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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 JUNE 30, 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 91367
(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 June 30, 1997,
9,764,079 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
June 30, 1997 and December 31, 1996..........................2
Statements of Income for three months
ended June 30, 1997 and 1996..................................3
Statements of Income for six months
ended June 30, 1997 and 1996..................................4
Statements of Cash Flows for six months
ended June 30, 1997 and 1996..................................5
Notes to Consolidated Condensed Financial Statements............6
Item 2. Management's Discussion and Analysis of Financial Condition.....7
Part II. Other Information...............................................9
SIGNATURE.................................................................11
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands, except per share data)
June 30, December 31,
1997 1996
___________ _____________
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents 18,339 25,214
Short-term investments 2,515 1,258
Accounts receivable, net 58,085 51,964
Inventory 6,584 7,827
Net assets of discontinued operations - 1,198
Prepaids and other current assets 5,200 5,519
_______ _______
Total current assets 90,723 92,980
Marketable investment securities 1,235 1,239
Property and equipment, net 22,824 21,532
Excess of purchase price over net assets
acquired, net 14,641 14,207
Other assets 25,569 15,605
_______ _______
$154,992 $145,563
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 36,991 $ 38,851
Accrued liabilities 4,867 3,249
Accrued wages and related costs 11,755 10,757
Federal and state taxes payable 1,133 2,284
Current maturities of long-term debt 2,770 2,324
_________ ________
Total current liabilities 57,516 57,465
Long-term debt, net of current maturities 12,967 7,595
Deferred compensation 1,971 1,971
Stockholders' equity:
Common stock, $.05 par value 567 567
Additional paid-in capital 53,148 53,072
Unrealized loss on investments (32) (27)
Employee stock ownership loan guarantee (4,021) (4,544)
Foreign currency translation adjustment (91) (157)
Retained earnings 47,880 40,234
Treasury stock, at cost; 1,586 shares at
June 30, 1997 and 1,126 shares at
December 31, 1996 (14,913) (10,613)
________ ________
Net stockholders' equity 82,538 78,532
======== ========
$154,992 $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 June 30,
___________________________
1997 1996
______ ______
(Unaudited)
NET SALES $98,187 $93,296
Cost of sales 74,333 71,547
_______ _______
Gross profit 23,854 21,749
Operating, selling and administrative expenses 18,869 17,654
_______ _______
Operating income 4,985 4,095
Other income, net 409 317
_______ _______
Income before taxes 5,394 4,412
Provision for income taxes 2,157 1,765
_______ _______
Income from continuing operations 3,237 2,647
Discontinued operations, net of taxes 1,063 (343)
_______ _______
Net income $ 4,300 $ 2,304
======= ========
Net income per share - Primary $.44 $ .22
======= =======
Weighted average shares outstanding - Primary 9,870 10,637
======= =======
Net income per share - Fully Diluted $ .43 $ .22
======= =======
Weighted average shares outstanding - Fully Diluted 9,964 10,796
======= =======
See notes to consolidated condensed financial statements.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(in thousands, except per share data)
Six Months Ended June 30,
_________________________
1997 1996
______ ______
(Unaudited)
Net sales $191,271 $185,317
Cost of sales 147,301 143,348
________ ________
Gross profit 43,970 41,969
Operating, selling and administrative expenses 36,139 35,562
________ ________
Operating income 7,831 6,407
Other income, net 3,140 1,048
________ ________
Income before taxes 10,971 7,455
Provision for income taxes 4,388 2,982
________ ________
Income from continuing operations 6,583 4,473
Discontinued operations, net of taxes 1,063 (463)
________ ________
Net income $ 7,646 $ 4,010
======== ========
Net income per share - Primary $ .76 $ .38
======== ========
Weighted average shares outstanding - Primary 10,107 10,495
======== ========
Net income per share - Fully Diluted $ .75 $ .37
======== ========
Weighted average shares outstanding - Fully Diluted 10,135 10,849
======== ========
See notes to consolidated condensed financial statements.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(in thousands)
Six Months Ended June 30,
_________________________
1997 1996
______ ______
(Unaudited)
Cash flows from operating activities:
Net income $ 7,646 $4,010
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,609 5,477
Amortization of ESSOP loan guarantee 523 712
Decrease (increase) in:
Accounts receivables, net (6,121) (2,227)
Inventory 1,243 (207)
Net assets of discontinued operations 1,198 -
Other current assets 319 (1,879)
Increase (decrease) in:
Accounts payable (1,860) 504
Accrued liabilities 1,618 755
Accrued wages and related costs 998 1,643
Federal and state taxes payable (1,151) 1,844
Foreign currency translation adjustment 66 27
_______ _______
Net cash provided by operating activities 9,088 10,659
_______ _______
Cash flows from investing and financing activities:
Purchase of property and equipment, net (4,978) (5,776)
(Increase) decrease in short-term investments (1,257) 372
Decrease in long-term investments 4 -
(Increase) in other non-current assets (11,321) (2,147)
Net proceeds from (repayment of) short-term debt 446 69
Net proceeds from (repayment of) long-term debt 5,372 1,448
Issuance of common stock 76 76
Reacquisition of common stock for treasury (4,300) (3,526)
Unrealized (loss) on investments (5) (2)
________ ________
Net cash used in investing and financing activities (15,963) (9,486)
________ ________
Net increase (decrease) in cash and cash equivalents (6,875) 1,173
Cash and cash equivalents at beginning of period 25,214 23,022
________ ________
Cash and cash equivalents at end of period $18,339 $24,195
======== ========
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 six months ended June 30, 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 second quarter of 1997, the Company
purchased 189,600 shares of its common stock in the open market
at an average price of $8.82 per share. For the six months
ended June 30, 1997, the Company has purchased 459,600 shares of
its common stock in the open market at an average price of $9.35
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 second quarter of 1997 increased 5.2
percent or $4.9 million to $98.2 million versus $93.3 million for the
second quarter of 1996. For the six months ended June 30, 1997, net
sales increased 3.2 percent or $6.0 million to $191.3 million compared
to $185.3 million for the same period in 1996.
There were three major factors which affected sales results during the
first six months 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
approximately 22 percent for the second quarter of 1997 when compared
to the same period in 1996. However, this growth has come at the
expense of thallium, a lower priced generic heart imaging agent.
Sales of thallium, the former cardiac agent of choice, declined by 11
percent in the second quarter of 1997 when compared to the comparable
period in 1996. 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
a net increase of 5.1 percent for the second quarter of 1997. The
outlook for sales performance for thallium and IV Persantine are not
expected to change significantly. However, the Food and Drug
Administration ("FDA") recently approved an additional indication for
Cardiolite(R) (breast imaging). Due to the newness of the approval, the
Company is not providing guidance as to the sales performance for this
product, other than to indicate it expects increased sales as a result
of this product in the second half of 1997. Also, the Company
anticipates that the market introduction of two new oncology products
in the second half of 1997, Verluma and Quadramet, will positively
impact sales.
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.
Sales for the second quarter ended June 30, 1997 were also negatively
affected as a result of a temporary interruption in the supply of
molybdenum, the parent isotope of technetium. The entire nuclear
medicine community experienced this interruption due to a labor
dispute by one of North America's major supplier of molybdenum. This
interruption in the supply of molybdenum impacted the Company's sales
for the second quarter of 1997 by an estimated $1.4 million and $.5
million in pharmacy profit. The estimated impact on net income was
in the range of $.2 million to $.3 million or earnings per share of
approximately $.03 per share.
