<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------- -------
Commission File Number 0-23832
-------
PHYSICIAN SALES & SERVICE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2280364
- ---------------------------- ---------------------------
(State or other jurisdiction (IRS employer
of incorporation) identification number)
7800 Belfort Parkway, Suite 250
Jacksonville, Florida 32256
- ------------------------------------------ ---------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number (904) 281-0011
------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[ X ] Yes [ ] No
As of August 13, 1996 a total of 35,155,312 shares of common stock, par
value $.01 per share, of the registrant were outstanding.
<PAGE> 2
PHYSICIAN SALES & SERVICE, INC. & SUBSIDIARIES
JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NUMBER
-----------
<S> <C>
Condensed Consolidated Balance Sheets -
June 30, 1996 and March 29, 1996 3
Condensed Consolidated Statements of Operations -
Three Months Ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 13
</TABLE>
2
<PAGE> 3
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, MARCH 29,
1996 1996
-------------- --------------
(UNAUDITED) *
<C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 69,554,183 $ 86,332,758
Accounts receivable, net 102,625,774 92,060,750
Inventories 60,271,763 52,270,694
Prepaid expenses and other 9,244,801 10,665,017
-------------- --------------
Total current assets 241,696,521 241,329,219
Property and equipment, net 16,006,762 14,486,092
Other Assets:
Intangibles, net 14,814,056 13,884,322
Other 4,880,491 1,374,148
-------------- --------------
Total assets $277,397,830 $271,073,781
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 64,596,452 $ 57,638,770
Accrued expenses 16,273,083 8,939,122
Other 2,973,865 2,806,048
-------------- --------------
Total current liabilities 83,843,400 69,383,940
-------------- --------------
Long-Term Liabilities 3,500,089 4,043,085
-------------- --------------
Total liabilities 87,343,489 73,427,025
-------------- --------------
Shareholders' Equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized,no shares
issued and outstanding - -
Common stock, $.01 par value; 60,000,000 shares authorized,
34,988,399 and 34,528,814 shares issued and outstanding at June 30,
1996 and March 29, 1996, respectively 349,884 345,288
Additional paid-in capital 203,147,420 200,124,412
Retained deficit (13,440,774) (2,822,944)
Foreign currency translation (2,189) -
-------------- --------------
Total shareholders' equity 190,054,341 197,646,756
-------------- --------------
Total liabilities and shareholders' equity $ 277,397,830 $ 271,073,781
============== ==============
</TABLE>
* Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed
consolidated statements.
3
<PAGE> 4
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
------------------ ------------------
<C> <C> <C>
Net Sales $ 139,702,551 $ 105,310,479
Cost of Goods Sold 99,782,401 73,481,303
------------------ ------------------
Gross Profit 39,920,150 31,829,176
General and Administrative Expenses 22,857,157 18,144,517
Selling Expenses 13,504,949 10,909,869
Merger Costs and Expenses 6,934,000 -
------------------ ------------------
(Loss) Income From Operations (3,375,956) 2,774,790
------------------ ------------------
Other Income (Expense):
Interest income (expense) 528,153 (1,027,676)
Other income 404,275 274,294
------------------ ------------------
932,428 (753,382)
------------------ ------------------
(Loss) Income Before Benefit (Provision) for Income Taxes (2,443,528) 2,021,408
Income Tax Benefit (Provision) 530,000 (848,550)
------------------ ------------------
Net (Loss) Income $ (1,913,528) $ 1,172,858
================== ==================
Net (Loss) Income Per Common and Common Equivalent Share $ (0.06) $ 0.05
================== ==================
Weighted average number of shares outstanding 34,589,000 25,888,000
================== ==================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
4
<PAGE> 5
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
---------------- ---------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net (loss) income $ (1,913,528) $ 1,172,858
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Depreciation and amortization 969,927 957,216
Merger costs and expenses 6,469,506 -
Foreign currency translation (2,189) -
Changes in operating assets and liabilities, net of
effects from business acquisitions:
Increase in accounts receivable (108,474) (5,907,310)
Increase in inventories (4,413,604) (6,059,368)
Decrease (increase) in prepaid expenses and other
current assets 1,946,583 (1,206,009)
(Increase) decrease in other assets (3,548,013) 99,330
(Decrease) increase in accounts payable, accrued
expenses and other liabilities (1,908,587) 9,777,050
---------------- ---------------
Net cash used in operating activities (2,508,379) (1,166,233)
---------------- ---------------
Cash Flows From Investing Activities:
Capital expenditures (1,437,689) (777,286)
Payment for purchases of net assets from business
acquisitions (4,572,740) (1,143,864)
Payments on noncompete agreements (376,486) (227,254)
---------------- ---------------
Net cash used in investing activities (6,386,915) (2,148,404)
---------------- ---------------
Cash Flows From Financing Activities:
Net (repayments) proceeds of long-term debt (8,763,651) 2,227,929
Net proceeds from issuance of common stock 880,370 967,350
---------------- ---------------
Net cash (used in) provided by financing
activities (7,883,281) 3,195,279
---------------- ---------------
Net decrease in cash and cash equivalents (16,778,575) (119,358)
---------------- ---------------
Cash and cash equivalents, beginning of period 86,332,758 1,151,210
---------------- ---------------
Cash and cash equivalents, end of period $ 69,554,183 $ 1,031,852
================ ===============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
5
<PAGE> 6
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements of Physician Sales &
Service, Inc. ("PSS") reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position and results of operations for the periods indicated.
The adjustments include the retroactive adjustment to reflect a three-for-one
stock split effective October 5, 1995 and give effect to the merger with
Taylor Medical Incorporated ("Taylor") effective August 21, 1995, accounted for
as a pooling-of-interests.
The accompanying condensed consolidated financial statements should be
read in conjunction with the financial statements and related notes in the
Company's 1996 Annual Report to Shareholders. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to the
Securities and Exchange Commission rules and regulations.
The results of operations for the interim periods covered by this report
may not necessarily be indicative of operating results for the full fiscal
year. Certain items have been reclassified to conform to the current year
presentation.
NOTE 2 - BUSINESS ACQUISITIONS
During the three months ended June 30, 1996, the Company merged with a
medical supply and equipment distributor in a stock for assets merger accounted
for under the pooling-of-interests method, by issuing 289,314 shares of PSS
common stock in exchange for all of the net assets of the acquired company.
The accompanying consolidated financial statements have not been restated for
periods prior to the pooling due to immateriality. Accordingly, the results of
operations have been reflected in the consolidated financial statements
prospectively from the acquisition date in June of 1996. The Company's
retained deficit increased approximately $8.7 million as a result of the
merger. Merger costs and expenses of $6.9 million associated with the mergers
of PSS and three medical supply and equipment distributors were recorded. Such
costs included direct merger costs primarily consisting of investment banking,
legal, accounting and filing fees as well as consolidation costs from the
closing of duplicate service center locations, realigning regional and
corporate functions, consolidating information systems and reducing personnel.
The remaining balance of the restructuring liability as of June 30, 1996 was
approximately $3.8 million. The majority of these liabilities should be paid
or settled during the 1997 fiscal year.
Additionally, during the three months ended June 30, 1996, the Company
acquired certain assets of two medical equipment and supply distribution
companies for approximately $9.5 million in transactions accounted for as
purchases. The assets acquired consist primarily of accounts receivable,
inventory, equipment, and other assets. The aggregate purchase prices paid
consisted of $4.6 million in cash and the assumption of accounts payable and
accrued liabilities of $6.1 million. The excess of purchase prices paid over
the fair market value of tangible net assets acquired of approximately $1.2
million has been recorded as goodwill and will be amortized over thirty years.
In addition, the Company entered into noncompete agreements with shareholders
of the acquired companies which provide for payments of approximately $0.2
million.
NOTE 3 - FOREIGN CURRENCY TRANSLATION
In accordance with Statement of Financial Accounting Standard No. 52,
"Foreign Currency Translation", assets and liabilities denominated in a foreign
currency are translated into U.S. dollars at the current rate of exchange
existing at year-end and revenues and expenses are translated at the average
quarterly exchange rates. The cumulative translation adjustment which
represents the effect of translating assets and liabilities of the Company's
foreign operations was an approximate loss of $2,000 for the three months ended
June 30, 1996. Transaction gains and losses included in income are immaterial.
6
<PAGE> 7
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company is a leading distributor of medical supplies, equipment and
pharmaceuticals to primary care and other office-based physicians. Since its
inception in 1983, the Company has achieved significant growth in the number of
service center locations, geographic area of operation, net sales, and
profitability. During fiscal years 1992 through 1996, PSS's net sales,
excluding the retroactive effect of net sales of Taylor, grew at a compound
annual rate of 40.5% and, giving retroactive effect to the merger with Taylor,
the Company's net sales grew at a compound annual rate of 28.6%. The number of
Company service centers has grown from two at the end of fiscal year 1984 to
66 as of June 30, 1996. The Company's objective is to be capable of servicing
every office-based physician in the United States by 1997. To achieve this
objective and expand profitability, PSS intends to (i) continue its efforts to
acquire local and regional medical supply distributors in select markets; (ii)
increase sales of existing service centers by adding additional sales
representatives and providing superior service, competitive pricing, and a
broad product line which includes sophisticated diagnostic equipment marketed
by PSS on an exclusive and semi-exclusive basis; (iii) open new service centers
in select markets; and (iv) continue expanding operating margins by increasing
sales force productivity, focusing on growth through acquisitions rather than
start-ups, which initially entail significant losses, reducing product costs
through volume purchase arrangements, leveraging fixed distribution costs, and
improving operational efficiencies through system enhancements.
In March 1996 the Company established three new subsidiaries, WorldMed,
N.V., a Belgian company, which is a subsidiary of WorldMed International, Inc.
("WorldMed Int'l.") and WorldMed, Inc., Delaware corporations. WorldMed
Int'l. was established by the Company to manage and develop the international
medical supply and equipment distribution, consolidation, and growth
opportunity. WorldMed, Inc. will serve as a platform for the Company to
acquire multimarket medical distributors in the United States without
disrupting the focus of PSS. On April 10, 1996, WorldMed, N.V. acquired
Deckers, located in Leuven, Belgium, a medical equipment and supply distributor
to hospitals and physician offices in Belgium, Germany, and France.
RESULTS OF OPERATIONS
The following is management's discussion and analysis of the results of
operations for the three months ended June 30, 1996 and 1995.
