<PAGE> 1
SCHEDULE 14A
(Rule 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2)
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
NATIONAL SANITARY SUPPLY COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(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
NATIONAL SANITARY SUPPLY COMPANY
Notice of Annual Meeting of Stockholders
May 19, 1997
The Annual Meeting of Stockholders of National Sanitary
Supply Company will be held at The Phoenix Club, 812 Race Street, Cincinnati,
Ohio, on Monday, May 19, 1997 at 1:30 p.m. for the following purposes:
(1) To elect directors;
(2) To approve and adopt the l997 Stock Incentive Plan;
(3) To approve an amendment to National Sanitary Supply
Company's Amended Certificate of Incorporation
increasing the number of authorized shares of Common
Stock from 7,000,000 to 9,000,000;
(4) To ratify the selection by the Board of independent
accountants; and
(5) To transact such other business as may properly be
brought before the meeting.
Stockholders of record at the close of business on March 19,
1997 are entitled to notice of, and to vote at, the meeting.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED AT YOUR
EARLIEST CONVENIENCE. NO POSTAGE IS REQUIRED IF IT IS MAILED IN THE UNITED
STATES.
Naomi C. Dallob
Secretary
April 4, 1997
<PAGE> 3
NATIONAL SANITARY SUPPLY COMPANY
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of National Sanitary Supply Company (hereinafter
called the "Company" or "National") of proxies to be used at the Annual Meeting
of Stockholders of the Company to be held on May 19, 1997 ("Annual Meeting")
and any adjournments thereof. The Company's mailing address is 2900 Chemed
Center, 255 E. Fifth Street, Cincinnati, Ohio 45202. The approximate date on
which this Proxy Statement and the enclosed proxy are being sent to
stockholders is April 4, 1997. Each valid proxy received in time will be voted
at the meeting and, if a choice is specified on the proxy, the shares
represented thereby will be voted accordingly. The proxy may be revoked by the
stockholder at any time before the meeting by providing notice to the
Secretary.
Only stockholders of record as of the close of business on March 19,
1997 will be entitled to vote at the meeting or any adjournments thereof. On
such date, the Company had outstanding 6,192,965 shares of common stock, $1 par
value ("Common Stock"), entitled to one vote per share.
ELECTION OF DIRECTORS
Eighteen directors are to be elected at the Annual Meeting to serve
until the following annual meeting of stockholders and until their successors
are duly elected and qualified. Set forth below are the names of the persons to
be nominated by the Board of Directors, together with a description of each
person's principal occupation during the past five years and other pertinent
information.
Unless authority is withheld or names are stricken, it is intended
that the shares covered by each proxy will be voted for the nominees listed.
Votes that are withheld will be excluded entirely from the vote and will have
no effect. The Company anticipates that all nominees listed in this Proxy
Statement will be candidates when the election is held. However, if for any
reason any nominee is not a candidate at that time, proxies will be voted for
any substitute nominee designated by the Board of Directors (except where a
proxy withholds authority with respect to the election of directors). The
affirmative vote of the holders of a plurality of the votes cast will be
necessary to elect each of the nominees for director.
1
<PAGE> 4
NOMINEES
EDWARD L. HUTTON Mr. Hutton is Chairman of the Company and
Director since 1983 has held this position since November 1983.
Age: 77 Mr. Hutton is also Chairman, Chief Executive
Officer, and a director of Chemed Corporation,
Cincinnati, Ohio (a diversified public corporation
with interests in residential and commercial
plumbing and drain cleaning services, home-repair
service contracts, janitorial supply distribution,
medical and dental disposable products
distribution and home healthcare services), a
Delaware corporation, the majority (83 percent)
owner of the Company's outstanding Common Stock
("Chemed") and has held those positions since
November 1993 and 1970, respectively. He was also
President of Chemed from 1970 to 1993. Mr. Hutton
is Chairman and a director of Omnicare, Inc.,
Cincinnati, Ohio (healthcare services and medical
equipment and supplies) ("Omnicare"), a publicly
held corporation in which Chemed holds
approximately a 1 percent ownership interest. Mr.
Hutton is the father of Thomas C. Hutton, a
director of the Company.
KEVIN J. MCNAMARA Mr. McNamara is a Vice Chairman of the Company
Director since 1988 and President of Chemed, having held these
Age: 43 positions since August 1994. Previously, he served
as General Counsel and Assistant Secretary of the
Company from August 1986, and as Executive Vice
President, General Counsel and Secretary of
Chemed, from November 1993. He served as a Vice
Chairman of Chemed from May 1992 to November 1993.
He is a director of Chemed and Omnicare.
2
<PAGE> 5
PAUL C. VOET Mr. Voet is President and Chief Executive
Director since 1983 Officer of the Company and has held these
Age: 50 positions since January 1992. Previously, from
November 1983 to January 1992, he was Vice
Chairman and Chief Executive Officer of the
Company. Mr. Voet is also an Executive Vice
President of Chemed. He held the position of Vice
Chairman of Chemed from May 1988 to November 1993.
He is a director of Chemed.
ROBERT B. GARBER Mr. Garber is a Vice Chairman of the Company
Director since 1984 and has held this position since January 1992.
Age: 70 Previously, from April 1986 to January 1992, he
was President and Chief Operating Officer of the
Company.
NAOMI C. DALLOB Ms. Dallob is Secretary and General Counsel of
Director since 1987 the Company and has held these positions since
Age: 43 November 1986 and August 1994, respectively. Ms.
Dallob is also a Vice President and Secretary of
Chemed and has held these positions since February
1987 and August 1994, respectively.
CHARLES H. ERHART, JR. Mr. Erhart retired as President of W. R. Grace &
Director since 1989 Co., Boca Raton, Florida (international specialty
Age: 71 chemicals and packaging) ("Grace") in August 1990,
having held this position since July 1989.
Previously, from November 1986 to July 1989, he
served Grace as Chairman of its Executive
Committee. He is a director of Omnicare and
Chemed.
NEAL GILLIATT Mr. Gilliatt is President of Neal Gilliatt/Stuart
Director since 1986 Watson, Inc., New York, New York (management
Age: 79 consulting), having held this position since April
1982. On April 1, 1982 he retired as Chairman of
the Executive Committee of the Interpublic Group
of Companies, Inc., New York, New York
(advertising and related communications), having
held that position since February 1980. Mr.
Gilliatt is a director of Consolidated Products,
Inc. (restaurants). He is a director emeritus of
Chemed.
3
<PAGE> 6
WILL J. HOEKMAN Mr. Hoekman is President and Chief Executive
Director since 1994 Officer of Composite Technologies Corporation,
Age: 51 Ames, Iowa and has held this position since June
l996. Previously, since November 1980 and May
1994, he was respectively a Senior Vice President
and an Executive Vice President of Firstar Bank
Iowa, N.A., Des Moines, Iowa.
THOMAS C. HUTTON Mr. T. C. Hutton is a Vice President of Chemed
Director since 1986 and has held this position since February
Age: 46 1988. Mr. Hutton is a director of Chemed and
Omnicare and is the son of Edward L. Hutton,
Chairman and a director of the Company.
W. DWIGHT JACKSON Mr. Jackson is an Executive Vice President of the
Director since 1995 Company and Executive Vice President and General
Age: 50 Manager of its Century Papers, Inc. subsidiary
("NSS - Southwest"). He has held these positions
since November and October 1994, respectively.
Previously, from January 1990 to October 1994, he
was Director of Sales for Scott Paper Co.'s
Southwest Division.
CHARLES O. LANE Mr. Charles Lane retired in February 1996 as
Director since l984 Executive Vice President of Marketing and
Age: 66 Manufacturing of the Company having held this
position since April 1986. Mr. Lane is the
brother of Mr. Thomas Lane, Vice
President-Administration of the Company.
4
<PAGE> 7
SANDRA E. LANEY Mrs. Laney is Senior Vice President and Chief
Director since 1986 Administrative Officer of Chemed and has held
Age: 53 these positions since November 1993 and May 1991,
respectively. She served as a Vice President of
Chemed from May 1984 to November 1993. Mrs. Laney
is a director of Chemed and Omnicare.
JOHN M. MOUNT Mr. Mount is a Principal of Lynch-Mount
Director since May 1996 Associates, Cincinnati, Ohio (management
Age: 55 consulting) and has held this position since
November 1993. From April 1991 to November 1993,
Mr. Mount was Senior Vice President of Diversey
Corporation, Detroit, Michigan (specialty
chemicals) and President of Diversey's DuBois
Industrial Division. He is a director of Chemed
and Omnicare.
TIMOTHY S. O'TOOLE Mr. O'Toole is an Executive Vice President and
Director since 1994 the Treasurer of Chemed and has held these
Age: 41 positions since May 1992. Previously, from
February 1989 to May 1992, he held the positions
of Vice President and Treasurer of Chemed. He is a
director of Chemed and Omnicare.
D. WALTER ROBBINS, JR. Mr. Robbins retired as Vice Chairman of Grace
Director since 1991 in January 1987 and thereafter became a
Age: 77 consultant to Grace until July 1995. He is a
director of Chemed and Omnicare.
GARY H. SANDER Mr. Sander is Senior Vice President, Treasurer
Director from May 1986 and Chief Financial Officer of the Company and
to May 1988 and since has held these positions since August 1996 and
August 1988 May 1988, respectively. From August 1988 to
Age: 47 August 1996 he was a Vice President of the
Company.