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 believes that it will continue to service
many of the existing members. 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 second quarter of 1997 increased $2.1 million to
$23.9 million, and as a percentage of net sales to 24.3 percent,
compared to 23.3 percent of net sales or $21.7 million for the
comparable quarter in 1996. For the six months ended June 30, 1997,
gross profit increased $2.0 million to $44.0 million and as a
percentage of net sales to 23 percent, compared to 22.6 percent of net
sales or $42 million for the comparable period in 1996.
The gross margin percentage in the second quarter of 1997 was
affected by two factors. First, the Company announced in July 1997,
that it had re-negotiated its long-term material supply agreement with
one of its major suppliers. The improved gross margin is due in part
to this transaction and due in part to a product mix shift in the
cardiology business. Secondly, some of the material expense savings
were partially offset by labor expense associated with bonus accrual
expenses that were made at a higher rate in 1997 versus 1996 to make
up for a lower accrual during the first quarter of 1997.
OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
Operating, selling and administrative expenses increased by 6.9
percent for the second quarter of 1997 or $1.2 million to $18.9
million, and as a percentage of sales increased to 19.2 percent from
18.9 percent for the same period in 1996. For the six months ended
June 30, 1997, operating, selling and administrative expenses
increased by 1.6 percent or $.6 million to $36.1 million, or 18.9
percent of sales, compared to $35.6 million or 19.2 percent of sales
for the same period in 1996.
The increase in operating, selling and administrative expenses for the
second quarter of 1997 is the result of increased labor costs
associated with accruing bonus expense at a greater rate in 1997
versus the same period in 1996. As previously indicated in the first
quarter 1997 10Q, the Company stated it may accrue bonus expense at
a higher rate later in the year if the earnings continue to remain
strong throughout the balance of the current year. During the second
quarter of 1997, the Company also experienced higher costs associated
with its Core Business Improvement Program, and certain other costs
associated with improving operations of the core business.
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 a 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
$22.1 million at June 30, 1997, compared with $27.7 million at
December 31, 1996. The Company's total debt position of $15.7 million
at June 30, 1997, reflects an increase of $5.8 million when compared
to the debt position at December 31, 1996 of $9.9 million. The
primary increase in debt is the result of a bank loan utilized for
an acquisition in April 1997. Working capital decreased by $2.3
million to $33.2 million at June 30, 1997, compared to $35.5 million
at December 31, 1996. Days sales outstanding on receivables increased
to 52 days at June 30, 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 June 30, 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,
undue reliance should not be place on such forward looking statements.
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company's Annual Meeting of Stockholders was held on June 18,
1997. 9,929,794 shares of the Company's Common Stock were entitled
to be voted during the meeting. 8,973,087 shares were represented at
the meeting in person or by proxy.
The stockholders were asked to vote on the following: (1) the
election of three of the seven directors for an additional three-year
term; and (2) the amendment of the Company's 1990 Master Stock
Incentive Plan (the "Plan") to increase the number of option shares
to be made available under the Plan by 750,000 shares and to limit the
number of option shares that may be granted to any one individual
employee during any given fiscal year to 200,000 shares. The
stockholders voted to elect the three directors nominated by the Board
of Directors, and to approve the amendments to the Plan. The voting
results were as follows:
Votes Against Abstentions and
Votes in Favor Or Withheld Broker Non-Votes
________________________________________________
Election of Directors
_____________________
Steven B. Gerber 8,209,526 763,561 0
Arnold E. Spangler 8,206,704 766,383 0
Dr. Gail Wilensky 8,209,677 763,410 0
Plan Amendments
_______________
3,749,311 3,389,224 1,834,552
ITEM 5. OTHER INFORMATION
STOCK REPURCHASE PROGRAM
________________________
During the second quarter of 1997, the Company purchased 179,600
shares of its common stock in the open market at an average price of
$9.31 per share. The shares are classified as "Treasury Stock" on the
Company's balance sheet.
At the June 18, 1997 Board of Directors Meeting, the Board approved
the repurchase of up to an additional 500,000 shares of common stock
from time to time, in the open market. This is the fourth
authorization given by the Board of Directors since June 1994,
bringing the total authorization to repurchase to 2.0 million shares.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10. Material Contracts
10.1 1990 Master Stock Incentive Plan, amended and restated as of
June 18, 1997.
(b) Reports on Form 8-K
A Form 8-K dated April 7, 1997, was filed by the Company as a result
of the acquisition of Golden Pharmaceuticals, Inc.
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 (filed electronically)
<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)
August 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 1990 Master Stock Incentive Plan, amended and restated as
of June 18, 1997.
27. Financial Data Schedule<PAGE>
EXHIBIT 10.1
SYNCOR INTERNATIONAL CORPORATION
1990 MASTER STOCK INCENTIVE PLAN
AMENDED AND RESTATED
as of
June 18, 1997
I. THE PLAN.
1.1 PURPOSE. The purpose of this Plan is to promote the success
of the Company by providing an additional means to attract, motivate
and retain key personnel through the grant of Options and other
Awards(1)at provide added long term incentives for high levels of
performance and for significant efforts to improve the financial
performance of the Company.
(1) For definitions of these and other capitalized terms, see Section
7.1, DEFINITIONS.
1.2 ADMINISTRATION.
(a) This Plan shall be administered by the Administrator;
provided that the provisions of Section 2.8 with respect to Awards
granted to Non-Employee Directors shall be, to the maximum extent
possible, self-effectuating and shall not be subject to administrative
discretion with respect to the amount, price, or timing of the grant
or realization of such Awards. The Administrator may delegate
ministerial, nondiscretionary functions to individuals who are
officers or employees of the Company.
(b) Subject to the express provisions of this Plan, the
Administrator shall have the authority to construe and interpret this
Plan and any agreements defining the rights and obligations of the
Company and Participants under this Plan; to identify among Eligible
Employees those to whom Awards will be granted and (consistent with
express limits of this Plan) the terms of such Awards; to further
define the terms used in this Plan and prescribe, amend and rescind
rules and regulations relating to the administration of this Plan;
either generally or on a case by case base (except with respect to
awards granted pursuant to Section 2.8) to establish terms and
conditions pertaining to termination of employment, modify or amend
any outstanding Award or waive any condition or restriction of an
Award, or extend (up to a maximum term of ten (10) years after the
initial Award Date) the term or post-termination exercise period of
any outstanding Award, or reduce (subject to Sections 2.4, 3.2(d) and
6.5) the minimum vesting period after initial grant to a Participant;
to determine the duration and purposes of leaves of absence which may
be granted to Participants without constituting a termination of their
employment for purposes of this Plan; and to make all other
determinations necessary or advisable for the administration of this
Plan. The determinations of the Administrator on the foregoing matters
shall be conclusive.
(c) Any action taken by, or inaction of, the Corporation,
any Subsidiary, the Board or the Administrator relating to this Plan
shall be within the absolute discretion of that entity or body. No
member of the Administrator, or officer of the Corporation or any
Subsidiary, shall be liable for any such action or inaction.
1.3 PARTICIPATION. Awards may be granted only to Eligible
Employees. An Eligible Employee who has been granted an Award may,
if otherwise eligible, be granted additional Awards if the
Administrator shall so determine. Members of the Administrator who
are not officers or employees of the Company shall not be eligible to
receive Awards, except pursuant to Section 2.8 of this Plan.