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
NET SALES. Net sales for the three months ended June 30, 1996 totaled
$139.7 million, an increase of $34.4 million or 32.7% over $105.3 million for
the three months ended June 30, 1995. In order of contribution to the increase
in net sales, net sales increased as the result of (i) internal sales growth
of centers operating at least two years, (ii) incremental sales generated in
connection with the Abbott Agreement, (iii) net sales of centers acquired
during fiscal 1996, (iv) net sales of fiscal year 1996 Company start-up service
centers, and (v) net sales of centers acquired during the first quarter of
fiscal 1997.
The Company's same center sales growth of 21.5% for three months ended
June 30, 1996, defined as the percentage increase in sales from service centers
operating for at least 24 consecutive months, resulted from the continued
development of PSS's sales force, further market penetration, increased
emphasis on diagnostic equipment and supplies, including the Abbott products,
and expansion of existing territories served by individual service centers.
GROSS PROFIT. Gross profit for the three months ended June 30, 1996
totaled $39.9 million, an increase of $8.1 million or 25.4% over the three
months ended June 30, 1995 total of $31.8 million. Gross profit as a percentage
of net sales decreased to 28.6% for the three months ended June 30, 1996 from
30.2% for the three months ended June 30, 1995. The decrease in gross profit
percentage is attributable to the penetration by the Company into larger
physician group practices that require more competitive pricing but entail
lower selling and servicing costs. The decrease in gross profit percentage is
7
<PAGE> 8
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
also attributable to lower margins on diagnostic products distributed under the
Abbott Agreement. The Company is currently in the second year of a five year
exclusive distributorship agreement with Abbott Laboratories. For the three
months ended June 30, 1996, the Company sold approximately $28.1 million of
Abbott product with a gross profit percentage of 20.8%. The Abbott sales
negatively impacted the Company's gross profit percentage by 2.7% of net sales.
Margins under the Abbott Agreement are scheduled to increase annually based on
achievement by the Company of certain performance goals as stipulated therein.
The Company exceeded the first year performance goals and believes it can
achieve the sales performance necessary to provide favorable margins over the
term of the Abbott Agreement.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the three months ended June 30, 1996 totaled $22.9 million, an increase of
$4.7 million or 26.0% over the three months ended June 30, 1995 total of $18.2
million. As a percentage of sales, general and administrative expenses
decreased to 16.4% for the three months ended June 30, 1996 from 17.2% for the
three months ended June 30, 1995. The decrease in general and administrative
expenses was a result of i) improved leveraging by PSS of its existing service
centers' fixed general and administrative expenses through increased sales
volume; ii) improved leveraging of fixed general and administrative expenses by
PSS through the integration of its acquired service centers into existing
branches; and iii) reduced overhead from the sale of the assets by Taylor and
decreased depreciation expense associated with the assets sold. The decrease in
general and administrative expenses was accomplished despite the following
investments made during the quarter. The Company has focused on increasing
equipment and managed care sales as a percentage of total net sales. Since
inception, the Company has maintained a comprehensive and consultative sales
approach with an emphasis on diagnostic products, which includes sophisticated
diagnostic equipment and supplies related to the use of such equipment.
However, since the acquisition of Taylor, the Company experienced a decline in
the percentage of sales represented by equipment. In order to increase the
sales of equipment, the Company has created a diagnostic team to train and
educate acquisition and new sales representatives. As a result, the Company
has been able to expand and increase its diagnostic products sales to 20.1% of
total net sales for the three months ended June 30, 1996. Sales of diagnostic
equipment, while generally lower in gross margin than supplies, normally
require the ongoing reordering of disposable diagnostic reagents which
generally yield higher margins. In addition, through the development of its
national accounts team, the Company has increased its emphasis on national
customer accounts, including large physician group practices, physician
practice management companies, physician-hospital organizations, physician
management service organizations and group purchasing organizations. Finally,
the Company has allocated resources to develop newly acquired sales
representatives and operational personnel to help them achieve improvements in
productivity and customer satisfaction, so that they become well-versed in
PSS's broad product offerings, innovative distribution systems, and focus on
superior customer service.
SELLING EXPENSES. Selling expenses for the three months ended June 30,
1996 totaled $13.5 million, an increase of $2.6 million or 23.8% over the three
months ended June 30, 1995 total of $10.9 million. As a percentage of sales,
selling expenses decreased to 9.7% for the three months ended June 30, 1996
from 10.4% for the three months ended June 30, 1995. The decrease in selling
expense as a percentage of net sales is due to improved leveraging of existing
service centers' fixed selling expenses, such as salaries paid to sales
representatives during the conversion period from a guaranteed salary to a
commission compensation arrangement and the leveraging of sales management
salaries. The decrease in selling expenses as a percentage of net sales is
also due to the variable commission plan of the Company which pays a lower
commission on non-Abbott products with gross profits less than 20%.
MERGER COSTS AND EXPENSES. During the three months ended June 30, 1996,
the Company recorded merger costs and expenses of approximately $6.9 million
associated with the mergers of PSS and three medical supply and equipment
distributors. Such costs included direct merger costs primarily consisting of
investment banking, legal, accounting and filing fees as well as consolidation
costs from the closing of duplicate service center locations, realigning
regional and corporate functions, consolidating information systems and
reducing personnel. No additional merger costs related to these mergers are
expected to be incurred and expensed in future quarters.
8
<PAGE> 9
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
OPERATING (LOSS) INCOME. The Company recorded an operating loss of
$(3.4) million for the three months ended June 30, 1996 as compared to
operating income of $2.8 million for the three months ended June 30, 1995. The
operating results for the three months ended June 30, 1996 include merger costs
and expenses related to the merger of PSS and three medical supply and
equipment distributors of approximately $6.9 million. Excluding the effect of
these merger costs and expenses, operating income for the three months ended
June 30, 1996 would have increased $0.8 million or 28.2% to $3.6 million for
the three months ended June 30, 1996 from operating income of $2.8 million for
the three months ended June 30, 1995.
INTEREST INCOME (EXPENSE). The Company recorded interest income of
approximately $0.5 million during the three months ended June 30, 1996 from the
short term investment of the remaining net proceeds from the secondary
offering. At June 30, 1996 the investments primarily consisted of government
securities and municipal issues with a weighted average, taxable equivalent
interest rate of approximately 6.0%. There was no interest expense for the
three months ended June 30, 1996, as compared to interest expense of $(1.0)
million for the three months ended June 30, 1995. The decrease in interest
expense resulted from no debt outstanding for the three months ended June 30,
1996.
OTHER INCOME. The Company's other income for the three months ended June
30, 1996 totaled $0.4 million, an increase of $0.1 million or 47.4% over the
three months ended June 30, 1995 total of $0.3 million. Other income for the
three months ended June 30, 1996 increased primarily due to increased finance
charges on customer accounts.
BENEFIT (PROVISION) FOR INCOME TAXES. The income tax benefit totaled $0.5
million for the three months ended June 30, 1996 as compared to a provision for
income taxes of $(0.8) million for the three months ended June 30, 1995. The
income tax benefit for the three months ended June 30, 1996 is the result of
net losses, partially offset by certain nondeductible merger costs and
expenses.
NET (LOSS) INCOME. Net (loss) income totaled $(1.9) million for the three
months ended June 30, 1996 as compared to net income of $1.2 million for the
three months ended June 30, 1995. The net loss for the three months ended June
30, 1996 include merger costs and expenses related to the merger of PSS and
medical supply and equipment distributors of approximately $6.9 million. The
following table shows net income (loss) and earnings (loss) per share for the
three months ended June 30, 1996 as compared to the three months ended June 30,
1995 as reported and the pro-forma effect on net income and earnings per share
excluding these merger costs and expenses.
<TABLE>
<CAPTION>
Pro-forma excluding
merger costs and expenses As reported
Three Months Ended Three Months Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income (loss) (in thousands) $2,771 $1,173 $(1,914) $1,173
Net income (loss) per share $ 0.08 $ 0.05 $ (0.06) $ 0.05
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $157.9 million and $171.9 million as of
June 30, 1996 and March 29, 1996, respectively. The decrease in working
capital was primarily attributable to the acquisition of three medical supply
and equipment distributors and the payoff of those acquired companies'
outstanding debt.
9
<PAGE> 10
PHYSICIAN SALES & SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
Net cash used in operating activities was $2.5 million for the three
months ended June 30, 1996 compared to $1.2 million for the three months ended
June 30, 1995. These funds were utilized principally to fund the growth in
the Company's accounts receivable and inventories from new service centers and
continued growth in existing service centers. Net cash used in investing
activities was $6.4 million and $2.1 million during the three months ended June
30, 1996 and June 30, 1995 respectively. The net cash used in investing
activities for the three months ended June 30, 1996 consisted primarily of
capital expenditures and the payment for purchases of net assets from business
acquisitions. The net cash used in financing activities of $7.8 million for
the three months ended June 30, 1996 consisted primarily of debt repayment of
$8.7 million assumed in connection with business acquisitions offset by
proceeds from the issuance of common stock of $0.9 million.
Accounts receivable (net of allowances) were $102.6 million and $92.1
million as of June 30, 1996 and March 29, 1996, respectively. The average
number of days sales in accounts receivable was approximately 63 days as of
June 30, 1996 and 58 days as of March 29, 1996. Inventories were $60.3
million and $52.3 million as of June 30, 1996 and March 29, 1996, respectively.
The Company had inventory turnover of 7.1 times as of June 30, 1996 and 8.0
times as of March 29, 1996.
The Company has historically financed its liquidity needs for expansion
through lines of credit provided by banks and the private and public offering
of stock. The Company has an unused credit line of $60 million on its credit
facility for capital and expansion requirements. Inventory financing has
historically been achieved through negotiating extended payment terms from
suppliers. The Company believes that the expected cash flows from operations,
bank borrowing, capital markets, and vendor credit will be sufficient to fund
its liquidity needs for its existing operations and for service center
expansion for at least the next two years.
10
<PAGE> 11
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
---------- -----------
<S> <C>
3.1 Amended and Restated Articles of Incorporation
dated March 15, 1994. (1)
3.2 Amended and Restated Bylaws dated March 15, 1994.
(1)
10.1 Financing and Security Agreement between the
Company and NationsBank of Georgia, N.A., (as
successor to NCNB National Bank of Florida),
dated as of September 26, 1991, as amended.(2)
10.2 Registration Rights Agreement between the Company
and Tullis-Dickerson Capital Focus, L.P., dated
as of March 16, 1994. (2)
10.3 Employment Contract, as amended, for Patrick C.
Kelly. (2)
10.4 Incentive Stock Option Plan dated May 14, 1986.
(2)
10.5 Shareholders Agreement dated March 26, 1986,
between the Company, the Charthouse Co.,
Underwood, Santioni and Dunaway. (2)
10.6 Shareholders Agreement dated April 10, 1986,
between the Company and Clyde Young. (2)
10.7 Shareholders Agreement between the Company and
John D. Barrow. (2)
10.8 Amended and Restated Directors Stock Plan.
10.9 Amended and Restated 1994 Long Term Incentive
Plan.
