<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [_]
FILED BY A PARTY OTHER THAN THE REGISTRANT [_]
CHECK THE APPROPRIATE BOX:
[_]Preliminary Proxy Statement [_]CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PSS WORLD MEDICAL, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X]No fee required
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
Notes:
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LOGO
[LOGO OF PSS WORLD MEDICAL APPEARS HERE]
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 3, 1998
----------------
The Annual Meeting of Shareholders of PSS World Medical, Inc., a Florida
corporation (the "Company"), will be held at 9:00 a.m., local time, on
Thursday, September 3, 1998, at the Company's executive offices located at
4345 Southpoint Boulevard, Jacksonville, Florida 32216 for the following
purposes:
1. To elect three Class II directors for a three-year term;
2. To ratify the adoption of the Company's Amended and Restated
Directors' Stock Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on July 2, 1998, are
entitled to notice of and to vote at the Annual Meeting and any and all
adjournments thereof.
All shareholders are invited to attend the Annual Meeting. Those
shareholders who are unable to attend are respectfully urged to sign and
return the enclosed Proxy Card as promptly as possible. Shareholders who sign
and return a Proxy Card may nevertheless attend the Annual Meeting, revoke
their Proxy, and vote their shares in person.
Whether or not you expect to be present, please sign, date and return the
enclosed Proxy Card in the enclosed pre-addressed envelope as soon as
possible. No postage is required if mailed from within the United States.
By Order of the Board of Directors
LOGO
/s/ David A. Smith
David A. Smith
Chief Financial Officer
Jacksonville, Florida
July 31, 1998
<PAGE>
PSS WORLD MEDICAL, INC.
4345 SOUTHPOINT BOULEVARD
JACKSONVILLE, FLORIDA 32216
PROXY STATEMENT
INTRODUCTION
The enclosed Proxy is solicited by the Board of Directors of PSS World
Medical, Inc., a Florida corporation ("PSS" or the "Company"), for use at its
Annual Meeting of Shareholders scheduled to be held on Thursday, September 3,
1998 at 9:00 a.m., local time, or at any postponements or adjournments thereof
(the "Annual Meeting"). The purposes of the Annual Meeting are set forth
herein and in the accompanying Notice of Annual Meeting of Shareholders. The
Annual Meeting will be held at the Company's executive offices located at 4345
Southpoint Boulevard, Jacksonville, Florida 32216. The date of the mailing of
this Proxy Statement and accompanying Proxy is on or about July 31, 1998.
PROCEDURAL MATTERS
Shareholders of record at the close of business on July 2, 1998 are entitled
to notice of and to vote at the Annual Meeting. At the record date, 69,859,374
shares of Common Stock of the Company, $0.01 par value per share (the "Common
Stock"), were issued and outstanding and held by approximately 1,822
shareholders of record. Shareholders are entitled to one vote per share on all
matters voted upon at the Annual Meeting. Shareholders do not have the right
to cumulate their votes for directors. The presence at the Annual Meeting, in
person or by proxy, of a majority of the shares of Common Stock outstanding on
July 2, 1998 will constitute a quorum. If the accompanying Proxy Card is
properly signed and timely returned to the Company and not revoked, it will be
voted in accordance with the instructions contained therein.
Unless contrary instructions are given, the persons designated as proxy
holders on the accompanying Proxy Card will vote: FOR the Board's nominees,
FOR ratification of the adoption of the Company's Amended and Restated
Directors' Stock Plan and if any other matters properly come before the Annual
Meeting, in accordance with their best judgment on such matters. Each such
proxy granted may be revoked by the shareholder(s) at any time before it is
exercised by filing with the Secretary of the Company a revoking instrument or
a duly executed Proxy Card bearing a later date or by voting in person at the
Annual Meeting. The powers of the proxy holder with respect to a particular
proxy will be suspended if the person executing that proxy attends the Annual
Meeting in person and so requests. Attendance at the Annual Meeting will not
in itself constitute revocation of the proxy. Shareholders have no dissenters'
rights of appraisal in connection with any matter being presented at the
Annual Meeting.
Directors will be elected by a plurality of the votes cast by the shares of
Common Stock represented in person or by proxy at the Annual Meeting. The
affirmative votes of the holders of a majority of the shares of Common Stock
represented in person or by proxy at the Annual Meeting will be required for
approval of the proposal to ratify the adoption of the Amended and Restated
1994 Directors' Stock Plan, and any other matter that may be submitted to a
vote of the shareholders. If less than a majority of the outstanding shares
entitled to vote are represented at the Annual Meeting, a majority of the
shares so represented may adjourn the Annual Meeting to another date, time or
place, and notice need not be given of the new date, time or place if the new
date, time or place is announced at the meeting before an adjournment is
taken.
Prior to the Annual Meeting, the Company will select one or more inspectors
of election for the meeting. Such inspector(s) shall determine the number of
shares of Common Stock represented at the meeting, the existence of a quorum
and the validity and effect of proxies, and shall receive, count and tabulate
ballots and votes and determine the results thereof. Abstentions will be
considered as shares present and entitled to vote at the Annual Meeting and
will be counted as votes cast at the Annual Meeting, but will not be counted
as votes cast for or against any given matter.
<PAGE>
A broker or nominee holding shares registered in its name, or in the name of
its nominee, which are beneficially owned by another person and for which it
has not received instructions as to voting from the beneficial owner, may have
discretion to vote the beneficial owner's shares with respect to the election
of directors and other matters addressed at the Annual Meeting. Any such
shares which are not represented at the Annual Meeting either in person or by
proxy will not be considered to have cast votes on any matters addressed at
the Annual Meeting.
PROPOSAL 1: ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors currently consists of ten directors who are elected
in three classes, with four Class I members, three Class II members and three
Class III members. Members of each class hold office for three-year terms; the
terms of the classes are staggered so that the term of one class terminates
each year. Each member of the Board of Directors holds office for the term for
which he or she was elected and until his or her successor shall have been
duly elected and qualified, or until the earlier of his or her resignation,
removal from office or death.
Class I Directors. The terms of the Class I directors, T. O'Neal Douglas,
Patrick C. Kelly, James L.L. Tullis and Hugh M. Brown, expire at the Annual
Meeting of Shareholders in 2000, or when their successors have been duly
elected and qualified.
Class II Directors. The terms of the Class II directors, Melvin L. Hecktman,
Delores P. Kesler and David A. Smith, expire at the Annual Meeting of
Shareholders in 1998, or when their successors have been duly elected and
qualified.
Class III Directors. The terms of the Class III directors, Thomas G. Hixon,
Donna C.E. Williamson and Charles R. Scott expire at the Annual Meeting of
Shareholders in 1999, or when their successors have been duly elected and
qualified.
ELECTION OF CLASS II DIRECTORS
Messrs. Hecktman and Smith and Ms. Kesler have been nominated for election
at the 1998 Annual Meeting by the Board of Directors to continue as Class II
directors and have informed the Company that they will serve if elected.
Proxies may not be voted for a greater number of persons than the number of
nominees named herein.
Directors will be elected by a plurality of the votes cast by the shares of
Common Stock represented in person or by proxy at the Annual Meeting. The
accompanying proxy, unless otherwise specified, will be voted FOR the election
of Messrs. Hecktman and Smith and Ms. Kesler as directors. If any of Messrs.
Hecktman or Smith or Ms. Kesler should become unavailable, which is not now
anticipated, the proxy will be voted for the election of such other person as
the Board of Directors may select to replace such nominee, unless the Board of
Directors instead reduces the number of directors comprising the Board. Each
such proxy granted may be revoked by the shareholder at any time before it is
exercised by filing with the Secretary of the Company a revoking instrument or
a duly executed Proxy Card bearing a later date or by voting in person at the
Annual Meeting. Attendance at the Annual Meeting will not in itself constitute
revocation of the proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE NOMINEES
FOR DIRECTOR.
2
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EXPERIENCE OF DIRECTORS
NOMINEES FOR DIRECTORS
CLASS II
(WHOSE TERMS, IF ELECTED, WILL EXPIRE
AT THE ANNUAL MEETING OF SHAREHOLDERS IN 2001)
Melvin L. Hecktman has served on the Board of Directors of the Company since
March 1998. From May 1993 through March 1998, Mr. Hecktman served on the Board
of Directors of Gulf South Medical Supply, Inc., a distributor of medical
supplies to the long-term care industry ("Gulf South"), which was acquired by
the Company in March 1998. Since 1993, Mr. Hecktman has served as President of
Hecktman Management, an investment management and consulting firm, and as a
partner of Commonwealth Capital Partners, a merchant banking group. Mr.
Hecktman was associated with United Stationers, Inc., a wholesaler of general
business products, as an employee or director for 33 years and served as its
Vice Chairman from 1989 through August 1993.
Delores P. Kesler has served on the Board of Directors of the Company since
July 1993. Ms. Kesler has been Chairman and Chief Executive Officer of Kesler,
Pass & Associates, Inc., a capital investment company, since 1996. Ms. Kesler
was also Chairman and Chief Executive Officer of Accustaff, Incorporated, a
strategic staffing, consulting and outsourcing venture, from January until
June 1996. Ms. Kesler currently serves on the Board of Directors of Thermoview
Industries, Inc., an investment and acquisition company, Clay County Bank in
Orange Park, Florida and St. Lukes/Mayo Foundation.
David A. Smith has served on the Board of Directors of the Company since
July 1993, as Executive Vice President since April 1996 and as Chief Financial
Officer since April 1992. Mr. Smith also served as a Vice President of the
Company from April 1992 to April 1996. Prior to serving as Vice President and
Chief Financial Officer, Mr. Smith served the Company as a Regional Manager,
General Manager, Sales Manager and Operations Manager from July 1987 to June
1993. Prior to joining the Company, Mr. Smith worked in public accounting from
1983 to 1987.
DIRECTORS WHOSE TERMS OF OFFICE
WILL CONTINUE AFTER THE 1998 ANNUAL MEETING
CLASS III
(TERMS EXPIRE AT THE ANNUAL MEETING
OF SHAREHOLDERS IN 1999)
Thomas G. Hixon has served on the Board of Directors of the Company since
March 1998 and as Chairman of Gulf South since April 1998. He also served as
President and Chief Operating Officer of the Company from April 1998 to May
1998. From 1985 until March 1998, Mr. Hixon served as President, Chief
Executive Officer and director of Gulf South, where he had served as Chairman
of the Board since 1995. Mr. Hixon also served as General Manager of Gulf
South from 1985 until March 1995.
