SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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14a-6(e)(2))
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[ ] Soliciting Material Persuant to sec. 14a-11(c) or Rule 14a-12
SYNCOR INTERNATIONAL CORPORATION
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<PAGE> 2
[SYNCOR LETTERHEAD]
May 5, 1998
NOTICE OF MEETING
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of Syncor
International Corporation on Tuesday, June 16, 1998, 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, 1997. This Notice of the Annual Meeting and the Proxy
Statement on the following pages cover the formal business of the meeting,
including the consideration of the following proposals:
(1) the election of two Directors;
(2) approval of the 1998 Senior Management Stock Purchase Plan;
and
(3) approval of the Universal Performance Equity Participation
Plan.
We urge you to review carefully the discussion of the proposals in the Proxy
Statement before you vote your proxy. The Board of Directors recommends that the
stockholders approve the three proposals.
To ensure that your shares are represented, even if you plan to attend the
meeting in person, we ask that you complete, date, sign and return the enclosed
proxy card in the accompanying envelope today. You may revoke your proxy at any
time prior to the time it is voted.
We look forward to welcoming you at the Annual Meeting.
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 16, 1998
-----------------------------------
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 16,
1998 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 first being mailed to the
stockholders commencing May 5, 1998. 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. The Company is engaging Morrow &
Co., Inc., a proxy solicitation company, to solicit proxies on behalf of the
Company. The Company will pay approximately $7,500 to Morrow & Co., Inc. for
its 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.
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 10,447,147
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, 1998, 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 owning a majority of
Syncor's shares entitled to vote at the meeting is necessary for a quorum for
the transaction of business. 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Based on Section 13 filings made with the Securities and Exchange Commission
on or before March 31, 1998, 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>
Merrill Lynch Trust Company, FSB (2)
Syncor International Corporation ESSOP
420 Montgomery Street
San Francisco, CA 94163 1,844,981 17.7%
Wellington Management Company (3)
75 State Street, Boston, MA 02109 1,366,359 13.1%
Vanguard Specialized Portfolios, Inc. - Health
Care Portfolio
Post Office Box 2600
Valley Forge, PA 19482-2600 856,559 8.2%
Monty Fu (4)
6464 Canoga Avenue
Woodland Hills, CA 91367-2407 714,887 6.8%
Dimensional Fund Advisors
1299 Ocean Ave, 11th Floor
Santa Monica, CA 90401 591,900 5.7%
Deerfield Capital, L.P. and
Deerfield Management Company (5)
450 Lexington Avenue
Suite 1450, New York, NY 10017 525,000 5.0%
</TABLE>
[FN]
(1) Calculated on the basis of 10,447,147 shares (excluding treasury shares)
of Syncor Common Stock outstanding as of March 31, 1998. Percentages are
calculated including shares not outstanding which the beneficial owner has a
right to acquire within 60 days of March 31, 1998.
(2) Merrill Lynch Trust Company, FSB is the trustee for Syncor's Employees'
Savings and Stock Ownership Plan ("ESSOP"). The trustee will vote the ESSOP
shares in accordance with the instructions of the beneficial owners. With
respect to ESSOP shares for which no voting instructions are given by the
beneficial owners, the Company may direct the trustee on how to vote those
shares.
(3) Includes 856,559 shares reported by Vanguard Specialized Portfolios, Inc.
- - Health Care Portfolio.
(4) Includes 33,500 shares not outstanding which Mr. Fu has the right to
acquire pursuant to options that were exercisable on March 31,1998 or
within 60 days thereafter, 9,926 shares owned by Mr. Fu by virtue of his
participation in the ESSOP as of March 31, 1998, 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.
</FN>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 31, 1998, 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 714,887 (2) 6.8%
Arnold E. Spangler 27,200 (3) (*)
George S. Oki 19,550 (4) (*)
Dr. Steven B. Gerber 36,400 (5) (*)
Dr. Henry N. Wagner, Jr. 42,600 (6) (*)
Dr. Gail R. Wilensky 35,066 (7) (*)
Robert G. Funari 150,066 (8) 1.4%
Michael E. Mikity 43,742 (9) (*)
Haig S. Bagerdjian 37,306 (10) (*)
Jack L. Coffey 39,648 (11) (*)
All Directors and executive
officers as a Group 1,257,780 (12) 11.5%
(13 Individuals)
- -----------------------------------------------------------------------
</TABLE>
[FN]
(1) Calculated on the basis of 10,447,147 shares (excluding treasury shares)
of Syncor Common Stock outstanding as of March 31, 1998. Percentages and
amounts are calculated including shares not outstanding which the individual has
a right to acquire pursuant to options exercisable on March 31, 1998 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, 1998 but do not include matching shares for the first quarter of
1998.
(2) Includes 33,550 shares not outstanding which the person has the right to
acquire pursuant to options, 9,926 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 and 3,000 shares held as co-trustee for his
children.
(6) Includes 41,600 shares not outstanding which the person has the right to
acquire pursuant to options.
(7) Includes 34,066 shares not outstanding which the person has the right to
acquire pursuant to options.
(8) Includes 126,625 shares not outstanding which the person has the right
to acquire pursuant to options and 3,441 shares under the ESSOP.
(9) Includes 34,750 shares not outstanding which the person has the right to
acquire pursuant to options and 7,492 shares under the ESSOP.
(10) Includes 35,175 shares not outstanding which the person has the right to
acquire pursuant to options and 2,131 shares under the ESSOP.
(11) Includes 31,400 shares not outstanding which the person has the right to
acquire pursuant to options and 7,248 shares under the ESSOP.
(12) Includes 469,369 shares not outstanding which the individuals as a group
have the right to acquire pursuant to options and 37,641 shares under the
ESSOP.
(*) Less than 1%.
</FN>
PROPOSAL ONE: ELECTION OF DIRECTORS
Identification of Directors and Nominees
In 1986, Syncor stockholders approved staggered three-year terms for Directors.
The two 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 2001
when their respective successors are duly elected and qualified.
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 principal business experience during at least the last five years.
The two nominees are currently Directors of Syncor.
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 Board of Directors recommends that the stockholders vote FOR the election of
the nominees named. 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 two nominees.
Nominees For Election
George S. Oki Director since May 17, 1985
Age: 47
Mr. Oki has been the Chairman of the Board of Meta Information Services Inc.
since April 1, 1993. Mr. Oki was a Director of a predecessor corporation of
Syncor 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: 50
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. Mr. Funari also serves as a director for three
affiliated non-publicly traded financial institutions: Peninsula Banking Group,
Inc., since May 1995; Bay Cities National Bank, since December 1994; and
Community First Financial Group, Inc., since January 1997.
Additional Directors
Terms Expiring In 1999
Monty Fu Director since May 17, 1985
Age: 51
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: 70
Dr. Wagner has spent more than 30 years at The Johns Hopkins University,
pioneering radioactive diagnostics and treatments. He is currently a Professor
of Radiological Science and Environmental Health Sciences, as well as the
Director of the Division of 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 Institute 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.
