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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
__________________________
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
__________________________
FOR QUARTER ENDED MARCH 31, 1997 COMMISSION FILE NUMBER 0-8640
SYNCOR INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 85-0229124
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6464 CANOGA AVENUE, WOODLAND HILLS, CALIFORNIA 91311
(Address of principal executive offices) (Zip Code)
(818) 737-4000
(Registrant's telephone number, including area code)
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
___ ___
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date. As of March 31, 1997, 9,946,494 shares of $.05 par
value common stock were outstanding.
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SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
INDEX
_____
PAGE
____
Part I. Financial Information
Item 1. Consolidated Condensed Financial Statements
Balance Sheets as of
March 31, 1997 and December 31, 1996. . . . . . . . . . . . . 2
Statements of Income for three months
ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . . 3
Statements of Cash Flows for three months
ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . . 4
Notes to Consolidated Condensed Financial Statements . . . . . 5
Item 2. Management's Discussion and Analysis of Financial Condition . . 6
Part II. Other Information . . . . . . . . . . . . . . . . . . . . . . . 8
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except per share data)
MARCH 31, DECEMBER 31,
1997 1996
--------- -----------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $29,943 $25,214
Short-term investments 2,513 1,258
Accounts receivable, net 57,859 51,964
Inventory 5,939 7,827
Net assets of discontinued operations 1,198 1,198
Prepaids and other current assets 6,677 5,519
_________________________
Total current assets 104,129 92,980
Marketable investment securities 1,241 1,239
Property and equipment, net 21,234 21,532
Excess of purchase price over net assets acquired, net 14,076 14,207
Other assets 15,593 15,605
_________________________
$156,273 $145,563
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 48,198 $ 38,851
Accrued liabilitie 4,182 3,249
Accrued wages and related costs 8,618 10,757
Federal and state taxes payable 3,546 2,284
Current maturities of long-term debt 2,605 2,324
_________________________
Total current liabilities 67,149 57,465
Long-term debt, net of current maturities 7,296 7,595
Deferred compensation 1,971 1,971
Stockholders' equity:
Common stock, $.05 par value 567 567
Additional paid-in capital 53,087 53,072
Unrealized loss on investments (25) (27)
Employee stock ownership loan guarantee (4,283) (4,544)
Foreign currency translation adjustment 171 (157)
Retained earnings 43,580 40,234
Treasury stock, at cost; 1,397 shares at March 31,
1997 and 1,126 shares at December 31, 1996 (13,240) (10,613)
_________________________
Net stockholders' equity 79,857 78,532
_________________________
$156,273 $145,563
=========================
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share data)
THREE MONTHS ENDED MARCH 31,
____________________________
1997 1996
___________ __________
(UNAUDITED)
Net sales $93,084 $92,021
Cost of sales 72,968 71,801
__________________________
Gross profit 20,116 20,220
Operating, selling and administrative expenses 17,270 17,908
___________________________
Operating income 2,846 2,312
Other income, net 2,731 731
____________________________
Income before taxes 5,577 3,043
Provision for income taxes 2,231 1,217
___________________________
Net income from continuing operations 3,346 1,826
Discontinued operations, net of tax benefit - (120)
___________________________
Net income $ 3,346 $ 1,706
===========================
Net income per share - Primary $ .32 $ .16
===========================
Weighted average shares outstanding - Primary 10,359 10,468
===========================
Net income per share - Fully Diluted $ .32 $ .16
===========================
Weighted average shares outstanding - Fully Diluted 10,359 10,468
===========================
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
THREE MONTHS ENDED MARCH 31,
1997 1996
___________ __________
(UNAUDITED)
Cash flows from operating activities:
Net income $ 3,346 $1,706
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,195 2,506
Amortization of ESSOP loan guarantee 261 450
Decrease (increase) in:
Accounts receivables, net (5,896) (3,542)
Inventory 1,888 198
Other current assets (1,158) 2,204
Increase (decrease) in:
Accounts payable 9,162 2,719
Accrued liabilities 1,118 628
Accrued wages and related costs (2,139) (1,313)
Federal and state taxes payable 1,262 (86)
Foreign currency translation adjustment 328 (5)
________________________
Net cash provided by operating activities 10,367 5,465
________________________
Cash flows from investing and financing activities:
Purchase of property and equipment, net (1,448) (1,474)
(Decrease) in short-term investments (1,255) 283
Increase in other non-current assets (307) (715)
Net proceeds from (repayment of) short-term debt 281 (11)
Repayment of long-term debt (299) (489)
Issuance of common stock 15 -
Reacquisition of common stock for treasury (2,627) -
Unrealized (loss) gain on investments 2 3
________________________
Net cash used in investing and financing activities (5,638) (2,403)
________________________
Net increase in cash and cash equivalents 4,729 3,062
Cash and cash equivalents at beginning of period 25,214 23,022
________________________
Cash and cash equivalents at end of period $29,943 $26,084
========================
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
1. GENERAL. The accompanying unaudited consolidated condensed
financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to form 10-Q.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair
presentation have been included. The results of the three
months ended March 31, 1997, are not necessarily indicative of
the results to be expected for the full year. For further
information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report
and Form 10-K for the period ended December 31, 1996.
2. ADOPTION OF FINANCIAL ACCOUNTING STANDARDS No. 123 "ACCOUNTING
FOR STOCK-BASED COMPENSATION." Prior to January 1, 1996, the
Company accounted for its stock option plan in accordance with
the provisions of Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees," and
related interpretations. As such, compensation expense would
be recorded on the date of grant only if the current market
price of the underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted SFAS No. 123, "Accounting
for Stock-Based Compensation," which permits entities to
recognize as expense over the vesting period the fair value of
all stock based awards on the date of grant. Alternatively,
SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion 25 and provide pro forma net income
and pro forma earnings per share disclosures for employee
stock option grants made in 1995 and future years as if the
fair-value-based method defined in SFAS No. 123 had been
applied.
The Company has elected to continue to apply the provisions of
APB Opinion No. 25 and provides the pro forma disclosure
provision of SFAS No. 123, accordingly, no compensation cost
has been recognized for its stock options in the financial
statements.
3. ADOPTION OF FINANCIAL ACCOUNTING STANDARDS No. 128 "EARNINGS
PER SHARE." The Financial Accounting Standards Board recently
issued Statement of Financial Accounting No. 128, "Earnings
Per Share," which is required to be adopted for financial
statements issued for periods ending after December 15, 1997.
This statement establishes new, simplified standards for
computing and presenting earnings per share. It replaces the
traditional presentation of primary earnings per share and
fully diluted earning per share with presentations of basic
earnings per share and diluted earnings per share,
respectively. When adopted by the Company, basic earnings per
share is expected to increase slightly from primary earnings
per share and diluted earnings per share is expected to
approximate fully diluted earnings per share.
4. TREASURY STOCK: During the first quarter of 1997, the Company
purchased 270,000 shares of its common stock in the open
market at an average price of $9.73 per share. These shares
were classified as "treasury stock at cost," on the
accompanying balance sheet.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
NET SALES
Consolidated net sales for the first quarter of 1997 increased 1.2
percent or $1.1 million to $93.1 million versus $92.0 million for
the first quarter of 1996.
There were three major factors which affected sales results in the
first quarter of 1997. First, the market for cardiology products
continues to grow. Cardiolite(R), a proprietary heart imaging
agent which the Company has preferential distribution rights to,
increased 15 percent on a year to year basis. However, this growth
has come at the expense of thallium, a lower priced generic heart
imaging agent. Thallium sales, on a quarter to quarter comparison,
declined by 18 percent. In addition, the cardiac stress agent, IV
Persantine, which was a proprietary product, is now generic. While
volumes have remained relatively high for I.V. Persantine, the
Company experienced a significant price decline for this product.
When taken together, the net change for these three major
cardiology products amounted to 1.6 percent. The outlook for the
sales performance of these three products is not expected to change
significantly until new applications for Cardiolite(R) are approved
by the Food and Drug Administration (FDA). Late in 1997, the
Company anticipates the approval by the FDA of additional
indications for Cardiolite(R), which has the potential to offer
significant sales increases. Also, the Company anticipates the
market introduction of several new oncology products in 1997,
including Verluma and Quadramet.
Secondly, the Company made a number of pharmacy acquisitions during
1995. These acquisitions added to the sales gains in 1996, however
there were no significant acquisitions in 1996. Therefore, the
year-to-year growth in sales normally attributed to pharmacy store
expansion does not exist in 1997.
Thirdly, the Company continues to experience a decline in its
"bulk" radiopharmaceutical business, as it converts those customers
to "unit dose" and competition increases among the manufacturers of
radiopharmaceuticals for this business.
In the first quarter of 1997, the Company announced it had lost a
competitive bid to supply products to a large hospital buying group
to a competitor. The annual value of the contract with members of
this buying group is estimated to be in the range of $60 million to
$65 million. The Company believe that it will continue to service
many of the existing members despite the award of the contract to
another service provider. It is difficult to quantify the
financial impact that the loss of this contract will have on
Syncor. The Company estimated that the potential negative impact
in 1997 could be in the range of $5 million to $10 million for
revenue and $1 million to $2 million for pre-tax profits. The
Company has initiated actions to minimize any potential negative
impact on its near-term financial results by continuing to provide
service to those members who value the broad scope of services that
Syncor provides.
GROSS PROFIT
Gross profit for the first quarter of 1997 decreased $.1 million to
$20.1 million, and as a percentage of net sales to 21.6 percent,
compared to 22.0 percent of net sales or $20.2 million for the
comparable quarter in 1996.
The gross margin percentage in the first quarter 1997 declined as
a result of price increases the Company experienced on a number of
material components, including kits and generators. These price
increases were absorbed by the Company and not passed on to
customers. THESE MATERIAL EXPENSE INCREASES WERE PARTIALLY OFFSET
BY LABOR SAVINGS RESULTING FROM A LOWER BONUS ACCRUAL IN 1997
COMPARED TO THE FIRST QUARTER OF 1996.
OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
Operating, selling and administrative expenses declined by 3.6
percent for the first quarter of 1997 or $.6 million to $17.2
million, and as a percentage of sales decreased to 18.6 percent
from 19.5 percent for the same period in 1996.
THE DECLINE IN OPERATING, SELLING AND ADMINISTRATIVE EXPENSES FOR
THE FIRST QUARTER OF 1997 IS THE RESULT OF DECREASED LABOR COSTS
ASSOCIATED WITH ACCRUING BONUS EXPENSES AT A LESSER RATE IN 1997
VERSUS 1996. The Company also experienced a decrease in
depreciation expense due to delayed purchases and of some fully
depreciated assets. These decreases were partially offset by
higher costs associated with the Company's Core Business
Improvement Program, the expense of relocating its corporate
headquarters and its annual sales meeting. The Company may accrue
bonuses at a higher rate later in the year if the Company's
earnings continue to remain strong throughout the balance of the
current year.
The Company is making significant investments in new business
opportunities which are aimed at increasing its long-term
competitiveness. These opportunities include, continued domestic
and international expansion, the re-engineering of critical
business practices and associated information systems, backward
integration into the manufacturing of certain radiopharmaceuticals
and the investment in new imaging business. The Company expects to
continue the increased level of expenditures in the operating,
selling and administrative expense categories for the next two
years in the areas of re-engineering opportunities, backward
integration in manufacturing and expansion.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash, cash equivalents and short-term investments
of $33.7 million at March 31, 1997, compared with $27.7 million at
December 31, 1996. The Company's total debt position of $9.9
million at March 31, 1997, was unchanged compare to the debt
position at December 31, 1996. Working capital increased by $1.5
million to $37.0 million at March 31, 1997, compared to $35.5
million at December 31, 1996. Days sales outstanding on receivables
increased to 55 days at March 31, 1997, compared to 50 days at
December 31, 1996.
The Company believes sufficient internal and external sources exist
to fund operations and future expansion programs. At March 31,
1997, the Company had unused lines of credit of $18.5 million to
fund short-term needs.
SAFE HARBOR STATEMENT
Statements which are not historical facts, including statements
about our confidence, strategies and expectations, opportunities,
industry and market growth, demand and acceptance of new and
existing products and return on investments are forward looking
statements that involve risks and uncertainties, including without
limitation, the effect of general economic and market conditions,
supply and demand for the Company's products, competitor pricing,
maintenance of the Company's current market position and other
factors. Given these uncertainties, undo reliance should not be
place on such forward looking statements.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
STOCK REPURCHASE PROGRAM
________________________
During the first quarter of 1997, the Company purchased 270,000
shares of its common stock in the open market at an average price
of $9.73 per share. These shares were classified as "treasury
stock at cost," on the accompanying balance sheet. An additional
137,100 shares have been purchased in the open market through May
94, 1997 at an average price of $8.61.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
________
10. Material Contracts
10.1 Loan Agreement, dated March 31, 1997, among Syncor
Pharmaceuticals, Inc., as borrower, the Company as guarantor, and
The First National Bank of Chicago, as lender.
10.2 Employment Agreement, dated January 1, 1997, between
Monty Fu, Chairman of the Board, and the Company.
10.3 Employment Agreement, dated January 1, 1997, between
Robert Funari, President and Chief Executive Officer, and the
Company.
11. Statement Re: Computation of Per Share Earnings
Computation can be clearly determined from the material
contained in Part I of this Form 10-Q.
27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
___________________
Form 8-K dated April 7, 1997 was filed by the Company as a
result of the acquisition of Golden Pharmaceuticals, Inc.
<PAGE>
SIGNATURE
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.
SYNCOR INTERNATIONAL CORPORATION
(Registrant)
May 15, 1997 By: /s/ Michael E. Mikity
______________________
Michael E. Mikity
Senior Vice President and
Chief Financial Officer
(Principal Financial /
Accounting Officer)
INDEX TO EXHIBITS
EXHIBIT NO.