10.10 Amended and Restated 1994 Long Term Stock Plan.
10.11 1994 Employee Stock Purchase Plan. (3)
10.12 1994 Amended Incentive Stock Option Plan. (2)
10.13 Amended and Restated Loan and Security Agreement
between the Company and NationsBank of Georgia,
N.A. dated December 21, 1994. (4)
10.14 Distributorship Agreement between Abbott
Laboratories and Physician Sales & Service,
Inc. (Portions omitted as confidential -
Separately filed with Commission). (5)
10.15 Stock Purchase Agreement between Abbott
Laboratories and Physician Sales & Service,
Inc. (5)
10.16 Intentionally Omitted
10.17 Third Amended and Restated Agreement and Plan of
Merger By and Among Taylor Medical, Inc. and
Physician Sales & Service, Inc. (including
exhibits thereto) (6)
</TABLE>
11
<PAGE> 12
PART II
OTHER INFORMATION
(CONTINUED)
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
---------- -----------
<S> <C>
21.1 Subsidiaries of the registrant. (6)
27 Financial Data Schedule (for SEC use only).
</TABLE>
--------------------
(1) Incorporated by Reference to the Company's Registration Statement on
Form S-3, Registration No. 33-97524
(2) Incorporated by Reference to the Company's Registration Statement on
Form S-1 No. 33-76580.
(3) Incorporated by Reference to the Company's Registration Statement on
Form S-8, filed October 7, 1994.
(4) Incorporated by Reference to the Company's Report on Form 10-Q for the
quarterly period ended December 31, 1994.
(5) Incorporated by Reference to the Company's Report on Form 10-K for the
fiscal year ended March 30, 1995.
(6) Incorporated by Reference to the Company's Report on Form 10-K for the
fiscal year ended March 29, 1996.
(B) REPORTS ON FORM 8-K
None.
12
<PAGE> 13
OTHER INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on August 13, 1996.
PHYSICIAN SALES & SERVICE, INC.
/s/ DAVID A. SMITH
----------------------------------
David A. Smith
Executive Vice President and Chief
Financial Officer
13
<PAGE> 1
EXHIBIT 10.8
PHYSICIANS SALES & SERVICE, INC.
AMENDED AND RESTATED
DIRECTORS' STOCK PLAN
I. GENERAL
1.1 PURPOSE OF THE PLAN
The purpose of the Physician Sales & Service, Inc. Directors' Stock Plan
(the "Plan") is to enable Physician Sales & Service, Inc. (the "Company") to
attract and retain persons of exceptional ability to serve as directors of the
Company and to align the interests of directors and shareholders in enhancing
the value of the Company's common stock (the "Common Stock").
1.2 ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee or its
successor (the "Committee") of the Company's Board of Directors (the "Board")
which shall have full and final authority in its discretion to interpret,
administer and amend the provisions of the Plan; to adopt rules and regulations
for carrying out the Plan; to decide all questions of fact arising in the
application of the Plan; and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee shall consist of at
least two persons and shall meet once each fiscal year, and at such additional
times as it may determine or as is requested by the chief executive officer of
the Company.
1.3 ELIGIBLE PARTICIPANTS
Each member of the Board who is not a full-time employee of the Company or
any of its subsidiaries shall be a participant (a "Participant") in the Plan.
1.4 GRANTS UNDER THE PLAN
Grants under the Plan shall be in the form of stock options as described in
Section II (an "Option" or "Options") and subject to restrictions described in
Section III ("Restricted Stock").
1.5 SHARES
The aggregate number of shares of Common Stock, including but not limited
to shares reserved for issuance pursuant to the exercise of Options, which may
be granted or issued under the terms of the Plan, may not exceed 200,000 shares
and hereby are reserved for such purpose. Whenever any outstanding grant or
portion thereof expires, is canceled or forfeited or is otherwise terminated for
any reason without having been exercised, the Common Stock allocable to the
expired, forfeited, canceled or otherwise terminated portion of the grant may
again be the subject of further grants hereunder.
Notwithstanding the foregoing, the number of shares of Common Stock
available for grants at any time under the Plan shall be reduced to such lesser
amount as may be required pursuant to the methods of calculation necessary so
that the exemptions provided pursuant to Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") will continue to be
available for transactions involving all current and future grants. In addition,
during the period that any grants remain outstanding under the Plan, the
Committee may make good faith adjustments with respect to the number of shares
of Common Stock attributable to such grants for purposes of calculating the
maximum number of shares of Common Stock available for the granting of future
grants under the Plan, provided that following such adjustments the exemptions
provided pursuant to Rule 16b-3 under the Exchange Act will continue to be
available for transactions involving all current and future grants.
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1.6 DEFINITIONS
The following definitions shall apply to the Plan:
(a) "Disability" shall have the meaning provided in the Company's
applicable disability plan or, in the absence of such a definition, when a
Participant becomes totally disabled (as determined by a physician mutually
acceptable to the Participant and the Company) before termination of his or
her service on the Board if such total disability continues for more than
three (3) months.
(b) "Fair Market Value" means the average of the high and low sales
prices of the shares of Common Stock on such date on the principal national
securities exchange or automated quotation system of a registered
securities association on which such shares of Common Stock are listed or
admitted to trading. If the shares of Common Stock on such date are not
listed or admitted to trading, the Fair Market Value shall be the value
established by the Board in good faith.
(c) "Retirement" shall have the meaning provided in the Company's
retirement policy applicable to directors of the Company.
II. OPTIONS
2.1 TERMS AND CONDITIONS OF OPTIONS
Each Participant shall receive an annual grant of an Option to Purchase
1,500 shares of Common Stock on the date of each annual meeting of shareholders
of the Company at which directors are elected (an "Annual Meeting Date") during
the period such director serves on the Board.
2.2 NONQUALIFIED STOCK OPTIONS
The terms of the Options shall, at the time of grant, provide that the
Options will not be treated as incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2.3 OPTION PRICE
The option price per share shall be the Fair Market Value of the Common
Stock on the date the Option is granted.
2.4 TERM AND EXERCISE OF OPTIONS
(a) The term of an Option shall not exceed ten (10) years from the date of
grant. Except as provided in this Section 2.4, after a Participant ceases to
serve as a director of the Company for any reason, including, without
limitation, Retirement, or any other voluntary or involuntary termination of a
Participant's service as a director (a "Termination"), the unexercisable portion
of an Option shall immediately terminate and be null and void, and the
unexercised portion of any outstanding Options held by such Participant shall
terminate and be null and void for all purposes, after three (3) months have
elapsed from the date of the Termination unless extended by the Committee, in
its sole discretion, within thirty (30) days from the date of the Termination.
Upon a Termination as a result of death or Disability, any outstanding Options
may be exercised by the Participant or the Participant's legal representative
within twelve (12) months after such death or Disability; provided, however,
that in no event shall the period extend beyond the expiration of the option
term.
(b) Options shall become exercisable in whole or in part after one (1) year
has elapsed from the date of grant. In no event, however, shall an Option be
exercised after the expiration of ten (10) years from the date of grant.
(c) A Participant, by written notice to the Company, may designate one or
more persons (and from time to time change such designation) including his or
her legal representative, who, by reason of his or her death, shall acquire the
right to exercise all or a portion of the Option. If no designation is made
before the death of
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the Participant, the Participant's Option may be exercised by the personal
representative of the Participant's estate, or by a person who acquired the
right to exercise such Option by will or the laws of descent and distribution.
If the person with exercise rights desires to exercise any portion of the
Option, such person must do so in accordance with the terms and conditions of
this Plan.
2.5 NOTICE OF EXERCISE
When exercisable pursuant to the terms of the Plan and the governing stock
option agreement, an Option shall be exercised by the Participant as to all or
part of the shares subject to the Option by delivering written notice of
exercise to the Company at its principal business office or such other office as
the Company may from time to time direct, (a) specifying the number of shares to
be purchased, (b) accompanied by a check payable to the Company in an amount
equal to the full exercise price of the number of shares being exercised, (c)
including a Tax Election, if applicable, in accordance with Section 4.7, and (d)
containing such further provisions consistent with the provisions of the Plan,
as the Company may from time to time prescribe. No Option may be exercised after
the expiration of the term specified in Section 2.4 hereof.
2.6 LIMITATION OF EXERCISE PERIODS
The Committee may limit the time periods within which an Option may be
exercised if a limitation on exercise is deemed necessary in order to effect
compliance with applicable law.
2.7 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control has
occurred, then the Option shall immediately become exercisable on the date such
Change in Control occurred.
III. RESTRICTED STOCK
3.1 TERMS AND CONDITIONS
Each Participant shall receive an annual grant of 1,500 shares of Common
Stock subject to the restrictions set forth in Section 3.2 ("Restricted Stock")
on the Annual Meeting Date at which the shareholders elect such Participant to
serve as a director; provided however, that (a) as of the date of their
election, Participants elected to serve as a Class II or Class III director in
1994 shall receive a grant of 500 and 1,000 shares, respectively, and (b) as of
the date of their election, Participants who are elected to fill a vacancy for a
term less than three (3) years shall receive a grant of 500 shares per year for
each full year of the term to which such Participant is elected. Restricted
Stock, with such restrictions noted on the face of the certificates, shall be
issued in the name of the Participant granted the Restricted Stock and such
certificates shall be deposited with a trust administered by the Committee (and
subject to the claims of the Company's creditors) during the restriction period
set forth in Section 3.3.
3.2 RESTRICTIONS
Until the lapse of the restriction period set forth in Section 3.3, the
shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated. The Committee may
impose such other restrictions on any shares of restricted stock as required by
law including, without limitation, restrictions under applicable federal or
state securities laws, and may place legends on the certificates representing
such restricted stock to provide appropriate notice of such restrictions.
3.3 PERIOD OF RESTRICTION
Subject to Section 3.6, the restrictions set forth in Section 3.2 shall
lapse and such shares shall be freely transferable upon the expiration of the
director's term in office as specified in accordance with Article VIII of the
Company's Amended and Restated Articles of Incorporation.