5
<PAGE> 8
KENNETH F. VUYLSTEKE Mr. Vuylsteke is an Executive Vice President of
Director since 1991 the Company and General Manager of National West
Age: 50 and has held these positions since January 1992
and July 1991, respectively. Previously, from
February 1989 to July 1991, he was Vice President
and General Manager of the Company's Northwest
division.
GEORGE J. WALSH III Mr. Walsh is a Partner in the law firm of
Director since May 1996 Gould & Wilkie, New York, New York and
Age: 51 has held this position since January 1978.
He is a director of Chemed.
COMPENSATION OF DIRECTORS
During 1996 each member of the Board of Directors who was not an
executive officer or an officer-employee of the Company was paid $1,000 for
attendance at each meeting of the Board and $550 for each meeting of a
Committee of the Board attended. The Chairman of each Committee was paid $600
for each Committee meeting attended.
Effective February 5, 1997, each member of the Board of Directors who
is not an executive officer or an officer-employee of the Company is paid
$1,075 for attendance at each meeting of the Board and $600 for each meeting of
a Committee of the Board attended. The Chairman of each committee is paid $650
for each Committee meeting attended. Members of the Incentive Committee were
also paid a fee at the rate of $1,200 per annum in l996, increased to $1,400 on
February 5, 1997. Since May 1991, each member of the Board of Directors (other
than those serving on the Incentive Committee and Mr. Robbins) has been granted
an annual unrestricted stock award covering 100 shares of the Company's Common
Stock under the 1988 and l995 Stock Incentive Plans. Incentive Committee
members and Mr. Robbins were paid the cash equivalent of the stock award. In
addition, each member of the Board of Directors and of a Committee is
reimbursed for reasonable travel expenses incurred in connection with such
meetings.
6
<PAGE> 9
COMMITTEES AND MEETINGS OF THE BOARD
The Company has the following Committees of the Board of Directors:
Audit Committee, Compensation Committee, and Incentive Committee. It does not
have a nominating committee of the Board of Directors.
The Audit Committee (a) recommends to the Board of Directors a firm of
independent accountants to audit the Company and its consolidated subsidiaries,
(b) reviews and reports to the Board of Directors on the Company's annual
financial statements and the independent accountants' report on such financial
statements and (c) meets with the Company's senior financial officers, internal
auditors and independent accountants to review audit plans and work and other
matters regarding the Company's accounting, financial reporting and internal
control systems. The Audit Committee consists of Messrs. Erhart, T. C. Hutton
and Hoekman. The Audit Committee met twice during 1996.
The Incentive Committee administers the Company's 1986, 1988 and 1995
Stock Incentive Plans. In addition, the Incentive Committee grants stock
options and stock awards to key employees of the Company and recommends to the
Board of Directors additional year-end contributions by the Company under The
National Sanitary Supply Company Employees Thrift and Profit Sharing Plan. The
Incentive Committee consists of Messrs. Cunningham, Erhart, Gilliatt and Walsh.
The Incentive Committee met three times during 1996.
The Compensation Committee reviews, approves and recommends to the
Board of Directors matters concerning base salary and annual cash incentive
compensation for key executives of the Company. The Compensation Committee,
consisting of Messrs. McNamara, Cunningham, Walsh and Mrs. Laney, met three
times in l996.
During 1996 there were five meetings of the Board of Directors. Each
incumbent director attended at least 75 percent of the aggregate of (a) the
total number of meetings held by the Board of Directors and (b) the total
number of meetings held by all Committees of the Board of Directors on which he
served that were held during the period for which he was a director or member
of any such Committee, with the exception of Mr. Mount, who attended two of the
three meetings held during such period.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
Mr. McNamara, a member of the Company's Compensation Committee, is a
Vice Chairman of the Company and is an executive
7
<PAGE> 10
officer and director of Chemed. Mrs. Laney, also a member of the Compensation
Committee, is also an executive officer and a director of Chemed. Messrs. E. L.
Hutton and Voet are directors of Chemed.
EXECUTIVE COMPENSATION
JOINT REPORT OF THE COMPENSATION COMMITTEE AND INCENTIVE COMMITTEE
ON EXECUTIVE COMPENSATION
The Company believes that executive compensation must align executive
officers' interests with those of the Company's shareholders and that such are
best served by directly and materially linking compensation to financial and
operating performance criteria, which, when successfully achieved, will enhance
shareholder value.
The Company attempts to achieve this objective with an executive
compensation package for its senior executives which combines base salary,
annual cash incentive compensation, long-term incentive compensation in the
form of stock options and restricted stock awards along with various benefit
plans, including pension plans, savings plans and medical benefits generally
available to the employees of the Company.
The executive compensation program is administered through the
coordinated efforts of the Compensation and the Incentive Committees of the
Board of Directors. The membership of the Incentive and Compensation Committees
is composed of outside directors (i.e., nonemployees of the Company), although
the Compensation Committee includes two officers of Chemed (see "Compensation
Committee Interlocks and Insider Participation in Compensation Decisions"
above). The recommendations of the Compensation Committee on base salary and
annual cash incentive compensation for key executives must be approved by the
full Board of Directors. The Incentive Committee administers the Company's
stock incentive plans under which it reviews and approves grants of stock
options and restricted stock awards.
Both the Compensation and Incentive Committees may use their
discretion subjectively to set executive compensation where, in their
collective judgment, external, internal or individual circumstances warrant.
The Compensation and Incentive Committees have considered, and are continuing
to review, the qualifying compensation regulations issued by the Internal
Revenue Service in December of 1993. As compensation is currently not expected
to exceed the $1 million base, it is not presently affected by these
regulations.
8
<PAGE> 11
Following is a discussion of the components of the executive officer
compensation program.
In determining base salary levels for the Company's executive
officers, the Compensation Committee takes into account the magnitude
of responsibility of the position, individual experience and
performance and specific issues particular to the Company. In general,
base salaries are set at levels believed by this Compensation
Committee to be sufficient to attract and retain qualified executives
when considered with the other components of the Company's
compensation structure.
The Compensation Committee believes that a significant portion of
total cash compensation should be linked to annual performance
criteria. Consequently, the purpose of annual incentive compensation
for senior executives and key managers is to provide a direct
financial incentive in the form of an annual cash bonus to achieve
their business unit's and the Company's annual goals. Operational and
financial goals are established at the beginning of each fiscal year
and generally take into account such measures of performance as sales
and earnings growth, profitability, cash flow and return on
investment. Other non-financial and somewhat subjective measures of
performance relate to organizational development, service expansion
and strategic positioning of the Company's assets.
Individual performance is also taken into account in determining
individual bonuses. It is the Company's belief that bonuses as a
percent of a senior executive's salary should be sufficiently high to
provide a major incentive for achieving annual performance targets.
Bonuses for senior executives of the Company generally range from 10
percent to 40 percent of base salary.
The stock option and restricted stock award program forms the basis of
the Company's incentive plans for executive officers and key managers.
The objective of these plans is to align executive and long-term
shareholder interests by creating a strong and direct link between
executive pay and shareholder return.
Stock options and restricted stock awards are generally granted
annually and are generally regarded as the primary incentive for
long-term performance as they are
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<PAGE> 12
granted at fair market value and have vesting restrictions which
generally lapse over three or four year periods. The Committee
considers each grantee's current option and award holdings in making
grants. Both the amounts of restricted stock awards and proportion of
stock options increase as a function of higher salary and positions of
responsibility within the Company.
Mr. P. C. Voet's compensation costs were paid 80 percent by the
Company and 20 percent by Chemed Corporation in 1996, with the
exception of a $42,000 special bonus in December 1996, paid wholly by
Chemed. His base salary was increased in 1996, from the base rate of
$264,500 to $289,500. His cash bonus paid 80 percent by the Company in
respect of 1996 services was $85,000, which represents a decrease of
20 percent from 1995 and 29 percent of his current base salary.
Restricted stock awards granted to Mr. Voet in respect of 1996
services are consistent with his responsibilities and relative
position in the Company and are shown on the Summary Compensation
Table. He received 20,000 stock options in 1996. Factors considered in
establishing Mr. Voet's compensation for 1996 were the Company's 9%
sales decrease in l996 coupled with increases of 2% points and 2.3%
points in gross profit margin and operating expenses as a percent of
sales, respectively. The Compensation Committee and the Incentive
Committee believe Mr. Voet's l996 compensation is consistent with his
performance as measured by these factors and the other criteria
discussed above.
By the Compensation Committee: Kevin J. McNamara, Chairman
James A. Cunningham
Sandra E. Laney
George J. Walsh III
By the Incentive Committee: Neal Gilliatt, Chairman
Charles H. Erhart, Jr.