1.4 STOCK SUBJECT TO THE PLAN. The maximum aggregated amount
of Common Stock that may be issued after June 18, 1997 pursuant to
Awards granted under this Plan shall not exceed the sum of (i)
2,417,506 shares(2), plus (ii) up to 785,000 shares which were
authorized and subject to options then outstanding under the 1981
Master Stock Option Plan of the Corporation (the "1981 PLAN") but are
not issued under the 1981 Plan because of the expiration, cancellation
or termination of such options without having been exercised in full,
in each case subject to adjustment as set forth in or pursuant to
Section 6.2 (and corresponding provisions of the 1981 Plan, as the
case may be).
(2) This number includes an additional 500,000 shares that were
authorized by the Board in July 1993 and subsequently approved by the
Corporation's stockholders, and an additional 750,000 shares that were
authorized by the Board in April 1997 and approved by the
Corporation's stockholders on June 18, 1997.
1.5 GRANT OF AWARDS. Subject to the express provisions of the
Plan, the Administrator shall determine from the class of Eligible
Employees those individuals to whom Awards under the Plan shall be
granted, the terms of Awards (which need not be identical) and the
number of shares of Common Stock subject to each Award. Each Award
shall be subject to the terms and conditions set forth in the Plan and
such other terms and conditions established by the Administrator as
are not inconsistent with the purpose and provisions of the Plan.
1.6 EXERCISE OF AWARDS. Notwithstanding any other provision of
this Plan, the Administrator may impose, by rule and in Award
Agreements, such conditions upon the exercise of Awards (including,
without limitation, conditions limiting the time of exercise to
specified periods) as may be required to satisfy applicable regulatory
requirements, including without limitation Rule l6b-3.
1.7 SHARE RESERVATION. No Award may be granted under this Plan
unless, on the date of grant, the sum of (i) the maximum number of
shares issuable at any time pursuant to such Award, plus (ii) the
number of shares that previously have been issued pursuant to Awards
granted under this Plan, other than reacquired shares available for
reissue consistent with any applicable limitations under Rule 16b-3,
plus (iii) the maximum number of shares that may be issued after such
date of grant pursuant to Awards granted under this Plan or under the
1981 Plan that remain outstanding on such date, does not exceed the
share limit in Section 1.4.
1.8 PROVISIONS FOR CERTAIN CASH AWARDS. The number of Awards
under this Plan that are payable solely in cash that would constitute
derivative securities but for the exclusion in Rule l6a-l(c)(3)(i)
under the Exchange Act ("CASH ONLY AWARDS") shall be determined by
reference to the number of shares referenced for purpose of
determining the value or price of the Cash Only Award (the "UNDERLYING
SHARES"). The maximum number of Cash Only Awards under this Plan shall
not, together with the number of shares previously issued and subject
to then outstanding Awards payable (or deemed payable) in shares under
this Plan, exceed the share limit in Section 1.4. To the extent that
any Cash Only Awards expire or are terminated without the cash payment
being made, the underlying shares shall again be available under this
Plan. Except as limited by Rule l6b-3, if an Award is or may be
settled only in cash and satisfies the requirements for exclusion from
the definition of derivative securities under Rule 16a-1(c)(3)(ii),
such Award need not be counted against any of the limits under Section
1.4 or 1.7 or this Section 1.8.
1.9 REISSUE OF AWARDS AND SHARES. Other Awards payable in cash
or payable in cash or shares that are forfeited or for any reason are
not so paid under this Plan, as well as shares subject to Awards that
expire or for any reason are terminated and are not issued, shall
again, to the extent permitted under Rule l6b-3, be available for
subsequent Awards under the Plan.
1.10 PLAN NOT EXCLUSIVE. Nothing in this Plan shall limit or be
deemed to limit the authority of the Board or the Administrator to
grant awards or authorize any other compensation, with or without
reference to the Common Stock, under any other plan or authority.
II. OPTIONS.
2.1 GRANTS. One or more Options may be granted to any Eligible
Employee. Each Option so granted shall be designated by the
Administrator as either a Nonqualified Stock Option, an Incentive
Stock Option or a Performance Stock Option. The maximum number of
shares underlying Options that may be granted to any one Eligible
Employee during any given fiscal year of the Corporation shall be
200,000 shares.
2.2 OPTION PRICE.
(a) Subject to applicable law, the purchase price per
share of the Common Stock covered by each Option shall be determined by the
Administrator, but in the case of any Incentive Stock Option, unless
otherwise permitted under the Code, shall not be less than 100% (or
110% in the case of a Participant who owns or under applicable Code
provisions is deemed to own more than 10% of the total combined voting
power of all classes of stock of the Company) of the Fair Market Value
of the Common Stock on the date the Incentive Stock Option is granted.
The purchase price of any shares purchased on exercise of any Option
shall be paid in full at the time of each purchase in one or a
combination of the following methods:
(i) in cash, or by check payable to the order
of the Corporation,
(ii) if authorized by the Administrator or
specified in the Option being exercised, by a promissory note made
by the Participant in favor of the Corporation, upon the terms and
conditions determined by the Administrator, bearing interest at
a rate sufficient to avoid imputed interest under the Code, and
secured by the Common Stock issuable upon exercise in compliance
with applicable law (including, without limitation, state
corporate law and federal margin requirements), or
(iii) by shares of Common Stock of the Corporation
already owned by the Participant; PROVIDED, HOWEVER, the
Administrator may in its absolute discretion limit the
Participant's ability to exercise an Option by delivering
shares, and any shares delivered which were initially acquired
upon exercise of a stock option must have been owned by the
Participant at least six months as of the date of delivery.
Shares of Common Stock used to satisfy the exercise price of an Option
shall be valued at their Fair Market Value on the date of exercise.
(b) In addition to the payment methods described in
subsection (a), the Option may provide that the Option can be
exercised and payment made by delivering a properly executed exercise
notice together with irrevocable instructions to a bank or broker to
promptly deliver to the Corporation the amount of sale or loan
proceeds necessary to pay the exercise price and, unless otherwise
allowed by the Administrator, any applicable tax withholding under
Section 6.6. The Corporation shall not be obligated to deliver
certificates for the shares unless and until it receives full payment
of the exercise price therefor.
(c) An Option shall be deemed to be exercised when the
Secretary of the Corporation receives written notice of such exercise
from the Participant, together with payment of the purchase price made
in accordance with Section 2.2(a) and satisfaction of any applicable
tax withholding under Section 6.6, except to the extent payment may
be permitted to be made following delivery of written notice of
exercise in accordance with Section 2.2(b).
2.3 OPTION PERIOD. Each Option and all rights or obligations
thereunder shall expire on such date as shall be determined by the
Administrator, but not later than 10 years after the Award Date, and
shall be subject to earlier termination as hereinafter provided.
2.4 EXERCISE OF OPTIONS. Except as otherwise provided in
Section 6.4 or in the case of death or Total Disability, no Option
shall be exercisable for at least six months after the Award Date.
The Administrator may, at any time after grant of the Option and from
time to time, increase the number of shares purchasable on or after
any particular date so long as the total number of shares then subject
to the Option is not increased. No Option shall be exercisable except
in respect of whole shares, and fractional share interests shall be
disregarded. Not less than 10 shares of Common Stock may be purchased
at one time unless the number purchased is the total number at the
time available for purchase under the terms of the Option.
2.5 LIMITATIONS ON GRANT OF INCENTIVE STOCK OPTIONS.
(a) To the extent that the aggregate Fair Market Value of
stock with respect to which an Option intended as an Incentive Stock
Option first exercisable by a Participant in any calendar year exceeds
any applicable limits from time to time imposed under the Code, such
options shall be treated as Nonqualified Stock Options. To the extent
any discretionary action is necessary to meet any such limits, the
Administrator on behalf of the Corporation may, in the manner and to
the extent permitted by law, take such action.
