<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
BINDLEY WESTERN INDUSTRIES, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(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:
__________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
__________________________________________________________________
2) Form, Schedule or Registration Statement No.:
__________________________________________________________________
3) Filing Party:
__________________________________________________________________
4) Date Filed:
__________________________________________________________________
<PAGE> 2
BINDLEY WESTERN INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 1996
The annual meeting of shareholders of Bindley Western Industries,
Inc. will be held at the Conference Center, 10333 North Meridian Street,
Indianapolis, Indiana, on Thursday, May 16, 1996, at 9:00 a.m., Indianapolis
time, for the following purposes:
(1) To elect eleven directors to serve until the next annual
meeting of shareholders and until their successors are elected and have
qualified;
(2) To approve or disapprove the appointment of Price Waterhouse
LLP as auditors for the Company for 1996;
(3) To approve the proposed amendment to the Company's 1993 Stock
Option and Incentive Plan, increasing from 1,500,000 to 3,000,000 the number of
shares of the Company's Common Stock subject to issuance under the plan; and
(4) To transact such other business as may come before the
meeting.
All shareholders of record at the close of business on March 22, 1996
will be eligible to vote.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING.
WHETHER OR NOT YOU EXPECT TO BE PRESENT, PLEASE FILL IN, DATE, SIGN AND RETURN
THE ENCLOSED PROXY FORM IN THE ACCOMPANYING ADDRESSED, POSTAGE-PREPAID
ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON.
Michael D. McCormick, Secretary
<PAGE> 3
BINDLEY WESTERN INDUSTRIES, INC.
10333 N. MERIDIAN STREET, SUITE 300
INDIANAPOLIS, INDIANA 46290
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1996
This statement is being furnished to shareholders on or about March
31, 1996 in connection with a solicitation by the Board of Directors of Bindley
Western Industries, Inc. (the "Company") of proxies to be voted at the annual
meeting of shareholders to be held at 9:00 a.m., Indianapolis time, Thursday,
May 16, 1996, at the Conference Center, 10333 North Meridian Street,
Indianapolis, Indiana, for the purposes set forth in the accompanying Notice.
At the close of business on March 22, 1996, the record date for the
meeting, there were 11,345,847 shares of Common Stock of the Company
outstanding and entitled to vote at the meeting. On all matters, including the
election of directors, each shareholder will have one vote for each share held.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked at any time insofar as it has not been exercised. If a
shareholder executes more than one proxy, the proxy having the latest date will
revoke any earlier proxies. A shareholder attending the meeting will be given
the opportunity to revoke his or her proxy and vote in person.
Unless revoked, a proxy will be voted at the meeting in accordance
with the instructions of the shareholder in the proxy, or, if no instructions
are given, for the election as directors of all nominees listed under Proposal
1 and for Proposals 2 and 3. Election of directors will be determined by the
vote of the holders of a plurality of the shares voting on such election.
Approval of Proposal 2 is subject to the vote of the holders of a greater
number of shares favoring approval than those opposing it. Approval of
Proposal 3 is subject to the affirmative vote of a majority of the shares
present or represented at the annual meeting and entitled to vote on the
matter. A proxy may indicate that all or a portion of the shares represented
by such proxy are not being voted with respect to a specific proposal. This
could occur, for example, when a broker is not permitted to vote shares held in
street name on certain proposals in the absence of instructions from the
beneficial owner. Shares that are not voted with respect to a specific
proposal will be considered as not present and entitled to vote on such
proposal, even though such shares will be considered present for purposes of
determining a quorum and voting on other proposals. Abstentions on a specific
proposal will be considered as present, but not as voting in favor of such
proposal. As a result, with respect to Proposals 1 and 2, neither broker
non-votes nor abstentions will affect the determination of whether such
proposals will be approved. With respect to Proposal 3, broker non-votes will
have no effect, but an abstention would have the same effect as a vote against
such proposal.
The Board of Directors knows of no matters, other than those described
in the attached Notice of Annual Meeting, which are to be brought before the
meeting. However, if other matters properly come before the meeting, it is the
intention of the persons named in the enclosed form of proxy to vote such proxy
in accordance with their judgment on such matters.
The Company intends to retain Corporate Investor Communications
("CIC") to assist in the solicitation of proxies. CIC may contact various
shareholders by telephone to solicit the return of
<PAGE> 4
their proxies. The fee to be paid to CIC is not expected to exceed $4,000.
The cost of the solicitation of proxies will be borne by the Company.
ELECTION OF DIRECTORS
NOMINEES
Eleven directors are to be elected at the meeting, each to hold office
for a term of one year and until his successor is elected and has qualified.
It is the intention of the persons named in the accompanying form of proxy to
vote such proxy for the election to the Board of Directors of the persons
identified below. Each of the nominees for director is presently a director.
If any such person is unable or unwilling to accept nomination or election, it
is the intention of the persons named in the accompanying form of proxy to
nominate such other person as director as they may in their discretion
determine, in which event the shares will be voted for such other person.
Unless otherwise indicated in a footnote to the following table, the
principal occupation of each nominee has been the same for the last five years,
and such nominee possesses sole voting and investment power with respect to the
shares of Common Stock indicated as beneficially owned by such nominee.
William E. Bindley is the father of William F. Bindley II. There is no family
relationship between any other of the directors or executive officers of the
Company.
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Present Owned on of Class
Principal Director January 31, (if more
Name Age Occupation Since 1996 than 1%)
- --------------------- --- ---------------------------- -------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
William E. Bindley (1) 55 Chairman of the Board, Chief 1970 3,151,730 (2)(3) 27.5%
Executive Officer and
President of the Company
Robert L. Koch II (4) 57 President, George Koch 1987 14,000 (5) --
Sons, Inc. (manufacturer of
industrial painting systems)
James K. Risk III (6) 54 President, Kirby Risk Supply 1987 12,817 (7) --
Company, Inc. (electrical
supply company)
K. Clay Smith (8) 58 President, Underwood Machinery 1983 8,000 (9) --
Transport, Inc. (transportation
company)
J. Timothy McGinley 55 President, H.M.I., Inc. 1987 15,000 (9) --
(real estate investment company)
Michael D. McCormick 48 Executive Vice President, 1990 231,882 (2)(10) 2.0%
General Counsel and
Secretary of the Company
William F. Bindley II 34 President, Heartland 1990 41,825 (11) --
Films, Inc. (motion picture
production company)
Thomas J. Salentine 56 Executive Vice President and 1990 275,608 (2)(12) 2.4%
Chief Financial Officer
Keith W. Burks 38 Executive Vice President 1993 177,825 (2)(13) 1.5%
</TABLE>
-2-
<PAGE> 5
<TABLE>
<S> <C> <C> <C> <C> <C>
of the Company
Seth B. Harris 56 Retired Chairman of the Board 1994 6,000 (14) ---
and President of Harris Wholesale
(wholesale pharmaceutical
distribution company)
Thomas G. Slama, M.D. 48 President and Chief Executive 1996 0 ---
Officer of National Infusion
Services, Inc. (subsidiary
of the Company) (15)
- ----------
</TABLE>
(1) Mr. Bindley also serves on the Board of Directors of Shoe Carnival,
Inc., a shoe retailer, and Key Bank, N.A., a bank holding company.
(2) Does not include shares subject to stock options which are not
exercisable within 60 days.
(3) Includes presently exercisable stock options to purchase 120,595 shares
granted by the Company.
(4) Mr. Koch also serves on the Board of Directors of CNB Bancshares, Inc.,
a bank holding company, and SIGCORP, Inc., a public utility holding
company.
(5) Mr. Koch shares voting and dispositive power with respect to 7,000 of
such shares with his wife or children. Includes presently exercisable
stock options to purchase 4,000 shares, granted under the Company's
Outside Directors Stock Option Plan.
(6) Mr. Risk also serves on the Board of Directors of Marsh Supermarkets,
Inc., a retail grocery chain.
(7) Mr. Risk shares voting and dispositive power with respect to 681 of
such shares with his wife or children. Includes presently exercisable
stock options to purchase 5,000 shares, granted under the Company's
Outside Directors Stock Option Plan.
(8) Mr. Smith also serves on the Board of Directors of Marsh Supermarkets,
Inc.
(9) Includes presently exercisable stock options to purchase 5,000 shares,
granted under the Company's Outside Directors Stock Option Plan.
(10) Includes presently exercisable stock options to purchase 224,125 shares
granted by the Company.
(11) Mr. W.F. Bindley II shares voting and dispositive power with respect to
16,825 of such shares with his spouse or minor child. Includes
presently exercisable stock options to purchase 5,000 shares, granted
under the Company's Outside Directors Stock Option Plan.
(12) Includes presently exercisable stock options to purchase 263,625 shares
granted by the Company.
(13) Includes presently exercisable stock options to purchase 170,125 shares
granted by the Company.
(14) Includes presently exercisable stock options to purchase 2,000 shares
granted under the Company's Outside Directors Stock Option Plan.
(15) Dr. Slama was elected to the Board of Directors of the Company and to
his present position on February 8, 1996. In addition to the practice
of medicine, for a period of more than the last five years Dr. Slama
has been Chief of the Division of Infectious Diseases at St. Vincent's
Hospital and Health Care in Indianapolis, Indiana and Clinical
Professor of Medicine at the Indiana University School of Medicine.
Until February 8, 1996, Dr. Slama served as President of Infectious
Disease of Indiana P.S.C. ("IDI"). In connection with the acquisition
by the Company and its subsidiary, National Infusion Services, Inc., of
certain assets of IDI, the Company agreed to use its best efforts to
cause Dr. Slama to be elected to the Board of Directors of the Company
for a period of five years.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED ABOVE.
-3-
<PAGE> 6
MEETINGS AND COMMITTEES
During 1995, the Board of Directors of the Company held four meetings.
No director attended fewer than 75% of the total meetings of the Board of
Directors and each committee on which he served. The Board of Directors does
not have a nominating committee. The Board of Directors has a Compensation and
Stock Option Committee (the "Committee"), which consists of Messrs. Harris,
Koch, McGinley, Risk and Smith. The primary function of the Committee is to
establish compensation policies and to administer all executive compensation
and stock option plans of the Company. The Committee met four times during
1995.
The Board of Directors of the Company has an Audit Committee, the
current members of which are Messrs. Koch and Smith. Mr. Bindley also served
on the Audit Committee until August 1, 1995, at which time he removed himself
to comply with the rules of the New York Stock Exchange (the "NYSE"). The
function of the Audit Committee is to meet with the independent accountants of
the Company, to review the audit plan for the Company, to review the annual
audit of the Company with the accountants together with any other reports or
recommendations made by the accountants, to recommend whether the accountants
should be continued as auditors for the Company and, if others are to be
selected, to recommend those to be selected, to meet with the chief accounting
officer for the Company and to review with him and the accountants for the
Company the adequacy of the Company's internal controls, and to perform such
other duties as shall be delegated to the Audit Committee by the Board of
Directors. The Audit Committee met once during 1995.
SECTION 16(a) REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10%
of Common Stock, to file reports of ownership with the Securities and Exchange
Commission and the NYSE. Such persons also are required to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during 1995, except for
one Form 4 filed late by the Company on behalf of Mr. Bindley with respect to
one grant of stock options, all filing requirements applicable to its executive
officers, directors, and greater than 10% shareholders were complied with.
EXECUTIVE OFFICERS
As used throughout this Proxy Statement, the term "executive officers"
refers to William E. Bindley, Chairman of the Board, Chief Executive Officer
and President, Keith W. Burks, Executive Vice President, Michael D. McCormick,
Executive Vice President, General Counsel and Secretary, Thomas J. Salentine,
Executive Vice President and Chief Financial Officer, Gregory S. Beyerl, Vice
President and Controller, Michael L. Shinn, Treasurer, and Thomas G. Slama,
M.D., President and Chief Executive Officer of National Infusion Services,
Inc., a subsidiary of the Company.