James A. Cunningham
George J. Walsh III
10
<PAGE> 13
SUMMARY COMPENSATION TABLE
The following table shows the plan and non-plan compensation awarded
to, earned by, or paid to the Chief Executive Officer and the three other
executive officers of the Company who qualify for inclusion in this table for
the past three years for all services rendered in all capacities to the Company
and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Annual Compensation Awards
- ------------------------------------------- ---------------------- ----------
Name Restricted Securities All
and Stock Underlying Other
Principal Awards Stock Compen-
Position Year Salary($) Bonus($) ($) (1) Options(#) sation($)
- --------- ---- --------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paul C. Voet 1996 $228,275 $68,000 $ 93,502 20,000 $ 96,033 (3)
President and 1995 198,378 79,688 109,992 40,000 199,154
CEO(2) 1994 171,150 59,500 79,625 - 37,854
Kenneth F. 1996 161,458 65,000 65,001 10,000 21,928 (4)
Vuylsteke 1995 152,500 57,609 49,996 20,000 19,850
Executive Vice 1994 143,958 42,000 42,875 - 8,672
President
W. Dwight 1996 138,750 32,500 30,000 10,000 18,303 (5)
Jackson 1995 125,000 56,215 39,997 15,000 12,517
Executive Vice 1994 120,000 7,500 18,375 - 1,837
President
Gary H. Sander 1996 102,500 26,000 25,502 6,000 39,214 (7)
Senior Vice 1995 96,250 35,568 29,998 7,500 96,893
President, 1994 93,125 26,000 24,500 - 17,209
Treasurer and
Chief Financial
Officer (6)
</TABLE>
(1) The number and value of aggregate restricted stock holdings at December
31, 1996 are as follows: Paul C. Voet 22,056 shares, $274,973; Kenneth
F. Vuylsteke 12,142 shares, $153,197; W. Dwight Jackson 6,605 shares,
$82,247; Gary H. Sander 6,308 shares, $78,580. Dividends are paid to
the holders of restricted stock, who are entitled to vote them, whether
or not vested. Restricted stock awards vest evenly over three-year
periods.
(2) Represents 80 percent of total compensation, as charged to the Company
by Chemed in 1996, 75 percent in 1995, and 60 percent in 1994. Excludes
a $35,000 special bonus
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<PAGE> 14
paid by Chemed in each December of l994 and 1995, and a $42,000 special
bonus paid by Chemed in December 1996.
(3) Composed of contributions to defined contribution plans - $79,362; term
life insurance premiums - $1,843; $1,375 in the form of an unrestricted
award of Company stock ("Stock Award"); $13,453, which is the value of
premium payments made by the Company for his benefit under a split
dollar life insurance policy, which provides for refund of premiums to
the Company on termination of the policy ("Split Dollar Premiums").
(4) Composed of contributions to defined contribution plans - $10,196; term
life insurance premiums - $276; Stock Award - $1,375; Split Dollar
Premiums - $9,811; car pool subsidy - $270.
(5) Mr. Jackson was hired in October 1994. Composed of contributions to
defined contribution plans - $8,745; term life insurance premiums -
$168; Stock Award - $1,375; Split Dollar Premiums - $8,015.
(6) Mr. Sander is an employee of Chemed Corporation; these costs are
reimbursed 100 percent by the Company.
(7) Composed of contributions to defined contribution plans - $31,421; term
life insurance premiums - $855; Stock Award - $1,375; Split Dollar
Premiums - $5,563.
OPTION GRANTS
The table below shows information concerning stock options granted in l996 to
the executive officers named in the Summary Compensation Table.
STOCK OPTION GRANTS IN l996
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term
- -----------------------------------------------------------------------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise
Options in Fiscal Price Expiration
Name Granted(#) Year $/Sh Date 5%($) 10%($)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
P.C. Voet 20,000(1) 18.6% $12.25 3/06/07 $174,000 $454,000
K.F. Vuylsteke 10,000(1) 9.3% 12.25 3/06/07 87,000 227,000
W.D. Jackson 10,000(1) 9.3% 12.25 3/06/07 87,000 227,000
G.H. Sander 4,000(1) 3.7% 12.25 3/06/07 34,800 90,800
2,000(2) 1.9% 13.00 11/06/06 16,360 41,440
- ----------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 15
(1) These options, which were granted on March 6, 1996, provide for the
purchase price of option shares equal to the fair market value of Common Stock
on that date and become exercisable in four equal annual installments beginning
September 6, 1996.
(2) These options, which were granted on November 6, 1996, provide for the
purchase price of option shares equal to the fair market value of Common Stock
on that date and become exercisable in four equal annual installments beginning
May 6, 1997.
The following table summarizes the year-end number and value of
unexercised stock options held by the named executive officers in the Summary
Compensation Table. None of these individuals exercised Company stock options in
l996.
AGGREGATED OPTION EXERCISES IN 1996 AND
STOCK OPTION VALUES AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Value of
Number of Unexercised Unexercised In-the-Money
Options at 12/31/96 (#) Options at 12/31/96($)(1)
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Paul C. Voet 72,500 35,000 $257,476 $35,800
Kenneth F. Vuylsteke 16,188 17,500 36,229 17,900
W. Dwight Jackson 10,000 15,000 10,675 15,075
Gary H. Sander 12,750 8,750 50,018 7,138
</TABLE>
(1) Based upon the market value of the underlying securities at year-end, minus
the exercise or base price.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Mr. Vuylsteke and Mr.
Jackson providing for their continued employment as executives until May 31,
1999 at base annual salary rates of $155,000 and $140,000, respectively. In the
event of employment termination without cause, the Company shall pay each of
them monthly severance for the remaining term of the agreement, at the rate of
150 percent of his then-current base salary and incentive bonus and the fair
market value of all stock awards which vested during the twelve months prior to
termination.
Messrs. Voet and Sander are employed by Chemed pursuant to agreements
providing for their continued employment as senior executives until May 31,
2001 and 1999, respectively. The remaining terms and conditions of these
agreements are the same as those of Messrs. Vuylsteke and Jackson's agreements,
except that Mr. Voet is to be a management nominee for election as a
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<PAGE> 16
Chemed director. The Company reimburses Chemed for 85 percent of such costs in
1997 with respect to Mr. Voet, and 100 percent with respect to Mr. Sander,
valued at $560,022 in the aggregate for l996, pursuant to a services agreement
with Chemed referred to below under "Certain Arrangements and Transactions".
COMPARATIVE STOCK PERFORMANCE GRAPH
The line graph below compares the yearly percentage change in the
Company's cumulative total shareholder return on its Common Stock, as measured
by dividing (i) the sum of (A) the cumulative amount of dividends for the
period January 1, 1992 to December 31, 1996, assuming dividend reinvestment,
and (B) the difference between the Company's share price at January 1, 1992 and
December 31, 1996; by (ii) the share price at January 1, 1992, with
(i) the cumulative total return, assuming reinvestment of dividends,
of the Media General Market Index; and
(ii) the cumulative total return, assuming reinvestment of dividends, of the
Media General Wholesale-Nondurable Index.
CUMULATIVE TOTAL SHAREHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING DECEMBER 31, 1996
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
National Sanitary Supply Co. 100.00 130.94 194.90 180.49 177.05 202.54
Media General Market Index 100.00 104.00 119.39 118.39 153.50 185.38
Media General Wholesale-Nondurable Index 100.00 110.81 121.92 120.16 156.48 173.63
</TABLE>
(a) FISCAL YEAR ENDS 12/31. ASSUMES $100 INVESTED ON 1/1/92.
SOURCE: MEDIA GENERAL
14
<PAGE> 17
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 31, 1996
information with respect to the only persons who are known to be the beneficial
owners of more than 5 percent of the Common Stock of the Company:
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Title of Name and Address of Beneficial of
Class Beneficial Owner Ownership(1) Class
- -------- ------------------- ------------ --------
<S> <C> <C>
Common Stock Chemed Corporation 5,144,551 83.4%
Par Value $1 2600 Chemed Center Shares; Direct
Per Share 255 East Fifth St. (2)
Cincinnati, OH 45202
Common Stock PNC Bank Corporation 363,184 shares; 5.8%
Par Value $1 One PNC Plaza Trustee of the
Per Share 249 Fifth Avenue Company's
Pittsburgh, PA 15222 Profit Sharing
and Thrift
Savings Plan(3)
</TABLE>
(1) As reported to the Securities and Exchange Commission by the
beneficial owners.
(2) Sole voting power, 5,144,551 shares; sole dispositive power,
5,144,551 shares.
(3) Shared voting power, 363,184 shares; shared dispositive power
363,184 shares.