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3.4 TERMINATION OF SERVICE AS A DIRECTOR
If a Participant ceases to serve as a director of the Company prior to the
lapsing of the restrictions in accordance with Section 3.3 as a result of death,
Disability or Retirement, restrictions on the shares of Restricted Stock granted
to the Participant shall immediately lapse on the date of death, Disability or
Retirement. If a Participant ceases to serve as a director of the Company prior
to the lapsing of restrictions in accordance with Section 3.3 for any reason
other than death, Disability or Retirement, the shares of Restricted Stock
granted to such Participant shall be forfeited and shall revert to the Company.
3.5 RIGHTS AS SHAREHOLDER
Prior to the lapsing of restrictions in accordance with Section 3.3,
Participants holding shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such shares while they
are held by the Participant. If any such dividend or distribution is paid in
shares of Common Stock, such shares shall be subject to the same restrictions on
transferability as the shares of Restricted Stock with respect to which they
were paid.
3.6 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control has
occurred, then all restrictions on the Restricted Stock shall lapse on the date
such Change in Control occurred.
3.7 SECTION 83(B) ELECTION
Participants shall not be permitted to make an election under Section 83(b)
of the Code with respect to shares of Restricted Stock granted under the Plan.
IV. GENERAL PROVISIONS
4.1 GENERAL RESTRICTIONS
Each grant under the Plan shall be subject to the requirement that if the
Committee shall determine, at any time, that (a) the listing, registration or
qualification of the shares of Common Stock subject or related thereto upon any
securities exchange or under any state or federal law, or (b) the consent or
approval of any government regulatory body, or (c) an agreement by the
Participant with respect to the disposition of shares of Common Stock, is
necessary or desirable as a condition of, or in connection with, the granting or
the issuance or purchase of shares of Common Stock thereunder, such grant may
not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, rights offer, liquidation, dissolution, merger,
consolidation, spin-off or sale of assets, or any other change in or affecting
the corporate structure or capitalization of the Company, the Board shall make
such adjustments as the Committee may recommend, and as the Board in its
discretion may deem appropriate, in the number and kind of shares authorized by
the Plan, in the number, Option price or kind of shares covered by the grants
and in any outstanding grants under the Plan in order to prevent substantial
dilution or enlargement thereof.
4.3 AMENDMENTS
Without further approval of the shareholders, the Board may discontinue the
Plan at any time and may amend it from time to time in such respects as the
Board may deem advisable, unless shareholder or regulatory approval is required
by law or regulation, and subject to any conditions established by the terms of
such amendment; provided however, that the Plan may not be amended more than
once every six (6) months
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other than to comport with changes in the Code, the Employee Retirement Income
Security Act or the rules thereunder.
4.4 MODIFICATION, SUBSTITUTION OR CANCELLATION OF GRANTS
No rights or obligations under any outstanding Option may be altered or
impaired without the Participant's consent. Any grant under the Plan may be
canceled at any time with the consent of the Participant, and a new grant may be
provided to such Participant in lieu thereof.
4.5 SHARES SUBJECT TO THE PLAN
Shares distributed pursuant to the Plan shall be made available from
authorized but unissued shares or from shares purchased or otherwise acquired by
the Company for use in the Plan, as shall be determined from time to time by the
Committee.
4.6 RIGHTS OF A SHAREHOLDER
Participants under the Plan, unless otherwise provided by the Plan, shall
have no rights as shareholders by reason thereof unless and until certificates
for shares of Common Stock are issued to them.
4.7 WITHHOLDING
The Company shall have the right to deduct from any distribution of Common
Stock to any Participant an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld (the
"Withholding Taxes") with respect to any grant under the Plan. If a Participant
is to experience a taxable event in connection with the receipt of cash or
shares of Common Stock pursuant to an Option exercise (a "Taxable Event"), the
Participant shall pay the Withholding Taxes to the Company prior to the issuance
of such shares of Common Stock. In satisfaction of the obligation to pay
Withholding Taxes to the Company, the Participant may make a written election
(the "Tax Election"), which may be accepted or rejected in the discretion of the
Committee, to have withheld a portion of the shares of Common Stock then
issuable to the Participant having an aggregate Fair Market Value on the day
immediately preceding the date of such issuance equal to the Withholding Taxes,
provided that in respect of a Participant who may be subject to liability under
Section 16(b) of the Exchange Act either: (i) in the case of a Taxable Event
involving an Option or a grant of Restricted Stock, (A) the Tax Election is made
at least six (6) months prior to the date of the Taxable Event and (B) the Tax
Election is irrevocable with respect to all Taxable Events of a similar nature
occurring prior to the expiration of six (6) months following a revocation of
the Tax Election; (ii) in the case of the exercise of an Option (A) the
Participant makes the Tax Election at least six (6) months after the date the
Option was granted, (B) the Option is exercised during the ten (10) day period
beginning on the third business day and ending on the twelfth business day
following the release for publication of the Company's quarterly or annual
statement of sales and earnings (the "Window Period") and (C) the Tax Election
is made during the Window Period in which the Option is exercised or prior to
such Window Period and subsequent to the immediately preceding Window Period; or
(iii) in the case of a Taxable Event relating to the payment of an award, (A)
the Participant makes the Tax Election at least six (6) months after the date of
grant and (B) the Tax Election is made (1) in the case of a Taxable Event
occurring within a Window Period, during the Window Period in which the Taxable
Event occurs or (2) in the case of a Taxable Event not occurring within a Window
Period, during the Window Period immediately preceding the Taxable Event.
Notwithstanding the foregoing, the Committee may, by the adoption of rules or
otherwise, (i) modify the provisions of this Section 4.7 as may be necessary to
ensure that the Tax Elections will be exempt transactions under Section 16(b) of
the Exchange Act, and (ii) permit Tax Elections to be made at such other times
and subject to such other conditions as the Committee determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.
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4.8 NONASSIGNABILITY
Except as expressly provided in the Plan, no grant shall be transferable
except by will, the laws of descent and distribution or a qualified domestic
relations order ("QDRO") as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.
During the lifetime of the Participant, except as expressly provided in the
Plan, grants under the Plan shall be exercisable only by such Participant or by
the guardian or legal representative of such Participant or pursuant to a QDRO.
4.9 NONUNIFORM DETERMINATIONS
Determinations by the Committee under the Plan (including, without
limitation, determinations of the persons to receive grants, the form, amount
and timing of such grants, and the terms and provisions of such grants and the
agreements evidencing the same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards under
the Plan, whether or not such persons are similarly situated.
4.10 EFFECTIVE DATE; DURATION
The Plan shall become effective as of the date the Company becomes admitted
to trading on the NASDAQ, subject to approval by the shareholders. No grant may
be given under the Plan after May 31, 2000, but grants theretofore granted may
extend beyond such date.
4.11 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control of
the Company occurs, then all Options shall become fully exercisable and all
restrictions on the Restricted Stock shall lapse as of the date such Change in
Control occurred. For the purposes of the Plan, a Change in Control of the
Company shall be deemed to have occurred upon the earliest of the following
events:
(a) when the Company acquires actual knowledge that any person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other
than any person who was the beneficial owner of 25% or more of the Common
Stock as of the effective date of the Plan, becomes the beneficial owner
(as defined in Rule 13d-3 of the Exchange Act) directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then-outstanding securities;
(b) upon the first purchase of Common Stock pursuant to a tender or
exchange offer (other than a tender or exchange offer made by the Company);
(c) upon the approval by the Company's shareholders of (i) a merger or
consolidation of the Company with or into another corporation (other than a
merger or consolidation in which the Company is the surviving corporation
and which does not result in any capital reorganization or reclassification
or other change in the Company's then-outstanding shares of Common Stock),
(ii) a sale or disposition of all or substantially all of the Company's
assets or (iii) a plan of liquidation or dissolution of the Company; or
(d) if the Board of Directors or any designated committee determines
in its sole discretion that any person (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a person who exercised a
controlling influence as of the effective date of the Plan, directly or
indirectly exercises a controlling influence over the management or
policies of the Company.
4.12 GOVERNING LAW
The Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of Florida.
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EXHIBIT 10.9
AMENDED AND RESTATED
1994 LONG TERM INCENTIVE PLAN
OF
PHYSICIAN SALES & SERVICE, INC.
I. GENERAL
1.1 PURPOSE OF THE PLAN
The Amended and Restated 1994 Long Term Incentive Plan (the "Plan") of
Physician Sales & Service, Inc. (the "Company") is intended to advance the best
interests of the Company by providing key employees who have substantial
responsibility for corporate management and growth with additional incentives
through the grant of non-qualified stock options, restricted stock and awards
based upon total shareholder return, thereby increasing the personal stake of
such key employees in the continued success and growth of the Company and
encouraging them to remain in the employ of the Company.
1.2 ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee or its
successor (the "Committee") of the Board of Directors of the Company (the
"Board"). Members of the Committee are not eligible to participate in the Plan.
The Committee shall have full and final authority in its discretion to
interpret conclusively the provisions of the Plan, to adopt such rules and
regulations for carrying out the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan.
The Committee shall meet once each fiscal year, and at such additional
times as it may determine or as is requested by the chief executive officer of
the Company, to designate the eligible employees, if any, to be granted awards
under the Plan and the type and amount of such awards and the time when awards
will be granted. No such designation by the Committee shall be effective as a
grant of an award under the Plan until approved by the Board; provided, however,
that the Board may empower the Committee to grant such awards without approval
by the Board. All awards granted under the Plan shall be on the terms and
subject to the conditions hereinafter provided.
1.3 ELIGIBLE PARTICIPANTS
Key employees, including officers of the Company and the Company's
subsidiaries, shall be eligible to participate in the Plan (any employee
receiving an award under the Plan hereinafter referred to as a "Participant").
Directors who are not employees of the Company shall not be eligible to
participate in the Plan.
1.4 GRANTS UNDER THE PLAN
Grants under the Plan may be stock options (as described in Section II) or
restricted stock (as described in Section III) or Performance Units (as
described in Section IV).
1.5 OTHER COMPENSATION PROGRAM
The adoption of the Plan contemplates the continuation of any existing
incentive compensation plan(s) of the Company and in no way limits or is limited
by the operation, administration or amendment of any such plan(s). The existence
and terms of the Plan shall not limit the authority of the Board in compensating
employees of the Company in such other forms and amounts as it may determine
from time to time.
