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EXHIBIT 7
AFFILIATE AGREEMENT
Physician Sales & Service, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxx
Gentlemen:
The undersigned is a shareholder of Gulf South Medical Supply, Inc.
("GSMS"), a corporation organized and existing under the laws of the State of
Delaware, and will become a shareholder of Physician Sales & Service, Inc.
("PSS"), a corporation organized and existing under the laws of the State of
Florida, pursuant to the transactions described in the Agreement and Plan of
Merger, dated as of December 14, 1997 (the "Agreement"), by and among PSS, PSS
Merger Corp. ("Merger Corp.") and GSMS. Under the terms of the Agreement,
Merger Corp. will be merged into and with GSMS (the "Merger"), and the shares
of the $.01 par value common stock of GSMS ("GSMS Common Stock") will be
converted into and exchanged for shares of the $.01 par value common stock of
PSS ("PSS Common Stock"). This Affiliate Agreement represents an agreement
between the undersigned and PSS regarding certain rights and obligations of the
undersigned in connection with the shares of PSS to be received by the
undersigned as a result of the Merger.
In consideration of the Merger and the mutual covenants contained herein,
the undersigned and PSS hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as
to GSMS he is an "affiliate" under Rule 145(c) as defined in Rule 405 of the
Rules and Regulations of the Securities and Exchange Commission ("SEC") under
the Securities Act of 1933, as amended ("1933 Act"), and the undersigned
anticipates that he will be such an "affiliate" at the time of the Merger.
2. Initial Restriction on Disposition. The undersigned agrees that
he will not sell, transfer, or otherwise dispose of his interests in, or reduce
his risk relative to, any of the shares of PSS Common Stock into which his
shares of GSMS Common Stock are converted upon consummation of the Merger until
such time as PSS notifies the undersigned that the requirements of SEC
Accounting Series Release Nos. 130 and 135 ("ASR 130 and 135") have been met.
The undersigned understands that ASR 130 and 135 relate to publication of
financial results of post-Merger combined operations of PSS and GSMS. PSS
agrees that it will publish such results as promptly as practicable following
the Merger in the sole discretion of PSS, but in any event within 45 days after
the end of the first fiscal quarter of PSS containing the required period of
post-Merger combined operations and that it will notify the undersigned
promptly following such publication.
3. Covenants and Warranties of Undersigned. The undersigned
represents, warrants and agrees that:
(a) The PSS Common Stock received by the undersigned as a result
of the Merger will be taken for his own account and not for others,
directly or indirectly, in whole or in part.
(b) PSS has informed the undersigned that any distribution by
the undersigned of PSS Common Stock has not been registered under the
1933 Act and that shares of PSS Common Stock received pursuant to the
Merger can only be sold by the undersigned (1) following registration
under the 1933 Act, or (2) in conformity with the volume and other
requirements of Rule 145(d) promulgated by the SEC as the same now exist
or may hereafter be amended, or (3) to the extent some other exemption
from registration under the 1933 Act might be available. The undersigned
understands that PSS is under no obligation to file a registration
statement with the SEC covering the disposition of the undersigned's
shares of PSS Common
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Stock or to take any other action necessary to make compliance with an
exemption from such registration available.
(c) During the 30 days immediately preceding the Effective Time
of the Merger, the undersigned has not sold, transfered, or otherwise
disposed of his interests in, or reduced his risk relative to, any of the
shares of GSMS Common Stock beneficially owned by the undersigned as of
the record date for determination of shareholders entitled to vote at the
Shareholders' Meeting of GSMS held to approve the Merger.
(d) The undersigned is aware that PSS intends to treat the
Merger as a tax-free reorganization under Section 368 of the Internal
Revenue Code ("Code") for federal income tax purposes. The undersigned
agrees to treat the transaction in the same manner as PSS for federal
income tax purposes. The undersigned acknowledges that Section
1.368-1(b) of the Income Tax Regulations requires "continuity of
interest" in order for the Merger to be treated as tax-free under Section
368 of the Code. This requirement is satisfied if, taking into account
those GSMS shareholders who receive cash in exchange for their stock, who
receive cash in lieu of fractional shares, or who dissent from the
Merger, there is no plan or intention on the part of the GSMS
shareholders to sell or otherwise dispose of the PSS Common Stock to be
received in the Merger that will reduce such shareholders' ownership to a
number of shares having, in the aggregate, a value at the time of the
Merger of less than 50% of the total fair market value of the GSMS Common
Stock outstanding immediately prior to the Merger. The undersigned has
no prearrangement, plan or intention to sell or otherwise dispose of an
amount of his PSS Common Stock to be received in the Merger which would
cause the foregoing requirement not to be satisfied.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of PSS Common Stock
received by the undersigned pursuant to the Merger will be given to PSS's
transfer agent and that there will be placed on the certificates for such
shares, or shares issued in substitution thereof, a legend stating in
substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is accounted for as a "pooling of interests"
and may not be sold, nor may the owner thereof reduce his risks relative
thereto in any way, until such time as PSS, Inc. ("PSS") has published
the financial results covering at least 30 days of combined operations
after the effective date of the merger through which the business
combination was effected. In addition, the shares represented by this
certificate may not be sold, transferred or otherwise disposed of except
or unless (1) covered by an effective registration statement under the
Securities Act of 1933, as amended, (2) in accordance with (i) Rule
145(d) (in the case of shares issued to an individual who is not an
affiliate of PSS) or (ii) Rule 144 (in the case of shares issued to an
individual who is an affiliate of PSS) of the Rules and Regulations of
such Act, or (3) in accordance with a legal opinion satisfactory to
counsel for PSS that such sale or transfer is otherwise exempt from the
registration requirements of such Act."
