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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NO. 0-27506
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COHR INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 95-4559155
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION)
21540 PLUMMER STREET
CHATSWORTH, CALIFORNIA 91311-4103
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 773-2647
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
As of August 11, 1998 there were outstanding 6,433,189 shares of the
Registrant's Common Stock, par value $0.01, which is the only class of common
stock of the Registrant.
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COHR INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
FOR THE THREE MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
PAGE
NUMBER
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheets as of June 30, 1998 (unaudited)
and March 31, 1998............................................. 4
Consolidated Statements of Loss for the three months ended
June 30, 1998 and 1997 (unaudited)............................. 5
Consolidated Statements of Cash Flows for the three months
ended June 30, 1998 and 1997 (unaudited)....................... 6
Notes to Consolidated Financial Statements..................... 7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 9
PART II OTHER INFORMATION
Item 1 Legal Proceedings.............................................. 11
Item 6 Exhibits and Reports on Form 8-K............................... 12
</TABLE>
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FORWARD LOOKING STATEMENTS
Statements in this Form 10-Q that are not historical facts are hereby
identified as "forward-looking statements" for the purposes of the safe harbor
provided by Section 21E of the Securities Exchange Act of 1934, as amended and
Section 27A of the Securities Act of 1933, as amended. COHR Inc. ("COHR" or the
"Company") cautions readers that such "forward-looking statements," including
without limitation, those relating to the Company's future business prospects,
revenues, working capital, liquidity, capital needs and income, wherever they
may appear in this document or in other statements attributable to the Company,
are necessarily estimates reflecting the best judgment of the Company's
management and involve a number of risks and uncertainties that could cause
actual results to differ materially from those suggested by the "forward-looking
statements." Such "forward-looking statements" should, therefore, be considered
in light of various important factors ("Cautionary Statements"), including those
set forth from time to time in the Company's reports and registration statements
filed with the Securities and Exchange Commission (the "SEC").
These "forward-looking statements" are found at various places throughout
this document. In addition, forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"expect," "should," "intend," "estimate," "anticipate," "believe," or "continue"
or the negative thereof or variations thereon or similar terminology. Moreover,
the Company, through its senior management or persons acting on its behalf, may
from time to time make "forward-looking statements" about the matters described
herein or other matters concerning the Company and such statements are subject
to the qualifications set forth herein and in the Cautionary Statements. The
Company disclaims any intent and undertakes no obligation to update publicly or
revise "forward-looking statements."
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PART I
COHR INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ITEM 1. FINANCIAL STATEMENTS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1998 1998
--------- ---------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ................................ $ 15,042 $ 14,026
Accounts receivable, net of allowance for doubtful
accounts of $4,414 (June 30, 1998) and $4,232
(March 31, 1998) .................................... 14,780 16,946
Inventory ................................................ 6,457 6,891
Prepaid expenses and other ............................... 341 716
Income tax refund receivable ............................. 5,714 8,391
-------- --------
Total current assets .................................. 42,334 46,970
EQUIPMENT AND IMPROVEMENTS, net of accumulated depreciation
of $5,741 (June 30, 1998) and $5,416 (March 31, 1998) 6,378 6,804
INTANGIBLE ASSETS, net of accumulated amortization of $314
(June 30, 1998) and $261 (March 31, 1998) ........... 2,562 2,615
OTHER ASSETS ............................................... 177 195
-------- --------
TOTAL .............................................. $ 51,451 $ 56,584
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable ............................................ $ 40 $ 40
Accounts payable ......................................... 5,401 6,183
Accrued expenses ......................................... 8,459 11,174
Deferred revenue ......................................... 213 734
Current portion of long-term debt ........................ 647 649
-------- --------
Total current liabilities ............................ 14,760 18,780
LONG-TERM DEBT ............................................. 453 498
OTHER LONG-TERM LIABILITIES ................................ 156 136
SHAREHOLDERS' EQUITY
Preferred Stock, $.01 par value; 2,000,000 shares
authorized; no shares issued and outstanding
Common Stock, $.01 par value; 20,000,000 shares
authorized; 6,433,189 shares issued and outstanding . 887 887
Additional paid in capital ............................... 55,153 55,153
Accumulated deficit ...................................... (19,958) (18,870)
-------- --------
Total shareholders' equity ............................ 36,082 37,170
-------- --------
TOTAL .............................................. $ 51,451 $ 56,584
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</TABLE>
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COHR INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-----------------------
1998 1997
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<S> <C> <C>
Revenues ................................................. $ 26,513 $ 24,811
Direct operating expenses ................................ 18,618 17,148
-------- --------
Gross margin ............................................. 7,895 7,663
Selling, general and administrative expenses ............. 8,664 8,518
Special charges .......................................... 479
-------- --------
Operating loss ........................................... (1,248) (855)
Interest income, net ..................................... 160 296
-------- --------
Loss before income tax benefit ........................... (1,088) (559)
Income tax benefit ....................................... 204
-------- --------
Net loss ................................................. $ (1,088) $ (355)
======== ========
Net loss per common share
Basic ................................................. $ (0.17) $ (0.06)
======== ========
Diluted ............................................... $ (0.17) $ (0.06)
======== ========
Number of shares used to compute net loss per common share 6,433 6,419
======== ========
</TABLE>
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COHR INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................................................... $ (1,088) $ (355)
-------- --------
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization ............................................. 378 505
Gain on sale of fixed assets .............................................. (17)
Provision for losses on accounts receivable ............................... 180 75
Increase in other long-term liabilities ................................... 20
Changes in assets and liabilities, net of effect of acquisitions of certain
assets:
(Increase) decrease in:
Accounts receivable ................................................. 1,986 (2,794)
Inventory, excluding transfer from equipment and improvements........ 559 (508)
Prepaid expense and other ........................................... 375 478
Income tax refund receivable ........................................ 2,677 (600)
Other assets ........................................................ 18 (460)
Increase (decrease) in:
Accounts payable .................................................... (782) 741
Accrued expenses .................................................... (2,715) 1,263
Deferred revenue .................................................... (521) (628)
-------- --------
Total adjustments ...................................................... 2,158 (1,928)
-------- --------
Net cash provided by (used in) operating activities ..................... 1,070 (2,283)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ........................................................ (50) (557)
Proceeds from sale of fixed assets .......................................... 43
Payment for business acquisitions ........................................... (1,147)
Sale of investments ......................................................... 4,000
-------- --------
Net cash (used in) provided by investing activities ..................... (7) 2,296
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt and notes payable .............................. (47) (1,836)
-------- --------
Net cash used in financing activities ................................... (47) (1,836)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........................... 1,016 (1,823)
CASH AND CASH EQUIVALENTS, beginning of period ................................. 14,026 22,948
-------- --------
CASH AND CASH EQUIVALENTS, end of period ....................................... $ 15,042 $ 21,125
======== ========
Supplemental disclosures of cash flow information -- Cash paid
during the period for:
Income taxes .............................................................. $ $ 407
======== ========
Interest .................................................................. $ 12 $ 70
======== ========
DETAILS OF BUSINESSES OR ASSETS ACQUIRED AT FAIR VALUE ARE AS FOLLOWS:
Current assets .............................................................. $ $ 409
Equipment ................................................................... 138
Goodwill and other intangibles .............................................. 660
-------- --------
1,207
-------- --------
Note issued ............................................................... 60
-------- --------
Net cash paid for acquisitions ........................................ $ $ 1,147
======== ========
</TABLE>
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COHR INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying consolidated financial
statements include all adjustments necessary for a fair presentation of the
financial position of COHR Inc. ("COHR") and subsidiaries (collectively, the
"Company"), and the results of its operations and its cash flows for the interim
periods presented. Although COHR believes that the disclosures in these
consolidated financial statements are adequate to make the information presented
not misleading, certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. Results of operations for
the interim periods are not necessarily indicative of results to be expected for
any other interim period or for the full year.
The consolidated financial statements for the three months ended June 30,
1998 and 1997 are unaudited and should be read in conjunction with the
consolidated financial statements and notes thereto included in COHR's Annual
Report on Form 10-K for the year ended March 31, 1998.
On February 17, 1998, the Company disclosed that it had restated its
financial statements for the fiscal year ended March 31, 1997 and for the first
two quarters of the fiscal year ended March 31, 1998 ("the Restatement"). All
references herein to the financial statements for such periods refer to such
financial statements as restated. These restatements related primarily to
management's determination that certain equipment and software sales were
prematurely recorded and that certain liabilities and reserves were understated.
Consolidation of Subsidiaries -- The Company's financial statements include
the activity of all of its wholly owned subsidiaries over which the Company has
direct or indirect unilateral and perpetual control. All intercompany
transactions have been eliminated in consolidation.
2. SPECIAL CHARGES
Special charges for the three months ended June 30, 1998 represent
severance costs for those officers and employees who were terminated or removed
from office by the Company and so notified as of June 30, 1998.
3. INCOME TAXES
At June 30, 1998, the Company had net operating loss carryforwards ("NOLs")
of approximately $8.9 million for Federal income tax purposes and $8.0 million
for state income tax purposes. The NOLs expire in 2013 and 2003, respectively.
Assuming the Company has sufficient future taxable income, the NOLs could be of
significant value to the Company, because generally the NOLs could be used to
offset future taxable income. However, if the Company has undergone, or
undergoes in the future, an "ownership change" within the meaning of Section 382
of the Internal Revenue Code of 1986, as amended ("Code"), then the Company's
utilization of the NOLs generally will be limited to an annual amount equal to
the product of (a) the fair market value of the Company's stock immediately
before the ownership change and (b) the "long-term tax-exempt rate" published by
the Internal Revenue Service at the time of the ownership change (5.15 percent
for the month of June, 1998). Such a limitation could significantly reduce the
value of the NOLs.
Generally speaking, an "ownership change" occurs whenever, within a
three-year period, the aggregate ownership of a company's stock by its "5
percent shareholders" (as defined by the applicable Federal income tax
regulations) increases by more than 50 percentage points. Making that
calculation is complex, uncertain and ongoing once a company has NOLs. The
Company has begun, but has not yet completed, an initial set of such
calculations. Nevertheless, because of the significant recent turnover in the
Company's stock, the Company believes that there is a strong possibility that an
"ownership change" has already occurred, or, if not, that an "ownership change"
could occur at any time. If so, then the Company's utilization of its NOLs would
be limited, as discussed above.
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4. RECLASSIFICATIONS
Certain reclassifications have been made to the prior period's consolidated
financial statements to conform to the current period's presentation.
5. BUSINESS SEGMENTS (unaudited)
The Company currently provides services to the health care industry through
two principal business segments. The COHR MasterPlan segment provides equipment
sales and maintenance to hospitals and other health care providers. The Purchase
Connection segment is a group purchasing organization that negotiates pricing
for its membership with manufacturers and distributors. General corporate
expenses are classified as Corporate. Identifiable assets are those used in the
Company's operations in each segment as estimated by management based upon
factors such as revenue generated, number of personnel and space occupied by
each segment. Information concerning the Company's business segments in the
quarter ended June 30, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
Equipment Purchasing
Services Services Corporate Total
--------- ---------- --------- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
JUNE 30, 1998
Revenues....................................... $ 20,781 $ 5,732 $ 26,513
Operating income (loss) ....................... 789 2,174 $ (4,211) (1,248)
Interest income, net........................... 160 160
Identifiable assets............................ 31,900 5,145 14,406 51,451
Depreciation and amortization.................. 193 57 128 378
Capital expenditures........................... 38 12 50
JUNE 30, 1997
Revenues....................................... $ 19,221 $ 5,590 $ 24,811
Operating income (loss)........................ 344 1,898 $ (3,097) (855)
Interest income, net........................... 296 296
Identifiable assets............................ 29,990 3,395 23,199 56,584
Depreciation and amortization.................. 323 121 61 505
Capital expenditures........................... 373 45 139 557
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of the Company's unaudited
consolidated results of operations and financial position should be read in
conjunction with the Company's unaudited consolidated financial statements,
including the notes thereto, appearing elsewhere in this Quarterly Report.
GENERAL
The Company is a national outsourcing service company, providing equipment
sales and servicing, group purchasing and other ancillary services to hospitals,
integrated health systems and alternative site providers.
On February 17, 1998, the Company disclosed that it had restated its
financial statements for the fiscal year ended March 31, 1997 and for the first
two quarters of the fiscal year ended March 31, 1998 ("the Restatement"). All
references herein to the financial statements for such periods refer to such
financial statements as restated. These restatements related primarily to
management's determination that certain equipment and software sales were
prematurely recorded and that certain liabilities and reserves were understated.
In June 1998 the Company announced the appointment of Mr. Raymond List as
President and Chief Executive Officer and Mr. Peter Socha as Executive Vice
President, Operations.
During the fourth quarter of fiscal year 1998 and the first quarter of
fiscal year 1999, the Company initiated a cost-reduction program which included
a 10% reduction in overall personnel, the closing or restructuring of certain
MasterPlan refurbishment and service operations and the closing of certain
under-utilized MasterPlan field offices. The Company will continue to pursue
additional cost-reduction opportunities during the balance of fiscal year 1999.
The goal to improve profitability may include the elimination or repricing of
certain low margin or unprofitable contracts. The Company has also instituted
stronger credit and collection policies and procedures and is adopting new
inventory management procedures to reduce its level of inventory investment.
Federal and state civil lawsuits have been filed against the Company
alleging, among other things, federal and/or state securities law violations and
the Securities and Exchange Commission (the "SEC") has commenced a formal
investigation of the Company. See Part II, Item 1 "Legal Proceedings" below.
In February 1998, the Company had announced the engagement of Lehman
Brothers, as its financial advisor, to evaluate strategic alternatives including
a possible sale of the Company. In June 1998, the Board of Directors determined
that it is not in the best interest of the shareholders to continue to pursue a
sale of the Company at the present time.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998, VERSUS THREE MONTHS ENDED JUNE 30, 1997
Revenues. The Company's revenues for the three months ended June 30, 1998
totaled $26.5 million, an increase of $1.7 million or 6.9% over revenues of
$24.8 million for the three months ended June 30, 1997. Revenues increased
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primarily due to a rise in contract revenues produced by the COHR MasterPlan
segment. The COHR MasterPlan segment generated revenues of $20.8 million in the
three months ended June 30, 1998, compared to $19.2 million in the same quarter
last year. The Purchase Connection segment, which includes the Company's group
purchasing organization (GPO) and other ancillary businesses, produced revenues
of $5.7 million in the three months ended June 30, 1998, compared to $5.6
million in the same quarter last year, with revenue growth in the GPO being
partially offset by declines in the ancillary businesses.
Direct Operating Expenses. The Company's direct expenses for the three
months ended June 30, 1998 totaled $18.6 million which represented an increase
of $1.5 million or 8.6% over the three months ended June 30, 1997 total of $17.1
million. This increase was primarily attributable to higher spending on
outsourced services related to the increase in COHR MasterPlan contract
revenues. As a percentage of revenues, direct operating expenses increased to
70.2% for the three month period ended June 30, 1998 from 69.1% for the three
months ended June 30, 1997.
Gross Margin. The Company's gross margin for the three months ended June 30,
1998 totaled $7.9 million, an increase of $232,000 or 3% over the three months
ended June 30, 1997 total of $7.7 million. Gross margin as a percentage of
revenues decreased to 29.8% for the three months ended June 30, 1998 from 30.9%
for the three months ended June 30, 1997.
Selling, General and Administrative Expenses. The Company's selling, general
and administrative expenses for the three months ended June 30, 1998 totaled
$8.7 million, an increase of $146,000 or 1.7% over the three months ended June
30, 1997 total of $8.5 million. This increase was primarily attributable to
higher professional outside services and insurance costs that were partially
offset by lower personnel and administrative expenses resulting from the
Company's ongoing cost-reduction program. As a percentage of revenues, selling,
general and administrative expenses decreased during the three months ended June
30, 1998 to 32.7% from 34.3% during the three months ended June 30, 1997.
Special Charges. Special charges for the three months ended June 30, 1998
represent severance costs for those officers and employees who were terminated
or removed from office by the Company and so notified as of June 30, 1998. Most
of this amount was disbursed during the quarter ended June 30, 1998.