-4-
<PAGE> 7
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid during each of the Company's last three years to the
Company's Chief Executive Officer and each of the Company's four other most
highly compensated executive officers, based on salary and bonus earned during
1995 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------------------------- -----------------
Awards
------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus (1) Compensation Options (2) Compensation
- ------------------- ----- ------- -------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William E. Bindley 1995 $599,260 $247,354 $ 4,800 (3) 100,000 261,990(4)
Chairman, Chief 1994 553,500 231,172 4,800 (3) 100,000 280,467
Executive Officer and 1993 514,400 165,000 3,925 (3) 148,000 289,473
President
Thomas J. Salentine 1995 $231,315 $188,856 $14,775 (5) 60,000 22,013(6)
Executive Vice 1994 192,331 176,501 13,550 (5) 60,000 20,226
President and Chief 1993 146,600 168,000 13,637 (5) 60,000 20,690
Financial Officer
Michael D. McCormick 1995 $223,955 $188,160 $14,775 (5) 60,000 21,732(7)
Executive Vice 1994 185,750 175,850 13,813 (5) 60,000 19,609
President, General 1993 143,100 165,000 14,162 (5) 60,000 19,678
Counsel and Secretary
Keith W. Burks 1995 $214,500 $187,396 $14,775 (5) 60,000 21,556(8)
Executive Vice 1994 172,000 175,136 13,550 (5) 60,000 19,224
President 1993 119,200 150,000 12,500 (5) 60,000 19,309
Michael L. Shinn 1995 $88,083 $30,000 $ 0 15,000 9,328(9)
Treasurer 1994 81,400 25,000 0 15,000 8,720
1993 77,460 22,500 0 14,500 8,165
- --------------------------------
</TABLE>
(1) Reflects bonus earned during the specified year, which bonuses at times
have been paid in the following year.
(2) Options to acquire shares of Common Stock. The Company has no SAR plan
and has never granted restricted stock awards.
(3) Represents an auto allowance.
(4) Consists of $12,000 in Company contributions to the Company's profit
sharing plan, $18,000 in Company contributions under Mr. Bindley's
deferred compensation arrangement, $30,242 for the term insurance portion
and $177,901 for the non-term insurance portion of the split-dollar life
insurance plan, $23,286 of above market interest and $561 in group life
insurance premiums. See "---Nonqualified Deferred Compensation
Arrangements" and "---Split Dollar Life Insurance." The 1993 amount has
been restated to include the non-term insurance portion of the
split-dollar life insurance plan.
(5) Amounts indicated, in each case, represent an auto allowance of $4,800
and the balance a gift from Mr. Bindley of Common Stock of the Company.
(6) Consists of $19,382 in Company contributions to the Company's profit
sharing plans, $2,043 of above market interest and $588 in group life
insurance premiums.
(7) Consists of $19,382 in Company contributions to the Company's profit
sharing plans, $2,043 of above market interest and $307 in group life
insurance premiums.
(8) Consists of $19,382 in Company contributions to the Company's profit
sharing plans, $2,043 of above market interest and $131 in group life
insurance premiums.
(9) Consists of $9,221 in Company contributions to the Company's profit
sharing plan and $107 in group life insurance premiums.
-5-
<PAGE> 8
EMPLOYMENT AGREEMENTS AND TERMINATION BENEFITS AGREEMENTS
The Company does not have an employment agreement with any Named
Executive Officer. On February 8, 1996, National Infusion Services, Inc.
("NIS") and the Company entered into an employment agreement with Dr. Slama,
pursuant to which Dr. Slama will serve as President and Chief Executive Officer
of NIS. The agreement has a term of five years and provides for an annual base
salary of $300,000. In addition, Dr. Slama is entitled to an annual bonus
based upon the financial performance of NIS and certain of the Company's
subsidiaries. Dr. Slama is also subject to certain non-competition provisions
for the term of his employment under the agreement and for a period of five
years thereafter, and is entitled to receive a total of $1.7 million in
consideration thereof. In connection with the execution of the agreement, the
Company granted Dr. Slama options to purchase 25,000 shares of Common Stock at
an exercise price of $18.125 per share. Dr. Slama is entitled to receive, on
each of the first three anniversaries of the date of the employment agreement,
an option to purchase 25,000 shares of Common Stock at an exercise price equal
to the fair market value of the Common Stock on the date of grant. The options
are exercisable for a period of ten years and vest in fourths on each of the
first four anniversaries of the respective dates of grant. The Company also
agreed to use its best efforts to elect Dr. Slama to the Board of Directors of
the Company for a period of five years. Dr. Slama has a termination benefits
agreement with NIS on substantially the same terms as described below, except
that Dr. Slama's agreement is based upon a "Change in Control" of NIS rather
than the Company and his lump-sum payment will be grossed up in an amount
sufficient to cover any excise tax imposed upon such payment pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code").
The Company has entered into a Termination Benefits Agreement with each
of Messrs. Bindley, Salentine, McCormick, and Burks (the "Covered Named
Executive Officers"). The purpose of the agreements is to encourage them to
remain with the Company by assuring them of certain benefits in the event of a
"Change in Control" of the Company.
The Termination Benefits Agreements provide for payments to the Covered
Named Executive Officers upon the occurrence of certain events. Each
Termination Benefits Agreement has a term of three years and is automatically
extended annually for an additional one-year period unless notice is given by
the Company or the Covered Named Executive Officer. The Termination Benefits
Agreements are designed to protect the Covered Named Executive Officer against
termination of his employment following a "Change in Control" of the Company.
For purposes of the Termination Benefits Agreement, "Change in Control" is
broadly defined to include, among other things, the acquisition by a person or
group of persons of 25% or more of the combined voting power of the stock of
the Company, the replacement of a majority of the current Board of Directors,
the approval by the shareholders of the Company of a reorganization, merger or
consolidation or the approval by shareholders of a liquidation or dissolution
of the Company or the sale or disposition of all or substantially all of the
assets of the Company.
Following a "Change in Control," the Covered Named Executive Officer is
entitled to the benefits provided by the Termination Benefits Agreement in the
event his employment is terminated for any reason other than his death,
disability, or normal retirement or is terminated by the Company for cause.
In addition, the Covered Named Executive Officer is entitled to the
benefits of the Termination Benefits Agreement if after a "Change in Control,"
he terminates his employment with the Company in response to certain actions by
the Company which include, among other things, a substantial reduction in his
duties or responsibilities, a reduction in the level of salary payable to him,
the failure by the Company to continue to provide him with benefits
substantially similar to those previously
-6-
<PAGE> 9
provided to him, the required relocation of the Covered Named Executive
Officer, or the breach by the Company of any of the provisions of the
Termination Benefits Agreement.
Upon termination of employment, a Covered Named Executive Officer who
is entitled to the benefits payable under the Termination Benefits Agreement
shall receive within 30 days following the termination all earned but unpaid
salary, bonus and incentive payments through the date of his termination. In
addition, he shall be entitled to a lump-sum payment of an amount equal to 2.9
times the Covered Named Executive Officer's average annual compensation paid by
the Company for the past five years.
COMPENSATION OF DIRECTORS
During 1995, the Company paid directors who are not employees of the
Company an annual retainer of $15,000 and a fee of $1,000 for each committee
meeting or special meeting of the Board of Directors attended. Directors who
are full- time employees do not receive any additional compensation for serving
as directors or for attending meetings, but all directors are reimbursed for
all reasonable out-of-pocket expenses incurred in connection with attendance at
meetings.
On March 29, 1991, the Board of Directors adopted, subject to
shareholder approval, an Outside Directors Stock Option Plan (the "Directors
Plan"). The shareholders approved the Directors Plan at the 1991 annual
meeting. Pursuant to the Directors Plan, each Eligible Director (as defined
therein) is automatically granted an option to purchase 1,000 shares of common
stock on June 1 of each year beginning 1991. The option price per share is 85%
of the fair market value of one share of Common Stock on the date of grant.
The option becomes exercisable six months following the date of grant and
expires ten years following the date of grant. Options may be exercised by the
holder only if he has been in continuous service on the Board of Directors at
all times since the grant of the option. There are currently six Eligible
Directors - Messrs. W.F. Bindley, Harris, Koch, McGinley, Risk and Smith. On
June 1, 1995, each of such Eligible Directors received an option to purchase
1,000 shares of Common Stock at an exercise price of $13.39. The Eligible
Directors are not eligible for grants or awards under any other stock, bonus or
benefit plans of the Company.
PROFIT SHARING PLAN
The Company and its subsidiaries maintain a qualified profit sharing
plan ("Profit Sharing Plan") for eligible employees of the Company and its
subsidiaries. All employees are generally eligible to participate in the
Profit Sharing Plan as of the first January 1, April 1, July 1 or October 1
after having completed at least one year of service (as defined in the Profit
Sharing Plan) and having reached age 21.
The annual contribution of the Company and its subsidiaries to the
Profit Sharing Plan is at the discretion of the Board and is generally 8% of a
participant's compensation for the year. The employer contribution for a year
is allocated among participants employed on the last day of the year in
proportion to their relative compensation for the year. Subject to limitations
imposed by the Code, a participant may, in addition to receiving a share of the
employer contribution, have a whole percentage (ranging from 1% to 13%) of his
or her compensation withheld from pay and contributed to the Profit Sharing
Plan. Subject to applicable Code requirements, employees may make "rollover"
contributions to the Profit Sharing Plan of qualifying distributions from other
employers' qualified plans.
-7-
<PAGE> 10
NONQUALIFIED DEFERRED COMPENSATION ARRANGEMENTS
On December 9, 1994, the Company established the Bindley Western
Industries, Inc. 401(k) Excess Plan ("401(k) Excess Plan") and the Bindley
Western Industries, Inc. Profit Sharing Excess Plan ("Profit Sharing Excess
Plan"), both of which are non-qualified deferred compensation plans for a
select group of executive employees. The four executives currently eligible to
participate in the plans are Messrs. Bindley, McCormick, Salentine, and Burks.
The Profit Sharing Excess Plan was established to compensate the eligible
executives for the effect of a new Code limitation on the contributions made on
their behalf to the Company's Profit Sharing Plan. The 401(k) Excess Plan is
designed to permit the eligible executives to save for retirement on a pre-tax
basis beyond the extent permitted under the Profit Sharing Plan's 401(k)
feature.
Effective January 1, 1994, the Omnibus Budget Reconciliation Act of
1993 ("OBRA 93") reduced the amount of an employee's compensation that could be
taken into account in determining contributions or benefits under a qualified
pension or profit sharing plan. Under the Profit Sharing Excess Plan, for each
year that an executive is in the plan, the Company will credit to the
executive's account an amount designed to be equal to the difference between
(1) the contribution that the Company may lawfully make on the executive's
behalf to the Profit Sharing Plan for the year, and (2) the amount that the
Company could have contributed to the Profit Sharing Plan for the executive for
that year had OBRA 93 not reduced the compensation limitation. The Profit
Sharing Excess Plan also provides for an additional annual contribution on
behalf of Mr. Bindley. This additional contribution for Mr. Bindley was
formerly provided under a separate deferred compensation agreement between Mr.
Bindley and the Company. That arrangement has now been terminated, and the
amounts accumulated in Mr. Bindley's account under that arrangement have been
transferred to his account under the Profit Sharing Excess Plan.
The 401(k) Excess Plan permits the eligible executives voluntarily to
defer portions of their pre-tax salary and bonus beyond what they can now defer
under the 401(k) feature of the Profit Sharing Plan. Under the 401(k) Excess
Plan, an eligible executive may elect to defer up to 100% of those portions of
his salary and bonus that he is not able to defer under the Profit Sharing
Plan.