Donna C.E. Williamson has served on the Board of Directors of the Company
since March 1998. Since October 1996, Ms. Williamson has been an independent
consultant. From July 1993 to September 1996, Ms. Williamson served as Senior
Vice President for Caremark International, Inc., a provider of healthcare
services. She has served on the boards of: (i) Haemonetics Corporation, a
manufacturer of automated systems for collection, processing and surgical
salvage of blood, since 1993; (ii) A.G. Edwards, Inc., a financial services
company, from 1988 to 1997; and (iii) Gulf South from July 1997 to March 1998.
Charles R. Scott has served on the Board of Directors of the Company since
March 1998. Currently, Mr. Scott is the Chairman and Chief Executive Officer
of Leadership Centers, USA d/b/a TEC Florida which
3
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provides continuing education for executives of Florida based companies. From
February 1991 to December 1996, Mr. Scott was President and Chief Executive
Officer of The Actava Group, Inc. (formerly Fuqua Industries, Inc.), an
operating holding company. Mr Scott also served as Chairman and Chief
Executive Officer of Intermark, Inc., an operating holding company, from 1970
to 1991.
CLASS I
(TERMS EXPIRE AT THE ANNUAL MEETING
OF SHAREHOLDERS IN 2000)
Hugh M. Brown has served on the Board of Directors of the Company since
March 1998. He serves as the Chairman of the Audit Committee of the Board of
Directors. Mr. Brown has served as Chairman of the Board and Chief Executive
Officer of BAMSI, Inc., an engineering and technical services company, since
he founded the company in 1978. From 1990 to 1997, Mr. Brown served as a
director for the Federal Reserve Bank of Atlanta and has served as Vice
Chairman since January 1998. He has been a director of SunTrust Bank--Florida
since January 1998.
T. O'Neal Douglas has served on the Board of Directors of the Company since
July 1993. He serves as the Chairman of the Company's Nominating and
Compensation Committees. Mr. Douglas has been Chairman of American Heritage
Life Insurance Co. ("AHL Insurance"), and its holding company American
Heritage Life Investment Company ("AHL Investment"), since 1994. He has also
served as Chief Executive Officer of AHL Insurance and AHL Investment since
1990, President of AHL Investment from 1990 to 1996 and President of AHL
Insurance from 1986 to 1994. In addition, Mr. Douglas has served as a director
of Barnett Bank of Jacksonville, N.A from 1986 to 1997 and as a director of
Nationsbank, N.A. since 1998.
Patrick C. Kelly, a co-founder of the Company, has served as Chairman of the
Board and Chief Executive Officer of the Company since its inception in May
1983 and as President of the Company from May 1983 to August 1995. Prior to
founding the Company, from August 1976 to February 1983, Mr. Kelly served as
Sales Manager, General Manager and Vice President of Intermedco, Inc., a
Houston-based medical supply company.
James L. L. Tullis has served on the Board of Directors of the Company since
1989. Mr. Tullis serves as the Chairman of the Executive Committee of the
Board of Directors. Since September 1987, Mr. Tullis has been a general
partner of Tullis-Dickerson Partners, the general partner of Tullis-Dickerson
Capital Focus, L.P., a venture capital fund that invests in the health care
industry and a shareholder of the Company. Mr. Tullis has served as Chief
Executive Officer of Tullis-Dickerson & Co., Inc., a venture capital company
which acts as a management company for Tullis-Dickerson Capital Focus, L.P.,
since July 1990. Mr. Tullis also serves on the boards of Crane Co., a
distributor of doors, windows and millwork, and Acme United, Inc., a
manufacturer of scissors and other medical products.
COMMITTEES OF THE BOARD AND BOARD MEETINGS
The Board of Directors has four standing committees, an Executive Committee,
an Audit Committee, a Compensation Committee and a Nominating Committee.
The Board's Executive Committee, which held 17 meetings in fiscal year 1998
and acted by written consent on three occasions, is authorized to act with the
full authority and in place of the Board at such times as members of the
Executive Committee deem necessary and appropriate. Current members of the
Executive Committee are Messrs. Kelly, Douglas, Tullis and Hecktman, with Mr.
Tullis acting as Chairman. Messrs. Tullis, Douglas and Kelly served on the
Executive Committee during the past fiscal year.
The Board's Audit Committee, which held four meetings in fiscal year 1998,
reviews the scope and results of the audit conducted by the Company's
independent auditors. In addition, it reviews systems of internal
4
<PAGE>
controls and accounting policies and procedures. Current members of the Audit
Committee are Messrs. Brown and Tullis and Ms. Williamson, with Mr. Brown
acting as Chairman. Messrs. Douglas, William C. Mason and Fred Elefant served
on the Audit Committee during the past fiscal year.
The Board's Compensation Committee, which held eight meetings in fiscal year
1998, reviews salary levels of management personnel and makes appropriate
recommendations to the Board with respect thereto. In addition, it makes
recommendations to the Board concerning certain employee benefit plan matters,
including the granting of stock options. Current members of the Compensation
Committee are Ms. Kesler and Messrs. Douglas and Scott, with Mr. Douglas
serving as Chairman. Messrs. Delmer W. Dallas and Elefant and Ms. Kesler
served on the Compensation Committee during the past fiscal year.
In April 1998 the Board of Directors formed the current Nominating Committee
to recommend candidates for directorship. Current members of the Nominating
Committee are Messrs. Douglas, Hixon and Kelly, with Mr. Douglas serving as
Chairman.
During fiscal year 1998, the Board held ten meetings. Each incumbent
director attended at least 75% of the aggregate of: (i) the total number of
meetings of the Board of Directors held during the period for which he or she
has been a director; and (2) the total number of meetings held by all
committees of the Board on which he or she served during the periods for which
he or she served, except for Ms. Kesler who attended 72% of the meetings of
the Board and all committees on which she served.
DIRECTOR COMPENSATION; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
In fiscal year 1998, directors who were not employees of the Company
received an annual retainer of $15,000 and $1,500 for each of the meetings of
the Board of Directors which they attended. Members of the Compensation
Committee and Audit Committee received additional fees of $750 for each
committee meeting attended ($1,200 in the case of committee chairperson),
although members of each committee receive no compensation for action taken by
written consent without a meeting. Directors who are employees of the Company
are not compensated for Board or committee meeting attendance.
Pursuant to the Company's Amended and Restated Directors' Stock Plan, non-
employee directors receive an annual grant of an option to purchase 3,000
shares of Common Stock. The exercise price of options granted under this plan
may be no less than the fair market value of the Company's common stock on the
date of grant and all options are fully vested at the date of grant. In
addition, upon election to the Board of Directors by the shareholders,
directors will receive a grant of 3,000 shares of restricted stock.
Restrictions on the restricted stock will lapse upon the expiration of the
director's term in office.
Non-employee directors can elect to receive stock options in lieu of their
annual director fees and/or their election-year grants of restricted stock
under the Amended and Restated Directors' Stock Plan.
In fiscal year 1998, the Company made payments totaling approximately
$130,000 to Fred Elefant, currently Secretary of the Company, for legal
services rendered to the Company. During fiscal year 1998, Mr. Elefant served
as a director of the Company and a member of the Compensation and Audit
Committees.
5
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Patrick C. Kelly(1)(4)........... 51 Chairman of the Board, Chief Executive
Officer and Director
David A. Smith................... 38 Executive Vice President, Chief
Financial Officer and Director
John F. Sasen, Sr. .............. 56 Executive Vice President and Chief
Marketing Officer
Thomas A. Crowley, Jr. .......... 51 Executive Vice President--Investor
Relations & Communications
Frederick E. Dell................ 37 Chief Executive Officer of Physician
Sales & Service
James B. Stallings, Jr. ......... 43 Executive Vice President--Eastern
Region of Physician Sales & Service
Jeffrey H. Anthony............... 37 Senior Vice President--Asset Management
of Eastern Region of Physician Sales &
Service
James E. Boyd.................... 44 Senior Vice President--Diagnostics of
Physician Sales & Service
Edward D. Dienes................. 37 Senior Vice President--Central Region
of Physician Sales & Service
Douglas J. Harper................ 47 Senior Vice President and Chief
Marketing Officer of Physician Sales &
Service
Kirk Zambetti.................... 30 Chief Executive Officer of Diagnostic
Imaging, Inc.
Kathleen H. Fehling.............. 38 Chief Marketing Officer of Diagnostic
Imaging, Inc.
Gary A. Corless.................. 33 Senior Vice President--Eastern Region
of Diagnostic Imaging, Inc.
Todd M. LaVelle.................. 31 Chief Executive Officer of Gulf South
Medical Supply, Inc.
Steven L. Richardson............. 39 Chief Marketing Officer of Gulf South
Medical Supply, Inc.
Thomas G. Hixon(4)............... 54 Chairman of Gulf South Medical Supply,
Inc. and Director
Hugh M. Brown(2)................. 63 Director
T. O'Neal Douglas (1)(3)(4)...... 62 Director
Melvin Hecktman(1)............... 58 Director
Delores Kesler(3)................ 57 Director
James L.L. Tullis(1)(2).......... 51 Director
Donna C.E. Williamson(2)......... 36 Director
Charles R. Scott(3).............. 70 Director
</TABLE>
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(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Nominating Committee.
For information pertaining to the experience and background of Patrick C.
Kelly, Thomas G. Hixon, David A. Smith, Hugh M. Brown, T. O'Neal Douglas,
Melvin Hecktman, Delores P. Kesler, James L.L. Tullis, Donna C.E. Williamson
and Charles R. Scott, see "Election of Directors--Experience of Directors."
6
<PAGE>
John F. Sasen, Sr. has served as Executive Vice President and Chief
Marketing Officer of the Company since April 1998. From July 1993 to April
1998, Mr. Sasen served as a Director of the Company, and from August 1995 to
April 1998, as President and Chief Operating Officer of the Company. Mr. Sasen
served as the Chief Operating Officer of the Company from December 1993 to
March 1997 and served as Executive Vice President from August 1993 to August
1995. Prior to joining the Company in 1993, Mr. Sasen was Vice President--
Sales, Marketing and Distributor Relations for a division of Becton Dickinson
& Company ("Becton Dickinson"), a manufacturer of health care products. In
that position, Mr. Sasen directed product development and marketing efforts,
technical services, product services and customer service. Mr. Sasen was with
Becton Dickinson for over 20 years. In addition, Mr. Sasen serves as a
director of Humascan, Inc., a manufacturer of a breast thermal detection
device. Mr. Sasen is currently Chairman of the Health Industry Distributors
Association, a non-profit organization that addresses the needs of the
healthcare industry.