___________
10. Material Contracts
10.1 Loan Agreement, dated March 31, 1997, among Syncor
Pharmaceuticals, Inc., as borrower, the Company as guarantor, and
The First National Bank of Chicago, as lender.
10.2 Employment Agreement, dated January 1, 1997, between
Monty Fu, Chairman of the Board, and the Company.
10.3 Employment Agreement, dated January 1, 1997, between
Robert Funari, President and Chief Executive Officer, and the
Company.
11. Statement Re: Computation of Per Share Earnings
Computation can be clearly determined from the material
contained in Part I of this Form 10-Q.
27. Financial Data Schedule
<PAGE>
March 31, 1997
Syncor Pharmaceuticals, Inc.
6464 Canoga Avenue
Woodland Hills, California 91367
Re: $6,500,000 Loan Facility
Ladies and Gentlemen:
This letter agreement (this "Agreement") shall constitute
the agreement of The First National Bank of Chicago, a national
banking association ("Lender"), to make a term loan of up to
$6,500,000 to Syncor Pharmaceuticals, Inc., a Delaware corporation
("Borrower"), pursuant to the terms and conditions described herein
for the purpose of financing the purchase of certain assets of
Golden Pharmaceuticals, Inc.
1. Definitions. The following terms used in this
Agreement shall have the following meanings:
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date with respect to an Interest Period for a
Eurodollar Rate Loan, the rate per annum obtained by dividing (i)
the rate at which Lender offers to place deposits in U.S. dollars
with first-class banks in the London interbank market at 11:00 a.m.
(London time) two Business Days prior to the first day of the
related Interest Period in the approximate amount of the related
Eurodollar Loan, and for a maturity corresponding to the related
Interest Period by (ii) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements (including any marginal,
emergency, supplemental, special or other reserves) applicable on
such Interest Rate Determination Date to any member bank of the
Federal Reserve System in respect of "Eurocurrency liabilities" as
defined in Regulation D (or any successor category of liabilities
under Regulation D).
"Affiliate" means, as applied to any Person, any other
Person directly or indirectly controlling, controlled by, or under
common control with, that Person. For the purposes of this
definition, "control" (including, with correlative meanings, the
terms "controlling," "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
"Alternate Base Rate" means, at any time, the higher of
(i) the rate which is 1/2 of 1% per annum in excess of the Federal
Funds Effective Rate or (ii) the rate that Lender announces from
time to time as its corporate base lending rate, as in effect from
time to time.
"Alternate Base Rate Loan" means Loans bearing interest
at rates determined by reference to the Alternate Base Rate as
provided in subsection 3(a).
"Borrower Obligations" has the meaning set forth in
Section 12.
"Business Day" means, unless otherwise provided for in
this Agreement, any day excluding Saturday or Sunday on which
Lender is open for business in Illinois. For the Eurodollar Rate
Loans, "Business Day" means any day excluding Saturday or Sunday on
which Lender is open for business in Illinois and London and
dealing in offshore dollars.
"Closing Date" means the date on or before April 1, 1997
on which the initial borrowing of the Loans is made.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Consolidated Capital Expenditures" means, for any
period, the sum of (i) the aggregate of all expenditures (whether
paid in cash or other consideration or accrued as a liability and
including that portion of any lease which is capitalized in
accordance with GAAP on the consolidated balance sheet of Guarantor
and its Subsidiaries) by Guarantor and its Subsidiaries during that
period that, in conformity with GAAP, are included in "additions
to property, plant or equipment" or comparable items reflected in
the consolidated statement of cash flows of Guarantor and its
Subsidiaries.
"Contingent Obligation" means, as to any Person, (i) any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not
contingent, (A) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (B) to
advance or supply funds (x) for the purchase or payment of any such
primary obligation or (y) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (C) to purchase
property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or
(D) otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof; provided, however, that
the term "Contingent Obligation" shall not include endorsements of
instruments for deposit or collection in the ordinary course of
business; and (ii) any obligations of such Person under any
interest rate agreement or any future, swap, currency contract,
forward contract or financial derivative. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Dollars" and the sign "$" mean the lawful money of the
United States of America.
"Domestic Subsidiary" means, with respect to any Person,
any Subsidiary of such Person that is organized under the laws of
any jurisdiction forming a part of the United States.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time. Section references to ERISA
are to ERISA, as in effect at the date of this Agreement, and to
any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" means any person (as defined in Section
3(9) of ERISA) which together with Borrower or Guarantor would be
a member of the same "controlled group" within the meaning of
Section 414(b), (m), (c) and (o) of the Code.
"Eurodollar Rate Loans" means Loans bearing interest at
rates determined by reference to the Adjusted Eurodollar Rate as
provided in subsection 3(a).
"Event of Default" means each of the events set forth in
Section 11.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor statute.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate equal for each day during such period to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Lender
from three Federal funds brokers of recognized standing selected by
Lender.
"Fixed Charge Coverage Ratio" means, with respect to
Guarantor and determined on a consolidated basis in accordance with
GAAP, the ratio of (i) the sum of net income before taxes plus
interest expense plus depreciation expense plus rental expense
minus Consolidated Capital Expenditures to (ii) the sum of interest
expense plus rental expense plus the current portion of long-term
debt (as of the end of the most recent fiscal quarter). The Fixed
Charge Coverage Ratio shall be calculated at the end of each fiscal
quarter based on the results of that quarter and each of the 3
immediately preceding fiscal quarters.
"GAAP" means generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, in
each case as the same are applicable to the circumstances as of the
date of determination.
"Guarantor" means Syncor International Corporation, a
Delaware corporation and the wholly-owning parent of Borrower.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, fees and
charges) of such Person for borrowed money or for the deferred
purchase price of property or services, (ii) the undrawn amount of
or unreimbursed amount under all letters of credit issued for the
account of such Person and all drafts drawn thereunder, (iii)
all liabilities secured by any lien on any property owned by such
Person, whether or not such liabilities have been assumed by such
Person, (iv) the aggregate amount required to be capitalized in
conformity with GAAP under leases under which such Person is the
lessee and (v) all Contingent Obligations of such Person.
"Interest Payment Date" means (i) with respect to any
Alternate Base Rate Loan, the last day of each month, commencing on
the first such date to occur after the Closing Date, and (ii) with
respect to any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Loan; provided that in the case of each
Interest Period of longer than three months "Interest Payment Date"
shall also include each date that is three months after the
commencement of such Interest Period.
"Interest Period" has the meaning assigned to that term
in subsection 3(b).
"Interest Rate Determination Date" means, with respect to
any Interest Period, the second Business Day prior to the first day
of such Interest Period.
"Loans" means the Alternate Base Loans and the Eurodollar
Rate Loans comprising the then outstanding borrowing made pursuant
to subsection 2(a).
"Material Adverse Effect" means (i) a material adverse
effect upon the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Borrower or Guarantor, as
the case may be, or any of their respective Subsidiaries or (ii)
the impairment of the ability of Lender to enforce, the
Obligations.
"Maturity Date" means April 1, 2002 or, if such Maturity
Date is extended pursuant to Section 2(c), April 1, 2004.
"Note" has the meaning set forth in Section 2(b).
"Notice of Conversion/Continuation" has the meaning
assigned to that term in subsection 3(f).
"Obligations" means all obligations of every nature of
Borrower from time to time owed to Lender under this Agreement or
the Note, whether for principal, interest, fees, expenses,
indemnification or otherwise.
"Parent Guaranty" has the meaning set forth in Section
12.
"Payment Office" means (i) the office of Lender located
at One First National Plaza, 11th Floor, Chicago, Illinois 60670 or
(ii) such other office of Lender as may from time to time hereafter
be designated as such in a written notice delivered by Lender to
Borrower.
"Person" means any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise
or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" means any multiemployer plan or single-employer
plan as defined in Section 4001 of ERISA, which is maintained or
contributed to, or at any time during the five calendar years
preceding the date of this Agreement was maintained or contributed
to, by Borrower or Guarantor or by an ERISA Affiliate of Borrower
or Guarantor.
"Potential Event of Default" means a condition or event
that, after notice or lapse of time or both, would constitute an
Event of Default.
"Quick Assets" means cash, short-term cash investments,
net trade receivables and marketable securities not classified as
long-term investments.
"Sale and Leaseback Transaction" means a transaction or
series of transactions pursuant to which Guarantor or any of its
Subsidiaries sells or transfers to any Person (other than Guarantor
or a Subsidiary) any property, whether now owned or hereafter
acquired, and, as part of the same transaction or series of
transactions, Guarantor or any Subsidiary rents or leases as
lessee, or similarly acquires the right to possession or use of,
such property or one or more properties which it intends to use for
the same purpose or purposes as such property.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company, association,
joint venture or other business entity of which more than 50% of
the total voting power of shares of stock or other ownership
interests entitled to vote in the election of the Persons having
the power to direct or cause the direction of the management and
policies thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries
of that Person or a combination thereof.
"Tangible Net Worth" means, with respect to Guarantor and
determined on a consolidated basis in accordance with GAAP, the
gross book value of Guarantor's assets (excluding goodwill,
patents, trademarks, trade names, organization expense,
unamortized debt discount and expense, deferred research and
development costs, deferred marketing expenses, and other like
intangibles, and monies due from affiliates, officers, directors,
or shareholders of Borrower) minus Total Liabilities, including,
but not limited to accrued and deferred income taxes, and any
reserves against assets.
"Total Liabilities" means, with respect to Guarantor and
determined on a consolidated basis in accordance with GAAP, the sum
of current liabilities plus long term liabilities.
"Unfunded Current Liability" means, as to any Plan, the
amount, if any, by which the present value of the accrued benefits
under such Plan as of the close of its most recent plan year
determined in accordance with Section 412 of the Code exceeds the
fair market value of the assets allocable thereto.
2. The Loan Facility.
(a) Commitment; Expiration. Subject to the terms and
conditions of this Agreement and in reliance upon the
representations and warranties of Borrower and Guarantor set forth
herein, Lender agrees to lend to Borrower on the Closing Date an
aggregate amount not exceeding $6,500,000 to be used for the
purposes identified in Section 5. The Loans and all other amounts
or Obligations owed hereunder with respect to the Loans or
otherwise shall be paid as provided in Section 4(g) and shall be
paid in full no later than the Maturity Date. Amounts borrowed
under this subsection 2(a) and subsequently repaid or prepaid may
not be reborrowed. Borrower may make only one borrowing hereunder.
Loans made on the Closing Date shall be Alternate Base Rate Loans
and may thereafter be converted into or continued as Eurodollar
Rate Loans as provided in subsection 3(f). The Loans shall be made
by crediting the account of Borrower at Lender in same day funds in
the amount of the borrowing.
Borrower shall notify Lender of the designation of the
Closing Date and the amount of the borrowing to be made on such
date at least one Business Day prior to the Closing Date. After
funding the one borrowing, Lender shall have no further commitment
to lend additional amounts.
(b) Note. Borrower shall execute and deliver to
Lender on the Closing Date a promissory note substantially in the
form of Exhibit I annexed hereto (the "Note") to evidence the
Loans, in the principal amount of the aggregate amount borrowed
under subsection 2(a) and with other appropriate insertions.
(c) Extension of Maturity Date. At any time during
the 30 day period prior to September 30, 2000, Borrower may, at its
option, deliver a written request to Lender requesting that the
Maturity Date be extended to April 1, 2004. Lender may, in its
sole discretion, consent or not consent to such extension of the
Maturity Date. In the event Lender elects not to consent to such
extension, the Maturity Date shall remain April 1, 2002. In the
event Lender elects to consent to such extension, the Maturity Date
shall be April 1, 2004. The Maturity Date shall in no event be
extended beyond April 1, 2004.
3. Interest on the Loans.
(a) Rate of Interest. Subject to the provisions of
subsections 3(g) and (i) below, each Loan shall bear interest on
the unpaid principal amount thereof from the date made through
maturity (whether by acceleration or otherwise) as follows: (i) if
a Alternate Base Rate Loan, then at the Alternate Base Rate; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus 0.95% per annum.
(b) Interest Periods for Eurodollar Rate Loans. In
connection with each Eurodollar Rate Loan, Borrower may, pursuant
to the applicable Notice of Conversion/Continuation select an
interest period (each an "Interest Period") to be applicable to
such Loan, which Interest Period shall be, at Borrower's option,
either a one, two, three or six month period; provided that:
(i) in the case of immediately successive
Interest Periods applicable to a Eurodollar Rate Loan continued as
such pursuant to a Notice of Conversion/Continuation, each
successive Interest Period shall commence on the day on which the
next preceding Interest Period expires;
(ii) no Interest Period with respect to any
portion of the Loans shall extend beyond the Maturity Date;
(iii) no Interest Period with respect to any
portion of the Loans shall extend beyond a date on which Borrower
is required to make a scheduled payment of principal of the Loans
unless the sum of (a) the aggregate principal amount of Loans that
are Alternate Base Rate Loans plus (b) the aggregate principal
amount of Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date equals or exceeds the
principal amount required to be paid on the Loans on such date;
(iv) if an Interest Period would otherwise expire
on a day that is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day; provided that, if any
Interest Period would otherwise expire on a day that is not a
Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(v) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a
calendar month;
(vi) there shall be no more than three Interest
Periods outstanding at any time; and
(vii) in the event Borrower fails to specify an
Interest Period for any Eurodollar Rate Loan in the applicable
Notice of Conversion/Continuation, Borrower shall be deemed to have
selected an Interest Period of one month.