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1.6 LIMITATIONS ON GRANTS
The maximum amount payable under a Performance Unit to a Participant may
not exceed $1 million per fiscal year of the Company. The aggregate number of
shares of Common Stock, including shares reserved for issuance pursuant to the
exercise of options, which may be granted or issued under the terms of the Plan,
may not exceed 2,190,000 shares, and such shares hereby are reserved for such
purpose. The maximum number of shares of Common Stock that may be subject to
grants under the Plan to a Participant may not exceed 200,000 shares of Common
Stock per fiscal year of the Company. Whenever any outstanding grant or portion
thereof expires, is canceled or forfeited or is otherwise terminated for any
reason without having been exercised, the Common Stock allocable to the expired,
forfeited, canceled or otherwise terminated portion of the grant may again be
the subject of further grants hereunder.
Notwithstanding the foregoing, the number of shares of Common Stock
available for grants at any time under the Plan shall be reduced to such lesser
amount as may be required pursuant to the methods of calculation necessary so
that the exemptions provided pursuant to Rule 16b-3 under the Exchange Act will
continue to be available for transactions involving all current and future
grants. In addition, during the period that any grants remain outstanding under
the Plan, the Committee may make good faith adjustments with respect to the
number of shares of Common Stock attributable to such grants for purposes of
calculating the maximum number of shares of Common Stock available for the
granting of future grants under the Plan, provided that following such
adjustments the exemptions provided pursuant to Rule 16b-3 under the Exchange
Act will continue to be available for transactions involving all current and
future grants.
1.7 DEFINITIONS
The following definitions apply with respect to Article II:
(a) "Common Stock" shall mean the common stock of the Company, $.0l
par value.
(b) "Disability" shall have the meaning provided in the Company's
applicable disability plan or, in the absence of such a definition, when a
Participant becomes totally disabled as determined by a physician mutually
acceptable to the Participant and the Company before attaining his or her
65th birthday and if such total disability continues for more than three
months. Disability does not include any condition which is intentionally
self-inflicted or caused by illegal acts of the Participant.
(c) "Fair Market Value" means the average of the high and low sales
prices of the shares of the Common Stock or other equity security on such
date on the National Association of Securities Dealers Automated Quotation
System (the "NASDAQ") or on a principal national securities exchange.
(d) "Performance Period" means the period of time set forth in the
Participant's Performance Unit Agreement.
(e) "Retirement" shall have the meaning provided in the Company's
applicable retirement plan or, in the absence of such a definition, the
first day of the month following the month in which the Participant attains
his or her 65th birthday.
(f) "Total Shareholder Return" or "TSR" means the percentage by which
the ending per share price of the Common Stock or other equity security
(determined as the Fair Market Value as of the last date of the applicable
Performance Period, as adjusted for any stock split or other
recapitalization) plus reinvested dividends exceeds the beginning per share
price of the Common Stock or other equity security (determined as the Fair
Market Value as of the first date of the applicable Performance Period).
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II. STOCK OPTIONS
2.1 TYPES OF OPTIONS
Options granted under the Plan shall, at the time of grant, provide that
they will not be treated as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2.2 TERMS AND CONDITIONS OF OPTIONS
Subject to the following provisions, all options granted under the Plan
shall be in such form and upon such terms and conditions as the Committee, in
its discretion, may from time to time determine, provided such terms and
conditions are clearly designated at the time of grant.
2.3 EXERCISE PRICE
The exercise price per share shall be at least the Fair Market Value of the
Common Stock on the date such option is granted.
2.4 TERM OF OPTIONS
Any option granted under the Plan may be exercised no later than ten (10)
years from the date of grant or such shorter period of time as designated by the
Committee at the time of grant. Subject to Sections 2.8, 2.9 and 2.11 hereof and
the stock option agreement governing the grant of the options under the Plan,
which may contemplate vesting of exercise rights, options may be exercised in
whole or in one or more parts throughout such term. All rights to exercise an
option shall expire at the end of the designated term.
2.5 PAYMENT
Payment for shares for which an option is exercised shall be made in full
to the Corporation in such manner and at such time or times as shall be provided
by the Committee at the time of grant in either (i) cash or its equivalent or
(ii) by tendering shares of previously acquired Common Stock having a Fair
Market Value equal to the exercise price or (iii) by a combination of (i) and
(ii). The proceeds from such payment shall be added to the general funds of the
Corporation and shall be used for general corporate purposes.
2.6 VESTING OF OPTIONS
Options shall be exercisable in whole or in part after completion of such
periods of service or achievement of such conditions as the Committee shall
specify when granting the options; provided however, that in the absence of a
Committee specification to the contrary and subject to Sections 2.8, 2.9 and
2.11, such option shall become fully exercisable five (5) years from the date of
grant.
2.7 NOTICE OF EXERCISE
When exercisable pursuant to the terms of the governing stock option
agreement, options granted under the Plan shall be exercised by the Participant
(or by other authorized persons in accordance with Section 5.9) as to all or
part of the shares subject to the option by delivering written notice of
exercise to the Company at its principal business office or such other office as
the Company may from time to time direct, (a) specifying the number of shares to
be purchased, (b) indicating the method of payment of the exercise price or
including a check payable to the Company in an amount equal to the full exercise
price of the number of shares being purchased, (c) including a Tax Election, if
applicable, in accordance with Section 5.8, and (d) containing such further
provisions consistent with the provisions of the Plan, as the Company may from
time to time prescribe.
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2.8 TERMINATION OF EMPLOYMENT
Except as otherwise provided in this Section 2.8, if a Participant ceases
being an employee of the Company or any subsidiary for any reason, including,
without limitation, Retirement, discharge, layoff or any other voluntary or
involuntary termination of a Participant's employment (a "Termination"), the
unexercisable portion of the option granted hereunder shall immediately
terminate and be null and void, and the unexercised portion of any outstanding
and exercisable options granted hereunder to such Participant shall terminate
and be null and void for all purposes, after three (3) months have elapsed from
the date of the Termination unless extended by the Committee, in its sole
discretion, within thirty (30) days from the date of Termination. Upon a
Termination as a result of death or Disability, any outstanding options may be
exercised by the Participant or the Participant's legal representative within
twelve (12) months after such termination; provided, however, that in no event
shall the period extend beyond the expiration of the option term. Transfer of
employment among the Company and any subsidiaries of the Company shall not be
deemed to be a Termination.
2.9 LIMITATION OF EXERCISE PERIODS
The Committee may limit the time periods within which an option may be
exercised if a limitation on exercise is deemed necessary in order to effect
compliance with applicable law.
2.10 STOCK OPTION AGREEMENT
Each option granted under the Plan shall be evidenced by an individual
stock option agreement which shall be executed by the Company and each
Participant. The agreement shall contain such terms and provisions, not
inconsistent with the terms of the Plan, as shall be determined by the
Committee, including: (a) the number of shares a Participant may acquire
pursuant to the option granted and the exercise price per share; (b) any
conditions affecting the exercise of the option; (c) the procedure for
exercising the option granted; (d) a clear designation of whether the exercise
of the option granted thereby is subject to vesting; (e) representations and
warranties of Participant regarding the acquisition of shares for investment
purposes; and (f) such provisions as the Committee, upon advice of counsel to
the Company, shall deem necessary or appropriate to comply with the requirements
of applicable laws. In the event there shall be any discrepancy or inconsistency
between the terms of the Plan and any term or provision contained in a stock
option agreement, the terms of the Plan, as interpreted by the Committee, shall
govern.
2.11 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control has
occurred, then any outstanding option shall immediately become exercisable with
respect to all shares subject to such option on the date such Change in Control
occurred.
III. RESTRICTED STOCK
3.1 TERMS AND CONDITIONS OF AWARDS
The Committee may grant shares of stock subject to the restrictions
described in Section 3.2 ("Restricted Stock") under a restricted stock
agreement, without payment by the Participant for such Restricted Stock. Such
agreement shall specify the number of shares granted and the conditions and
terms of the grant. Restricted Stock, with restrictions noted on the face of the
certificates, shall be issued in the name of the Participant granted the
Restricted Stock and deposited with a trust administered by the Committee (and
subject to the claims of the Company's creditors) during the restriction period.
3.2 RESTRICTIONS
Until the restrictions have lapsed in accordance with Section 3.3, the
shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated. The
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Committee may impose such other restrictions on any shares of restricted stock
as required by law including, without limitation, restrictions under applicable
federal or state securities laws, and may place legends on the certificates
representing such Restricted Stock to provide appropriate notice of such
restrictions.
3.3 PERIOD OF RESTRICTION
Subject to Section 3.6, the restrictions set forth in Section 3.2 shall
lapse and such shares shall be freely transferable upon completion of such
periods of service or achievement of such conditions as the Committee shall
specify in an individual Restricted Stock Agreement between the Company and the
Participant when granting the shares of Restricted Stock.
3.4 TERMINATION OF EMPLOYMENT
If a Participant's employment is terminated prior to the lapsing of the
restrictions in accordance with Section 3.3 as a result of death, Retirement or
Disability, restrictions on the shares of Restricted Stock granted to the
Participant shall immediately lapse on the date of such death, Disability or
Retirement. If any Participant's employment is terminated prior to the lapsing
of restrictions in accordance with Section 3.3 for any reason other than death,
Disability or Retirement, the shares of Restricted Stock granted to such
Participant shall be forfeited and shall revert to the Company.
3.5 RIGHTS AS SHAREHOLDER
Prior to the lapsing of restrictions in accordance with Section 3.3,
Participants holding shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such shares while they
are held by the Participant. If any such dividend or distribution is paid in
shares of Common Stock, such shares shall be subject to the same restrictions on
transferability as the shares of Restricted Stock with respect to which they
were paid.
3.6 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control has
occurred, then all restrictions on shares of Restricted Stock shall immediately
lapse on the date such Change in Control occurred.
3.7 SECTION 83(B) ELECTION
Participants shall not be permitted to make an election under Section 83(b)
or any successor provision of the Code with respect to shares of Restricted
Stock granted under the Plan.
IV. PERFORMANCE UNITS
4.1 TERMS AND CONDITIONS OF GRANTS
(a) Each Participant shall be eligible for a performance award (a
"Performance Unit") determined in accordance with the table set forth in Section
4.1(b) and based on the Company's percentile rank among the companies comprising
the NASDAQ Composite Index (the "NASDAQ Companies") on a TSR basis. The Fair
Market Value of the Common Stock as of the first date of the Performance Period
will be indexed to 100 so that the Company's accumulated compound shareholder
return can be compared to and ranked on a percentile basis among the NASDAQ
Companies as provided by Compustat Services, a subsidiary of Standard & Poor's,
Inc. or by another reputable source publishing the same information. In the
event that the Company is not listed on the NASDAQ, the Company shall be ranked
against an equivalent broad-based group of peer companies designated by the
Committee in its sole discretion as such TSR information is published by a
reputable source. The Committee shall establish a percentage of each
Participant's annual base salary as of the last day of any Performance Period as
a "Target Award." An agreement with respect to a particular Performance Unit
granted to a Participant (a "Performance Unit Agreement") shall set forth the
Target Award, Performance Period, and the number of Performance Units granted.