Such legend will also be placed on any certificate representing PSS securities
issued subsequent to the original issuance of the PSS Common Stock pursuant to
the Merger as a result of any transfer of such shares or any stock dividend,
stock split, or other recapitalization as long as the PSS Common Stock issued
to the undersigned pursuant to the Merger has not been transferred in such
manner to justify the removal of the legend therefrom. Upon the request of the
undersigned, PSS shall cause the certificates representing the shares of PSS
Common Stock issued to the undersigned in connection with the Merger to be
reissued free of any legend relating to restrictions on transfer by virtue of
ASR 130 and 135 as soon as practicable after the requirements of ASR 130 and
135 have been met. In addition, if the provisions of Rules 144 and 145 are
amended to eliminate restrictions applicable to the PSS Common Stock received
by the undersigned pursuant to the Merger, or at the expiration of the
restrictive period set forth in Rule 145(d), PSS, upon the request of the
undersigned, will cause the certificates representing the shares of PSS Common
Stock issued to the undersigned in connection with the Merger to be reissued
free of any legend relating to the restrictions set forth in Rules 144 and
145(d) upon receipt by PSS of an opinion of its counsel to the effect that such
legend may be removed.
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5. Understanding of Restrictions on Dispositions. The undersigned
has carefully read the Agreement and this Affiliate Agreement and discussed
their requirements and impact upon his ability to sell, transfer, or otherwise
dispose of the shares of PSS Common Stock received by the undersigned, to the
extent he believes necessary, with his counsel or counsel for GSMS.
6. Filing of Reports by PSS. PSS agrees, for a period of three years
after the effective date of the Merger, to file on a timely basis all reports
required to be filed by it pursuant to Section 13 of the Securities Exchange
Act of 1934, as amended, so that the public information provisions of Rule
145(d) promulgated by the SEC as the same are presently in effect will be
available to the undersigned in the event the undersigned desires to transfer
any shares of PSS Common Stock issued to the undersigned pursuant to the
Merger.
7. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of PSS Common Stock received by him in connection
with the Merger at any time during the restrictive period set forth in Rule
145(d), the undersigned will provide the necessary representation letter to the
transfer agent for PSS Common Stock together with such additional information
as the transfer agent may reasonably request. If PSS's counsel concludes that
such proposed sale or transfer complies with the requirements of Rule 145(d),
PSS shall cause such counsel to provide such opinions as may be necessary to
PSS's Transfer Agent so that the undersigned may complete the proposed sale or
transfer.
8. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to all shares of the capital stock of GSMS and
PSS that are deemed to be beneficially owned by the undersigned pursuant to
applicable federal securities laws, which the undersigned agrees may include,
without limitation, shares owned or held in the name of (i) the undersigned's
spouse, (ii) any relative of the undersigned or of the undersigned's spouse who
has the same home as the undersigned, (iii) any trust or estate in which the
undersigned, the undersigned's spouse, and any such relative collectively own
at least a 10% beneficial interest or of which any of the foregoing serves as
trustee, executor, or in any similar capacity, and (iv) any corporation or
other organization in which the undersigned, the undersigned's spouse and any
such relative collectively own at least 10% of any class of equity securities
or of the equity interest. The undersigned further recognizes that, in the
event that the undersigned is a director or officer of PSS or becomes a
director or officer of PSS upon consummation of the Merger, among other things,
any sale of PSS Common Stock by the undersigned within a period of less than
six months following the effective time of the Merger may subject the
undersigned to liability pursuant to Section 16(b) of the Securities Exchange
Act of 1934, as amended.
9. Miscellaneous. This Affiliate Agreement is the complete agreement
between PSS and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any party hereunder shall be sent by registered
or certified mail, return receipt requested, using the addresses set forth
herein or such other address as shall be furnished in writing by the parties.
This Affiliate Agreement shall be governed by the laws of the State of
Delaware.
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This Affiliate Agreement is executed as of the ____ day of _________,
19__.
Very truly yours,
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Signature
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Print Name
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Address
[add below the signatures of all
registered owners of shares deemed
beneficially owned by the affiliate]
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Name:
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Name:
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Name:
AGREED TO AND ACCEPTED as of
_______________, 19__
PHYSICIAN SALES & SERVICE, INC.
By:
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