Terms Expiring In 2000
Steven B. Gerber, M.D. Director since May 1, 1990
Age: 44
Dr. Gerber has been Managing Director for CIBC Oppenheimer Corp. since 1993, and
its head of health care research since 1997. 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. He is also a director of Intracel Corp.
Arnold E. Spangler Director since August 9, 1985
Age: 49
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: 54
Dr. Wilensky's professional career spans 30 years of policy analysis,
management, and university-level teaching. She has been the John M. Olin
Senior Fellow at Project HOPE, an international health foundation, since
1993, and has been chair of the Medicare Payment Advisory Commission since
October 1997. She was chair of the Physican Payment Review Commission from
1995 to 1997.From 1992 to 1993, 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 director of Advanced Tissue Sciences, Inc.,
St. Jude Medical, Inc., PharMerica,Inc., United Healthcare Corporation,
Neopath, Inc., Quest Diagnostics Incorporated and Shared Medical Systems
Corporation, and a Trustee of the Combined Benefits Fund of the United
Mine Workers of America. Dr. Wilensky is also a member of many professional
societies and serves on several professional committees.
There are no family relationships between any of the nominees, Directors or
executive officers, except that Mr. George Oki is a brother-in-law of Mr. Monty
Fu. Mr. Oki has been affiliated with two companies recently dissolved under
Federal bankruptcy laws. Oki Nursery Company, Inc., where Mr. Oki served as
director until 1997, filed a Chapter 7 petition on December 1, 1994 and was
dissolved in 1997. Iko Land, Inc., where Mr. Oki serves as President, acquired
a general partner's interest in a partnership which subsequently elected to
restructure under a Chapter 11 plan. The restructuring, however, was
unsuccessful, and the partnership was dissolved in 1997.
IDENTIFICATION OF EXECUTIVE OFFICERS
The following persons are all of the executive officers of Syncor. The executive
officers serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
Director
and/or
Name Age Officer Position(s)
Since
- ---- --- ------------- -----------
<S> <C> <C> <C>
Monty Fu 51 May 1985 Director, Chairman of the Board
Robert G. Funari 50 August 1993 Director, President and Chief
Executive Officer
Brad Nutter 46 July 1997 Executive Vice President and
Chief Operating Officer
Michael E. Mikity 50 November 1985 Senior Vice President,
Treasurer and Chief Financial
Officer
Haig S. Bagerdjian 41 January 1995 Senior Vice President, Business
Development, Secretary and
General Counsel
Jack L. Coffey 46 April 1989 Corporate Vice President, Quality
and Regulatory
Sheila H. Coop 57 November 1992 Corporate Vice President, Human
Resources
Charles A. Smith 45 November 1992 Corporate Vice President,
Business Development
</TABLE>
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
Haig S. Bagerdjian has served as Senior Vice President, Business Development,
Secretary and General Counsel for Syncor since 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. Mr. Bagerdjian has also served as a director of Advanced
Machine Vision Corporation (NASDAQ: "AMVC") since January 1997.
Jack L. Coffey has served as Corporate Vice President, Quality and Regulatory
since 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 for 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.
Brad Nutter has served as Executive Vice President and Chief Operating Officer
for Syncor since July 7, 1997. Prior to joining Syncor, Mr. Nutter worked for
Sunrise Medical Inc. in various management positions including Senior Vice
President, Corporate Marketing. From 1975 to 1993, Mr. Nutter worked for Baxter
International where he was President of the Hospitex Division from 1990 to 1993
and Vice President of Corporate Sales from 1985 to 1990. Mr. Nutter received a
Bachelor of Business Administration degree from Texas Christian University in
1975.
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 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 from the
University of the Pacific in 1979, 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.
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. ceased to be a member in March 1997. The committee held one meeting during
the fiscal year ending December 31, 1997 ("Fiscal 1997"). 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 five meetings during Fiscal 1997. The functions of
the Compensation Committee include (i) the review of the performance of the
Chief Executive Officer and other executive officers , (ii) the annual review,
examination and approval, as needed, of salary ranges and salaries for the
executive officers and compensation for non-employee Directors, (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, and (iv) the administration of the Company's 1990 Master
Stock Incentive Plan.
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 twice during Fiscal 1997. 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 1997. 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 1997. The committee reviews current and past compensation of non-
employee Directors and administers the Non-Employee Director Stock Compensation
Plan, which was allocated 25,000 shares of the Company's Common Stock in 1996 to
be used to compensate non-employee Directors from time to time. In Fiscal 1997,
the Officer Director Committee approved the granting of 500 shares of the
Company's Common Stock to each of the non-employee Directors.
Board of Directors. During Fiscal 1997, the Board of Directors held 14
meetings, eight 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 1997, including the annual retainer, non-employee
Directors were paid as follows: Dr. Gerber, $31,000; Mr. Oki, $31,000; Mr.
Spangler, $34,000; Dr. Wagner, $36,000; and Dr. Wilensky, $34,000. Each
non-employee Director also received 500 shares of the Company's Common Stock in
1997 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. Commencing July 11,
1989, each newly elected non-employee Board member received 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. Each of the non-employee Board members has received 25,000 options.
1990 Master Stock Incentive Plan, As Amended and Restated (the "1990 MSIP").
The 1990 Master Stock Incentive Plan, amended and restated on June 18, 1997,
provides long term incentives for 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." The Board of Directors
had delegated its discretionary and administrative authority under the 1990
MSIP to the Stock Option Committee until March 1997, when that Committee was
dissolved. The Board of Directors thereafter delegated its discretionary and
administrative authority to the Compensation Committee (the "Administrator").
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. Except as
described in the subsection below captioned "Performance Equity Plan," 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 administered pursuant to Section 401(k)
of the Internal Revenue Code(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 with the Company's Common Stock 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.
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. Under the Deferral Plan in
effect prior to January 1, 1998, at retirement (or termination), the Company
would have made a contribution of up to the first 15% (100% for non-employee
Directors) of the deferred compensation toward the payment of taxes on the value
of such deferral distribution. This amount would have been calculated by
applying a 30 percent "gross-up" rate on the amount to be distributed. A new
Deferral Plan took into effect January 1, 1998. Under the new Deferral
Plan, the "gross-up" has been eliminated, and instead, the Company will make a
monthly contribution on behalf of the employee at a rate of 25% on up to 15%
(100% for non-employee Directors) of the deferred compensation. 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 and in a selection of funds available through an independent money
management firm. The Deferral Plan participants select from up to eighteen
investment accounts. The investment performance of each account selected will
determine the returns credited to the individual participant's deferral account
value.
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.
The agreement 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 the year ended December 31, 1995
("Fiscal 1995"), the year ended December 31, 1996 ("Fiscal 1996"), and the year
ended December 31, 1997 ("Fiscal 1997"), the Company 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 successful achievement of specific
performance goals known as Management by Objectives and Individual Performance
Achievement Factors ("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. Each officer is eligible to receive the following
components of the MIPs: (1) EPS Incentive and (2) Long Term Incentive.