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(b) The percentage of the Target Award and cash value of each Performance
Unit shall be determined in accordance with the following table:
<TABLE>
<CAPTION>
TSR PERCENTILE PERCENT OF
RANK AMONG THE TARGET AWARD PERFORMANCE
NASDAQ COMPANIES PAYABLE* UNIT CASH VALUE
---------------- ------------ ---------------
<S> <C> <C> <C>
Threshold................................. 50 50% $ 500
55 75 750
Target.................................... 60 100 1,000
65 130 1,300
70 160 1,600
75 195 1,950
80 230 2,300
85 265 2,650
Maximum................................... 90 300% $ 3,000
</TABLE>
- ---------------
* Interpolate between points
(c) No performance award will be payable if the Company's TSR as a
percentile among the NASDAQ Companies or an equivalent group of peer companies
is less than the 50th, and the maximum performance award payable is 300% of the
Target Award. If the TSR as a percentile among the NASDAQ Companies or an
equivalent group of peer companies is not specifically shown in the table in
Section 4.1(b), the Committee shall interpolate between the amounts shown.
4.2 PAYMENT
Upon the expiration of the Performance Period and the determination of the
Committee of the Company's TSR Percentile Rank, the Company shall distribute
cash, or registered shares of the Common Stock or a combination thereof, to the
Participant equal to the cash value of the Performance Unit as calculated in
accordance with Section 4.1(b) using the TSR Percentile Rank determined by the
Committee.
4.3 TERMINATION OF EMPLOYMENT
(a) Retirement, Death or Disability. If a Participant's employment is
terminated prior to the end of the Performance Period because of Retirement,
death or Disability, the extent to which a Performance Unit shall be deemed to
have been earned and payable shall be determined by multiplying (1) the cash
value of the Performance Unit as calculated in accordance with Section 4.1(b)
using the Company's TSR Percentile Rank as of the date of termination (or if
such rank is not available, the date closest to the date of termination for
which such rank is available) by (2) a fraction, the numerator of which is the
number of full calendar months such Participant was employed during the
Performance Period and the denominator of which is the total number of full
calendar months in the Performance Period.
(b) Other Causes. If a Participant's employment terminates for any reason
other than because of Retirement, death, Disability, or a Change in Control (as
defined in Section 5.13), the Performance Unit and any and all rights to payment
under such Performance Unit shall be immediately cancelled and the Performance
Unit Agreement with such terminated Participant shall be null and void.
V. ADDITIONAL PROVISIONS
5.1 GENERAL RESTRICTIONS
Each grant of an option or restricted stock under the Plan shall be subject
to the requirement that if the Committee shall determine, at any time, that (a)
the listing, registration or qualification of the shares of Common Stock subject
or related thereto upon any securities exchange or under any state or federal
law, (b) the consent or approval of any government regulatory body, or (c) an
agreement by the Participant with
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respect to the disposition of shares of Common Stock, is necessary or desirable
as a condition of, or in connection with, the granting or the issuance or
purchase of shares of Common Stock thereunder, such grant may not be consummated
in whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee.
5.2 ADJUSTMENTS FOR CERTAIN CORPORATE EVENTS
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, rights offer, liquidation, dissolution, merger,
consolidation, spin-off or sale of assets, or any other change in or affecting
the corporate structure or capitalization of the Company, the Board shall make
such adjustments as the Committee may recommend, and as the Board in its
discretion may deem appropriate, in the number and kind of shares authorized by
the Plan, in the number, exercise price or kind of shares covered by the grants
and in any outstanding grants under the Plan in order to prevent substantial
dilution or enlargement thereof.
5.3 NATURE OF PERFORMANCE UNITS
Performance Units granted under the Plan shall at all times be reflected on
the Company's books and records as a general, unsecured and unfunded obligation
of the Company, and the Plan shall not give any person any right or security
interest in any asset of the Company nor shall it imply a trust or segregation
of assets by the Company.
5.4 AMENDMENTS
The Board may discontinue the Plan at any time, and may amend it from time
to time, as it deems advisable and in the best interests of the Company, but no
amendment, without approval by shareholders, may (a) increase the total number
of shares which may be issued under the Plan, except as provided in Section 5.2
hereof, (b) change the class of employees of the Company to whom grants may be
granted, or (c) cause the Plan to no longer comply with Rule 16b-3 of the
Exchange Act or any other federal or state statutory or regulatory requirements.
5.5 MODIFICATION, SUBSTITUTION OR CANCELLATION OF GRANTS
Subject to the terms of the Plan, the Committee may modify outstanding
grants under the Plan or accept the surrender of outstanding grants and make new
grants in substitution for them. Notwithstanding the foregoing, no modification
of any grant shall adversely alter or impair any rights or obligations of the
Participant without the Participant's consent. Any grant under the Plan may be
canceled at any time with the consent of the Participant, and a new grant may be
provided to such Participant in lieu thereof.
5.6 SHARES SUBJECT TO THE PLAN
Shares distributed pursuant to the Plan shall be made available from
authorized but unissued shares or from shares purchased or otherwise acquired,
in open market, in private transactions or otherwise, by the Company for use in
the Plan, as shall be determined from time to time by the Committee.
5.7 RIGHTS OF A SHAREHOLDER
Participants under the Plan, unless otherwise provided by the Plan, shall
have no rights as shareholders by reason thereof unless and until certificates
for shares of Common Stock are issued to them.
5.8 WITHHOLDING
The Company shall have the right to deduct from any distribution of cash to
any Participant an amount equal to the federal, state and local income taxes and
other amounts as may be required by law to be withheld with respect to any grant
or distribution under the Plan.
The Company shall have the right to deduct from any distribution of Common
Stock to any Participant an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to
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be withheld (the "Withholding Taxes") with respect to any grant under the Plan.
If a Participant is to experience a taxable event in connection with the receipt
of cash or shares of Common Stock pursuant to an option exercise (a "Taxable
Event"), the Participant shall pay the Withholding Taxes to the Company prior to
the issuance of such shares of Common Stock. In satisfaction of the obligation
to pay Withholding Taxes to the Company, the Participant may make a written
election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the shares of Common
Stock then issuable to the Participant having an aggregate Fair Market Value on
the day immediately preceding the date of such issuance equal to the Withholding
Taxes, provided that in respect of a Participant who may be subject to liability
under Section 16(b) of the Exchange Act either: (i) in the case of a Taxable
Event involving a stock option or the grant of restricted stock, (A) the Tax
Election is made at least six (6) months prior to the date of the Taxable Event
and (B) the Tax Election is irrevocable with respect to all Taxable Events of a
similar nature occurring prior to the expiration of six (6) months following a
revocation of the Tax Election; (ii) in the case of the exercise of an option
(A) the Participant makes the Tax Election at least six (6) months after the
date the option was granted, (B) the option is exercised during the ten (10) day
period beginning on the third business day and ending on the twelfth business
day following the release for publication of the Company's quarterly or annual
statement of sales and earnings (the "Window Period") and (C) the Tax Election
is made during the Window Period in which the option is exercised or prior to
such Window Period and subsequent to the immediately preceding Window Period; or
(iii) in the case of a Taxable Event relating to the payment of an award, (A)
the Participant makes the Tax Election at least six (6) months after the date of
grant and (B) the Tax Election is made (1) in the case of a Taxable Event
occurring within a Window Period, during the Window Period in which the Taxable
Event occurs or (2) in the case of a Taxable Event not occurring within a Window
Period, during the Window Period immediately preceding the Taxable Event.
Notwithstanding the foregoing, the Committee may, by the adoption of rules or
otherwise, (i) modify the provisions of this Section 4.7 as may be necessary to
ensure that the Tax Elections will be exempt transactions under Section 16(b) of
the Exchange Act, and (ii) permit Tax Elections to be made at such other times
and subject to such other conditions as the Committee determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.
5.9 NONASSIGNABILITY
Except as expressly provided in the Plan, no awards under the Plan shall be
transferable except by will, the laws of descent and distribution or a qualified
domestic relations order ("QDRO") as defined by the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder. A Participant may from time to time
name in writing any person or persons to whom his or her benefit is to be paid
if he or she dies before complete payment of such benefit has occurred. Each
such beneficiary designation will revoke all prior designations by the
Participant with respect to the Plan, shall not require the consent of any
previously named beneficiary, shall be in a form prescribed by the Committee,
and will be effective only when filed with the Committee during the
Participant's lifetime.
If the Participant fails to designate a beneficiary before his or her
death, as provided above, or if the beneficiary designated by the Participant
dies before the date of the Participant's death or before complete payment of
the Participant's benefit has occurred, the Company may pay the remaining unpaid
portion of the Participant's benefit to either (i) one or more of the
Participant's relatives by blood, adoption, or marriage, and in such proportion
as the Company determines; or (ii) the legal representative or representatives
of the estate of the last to die of the Participant and his or her designated
beneficiary.
5.10 NONUNIFORM DETERMINATIONS
Determinations by the Committee under the Plan (including, without
limitation, determinations of the persons to receive grants, the form, amount
and timing of such grants, and the terms and provisions of such grants and the
agreements evidencing the same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, grants under
the Plan, whether or not such persons are similarly situated.
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5.11 NO GUARANTEE OF EMPLOYMENT
Neither grants under the Plan nor any action taken pursuant to the Plan
shall constitute or be evidence of any agreement or understanding, express or
implied, that the Company shall retain the Participant for any period of time or
at any particular rate of compensation.
5.12 EFFECTIVE DATE; DURATION
The Plan shall become effective as of the date the Company is first
admitted to trading on the NASDAQ. No grant may be given under the Plan after
six (6) years from the effective date of the Plan.
5.13 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control of
the Company occurs or if the Committee determines in its sole discretion that a
Change in Control has occurred, then, as of the date of such Change in Control,
(i) all options shall become fully exercisable, (ii) all restrictions on grants
of Restricted Stock shall lapse, and (iii) all Performance Units shall become
fully payable at the TSR Percentile Rank of the Company calculated using the TSR
of the Company as of the date of the Change in Control as compared the TSR of
the NASDAQ Companies or equivalent group of peer companies as of the last
quarterly period for which such TSR information is available.