Operating Loss. The Company's operating loss for the three months ended June
30, 1998 totaled $1.2 million, an increase of $393,000 from an operating loss
for the three months ended June 30, 1997 of $855,000. Operating loss as a
percentage of revenues for three months ended June 30, 1998 was 4.7% compared to
3.4% for the three months ended June 30, 1997.
Income Tax Benefit. The Company recognized no income tax benefit for the
three months ended June 30, 1998 due to the Company's being in a net operating
loss carryforward position. The income tax benefit for the three months ended
June 30, 1997 was $204,000. The Company's effective tax benefit rate was 36.5%
for the three months ended June 30, 1997 which was lower than it would have
otherwise been due to the fact that the Company is unable to carryback net
operating losses for state income tax purposes.
Net Loss. The Company's net loss for the three months ended June 30, 1998
totaled $1.1 million, an increase of $733,000 from the net loss for the three
months ended June 30, 1997 of $355,000. As a percentage of revenues, the net
loss was 4.1% for the three months ended June 30, 1998 as compared to 1.4% for
the three months ended June 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $27.6 million and $28.2 million as of
June 30, 1998 and March 31, 1998, respectively. The Company had cash and cash
equivalents of $15 million and $14 million at those same respective dates. The
increase in the amount of cash and cash equivalents during the first three
months of fiscal year 1999 was primarily attributable to the receipt of a $2.7
million income tax refund and a $2.0 million reduction in accounts receivable
offset in part by the net loss for the quarter and a reduction in trade accounts
payable and accrued expenses.
Net cash provided by (used in) operating activities amounted to $1.1
million and $(2.3) million for the three months ended June 30, 1998 and 1997,
respectively. The factors contributing to the positive cash flow from
operations in the first quarter of fiscal year 1999 were noted in the change in
cash and cash equivalents above.
Net cash (used in) provided by investing activities was $(7,000) and $2.3
million in the first quarter of fiscal years 1999 and 1998, respectively. There
were no acquisitions of new businesses in the first quarter of fiscal year 1999
as compared to spending on acquisitions of $1.1 million in the prior year's
first quarter. The prior year's first quarter also included the sale of
investments of $4.0 million.
Cash used in financing activities for the repayment of long-term debt and
notes payable totaled $47,000 in the first quarter of fiscal year 1999 as
compared to $1.8 million in the first quarter of fiscal year 1998.
At present, the Company does not have a credit facility or line of credit.
The Company believes that its cash on hand and anticipated cash flows will be
sufficient to meet the Company's operating needs for the current fiscal year.
The Company has not paid dividends since its initial public offering in February
of 1996.
The Company is subject to various commitments and contingencies. See Part
II, Item 1 "Legal Proceedings" and "Additional Factors Affecting Operating
Results" below.
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INFLATION
The Company believes that its operations have not been materially adversely
affected by inflation. The Company expects that salary and wage increases for
its skilled staff will continue to be higher than average wage increases, as is
common in the Company's industry.
ADDITIONAL FACTORS AFFECTING OPERATING RESULTS
The Company's business is subject to a number of risks, some of which are
beyond the Company's control. In addition to the factors described herein, the
Company has identified in "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Risk Factors" in its Annual Report on Form
10-K for the fiscal year ending March 31, 1998, important factors that could
cause actual results to differ materially from those projected in any
forward-looking statements the Company may make from time to time.
RISKS ASSOCIATED WITH MANAGEMENT OF DATA AND YEAR 2000 ISSUES
The Company's business is dependent upon its ongoing ability to obtain,
process, analyze and manage data and to maintain and upgrade its data processing
capabilities. Interruption of data processing capabilities for any extended
period of time, the failure to upgrade data services, difficulties in converting
data and information systems after acquisitions, loss of stored data,
programming errors or other computer programs could have a material adverse
effect on the Company's business. As the year 2000 approaches, an issue ("Year
2000 Issue") affecting many companies has emerged regarding how existing
application software programs and operating systems can accommodate the date
value as described herein. In brief, many existing applications in the
marketplace and some proprietary database applications developed by the Company
were designed to use a two-digit data position to represent the year (e.g., "98"
is stored on the systems and represents the year 1998). The Company has
initiated an assessment of its own computer systems and other date-sensitive
electronic systems, such as security systems. The financial and general ledger
systems of the Company are substantially compliant already; the cost to upgrade
these systems is not expected to be material. The Company expects the year 2000
related modifications and conversions to its own systems and software, including
testing, to be substantially completed by December 1998. The Company has also
commenced communications with suppliers, customers, financial institutions and
others with whom it conducts business to assess whether the systems of these
other companies, with which the Company interfaces or on which the Company
relies, will be upgraded on a timely basis or that such systems will not have an
adverse effect on the Company's systems. The Company does not believe that it
will incur a material financial impact from the risk, or from assessing the
risk, arising from the Year 2000 Issues. However, there can be no assurance that
the Company's initial assessment of this risk will be accurate or that the Year
2000 Issue will not materially affect future financial results or future
financial conditions.
Another area of potential risk is with certain medical equipment which
belongs to the Company's customers but which is maintained or serviced by the
Company and has microprocessors with date functionality which could malfunction
in the year 2000. Among other steps, the Company has initiated formal
communications with all of its customers and with all of the major suppliers of
medical equipment to ensure that these third parties are also working to
remediate their own Year 2000 Issues, if applicable. However, the Company is
unable to determine whether the Year 2000 Issue related to customer's medical
equipment which is serviced or maintained by the Company will materially affect
future financial results or future financial conditions.
Upon the completion of the Company's assessment of its exposure to the risk
of Year 2000 non-compliance by third parties, the Company will formulate
contingency plans to handle the most likely worst-case Year 2000 scenarios.
Until the assessment is completed, the Company cannot reasonably define what
those scenarios might be.
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company, certain of its present and former officers and directors and
others are named as defendants in four purported class action lawsuits which
allege, among other things, false and misleading statements in various public
disclosures in violation of federal and/or state securities laws. Sherleigh
Associates Inc. Profit Sharing Plan v. Cohr, Inc. et al. (Case No. 98-3028 JSL)
was filed in the United States District Court for Central District of California
on or about April 21, 1998. Zabronsky et al. V. Cohr, Inc. et al. (Case No.
98-3493 JSL) was filed in the same court on May 6, 1998. Bird v. Cohr, Inc. et
al. (Case No. 98-4177 WMB) was filed in the same court on May 27, 1998. Leeds v.
Malhotra et al. (Case No. BC198490) was filed in the Superior Court of the State
of California, Los Angeles County, on April 16, 1998. The plaintiffs in each
action seek to represent a class of purchasers of the Company's common stock
during various time periods between 1996 and 1998.
The plaintiffs in each of the three federal actions filed in the United
States District Court for the Central District of California assert claims of
violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934,
and of certain regulations promulgated thereunder. The plaintiffs in each of the
three federal actions seek unspecified compensatory damages, interest,
attorneys' fees and costs, and injunctive and/or other relief as permitted by
law. The plaintiff in the action filed in California Superior Court asserts
claims of violations of California Corporations Code Section 25400 and 25500.
The plaintiff in that action seeks unspecified compensatory damages, interest,
attorneys' fees and costs, and injunctive and/or other relief as permitted by
law. No class has been certified in any of these actions.
A shareholder of the Company has brought a derivative lawsuit purportedly
on behalf of the Company, alleging breaches of fiduciary duty and related
claims, and naming certain of its present and former officers and directors as
defendants, with the Company as a nominal defendant. This action, which is
entitled Schug v. Chopra et al. (Case No. BC190933) was filed in the Superior
Court for the State of California, Los Angeles County, on May 12, 1998. The
shareholder-plaintiff seeks unspecified compensatory and punitive damages,
disgorgement of profits and gains, attorneys' fees and costs, injunctive relief,
and other relief as permitted by law.
The Securities and Exchange Commission (the "SEC") is conducting an
investigation relating to the Company. The Company understands that the
investigation relates to, among other things: (1) the accuracy of the Company's
financial statements and periodic filings with the SEC; (2) the accuracy of the
Company's books and records; (3) the adequacy of the Company's system of
internal accounting controls; and (4) trading of the Company's securities by
certain present or former officers, directors, or employees, or other persons.
In addition, the Nasdaq Listing Investigations, a division of the Nasdaq Stock
Market, has requested from the Company certain documents in connection with its
review of the Restatement and the Company's compliance with its rules and
regulations. The Company intends to cooperate fully with the inquiries from all
regulatory agencies.
Management is unable to predict at this time the final outcome of the
matters described above or whether the resolution of such matters will
materially affect the Company's results of operations, cash flows or financial
position.
The Company is also involved from time to time in various legal proceedings
incidental to the normal conduct of its business. Management does not believe
that such proceedings are likely, individually or in the aggregate, to have a
material adverse effect on the Company's business.
ITEM 2. CHANGES IN SECURITIES
None.
11
<PAGE> 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
On June 29, 1998 the Board of Directors was expanded from eight to nine
members with Mr. Stephen W. Ritterbush appointed as a director. On July 17,
1998, Mr. Paul Chopra resigned as a director.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits included or incorporated herein:
See Index to Exhibits
(b) Reports on Form 8-K:
None.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COHR INC.
(Registrant)
Date: August 14, 1998 /s/ RAYMOND E. LIST
------------------------------------------
Raymond E. List
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 1998 /s/ DANIEL F. CLARK
------------------------------------------
Daniel F. Clark
Executive Vice President and Chief
Financial Officer
(Principal Accounting and Financial
Officer)
13
<PAGE> 14
COHR INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
ITEM (6)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.1* Certificate of Incorporation of Registrant
3.2* By-laws of Registrant
3.3 By-laws of Registrant as amended on June 29, 1998
4.1* Form of Warrant to be issued to the Representatives of the
Underwriters
4.2* Form of Registration Rights Agreement between Registrant,
Healthcare Association of Southern California ("HASC")
and Hospital Council Coordinated Programs, Inc
4.3* Specimen Stock Certificate
10.16 Employment Agreement between Registrant and Raymond E. List
10.17 Stock Option Agreement between Registrant and
Raymond E. List
10.18 Employment Agreement between Registrant and Stephen W.
Ritterbush
10.19 Stock Option Agreement between Registrant and Stephen W.
Ritterbush
10.20 Employment Agreement between Registrant and Peter T. Socha
10.21 Stock Option Agreement between Registrant and Peter T. Socha
11 Computation of Net Loss Per Share
27.1 Financial Data Schedule
99.1 Press release dated August 13, 1998
</TABLE>
- ----------
* Incorporated by reference from Registrant's Statement on Form S-1,
Registration No. 33-80635.
14
<PAGE> 1
BYLAWS
OF
COHR INC.
A DELAWARE CORPORATION
-----------
ARTICLE I
OFFICES
SECTION 1.1 REGISTERED OFFICE.
The registered office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
SECTION 1.2 OTHER OFFICES.
The Corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors from time to
time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1 ANNUAL MEETINGS.
The annual meeting of the stockholders shall be held each year at
a time and place designated by the Board of Directors.
SECTION 2.2 NOTICE OF ANNUAL MEETINGS.
It shall be the duty of the secretary to cause written notice of
each annual meeting, stating the place, day and hour thereof, to be mailed or
otherwise sent or delivered, not less than ten (10) days nor more than sixty
(60) days next preceding the date of such meeting, to each stockholder entitled
to vote. Except as otherwise provided by a resolution or resolutions of the
Board of Directors creating any series of Preferred Stock or by the laws of the
State of Delaware, the holders of shares of the Common Stock issued and
outstanding shall have and possess the exclusive right
<PAGE> 2
to notice of stockholders' meetings and exclusive power to vote. Any business
may be transacted at such meeting, whether or not it is mentioned in the notice;
provided that the general nature of the business must be stated in the notice in
order for action to be taken thereon at an annual meeting.
SECTION 2.3 SPECIAL MEETINGS.
Special meetings of the stockholders of the Corporation for any
purpose or purposes whatsoever may be called at any time by the Board of
Directors, or by a committee of the Board of Directors which has been duly
designated by the Board of Directors and whose powers and authority, as provided
in a resolution of the Board of Directors or in these Bylaws, include the power
to call such meetings, and such special meetings may not be called by any other
person or persons; provided, however, that if and to the extent that any special
meeting of stockholders may be called by any other person or persons specified
in any certificate filed under Section 151(g) of the Delaware General
Corporation Law (or its successor statute as in effect from time to time), then
such special meeting may also be called by the person or persons, in the manner,
at the times, and for the purposes so specified. Every such call shall be in
writing and shall state the purpose or purposes for which the meeting is called
and no other business shall be transacted.
SECTION 2.4 NOTICE OF SPECIAL MEETINGS.
Written notice of each special meeting of stockholders, stating
the place, date and hour thereof, and the general nature of the business to be
transacted, shall be mailed, or otherwise sent or delivered, by the secretary or
other person authorized or required by law to give such notice, not less than
ten (10) days nor more than sixty (60) days next preceding the date of such
meeting, to each stockholder entitled to vote. Except as otherwise provided by a
resolution or resolutions of the Board of Directors creating any series of
Preferred Stock or by the laws of the State of Delaware, the holders of shares
of the Common Stock issued and outstanding shall have and possess the exclusive
right to notice of special meetings of stockholders and exclusive power to vote
thereat.
SECTION 2.5 ADJOURNED MEETINGS AND NOTICE THEREOF.
Any stockholders' meeting, whether a quorum is or is not present,
may be adjourned from time to time by the vote of a majority of the shares, the
holders of which are either present in person or represented by proxy at the
meeting, but no other business may be transacted at the meeting in the absence
of a quorum except as provided in Section 2.6 of this Article II. When any
annual or special meeting of the stockholders is adjourned for thirty (30) days
or more, notice of the adjourned meeting shall be given as in the case of an
original meeting. Except as
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<PAGE> 3
hereinbefore stated, it shall not be necessary to give any notice of the time or
place of the adjourned meeting or of the business to be transacted thereat,
other than by announcement at the meeting at which the adjournment is approved.
SECTION 2.6 QUORUM.
The presence in person or by proxy of the persons entitled to
vote a majority of the voting shares at any meeting of the stockholders shall,
except as otherwise provided by law, constitute a quorum for the transaction of
business. The stockholders present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum.
SECTION 2.7 PLACE OF STOCKHOLDERS' MEETINGS.
Meetings of the stockholders shall be held at any place within or
without the State of Delaware designated by the Board of Directors. In the
absence of any such designation such meetings shall be held at the principal
office of the Corporation.
SECTION 2.8 NO CONSENTS IN LIEU OF MEETINGS.
No action which is required to be taken at any annual or special
meeting of stockholders of the Corporation or which may be taken at any annual
or special meeting of the stockholders may be taken without conducting a
meeting; and no consent in writing to any such action of the stockholders shall
be valid.
SECTION 2.9 PROXIES.
Every stockholder entitled to vote may do so either in person or
by one or more agents authorized by a written proxy executed by the person or
his or her duly authorized agent and filed with the secretary of the
Corporation, but no proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it
is irrevocable and if, and only so long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the Corporation generally.
SECTION 2.10 RECORD DATE AND CLOSING STOCK BOOKS.
The Board of Directors may fix a time, in the future, not more
than sixty (60) nor less than ten (10) days prior to the date of any meeting of
stockholders, or the date fixed for the payment
-3-
<PAGE> 4
of any dividend or distribution, or for the allotment of rights, or when any
change or conversion or exchange of shares shall go into effect, as a record
date for the determination of the stockholders entitled to receive any such
dividend or distribution, or any such allotment of rights, or to exercise the
rights in respect to any such change, conversion, or exchange of shares, and in
such case only stockholders of record on the date so fixed shall be entitled to
notice of and to vote at such meeting or to receive such dividend, distribution
or allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
any record date so fixed. The Board of Directors may close the books of the
Corporation against transfers of shares during the whole or any part of any such
period. If no record date is fixed, as hereinbefore provided in this Section
2.10, then the record date shall be as provided in Sections 213(a) and 213(c) of
the Delaware General Corporation Law.
SECTION 2.11 VOTING.