Thomas A Crowley, Jr. has served as the Company's Executive Vice President--
Investor Relations & Communications since June 1997. Prior to that position,
Mr. Crowley served as Vice President--Clinical Business Unit of Roche
Diagnostics, a division of F. Hoffman La-Rouche Ltd.
Frederick E. Dell has served as President and Chief Executive Officer of
Physician Sales & Service, a division of the Company, since April 1998. Mr.
Dell served as Executive Vice President of the Company and as President of
Diagnostic Imaging, Inc. ("Diagnostic Imaging"), a wholly-owned subsidiary of
the Company, from November 1996 to April 1998. Prior to these positions, Mr.
Dell served as Senior Vice President--Southern Region of the Company from
April 1996 to November 1996 and served as Vice President--Southern Region from
January 1994 to March 1996. Mr. Dell also served as Director of the Company
from July 1991 through July 1992. He served as Regional Manager and Vice
President of the Company's Western Region from December 1989 to January 1994.
James B. Stallings, Jr. has served as Executive Vice President--Eastern
Region for Physician Sales & Service since April 1998. Mr. Stallings has
served as Executive Vice President--Southern Region for the Company from March
1997 to April 1998. Mr. Stallings also served as Executive Vice President--
Sales and Marketing for the Company and WorldMed, the Company's European
operations, from May 1996 to March 1997. From July 1997 to April 1998, he was
the Company's Executive Vice President and Chief Operating Officer. Prior to
such time, from 1988 to 1996, Mr. Stallings held several positions with IBM
Corporation, a computer hardware manufacturer and software developer,
including Director of Worldwide Sales--AS/400 Division, Director of Business
Reengineering and General Manager.
Jeffrey H. Anthony has served as Senior Vice President of Asset Management--
Eastern Region for Physician Sales & Service since April 1998. He served as
Vice President and Chief Information Officer from April 1997 to March 1998.
From 1993 to 1997, Mr. Anthony served the Company in various operational
leadership positions including Regional Leader.
James E. Boyd has served as Senior Vice President--Diagnostics Division for
Physician Sales & Service since April 1996. Prior to such position, Mr. Boyd
served the Company as a marketing manager from October 1994 to March 1995 and
as Vice President--Central Region from March 1992 to September 1994.
Edward D. Dienes has served as Senior Vice President--Central Region for
Physician Sales & Service since October 1996. Prior to this position, Mr.
Dienes served as Vice President--Pacific Region beginning in April 1995. Prior
to such time, Mr. Dienes served the Company as Director of Marketing from
April 1993 to March 1995 and as General Manager, Sales Manager and Operational
Manager from August 1988 to March 1993.
Douglas J. Harper has served as Senior Vice President and Chief Marketing
Officer of Physician Sales & Service since March 1997. Prior to this position,
Mr. Harper served as Senior Vice President--Northern Region of the Company
from April 1996 to March 1997 and served as Vice President--Northern Region
from August 1995 to March 1996. He served as the Northeast Regional Manager
for Taylor Medical, Inc. ("Taylor"), a medical supply distribution company,
which was acquired by the Company in August 1995, from 1990 to August
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<PAGE>
1995. Mr. Harper founded Medco Systems/Quinoy Medical Supply, a medical supply
distribution company, which was acquired by Taylor in 1990.
Kirk A. Zambetti has served as Chief Executive Officer of Diagnostic Imaging
since April 1998. Prior to that time, Mr. Zambetti served as Vice President
for the Southern Region of Diagnostic Imaging in 1997 and 1998 and as the
General Leader in Atlanta for Diagnostic Imaging in 1997. From 1993 to 1997,
Mr. Zambetti served the Company as a branch manager and a sales manager.
Kathleen H. Fehling has served as Chief Marketing Officer of Diagnostic
Imaging since April 1998. Prior to that time, Ms. Fehling served as Executive
Vice President and Chief Operating Officer of Diagnostic Imaging since
February 1997. Prior to joining the Company, Ms. Fehling was employed by
Picker International, an imaging supply distribution company, as Vice
President of Marketing & Service from 1994 to 1997 and as National Service
Manager from 1992 to 1994.
Gary A. Corless has served as Senior Vice President--Eastern Region of
Diagnostic Imaging since April 1998. Prior to that position he served as the
Company's Vice President--Southern Region from June 1997 to March 1998. From
1993 to 1997, Mr. Corless served the Company as a regional vice president of
sales.
Todd M. LaVelle has served as Chief Executive Officer of Gulf South since
April 1998. Mr. LaVelle served as Vice President--Mid America Region of the
Company from June 1996 to April 1998. Prior to that time, Mr. LaVelle served
the Company as Vice President--Sales beginning in April 1996. In addition to
these positions, Mr. LaVelle has served the Company as Vice President--Sales &
Marketing from July 1995 to April 1996, as Regional Manager for the Pacific
Region from July 1994 to June 1995, as Diagnostic Market Leader from April
1994 to June 1994, and as Sales Manager and Sales Representative from August
1990 to March 1994.
Steven L. Richardson has served as Chief Marketing Officer of Gulf South
since April 1998. Prior to that position he served as Senior Vice President of
Operations for Gulf South from February 1996 to March 1998. Mr. Richardson
also served as Vice President of Operations for Gulf South from October 1991
to February 1996.
Executive officers of the Company are elected annually and serve at the
discretion of the Board. There are no family relationships between or among
any of the Company's directors or executive officers.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of three outside directors of the
Board who are not employees or former employees of the Company. The Committee
is responsible for the approval and oversight of the compensation program for
the Company's officers. In performing these responsibilities, the Committee
has utilized the services of an independent compensation consultant from KPMG
Peat Marwick. This report to shareholders addresses the Company's compensation
policies for the executive officers and its basis for determining the
compensation of the Chief Executive Officer for the past fiscal year.
The Compensation Committee met eight times during the past fiscal year, and
it dealt with a number of subjects described in this report. It also should be
noted that the committee's membership changed during the year due to changes
in the composition of the Board of Directors itself resulting from the
acquisition of Gulf South.
Compensation Strategy. The Compensation Committee reviewed the Company's
strategy adopted in 1994 and affirmed its continuing appropriateness. The
compensation strategy states that the goals of the executive compensation
program are to:
. enable the Company to attract and retain high quality executives by
providing total compensation opportunities and a compensation mix which
are at, or above, the relevant employment market levels, but with modest
fixed costs and leverage incentive opportunities; and
8
<PAGE>
. motivate executives to act in the best interests of shareholders by
providing substantial incentive opportunities to be earned through
performance on direct and indirect measures of long-term shareholder
value creation.
Targeted compensation levels are stated below and are followed by a more
detailed discussion of each of the three compensation elements.
. the base salary policy reflects median levels for companies of
comparable revenue size;
. annual incentive plan award opportunities are targeted at median levels
and associated with aggressive earning growth goals. Actual awards are
determined based upon how performance compares to such goals; and
. long-term incentives earned reflect contributions to shareholder value
over a long-term period, both in terms of the absolute growth in value
per share of the Common Stock and relative growth compared to a broad
sample of companies or a composite index (e.g., Nasdaq National Market).
Base Salary. Consistent with this compensation strategy, the Committee
approved at its March 13, 1998 meeting salary ranges for its executive officer
positions with competitive market data for companies having the same primary
and/or secondary SIC code as the Company. These companies had annual sales
ranging from $750.0 million to $3.0 billion with the median being
approximately $1.3 billion. This data was further supplemented with published
survey information for companies of a similar size to that of the Company.
This information was provided to the Committee and the Chief Executive Officer
by our independent compensation consultant.
The midpoints of the salary ranges were established at essentially the
competitive average. Range minimums were then established at 75% of their
respective midpoints and range maximums were established at 125% of their
respective midpoints. All executives officers were then assigned to a specific
salary amount for fiscal year 1999 within their respective salary ranges. The
approved individual salary amounts were recommended by the Company's Chief
Executive Officer after due consideration of their individual roles and new
duties and responsibilities due to the Company reorganization stemming from
the acquisition of Gulf South; and their individual qualifications,
experience, and contributions over time. In every instance, the salary
assigned to each executive officer places him/her within their respective
salary range.
Annual Incentives. With respect to annual incentive compensation, the
Committee approved new target incentive amounts as a percentage of salary
(i.e., 60% for the Chief Executive Officer position, 50% for the executive
officer positions, and 40% for the other corporate officer positions). These
modifications were made in order to keep the annual incentive opportunity
consistent with the Company's stated compensation strategy calling for
incentive targets that are established at the median levels to those of other
companies of similar size to that of the Company and with whom it competes for
human resources.
The profit target was established at the beginning of the 1998 fiscal year
based on a business plan reviewed and approved by the Compensation Committee.
The Compensation Committee also reserved the right to increase or decrease
such incentives by as much as 25% based upon the achievement, or lack thereof,
of key strategic milestones, such as number and cost of new site openings,
acquisition and growth revenues.
While the Chief Executive Officer's annual incentive compensation is based
solely upon profit performance results, other corporate staff officers have up
to 20% of their incentive opportunity based upon their assessed individual
contribution to the Company's success. Incentive amounts listed in the Summary
Compensation Table for the five highest compensated officers were paid for
results achieved during fiscal year 1998.
Long-Term Incentives. The Long-Term Stock and Long-Term Incentive Plans were
adopted in March of 1994, and continue to be utilized. These compensation
plans have the following objectives:
. award opportunities are directly linked to shareholder returns;
. award opportunities have upside potential;
9
<PAGE>
. equity is the cornerstone of the program;
. performance-based cash incentives are provided to help executives pay
taxes and exercise stock options; and
. the charge to earnings for financial reporting purposes associated with
these plans is controlled and to be kept to a reasonably low amount.