15
<PAGE> 18
The following table sets forth information as of December 31,
1996 with respect to the Common Stock of the Company and the capital stock of
Chemed beneficially owned by all nominees and Directors of the Company, each of
the executive officers named in the Summary Compensation Table, and the
Company's directors and executive officers as a group:
<TABLE>
<CAPTION>
Name Title of Class Amount and Nature of Percent of
Beneficial Ownership(1) Class (2)
- ---- -------------- ----------------------- ----------
<S> <C> <C> <C>
E.L. Hutton National Common 36,067 Direct
Stock 53,600 Option
3,194 Trustee
Chemed Capital 38,937 Direct
Stock 63,250 Option
3,967 Trustee
P.C. Voet National Common 38,948 Direct 1.1%
Stock 72,500 Option
Chemed Capital 26,610 Direct
Stock 1,000 Option
Trustee(3)
R.B. Garber National Common 27,366 Direct
Stock
Chemed Capital 1,543 Direct
Stock
J.A. Cunningham National Common 1,000 Direct
Stock
Chemed Capital 1,000 Direct
Stock 500 Trustee
N.C. Dallob National Common 4,400 Direct
Stock 3,312 Option
Chemed Capital 7,973 Direct
Stock 4,750 Option
C.H. Erhart, Jr. National Common 5,000 Direct
Stock
Chemed Capital 1,500 Direct
Stock
N. Gilliatt National Common 1,000 Direct
Stock
Chemed Capital 3,400 Direct
Stock
</TABLE>
16
<PAGE> 19
<TABLE>
<S> <C> <C>
W.J. Hoekman National Common 100 Direct
Stock
Chemed Capital None
Stock
T.C. Hutton National Common 4,556 Direct
Stock 3,500 Option
3,194 Trustee
Chemed Capital 18,003 Direct
Stock 12,250 Option
4,567 Trustee (3)
W.D. Jackson National Common 5,346 Direct
Stock 10,000 Option
Chemed Capital 288 Direct
Stock
C.O. Lane National Common 29,529 Direct
Stock 50,000 Option
Chemed Capital 8,042 Direct
Stock
S.E. Laney National Common 4,936 Direct
Stock 2,188 Option
Chemed Capital 29,953 Direct
Stock 40,750 Option
Trustee (3)
J.M. Mount National Common 100 Direct
Stock
Chemed Capital 7,620 Direct
Stock
K.J. McNamara National Common 4,542 Direct
Stock 5,625 Option
Chemed Capital 14,401 Direct
Stock 24,250 Option
Trustee (3)
T.S. O'Toole National Common 3,977 Direct
Stock 1,250 Option
Chemed Capital 14,288 Direct
Stock 23,000 Option
D.W. Robbins, National Common 2,000 Direct
Jr. Stock
Chemed Capital 2,000 Direct
Stock
G.H. Sander National Common 8,935 Direct
Stock 12,750 Option
Chemed Capital 8,977 Direct
Stock
</TABLE>
17
<PAGE> 20
<TABLE>
<S> <C> <C> <C>
K.F. Vuylsteke National Common 14,027 Direct
Stock 16,188 Option
Chemed Capital 1,117 Direct
Stock
G.J. Walsh III National Common 1,100 Direct
Stock
Chemed Capital 1,100 Direct
Stock
Directors and National Common 192,929 Direct 2.94%
Executive Stock 231,163 Option 3.52%
Officers as a 3,194 Trustee
Group (19 Chemed Capital 186,252 Direct 1.81%
Persons) Stock 169,250 Option ----
72,200 Trustee (4) 1.64%
----
</TABLE>
FOOTNOTES TO STOCK OWNERSHIP TABLE
(1) Includes securities beneficially owned (a) by the named persons or group
members, their spouses and their minor children (including shares of
Chemed capital stock and the Company's Common Stock allocated as at
December 31, 1996 to the account of each named person or member of the
group participating under Chemed's Savings and Investment Plan, Chemed's
Employee Stock Ownership Plans, and the Company's Thrift and Profit
Sharing Plan), (b) by trusts and custodianships for their benefit and (c)
by trusts and other entities as to which the named person or group has or
shares the power to direct voting or investment of securities. "Direct"
refers to securities in categories (a) and (b) and "Trustee" to securities
in category (c). Where securities would fall into both "Direct" and
"Trustee" classifications, they are included under "Trustee" only.
"Option" refers to shares which the named person or group has a right to
acquire within 60 days from December 31, 1996. For purposes of determining
the Percent of Class, all shares subject to stock option, which were
exercisable within 60 days of December 31, 1996, were assumed to have been
issued.
(2) Percent of Class under 1.0 percent is not shown.
(3) Messrs. T.C. Hutton, McNamara and Voet and Mrs. Laney are trustees of the
Chemed Foundation which holds 66,153 shares of Chemed capital stock over
which the trustees share both voting and investment power. This number is
included in the total number of "Trustee" shares held by the Directors and
Executive Officers as a Group, but is not reflected in the respective
holdings of the individual trustees.
(4) Shares over which more than one individual holds beneficial ownership have
been counted only once in calculating the aggregate number of shares owned
by Directors and Executive Officers as a Group.
18
<PAGE> 21
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and the
regulations thereunder require the Company's directors and certain officers,
and persons who own more than 10 percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission ("SEC"). Officers, directors and greater
than 10 percent shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based on review of the copies of such forms furnished to the
Company and on the written representations of those who have not furnished such
forms that, with respect to 1996, no Forms 5 were required to be filed with the
SEC, the Company believes that during the period January 1, 1996 through
December 31, 1996, the Company's officers, directors and greater than 10
percent shareholders have complied with all Section 16(a) filing requirements,
with the exception of Mr. Garber, who filed a Form 4 in October l996 reflecting
the exercise of 2,500 options in March 1996 and who filed a Form 5 in January
l997 reflecting the sale of 1,000 shares of Company Stock in March 1996.
CERTAIN ARRANGEMENTS AND TRANSACTIONS
TRANSACTIONS WITH CHEMED
CASH MANAGEMENT AND FINANCING. The Company deposits funds in
excess of its working capital requirements with Chemed for short-term
investment and Chemed may make short-term loans to the Company for working
capital needs. These unsecured demand deposits and short-term loans bear
interest at fifty basis points over U.S. Treasury Notes. At January 31, 1996,
the Company had a short-term loan from Chemed of $3,805,000, which represented
the largest loan balance during the year. The amount of interest expense paid
to Chemed during 1996 for the combination of demand deposits and short-term
loans was $129,000.
Chemed loaned the Company $11 million on November 10, 1988 at
an interest rate of 10.67 percent, due in eleven equal annual installments
beginning November 1, 1993. The Company paid $1 million on this note November
1, 1996. The Company borrowed $8 million from Chemed on January 1, 1993,
executing a promissory note at an interest rate of 7.66 percent, with interest
payable quarterly and the principal payable in full on January 1, 1998. The
Company paid Chemed interest of $1,449,000 in l996 on these loans. The Company
used these funds to acquire NSS-Southwest and real estate in Tempe, Arizona.
The loans are evidenced by
19
<PAGE> 22
promissory notes which provide Chemed with a call at any time in the event the
debtor becomes insolvent; files, or consents to the filing of, a petition for
protection under any bankruptcy or insolvency law in any jurisdiction; makes an
assignment for the benefit of its creditors; or assigns its obligations
thereunder to any third party without Chemed's consent.
During 1996, non-union employees of the Company participated
in Chemed's ESOPs. The Company paid Chemed 75 percent of the average monthly
price of Chemed stock during 1996 for these shares to be allocated to
employees' accounts, or $1,530,000.
SERVICE ARRANGEMENTS. As a subsidiary of Chemed and pursuant
to an agreement with Chemed, the Company uses certain administrative,
financial, insurance, tax, audit, legal, managerial and other services provided
by Chemed. The Company pays fees for these services based on Chemed's costs.
During 1996, the Company paid Chemed $596,000 for such services.
LEASES. The Company has lease arrangements with Chemed for
its headquarters office facility in Cincinnati, Ohio and for a portion of its
transportation equipment. The rents paid by the Company to Chemed totaled
$509,000 in 1996 and represented Chemed's cost to provide such leases.
STATE AND LOCAL INCOME TAXES. Should any state or locality
impose an income or franchise tax on Chemed or the Company by combining or
consolidating all or part of the income, losses, properties, payrolls, sales or
other attributes of Chemed and the Company or one of Chemed's subsidiaries,
Chemed and the Company have agreed the Company will reimburse Chemed for the
Company's share of such franchise or income tax, or Chemed shall reimburse the
Company for Chemed's share of such franchise or income tax, as the case may be.
The amount to be reimbursed is equal to the tax that would have been required
to be paid had the Company or Chemed, as the case may be, filed a separate
return without the inclusion of any income, losses, properties, payrolls, sales
or other attributes of any related parent or subsidiary corporation.
PROPOSAL TO APPROVE AND ADOPT THE
1997 STOCK INCENTIVE PLAN
In view of the few remaining shares available for the grant
of additional stock awards or stock options under the previously adopted stock
incentive plans, the Board of Directors has approved, subject to stockholder
approval, the adoption of the 1997 Stock Incentive Plan (the "Plan") pursuant
to which 300,000 shares of the Company's Common Stock may be issued or
transferred to key employees as stock incentives. The full text of the proposed
Plan is set forth as Exhibit A to this Proxy
20
<PAGE> 23
Statement and the following discussion is qualified in its entirety by
reference to such text.
THE PLAN
The Plan will become effective as of the date it is adopted by
the stockholders of the Company, i.e., May 19, l997. If it is not adopted by the
stockholders, the Plan will be of no force and effect. If it is adopted, no
stock options may be granted under the Plan after May 19, 2007. The Board of
Directors may terminate the Plan at any earlier time, but outstanding options
will continue to be exercisable until they expire in accordance with their
terms. The market value of the Common Stock as of March 20, 1997 was $13.00 per
share.
The Plan authorizes the issuance or transfer of a maximum of
300,000 shares of Common Stock pursuant to stock incentives granted to key
employees of the Company and its subsidiaries under the Plan. The maximum
number of shares subject to stock options allocable to an individual in any one
calendar year is 45,000. No more than 150,000 shares of Common Stock may be
issued or transferred pursuant to stock incentives in the form of stock awards
under the Plan. For purposes of the Plan, a "subsidiary" is a corporation or
other form of business association of which shares (or other ownership
interests) having 50 percent or more of the voting power are owned or
controlled, directly or indirectly, by the Company and "key employees" are
employees of the Company or a subsidiary, including officers and directors
thereof, who in the opinion of the Incentive Committee (as defined below) are
deemed to have the capacity to contribute significantly to the growth and
successful operations of the Company or a subsidiary.
