PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant X
____
Filed by a Party other than the Registrant ____
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___ Preliminary Proxy Statement
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6(e)(2))
X Definitive Proxy Statement
___
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a
SYNCOR INTERNATIONAL CORPORATION
__________________________________________________________________________
(Name of Registrant as Specified in its Charter)
__________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required
___
___ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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5) Total fee paid:
___ Fee paid previously with preliminary materials.
___ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:<PAGE>
[SYNCOR INTERNATIONAL CORPORATION LETTERHEAD]
May 5, 1997
NOTICE OF MEETING
DEAR STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of Stockholders
of Syncor International Corporation on Wednesday, June 18, 1997, beginning at
1:00 p.m. local time. The meeting will be held at the Warner Center Hilton
Hotel, 6360 Canoga Avenue, Woodland Hills, California 91367.
Enclosed you will find the Proxy Statement and the Annual Report for the
year ended December 31, 1996. This Notice of the Annual Meeting and the Proxy
Statement on the following pages cover the formal business of the meeting
which includes the election of three of the seven Directors for a three-year
term.
In addition to the usual business of the meeting, you are being asked to
consider and approve an amendment to the 1990 Master Stock Incentive Plan(the
"Plan" to increase the authorized number of shares available under the Plan in
order to provide for continued incentives to the directors, officers and key
employees of Syncor. The amendment is critical for us to continue to provide
appropriate equity incentives for our key performers who can have a major
impact on Syncor's financial results. In addition, you are also being asked
to consider and approve an amendment to the Plan to limit the number of shares
subject to options that may be granted to any one employee during any given
fiscal year. A discussion of the proposals begins on page 22 of the Proxy
Statement. We urge you to review the discussion carefully before you vote
your proxy.
We look forward to welcoming you at the forthcoming Annual Meeting. We
urge all Syncor stockholders to vote using the enclosed proxy card. Thank you
for your continued confidence and support.
Sincerely,
/S/ MONTY FU /S/ ROBERT G. FUNARI
_____________________ ___________________________________
MONTY FU ROBERT G. FUNARI
CHAIRMAN OF THE BOARD PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
SYNCOR INTERNATIONAL CORPORATION
6464 CANOGA AVENUE
WOODLAND HILLS, CALIFORNIA 91367-2407
_______________________________________________________________
PROXY STATEMENT
FOR ANNUAL MEETING ON JUNE 18, 1997
_______________________________________________________________
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited by the Board of Directors of Syncor
International Corporation ("SYNCOR" or the "COMPANY") for use at the annual
meeting of stockholders of the Company ("ANNUAL MEETING") to be held June 18,
1997 at the Warner Center Hilton Hotel, 6360 Canoga Avenue, Woodland Hills,
California 91367-2407, beginning at 1:00 p.m. local time, and any
postponement(s) or adjournment(s) thereof. The Company's proxy statement and
form of proxy/voting instruction card are being mailed to the stockholders
commencing May 5, 1997. Syncor will bear all expenses incurred in connection
with the solicitation. In addition to solicitation by mail, proxies may be
solicited by Directors, executive officers or employees of Syncor in person or
by telephone or otherwise. They will not be specifically compensated for such
services.
GENERAL INFORMATION
Votes cast by proxy or in person at the Annual Meeting will be counted by the
persons appointed by the Board of Directors of Syncor to act as election
inspectors at the meeting. The election inspectors will treat shares
represented by proxies that reflect abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum and for
purposes of determining the outcome of any matter submitted to the
stockholders for a vote. Abstentions, however, do not constitute a vote "for"
or "against" any matter.
The election inspectors will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not
been received from the beneficial owners or other persons entitled to vote and
that the broker or nominee does not have discretionary power to vote on a
particular matter) as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. However, for purposes of
determining the outcome of any matter as to which the broker has indicated on
the proxy that it does not have discretionary authority to vote, those shares
will be treated as not present and not entitled to vote (even though the same
shares are present for quorum purposes and may be entitled to vote on other
matters).
Any unmarked proxies, including those submitted by brokers or nominees, will
be voted as indicated in any marked proxy accompanying any such unmarked
proxies and as summarized elsewhere in this proxy statement.
Your executed proxy may be revoked at any time before it is exercised by
filing with the Secretary of Syncor at the principal executive office of
Syncor, 6464 Canoga Avenue, Woodland Hills, California 91367-2407, a duly
executed written revocation or a duly executed proxy bearing a later date.
The execution of the enclosed proxy will not affect your right to vote in
person should you find it convenient to attend the Annual Meeting.
VOTING SECURITIES
The number of shares of the Company's $.05 par value common stock ("COMMON
STOCK") outstanding and entitled to vote at the Annual Meeting is 9,929,794
shares. Each share is entitled to one vote, and the stockholders are not
entitled to cumulate their votes in the election of Directors. Only
stockholders of record at the close of business on April 21, 1997, are
entitled to notice and to vote at the Annual Meeting. Shares represented by
all valid proxies will be voted according to the instructions contained in the
proxies. IN THE ABSENCE OF INSTRUCTIONS, SHARES REPRESENTED BY VALID PROXIES
WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS
AS SHOWN ON THE PROXY. WITH RESPECT TO OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING, THE PROXY HOLDERS WILL VOTE THE PROXY IN ACCORDANCE WITH
THEIR BEST JUDGMENT.
The presence, either in person or by proxy, of the persons entitled to vote a
majority of Syncor's shares are necessary for a quorum for the transaction of
business at the Annual Meeting. A plurality of the votes cast will elect the
Directors. Approval of each other proposal to be brought before the Annual
Meeting (not including the election of the Directors) will require the
affirmative vote of at least the majority in voting interests of the
stockholders present, in person or by proxy, at the Annual Meeting and
entitled to vote thereon.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Based upon information available to the Company as of March 31, 1997, the
following table sets forth certain information concerning persons known to
Syncor to own beneficially more than five percent of the outstanding Syncor
Common Stock (the only class of Syncor's voting securities). All ownership is
direct except as otherwise noted.
<TABLE>
<CAPTION>
=============================================================================
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class (1)
______________________________________________________________________________
<S> <C> <C>
BZW GLOBAL INVESTORS, N.A. (2) 1,667,734 16.8%
Syncor International Corporation ESSOP
420 Montgomery Street, San Francisco, CA 94163
______________________________________________________________________________
WELLINGTON MANAGEMENT COMPANY (3) 1,396,959 14.0%
75 State Street, Boston, MA 02109
______________________________________________________________________________
VANGUARD SPECIALIZED PORTFOLIOS, INC. 856,559 8.6%
- - - HEALTH CARE PORTFOLIO
Post Office Box 2600, Valley Forge,
PA 19482-2600
______________________________________________________________________________
MONTY FU (4) 698,817 7.0%
6464 Canoga Avenue, Woodland Hills, CA 91367-2407
_____________________________________________________________________________
HEARTLAND ADVISORS, INC. 619,900 6.2%
790 North Milwaukee Street, Milwaukee, WI 53202
_____________________________________________________________________________
DEERFIELD CAPITAL, L.P. AND 525,000 5.2%
DEERFIELD MANAGEMENT COMPANY (5)
450 Lexington Avenue, Suite 1930,
New York, NY 10017
=============================================================================
<FN>
(1) Calculated on the basis of 9,947,094 shares (excluding treasury shares)of
Syncor Common Stock outstanding as of March 31, 1997. Percentages are
calculated including shares not outstanding which the beneficial owner has a
right to acquire within 60 days of March 31, 1997.
(2) BZW Global Investors is the trustee for Syncor's Employees' Savings and
Stock Ownership Plan ("ESSOP") and has the right to vote the shares according
to the plan and in proportion to the vote of the beneficial owners.
(3) Includes 856,559 shares reported by Vanguard Specialized Portfolios, Inc.
- - - Health Care Portfolio.
(4) Includes 18,200 shares not outstanding which Mr. Fu has the right to
acquire pursuant to options that are currently exercisable, 9,206 shares owned
by Mr. Fu by virtue of his participation in the ESSOP as of March 31, 1997,
and 11,600 shares held as trustee for his children.
(5) Arnold H. Snider is the sole stockholder, president and director of
Snider Capital Corp., a Delaware corporation which serves as the general
partner of Deerfield Capital, L.P. Mr. Snider is also the sole stockholder,
president and director of Snider Management Corporation, a Delaware
corporation which serves as the general partner of Deerfield Management
Company.
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 31, 1997, the beneficial ownership
of Syncor Common Stock (the only class of Syncor's voting securities) by each
Syncor Director, by each nominee and by each of the executive officers named
in the "SUMMARY COMPENSATION TABLE." All ownership is direct unless otherwise
noted.
<TABLE>
<CAPTION>
==============================================================================
Name of Amount and Nature of Beneficial Percent of
Beneficial Owner Ownership Class(1)
______________________________________________________________________________
<S> <C> <C>
Monty Fu 698,817 (2) 7.0%
______________________________________________________________________________
Arnold E. Spangler 26,700 (3) (*)
______________________________________________________________________________
George S. Oki 19,050 (4) (*)
______________________________________________________________________________
Dr. Steven B. Gerber 35,900 (5) (*)
______________________________________________________________________________
Dr. Henry N. Wagner, Jr. 38,766 (6) (*)
______________________________________________________________________________
Dr. Gail R. Wilensky 29,566 (7) (*)
______________________________________________________________________________
Robert G. Funari 92,315 (8) (*)
______________________________________________________________________________
Michael E. Mikity 34,269 (9) (*)
______________________________________________________________________________
Haig S. Bagerdjian 18,039 (10) (*)
______________________________________________________________________________
Jack L. Coffey 25,404 (11) (*)
______________________________________________________________________________
All Directors and executive 1,060,883 (12) 10.0%
officers as a Group (12
Individuals)
==============================================================================
<FN>
(1) Calculated on the basis of 9,947,094 shares (excluding treasury shares)
of Syncor Common Stock outstanding as of March 31, 1997. Percentages and
amounts are calculated including shares not outstanding which the individual
has a right to acquire pursuant to options exercisable on March 31, 1997 or
within 60 days thereafter. Exceptions are noted for each individual. The
executive officers' ESSOP shares are included and separately noted for named
executive officers in the following notes. The ESSOP number and percentage
are as of March 31, 1997 but does not include matching shares for the first
quarter of 1997.
(2) Includes 18,200 shares not outstanding which the person has the right to
acquire pursuant to options, 9,206 shares under the ESSOP, and 11,600 shares
held as trustee for his children.
(3) Includes 20,200 shares not outstanding which the person has the right to
acquire pursuant to options.
(4) Includes 14,550 shares not outstanding which the person has the right to
acquire pursuant to options and 3,000 shares held as trustee for his children.
(5) Includes 33,400 shares not outstanding which the person has the right to
acquire pursuant to options.
(6) Includes 38,266 shares not outstanding which the person has the right to
acquire pursuant to options.
(7) Includes 29,066 shares not outstanding which the person has the right to
acquire pursuant to options.
(8) Includes 80,250 shares not outstanding which the person has the right to
acquire pursuant to options and 2,065 shares under the ESSOP.
(9) Includes 26,000 shares not outstanding which the person has the right to
acquire pursuant to options and 6,769 shares under the ESSOP.
(10) Includes 16,367 shares not outstanding which the person has the right to
acquire pursuant to options and 1,672 shares under the ESSOP.
(11) Includes 17,850 shares not outstanding which the person has the right to
acquire pursuant to options and 6,554 shares under the ESSOP.