(c) Determination of Applicable Interest Rate. As
soon as practicable after 10:00 A.M. (Chicago time) on each
Interest Rate Determination Date, Lender shall determine the
interest rate that shall apply to the Eurodollar Rate Loans for
which an interest rate is then being determined for the applicable
Interest Period and shall promptly give notice thereof (in writing
by facsimile or by telephone confirmed in writing by facsimile) to
Borrower.
(d) Eurodollar Rate Loans After Default. After the
occurrence of and during the continuation of an Event of Default,
(i) Borrower may not elect to have a Loan be maintained as, or
converted to, a Eurodollar Rate Loan after the expiration of any
Interest Period then in effect for such Loan and (ii) subject to
the provisions of subsection 3(j) any Notice of
Conversion/Continuation given by Borrower with respect to a
requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Borrower.
(e) Interest Payments. Subject to the provisions of
subsection 3(g) interest on each Loan shall be payable in arrears
on and to each Interest Payment Date applicable to such Loan, upon
any prepayment of such Loan (whether due to acceleration or
otherwise) and at maturity (including final maturity).
(f) Conversion or Continuation. Subject to the
provisions of subsections 3(d) and (i), Borrower shall have the
option (i) to convert at any time all or any part of its
outstanding Loans equal to $1,000,000 and integral multiples of
$100,000 in excess of that amount from Loans bearing interest at
a rate determined by reference to one basis to Loans bearing
interest at a rate determined by reference to the alternative basis
or (ii) upon the expiration of any Interest Period applicable to a
Eurodollar Rate Loan, to continue all or any portion of such Loan
equal to $1,000,000 and integral multiples of $100,000 in excess of
that amount as a Eurodollar Rate Loan; provided, however, that a
Eurodollar Rate Loan may only be converted into a Alternate Base
Rate Loan on the expiration date of an Interest Period applicable
thereto. Borrower shall deliver a notice regarding such conversion
or continuation ("Notice of Conversion/Continuation") to Lender no
later than 10:00 A.M. (Chicago time) at least one Business Day in
advance of the proposed conversion date (in the case of a
conversion to a Alternate Base Rate Loan) and at least three
Business Days in advance of the proposed conversion/continuation
date (in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan) (in writing by facsimile or by telephone
confirmed in writing by facsimile). A Notice of
Conversion/Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii)
the amount and type of the Loan to be converted/continued, (iii)
the nature of the proposed conversion/continuation, (iv) in the
case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, the requested Interest Period, and (v) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, that
no Event of Default has occurred and is continuing.
(g) Default Rate. Upon the occurrence and during the
continuation of any Event of Default, the outstanding principal
amount of all Loans and, to the extent permitted by applicable law,
any interest payments thereon not paid when due and any fees and
other amounts then due and payable hereunder, shall thereafter bear
interest (including post-petition interest in any proceeding under
the Bankruptcy Code or other applicable bankruptcy laws) payable
upon demand at the Alternate Base Rate plus 2% per annum; provided
that, in the case of Eurodollar Rate Loans, upon the expiration of
the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall
thereupon become Alternate Base Rate Loans and shall thereafter
bear interest payable upon demand at the Alternate Base Rate plus
2% per annum. Payment or acceptance of the increased rates of
interest provided for in this subsection 3(g) is not a permitted
alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or
remedies of Lender.
(h) Computation of Interest. Interest on the Loans
shall be computed (i) in the case of Alternate Base Rate Loans, on
the basis of a 365-day or 366-day year, as the case may be, and
(ii) in the case of Eurodollar Rate Loans, on the basis of a
360-day year, in each case for the actual number of days elapsed in
the period during which it accrues. In computing interest on any
Loan, the date of the making of such Loan or the first day of an
Interest Period applicable to such Loan or, with respect to a
Alternate Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such
Alternate Base Rate Loan, as the case may be, shall be included,
and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a
Alternate Base Rate Loan being converted to a Eurodollar Rate
Loan, the date of conversion of such Alternate Base Rate Loan to
such Eurodollar Rate Loan, as the case may be, shall be excluded.
(i) Illegality or Impracticability of Eurodollar Rate
Loans. In the event that on any date Lender shall have determined
that the making, maintaining or continuation of its Eurodollar Rate
Loans (i) has become unlawful as a result of compliance by Lender
in good faith with any law, treaty, governmental rule, regulation,
guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not
be unlawful) or (ii) has become impracticable, or would cause such
Lender material hardship, as a result of contingencies occurring
after the date of this Agreement which materially and adversely
affect the London interbank market or the position of such Lender
in that market, then, and in any such event, Lender shall give
notice (by telefacsimile or by telephone confirmed in writing) to
Borrower of such determination. Thereafter (a) the obligation of
Lender to convert Loans to, Eurodollar Rate Loans shall be
suspended until such notice shall be withdrawn by Lender, (b) to
the extent such determination by Lender relates to a Eurodollar
Rate Loan then being requested by Borrower pursuant to a Notice of
Conversion/Continuation, Lender shall convert or continue such Loan
as an Alternate Base Rate Loan, (c) Lender's obligation to maintain
its outstanding Eurodollar Rate Loans (the "Affected Loans") shall
be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans
or when required by law, and (d) the Affected Loans shall
automatically convert into Alternate Base Rate Loans on the date of
such termination.
(j) Compensation For Breakage or Non-Commencement of
Interest Periods. Borrower shall compensate Lender, upon written
request by Lender (which request shall set forth the basis for
requesting such amounts), for all reasonable losses, expenses and
liabilities (including any interest paid by Lender to lenders of
funds borrowed by it to make or carry its Eurodollar Rate Loans and
any loss, expense or liability sustained by Lender in connection
with the liquidation or re-employment of such funds) which that
Lender may sustain: (i) if for any reason (other than a default by
Lender) a conversion to or continuation of any Eurodollar Rate Loan
does not occur on a date specified therefor in a Notice of
Conversion/Continuation, (ii) if any prepayment (including any
prepayment pursuant to subsection 4(b)) or other principal payment
or any conversion of any of its Eurodollar Rate Loans occurs on a
date prior to the last day of an Interest Period applicable to such
Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans
is not made on any date specified in a notice of prepayment given
by Borrower, or (iv) as a consequence of any other default by
Borrower in the repayment of its Eurodollar Rate Loans when
required by the terms of this Agreement.
4. Payments; Prepayments.
(a) Scheduled Payments of Loans. Subject to the
immediately succeeding sentence, Borrower shall make principal
payments on the Loans in separate installments in the amount of
$175,000 for each such installment beginning on June 30, 1999 and
on each September 30, December 31, March 31 and June 30 thereafter
through and including April 1, 2002. In the event the Maturity
Date is extended pursuant to Section 2(c), Borrower shall make
principal payments on the Loans in separate installments in the
amount of $550,000 for each such installment beginning on June 30,
2002 and on each September 30, December 31, March 31 and June 30
thereafter through and including the Maturity Date as so extended.
The scheduled installments of principal of the Loans set forth
above shall be reduced in connection with any voluntary prepayments
of the Loans in accordance with subsection 4(d). The Loans and all
other amounts owed hereunder with respect to the Loans shall be
paid in full no later than the Maturity Date, and the final
installment payable by Borrower in respect of the Loans on the
Maturity Date shall be in an amount, if such amount is different
from that specified above, sufficient to repay all amounts owing by
Borrower under this Agreement with respect to the Loans.
(b) Voluntary Prepayments. Borrower may, upon not
less than one Business Day's prior written or telephonic notice, in
the case of Alternate Base Rate Loans, and three Business Days'
prior written or telephonic notice, in the case of Eurodollar Rate
Loans, in each case given to Lender by 12:00 Noon (Chicago time) on
the date required and, if given by telephone, promptly confirmed in
writing to Lender, at any time and from time to time prepay any
Loans on any Business Day in whole or in part in an aggregate
minimum amount of $100,000 and integral multiples of $10,000 in
excess of that amount; provided, however, that a Eurodollar Rate
Loan may only be prepaid on the expiration of the Interest Period
applicable thereto. Notice of prepayment having been given as
aforesaid, the principal amount of the Loans specified in such
notice shall become due and payable on the prepayment date
specified therein. Any such voluntary prepayment shall be applied
as specified in subsection 4(d).
(c) Manner and Place of Payment. All payments by
Borrower under this Agreement or the Note shall be made in Dollars
in same day funds, without defense, setoff or counterclaim, free of
any restriction or condition, and delivered to Lender not later
than 12:00 Noon (Chicago time) on the date due at the Payment
Office for the account of Lender. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder or under any Note.
(d) Application of Voluntary Prepayments. Any
voluntary prepayments of the Loans pursuant to subsection 4(b)
shall be applied to reduce the scheduled installments of principal
of the Loans set forth in subsection 4(a) in inverse order of
maturity.
5. Use of Proceeds. The proceeds of any borrowing
under this Agreement shall be applied by Borrower to finance the
purchase of certain assets from Golden Pharmaceuticals, Inc., a
Colorado corporation.
6. Conditions Precedent. The obligations of Lender
to make Loans hereunder are subject to the satisfaction of the
following conditions:
(a) Delivery of Documents. On or before the Closing
Date (except as otherwise provided), each of Borrower and Guarantor
shall deliver to Lender the following, each dated the Closing Date
and in form and substance satisfactory to Lender:
(i) Resolutions of the board of directors of
such Person approving and authorizing the execution, delivery and
performance of this Agreement and, in the case of Borrower, the
Note, certified as of the Closing Date by the corporate secretary
or an assistant secretary of such Person as being in full force and
effect without modification or amendment; provided, that Borrower
and Guarantor shall deliver the foregoing certified resolutions
no later than April 9, 1997 in the event they are unable, after
reasonable effort, to obtain such resolutions by the Closing Date.
(ii) Signature and incumbency certificates of the
officers of such Person executing this Agreement and, in the case
of Borrower, the Note;
(iii) Executed originals of this Agreement and, in
the case of Borrower, the Note;
(iv) A favorable legal opinion of such Person's
counsel as to the matters set forth in subsections 7(a), (b), (c),
(d), (e) and (h); provided, that Borrower and Guarantor shall
deliver the foregoing opinions no later than April 9, 1997 in the
event they are unable, after reasonable effort, to obtain such
opinions by the Closing Date; and
(v) Such other documents as Lender may
reasonably request.
(b) Arrangement Fee. Borrower shall have paid to
First Chicago Capital Markets, Inc. a fee of $10,000 for its
services in arranging the Loans.
(c) Representations and Warranties True. The
representations and warranties set forth in Section 7 shall be
true, correct and complete in all material respects on and as of
the Closing Date to the same extent as though made on and as of
such date.
(d) No Default. No event shall have occurred and be
continuing or would result from the consummation of the borrowing
on the Closing Date that would constitute an Event of Default or
Potential Event of Default.
(e) Officer's Certificate. Each of Borrower and
Guarantor shall have delivered an officer's certificate confirming
the matters set forth in subsections 6(c) and (d).
7. Representations and Warranties of Borrower and
Guarantor. In order to induce Lender to enter into this Agreement
and to maintain and make the Loans, each of Borrower and Guarantor
makes the following representations, warranties and agreements,
which shall survive the execution and delivery of this Agreement
and the Note and the making of Loans:
(a) Organization and Powers. Such Person is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. Such Person
has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted, to enter
into this Agreement and, in the case of Borrower, the Note and to
carry out the transactions contemplated thereby.
(b) Due Authorization. The execution, delivery and
performance of this Agreement and, in the case of Borrower, the
Note have been duly authorized by all necessary corporate action on
the part of such Person.
(c) Binding Obligation. Each of this Agreement and,
in the case of Borrower, the Note has been duly executed and
delivered by such Person and is the legally valid and binding
obligation of such Person, enforceable against it in accordance
with its respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
(d) No Violation. To such Person's knowledge, the
execution, delivery or performance by such Person of this Agreement
and, in the case of Borrower, the Note will not (i) contravene any
provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or governmental
instrumentality, (ii) conflict or be inconsistent with or result
in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose)
any lien upon any of the property or assets of Borrower pursuant to
the terms of any indenture, mortgage, deed of trust, credit
agreement, loan agreement or any other material agreement, contract
or instrument to which such Person is a party or by which it or any
of its property or assets is bound or to which it may be subject or
(iii) violate any provision of the articles or certificate of
incorporation or by-laws of such Person or any of its Domestic
Subsidiaries.
(e) Government Consents. To such Person's knowledge,
the execution, delivery and performance by such Person of this
Agreement and, in the case of Borrower, the Note and the
consummation of the transactions contemplated by this Agreement
and, in the case of Borrower, the Note do not and will not require
any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other
governmental authority or regulatory body.
(f) Financial Statements. The audited consolidated
balance sheet of Guarantor and its Subsidiaries at December 31,
1996 and the related audited consolidated statement of operations
and cash flows of Guarantor and its Subsidiaries for the fiscal
year ended on such date heretofore furnished to Lender present
fairly the consolidated financial condition of Guarantor and
its Subsidiaries at the date of such balance sheets and statements
of income and all such consolidated financial statements have been
prepared in accordance with GAAP consistently applied. The
unaudited consolidated balance sheet of Borrower and its
Subsidiaries at December 31, 1996 and the related unaudited
consolidated statements of operations and cash flows of Borrower
and its Subsidiaries for the fiscal year ended on such date
heretofore furnished to Lender present fairly the financial
condition of Borrower and its Subsidiaries at the date of such
balance sheets and statements of income and all such financial
statements have been prepared in accordance with GAAP consistently
applied.
(g) No Material Adverse Change. Since December 31,
1996, to such Person's knowledge, no event or change has occurred
that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect.
(h) Absence of Litigation; Adverse Facts. To such
Person's knowledge, there is no action, suit, arbitration, tax
claim or other dispute pending or threatened against such Person,
which, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect. To such Person's knowledge,
neither such Person nor any of its Subsidiaries (i) is in
violation of any applicable laws that, individually or in the
aggregate, could reasonably be expected to result in a Material
Adverse Effect, or (ii) is subject to or in default with respect to
any final material judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to result in a Material
Adverse Effect.