Stock incentives granted under the Plan may be in the form of
options to purchase Common Stock ("stock options") or in the form of awards of
Common Stock in payment of incentive compensation ("stock awards"), or a
combination of stock awards and stock options.
The Plan shall be administered by a Committee (the "Incentive
Committee") consisting of no fewer than three persons designated by, and
serving at the pleasure of, the Board of Directors of the Company. ("Board")
The Incentive Committee designates the key employees of the
Company and its subsidiaries who might participate in the Plan and the form and
terms of the number of shares covered by each stock incentive granted
thereunder. In making such designation the Committee may consider an employee's
present or potential contribution to the success of the Company or any
subsidiary and other factors which it may deem relevant.
21
<PAGE> 24
Under the Plan, a stock incentive in the form of a stock
award will consist of shares of Common Stock issued as incentive compensation
earned or to be earned by the employee. Shares subject to a stock award may be
issued when the award is granted or at a later date, with or without dividend
equivalent rights. A stock award shall be subject to such terms, conditions and
restrictions (including restrictions on the transfer of the shares issued
pursuant to the award) as the Incentive Committee shall designate.
Under the Plan, a stock incentive in the form of a stock
option will provide for the purchase of shares of Common Stock in the future at
an option price per share which will not be less than l00 percent of the fair
market value of the shares covered thereby on the date the stock option is
granted. Each option shall be exercisable in full or in part one year after the
date the option is granted, or may become exercisable in one or more
installments and at such time or times, as the Incentive Committee shall
determine or upon various circumstances which may result in a change of control;
provided, however, that in no event shall an option be exercisable until six
months after the date the option is granted. Unless otherwise provided in the
option, an option, to the extent it is or becomes exercisable, may be exercised
at any time in whole or in part until the expiration or termination of the
option. Any term or provision in any outstanding option specifying when the
option may be exercisable or that it be exercisable in installments may be
modified at any time during the life of the option by the Incentive Committee,
provided, however, no such modification of an outstanding option shall, without
the consent of the optionee, adversely affect any option theretofore granted to
him.
Upon the exercise of an option, the purchase price shall be
paid in cash or, if so provided in the option, in shares of Common Stock or in
a combination of cash and such shares. The Company may cancel all or a portion
of an option subject to exercise, and pay the holder cash or shares equal in
value to the excess of the fair market value of the shares subject to the
portion of the option so canceled over the option price of such shares. Options
shall be granted for such lawful consideration as the Incentive Committee shall
determine.
All stock options granted under the Plan will expire within
ten years from the date of grant. A stock option is not transferable or
assignable by an optionee other than by will, by the laws of descent and
distribution, pursuant to a qualified domestic relations order or to certain
family members, and each option is exercisable, during his lifetime, only by
him. Unexercised options terminate upon termination of employment, except that
if termination arises from a resignation with the consent of the Incentive
Committee, the options terminate three months after such termination of
employment, and except further that if an optionee ceases to be an employee by
reason of his death while
22
<PAGE> 25
employed, retirement or disability, or if he should die within three months
following his resignation with the consent of the Board, the options terminate
fifteen months after an optionee's termination of employment but may be
exercised only to the extent that they could have been exercised by the
optionee, had he lived, three months after he ceased to be an employee. A leave
of absence for military or governmental service or for other purposes, if
approved by the Board, does not constitute a termination of employment, but no
options are exercisable during any such leave of absence.
Exercise of a stock option will be conditioned on an
optionee's payment in full of the purchase price for the shares, in cash or by
the transfer to the Company of shares of the Company's Common Stock at fair
market value on the date of transfer. An optionee shall not be considered a
holder of the shares subject to a stock option until actual delivery of a
certificate representing such shares is made by the Company.
None of the stock options granted under the Plan will be
"restricted", "qualified" or "incentive" stock options or options granted
pursuant to an "employee stock purchase plan" as the quoted terms are defined
in Sections 422 through 424 of the Internal Revenue Code of 1986, as amended.
With respect to stock awards in shares of Common Stock that
are either transferable or not subject to a substantial risk of forfeiture, the
employee must recognize ordinary income equal to the cash or the fair market
value of the shares of Common Stock and the Company will be entitled to a
deduction for the same amount. With respect to stock awards that are settled in
shares of Common Stock that is restricted as to transferability and subject to
substantial risk of forfeiture, the employee must recognize ordinary income
equal to the fair market value of the Common Stock at the first time such stock
becomes transferable or not subject to a substantial risk of forfeiture,
whatever occurs earlier, and the Company will be entitled to a deduction for the
same amount.
An optionee realizes no taxable income by reason of the grant
of a nonstatutory option. Subject to insider trading restrictions, upon
exercise of the option, an optionee realizes compensation taxable as ordinary
income in the amount of the excess of the fair market value of the stock over
the option price on the date of exercise. Upon the sale of stock acquired
pursuant to the exercise of an option, an optionee realizes either a capital
gain or a capital loss based upon the difference between his selling price and
the fair market value of the stock on the date of exercise. Such capital gain
or loss, as the case may be, will be either short term or long term depending
on the period elapsed between the date of exercise and the date of sale. In
those instances where the employee receives compensation taxable as ordinary
income, the Company or a subsidiary will
23
<PAGE> 26
generally be entitled to a Federal income tax deduction in the amount of such
compensation. An employee will not recognize gain on previously owned shares of
the Company's Common Stock if he exercises an option and transfers such shares
to the Company in payment of the option price. Taxes payable by an optionee or
awardee on exercise of an option or removal of restrictions on an award may be
paid in cash, surrender of shares, or withholding of shares of Common Stock as
the Incentive Committee shall determine.
The Board may amend the Plan subject, in the case of
specified amendments, to stockholder approval. The Plan may be discontinued at
any time by the Board. No amendment or discontinuance of the Plan shall,
without the consent of the employee, adversely affect any stock incentive held
by him under the Plan.
No determination has or can be made as to prospective grants
of stock incentives under the Plan to any persons, or as to such grants which
would have been made had the Plan been in effect during 1996. The proceeds of
sale of Common Stock under the Plan will be used by the Company for general
corporate purposes.
In order to effect the approval and adoption of the Plan, the
following resolution will be presented to the Annual Meeting:
"RESOLVED THAT THE 1997 STOCK INCENTIVE PLAN SET FORTH AS
EXHIBIT A TO THE PROXY STATEMENT ACCOMPANYING THE NOTICE OF
THE ANNUAL MEETING OF THE STOCKHOLDERS OF NATIONAL SANITARY
SUPPLY COMPANY TO BE HELD MAY 19, 1997 BE AND THE SAME HEREBY
IS APPROVED AND ADOPTED."
The affirmative vote of the holders of a majority of the
voting power of the stockholders represented at the meeting will be necessary
for the adoption of the foregoing resolution, with abstentions having the
effect of negative votes, and broker non-votes deemed to be absent shares. The
approval and adoption of the Plan is not a matter which is required to be
submitted to a vote of the stockholders of the Company. The reason for
submitting such proposal to a vote of the stockholders is to comply with
ss.162(m) of the Internal Revenue Code of 1986, as amended, which allows the
deduction of certain executive compensation in excess of $1,000,000. Management
has not determined what course of action it intends to take in the event of a
negative vote on the proposal by stockholders.
24
<PAGE> 27
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL AND
ADOPTION OF THE PLAN.
PROPOSAL TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has approved, declared advisable and
recommends to the stockholders that an amendment to the Company's Amended
Certificate of Incorporation ("Certificate") be adopted increasing the number of
authorized shares of Common Stock from 7,000,000 to 9,000,000(the "Proposed
Amendment"). At March 19, 1997, there were 6,192,965 shares of Common Stock
outstanding, 570,239 shares reserved for potential exercise of stock options
previously granted and 41,195 shares reserved for possible grant under the
Company's 1986, 1988 and l995 Stock Incentive Plans. This leaves 195,601 shares
of Common Stock available for issuance out of the 7,000,000 presently
authorized. Upon adoption of the Proposed Amendment 2,195,601 shares of Common
Stock would be available for issuance by the Board of Directors for purposes for
which shares are not currently reserved.
The Board of Directors believes that it is desirable and in
the best interests of the Company and its stockholders that there be a
substantial number of authorized shares of Common Stock available for issuance
in the future. Such shares may be used for general corporate purposes,
including stock splits and stock dividends, acquisitions, public offerings,
stock option and other employee incentive plans, including the l997 Stock
Incentive Plan, if approved. Authorized but unissued shares are available for
issuance from time to time to such persons and for such consideration as the
Board of Directors may determine, without requiring further action by the
stockholders, except as may be required by law, the Certificate or pursuant to
the rules of any stock market on which the shares may then be traded. The
Company has no present plans to issue any of the additional shares of Common
Stock which would be authorized by adoption of the Proposed Amendment, and
there are no pending negotiations, discussions, agreements or understandings
which would obligate the Company to the issuance of any such shares.
While the Board of Directors believes that it is in the best
interests of the stockholders for the Board to have the flexibility to issue
additional shares in any or all of the circumstances described in the preceding
paragraph, the holders of Common Stock do not have pre-emptive rights and the
issuance of additional shares, other than on a pro rata basis to current
stockholders, would have the effect of diluting the voting power of current
stockholders. In addition, the availability of sufficient authorized and
unissued shares could, in certain circumstances, discourage an attempt by
another person or entity to acquire control of the Company. The proposal has
not,
25
<PAGE> 28
however, been prompted by an attempt by anyone to acquire control of the
Company, and the Company is not aware of any such attempt.