Under the 1997 MIP, if the Company achieves consolidated EPS of $.68 for
Fiscal 1997, 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 radiopharmaceutical business reaches the threshold
(the "Threshold") of $.60 in 1997, plus an additional 16% of the officer's
salary if the Company's EPS in its core radiopharmaceutical business
reaches the target (the "Target") of $.70 in 1997. The Company met the
Threshold and Target requirements for 1997. Payment of the EPS Incentive to
the eligible employee is made within seventy five days of the end of the
calendar year in which such EPS Incentive was earned. The Long Term Incentive
component of the 1995 MIP is described in the "Summary Compensation Table"
below and the footnotes thereto, and the Long Term Incentive components of the
1996 MIP and the 1997 MIP are described in the "Long Term Incentive Plans -
Awards in Last Fiscal Year" table below and the footnotes thereto.
1998 Annual EPS Incentive Compensation. For Fiscal 1998, the design of the
annual EPS incentive compensation differs from the annual incentive compensation
component under the MIPs described above. Instead of bifurcating incentive
compensation according to the attainment of multiple EPS levels, the Board of
Directors decided to award the annual incentive compensation only if the Company
achieves an EPS level of $.95 in Fiscal 1998. Assuming that the EPS level is
reached and an officer achieves 100% of his MBOs, the executive officer will
receive as his or her annual incentive compensation 40% to 65% of base salary,
depending on the officer's title and as determined in advance by the Board of
Directors.
Performance Equity Plan. To better align the interests of stockholders and
management, in lieu of a long-term component similar to that offered under the
MIPs during the three previous fiscal years, effective January 1, 1998, the
Company implemented the Performance Equity Plan for officers and members of
senior management. Awards under the Performance Equity Plan have three
components of equal value as measured at the time of grant: a stock grant, a
stock option grant, and a cash award. The awards are earned in four stages
during a period of four-and-one-half years after January 1, 1998, depending on
the attainment of four separate Syncor Common Stock price targets within four
eighteen-month window periods. The stock price targets must be maintained for
at least ten trading days in a period of twenty consecutive trading days during
such window period.
The price targets are $20 (by June 30, 1999), $25 (by June 30,2000), $34 (by
June 30, 2001), and $43 (by June 30, 2002). If all stock price targets are met
within the specified window periods, an executive officer participating in the
Performance Equity Plan will receive, during the course of four and one half
years, awards with a total value of approximately four to eight times his or
her January 1, 1998 base salary, depending on his or her title. If a stock
price target is not met within the specified window period, then the Performance
Equity Plan participant will lose the opportunity to earn the cash or stock
awards, or to accelerate the vesting of stock options, designated for that
target period. If a stock price target is met within the specified window
period, one fourth of the cash award will be paid, one-fourth of the stock
option award will vest, and one-fourth of the stock award will be granted; the
value of the award, however, may be adjusted upward or downward depending on how
Syncor Common Stock performs in comparison to the S&P Health Care Index. Stock
options that do not vest on an accelerated basis because stock price targets
are not met vest nine and one-half years after January 1, 1998. The stock
option and stock components of the Performance Equity Plan were granted under
the 1990 Master Stock Incentive Plan.
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 $15,000 per month, whichever is less, of the executive
officer's cash compensation, upon total disability, until the age of 65.
Summary Compensation of Executive Officers. The following tables and
accompanying notes show the compensation for the Chief Executive Officer and the
four other highest paid executive officers of Syncor.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
Other Securities All
Annual Restricted Underlying LTIP Other
Compen- Stock Options/ Payouts Compensation
Name and Salary Bonus sation Award(s) SARS (4)(5)($) (6)($)
Principal Position Year (1)($) (2)($) (3)($) ($) (#)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert G.Funari 1997 240,000 144,643 40,000 151,200 9,766
President and Chief 1996 233,077 131,467 50,000 12,581
Executive Officer 1995 210,000 117,600 4,335
Monty Fu 1997 240,000 140,251 40,000 151,200 11,342
Chairman of the 1996 233,077 131,467 50,000 10,507
Board 1995 210,000 117,600 4,335
Haig S. Bagerdjian 1997 163,135 95,310 25,000 75,600 5,861
Senior Vice President, 1996 134,539 174,600 35,000 5,778
Business Development, 1995 104,667 58,800 15,000 3,894
and Secretary
Michael E.Mikity 1997 160,000 91,744 25,000 100,800 9,090
Senior Vice President, 1996 155,385 91,744 25,000 9,631
Chief Financial Officer1995 140,000 78,400 3,594
and Treasurer
Jack L. Coffey 1997 130,000 79,300 17,000 106,704 8,689
Corporate Vice 1996 145,770 86,010 63,133 18,500 10,870
President, Quality and 1995 150,000 82,992 2,929
Regulatory
</TABLE>
[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.
(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. The bonuses shown for 1997 were
earned pursuant to the 1997 MIP but were not paid until March 1998. The bonuses
for Mr. Fu, Mr. Funari, Mr. Mikity and Mr. Coffey shown for 1996 were adjusted
from the bonus amounts indicated in the Proxy Statement for the 1997 Annual
Stockholders' Meeting as a result of an adjustment to their respective MBOs, as
described more fully in sub-footnote (a)of footnote 2 under the table captioned
"Long Term Incentive Plans - Awards in Last Fiscal Year" below. With respect to
the bonus shown for Mr. Bagerdjian in 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. 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) The long term incentive payouts were made under the 1995 MIP. Under the
long term incentive component of the 1995 MIP, executive officers were eligible
for long term incentive compensation in addition to the EPS Incentive as a
result of the Company's achieving the EPS Threshold levels and the EPS Target
levels for Fiscal 1995, Fiscal 1996 and Fiscal 1997. For Fiscal 1995, the EPS
Threshold was $.40 and the EPS Target was $.45 in the Company's core
radiopharmaceutical business. For Fiscal 1996, the EPS Threshold was $.50 and
the EPS Target was $.55 in the Company's core radiopharmaceutical business, and
the consolidated EPS target was $.33. For Fiscal 1997, the EPS Threshold was
$.60 and the EPS Target was $.70 in the Company's core radiopharmaceutical
business, and the consolidated EPS target was $.68. The long term incentive
for executive officers has four elements: (i) an officer's base salary in
1995, multiplied by 12% if the EPS reached the EPS Threshold in Fiscal 1995,
which product was multiplied by the percentage of the MBOs achieved by such
officer during the fiscal year; (ii) such officer's base salary multiplied by
an additional 12% if the EPS reached the EPS Target, which product was
multiplied by such officer's MBOs percentage; (iii) to encourage employment
longevity, there was an additional element of the long term incentive known
as the Company Match, under which the sum of (i) and (ii) above was
multiplied by one-third if the EPS Threshold was met or two-thirds if the
EPS Target was met; and (iv) during the following two fiscal years, there
was an additional Company Match if the Company meets its EPS Threshold and/or
EPS Targets during those following years. Payment to the eligible employee of
the long term incentive was deferred until the completion of Fiscal 1997;
actual payment was made in March 1998. An officer would have forfeited all
of the Company Match earned under the 1995 MIP in any year if such officer
had left the Company before December 31, 1997. The following table summarizes
how the long term incentive payouts were calculated for each officer:
<TABLE>
<CAPTION>
Officer Year Base Multiplier MBOs Co. Threshold Target Maximum
Accrued Salary Match
($) (%) (%) (a)($) (b)($) (c)($) (d)($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert Funari 1995 210,000 12 100 16,800 42,000 42,000 84,000
1996 210,000 12 100 16,800 16,800 16,800 33,600
1997 210,000 12 100 16,800 16,800 16,800 33,600
-------
Total 151,200
Monty Fu 1995 210,000 12 100 16,800 42,000 42,000 84,000
1996 210,000 12 100 16,800 16,800 16,800 33,600
1997 210,000 12 100 16,800 16,800 16,800 33,600
-------
Total 151,200
Haig Bagerdjian1995 105,000 12 100 8,400 21,000 21,000 42,000
1996 105,000 12 100 8,400 8,400 8,400 16,800
1997 105,000 12 100 8,400 8,400 8,400 16,800
-------
Total 75,600
Michael Mikity 1995 140,000 12 100 11,200 28,000 28,000 56,000
1996 140,000 12 100 11,200 11,200 11,200 22,400
1997 140,000 12 100 11,200 11,200 11,200 22,400
-------
Total 100,800
Jack Coffey 1995 150,000 12 98.8 11,856 29,640 29,640 59,280
1996 150,000 12 98.8 11,856 11,856 11,856 23,712
1997 150,000 12 98.8 11,856 11,856 11,856 23,712
-------
Total 106,704
</TABLE>
(a) Company Match = 2/3 of (Base Salary x Multiplier x MBOs)
(b) For Fiscal 1995, Threshold = (Base Salary x Multiplier x MBOs) +
Company Match. For Fiscal 1996 and Fiscal 1997, Threshold =
Company Match.