(i) Payment of Taxes. All material tax returns and
reports of such Person and its Domestic Subsidiaries required to be
filed have been timely filed, and all taxes shown on such tax
returns to be due and payable and all assessments, fees and other
governmental charges upon such Person and its Domestic Subsidiaries
which are due and payable have been paid when due and payable.
Such Person knows of no proposed tax assessment against it or
any of its Subsidiaries which is not being actively contested by
such Person or such Subsidiary.
(j) Subsidiaries. Each of the Domestic Subsidiaries
of such Person is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction
of incorporation, has all requisite corporate power and authority
to own and operate its properties and to carry on its business as
now conducted, and is qualified to do business and in good standing
in every jurisdiction where such qualification is required, in each
case except where failure to be so qualified or in good standing or
a lack of such corporate power and authority has not had and will
not have a Material Adverse Effect.
(k) Compliance with ERISA. Each Plan is in
substantial compliance with ERISA; no Plan is insolvent or in
reorganization; no Plan has an Unfunded Current Liability, no Plan
has an accumulated or waived funding deficiency or permitted
decreases in its funding standard account within the meaning of
Section 412 of the Code. Neither Borrower nor any ERISA Affiliate
has incurred any material liability to or on account of a Plan
pursuant to Sections 502(c), (i) or (l), 515, 4062, 4063, 4064,
4071, 4201 or 4204 of ERISA or Chapter 43 of the Code or expects to
incur any liability under any of the foregoing sections. No
proceedings have been instituted to terminate any Plan. No
condition exists which presents a material risk to such Person of
incurring a liability to or on account of a Plan pursuant to the
foregoing provisions of ERISA and the Code. No lien imposed under
the Code or ERISA on the assets of such Person exists or is likely
to arise on account of any Plan. Such Person may terminate
contributions to any other employee benefit plans maintained by
them without incurring any material liability to any Person
interested therein. No Plan has received notice from the Internal
Revenue Service of the failure of such Plan to qualify under
Section 401(a) of the Code.
(l) Compliance with Laws. To such Person's knowledge,
each of such person and its Domestic Subsidiaries is in compliance
with all applicable material statutes, regulations and orders of,
and all applicable material restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct
of its business and the ownership of its property (including
applicable statutes, regulations, orders and restrictions relating
to environmental standards and controls), except such
noncompliances as would not, in the aggregate, have a material
adverse effect on the business, operations, property, assets,
condition (financial or otherwise) or prospects of such Person or
any of its Subsidiaries.
(m) Title to Properties. Such Person and its Domestic
Subsidiaries have (i) good, sufficient and legal title to (in the
case of fee interests in real property), (ii) valid leasehold
interests in (in the case of leasehold interests in real or
personal property), or (iii) good title to (in the case of all
other personal property), all of their respective properties
and assets. Except as permitted by this Agreement, all such
properties and assets are free and clear of lien.
(n) True and Complete Disclosure. To such Person's
knowledge, all factual information heretofore furnished by or on
behalf of such Person in writing to Lender for purposes of or in
connection with this Agreement or any transaction contemplated
herein is, and all other such factual information hereafter
furnished by or on behalf of such Person in writing to Lender (or
any successor or assignee thereof) will be, true and accurate in
all material respects.
(o) Other Obligations. To such Person's knowledge,
such Person is not in default on any obligation for borrowed money,
any purchase money obligation or, to the best of its knowledge, any
other material lease, commitment, contract, instrument or
obligation.
(p) No Event of Default. To such Person's knowledge,
there is no event which is, or with notice or lapse of time would
be, an Event of Default under this Agreement.
8. Affirmative Covenants of Borrower and Guarantor.
Each of Borrower and Guarantor covenants and agrees that until the
Loans and the Note, together with interest, fees and all other
Obligations incurred hereunder and thereunder, are paid in full:
(a) Information Covenants. Each of Borrower and
Guarantor will furnish to Lender:
(i) Quarterly Financials. Within 60 days after
the end of each fiscal quarter of such Person, copies of the
consolidated balance sheet of such Person and its Subsidiaries as
of the end of such fiscal quarter and consolidated statements of
income and retained earnings and statements of cash flows of such
Person and its Subsidiaries for such fiscal quarter and for the
portion of the fiscal year of such Person and its Subsidiaries
ending with such fiscal quarter, all in reasonable detail, prepared
in accordance with GAAP, containing the certification of and signed
on behalf of such Person by the chief operating officer, president
or chief financial officer of such Person. All such balance sheets
shall set forth in comparative form figures from the preceding year
end. All such income statements shall reflect current period and
year-to-date figures, and all such statements of cash flow shall
reflect year-to-date figures.
(ii) Annual Financial Statements. Within 120
days after the end of each fiscal year of such Person, copies of
the consolidated balance sheets of such Person and its Subsidiaries
as of the end of such fiscal year and consolidated statements of
income and retained earnings and statements of cash flow of such
Person and its Subsidiaries for such fiscal year, in each case
setting forth in comparative form the figures for the preceding
fiscal year of such Person and its Subsidiaries, all in reasonable
detail and prepared in accordance with GAAP, and, in the case of
Guarantor, accompanied by an unqualified opinion rendered by
Guarantor's regularly retained nationally recognized independent
certified public accountants satisfactory to Lender and containing
the certification of and signed by on behalf of Guarantor by the
chief operating officer, president or chief financial officer.
(iii) Officer's Certificates. At the time of the
delivery of the financial statements provided for in subsections
8(a)(i) and 8(a)(ii), a certificate of the chief executive officer
or the chief financial officer of such Person to the effect that,
to the best of his/her knowledge, no Potential Event of Default or
Event of Default has occurred and is continuing or, if any
Potential Event of Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which
certificate shall also set forth the calculations required to
establish whether (x) Guarantor was in compliance with the
provisions of Section 9(g) at the end of such fiscal quarter or
year, as the case may be, in the case of Guarantor, and (y)
Borrower was in compliance with the provisions of Section 10 at the
end of such fiscal quarter or year, as the case may be, in the case
of Borrower.
(iv) Notice of Default or Litigation. As soon as
possible, but in no event later than seven Business Days, in the
case of clause (A) below, 20 calendar days, in the case of clause
(B) below, and 10 calendar days, in the case of clause (C) below,
after any officer of such Person obtains actual knowledge thereof,
notice of (A) the occurrence of any event which constitutes a
Potential Event of Default or an Event of Default, (B) any
litigation or governmental or arbitration proceeding pending (x)
against such Person or any of its Subsidiaries which could
reasonably be expected to result in a Material Adverse Effect or
(y) with respect to this Agreement or the Note, and (C) any other
event which could reasonably be expected to result in a Material
Adverse Effect.
(v) Other Information. From time to time, such
other information or documents (financial or otherwise) as Lender
may reasonably request.
(b) Compliance with Laws. Such Person will comply
with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies in
respect of the conduct of its business and the ownership of its
property (including applicable statutes, regulations, orders and
restrictions relating to (i) environmental standards and controls
and (ii) compliance with ERISA in respect of any Plan), except
such noncompliances as could not, in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(c) Maintenance of Property, Insurance. Such Person
will (i) keep all property necessary in its business in good
working order and condition, subject to ordinary course
replacements and obsolescence, and (ii) maintain with financially
sound and reputable insurance companies insurance on all its
property and its directors and officers in such amounts and against
such risks as are reasonable and prudent for the type of businesses
engaged in by such Person and its Subsidiaries, consistent with
standard industry practices for companies in the same or similar
businesses.
(d) Books, Records and Inspections. Such Person will,
and will cause its Domestic Subsidiaries to, keep proper books of
record and account in which full, true and correct entries in
conformity with GAAP and all material requirements of law shall be
made of all dealings and transactions in relation to its business
and activities. Such Person will permit officers and designated
representatives of Lender to visit and inspect, under guidance of
officers of such Person, any of the properties of such Person, and
to examine the books of records and accounts of such Person and
discuss the affairs, finances and accounts of such Person with, and
be advised as to the same by, its and their officers and
independent accountants, all at such reasonable times (during
normal business hours) and intervals and to such reasonable
extent as Lender may request.
(e) Payment of Taxes. Such Person will, and will
cause each of its Domestic Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any
of its properties or assets or in respect of any of its income,
businesses or franchises before any penalty accrues thereon, and
all claims (including claims for labor, services, materials and
supplies) for sums that have become due and payable and that by
law have or may become a lien upon any of its properties or assets,
prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid
if it is being contested in good faith by appropriate proceedings
timely instituted and diligently conducted, so long as such reserve
or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
(f) Corporate Existence. Such Person will, and will
cause each of its Domestic Subsidiaries to, at all times preserve
and keep in full force and effect its corporate existence and all
rights and franchises material to its business.
9. Negative Covenants of Guarantor. Guarantor
covenants and agrees that until the Loans and Note, together with
interest, fees and all other Obligations incurred hereunder, are
paid in full:
(a) Liens. Guarantor will not, and will not allow any
Domestic Subsidiary (including Borrower) to, create, incur, assume
or permit to exist any lien upon or with respect to any property or
assets (real or personal, tangible or intangible) of Guarantor or
such Subsidiary, whether now owned or hereafter acquired, except:
(i) liens for taxes not yet due;
(ii) liens in respect of property or assets of
Guarantor or any of its Domestic Subsidiaries imposed by law, which
were incurred in the ordinary course of business;
(iii) easements, rights-of-way, restrictions,
minor defects or irregularities of title;
(iv) additional purchase money security interests
in personal or real property acquired after the date of this
Agreement if the total principal amount of debts secured by such
liens does not exceed $1,000,000 at any one time;
(v) liens in favor of Lender; and
(vi) existing liens described on Schedule 9(a)
attached hereto.
(b) Dividends. Guarantor will not declare or pay
dividends on any of its capital stock except dividends payable in
capital stock of Guarantor.
(c) Advances, Investments and Loans. Except in the
ordinary course of business and as otherwise provided herein,
including the transactions permitted by subsection 9(d) below,
Guarantor will not, and will not allow any Domestic Subsidiary to,
lend money or credit or make advances to any Person (other than a
Subsidiary of Guarantor or an Affiliate of Guarantor or such
Subsidiary), or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital
contribution to, any other Person; provided, that (i) Guarantor may
make loans or advances to its Employee's Savings and Stock
Ownership Plan to permit it to purchase stock and (ii) Guarantor
may make loans to Syncor Diagnostics, LLC (or its designated
Subsidiaries) in the amount of $200,000 for each MRI center to be
opened by Syncor Diagnostics, LLC and in an aggregate amount for
all such loans not to exceed $2,000,000.
(d) Fundamental Changes, Consolidation, Merger, Sale
of Assets, etc. Guarantor will not, and will not allow any
Subsidiary to, without Lender's written consent, do any of the
following:
(i) engage in any business activity
substantially different from Guarantor's or such Subsidiary's
present line of business;
(ii) except as set forth in clause (iii) below,
liquidate or dissolve;
(iii) enter into any consolidation, merger, pool,
joint venture, syndicate, or other combination where Guarantor's or
such Subsidiary's contribution is in excess of $5,000,000 in any
fiscal year; provided, that after entering into any such permitted
consolidation or merger, Guarantor or such Subsidiary (which shall
be a wholly-owned Subsidiary of Guarantor) shall be the surviving
entity;
(iv) lease, or dispose of all or a substantial
part of Guarantor's or such Subsidiary's business or assets;
(v) acquire or purchase any other business or
its assets; provided, that Guarantor or any such Subsidiary may
acquire or purchase another business or its assets if (A) the
consideration paid for such acquisition or purchase (including
assumption of debt), when added to the consideration paid for any
other such acquisitions or purchases in Guarantor's fiscal year
does not exceed a total of $12,000,000, with no single acquisition
in excess of $8,000,000; and (B) the acquisition has been approved
in writing by the board of directors or other Persons having the
right to control and direct the policies of the business or assets
to be acquired; provided, that acquisitions involving total
consideration of less than $500,000 shall not require such written
approval;
(vi) sell or otherwise dispose of any assets for
less than fair market value, or enter into any Sale and Leaseback
Transaction covering any of its fixed or capital assets in an
aggregate amount exceeding $500,000; and
(vii) voluntarily suspend its business for more
than 5 days in any 30 day period.
(e) Transactions with Affiliates. Guarantor will not,
and will not allow any Subsidiary to, enter into any transaction or
series of related transactions, whether or not in the ordinary
course of business, with any Affiliate of Guarantor, other than on
terms and conditions substantially as favorable to Guarantor as
would be obtainable by Guarantor at the time in a comparable
arm's-length transaction with a Person other than an Affiliate.
(f) Indebtedness. Guarantor will not, and will not
allow any Subsidiary to, contract, create, incur, assume or suffer
to exist any Indebtedness or obligation with respect to any lease,
without Lender's written consent, such consent not to be
unreasonably withheld; provided, that Guarantor or such Subsidiary
may:
(i) incur Indebtedness owed to Lender under this
Agreement and the Note;
(ii) acquire goods, supplies or merchandise on
trade credit in the ordinary course of business;
(iii) endorse negotiable instruments received in
the ordinary course of business;
(iv) obtain surety bonds in the ordinary course
of business;
(v) maintain debts and lines of credit in
existence on the date of this Agreement and disclosed in writing to
Lender in Guarantor's financial statements dated December 31, 1996;
(vi) incur Indebtedness for the acquisition or
purchase of a business or its assets subject to the limitations
under subsection 9(d) above;
(vii) incur other Indebtedness in an aggregate
outstanding amount at no time exceeding $8,000,000; and
(viii) remain liable with respect to Indebtedness
described in Schedule 9(f) annexed hereto.