(12) Includes 329,435 shares not outstanding which the individuals as a group
have the right to acquire pursuant to options and 32,826 shares under the
ESSOP.
(*) Less than 1%.
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
IDENTIFICATION OF DIRECTORS AND NOMINEES
ELECTION OF DIRECTORS
In 1986, Syncor stockholders approved staggered three-year terms for
Directors. The three nominees named below are successors to the class whose
term expires at this Annual Meeting and, if elected, will serve until the
Annual Meeting in 2000 when their respective successors are duly elected and
qualified. In accordance with Syncor's By-Laws, the Board of Directors
unanimously adopted a resolution in August 1996 pursuant to which the number
of Directors was fixed at seven. Prior to the resolution, the number of
Directors was fixed at eight. Mr. Gene McGrevin was the eighth Director until
his resignation from Syncor effective July 3, 1996.
The nominees are described below with brief statements setting forth their
present principal occupations, their current ages, the lengths of time they
have served as Directors of Syncor (including as a Director of a Syncor
predecessor) and their business experience during at least the last five
years. The three nominees are currently Directors of Syncor. There are no
family relationships between any of the nominees, Directors or executive
officers except that Mr. Oki is a brother-in-law of Mr. Fu. Oki Nursery
Company, Inc., where Mr. Oki served as Chief Financial Officer until March
1993, and continues to serve as a director, filed Chapter 7 on December 1,
1994 in connection with the dissolution of that company. Iko Land, Inc.,
where Mr. Oki serves as President, acquired a general partner's interest in a
partnership. Subsequent to such acquisition, the partnership elected to
restructure under a Chapter 11 plan, and is currently in the process of being
wound down.
All of the nominees have indicated their willingness to serve. In the event,
however, that any of them should be unable to serve, the proxies named on the
enclosed proxy card will vote in their discretion for such other persons as
the Board of Directors may recommend, unless the Board of Directors reduces
the number of Directors to eliminate any vacancies. Unless otherwise
instructed, the proxies will vote for all of the nominees. The shares
represented in person and by proxy cannot be voted for more than three
nominees.
NOMINEES FOR ELECTION (CURRENT TERMS EXPIRE IN 1997)
STEVEN B. GERBER, M.D. Director since May 1, 1990
Age: 43
Mr. Gerber has been Managing Director and pharmaceutical industry analyst for
Oppenheimer & Co., Inc. for the past seven years. Dr. Gerber has an M.B.A. in
Finance from the University of California, Los Angeles, and is a
board-certified internist and cardiologist with subspecialty training in
Nuclear Cardiology. He received his M.D. from Tufts University and a B.A. in
Psychology from Brandeis University.
ARNOLD E. SPANGLER Director since August 9, 1985
Age: 48
Mr. Spangler has been a Managing Director of Mancuso & Company, a private
merchant banking firm, since 1993. Previously, he was a financial consultant
and private investor from 1991 to 1993. From 1989 to 1991, Mr. Spangler was a
Managing Director of PaineWebber Incorporated and a Co-Director of its mergers
and acquisitions department. From 1983 to 1989, Mr. Spangler was a General
Partner in the investment banking firm of Lazard Freres & Co., where he worked
primarily in the areas of mergers and acquisitions and financial advising.
Mr. Spangler has a B.S. in Economics and an M.B.A.
DR. GAIL R. WILENSKY Director since July 12, 1993
Age: 53
Dr. Wilensky's professional career spans 25 years of policy analysis,
management, and university-level teaching. She is currently the John M. Olin
Senior Fellow at Project HOPE, an international health foundation and chair of
the Physician Payment Review Commission. Previously, she served in the White
House as Deputy Assistant to the President for Policy Development. Before
joining the White House staff, she was the Administrator of the Health Care
Financing Administration in the Department of Health and Human Services for
two years. As Administrator, she directed the Medicare and Medicaid programs.
Dr. Wilensky is a nationally recognized expert on a wide range of health
policy and financing issues and has published extensively on health economics
and other policy issues. Dr. Wilensky has received numerous honors and
awards and is an elected member of the Institute of Medicine of the National
Academy of Sciences. She is a member of many professional societies and
serves on several professional committees and boards and currently serves as a
Trustee of the Combined Benefits Fund of the United Mine Workers of America.
ADDITIONAL DIRECTORS
TERMS EXPIRING IN 1998
GEORGE S. OKI Director since May 17, 1985
Age: 46
Mr. Oki has been the Chairman of the Board of Meta Information Services Inc.
since April 1, 1993. Previously, he was the Chairman of the Board of Oki
Nursery, Inc., where he was employed since 1975. Mr. Oki was a Director of a
predecessor corporation from July 1982 to August 1983 and from December 1984
until its merger into Syncor. Mr. Oki has a B.S. degree in Horticulture from
Colorado State University and an M.B.A. from the University of Southern
California.
ROBERT G. FUNARI Director since January 23, 1995
Age: 49
Mr. Funari has served as Chief Executive Officer for Syncor since July 3,1996,
and as President since January 14, 1996. Mr. Funari joined Syncor on August
9, 1993, and was appointed Executive Vice President and Chief Operating
Officer for Syncor. Prior to joining Syncor, Mr. Funari was Executive Vice
President and General Manager for McKesson Drug Company. From 1975 to 1992,
Mr. Funari held a number of key management positions with Baxter International
and its subsidiaries. His last position with Baxter was as Corporate Vice
President and as President of its Pharmaseal Division. Mr. Funari received a
Bachelor of Science degree in Mechanical Engineering from Cornell University
and an M.B.A. from Harvard Business School.
TERMS EXPIRING IN 1999
MONTY FU Director since May 17, 1985
Age: 50
Mr. Fu is the Chairman of the Board of Directors of Syncor. Mr. Fu was
chairman of the Board and a Vice President of Syncor International
Corporation, a California corporation, commencing in 1982 until it merged into
a predecessor of Syncor. Mr. Fu was co-founder of Pharmatopes, Inc., and
served as Secretary-Treasurer and Director from its inception in 1975 until
July 1982 when it was acquired by the Syncor California corporation. Mr. Fu
has a B.S. degree in Pharmacy with a specialization in Nuclear Pharmacy.
HENRY N. WAGNER, JR., M.D. Director since August 3, 1992
Age: 69
Dr. Wagner has spent more than 30 years at The Johns Hopkins University,
pioneering radioactive diagnostics and treatments. He is currently a
Professor of Medicine, Radiology and Radiological Science and Environmental
Health Sciences, as well as the Director of the Divisions of Nuclear Medicine
and Radiation Health Sciences. At The Johns Hopkins Hospital, he is Director
of the Division of Nuclear Medicine. Dr. Wagner and his work have been
nationally and internationally recognized with numerous honors and awards,
including the prestigious American Medical Association's Scientific
Achievement Award. Dr. Wagner is a member of many professional societies,
including the National Academy of Medicine, and serves on several research
committees for such organizations as the National Institutes of Health,
National Research Council and the Nuclear Regulatory Commission.
IDENTIFICATION OF EXECUTIVE OFFICERS
The following persons are all of the executive officers of Syncor. The
respective executive officers hold the same or similar positions for Syncor
Management Corporation and other wholly owned subsidiaries of Syncor. The
executive officers serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
DIRECTOR AND/OR
NAME AGE OFFICER SINCE POSITION(S)
____ ___ _____________ _____________
<S> <C> <C> <C>
Monty Fu 50 May 1985 Director, Chairman of the Board
Robert G. Funari 49 August 1993 Director, President and Chief
Executive Officer (1)
Michael E. Mikity 49 November 1985 Senior Vice President, Treasurer and
Chief Financial Officer
Haig S. Bagerdjian 40 January 1995 Senior Vice President, Business
Development, Secretary and General
Counsel (2)
Jack L. Coffey 45 April 1989 Corporate Vice President, Quality
and Regulatory
Sheila H. Coop 56 November 1992 Corporate Vice President, Human
Resources
Charles A. Smith 44 November 1992 Corporate Vice President, Business
Development
<FN>
(1) Mr. Funari was elected President effective January 14, 1996 and Chief
Executive Officer effective July 3,1996. Prior to July 3, 1996, Mr. Funari
was President and Chief Operating Officer.
(2) Since January 1997, Mr. Bagerdjian has also served as a director of
Advanced Machine Vision Corporation ("AMVC"), a publicly traded California
corporation based in Medford, Oregon (NASDAQ: "ARCCA"). AMVC designs,
develops, manufactures and markets machine vision systems that process images
not discernible to the human eye. For his services, Mr. Bagerdjian received
100,000 options, 25% of which vested in 1997. The shares underlying his
options in AMVC represent less than one percent of the company's outstanding
shares.
</TABLE>
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
HAIG S. BAGERDJIAN is Senior Vice President, Business Development, Secretary
and General Counsel for Syncor, effective October 22, 1996. Mr. Bagerdjian
joined Syncor in 1991 as an Associate General Counsel and Assistant Secretary,
and became Vice President, Secretary and General Counsel in January 1995.
Prior to joining Syncor, from 1987 to 1991, Mr. Bagerdjian worked for Calmark
Holding Corporation in various management positions, including the General
Counsel for one of its subsidiaries, American Adventure, Inc. Mr. Bagerdjian
received a Bachelor of Arts degree from the University of Southern California
in International Relations and Slavic Languages and Literature, Certificates
in Russian Studies, Strategic Defense and National Security in 1983, and a
J.D. from Harvard Law School in 1986. He is admitted to the State Bar of
California.
JACK L. COFFEY is Corporate Vice President, Quality and Regulatory, effective
July 1, 1996, and previously served as Vice President in various capacities.
Most recently, he was Vice President for the Eastern area of Syncor from March
1995 until July 1996. He joined Nuclear Pharmacy, Inc., a predecessor of
Syncor, in 1984 as Director of Radiation Services. Mr. Coffey received a
Bachelor of Science degree from Cumberland College in 1973 and a Master's
Degree in Radiation Biology in 1978 from the University of Tennessee. He is
also a Board Certified Health Physicist.
SHEILA H. COOP is Corporate Vice President, Human Resources, for Syncor. Ms.
Coop joined Syncor in July 1991, as Director of Human Resources. Prior to
joining Syncor, Ms. Coop was a Senior Human Resources Consultant with
Jorgensen and Associates. From 1988 to 1990, Ms. Coop was Director, Human
Resources for Daylight Transport, Inc., a national transportation company.
Ms. Coop received a Bachelor of Science degree from the University of
California, Los Angeles, and a Certificate of Professional Designation in
Human Resources Management awarded by the University of California, Los
Angeles, School of Law and Graduate School of Business in 1983.
MICHAEL E. MIKITY is Senior Vice President, Treasurer and Chief Financial
Officer for Syncor. He became Senior Vice President effective June 28, 1996,
and previously was Vice President, Treasurer and Chief Financial Officer.
From June 1993 until August 1994, Mr. Mikity served as Vice President and
Chief Information Officer for Syncor. From 1983 until June 1993, Mr. Mikity
served as Chief Financial Officer and Treasurer of Syncor. Since February
1997, Mr. Mikity has also served as chief executive officer for Syncor
Diagnostics, LLC, a joint venture that is owned 50% by Syncor. Mr. Mikity is a
certified public accountant and received his Bachelor of Science degree in
Accounting in 1973, from the University of Southern California.