At all meetings of the stockholders of the Corporation, the
holders of shares of the Common Stock shall be entitled to one vote for each
share of Common Stock held by them. Except as otherwise provided by a resolution
or resolutions of the Board of Directors creating any series of Preferred Stock
or by the laws of the State of Delaware, the holders of shares of the Common
Stock issued and outstanding shall have and possess the exclusive right to
notice of stockholders' meetings and exclusive power to vote. The holders of
shares of the Preferred Stock issued and outstanding shall, in no event, be
entitled to more than one vote for each share of Preferred Stock held by them
unless otherwise required by law. Voting may be viva voce or by ballot;
provided, that an election for directors must be by ballot if a stockholder
demands election by ballot at the election and before the voting begins or if
there are more than ten (10) stockholders present in person or by proxy at the
meeting.
SECTION 2.12 STOCKHOLDER PROPOSALS.
Unless, and to the extent, otherwise specified in applicable laws
or regulations, all stockholder proposals for action at an annual or special
meeting of stockholders shall be governed by the provisions of this Section.
Any stockholder proposal for action at an annual or special
meeting of stockholders, including any nomination for a directorship, shall be
submitted in writing to the Corporation not less than one hundred fifty (150)
days prior to the date of the meeting. Such written proposal shall state with
specificity the nature of the action sought, including the form and text of
proposed resolutions, reasonable explanations of the need for the
-4-
<PAGE> 5
action to be taken, and the age and business background and
qualifications of a nominee for a directorship.
Whether or not a proposal so submitted shall be presented for
action at a meeting of the stockholders shall be at the sole discretion of the
Board of Directors. Except as provided in this ARTICLE II, no proposal of a
stockholder may be presented for action at any meeting of stockholders.
SECTION 2.13 ACTIONS WITHOUT A MEETING.
No action may be taken by the stockholders except at an annual or
special meeting of stockholders. No action may be taken by stockholders by
written consent. The provisions of this Section 2.13 shall be inapplicable if,
at the time of an action by Stockholders, there are no more than two (2)
stockholders of the Corporation.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1 POWERS.
The business of the Corporation shall be managed by or under the
direction of its Board of Directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by these Bylaws directed or required to be
exercised or done by the stockholders.
SECTION 3.2 EXACT NUMBER OF DIRECTORS.
The exact number of directors of this Corporation shall be nine
(9) until this Section 3.3 shall be changed by the amendment thereof, not in
contravention of the Certificate of Incorporation, duly adopted by the Board of
Directors or by the stockholders.
SECTION 3.3 CLASS OF DIRECTORS, ELECTION AND TERM OF OFFICE.
The Board of Directors shall be and is divided into three
classes, Class I, Class II and Class III. Such classes shall be as nearly equal
in number of directors as possible. Each director shall serve for a term ending
on the date of the third annual meeting following the annual meeting at which
such director was elected; provided, however, that the directors first elected
to Class I shall serve for a term ending on the date of the annual
-5-
<PAGE> 6
meeting next following the date of their initial election, the directors first
elected to Class II shall serve for a term ending on the date of the second
annual meeting next following the date of their initial election, and directors
first elected to Class III shall serve for a term ending on the date of the
third annual meeting next following the date of their initial election. The
foregoing notwithstanding, each director shall serve until his or her successor
shall have been duly elected and qualified, unless he or she shall resign, die
or be removed from office.
At each annual election, the directors chosen to succeed those
whose terms then expire shall be of the same class as the directors they
succeed, unless by reason of any intervening changes in the authorized number of
directors, the Board shall designate one or more directorships whose term then
expires as directorships of another class in order more nearly to achieve
equality of number of directors among the classes.
Notwithstanding the provision that the three classes shall be as
nearly equal in number of directors as possible, in the event of any change in
the authorized number of directors, each director then continuing to serve as
such shall nevertheless continue as a director of the class of which he or she
is a member until the expiration of his or her current term, or his or her prior
death, resignation or removal.
SECTION 3.4 VACANCIES AND REMOVAL.
Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause shall be filled by a majority vote of the directors then
in office, or by a sole remaining director, and directors so chosen shall hold
office for a term expiring at the Annual Meeting of Stockholders at which the
term of the class to which they have been elected expires. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director. Unless there are no remaining Directors, stockholders
shall have no right to fill a vacancy created on the Board of Directors for any
reason.
Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of at least sixty-seven percent (67%) of the total voting
power of all outstanding securities entitled to vote generally in the election
of directors of the Corporation, voting together as a single class.
-6-
<PAGE> 7
SECTION 3.5 ORGANIZATIONAL AND OTHER REGULAR MEETINGS.
Immediately after each annual meeting of the stockholders, the
directors shall hold a meeting (which may be designated as an organizational
meeting), without call, for purposes of organization, the election of officers
and the transaction of other business. Every such meeting shall be deemed to be
a regular meeting.
No other regular meetings of the Board of Directors need be held;
however, other regular meetings of the Board of Directors may be held, without
call, at such times as the Board may from time to time specify by resolution. No
notice of any regular meeting of the Board of Directors need be given.
SECTION 3.6 SPECIAL MEETINGS.
Special meetings of the Board of Directors for any purpose or
purposes shall be held whenever duly called by the chairman of the board or the
president, or by the president or secretary on the written request of any three
(3) directors.
SECTION 3.7 NOTICE OF SPECIAL MEETINGS.
Written notice of the time and place of each special meeting of
the Board of Directors shall be delivered personally or sent by mail or
facsimile or other written form of communication, to each director. If the
notice is personally delivered to a director, or if it is sent by confirmed
facsimile or confirmed telex, it shall be so delivered or sent at least
twenty-four (24) hours before the time fixed for the meeting; and if the notice
is sent by mail, it shall be sent at least four (4) days before the time fixed
for the meeting, with charges fully prepaid, addressed to him or her at his or
her address, if any, shown on the records of the Corporation, or if no such
address appears on such records, at the city or place in which the meetings of
the Board of Directors are usually held.
No notice of the objects or purposes of any special meeting of
the Board of Directors need be given, and unless otherwise indicated in the
notice thereof, any business of any nature may be transacted at such meeting.
SECTION 3.8 ADJOURNED MEETINGS.
A quorum of the directors may adjourn any directors' meeting to
meet again at a stated day and hour; provided, however, that in the absence of a
quorum, a majority of the directors present at any directors' meeting, either
regular or special, may adjourn from time to time until the time fixed for the
next regular meeting of the Board.
-7-
<PAGE> 8
No notice of the time or place or purpose of holding an adjourned
meeting need be given to any absent director if the time and place is fixed at
the meeting adjourned.
SECTION 3.9 QUORUM.
Subject to the provisions of Sections 3.4 and 3.8 of these
Bylaws, a majority of the entire Board (as defined in Article SEVENTH of the
Corporation's Certificate of Incorporation) shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors unless a greater number is required by these
Bylaws or by the Certificate of Incorporation. A majority of the directors
present at any meeting of the Board, whether a quorum shall be present or not,
may adjourn the meeting from time to time without notice, other than
announcement at the meeting, provided that the time so fixed shall not extend
beyond the time for the next regular meeting of the Board.
SECTION 3.10 PLACE OF MEETINGS.
Meetings of the Board of Directors may be held at any place
within or without the State of Delaware which may be designated from time to
time by or pursuant to authorization contained in either a prior resolution of
the Board or a prior written consent signed by all of the members of the Board;
and in the absence of such designation with respect to any meeting, and subject
to the provisions of Section 3.11 of these Bylaws, the meeting shall be held at
the principal office of the Corporation.
SECTION 3.11 CONSENT TO MEETINGS, ETC.
The transactions of any meeting of the Board of Directors,
however called and noticed or wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum is present and
if, either before or after the meeting, each of the directors not present signs
a written waiver of notice or a consent to holding such meeting, or an approval
of the minutes thereof. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
SECTION 3.12 ACTION WITHOUT MEETING.
Any action required or permitted to be taken by the Board
of Directors or any committee thereof may be taken without a
meeting, if all members of the Board or committee, as the case may
be, shall individually or collectively consent in writing to such
action. Such written consent or consents shall be filed with the
minutes of the proceedings of the Board or committee. Any
-8-
<PAGE> 9
certificate or other document which relates to action taken without a meeting
pursuant to this section shall state that the action was taken by unanimous
written consent of the Board of Directors or the committee without a meeting,
and that the Bylaws authorize the directors or committee to so act.
SECTION 3.13 TELEPHONIC CONFERENCES.
Members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
SECTION 3.14 COMPENSATION OF DIRECTORS.
Unless otherwise restricted by the Certificate of Incorporation
or these Bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be reimbursed their reasonable
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary for service as a director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like reimbursement and compensation for attending committee meetings.
ARTICLE IV
OFFICERS
SECTION 4.1 DESIGNATION, QUALIFICATION, SELECTION AND
TERM OF OFFICE OF OFFICERS.
The officers of the Corporation shall include a chairman of the
board, a president and chief executive officer, a vice president, a secretary
and a treasurer (who shall be the chief financial officer unless otherwise
designated by resolution of the Board of Directors, all of whom shall be chosen
by the Board of Directors, and such other officers as shall be appointed in
accordance with the provisions of Section 4.2 of these Bylaws. The chairman of
the board must be a director, but no other officers need be a director. One
person may hold two or more offices.
The officers of the Corporation except those appointed in
accordance with the provisions of Section 4.4 of these Bylaws shall be elected
by the Board of Directors at the annual organizational
-9-
<PAGE> 10
meeting provided for in Section 2.1 of these Bylaws, and each shall hold and
continue in office until he or she shall resign or shall be removed or otherwise
become disqualified to serve or until his or her successor shall be elected and
qualified. All officers shall serve at the pleasure of the Board unless
otherwise provided by the terms of a written agreement between the officer and
the Corporation duly approved by the Board or a committee of the Board having
authority to so act.
SECTION 4.2 OTHER OFFICERS.
The Board of Directors may, in its discretion, appoint one or
more vice chairman of the board, one or more additional vice presidents, one or
more assistant secretaries, one or more assistant treasurers, and such other
officers, agents, and employees as it may deem necessary or advisable, each of
whom shall have such powers and authority, and shall perform such duties as are
or may be conferred or prescribed by these Bylaws or as the Board of Directors
may from time to time direct or determine. The Board of Directors may delegate
to any officer the power to appoint and to prescribe the authority and duties of
any officer, agent or employee except of assistant secretaries, assistant
treasurers, and those whose powers and duties are hereinafter in this Article IV
specifically set forth. Subject to the provisions of this Article IV, any
assistant secretary, or assistant treasurer, may exercise any of the powers of
the secretary or the treasurer, respectively.
SECTION 4.3 REMOVAL AND RESIGNATION.
Any officer may be removed, either with or without cause, by a
majority of the directors at the time in office, at any regular or special
meeting of the Board, or except in case of an officer chosen by the Board of
Directors, by an officer upon whom such power of removal shall have been
conferred by a majority of the directors acting at a regular or special meeting
thereof.
Subject to the provisions of any written agreement described in
the last sentence of Section 4.1, any officer may resign at any time by giving
written notice to the Board of Directors or to the president, or to the
secretary of the Corporation. Any such resignation shall take effect at the date
of the receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 4.4 VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification, or any other cause shall be filled in the manner provided in
these Bylaws for regular appointments to such office except that the successor
may be chosen at any regular or special meeting of the Board of Directors.
-10-
<PAGE> 11
SECTION 4.5 COMPENSATION.
The amount of compensation which each officer shall receive, and
the manner and time of its payment shall be fixed and determined by the Board of
Directors, and subject to the provisions of any written agreement described in
the last sentence of Section 4.1, may be altered from time to time by the Board
at its pleasure. No officer shall be prevented from receiving such compensation
by reason of the fact he or she is also a director of the Corporation.
SECTION 4.6 CHAIRMAN OF THE BOARD.
The chairman of the board shall preside at all meetings of the
stockholders and at all meetings of the Board of Directors. He or she shall also
have such other powers and duties as may be prescribed by the Board of Directors
or the Bylaws.
SECTION 4.7 VICE CHAIRMAN.
In the absence or disability of chairman of the board, the vice
chairmen, in order of their rank as fixed by the Board of Directors, or if not
ranked, the vice chairmen designated by the Board of Directors, shall perform
all the duties of the chairman of the board, and when so acting shall have all
the powers of, and be subject to all the restrictions upon the chairman of the
board. The vice chairmen shall have such other powers and perform such other
duties as from time to time may be prescribed for them, respectively, by the
Board of Directors or the Bylaws.
SECTION 4.8 PRESIDENT.
In the absence or disability of the chairman of the board, the
president will perform all the duties of, and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the chairman of the
board. The president will be the chief executive officer of the Corporation and
shall, subject to the control of the Board of Directors, have general
supervision, direction and control of the business and affairs of the
Corporation. He or she shall have the general powers and duties of management
usually vested in the chief executive officer of a Corporation.
SECTION 4.9 VICE PRESIDENT.
In the absence or disability of the president, the vice
presidents in order of their rank as fixed by the Board of Directors, or if not
ranked, the vice president designated by the Board of Directors, shall perform
all the duties of the president, and when so acting shall have all the powers
of, and be subject to all the restrictions upon the president. The vice
presidents shall have such other powers and perform such other duties as from
time
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<PAGE> 12
to time may be prescribed for them, respectively, by the Board of
Directors or the Bylaws.
SECTION 4.10 SECRETARY.
The secretary shall keep, or cause to be kept, a book of minutes,
at the principal office or such other place as the Board of Directors may order,
of all meetings of directors and stockholders, with the time and place of
holding, whether regular or special, and if special, how authorized, the notice
thereof given, the names of those present at directors' meetings, the number of
shares present or represented at stockholders' meetings and the proceedings
thereof.
The secretary shall keep, or cause to be kept, at the principal
office or at the office of the Corporation's transfer agent, a share register,
or a duplicate share register, showing the names of the stockholders and their
addresses; the number and classes of shares held by each stockholder; the number
and dates of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the
meetings of the stockholders and of the Board of Directors required by the
Bylaws or by law to be given, and he or she shall keep the seal of the
Corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or by the Bylaws.
SECTION 4.11 TREASURER.
The treasurer shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the Corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all times be open to
inspection by any director.
The treasurer shall deposit all monies and other valuables in the
name and to the credit of the Corporation with such depositaries as may be
designated by the Board of Directors. He or she shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, shall render to the
chairman of the board, the president, and directors, whenever they request it,
an account of all of his or her transactions as treasurer and of the financial
condition of the Corporation, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or the Bylaws.
Unless another officer is so designated by the Board of Directors, the treasurer
shall be the
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chief financial officer and the principal accounting officer of the
Corporation.
ARTICLE V
COMMITTEES
SECTION 5.1 APPOINTMENT, POWERS AND PROCEEDINGS OF EXECUTIVE
COMMITTEE, AUDIT COMMITTEE, AND OTHER COMMITTEES.
The Board of Directors shall, by resolution passed by a majority
of the entire Board, designate an executive committee, an audit committee, a
compensation committee and such other committees as the Board of Directors may
deem appropriate, each committee to consist of one or more of the directors of
the Corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to papers which may require it; but no such committee shall have the
power or authority to amend the Certificate of Incorporation, adopt an agreement
of merger or consolidation, recommend to the stockholders a dissolution of the
Corporation, or a revocation of a dissolution, or a sale, lease or exchange of
all or substantially all of the Corporation's property and assets, or amend the
Bylaws of the Corporation; and, unless the enabling resolution expressly so
provides, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock. The Board shall prescribe from
time to time the manner in which proceedings of the committees shall be called
and conducted.
ARTICLE VI
OFFICES
SECTION 6.1 PRINCIPAL OFFICE.
The principal office for the transaction of the business of the
Corporation is hereby fixed and located at 201 North Figueroa Street, Suite 400,
Los Angeles, California 90012. The Board of Directors is hereby granted full
power and authority to change said principal office location. Any such change
shall be noted on the Bylaws by the secretary, opposite this section, or this
section may be amended to state the new location.
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SECTION 6.2 OTHER OFFICES.