(g) Financial Covenants.
(i) Tangible Net Worth. Guarantor shall not
permit Tangible Net Worth to be less than the sum of $50,000,000
plus 50% of net income after income taxes (without subtracting
losses) earned in each fiscal quarter ending on or after March 31,
1996.
(ii) Total Liabilities to Tangible Net Worth.
Guarantor shall not permit the ratio of Total Liabilities to
Tangible Net Worth to exceed 1.25:1.00.
(iii) Quick Ratio. Guarantor shall maintain on a
consolidated basis a ratio of Quick Assets to current liabilities
(including the current portion of long-term debt) of not less than
1.10:1.00.
(iv) Fixed Charge Coverage Ratio. Guarantor
shall not permit the Fixed Charge Coverage Ratio to be less than
1.25:1.00.
(h) Subsidiary Status of Borrower. Guarantor shall at
all times directly own all the outstanding capital stock of
Borrower.
10. Negative Covenants of Borrower. Borrower
covenants and agrees that until the Loans and Note, together with
interest, fees and all other Obligations incurred hereunder, are
paid in full:
(a) Indebtedness. Borrower will not, and will not
allow any Subsidiary to, contract, create, incur, assume or suffer
to exist any Indebtedness or obligation with respect to any lease
other than Indebtedness owed to Lender under this Agreement and the
Note.
(b) Net Income. Borrower will not permit its net
income before taxes plus interest expense for any fiscal quarter to
be less than zero.
(c) Subsidiary Status of Borrower. Borrower will not
issue any of its capital stock to any Person other than Guarantor.
11. Events of Default. Upon the occurrence of any of
the following specified events (each an "Event of Default");
(a) Payments. Borrower shall (i) default in the
payment when due of any principal of any Loan or the Note or (ii)
default, and such default shall continue unremedied for five
Business Days, in the payment when due of interest on any Loan, any
fees or any other amounts owing hereunder or under the Note; or
(b) Representations, etc. Any material
representation, warranty or statement made by Borrower or Guarantor
herein or in any certificate delivered pursuant hereto shall prove
to be untrue in any material respect on the date as of which made
or deemed made; or
(c) Covenants. Borrower or Guarantor shall (i)
default in the due performance or observance by it of any term,
covenant or agreement contained in subsection 8(f), Section 9 or
Section 10 or (ii) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to
in subsections 11(a) or 11(b) or clause (i) of this subsection
11(c)) contained in this Agreement and such default shall continue
unremedied for a period of 15 Business Days after written notice to
Borrower and Guarantor by Lender; or
(d) Cross-Default. Any default occurs under any
agreement and is not cured pursuant to the terms of such agreement
in connection with any credit Borrower or Guarantor or any of their
respective Domestic Subsidiaries has obtained from another Person
or which Borrower or Guarantor or any of their respective Domestic
Subsidiaries has guaranteed in the amount of $250,000 or more in
the aggregate if the default consists of failing to make a payment
when due or gives the other party the right to accelerate the
obligation (whether or not resulting in acceleration); or
(e) Other Bank Agreements. Borrower or Guarantor or
any of their respective Domestic Subsidiaries fails to meet the
conditions of, or fails to perform any material obligation under
any other agreement that Borrower or Guarantor or any of their
respective material Subsidiaries has with any other bank or any
affiliate of any other bank.
(f) Bankruptcy, etc. Borrower or Guarantor files a
bankruptcy petition, a bankruptcy petition is filed against
Borrower or Guarantor or any of their respective material
Subsidiaries, or Borrower or Guarantor or any of their respective
material Subsidiaries makes a general assignment for the benefit of
creditors; notwithstanding the foregoing, any bankruptcy petition
filed against Borrower or Guarantor or any of their respective
material Subsidiaries will not be an Event of Default hereunder if
the bankruptcy petition is dismissed within a period of 60 days
after the filing; or
(g) Receivers. A receiver or similar official is
appointed for Borrower's or Guarantor's (or any of their respective
material Subsidiary's) business, or the business is terminated; or
(h) Judgments. One or more judgments, decrees or
arbitration awards shall be entered against Borrower or Guarantor
or any of their respective Subsidiaries involving in the aggregate
a liability (not paid or fully covered by insurance) of $1,000,000
or more, and all such judgments, decrees or awards shall not have
been vacated, discharged or stayed or appealed pending appeal
within the permitted time period after the entry thereof; or
(i) Changes of Control. Any Person or any two or more
Persons acting in concert shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission, directly or indirectly, of securities of Borrower (or
other securities convertible into such securities) representing 30%
or more of the combined voting power of all securities of Guarantor
entitled to vote in the election of directors, other than
securities having such power only by reason of the happening of a
contingency; or
(j) Material Adverse Effect. Any Material Adverse
Effect occurs with respect to Borrower or Guarantor; or
(k) Invalidity of Parent Guaranty. The Parent
Guaranty for any reason, other than the satisfaction in full of all
the Borrower Obligations, ceases to be in full force and effect or
is declared null and void, or Guarantor denies that it has any
further liability thereunder, or gives notice to such effect;
then, and in any such event, and at any time thereafter, if any
Event of Default shall then be continuing, Lender may by written
notice to Borrower, (provided, that, if an Event of Default
specified in Section 11(d) shall occur with respect to Borrower or
Guarantor, as the case may be, the result which would occur upon
the giving of written notice by Lender to Borrower or Guarantor, as
the case may be, as hereafter shall occur automatically without
the giving of any such notice) declare the principal of and any
accrued interest in respect of all Loans and the Note and all
Obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by Borrower, and the obligation of Lender to make
any Loan shall thereupon terminate.
12. Parent Guaranty. Guarantor hereby
unconditionally guaranties the due and punctual payment of all
obligations of Borrower arising under this Agreement and the Note,
in each case when due, whether by required prepayment, declaration,
demand or otherwise (including amounts which would become due but
for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)) (the "Borrower
Obligations"), and agrees to pay any and all costs and expenses
(including fees and disbursements of counsel and reasonable
allocated costs of internal counsel) incurred by Lender in
enforcing any rights under this guaranty. For purposes of this
Section 12, the obligations of Guarantor under this Section 12, as
they may be amended, modified or supplemented from time to time,
are referred to as its "Parent Guaranty".
Guarantor agrees that the Borrower Obligations may be
extended or renewed, in whole or in part, without notice or further
assent from it, and that it will remain bound upon this Parent
Guaranty notwithstanding any extension, renewal or other alteration
of any such Borrower Obligation or any other Obligation.
Guarantor waives presentation of, demand of and protest
of any Borrower Obligation and also waives notice of protest for
nonpayment. The obligations of Guarantor under this Parent
Guaranty shall be valid and enforceable and shall not be subject to
any limitation, impairment, or discharge for any reason (other than
payment in full of the Borrower Obligations) and Guarantor hereby
irrevocably waives any defenses it may now or hereafter have in any
way relating thereto, including, without limitation, the occurrence
of any of the following, whether or not Guarantor shall have had
notice or knowledge of any of them:
(a) the failure of Lender to assert any claim or
demand or to enforce any right or remedy against Borrower or any
other Person under the provisions of this Agreement or the Parent
Guaranty,
(b) any extension or renewal of any provision of any
thereof,
(c) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Agreement (other than
this Section 12, it being agreed and understood that any waiver,
amendment or modification of this Section 12 shall be limited
exactly as written and shall not, except as expressly written,
affect the obligations of Guarantor under this Parent Guaranty), or
(d) the failure of Lender to exercise any right or
remedy against any other guarantor of the Borrower Obligations or
the Obligations.
Guarantor further agrees that this Parent Guaranty
constitutes a guaranty of payment when due and not of collection
and waives any right to require that any resort be had by Lender to
any balance of any deposit account or credit on the books of Lender
in favor of Borrower or any other Person.
The obligations of Guarantor under this Parent Guaranty
shall not be subject to any reduction, limitation, impairment or
termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise of
any of the Borrower Obligations, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Borrower Obligations, discharge of
Borrower from any of the Borrower Obligations in a bankruptcy or
similar proceeding, or otherwise. Without limiting the generality
of the foregoing, the obligations of Guarantor under this Parent
Guaranty shall not be discharged or impaired or otherwise affected
by the failure of Lender to assert any claim or demand or to
enforce any remedy under this Agreement or any document or
instrument executed by Borrower in connection therewith, by any
waiver or modification of any thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Borrower
Obligations, or by any other act or thing or omission or delay to
do any other act or thing which may or might in any manner or to
any extent vary the risk of Guarantor or which would otherwise
operate as a discharge of Guarantor as a matter of law or equity.
Guarantor further agrees that this Parent Guaranty shall
continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of or
interest on any Borrower Obligation is rescinded or must otherwise
be restored by Lender upon the bankruptcy or reorganization of
Borrower, any other person or otherwise.
Guarantor further agrees, in furtherance of the foregoing
and not in limitation of any other right which Lender may have at
law or in equity against Guarantor by virtue hereof, upon the
failure of Borrower to pay any of the Borrower Obligations when and
as the same shall become due, whether by required prepayment,
declaration, demand or otherwise (including amounts which would
become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)),
Guarantor will forthwith pay, or cause to be paid, in cash, to
Lender an amount equal to the sum of the unpaid principal amount of
such Borrower Obligations then due as aforesaid, accrued and unpaid
interest on such Borrower Obligations (including, without
limitation, interest which, but for the filing of a petition in
bankruptcy with respect to Guarantor, would accrue on such Borrower
Obligations) and all other Borrower Obligations then owed to
Lenders as aforesaid.
Upon payment by Guarantor of any sum to Lender as
provided above so long as any of the Borrower Obligations shall
remain outstanding hereunder, all rights of Guarantor against
Borrower arising as a result thereof, by way of right of
subrogation or otherwise, shall in all respects be subordinate and
junior in right of payment to the prior indefeasible payment in
full of all the Borrower Obligations to Lenders.
This Parent Guaranty shall be binding upon Guarantor and
its successors and assigns and shall inure to the benefit of the
successors and assigns of Lender and, in the event of any transfer
and assignment of rights by Lender, the rights and privileges
herein conferred upon Lender shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and
conditions hereof.
13. Miscellaneous.
(a) Expenses. Borrower shall pay all reasonable
out-of-pocket costs and expenses of Lender (including, without
limitation, the reasonable fees and disbursements of counsel for
Lender) in connection with (i) the preparation, execution and
delivery of this Agreement and the Note, the documents and
instruments referred to herein and therein and any amendment,
waiver or consent relating hereto or thereto and (ii) the
enforcement of this Agreement and the Note and the documents and
instruments referred to herein and therein. All costs, fees and
expenses incurred by First Chicago Capital Markets, Inc. in
connection with this Agreement shall also be paid by Borrower.
(b) Participation and Assignments. Lender may, in its
sole discretion, sell participations in any amount in the Loans.
Lender shall also have the right to sell assignments of any amounts
of the Loans with the giving of notice to and the prior written
consent of Borrower (which consent shall not be unreasonably
withheld); provided, that if an Event of Default has occurred and
is continuing, the consent of Borrower shall not be required.
Borrower shall release Lender for any the amounts so assigned.
Lender may release any information regarding Borrower and its
Subsidiaries to prospective participants and assigns.
(c) Indemnification. Borrower hereby indemnifies and
holds Lender and the officers, directors, employees, agents and
Affiliates of Lender (the "Indemnitees") harmless from and against
any and all claims, damages, losses, liabilities, costs or expenses
(including reasonable attorneys' fees and expenses) which the
Indemnitees may incur or which may be claimed against the
Indemnitees by any Person by reason of or in connection with the
execution, delivery or performance by Borrower of this Agreement,
the Note, or any transaction contemplated therein, and in any case,
Borrower shall not be liable under this Section 13(c) to indemnify
the Indemnitees for any claims, damages, losses, liabilities, costs
or expenses resulting solely from Lender's gross negligence or
willful misconduct.
(d) Increased Costs. If Lender shall determine that
the adoption of any applicable law, rule or regulation concerning
capital adequacy or any applicable change therein, or any change in
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority,
central bank or comparable agency, in each case occurring after the
date hereof, has or will have the effect of reducing the rate of
return on Lender's capital as a consequence of its obligation to
make any Loans hereunder to a level below that which Lender could
have achieved but for such adoption, change or compliance (taking
into consideration Lender's policies with respect to capital
adequacy) by any amount deemed by Lender to be material, then from
time to time, within 15 days after demand by Lender, Borrower shall
pay to Lender such additional amounts as shall compensate Lender
for such reduction. Lender shall promptly notify Borrower of any
of the matters set forth in the preceding sentence. A certificate
as to additional amounts owed Lender, showing in reasonable detail
the basis for the calculation thereof, submitted in good faith to
Borrower by Lender shall, absent manifest error, be final and
conclusive and binding upon all of the parties hereto.
(e) Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, telecopier or
cable communication) and mailed, telegraphed, telexed, telecopied,
cabled or delivered at the addresses shown on the signature pages
hereof.
(f) No Waiver. No failure or delay on the part of
Lender or the holder of any Note in exercising any right, power or
privilege hereunder and no course of dealing between Borrower and
Lender or the holder of any Note shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder or
thereunder.
(g) Governing Law; Waiver of Jury Trial. THIS
AGREEMENT AND THE NOTE AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA. ALL
PARTIES HERETO HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
(h) Amendment or Waiver. No approval, consent,
amendment or waiver of this Agreement or the Note shall be
effective unless it is in writing signed by Borrower and the
Lender.