If the Proposed Amendment is adopted, the first sentence of
Article 4 of the Certificate would be amended to read as follows:
4. The total number of shares of stock which the
Corporation shall have authority to issue is Ten Million
(10,000,000), of which Nine Million (9,000,000) shares of the
par value of One Dollar ($1.00) each, amounting in the
aggregate to Nine Million Dollars ($9,000,000), shall be
Common Stock and of which One Million (1,000,000) shares, of
the par value of One Dollar ($1.00) each, amounting in the
aggregate to One Million Dollars ($1,000,000), shall be
Preferred Stock.
Adoption of the Proposed Amendment requires the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock,
with abstentions having the effect of negative votes, and broker non-votes
deemed to be absent shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE
PROPOSED AMENDMENT.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price
Waterhouse LLP as independent accountants for the Company and its consolidated
subsidiaries for the year 1997. This firm has acted as independent accountants
for Chemed since 1970 and for the Company since 1983.
Although the submission of this matter to the stockholders is
not required by law or by the By-Laws of the Company, the selection of Price
Waterhouse will be submitted for ratification at the Annual Meeting. The
affirmative vote of the holders of a majority of the voting power of the
stockholders represented at the meeting with abstentions having the effect of
negative votes and broker nonvotes deemed to be absent shares, will be
necessary to ratify the selection of Price Waterhouse as independent
accountants for the Company and its consolidated subsidiaries for the year
1997. If the selection is not ratified at the meeting, the Board of Directors
will reconsider its selection of independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
It is expected that a representative of Price Waterhouse will
be present at the Company's Annual Meeting. Such representative shall have the
opportunity to make a statement if
26
<PAGE> 29
he so desires and shall be available to respond to appropriate questions raised
at the meeting.
STOCKHOLDER PROPOSALS
Any proposals by stockholders intended to be included in the
proxy materials for presentation at the 1998 Annual Meeting of Stockholders
must be in writing and received by the Secretary of the Company no later than
December 6, 1997.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of
no other matters which will be presented for consideration at the Annual
Meeting. However, if any other business should come before the meeting, the
persons named in the enclosed proxy (or their substitutes) will have
discretionary authority to take such action as shall be in accordance with
their best judgment.
EXPENSES OF SOLICITATION
The expense of soliciting proxies in the accompanying form
will be borne by the Company. The Company will request banks, brokers and other
persons holding shares beneficially owned by others to send proxy materials to
the beneficial owners and to secure their voting instructions, if any. The
Company will reimburse such persons for their expenses in so doing. In addition
to solicitation by mail, officers and regular employees of the Company may
solicit, without extra remuneration, proxies personally, by telephone or by
facsimile from some stockholders if such proxies are not promptly received.
This Proxy Statement and the accompanying Notice of Meeting are sent by order
of the Board of Directors.
Naomi C. Dallob
Secretary
April 4, 1997
27
<PAGE> 30
EXHIBIT A
NATIONAL SANITARY SUPPLY COMPANY
1997 STOCK INCENTIVE PLAN
1. PURPOSES: The purposes of this Plan are (a) to secure for the
Corporation the benefits of incentives inherent in ownership of Common Stock by
Key Employees, (b) to encourage Key Employees to increase their interest in the
future growth and prosperity of the Corporation and to stimulate and sustain
constructive and imaginative thinking by Key Employees, (c) to further the
identity of interest of those who hold positions of major responsibility in the
Corporation and its Subsidiaries with the interests of the Corporation's
stockholders, (d) to induce the employment or continued employment of Key
Employees and (e) to enable the Corporation to compete with other organizations
offering similar or other incentives in obtaining and retaining the services of
competent executives.
2. DEFINITIONS: Unless otherwise required by the context, the following
terms when used in this Plan shall have the meanings set forth in this section
2.
BOARD OF DIRECTORS: The Board of Directors of the Corporation.
COMMON STOCK: The Common Stock of the Corporation, par value $l.00
per share, or such other class of shares or other securities as may be
applicable pursuant to the provisions of section 8.
CORPORATION: National Sanitary Supply Company, a Delaware
corporation.
FAIR MARKET VALUE: As applied to any date, the last trading price of
a share of Common Stock on the principal stock exchange on which the Common
Stock is listed or, if it is not so listed, as reported by the National
Association of Securities Dealers Automated Quotation System on such date or, if
no sales were made on such date, on the next preceding date on which there were
sales of Common Stock; provided, however, that, if the Common Stock is not so
listed or quoted, Fair Market Value shall be determined in accordance with the
method approved by the Board of Directors, and, provided further, if any of the
foregoing methods of determining Fair Market Value shall not be consistent with
the regulations of the Secretary of the Treasury or his
Page A-1
<PAGE> 31
delegate at the time applicable to a Stock Incentive of the type involved, Fair
Market Value in the case of such Stock Incentive shall be determined in
accordance with such regulations and shall mean the value as so determined.
INCENTIVE COMMITTEE: The Incentive Committee designated to
administer this Plan pursuant to the provisions of section 10.
INCENTIVE COMPENSATION: Bonuses and extra and other compensation
payable in addition to a salary or other base amount, whether contingent or
discretionary or required to be paid pursuant to an agreement, resolution or
arrangement, and whether payable currently or on a deferred basis, in cash,
Common Stock or other property, awarded by the Corporation or a Subsidiary prior
or subsequent to the date of the approval and adoption of this Plan by the
stockholders of the Corporation.
KEY EMPLOYEE: An employee of the Corporation or of a Subsidiary who
in the opinion of the Incentive Committee can contribute significantly to the
growth and successful operations of the Corporation or a Subsidiary. The grant
of a Stock Incentive to an employee shall be deemed a determination by the
Incentive Committee that such employee is a Key Employee. For the purposes of
this Plan, a director or officer of the Corporation or of a Subsidiary shall be
deemed an employee regardless of whether or not such director or officer is on
the payroll of, or otherwise paid for services by, the Corporation or a
Subsidiary.
OPTION: An option to purchase shares of Common Stock.
PERFORMANCE UNIT: A unit representing a share of Common Stock,
subject to a Stock Award, the issuance, transfer or retention of which is
contingent, in whole or in part, upon attainment of a specified performance
objective or objectives, including, without limitation, objectives determined by
reference to or changes in (a) the Fair Market Value, book value or earnings per
share of Common Stock, or (b) sales and revenues, income, profits and losses,
return on capital employed, or net worth of the Corporation (on a consolidated
or unconsolidated basis) or of any one or more of its groups, divisions,
Subsidiaries or departments, or (c) a combination of two or more of the
foregoing factors.
PLAN: The l997 Stock Incentive Plan herein set forth as the same may
from time to time be amended.
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STOCK AWARD: An issuance or transfer of shares of Common Stock at
the time the Stock Incentive is granted or as soon thereafter as practicable, or
an undertaking to issue or transfer such shares in the future, including,
without limitation, such an issuance, transfer or undertaking with respect to
Performance Units.
STOCK INCENTIVE: A stock incentive granted under this Plan in one of
the forms provided for in section 3.
SUBSIDIARY: A corporation or other form of business association of
which shares (or other ownership interests) having 50% or more of the voting
power are owned or controlled, directly or indirectly, by the Corporation.
3. GRANTS OF STOCK INCENTIVES:
(a) Subject to the provisions of this Plan, the Incentive Committee
may at any time, or from time to time, grant Stock Incentives under this Plan
to, and only to, Key Employees.
(b) Stock Incentives may be granted in the following forms:
(i) a Stock Award, or
(ii) an Option, or
(iii) a combination of a Stock Award and an
Option.
4. STOCK SUBJECT TO THIS PLAN:
(a) Subject to the provisions of paragraphs (c) and (d) of this
section 4 and of section 8, the aggregate number of shares of Common Stock which
may be issued or transferred pursuant to Stock Incentives granted under this
Plan shall not exceed 300,000 shares.
(b) The maximum aggregate number of shares of Common Stock issuable
or transferrable as Options to a single individual in any one calendar year
shall not exceed 45,000 shares. The maximum aggregate number of shares of
Common Stock issuable or transferrable as Stock Awards under this Plan shall not
exceed 150,000 shares.
(c) Authorized but unissued shares of Common Stock and shares of
Common Stock held in the treasury, whether acquired by the Corporation
specifically for use under this Plan or
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otherwise, may be used, as the Board of Directors may from time to time
determine, for purposes of this Plan, provided, however, that any shares
acquired or held by the Corporation for the purposes of this Plan shall, unless
and until transferred to a Key Employee in accordance with the terms and
conditions of a Stock Incentive, be and at all times remain treasury shares of
the Corporation, irrespective of whether such shares are entered in a special
account for purposes of this Plan, and shall be available for any corporate
purpose.
(d) If any shares of Common Stock subject to a Stock Incentive shall
not be issued or transferred and shall cease to be issuable or transferable
because of the termination, in whole or in part, of such Stock Incentive or for
any other reason, or if any such shares shall, after issuance or transfer, be
reacquired by the Corporation or a Subsidiary because of an employee's failure
to comply with the terms and conditions of a Stock Incentive, the shares not so
issued or transferred, or the shares so reacquired by the Corporation or a
Subsidiary shall no longer be charged against any of the limitations provided
for in paragraphs (a) or (b) of this section 4 and may again be made subject to
Stock Incentives.