(c) For Fiscal 1995, Target = (Base Salary x Mulitplier x MBOs) +
Company Match. For Fiscal 1996 and Fiscal 1997, Target = Company
Match.
(d) Maximum = Threshold + Target
(5) The Proxy Statement for the 1997 Annual Meeting of Stockholders
reflected a long-term incentive payout for Fiscal 1996. The amounts reflected
therein, however, were earned under the 1995 MIP and the 1996 MIP, but the
payout was not actually made in 1996. Payouts under the 1995 MIP earned in
Fiscal 1996 were paid in March 1998, and payouts under the 1996 MIP earned in
Fiscal 1996 will be paid after December 31, 1998. Accordingly, the Summary
Compensation Table above indicates that no long-term incentive payout was
made in Fiscal 1996.
(6)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
and bonus contributions: (i) for Fiscal 1997, valued at an average of $16.125
per share as of December 31, 1997: Mr. Fu, 499, Mr. Funari, 595, Mr. Mikity,
492, Mr. Bagerdjian, 310, and Mr. Coffey, 480; (ii) for Fiscal 1996, valued at
an average of $13.38 per share as of December 31, 1996: Mr. Fu, 536, Mr.
Funari, 702, Mr. Mikity, 559, Mr. Bagerdjian, 333, and Mr. Coffey, 620; and
(iii) for Fiscal 1995, valued at $6.75 per share as of December 31, 1995: Mr.
Fu, 511, Mr. Funari, 693, Mr. Mikity, 541, Mr. Bagerdjian, 290, and Mr.
Coffey, 677.
</FN>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Estimated Future Payouts
under Non-Stock
Price-Based Plans
Performance
Number of or
Shares, Other Period
Units or Until
Other Maturation or Threshold Target Maximum
Name Plan Rights(#) Payout (1) ($)(2)(3) ($)(2)(3) ($)(2)(3)
- ---- ---- --------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Funari 1997 MIP n/a 12/31/99 $47,424 $47,424 $94,848
1996 MIP n/a 12/31/98 17,242 17,242 34,484
Monty Fu 1997 MIP n/a 12/31/99 45,983 45,983 91,966
1996 MIP n/a 12/31/98 17,242 17,242 34,484
Haig S. Bagerdjian 1997 MIP n/a 12/31/99 31,250 31,250 62,500
1996 MIP n/a 12/31/98 12,400 12,400 24,800
Michael E. Mikity 1997 MIP n/a 12/31/99 30,080 30,080 60,160
1996 MIP n/a 12/31/98 12,032 12,032 24,064
Jack L. Coffey 1997 MIP n/a 12/31/99 26,000 26,000 52,000
1996 MIP n/a 12/31/98 11,280 11,280 22,560
</TABLE>
[FN]
(1) Under the 1996 MIP and the 1997 MIP, amounts earned under the long term
incentive component are not paid until the earlier of an employee's termination
from the Company or, respectively, December 31, 1998 or December 31, 1999. An
eligible employee forfeits all of the Company Match earned in any year if such
employee leaves the Company before the applicable December 31 date.
(2) The methodology by which future payouts earned in 1997 under the 1996 MIP
are calculated is the same methodology for the calculaton of future payouts
earned in 1996 under the 1995 MIP, as described in footnote 4 to the "Summary
Compensation Table." Since all EPS Threshold and EPS Target levels for Fiscal
1997 were achieved, each executive officer is entitled to the Company Match
component under the 1996 MIP. The following table summarizes how the future
long term incentive payouts earned in Fiscal 1997 under the 1996 MIP were
calculated for each officer:
<TABLE>
<CAPTION>
Officer Base Multiplier MBOs Co. Threshold Target Maximum Date
Salary Match Paid
($) (%) (%)(a) ($)(b) ($)(c) ($)(d) ($)(e)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert Funari 240,000 12 89.8 17,242 17,242 17,242 34,484 12/31/98
Monty Fu 240,000 12 89.8 17,242 17,242 17,242 34,484 12/31/98
Haig Bagerdjian 155,000 12 100.0 12,400 12,400 12,400 24,800 12/31/98
Michael Mikity 160,000 12 94.0 12,032 12,032 12,032 24,064 12/31/98
Jack Coffey 150,000 12 94.0 11,280 11,280 11,280 22,560 12/31/98
</TABLE>
(a) The MBOs for certain officers for Fiscal 1996 were adjusted
after the Proxy Statement for the 1997 Annual Stockholders'
Meeting was already distributed to the stockholders. Mr. Fu's
and Mr.Funari's respective MBOs were increased from 83% to
89.8%. Mr.Mikity's and Mr. Coffey's respective MBOs were
increased from 90% to 94%. The adjustments were made
because initial calculations did not take into account financial
objectives, as provided by the terms of the 1996 MIP, measured
by budget attainment results for the department over which
the respective officer has direct responsibility.