CHARLES A. SMITH is Corporate Vice President, Business Development, for
Syncor. Mr. Smith joined Nuclear Pharmacy, Inc., a predecessor of Syncor, in
1979 as a Staff Pharmacist. In 1985, he was named a Director of Operations
for Syncor. From June 1988 to November 1992, Mr. Smith was the Director of
Business Development. Since April 1997, Mr. Smith has also served as
president of Syncor Pharmaceuticals, Inc., a newly-formed and wholly-owned
subsidiary of Syncor. Mr. Smith received a Pharm. B.S. degree from Drake
University, College of Pharmacy in 1977, an M.S. in Pharmaceutical Sciences
with emphasis in Clinical Pharmacy in 1979, from the University of the
Pacific, and an M.B.A. from Pepperdine University in 1988.
INFORMATION CONCERNING OPERATION OF THE
BOARD OF DIRECTORS AND ITS COMMITTEES
In order to facilitate the handling of various functions of the Board of
Directors, the Board has appointed a standing Audit Committee, Compensation
Committee, Nominating Committee, Quality Committee and Officer Director
Committee. The Stock Option Committee, which was a standing committee of the
Board throughout Fiscal 1996, was dissolved in March 1997.
AUDIT COMMITTEE. The current members of the Audit Committee are George S.
Oki, Chairperson, Dr. Steven B. Gerber, and Arnold E. Spangler. Dr. Henry N.
Wagner, Jr. was a member of the committee during the year ended December 31,
1996 ("FISCAL 1996"), but ceased to be a member in March 1997. The committee
held two meetings during Fiscal 1996. The functions of the Audit Committee
include review of those matters that primarily relate to a financial audit of
Syncor and its subsidiaries including (i) the findings of the independent
auditors, (ii) the accounting principles used by Syncor and actual or
impending changes in financial accounting requirements, (iii) the financial
and accounting controls, and (iv) the recommendations by the independent
auditors.
COMPENSATION COMMITTEE. The current members of the Compensation Committee are
Arnold E. Spangler, Chairperson, Dr. Steven B. Gerber and Dr. Gail R.
Wilensky. The committee held four meetings during Fiscal 1996. The functions
of the Compensation Committee include (i) the review with the Chief Executive
Officer, of his performance and the performance of the executive officers
whose compensation is the subject of review, (ii) annual review, examination
and approval, as needed of salary ranges and salaries for the executive
officers and compensation for non-employee Directors and (iii) the review of
compensation arrangements involving major acquisitions, salary administration
policy, fringe benefit policy and other compensation matters as requested by
the Board of Directors. On March 4, 1997, the Compensation Committee also
undertook the duty of administering the Company's 1990 Master Stock Incentive
Plan, which was previously the duty of the Stock Option Committee until its
dissolution.
NOMINATING COMMITTEE. The current members of the Nominating Committee are Dr.
Steven B. Gerber, Chairperson, Monty Fu, George S. Oki and Robert G. Funari.
The committee met once during Fiscal 1996. The functions of the Nominating
Committee include (i) setting-up procedures for locating nominees for the
Director positions, (ii) reviewing prospective new members of the Board of
Directors and nominations for successive terms of current Board members, and
(iii) making recommendations to the Board of Directors for nominees for
Director positions. The Nominating Committee will consider the possible
nomination as Directors of persons recommended by stockholders. Any such
recommendations should be in writing and should be mailed or delivered to the
Company, marked for the attention of the Nominating Committee, on or before
the date for receipt of stockholder proposals for the next annual meeting (see
"STOCKHOLDER PROPOSALS").
QUALITY COMMITTEE. The current members of the Quality Committee are Dr. Gail
R. Wilensky, Chairperson, Dr. Henry N. Wagner, Jr., and Robert G. Funari. The
committee held one meeting during Fiscal 1996. The functions of the Quality
Committee include establishing strategic priorities for quality, assessment
and evaluation of quality standards and determining who will carry out the
process. The committee also establishes expectations and reviews plans and
procedures that improve Syncor's quality standards.
OFFICER DIRECTOR COMMITTEE. The current members of the Officer Director
Committee are Monty Fu and Robert G. Funari. The committee held one meeting
during Fiscal 1996. The committee was created by the Company's Board of
Directors on June 26, 1996 to review current and past compensation of
non-employee Directors and to administer the Non-Employee Director Stock
Compensation Plan, which was allocated 25,000 shares of the Company's Common
Stock to be used to compensate non-employee Directors from time to time. In
Fiscal 1996, the Officer Director Committee approved the granting of 500
shares of the Company's Common Stock to each of the non-employee Directors.
STOCK OPTION COMMITTEE. The members of the Stock Option Committee in Fiscal
1996 were Dr. Henry N. Wagner, Jr. Chairperson, Dr. Steven B. Gerber and
Arnold E. Spangler. The Stock Option Committee held four meetings during
Fiscal 1996. The function of the committee was to administer the Company's
1990 Master Stock Incentive Plan. On March 4, 1997, the Stock Option
Committee was dissolved, and its duties were undertaken by the Compensation
Committee.
BOARD OF DIRECTORS. During Fiscal 1996, the Board of Directors held nine
meetings, four of which were telephonic. All of the Directors attended more
than 75 percent of the total number of meetings of the Board of Directors and
no Director attended fewer than 75 percent of the total number of meetings
held by all Committees of the Board of Directors on which he or she served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS. Each non-employee Director is paid an annual
retainer of $20,000, paid in quarterly payments of $5,000, and $1,000 per day
for Board meetings, including one travel day per meeting if traveling from
out-of-state. In addition, reasonable, out-of-pocket expenses of a Director
incurred in connection with his or her service as a Director is reimbursed by
the Company. For Fiscal 1996, including the annual retainer, non-employee
Directors were paid as follows: Dr. Gerber, $30,000; Mr. Oki, $30,000; Mr.
Spangler, $33,000; Dr. Wagner, $31,000; and Dr. Wilensky, $32,000. Each
non-employee Director also received 500 shares of the Company's Common Stock
in 1996 pursuant to the Non-Employee Director Stock Compensation Plan, under
which non-employee Directors receive, at the discretion of the Officer
Director Committee of the Board of Directors, shares of the Company's Common
Stock as part of their compensation for their services. The non-employee
Directors also received the following travel perquisites in connection with
the Board of Directors' meeting held outside of California: Dr. Gerber,
$1,754; Mr. Oki, $1,717; Mr. Spangler, $2,016; and Dr. Wilensky, $1,963. Dr.
Wagner also received a speaking honorarium of $1,500. Commencing July 11,
1989, each newly elected non-employee Board member receives on his or her date
of election, 10,000 options to purchase shares of the Company's Common Stock
and, subject to certain restrictions, an additional 5,000 options following
each subsequent Annual Meeting of Stockholders attended by such Director up to
a total of 25,000 options, exercisable within a ten year period. On June 26,
1996, Dr. Wilensky received 5,000 options at the exercise price equal to the
closing price at the date of the grant. Each of the non-employee Board
members has received 25,000 options. In addition, in 1996, pursuant to
non-qualified 1995 Stock Incentive Award Agreements outside of the 1990 Master
Stock Incentive Plan, Dr. Gerber received 8,400 options, and Dr. Wilensky
received 12,400 options.
1990 MASTER STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED (the "1990 MSIP").
The 1990 Master Stock Incentive Plan, amended and restated on November 15,
1993, provides long term incentives for high levels of performance from
Directors and employees through the grant of (a) options and (b) other awards
such as stock appreciation rights, restricted stock awards and performance
share awards ("OTHER AWARDS"). The options granted to the non-employee
Directors are fixed in the 1990 MSIP as described above in the paragraph
captioned "Compensation of Directors." In March 1997, the Board of Directors
delegated its discretion and administrative authority under the 1990 MSIP to
the Compensation Committee (the "ADMINISTRATOR"). Previously, the Board of
Directors had delegated its discretion and administrative authority to the
Stock Option Committee, which was dissolved in March 1997. Options are
granted to executive officers and other key employees under the 1990 MSIP at
the discretion of the Administrator. The purchase price per option is
determined by the Administrator, but in the case of incentive stock options,
it must be at least fair market value on the date of grant. The purchase
price per option purchased may be paid in cash or by check, by a promissory
note if authorized by the Administrator upon terms it determines, or by shares
of the Company's Common Stock under certain limitations. Options are subject
to a vesting schedule and period determined by the Administrator. However,
vesting cannot occur in less than six months from the date of grant and the
option period cannot exceed ten years. The 1990 MSIP is qualified under the
Internal Revenue Code (the "CODE"). To date, no Other Awards have been
granted under the 1990 MSIP, and although the 1990 MSIP permits tandem rights,
none of the options granted to date have tandem rights.
EMPLOYEES' SAVINGS AND STOCK OWNERSHIP PLAN ("ESSOP"). Eligible employees may
participate in the Company's ESSOP, as amended and restated on June 6, 1996,
and as administered pursuant to Section 401(k) of the Code, by contributing up
to two percent of their pay through pre-tax payroll deductions for the
purchase of the Company's Common Stock. The Company matches such
contributions on a share-for-share basis. In addition, participating
employees may contribute up to an additional 14 percent of their pay, subject
to a maximum dollar amount, to an account with several investment fund
choices. The Company will match these additional contributions at the rate of
$.50 on the dollar up to the first four percent of such contributions.
EXECUTIVE LIFE INSURANCE PLAN. All executive officers are part of Syncor's
life insurance plan receiving coverage computed on the same basis as all
salaried employees. In addition, the executive officers each have term life
insurance of $250,000, premiums for which are paid by Syncor. Since July
1993, Syncor has also contributed to the split ownership/split dollar plan for
Mr. McGrevin. Under that plan, Syncor has an ownership right in a certain
life insurance policy of $2,000,000 purchased by Mr. McGrevin. For that
right, Syncor agreed to contribute an annual premium equal to $62,000 per year
for the first two years of the plan and $77,000 per year for the remaining
eight consecutive years of the plan. Syncor made a contribution of $77,000 to
the plan in Fiscal 1996. In connection with Mr. McGrevin's resignation, Syncor
and Mr. McGrevin agreed to limit Syncor's payment obligations under the plan
to one more payment of $77,000 in June 1997 and another payment of $4,641 in
June 1998. The plan terminates upon the earlier of: (i) Mr. McGrevin's death,
(ii) Mr. McGrevin's surrender or cancellation of the plan, or (iii) October 8,
2001. Upon a termination event as a result of Mr. McGrevin's death, Syncor
shall be reimbursed an amount equal to the cumulative premium payments made by
Syncor to the plan. Upon a termination event as a result of the surrender or
cancellation of the policy, Syncor shall receive an amount equal to the lesser
of the cumulative premiums paid by it or the policy's cash surrender value.
Upon a termination event on October 8, 2001, the proceeds of the plan will be
distributed to Mr. McGrevin, except for the amount of $359,641 representing
the cumulative payments made by Syncor to the plan, which amount will be
distributed to Syncor. Finally, Syncor will also continue to pay the premiums
under Mr. McGrevin's life insurance policy, life benefit plans, and group life
insurance until July 1998.