Amounts credited to an executive's account under the Profit Sharing
Excess Plan are deemed to bear interest each year at an annual rate equal to
the rate of return of the Standard & Poor's 500 Index for the year. With
respect to amounts deferred under the 401(k) Excess Plan, each executive, at
the time he makes his deferral election for the coming year, may designate the
investment option or options (from among those available under the Profit
Sharing Plan) to serve as the measure of the investment earnings and losses on
the executive's deferrals for the year. Under both plans, a participating
executive may choose the form in which his benefits will be paid to him or his
beneficiary upon his retirement or death. The three options available are a
single lump sum payment, quarterly installment payments for a specified period
of up to 15 years, and annual installment payments over a specified period of
up to 15 years.
The Company's contributions under the Profit Sharing Excess Plan and
amounts deferred under the 401(k) Excess Plan are credited in separate trusts.
Each trust is what is commonly referred to as a "rabbi trust" arrangement,
pursuant to which the assets of the trust are subject to the claims of the
Company's general creditors in the event of the Company's insolvency. The
trust assets are invested by the trustee in accordance with written investment
guidelines submitted to the trustee from time to time by the Committee.
Currently, such assets include cash and corporate owned life insurance policies
on the lives of Messrs. Burks and McCormick.
Effective January 1, 1996, the Company adopted the First Amendment to
the 401(k) Excess Plan (the "Amendment"). The Amendment is designed to comply
with the conditions set forth in a
-8-
<PAGE> 11
1995 Internal Revenue Service ruling regarding the coordination between
non-qualified deferred compensation plans and 401(k) plans. To conform to the
ruling, the executive must decide the total deferral he wants to make for the
year and elect to have that deferral made under the 401(k) Excess Plan. Once
the plan administrator of the Profit Sharing Plan determines how much the
executive can defer under the Profit Sharing Plan's 401(k) feature for a year
without exceeding Code limits, then that amount will be transferred from the
401(k) Excess Plan to that executive's Profit Sharing Plan 401(k) account.
SPLIT DOLLAR LIFE INSURANCE
The Company and a family trust created by Mr. Bindley established in
December 1992 a split-dollar life insurance arrangement on the life of Mr.
Bindley. The life insurance policy provides coverage in the amount of $7
million. The trust pays premiums on the policy as if it were a one year term
life policy. The Company pays the excess premiums. In addition, the Company
pays to Mr. Bindley an annual bonus in an amount sufficient to cover the
premiums paid by the trust and the tax liability on the bonus.
At the earlier of Mr. Bindley's death or December 16, 2007, the Company
will be reimbursed for all premiums paid by it. In the event of Mr. Bindley's
death, the balance of the proceeds of the policy would be paid to the trust
established by Mr. Bindley and used to purchase Common Stock of the Company
from Mr. Bindley's estate. The premiums on the policy are $404,350, of which
$390,910, $389,720, $388,530 and $387,270 were paid by the Company on January
25, 1993, December 15, 1993, December 14, 1994, and December 15, 1995,
respectively.
The Company also purchased a $13 million term life insurance policy on
the life of Mr. Bindley in June 1993. The Company is both the owner and
beneficiary of the policy. The premiums on the policy of $23,060, $27,610 and
$35,410 were paid by the Company on June 4, 1993, May 31, 1994 and May 30,
1995, respectively.
STOCK OPTIONS
On June 27, 1983, the Company's Board of Directors and the then sole
shareholder approved two stock option plans, a nonqualified stock option plan
(the "Nonqualified Plan") and an incentive stock option plan (the "ISO Plan").
The Nonqualified Plan and the ISO Plan reserve 200,000 and 300,000 shares,
respectively, of Common Stock (subject to adjustment for subsequent stock
splits, stock dividends and certain other changes in the Common Stock) for
issuance pursuant to the exercise of options granted by the Board of Directors.
The Nonqualified Plan and the ISO Plan are administered by the Committee.
On March 21, 1987, the Board of Directors adopted, subject to
shareholder approval, the 1987 Stock Option and Incentive Plan (the "1987
Plan"). The shareholders approved the 1987 Plan at the 1987 annual meeting of
shareholders. As a result, no further awards will be made under the ISO Plan
or the Nonqualified Plan. The 1987 Plan reserves for issuance 2,000,000 shares
of Common Stock pursuant to incentive awards granted by the Committee. The
1987 Plan provides for the grant to officers and other key employees of the
Company or its subsidiaries of incentive awards in the form of stock options or
restricted stock. Stock options granted under the 1987 Plan may be either
options intended to qualify for federal income tax purposes as "incentive stock
options" or options not qualifying for favorable tax treatment ("nonqualified
stock options"). The shareholders amended the 1987 Plan at the 1989, 1990,
1991 and 1994 annual meetings of shareholders.
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<PAGE> 12
The Company's shareholders approved the 1993 Stock Option and Incentive
Plan (the "1993 Plan") on May 20, 1993, and amended it at the 1994 annual
meeting of shareholders. The 1993 Plan reserves for issuance 1,500,000 shares
of the Company's Common Stock for sale or award to officers and key employees
(including any such officer or employee who holds at least 10% of the Company's
outstanding Common Stock) as stock options or restricted stock. As a result of
the adoption of the 1993 Plan, no further awards will be made from the shares
of Common Stock that remained available for grants under the 1987 Plan.
The Company's Board of Directors has proposed to amend the 1993 Plan.
For a description of the proposed amendment, see "Approval of Amendments to the
Company's 1993 Stock Option and Incentive Plan."
The following table sets forth information with respect to options
granted by the Company under the 1993 Plan to the Named Executive Officers
during 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
------------------------------------------------------------------ ----------------
% of Total
Options
Granted
Number of to Market
Securities Employees Price
Underlying in on
Options Fiscal Exercise Date of Grant Date
Name Granted Year Price Grant Expiration Date Present Value (1)
- --------------------- ------------ ------ ----------- --------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
William E. Bindley 5,00(2) 0.8% $19.3875 --- December 8, 2000 $ 29,000(3)
50,00(4) 7.7% 13.2500 $15.50 December 9, 2004 486,000(5)
45,00(6) 7.0% 17.6250 --- December 8, 2005 418,950(7)
Thomas J. Salentine 60,00(8) 9.3% 17.6250 --- December 8, 2005 558,600(7)
Michael D. McCormick 60,00(8) 9.3% 17.6250 --- December 8, 2005 558,600(7)
Keith W. Burks 60,00(8) 9.3% 17.6250 --- December 8, 2005 558,600(7)
Michael L. Shinn 15,00(9) 2.3% 17.6250 --- December 8, 2005 139,650(7)
- --------------------------
</TABLE>
(1) The Company does not believe that the Black-Scholes model or any other
valuation model is a reliable method of computing the present value of
the Company's employee stock options. The value ultimately realized,
if any, will depend on the amount by which the market price of the
stock exceeds the exercise price on the date of exercise.
(2) Incentive stock options granted at 110% of the fair market value of
the stock on the date of grant. The options are exercisable on or
after December 8, 1996.
(3) The grant date present value is based on a Black-Scholes model and
assumes a risk-free rate of return of 5.51%, an option term of five
years, a dividend yield of 0.45%, a stock volatility of 31.81% and no
adjustments for nontransferability or risk of forfeiture.
(4) Nonqualified stock options granted at 85% of the fair market value of
the stock on the date of grant. The options are exercisable at the
rate of 25% per year, beginning on December 9, 1995.
(5) The grant date present value is based on a Black-Scholes model and
assumes a risk-free rate of return of 7.96%, an option term of ten
years, a dividend yield of 0.52%, a stock volatility of 33.22% and no
adjustments for nontransferability or risk of forfeiture.
-10-
<PAGE> 13
(6) Nonqualified stock options granted at 100% of the fair market
value of the stock on the date of grant. The options are
exercisable at the rate of 25% per year, beginning on December
8, 1996.
(7) The grant date present value is based on a Black-Scholes model and
assumes a risk-free rate of return of 5.89%, an option term of ten
years, a dividend yield of 0.45%, a stock volatility of 31.81% and no
adjustments for nontransferability or risk of forfeiture.
(8) Consists of 5,000 shares of incentive stock options and 55,000 shares
of nonqualified stock options, both granted at 100% of the fair market
value of the stock on the date of grant. The incentive stock options
are exercisable on or after December 8, 1996 and the nonqualified
stock options are exercisable at the rate of 25% per year, beginning
on December 8, 1996.
(9) Consists of 5,673 shares of incentive stock options and 9,327 shares
of nonqualified stock options, both granted at 100% of fair market
value on the date of grant. The incentive stock options are
exercisable on or after December 8, 1996 and the nonqualified stock
options are exercisable at the rate of 25% per year, beginning on
December 8, 1996.
The following table sets forth information with respect to the
exercise of options by the Named Executive Officers during 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End at Fiscal Year-End (2)
--------------------------- ------------------------
Shares Value
Acquired on Realized
Name Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
- ------------------ ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William E. Bindley --- --- 108,095 239,905 $ 523,593 $ 834,731
Thomas J. Salentine --- --- 263,625 125,375 1,596,064 290,656
Michael D. McCormick --- --- 224,125 125,375 1,168,199 290,656
Keith W. Burks 5,000 $ 42,800 170,125 125,375 745,099 290,656
Michael L. Shinn 9,625 56,700 25,000 23,875 91,219 38,969
- ------------------
</TABLE>
(1) The value is calculated based on the difference between the option
exercise price and the closing market price of the Common Stock on the
date of exercise, multiplied by the number of shares to which the
exercise relates.
(2) The closing price for the Company's Common Stock as reported by the
NYSE on December 31, 1995 was $17.00. The value is calculated on the
basis of the difference between the Common Stock option exercise price
and $17.00, multiplied by the number of "In-the-Money" shares of
Common Stock underlying the option.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Committee's established practice with respect to executive
compensation has been to: (a) conduct annual merit reviews in May of each year,
to become effective June 1; (b) grant stock options on the second Friday of
each December; and (c) approve annual bonuses payable, in whole or part, during
December or the following January or March. The Committee applied the criteria
discussed below to the June 1, 1995 annual merit reviews and the 1995 annual
bonus amounts for the executive officers.
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<PAGE> 14
Executive Compensation Policy
The Company's compensation policy is designed to: (a) be competitive
so that the Company can attract, reward, and retain the quality talent that is
essential to its continued success; (b) motivate key employees through the use
of incentive compensation programs, including annual bonuses and stock option
grants; (c) treat employees fairly and, at the same time, be cost effective;
(d) foster teamwork within the Company so that employees share in the rewards
and risks of the Company; (e) offer executive officers the opportunity to
achieve significant levels of ownership in the Company's stock so that their
interests will be aligned with those of its shareholders; and (f) assure that
executive officers' compensation will be tax deductible to the maximum extent
permissible.
Cash Based Compensation
Base Compensation. In making compensation decisions, the Committee's
subjective review process primarily includes: (a) an analysis of executive
compensation levels within the pharmaceutical distribution industry at other
publicly-traded companies of comparable size and stature by reviewing proxy
statements and national compensation surveys and reports; (b) individual
efforts and accomplishments within the Company, the distribution industry, and
the community; (c) management experience and development; (d) team building
skills consistent with the Company's best interests; and (e) base compensation
paid to other executive officers within the Company. For the past three years,
annual merit increases have averaged 9.25%. During this period, certain
executive officers have received greater base compensation increases
corresponding to promotions and/or expanded responsibilities.
The Committee's decision with respect to 1995 base compensation was
made after the annual merit review of the other executive officers was
conducted by the CEO. During May 1995, the Committee authorized the CEO to
increase the base salaries for Messrs. Burks, McCormick, and Salentine. These
annual merit increases averaged 8.8% and were made effective on June 1, 1995.