(b) There shall be imposed in any Award Agreement
relating to Incentive Stock Options such terms and conditions as are required
in order that the Option be an "incentive stock option" as that term
is defined in Section 422 of the Code.
(c) Unless otherwise permitted under applicable
provisions of the Code, no Incentive Stock Option may be granted to any person
who, at the time the Incentive Stock Option is granted, owns or under
applicable Code provisions is deemed to own shares of outstanding
Common Stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, unless the exercise
price of such Option is at least 110% of the Fair Market Value of the
stock subject to the Option and such Option by its terms is not
exercisable after the expiration of five years from the date such
Option is granted.
2.6 PERFORMANCE STOCK OPTIONS. The Administrator may grant
Performance Stock Options to Eligible Employees who are deemed by the
Administrator to be members of senior management whose performance has
a direct relationship to improvement of the earnings of the Company.
Vesting of such Options shall be contingent upon attainment of
performance objectives measured by compounded earnings growth and such
other criteria as may be established by the Administrator.
2.7 STOCK DEPRECIATION RIGHTS; TAX OFFSET BONUSES.
(a) The Administrator may grant Stock Depreciation Rights
to a Participant who is subject to Section 16(b) of the Exchange Act.
Such Stock Depreciation Rights shall be evidenced in the Award
Agreement or by means of an amendment to the Award Agreement in the
event an employee becomes subject to Section 16(b) of the Exchange Act
subsequent to the date of grant of the Option. A Stock Depreciation
Right shall entitle such officer or director to a payment by the
Company in the event that the Fair Market Value of shares of Common
Stock issued pursuant to the exercise of an Option declines during the
six month period after exercise while such Common Stock is still held
by a Participant to the extent that such shares if sold would be
subject to matching liability under Section 16 by virtue of a prior
purchase. Payment may be made in cash in an amount per covered share
equal to the lesser of (i) the difference between the Fair Market
Value of a share of Common Stock on the date of expiration of such six
month period and the Fair Market Value of a share of Common Stock on
the date of exercise, (ii) the difference between the Fair Market
Value of a share of Common Stock on the date of disposition of the
covered share and the Fair Market Value of a share of Common Stock on
the date of exercise and (iii) the difference between the Fair Market
Value of a share of Common Stock on the date of exercise and the
exercise price. This amount per share shall become payable subsequent
to the disposition of the covered shares on or after the expiration
of the six month period subject to such conditions, limits and rules
as the Administrator may impose, including, without limitation,
conditions required to satisfy the applicable regulatory requirements
under Rule l6b-3.
(b) In its discretion the Administrator may, in the Award
Agreement, provide for a Tax-Offset Bonus to Participants upon
exercise of Nonqualified or Performance Stock Options or to any
Participant who elects to make a disqualifying disposition (as defined
in Section 422(a)(l) of the Code) of Common Stock acquired pursuant
to the exercise of an Incentive Stock Option. The Tax-Offset Bonus
shall be in the form of a cash payment equal to a percentage of the
difference between the exercise price and the Fair Market Value on the
date of exercise of the Common Stock with respect to which the Bonus
is payable. Such percentage shall be designed to offset the impact
of additional taxes which result from the exercise of the Option or
the disqualifying disposition, as the case may be.
2.8 OPTION GRANTS TO NON-EMPLOYEE DIRECTORS.
(a) Direct grants of Non-Qualified Stock Options to Non-
Employee Directors of the Company, without any action or authorization
by the Board or the Administrator, shall be made as follows:
(i) upon first being appointed or elected as a
director, the director shall be granted an Option covering
10,000 shares of Common Stock;
(ii) thereafter, immediately following each
annual meeting held more than six months after the director's original
appointment or election date, if the director continues to serve
as a director (either because the director's term of office
extends beyond such annual meeting or because the director was
re-elected at such annual meeting), the director shall be
granted an additional Option covering 5,000 shares of Common
Stock; and
(iii) the total number of shares covered by Options
granted to a director pursuant to the foregoing provisions shall
not exceed 25,000 shares of Common Stock (including, in the case
of persons who were Non-Employee Directors of the Company in
office at the time this Plan was first approved by the
stockholders of the Company in 1990, any Options previously
granted by the Company to such persons). The numbers of shares
stated in the foregoing sentence shall be subject to adjustment
in certain events as provided in Section 6.2 of this Plan.
(b) A director who becomes an employee of the Company
shall not thereafter receive grants of Options pursuant to the provisions
of this Section, and a person who becomes an employee of the Company
in connection with and at substantially the same time as his or her
election or appointment as a director of the Company shall not receive
any grants of options pursuant to this Section.
(c) Each Option granted pursuant to this Section shall be
for a term of ten years or until one year after the director ceases
to be a director of the Company, whichever occurs first; shall become
exercisable as to one-third of the covered shares twelve months after
the date of grant, as to an additional one-third of the covered shares
twenty-four months after the date of grant, and as to all covered
shares thirty-six months after the date of grant, subject to
acceleration as provided in Section 6.4; shall have an exercise price
equal to the Fair Market Value of the Common Stock on the date of
grant; shall (except to the extent permitted by Rule l6b-3) be
exercisable only by the Optionee (or in event of his or her Death or
Disability, by the Optionee's Beneficiary or Personal Representative,
as the case may be) and shall be nontransferable, except by will or
the laws of descent and distribution; shall provide for payment of the
exercise price in cash or by delivery of shares of Common Stock valued
at their Fair Market Value at the date of exercise; shall not contain
any provision for tax offset bonuses, stock appreciation rights, or
stock depreciation rights, and shall otherwise conform to the terms
and conditions of this Plan.
(d) The provisions of this Section 2.8 and other
provisions of this Plan with respect to the amount, price and timing of
securities awarded pursuant to this Section shall not be amended more
than once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act,
or any applicable rules thereunder, or as may otherwise be permitted
with respect to formula plan awards under Rule l6b-3.
III. STOCK APPRECIATION RIGHTS.
3.1 GRANTS. In its discretion, the Administrator may grant
Stock Appreciation Rights concurrently with the grant of Options. A
Stock Appreciation Right shall extend to all or a portion of the
shares covered by the related Option. A Stock Appreciation Right
shall entitle the Participant who holds the related Option, upon
exercise of the Stock Appreciation Right and surrender of the related
Option, or portion thereof, to the extent the Stock Appreciation Right
and related Option each were previously unexercised, to receive
payment of an amount determined pursuant to Section 3.3. Any Stock
Appreciation Right granted in connection with an Incentive Stock
Option shall contain such terms as may be required to comply with the
provisions of Section 422 of the Code and the regulations promulgated
thereunder. In its discretion, the Administrator may also grant Stock
Appreciation Rights independently of any Option subject to such
conditions as the Administrator may in its absolute discretion
provide.
3.2 EXERCISE OF STOCK APPRECIATION RIGHTS.
(a) A Stock Appreciation Right granted concurrently with
an option shall be exercisable only at such time or times, and to the
extent, that the related Option shall be exercisable and only when the
Fair Market Value of the stock subject to the related Option exceeds
the exercise price of the related Option.
(b) In the event that a Stock Appreciation Right granted
concurrently with an Option is exercised, the number of shares of
Common Stock subject to the related Option shall be charged against
the maximum amount of Common Stock that may be issued or transferred
pursuant to Awards under this Plan. The number of shares subject to
the Stock Appreciation Right and the related Option of the Participant
shall also be reduced by such number of shares.