For the purposes of the Plan, a Change in Control of the Company shall be
deemed to have occurred upon the earliest of the following events:
(a) when the Company acquires actual knowledge that any person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other
than any such person who is the beneficial owner of 25% or more of the
Common Stock as of the effective date of the Plan, becomes the beneficial
owner (as defined in Rule 13d-3 of the Exchange Act) directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities;
(b) upon the first purchase of Common Stock pursuant to a tender or
exchange offer (other than a tender or exchange offer made by the Company);
(c) upon the approval by the Company's shareholders of (i) a merger or
consolidation of the Company with or into another corporation (other than a
merger or consolidation in which the Company is the surviving corporation
and which does not result in any capital reorganization or reclassification
or other change in the Company's then-outstanding shares of Common Stock),
(ii) a sale or disposition of all or substantially all of the Company's
assets or (iii) a plan of liquidation or dissolution of the Company;
(d) if the Board or any designated committee determines in its sole
discretion that any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a person who exercises a controlling
influence over the Company on the effective date of the Plan, directly or
indirectly exercises a controlling influence over the management or
policies of the Company.
5.14 GOVERNING LAW
The Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of Florida.
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EXHIBIT 10.10
PHYSICIAN SALES & SERVICE, INC.
AMENDED AND RESTATED
1994 LONG TERM STOCK PLAN
I. GENERAL
1.1 PURPOSE OF THE PLAN
The purpose of the Amended and Restated 1994 Long-Term Stock Plan (the
"Plan") of Physician Sales & Service, Inc. (the "Company") is to provide an
incentive, in the form of a proprietary shareholder interest in the Company, to
employees of the Company and/or its subsidiaries, to increase their interest in
the Company's welfare, and to assist the Company and its subsidiaries in
attracting and retaining employees.
1.2 ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee or its
successor (the "Committee") of the Board of Directors of the Company (the
"Board") which shall consist solely of two or more directors meeting the
definition of disinterested person under Rule 16b-3 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
The Committee shall have full and final authority in its discretion,
subject to the provisions of the Plan: (a) to determine individuals to whom and
the time or times at which options or restricted stock shall be granted and
exercised and the number of shares and exercise price, if any, of the common
stock of the Company ("Common Stock") covered by each option or grant of
restricted stock; (b) to determine the terms of the option or restricted stock
agreements, which need not be identical, including, without limitation, terms
covering vesting, exercise dates, if any, and exercise prices, if any; (c) to
decide all questions of fact arising in the application of the Plan; and (d) to
administer and interpret the Plan in all respects. All determinations made by
the Committee shall be final and conclusive.
The Committee shall meet once each fiscal year, and at such additional
times as it may determine or as is requested by the chief executive officer of
the Company, to designate the eligible employees, if any, to be granted awards
under the Plan and the type and amount of such awards and the time when awards
will be granted. No such designation by the Committee shall be effective as a
grant of an award under the Plan until approved by the Board; provided, however,
that the Board may empower the Committee to grant such awards without approval
by the Board. All awards granted under the Plan shall be on the terms and
subject to the conditions hereinafter provided.
1.3 ELIGIBLE PARTICIPANTS
Employees of the Company and the Company's subsidiaries shall be eligible
to participate in the Plan (any employee receiving an award under this Plan
hereinafter referred to as a "Participant"). The terms "subsidiary" or
"subsidiaries" shall mean any corporation now existing or hereafter organized or
acquired (other than the Company) in an unbroken chain of corporations beginning
with the Company, if, at the time of option grant, each of the corporations
(including the Company) other than the last corporation in the unbroken chain
owns stock possessing 80% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
1.4 GRANTS
Grants under the Plan may be stock options (as described in Section II) or
restricted stock (as described in Section III).
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1.5 OTHER COMPENSATION PROGRAMS
The adoption of the Plan contemplates the continuation of any existing
incentive compensation plan(s) of the Company and in no way limits or is limited
by the operation, administration or amendment of any such plan(s). The existence
and terms of the Plan shall not limit the authority of the Board in compensating
employees of the Company in such other forms and amounts as it may determine
from time to time.
1.6 LIMITATIONS ON GRANTS
The aggregate number of shares of Common Stock, including shares reserved
for issuance pursuant to the exercise of options, which may be granted or issued
under the terms of the Plan, may not exceed 2,190,000 shares, and such shares
hereby are reserved for such purpose. The maximum number of shares of Common
Stock that may be subject to grants under the Plan to a Participant may not
exceed 200,000 shares of Common Stock per fiscal year of the Company. Whenever
any outstanding grant or portion thereof expires, is canceled or forfeited or is
otherwise terminated for any reason without having been exercised, the Common
Stock allocable to the expired, forfeited, canceled or otherwise terminated
portion of the grant may again be the subject of further grants hereunder.
Notwithstanding the foregoing, the number of shares of Common Stock
available for grants at any time under the Plan shall be reduced to such lesser
amount as may be required pursuant to the methods of calculation necessary so
that the exemptions provided pursuant to Rule 16b-3 under the Exchange Act will
continue to be available for transactions involving all current and future
grants. In addition, during the period that any grants remain outstanding under
the Plan, the Committee may make good faith adjustments with respect to the
number of shares of Common Stock attributable to such grants for purposes of
calculating the maximum number of shares of Common Stock available for the
granting of future grants under the Plan, provided that following such
adjustments the exemptions provided pursuant to Rule 16b-3 under the Exchange
Act will continue to be available for transactions involving all current and
future grants.
1.7 DEFINITIONS
The following definitions shall apply to the Plan:
(a) "Disability" shall have the meaning provided in the Company's
applicable disability plan or, in the absence of such a definition, when a
Participant becomes totally disabled (as determined by a physician mutually
acceptable to the Participant and the Company) before attaining his or her
65th birthday and if such total disability continues for more than three
months. Disability does not include any condition which is intentionally
self-inflicted or caused by illegal acts of the Participant.
(b) "Fair Market Value" means the average of the high and low sales
prices of the shares of Common Stock on such date on the principal national
securities exchange or automated quotation system of a registered
securities association on which such shares of Common Stock are listed or
admitted to trading. If the shares of Common Stock on such date are not
listed or admitted to trading, the Fair Market Value shall be the value
established by the Board in good faith.
(c) "Retirement" shall have the meaning provided in the Company's
applicable retirement plan or, in the absence of such a definition, the
first day of the month following the month in which the Participant attains
his or her 65th birthday.
II. STOCK OPTIONS
2.1 TYPES OF OPTIONS
Options granted under the Plan shall, at the time of grant, provide that
they will not be treated as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
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2.2 TERMS AND CONDITIONS OF OPTIONS
Subject to the following provisions, all options granted under the Plan
shall be in such form and upon such terms and conditions as the Committee, in
its discretion, may from time to time determine, provided such terms and
conditions are clearly designated at the time of grant.
2.3 EXERCISE PRICE
The exercise price per share shall be at least the Fair Market Value of the
Common Stock on the date such option is granted.
2.4 TERM OF OPTIONS
Any option granted under the Plan may be exercised no later than ten (10)
years from the date of grant or such shorter period of time as designated by the
Committee at the time of grant. Subject to Sections 2.8, 2.9 and 2.11 hereof and
the stock option agreement governing the grant of the options under the Plan,
which may contemplate vesting of exercise rights, options may be exercised in
whole or in one or more parts throughout such term. All rights to exercise an
option shall expire at the end of the designated term.
2.5 PAYMENT
Payment for shares for which an option is exercised shall be made in full
to the Corporation in such manner and at such time or times as shall be provided
by the Committee at the time of grant in either (i) cash or its equivalent or
(ii) by tendering shares of previously acquired Common Stock having a Fair
Market Value equal to the exercise price or (iii) by a combination of (i) and
(ii). The proceeds from such payment shall be added to the general funds of the
Corporation and shall be used for general corporate purposes.
2.6 VESTING OF OPTIONS
Options shall be exercisable in whole or in part after completion of such
periods of service or achievement of such conditions as the Committee shall
specify when granting the options; provided however, that in the absence of a
Committee specification to the contrary and subject to Sections 2.8, 2.9 and
2.11, such option shall become fully exercisable five (5) years from the date of
grant.
2.7 NOTICE OF EXERCISE
When exercisable pursuant to the terms of the governing stock option
agreement, options granted under the Plan shall be exercised by the Participant
(or by other authorized persons in accordance with Section 4.8) as to all or
part of the shares subject to the option by delivering written notice of
exercise to the Company at its principal business office or such other office as
the Company may from time to time direct, (a) specifying the number of shares to
be purchased, (b) indicating the method of payment of the exercise price or
including a check payable to the Company in an amount equal to the full exercise
price of the number of shares being purchased, (c) including a Tax Election, if
applicable, in accordance with Section 4.7, and (d) containing such further
provisions consistent with the provisions of the Plan, as the Company may from
time to time prescribe.
2.8 TERMINATION OF EMPLOYMENT
Except as otherwise provided in this Section 2.8, if a Participant ceases
being an employee of the Company or any subsidiary for any reason, including,
without limitation, Retirement, discharge, layoff or any other voluntary or
involuntary termination of a Participant's employment (a "Termination"), the
unexercisable portion of the option granted hereunder shall immediately
terminate and be null and void, and the unexercised portion of any outstanding
and exercisable options granted hereunder to such Participant shall terminate
and be null and void for all purposes, after three (3) months have elapsed from
the date of the Termination unless extended by the Committee, in its sole
discretion, within thirty (30) days from the date of Termination. Upon a
Termination as a result of death or Disability, any outstanding options may be
exercised
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by the Participant or the Participant's legal representative within twelve (12)
months after such termination; provided, however, that in no event shall the
period extend beyond the expiration of the option term. Transfer of employment
among the Company and any subsidiaries of the Company shall not be deemed to be
a Termination.
2.9 LIMITATION OF EXERCISE PERIODS
The Committee may limit the time periods within which an option may be
exercised if a limitation on exercise is deemed necessary in order to effect
compliance with applicable law.