(b) Company Match = 2/3 of (Base Salary x Multiplier x MBOs)
(c) Threshold = Company Match
(d) Target = Company Match
(e) Maximum = Threshold + Target
(3) The methodology by which future payouts earned in 1997 under the 1997
MIP are calculated is the same methodology for calculating
future payouts earned in 1995 under the 1995 MIP, as described in
footnote 4 to the "Summary Compensation Table." Since all EPS
Threshold and EPS Target levels for Fiscal 1997 were achieved, each
executive officer is entitled to the long term incentive component
and the Company Match component under the 1997 MIP. The following
table summarizes how the future long term incentive payouts earned in
Fiscal 1997 under the 1997 MIP were calculated for each officer:
<TABLE>
<CAPTION>
Officer Base Multiplier MBOs Co. Threshold Target Maximum Date
Salary Match Paid
($) (%) (%) (a)($) (b)($) (c)($) (d)($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert Funari 240,000 12 98.8 18,970 47,424 47,424 94,848 12/31/99
Monty Fu 240,000 12 95.8 18,393 45,983 45,983 91,966 12/31/99
Haig Bagerdjian 163,096 12 95.8 12,500 31,250 31,250 62,500 12/31/99
Michael Mikity 160,000 12 94 12,032 30,080 30,080 60,160 12/31/99
Jack Coffey 130,000 12 100 10,400 26,000 26,000 52,000 12/31/99
</TABLE>
(a) Company Match = 2/3 of (Base Salary x Multiplier x MBOs)
(b) Threshold = (Base Salary x Multiplier x MBOs) + Company
Match
(c) Target = (Base Salary x Multiplier x MBOs) + Company Match
(d) Maximum = Threshold + Target
</FN>
OPTION EXERCISES AND YEAR-END VALUES TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End at FY-End(1)
(#) ($)
--------- -----------
Shares Value Exercisable/ Exercisable/
Acquired on Realized Unexercisable Unexercisable
Name Exercise(#) ($) (2) (3)
<S> <C> <C>
Robert Funari 114,125/111,375 851,453/742,984
Monty Fu 21,050/80,350 141,756/506,419
Haig Bagerdjian 35,175/65,059 209,616/306,544
Michael Mikity 34,750/46,250 231,913/215,938
Jack Coffey 31,400/39,800 213,409/204,178
</TABLE>
[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.
(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 $16.125 per share (the closing price of the
Company's Common Stock as reported on NASDAQ on December 31, 1997).
</FN>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
----------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options
Options Granted to Exercises or Expiration
Name Granted Employees in Base Price Date 5%($) 10%($)
(1) Fiscal Year ($/Sh) (2) (2)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert Funari 40,000 9.99 9.75 6/18/07 245,269 621,560
Monty Fu 40,000 9.99 9.75 6/18/07 245,269 621,560
Haig Bagerdjian 25,000 6.24 9.75 6/18/07 153,293 388,475
Michael Mikity 25,000 6.24 9.75 6/18/07 153,293 388,475
Jack Coffey 25,000 4.24 9.75 6/18/07 104,239 264,163
</TABLE>
[FN]
(1) The options were granted on June 18, 1997 under the Company's 1990 Master
Stock Incentive Plan. One-fourth of the shares underlying each option
vest on each anniversary date.
(2) 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.
</FN>
EMPLOYMENT, SEVERANCE, INDEMNITY AND CHANGE OF CONTROL ARRANGEMENTS
Monty Fu's Employment Agreement. The employment agreement between Syncor and Mr.
Fu, dated January 1, 1997 and amended and restated on December 31, 1997 (the "Fu
agreement"), expires on December 31, 1999. The Fu Agreement provides for a base
salary in the annual amount of $240,000 for Fiscal 1997 and $275,000 for Fiscal
1998, plus various fringe benefits, including participation in the Company's
Management Incentive Plans, the Performance Equity Plan implemented in 1998, and
any other incentive plan approved by the Board of Directors and applicable
generally to the Company's executive officers. 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 his then
current salary and to receive prorated, earned and deferred amounts due under
any incentive plan in which Mr. Fu is a participant. Payouts deferred under such
incentive plans would be paid in accordance with the terms of the applicable
plan, but the Company would have no obligation to pay any portion of the Company
matching component available under such 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
above, 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, Mr.Fu's severance compensation would equal
two years' salary. A change of control occurs under the agreement when (i) 20%
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, as amended and restated as of
December 31, 1997. The material terms of Mr. Funari's employment agreement are
identical to the terms of the Agreement described above, except that his base
salary for Fiscal 1998 will be $325,000.
Other Agreements with Change of Control Arrangements. In addition to the above
agreements, 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 person receives compensation for one year and all stock
options fully vest immediately. The 1990 Master Stock Incentive Plan also
provides for the vesting of all unvested options upon a change of control.
Finally, the Performance Equity Plan, described above under the section
"Compensation of Directors and Officers," provides for the acceleration of the
vesting of stock options, the grant of stock awards and the payment of cash
awards upon a change of control.
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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during Fiscal 1997 were Arnold E.
Spangler, Chairman, Dr. Steven B. Gerber and Dr. Gail R. Wilensky, all of whom
were non-employee Directors. From time to time, members of the Compensation
Committee asked the participation of the executive officers, including the Chief
Executive Officer, in their deliberations for the purpose of gathering
information or recommendations. During Fiscal 1997, none of the Compensation
Committee members had a relationship requiring disclosure under any paragraph of
Item 404 of Regulation S-K.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1997, the Company made an interest-free loan to Michael Mikity,
Senior Vice President and Chief Financial Officer, in the amount of $100,000 in
advance of his 1997 bonus. The amount was repaid in full in March 1998.
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, 1998. KPMG Peat
Marwick LLP was Syncor's independent auditor for Fiscal 1997.
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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, except that
Brad Nutter,who became the Company's Executive Vice President and Chief
Operating Officer in July 1997, was 24 days' late in filing his initial Form 3.
The Company's legal department typically prepares the Forms 3, 4 and 5 on behalf
of the executive officers. The Company did not become aware during 1997 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 on executive base
salary compensation and annual incentive compensation, makes recommendations to
the Board of Directors, and evaluates the executive officers' performance.
In determining the compensation recommendations for all executive officers to
the Board of Directors, the Compensation Committee considers the contributions
of individual executive officers, the performance and prospects of the Company
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, are also taken into consideration in determining total compensation of
the executive officers.
The Company's policy for compensating executive officers is to offer a
compensation package consisting of a base salary that is comparable to
other publicly traded companies of similar size, annual incentive
compensation in the form of a bonus based upon the Company's and the individual
executive officer's performance during the year, and long-term incentive
compensation based on the Company's future performance. The philosophy
underlying the Company's compensation policy is that effective management
promotes growth for the Company, which in turn builds stockholder value; an
officer would be rewarded if he or she contributes to building stockholder
value.
The Compensation Committee designed the annual incentive compensation under the
1995, 1996 and 1997 Management Incentive Plans (each a "MIP") to be consistent
with (a)overall Company performance, measured as earnings per share ("EPS"), and
(b) the employee's individual performance, measured by successful achievement of
specific performance goals. The Threshold and Target EPS levels required to be
met to receive the annual incentive compensation were set at $.40 and $.45,
respectively, for Fiscal 1995, $.50 and $.55 for Fiscal 1996, and $.60 and $.70
for Fiscal 1997. The individual performance goals are established each year
based on recommendations of the Chief Executive Officer, as approved by the
Compensation Committee and the Board of Directors. Individual performance, in
turn, is measured by "management by objectives" or "MBOs", goal-oriented methods
used to evaluate the performance of managers against established individual and
department objectives. Annual incentive compensation for Syncor's executive
officers can increase or decrease significantly if individual performance or
Syncor's performance exceeds, or fails to achieve, targeted performance levels.