The Long-Term Stock Plan is primarily composed of non-qualified stock
options to be granted to a broad group of managers and restricted stock, which
can be granted to any employee. As pertains to the granting of stock options
to officers, the Committee has adopted a grant guideline under which a set
number of shares are annually awarded to officers based on their respective
base salary and tier responsibility level within the Company.
The Long-Term Incentive Plan provides contingent cash award opportunities to
eligible participants based upon the Company's relative total shareholder
return results as compared to all other companies on the Nasdaq National
Market. In order to receive any payment, the Company must have at least a 50th
percentile rank on a total shareholder return basis over a three-year time
period. A target award may be paid at the 60th percentile and a scale has been
created whereby a maximum award of three times the target may be earned if the
Company's total shareholder return results would place it among the top 10%
(90th percentile or above) of all Nasdaq National Market companies.
The first performance period under this plan ended on December 31, 1997 and
the Company's three year total shareholder return result placed it above the
90th percentile among the Nasdaq National Market Companies. Accordingly, the
Committee approved the payment of the earned awards to the eligible
participants.
New grants are made at the beginning of each calendar year and each is based
upon a three-year performance period. New contingent grants for the January
1998 through December 2000 performance period were approved by the Committee
for several executive position holders in accordance with the award guideline
adopted in conjunction with the Company's Compensation Strategy.
In keeping with the Company's stated compensation strategy calling for
substantial long term incentive opportunities directly associated with
creating shareholder value. The Committee approved new annualized award
opportunities as a percent of base salary (i.e., 150% for the Chief Executive
Officer, 100% for the executive officer positions, and 75% for the other
corporate officer positions).
Compensation of Chief Executive Officer. In fiscal 1998, the Chief Executive
Officer (CEO) received a base salary of $535,000. The Compensation Committee
has approved the CEO's base salary of $500,000 for fiscal year 1999. These
salary levels were approved by the Compensation Committee after considering
compensation information from the companies in the Peer Index, the
responsibilities and the specific skills of the CEO as they relate to the
needs of the Company and the cost of living. Our independent compensation
consultants have confirmed that this salary level is below the midpoint of the
salary range for this position.
The annual incentive award of $128,400 for fiscal year 1998 paid to the CEO
was determined based upon the annual incentive plan profit targets that the
Committee reviewed and approved for fiscal 1998 at its meeting in March of
1997. In addition, contingent units were granted to Mr. Kelly under the 1994
Long-Term Incentive Plan. The value of this grant, if any, will be determined
as of December 31, 2000. Upon completion of the first performance period which
ended December 31, 1997 under the 1994 Long-Term Incentive Plan, Mr. Kelly
received a payout of $487,500.
Other Considerations:
1) In 1993, the Internal Revenue Code was amended (Section 162(m) to limit
the deductibility of certain nonperformance based compensation expenses in
excess of $1.0 million. Section 162(m) generally disallows a
10
<PAGE>
tax deduction for compensation over $1.0 million paid to an executive officer
named in the Summary Compensation Table, unless such compensation qualifies as
performance-based. The Committee is aware that the compensation payable for
the 1998 fiscal year will not result in any loss of tax deduction for the
Company, since no individual received compensation in excess of $1.0 million.
However, the Company has previously qualified its compensation program, and
any and all amounts paid under it, as performance-based, and therefore, fully
deductible as compensation expense. It is the intent of the Committee that all
future amounts paid under the compensation program will also meet this
performance-based standard.
2) While not a compensatory matter per se, the Compensation Committee did
concur in the granting of a loan to the Chief Executive Officer. The loan was
made so that he would not have a need to reduce his stock interests in the
Company. To have had to do so was felt to send an inappropriate message to
present and prospective shareholders about the Company's near term and longer-
term expectations for success. The original loan amount was $3.0 million, and
interest is paid on this amount at a rate established by the Committee. The
interest rate can be adjusted by the Committee but never to a rate below the
Internal Revenue Service minimum imputed interest rate. In this way neither a
tax obligation is created for the CEO nor is a charge to earnings required of
the Company. The remaining principal amount outstanding as of the end of
fiscal year 1998 was $2.7 million.
3) A second matter reviewed by the Committee during this past fiscal year
was that of a proposed voluntary income deferral plan. This plan was adopted
in fiscal 1997 for sales force personnel. Their initial reaction and
participation levels were quite high and thus the plan was reviewed and
recommended for executive management personnel as well.
The plan is called the Officer Deferral Incentive Program. Under it an
executive can convert salary and/or annual incentive amounts into either a
premium priced stock option or a fixed and guaranteed rate of return at a
future date (i.e. retirement). The Company will match a portion of the amount
deferred by the executive. The match varies from 50% to 125% of the amount the
individual chooses to defer up to 15% of his/her annual cash compensation
depending on officer class. So as to minimize any charge to earnings
associated with the plan, the Company will purchase and own life insurance on
any participating executive. In effect, the life insurance will cover the
Company's cost associated with both the guaranteed interest rate on the amount
deferred and the match percentage provided to each participant. Initially the
stock option shares that may be involved in this voluntary plan will be drawn
from the presently authorized shares available for stock option grant
purposes.
4) The Committee along with the full Board of Directors reviewed the stock
option grants made on July 8, 1996 at a then fair market value of $23.94 and
determined that they should be repriced as of June 13, 1997 at the then fair
market value of $14.75. In order for this repricing to take effect the
optionee will have to be employed by the Company or any of its affiliates or
successors as of June 13, 1999. This decision was made after considerable
deliberation and discussion for we recognize the fact that our shareholders
are not afforded such an opportunity. However, the Committee and the full
Board of Directors concluded that the incentive value of these options had
been seriously compromised, and that their repricing would greatly enhance
their retention value. This determination is further detailed in the following
report of the Committee.
Respectfully submitted,
The Compensation Committee
Delmer W. Dallas, Chairman
Fred Elefant
Delores P. Kesler
REPORT ON REPRICING OF STOCK OPTIONS
At its meeting on June 13-14, 1997 the Compensation Committee met with the
other outside directors to consider the propriety of repricing the options
granted on January 10, 1996 and July 8, 1996 to the named
11
<PAGE>
executive officers, other officer and employee option recipients, and outside
directors. These options had all been granted at the then fair market values
of $22.13 and $23.94 per common share, respectively. The fair market value on
June 13, 1997 was $14.75.
After due consideration the Board of Directors concluded that a repricing of
these previously granted stock options was in the best interest of both the
optionees and our shareholders. Therefore, the Board of Directors adopted
resolutions which had the effect of changing the exercise price of these
options from the fair market value of a common share on January 10, 1996 and
July 8, 1996, respectively, to the fair market value of a common share on June
13, 1997. This was accomplished by granting substitute options for the
replaced options. The vesting schedule and exercise term remained unchanged
from when the options were originally granted. However, in order for the
repricing to take effect, the optionee will have to be employed by the Company
or any of its affiliates or successors as of June 13, 1999.
The decision to reprice these options was an acknowledgment by the Committee
and the Board as to the importance of our optionees to the success of the
Company, as well as, the importance of stock options to these many optionees.
In approving the repricing of these stock options the Committee and Board
considered the extremely competitive environment for obtaining and retaining
talented employees and the overall benefit to the shareholders by having a
highly motivated workforce. The provision requiring continuing service for two
years after the date of the conditioned repricing should help the Company
retain its critical employees.
The total number of shares so repriced under these resolutions was 381,866
and the following table details their attributes as pertains to the executive
officers.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
NUMBER OF
SECURITIES MARKET PRICE OF EXERCISE PRICE LENGTH OF ORIGINAL
UNDERLYING STOCK AT TIME OF AT TIME OF OPTION TERM
OPTIONS REPRICING OR REPRICING NEW EXERCISE REMAINING AT DATE OF
NAME DATE REPRICED(#)(1) AMENDMENT($) ($)(2) PRICE($) REPRICING
- ---- ------- -------------- ---------------- -------------- ------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
Patrick C. Kelly........ 6/13/97 33,333 14.75 23.94 14.75 9 years and 1 month
6/13/97 70,000 14.75 22.13 14.75 8 years and 7 months
John F. Sasen, Sr. ..... 6/13/97 13,157 14.75 23.94 14.75 9 years and 1 month
David A. Smith.......... 6/13/97 9,045 14.75 23.94 14.75 9 years and 1 month
Frederick E. Dell....... 6/13/97 4,217 14.75 23.94 14.75 9 years and 1 month
Thomas G. Hixon......... -- -- -- -- -- --
</TABLE>
12
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The following table presents certain summary information concerning
compensation paid or accrued by the Company, for services rendered in all
capacities for the three fiscal years ended April 3, 1998, for its Chief
Executive Officer and the four most highly compensated officers other than the
Chief Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------- --------------------
SECURITIES LONG-TERM
NAME AND PRINCIPAL UNDERLYING INCENTIVE ALL OTHER
POSITION YEAR SALARY(1) BONUS(2) OPTIONS(3) PLAN(4) COMPENSATION(5)
- ------------------ ---- --------- -------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Patrick C. Kelly........ 1998 $535,000 $128,400 403,242 $487,500 $12,006
Chairman of the Board 1997 475,000 76,000 70,000 -- 58,001
and Chief Executive 1996 360,000 154,800 290,462 -- 30,434
Officer
John F. Sasen, Sr. ..... 1998 330,000 52,800 42,667 173,250 1,753
Executive Vice 1997 300,000 36,000 13,157 -- 1,573
President and Chief 1996 212,083 69,300 54,282 -- 4,427
Marketing Officer(6)
David A. Smith.......... 1998 255,000 45,880 32,970 101,250 870
Executive Vice 1997 235,000 28,200 9,045 -- 870
President and Chief 1996 145,799 47,850 31,251 -- 2,628
Financial Officer
Frederick E. Dell....... 1998 200,000 48,000 25,859 70,380 689
Chief Executive Officer 1997 170,000 21,591 4,217 -- 504
of Physician Sales & 1996 138,000 15,660 21,084 -- 2,630
Service (7)
Thomas G. Hixon......... 1998 200,000 91,088 70,000 -- --
Chairman of Gulf South
Medical Supply, Inc.(8)
</TABLE>
- --------
(1) Total base salary earned during the fiscal years presented.
(2) Annual incentive award paid for results achieved during the fiscal years
presented. Any amounts deferred at the election of the executive are
included in the reported amounts.