Annual Bonus. A portion of the cash compensation of the executive
officers (and most other salaried employees) consists of annual bonus payments
under the Company's bonus pool. The bonus pool is approved annually by the
Committee and the Board of Directors. For the past three years, the bonus pool
has averaged $1,136,709. Allocation of the bonus pool to the executive
officers (other than the CEO) is based on recommendations made by the Committee
with input from the CEO. Allocation of the bonus pool to non-executive
officers is generally based on recommendations made by the heads of the
Company's divisions or departments.
The Committee gives equal consideration to the Company's overall
performance and the executive officer's performance for the specific areas of
the Company under his or her direct control. This 50-50 balance supports
accomplishment of overall objectives and rewards individual contributions by
the executive officers.
At the December 9, 1994 meeting, the Committee elected to expand its
previously reported measures of the Company's performance for purposes of
establishing the annual bonuses for the executive officers by including year to
year comparisons in the following areas: (a) net gross sales; (b) net DSD
sales; (c) operating cash flow; (d) operating earnings; (e) net pre tax
earnings; (f) net after tax earnings; (g) shareholders equity; (h) primary and
fully diluted earnings per share; and (i) December 31 closing stock price. Of
these criteria, operating earnings were given the greatest weight and
shareholders equity the least weight. If the 1995 operating earnings were
greater than those in 1994 and if the percentage improvement of the other
criteria averaged at least 10%, the Committee agreed to approve 1995 bonuses to
Messrs. Bindley, Burks, McCormick and Salentine
-12-
<PAGE> 15
such that the combination of salary and bonus equaled 2.14% of operating
earnings for 1995, compared to 2.09% for 1994 and 2.07% for 1993. On March 21,
1996, the Committee ratified the above noted bonuses to be paid during that
month. These bonus amounts average 64% of base compensation for these
executive officers, compared to 69% for 1994 and 70% for 1993.
The Committee deems such financial goals to be a valid measure of
performance within the pharmaceutical distribution industry and consistent with
the Company's best interests. Discretionary adjustments by the Committee are
possible should unforeseen or uncontrollable events occur during the course of
the year.
The Committee's intent is to make the executive officers' total cash
compensation package (base compensation plus annual bonus) competitive with
other publicly-traded companies of comparable size and stature within the
pharmaceutical distribution industry. Based on its analysis of total cash
compensation for similar executive officers within the pharmaceutical
distribution industry, the Committee has determined the Company's cash
compensation for its executive officers to be competitive with respect to the
Company's relative position within the industry.
Equity Based Compensation
The Committee believes that equity compensation, in the form of stock
options, is an important element of performance based compensation of executive
officers. By granting stock options, the Committee will continue the Company's
long-standing practice of increasing key employees' equity ownership in order
to ensure that their interests remain closely aligned with those of the
Company's shareholders. Stock options and equity ownership in the Company
provide a direct link between executive compensation and shareholder value.
Stock options also create an incentive for key employees to remain with the
Company for the long term because the options are not immediately exercisable
and, if not exercised, are forfeited if the employee leaves the Company before
retirement.
Consistent with the above philosophy, the Committee, based on input
from the CEO, approved the granting of stock options to 182 key employees on
December 8, 1995. For the executive officers (other than the CEO) the
Committee considered: (a) the CEO's input; (b) the Company's long-standing
practices with respect to stock option grants; (c) the objective criteria for
evaluating the Company's performance previously set forth in the discussion
with respect to cash compensation; (d) subjective criteria with respect to
individual performance, including individual efforts and accomplishments,
experience, and team building skills; and (e) the number of stock option grants
to other executive officers within the Company. No executive officer was
granted more stock options in 1995 than in 1994.
Compensation of William E. Bindley, Chairman, Chief Executive Officer,
and President
Mr. Bindley's cash compensation is based on the same factors as the
other executive officers. As represented in the Summary Compensation Table set
forth under "Compensation of Executive Officers and Directors," Mr. Bindley's
cash compensation is 7.9% greater in 1995 than 1994. Mr. Bindley's 1995 annual
bonus, when adjusted for income attributable to the premiums and taxes on the
split dollar life insurance policy described under "Compensation of Executive
Officers and Directors -- Split Dollar Life Insurance," was in an amount equal
to 0.65% of the Company's 1995 operating earnings, compared to 0.64% in 1994
and 0.53% in 1993. The Committee's decision to increase Mr. Bindley's cash
compensation was based on the subjective and objective criteria previously set
forth in this report in the discussion with respect to cash compensation,
including
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<PAGE> 16
Mr. Bindley's leadership during a year in which the Company posted record sales
and earnings, notwithstanding extremely competitive pressure on margins, and
the successful acquisition of the IV One Companies.
Since the approval of the 1993 Plan, Mr. Bindley has also participated
in the Company's equity based compensation program. By employing the
subjective and objective criteria previously set forth in the discussion with
respect to cash and equity based compensation, the Committee granted Mr.
Bindley the stock options shown in the Option Grants In Last Fiscal Year table
set forth under "Compensation of Executive Officers and Directors."
It is the Committee's view that Mr. Bindley's total compensation
package for 1995 was based on an appropriate balance of: (a) individual
performance; (b) Company performance; and (c) other CEO compensation packages
within the pharmaceutical distribution industry. The Committee points out that
the companies used for evaluation of competitive compensation may not, in all
cases, be the same as those companies comprising the industry peer group
described under "Compensation of Executive Officers and Directors--Performance
Graph."
Compensation and Stock Option Committee
Seth B. Harris
Robert L. Koch II
J. Timothy McGinley
James K. Risk III
K. Clay Smith
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<PAGE> 17
PERFORMANCE GRAPHS
The performance graph set forth below compares the cumulative total
shareholder return on the Company's Common Stock with the New York Stock
Exchange Index and with peer companies within SIC Code 5122 (Drug, Drug
Proprietaries and Druggists' Sundries) for the years 1990 through 1995.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
NEW YORK STOCK EXCHANGE INDEX AND SIC 5122 COMPANIES
<TABLE>
<CAPTION>
December 31 . . . 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
New York Stock Exchange 100.00 129.41 135.50 153.85 150.86 195.61
SIC 5122 Companies 100.00 119.96 130.86 152.75 198.74 257.74
Bindley Western 100.00 138.89 102.80 97.27 127.76 140.83
</TABLE>
The Company's Common Stock has been listed on the NYSE since August 2,
1995. Prior to that time, the Company's Common Stock was traded on the Nasdaq
National Market System. As a result, the performance graph in the Company's
Proxy Statement for the 1995 annual meeting of shareholders compared the
cumulative total shareholder return on the Company's Common Stock with the
Nasdaq Market Index and the Nasdaq Index for Non-Financial Stocks. The
performance graph set forth on the following page provides such comparison for
the years 1990 through 1995.
-15-
<PAGE> 18
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
NASDAQ MARKET INDEX AND NASDAQ INDEX FOR NON-FINANCIAL STOCKS
<TABLE>
<CAPTION>
December 31 . . . 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Nasdaq Stock Market (U.S.) 100.00 160.56 186.87 214.51 209.69 296.30
Nasdaq Non-Financial Stocks 100.00 160.98 176.09 203.32 194.86 267.92
Bindley Western 100.00 138.89 102.80 97.27 127.76 140.83
</TABLE>
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that may incorporate future
filings (including this Proxy Statement, in whole or in part), the preceding
Committee Report on Executive Compensation and the stock price Performance
Graphs shall not be incorporated by reference in any such filings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On March 18, 1993, the Board of Directors established the Committee to
approve compensation and stock option grants for the Company's executive
officers. The Committee members during 1995 were Messrs. Harris, Koch,
McGinley, Risk and Smith. None of the Committee members are involved in a
relationship requiring disclosure as an interlocking executive officer/director
or under Item 404 of Regulation S-K or as a former officer or employee of the
Company.
CERTAIN TRANSACTIONS
LEASE AND PURCHASE OF BUILDING
Until September 30, 1995, the Company leased its Indianapolis facility
from a limited partnership, the general partner of which is Mr. Bindley. The
Company paid $83,250 in rent to the limited partnership during fiscal 1995. On
September 30, 1995, the Company terminated the lease
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<PAGE> 19
of its Indianapolis facility, and on October 1, 1995, the Company purchased the
Indianapolis facility and 2.19 acres of adjoining real estate from the limited
partnership for $1,450,000. Based upon an opinion of value received from its
real estate advisor, the Company believes that the purchase price represents
fair market value for the Indianapolis facility and adjoining real estate. The
Company also believes that the lease in effect prior to the purchase was on
terms no less favorable to the Company than those that could have been obtained
from unaffiliated third parties.
APPROVAL OF AMENDMENT TO THE COMPANY'S 1993 STOCK OPTION
AND INCENTIVE PLAN
On December 8, 1995, the Board of Directors of the Company adopted an
amendment to the Company's 1993 Plan and directed that the amendment to the
1993 Plan be submitted to the shareholders of the Company for consideration and
approval at the 1996 annual meeting. The amendment would increase from
1,500,000 to 3,000,000 the number of shares available for issuance pursuant to
awards made under the 1993 Plan. The purpose of the 1993 Plan is and has been
to promote the long-term interests of the Company and its shareholders by
providing a means of attracting and retaining officers and key employees of the
Company. The Company believes that employees who own shares of the Company's
Common Stock will have a closer identification with the Company and greater
motivation to work for the Company's success by reason of their ability as
shareholders to participate in the Company's growth and earnings.
While options remain outstanding under each of the ISO Plan, the
Nonqualified Plan and the 1987 Plan, new awards can only be made under the 1993
Plan. See "Compensation of Executive Officers and Directors -- Stock Options."
As of March 15, 1996, options to purchase 7,500 shares remained outstanding
under the ISO Plan and the Nonqualified Plan combined, 961,954 shares under the
1987 Plan and 1,744,725 shares under the 1993 Plan. The following is a summary
of the principal features of the 1993 Plan.
ELIGIBLE PERSONS
Recipients of incentive awards under the 1993 Plan must be, or have
been at the time of grant, officers or key employees (as determined by the
Committee). The Company presently has approximately 200 officers and employees
who fall within the category of key employees and may be considered for
incentive awards under the 1993 Plan. No awards may be granted to directors
who are not also employees of the Company or one of its subsidiaries.
STOCK SUBJECT TO THE 1993 PLAN
If the amendment to the 1993 Plan is approved by the shareholders, the
number of shares subject to the 1993 Plan would be increased from 1,500,000 to
3,000,000. The number of shares subject to the 1993 Plan is subject to
antidilution adjustments.
The number of shares covered by an award under the 1993 Plan reduces
the number of shares available for future awards under the 1993 Plan; however,
any shares of restricted stock that ultimately are forfeited to the Company by
the grantee (so long as any cash dividends paid on such shares are also
forfeited) will become available for further incentive awards under the 1993
Plan. Similarly, if any stock option granted under the 1993 Plan expires,
terminates, or is surrendered or cancelled without having been exercised in
full, the number of shares then subject thereto is added back to the number of
remaining available shares under the 1993 Plan.
-17-
<PAGE> 20
The closing sale price of the Company's Common Stock on March 21,
1996, as quoted on the NYSE and reported in The Wall Street Journal, was $16.25
per share.
ADMINISTRATION OF THE PLAN
The 1993 Plan is administered by the Committee which is presently
composed of five directors who are not eligible to participate in the 1993
Plan. Subject to the terms of the 1993 Plan, the Committee has sole authority
to determine and designate those officers and key employees who are to be
granted incentive awards under the 1993 Plan and the nature and terms of the
incentive awards to be granted, including the number of shares to be subject to
such awards.
GRANT OF STOCK OPTIONS
With respect to the grant of stock options under the 1993 Plan that
are intended to qualify as "incentive stock options" under Section 422 of the
Code, the option price is 100% (or 110% in the case of any holder of 10% or
more of the voting power of the Company) of the fair market value of the
Company's Common Stock on the date of the grant of the stock option. The
aggregate fair market value (determined on the date of grant) of the shares of
stock subject to "incentive stock options" that become exercisable for the
first time by a grantee in any calendar year may not exceed $100,000. The
Committee establishes the exercise price of nonqualified stock options at the
time the options are granted.