(c) If a Stock Appreciation Right granted concurrently
with an Option extends to less than all the shares covered by the related
Option and if a portion of the related Option is thereafter exercised,
the number of shares subject to the unexercised Stock Appreciation
Right shall be reduced only if and to the extent that the remaining
number of shares covered by such related Option is less than the
remaining number of shares subject to such Stock Appreciation Right.
(d) A Stock Appreciation Right granted independently
of any Option shall be exercisable pursuant to the terms of the Award
Agreement but in no event earlier than six months after the Award
Date, except in the case of death or Total Disability.
3.3 PAYMENT.
(a) Upon exercise of a Stock Appreciation Right and
surrender of an exercisable portion of the related Option, the
Participant shall be entitled to receive payment of an amount
determined by multiplying:
(1) the difference obtained by subtracting the
exercise price per share of Common Stock under the related
Option from the Fair Market Value of a share of Common Stock on
the date of exercise of the Stock Appreciation Right, by
(2) the number of shares with respect to which
the Stock Appreciation Right shall have been exercised.
(b) The Administrator, in its sole discretion, may settle
the amount determined under paragraph (a) above solely in cash, solely
in shares of Common Stock (valued at Fair Market Value on the date of
exercise of the Stock Appreciation Right), or partly in such shares
and partly in cash, provided that the Administrator shall have
determined that such exercise and payment are consistent with
applicable law. In any event, cash shall be paid in lieu of
fractional shares. Absent a determination to the contrary, all Stock
Appreciation Rights shall be settled in cash as soon as practicable
after exercise. The exercise price for the Stock Appreciation Right
shall be the exercise price of the related Option. Notwithstanding
the foregoing, the Administrator may, in the Award Agreement,
determine the maximum amount of cash or stock or a combination thereof
which may be delivered upon exercise of a Stock Appreciation Right.
(c) Upon exercise of a Stock Appreciation Right granted
independently of any Option, the Participant shall be entitled to
receive payment of an amount based on a percentage, specified in the
Award Agreement, of the difference obtained by subtracting the Fair
Market Value per share of Common Stock on the Award Date from the Fair
Market Value per share of Common Stock on the date of exercise of the
Stock Appreciation Right. Such amount shall be paid as described in
paragraph (b) above.
IV. RESTRICTED STOCK AWARDS.
4.1 GRANTS. Subject to Section 1.4, the Administrator may, in
its discretion, grant one or more Restricted Stock Awards to any
Eligible Employee. Each Restricted Stock Award Agreement shall
specify the number of shares of Common Stock to be issued to the
Participant, the date of such issuance, the consideration to be paid
for such shares by the Participant and the restrictions imposed on
such shares, which restrictions shall not terminate earlier than six
(6) months nor later than ten (10) years after the Award Date.
4.2 RESTRICTIONS.
(a) Except as provided in or pursuant to Section 6.12,
shares of Common Stock comprising Restricted Stock Awards may not be
sold, assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or involuntarily, until such shares
have vested.
(b) Unless the Administrator otherwise provides,
Participants receiving Restricted Stock shall be entitled to dividend
and voting rights for the shares issued even though they are not
vested, provided that such rights shall terminate immediately as to
any forfeited Restricted Stock.
(c) In the event that the Participant shall have paid
cash in connection with the Restricted Stock Award, the Award Agreement
shall specify whether and to what extent such cash shall be returned
upon a forfeiture (with or without an earnings factor).
(d) Restricted Stock Awards may include performance or
other conditions to vesting as the Administrator deems appropriate.
V. PERFORMANCE SHARE AWARDS.
5.1 GRANTS. The Administrator may, in its discretion, grant
other types of performance-based Awards related to equity of the
Company or any part thereof ("Performance Share Awards") to Eligible
Employees based upon such factors as the Administrator shall
determine. A Performance Share Award Agreement shall specify the
number of shares of Common Stock subject to the Performance Share
Award, the price, if any, to be paid for such shares by the
Participant and the conditions upon which issuance to the Participant
shall be based, which issuance shall not be earlier than six (6)
months nor later than ten (10) years after the Award Date.
VI. OTHER PROVISIONS.
6.1 RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND
BENEFICIARIES.
(a) Adoption of this Plan shall not be construed as a
commitment that any Award will be made under this Plan to an Eligible
Employee or to Eligible Employees generally.
(b) Nothing contained in this Plan (or in Award
Agreements or in any other documents related to this Plan or to Awards) shall
confer upon any Eligible Employee or Participant any right to continue
in the employ of the Company or constitute any contract or agreement
of employment, or interfere in any way with the right of the Company
to reduce such person's compensation or other benefits or to terminate
the employment of such Eligible Employee or Participant, with or
without cause. Nothing contained in this Plan or any document related
thereto shall affect any other contractual right of any Eligible
Employee or Participant.
6.2 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) If the outstanding shares of Common Stock are changed
into or exchanged for cash or a different number or kind of shares or
securities of the Corporation or of another issuer, or if additional
shares or new or different securities are distributed with respect to
the outstanding shares of the Common Stock, through a reorganization
or merger to which the Corporation is a party, or through a
combination, consolidation, recapitalization, reclassification, stock
split, stock dividend, reverse stock split, stock consolidation or
other capital change or adjustment, an appropriate proportionate,
equitable adjustment shall be made in the number and kind of shares
or other consideration that is subject to or may be delivered under
this Plan and pursuant to outstanding Awards. Corresponding
adjustments to the consideration payable with respect to Awards
granted prior to any such change and to the price, if any, paid in
connection with or the criteria applicable to Restricted Stock Awards
or Performance Share Awards shall also be made. Any such adjustments,
however, shall be made without change in the total payment, if any,
applicable to the portion of the Award not exercised but with a
corresponding adjustment in the price for each share. Corresponding
adjustments shall be made with respect to Stock Appreciation Rights
based upon the adjustments made to the Options to which they are
related or, in the case of Stock Appreciation Rights granted
independently of any Option, based upon the adjustments made to Common
Stock.
(b) Upon the dissolution or liquidation of the
Corporation, or upon a reorganization, merger or consolidation of the
Corporation with one or more corporations as a result of which the
Corporation is not the surviving corporation, the Plan shall terminate. The
Administrator may provide in writing in connection with, or in
contemplation of, any such transaction for any or all of the following
alternatives (separately or in combination): (i) for the assumption
by the successor corporation (if any) of the Awards theretofore
granted or the substitution by such corporation for such Awards of
awards covering the stock of the successor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the number
and kind of securities and/or other property and prices; (ii) for the
continuance of the Plan by such successor corporation in which event
the Plan and the Awards shall continue in the manner and under the
terms so provided; or (iii) for the payment in cash, securities and/or
other property in lieu of and in complete satisfaction of such Awards.
(c) In adjusting Awards to reflect the changes described
in this Section 6.2, or in determining that no such adjustment is
necessary, the Administrator may rely upon the advice of independent
counsel and accountants of the Corporation, and the determination of
the Administrator shall be conclusive. No fractional shares of stock
shall be issued under this Plan on account of any such adjustment.