Branch or subordinate offices may at any time be established by
the Board of Directors at any place or places where the Corporation is qualified
to do business.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1 SEAL.
The Board of Directors shall provide a suitable seal containing
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware", and may alter the same at its pleasure. The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced upon appropriate documents and instruments.
SECTION 7.2 STOCK CERTIFICATES.
A certificate or certificates for shares of the capital stock of
the Corporation shall be issued to each stockholder when any such shares are
fully paid up. Such certificates shall be in such form as the Board may approve
from time to time, having regard for the requirements of any exchange upon which
the capital stock of the Corporation may be traded. All such certificates shall
be signed by the chairman of the board, the president or a vice president and
the secretary or an assistant secretary, or be authenticated by facsimiles of
such signatures. Every certificate authenticated by a facsimile of a signature
must be countersigned by a transfer agent or transfer clerk, and be registered
by an incorporated bank or trust company, either domestic or foreign, as
registrar of transfers, before issuance. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he or she were such officer, transfer agent or registrar at
the date of issue.
Certificates for shares may be issued prior to full payment under
such restrictions and for such purposes as the Board of Directors or the Bylaws
may provide; provided, however, that any such certificate so issued prior to
full payment shall state the amount of the consideration to be paid therefor and
the amount paid thereon.
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SECTION 7.3 TRANSFER AGENTS AND REGISTRARS.
The Board of Directors may appoint and remove transfer agents and
registrars of transfers, and notwithstanding any of the provisions of Section
7.2 of these Bylaws that may be construed to the contrary, may, in the
discretion of the Board, require all stock certificates, warrants, scrip
certificates or scrip warrants to bear the signature of any such transfer agent
or of any such registrar of transfers.
SECTION 7.4 REGISTERED STOCKHOLDERS.
The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of the
State of Delaware.
SECTION 7.5 LOST OR DESTROYED CERTIFICATES.
In case any certificate for shares, or any bond, debenture or
other security issued by this Corporation, or by any Corporation of which it is
the lawful successor, is lost or destroyed, the Board of Directors may authorize
the issuance of a new instrument therefor, on such terms and conditions as the
Board may determine, after proof of such loss or destruction satisfactory to the
Board of Directors, and it may, in its discretion, require a bond or other
security, in an adequate amount, as indemnity against any claim that may be made
against this Corporation therefor. A new instrument may be issued without
requiring any bond or security when, in the judgment of the Board, it is proper
to do so.
SECTION 7.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
Any one of the chairman of the board, the president or any vice
president together with any one of the secretary or any assistant secretary of
this Corporation may vote, exercise written consents with respect to, or
otherwise represent, on behalf of this Corporation, any and all shares of any
other corporation or corporations standing in the name of this Corporation, and
may exercise, on behalf of this Corporation, any and all rights incidental to
said shares. Such authority may be exercised by such officers acting in person,
or by any other person or persons authorized, by proxy or power of attorney
signed by said officers, to vote or represent such shares.
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SECTION 7.7 CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for payment of money, notes or
other evidences of indebtedness, issued in the name of or payable to the
Corporation, and any and all securities owned or held by the Corporation
requiring signature for transfer, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board of Directors.
SECTION 7.8 CONTRACTS, ETC., HOW EXECUTED.
The Board of Directors, except as in the Bylaws otherwise
provided, may authorize any officer or officers, agent or agents, to enter into
any contract or execute any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances; and unless so authorized by the Board of Directors, no officer, agent
or employee shall have any power or authority to bind the Corporation by any
contract or engagement or to pledge its credit or to render it liable for any
purpose or to any amount.
SECTION 7.9 ANNUAL REPORTS AND FINANCIAL STATEMENTS.
The Board of Directors of this Corporation shall cause an annual
report to be sent to the stockholders within the times required by law.
The annual report shall include the following:
(a) An audited consolidated balance sheet, eliminating all
intercompany transactions, of the Corporation and its subsidiaries as of such
closing date.
(b) Audited consolidated surplus and income statements thereof
for the year ended on such closing date.
Such financial statements shall be prepared from the books and
records of the Corporation and shall be in accordance therewith. They shall be
prepared in a form sanctioned by sound accounting practices for the kind of
business carried on by the Corporation.
SECTION 7.10 INSPECTION OF BYLAWS.
The Corporation shall keep in its principal office for the
transaction of business, the original or a copy of the Bylaws as amended or
otherwise altered to date, certified by the secretary, which shall be open to
inspection by the stockholders at all reasonable times during office hours.
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SECTION 7.11 RESIGNATIONS AND VACANCIES.
Any director or committee member may resign at any time, by a
resignation in writing which shall take effect at the time specified therein, or
if no time is so specified such resignation shall take effect at the time of its
receipt by the president or secretary, or other person authorized to perform and
performing the duties of either office at the time of such receipt. The
acceptance of a resignation shall not be necessary to make it effective, unless
otherwise specified in the resignation. The persons (or person) having the
authority to fill a vacancy to be created by a resignation tendered to take
effect at a future time may elect or appoint a successor to take office when
such resignation becomes effective.
ARTICLE VIII
INDEMNIFICATION AND INSURING
OF DIRECTORS AND OFFICERS
SECTION 8.1 POLICY.
It is the policy and intention of the Corporation to provide to
its officers and directors broad and comprehensive indemnification from
liability to the fullest extent permitted by law.
SECTION 8.2 RIGHT TO INDEMNIFICATION.
Each person who was or is a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent permitted by the laws of the State of Delaware
against all costs, charges, expenses, liabilities and losses (including
attorneys' fees, judgments, fines, ERISA excise taxes and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in Section 8.3, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such
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<PAGE> 18
proceeding (or part thereof) was initiated or authorized by the Board of
Directors of the Corporation. The right to indemnification conferred in this
Article shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the Delaware General
Corporation Law requires, the payment of such expenses incurred by a director or
officer in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, satisfactory to the Board, by or
on behalf of such director or officer, to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under this Article or otherwise. The Corporation may, by action
of its Board of Directors, provide indemnification to employees and agents of
the Corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
SECTION 8.3 RIGHT OF CLAIMANT TO BRING SUIT.
If a claim under this Article is not paid in full by the
Corporation within thirty days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
failed to meet a standard of conduct which makes it permissible under Delaware
law for the Corporation to indemnify the claimant for the amount claimed.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
permissible in the circumstances because he or she has met such standard of
conduct, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel or its stockholders), that the claimant has
not met such standard of conduct, shall be a defense to the action or create a
presumption that the claimant has failed to meet such standard of conduct.
SECTION 8.4 NON-EXCLUSIVITY OF RIGHTS.
The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Article shall not be exclusive of any
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other right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 8.5 INSURANCE.
The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under Delaware law.
SECTION 8.6 EXPENSES AS A WITNESS.
To the extent that any director, officer, employee or agent of
the Corporation is by reason of such position, or a position with another entity
at the request of the Corporation, a witness in any action, suit or proceeding,
he or she shall be indemnified against all costs and expenses actually and
reasonably incurred by him or her or on his or her behalf in connection
therewith.
SECTION 8.7 INDEMNITY AGREEMENTS.
The Corporation may enter into indemnity agreements with the
persons who are members of its Board of Directors from time to time, and with
such officers, employees and agents as the Board may designate, such indemnity
agreements to provide in substance that the Corporation will indemnify such
persons to the full extent contemplated by this Article.
SECTION 8.8 EFFECT OF REPEAL OR MODIFICATION.
Any repeal or modification of this Article shall not result in
any liability for a director with respect to any action or omission occurring
prior to such repeal or modification.
ARTICLE IX
AMENDMENTS
SECTION 9.1 POWER OF SHAREHOLDERS.
Except as otherwise provided from time to time by law or by the
Certificate of Incorporation, the Bylaws, or any provision thereof, may be
amended or repealed and new Bylaws may be adopted the affirmative vote of
holders of not less than sixty-seven
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percent (67%) of the total voting power of all outstanding securities entitled
to vote generally in the election of directors of the Corporation.
SECTION 9.2 POWER OF DIRECTORS.
Subject to the right of stockholders to amend, repeal and adopt
Bylaws, and to the provisions of the Bylaws as from time to time amended by the
stockholders, the Bylaws, or any provision thereof, may be amended or repealed
and new Bylaws may be adopted by a majority of the authorized number of
directors.
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<PAGE> 1
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of August __, 1998, is made and
entered into by and between COHR, INC., a Delaware corporation ("Company"), and
Raymond E. List, an individual ("Executive").
RECITAL
1. On June 3, 1998, in order to induce Executive to serve as a senior
executive of the Company, the Company agreed to provide an employment agreement
and issue stock options to Executive.
2. The Executive and the Company hereby agree to the terms of such
employment.
3. A Stock Option Agreement of even date is attached hereto.
AGREEMENT
NOW, THEREFORE, Company and Executive agree as follows:
1. a. This Agreement shall be in effect from June 3, 1998 to and
including September 1, 1998, at which time Executive's employment may be
extended by mutual agreement of the Executive and the Company or terminated by
the Company or Executive.
b. Executive will be employed by Company in the position held
by Executive as of the effective date of this Agreement and pursuant to its
terms. Executive's job description as of the effective date hereof is attached
as Exhibit A. During his employment, Executive shall devote substantially all of
his business time, attention, skill, and energy to the performance of this
Agreement and shall, without the Company's prior written consent in each
instance, refrain from rendering (i) services of any kind to others for
compensation or (ii) services which would materially interfere with the
performance with his duties under this Agreement.
c. Notwithstanding the above, the Company and the Executive
agree that nothing herein shall preclude the Executive from managing or devoting
time to his personal investments, and receiving compensation therefrom,
including serving as a member of Fairfax Consulting Company, LLC and its
affiliated entities; managing or devoting time to the portfolio companies of
Fairfax Partners/The Venture Fund of Washington, L.P., Fairfax Management
Company II, LLC or their affiliated entities; serving on the board of directors
of any such companies; or serving on the board of
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<PAGE> 2
directors of other profit or non-profit entities, provided that such activities
do not materially adversely interfere with his duties to the Company.
2. a. Company shall pay a salary to Executive for the term hereof
at the rate of Ten Thousand Dollars per month.
b. In addition to his salary, and as an inducement to
Executive agreeing to be employed by Company, Executive is awarded options to
purchase 125,000 (One hundred and twenty-five thousand)] shares of COHR Common
Stock at an exercise price of $7.00 per share. This grant is made pursuant to a
Stock Option Agreement in the form attached hereto as Exhibit B. The Company
shall promptly take such action necessary to register the shares of Common Stock
underlying the option on Form S-8 (or such other form) to cause the shares to be
registered under the Securities Act of 1933, as amended.
c. All compensation provided pursuant to this Paragraph 2
shall be subject to customary income tax withholding and such other employee
deductions as are required by law with respect to compensation paid to an
employee.
d. In addition to the salary and stock options provided in
this Agreement, Executive shall throughout the term hereof (prior to death) be
entitled to receive all other benefits, at levels no less favorable than the
benefit levels generally afforded officers of the Company and on the same terms
as such benefits are made available to such officers, including medical, health,
and dental benefits. The Company shall also pay directly or reimburse the
Executive for all reasonable business expenses, including but not limited to
travel (including the cost of commercial coach airline tickets and business
meals) incurred by him in connection with his duties hereunder.
3. Executive acknowledges that he is a fiduciary of the Company and
as such is subject to duties to the Company, its Board of Directors and
Stockholders, including but not limited to the obligation to discharge his
duties (a) in good faith, (b) with the care an ordinarily prudent person in a
like position would exercise under similar circumstances, and (c) in a manner he
reasonably believes to be in the best interests of the Corporation.
4. Executive and the Company agree that Executive's services for the
Company create a relationship of confidence and trust between the Company and
Executive with respect to any information (a) applicable to the business of the
Company or (b) applicable to the business of any client or customer of the
Company which may be made known to Executive by the Company or by any client of
the Company, or learned by Executive in such context during the period of
Executive's service. All such information has commercial value in the business
in which Company is engaged and is hereinafter referred to as "Proprietary
Information."
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<PAGE> 3
The Company acknowledges and agrees that prior to his
engagement Executive possessed, and continues to possess, a broad body of
knowledge of health care and information technology generally, and specific
expertise in the areas of health care information systems, electronic commerce
within health care and other industries, health care group purchasing
organizations and inventory management.
Executive and the Company agree that all Proprietary
Information is the sole property of the Company, its assigns and its customers,
and the Company, its assigns and its customers shall be the sole owner of all
patents, copyrights, trade secrets and other rights in connection therewith.
Executive hereby assigns to the Company any rights it may have or acquire in
such Proprietary Information. At all times, both during Executive's services for
the Company and for a period of 12 months after its termination, Executive will
keep in confidence and trust all Proprietary Information or anything directly
relating to it without the written consent of the Company, except as may be
necessary in the ordinary course of performing Executive's duties hereunder.
Notwithstanding the foregoing, Proprietary Information shall
not be deemed to include, and Executive shall not be under any of the
aforementioned obligations with respect to, information that Executive can
document (a) was in the public domain at the time it was communicated to
Executive, (b) entered the public domain subsequent to the time it was
communicated to Executive through no fault of Executive, (c) was in Executive's
possession free of any obligation of confidence at the time it was communicated
to Executive, (d) is part of Executive's own skill, knowledge, know-how and
experience or (e) was disclosed in response to a valid order by a court or other
governmental body, and Executive provided the Company with prior written notice
of such disclosure in order to permit the Company to seek confidential treatment
of such information.
5. Executive acknowledges that he will be instrumental in the
business of the Company and its success. Accordingly, Executive agrees that
during the term of this Agreement, he will not, directly or indirectly, within
any location in the United States where the Company is transacting business
during the term of this Agreement, if earlier, or at the time of the termination
of Executive's services hereunder, as the case may be, engage or participate or
make financial investments in or become employed by or render advisory or other
services to or for any person, firm or corporation engaged in the business of,
and deriving substantially all of its revenues from, owning and operating
medical group purchasing organizations and/or the sale, lease and/or servicing
of medical equipment (the "Restricted Business"). Nothing herein contained,
however, shall restrict Executive from making any investment in any company
whose stock is listed on the National Securities Exchange or actively traded in
the over-the-counter market, so long as such investment does not give him the
right to control or influence the policy decisions of any such business or
enterprise which is engaged in and derives substantially all of its revenues
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from the Restricted Business, nor shall Executive be precluded from investing in
entities engaged in the Restricted Business and being able to nominate and elect
a representative to serve on the Board of Directors of any such companies.
6. For a period of one (1) year from and after the effective date of
termination or expiration of Executive's employment with Company, whether
pursuant to the terms of this Agreement or otherwise, Executive shall not:
a. Directly or indirectly solicit any executive or managerial
employee of Company to discontinue working for or representing Company for the
purpose of working for or representing any subsequent employer of Executive
which is a competitor of Company; or
b. Authorize or knowingly approve the taking of such actions
as those described above by other persons (on behalf of any such competitor) or
assist any such person, firm or corporation in taking such action.
7. In the event that Executive becomes involved in any claim, action
or legal proceeding brought by or against any person, including stockholders of
the Company, in connection with or as a result of the rendering of services
under this Agreement, the Company will reimburse the Executive for his legal and
other expenses (including the cost of any investigation or preparation) in
connection therewith as incurred. The Company will also indemnify and hold the
Executive harmless against any and all losses, liabilities, suits, claims,
costs, damages or expenses (including reasonable attorneys' fees) to Executive
in connection with or as a result of the rendering of services under this
Agreement, except to the extent that any such loss, liability, suit, claim,
cost, damage, or expense results from the willful misconduct of any such person
in performing the services that are the subject of this Agreement.
8. Executive acknowledges that he has been advised to seek an
attorney for advice regarding the effect of this Agreement prior to signing it.