The exercise price of, and the number of shares subject to, an option
are adjusted by the Committee in the event of stock splits, stock dividends,
recapitalizations and certain other events involving a change in the Company's
capital.
The 1993 Plan provides that the Committee may, as a condition of
granting any stock option, require the grantee to surrender for cancellation
one or more stock options previously granted under the 1993 Plan. This
authority would enable the Committee to substitute options at a lower price in
periods when the market price of the Common Stock declines.
EXERCISE OF STOCK OPTIONS
No incentive stock option granted under the 1993 Plan may be exercised
more than ten years or five years in the case of any holder of 10% or more of
the voting power of the Company (or such shorter period as the Committee may
determine) from the date it is granted. Nonqualified stock options may be
exercised during such period as the Committee determines at the time of grant.
If a grantee's employment with the Company or a subsidiary is
terminated for cause or voluntarily by the grantee for any reason other than
death, disability or retirement, such grantee's options expire at the date of
termination.
Stock options granted under the 1993 Plan become exercisable in one or
more installments in the manner and at the time or times specified by the
Committee at the time of grant.
RESTRICTED STOCK
Incentive awards may be made in the form of restricted stock, in which
case the participant would be granted shares of the Company's Common Stock,
which shares would be subject to such forfeiture provisions and transfer
restrictions as the Committee determined at the time of grant. Pending the
lapse of such forfeiture provisions and transfer restrictions, certificates
representing
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<PAGE> 21
restricted stock would be held by the Company, but the grantee generally would
have all of the rights of a stockholder, including the right to vote the shares
and the right to receive all dividends thereon.
While restricted stock would be subject to forfeiture provisions and
transfer restrictions for a period or periods of time, the 1993 Plan does not
set forth any minimum or maximum duration for such provisions and restrictions.
It is expected that the terms of restricted stock awards ordinarily will
provide that the restricted stock will be forfeited to the Company if the
grantee ceases to be employed by the Company prior to the lapse of the
forfeiture provisions and transfer restrictions, subject to exceptions for
death, disability or retirement while employed by the Company. It is also
expected that a specified percentage of the restricted stock will become free
of the forfeiture provisions and transfer restrictions on each anniversary of
the date of grant of the restricted stock award.
As of the date of this Proxy Statement, the Company has not made any
awards of restricted stock.
PAYMENT FOR SHARES; LOANS BY THE COMPANY
The Committee may permit payment of the exercise price of stock
options to be made in cash, by the surrender of Common Stock valued at its then
fair market value, or by such other means (including a combination of stock so
valued and cash) as it deems appropriate.
The 1993 Plan empowers the Company to make loans to grantees in
connection with the exercise of stock options or the ownership of restricted
stock, up to the following amounts:
(1) With respect to the exercise of stock options, the sum of the
exercise price and the amount of income taxes reasonably estimated to be
payable by the grantee in connection with such exercise; or
(2) With respect to restricted stock, the amount of income taxes
reasonably estimated to be payable by the grantee in connection with the
ownership of the restricted stock.
Loans made under the terms of the 1993 Plan bear interest at such
rates as may be established by the Committee. No loan may have an initial term
exceeding three years, but the loan may be renewed at the discretion of the
Committee. With the consent of the Committee, loans may be repaid in shares of
common stock at their then fair market value. Loans may, but are not required
to be, secured by shares of Common Stock.
MISCELLANEOUS PROVISIONS
The Committee may accelerate the period of exercise or vesting of any
incentive award, either absolutely or contingently, for such reasons as the
Committee may deem appropriate.
In general, if the employment of a recipient of restricted stock is
involuntarily terminated within 18 months following a change in control of the
Company, the forfeiture provisions and transfer restrictions applicable to such
stock lapse. In addition, in the event of a tender offer or exchange offer for
the Common Stock or upon the occurrence of certain other events, all options
granted under the 1993 Plan shall become exercisable in full, unless otherwise
provided by the Committee.
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<PAGE> 22
AMENDMENT OF THE PLAN
The Board, or the Committee with the approval of the Board, may at any
time terminate or amend the 1993 Plan. No amendments to the 1993 Plan will
require shareholder approval unless such approval is required to comply with
Rule 16b-3 under the Securities Exchange Act of 1934, Section 422 of the Code
or the requirements of the NYSE.
FEDERAL INCOME TAX CONSEQUENCES
The statements below are based upon those laws that are in force on
the date of this Proxy Statement and are subject to any subsequent changes
therein. The following discussion applies only to acquisitions or dispositions
of shares occurring during the lifetime of the optionees. The consequences may
differ in the event of an acquisition or disposition of shares following the
death of an optionee. The Company and its employees may also be subject to
other federal, state and local taxes.
Nonqualified Stock Options
The holder of a nonqualified stock option does not recognize taxable
income upon the grant of the option, nor is the Company entitled, for income
tax purposes, to a deduction. The optionee recognizes ordinary income on the
date the option is exercised, in an amount equal to the excess of the fair
market value of the shares on the date the option is exercised over the option
price of such shares. Such income is ordinary compensation income subject to
withholding and the Company is generally entitled to a deduction in computing
its federal income taxes in an amount equal to the compensation taxable to the
optionee as ordinary income. Such deduction is available in the year in which
the income is taxable to the optionee.
Upon the optionee's sale of option shares, if the selling price
exceeds the fair market value of the option shares on the date of exercise, the
excess is taxable to the optionee as capital gain income (long- or short-term,
depending on whether the optionee has then held the option shares for more than
one year) and no deduction is allowed to the Company with respect to such
excess. Should the selling price of the option shares be less than their fair
market value on the date of exercise, the difference is treated as a capital
loss to the optionee (long- or short-term, depending on whether the optionee
has then held the option shares for more than one year).
Incentive Stock Options
The holder of an incentive stock option does not recognize taxable
income upon the grant or exercise of the option, nor is the Company entitled,
for income tax purposes, to a deduction in respect of such grant or exercise.
The income tax treatment of any gain or loss realized upon an
optionee's disposition of option shares depends on the timing of the
disposition. If the option shares have been held for at least one year and if
at least two years have elapsed since the date of grant, then (i) if the
selling price exceeds the option price, the excess is taxable to the optionee
as long-term capital gain, and (ii) if the selling price is less than the
option price, the difference is treated as a long-term capital loss. In
neither event is any deduction allowed to the Company.
If a disposition of option shares occurs prior to the elapsing of the
two time periods referred to above (a "disqualifying disposition"), then (i) if
the selling price exceeds the fair market value of the option shares on the
date the option was exercised, the excess of such fair market value over the
option price is taxable to the optionee as ordinary income, and the excess of
the selling price
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<PAGE> 23
over such fair market value is taxable to the optionee as capital gain income
(long- or short-term, depending on whether the optionee has held the option
shares for more than one year), (ii) if the selling price exceeds the option
price but does not exceed the fair market value of the option shares on the
date the option was exercised, the excess of the selling price over the option
price is taxable to the optionee as ordinary income, and (iii) if the selling
price is less than the option price, the difference is treated as a capital
loss to the optionee (long- or short-term, depending on whether the optionee
has then held the option shares for more than one year). If, however, the
disposition is a sale to a related party (as defined in Section 267(b) of the
Code to include, for example, a member of the optionee's family or a
corporation majority-owned by the optionee), a "wash sale" described in Section
1091 of the Code or a gift, then the excess of the fair market value of the
option shares on the date the option was exercised over the option price is
taxable to the optionee as ordinary income regardless of the selling price of
the shares. The Company is generally entitled to a deduction in computing its
federal income taxes for the year of disposition in an amount equal to any
amount taxable to the optionee as ordinary income.
The holder of incentive stock options may in certain circumstances be
subject to an alternative minimum tax. An optionee's alternative minimum tax
liability for a tax year is equal to the excess, if any, of the optionee's
tentative minimum tax for such tax year over the optionee's regular income tax
liability for such tax year. The optionee's tentative minimum tax for the tax
year is equal to (i) 26% of the "taxable excess" that does not exceed $175,000,
plus (ii) 28% of the "taxable excess" that does exceed $175,000. The "taxable
excess" is the excess of the alternative minimum taxable income over an
exemption amount. In general, alternative minimum taxable income for a tax
year means the optionee's taxable income (without regard to any net operating
loss deduction), computed with certain adjustments and increased by the amount
of the optionee's tax preference items, if any. Up to 90% of the optionee's
alternative minimum taxable income may be offset by the optionee's alternative
minimum tax net operating loss, if any.
The amount of alternative minimum tax paid by an optionee in taxable
years beginning after 1986 which is attributable to timing preferences and
adjustments will be available as a credit against the optionee's regular income
tax liability (but not against alternative minimum tax liability) in future
years. This credit cannot reduce the regular tax below the alternative minimum
tax in any year.
The amount by which the fair market value of Common Stock received
through the exercise of an incentive stock option exceeds the option price is
an item of tax preference and is considered a timing preference for purposes of
the credit for alternative minimum tax paid in prior years. The amount of such
preference will be added to the basis of the stock received for purposes of
computing the optionee's alternative minimum taxable income in the future.
Since the 1993 Plan has been in effect, the following persons have
received options to purchase the indicated numbers of shares of Common Stock
(excluding any options which have been forfeited) under the 1993 Plan, all as
of March 15, 1996: Mr. Bindley, Chairman, Chief Executive Officer and President
(394,000 shares), Mr. Salentine, Executive Vice President and Chief Financial
Officer (180,000 shares), Mr. McCormick, Executive Vice President, General
Counsel and Secretary (180,000 shares), Mr. Burks, Executive Vice President
(180,000 shares), Mr. Shinn, Treasurer (44,500 shares), all current executive
officers as a group (1,048,000 shares), all current directors who are not
executive officers as a group (0 shares), Dr. Slama (25,000 shares), and all
other employees, including all current officers who are not executive officers,
as a group (940,119 shares).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT.
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<PAGE> 24
APPOINTMENT OF AUDITORS
The appointment of Price Waterhouse LLP as auditors for the Company
during 1996 will be submitted to the meeting in order to permit the
shareholders to express their approval or disapproval. In the event of a
negative vote, a selection of other auditors will be made by the Board. A
representative of Price Waterhouse LLP is expected to be present at the
meeting, will be given an opportunity to make a statement if he or she desires
and will respond to appropriate questions. Notwithstanding approval by the
shareholders, the Board of Directors reserves the right to replace the auditors
at any time upon the recommendation of the Audit Committee of the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT
OF PRICE WATERHOUSE LLP.
PRINCIPAL OWNERS OF COMMON STOCK
The following table sets forth as of January 31, 1996 the number of
shares of Common Stock of the Company owned by any person (including any group)
known by management to beneficially own more than 5% of the Common Stock of the
Company, by each of the Named Executive Officers, and by all directors and
executive officers of the Company as a group. Unless otherwise indicated in a
footnote, each individual or group possesses sole voting and investment power
with respect to the shares indicated as beneficially owned.
<TABLE>
<CAPTION>
Name and Address of Number of Shares
Individual or Beneficially Percent of Class
Identity of Group Owned (1) (if more than 1%)
- ---------------------------------- -------------------------- ------------------------------
<S> <C> <C>
William E. Bindley (2) 3,151,730 (3)(4) 27.5%
Thomas J. Salentine 275,608 (3)(5) 2.4%
Michael D. McCormick 231,882 (3)(6) 2.0%
Keith W. Burks 177,825 (3)(7) 1.5%
Michael L. Shinn 20,875 (3)(8) --
Palisade Capital Management, L.L.C. 637,050 (9) 5.4%
One Bridge Plaza, Suite 695
Fort Lee, NJ 07024 (10)
All current directors and executive
officers as a group (13 persons) 4,032,259 (3)(11) 32.9%
- ----------
</TABLE>
(1) For information regarding the beneficial ownership of shares held by
non-employee directors, see "Election of Directors--Nominees."