6.3 TERMINATION OF EMPLOYMENT. Unless the Administrator
otherwise expressly provides, either in the applicable Award Agreement
or by subsequent modification thereof:
(a) If the Participant's employment by the Company
terminates for any reason other than Retirement, death or Total
Disability, the Participant shall have, subject to earlier termination
pursuant to or as contemplated by Section 2.3, three (3) months from
the date of termination of employment to exercise any Option to the
extent it shall have become exercisable on the date of termination of
employment, and any Option not exercisable on that date shall
terminate. Notwithstanding the preceding sentence, in the event the
Participant is discharged for cause as determined by the Administrator
in its sole discretion, all Options shall terminate immediately upon
such termination of employment.
(b) If the Participant's employment by the Company
terminates as a result of Retirement or Total Disability, the
Participant or Participant's Personal Representative, as the case may
be, shall have, subject to earlier termination pursuant to or as
contemplated by Section 2.3, twelve (12) months from the date of
termination of employment to exercise any Option to the extent it
shall have become exercisable by the date of termination of
employment, and any Option not exercisable on that date shall
terminate.
(c) If the Participant's employment by the Company
terminates as a result of death while the Participant is employed by
the Company or during the twelve (12) month period referred to in
subsection (b) above, the Participant's Option shall be exercisable
by the Participant's Beneficiary, subject to earlier termination
pursuant to or as contemplated by Section 2.3, during the twelve (12)
month period following the Participant's death, as to all or any part
of the shares of Common Stock covered thereby to the extent
exercisable on the date of death (or earlier termination).
(d) Each Stock Appreciation Right granted concurrently
with an Option shall have the same termination provisions and
exercisability periods as the Option to which it relates. The
termination provisions and exercisability periods of any Stock
Appreciation Right granted independently of an Option shall be
established in accordance with Section 3.2(d). The exercisability
period of a Stock Appreciation Right shall not exceed that provided
in Section 2.3 or in the related Award Agreement and the Stock
Appreciation Right shall expire at the end of such exercisability
period.
(e) In the event of termination of employment with the
Company for any reason: (i) shares of Common Stock subject to a
Participant's Restricted Stock Award shall be forfeited in accordance
with the provisions of the related Award Agreement to the extent such
shares have not become vested on that date; and (ii) shares of Common
Stock subject to the Participant's Performance Share Award shall be
forfeited in accordance with the provisions of the related Award
Agreement to the extent such shares have not been issued or become
issuable on that date.
(f) In the event of (or in anticipation of) a
Participant's termination of employment with the Company for any reason,
other than discharge for cause, the Administrator may, in its discretion,
accelerate the exercisability of or increase the portion of the
Participant's Award available to the Participant, or Participant's
Beneficiary or Personal Representative, as the case may be, or
(subject to the ten (10)-year limit) extend the period after
termination during which the Award may continue to vest and/or be
exercisable upon such terms and subject to such conditions as the
Administrator shall determine.
(g) If an entity ceases to be a Subsidiary, such action
shall be deemed for purposes of this Section 6.3 to be a termination
of employment of each employee of that entity who does not continue
as an employee of another entity within the Company.
6.4 ACCELERATION OF AWARDS. Except to the extent that prior to
an Event the Administrator determines that, upon its occurrence, there
shall be no acceleration of Awards held by Participants or determines
those Awards held by Participants that will be accelerated and the
extent to which they will be accelerated, upon the occurrence of an
Event (i) each Option and each related Stock Appreciation Right shall
become immediately exercisable to the full extent theretofore not
exercisable, (ii) Restricted Stock shall immediately vest free of
restrictions and (iii) the number of shares covered by each
Performance Share Award shall be issued to the Participant; subject,
however, to compliance with applicable regulatory requirements,
including without limitation Rule l6b-3 promulgated by the Commission
pursuant to the Exchange Act and Section 422 of the Code.
6.5 GOVERNMENT REGULATIONS. This Plan, the granting of Awards
under this Plan and the issuance or transfer of shares of Common Stock
(and/or the payment of money) pursuant thereto are subject to all
applicable federal and state laws, rules and regulations and to such
approvals by any regulatory or governmental agency (including without
limitation "no action" positions of the Commission) which may, in the
opinion of counsel for the Corporation, be necessary or advisable in
connection therewith. Without limiting the generality of the
foregoing, no Awards may be granted under this Plan, and no shares
shall be issued by the Corporation, nor cash payments made by the
Corporation, pursuant to or in connection with any such Award, unless
and until, in each such case, all legal requirements applicable to the
issuance or payment have, in the opinion of counsel to the
Corporation, been complied with. In connection with any stock
issuance or transfer, the person acquiring the shares shall, if
requested by the Corporation, give assurances satisfactory to counsel
to the Corporation in respect of such matters as the Corporation may
deem desirable to assure compliance with all applicable legal
requirements.
6.6 TAX WITHHOLDING.
(a) Upon the disposition by a Participant or other person
of shares of Common Stock acquired pursuant to the exercise of an
Incentive Stock Option prior to satisfaction of the holding period
requirements of Section 422 of the Code, or upon the exercise of a
Nonqualified Stock Option or a Performance Stock Option, the exercise
of a Stock Appreciation Right, the vesting of a Restricted Stock
Award, the payment of a Performance Share Award, payment pursuant to
a Stock Depreciation Right or payment of a Tax-Offset Bonus, the
Company shall have the right to require such Participant or such other
person to pay by cash, or certified or cashier's check payable to the
Company, the amount of any taxes which the Company may be required to
withhold with respect to such transactions. The above
notwithstanding, in any case where a tax is required to be withheld
in connection with the issuance or transfer of shares of Common Stock
under this Plan, the Participant may elect, pursuant to such rules as
the Administrator may establish, to have the Company reduce the number
of such shares issued or transferred by the appropriate number of
shares to accomplish such withholding; provided, the Administrator may
impose such conditions on the payment of any withholding obligation
as may be required to satisiy applicable regulatory requirements,
including, without limitation, Rule 16b-3 promulgated by the
Commission pursuant to the Exchange Act.
(b) The Administrator may, in its discretion, permit a
loan from the Company to a Participant in the amount of any taxes which the
Company may be required to withhold with respect to shares of Common
Stock received pursuant to a transaction described in subsection (a)
above. Such a loan will be for a term, at a rate of interest and
pursuant to such other terms and rules as the Administrator may
establish.
6.7 AMENDMENT, TERMINATION AND SUSPENSION.
(a) The Board may, at any time, terminate or, from
time to time, amend, modify or suspend this Plan (or, subject to Section
2.8(d), any part hereof). The amendment shall be approved by the
stockholders to the extent then required by Rule 16b-3, Section 425
of the Internal Revenue Code or any successors thereto, or any other
applicable law or rules.
(b) In the case of Awards issued before the effective
date of any amendment, suspension or termination of this Plan, such
amendment, suspension or termination of this Plan shall not, without
specific action of the Administrator and the consent of the
Participant, in any manner materially adverse to the Participant,
modify, amend, alter or impair any rights or obligations under any
Award previously granted under this Plan.
(c) No Awards may be granted during any suspension of
this Plan or after its termination, but Awards theretofore granted may be
amended to the same extent as if this Plan had not been terminated or
suspended, provided no additional shares become the subject of the
Award by reasons of the amendment.
(d) The Administrator may, subject to the consent of the
Participant in the case of an amendment that might have a material
adverse effect on the Participant, make such modifications of the
terms and conditions of such Participant's Award as it shall deem
advisable, including an amendment to the terms of any Option to
provide that the Option price of the shares remaining subject to the
original Award shall be established at a price not less than 100% of
the Fair Market Value of the Common Stock on the effective date of the
amendment. No modification of any other term or provision of any
Option which is amended in accordance with the foregoing shall be
required, although the Administrator may, in its discretion, make such
other modifications of any such Option as are not inconsistent with
or prohibited by this Plan.