9. If any claim is brought under this Agreement, or any dispute of
any nature whatsoever arises regarding the termination of this Agreement or the
termination of Executive's employment, the Company and Executive agree that such
claim or dispute shall be resolved in an arbitration proceeding before a single
arbitrator, to be mutually agreed, conducted under the auspices of the American
Arbitration Association, Los Angeles, California, and in accordance with its
Employment Dispute Resolution rules. The arbitrator agreed to under such rules
shall be empowered to resolve the dispute through consideration of the facts,
the terms of this Agreement, and any statute, law, regulation or defense
asserted by either party. The arbitrator shall be experienced in employment law
and his/her decision shall be in writing and contain findings of fact and
conclusions of law. If so
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authorized by the arbitrator, the prevailing party shall be entitled to recover
from tho non-prevailing party such damages as the arbitrator determines
appropriate based upon the legal theories asserted by either party in such
arbitration and reasonable expenses, including without limitation reasonable
attorneys' fees.
10. If any of the above provisions are found null, void, or
inoperative for any reason, the remaining provisions will remain in full force
and effect.
11. This Agreement may be executed by facsimile and in identical
counterparts. The Agreement will be binding on the parties once it has been
fully executed. Thereafter, the parties will exchange hard copies and all the
counterparts together shall constitute a single agreement. It shall not be
necessary to introduce more than one fully executed counterpart to enforce this
Agreement.
12. Any notice to the Company required or permitted hereunder shall
be given in writing to the secretary of Company either by personal service or by
registered mail postage prepaid addressed to Company at its then principal place
of business. Any such notice to Executive shall be given in like manner, and
mail shall be addressed to the Executive at his home address then shown in the
files of Company. Notice by mail will be deemed received three (3) business days
after the notice is deposited in the United States mail, postage prepaid.
13. This Agreement may be extended for an additional period or
subject to additional or different terms by written agreement of the parties.
14. This Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective successors, assigns, heirs
and legal representatives.
15. This Agreement contains the entire understanding between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be changed orally, but only by any instrument in writing signed by the party
against whom enforcement of any waiver, change, modification, extension, or
discharge is sought.
16. This Agreement shall be governed by California law.
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IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date above written.
"Company" "Executive"
COHR, INC.
-------------------------------
Raymond E. List
By:
---------------------------
Its:
--------------------------
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EXHIBIT A
EXECUTIVE JOB DESCRIPTION
Raymond List is the Chief Executive Officer of Cohr, Inc. He is responsible for
the general supervision, direction, and control of the business of the
corporation. He has the general powers and duties of management usually vested
in the Chief Executive Officer of a corporation, as well as such other powers
and duties as may be prescribed by the Board of Directors or the Company's
bylaws.
A-1
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EXHIBIT B
STOCK OPTION GRANT
B-0
<PAGE> 1
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered
into as of August __, 1998 (the "Date of Grant") by and between COHR Inc., a
Delaware corporation (the "Company"), and Raymond E. List ("Optionee").
RECITALS
On June 3, 1998, the Board of Directors of the Company
approved a grant to Optionee of an option to purchase shares of the common
stock, $.01 par value, of the Company (the "Common Stock") in accordance with
the terms and conditions set forth herein. The Company issued these stock
options in order to induce Optionee to serve as an executive of the Company, as
provided in Optionee's employment agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Option; Certain Terms and Conditions. As of the
date hereof ("Date of Grant"), the Company hereby grants to Optionee, and
Optionee hereby accepts, an option (the "Option") to purchase 125,000 shares of
Common Stock (the "Option Shares") at the Exercise Price per share of $7.00
("Exercise Price"). This Option shall expire at 5:00 p.m., Pacific Standard
Time, on June 1, 2008 (the "Expiration Date"), or on such earlier date as
provided herein, and shall be subject to all of the terms and conditions set
forth in this Agreement.
2. Vesting. The Optionee's right to exercise an Option shall
be become vested in accordance with the following schedule:
<TABLE>
<CAPTION>
Date of Vesting Percentage Vested
--------------- -----------------
<S> <C>
June 3, 1998 25% Vested (31.250 shares)
June 3, 1999 50% Vested (62,500 shares)
June 3, 2000 75% Vested (93,750 shares)
June 3, 2001 100% Vested (125,000 shares)
</TABLE>
For purposes of this Agreement, a "Vested Option" shall refer to that portion of
the Option which is exercisable pursuant to the above vesting schedule.
1
<PAGE> 2
3. Accelerated Vesting.
(a) Change in Control. In the event of a Change
in Control (as defined in the 1996 Stock Option Plan of COHR, Inc. (the "Plan"))
prior to the third anniversary of the Date of Grant, Optionee shall
automatically become 100% vested in the Option Shares and such Option shall be
immediately exercisable as to all shares covered thereby.
(b) Underwritten Public Offering.
Notwithstanding paragraph 2 above, in the event of an underwritten public
offering of Common Stock of the Company or by an Affiliate of the Company on or
after January 1, 1997, Optionee shall become 50% vested in the nonvested portion
of the Option awarded to such Optionee, determined as of the date of the
underwritten public offering. In such event, the remaining nonvested portion of
the Option awarded to Optionee, after application of the subparagraph (b), shall
thereafter become vested as follows:
(i) If the underwritten public offering
occurs prior to the first anniversary of the date the Option
is granted, then:
<TABLE>
<CAPTION>
Anniversary of
Date Option Granted Percentage Vested
-------------------- -----------------
<S> <C>
First Anniversary 33%
Second Anniversary 66%
Third Anniversary 100%
</TABLE>
(ii) If the underwritten public offering
occurs after the first anniversary but prior to the second
anniversary of the date the Option is granted, then:
<TABLE>
<CAPTION>
Anniversary of
Date Option Granted Percentage Vested
-------------------- -----------------
<S> <C>
Second Anniversary 50%
Third Anniversary 100%
</TABLE>
(iii) If the underwritten public offering
occurs after the second anniversary but prior to the third
anniversary of the date the Option is granted, then:
2
<PAGE> 3
<TABLE>
<CAPTION>
Anniversary of
Date Option Granted Percentage Vested
-------------------- -----------------
<S> <C>
Third Anniversary 100%
</TABLE>
4. Termination of Option.
(a) Expiration Date. Except as otherwise
provided herein, the Option shall terminate on the Expiration Date.
(b) If the Optionee dies while an Option is
exercisable under the terms of this Agreement, the Optionee's beneficiary may
exercise such rights, to the extent the Optionee could have done so immediately
preceding his death, within twelve (12) months after the Optionee's death, but
not later than the Option's Expiration Date.
(c) If the Optionee's employment is terminated
due to his permanent and total disability, as determined by the Committee, the
Optionee may exercise his Option, to the extent exercisable as of his
termination of employment, within twelve (12) months after termination, but not
later than the Option's Expiration Date.
(d) If the Optionee's employment is terminated
for any reason other than those set forth in sections 4(b) or (c) above, the
Optionee may exercise his Option, to the extent exercisable as of his
termination of employment, within nine (9) months after termination of
employment, but not later than the Option's Expiration Date.
5. Adjustments. In the event that the outstanding shares
of Common Stock are changed into or exchanged for cash or for a different number
or kind of shares or other securities of the Company, or of another corporation,
by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares (other
than for shares or securities of another corporation or by reason of
reorganization), then the Committee shall make appropriate and equitable
adjustments in the number and kind of shares that may thereafter be acquired
upon the exercise of the Option and the Exercise Price per share; provided,
however, that any such adjustments in the Option shall be made without changing
the aggregate Exercise Price of the then unexercised portion of the Option.
In the event of a "spin-off" or other substantial
distribution of assets of the Company which has a material diminutive effect
upon the Fair Market
3
<PAGE> 4
Value (as defined in the Plan) of the Company's Common Stock, the Committee may
in its discretion make an appropriate and equitable adjustment to the per share
and the aggregate Option Exercise Price to reflect such diminution.
Any adjustments made under this Section shall
parallel the adjustments made by the Committee under the Plan.
6. Exercise. Subject to Section 4 of this Agreement, the
Option shall be exercisable during Optionee's lifetime only by Optionee or by
his guardian or legal representative, and after Optionee's death only by the
Optionee's beneficiary. Optionee may designate his or her beneficiary or
beneficiaries or change such designation by delivery of a written beneficiary
designation to the Company, on such terms and conditions as determined by the
Committee. The Option may be exercised only by the delivery to the Company of a
written notice of such exercise, accompanied by payment in full of the aggregate
Exercise Price by any one or more of the following means:
(a) Certified or cashier's check payable to the
Company.
(b) By the delivery to the Company of a
certificate or certificates representing shares of Common Stock, duly endorsed
or accompanied by duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and clear of
any pledge, commitment, lien, claim or other encumbrance, such shares to be
valued on the basis of the aggregate Fair Market Value (as defined in the Plan)
on the date the Option is exercised, provided that the Company is not then
prohibited from purchasing or acquiring such shares of Common Stock and provided
that Optionee has either owned such shares of Common Stock for at least 6 months
(or such longer period as is determined by the Company to be required by
applicable accounting standards to avoid a charge to the Company's earnings) or
Optionee purchased such shares on the open market.
(c) Subject to procedures previously approved by
the Company, through the sale of the shares of Common Stock acquired on exercise
of this Option through a broker-dealer to whom Optionee has submitted an
irrevocable notice of exercise and irrevocable instructions to deliver promptly
to the Company the amount of sale proceeds sufficient to pay for such shares,
together with, if requested by the Company, the amount of federal, state, local
or foreign withholding taxes payable by reason of such exercise.
4
<PAGE> 5
7. Tax Withholding. The Company shall be entitled to
require payment or deduction from other compensation payable to Optionee of any
sums required by federal, state or local tax law to be withheld with respect to
the Option. Optionee may elect the withholding ("Share Withholding") by the
Company of a portion of the shares of Common Stock otherwise deliverable to
Optionee upon the exercise of the Option to satisfy the Company's withholding
obligation, subject to such terms and conditions for such election as the
Committee may impose. The Committee may, in its sole discretion revoke
Optionee's right to elect Share Withholding at any time before such election.
8. Notices. All notices and other communications required
or permitted to be given pursuant to this Agreement shall be in writing and
shall be deemed given if delivered personally, or five days after mailing by
certified or registered mail, postage prepaid, return receipt requested, to the
Company, at 21540 Plummer Street, Chatsworth, California 91311-4103, Attention:
Chief Financial Officer, or to Optionee at the address set forth beneath his or
her signature on the signature page hereto, or at such other addresses as each
may designate by written notice in the manner aforesaid.
9. Transferability. The Option and any interest therein
may not be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner, other than by will or by the laws of descent and
distribution. An Option shall be exercised only by the Optionee or his guardian
or legal representative.
10. Registration.
(a) The Optionee hereby warrants and represents
that the Options are being acquired and that the shares underlying the Options
will be acquired for the undersigned's own account, for investment and without
any present intention of distributing or reselling said shares or any of them
except as may be permitted under the Securities Act of 1933, as amended (the
"Act"), and the then applicable rules and regulations thereunder, and except and
as may be permitted by the California Corporate Securities Law of 1968, as
amended, and the then applicable rules and regulations thereunder, and that
Optionee will indemnify the Company against and hold it free and harmless from
any loss, damage, expense or liability resulting to the Company if any sale or
distribution of the shares by Optionee is contrary to the representation and
Agreement referred to above. The Company may, in its absolute discretion, take
whatever reasonable additional actions it deems appropriate to ensure the
observance and performance of such representation and agreement and to effect
compliance with the Act and any other
5
<PAGE> 6
federal or state securities laws or regulations. Without limiting the generality
of the foregoing, the Company may require an opinion of counsel reasonably
acceptable to it to the effect that any subsequent transfer of shares acquired
on an Option exercise does not violate the Act, and may issue stop-transfer
orders covering such shares. Share certificates evidencing stock issued on
exercise of this Option shall bear an appropriate legend referring to the
provisions of this paragraph and the agreements herein. The written
representation and agreement referred to in the first sentence of this paragraph
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.
(b) The Company shall not be required to issue
or deliver any certificate or certificates for shares of stock purchased upon
the exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions. The Company shall however use its best efforts to assist
in meeting these conditions.
(i) The admission of such shares to
listing on all stock exchanges on which such class of stock is
then listed;
(ii) The completion of any registration or
other qualification of such shares under any state or federal
law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory
body, which the Company shall, in its absolute discretion,
deem necessary or advisable; provided, however, that such
registration or qualification shall not be necessary if the
undersigned has provided the Company with an opinion of
counsel reasonably satisfactory to the Company to the effect
that registration or qualification is not required; and
(iii) The obtaining of any approval or
other clearance from any state or federal governmental agency
which the Company shall, in its absolute discretion, determine
to be necessary or advisable.
11. Stockholder Rights. No person or entity shall be entitled
to vote, receive dividends, or be deemed for any purpose the holder of any
Option Shares until the Option shall have been duly exercised to purchase such
Option Shares in accordance with the provisions of this Agreement.
12. Employment Rights. No provision of this Agreement or of
the Option granted hereunder shall (a) confer upon Optionee any right to
continue in
6
<PAGE> 7
the employ of the Company, or any of its subsidiaries or other affiliates, (b)
affect the right of the Company, and each of its subsidiaries or other
affiliates, to terminate the services of Optionee, with or without cause, or (c)
confer upon Optionee any right to participate in any employee welfare or benefit
plan or other program of the Company, or any of its subsidiaries or other
affiliates, other than the Plan. Optionee hereby acknowledges and agrees that
the Company and each of its subsidiaries or other affiliates may terminate the
services of Optionee at any time and for any reason, or for no reason, unless
Optionee and the Company, or such subsidiary or other affiliate, are parties to
a written agreement that expressly provides otherwise.
13. Amendments. This Agreement may be amended only by a
writing executed by the Company and Optionee which specifically states that it
is amending this Agreement.
14. Governing Law. This Agreement and the Option granted
hereunder shall be governed by, construed, and enforced in accordance with the
laws of the State of California.
15. Severability. If any part of this Agreement is declared by
any court or governmental authority to be unlawful or invalid, such unlawfulness
or invalidity shall not serve to invalidate any part of this Agreement not
declared to be unlawful or invalid. Any part so declared unlawful or invalid
shall, if possible, be construed in a manner which gives effect to the terms of
such part to the fullest extent possible while remaining lawful and valid.
IN WITNESS WHEREOF, the Company and the Optionee have duly
executed this Agreement as of the Date of Grant.
COHR INC., a Delaware corporation OPTIONEE
By:
---------------------------- ---------------------------
Signature
Title:
------------------------- ---------------------------
Raymond E. List
---------------------------
---------------------------
Address
7
<PAGE> 1
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of August __, 1998, is made and
entered into by and between COHR, INC., a Delaware corporation ("Company"), and
Steven Ritterbush, an individual ("Executive").
RECITAL
1. On June 3, 1998, in order to induce Executive to serve as a senior
executive of the Company, the Company agreed to provide an employment agreement
and issue stock options to Executive.
2. The Executive and the Company hereby agree to the terms of such
employment.
3. A Stock Option Agreement of even date is attached hereto.
AGREEMENT
NOW, THEREFORE, Company and Executive agree as follows:
1. a. This Agreement shall be in effect from June 3, 1998 to and
including September 1, 1998, at which time Executive's employment may be
extended by mutual agreement of the Executive and the Company or terminated by
the Company or by the Executive.
b. Executive will be employed by Company in the position held by
Executive as of the effective date of this Agreement and pursuant to its terms.
Executive's job description as of the effective date hereof is attached as
Exhibit A. Executive shall devote his time, attention, skill and energy to the
performance of this Agreement. Executive shall, without the Company's prior
written consent in each instance, refrain from rendering (a) services of any
kind to others for compensation or (b) services which would materially interfere
with the performance with his duties under this Agreement.
c. During the term of this Agreement, Executive will work 32
business days, or half of the 64 total business days occurring from June 3, 1998
to and including September 1, 1998. Executive will maintain a log of time worked
under this Agreement and provide each month's total number of days worked to the
CFO of the Company no later than the fifth day of the subsequent month. The
Company and the Executive may agree to work beyond this Agreement under the
terms of the Management Services Agreement.