EXECUTIVE DEFERRAL PLAN. All executive officers, members of the Board of
Directors and senior management are eligible to participate in the Executive
Deferral Plan (the "DEFERRAL PLAN"). The Deferral Plan allows each
participant to defer up to 25 percent, and in the case of non-employee
Directors, 100 percent, of his or her annual compensation. The Deferral Plan
is designed to defer the payment of taxes on the deferred income until such
time as the deferments are distributed to the participants. At retirement (or
termination), Syncor makes a contribution on behalf of the participant up to
the first 15 percent (100% for non-employee Directors) of the deferred
compensation toward the payment of taxes on the value of such deferral
distribution. This amount is calculated by applying a 30 percent "gross-up"
rate on the amount to be distributed. The Deferral Plan is secured with a
"Rabbi Trust" which is responsible for plan investments. Currently, assets
are invested in a selection of separate and fixed accounts made available
through flexible variable life insurance policies owned by the trust. The
Deferral Plan participants select from up to five accounts, including stock,
aggressive stock, bond, total return (managed) and fixed. The investment
performance of each account selected will determine the returns credited to
the individual participant's deferral account value. Syncor bears no
investment risk under the Deferral Plan. Each individual policy bears its own
investment and policy expenses. It is the total surrender value of each
underlying insurance policy that is "grossed-up" for the participant under the
circumstances described above.
BENEFITS AGREEMENT. The Company entered into a Benefits Agreement, the form
of which was approved by the Board of Directors in November 1989 and amended
by the Board on June 20, 1995, with all of its Directors and certain of its
employees which provides for accelerated vesting of stock options, deferred
incentive earnings and all other awards under the Company's incentive plans in
the event of a "change in control" as defined in such Benefits Agreement.
MANAGEMENT INCENTIVE PLANS. For each of Fiscal 1995, Fiscal 1996 and Fiscal
1997, the Company has implemented a Management Incentive Plan (collectively,
the "MIPS"): the 1995 Management Incentive Plan (the "1995 MIP"), the 1996
Management Incentive Plan (the "1996 MIP"), and the 1997 Management Incentive
Plan (the "1997 MIP"). Each of the MIPs is a three-year plan, and is designed
to be consistent with (a) overall Company performance, measured as earnings
per share ("EPS") and (b) the employee's individual performance, measured by
successfully achieving specific performance goals known as Management by
Objectives ("MBOs"). Any amounts payable under the MIPs are subject to
several conditions: an eligible employee must have an acceptable performance
appraisal; be actively employed by the Company at the end of the year to
receive an annual payout; and must successfully achieve his or her MBOs. Each
of the MIPs has separate thresholds and targets for each year as described
below. Based upon an employee's position, he/she may be eligible for one or
more of the following components of the MIPs: (1) Local Achievement
Incentive, (2) EPS Incentive, and (3) Long Term Incentive. Only Pharmacy
Managers and Senior Pharmacy Managers are eligible for the Local Achievement
Incentive. Under the 1996 MIP, if the Company achieves consolidated EPS of
$.33 for Fiscal 1996, each executive officer is eligible to receive EPS
Incentive awards up to an amount equal to: 45% of the officer's salary if the
Company's EPS in its "core business" (as defined in the next sentence) reaches
the threshold (the "Threshold") of $.50 in 1996, plus an additional 16% of the
officer's salary if the Company's EPS in its core business reaches the target
(the "Target") of $.55 in 1996. "Core business" EPS excludes earnings from
P.E.T.Net Pharmaceutical Services, LLC and the Company's positron emission
tomography radiopharmacies. The Company met the Threshold and Target
requirements for 1996. Payment of the EPS Incentive to the eligible employee
is made within two months of the end of the calendar year in which such EPS
Incentive was earned, subject to confirmation by the Company's independent
certified public accountants. The Long Term Incentive component of the 1995
MIP and 1996 MIP is described below in the footnotes to the Long-Term
Incentive Plans--Awards in Last Fiscal Year table.
EXECUTIVE VACATIONS AND DISABILITY INSURANCE. Each executive officer receives
four weeks of vacation annually and is covered by disability insurance paying
up to 70 percent or $15,000 per month, whichever is less, of the executive
officer's cash compensation, upon total disability, until the age of 65. The
Company will also continue to pay premiums on Mr. McGrevin's disability
insurance until July 1998 in accordance with the terms of his employement
agreement.
SUMMARY COMPENSATION OF EXECUTIVE OFFICERS. The following tables and
accompanying notes show the compensation for the Chief Executive Officer, its
former Chief Executive Officer, and the four next highest paid executive
officers of Syncor and its subsidiaries during Fiscal 1996, the fiscal year
ended December 31, 1995 ("FISCAL 1995"), and the fiscal year ended December
31, 1994 ("FISCAL 1994").<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
==============================================================================
Long Term Compensation
Annual Compensation Awards Payouts
______________________ _______________________
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Re- Securities All
Annual stricted Underlying Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year (1)($) (2)($) (3)($) ($) (#) (5)(6)($) (8)($)
______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MONTY FU 1996 233,077 121,500 50,000 113,280 10,507
Chairman of the 1995 210,000 117,600 84,000 4,335
Board 1994 222,876 11,400(4) 9,532
______________________________________________________________________________
ROBERT G. FUNARI 1996 233,077 121,500 50,000 113,280 12,581
President and 1995 210,000 117,600 84,000 4,335
Chief Executive 1994 210,000 85,500(4) 4,394
Officer 50,000
______________________________________________________________________________
GENE R. MCGREVIN 1996 786,923 246,995 60,000 74,400(7) 8,389
former Vice 1995 310,000 173,600 124,000 8,437
Chairman and Chief 1994 310,000 69,000(4) 7,077
Executive Officer
until July 3, 1996
______________________________________________________________________________
MICHAEL E. MIKITY 1996 155,385 87,800 25,000 80,000 9,631
Senior Vice 1995 140,000 78,400 56,000 3,594
President, Chief 1994 139,808 10,000 6,004
Financial Officer
and Treasurer
______________________________________________________________________________
HAIG S. BAGERDJIAN 1996 134,539 174,600 35,000 78,800 5,778
Senior Vice 1995 104,667 58,800 15,000 42,000 3,894
President and 1994 93,067 7,234(4) 1,638
Secretary 18,000
______________________________________________________________________________
JACK L. COFFEY 1996 145,770 76,281 63,133 18,500 77,712 10,870
Vice President 1995 150,000 82,992 21,464 59,280 2,929
1994 152,307 35,700(4) 2,855
==============================================================================
<FN>
(1) Amounts shown include cash and non-cash compensation earned and received
by Executive officers as well as amounts earned but deferred at the election
of those Executive officers under the Deferral Plan. Mr. McGrevin's salary
includes: (i) $166,923 in regular salary for the period commencing January 1,
1996 until his resignation effective July 3, 1996; and (ii) $620,000 paid to
him pursuant to his employment agreement with the Company.
(2) The bonuses shown for 1995 were earned pursuant to the 1995 MIP but were
not paid until February 1996. The bonuses shown for 1996 were earned pursuant
to the 1996 MIP but were not paid until March 1997. With respect to the bonus
for Mr. Bagerdjian in Fiscal 1996, the amount includes: (i) $94,600 received
pursuant to the 1996 MIP, (ii) $70,000 received pursuant to the successful
settlement of an insurance claim under which Syncor was awarded $1,000,000,
and (iii) $10,000 awarded in connection with his receipt of the Chairman's
Award from the Company.
(3) Other Annual Compensation in the form of the value of certain perquisites
did not, in the aggregate, exceed the amount of $50,000 or 10 percent of the
aggregate salary and bonus compensation for the reported period, except as
otherwise reported. Syncor accrues amounts for the "grossed-up" component
under the Deferral Plan, however, those amounts are not shown as other
compensation for the following reasons: (i) each individual policy bears its
own investment and policy expenses; (ii) amounts accrued by Syncor are not
invested on behalf of the participants; (iii) the actual "grossed-up"
component could be zero at the time of retirement or termination. Mr.
McGrevin's other annual compensation is comprised of: (i) $58,424 for accrued
vacation, holiday and sick pay; (ii) $11,000 for expenses incurred as a result
of his relocation to the Company's Atlanta, Georgia office; (iii) $176,368
representing the "gross-up" component under the Deferral Plan described in the
"Executive Deferral Plan" section above; and (iv) $1,203 in travel perquisites
in connection with the annual meeting of the Board of Directors and officers
held outside of California. The amount reported for Mr. Coffey in Fiscal 1995
represents relocation allowance according to the Company's Homeowners' Full
Relocation Package in connection with his relocation from the Company's
corporate headquarters to Atlanta, Georgia, available to all employees, which
included $20,140 paid directly to Mr. Coffey for relocation and $1,324 paid to
third parties on his behalf. The amount for Mr. Coffey in Fiscal 1996
represents (i) relocation-related compensation in connection with his
relocation from Atlanta, Georgia to the Company's corporate headquarters,
comprised of (a) $50,471 as relocation bonus, (b) $8,054 paid to third parties
on his behalf, and (c) $1,250 to offset the higher mortgage costs in
California (available to Mr. Coffey for a period of 12 months after his
relocation), and (ii) $3,093 in travel perquisites in connection with the
Company's annual meeting of officers and directors held outside of California.
(4) Exchanged under the repricing offered by the Company on July 14, 1994
when current employees holding stock options under the Company's 1990 Master
Stock Incentive Plan had the opportunity to exchange all of their unexercised
options with exercise prices of $9.125 and higher for a reduced number of new
options with an exercise price equal to the then-current fair market value of
$8.50. The exchange formula reduced the number of options, but reestablished
motivation at market prices more in keeping with current market conditions.
The vesting status of the new option shares was based on the percentage of
option shares vested immediately preceding the exchange with all new options
having a 10-year expiration date. Certain named executive officers
participated in the exchange program.
(5) The payouts described for Fiscal 1996 represent the sum of the payouts
earned in 1996 but deferred under the 1995 MIP and the 1996 MIP. For details
of how the payouts were derived, see Long-Term Incentive Plans--Awards in Last
Fiscal Year below.
(6) The payouts described for Fiscal 1995 represent the payouts earned in
1995 but deferred under the 1995 MIP. Pursuant to the Long Term Incentive
component of the 1995 MIP, in Fiscal 1995, program directors, operational
directors, general managers, and executive officers of the Company were
eligible for incentive compensation in addition to the EPS Incentive as a
result of the Company's achieving the EPS Threshold of $.40 and Target of $.45
in Fiscal 1995. The Long Term Incentive for executive officers had three
elements: (i) an officer's base salary as of December 31, 1995 multiplied by
12% if the EPS reached the Threshold of $.40 in 1995, which product was
multiplied by the percentage of the MBOs achieved by such officer in 1995;
(ii) such officer's base salary multiplied by an additional 12% if the EPS
reached the Target of $.45 in 1995, which product was multiplied by such
officer's MBOs percentage in 1995; and (iii) to encourage employment
longevity, there was an additional element of the Long Term Incentive known as
the Company Match, under which the sum of (i) and (ii) above was multiplied by
one-third if the Threshold was met or two-thirds if the Target was met. The
Company met its EPS Threshold and Target requirements under the 1995 MIP.
Payment to the eligible employee of the Long Term Incentive was deferred until
the earlier of such employee's termination or December 31, 1997. An eligible
employee forfeits all of the Company Match earned under the 1995 MIP in any
year if such employee leaves the Company before December 31, 1997.
Mr. Fu and Mr. Funari achieved 100 percent of their MBOs in 1995. Therefore,
their Long Term Incentive amount for 1995 was calculated as follows: $210,000
x 12% x 100% = $25,200 for the Threshold component; plus $210,000 x 12% x 100%
= $25,200 for the Target Component; plus $50,400 x 2/3 = $33,600 for the
Company Match component. Accordingly, the Long Term Incentive amount accrued
in 1995 for each of Mr. Fu and Mr. Funari was $84,000.