(e) Adjustments pursuant to Section 6.2 shall not be
deemed amendments requiring the consent of the Participant.
6.8 PRIVILEGES OF STOCK OWNERSHIP; NONDISTRIBUTIVE INTENT. A
Participant shall not be entitled to the privilege of stock ownership
as to any shares of Common Stock not actually issued to him or her.
Upon the issuance and transfer of shares to the Participant, unless
a registration statement is in effect under the Securities Act,
relating to such issued and transferred Common Stock and there is
available for delivery a prospectus meeting the requirements of
Section 10 of the Securities Act, the Common Stock may be issued and
transferred to the Participant only if he or she represents and
warrants in writing to the Corporation that the shares are being
acquired for investment and not with a view to the resale or
distribution thereof. No shares shall be issued and transferred
unless and until there shall have been full compliance with any then
applicable regulatory requirements (including those of exchanges upon
which any Common Stock of the Corporation may be listed).
6.9 EFFECTIVE DATE OF THE PLAN. This Plan shall be effective
upon its approval by the Board, subject to approval by the
shareholders of the Corporation within 12 months from the date of such
Board approval.
6.10 TERM OF THE PLAN. Unless previously terminated.by the
Board, this Plan shall terminate at the close of business on September
15, 2000, and no Awards shall be granted under it thereafter, but such
termination shall not affect any Award theretofore granted or the
authority of the Administrator with respect to then outstanding
Awards.
6.11 GOVERNING LAW. This Plan and the documents evidencing
Awards and all other related documents shall be governed by, and
construed in accordance with, the laws of the State of Delaware. If
any provision shall be held by a court of competent jurisdiction to
be invalid and unenforceable, the remaining provisions of this Plan
shall continue to be fully effective.
6.12 TRANSFER RESTRICTIONS.
(a) Awards constituting derivative securities shall be
exercisable only by, and shares, cash or other property payable
pursuant to such Awards shall be paid only to, the Participant (or,
in the event of the Participant's death, to the Participant's
Beneficiary or, in the event of the Participant's Total Disability,
to the Participant's Personal Representative or, if there is none, to
the Participant). Other than by will or the laws of descent and
distribution, no such Awards, or interest in or under any such Award
or this Plan, shall be transferable or subject in any manner to
encumbrance or other charge and any such attempted transfer or charge
shall be void.
(b) The restrictions on exercise, transfer and payment in
Section 6.12 (a) shall not be deemed to prohibit (l) "cashless
exercise" procedures through unaffiliated third parties which provide
financing for the purpose of exercising an Award consistent with
applicable legal restrictions and Rule 16b-3, nor (2) to the extent
permitted by the Administrator and expressly set forth in the Award
Agreement or an amendment thereto, transfers without consideration for
estate or financial planning purposes, notwithstanding that the
inclusion of such features may render the particular Awards ineligible
for the benefits of Rule l6b-3, nor (3) in the case of Participants
who are not Section 16 Persons, transfers in such other circumstances
as the Administrator may (to the extent consistent with Rule 16b-3,
applicable provisions of the Code and applicable securities or other
laws) in the applicable Award Agreement or other writing expressly
provide, nor (4) the subsequent transfer of shares issued on exercise
of a derivative security or the vesting of a Restricted Stock or
Performance Share Award (except to the extent that the Award, this
Plan or the Administrator otherwise expressly provides).
(c) No Participant, Beneficiary or other person shall
have any right, title or interest in any fund or in any specific asset
(including shares of Common Stock) of the Company by reason of any
Award granted hereunder. Neither the provisions of this Plan (or of
any documents related hereto), nor the creation or adoption of this
Plan, nor any action taken pursuant to the provisions of this Plan
shall create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant,
Beneficiary or other person acquires a right to receive an Award
hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Company.
6.13 LIMITATIONS AS TO SECTION 16 PERSONS; PLAN CONSTRUCTION.
(a) Notwithstanding any other provision of this Plan
except subsection (b), any discretionary Award granted to (or amended for the
benefit of) a Section 16 Person shall be subject to the following
additional limitations:
(l) the Award may provide for the issuance of
shares of Common Stock as a stock consideration other than services
rendered or to be rendered; and
(2) in the event of an Award under which
shares of Common Stock are or in the future may be issued for any other
type of consideration, the amount of such consideration either
(i) shall be equal to the minimum amount (such as the par value
of such shares) required to be received by the Company to comply
with applicable state law, or (ii) shall be equal to or greater
than fifty percent (50%) of the Fair Market Value of the shares
of Common Stock on the date of the Award; provided in the case
of Restricted Stock Awards, that the consideration shall equal
the minimum amount described in clause (i) above (but not more
than ten percent (10%) of the Fair Market Value of the stock
subject to the Award on the Award Date) and any right to
purchase such restricted stock must be exercised within sixty
(60) days of the Award Date.
(b) The limitations in subsection (a) shall be suspended
as of September 1, 1994 or such earlier date as the Corporation elects
or is required to conform this Plan to the provisions of Rule 16b-3
of the Exchange Act as adopted effective May 1, 1991 or as thereafter
amended, except to the extent that the Commission by regulation or
staff interpretation determines that such limitations are necessary
to conform this Plan to the requirements of' or otherwise secure the
benefits available with respect to a conforming "plan" or particular
Award, as the case may be, under Rule l6b-3.
(c) It is the intent of the Corporation that this Plan
and Awards hereunder satisfy and be interpreted in a manner that in the
case of persons who are or may be subject to Section 16 of the
Exchange Act satisfies the applicable plan requirements of Rule l6b-3,
so that such persons will be entitled (unless otherwise expressly
acknowledged in writing) to the benefits of the Rule 16b-3 or other
exemptive rules under Section 16 Exchange Act and will not be
subjected to avoidable liability thereunder. In furtherance of such
intent, any provision of this Plan or of any Award would otherwise
frustrate or otherwise conflict with the intent expressed above, that
provision to the extent possible shall be interpreted and deemed
amended so as to avoid conflict, but to the extent of any remaining
irreconcilable conflict with such intent as to such persons in the
circumstances, such provision may be deemed void.
VII. DEFINITIONS.
7.1 DEFINITIONS.
(a) "ADMINISTRATOR" shall mean (l) on and prior to
July 12, 1993, the Board, and, to the extent theretofore delegated authority
hereunder, the Compensation Committee of the Board and (2) after July
12, 1993, the Compensation Committee or any other Committee of
directors appointed by the Board for purposes of serving as the
Committee under this Plan.
(b) "AWARD" shall mean a Nonqualified Stock Option, an
Incentive Stock Option, a Performance Stock Option, a Stock
Appreciation Right, a Restricted Stock Award, or a Performance Share
Award granted under this Plan.
(c) "AWARD AGREEMENT" shall mean a written agreement
setting forth the terms of an Award.
(d) "AWARD DATE" shall mean the date upon which the
Administrator took the action granting an Award or such later date as
is prescribed by the Administrator.
(e) "AWARD PERIOD" shall mean the period beginning on an
Award Date and ending on the expiration date of such Award.
(f) "BENEFICIARY" shall mean the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to
receive the benefits specified under this Plan in the event of a
Participant's death, and shall mean the Award holder's executor or
administrator in such circumstances if no other Beneficiary is
identified and able to act.
(g) "BOARD" shall mean the Board of Directors of the
Corporation.