(i) Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on
separate counterparts by facsimile or otherwise, each of which when
so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
(j) Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
(k) Severability. In case any provision in or
obligation under this Agreement or the Note shall be invalid,
illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
(l) Arbitration. At the request of either Lender or
Borrower, any controversies or claims between Lender and Borrower
will be settled by arbitration in accordance with the rules of the
American Arbitration Association. The venue of such arbitration
shall be Los Angeles, California. The arbitrators shall have the
authority to award costs (including reasonable attorney's fees) to
the respective parties in connection with the arbitration
proceedings based on the success of each party's position with
respect to the issues decided in such arbitration proceedings.
[remainder of page intentionally blank]
<PAGE>
Kindly indicate your acceptance of this Agreement by
executing and delivering a counterpart of this Agreement on or
before March 31, 1997.
THE FIRST NATIONAL BANK OF CHICAGO
/S/ GARY S. GAGE
By: ______________________________
Its: Senior Vice President
Notice Address:
First Chicago NBD
1 First National Plaza, Suite 0364/1/14
Chicago, Illinois 60670
Attention: Sharon Bosch, CFA
Tel: (312) 732-7112
Fax: (312) 732-4840
THE FOREGOING AGREEMENT IS
ACCEPTED ON MARCH 31, 1997:
SYNCOR PHARMACEUTICALS, INC.,
as Borrower
/S/ CHARLES A. SMITH
By: __________________________
Its: President
Notice Address:
6464 Canoga Avenue
Woodland Hills, California 91367
Attention: Michael E. Mikity
Vice President and CFO
Attention: Company General Counsel
SYNCOR INTERNATIONAL CORPORATION,
as Guarantor
By: ____________________________
Its: ___________________________
Notice Address:
6464 Canoga Avenue
Woodland Hills, California 91367
Attention: Michael E. Mikity
Vice President and CFO
Attention: Company General Counsel
<PAGE>
EXHIBIT I
[FORM OF NOTE]
SYNCOR PHARMACEUTICALS, INC.
PROMISSORY NOTE
$____________ ____________, 1997
FOR VALUE RECEIVED, SYNCOR PHARMACEUTICALS, INC., a
Delaware corporation ("Company"), promises to pay to THE FIRST
NATIONAL BANK OF CHICAGO ("Payee") or its registered assigns the
principal amount of _____________________ DOLLARS ($_____________)
in the installments referred to below.
Company also promises to pay interest on the unpaid
principal amount hereof, from the date hereof until paid in full,
at the rates and at the times which shall be determined in
accordance with the provisions of that certain Agreement dated as
of March 31, 1997 by and among Company, Payee, as Lender, and
Syncor International Corporation, as Guarantor (said Agreement, as
it may be amended, supplemented or otherwise modified from time to
time, being the "Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined).
Company shall make principal payments on this Note in
consecutive quarterly installments, commencing on June 30, 1999 and
ending on the Maturity Date. Each such installment shall be due on
the date specified in the Agreement and in an amount determined in
accordance with the provisions thereof; provided that the last such
installment shall be in an amount sufficient to repay the entire
unpaid principal balance of this Note, together with all accrued
and unpaid interest thereon.
This Note is issued pursuant to and entitled to the
benefits of the Agreement, to which reference is hereby made for a
more complete statement of the terms and conditions under which the
Loan evidenced hereby was made and is to be repaid.
All payments of principal and interest in respect of this
Note shall be made in lawful money of the United States of America
in same day funds at the Payment Office or at such other place as
shall be designated in writing for such purpose in accordance with
the terms of the Agreement.
Whenever any payment on this Note shall be stated to be
due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time
shall be included in the computation of the payment of interest on
this Note.
This Note is subject to prepayment at the option of
Company as provided in subsection 4(b) of the Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND
_______________________________________________________
PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
________________________________________________________________
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
______________________________________________________________
CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL CODE OF THE STATE
___________________________________________________________________
OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
______________________________________________________________
Upon the occurrence of an Event of Default, the unpaid
balance of the principal amount of this Note, together with all
accrued and unpaid interest thereon, may become, or may be declared
to be, due and payable in the manner, upon the conditions and with
the effect provided in the Agreement.
The terms of this Note are subject to amendment only in
the manner provided in the Agreement.
This Note is subject to restrictions on transfer or
assignment as provided in subsection 13(b) of the Agreement.
No reference herein to the Agreement and no provision of
this Note or the Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal
of and interest on this Note at the place, at the respective times,
and in the currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 13(a) of
the Agreement, incurred in the collection and enforcement of this
Note. Company and any endorsers of this Note hereby consent to
renewals and extensions of time at or after the maturity hereof,
without notice, and hereby waive diligence, presentment, protest,
demand and notice of every kind and, to the full extent permitted
by law, the right to plead any statute of limitations as a defense
to any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be
duly executed and delivered by its officer thereunto duly
authorized as of the date and at the place first written above.
SYNCOR PHARMACEUTICALS, INC.
By: __________________________
Title: ________________________
<PAGE>
The undersigned, as Guarantor under the Agreement
referred to in the attached Note, hereby acknowledges that it
guaranties the due and punctual payment in full of all obligations
of Company arising under the attached Note.
SYNCOR INTERNATIONAL CORPORATION
By: __________________________
Title: ________________________
<PAGE>
SCHEDULE 9(a)
EXISTING LIENS
<PAGE>
SCHEDULE 9(f)
EXISTING INDEBTEDNESS
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and
entered into as of this 1st day of January, 1997, by and between
Syncor International Corporation, a Delaware corporation(the
"Company"), and Monty Fu ("Employee").
1. Employment. The Company agrees to employ Employee, and
Employee agrees to be employed by the Company, during the
Employment Period (as hereinafter defined) to perform his duties as
Chairman of the Board of the Company and President and Chief
Executive Officer of Syncor Overseas Ltd. or such other or
additional duties as determined from time to time by the Board of
Directors of the Company or its designee. If Employee is elected
or appointed to an office with any of the Company's other
subsidiaries or affiliates during the Employment Period, Employee
shall serve in such capacity or capacities without additional
compensation. Employee agrees to perform such duties faithfully
and to the best of his ability, to devote his full working time and
efforts to the performance of such duties and not to accept any
other gainful employment without the prior written consent of the
Board of Directors.
2. Employment Period; Extension. The "Employment Period,"
as used herein, means the period beginning on the date initially
set forth above (the "Commencement Date") and ending on the first
anniversary thereof (the "Expiration Date"). On or after June 1,
1997, the Company will negotiate with Employee regarding an
extension of the Employment Period beyond the Expiration Date.
Such negotiations shall conclude on or before October 1, 1997. Any
extension of this Agreement beyond the Expiration Date shall be
subject to the mutual written agreement of Employee and the Company
with respect to the terms thereof. Neither the Company nor
Employee shall have any obligation to extend the Employment Period.
If Employee and the Company do not execute a written agreement on
or before October 1, 1997 extending the Employment Period beyond
the Expiration Date, and if Employee remains in the employ of the
Company following the Expiration Date, such employment shall be
at-will, subject to termination by either party, with or without
cause, upon 90 days written notice (the "90-Day Notice") to the
other party, and with the Company's sole liability to Employee
following the Expiration Date to be payment of Employee's base
salary and incentive compensation prorated through the termination
date specified in the 90-Day Notice. Employee's employment by the
Company, if any, after the expiration of the Employment Period
shall be governed by all of the terms and conditions of this
Agreement not inconsistent with the at-will nature of such
employment.
3. Annual Salary and Benefits.
3.1 Base Salary and Incentive Compensation. For all
services rendered by Employee during the Employment Period, the
Employee shall be entitled to be paid by the Company a base salary
in the annual amount of $240,000 (the "Base Salary") and to receive
such fringe benefits as may be made available by the Company to
Employee, including participation in the 1995 Management Incentive
Plan (the "1995 MIP"), the 1996 Management Incentive Plan (the
"1996 MIP"), and any other incentive plan(s) that may be prepared
and approved by the Board of Directors which are applicable
generally to the Company's executives of comparable rank to
Employee. Employee also shall be eligible to receive such
additional compensation, contingent or otherwise, as determined
solely in the discretion of the Board of Directors (or a committee
of the Board of Directors to which such discretion is delegated).
The Base Salary shall be payable in biweekly installments, subject
to all applicable withholding and deductions.
3.2 Stock Options. From time to time, at the Board
of Directors meetings, the appropriate Board committee shall
consider the adequacy of Employee's then existing stock options.
If in the Board of Directors' sole discretion, additional options
are warranted, they shall be granted with terms and conditions
which the Board deems appropriate and at all times consistent with
the Company's then existing stock option plans. At any time that
Employee wants to exercise any of his vested stock options, upon
Employee's request, the Company may loan to him the amount
necessary to exercise such options; provided, however, that any
such loan shall not include any amount for Employee's withholding
taxes, unless such exercise is in connection with a Termination
Without Cause following a Change in Control, as such terms are
defined in Section 7.3 below. The terms and conditions of any such
loan shall be determined by the Board of Directors.
4. Employee Handbook. The Company maintains an Employee
Handbook, which the Company may revise as the Company deems
necessary. Employee's employment hereunder is and will be subject
to the provisions of any such Handbook maintained by the Company;
however, the express provisions of this Agreement will control in
the event they conflict or are inconsistent with the
provisions of the Handbook.
5. Execution of Documents and Other Agreements. Employee
(a) shall execute an Invention, Secrecy and Other Matters Agreement
substantially in the form attached hereto as Exhibit A, (b) shall
execute a Benefits Agreement substantially in the form attached
hereto as Exhibit B; provided however, the express provisions of
this Agreement will control in the event they conflict or are
inconsistent with the provision of such Benefits Agreement, (c)
shall deliver to the Company the Form I-9 prescribed by the
Immigration and Naturalization Service together with the original
documentation required therewith, and (d) shall execute and deliver
to the Company all such documents as the Company may from time to
time deem necessary or desirable to evidence, protect, enforce or
defend its right, title and interest in or to any Proprietary
Information, as defined in the Invention, Secrecy & Other Matters
Agreement.
6. Termination.
6.1 This Agreement and Employee's employment
hereunder will automatically terminate upon the first to occur of
the following circumstances (any such termination and any
termination pursuant to Section 6.2 being referred to herein as a
"Termination of Employment"):
(a) the failure of the parties prior to the
first anniversary of the Commencement Date to extend the Employment
Period pursuant to Section 2 hereof, or the expiration of any such
extended Employment Period or pursuant to a 90-Day Notice; or
(b) Employee's death.
6.2 This Agreement and Employee's employment
hereunder may be terminated by the Company or Employee, as the case
may be, by notice to the other under the following circumstances:
(a) by the Company at any time for "cause"
consisting of, as determined in the sole discretion of the Board of
Directors, Employee's willful misconduct which has or could
reasonably be expected to have a material adverse effect on the
financial condition, results of operations, business, assets,
operations, performance or prospects of the Company (a ="Material
Adverse Effect"), Employee's willful violation of specific written
directions from the Board of Directors of the Company, which
directions are lawful and are consistent with the provisions of
this Agreement, or Employee's material neglect of his duties
hereunder, the commission by Employee of an act constituting common
law fraud or embezzlement or a felony or criminal act (other than
traffic violations), Employee's abuse of alcohol or other drugs or
controlled substances or conviction of a crime involving moral
turpitude, in each case which has or could be reasonably expected
to have a Material Adverse Effect or impairs Employee's ability to
perform his duties hereunder, Employee's material breach of this
Agreement, or (vi) Employee's adjudication as a bankrupt;
(b) by the Company in the event that Employee
has been unable to perform substantially all of his employment
duties under this Agreement for a continuous period of 90 days, or
can reasonably be expected to be unable to do so for such period,
as the result of Employee's incapacity due to physical or mental
impairment; or
(c) by Employee at any time by voluntarily
resigning or retiring.
6.3 This Agreement and Employee's employment
hereunder may be terminated by the Company by notice to the
Employee at any time and for any reason, or for no reason, without
"cause" (any such termination being referred to herein as a
"Termination Without Cause").
7. Effect of Termination of Employment or Termination
Without Cause.
7.1 Termination of Employment. Upon a Termination
of Employment pursuant to Section 6.1 or 6.2 hereof, neither
Employee nor Employee's beneficiaries or estate shall have any
further rights under this Agreement or any claims against the
Company arising out of this Agreement, except the right to receive,
within 30 days of the Termination of Employment, (a) that portion
of the Base Salary earned but unpaid through the date of the
Termination of Employment, and (b) the right to receive certain
prorated amounts due under any incentive plan as described below.
Employee shall have the right to exercise any vested stock option
shares for a period of 90 days following the date of the
Termination of Employment, in accordance with the terms of the
applicable stock option agreement. With respect to any incentive
plan described below, the Company shall have no obligation to pay
any amount to Employee unless and until the Board of Directors of
the Company shall have approved generally the funding of payout to
all employees pursuant to any such incentive plan.
7.1.1 With respect to the 1995 MIP, in the
event of a Termination of Employment, the Company shall pay
Employee any Long Term Incentive (as defined in the 1995 MIP)
earned but deferred from any year prior to the year in the
Termination of Employment occurs in addition to the prorata portion
of such Long Term Incentive earned during the year of such
Termination of Employment. However, the Company shall have no
obligation to pay any portion of the Company Match element (as
defined in the 1995 MIP) of the Long Term Incentive.
7.1.2 With respect to the 1996 MIP, in the
event of a Termination of Employment, the Company shall pay
Employee (a) the EPS Incentive (as defined in the 1996 MIP)
prorated through the date of the Termination of Employment, and (b)
any Long Term Incentive (as defined in the 1996 MIP) earned but
deferred from any year prior to the year in the Termination of
Employment occurs in addition to the prorata portion of such Long
Term Incentive earned during the year of such Termination of
Employment. However, the Company shall have no obligation to pay
any portion of the Company Match element (as defined in the 1996
MIP) of the Long Term Incentive.