(3) Grants of stock options made during the fiscal years presented. These
awards were made under the Company's Amended and Restated 1994 Long Term
Incentive Plan, Amended and Restated 1994 Long Term Stock Plan and the
1997 Gulf South Medical Supply, Inc. Stock Option Plan.
(4) Reflects payouts for the first performance period which ended December 31,
1997 under the Company's 1994 Amended and Restated Long-Term Incentive
Plan.
(5) All other compensation which is not included in the aforementioned
categories. Amounts shown in this column include the following payments
for fiscal year 1998: (i) for Mr. Kelly, $506 for PSS contributions to the
Employee Stock Ownership Plan (the "ESOP"), and $11,500 for total premiums
under a key-man life insurance policy; (ii) for Mr. Sasen, $493 for PSS
contributions to the ESOP and $1,260 for imputed income under a split
dollar life insurance policy; (iii) for Mr. Smith, $500 for PSS
contributions to the ESOP and $370 for imputed income under a split dollar
life insurance policy; (iv) for Mr. Dell, $319 for PSS contributions to
the ESOP and $370 for imputed income under a split dollar life insurance
policy.
(6) Mr. Sasen served as President and Chief Operating Officer of the Company
during fiscal year 1998.
(7) Mr. Dell served as Executive Vice President of the Company and President
of Diagnostic Imaging, Inc. during fiscal year 1998.
(8) Mr. Hixon was employed by Gulf South Medical Supply, Inc. during fiscal
years 1996 and 1997. Mr. Hixon served as President and Chief Executive
Officer of Gulf South during fiscal year 1998 and as President and Chief
Operating Officer for the Company at the end of fiscal year 1998.
13
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1998
The following table contains information concerning the grant of stock
options made during fiscal year 1998 pursuant to the Company's option plans:
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ACTUARIAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(3)
------------------------------------------------------- ---------------------
PERCENTAGE
NUMBER OF OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES
OPTIONS IN FISCAL EXERCISE PRICE EXPIRATION
NAME GRANTED(1) YEAR 1998 ($/SH)(2) DATE 5% 10%
- ---- ---------- ---------------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Patrick C. Kelly........ 150,000(4) 11.9% $22.00 10/7/07 $2,075,352 $5,259,350
253,242 20.1 14.75 6/13/07 2,349,122 5,951,187
John F. Sasen, Sr....... 42,667 3.4 14.75 6/13/07 395,787 1,003,003
David A. Smith.......... 32,970 2.6 14.75 6/13/07 305,836 775,048
Frederick E. Dell....... 25,859 2.1 14.75 6/13/07 239,873 607,886
Thomas G. Hixon......... 70,000 5.6 20.50 2/26/08 902,464 2,287,020
</TABLE>
- --------
(1) The options granted in fiscal year 1998 to Messrs. Kelly, Sasen, Smith and
Dell are exercisable immediately and expire ten years from the date of
grant. Of the 70,000 options granted in fiscal year 1998 to Mr. Hixon,
only 14,000 are currently exercisable. All of the options granted to Mr.
Hixon in fiscal year 1998 expire ten years from the date of grant.
(2) In fiscal year 1998, the named executive officers were granted options to
acquire an aggregate of 574,738 shares of Common Stock at an exercise
price of fair market value as of the date of grant.
(3) The dollar amount under the columns assumes that the market price of the
Common Stock from the date of the option grant appreciates at cumulative
annual rates of 5% and 10%, respectively, over the term of each option
granted in fiscal year 1998. The assumed rates of 5% and 10% were
established by the Securities and Exchange Commission and therefore are
not intended to forecast possible future appreciation, if any, of the
price or value of the Common Stock.
(4) Represent options granted in advance under Mr. Kelly's employment
agreement. Options were not exercisable until July 1, 1998.
OPTION EXERCISES AND HOLDING AS OF APRIL 3, 1998
The following table sets forth information regarding stock options exercised
in fiscal year 1998 by each of the named executive officers and the value of
the unexercised options held by these individuals as of April 3, 1998, based
on the market value of the Common Stock on that date:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998 AND OPTION VALUES AS OF APRIL
3, 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES APRIL 3, 1998 APRIL 3, 1998(1)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Patrick C. Kelly........ 190,000 $2,872,150 506,806 150,000 $3,853,262 $ 75,000
John F. Sasen, Sr. ..... -- -- 110,106 -- 744,570 --
David A. Smith.......... -- -- 73,266 -- 493,806 --
Frederick E. Dell....... -- -- 66,160 -- 643,668 --
Thomas G. Hixon......... -- -- 216,213 -- 902,649 --
</TABLE>
- --------
(1) Based upon the closing price of $22.50 of the Common Stock on the Nasdaq
National Market on April 3, 1998.
14
<PAGE>
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF NON-STOCK PRICE-BASED PLAN
PERFORMANCE PERIOD UNTIL ---------------------------------
NAME UNITS(1) PAYOUT THRESHOLD(2) TARGET(3) MAXIMUM(4)
- ---- ----------- --------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Patrick C. Kelly........ 268 1/1/98-12/31/00 $133,750 $267,500 $802,500
John F. Sasen, Sr....... 109 1/1/98-12/31/00 54,450 108,900 326,700
David A. Smith.......... 84 1/1/98-12/31/00 42,075 84,150 252,450
Frederick E. Dell....... 79 1/1/98-12/31/00 39,600 79,200 237,600
Thomas G. Hixon......... -- -- -- -- --
</TABLE>
- --------
(1) Under the Company's 1994 Long Term Incentive Plan, officers of the Company
may be awarded a certain number of Performance Units each year equal to a
percentage of the officer's salary. Each Performance Unit granted has a
target value of $1,000 assuming the Company's total shareholder return
result is in the 60th percentile of peer group companies. The actual value
of each Performance Unit depends on the Company's performance over a
period of three fiscal years, beginning on the effective date of the
award.
(2) The threshold amounts shown are based upon the Company achieving a total
shareholder return result in the 50th percentile of peer group companies,
at which point each Unit granted will have a value of $500.
(3) The target amounts shown are based upon the Company achieving a total
shareholder return result in the 60th percentile of peer group companies,
at which point each Unit granted will have a value of $1,000.
(4) The maximum amounts shown are based upon the Company achieving a total
shareholder return result in the 90th percentile or greater of peer group
companies, at which point each Unit granted will have a value of three
times the target value, or $3,000.
15
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Common Stock
to the Nasdaq National Market Composite index and a line-of-business index of
selected peer companies assuming $100 was invested and all dividends, if any,
were reinvested. The graph covers the period from May 5, 1994, the date of the
Company's initial public offering, to the Company's fiscal year ended on April
3, 1998. The Company did not pay dividends during the period covered by this
graph. The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURNS
PSS WORLD MEDICAL, INC.
[PERFORMANCE GRAPH APPEARS HERE]
Cumulative Total Return
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
--------------------------------
<S> <C> <C> <C> <C> <C>
PSS WORLD MEDICAL, INC. 100 231 535 281 486
NEW PEER GROUP 100 117 158 181 274
OLD PEER GROUP 100 117 158 181 273
NASDAQ STOCK MARKET 100 112 152 172 258
(U.S.)
</TABLE>
- --------
(1) The New Peer Group is comprised of Allegiance Corporation, Amerisource
Health Corporation, Baxter International Inc., Bergen Brunswig
Corporation, Cardinal Health, Inc., Henry Schein, Inc., McKesson
Corporation, Moore Medical Corp., Owens and Minor, Inc. and Patterson
Dental Company.
(2) The Old Peer group was comprised of the same members as the New Peer Group
listed in footnote 1 above, except the Old Peer Group (i) included Gulf
South Medical Supply, Inc., which was acquired by the Company, (ii)
included MicroBioMedics, Inc. and Sullivan Dental Products which were
acquired by Henry Schein, Inc. and (iii) excluded Allegiance Corporation,
Henry Schein, Inc. and Amerisource Health Corporation.
16
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of its named
executive officers, which include the terms described below:
Term. Mr. Kelly's employment agreement is an initial period of five years
expiring March 3, 2003, and can be was renewed for a five-year period ending
June March 3, 2008. The other executive officers' employment agreements are
for terms of two years and are automatically renewable for additional two year
terms.
Covenants not to compete. Each executive officer has agreed not to compete
with the Company for a period of 18 months following the termination of his
employment within the territory in which the Company is then operating.
The covenants not to compete are not valid upon the occurrence of certain
events. In Mr. Kelly's employment agreement, such events include either (i)
Mr. Kelly no longer being employed as Chairman of the Board and/or Chief
Executive Officer or (ii) the acquisition of a voting majority of the issued
and outstanding capital stock of the Company by an outside entity. In the
other executive officers' employment agreements, such events include, in
addition to those set forth in the previous sentence, Mr. Kelly no longer
being employed by or resigning his employment with the Company or, following
Mr. Kelly's death or disability.
Termination. Each employment agreement includes several provisions requiring
the Company to make certain payments upon the occurrence of certain events.
Following Mr. Kelly's termination by the Company for any reason except for
good cause or if Mr. Kelly resigns from the Company for good cause, the
Company is required to pay Mr. Kelly's full salary for 24 months following
such termination or resignation, and to provide Mr. Kelly with insurance
coverage during that period. In addition, the Company is required to
repurchase up to 50% of the Common Stock owned by Mr. Kelly at its market
value within 30 days of demand by Mr. Kelly at any time during the 24 month
period. During that period, Mr. Kelly is entitled to have his shares of Common
Stock registered in the event that securities held by any persons who are at
such time members of Board of Directors are registered. The other executive
officers have similar rights as to payment of salary, provision of insurance
benefits, repurchase of up to 20% of their Common Stock and registration of
Common Stock for a period of six months.
Upon a change in control of the Company, if the Company then terminates Mr.
Kelly's employment or if Mr. Kelly resigns, the Company is required to pay Mr.
Kelly's salary and provide Mr. Kelly with insurance coverage for a period of
three years and to repurchase all of Mr. Kelly's Common Stock at its market
value upon demand. A change in control of the Company is defined as the
resignation, removal or failure to re-elect Mr. Kelly as a director of the
Company, or following Mr. Kelly's death or disability. Mr. Kelly is also
entitled to reimbursement of up to $100,000 per year for office, secretarial,
and related expenses. In this case, Mr. Kelly also has registration rights as
described above during such three-year period. The other executive officers
have similar rights for a period of one year in the event of their termination
or resignation following a change in control of the Company.