The annual incentive compensation for Fiscal 1998 is governed by the same
principles discussed above, except that instead of having multi-tiered EPS
levels, the Board decided to award the incentive compensation if the Company
achieves an EPS level of $.95 in Fiscal 1998. Assuming that the EPS level is
reached and an officer achieves 100% of his MBOs, the executive officer will
receive as his or her annual incentive compensation 40% to 65% of base salary,
depending on his title and as determined in advance by the Board of Directors.
The long term incentive is intended (x) to achieve longer term accountability
for planning and execution; (y) to encourage overachievement; and (z) to enhance
the retention of highly effective management personnel. In addition, the long
term incentive is intended to link the officer's overall compensation with the
Company's future performance. The MIPs 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. 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. All compensation earned under the 1995 MIP have been paid
to the executive officers. The long-term incentive under the 1996 MIP and the
1997 MIP will be paid after December 31, 1998 and December 31, 1999,
respectively.
In April 1998, the Board of Directors, upon the recommendation of the
Compensation Committee, approved the Performance Equity Plan as the long-term
incentive component of the executive officers' compensation in lieu of the long-
term incentive component of the previous plans. The Performance Equity Plan is
described in more detail above in the section captioned "Compensation of
Directors and Executive Officers." The objectives of the Performance Equity
Plan are similar to those of the MIPs, but instead of conditioning the awards
on the attainment of EPS levels, the Performance Equity Plan conditions the
award of cash and stock and the accelerated vesting of options on the attainment
of Syncor Common Stock price targets ($20 by June 30, 1999, $25 by June 30,
2000, $34 by June 30, 2001, and $43 by June 30, 2002). The awards would also be
adjusted upwards or downwards depending on how Syncor's Common Stock performs
relative to the S&P Health Care Index. The Compensation Committee believes
that tying the awards to the achievement of the stock price targets provides a
more quantifiable and objective measure of the performance of the Company's
executive officers. In addition, since executive officers would receive their
awards only if the stockholders obtain a direct financial benefit through the
achievement of higher stock prices, the interests of the executive officers are
even more closely aligned with the interests of the stockholders.
Mr. Fu's and Mr. Funari's compensation and related benefits are based
principally on their rights under their respective employment agreement with
Syncor, each of which is described above in the section captioned "Employment,
Severance, Indemnity and Change of Control Arrangements." Their annual incentive
compensation in 1997 reflected the Company's achieving its EPS Threshold and
Target levels in 1997 and MBO levels of 98.8% for Mr. Funari and 95.8% for Mr.
Fu. The annual incentive compensation is summarized for Fiscals 1995, 1996 and
1997 in the "Summary Compensation Table" and the related footnotes. Their long
term incentive compensation paid out or accrued in 1997 reflected the Company's
achieving its EPS Threshold and Target levels during the past three years, as
well as the MBO levels achieved by Mr. Fu and Mr. Funari during those years. The
long term incentive compensation is summarized for Fiscal 1997 in the "Long-Term
Incentive Plans--Awards in Last Fiscal Year" table and the related footnotes.
Consistent with our effort to link further the interests of the executive
officers and the Company's stockholders, the Company has submitted the Senior
Management Stock Purchase Plan to the stockholders for their approval. The
Stock Purchase Plan is designed to encourage the further linkage of the risks of
ownership associated with the ownership of shares by executive officers and
other members of senior management. A discussion of the Stock Purchase Plan is
provided below under the section captioned "Proposal Two: 1998 Senior
Management Stock Purchase Plan," and a copy of the Stock Purchase Plan is
attached hereto as Exhibit A.
Finally, we recognize that all employees contribute to the Company's goals and
objectives. We believe that all employees should also be able to obtain rewards
from future appreciation of the Company's stock price. Accordingly, we are
submitting to the stockholders for their approval the Universal Performance
Equity Participation Plan, which is summarized below under the section captioned
"Proposal Three:Universal Performance Equity Participation Plan." A copy of the
plan is attached hereto as Exhibit B. The plan is available to all Company
employees who participate in the ESSOP and who work for the Company at least 30
hours per week, but who do not participate in the Performance Equity Plan
described above. Under the plan, employees would be granted options that would
vest on December 31,2007, but that could vest earlier if at any time on or after
June 30, 2002, the price of the Company's Common Stock is at $43 or higher. In
addition to giving employees a stake in the Company's future financial
performance, the plan also promotes the retention of employees and aligns the
interests of all employees with the interests of the stockholders.
Dated: May 5, 1998 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, 1992, through December 31, 1997, 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-Major
Pharmaceuticals (43.8%); Hospital Management (3.5%); Medical Products and
Supplies (9%); Biotechnology (1.7%); Managed Care (1.5%); Long Term Care (1.6%);
and Health Care Specialized Services (0.3%). The S&P SmallCap 600 Health Care
(Medical Products & Services) Index is a composite index of twenty health care
companies in the S&P SmallCap 600, including Syncor (.041%), that primarily
provide medical products and supplies. The table below shows the value of each
such investment on May 31, 1992 and 1993, and December 31, 1993,1994,1995,1996
and 1997 assuming reinvestment of dividend.
CUMULATIVE TOTAL RETURN GRAPH
<TABLE>
<CAPTION>
May-92 May-93 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Syncor International Corporation $100 $108 $119 $37 $36 $71 $86
- --------------------------------
NASDAQ Stock Market(U.S.) $100 $120 $134 $131 $185 $227 $279
- --------------------------------
S&P Health Care Composite Index $100 $87 $88 $100 $157 $190 $273
- --------------------------------
S&P SmallCap Health Care $100 $107 $119 $113 $167 $171 $200
(Medical Products & Supplies)
Index
- --------------------------------
</TABLE>
PROPOSAL TWO: 1998 SENIOR MANAGEMENT STOCK PURCHASE PLAN
On April 17, 1998, the Board of Directors of the Company adopted the 1998 Senior
Management Stock Purchase Plan (the "Purchase Plan"), subject to approval of the
Company's stockholders. The Purchase Plan entitles selected officers, directors
and employees of the Company, or any subsidiary of the Company, to purchase, in
the aggregate, up to 1,000,000 shares of common stock of the Company ("Shares")
in accordance with the terms of the Purchase Plan.
The major provisions of the Purchase Plan are summarized below. The following
summary is qualified in its entirety by reference to the text of the Purchase
Plan, which is attached hereto as Exhibit A.
Description of the Purchase Plan
Purpose. The purpose of the Purchase Plan is to advance the interests of the
Company and its subsidiaries by providing stock ownership opportunities to
officers, directors and other employees of the Company and its subsidiaries. The
Company recognizes that aligning the officers', directors', and employees'
personal interests more closely with the stockholders' interests and with the
Company's financial performance will benefit the long-term growth of the Company
while aiding it in attracting and retaining employees of exceptional ability.
Administration. The Board of Directors, or any committee appointed by the Board
consisting of two or more non-employee directors, is the administrator of the
Purchase Plan (the "Administrator"). The Administrator has broad discretion
under the Purchase Plan.