7.1.3 With respect to any other incentive
plan(s) that may be approved by the Board of Directors during the
Employment Period ("New Plans"), in the event of a Termination of
Employment pursuant to Section 6.1, the Company's obligation to pay
Employee any portion of such New Plans shall be consistent with the
Company's obligations under the preceding Sections 7.1.1 and 7.1.2.
However, with respect to a Termination of Employment pursuant to
Section 6.2, the Company shall have no obligation to pay any
incentive compensation to Employee pursuant to any New Plans.
7.2 Termination Without Cause. Subject to Section
7.3 below, upon a Termination Without Cause (as defined in Section
6.3 above), neither Employee nor Employee's beneficiaries or estate
shall have any further rights under this Agreement or any claims
against the Company arising out of this Agreement, except (a) the
right to receive the amounts described in Section 7.1, which
amounts shall be calculated through the end of the Severance Period
and (b) subject to and so long as Employee is in compliance with
the terms of Sections 8, 9 and 10 hereof following the Termination
Without Cause, annual severance compensation during the Severance
Period equal to the annual Base Salary provided for in Section 3.
The "Severance Period" for purposes of this Agreement shall mean
the one-year period following the effective date of the Termination
Without Cause, unless such period is extended pursuant to Section
7.3 below. All payments under this Section 7.2 shall be payable in
biweekly installments as provided in Section 3 above. Employee
shall have the right to exercise any vested stock option shares for
a period of 90 days following the date of the Termination Without
Cause, in accordance with the terms of the applicable stock option
agreement.
7.3 Termination Without Cause Following a Change in
Control.
7.3.1 Upon a Termination Without Cause
following a "Change in Control" as defined below, the Severance
Period shall be extended to mean the two-year period following such
Termination Without Cause.
7.3.2 A "Change in Control" shall be defined to
include either (i) acquisition of 20% or more of the outstanding
common stock of the Company by a person, or group of related
persons (as defined by Securities and Exchange Commission Rule
13d-3), that is not affiliated with the Company as of the date
hereof, or (ii) the sale by the Company of more than 50% of the
Company's assets not in the ordinary course of business, or (iii)
the failure by the Board of Directors to determine a "Qualified
Offer" as that term is defined in Section 1 (a) of that certain
Rights Agreement dated as of September 8, 1989 between the Company
and the American Stock Transfer & Trust Company.
7.3.3 All payments under this Section 7.3 shall
be payable in biweekly installments as provided in Section 3 above;
provided, however, that Employee shall have the option to receive
such payments due under this Section 7.3 in a lump sum.
7.3.4 In the event of a Change in Control,
Employee's vesting in all grants of stock option shares, all
incentive plans and all other benefits as provided in the Benefits
Agreement shall be accelerated and shall be fully vested to the
date of such Change in Control. If a Change in Control results in
the involuntary or voluntary termination of Employee, (a) such
vested options shall be exercisable by Employee at any time during
the Severance Period and for 90 days thereafter and (b) Company
shall pay to Employee all amounts due under any and all components
of any incentive plan applicable to Employee, including the EPS
Incentive, Long Term Incentive and Company Match components,
without any proration, through the end of the Severance Period. At
any time that Employee wants to exercise any of his vested stock
options in connection with a Termination Without Cause following a
Change in Control, upon Employee's request, the Company shall loan
to him the amount necessary to exercise such options, including an
amount equal to Employee's withholding taxes payable in connection
with such exercise. Such loan shall be for a period of three years
with interest charged at the prime rate as determined by the First
National Bank of Chicago at the time of such loan.
7.4 Employee's obligations under Sections 8, 9 and
10 of this Agreement shall survive the expiration or termination
hereof; provided, however, that in the event of a Change in
Control, Employee has no obligation to comply with such sections
following the date of such Change in Control.
8. Agreement Not to Solicit Employees. Employee agrees
that, prior to a Termination of Employment and during the
Noncompetition Period referred to in Section 10.1 below, Employee
shall not solicit or otherwise attempt, directly or indirectly, to
entice the Company's other employees to leave the Company or its
affiliates or breach any agreement they have with the Company or
its affiliates.
9. Proprietary Information. Employee hereby agrees to be
bound by the terms of the Invention, Secrecy & Other Matters
Agreement to be executed by Employee substantially in the form
attached hereto as Exhibit A, specifically including the
obligations contained in Section 3 thereof regarding the
nondisclosure of proprietary information.
10. Noncompetition.
10.1 Employee agrees that, prior to a Termination of
Employment and for the one-year period following Termination of
Employment (the "Noncompetition Period"), Employee shall not engage
or participate in any state of the United States, directly or
indirectly, either as an owner, partner, director, trustee,
officer, employee, consultant, advisor or in any other individual
or representative capacity, in any activity which is the same as,
similar to or competitive in any manner whatsoever with the
business of the Company, its subsidiaries or affiliates (herein, a
"Competing Activity") and will not have any investment in a
business which is engaged in a Competing Activity other than an
ownership interest of less than five percent (5%) of any company
whose securities are listed on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market. Employee
agrees that, in the event the Severance Period is extended by the
Company as permitted in Section 7.2, the Noncompetition Period
shall thereupon automatically be extended to coincide with the
extended Severance Period.
10.2 Employee acknowledges and agrees that the
breadth of the territorial restriction in Section 10.1 is
reasonable and necessary to protect the Company, its subsidiaries
and affiliates because, among other things, the Company, its
subsidiaries and affiliates conduct or propose to conduct business
throughout the United States, such business could be located in any
jurisdiction in the United States and any lesser restriction would
unfairly infringe upon the conduct of such business.
10.3 Employee understands that the foregoing
restrictions may limit his ability to earn a livelihood in a
business similar to the respective business of the Company, its
subsidiaries and affiliates, but he nevertheless believes that he
has received and will receive sufficient consideration hereunder
and otherwise as an employee of the Company to justify such
restrictions which, in any event, given his education, abilities
and skills, Employee does not believe would prevent him from
earning a living.
11. Assignment. This Agreement shall inure to the benefit
of and shall be binding upon the Company, its successors and
assigns. The obligations and duties of Employee hereunder are
personal and not assignable, whether voluntarily or involuntarily
or by operation of law or otherwise.
12. Entire Agreement. This Agreement contains the entire
agreement of the Company and Employee relating to the subject
matter hereof, and it replaces and supersedes any and all prior
agreements between the parties relating to the same subject matter,
including without limitation, any prior employment agreement
between Employee and the Company. In connection therewith, by
execution of this Agreement, Employee hereby terminates in its
entirety as of the Commencement Date any such prior agreement which
shall thereafter cease to have any force or effect.
13. Waiver; Amendment. No provision hereof may be waived
except by a written agreement signed by the waiving party. The
waiver of any term or condition of this Agreement shall not be
deemed to constitute a waiver of any other term or condition
hereof. This Agreement may be amended only by a subsequent writing
signed by the party or parties to be bound thereby.
14. Remedies. All remedies hereunder are cumulative, are
in addition to any other remedies provided for by law and may, to
the extent permitted by law, be exercised concurrently or
separately, and the exercise of any one remedy shall not be deemed
to be an election of such remedy or to preclude the exercise of any
other remedy. Employee acknowledges that in the event of any
breach of Employee's covenants contained in Section 8, 9 or 10, the
Company shall be entitled to immediate relief enjoining such
violations in any court or before any judicial body having
jurisdiction over such claim.
15. Severability. In the event that any provision of this
Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to
such jurisdiction, shall be ineffective, without invalidating the
remaining provisions of this Agreement in such jurisdiction or any
other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to
such jurisdiction, be so narrowly drawn, without affecting the
validity or enforceability of such provision in any other
jurisdiction.
16. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same
instrument.
17. Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference only and
shall not be deemed to be a part of this Agreement.
18. Attorneys' Fees. In the event that any party hereto
brings an action or proceeding for a declaration of the rights of
the parties under this Agreement, for injunctive relief, for an
alleged breach or default of, or any other action arising out of
this Agreement or the transactions contemplated hereby, or in the
event any party is in default of its obligations pursuant hereto,
the prevailing party in any such action or proceeding shall be
entitled to reasonable attorneys' fees, in addition to any costs
incurred and in addition to any other damages or relief awarded.
19. Governing Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the
State of California applicable to agreements made and to be wholly
performed within such state.
20. Arbitration. In the event (a) Employee disagrees with
a Company decision involving Employee's compensation, position or
other personal employment condition or (b) there is a dispute
arising out of the separation of Employee from employment by the
Company, then Employee and the Company shall first try to resolve
such disagreement or dispute pursuant to the problem solving
procedure in the Employee Handbook. If such disagreement or
dispute is not resolved by such procedure, then it shall be
resolved by binding arbitration, at the request of either party, in
accordance with the rules of the American Arbitration Association.
The arbitrator shall have the power to award only actual direct
compensatory damages which excludes punitive damages and the
parties waive the right to recover punitive damages. The
arbitrator shall prepare in writing and provide to the parties an
award including factual findings and the reasons on which the
decision is based. The arbitrator shall not have the power to
commit errors of law or legal reasoning, and the award may be
vacated or corrected by judicial review for any such error.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
SYNCOR INTERNATIONAL CORPORATION,
a Delaware corporation
/S/ HAIG BAGERDJIAN
By:_______________________________
HAIG BAGERDJIAN
Senior Vice President
Business Development and General Counsel
EMPLOYEE
/S/ MONTY FU
____________________________
MONTY FU
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and
entered into as of this 1st day of January, 1997, by and between
Syncor International Corporation, a Delaware corporation (the
"Company"), and Robert G. Funari ("Employee").
1. Employment. The Company agrees to employ Employee, and
Employee agrees to be employed by the Company, during the
Employment Period (as hereinafter defined) to perform his duties as
President and Chief Executive Officer of the Company or such other
or additional duties as determined from time to time by the Board
of Directors of the Company or its designee. If Employee is
elected or appointed to an office with any of the Company's other
subsidiaries or affiliates during the Employment Period, Employee
shall serve in such capacity or capacities without additional
compensation. Employee agrees to perform such duties faithfully
and to the best of his ability, to devote his full working time and
efforts to the performance of such duties and not to accept any
other gainful employment without the prior written consent of the
Board of Directors.
2. Employment Period; Extension. The "Employment Period,"
as used herein, means the period beginning on the date initially
set forth above (the "Commencement Date") and ending on the first
anniversary thereof (the "Expiration Date"). On or after June 1,
1997, the Company will negotiate with Employee regarding an
extension of the Employment Period beyond the Expiration Date.
Such negotiations shall conclude on or before October 1, 1997. Any
extension of this Agreement beyond the Expiration Date shall be
subject to the mutual written agreement of Employee and the Company
with respect to the terms thereof. Neither the Company nor
Employee shall have any obligation to extend the Employment Period.
If Employee and the Company do not execute a written agreement on
or before October 1, 1997 extending the Employment Period beyond
the Expiration Date, and if Employee remains in the employ of the
Company following the Expiration Date, such employment shall be
at-will, subject to termination by either party, with or without
cause, upon 90 days written notice (the "90-Day Notice") to the
other party, and with the Company's sole liability to Employee
following the Expiration Date to be payment of Employee's base
salary and incentive compensation prorated through the termination
date specified in the 90-Day Notice. Employee's employment by the
Company, if any, after the expiration of the Employment Period
shall be governed by all of the terms and conditions of this
Agreement not inconsistent with the at-will nature of such
employment.
3. Annual Salary and Benefits.
3.1 Base Salary and Incentive Compensation. For all
services rendered by Employee during the Employment Period, the
Employee shall be entitled to be paid by the Company a base salary
in the annual amount of $240,000 (the "Base Salary") and to receive
such fringe benefits as may be made available by the Company to
Employee, including participation in the 1995 Management Incentive
Plan (the "1995 MIP"), the 1996 Management Incentive Plan (the
"1996 MIP"), and any other incentive plan(s) that may be prepared
and approved by the Board of Directors which are applicable
generally to the Company's executives of comparable rank to
Employee. Employee also shall be eligible to receive such
additional compensation, contingent or otherwise, as determined
solely in the discretion of the Board of Directors (or a committee
of the Board of Directors to which such discretion is delegated).
The Base Salary shall be payable in biweekly installments, subject
to all applicable withholding and deductions.
3.2 Stock Options. From time to time, at the Board
of Directors meetings, the appropriate Board committee shall
consider the adequacy of Employee's then existing stock options.
If in the Board of Directors' sole discretion, additional options
are warranted, they shall be granted with terms and conditions
which the Board deems appropriate and at all times consistent with
the Company's then existing stock option plans. At any time that
Employee wants to exercise any of his vested stock options, upon
Employee's request, the Company may loan to him the amount
necessary to exercise such options; provided, however, that any
such loan shall not include any amount for Employee's withholding
taxes, unless such exercise is in connection with a Termination
Without Cause following a Change in Control, as such terms are
defined in Section 7.3 below. The terms and conditions of any such
loan shall be determined by the Board of Directors.
4. Employee Handbook. The Company maintains an Employee
Handbook, which the Company may revise as the Company deems
necessary. Employee's employment hereunder is and will be subject
to the provisions of any such Handbook maintained by the Company;
however, the express provisions of this Agreement will control in
the event they conflict or are inconsistent with the
provisions of the Handbook.