If the Company terminates Mr. Kelly for cause, or if Mr. Kelly resigns from
the Company without good reason, Mr. Kelly is entitled to receive his salary
and full insurance coverage for a period of 12 months or, if earlier, until
his employment with another company. The other executive officers have similar
rights for a period of three months or, if earlier, until their employment
with another company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Fred Elefant, Secretary of the Company, provides legal services to the
Company. Mr. Elefant also served as a member of the Board of Directors of the
Company during fiscal year 1998. Fees for such legal services were
approximately $130,000 in fiscal year 1998.
17
<PAGE>
BENEFICIAL OWNERSHIP OF EQUITY SECURITIES
The following table reflects the number of shares of Common Stock
beneficially owned as of April 3, 1998, by (i) each person who is known by the
Company to beneficially own more than 5% of the outstanding Common Stock, (ii)
each of the executive officers named in the Summary Compensation Table, (iii)
each director, and (iv) all of the Company's executive officers and directors
as a group. Unless otherwise noted, the address of the following beneficial
owners is 4345 Southpoint Boulevard, Jacksonville, Florida 32216. Also unless
otherwise noted, all shares are owned directly with sole voting and
dispositive powers.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME SHARES TOTAL(1)
---- --------- ----------
<S> <C> <C>
The Kaufmann Fund, Inc.(2)............................... 3,915,000 5.6%
Patrick C. Kelly(4)(3)................................... 1,318,342 1.9%
Thomas G. Hixon(3)....................................... 3,132,719 4.5%
David A. Smith(3)........................................ 209,802 *
John F. Sasen(3)......................................... 230,096 *
Frederick E. Dell(3)..................................... 241,225 *
James B. Stallings, Jr.(3)............................... 49,566 *
Hugh M. Brown............................................ 7,143 *
T. O'Neal Douglas........................................ 45,196 *
Melvin L. Hecktman....................................... 80,500 *
Delores P. Kesler........................................ 42,886 *
James L.L. Tullis........................................ 373,208 *
Donna C.E. Williamson.................................... 10,500 *
Charles R. Scott......................................... 0 *
All Executive Officers and Directors as a group (27
persons)(3)............................................. 6,420,964 9.2%
</TABLE>
- --------
* Less than 1%
(1) Based upon 69,859,374 shares of Common Stock outstanding as of July 2,
1998.
(2) The address for The Kaufmann Fund, Inc. is 140 E. 45th Street, 43rd Floor,
New York, New York 10017. All information regarding the foregoing
shareholder was obtained solely from Schedule 13G/A filed by The Kaufmann
Fund, Inc. on January 29, 1998.
(3) Included in such beneficial ownership are shares of Common Stock issuable
upon the exercise of certain options exercisable immediately or within 60
days of April 3, 1998 as follows: Mr. Kelly, 506,806 shares; Mr. Hixon,
166,213 shares; Mr. Smith, 73,266 shares; Mr. Sasen, 110,106 shares; Mr.
Dell, 66,160 shares; Mr. Tullis, 28,478 shares, Ms. Williamson, 10,500
shares; Mr. Douglas, 28,696 shares; Ms. Kesler, 20,186 shares; and Mr.
Stallings, 44,566 shares; and executive officers and directors as a group,
1,838,142 shares. Also included in such beneficial ownership are shares
held for the account of certain individuals by the ESOP as follows: Mr.
Kelly, 154,730 shares; Mr. Smith, 16,386 shares; Mr. Sasen, 11,141 shares;
Mr. Dell, 64,248 shares; and all executive officers and directors as a
group, 283,300 shares. In addition, shares held in the Company's 401(k)
Plan are included in such beneficial ownership as follows: Mr. Kelly,
48,715 shares; Mr. Dell, 31,948 shares; Mr. Sasen, 7,983 shares; Mr.
Smith, 9,881 shares; and all executive officers and directors as a group,
176,440 shares.
(4) Includes 127,881 shares owned by Tullis Dickerson Capital Focus, L.P. and
11,020 shares owned by Tullis Dickerson Partners. Mr. Tullis is the
general partner of Tullis-Dickerson Partners, the sole general partner of
Tullis-Dickerson Capital Focus, L.P. Also includes 6,000 shares owned by
Mr. Tullis's wife, Linda A. Tullis.
18
<PAGE>
PROPOSAL 2: RATIFICATION OF ADOPTION OF THE
AMENDED AND RESTATED DIRECTORS' STOCK PLAN
INTRODUCTION
On June 13, 1997, the Company's Amended and Restated Directors' Stock Plan
(the "Plan") was amended and restated by the Board in order to: (i) increase
the number of annual option grants to non-employee directors under the Plan
from 1,500 to 3,000; (ii) increase the number of election-year restricted
stock awards to non-employee directors under the Plan from 1,500 to 3,000;
(iii) permit the Committee to make discretionary grants of options under the
Plan in addition to the automatic annual grants to non-employee directors;
(iv) permit non-employee directors to elect to receive stock options in lieu
of their annual director fees and/or their election-year grants of restricted
stock under the Plan; (v) change the definition of "change in control" of the
Company to more closely coincide with such definition in use generally by the
Company in other contexts; and (vi) make certain technical amendments to the
Plan to comply with current securities laws under Section 16 of the Securities
Exchange Act of 1934. The Board of Directors has subsequently adopted, subject
to shareholder approval at the Annual Meeting, an additional amendment to the
Plan to increase the number of shares of Common Stock available for the grant
of options and restricted stock under the Plan from 200,000 to 400,000 (the
"Proposed Amendment").
The Board of Directors believes that the Plan increases the Company's
ability to attract and retain highly qualified outside directors, and that the
Proposed Amendment is needed to continue and expand upon such benefits
provided by the Plan. As of July 29, 1998, there were seven non-employee
directors eligible to participate in the Plan.
THE FOLLOWING IS A SUMMARY OF THE PRINCIPAL FEATURES OF THE PLAN, BUT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE PLAN AS
AMENDED, AND AS PROPOSED TO BE FURTHER AMENDED, SET FORTH AS EXHIBIT 1 TO THIS
PROXY STATEMENT. SHAREHOLDERS ARE URGED TO READ THE ACTUAL TEXT OF THE PLAN.
PURPOSE
The purpose of the Plan is to enable 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.
SHARES SUBJECT TO THE PLAN
A total of 200,000 shares of the Company's Common Stock have been reserved
for issuance upon the exercise of options or upon the grant of restricted
stock awards under the Plan. The Proposed Amendment increases the number of
shares of Common Stock reserved for issuance under the Plan from 200,000 to
400,000 shares of Common Stock. In the event any change in or affecting the
corporate structure or capitalization of the Company, the Board will make
adjustments in the number and kind of shares authorized by the Plan, in the
number, exercise price or kind of shares covered by outstanding awards, and in
any outstanding awards under the Plan, in order to prevent substantial
dilution or enlargement thereof. If any award terminates for any reason
without having been exercised, or any award is forfeited, the shares of Common
Stock not issued will then become available for additional grants under the
Plan.
ADMINISTRATION
The Plan is administered by the Compensation Committee or any other
committee of the Board consisting of at least two directors. The Committee has
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 may appoint a plan administrator to
carry out the ministerial functions of the Plan, but the administrator will
have no other authority or powers of the Committee.
19
<PAGE>
AMENDMENT OF THE PLAN
The Board or the Committee may, at any time and from time to time, amend,
modify or terminate the Plan without stockholder approval; provided, however,
that the Board or Committee may condition any amendment or modification on the
approval of stockholders of the Company if such approval is necessary or
deemed advisable with respect to tax, securities or other applicable laws,
policies or regulations. No termination, amendment, or modification of the
Plan may adversely affect any award previously granted under the Plan, without
the written consent of the participant.
ELIGIBILITY
Only non-employee directors of the Company (or its subsidiaries designated
by the Committee) are eligible to receive awards under the Plan.
TERMS OF AWARDS
Grant of Annual Options. Each non-employee director will automatically
receive on the date of each annual meeting of the Company's shareholders at
which directors are elected ("Annual Meeting Date") during the period such
director serves as a non-employee director, an Option to purchase 3,000 shares
of Common Stock ("Annual Options"). The option price per share of an Annual
Option will be the fair market value of the Common Stock on the date the
option is granted. Annual Options have a term of ten years and will terminate
earlier upon the termination of the holder's service as a director. Annual
Options are immediately exercisable in whole or in part.
Replacement Options. A non-employee director may elect to defer all (but not
less than all) of (i) his or her director compensation ("Fees") and/or (ii)
awards of restricted stock under the Plan for a plan year, by conversion to
options in accordance with the Plan ("Replacement Options"). If Replacement
Options are to be granted in lieu of Fees, the number of options to be granted
will be calculated by dividing (i) the estimated Fees payable to such
participant during the year, based on the number of scheduled meetings during
the year, by (ii) 45% of the fair market value per share of the Common Stock
on the date of grant, and rounding such quotient up to the nearest whole
share. If Replacement Options are to be granted in lieu of restricted stock
awards, the number of options to be granted will be calculated by dividing (i)
the aggregate fair market value (on the date of grant of the Replacement
Options) of the shares of restricted stock that otherwise would be granted, by
(ii) 45% of the fair market value per share of the Common Stock on the date of
grant, and rounding such quotient up to the nearest whole share.
The option price per share of a Replacement Option will be the fair market
value of the Common Stock on the date of grant. Replacement Options have a
term of ten years and will terminate earlier upon the termination of the
holder's service as a director. Replacement Options are immediately
exercisable in whole or in part.
Discretionary Options. In addition to Annual Options and Replacement
Options, the Committee is authorized to grant options to non-employee
directors on a discretionary basis ("Discretionary Options"). The exercise
price and other terms of a Discretionary Option will be determined by the
Committee.
Restricted Stock Awards. Each non-employee director of the Company who has
not elected to receive Replacement Options in lieu thereof (as described
above) will receive, on each Annual Meeting Date at which he or she is elected
or re-elected as a director, a grant of 3,000 shares of Common Stock subject
to the following restrictions; provided however, that any non-employee
director elected to fill a vacancy for a term of less than three years will
receive a grant of 1,000 shares per year for each full year of the term to
which such non-employee director is elected. Until the end of such current
term as a director, the shares of restricted stock so granted may not be
transferred and will be subject to a risk of forfeiture if the holder ceases
to
20
<PAGE>
be a director for any reason other than death, disability or retirement.