-1-
<PAGE> 2
d. Notwithstanding the above, the Company and the Executive
agree that nothing herein shall preclude the Executive from managing or devoting
time to his personal investments, and receiving compensation therefore,
including serving as a member of Fairfax Consulting Company, LLC and its
affiliated entities; managing or devoting time to the portfolio companies of
Fairfax Partners/The Venture Fund of Washington, L.P., Fairfax Management
Company II, LLC or their affiliated entities; serving on the board of directors
of any such companies; or serving on the board of directors of other profit or
non-profit entities, provided that such activities do not materially adversely
interfere with his duties to the Company.
2. a. Company shall pay a salary to Executive for the term hereof
at the rate of Ten Thousand Dollars per month.
b. In addition to his salary, and as an inducement to
Executive agreeing to be employed by Company, Executive is awarded options to
purchase 91,667 (Ninety-one thousand, six hundred and sixty-seven) shares of
COHR Common Stock at an exercise price of $7.00 per share. This grant is made
pursuant to a Stock Option Agreement in the form attached hereto as Exhibit B.
The Company shall promptly take such action necessary to register the shares of
Common Stock underlying the option on Form S-8 (or such other form) to cause the
shares to be registered under the Securities Act of 1933, as amended.
c. All compensation provided pursuant to this Paragraph 2
shall be subject to customary income tax withholding and such other employee
deductions as are required by law with respect to compensation paid to an
employee.
d. In addition to the salary and stock options provided in
this Agreement, Executive shall throughout the term hereof (prior to death) be
entitled to receive all other benefits, at levels no less favorable than the
benefit levels generally afforded officers of the Company and on the same terms
as such benefits are made available to such officers, including medical, health,
and dental benefits. The Company shall also pay directly or reimburse the
Executive for all reasonable business expenses, including but not limited to
travel expense (including the cost of commercial coach airline tickets and
business meals) incurred by him in connection with his duties hereunder.
3. Executive acknowledges that he is a fiduciary of the Company
and as such is subject to duties to the Company, its Board of Directors and
Stockholders, including but not limited to the obligation to discharge his
duties (a) in good faith, (b) with the care an ordinarily prudent person in a
like position would exercise under similar circumstances, and (c) in a manner he
reasonably believes to be in the best interests of the Corporation.
-2-
<PAGE> 3
4. Executive and the Company agree that Executive's services for the
Company create a relationship of confidence and trust between the Company and
Executive with respect to any information (a) applicable to the business of the
Company or (b) applicable to the business of any client or customer of the
Company which may be made known to Executive by the Company or by any client of
the Company, or learned by Executive in such context during the period of
Executive's service. All such information has commercial value in the business
in which Company is engaged and is hereinafter referred to as "Proprietary
Information."
The Company acknowledges and agrees that prior to his
engagement, Executive possessed, and continues to possess, a broad body of
knowledge of health care and information technology generally, and specific
expertise in the areas of health care information systems, electronic commerce
within health care and other industries, health care group purchasing
organizations and inventory management.
Executive and the Company agree that all Proprietary
Information is the sole property of the Company, its assigns and its customers,
and the Company, its assigns and its customers shall be the sole owner of all
patents, copyrights, trade secrets and other rights in connection therewith.
Executive hereby assigns to the Company any rights it may have or acquire in
such Proprietary Information. At all times, both during Executive's services for
the Company and for a period of 12 months after its termination, Executive will
keep in confidence and trust all Proprietary Information or anything directly
relating to it without the written consent of the Company, except as may be
necessary in the ordinary course of performing Executive's duties hereunder.
Notwithstanding the foregoing, Proprietary Information shall
not be deemed to include, and Executive shall not be under any of the
aforementioned obligations with respect to, information that Executive can
document (a) was in the public domain at the time it was communicated to
Executive, (b) entered the public domain subsequent to the time it was
communicated to Executive through no fault of Executive, (c) was in Executive's
possession free of any obligation of confidence at the time it was communicated
to Executive, (d) is part of Executive's own skill, knowledge, know-how and
experience or (e) was disclosed in response to a valid order by a court or other
governmental body, and Executive provided the Company with prior written notice
of such disclosure in order to permit the Company to seek confidential treatment
of such information.
5. Executive acknowledges that he will be instrumental in the business
of the Company and its success. Accordingly, Executive agrees that during the
term of this Agreement, he will not, directly or indirectly, within any location
in the United States where the Company is transacting business during the term
of this Agreement, if earlier, or at the time of the termination of Executive's
services hereunder, as the case may be, engage or participate or make financial
investments
-3-
<PAGE> 4
in or become employed by or render advisory or other services to or for any
person, firm or corporation engaged in the business of, and deriving
substantially all of its revenues from, owning and operating medical group
purchasing organizations and/or the sale, lease and/or servicing of medical
equipment (the "Restricted Business"). Nothing herein contained, however, shall
restrict Executive from making any investment in any company whose stock is
listed on the National Securities Exchange or actively traded in the
over-the-counter market, so long as such investment does not give him the right
to control or influence the policy decisions of any such business or enterprise
which is engaged in and derives substantially all of its revenues from the
Restricted Business, nor shall Executive be precluded from investing in entities
engaged in the Restricted Business and being able to nominate and elect a
representative to serve on the Board of Directors of any such companies.
6. For a period of one (1) year from and after the effective date of
termination or expiration of Executive's employment with Company, whether
pursuant to the terms of this Agreement or otherwise, Executive shall not:
a. Directly or indirectly solicit any executive or
managerial employee of Company to discontinue working for or representing
Company for the purpose of working for or representing any subsequent employer
of Executive which is a competitor of Company; or
b. Authorize or knowingly approve the taking of such actions
as those described above by other persons (on behalf of any such competitor) or
assist any such person, firm or corporation in taking such action.
7. In the event that Executive becomes involved in any claim, action
or legal proceeding brought by or against any person, including stockholders of
the Company, in connection with or as a result of the rendering of services
under this Agreement, the Company will reimburse the Executive for his legal and
other expenses (including the cost of any investigation or preparation) in
connection therewith as incurred. The Company will also indemnify and hold the
Executive harmless against any and all losses, liabilities, suits, claims,
costs, damages or expenses (including reasonable attorneys' fees) to Executive
in connection with or as a result of the rendering of services under this
Agreement, except to the extent that any such loss, liability, suit, claim,
cost, damage, or expense results from the willful misconduct of any such person
in performing the services that are the subject of this Agreement.
8. Executive acknowledges that he has been advised to seek an attorney
for advice regarding the effect of this Agreement prior to signing it.
9. If any claim is brought under this Agreement, or any dispute of any
nature whatsoever arises regarding the termination of this Agreement or the
-4-
<PAGE> 5
termination of Executive's employment, the Company and Executive agree that such
claim or dispute shall be resolved in an arbitration proceeding before a single
arbitrator, to be mutually agreed, conducted under the auspices of the American
Arbitration Association, Los Angeles, California, and in accordance with its
Employment Dispute Resolution rules. The arbitrator agreed to under such rules
shall be empowered to resolve the dispute through consideration of the facts,
the terms of this Agreement, and any statute, law, regulation or defense
asserted by either party. The arbitrator shall be experienced in employment law
and his/her decision shall be in writing and contain findings of fact and
conclusions of law. If so authorized by the arbitrator, the prevailing party
shall be entitled to recover from tho non-prevailing party such damages as the
arbitrator determines appropriate based upon the legal theories asserted by
either party in such arbitration and reasonable expenses, including without
limitation reasonable attorneys' fees.
10. If any of the above provisions are found null, void, or inoperative
for any reason, the remaining provisions will remain in full force and effect.
11. This Agreement may be executed by facsimile and in identical
counterparts. The Agreement will be binding on the parties once it has been
fully executed. Thereafter, the parties will exchange hard copies and all the
counterparts together shall constitute a single agreement. It shall not be
necessary to introduce more than one fully executed counterpart to enforce this
Agreement.
12. Any notice to the Company required or permitted hereunder shall be
given in writing to the secretary of Company either by personal service or by
registered mail postage prepaid addressed to Company at its then principal place
of business. Any such notice to Executive shall be given in like manner, and
mail shall be addressed to the Executive at his home address then shown in the
files of Company. Notice by mail will be deemed received three (3) business days
after the notice is deposited in the United States mail, postage prepaid.
13. This Agreement may be extended for an additional period or subject
to additional or different terms by written agreement of the parties.
14. This Agreement shall inure to the benefit of, and shall be binding
upon, the parties hereto and their respective successors, assigns, heirs and
legal representatives.
15. This Agreement contains the entire understanding between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be changed orally, but only by any instrument in writing signed by the party
against whom enforcement of any waiver, change, modification, extension, or
discharge is sought.
-5-
<PAGE> 6
16. This Agreement shall be governed by California law.
IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date above written.
"Company" "Executive"
COHR, INC. ----------------------------------
Steven Ritterbush
By:
--------------------------
Its:
-------------------------
-6-
<PAGE> 7
EXHIBIT A
EXECUTIVE JOB DESCRIPTION
Steven Ritterbush is the Management Director of COHR, Inc. responsible for
identifying new business that can be added to COHR's business base.
A-1
<PAGE> 8
EXHIBIT B
STOCK OPTION GRANT
B-0
<PAGE> 1
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered
into as of August __, 1998 (the "Date of Grant") by and between COHR Inc., a
Delaware corporation (the "Company"), and Steven Ritterbush ("Optionee").
RECITALS
On June 3, 1998, the Board of Directors of the Company
approved a grant to Optionee of an option to purchase shares of the common
stock, $.01 par value, of the Company (the "Common Stock") in accordance with
the terms and conditions set forth herein. The Company issued these stock
options in order to induce Optionee to serve as an executive of the Company, as
provided in Optionee's employment agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Option; Certain Terms and Conditions. As of the
date hereof ("Date of Grant"), the Company hereby grants to Optionee, and
Optionee hereby accepts, an option (the "Option") to purchase 91,667 shares of
Common Stock (the "Option Shares") at the Exercise Price per share of $7.00
("Exercise Price"). This Option shall expire at 5:00 p.m., Pacific Standard
Time, on June 1, 2008 (the "Expiration Date"), or on such earlier date as
provided herein, and shall be subject to all of the terms and conditions set
forth in this Agreement.
2. Vesting. The Optionee's right to exercise an Option shall
be become vested in accordance with the following schedule:
<TABLE>
<CAPTION>
Date of Vesting Percentage Vested
--------------- -----------------
<S> <C>
June 3, 1998 25% Vested (22,917 shares)
June 3, 1999 50% Vested (45,834 shares)
June 3, 2000 75% Vested (68,750 shares)
June 3, 2001 100% Vested (91,667 shares)
</TABLE>
For purposes of this Agreement, a "Vested Option" shall refer to that portion of
the Option which is exercisable pursuant to the above vesting schedule.
1
<PAGE> 2
3. Accelerated Vesting.
(a) Change in Control. In the event of a Change
in Control (as defined in the 1996 Stock Option Plan of COHR, Inc. (the "Plan"))
prior to the third anniversary of the Date of Grant, Optionee shall
automatically become 100% vested in the Option Shares and such Option shall be
immediately exercisable as to all shares covered thereby.
(b) Underwritten Public Offering.
Notwithstanding paragraph 2 above, in the event of an underwritten public
offering of Common Stock of the Company or by an Affiliate of the Company on or
after January 1, 1997, Optionee shall become 50% vested in the nonvested portion
of the Option awarded to such Optionee, determined as of the date of the
underwritten public offering. In such event, the remaining nonvested portion of
the Option awarded to Optionee, after application of the subparagraph (b), shall
thereafter become vested as follows:
(i) If the underwritten public offering occurs prior
to the first anniversary of the date the Option is granted,
then:
<TABLE>
<CAPTION>
Anniversary of
Date Option Granted Percentage Vested
------------------- -----------------
<S> <C>
First Anniversary 33%
Second Anniversary 66%
Third Anniversary 100%
</TABLE>
(ii) If the underwritten public offering occurs after
the first anniversary but prior to the second anniversary of
the date the Option is granted, then:
<TABLE>
<CAPTION>
Anniversary of
Date Option Granted Percentage Vested
------------------- -----------------
<S> <C>
Second Anniversary 50%
Third Anniversary 100%
</TABLE>
(iii) If the underwritten public offering occurs
after the second anniversary but prior to the third
anniversary of the date the Option is granted, then:
2
<PAGE> 3
<TABLE>
<CAPTION>
Anniversary of
Date Option Granted Percentage Vested
------------------- -----------------
<S> <C>
Third Anniversary 100%
</TABLE>
4. Termination of Option.
(a) Expiration Date. Except as otherwise
provided herein, the Option shall terminate on the Expiration Date.
(b) If the Optionee dies while an Option is
exercisable under the terms of this Agreement, the Optionee's beneficiary may
exercise such rights, to the extent the Optionee could have done so immediately
preceding his death, within twelve (12) months after the Optionee's death, but
not later than the Option's Expiration Date.
(c) If the Optionee's employment is terminated
due to his permanent and total disability, as determined by the Committee, the
Optionee may exercise his Option, to the extent exercisable as of his
termination of employment, within twelve (12) months after termination, but not
later than the Option's Expiration Date.
(d) If the Optionee's employment is
terminated for any reason other than those set forth in sections 4(b) or (c)
above, the Optionee may exercise his Option, to the extent exercisable as of his
termination of employment, within nine (9) months after termination of
employment, but not later than the Option's Expiration Date.
5. Adjustments. In the event that the outstanding shares of
Common Stock are changed into or exchanged for cash or for a different number or
kind of shares or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares (other
than for shares or securities of another corporation or by reason of
reorganization), then the Committee shall make appropriate and equitable
adjustments in the number and kind of shares that may thereafter be acquired
upon the exercise of the Option and the Exercise Price per share; provided,
however, that any such adjustments in the Option shall be made without changing
the aggregate Exercise Price of the then unexercised portion of the Option.
In the event of a "spin-off" or other substantial
distribution of assets of the Company which has a material diminutive effect
upon the Fair Market
3
<PAGE> 4
Value (as defined in the Plan) of the Company's Common Stock, the Committee may
in its discretion make an appropriate and equitable adjustment to the per share
and the aggregate Option Exercise Price to reflect such diminution.
Any adjustments made under this Section shall
parallel the adjustments made by the Committee under the Plan.
6. Exercise. Subject to Section 4 of this Agreement, the
Option shall be exercisable during Optionee's lifetime only by Optionee or by
his guardian or legal representative, and after Optionee's death only by the
Optionee's beneficiary. Optionee may designate his or her beneficiary or
beneficiaries or change such designation by delivery of a written beneficiary
designation to the Company, on such terms and conditions as determined by the
Committee. The Option may be exercised only by the delivery to the Company of a
written notice of such exercise, accompanied by payment in full of the aggregate
Exercise Price by any one or more of the following means:
(a) Certified or cashier's check payable to the
Company.
(b) By the delivery to the Company of a
certificate or certificates representing shares of Common Stock, duly endorsed
or accompanied by duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and clear of
any pledge, commitment, lien, claim or other encumbrance, such shares to be
valued on the basis of the aggregate Fair Market Value (as defined in the Plan)
on the date the Option is exercised, provided that the Company is not then
prohibited from purchasing or acquiring such shares of Common Stock and provided
that Optionee has either owned such shares of Common Stock for at least 6 months
(or such longer period as is determined by the Company to be required by
applicable accounting standards to avoid a charge to the Company's earnings) or
Optionee purchased such shares on the open market.
(c) Subject to procedures previously approved by
the Company, through the sale of the shares of Common Stock acquired on exercise
of this Option through a broker-dealer to whom Optionee has submitted an
irrevocable notice of exercise and irrevocable instructions to deliver promptly
to the Company the amount of sale proceeds sufficient to pay for such shares,
together with, if requested by the Company, the amount of federal, state, local
or foreign withholding taxes payable by reason of such exercise.
7. Tax Withholding. The Company shall be entitled to
require
4
<PAGE> 5
payment or deduction from other compensation payable to Optionee of any sums
required by federal, state or local tax law to be withheld with respect to the
Option. Optionee may elect the withholding ("Share Withholding") by the Company
of a portion of the shares of Common Stock otherwise deliverable to Optionee
upon the exercise of the Option to satisfy the Company's withholding obligation,
subject to such terms and conditions for such election as the Committee may
impose. The Committee may, in its sole discretion revoke Optionee's right to
elect Share Withholding at any time before such election.