Mr. McGrevin achieved 100 percent of his MBOs in 1995. Therefore, his Long
Term Incentive amount for 1995 was calculated as follows:$310,000 x 12% x 100%
= $37,200 for the Threshold component; plus $310,000 x 12% x 100% = $37,200
for the Target component; plus $74,400 x 2/3 = $49,600 for the Company Match
component. Accordingly, the Long Term Incentive amount accrued in 1995 for
Mr. McGrevin was $124,000.
Mr. Mikity achieved 100 percent of his MBOs in 1995. Therefore, his Long Term
Incentive amount for 1995 was calculated as follows: $140,000 x 12% x 100% =
$16,800 for the Threshold component; plus $140,000 x 12% x 100% = $16,800 for
the Target component; plus $33,600 x 2/3 = $22,400 for the Company Match
component. Accordingly, the Long Term Incentive amount for Mr. Mikity in 1995
was $56,000.
Mr. Bagerdjian achieved 100 percent of his MBOs in 1995. Therefore, his Long
Term Incentive amount for 1995 was calculated as follows: $105,000 x 12% x
100% = $12,600 for the Threshold component; plus $105,000 x 12% x 100% =
12,600 for the Target component; plus $25,200 x 2/3 = 16,800 for the Company
Match component. Accordingly, the Long Term Incentive amount for Mr.
Bagerdjian in 1995 was $42,000.
Mr. Coffey achieved 98.8 percent of his MBOs in 1995. Therefore, his Long
Term Incentive amount for 1995 was calculated as follows: $150,000 x 12% x
98.8% = $17,784 for the Threshold component; plus $150,000 x 12% x 98.8% =
$17,784 for the Target component; plus $35,568 x 2/3 = $23,712 for the Company
Match component. Accordingly, the Long Term Incentive amount for Mr. Coffey
in 1995 was $59,280.
(7) The amount for Mr. McGrevin represents the early payout of amounts earned
but deferred under the 1995 MIP. The payout was made after his resignation
from the Company in July 1996.
(8) The amounts represent premiums paid for term life and disability
insurance (see "EXECUTIVE LIFE INSURANCE PLAN") and the dollar value of
Syncor's contribution under the ESSOP. Under the ESSOP, named executive
officers received the following number of shares of Syncor Common Stock as
matching contributions: (i) for Fiscal 1996, valued at an average of $13.38
per share as of December 31, 1996: Mr. Fu, 502, Mr. Funari, 668, Mr.
McGrevin, 372, Mr. Mikity, 525, Mr. Bagerdjian, 307, and Mr. Coffey, 589; (ii)
for Fiscal 1995, valued at $6.75 per share as of December 31, 1995: Mr. Fu,
511, Mr. Funari, 693, Mr. McGrevin, 325, Mr. Mikity, 541, Mr. Bagerdjian,
290, and Mr. Coffey, 677; and (iii) for Fiscal 1994, valued at $7.00 per share
as of December 31, 1994: Mr. Fu, 268; Mr. Funari, 239, Mr. McGrevin, 332, Mr.
Mikity, 204, Mr. Bagerdjian, 234, and Mr. Coffey, 272. The amounts for Fiscal
1996 also includes the value of the following bonus shares received by the
executive officers under the ESSOP, which shares were allocated to each ESSOP
participant according to the percentage of ESSOP shares owned by such
participant: Mr. Fu, 34 shares, Mr. Funari, 34 shares, Mr. Mikity, 34 shares,
Mr. Bagerdjian, 26 shares, and Mr. Coffey, 31 shares.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
==============================================================================
Estimated Future Payouts
under Non-Stock Price-Based Plans
______________________________________________________________________________
(a) (b) (c) (d) (e) (f) (g) (h)
Performance
Number or
Of Other
Shares, Period
Units Until
or Maturation Company
Name Plan Other or Threshold Target Match Maximum
Rights Payout(1) ($)(2)(3) ($)(4) ($)(5) ($)(6)
_____________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MONTY FU 1996 MIP n/a 12/31/98 $23,904 $23,904 $31,872 $79,680
1995 MIP n/a 12/31/97 n/a n/a 33,600 33,600
______________________________________________________________________________
ROBERT G. FUNARI 1996 MIP n/a 12/31/98 23,904 23,904 31,872 79,680
1995 MIP n/a 12/31/97 n/a n/a 33,600 33,600
______________________________________________________________________________
GENE R. MCGREVIN 1996 MIP n/a n/a n/a n/a n/a n/a
1995 MIP n/a 12/31/97 n/a n/a n/a 74,400(7)
______________________________________________________________________________
MICHAEL E. MIKITY 1996 MIP n/a 12/31/98 17,280 17,280 23,040 57,600
1995 MIP n/a 12/31/97 n/a n/a 22,400 22,400
______________________________________________________________________________
HAIG S. BAGERDJIAN 1996 MIP n/a 12/31/98 18,600 18,600 24,800 62,000
1995 MIP n/a 12/31/97 n/a n/a 16,800 16,800
______________________________________________________________________________
JACK L. COFFEY 1996 MIP n/a 12/31/98 16,200 16,200 21,600 54,000
1995 MIP n/a 12/31/97 n/a n/a 23,712 23,712
==============================================================================
<FN>
(1) Pursuant to the 1996 MIP described above, (i) amounts earned under the
Long Term Incentive component are not paid until the earlier of an employee's
termination from the Company or December 31, 1998, and (ii) all amounts earned
under the Company Match element of the Long Term Incentive component are not
paid until December 31, 1998. Pursuant to the 1995 MIP described above, (i)
amounts earned under the Long Term Incentive component are not paid until the
earlier of an employee's termination from the Company or December 31, 1997
and (ii) all amounts earned under the Company Match element of the Long Term
Incentive component are not paid until December 31, 1997.
(2) Pursuant to the Long Term Incentive component of the 1996 MIP, program
directors, operational directors, general managers, and executive officers of
the Company are eligible for incentive compensation in addition to the EPS
Incentive, provided that the Company achieves consolidated EPS of $.33. The
Long Term Incentive for executive officers has three elements: (i) an
officer's base salary for 1996 (as of December 31, 1996 unless otherwise
described below) is multiplied by 12% if the EPS for the Company's core
business reaches the Threshold of $.50 in 1996, which product is multiplied by
the percentage of the MBOs achieved by such officer; (ii) such officer's base
salary is multiplied by an additional 12% if the EPS for the Company's core
business reaches the Target of $.55 in 1996, which product is multiplied by
such officer's MBOs percentage; and (iii) to encourage employment longevity,
there is an additional element of the Long Term Incentive known as the Company
Match, under which the sum of (i) and (ii) above is multiplied by one-third if
the Threshold was met or two-thirds if the Target was met. The Company met its
consolidated EPS and its core EPS Threshold and Target requirements under the
1996 MIP. Payment to the eligible employee of the Long Term Incentive is
deferred until the earlier of such employee's termination or December 31,
1998. An eligible employee forfeits all of the Company Match earned under the
1996 MIP in any year if such employee leaves the Company before December 31,
1998.
Mr. Fu and Mr. Funari achieved 83 percent of their MBOs in 1996. Therefore,
their Long Term Incentive amount for 1996 was calculated as follows: $240,000
x 12% x 83% = $23,904 for the Threshold component; plus $240,000 x 12% x 83% =
$23,904 for the Target Component; plus $47,808 x 2/3 = $31,872 for the
Company Match component. Accordingly, the Long Term Incentive amount accrued
in 1996 for each of Mr. Fu and Mr. Funari was $79,680.
Mr. Mikity achieved 90 percent of his MBOs in 1996. Therefore, his Long Term
Incentive amount for 1996 is calculated as follows: $160,000 x 12% x 90% =
$17,280 for the Threshold component; plus $160,000 x 12% x 90% = $17,280 for
the Target component; plus $34,560 x 2/3 = $23,040 for the Company Match
component. Accordingly, the Long Term Incentive amount for Mr. Mikity in 1996
was $57,600.
Mr. Bagerdjian achieved 100 percent of his MBOs in 1996. Therefore, his Long
Term Incentive amount for 1996 is calculated as follows: $155,000 x 12% x
100% = $18,600 for the Threshold component; plus $155,000 x 12% x 100% =
$18,600 for the Target component; plus $37,200 x 2/3 = 24,800 for the Company
Match component. Accordingly, the Long Term Incentive amount for Mr.
Bagerdjian in 1996 was $62,000.
Mr. Coffey achieved 90 percent of his MBOs in 1996. Therefore, his Long Term
Incentive amount for 1996 is calculated as follows: $150,000 (his base salary
as of January 1, 1996) x 12% x 90% = $16,200 for the Threshold component; plus
$150,000 x 12% x 90% = $16,200 for the Target component; plus $32,400 x 2/3 =
$21,600 for the Company Match component. Accordingly, the Long Term
Incentive amount for Mr. Coffey in 1996 was $54,000.
(3) Pursuant to the Long Term Incentive component of the 1995 MIP, executive
officers of the Company are eligible to receive an additional Company Match
component as a result of the Company's achieving in Fiscal 1996 its
consolidated EPS of $.33, its core business EPS Threshold of $.50, and its
core business EPS Target of $.55. Accordingly, the Company Match component for
executive officers under the 1995 MIP is two-thirds of the sum of (i) an
officer's base salary for 1995 (as of December 31, 1995) multiplied by 12% for
achieving the Threshold multiplied by such officer's MBOs percentage in Fiscal
1995, plus (ii) such officer's base salary multiplied by an additional 12% for
reaching the Target multiplied by such officer's MBOs percentage. Payment to
the eligible employee of the Long Term Incentive is deferred until the earlier
of such employee's termination or December 31, 1997. An eligible employee
forfeits all of the Company Match earned in any year if such employee leaves
the Company before December 31, 1997.<PAGE>
Based on Mr. Fu and Mr. Funari achieving 100 percent of their MBOs in 1995,
their Company Match component for 1996 under the 1995 MIP is calculated as
follows: 2/3 x $210,000 x 12% x 100% = $16,800 for the Threshold component of
the Company Match; plus 2/3 x $210,000 x 12% x 100% = $16,800 for the Target
Component of the Company Match. Accordingly, the Company Match in 1996 for
each of Mr. Fu and Mr. Funari under the 1995 MIP was $33,600.
Based on Mr. Mikity achieving 100 percent of his MBOs in 1995, his Company
Match component for 1996 under the 1995 MIP was calculated as follows: 2/3 x
$140,000 x 12% x 100% = $11,200 for the Threshold component of the Company
Match; plus 2/3 x $140,000 x 12% x 100% = $11,200 for the Target component of
the Company Match. Accordingly, the Company Match in 1996 for Mr. Mikity
under the 1995 MIP was $22,400.
Based on Mr. Bagerdjian achieving 100 percent of his MBOs in 1995, his Company
Match component for 1996 under the 1995 MIP is calculated as follows: 2/3 x
$105,000 x 12% x 100% = $8,400 for the Threshold component of the Company
Match; plus 2/3 x $105,000 x 12% x 100% = $8,400 for the Target component of
the Company Match. Accordingly, the Company Match in 1996 for Mr. Bagerdjian
under the 1995 MIP was $16,800.
Based on Mr. Coffey achieving 98.8% of his MBOs in 1995, his Company Match
component for 1995 under the 1995 MIP is calculated as follows: 2/3 x $150,000
x 12% x 98.8% = $11,856 for the Threshold component of the Company Match; plus
2/3 x $50,000 x 12% x 98.8% = 11,856. Accordingly, the Company Match in 1996
for Mr. Coffey under the 1995 MIP was $23,712.
(4) See footnote 2 above for the calculation of the Target component of the
Long Term Incentive amount.