During the restricted period, holder of restricted stock will be entitled to
receive all dividends and other distributions paid with respect to such
shares.
Change in Control. Upon a change in control of the Company (as defined in
the Plan) all options granted under the Plan will immediately become
exercisable, and all restrictions on restricted shares will lapse, effective
as of the date such change in control occurs.
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING DISCUSSION OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
IS INTENDED TO BE A SUMMARY OF APPLICABLE FEDERAL INCOME TAX LAW. STATE AND
LOCAL TAX CONSEQUENCES MAY DIFFER.
Stock Options. Options granted under the Plan are nonqualified stock options
("NSOs"). A participant is not taxed on the grant of an NSO. Upon exercise,
however, the participant recognizes ordinary income equal to the difference
between the exercise price and the fair market value of the shares on the date
of the exercise. The Company is entitled to an income tax deduction in the
year of exercise in the amount recognized by the participant as ordinary
income. Any gain on subsequent disposition of the shares will be capital gain
if the shares are held for at least 12 months following exercise. The Company
does not receive an income tax deduction for this gain. Under recently enacted
legislation, capital gains recognized by recipients generally will be subject
to a maximum federal income tax rate of 20% if the shares sold or exchanged
are held for more than 18 months, and to a maximum federal income tax rate of
28% if such shares are held for more than one year but less than or equal to
18 months.
Restricted Stock. Unless a recipient of a restricted stock award makes an
election to accelerate recognition of income to the grant date (which is not
permitted under the terms of the Plan), the participant will not recognize
income upon the grant of the restricted stock award. When the restrictions are
deemed to have lapsed under applicable tax rules, the participant recognizes
ordinary income in an amount equal to the fair market value of shares of
Common Stock to which the restricted stock award relates, and the Company is
entitled to an income tax deduction equal to such amount.
BENEFITS TO NON-EMPLOYEE DIRECTORS
Only non-employee directors are permitted to participate in the Plan. The
following table sets forth the options and restricted stock awards granted
under the Plan as of July 28, 1998. The Committee has not yet made any
determination as to future discretionary grants of options to non-employee
directors.
<TABLE>
<CAPTION>
DOLLAR VALUE SHARES OF DOLLAR VALUE NUMBER
NAME AND POSITION ($)(1) RESTRICTED STOCK ($) OF OPTIONS
- ----------------- ------------ ---------------- ------------ ----------
<S> <C> <C> <C> <C>
All current directors
that are not executive
officers as a group
(10 people) (3)....... $202,500 13,500 $363,278(2) 197,509
</TABLE>
- --------
(1) This value is based on the market price of the Common Stock on July 28,
1998.
(2) This value for each outstanding option will be equal to the excess, if
any, of fair market value of the Common Stock on the date of exercise over
the option exercise price.
(3) Includes options and restricted stock award grants under the Plan made to
three non-employee directors who served during fiscal year 1998, but are
no longer directors of the Company.
21
<PAGE>
APPROVAL BY SHAREHOLDERS
The affirmative vote of a majority of the Common Stock of the Company
entitled to notice of and to vote at the Annual Meeting is required to ratify
the adoption of the Amended and Restated Directors' Stock Plan. The vote shall
be counted as described in the Introduction to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
RATIFICATION OF THE ADOPTION OF THE AMENDED AND RESTATED DIRECTORS' STOCK PLAN
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP, independent
certified public accountants, as the Company's auditors for the fiscal year
ending April 2, 1999. Representatives of Arthur Andersen LLP will be present
at the Annual Meeting to respond to appropriate questions and to make such
statements as they may desire.
SHAREHOLDER PROPOSALS
Shareholders who wish a proposal to be included in the Company's proxy
statement and form of proxy relating to the 1999 Annual Meeting should deliver
a written copy of their proposal to the Company no later than March 30, 1999.
Proposals should be directed to the Chief Financial Officer, PSS World
Medical, Inc., 4345 Southpoint Boulevard, Jacksonville, Florida 32216.
OTHER MATTERS
EXPENSES OF SOLICITATION
The cost of soliciting proxies in the accompanying form will be borne by the
Company. In addition to the use of the mail, proxies may be solicited by
directors, officers or other employees of the Company, personally, or by
telephone. The Company does not expect to pay any compensation for the
solicitation of proxies, but may reimburse brokers, custodians or other
persons holding stock in their names or in the names of the nominees for their
expenses in sending proxy materials to principals and obtaining their
instructions.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
certain officers of the Company and its directors, and persons who
beneficially own more than ten percent of any registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the Company.
Based solely on a review of the reports provided to the Company by the above
referenced persons, the Company believes that as of the date of this Proxy
Statement all filing requirements applicable to its reporting officers,
directors and greater than ten percent beneficial owners were properly and
timely complied with, except for the Form 4 filings for Kathleen H. Fehling
and William C. Mason.
MISCELLANEOUS
Management does not know of any matters to be brought before the Annual
Meeting other than as described in this Proxy Statement. Should any other
matters properly come before the Annual Meeting, the persons designated as
proxies will vote in their sole discretion on such matters.
22
<PAGE>
EXHIBIT 1
PSS WORLD MEDICAL, INC.
AMENDED AND RESTATED
DIRECTORS' STOCK PLAN
I. GENERAL
1.1 PURPOSE OF THE PLAN
The purpose of the PSS World Medical, Inc. Directors' Stock Plan is to
enable PSS World Medical, Inc. 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.
1.2 DEFINITIONS
The following definitions shall apply to the Plan:
"Annual Meeting Date" means the date of each annual meeting of
shareholders of the Company at which directors are elected.
"Annual Option" means an Option automatically granted to a Non-Employee
Director pursuant to Section 2.1 of the Plan.
"Award" means any Option or Restricted Stock award granted to a
Participant under the Plan.
"Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
"Board" means the Board of Directors of the Company.
"Change in Control" has the meaning assigned such term in Section 4.11.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the committee of the Board described in Section 1.3.
"Common Stock" means the $0.01 par value common stock of the Company and
such other securities of the Company as may be substituted for Common Stock
pursuant to Section 4.2.
"Company" means PSS World Medical, Inc., a Florida corporation.
"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.
"Discretionary Option" means an Option granted under Section 2.3.
"Election Form" means a form approved by the Committee pursuant to which
a Non-Employee Director elects to receive Replacement Options under Section
2.2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"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.
"Fees" means the annual cash retainer fee and meeting fees payable by the
Company (or a Participating Subsidiary) to a Non-Employee Director for
services as a director (and, if applicable, as the member or chairman of a
committee of the Board), as such amount may be changed from time to time.
23
<PAGE>
"Non-Employee Director" means a director of the Company or of any
Participating Subsidiary who is not at the time serving as an employee of
the Company or any of its Subsidiaries.
"Option" means an Annual Option, a Replacement Option or a Discretionary
Option.
"Options Election Period" means the period designated by the Committee
each year during which Non-Employee Directors may elect to receive Options
in lieu of Fees and/or Restricted Stock Awards. The Options Election Period
shall end on or before June 13, 1997, with respect to Plan Year 1997, and
March 1 of each subsequent year for the following Plan Year.
"Participant" means a person who, as a Non-Employee Director, has been
granted an Award under the Plan.
"Participating Subsidiary" means any Subsidiary designated by the
Committee whose non-employee directors are eligible to receive Awards under
the Plan.
"Plan" means the PSS World Medical, Inc. Directors' Stock Plan, as
amended from time to time.
"Plan Year" means the fiscal year of the Company.
"Replacement Option" means an Option granted to a Non-Employee Director
pursuant to Section 2.2 of the Plan.
"Restricted Stock" means Common Stock granted under Article III which is
subject to the restrictions described therein.
"Retirement" shall have the meaning provided in the Company's retirement
policy applicable to directors of the Company or its Subsidiaries.
"Subsidiary" means any corporation, limited liability company,
partnership or other entity of which a majority of the outstanding voting
stock or voting power is beneficially owned directly or indirectly by the
Company.
1.3 ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee or any other
committee of the Board consisting of at least two directors. The Committee
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 directors 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. It is intended that the directors appointed to serve
on the Committee shall be "non-employee directors" within the meaning of Rule
16b-3 promulgated under the Exchange Act. However, the mere fact that a
Committee member shall fail to qualify under such requirements shall not
invalidate any Award made by the Committee which Award is otherwise validly
made under the Plan. The Committee may appoint a plan administrator to carry
out the ministerial functions of the Plan, but the administrator shall have no
other authority or powers of the Committee.
Without limiting the foregoing, the Committee has the exclusive power,
authority and discretion to:
(a) Designate and change the Participating Subsidiaries from time to
time;
(b) Make all determinations concerning Discretionary Options, including
the terms, timing, amounts and recipients thereof;
(c) Accelerate the vesting or lapse of restrictions of any outstanding
Award, based in each case on such considerations as the Committee in its
sole discretion determines; and
(d) Determine whether, to what extent, and under what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in,
cash, Common Stock, or other property, or an Award may be canceled,
forfeited, or surrendered.
24
<PAGE>
The Committee's interpretation of the Plan, any Awards granted under the
Plan, any Award Agreement and all decisions and determinations by the
Committee with respect to the Plan are final, binding, and conclusive on all
parties.
1.4 ELIGIBLE PARTICIPANTS
Each Non-Employee Director shall be eligible to participate in the Plan.
1.5 AWARDS UNDER THE PLAN
Awards under the Plan shall be in the form of Options as described in
Article II or shares of Restricted Stock as described in Article III.
1.6 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 400,000 shares
and hereby are reserved for such purpose. Whenever any outstanding Award 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 Award
may again be the subject of further Awards hereunder.
II. OPTIONS
2.1 ANNUAL GRANTS OF OPTIONS
(a) Grant of Annual Options. In addition to any Replacement Options or
grants of Discretionary Options that the Committee may make under the Plan
from time to time, each Non-Employee Director shall automatically receive on
each Annual Meeting Date during the period such director serves as a Non-
Employee Director, an Option to purchase 3,000 shares of Common Stock ("Annual
Options").
(b) Option Price. The option price per share of an Annual Option shall be
the Fair Market Value of the Common Stock on the date the Option is granted.