(2) The address of this shareholder is 10333 N. Meridian Street, Suite
300, Indianapolis, Indiana 46290.
(3) Does not include shares subject to stock options which are not
exercisable within 60 days.
(4) Includes presently exercisable stock options to purchase 120,595
shares granted by the Company.
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<PAGE> 25
(5) Includes presently exercisable stock options to purchase 263,625
shares granted by the Company.
(6) Includes presently exercisable stock options to purchase 224,125
shares granted by the Company.
(7) Includes presently exercisable stock options to purchase 170,125
shares granted by the Company.
(8) Includes presently exercisable stock options to purchase 20,875 shares
granted by the Company.
(9) Includes present right to acquire 406,050 shares upon conversion of 6
1/2% Convertible Subordinated Debentures Due 2002.
(10) Information is based solely on reports filed by such shareholder under
Section 13(d) of the Securities Exchange Act of 1934.
(11) Includes presently exercisable stock options to purchase 901,970
shares granted by the Company.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
The date by which shareholder proposals must be received by the
Company for inclusion in proxy materials relating to the 1997 Annual Meeting of
Common Shareholders is December 1, 1996.
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<PAGE> 26
BINDLEY WESTERN INDUSTRIES, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
1. PLAN PURPOSE. The purpose of the Plan is to promote the long-term
interests of the Company and its shareholders by providing a means for
attracting and retaining officers and key employees of the Company and its
Affiliates.
2. DEFINITIONS. The following definitions are applicable to the Plan:
"Affiliate" -- means any "parent corporation" or "subsidiary corporation"
of the Company as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Award" -- means the grant by the Committee of an Incentive Stock Option, a
Non-Qualified Stock Option, or Restricted Stock, or any combination thereof, as
provided in the Plan.
"Board" -- means the Board of Directors of the Company.
"Change in Control" -- means each of the events specified in the following
clauses (i) through (iii): (i) any third person, including a "group" as
defined in Section 13(d)(3) of the Exchange Act shall, after the date of the
adoption of the Plan by the Board, first become the beneficial owner of shares
of the Company with respect to which 25% or more of the total number of votes
for the election of the Board of Directors of the Company may be cast, (ii) as
a result of, or in connection with, any cash tender offer, exchange offer,
merger or other business combination, sale of assets or contested election, or
combination of the foregoing, the persons who were directors of the Company
shall cease to constitute a majority of the Board of Directors of the Company
or (iii) the stockholders of the Company shall approve an agreement providing
either for a transaction in which the Company will cease to be an independent
publicly owned entity or for a sale or other disposition of all or
substantially all the assets of the Company; provided, however, that the
occurrence of any of such events shall not be deemed a Change in Control if,
prior to such occurrence, a resolution specifically approving such occurrence
shall have been adopted by at least a majority of the Board of Directors of the
Company.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee referred to in Section 3 hereof.
"Company" -- means Bindley Western Industries, Inc., an Indiana
corporation.
"Continuous Service" -- means the absence of any interruption or
termination of service as an employee of the Company or an Affiliate. Service
shall not be considered interrupted in the case of sick leave, military leave
or any other leave of absence approved by the Company or in the case of any
transfer between the Company and an Affiliate or any successor to the Company.
"Disinterested Person" -- means any person who, at the time discretion
under this Plan is exercised, meets the definition of a "disinterested person"
in Rule 16b-3 of the Securities and Exchange Commission promulgated under
Section 16(b) of the Exchange Act and then applicable to the Company.
"Employee" -- means any person, including an officer or director, who is
employed by the Company or any Affiliate.
"Exchange Act" -- means the Securities Exchange Act of 1934, as amended.
"Exercise Price" -- means the price per Share at which the Shares subject
to an Option may be purchased upon exercise of such Option.
"Incentive Stock Option" -- means an option to purchase Shares granted by
the Committee pursuant to Section 6 hereof which is subject to the limitations
and restrictions of Section 8 hereof and is intended to qualify under Section
422 of the Code.
<PAGE> 27
"Market Value" -- means the last reported sale price on the date in
question (or, if there is no reported sale on such date, on the last preceding
date on which any reported sale occurred) of one Share on the principal
exchange on which the Shares are listed for trading, or if the Shares are not
listed for trading on any exchange, on the NASDAQ National Market System or any
similar system then in use, or, if the Shares are not listed on the NASDAQ
National Market System, the mean between the closing high bid and low asked
quotations of one Share on the date in question as reported by NASDAQ or any
similar system then in use, or, if no such quotations are available, the fair
market value on such date of one Share as the Committee shall determine.
"Non-Qualified Stock Option" -- means an option to purchase shares granted
by the Committee pursuant to Section 6 hereof, which option is not intended to
qualify under Section 422 of the Code.
"Option" -- means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" -- means any officer or key employee of the Company or any
Affiliate who is selected by the Committee to receive an Award.
"Plan" -- means this 1993 Stock Option and Incentive Plan of the Company.
"Reorganization" -- means the liquidation or dissolution of the Company or
any merger, consolidation or combination of the Company (other than a merger,
consolidation or combination in which the Company is the continuing entity and
which does not result in the outstanding Shares being converted into or
exchanged for different securities, cash or other property or any combination
thereof).
"Restricted Period" -- means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 9
hereof with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" -- means Shares which have been contingently awarded to
a Participant by the Committee subject to the restrictions referred to in
Section 9 hereof, so long as such restrictions are in effect.
"Securities Act" -- means the Securities Act of 1933, as amended.
"Shares" -- means the Common Stock, $.01 par value, of the Company.
3. ADMINISTRATION. The Plan shall be administered by the Company's
Compensation and Stock Option Committee, which shall consist of three or more
members of the Board, each of whom shall be a Disinterested Person; provided,
however, that if the full Board does not consist of at least three
Disinterested Persons, then the Committee shall be composed of as many
Disinterested Persons as possible and the remaining member or members of the
Committee need not be Disinterested Persons and; provided, further, if Rule
16b-3 of the Securities and Exchange Commission promulgated under the Exchange
Act or any replacement of such rule shall hereafter permit the use of a
committee of two or more Disinterested Persons and the Company elects or is
required to comply with such rule, then the Committee shall consist of two or
more Disinterested Persons. The members of the Committee shall be appointed by
the Board. Except as limited by the express provisions of the Plan, the
Committee shall have sole and complete authority and discretion to (i) select
Participants and grant Awards; (ii) determine the number of Shares to be
subject to types of Awards generally, as well as to individual Awards granted
under the Plan; (iii) determine the terms and conditions upon which Awards
shall be granted under the Plan; (iv) prescribe the form and terms of
instruments evidencing such grants; and (v) establish from time to time
regulations for the administration of the Plan, interpret the Plan, and make
all determinations deemed necessary or advisable for the administration of the
Plan. The Committee may maintain and update from time to time as appropriate,
a list designating selected directors as Disinterested Persons. The purpose of
such list shall be to evidence the status of such individuals as Disinterested
Persons, and the Board may appoint to the Committee any individual actually
qualifying as a Disinterested Person, regardless of whether identified as such
on said list.
-2-
<PAGE> 28
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by all members of the Committee without a meeting,
shall be acts of the Committee.
4. PARTICIPANTS. The Committee may select from time to time Participants
in the Plan from those officers and key employees of the Company or its
Affiliates who, in the opinion of the Committee, have the capacity for
contributing in a substantial measure to the successful performance of the
Company or its Affiliates.
5. SHARES SUBJECT TO PLAN. Subject to adjustment by the operation of
Section 10 hereof, the maximum number of Shares with respect to which Awards
may be made under the Plan is 1,000,000 Shares. The Shares with respect to
which Awards may be made under the Plan may either be authorized and unissued
shares or unissued shares heretofore or hereafter reacquired and held as
treasury shares. An Award shall not be considered to have been made under the
Plan with respect to any Option which terminates or is surrendered for
cancellation or with respect to Restricted Stock which is forfeited (so long as
any cash dividends paid on such shares are also forfeited), and new Awards may
be granted under the Plan with respect to the number of Shares as to which such
termination or forfeiture has occurred.
6. GENERAL TERMS AND CONDITIONS OF OPTIONS. The Committee shall have
full and complete authority and discretion, except as expressly limited by the
Plan, to grant Options and to provide the terms and conditions (which need not
be identical among Participants) thereof. In particular, the Committee shall
prescribe the following terms and conditions: (i) the Exercise Price, (ii) the
number of Shares subject to, and the expiration date of, any Option, (iii) the
manner, time and rate (cumulative or otherwise) of exercise of such Option, and
(iv) the restrictions, if any, to be placed upon such Option or upon Shares
which may be issued upon exercise of such Option. The Committee may, as a
condition of granting any Option, require that a Participant agree to surrender
for cancellation one or more Options previously granted to such Participant.
7. EXERCISE OF OPTIONS.
(a) Except as provided in Section 13, an Option granted under the Plan
shall be exercisable during the lifetime of the Participant to whom such
Option was granted only by such Participant, and except as provided in
paragraphs (c) and (d) of this Section 7, no such Option may be exercised
unless at the time such Participant exercises such Option, such Participant
has maintained Continuous Service since the date of the grant of such
Option.
(b) To exercise an Option under the Plan, the Participant shall give
written notice to the Company (which shall specify the number of Shares
with respect to which such Participant elects to exercise such Option)
together with full payment of the Exercise Price. The date of exercise
shall be the date on which such notice is received by the Company. Payment
shall be made either (i) in cash (including check, bank draft or money
order) or (ii) by delivering (A) Shares already owned by the Participant
and having a Market Value on the date of exercise equal to the applicable
Exercise Price, or (B) a combination of cash and such Shares.
(c) If a Participant shall cease to maintain Continuous Service for
any reason other than those reasons specified in the last sentence of this
paragraph (c), such Participant may exercise such Option to the extent that
such Participant was entitled to exercise such Option at the date of such
cessation; provided, however, that such right of exercise after cessation
of Continuous Service shall not be available to a Participant if the
Company otherwise determines and so provides in the applicable instrument
or instruments evidencing the grant of such Option. The right granted by
this paragraph (c) may be exercised only within the period of three (3)
months immediately succeeding such cessation of Continuous Service, but in
no event after the expiration date of the subject Option. If the
Continuous Service of a Participant is terminated for cause, or voluntarily
by the Participant for any reason other than death, disability, or
-3-
<PAGE> 29
retirement at the normal retirement age, all rights under any Option of
such Participant shall expire immediately upon such cessation of Continuous
Service.
(d) In the event of the death of a Participant while in the Continuous
Service of the Company or an Affiliate or within the three-month period
referred to paragraph (c) of this Section 7, the person to whom any Option
held by the Participant at the time of his death is transferred by will or
by the laws of descent and distribution may exercise such Option on the
same terms and conditions that such Participant was entitled to exercise
such Option. Following the death of any Participant to whom an Option was
granted under the Plan, the Committee, as an alternative means of
settlement of such Option, may elect to pay to the person to whom such
Option is transferred the amount by which the Market Value per Share on the
date of exercise of such Option shall exceed the Exercise Price of such
Option, multiplied by the number of Shares with respect to which such
Option is properly exercised. Any such settlement of an Option shall be
considered an exercise of such Option for all purposes of the Plan.
8. INCENTIVE STOCK OPTIONS. Incentive Stock Options may be granted only
to Participants who are Employees. Any provisions of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the
Company and no Incentive Stock Option shall be exercisable more than ten years
from the date such Incentive Stock Option is granted, (ii) the Exercise Price
of any Incentive Stock Option shall not be less than the Market Value per Share
on the date such Incentive Stock Option is granted, (iii) any Incentive Stock
Option shall not be transferable by the Participant to whom such Incentive
Stock Option is granted other than by will or the laws of descent and
distribution and shall be exercisable during such Participant's lifetime only
by such Participant, and (iv) no Incentive Stock Option shall be granted which
would permit a Participant to acquire, through the exercise of Incentive Stock
Options in any calendar year, Shares or shares of any capital stock of the
Company or any Affiliate thereof having an aggregate Market Value (determined
as of the time any Incentive Stock Option is granted) in excess of $100,000.
