY - Annual Meeting of Shareholders - March 6, 1996
The undersigned, a shareholder of GUEST SUPPLY, INC., does hereby
appoint CLIFFORD W. STANLEY and THOMAS M. HAYTHE, or either of them, with full
power of substitution, his proxies, to appear and vote all shares of Common
Stock of the Company which the undersigned is entitled to vote at the Annual
Meeting of Shareholders to be held on Wednesday, March 6, 1996 at 10:00 A.M.,
local time, or at any adjournments thereof, upon such matters as may properly
come before the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND RETURN PROMPTLY
The undersigned hereby instructs said proxies or their substitutes to
vote as specified below on each of the following matters and in accordance with
their judgment on any other matters which may properly come before the Meeting:
<PAGE>
- --------------------------------------------------------------------------------
1. Election of Directors. FOR all nominees WITHHOLD AUTHORITY
listed [_] to vote [_]
(except as marked to for all nominees listed
the contrary below)
Peter L. Richard, Teri E. Unsworth and Edward J. Walsh
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. Approval of the Guest Supply, Inc. FOR [_] AGAINST [_] ABSTAIN [_]
1996 Long Term Incentive Plan.
3. Approval of an amendment to the FOR [_] AGAINST [_] ABSTAIN [_]
Company's Certificate of
Incorporation to increase the number
of shares of authorized Common Stock
from 10,000,000 to 20,000,000
shares.
4. Ratification of appointment of KPMG FOR [_] AGAINST [_] ABSTAIN [_]
Peat Marwick LLP as independent
auditors for fiscal 1996.
The Board of Directors favors a vote "FOR" each item.
The shares represented by this Proxy will be voted as directed. If no
direction is indicated as to Items 1, 2, 3 or 4 they will be voted in
favor of the Item(s) for which no direction is indicated.
IMPORTANT: Before returning this Proxy, please
sign your name or names on the line(s) below
exactly as shown hereon. Executors,
administrators, trustees, guardians or
corporate officers should indicate their full
titles when signing. Where shares are
registered in the name of joint tenants or
trustees, each joint tenant or trustee should
sign.
Dated:______________________, 1996
____________________________(L.S.)
____________________________(L.S.)
Shareholder(s) Sign Here