(c) Term and Exercise of Annual Options. The term of an Annual Option shall
expire ten (10) years from the date of grant. Except as provided in this
Section 2.1(c), after a Participant ceases to serve as a director of the
Company (or of any Participating Subsidiary) for any reason, including,
without limitation, Retirement, or any other voluntary or involuntary
termination of a Participant's service as such a director (a "Termination"),
the unexercisable portion of such Participant's Annual Options shall
immediately terminate and be null and void, and the unexercised portion of any
outstanding Annual 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 Annual 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.
(d) Vesting. Annual Options shall become exercisable in whole or in part on
the date of grant. In no event, however, shall an Annual Option be exercised
after the expiration of ten (10) years from the date of grant.
2.2 OPTIONS IN LIEU OF DIRECTOR FEES AND/OR RESTRICTED STOCK.
(a) Election to Receive Replacement Options. A Non-Employee Director may
elect to defer all (but not less than all) of (i) his or her Fees and/or (ii)
Awards of Restricted Stock under Article III, by conversion to
25
<PAGE>
Options in accordance with this Section 2.2 ("Replacement Options"). A Non-
Employee Director who wishes to receive Fees or a Restricted Stock Award for a
Plan Year in the form of Replacement Options must irrevocably elect to do so
during the Options Election Period for such Plan Year, by delivering a valid
Election Form to the Committee or the plan administrator. A Non-Employee
Director's participation in Section 2.2 of the Plan will be effective as of
June 13, 1997 with respect to the Fees and Restricted Stock Awards for Plan
Year 1997 and, in all other cases, as of the first day of the Plan Year
beginning after the Committee or the plan administrator receives the Non-
Employee Director's Election Form.
(b) Irrevocable, Annual Election. Elections to receive Replacement Options
are irrevocable and shall be valid only for one Plan Year. New elections must
be made for participation in Section 2.2 of the Plan for subsequent Plan
Years.
(c) Time of Grant. Options shall be granted to each Non-Employee Director
who, during the applicable Options Election Period, filed with the Committee
or the plan administrator a written irrevocable election to receive
Replacement Options as payment of his or her Fees and/or Restricted Stock
Award payable in the following Plan Year. Such Replacement Options will be
granted on June 13, 1997 in the case of Plan Year 1997 and, in the case of any
other Plan Year, on the first business day in the Plan Year for which such
election was made.
(d) Number of Options. If Replacement Options are to be granted in lieu of
Fees, the number of Replacement Options to be granted will be calculated by
dividing (i) the estimated Fees payable to such participant during the Plan
Year, based on the number of scheduled meetings during the Plan Year, by (ii)
45% of the Fair Market Value per share of the Common Stock on the date of
grant, and rounding such quotient up to the nearest whole share. If
Replacement Options are to be granted in lieu of Restricted Stock Awards, the
number of Replacement Options to be granted will be calculated by dividing (i)
the aggregate Fair Market Value (on the date of grant of the Replacement
Options) of the shares of Restricted Stock that otherwise would be granted, by
(ii) 45% of the Fair Market Value per share of the Common Stock on the date of
grant, and rounding such quotient up to the nearest whole share.
(e) Exercise Price. The total price paid per Share under each Replacement
Option granted under this Section 2.2 shall be the Fair Market Value per share
of Common Stock on the date of grant.
(f) Term and Exercise of Replacement Options. The term of an Replacement
Option shall expire ten (10) years from the date of grant. Except as provided
in this Section 2.2(f), after a Participant ceases to serve as a director of
the Company (or of any Participating Subsidiary) for any reason, including,
without limitation, Retirement, or any other voluntary or involuntary
termination of a Participant's service as such a director (a "Termination"),
the unexercisable portion of such Participant's Replacement Options shall
immediately terminate and be null and void, and the unexercised portion of any
outstanding Replacement 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 Replacement
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.
(g) Vesting. Replacement Options shall become exercisable in whole or in
part on the date of grant. In no event, however, shall a Replacement Option be
exercised after the expiration of ten (10) years from the date of grant.
2.3 DISCRETIONARY OPTIONS
In addition to Annual Options and Replacement Options, the Committee is
authorized, in its discretion from time to time, to grant Options to Non-
Employee Directors on the following terms and conditions:
26
<PAGE>
(a) Exercise Price. The exercise price per share of Common Stock under a
Discretionary Option shall be determined by the Committee.
(b) Time and Conditions of Exercise. The Committee shall determine the
time or times at which a Discretionary Option may be exercised in whole or
in part. The Committee also shall determine the performance or other
conditions, if any, that must be satisfied before all or part of a
Discretionary Option may be exercised. The Committee may waive any exercise
provisions at any time in whole or in part based upon factors as the
Committee may determine in its sole discretion so that the Discretionary
Option becomes exerciseable at an earlier date.
2.4 TERMS APPLICABLE TO OPTIONS GENERALLY
(a) Nonqualified Stock Options. Options granted under the Plan will not be
treated as incentive stock options within the meaning of Section 422 of the
Code.
(b) Evidence of Grant. All Options shall be evidenced by a written Award
Agreement between the Company and the Participant. The Award Agreement shall
include such provisions, not inconsistent with the Plan, as may be specified
by the Committee.
(c) Notice of Exercise. When exercisable pursuant to the terms of the Plan
and the governing Award 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.
(d) 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.
(e) Payment. The Committee shall determine the methods by which the exercise
price of an Option may be paid, the form of payment, including, without
limitation, cash, shares of Common Stock, or other property (including
"cashless exercise" arrangements), and the methods by which shares of Common
Stock shall be delivered or deemed to be delivered to Participants; provided,
however, that if shares of Common Stock are used to pay the exercise price of
an Option, such shares must have been held by the Participant for at least six
months.
(f) Beneficiaries. 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 an Option. If no
designation is made before the death of 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.
(g) Change in Control. Notwithstanding anything herein to the contrary, if a
Change in Control has occurred, then all Options granted under the Plan shall
immediately become exercisable on the date such Change in Control occurred, in
accordance with Section 4.11.
III. RESTRICTED STOCK
3.1 TERMS AND CONDITIONS
Each Non-Employee Director of the Company who has not filed a timely
Election Form to receive Replacement Options in lieu thereof in accordance
with Section 2.2 above, shall receive a grant of 3,000 shares
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of Common Stock subject to the restrictions set forth in Section 3.2
("Restricted Stock") on each Annual Meeting Date at which the shareholders
elect such Non-Employee Director to serve as a director; provided however,
that as of the date of their election, Non-Employee Directors of the Company
who are elected to fill a vacancy for a term of less than three (3) years
shall receive a grant of 1,000 shares per year for each full year of the term
to which such Non-Employee Director 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 (i) may not be sold, transferred,
pledged assigned or otherwise alienated or hypothecated, and (ii) will be
subject to the risks of forfeiture described in Section 3.4. 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 then-current term in office (i.e., the term with respect to which
the Restricted Stock Award was granted) as specified in accordance with the
Company's Amended and Restated Articles of Incorporation, as amended from time
to time.
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, in accordance with Section 4.11.
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.
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IV. GENERAL PROVISIONS
4.1 GENERAL RESTRICTIONS
Each Award 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, exercise price or kind of shares
covered by the Awards and in any outstanding Awards under the Plan in order to
prevent substantial dilution or enlargement thereof.
4.3 AMENDMENTS
The Board or the Committee may, at any time and from time to time, amend,
modify or terminate the Plan without stockholder approval; provided, however,
that the Board or Committee may condition any amendment or modification on the
approval of stockholders of the Company if such approval is necessary or
deemed advisable with respect to tax, securities or other applicable laws,
policies or regulations. No termination, amendment, or modification of the
Plan shall adversely affect any Award previously granted under the Plan,
without the written consent of the Participant.
4.4 MODIFICATION, SUBSTITUTION OR CANCELLATION OF AWARDS
At any time and from time to time, the Committee may amend, modify or
terminate any outstanding Award without approval of the Participant; provided,
however, that, subject to the terms of the applicable Award Agreement, such
amendment, modification or termination shall not, without the Participant's
consent, reduce or diminish the value of such Award determined as if the Award
had been exercised, vested, cashed in or otherwise settled on the date of such
amendment or termination. Subject to the above, the Committee may grant Awards
in substitution for any other Award granted under the Plan and may require the
surrender of such other Award in consideration of the grant of the new Award.
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.
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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 Award 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") 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.
4.8 NONASSIGNABILITY
Except as expressly provided in the Plan, no Award 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, Awards 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 NON-UNIFORM DETERMINATIONS
Determinations by the Committee with respect to Discretionary Options under
the Plan (including, without limitation, determinations of the persons to
receive Discretionary Options, the form, amount and timing of such Options,
and the terms and provisions of such Options 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 first became effective in 1994, and was subsequently amended and
restated effective as of July 8, 1996. The second amendment and restatement of
the Plan was approved by the Board of Directors and became effective as of
June 13, 1997, subject to approval by the shareholders. No Award may be given
under the Plan after May 31, 2000, but Awards 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) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 50% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company, or (ii) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this Section 4.11; or
(b) Individuals who, as of June 1997, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to June 1997 whose election, or nomination for election by the
Company's stockholders,
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was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company
(a "Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more
than 80% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 25% or more of the combined voting power of the then
outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination, and (iii) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business Combination.
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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PSS WORLD MEDICAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Fred Elefant and David A. Smith as
Proxies, each with the power to appoint his substitute, and hereby authorizes
either one or both of them to represent and to vote, as designated below, all
the shares of Common Stock of PSS World Medical, Inc. (the Company) held of
record by the undersigned on July 2, 1998 at the Annual Meeting of Shareholders
to be held on September 3, 1998.
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed
below
(INSTRUCTION To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below)
- --------------------------------------------------------------------------------
Melvin L. Hecktman, Delores P. Kesler, David A. Smith
2. PROPOSAL TO ratify the adoption of the Company's Amended and Restated
Directors' Stock Plan, as set forth in Exhibit 1 to the Proxy Statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUE AND TO BE DATED AND SIGNED ON REVERSE SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER, IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES FOR DIRECTOR LISTED ABOVE, FOR PROPOSAL 2 AND FOR
PROPOSAL 3.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such
If a corporation, please sign in
full corporate name by President
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated: ____________, 1998
_________________________
Signature
__________________________
Signature if held jointly