5. STOCK AWARDS: Stock Incentives in the form of Stock
Awards shall be subject to the following provisions:
(a) A Stock Award shall be granted only in payment of Incentive
Compensation that has been earned or as Incentive Compensation to be earned,
including, without limitation, Incentive Compensation awarded concurrently with
or prior to the grant of the Stock Award.
(b) For the purposes of this Plan, in determining the value of a
Stock Award, all shares of Common Stock subject to such Stock Award shall be
valued at not less than l00% of the Fair Market Value of such shares on the date
such Stock Award is granted, regardless of whether or when such shares are
issued or transferred to the Key Employee and whether or not such shares are
subject to restrictions which affect their value.
(c) Shares of Common Stock subject to a Stock Award may be issued or
transferred to the Key Employee at the time the Stock Award is granted, or at
any time subsequent thereto, or in installments from time to time, as the
Incentive Committee shall determine. In the event that any such issuance or
transfer shall not be made to the Key Employee at the time the Stock Award is
granted, the Incentive Committee may provide for payment to such Key Employee,
either in cash or in shares of Common Stock from
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<PAGE> 34
time to time or at the time or times such shares shall be issued or transferred
to such Key Employee, of amounts not exceeding the dividends which would have
been payable to such Key Employee in respect of such shares (as adjusted under
section 8) if they had been issued or transferred to such Key Employee at the
time such Stock Award was granted. Any amount payable in shares of Common Stock
under the terms of a Stock Award may, at the discretion of the Corporation, be
paid in cash, on each date on which delivery of shares would otherwise have been
made, in an amount equal to the Fair Market Value on such date of the shares
which would otherwise have been delivered.
(d) A Stock Award shall be subject to such terms and conditions,
including, without limitation, restrictions on sale or other disposition of the
Stock Award or of the shares issued or transferred pursuant to such Stock Award,
as the Incentive Committee shall determine; provided, however, that upon the
issuance or transfer of shares pursuant to a Stock Award, the recipient shall,
with respect to such shares, be and become a stockholder of the Corporation
fully entitled to receive dividends, to vote and to exercise all other rights of
a stockholder except to the extent otherwise provided in the Stock Award. Each
Stock Award shall be evidenced by a written instrument in such form as the Board
of Directors shall determine, provided the Stock Award is consistent with this
Plan and incorporates it by reference.
6. OPTIONS: Stock Incentives in the form of Options shall be subject
to the following provisions:
(a) Upon the exercise of an Option, the purchase price shall be paid
in cash or, if so provided in the Option or in a resolution adopted by the
Incentive Committee (and subject to such terms and conditions as are specified
in the Option or by the Incentive Committee), in shares of Common Stock or in a
combination of cash and such shares. Shares of Common Stock thus delivered shall
be valued at their Fair Market Value on the date of exercise. Subject to the
provisions of section 8, the purchase price per share shall be not less than
l00% of the Fair Market Value of a share of Common Stock on the date the Option
is granted.
(b) Each Option shall be exercisable in full or in part six months
after the date the Option is granted, or may become exercisable in one or more
installments and at such time or times, as the Incentive Committee shall
determine. Unless otherwise provided in the Option, an Option, to the extent it
is or becomes exercisable, may be exercised at any time in whole or
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<PAGE> 35
in part until the expiration or termination of the Option. Subject to the first
sentence of this paragraph, any term or provision in any outstanding Option
specifying when the Option is exercisable or that it be exercisable in
installments may be modified at any time during the life of the Option by the
Incentive Committee, provided, however, no such modification of an outstanding
Option shall, without the consent of the optionee, adversely affect any Option
theretofore granted to him. Subject to the preceding provisions of this
paragraph, an Option will become immediately exercisable in full if at any time
during the term of the Option the Corporation obtains actual knowledge that any
of the following events has occurred, irrespective of the applicability of any
limitation on the number of shares then exercisable under the Option: (1) any
person within the meaning of Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934 (the "1934 Act"), other than Chemed Corporation or the Corporation
or any of its subsidiaries, has become the beneficial owner, within the meaning
of Rule 13d-3 under the 1934 Act, of 30 percent or more of the combined voting
power of the Corporation's then outstanding voting securities; (2) the
expiration of a tender offer or exchange offer, other than an offer by the
Corporation or Chemed Corporation, pursuant to which 20 percent or more of the
shares of the Corporation's Common Stock or Chemed Corporation's capital stock
have been purchased; (3) the stockholders of the Corporation or Chemed
Corporation have approved (i) an agreement to merge or consolidate with or into
another corporation and the Corporation or Chemed Corporation is not the
surviving corporation or (ii) an agreement to sell or otherwise dispose of all
or substantially all of the assets of Chemed Corporation or the Corporation
(including a plan of liquidation); or (4) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least a majority thereof, unless
the nomination for the election by the Corporation's stockholders of each new
director was approved by a vote of at least one-half of the persons who were
directors at the beginning of the two-year period.
(c) Each Option shall be exercisable during the life of the optionee
only by him or any assignee or transferee permitted by Section 6(f), and, after
his death, only by his estate or by a person who acquired the right to exercise
the Option pursuant to one of the provisions of Section 6(f). An Option, to the
extent that it shall not have been exercised, shall terminate when the optionee
ceases to be an employee of the Corporation or a Subsidiary, unless he ceases to
be an employee because of his resignation with the consent of the Incentive
Committee (which consent may be given before or after resignation), or by reason
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<PAGE> 36
of his death, incapacity or retirement under a retirement plan of the
Corporation or a Subsidiary. Except as provided in the next sentence, if the
optionee ceases to be an employee by reason of such resignation, the Option
shall terminate three months after he ceases to be an employee. If the optionee
ceases to be an employee by reason of such death, incapacity or retirement, or
if he should die during the three-month period referred to in the preceding
sentence, the Option shall terminate fifteen months after he ceases to be an
employee. Where an Option is exercised more than three months after the optionee
ceased to be an employee, the Option may be exercised only to the extent it
could have been exercised three months after he ceased to be an employee. A
leave of absence for military or governmental service or for other purposes
shall not, if approved by the Incentive Committee, be deemed a termination of
employment within the meaning of this paragraph (c); provided, however, that an
Option may not be exercised during any such leave of absence. Notwithstanding
the foregoing provisions of this paragraph (c) or any other provision of this
Plan, no Option shall be exercisable after expiration of the term for which the
Option was granted, which shall in no event exceed ten years. Where an Option is
granted for a term of less than ten years, the Incentive Committee may, at any
time prior to the expiration of the Option, extend its term for a period ending
not later than ten years from the date the Option was granted.
(d) Options shall be granted for such lawful consideration as the
Board of Directors shall determine.
(e) Neither the Corporation nor any Subsidiary may directly or
indirectly lend any money to any person for the purpose of assisting him to
purchase or carry shares of Common Stock issued or transferred upon the exercise
of an Option.
(f) No Option nor any right thereunder may be assigned or
transferred by the optionee except:
(i) by will or the laws of descent and distribution;
(ii) pursuant to a qualified domestic relations order as defined
by the Internal Revenue Code of 1986, as amended, or by the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder;
(iii) by an optionee who, at the time of the transfer, is not
subject to the provisions of Section 16 of the 1934 Act, provided such transfer
is to or for the benefit of (including but
Page A-7
<PAGE> 37
not limited to trusts for the benefit of) the optionee's spouse or lineal
descendants of the optionee's parents; or
(iv) by an optionee who, at the time of the transfer, is subject
to the provisions of Section 16 of the 1934 Act, to the extent, if any, such
transfer would be permitted under Securities and Exchange Commission Rule 16b-3
or any successor rule thereto, as such rule or any successor rule thereto may be
in effect at the time of the transfer.
If so provided in the Option or if so authorized by the Board of
Directors and subject to such terms and conditions as are specified in the
Option or by the Incentive Committee, the Corporation may, upon or without the
request of the holder of the Option and at any time or from time to time, cancel
all or a portion of the Option then subject to exercise and either (i) pay the
holder an amount of money equal to the excess, if any, of the Fair Market Value,
at such time or times, of the shares subject to the portion of the Option so
cancelled over the aggregate purchase price of such shares, or (ii) issue or
transfer shares of Common Stock to the holder with a Fair Market Value, at such
time or times, equal to such excess.
(g) Each Option shall be evidenced by a written instrument, which
shall contain such terms and conditions, and shall be in such form, as the
Incentive Committee may determine, provided the Option is consistent with this
Plan and incorporates it by reference. Notwithstanding the preceding sentence,
an Option, if so granted by the Incentive Committee, may include restrictions
and limitations in addition to those provided for in this Plan.
(h) Any federal, state or local withholding taxes payable by an
optionee or awardee upon the exercise of an Option or upon the removal of
restrictions of a Stock Award shall be paid in cash, or in such other form as
the Incentive Committee may authorize from time to time, including the surrender
of shares of Common Stock or the withholding of shares of Common Stock to be
issued to the optionee or awardee. All such shares so surrendered or withheld
shall be valued at Fair Market Value on the date such are surrendered to the
Corporation or authorized to be withheld.