(5) See footnote 2 above for the calculation of the Company Match component
under the 1996 MIP and footnote 3 above for the calculation of the Company
Match component under the 1995 MIP.
(6) For the 1996 MIP, the Maximum is the sum of the Threshold, Target and
Company Match. For the 1995 MIP, the Maximum is the Company Match earned in
Fiscal 1996 (except for Mr. McGrevin, whose payout is described in footnote 7
below).
(7) The amount for Mr. McGrevin was received in Fiscal 1996 as early payout
of amounts earned but deferred under the 1995 MIP. The payout was made after
his resignation from the Company in July 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OPTION EXERCISES AND YEAR-END VALUES TABLE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
==============================================================================
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End at FY-End(1)
(#) ($)
__________ ___________
Shares Value Exercisable/ Exercisable/
Acquired on Realized(1) Unexercisable Unexercisable
Name Exercise(#) ($) (2) (3)
______________________________________________________________________________
<S> <C> <C> <C> <C>
MONTY FU 5,700/55,700 27,788/196,538
______________________________________________________________________________
ROBERT G. FUNARI 67,750/117,750 330,281/499,031
______________________________________________________________________________
GENE R. MCGREVIN 644,000 4,287,625 0/0 0/0
______________________________________________________________________________
MICHAEL E. MIKITY 26,000/30,000 128,850/24,375
______________________________________________________________________________
HAIG S. BAGERDJIAN 16,367/58,867 75,414/100,727
______________________________________________________________________________
JACK L. COFFEY 17,850/36,350 87,019/87,019
==============================================================================
<FN>
(1) Market value of underlying securities at exercise date or year-end, as
the case may be, minus the exercise or base price of "in-the-money"
options/SARs. Mr. McGrevin exercised his options at $12.875 per share (the
closing price of the Company's common stock as traded in NASDAQ on July 12,
1996). In accordance with the standing authorization given by the Company's
Board of Directors to purchase the Company's shares in the open market, upon
learning that Mr. McGrevin's 644,000 shares were available in the open market,
the Company decided to repurchase Mr. McGrevin's shares at $9.75 per share.
(2) Each of the outstanding options were granted with an exercise price of
100 percent of fair market value on the date of grant, for a term (subject to
earlier termination following a termination of employment) of five to ten
years. The options are exercisable no earlier than six months of the grant
date for repriced stock options, and no earlier than the first anniversary of
the grant date for all other stock options. The options vest over the course
of up to four years. The options were granted under Syncor's 1990 MSIP, or
earlier 1981 Master Stock Option Plan (established by the predecessor of
Syncor, the "1981 MSOP"), at the discretion of the Board of Directors.
Grantees did not pay for options. The 1981 MSOP is not qualified under the
Internal Revenue Code. No options under the 1981 MSOP have tandem rights.
After the adoption of the 1990 MSIP, no options were granted under the 1981
MSOP. All options that expire or lapse under the MSOP become available for
grant under the MSIP.
(3) Based upon a market value of $13.38 per share (the closing price of the
Company's Common Stock as traded in NASDAQ on December 31, 1996).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS--AWARDS IN LAST FISCAL YEAR
==============================================================================
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
______________________________________________________________________________
(a) (b) (c) (d) (e) (f) (g)
% of
Total
Options
Number Granted
of to Exercise
Securities Employees or
Underlying in Base
Options Fiscal Price Expiration
Name Granted Year ($/Sh) Date 5%($)(1) 10%($)(1)
______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
MONTY FU 50,000 13.6% $10.00 4/30/06 $314,447 $796,871
______________________________________________________________________________
ROBERT G. FUNARI 50,000 13.6 10.00 4/30/06 314,447 796,871
______________________________________________________________________________
GENE R. MCGREVIN 60,000 16.3 10.00 4/30/06 n/a n/a
______________________________________________________________________________
MICHAEL E. MIKITY 25,000 6.8 14.13 6/26/06 222,078 562,790
______________________________________________________________________________
HAIG S. BAGERDJIAN 35,000 9.5 14.13 6/26/06 310,910 787,906
______________________________________________________________________________
JACK L. COFFEY 18,500 5.0 14.13 6/26/06 164,338 416,465
==============================================================================
<FN>
(1) Assumes that the market price of Syncor's Common Stock appreciates in
value from the date of grant to the end of the option term at the rates
indicated. Mr. McGrevin assigned to the Company all of his rights to the
60,000 options granted to him in exchange for $37,500.
</TABLE>
No SARs were granted to the executive officers named in the Summary
Compensation Table above.
EMPLOYMENT, SEVERANCE, INDEMNITY AND CHANGE OF CONTROL ARRANGEMENTS
Monty Fu's Employment Agreement. The employment agreement entered into
between Syncor and Mr. Fu dated January 1, 1997 (the "FU AGREEMENT") is in
effect for a term of one year, and provides for a negotiation period from June
1, 1997 to October 1, 1997, for extension of the term. In the event that
Syncor and Mr. Fu do not execute an agreement on or before October 1, 1997
extending the term of his employment beyond the scheduled expiration date of
the Fu Agreement, then Mr. Fu's employment with Syncor becomes at-will
employment, subject to termination by either Mr. Fu or Syncor, with or without
cause, upon 90 days' prior written notice to the other party. The Fu
Agreement provides for a base salary in the annual amount of $240,000 and
various fringe benefits that may be made available by Syncor to Mr. Fu,
including participation in the 1995 MIP, the 1996 MIP, the 1997 MIP, and any
other incentive plan that may be prepared and approved by the Board of
Directors which are applicable generally to the Company's executives of
comparable rank to Mr. Fu. The Fu Agreement provides for various payments to
Mr. Fu or his beneficiaries in the event of his death, disability or
termination and in the event of a change of control of Syncor. In the event
of his death or termination due to disability, a termination for cause, or a
voluntary resignation or retirement, Mr. Fu or his beneficiaries would be
entitled to receive a payment equal to the prorated portion of Mr. Fu's then
current salary and to receive prorated, earned and deferred amounts due under
any incentive plan to which Mr. Fu is eligible to participate as funding for
the payout of the amounts due under such incentive plan is approved by the
Board of Directors; the Company, however, would have no obligation to pay any
portion of the Company matching component under such incentive plan. Mr. Fu
would also be entitled to exercise any vested stock options for a period of 90
days. In the event of a termination without cause, Mr. Fu would receive the
same payments described in the preceding two sentences, plus severance
compensation equal to his annual salary payable in biweekly installments. If
a termination without cause occurred following a change of control as defined
below, the severance compensation to which Mr. Fu would be entitled shall
equal two years' salary, which may be made in a lump sum payment in the
discretion of Mr. Fu. A change of control occurs under the agreement when (i)
0% or more of Syncor's outstanding voting stock is acquired by a person, or
group of related persons not affiliated with Syncor, or (ii) Syncor sells more
than 50% of Syncor's assets not in the ordinary course of business, or (iii)
the Board of Directors fails 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 Syncor and the American Stock Transfer & Trust
Company.
ROBERT FUNARI'S EMPLOYMENT AGREEMENT. Mr. Funari entered into an employment
agreement with Syncor dated January 1, 1997. The material terms of Mr.
Funari's employment agreement are identical to the terms of the Fu Agreement
described above.
INDEMNITY AGREEMENT. Each non-employee Director and executive officer has an
Indemnity Agreement which under certain conditions, provides for
indemnification of the Directors or executive officers for the duties
performed for Syncor or its subsidiaries and affiliates.
BENEFITS AGREEMENT. In addition, each non-employee Director and executive
officer has a Benefits Agreement pursuant to which, under certain limited
conditions in the event of a change in control, each receives compensation for
one year and all stock options fully vest immediately.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during Fiscal 1996 were Arnold E.
Spangler, Chairman, Dr. Steven B. Gerber and Dr. Gail R. Wilensky, all of whom
were non-employee Directors. The Compensation Committee, from time to time,
for the purpose of gathering information or recommendations includes executive
officers, including the Chief Executive Officer, in its deliberations. During
Fiscal 1996, none of the Compensation Committee members had a relationship
requiring disclosure under any paragraph of Item 404 of Regulation S-K. In
addition to the Compensation Committee, the Board of Directors of the Company
created a Stock Option Committee to administer the 1990 MSIP and award of
stock options. The members of such committee during Fiscal 1996 were Dr.
Henry N. Wagner, Jr., Chairman, Dr. Steven B. Gerber and Arnold E. Spangler,
and none of such members had a relationship requiring disclosure under any
paragraph of Item 404 of Regulation S-K. The Stock Option Committee was
dissolved in March 1997, and its duties were assumed by the Compensation
Committee.
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG Peat Marwick LLP was appointed by the Board of Directors as Syncor's
independent auditor for the fiscal year ending December 31, 1997. KPMG Peat
Marwick LLP was Syncor's independent auditor for Fiscal 1996.
A representative from KPMG Peat Marwick LLP will be present at the Annual
Meeting, will have the opportunity to make statements, and will be available
to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 ACT"),
requires Syncor's Directors and executive officers to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Additionally, Item 405 of Regulation S-K under the 1934 Act
requires the Company to identify in its proxy statement those individuals for
whom one of the above-referenced reports was not filed on a timely basis
during the most recent fiscal year or prior fiscal years. Based solely upon
its review of Forms 3, 4 and 5 furnished to the Company, the Company believes
that all reports required to be filed during 1996 pursuant to Section 16(a) of
the Act were timely filed. In addition, the Company did not become aware
during 1996 of any delinquent filings for prior fiscal years.
__________________________
The following Report of the Compensation Committee and the Performance Graph
included in this proxy statement shall not be deemed to be incorporated by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or the 1934 Act, except to the extent
Syncor specifically incorporates this Report or the Performance Graph by
reference therein, and shall not be deemed soliciting material or otherwise
deemed filed under either of such Acts.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee reviews management's suggestions and recommends to
the Board of Directors the base salary compensation and the annual incentive
compensation of the executive officers and evaluates the executive officers'
performance.
In determining the compensation recommendations for all executive officers
which the Compensation Committee makes to the Board of Directors, it is the
policy and practice of the Compensation Committee to consider the
contributions of individual executive officers, the performance and prospects
of Syncor over time, and the desirability of attracting and retaining a highly
capable and experienced executive officer group. The Internal Revenue
Service's regulations, limiting the corporate deductions to $1,000,000 per
executive officer, will be taken into consideration in determining total
compensation of the executive officers.
In recent years, it has been Syncor's policy to pay to each executive officer
a compensation package consisting of a base salary which is relatively low
based upon industry comparisons, and annual incentive compensation in the form
of a discretionary bonus based upon the performance of the Company and the
individual executive officer. The annual incentive compensation is based upon
performance levels which include achievement of budgeted net profit before tax
and individual objective factors established each year on recommendations of
the Chief Executive Officer and approved by the Compensation Committee and the
Board of Directors. Such incentive compensation can account for approximately
45 percent of total compensation. Annual incentive compensation for Syncor's
executive officers can increase or decrease significantly if individual
contribution or Syncor's performance exceeds, or fails to achieve, targeted
performance levels.