The foregoing limitation shall be determined by assuming that the Participant
will exercise each Incentive Stock Option on the date that such Option first
becomes exercisable. Notwithstanding the foregoing, in the case of any
Participant who, at the date of grant, owns stock possessing more than 10% of
the total combined voting power of all classes of capital stock of the Company
or any Affiliate, the Exercise Price of any Incentive Stock Option shall not be
less than 110% of the Market Value per Share on the date such Incentive Stock
Option is granted and such Incentive Stock Option shall not be exercisable more
than five years from the date such Incentive Stock Option is granted.
9. TERMS AND CONDITIONS OF RESTRICTED STOCK. The Committee shall have
full and complete authority, subject to the limitations of the Plan, to grant
awards of Restricted Stock and, in addition to the terms and conditions
contained in paragraphs (a) through (f) of this Section 9, to provide such
other terms and conditions (which need not be identical among Participants) in
respect of such Awards, and the vesting thereof, as the Committee shall
determine and provide in the agreement referred to in paragraph (d) of this
Section 9.
(a) At the time of an award of Restricted Stock, the Committee shall
establish for each Participant a Restricted Period during which or at the
expiration of which, the Shares of Restricted Stock shall vest. The
Committee may also restrict or prohibit the sale, assignment, transfer,
pledge or other encumbrance of the Shares of Restricted Stock by the
Participant during the Restricted Period. Except for such restrictions,
and subject to paragraphs (c), (d) and (e) of this Section 9 and Section 10
hereof, the Participant as owner of such Shares shall have all the rights
of a stockholder, including but not limited to, the right to receive all
dividends paid on such Shares and the right to vote such Shares. The
Committee shall have the authority, in its discretion, to accelerate the
time at which any or all of the restrictions shall lapse with respect to
any Shares of Restricted Stock prior to the expiration of the Restricted
Period with respect thereto, or to remove any or all of such restrictions,
whenever it may determine that such action is appropriate by reason of
changes in applicable tax or other laws
-4-
<PAGE> 30
or other changes in circumstances occurring after the commencement of such
Restricted Period.
(b) Except as provided in Section 12 hereof, if a Participant ceases
to maintain Continuous Service for any reason (other than death, total or
partial disability or normal or early retirement) unless the Committee
shall otherwise determine, all Shares of Restricted Stock theretofore
awarded to such Participant and which at the time of such termination of
Continuous Service are subject to the restrictions imposed by paragraph (a)
of this Section 9 shall upon such termination of Continuous Service be
forfeited and returned to the Company. If a Participant ceases to maintain
Continuous Service by reason of death or total or partial disability, then
the restrictions with respect to the Ratable Portion of the Shares of
Restricted Stock shall lapse and such Shares shall be free of restrictions
and shall not be forfeited. The Ratable Portion shall be determined with
respect to each separate Award of Restricted Stock issued and shall be
equal to (i) the number of Shares of Restricted Stock awarded to the
Participant multiplied by the portion of the Restricted Period that expired
at the date of the Participant's death or total or partial disability
reduced by (ii) the number of Shares of Restricted Stock awarded with
respect to which the restrictions had lapsed as of the date of the death or
total or partial disability of the Participant.
(c) Each certificate issued in respect of Shares of Restricted Stock
awarded under the Plan shall be registered in the name of the Participant
and deposited by the Participant, together with a stock power endorsed in
blank, with the Company and shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the 1993 Stock Option and Incentive Plan of
Bindley Western Industries, Inc., and an Agreement entered into between the
registered owner and Bindley Western Industries, Inc. Copies of such Plan
and Agreement are on file in the office of the Secretary of Bindley Western
Industries, Inc.
(d) At the time of an award of Shares of Restricted Stock, the
Participant shall enter into an Agreement with the Company in a form
specified by the Committee, agreeing to the terms and conditions of the
award, that such Participant will not make the election provided for under
Section 83(b) of the Code with respect to any Shares covered by the award
and such other matters as the Committee shall in its sole discretion
determine.
(e) At the time of an award of Shares of Restricted Stock, the
Committee may, in its discretion, determine that the payment to the
Participant of dividends declared or paid on such Shares by the Company or
a specified portion thereof, shall be deferred until the earlier to occur
of (i) the lapsing of the restrictions imposed under paragraph (a) of this
Section 9 or (ii) the forfeiture of such Shares under paragraph (b) of this
Section 9, and shall be held by the Company for the account of the
Participant until such time. In the event of such deferral, there shall be
credited at the end of each year (or portion thereof) interest on the
amount of the account at the beginning of the year at a rate per annum as
the Committee, in its discretion, may determine. Payment of deferred
dividends, together with interest accrued thereon as aforesaid, shall be
made upon the earlier to occur of the events specified in (i) and (ii) of
the immediately preceding sentence.
(f) At the expiration of the restrictions imposed by paragraph (a) of
this Section 9, the Company shall redeliver to the Participant (or where
the relevant provision of paragraph (b) of this Section 9 applies in the
case of a deceased Participant, to his legal representative, beneficiary or
heir) the certificate(s) and stock power deposited with it pursuant to
paragraph (c) of this Section 9 and the Shares represented by such
certificate(s) shall be free of the restrictions referred to in paragraph
(a) of this Section 9.
-5-
<PAGE> 31
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
change in the outstanding Shares subsequent to the effective date of the Plan
by reason of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Company, the maximum aggregate number and
class of shares as to which Awards may be granted under the Plan and the number
and class of shares with respect to which Awards theretofore have been granted
under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any shares of stock or other securities
received, as a result of any of the foregoing, by a Participant with respect to
Restricted Stock shall be subject to the same restrictions and the
certificate(s) or other instruments representing or evidencing such shares or
securities shall be legended and deposited with the Company in the manner
provided in Section 9 hereof.
11. EFFECT OF REORGANIZATION. Awards will be affected by a Reorganization
as follows:
(a) If the Reorganization is a dissolution or liquidation of the
Company then (i) the restrictions of Section 9(a) on Shares of Restricted
Stock shall lapse and (ii) each outstanding Option shall terminate, but
each Participant to whom the Option was granted shall have the right,
immediately prior to such dissolution or liquidation to exercise his Option
in full, notwithstanding the provisions of Section 8, and the Company shall
notify each Participant of such right within a reasonable period of time
prior to any such dissolution or liquidation.
(b) If the Reorganization is a merger or consolidation, other than a
Change in Control subject to Section 12 of this Agreement, upon the
effective date of such Reorganization (i) each Optionee shall be entitled,
upon exercise of his Option in accordance with all of the terms and
conditions of the Plan, to receive in lieu of Shares, shares of such stock
or other securities or consideration as the holders of Shares shall be
entitled to receive pursuant to the terms of the Reorganization; and (ii)
each holder of Restricted Stock shall receive shares of such stock or other
securities as the holders of Shares received which shall be subject to the
restrictions set forth in Section 9(a) unless the Committee accelerates the
lapse of such restrictions and the certificate(s) or other instruments
representing or evidencing such shares or securities shall be legended and
deposited with the Company in the manner provided in Section 9 hereof.
The adjustments contained in this Section and the manner of application of such
provisions shall be determined solely by the Committee.
12. EFFECT OF CHANGE OF CONTROL. If the Continuous Service of any
Participant of the Company or any Affiliate is involuntarily terminated, for
whatever reason, at any time within eighteen months after a Change in Control,
unless the Committee shall have otherwise provided in the agreement referred to
in paragraph (d) of Section 9 hereof, any Restricted Period with respect to
Restricted Stock theretofore awarded to such Participant shall lapse upon such
termination and all Shares awarded as Restricted Stock shall become fully
vested in the Participant to whom such Shares were awarded. If a tender offer
or exchange offer for Shares (other than such an offer by the Company) is
commenced, or if the event specified in clause (iii) of the definition of a
Change in Control contained in Section 2 shall occur, unless the Committee
shall have otherwise provided in the instrument evidencing the grant of an
Option, all Options theretofore provided in the instrument evidencing the grant
of an Option, all Options theretofore granted and not fully exercisable shall
(except as otherwise provided in Section 8) become exercisable in full upon the
happening of such event and shall remain so exercisable in accordance with
their terms; provided, however, that no Option shall be exercisable by a
director or officer of the Company within six months of the date of grant of
such Option and no Option which has previously been exercised or otherwise
terminated shall become exercisable.
13. ASSIGNMENTS AND TRANSFERS. No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the
Plan may be assigned, encumbered or
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<PAGE> 32
transferred except, in the event of the death of a Participant, by will or the
laws of descent and distribution.
14. EMPLOYEE RIGHTS UNDER THE PLAN. No officer, employee or other person
shall have a right to be selected as a Participant nor, having been so
selected, to be selected again as a Participant and no officer, employee or
other person shall have any claim or right to be granted an Award under the
Plan or under any other incentive or similar plan of the Company or any
Affiliate. Neither the Plan nor any action taken thereunder shall be construed
as giving any employee any right to be retained in the employ of the Company or
any Affiliate.
15. DELIVERY AND REGISTRATION OF STOCK. The Company's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Company shall determine to be necessary or advisable to comply with the
provisions of the Securities Act or any other applicable federal or state
securities legislation. It may be provided that any representation requirement
shall become inoperative upon a registration of the Shares or other action
eliminating the necessity of such representation under the Securities Act or
other securities legislation. The Company shall not be required to deliver any
Shares under the Plan prior to (i) the admission of such shares to listing on
any stock exchange or system on which Shares may then be listed, and (ii) the
completion of such registration or other qualification of such Shares under any
state or federal law, rule or regulation, as the Company shall determine to be
necessary or advisable.
16. WITHHOLDING TAX. Upon the termination of the Restricted Period with
respect to any Shares of Restricted Stock, the Company shall, in lieu of
requiring the Participant or other person receiving such Shares to pay the
Company the amount of any taxes which the Company is required to withhold with
respect to such Shares, retain a sufficient number of Shares held by it to
cover the amount required to be withheld. The Company shall have the right to
deduct from all dividends paid with respect to Shares of Restricted Stock the
amount of any taxes which the Company is required to withhold with respect to
such dividend payments.
Where a Participant or other person is entitled to receive Shares pursuant
to the exercise of an Option pursuant to the Plan, the Company shall, in lieu
of requiring the Participant or such other person to pay the Company the amount
of any taxes which the Company is required to withhold with respect to such
Shares, retain a number of such Shares sufficient to cover the amount required
to be withheld.
17. LOANS.
(a) The Company may make loans to a Participant in connection with
Restricted Stock or the exercise of Options subject to the following terms
and conditions and such other terms and conditions not inconsistent with
the Plan, including the rate of interest, if any, as the Company shall
impose from time to time.
(b) No loan made under the Plan shall exceed (i) with respect to
Options, the sum of (A) the aggregate option price payable upon exercise of
the Option in relation to which the loan is made, plus (B) the amount of
the reasonably estimated income taxes payable by the grantee and (ii) with
respect to Restricted Stock, the amount of reasonably estimated income
taxes payable by the grantee. In no event may any such loan exceed the
Market Value of the related Shares at the time of the loan.
(c) No loan shall have an initial term exceeding three years; provided,
that loans under the Plan shall be renewable at the discretion of the
Committee; and provided, further, that the indebtedness under each loan
shall become due and payable on a date no later than (i) one year after
termination of the Participant's employment due to death, retirement or
disability, or
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<PAGE> 33
(ii) the day of termination of the Participant's employment for any reason
other than death, retirement or disability.