5. Execution of Documents and Other Agreements. Employee
(a) shall execute an Invention, Secrecy and Other Matters Agreement
substantially in the form attached hereto as Exhibit A, (b) shall
execute a Benefits Agreement substantially in the form attached
hereto as Exhibit B; provided however, the express provisions of
this Agreement will control in the event they conflict or are
inconsistent with the provision of such Benefits Agreement, (c)
shall deliver to the Company the Form I-9 prescribed by the
Immigration and Naturalization Service together with the original
documentation required therewith, and (d) shall execute and deliver
to the Company all such documents as the Company may from time to
time deem necessary or desirable to evidence, protect, enforce or
defend its right, title and interest in or to any Proprietary
Information, as defined in the Invention, Secrecy & Other Matters
Agreement.
6. Termination.
6.1 This Agreement and Employee's employment
hereunder will automatically terminate upon the first to occur of
the following circumstances (any such termination and any
termination pursuant to Section 6.2 being referred to herein as a
"Termination of Employment"):
(a) the failure of the parties prior to the
first anniversary of the Commencement Date to extend the Employment
Period pursuant to Section 2 hereof, or the expiration of any such
extended Employment Period or pursuant to a 90-Day Notice; or
(b) Employee's death.
6.2 This Agreement and Employee's employment
hereunder may be terminated by the Company or Employee, as the case
may be, by notice to the other under the following circumstances:
(a) by the Company at any time for "cause"
consisting of, as determined in the sole discretion of the Board of
Directors, Employee's willful misconduct which has or could
reasonably be expected to have a material adverse effect on the
financial condition, results of operations, business, assets,
operations, performance or prospects of the Company (a "Material
Adverse Effect"), Employee's willful violation of specific written
directions from the Board of Directors of the Company, which
directions are lawful and are consistent with the provisions of
this Agreement, or Employee's material neglect of his duties
hereunder, the commission by Employee of an act constituting common
law fraud or embezzlement or a felony or criminal act (other than
traffic violations), Employee's abuse of alcohol or other drugs or
controlled substances or conviction of a crime involving moral
turpitude, in each case which has or could be reasonably expected
to have a Material Adverse Effect or impairs Employee's ability to
perform his duties hereunder, Employee's material breach of this
Agreement, or (vi) Employee's adjudication as a bankrupt;
(b) by the Company in the event that Employee
has been unable to perform substantially all of his employment
duties under this Agreement for a continuous period of 90 days, or
can reasonably be expected to be unable to do so for such period,
as the result of Employee's incapacity due to physical or mental
impairment; or
(c) by Employee at any time by voluntarily
resigning or retiring.
6.3 This Agreement and Employee's employment
hereunder may be terminated by the Company by notice to the
Employee at any time and for any reason, or for no reason, without
"cause" (any such termination being referred to herein as a
"Termination Without Cause").
7. Effect of Termination of Employment or Termination
Without Cause.
7.1 Termination of Employment. Upon a Termination
of Employment pursuant to Section 6.1 or 6.2 hereof, neither
Employee nor Employee's beneficiaries or estate shall have any
further rights under this Agreement or any claims against the
Company arising out of this Agreement, except the right to receive,
within 30 days of the Termination of Employment, (a) that portion
of the Base Salary earned but unpaid through the date of the
Termination of Employment, and (b) the right to receive certain
prorated amounts due under any incentive plan as described below.
Employee shall have the right to exercise any vested stock option
shares for a period of 90 days following the date of the
Termination of Employment, in accordance with the terms of the
applicable stock option agreement. With respect to any incentive
plan described below, the Company shall have no obligation to pay
any amount to Employee unless and until the Board of Directors of
the Company shall have approved generally the funding of payout to
all employees pursuant to any such incentive plan.
7.1.1 With respect to the 1995 MIP, in the
event of a Termination of Employment, the Company shall pay
Employee any Long Term Incentive (as defined in the 1995 MIP)
earned but deferred from any year prior to the year in the
Termination of Employment occurs in addition to the prorata portion
of such Long Term Incentive earned during the year of such
Termination of Employment. However, the Company shall have no
obligation to pay any portion of the Company Match element (as
defined in the 1995 MIP) of the Long Term Incentive.
7.1.2 With respect to the 1996 MIP, in the
event of a Termination of Employment, the Company shall pay
Employee (a) the EPS Incentive (as defined in the 1996 MIP)
prorated through the date of the Termination of Employment, and (b)
any Long Term Incentive (as defined in the 1996 MIP) earned but
deferred from any year prior to the year in the Termination of
Employment occurs in addition to the prorata portion of such Long
Term Incentive earned during the year of such Termination of
Employment. However, the Company shall have no obligation to pay
any portion of the Company Match element (as defined in the 1996
MIP) of the Long Term Incentive.
7.1.3 With respect to any other incentive
plan(s) that may be approved by the Board of Directors during the
Employment Period ("New Plans"), in the event of a Termination of
Employment pursuant to Section 6.1, the Company's obligation to pay
Employee any portion of such New Plans shall be consistent with the
Company's obligations under the preceding Sections 7.1.1 and 7.1.2.
However, with respect to a Termination of Employment
pursuant to Section 6.2, the Company shall have no obligation to
pay any incentive compensation to Employee pursuant to any New
Plans.
7.2 Termination Without Cause. Subject to Section
7.3 below, upon a Termination Without Cause (as defined in Section
6.3 above), neither Employee nor Employee's beneficiaries or estate
shall have any further rights under this Agreement or any claims
against the Company arising out of this Agreement, except (a) the
right to receive the amounts described in Section 7.1, which
amounts shall be calculated through the end of the Severance Period
and (b) subject to and so long as Employee is in compliance with
the terms of Sections 8, 9 and 10 hereof following the Termination
Without Cause, annual severance compensation during the Severance
Period equal to the annual Base Salary provided for in Section 3.
The "Severance Period" for purposes of this Agreement shall mean
the one-year period following the effective date of the Termination
Without Cause, unless such period is extended pursuant to Section
7.3 below. All payments under this Section 7.2 shall be payable in
biweekly installments as provided in Section 3 above. Employee
shall have the right to exercise any vested stock option shares for
a period of 90 days following the date of the Termination Without
Cause, in accordance with the terms of the applicable stock option
agreement.
7.3 Termination Without Cause Following a Change in
Control.
7.3.1 Upon a Termination Without Cause
following a "Change in Control" as defined below, the Severance
Period shall be extended to mean the two-year period following such
Termination Without Cause.
7.3.2 A "Change in Control" shall be defined
to include either (i) acquisition of 20% or more of the outstanding
common stock of the Company by a person, or group of related
persons (as defined by Securities and Exchange Commission Rule
13d-3), that is not affiliated with the Company as of the date
hereof, or (ii) the sale by the Company of more than 50% of the
Company's assets not in the ordinary course of business, or (iii)
the failure by the Board of Directors to determine a "Qualified
Offer" as that term is defined in Section 1 (a) of that certain
Rights Agreement dated as of September 8, 1989 between the Company
and the American Stock Transfer & Trust Company.
7.3.3 All payments under this Section 7.3
shall be payable in biweekly installments as provided in Section 3
above; provided, however, that Employee shall have the option to
receive such payments due under this Section 7.3 in a lump sum.
7.3.4 In the event of a Change in Control,
Employee's vesting in all grants of stock option shares, all
incentive plans and all other benefits as provided in the Benefits
Agreement shall be accelerated and shall be fully vested to the
date of such Change in Control. If a Change in Control results in
the involuntary or voluntary termination of Employee, (a) such
vested options shall be exercisable by Employee at any time during
the Severance Period and for 90 days thereafter and (b) Company
shall pay to Employee all amounts due under any and all components
of any incentive plan applicable to Employee, including the EPS
Incentive, Long Term Incentive and Company Match components,
without any proration, through the end of the Severance Period. At
any time that Employee wants to exercise any of his vested stock
options in connection with a Termination Without Cause following a
Change in Control, upon Employee's request, the Company shall loan
to him the amount necessary to exercise such options, including an
amount equal to Employee's withholding taxes payable in connection
with such exercise. Such loan shall be for a period of three years
with interest charged at the prime rate as determined by the First
National Bank of Chicago at the time of such loan.
7.4 Employee's obligations under Sections 8, 9 and
10 of this Agreement shall survive the expiration or termination
hereof; provided, however, that in the event of a Change in
Control, Employee has no obligation to comply with such sections
following the date of such Change in Control.
8. Agreement Not to Solicit Employees. Employee agrees
that, prior to a Termination of Employment and during the
Noncompetition Period referred to in Section 10.1 below, Employee
shall not solicit or otherwise attempt, directly or indirectly, to
entice the Company's other employees to leave the Company or its
affiliates or breach any agreement they have with the Company or
its affiliates.
9. Proprietary Information. Employee hereby agrees to be
bound by the terms of the Invention, Secrecy & Other Matters
Agreement to be executed by Employee substantially in the form
attached hereto as Exhibit A, specifically including the
obligations contained in Section 3 thereof regarding the
nondisclosure of proprietary information.
10. Noncompetition.
10.1 Employee agrees that, prior to a Termination of
Employment and for the one-year period following Termination of
Employment (the "Noncompetition Period"), Employee shall not engage
or participate in any state of the United States, directly or
indirectly, either as an owner, partner, director, trustee,
officer, employee, consultant, advisor or in any other individual
or representative capacity, in any activity which is the same as,
similar to or competitive in any manner whatsoever with the
business of the Company, its subsidiaries or affiliates (herein, a
"Competing Activity") and will not have any investment in a
business which is engaged in a Competing Activity other than an
ownership interest of less than five percent (5%) of any company
whose securities are listed on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market. Employee
agrees that, in the event the Severance Period is extended by the
Company as permitted in Section 7.2, the Noncompetition Period
shall thereupon automatically be extended to coincide with the
extended Severance Period.
10.2 Employee acknowledges and agrees that the
breadth of the territorial restriction in Section 10.1 is
reasonable and necessary to protect the Company, its subsidiaries
and affiliates because, among other things, the Company, its
subsidiaries and affiliates conduct or propose to conduct business
throughout the United States, such business could be located in any
jurisdiction in the United States and any lesser restriction would
unfairly infringe upon the conduct of such business.
10.3 Employee understands that the foregoing
restrictions may limit his ability to earn a livelihood in a
business similar to the respective business of the Company, its
subsidiaries and affiliates, but he nevertheless believes that he
has received and will receive sufficient consideration hereunder
and otherwise as an employee of the Company to justify such
restrictions which, in any event, given his education, abilities
and skills, Employee does not believe would prevent him from
earning a living.
11. Assignment. This Agreement shall inure to the benefit
of and shall be binding upon the Company, its successors and
assigns. The obligations and duties of Employee hereunder are
personal and not assignable, whether voluntarily or involuntarily
or by operation of law or otherwise.
12. Entire Agreement. This Agreement contains the entire
agreement of the Company and Employee relating to the subject
matter hereof, and it replaces and supersedes any and all prior
agreements between the parties relating to the same subject matter,
including without limitation, any prior employment agreement
between Employee and the Company. In connection therewith, by
execution of this Agreement, Employee hereby terminates in its
entirety as of the Commencement Date any such prior agreement which
shall thereafter cease to have any force or effect.
13. Waiver; Amendment. No provision hereof may be waived
except by a written agreement signed by the waiving party. The
waiver of any term or condition of this Agreement shall not be
deemed to constitute a waiver of any other term or condition
hereof. This Agreement may be amended only by a subsequent writing
signed by the party or parties to be bound thereby.
14. Remedies. All remedies hereunder are cumulative, are
in addition to any other remedies provided for by law and may, to
the extent permitted by law, be exercised concurrently or
separately, and the exercise of any one remedy shall not be deemed
to be an election of such remedy or to preclude the exercise of any
other remedy. Employee acknowledges that in the event of any
breach of Employee's covenants contained in Section 8, 9 or 10, the
Company shall be entitled to immediate relief enjoining such
violations in any court or before any judicial body having
jurisdiction over such claim.
15. Severability. In the event that any provision of this
Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to
such jurisdiction, shall be ineffective, without invalidating the
remaining provisions of this Agreement in such jurisdiction or any
other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to
such jurisdiction, be so narrowly drawn, without affecting the
validity or enforceability of such provision in any other
jurisdiction.
16. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same
instrument.
17. Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference only and
shall not be deemed to be a part of this Agreement.
18. Attorneys' Fees. In the event that any party hereto
brings an action or proceeding for a declaration of the rights of
the parties under this Agreement, for injunctive relief, for an
alleged breach or default of, or any other action arising out of
this Agreement or the transactions contemplated hereby, or in the
event any party is in default of its obligations pursuant hereto,
the prevailing party in any such action or proceeding shall be
entitled to reasonable attorneys' fees, in addition to any costs
incurred and in addition to any other damages or relief awarded.
19. Governing Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the
State of California applicable to agreements made and to be wholly
performed within such state.
20. Arbitration. In the event (a) Employee disagrees with
a Company decision involving Employee's compensation, position or
other personal employment condition or (b) there is a dispute
arising out of the separation of Employee from employment by the
Company, then Employee and the Company shall first try to resolve
such disagreement or dispute pursuant to the problem solving
procedure in the Employee Handbook. If such disagreement or
dispute is not resolved by such procedure, then it shall be
resolved by binding arbitration, at the request of either party, in
accordance with the rules of the American Arbitration Association.
The arbitrator shall have the power to award only actual direct
compensatory damages which excludes punitive damages and the
parties waive the right to recover punitive damages. The
arbitrator shall prepare in writing and provide to the parties an
award including factual findings and the reasons on which the
decision is based. The arbitrator shall not have the power to
commit errors of law or legal reasoning, and the award may be
vacated or corrected by judicial review for any such error.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
SYNCOR INTERNATIONAL CORPORATION,
a Delaware corporation
/S/ HAIG BAGERDJIAN
By:_________________________________
HAIG BAGERDJIAN
Senior Vice President
Business Development and General Counsel
EMPLOYEE
/S/ ROBERT G. FUNARI
________________________
ROBERT G. FUNARI
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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