Mr. Fu's and Mr. Funari's compensation and related benefits are based
principally on their rights under their respective employment agreement with
Syncor. In addition, Mr. Fu, Mr. Funari, and others are eligible to
participate in the 1995 MIP, 1996 MIP, and 1997 MIP, as described above in the
section captioned "COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS", which is
designed to support the achievement of the Company's profit objectives by
awarding incentive compensation to executives at or above the manager level
who have direct influence in accomplishing the Company's business objectives
for 1997 and the other years covered by those plans. In creating the 1995
MIP, the 1996 MIP and the 1997 MIP, the Compensation Committee wanted them to
be consistent with (a) overall Company performance, measured as earnings per
share and (b) the employee's individual performance, measured by successfully
achieving specific performance goals. Departing from the Company's former
approach of paying an annual lump sum bonus, the Compensation Committee
decided that it is important to divide the incentive compensation resulting in
a reduced annual bonus but offering the challenge and opportunity of a long
term incentive component. The long term incentive is intended (x) to achieve
longer term accountability for planning and execution; (y) to encourage
overachievment; and (z) to enhance the retention of highly effective
management personnel. In connection therewith, the 1995 MIP, the 1996 MIP and
the 1997 MIP were designed as three year plans with separate thresholds and
targets for each year based upon Company performance, measured by EPS, and
individual performance, measured by MBOs, a goal-oriented method used to
evaluate the performance of managers against established objectives. MBOs
include three steps: (1) establishing objectives; (2) setting performance
standards for each objective; and (3) comparing actual goal attainment against
the established objectives. Any amounts calculated for any of the components
of the 1995 MIP, the 1996 MIP and the 1997 MIP must be multiplied by the
degree to which MBOs were attained by each eligible employee.
The annual incentive compensation is summarized for the Fiscal 1994, 1995 and
1996 in the "SUMMARY COMPENSATION TABLE" and the footnotes thereto. The long
term incentive compensation is summarized for Fiscal 1996 in the "LONG-TERM
INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR" table and the footnotes thereto.
Dated: May 5, 1997 Compensation Committee of
the Board of Directors,
Syncor International Corporation
Arnold E. Spangler, Chairman
Dr. Gail R. Wilensky
Dr. Steven B. Gerber
SYNCOR STOCK PRICE PERFORMANCE
The following chart compares the value of $100 invested in Syncor Common Stock
from May 31, 1991, through December 31, 1996, with the similar investment in
the NASDAQ Composite (U.S. companies), with the S&P Health Care Composite, and
with the S&P SmallCap 600 Health Care (Medical Products & Supplies)
Composite. The NASDAQ Composite (U.S. companies) is an index comprised of all
domestic common shares traded on the NASDAQ National Market and the NASDAQ
SmallCap Market. The S&P Health Care Composite is a composite index which is
weighted among the following S&P indices: Health Care Diversified (38.6%);
Health Care Drugs (40.3%); Hospital Management (5.5%); Medical Products and
Services (10.2%); Biotechnology (2.5%); Managed Care (2.0%); and Health Care
Miscellaneous (0.9%). The S&P SmallCap 600 Health Care (Medical Products &
Supplies) Index is a composite index of nineteen health care companies in the
S&P SmallCap 600 that primarily provide medical products and supplies,
including Syncor (1.4%). The table below shows the value of each such
investment on May 31, 1991, 1992 and 1993 and December 31, 1993, 1994, 1995
and 1996, assuming reinvestment of dividend.
[CUMULATIVE TOTAL RETURN GRAPH]
<TABLE>
<CAPTION>
==============================================================================
May-91 May-92 May-93 Dec-93 Dec-94 Dec-95 Dec-96
______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
Syncor International Corp. $100 $123 $133 $147 $ 46 $ 44 $ 88
______________________________________________________________________________
NASDAQ Stock Market (U.S.) $100 $117 $141 $157 $153 $217 $267
______________________________________________________________________________
S&P [Registered Trademark]
Health Care Composite Index $100 $109 $ 94 $ 96 $108 $171 $206
______________________________________________________________________________
S&P [Registered Trademark]
SmallCap Health Care
(Medical Products & Supplies) $100 $118 $127 $140 $135 $198 $202
==============================================================================
</TABLE>
<PAGE>
PROPOSED AMENDMENTS TO THE 1990 MASTER STOCK INCENTIVE PLAN
At the Annual Meeting, stockholders will be asked to approve two amendments to
the Company's 1990 Master Stock Incentive Plan (as amended and restated, the
"PLAN") approved by the Board of Directors on April 18, 1997, which would (i)
increase the authorized number of shares of Syncor Common Stock available for
issue under the Plan by 750,000 shares, and (ii) set the maximum number of
shares subject to options that may be granted under the Plan to any one
employee during any given fiscal year to 200,000 shares. (For electronic
filing purposes only, the Plan without the proposed amendments is attached in
the Appendix). As of March 31, 1997, the closing price of Syncor Common Stock
(as reported by NASDAQ) was $8.13 per share.
Since 1990, the Plan has provided significant incentives for Directors,
officers and key employees of the Company. However, the number of shares of
the Company Common Stock remaining available for grants of awards thereunder
is insufficient for the continuing needs of Syncor, and Syncor needs
additional flexibility in the conditions associated with such awards.
The major provisions of the Plan, including a description of the types of
awards that may be granted thereunder, are summarized below. The following
summary is qualified in its entirety by reference to the text of the Plan,
which was filed as part of the Company's Proxy Statement dated October 4, 1993
for its 1993 Annual Meeting of Stockholders.
ADMINISTRATION. The Plan is administered by the Compensation Committee of the
Board or any other Committee of Directors appointed by the Board for purposes
of serving as the committee under the Plan ("ADMINISTRATOR"). The
Administrator has considerable discretion under the Plan.
GRANTS OF AWARDS. The Administrator in its capacity as grantor of awards, may
grant awards to any officer or key employee of Syncor and its subsidiaries.
Members of the Board who are not officers or employees of Syncor are not
eligible to participate, except that the Plan provides for certain
non-discretionary fixed awards to non-employee members of the Board. Each
non-employee Director receives a 10,000 share option on date of election and,
subject to certain restrictions, an additional 5,000 share option following
each annual stockholder meeting, up to a total of 25,000 share options. The
options are granted at market price on date of grant, with a term of ten years
subject to earlier termination. The five non-employee members of the Board
have received awards subject to the same 25,000 option limitation. Each of
the non-employee members of the Board has already reached their maximum
grants.
Potentially all full-time Syncor employees, including officers who are also
Directors, are considered eligible at the present time for discretionary
awards under the plan if the Administrator determines that they are "key
employees", i.e., able to make key contributions to the success of Syncor.
The Administrator also determines which key employees will actually receive
awards. There is currently no separate individual maximum number of awards
and the specific amounts or benefits to be received pursuant to these
amendments are not determinable. Under the proposed amendments, the maximum
number of shares subject to options that may be granted to an employee during
any given fiscal year will be 200,000 shares.
Typically, the only consideration received by Syncor for the grant of an award
will be past and/or the expectation of future services. The number and type
of awards under the Plan to be received by any eligible person cannot be
determined at this time because no determination has been made as to any
specific award except for the non-discretionary Directors' options as
described above.
SHARES THAT MAY BE ISSUED UNDER THE PLAN. If the proposal herein is approved
by the stockholders, the Plan will authorize an additional 750,000 shares of
Common Stock (in addition to the 128,628 shares which remain available (as of
April 9, 1997), and the shares which may become available under the Plan from
options to purchase 1,140,102 option shares that are currently outstanding (as
of April 9, 1997), to the extent they should expire or terminate without being
exercised) to be issued in the form of various long-term incentive awards,
thereby furthering the purpose of the Plan to provide an additional means to
attract and retain Directors, officers and key employees and promoting the
success of Syncor. The number and kind of shares available under the Plan as
well as under outstanding awards are subject to adjustment in the event of a
reorganization or merger in which Syncor is the surviving entity, or a
combination, recapitalization, stock split, stock dividend or other similar
event which changes the number or kind of shares outstanding. Shares relating
to options or SARs which are not exercised and lapse or are terminated, shares
relating to restricted stock awards which do not vest, and shares relating to
performance share awards which are not issued will again be available for
purposes of the Plan. The 750,000 additional shares represent approximately
7.6 percent of Syncor Common Stock issued and outstanding as of March 31, 1997
(excluding treasury shares).
OPTIONS. An option is the right to purchase shares of Syncor Common Stock at
a future date at the exercise price (which may be less than fair market value)
fixed by the Administrator on the date the option is granted. The purchase
price may be paid in cash, with shares of Syncor Common Stock or with such
other lawful consideration as the Administrator may approve.
The Administrator will designate each option as a "non-qualified" or an
"incentive stock option." For a summary of the differences in the tax
treatment of the two types of options, please refer to "Federal Income Tax
Consequences" below. Incentive stock options may be subsequently amended in a
manner that disqualifies them from such treatment.
Subject to early termination or acceleration provisions (which are summarized
below), an option is exercisable, in whole or in part, from the date specified
in the related award agreement until the expiration date determined by the
Administrator. In no event, however, is an option exercisable prior to six
months or after ten years and one day, from its date of grant.
STOCK APPRECIATION RIGHTS. A stock appreciation right ("SAR") is a right to
receive payment based on the appreciation in the fair market value of Syncor
Common Stock from the date of grant to the date of exercise. In its
discretion, the Administrator may grant an SAR concurrently with the grant of
an option, which SAR may extend to all or a portion of the shares covered by
such option. An SAR is only exercisable at such time, and to the extent, that
the related option is exercisable. The number of shares with respect to which
SARs are exercised will be charged against the aggregate amount of Syncor
Common Stock available under the Plan.
Upon exercise of an SAR, the holder receives, for each share with respect to
which the SAR is exercised, an amount equal to the difference between the
exercise price of the related option and the fair market value of a share of
Syncor Common Stock on the date of exercise of the SAR. Such amounts may be
paid in cash, shares of Syncor Common Stock, or a combination thereof, subject
to the discretion of the Administrator. As of March 31, 1997 no SAR was
outstanding.
RESTRICTED STOCK AWARDS. A Restricted Stock Award is an award of a fixed
number of shares of Syncor Common Stock subject to restrictions. The
Administrator specifies the price, if any, the recipient must pay for such
shares and the restrictions imposed on such shares. The recipient typically
is entitled to dividends and voting rights pertaining to such shares even
though they have not vested, so long as such shares have not been forfeited.
PERFORMANCE SHARE AWARDS. A performance share award is an award of a fixed
number of shares of Syncor Common Stock, the issuance of which is contingent
upon the attainment of such performance objectives, and the payment of such
consideration, if any, as specified by the Administrator.
CONTINUATION OF EMPLOYMENT. No option or SAR will be exercisable, no shares
subject to a restricted stock award will vest and no performance share award
will be paid unless the recipient remains in the continuous employment of
Syncor or its subsidiaries for at least six months following the applicable
date of grant.
Upon the date a recipient is no longer employed by Syncor or its subsidiaries
for any reason, shares subject to the recipient's restricted stock awards
which have not become vested by that date or shares subject to the recipient's
performance share awards which have not been issued usually will be forfeited
in accordance with the terms of the related award agreements. In addition, on
such date, the recipient's options which have not yet become exercisable
usually will terminate, while options which have become exercisable usually
must be exercised within three months from such date or one year from such
date if the termination of employment is a result of retirement, death or
total disability. Such periods, however, cannot exceed the expiration dates
of the options and are subject to extension, acceleration of ability to
exercise or amendment in the discretion of the Administrator. SARs have the
same termination provisions as the options to which they relate.