Number of Shares. The total number of Shares available for purchase pursuant to
the Purchase Plan will not exceed 1,000,000 shares.
Eligibility and Participation. Unless otherwise approved by the Board of
Directors, only selected officers and employees of the Company or any subsidiary
of the Company who have worked for the Company for at least twelve months, and
directors of the Company or a subsidiary of the Company (the "Purchasers"), may
purchase Shares under the Purchase Plan. As of the date of the Purchase Plan's
adoption, 20 employees and directors have been selected to participate in the
Purchase Plan.
Voluntary and Discretionary Nature of Purchase Plan. The granting of the right
to purchase Shares under the Purchase Plan shall be entirely discretionary with
the Administrator. Purchasers are under no obligation to purchase any or all of
the Shares made available for purchase by them.
Price, Payment and Pledge. The purchase price per Share shall be the lower of
(a) the closing price per share of the Company's Common Stock at the close of
trading on the date of stockholder approval or (b) the average closing price
during the ten-day period immediately preceding the date of stockholder
approval. Payment for the Shares shall be made by means of a full recourse,
interest-bearing Promissory Note, the payment of which shall be secured by a
pledge of the Shares. The Board of Directors may, in its discretion, extend
the maturity date of any Promissory Note. The Promissory Note is due five
years after execution, subject to the provisions described in the section
captioned "Rights Upon Termination and/or Change in Control" below.
Rights of Purchaser. The Purchaser shall be issued a certificate representing
the number of Shares purchased, and the Purchaser shall have all rights of a
stockholder with respect thereto, including voting rights and the right to
receive dividends and distributions so long as Purchaser is not in default under
the terms of the Purchase Plan, the Promissory Note, the Subscription Agreement,
the Pledge Agreement, and other related documents.
Rights Upon Termination and/or Change in Control. If Purchaser's employment
with the Company is terminated for any reason, with or without cause or
voluntarily by the Purchaser, at any time prior to the payment in full of the
Promissory Note, the Company shall have an option (the "Option") to purchase
all or any portion of the Shares owned by the Purchaser at a price equal to the
closing sale price per share of the Common Stock on the effective date of
termination. In the event that the Company does not exercise the Option, or
exercises the Option only with respect to a portion of the Purchaser's Shares,
the maturity date of the Promissory Note of that Purchaser shall be immediately
accelerated to the date that is sixty days after the expiration of the option
period.
Following a Change in Control (as defined in the Purchase Plan) of the Company
approved by the Board of Directors, the maturity date of the Promissory Note
shall be as set forth therein, provided, however, that if the Purchaser's
employment with the Company is terminated, with or without cause or voluntarily
by the Purchaser, then the maturity date of the Promissory Note shall be
immediately accelerated to the date that is six months after the effective date
of termination.
In the event of a Change in Control that is not approved by the Board of
Directors of the Company, the Promissory Note shall be deemed to have been fully
paid by the Purchaser as of the date of the Change in Control, and all payment
and other obligations of the Purchaser thereunder shall be fully extinguished
and forgiven. If the forgiveness of the loan results in an excess parachute
payment pursuant to Internal Revenue Code Section 280G, the amount deemed paid
upon a Change in Control not approved by the Board of Directors shall be the
maximum amount that may be deemed paid by the Purchaser without triggering an
excess parachute payment under Internal Revenue Code Section 280G; the balance
of the Promissory Note would be treated in accordance with the preceding
paragraph.
Forfeiture of Gain. If the Purchaser sells any Shares within two years after his
or her purchase of the Shares for any reason other than pursuant to a Change in
Control of the Company, or a merger, acquisition or other corporate transaction
pursuant to which the Shares are effectively sold, converted or transferred by
operation of law, and such sold Shares, at the time of sale, were pledged to
Syncor to secure the Purchaser's obligations under his or her Promissory Note,
then twenty five percent (25%) of any gain realized by the Purchaser upon such
sale shall be forfeited and paid over to the Company, less any interest payment
the Purchaser may have paid to the Company with respect to those sold Shares.
Purchaser Option to Sell Shares to Company. In the event that the closing price
for a share of Common Stock falls below ninety five percent (95%) of the
Purchaser's purchase price for a Share while the Promissory Note remains
outstanding (such event being hereinafter referred to as the "Threshold Event")
and so long as such Threshold Event is continuing, the Purchaser shall have the
option (the "Purchaser Option") to sell all or any portion of his or her Shares
to the Company, and the Company shall be obligated to purchase all such Shares
from the Purchaser, for an amount per Share equal to the closing price for a
share of Common Stock on the date that the Purchaser Option notice is received
by the Company. The proceeds from such sale shall be used by the Purchaser to
pay, in part, its obligations under the Promissory Note. If the Purchaser
exercises the Purchaser Option with respect to all of his or her Shares, the
Purchaser shall pay to the Company the remaining balance under the Promissory
Note within thirty (30) days after the Company purchases the Purchaser's Shares.
If the Purchaser exercises the Purchaser Option with respect to only a portion
of his or her Shares, the Purchaser shall pay down the Promissory Note such that
the Purchaser's remaining obligations under the Promissory Note after taking
into account such payment will not exceed the fair market value of the
Purchaser's remaining Shares pledged to the Company.
Purchase by Non-Employee Directors. Each non-employee Director shall be eligible
to purchase up to 15,000 Shares under the Purchase Plan. If any decision with
respect to, or any amendment is made to, the Purchase Plan by the Board of
Directors or the committee designated by the Board to administer the Purchase
Plan, and such decision or amendment has the effect of benefitting the Board's
non-employee Directors, such decision or amendment must also be approved by a
majority of Directors of the Board who have no self-interest in such decision or
amendment. If there are no disinterested directors with respect to such decision
or amendment, then any such decision or amendment must be approved by the
stockholders of the Company.
Federal Tax Aspects of the Purchase Plan
The following is a brief summary of certain of the Federal income tax
consequences relevant to purchases made under the Purchase Plan based on Federal
income tax laws in effect on the date hereof. This summary is not intended to
be exhaustive and does not describe state or local tax consequences.
In general, no compensation income or other income will be recognized by a
Purchaser under the Purchase Plan to the extent that the purchase of Shares is
at a price which is not less than their value at the date of purchase.
Compensation income to the Purchaser, subject to payroll tax withholding, will
arise to the extent that the price of Shares is less than their value at that
date. In the event of a Change of Control which is not approved by the Company's
Board of Directors, a Purchaser's unpaid Promissory Note may be cancelled and
such cancellation would constitute compensation income to the Purchaser, also
subject to payroll tax withholding. Whenever the Purchaser is required to
recognize compensation income, the Company would generally be entitled to a
deduction in an equal amount, subject to the $1,000,000 limitation on
deductibility of employee remuneration under Section 162(m) of the Code.
The interest payable on a Promissory Note will constitute income to the Company
as it accrues and will, subject to the limitation on investment interest, be
deductible by a Purchaser when paid. The portion of any gain remitted to the
Company if and when a Purchaser makes a disposition of Shares within two years
of their acquisition under the Purchase Plan, would probably be treated as the
payment by the Purchaser of additional interest.