(d) Loans under the Plan may be satisfied by the Participant, as
determined by the Committee, in cash or, with the consent of the Committee,
in whole or in part in Shares at Market Value on the date of such payment.
(e) When a loan shall have been made, Shares having an aggregate
Market Value equal to the amount of the loan may, in the discretion of the
Committee, be required to be pledged by the Participant to the Company as
security for payment of the unpaid balance of the loan. Portions of such
Shares may, in the discretion of the Committee, be released from time to
time as it deems not to be needed as security.
(f) Every loan shall meet all applicable laws, regulations and rules
of the Federal Reserve Board and any other governmental agency having
jurisdiction.
18. TERMINATION, AMENDMENT AND MODIFICATION OF PLAN. The Board may at any
time terminate, and may at any time and from time to time and in any respect
amend or modify, the Plan; provided however, that no such action of the Board
may without approval of the stockholders of the Company:
(a) materially increase the total number of Shares subject to the Plan
except as contemplated in Section 10; or
(b) materially increase the benefits accruing to Participants under the
Plan; or
(c) materially modify the requirements as to eligibility for
participation in the Plan; and
provided further, that no termination, amendment or modification of the Plan
shall in any manner affect any Award theretofore granted pursuant to the Plan
without the consent of the Participant to whom the Award was granted or
transferee of the Award.
19. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective upon
its adoption by the Board of Directors and shareholders of the Company and
shall continue in effect for a term of ten years from the date of adoption by
the Board of Directors unless sooner terminated under Section 18 hereof.
ADOPTED BY THE BOARD OF DIRECTORS OF BINDLEY
WESTERN INDUSTRIES, INC. AS OF MARCH 18, 1993
ADOPTED BY THE SHAREHOLDERS OF BINDLEY
WESTERN INDUSTRIES, INC. AS OF MAY 20, 1993
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<PAGE> 34
FIRST AMENDMENT TO
BINDLEY WESTERN INDUSTRIES, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
WHEREAS, the Board of Directors of Bindley Western Industries, Inc. (the
"Company") adopted the Bindley Western Industries, Inc. 1993 Stock Option and
Incentive Plan (the "Plan") on March 18, 1993; and
WHEREAS, the Plan was approved by the shareholders of the Company on May 20,
1993; and
WHEREAS, the Company now desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 4 of the Plan is hereby amended to read in its entirety as
follows:
4. PARTICIPANTS. The Committee may select from time to time
Participants in the Plan from those officers and key employees of the
Company or its Affiliates who, in the opinion of the Committee, have
the capacity for contributing in a substantial measure to the
successful performance of the Company or its Affiliates; provided,
however, no Participant shall after the date of this Amendment receive
Awards in excess of 100,000 Shares during any calendar year.
2. Section 5 of the Plan is hereby amended to read in its entirety as
follows:
5. SHARES SUBJECT TO PLAN. Subject to adjustment by the
operation of Section 10 hereof, the maximum number of Shares with
respect to which Awards may be made under the Plan is 1,500,000
Shares. The Shares with respect to which Awards may be made under the
Plan may either be authorized and unissued shares or unissued shares
heretofore or hereafter reacquired and held as treasury shares. An
Award shall not be considered to have been made under the Plan with
respect to any Option which terminates or is surrendered for
cancellation or with respect to Restricted Stock which is forfeited
(so long as any cash dividends paid on such shares are also
forfeited), and new Awards may be granted under the Plan with respect
to the number of Shares as to which such termination or forfeiture has
occurred.
3. Section 7 of the Plan is hereby amended to read in its entirety as
follows:
7. EXERCISE OF OPTIONS.
(a) Except as provided in Section 13, an Option granted under
the Plan shall be exercisable during the lifetime of the Participant
to whom such Option was granted only by such Participant, and except
as provided in paragraphs (c), (d) and (e) of this Section 7, no such
Option may be exercised unless at the time such Participant exercises
such Option, such Participant has maintained Continuous Service since
the date of the grant of such Option.
(b) To exercise an Option under the Plan, the Participant shall
give written notice to the Company (which shall specify the number of
Shares with respect to which such Participant elects to exercise such
Option) together with full payment of the Exercise Price. The date of
exercise shall be the date on which such notice is received by the
Company. Payment shall be made either (i) in cash (including check,
bank draft or money order) or (ii) by delivering (A) Shares already
owned by the Participant and having a Market Value on the date of
exercise equal to the applicable Exercise Price, or (B) a combination
of cash and such Shares.
(c) If the Continuous Service of a Participant is terminated for
cause, or voluntarily by the Participant for any reason other than
death, disability or retirement, all rights under any
<PAGE> 35
Option of such Participant shall expire immediately upon such
cessation of Continuous Service. If the Continuous Service of a
Participant is terminated by reason of death, disability or
retirement, such Participant may exercise such Option, but only to the
extent such Participant was entitled to exercise such Option at the
date of such cessation, at any time during the remaining term of such
Option, or, in the case of Incentive Stock Options, during such
shorter period as the Committee may determine and so provide in the
applicable instrument or instruments evidencing the grant of such
Option. If a Participant shall cease to maintain Continuous Service
for any reason other than those set forth above in this paragraph (c)
of this Section 7, such Participant may exercise such Option to the
extent that such Participant was entitled to exercise such Option at
the date of such cessation but only within the period of three (3)
months immediately succeeding such cessation of Continuous Service,
and in no event after the expiration date of the subject Option;
provided, however, that such right of exercise after cessation of
Continuous Service shall not be available to a Participant if the
Company otherwise determines and so provides in the applicable
instrument or instruments evidencing the grant of such Option.
(d) In the event of the death of a Participant while in the
Continuous Service of the Company or an Affiliate, the person to whom
any Option held by the Participant at the time of his death is
transferred by will or by the laws of descent and distribution may
exercise such Option on the same terms and conditions that such
Participant was entitled to exercise such Option. Following the death
of any Participant to whom an Option was granted under the Plan, the
Committee, as an alternative means of settlement of such Option, may
elect to pay to the person to whom such Option is transferred the
amount by which the Market Value per Share on the date of exercise of
such Option shall exceed the Exercise Price of such Option, multiplied
by the number of Shares with respect to which such Option is properly
exercised. Any such settlement of an Option shall be considered an
exercise of such Option for all purposes of the Plan.
(e) Notwithstanding the provisions of the foregoing paragraphs of
this Section 7, the Committee may, in its sole discretion, establish
different terms and conditions pertaining to the effect of the
cessation of Continuous Service, to the extent permitted by applicable
federal and state law.
4. Section 13 of the Plan is hereby amended to read in its entirety as
follows:
13. ASSIGNMENTS AND TRANSFERS. Except as otherwise determined by the
Committee, no Award nor any right or interest of a Participant under the
Plan in any instrument evidencing any Award under the Plan may be assigned,
encumbered or transferred except, in the event of the death of a
Participant, by will or the laws of descent and distribution.
5. Section 18 of the Plan is hereby amended to read in its entirety as
follows:
18. TERMINATION, AMENDMENT AND MODIFICATION OF PLAN. The Board may at
any time terminate, and may at any time and from time to time and in any
respect amend or modify, the Plan; provided however, that to the extent
necessary and desirable to comply with Rule 16b-3 under the Exchange Act or
Section 422 of the Code (or any other applicable law or regulation,
including requirements of any stock exchange or NASDAQ system on which the
Common Stock is listed or quoted) shareholder approval of any Plan
Amendment shall be obtained in such a manner and to such a degree as is
required by the applicable law or regulation; and provided further, that no
termination, amendment or modification of the Plan shall in any manner
affect any Award theretofore granted pursuant to the Plan without the
consent of the Participant to whom the Award was granted or transferee of
the Award.
<PAGE> 36
6. This First Amendment to the Plan shall become effective upon its
adoption by the Board of Directors and shareholders of the Company.
ADOPTED BY THE BOARD OF DIRECTORS OF BINDLEY
WESTERN INDUSTRIES, INC. AS OF MARCH 22, 1994
ADOPTED BY THE SHAREHOLDERS OF BINDLEY
WESTERN INDUSTRIES, INC. AS OF MAY 19, 1994
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<PAGE> 37
SECOND AMENDMENT TO
BINDLEY WESTERN INDUSTRIES, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
WHEREAS, the Board of Directors of Bindley Western Industries, Inc. (the
"Company") adopted the Bindley Western Industries, Inc. 1993 Stock Option and
Incentive Plan (the "Plan") on March 18, 1993; and
WHEREAS, the Plan was approved by the shareholders of the Company on May 20,
1993; and
WHEREAS, the Plan was amended by the Board of Directors and the shareholders
of the Company, effective as of May 19, 1994; and
WHEREAS, the Company now desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 5 of the Plan is hereby amended to read in its entirety as
follows:
5. SHARES SUBJECT TO PLAN. Subject to adjustment by the operation of
Section 10 hereof, the maximum number of Shares with respect to which
Awards may be made under the Plan is 3,000,000 Shares. The Shares with
respect to which Awards may be made under the Plan may either be authorized
and unissued shares or unissued shares heretofore or hereafter reacquired
and held as treasury shares. An Award shall not be considered to have been
made under the Plan with respect to any Option which terminates or is
surrendered for cancellation or with respect to Restricted Stock which is
forfeited (so long as any cash dividends paid on such shares are also
forfeited), and new Awards may be granted under the Plan with respect to
the number of Shares as to which such termination or forfeiture has
occurred.
2. This Second Amendment to the Plan shall become effective upon its
adoption by the Board of Directors and shareholders of the Company.
ADOPTED BY THE BOARD OF DIRECTORS OF BINDLEY
WESTERN INDUSTRIES, INC. AS OF DECEMBER 8, 1995
ADOPTED BY THE SHAREHOLDERS OF BINDLEY
WESTERN INDUSTRIES, INC. AS OF ________, 1996
<PAGE> 38
PROXY
BINDLEY WESTERN INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby appoint William E. Bindley and Michael D. McCormick, or either
of them, my proxies, with power of substitution, to vote all shares of
common stock of the Company which I am entitled to vote at the annual
meeting of common shareholders of said company, to be held at the Conference
Center, 10333 North Meridian Street, Indianapolis, Indiana, on May 16, 1996,
at 9:00 a.m., Indianapolis time, and at any adjournment, as follows:
<TABLE>
<S> <C>
Election of Directors, Nominees: (change of address)
William E. Bindley, Keith W. Burks, Robert L. Koch II, James K.
----------------------------
Risk III, Seth B. Harris, K. Clay Smith, J. Timothy McGinley.
----------------------------
Michael D. McCormick, William F. Bindley II, Thomas J. Salentine,
----------------------------
Thomas G. Slama
----------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE SIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES LISTED UNDER PROPOSAL 1
AND FOR PROPOSALS 2 AND 3.
000999 SEE REVERSE
SIDE
DETACH CARD
Note: The Conference Center is located on the 1st floor of 3 Meridian Plaza at
the northeast corner of 103rd Street and Meridian Street.
<TABLE>
<S> <C>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of 2. Proposal to 3. Proposal to approve
Directors approve the the appointment of
(see reverse) adoption of an Price Waterhouse
amendment to LLP, as auditors for
the Company's 1993 Stock Option and the Company for 1996.
For, except withheld from the Incentive Plan.
following nominee(s):
4. In their discretion, on any other matters that may
properly come before the meeting.
Change
of
Address
Attend
Meeting
</TABLE>
SIGNATURE(S) DATE ,1996
------------------------- -------
SIGNATURE(S) DATE ,1996
------------------------- -------
NOTE: Please sign exactly as name appears below. When shares are held
by two or more persons, all of them should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign full corporate name
by President or other authorized officer. If a partnership, please
sign in partnership name by authorized person. Please mark, sign, date
and return the proxy card promptly using the enclosed envelope.
DETACH CARD