8. Notices. All notices and other communications required
or permitted to be given pursuant to this Agreement shall be in writing and
shall be deemed given if delivered personally, or five days after mailing by
certified or registered mail, postage prepaid, return receipt requested, to the
Company, at 21540 Plummer Street, Chatsworth, California 91311-4103, Attention:
Chief Financial Officer, or to Optionee at the address set forth beneath his or
her signature on the signature page hereto, or at such other addresses as each
may designate by written notice in the manner aforesaid.
9. Transferability. The Option and any interest therein may
not be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner, other than by will or by the laws of descent and
distribution. An Option shall be exercised only by the Optionee or his guardian
or legal representative.
10. Registration.
(a) The Optionee hereby warrants and represents
that the Options are being acquired and that the shares underlying the Options
will be acquired for the undersigned's own account, for investment and without
any present intention of distributing or reselling said shares or any of them
except as may be permitted under the Securities Act of 1933, as amended (the
"Act"), and the then applicable rules and regulations thereunder, and except and
as may be permitted by the California Corporate Securities Law of 1968, as
amended, and the then applicable rules and regulations thereunder, and that
Optionee will indemnify the Company against and hold it free and harmless from
any loss, damage, expense or liability resulting to the Company if any sale or
distribution of the shares by Optionee is contrary to the representation and
Agreement referred to above. The Company may, in its absolute discretion, take
whatever reasonable additional actions it deems appropriate to ensure the
observance and performance of such representation and agreement and to effect
compliance with the Act and any other federal or state securities laws or
regulations. Without limiting the generality of the
5
<PAGE> 6
foregoing, the Company may require an opinion of counsel reasonably acceptable
to it to the effect that any subsequent transfer of shares acquired on an Option
exercise does not violate the Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of this
paragraph and the agreements herein. The written representation and agreement
referred to in the first sentence of this paragraph shall, however, not be
required if the shares to be issued pursuant to such exercise have been
registered under the Act, and such registration is then effective in respect of
such shares.
(b) The Company shall not be required to issue
or deliver any certificate or certificates for shares of stock purchased upon
the exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions. The Company shall however use its best efforts to assist
in meeting these conditions.
(i) The admission of such shares to
listing on all stock exchanges on which such class of stock is
then listed;
(ii) The completion of any registration or
other qualification of such shares under any state or federal
law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory
body, which the Company shall, in its absolute discretion,
deem necessary or advisable; provided, however, that such
registration or qualification shall not be necessary if the
undersigned has provided the Company with an opinion of
counsel reasonably satisfactory to the Company to the effect
that registration or qualification is not required; and
(iii) The obtaining of any approval or
other clearance from any state or federal governmental agency
which the Company shall, in its absolute discretion, determine
to be necessary or advisable.
11. Stockholder Rights. No person or entity shall be
entitled to vote, receive dividends, or be deemed for any purpose the holder of
any Option Shares until the Option shall have been duly exercised to purchase
such Option Shares in accordance with the provisions of this Agreement.
12. Employment Rights. No provision of this Agreement or of
the Option granted hereunder shall (a) confer upon Optionee any right to
continue in the employ of the Company, or any of its subsidiaries or other
affiliates, (b) affect
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<PAGE> 7
the right of the Company, and each of its subsidiaries or other affiliates, to
terminate the services of Optionee, with or without cause, or (c) confer upon
Optionee any right to participate in any employee welfare or benefit plan or
other program of the Company, or any of its subsidiaries or other affiliates,
other than the Plan. Optionee hereby acknowledges and agrees that the Company
and each of its subsidiaries or other affiliates may terminate the services of
Optionee at any time and for any reason, or for no reason, unless Optionee and
the Company, or such subsidiary or other affiliate, are parties to a written
agreement that expressly provides otherwise.
13. Amendments. This Agreement may be amended only by a
writing executed by the Company and Optionee which specifically states that it
is amending this Agreement.
14. Governing Law. This Agreement and the Option granted
hereunder shall be governed by, construed, and enforced in accordance with the
laws of the State of California.
15. Severability. If any part of this Agreement is declared
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any part of this
Agreement not declared to be unlawful or invalid. Any part so declared unlawful
or invalid shall, if possible, be construed in a manner which gives effect to
the terms of such part to the fullest extent possible while remaining lawful and
valid.
IN WITNESS WHEREOF, the Company and the Optionee have duly
executed this Agreement as of the Date of Grant.
COHR INC., a Delaware corporation OPTIONEE
By:
---------------------------
Title: ---------------------------------
------------------------ Signature
---------------------------------
Steven Ritterbush
---------------------------------
---------------------------------
Address
7
<PAGE> 1
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of August __, 1998, is made and
entered into by and between COHR, INC., a Delaware corporation ("Company"), and
Peter Socha, an individual ("Executive").
RECITAL
1. On June 3, 1998, in order to induce Executive to serve as a senior
executive of the Company, the Company agreed to provide an employment agreement
and issue stock options to Executive.
2. The Executive and the Company hereby agree to the terms of such
employment.
3. A Stock Option Agreement of even date is attached hereto.
AGREEMENT
NOW, THEREFORE, Company and Executive agree as follows:
1. a. This Agreement shall be in effect from June 3, 1998 to and
including September 1, 1998, at which time Executive's employment may be
extended by mutual agreement of the Executive and the Company or terminated by
the Company or Executive.
b. Executive will be employed by Company in the position held
by Executive as of the effective date of this Agreement and pursuant to its
terms. Executive's job description as of the effective date hereof is attached
as Exhibit A. During his employment, Executive shall devote substantially all of
his business time, attention, skill, and energy to the performance of this
Agreement and shall, without the Company's prior written consent in each
instance, refrain from rendering (i) services of any kind to others for
compensation or (ii) services which would materially interfere with the
performance with his duties under this Agreement.
c. Notwithstanding the above, the Company and the Executive
agree that nothing herein shall preclude the Executive from managing or devoting
time to his personal investments, and receiving compensation therefrom,
including serving as a member of Fairfax Consulting Company, LLC and its
affiliated entities; managing or devoting time to the portfolio companies of
Fairfax Partners/The Venture Fund of Washington, L.P., Fairfax Management
Company II, LLC or their affiliated entities; serving on the board of directors
of any such companies; or serving on the board of
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<PAGE> 2
directors of other profit or non-profit entities, provided that such activities
do not materially adversely interfere with his duties to the Company.
2. a. Company shall pay a salary to Executive for the term hereof
at the rate of Ten Thousand Dollars per month.
b. In addition to his salary, and as an inducement to
Executive agreeing to be employed by Company, Executive is awarded options to
purchase 108,333 (One hundred and eight thousand, three hundred and
thirty-three) shares of COHR Common Stock at an exercise price of $7.00 per
share. This grant is made pursuant to a Stock Option Agreement in the form
attached hereto as Exhibit B. The Company shall promptly take such action
necessary to register the shares of Common Stock underlying the option on Form
S-8 (or such other form) to cause the shares to be registered under the
Securities Act of 1933, as amended.
c. All compensation provided pursuant to this Paragraph 2
shall be subject to customary income tax withholding and such other employee
deductions as are required by law with respect to compensation paid to an
employee.
d. In addition to the salary and stock options provided in
this Agreement, Executive shall throughout the term hereof (prior to death) be
entitled to receive all other benefits, at levels no less favorable than the
benefit levels generally afforded officers of the Company and on the same terms
as such benefits are made available to such officers, including medical, health,
and dental benefits. The Company shall also pay directly or reimburse the
Executive for all reasonable business expenses, including but not limited to
travel (including the cost of commercial coach airline tickets and business
meals) incurred by him in connection with his duties hereunder.
3. Executive acknowledges that he is a fiduciary of the Company and
as such is subject to duties to the Company, its Board of Directors and
Stockholders, including but not limited to the obligation to discharge his
duties (a) in good faith, (b) with the care an ordinarily prudent person in a
like position would exercise under similar circumstances, and (c) in a manner he
reasonably believes to be in the best interests of the Corporation.
4. Executive and the Company agree that Executive's services for the
Company create a relationship of confidence and trust between the Company and
Executive with respect to any information (a) applicable to the business of the
Company or (b) applicable to the business of any client or customer of the
Company which may be made known to Executive by the Company or by any client of
the Company, or learned by Executive in such context during the period of
Executive's service. All such information has commercial value in the business
in which Company is engaged and is hereinafter referred to as "Proprietary
Information."
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<PAGE> 3
The Company acknowledges and agrees that prior to his
engagement Executive possessed, and continues to possess, a broad body of
knowledge of health care and information technology generally, and specific
expertise in the areas of health care information systems, electronic commerce
within health care and other industries, health care group purchasing
organizations and inventory management.
Executive and the Company agree that all Proprietary
Information is the sole property of the Company, its assigns and its customers,
and the Company, its assigns and its customers shall be the sole owner of all
patents, copyrights, trade secrets and other rights in connection therewith.
Executive hereby assigns to the Company any rights it may have or acquire in
such Proprietary Information. At all times, both during Executive's services for
the Company and for a period of 12 months after its termination, Executive will
keep in confidence and trust all Proprietary Information or anything directly
relating to it without the written consent of the Company, except as may be
necessary in the ordinary course of performing Executive's duties hereunder.
Notwithstanding the foregoing, Proprietary Information shall
not be deemed to include, and Executive shall not be under any of the
aforementioned obligations with respect to, information that Executive can
document (a) was in the public domain at the time it was communicated to
Executive, (b) entered the public domain subsequent to the time it was
communicated to Executive through no fault of Executive, (c) was in Executive's
possession free of any obligation of confidence at the time it was communicated
to Executive, (d) is part of Executive's own skill, knowledge, know-how and
experience or (e) was disclosed in response to a valid order by a court or other
governmental body, and Executive provided the Company with prior written notice
of such disclosure in order to permit the Company to seek confidential treatment
of such information.
5. Executive acknowledges that he will be instrumental in the business
of the Company and its success. Accordingly, Executive agrees that during the
term of this Agreement, he will not, directly or indirectly, within any location
in the United States where the Company is transacting business during the term
of this Agreement, if earlier, or at the time of the termination of Executive's
services hereunder, as the case may be, engage or participate or make financial
investments in or become employed by or render advisory or other services to or
for any person, firm or corporation engaged in the business of, and deriving
substantially all of its revenues from, owning and operating medical group
purchasing organizations and/or the sale, lease and/or servicing of medical
equipment (the "Restricted Business"). Nothing herein contained, however, shall
restrict Executive from making any investment in any company whose stock is
listed on the National Securities Exchange or actively traded in the
over-the-counter market, so long as such investment does not give him the right
to control or influence the policy decisions of any such business or enterprise
which is engaged in and derives substantially all of its revenues
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<PAGE> 4
from the Restricted Business, nor shall Executive be precluded from investing in
entities engaged in the Restricted Business and being able to nominate and elect
a representative to serve on the Board of Directors of any such companies.
6. For a period of one (1) year from and after the effective date of
termination or expiration of Executive's employment with Company, whether
pursuant to the terms of this Agreement or otherwise, Executive shall not:
a. Directly or indirectly solicit any executive or managerial
employee of Company to discontinue working for or representing Company for the
purpose of working for or representing any subsequent employer of Executive
which is a competitor of Company; or
b. Authorize or knowingly approve the taking of such actions
as those described above by other persons (on behalf of any such competitor) or
assist any such person, firm or corporation in taking such action.
7. In the event that Executive becomes involved in any claim,
action or legal proceeding brought by or against any person, including
stockholders of the Company, in connection with or as a result of the rendering
of services under this Agreement, the Company will reimburse the Executive for
his legal and other expenses (including the cost of any investigation or
preparation) in connection therewith as incurred. The Company will also
indemnify and hold the Executive harmless against any and all losses,
liabilities, suits, claims, costs, damages or expenses (including reasonable
attorneys' fees) to Executive in connection with or as a result of the rendering
of services under this Agreement, except to the extent that any such loss,
liability, suit, claim, cost, damage, or expense results from the willful
misconduct of any such person in performing the services that are the subject of
this Agreement.
8. Executive acknowledges that he has been advised to seek an
attorney for advice regarding the effect of this Agreement prior to signing it.
9. If any claim is brought under this Agreement, or any dispute of
any nature whatsoever arises regarding the termination of this Agreement or the
termination of Executive's employment, the Company and Executive agree that such
claim or dispute shall be resolved in an arbitration proceeding before a single
arbitrator, to be mutually agreed, conducted under the auspices of the American
Arbitration Association, Los Angeles, California, and in accordance with its
Employment Dispute Resolution rules. The arbitrator agreed to under such rules
shall be empowered to resolve the dispute through consideration of the facts,
the terms of this Agreement, and any statute, law, regulation or defense
asserted by either party. The arbitrator shall be experienced in employment law
and his/her decision shall be in writing and contain findings of fact and
conclusions of law. If so
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<PAGE> 5
authorized by the arbitrator, the prevailing party shall be entitled to recover
from tho non-prevailing party such damages as the arbitrator determines
appropriate based upon the legal theories asserted by either party in such
arbitration and reasonable expenses, including without limitation reasonable
attorneys' fees.
10. If any of the above provisions are found null, void, or
inoperative for any reason, the remaining provisions will remain in full force
and effect.
11. This Agreement may be executed by facsimile and in identical
counterparts. The Agreement will be binding on the parties once it has been
fully executed. Thereafter, the parties will exchange hard copies and all the
counterparts together shall constitute a single agreement. It shall not be
necessary to introduce more than one fully executed counterpart to enforce this
Agreement.
12. Any notice to the Company required or permitted hereunder shall
be given in writing to the secretary of Company either by personal service or by
registered mail postage prepaid addressed to Company at its then principal place
of business. Any such notice to Executive shall be given in like manner, and
mail shall be addressed to the Executive at his home address then shown in the
files of Company. Notice by mail will be deemed received three (3) business days
after the notice is deposited in the United States mail, postage prepaid.
13. This Agreement may be extended for an additional period or
subject to additional or different terms by written agreement of the parties.
14. This Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective successors, assigns, heirs
and legal representatives.
15. This Agreement contains the entire understanding between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be changed orally, but only by any instrument in writing signed by the party
against whom enforcement of any waiver, change, modification, extension, or
discharge is sought.
16. This Agreement shall be governed by California law.
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<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date above written.
"Company" "Executive"
COHR, INC.
--------------------------
Peter Socha
By:
--------------------------
Its:
-------------------------
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<PAGE> 7
EXHIBIT A
EXECUTIVE JOB DESCRIPTION
Peter Socha is the Executive Vice President of Operations of COHR, Inc.
responsible for Purchase Connection and COHR MasterPlan operations east of the
Mississippi.
A-1
<PAGE> 8
EXHIBIT B
STOCK OPTION GRANT
B-0
<PAGE> 1
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered
into as of August __, 1998 (the "Date of Grant") by and between COHR Inc., a
Delaware corporation (the "Company"), and Peter Socha ("Optionee").
RECITALS
On June 3, 1998, the Board of Directors of the Company
approved a grant to Optionee of an option to purchase shares of the common
stock, $.01 par value, of the Company (the "Common Stock") in accordance with
the terms and conditions set forth herein. The Company issued these stock
options in order to induce Optionee to serve as an executive of the Company, as
provided in Optionee's employment agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Option; Certain Terms and Conditions. As of the
date hereof ("Date of Grant"), the Company hereby grants to Optionee, and
Optionee hereby accepts, an option (the "Option") to purchase 108,333 shares of
Common Stock (the "Option Shares") at the Exercise Price per share of $7.00
("Exercise Price"). This Option shall expire at 5:00 p.m., Pacific Standard
Time, on June 1, 2008 (the "Expiration Date"), or on such earlier date as
provided herein, and shall be subject to all of the terms and conditions set
forth in this Agreement.
2. Vesting. The Optionee's right to exercise an Option shall
be become vested in accordance with the following schedule:
<TABLE>
<CAPTION>
Date of Vesting Percentage Vested
--------------- -----------------
<S> <C>
June 3, 1998 25% Vested (27,083 shares)
June 3, 1999 50% Vested (54,167 shares)
June 3, 2000 75% Vested (81,250 shares)
June 3, 2001 100% Vested (108,333 shares)
</TABLE>
For purposes of this Agreement, a "Vested Option" shall refer to that portion of
the Option which is exercisable pursuant to the above vesting schedule.