(h) "CODE" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
(i) "COMMISSION" shall mean the Securities and Exchange
Commission.
(j) "COMMITTEE" shall mean a committee of directors
satisfying the requirements for disinterested administration under
Rule l6b-3.
(k) "COMMON STOCK" shall mean the Common Stock of the
Corporation.
(l) "COMPANY" shall mean, collectively, Syncor
International Corporation and its Subsidiaries.
(m) "CORPORATION" shall mean Syncor International
Corporation and its successors.
(n) "DISINTERESTED" shall mean disinterested within the
meaning of any applicable regulatory requirements, including those set
forth in Rule 16b-3 or otherwise promulgated under Section 16 of the
Exchange Act.
(o) "ELIGIBLE EMPLOYEE" shall mean an officer or key
employee of the Company.
(p) "EVENT" shall mean any of the following:
(1) Approval by the shareholders of the
Corporation of the dissolution or liquidation of the Corporation;
(2) Approval by the shareholders of the
Corporation of an agreement to merge or consolidate, or otherwise
reorganize, with or into one or more entities which are not
Subsidiaries, as a result of which less than 50% of the
outstanding voting securities of the surviving or resulting
entity are, or are to be, owned by former shareholders of the
Corporation;
(3) Approval by the shareholders of the
Corporation of the sale of substantially all of the Corporation's
business and/or assets to a person or entity which is not a Subsidiary;
or
(4) A Change in Control. A "CHANGE IN
CONTROL" shall be deemed to have occurred if (A) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities; or (B)
during any period of two consecutive years, individuals who at
the beginning of such period constitute the Administrator cease
for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election by the
Corporation's shareholders, of each new Administrator member was
approved by a vote of at least three-fourths of the
Administrator members then still in office who were
Administrator members at the beginning of such period.
(q) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
(r) "FAIR MARKET VALUE" shall mean (i) if the stock is
listed or admitted to trade on a national securities exchange, the
closing price of the stock on the Composite Tape, as published in the
Western Edition of The Wall Street Journal, of the principal national
securities exchange on which the stock is so listed or admitted to
trade, on such date, or, if there is no trading of the stock on such
date, then the closing price of the stock as quoted on such Composite
Tape on the next preceding date on which there was trading in such
shares; (ii) if the stock is not listed or admitted to trade on a
national securities exchange, the last price for the stock on such
date, as furnished by the National Association of Securities Dealers,
Inc. ("NASD") through the NASDAQ National Market Reporting System or
a similar organization if the NASD is no longer reporting such
information; (iii) if the stock is not listed or admitted to trade on
a national securities exchange and is not reported on the National
Market Reporting System, the mean between the bid and asked price for
the stock on such date, as furnished by the NASD; or (iv) if the stock
is not listed or admitted to trade on a national securities exchange,
is not reported on the National Market Reporting System and if bid and
asked prices for the stock are not furnished by the NASD or a similar
organization, the values established by the Administrator for purposes
of the Plan.
(s) "INCENTIVE STOCK OPTION" shall mean an option
which is designated as an incentive stock option within the meaning of Section
422 of the Code, the award of which contains such provisions as are
necessary to comply with that section.
(t) "NON-EMPLOYEE DIRECTOR" shall mean a director of the
Corporation who is not an officer or key employee of the Company.
(u) "NONQUALIFIED STOCK OPTION" shall mean an option
which is designated as a Nonqualified Stock Option or an option that fails
(or to the extent that it fails) to satisfy the applicable
requirements under the Code for an Incentive Stock Option.
(v) "OPTION" shall mean an option to purchase Common
Stock under this Plan. An Option shall be designated by the Administrator
as a Nonqualified Stock Option, an Incentive Stock Option, or a
Performance Stock Option.
(w) "OPTIONEE" shall mean the person to whom an Option is
granted.
(x) "PARTICIPANT" shall mean an Eligible Employee who has
been awarded an Award.
(y) "PERFORMANCE SHARE AWARD" shall mean an award of
shares of Common Stock, issuance of which is contingent upon attainment of
performance objectives specified by the Administrator.
(z) "PERFORMANCE STOCK OPTION" shall mean an option
granted under Section 2.6 of this Plan, the exercise of which is contingent
upon the attainment of specified performance objectives.
(aa) "PERSONAL REPRESENTATIVE" shall mean the legal
representative or representatives who, upon the disability or
incompetence of a Participant, shall have acquired on behalf of the
Participant by legal proceeding or otherwise the power to exercise the
rights and receive the benefits specified in this Plan.
(bb) "PLAN" shall mean this 1990 Master Stock Incentive
Plan, as amended and restated.
(cc) "RESTRICTED STOCK" shall mean those shares of Common
Stock issued pursuant to a Restricted Stock Award which are subject
to the restrictions set forth in the related Award Agreement.
(dd) "RESTRICTED STOCK AWARD" shall mean an award of a fixed
number of shares of Common Stock to the Participant subject, however,
to payment of such consideration, if any, and such forfeiture
provisions, as are set forth in the Award Agreement.
(ee) "RETIREMENT" shall mean retirement at normal
retirement date with the consent of the Company.
(ff) "RULE 16b-3" means Rule l6b-3 under Section 16 of the
Exchange Act, as applicable to this Plan (taking into consideration
relevant transition period provisions) and as the same may be amended
from time to time.
(gg) "SECTION l6 PERSON" means a person subject to the
reporting requirements of Section 16(a) of the Exchange Act.
(hh) "SECURITIES ACT" shall mean the Securities Act of
1933.
(ii) "STOCK APPRECIATION RIGHT" shall mean a right to
receive a number of shares of Common Stock or an amount of cash, or
a combination of shares and cash, determined as provided in the
applicable Section of this Plan or in the Award Agreement with respect
thereto.
(jj) "STOCK DEPRECIATION RIGHT" shall mean a right to
receive a number of shares of Common Stock or an amount of cash, or
a combination of shares and cash, determined as provided in the
applicable Section of this Plan or in an Award Agreement providing for
such right.
(kk) "SUBSIDIARY" shall mean any corporation or other
entity a majority or more of whose outstanding voting stock or voting power
is beneficially owned directly or indirectly by the Corporation.
(ll) "TAX-OFFSET BONUS" shall mean a bonus payable upon
exercise of a nonstatutory Option or upon a disqualifying disposition
of Common Stock acquired pursuant to the exercise of an Incentive
Stock Option, determined as provided in the applicable Section of this
Plan or in an Award Agreement providing for such Bonus.
(mm) "TOTAL DISABILITY" shall mean a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code.
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
1,000
<S> <C>
Period-type 6-mos
Fiscal-year-end 12/31/97
Period-start 01/01/97
Period-end 06/30/97
Cash 18,339
Securities 2,515
Receivables 58,956
Allowances (871)
Inventory 6,584
Current-assets 90,723
PP&E 58,509
Depreciation (35,685)
Total-assets 154,992
Current-liabilities 56,963
Bonds 0
Preferred-mandatory 0
Preferred 0
Common 567
Other-SE 81,971
Total-Liability-and-Equity 154,992
Sales 191,271
Total-Revenue 191,271
CGS 147,301
Total-costs 147,301
Other-expenses 36,139
Loss-provision 0
Interest-expense (560)
Income-pre-tax 10,971
Income-tax 4,388
Income-continuing 6,583
Discontinued 1,063
Extraordinary 0
Changes 0
Net-income 7,646
EPS-primary .76
EPS-diluted .75
</TABLE>