OTHER ACCELERATION OF AWARDS; CHANGE IN CONTROL. Upon the occurrence of a
merger, liquidation, sale of all the assets, or change in control, which
constitutes an "Event" (as defined in the Plan), each option and each SAR will
immediately become exercisable, each share covered by a restricted stock award
will immediately vest, and each share covered by a performance share award
will be issued to the recipient. Such acceleration will automatically occur
unless the Administrator, prior to the Event, determines otherwise. The
Administrator may (subject to the consent of the holder, where required)
substitute awards or modify the terms and conditions of an outstanding award,
among other things, to extend the term, accelerate vesting, reduce the price
or otherwise preserve or enhance intended benefits, subject to the outer
limits of the Plan.
TERMINATION OR CHANGES TO THE PLAN. The Board may amend the Plan, but no
amendment may be made without stockholder approval if such approval is
required by law. Unless previously terminated by the Board, the Plan will
terminate on September 15, 2000.
TAX CONSEQUENCES OF THE PLAN. The federal income tax consequences of the Plan
under current federal law, which is subject to change, are summarized in the
following discussion which deals with the general tax principles applicable to
the Plan. State and local tax consequences are beyond the scope of this
summary.
NON-QUALIFIED STOCK OPTIONS. No taxable income will be realized by an
optionee upon the grant of a non-qualified stock option. Upon exercise of a
non-qualified stock option, the optionee will realize ordinary income in an
amount measured by the excess of the fair market value of the shares on the
date of exercise over the option price, and Syncor will be entitled to a
corresponding deduction. Upon a subsequent disposition of the shares, the
participant will realize short-term or long-term capital gain or loss measured
by the difference between the fair market value of the shares on the date of
exercise and the amount realized upon disposition of the shares. Syncor will
not be entitled to any further deduction at that time.
INCENTIVE STOCK OPTIONS. An optionee who receives an incentive stock option
will not be treated as receiving taxable income upon the grant of the option
or upon the exercise of the option. However, any appreciation in share value
from the date of grant to the date of exercise will be an item of tax
preference in determining liability for the alternative minimum tax. If stock
acquired pursuant to an incentive stock option is not sold or otherwise
disposed of within two years from the date of grant of the option or within
one year after the date of exercise, any gain or loss resulting from
disposition of the stock will be treated as long-term capital gain or loss.
If stock acquired upon exercise of an incentive stock option is disposed of
prior to the expiration of such holding periods (a) "DISQUALIFYING
DISPOSITION"), the optionee will realize ordinary income in the year of such
disposition in an amount equal to the excess of the fair market value of the
stock on the date of exercise over the exercise price. Any gain in excess of
that ordinary income amount generally will be capital gains. However, under a
special rule, the ordinary income realized upon a disqualifying disposition
will not exceed the amount of the optionee's gain.
Syncor will not be entitled to any deduction as a result of the grant or
exercise of an incentive stock option, or on a later disposition of the stock
received, except that in the event of a disqualifying disposition Syncor will
be entitled to a deduction equal to the amount of ordinary income realized by
the optionee.
STOCK APPRECIATION RIGHTS. At the time of receiving an SAR, the participant
will not recognize any taxable income. Likewise, Syncor will not be entitled
to a deduction for the SAR. Upon the exercise of an SAR, the participant will
generally recognize ordinary income in an amount equal to the cash and/or fair
market value of the shares received. If a participant receives stock, then
the amount recognized as ordinary income becomes the participant's tax basis
for determining gains or losses (taxable either as short-term or long-term
capital gain or loss, depending on whether or not the shares are held for more
than one year) on the subsequent sale of such stock. The holding period for
such shares commences as of the date ordinary income is recognized. Syncor
will be entitled to a deduction in the amount and at a time that the
participant first recognizes ordinary income.
RESTRICTED STOCK. The recipient of restricted stock will recognize ordinary
income equal to the excess of the fair market value of the restricted stock at
the time the restrictions lapse over the amount which the recipient paid for
the restricted stock. However, the recipient may elect, within 30 days after
the date of receipt, to report the fair market value of the stock as ordinary
income at the time of receipt. Syncor may deduct an amount equal to the
income recognized by the recipient at the time the recipient recognizes the
income.
The tax treatment of restricted stock which is disposed of will depend upon
whether the recipient made an election to include the value of the stock in
income when awarded. If the recipient made such an election, any disposition
after the restrictions lapse will result in a long-term or short-term capital
gain or loss depending upon the period the restricted stock is held. If,
however, such election is made and for any reason the restrictions imposed on
the restricted stock fail to lapse, the individual will not be entitled to a
deduction. If an election is not made, disposition after the lapse of
restrictions will result in short-term or long-term capital gain or loss equal
to the difference between the amount received on disposition and the greater
of the amount paid for the stock by the recipient or its fair market value at
the date the restrictions lapsed.
PERFORMANCE AWARDS. A participant who has been granted a performance award
will not realize taxable income at the time of the grant, and Syncor will not
be entitled to a deduction at that time. When an award is paid, whether in
cash or shares, the participant will have ordinary income, and Syncor will
have a corresponding deduction. The measure of such income and deduction will
be the amount of cash and the fair market value of the shares at the time the
award is paid.
SPECIAL RULES GOVERNING PERSONS SUBJECT TO SECTION 16(b). Under the federal
tax law, special rules may apply to participants in the Plan who are subject
to the restrictions on resale of Syncor Common Stock under Section 16(b) of
the Securities Exchange Act. These rules, which effectively take into account
the Section 16(b) restrictions, apply in limited circumstances and may impact
the timing and/or amount of income recognized by these persons with respect to
certain stock-based awards under the Plan.
LIMITATIONS ON DEDUCTIBILITY. If, as a result of certain changes in control
in Syncor, a participant's options or SARs become immediately exercisable, or
if restrictions immediately lapse on restricted stock, or if shares covered by
a performance award are immediately issued, the additional economic value, if
any, attributable to the acceleration may be deemed a "parachute payment."
The additional value will be deemed a parachute payment if such value, when
combined with the value of other payments which are deemed to result from the
change in control, equals or exceeds a threshold amount equal to 300 percent
of the participant's average annual taxable compensation over the five
calendar years preceding the year in which the change in control occurs. In
such case, the excess of the total parachute payments over such participants's
average annual taxable compensation will be subject to a 20 percent
non-deductible excise tax in addition to any income tax payable. Syncor will
not be entitled to a deduction for that portion of any parachute payment which
is subject to the excise tax. A "change in control" for those purposes is
defined in Section 7.1(p)(4) of the Plan.
The amount which may be deducted by Syncor with respect to compensation paid
to the Chief Executive Officer and four other most highly compensated
Executives is limited to $1 million per tax year for each individual. This
limitation does not apply to awards granted under the Plan on or before
February 7, 1993, provided that such awards were made pursuant to a written
binding contract which has not been materially modified since that date. In
addition, certain awards under the Plan may be exempt from the $1 million
limit because of a "performance-based" exception.
DIVIDEND EQUIVALENTS. A recipient of a dividend equivalent award will not
realize taxable income at the time of grant and Syncor will not be entitled to
a deduction at that time. When a dividend equivalent is paid, the participant
will recognize ordinary income, and Syncor will be entitled to a deduction.
The measure of the income and deduction will be the amount of cash and the
fair market value of the shares at the time the dividend equivalent award is
paid.
STOCK PAYMENTS. A participant who receives a stock payment in lieu of a cash
payment that would otherwise have been made will be taxed as if the cash
payment has been received and Syncor will have a deduction in the same amount.
DEFERRED FEES. Participants who defer compensation (including fees) generally
will not recognize income gain or loss for federal income tax purposes, when
non-qualified stock options are granted in lieu of amounts otherwise payable
and Syncor will not be entitled to a deduction at that time. When and to the
extent options are exercised, the ordinary rules regarding non-qualified stock
options outlined above will apply.
VOTE REQUIRED. To approve the amendments to the Plan, the affirmative vote of
the holders of a majority of the shares present or represented and entitled to
vote at the meeting is required, assuming the presence of a quorum.
By unanimous telephonic consent of the Directors present on April 18, 1997,
the Board of Directors approved the amendments described above and recommends
that the stockholders vote FOR approval of the amendments. Proxies solicited
by the Board of Directors will be so voted unless stockholders specify
otherwise in their proxies.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders concerning the operations of Syncor for
Fiscal 1996 including consolidated financial statements for that period, has
been enclosed with this proxy statement.
FINANCIAL STATEMENTS AND INFORMATION
Syncor's consolidated financial statements for Fiscal 1996 and management's
discussion and analysis of financial condition and results of operations
appear in Syncor's Annual Report to Stockholders which accompanies this proxy
statement, and are incorporated herein by reference.
STOCKHOLDER PROPOSALS
Stockholder proposals for consideration at the Annual Meeting expected to be
held on June 16, 1998, must be received by the Company no later than April 17,
1998 in order for such proposals to be included in the proxy materials for the
1998 Annual Meeting. To be included, proposals must be proper under law and
must comply with the Rules and Regulations of the Securities and Exchange
Commission and the By-Laws of the Company. All such proposals should be
addressed to the Secretary of the Company.
OTHER MATTERS
The Board of Directors is not aware of any other matters which are to be
presented at the Annual Meeting. However, if any other matters should
properly come before the Annual Meeting, the persons named in the proxy will
vote on such matters in accordance with their judgment.
The above notice and proxy statement are sent by order of the Board of
Directors.
/S/ HAIG S. BAGERDJIAN
_______________________
May 5, 1997 HAIG S. BAGERDJIAN
Woodland Hills, California Secretary
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST, SYNCOR WILL PROVIDE, WITHOUT CHARGE, A COPY OF ITS
ANNUAL REPORT ON FORM 10-K, EXCEPT FOR EXHIBITS THERETO, FOR THE PERIOD ENDED
DECEMBER 31, 1996 FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION, TO ANY STOCKHOLDER OF RECORD AT THE CLOSE OF BUSINESS ON APRIL
21, 1997. ANY EXHIBIT WILL BE PROVIDED ON REQUEST UPON PAYMENT OF THE
REASONABLE EXPENSES OF FURNISHING THE EXHIBIT. REQUESTS SHOULD BE ADDRESSED
TO SYNCOR, TO THE ATTENTION OF INVESTOR RELATIONS, 6464 CANOGA AVENUE,
WOODLAND HILLS, CALIFORNIA 91367-2407, OR TELEPHONE (818) 737-4000. <PAGE>
APPENDIX TO PROXY STATEMENT
SYNCOR INTERNATIONAL CORPORATION
1990 MASTER STOCK INCENTIVE PLAN,
AS AMENDED AND RESTATED
(WITHOUT THE PROPOSED AMENDMENTS-
IN ELECTRONIC FILING VERSION ONLY)<PAGE>
SYNCOR INTERNATIONAL CORPORATION
1990 MASTER STOCK INCENTIVE PLAN,
AS AMENDED AND RESTATED
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* that provide added
long term incentives for high levels of performance and for significant
efforts to improve the financial performance of the Company.
*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 August 31, 1993 pursuant to Awards granted
under this Plan shall not exceed the sum of (i) 1,667,506 shares**, 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).
**This number includes an additional 500,000 shares that were authorized by
the Board in July 1993, subject to the approval of stockholders at their next
annual meeting.
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 16b-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-1(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 16b-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 16b-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.
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 16b-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
hereafter 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 16b-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 16b-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 16b-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 satisfy 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 reestablished 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 further 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 (1) "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 16b-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:
(1) the Award may provide for the issuance of shares of Common
Stock as a stock bonus for no 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 16b-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 16b-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 of the Exchange
Act and will not be subjected to avoidable liability thereunder. In
furtherance of such intent, if 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 such 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 (1) 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 16b-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 the 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 16b-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 16 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.