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<PAGE> 2
3. Accelerated Vesting.
(a) Change in Control. In the event of a Change
in Control (as defined in the 1996 Stock Option Plan of COHR, Inc. (the "Plan"))
prior to the third anniversary of the Date of Grant, Optionee shall
automatically become 100% vested in the Option Shares and such Option shall be
immediately exercisable as to all shares covered thereby.
(b) Underwritten Public Offering.
Notwithstanding paragraph 2 above, in the event of an underwritten public
offering of Common Stock of the Company or by an Affiliate of the Company on or
after January 1, 1997, Optionee shall become 50% vested in the nonvested portion
of the Option awarded to such Optionee, determined as of the date of the
underwritten public offering. In such event, the remaining nonvested portion of
the Option awarded to Optionee, after application of the subparagraph (b), shall
thereafter become vested as follows:
(i) If the underwritten public offering occurs prior
to the first anniversary of the date the Option is granted,
then:
<TABLE>
<CAPTION>
Anniversary of
Date Option Granted Percentage Vested
------------------- -----------------
<S> <C>
First Anniversary 33%
Second Anniversary 66%
Third Anniversary 100%
</TABLE>
(ii) If the underwritten public offering occurs after
the first anniversary but prior to the second anniversary of
the date the Option is granted, then:
<TABLE>
<CAPTION>
Anniversary of
Date Option Granted Percentage Vested
------------------- -----------------
<S> <C>
Second Anniversary 50%
Third Anniversary 100%
</TABLE>
(iii) If the underwritten public offering occurs
after the second anniversary but prior to the third
anniversary of the date the Option is granted, then:
2
<PAGE> 3
<TABLE>
<CAPTION>
Anniversary of
Date Option Granted Percentage Vested
------------------- -----------------
<S> <C>
Third Anniversary 100%
</TABLE>
4. Termination of Option.
(a) Expiration Date. Except as otherwise
provided herein, the Option shall terminate on the Expiration Date.
(b) If the Optionee dies while an Option is
exercisable under the terms of this Agreement, the Optionee's beneficiary may
exercise such rights, to the extent the Optionee could have done so immediately
preceding his death, within twelve (12) months after the Optionee's death, but
not later than the Option's Expiration Date.
(c) If the Optionee's employment is terminated
due to his permanent and total disability, as determined by the Committee, the
Optionee may exercise his Option, to the extent exercisable as of his
termination of employment, within twelve (12) months after termination, but not
later than the Option's Expiration Date.
(d) If the Optionee's employment is terminated
for any reason other than those set forth in sections 4(b) or (c) above, the
Optionee may exercise his Option, to the extent exercisable as of his
termination of employment, within nine (9) months after termination of
employment, but not later than the Option's Expiration Date.
5. Adjustments. In the event that the outstanding shares
of Common Stock are changed into or exchanged for cash or for a different number
or kind of shares or other securities of the Company, or of another corporation,
by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares (other
than for shares or securities of another corporation or by reason of
reorganization), then the Committee shall make appropriate and equitable
adjustments in the number and kind of shares that may thereafter be acquired
upon the exercise of the Option and the Exercise Price per share; provided,
however, that any such adjustments in the Option shall be made without changing
the aggregate Exercise Price of the then unexercised portion of the Option.
In the event of a "spin-off" or other substantial
distribution of assets of the Company which has a material diminutive effect
upon the Fair Market
3
<PAGE> 4
Value (as defined in the Plan) of the Company's Common Stock, the Committee may
in its discretion make an appropriate and equitable adjustment to the per share
and the aggregate Option Exercise Price to reflect such diminution.
Any adjustments made under this Section shall
parallel the adjustments made by the Committee under the Plan.
6. Exercise. Subject to Section 4 of this Agreement, the
Option shall be exercisable during Optionee's lifetime only by Optionee or by
his guardian or legal representative, and after Optionee's death only by the
Optionee's beneficiary. Optionee may designate his or her beneficiary or
beneficiaries or change such designation by delivery of a written beneficiary
designation to the Company, on such terms and conditions as determined by the
Committee. The Option may be exercised only by the delivery to the Company of a
written notice of such exercise, accompanied by payment in full of the aggregate
Exercise Price by any one or more of the following means:
(a) Certified or cashier's check payable to the
Company.
(b) By the delivery to the Company of a
certificate or certificates representing shares of Common Stock, duly endorsed
or accompanied by duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and clear of
any pledge, commitment, lien, claim or other encumbrance, such shares to be
valued on the basis of the aggregate Fair Market Value (as defined in the Plan)
on the date the Option is exercised, provided that the Company is not then
prohibited from purchasing or acquiring such shares of Common Stock and provided
that Optionee has either owned such shares of Common Stock for at least 6 months
(or such longer period as is determined by the Company to be required by
applicable accounting standards to avoid a charge to the Company's earnings) or
Optionee purchased such shares on the open market.
(c) Subject to procedures previously approved by
the Company, through the sale of the shares of Common Stock acquired on exercise
of this Option through a broker-dealer to whom Optionee has submitted an
irrevocable notice of exercise and irrevocable instructions to deliver promptly
to the Company the amount of sale proceeds sufficient to pay for such shares,
together with, if requested by the Company, the amount of federal, state, local
or foreign withholding taxes payable by reason of such exercise.
7. Tax Withholding. The Company shall be entitled to
require
4
<PAGE> 5
payment or deduction from other compensation payable to Optionee of any sums
required by federal, state or local tax law to be withheld with respect to the
Option. Optionee may elect the withholding ("Share Withholding") by the Company
of a portion of the shares of Common Stock otherwise deliverable to Optionee
upon the exercise of the Option to satisfy the Company's withholding obligation,
subject to such terms and conditions for such election as the Committee may
impose. The Committee may, in its sole discretion revoke Optionee's right to
elect Share Withholding at any time before such election.
8. Notices. All notices and other communications required
or permitted to be given pursuant to this Agreement shall be in writing and
shall be deemed given if delivered personally, or five days after mailing by
certified or registered mail, postage prepaid, return receipt requested, to the
Company, at 21540 Plummer Street, Chatsworth, California 91311-4103, Attention:
Chief Financial Officer, or to Optionee at the address set forth beneath his or
her signature on the signature page hereto, or at such other addresses as each
may designate by written notice in the manner aforesaid.
9. Transferability. The Option and any interest therein
may not be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner, other than by will or by the laws of descent and
distribution. An Option shall be exercised only by the Optionee or his guardian
or legal representative.
10. Registration.
(a) The Optionee hereby warrants and represents
that the Options are being acquired and that the shares underlying the Options
will be acquired for the undersigned's own account, for investment and without
any present intention of distributing or reselling said shares or any of them
except as may be permitted under the Securities Act of 1933, as amended (the
"Act"), and the then applicable rules and regulations thereunder, and except and
as may be permitted by the California Corporate Securities Law of 1968, as
amended, and the then applicable rules and regulations thereunder, and that
Optionee will indemnify the Company against and hold it free and harmless from
any loss, damage, expense or liability resulting to the Company if any sale or
distribution of the shares by Optionee is contrary to the representation and
Agreement referred to above. The Company may, in its absolute discretion, take
whatever reasonable additional actions it deems appropriate to ensure the
observance and performance of such representation and agreement and to effect
compliance with the Act and any other federal or state securities laws or
regulations. Without limiting the generality of the
5
<PAGE> 6
foregoing, the Company may require an opinion of counsel reasonably acceptable
to it to the effect that any subsequent transfer of shares acquired on an Option
exercise does not violate the Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of this
paragraph and the agreements herein. The written representation and agreement
referred to in the first sentence of this paragraph shall, however, not be
required if the shares to be issued pursuant to such exercise have been
registered under the Act, and such registration is then effective in respect of
such shares.
(b) The Company shall not be required to issue
or deliver any certificate or certificates for shares of stock purchased upon
the exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions. The Company shall however use its best efforts to assist
in meeting these conditions.
(i) The admission of such shares to
listing on all stock exchanges on which such class of stock is
then listed;
(ii) The completion of any registration or
other qualification of such shares under any state or federal
law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory
body, which the Company shall, in its absolute discretion,
deem necessary or advisable; provided, however, that such
registration or qualification shall not be necessary if the
undersigned has provided the Company with an opinion of
counsel reasonably satisfactory to the Company to the effect
that registration or qualification is not required; and
(iii) The obtaining of any approval or
other clearance from any state or federal governmental agency
which the Company shall, in its absolute discretion, determine
to be necessary or advisable.
11. Stockholder Rights. No person or entity shall be
entitled to vote, receive dividends, or be deemed for any purpose the holder of
any Option Shares until the Option shall have been duly exercised to purchase
such Option Shares in accordance with the provisions of this Agreement.
12. Employment Rights. No provision of this Agreement or of
the Option granted hereunder shall (a) confer upon Optionee any right to
continue in the employ of the Company, or any of its subsidiaries or other
affiliates, (b) affect
6
<PAGE> 7
the right of the Company, and each of its subsidiaries or other affiliates, to
terminate the services of Optionee, with or without cause, or (c) confer upon
Optionee any right to participate in any employee welfare or benefit plan or
other program of the Company, or any of its subsidiaries or other affiliates,
other than the Plan. Optionee hereby acknowledges and agrees that the Company
and each of its subsidiaries or other affiliates may terminate the services of
Optionee at any time and for any reason, or for no reason, unless Optionee and
the Company, or such subsidiary or other affiliate, are parties to a written
agreement that expressly provides otherwise.
13. Amendments. This Agreement may be amended only by a
writing executed by the Company and Optionee which specifically states that it
is amending this Agreement.
14. Governing Law. This Agreement and the Option granted
hereunder shall be governed by, construed, and enforced in accordance with the
laws of the State of California.
15. Severability. If any part of this Agreement is declared
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any part of this
Agreement not declared to be unlawful or invalid. Any part so declared unlawful
or invalid shall, if possible, be construed in a manner which gives effect to
the terms of such part to the fullest extent possible while remaining lawful and
valid.
IN WITNESS WHEREOF, the Company and the Optionee have duly
executed this Agreement as of the Date of Grant.
COHR INC., a Delaware corporation OPTIONEE
By:
---------------------------- ---------------------------
Signature
Title:
------------------------- ---------------------------
Peter Socha
---------------------------
---------------------------
Address
7
<PAGE> 1
EXHIBIT 11
COHR Inc. and Subsidiaries
COMPUTATION OF NET LOSS PER SHARE
(unaudited)
(in thousands, except net loss per share)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------
1998 1997
------ ------
<S> <C> <C>
Net loss attributable to common stock .............. $(1,088) $ (355)
Common share information:
Average shares outstanding for basic loss
per share ...................................... 6,433 6,419
Dilutive effect of stock options and warrants ....
------ ------
Shares for diluted loss per share ................ 6,433 6,419
====== ======
Net loss per common share:
Basic ............................................ $(0.17) $(0.06)
====== ======
Diluted .......................................... $(0.17) $(0.06)
====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COHR INC.,
FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 15,042
<SECURITIES> 0
<RECEIVABLES> 14,780
<ALLOWANCES> 4,414
<INVENTORY> 6,457
<CURRENT-ASSETS> 42,334
<PP&E> 6,378
<DEPRECIATION> 5,741
<TOTAL-ASSETS> 51,451
<CURRENT-LIABILITIES> 14,760
<BONDS> 0
0
0
<COMMON> 887
<OTHER-SE> 35,195
<TOTAL-LIABILITY-AND-EQUITY> 51,451
<SALES> 26,513
<TOTAL-REVENUES> 26,513
<CGS> 18,618
<TOTAL-COSTS> 8,664
<OTHER-EXPENSES> 479
<LOSS-PROVISION> 180
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,088)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,088)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,088)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
<PAGE> 1
EXHIBIT 99.1
Thursday, August 13, 1998
COMPANY PRESS RELEASE
Source: COHR Inc.
COHR REVENUES RISE 6.9 PERCENT IN THE FIRST QUARTER
CHATSWORTH, CA -- COHR Inc. (NASDAQ-CHRI) today announced revenues of $26.5
million for its first quarter ended June 30, 1998, an increase of 6.9% over the
first quarter of the prior fiscal year. The net loss for the first quarter of
fiscal year 1999 was $1.1 million, or $0.17 per basic share, compared to a net
loss of $355,000, or $0.06 per basic share, in the first quarter of fiscal year
1998.
Included in the $1.1 million net loss were special charges of $479,000,
representing severance costs incurred during the quarter. In addition, the net
loss included continuing legal expenses associated with pending shareholder
litigation.
Ray List, Chief Executive Officer of COHR Inc. commented, "The top-line growth
at a time when the Company is restructuring and emerging from a difficult period
in its history is truly gratifying. Our customers continue to want the
high-quality services we offer." List continued, "Our focus is not only on
revenue growth, but also on reducing administrative expenses, improving
operating margins and managing our balance sheet more effectively. Between
January and June of this year, we reduced our overall headcount by 10%. Our goal
is to restore the Company to profitability as quickly as possible, and the first
quarter represented a good start."
The COHR MasterPlan segment, the Company's equipment sales and servicing group
and largest operating division, generated revenues of $20.8 million in the first
quarter, compared to $19.2 million in last year's first quarter. The Purchase
Connection segment, which includes the Company's group purchasing organization
(GPO) and other ancillary businesses, produced revenues of $5.7 million in the
quarter, compared to $5.6 million in last year's first quarter, with revenue
growth in the GPO being partially offset by declines in the ancillary
businesses.
The Company's annual Shareholder's Meeting is scheduled for August 14, 1998, at
11:00 a.m. (PDT), at the Company's headquarters in Chatsworth, California. The
Company will not conduct a conference call in conjunction with this earnings
release.
COHR Inc. is a national outsourcing service organization providing equipment
sales and servicing, group purchasing and other ancillary services to hospitals,
integrated health systems and alternative site providers.
<PAGE> 2
This press release includes statements regarding anticipated future developments
that are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Because such statements involve risks and
uncertainties, the Company's actual future results could differ materially from
historical results and from those set forth in the forward-looking statements.
Some of the factors that could cause actual results to differ materially include
the effect of final accounting adjustments, the collectibility of accounts
receivable, competitive conditions, the effect of prior restatements of
financial statements on the results of operations or on relationships with
customers, and other factors identified in the Company's documents filed from
time to time with the Securities and Exchange Commission.
*******
COHR INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS -- (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
- ---------------------------------------------- ---------------------------------- ----------------------------------
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
- ---------------------------------------------- ---------------------------------- ----------------------------------
Revenues $ 26,513 $ 24,811
- ---------------------------------------------- ---------------------------------- ----------------------------------
Direct Operating Expenses 18,618 17,148
- ---------------------------------------------- ---------------------------------- ----------------------------------
Gross Margin 7,895 7,663
- ---------------------------------------------- ---------------------------------- ----------------------------------
Selling, General and Administrative Expenses 8,664 8,518
- ---------------------------------------------- ---------------------------------- ----------------------------------
Special Charges 479 ____
- ---------------------------------------------- ---------------------------------- ----------------------------------
Operating Loss $ (1,248) $ (855)
- ---------------------------------------------- ---------------------------------- ----------------------------------
Interest Income, Net 160 296
- ---------------------------------------------- ---------------------------------- ----------------------------------
Loss Before Income Tax Benefit (1,088) (559)
- ---------------------------------------------- ---------------------------------- ----------------------------------
Income Tax Benefit ______ 204
- ---------------------------------------------- ---------------------------------- ----------------------------------
Net Loss $ (1,088) $ (355)
========= =========
- ---------------------------------------------- ---------------------------------- ----------------------------------
Net Loss Per Share - Basic $ (0.17) $ (0.06)
========= =========
- ---------------------------------------------- ---------------------------------- ----------------------------------
Number of Shares Used to Compute Net Loss
Per Share - Basic 6,433 6,419
- ---------------------------------------------- ---------------------------------- ----------------------------------
</TABLE>