2.10 STOCK OPTION AGREEMENT
Each option granted under the Plan shall be evidenced by an individual
stock option agreement which shall be executed by the Company and each
Participant. The agreement shall contain such terms and provisions, not
inconsistent with the terms of the Plan, as shall be determined by the
Committee, including: (a) the number of shares a Participant may acquire
pursuant to the option granted and the exercise price per share; (b) any
conditions affecting the exercise of the option; (c) the procedure for
exercising the option granted; (d) a clear designation of whether the exercise
of the option granted thereby is subject to vesting; (e) representations and
warranties of Participant regarding the acquisition of shares for investment
purposes; and (f) such provisions as the Committee, upon advice of counsel to
the Company, shall deem necessary or appropriate to comply with the requirements
of applicable laws. In the event there shall be any discrepancy or inconsistency
between the terms of the Plan and any term or provision contained in a stock
option agreement, the terms of the Plan, as interpreted by the Committee, shall
govern.
2.11 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control has
occurred, then any outstanding option shall immediately become exercisable with
respect to all shares subject to such option on the date such Change in Control
occurred.
III. RESTRICTED STOCK
3.1 TERMS AND CONDITIONS OF AWARDS
The Committee may grant shares of stock subject to the restrictions
described in Section 3.2 ("Restricted Stock") under a restricted stock
agreement, without payment by the Participant for such Restricted Stock. Such
agreement shall specify the number of shares granted and the conditions and
terms of the grant. Restricted Stock, with restrictions noted on the face of the
certificates, shall be issued in the name of the Participant granted the
Restricted Stock and deposited with a trust administered by the Committee (and
subject to the claims of the Company's creditors) during the restriction period.
3.2 RESTRICTIONS
Until the restrictions have lapsed in accordance with Section 3.3, the
shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated. The Committee may
impose such other restrictions on any shares of restricted stock as required by
law including, without limitation, restrictions under applicable federal or
state securities laws, and may place legends on the certificates representing
such Restricted Stock to provide appropriate notice of such restrictions.
3.3 PERIOD OF RESTRICTION
Subject to Section 3.6, the restrictions set forth in Section 3.2 shall
lapse and such shares shall be freely transferable upon completion of such
periods of service or achievement of such conditions as the Committee shall
specify in an individual Restricted Stock Agreement between the Company and the
Participant when granting the shares of Restricted Stock.
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3.4 TERMINATION OF EMPLOYMENT
If a Participant's employment is terminated prior to the lapsing of the
restrictions in accordance with Section 3.3 as a result of death, Retirement or
Disability, restrictions on the shares of Restricted Stock granted to the
Participant shall immediately lapse on the date of such death, Disability or
Retirement. If any Participant's employment is terminated prior to the lapsing
of restrictions in accordance with Section 3.3 for any reason other than death,
Disability or Retirement, the shares of Restricted Stock granted to such
Participant shall be forfeited and shall revert to the Company.
3.5 RIGHTS AS SHAREHOLDER
Prior to the lapsing of restrictions in accordance with Section 3.3,
Participants holding shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such shares while they
are held by the Participant. If any such dividend or distribution is paid in
shares of Common Stock, such shares shall be subject to the same restrictions on
transferability as the shares of Restricted Stock with respect to which they
were paid.
3.6 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control has
occurred, then all restrictions on shares of Restricted Stock shall immediately
lapse on the date such Change in Control occurred.
3.7 SECTION 83(B) ELECTION
Participants shall not be permitted to make an election under Section 83(b)
or any successor provision of the Code with respect to shares of Restricted
Stock granted under the Plan.
IV. GENERAL PROVISIONS
4.1 GENERAL RESTRICTIONS
Each grant under the Plan shall be subject to the requirement that if the
Committee shall determine, at any time, that (a) the listing, registration or
qualification of the shares of Common Stock subject or related thereto upon any
securities exchange or under any state or federal law, (b) the consent or
approval of any government regulatory body, or (c) an agreement by the
Participant with respect to the disposition of shares of Common Stock, is
necessary or desirable as a condition of, or in connection with, the granting or
the issuance or purchase of shares of Common Stock thereunder, such grant may
not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
4.2 ADJUSTMENTS FOR CERTAIN CORPORATE EVENTS
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, rights offer, liquidation, dissolution, merger,
consolidation, spin-off or sale of assets, or any other change in or affecting
the corporate structure or capitalization of the Company, the Board shall make
such adjustments as the Committee may recommend, and as the Board in its
discretion may deem appropriate, in the number and kind of shares authorized by
the Plan, in the number, exercise price or kind of shares covered by the grants
and in any outstanding grants under the Plan in order to prevent substantial
dilution or enlargement thereof.
4.3 AMENDMENTS
The Board may discontinue the Plan at any time and may amend it from time
to time, but no amendment, without approval by shareholders, may (a) increase
the total number of shares which may be issued under the Plan, except as
provided in Section 4.2 hereof, (b) change the class of employees of the Company
to whom grants may be granted, or (c) cause the Plan to no longer comply with
Rule 16b-3 of the Exchange Act or any other federal or state statutory or
regulatory requirements.
5
<PAGE> 6
4.4 MODIFICATION, SUBSTITUTION OR CANCELLATION OF GRANTS
Subject to the terms of the Plan, the Committee may modify outstanding
grants under the Plan or accept the surrender of outstanding grants and make new
grants in substitution for them. Notwithstanding the foregoing, no modification
of any grant shall adversely alter or impair any rights or obligations of the
Participant without the Participant's consent.
4.5 SHARES SUBJECT TO THE PLAN
Shares distributed pursuant to the Plan shall be made available from
authorized but unissued shares or from shares purchased or otherwise acquired,
in open market, in private transactions or otherwise, by the Company for use in
the Plan, as shall be determined from time to time by the Committee.
4.6 RIGHTS OF A SHAREHOLDER
Participants under the Plan, unless otherwise provided by the Plan, shall
have no rights as shareholders by reason thereof unless and until certificates
for shares of Common Stock are issued to them.
4.7 WITHHOLDING
The Company shall have the right to deduct from any distribution of Common
Stock to any Participant an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld (the
"Withholding Taxes") with respect to any grant under the Plan. If a Participant
is to experience a taxable event in connection with the receipt of cash or
shares of Common Stock pursuant to an option exercise (a "Taxable Event"), the
Participant shall pay the Withholding Taxes to the Company prior to the issuance
of such shares of Common Stock. In satisfaction of the obligation to pay
Withholding Taxes to the Company, the Participant may make a written election
(the "Tax Election"), which may be accepted or rejected in the discretion of the
Committee, to have withheld a portion of the shares of Common Stock then
issuable to the Participant having an aggregate Fair Market Value on the day
immediately preceding the date of such issuance equal to the Withholding Taxes,
provided that in respect of a Participant who may be subject to liability under
Section 16(b) of the Exchange Act either: (i) in the case of a Taxable Event
involving a stock option or the grant of restricted stock, (A) the Tax Election
is made at least six (6) months prior to the date of the Taxable Event and (B)
the Tax Election is irrevocable with respect to all Taxable Events of a similar
nature occurring prior to the expiration of six (6) months following a
revocation of the Tax Election; (ii) in the case of the exercise of an option
(A) the Participant makes the Tax Election at least six (6) months after the
date the option was granted, (B) the option is exercised during the ten (10) day
period beginning on the third business day and ending on the twelfth business
day following the release for publication of the Company's quarterly or annual
statement of sales and earnings (the "Window Period") and (C) the Tax Election
is made during the Window Period in which the option is exercised or prior to
such Window Period and subsequent to the immediately preceding Window Period; or
(iii) in the case of a Taxable Event relating to the payment of an award, (A)
the Participant makes the Tax Election at least six (6) months after the date of
grant and (B) the Tax Election is made (1) in the case of a Taxable Event
occurring within a Window Period, during the Window Period in which the Taxable
Event occurs or (2) in the case of a Taxable Event not occurring within a Window
Period, during the Window Period immediately preceding the Taxable Event.
Notwithstanding the foregoing, the Committee may, by the adoption of rules or
otherwise, (i) modify the provisions of this Section 4.7 as may be necessary to
ensure that the Tax Elections will be exempt transactions under Section 16(b) of
the Exchange Act, and (ii) permit Tax Elections to be made at such other times
and subject to such other conditions as the Committee determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.
4.8 NONASSIGNABILITY
Except as expressly provided in the Plan, no grant shall be transferable
except by will, the laws of descent and distribution or a qualified domestic
relations order ("QDRO") as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.
During the lifetime
6
<PAGE> 7
of the Participant, except as expressly provided in the Plan, grants under the
Plan shall be exercisable only by such Participant, by the guardian or legal
representative of such Participant or pursuant to a QDRO.
4.9 NONUNIFORM DETERMINATIONS
Determinations by the Committee under the Plan (including, without
limitation, determinations of the persons to receive grants, the form, amount
and timing of such grants, and the terms and provisions of such grants and the
agreements evidencing the same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, grants under
the Plan, whether or not such persons are similarly situated.
4.10 NO GUARANTEE OF EMPLOYMENT
Neither grants under the Plan nor any action taken pursuant to the Plan
shall constitute or be evidence of any agreement or understanding, express or
implied, that the Company shall retain the Participant for any period of time or
at any particular rate of compensation.
4.11 EFFECTIVE DATE; DURATION
The Plan shall become effective as of the date the Company is first
admitted to trading on the NASDAQ, subject to approval by shareholders. No grant
may be given under the Plan after May 31, 2000, but grants theretofore granted
may extend beyond such date.
4.12 CHANGE IN CONTROL
Notwithstanding anything herein to the contrary, if a Change in Control of
the Company occurs, then all options shall become fully exercisable and all
restrictions on grants of Restricted Stock shall lapse as of the date such
Change in Control occurred. For the purposes of the Plan, a Change in Control of
the Company shall be deemed to have occurred upon the earliest of the following
events:
(a) when the Company acquires actual knowledge that any person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other
than any person who was the beneficial owner of 25% or more of the Common
Stock as of the effective date of the Plan, becomes the beneficial owner
(as defined in Rule 13d-3 of the Exchange Act) directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then-outstanding securities;
(b) upon the first purchase of Common Stock pursuant to a tender or
exchange offer (other than a tender or exchange offer made by the Company);
(c) upon the approval by the Company's shareholders of (i) a merger or
consolidation of the Company with or into another corporation (other than a
merger or consolidation in which the Company is the surviving corporation
and which does not result in any capital reorganization or reclassification
or other change in the Company's then-outstanding shares of Common Stock),
(ii) a sale or disposition of all or substantially all of the Company's
assets or (iii) a plan of liquidation or dissolution of the Company; or
(d) if the Board or any designated committee determines in its sole
discretion that any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a person who exercised a controlling
influence as of the effective date of the Plan, directly or indirectly
exercises a controlling influence over the management or policies of the
Company.
4.13 GOVERNING LAW. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Florida.
7
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