7. COMBINATIONS OF STOCK AWARDS AND OPTIONS: Stock Incentives
authorized by paragraph (b)(iii) of section 3 in the form of combinations of
Stock Awards and Options shall be subject to the following provisions:
(a) A Stock Incentive may be a combination of any form
of Stock Award with any form of Option; provided, however, that
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<PAGE> 38
the terms and conditions of such Stock Incentive pertaining to a Stock Award are
consistent with section 5 and the terms and conditions of such Stock Incentive
pertaining to an Option are consistent with section 6.
(b) Such combination Stock Incentive shall be subject to such
other terms and conditions as the Incentive Committee may determine, including,
without limitation, a provision terminating in whole or in part a portion
thereof upon the exercise in whole or in part of another portion thereof. Such
combination Stock Incentive shall be evidenced by a written instrument in such
form as the Incentive Committee shall determine, provided it is consistent with
this Plan and incorporates it by reference.
8. ADJUSTMENT PROVISIONS: In the event that any recapitalization, or
reclassification, split-up or consolidation of shares of Common Stock shall be
effected, or the outstanding shares of Common Stock are, in connection with a
merger or consolidation of the Corporation or a sale by the Corporation of all
or a part of its assets exchanged for a different number or class of shares of
stock or other securities of the Corporation or for shares of the stock or other
securities of any other corporation, or a record date for determination of
holders of Common Stock entitled to receive a dividend payable in Common Stock
shall occur (a) the number and class of shares or other securities that may be
issued or transferred pursuant to Stock Incentives, (b) the number and class of
shares or other securities which have not been issued or transferred under
outstanding Stock Incentives, (c) the purchase price to be paid per share or
other security under outstanding Options, and (d) the price to be paid per share
or other security by the Corporation or a Subsidiary for shares or other
securities issued or transferred pursuant to Stock Incentives which are subject
to a right of the Corporation or a Subsidiary to reacquire such shares or other
securities, shall in each case be equitably adjusted.
9. TERM: This Plan shall be deemed adopted and shall become
effective on the date it is approved and adopted by the stockholders of the
Corporation. No Stock Incentives shall be granted under this Plan after May 19,
2007.
10. ADMINISTRATION:
(a) The Plan shall be administered by the Incentive Committee,
which shall consist of no fewer than three persons designated by the Board of
Directors. Grants of Stock Incentives may be made by the Incentive Committee
either in or without
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<PAGE> 39
consultation with employees, but, anything in this Plan to the contrary
notwithstanding, the Incentive Committee shall have full authority to act in the
matter of selection of all Key Employees and in determining the number of Stock
Incentives to be granted to them.
(b) The Incentive Committee may establish such rules and
regulations, not inconsistent with the provisions of this Plan, as it deems
necessary to determine eligibility to participate in this Plan and for the
proper administration of this Plan, and may amend or revoke any rule or
regulation so established. The Incentive Committee may make such determinations
and interpretations under or in connection with this Plan as it deems necessary
or advisable. All such rules, regulations, determinations and interpretations
shall be binding and conclusive upon the Corporation, its Subsidiaries, its
stockholders and all employees, and upon their respective legal representatives,
beneficiaries, successors and assigns and upon all other persons claiming under
or through any of them.
(c) Members of the Board of Directors and members of the
Incentive Committee acting under this Plan shall be fully protected in relying
in good faith upon the advice of counsel and shall incur no liability except for
gross negligence or willful misconduct in the performance of their duties.
11. GENERAL PROVISIONS:
(a) Nothing in this Plan nor in any instrument executed pursuant
hereto shall confer upon any employee any right to continue in the employ of the
Corporation or a Subsidiary, or shall affect the right of the Corporation or of
a Subsidiary to terminate the employment of any employee with or without cause.
(b) No shares of Common Stock shall be issued or transferred
pursuant to a Stock Incentive unless and until all legal requirements applicable
to the issuance or transfer of such shares, in the opinion of counsel to the
Corporation, have been complied with. In connection with any such issuance or
transfer the person acquiring the shares shall, if requested by the Corporation,
give assurances, satisfactory to counsel to the Corporation, that the shares are
being acquired for investment and not with a view to resale or distribution
thereof and assurances in respect of such other matters as the Corporation or a
Subsidiary may deem desirable to assure compliance with all applicable legal
requirements.
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<PAGE> 40
(c) No employee (individually or as a member of a group), and no
beneficiary or other person claiming under or through him, shall have any right,
title or interest in or to any shares of Common Stock allocated or reserved for
the purposes of this Plan or subject to any Stock Incentive except as to such
shares of Common Stock, if any, as shall have been issued or transferred to him.
(d) The Corporation or a Subsidiary may, with the approval of the
Incentive Committee, enter into an agreement or other commitment to grant a
Stock Incentive in the future to a person who is or will be a Key Employee at
the time of grant, and, notwithstanding any other provision of this Plan, any
such agreement or commitment shall not be deemed the grant of a Stock Incentive
until the date on which the Company takes action to implement such agreement or
commitment.
(e) In the case of a grant of a Stock Incentive to an employee of
a Subsidiary, such grant may, if the Incentive Committee so directs, be
implemented by the Corporation issuing or transferring the shares, if any,
covered by the Stock Incentive to the Subsidiary, for such lawful consideration
as the Board of Directors may specify, upon the condition or understanding that
the Subsidiary will transfer the shares to the employee in accordance with the
terms of the Stock Incentive specified by the Incentive Committee pursuant to
the provisions of this Plan. Notwithstanding any other provision hereof, such
Stock Incentive may be issued by and in the name of the Subsidiary and shall be
deemed granted on the date it is approved by the Incentive Committee, on the
date it is delivered by the Subsidiary or on such other date between said two
dates, as the Incentive Committee shall specify.
(f) The Corporation or a Subsidiary may make such provisions as
it may deem appropriate for the withholding of any taxes which the Corporation
or a Subsidiary determines it is required to withhold in connection with any
Stock Incentive.
(g) Nothing in this Plan is intended to be a substitute for, or
shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or fringe benefits to
employees generally, or to any class or group of employees, which the
Corporation or any Subsidiary or other affiliate now has or may hereafter
lawfully put into effect, including, without limitation, any retirement,
pension, group insurance, stock bonus or stock option plan.
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<PAGE> 41
12. AMENDMENTS AND DISCONTINUANCE:
(a) This Plan may be amended by the Board of Directors, provided
that, without the approval of the stockholders of the Corporation, no amendment
shall be made which (i) increases the aggregate number of shares of Common Stock
that may be issued or transferred pursuant to Stock Incentives as provided in
paragraph (a) of section 4, (ii) increases the maximum aggregate number of
shares of Common Stock that may be issued or transferred under the Plan to an
individual as provided in paragraph (b) of section 4, (iii) withdraws the
administration of this Plan from the Incentive Committee, (iv) permits any
person who is not at the time a Key Employee of the Corporation or of a
Subsidiary to be granted a Stock Incentive, (v) permits any Option to be
exercised more than ten years after the date it is granted, (vi) amends section
9 to extend the date set forth therein or (vii) amends this section 12.
(b) Notwithstanding paragraph (a) of this section 12, the Board
of Directors may amend the Plan to take into account changes in applicable
securities laws, federal income tax laws and other applicable laws. Should the
provisions of Rule 16b-3, or any successor rule, under the Securities Exchange
Act of 1934 be amended, the Board of Directors may amend the Plan in accordance
therewith.
(c) The Board of Directors may by resolution adopted by a
majority of the entire Board of Directors discontinue this Plan.
(d) No amendment or discontinuance of this Plan by the Board of
Directors or the stockholders of the Corporation shall, without the consent of
the employee, adversely affect any Stock Incentive theretofore granted to him.
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NATIONAL SANITARY SUPPLY COMPANY
2900 CHEMED CENTER
255 EAST FIFTH STREET PLEASE MARK, SIGN, DATE AND RETURN PROXY
CINCINNATI, OHIO 45202 CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
- -------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS, MAY 19, 1997.
The undersigned hereby appoints E. L. Hutton and P.C. Voet as Proxies, both with
the power to appoint a substitute, and hereby authorizes them to represent and
to vote, as designated on the reverse side, all the shares of stock of National
Sanitary Supply Company held of record by the undersigned on March 19, 1997, at
the Annual Meeting of Stockholders to be held on May 19, 1997, or at any
adjournment thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
(1) Election of Directors (mark only ONE box):
[ ]FOR all nominees [ ]FOR nominees listed EXCEPT [ ]WITHHOLD ALL AUTHORITY
listed. THOSE WHOSE NAMES I HAVE to vote in the selection
STRICKEN. of directors
Edward L. Hutton Will J. Hoekman John M. Mount
Paul C. Voet Thomas C. Hutton Timothy S. O'Toole
Robert B. Garber W. Dwight Jackson D. Walter Robbins, Jr.
Naomi C. Dallob Charles O. Lane Gary H. Sander
Charles H. Erhart, Jr. Sandra E. Laney Kenneth F. Vuylsteke
Neal Gilliatt Kevin J. McNamara George J. Walsh III
(2) Approve an amendment to National Sanitary Supply Company's Amended
Certificate of Incorporation increasing the number of authorized shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Approval and adoption of the 1997 Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Ratifying the selection of independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS (1), (2),
(3) AND (4).
DATED: _________________________________, 1997
(Be sure to date Proxy)
SIGNED:
-------------------------------------------
-------------------------------------------
(Please sign exactly as names appear at left)
When signed on behalf of a corporation,
partnership, estate, trust, or other
stockholder, state your title or capacity or
otherwise indicate that you are authorized to
sign.