Gain or loss realized by the Purchaser on a sale will be taxable as long-term or
short-term capital gain depending on the holding period of the Shares.
Tax Treatment of Capital Gain. The maximum Federal income tax rate applied to
capital gains realized on a taxable disposition of common stock held by a
taxpayer as a capital asset is (i) 20% if the stock is held for more than 18
months; (ii) 28% if held for more than 12 months but not more than 18 months;
and (iii) the rate that applies to ordinary income if held for 12 months or
less.
Interest of Current Executive Officers and Directors in the Purchase Plan
The following table sets forth certain information with respect to the
maximum of shares that the individuals below are eligible to purchase under
the Purchase Plan, as approved by the Board of Directors. All 1,000,000 shares
available for purchase have been allocated to the 20 eligible individuals.
<TABLE>
<CAPTION>
New Plan Benefits
Name and position Dollar Value($)(1) Number of Shares
- ----------------- ------------------ ----------------
<S> <C> <C>
Robert G. Funari 2,182,500 120,000
President and Chief
Executive Officer
Monty Fu 2,273,438 125,000
Chairman of the Board
Brad Nutter 1,818,750 100,000
Executive Vice President
and Chief Operating Officer
Michael E. Mikity 1,636,875 90,000
Senior Vice President,
Chief Financial Officer and
Treasurer
Haig S. Bagerdjian 1,636,875 90,000
Senior Vice President,
Business Development, and
Secretary
Jack L. Coffey 1,091,250 60,000
Corporate Vice President,
Quality and Regulatory
Executive Group 14,186,250 780,000
(13) Individuals
Non-Executive Group 1,364,063 75,000
(5) Individuals
Non-Executive Officer 4,001,250 220,000
Employee Group
</TABLE>
[FN]
(1) Unless otherwise stated below, the dollar value is an estimate of the
maximum purchase price based on the closing price per share of
$18.1875 as of March 31, 1998. The actual purchase price will be
determined as described above.
</FN>
Vote Required
To approve the Purchase Plan, the affirmative vote of the holders of a majority
of the shares present and voting on this proposal at the Annual Meeting is
required.
The Board of Directors recommends that the stockholders vote FOR approval of the
Purchase Plan. Proxies solicited by the Board of Directors will be so voted
unless stockholders specify otherwise in their proxies.
PROPOSAL THREE: UNIVERSAL PERFORMANCE EQUITY PARTICIPATION PLAN
On April 17, 1998, the Board of Directors of the Company adopted the Universal
Performance Equity Participation Plan (the "Universal Plan"), subject to
approval of the Company's stockholders. The Universal Plan enables the Company
to grant stock options to all non-management employees and thereby allows these
employees to have a stake in the Company's future growth and to obtain direct
benefits from future appreciation of the Company's Common Stock. The Universal
Plan also promotes the retention of the Company's employees, and aligns the
interests of employees with the interests of the stockholders.
The major provisions of the Universal Plan are summarized below. The following
summary is qualified in its entirety by reference to the text of the Universal
Plan, which is attached hereto as Exhibit B.
Description of the Universal Plan
Administration. The Universal 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 Universal Plan ("Administrator").
The Administrator has considerable discretion under the Universal Plan,
including the authority to reprice an option if circumstances so warrant.
Eligibility. In order for an employee to be eligible to participate in the
Universal Plan, the employee must be a participant of the Company's Employees'
Savings and Stock Ownership Plan (the "ESSOP"), the employee must work 30 hours
or more per week for the Company, and the employee does not participate in any
of the Performance Equity Plans available to executive officers, other members
of senior management and selected employees. Almost all full-time employees who
have or will have been with the Company for at least one year will be eligible
to participate.
Shares That May Be Issued Under The Universal Plan. The number of shares that
may be issued pursuant to awards under the Universal Plan cannot exceed
1,800,000 shares. Shares relating to options which are not exercised and lapse
or are terminated, will again be available for purposes of the Universal Plan.
Grants of Awards. The options are granted at market price on date of grant, and
terminate on June 15, 2008 regardless of when the options are granted. The
number and type of awards under the Universal 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. The maximum number of option shares granted
to an employee will be based on a formula to be determined by the Administrator.
The actual number of option shares granted, however, will depend on when an
employee becomes eligible to participate in the Universal Plan:
<TABLE>
<CAPTION>
Date of Eligibility % of Maximum Shares
------------------ -------------------
<S> <C>
On or before June 30, 1999 100%
After June 30, 1999 but on or before January 1, 2000 85%
After January 1, 2000 but on or before June 30, 2000 66%
After June 30, 2000 but on or before January 1, 2001 50%
After January 1, 2001 but on or before June 30, 2001 33%
After June 30, 2001 0%
</TABLE>
At the Administrator's discretion, the number of option shares granted to an
employee may be increased from time to time to take into account salary
increases, the effects of inflation and other relevant factors.
Options. 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 Tax Aspects of the
Universal Plan" below. Incentive stock options may be subsequently amended in a
manner that disqualifies them from such treatment.
Vesting of Options. All options shall vest on December 31,2007. An option may
vest on an earlier date after June 30, 2002, however, if the Company's Common
Stock price is $43 or higher on or after June 30, 2002 and that stock price is
maintained for a period of ten trading days during a period of twenty
consecutive trading days immediately prior to the vesting date. As a condition
to the accelerated vesting of an option, however, an optionee must have
delivered, within sixty days after the award date, a letter addressed to the
Company's Chief Executive Officer expressing such employee's commitment to the
achievement of the goals and objectives set by the Chief Executive Officer for
the Company.
Company's Option to Purchase Option Shares. In the event that an optionee
exercises his or her option and proposes to sell the underlying shares, the
Company shall have an option to purchase the shares acquired by the optionee as
a result of the exercise at fair market value.
Exercise Period. Upon the date a recipient is no longer employed by Syncor or
its subsidiaries for any reason, all options which have not yet become
exercisable 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.
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 will immediately
become exercisable. 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 terms of the Universal Plan.
Termination or Changes to the Plan. The Board may amend the Universal Plan,
but stockhlder approval will be required to increase the number of option shares
available under the Universal Plan or if such approval is necessary to continue
to qualify stock options as incentive stock options. Unless previously
terminated by the Board, the Universal Plan will terminate on June 30, 2002, and
no awards will be granted under it thereafter, but such termination will not
affect any award previously granted.
Federal Tax Aspects of the Universal Plan
The following is a brief summary of certain of the Federal income tax
consequences relevant to stock options granted under the Universal Plan based
on Federal income tax laws in effect on the date hereof. This summary is not
intended to be exhaustive and does not describe state or local tax consequences.
(a) Non-Statutory Stock Options. In general, (i) no income will be recognized
by an optionee at the time a non-statutory stock option is granted; (ii) at
exercise, ordinary income will be recognized by the optionee in an amount equal
to the difference between the option price paid for the Shares and the value of
the Shares on the date of exercise; and (iii) at sale, the amount of the sales
proceeds in excess of the Shares' tax basis (normally, value at the time of
exercise), or less than their tax basis, as the case may be, will be treated as
either short-term or long-term capital gain or loss, depending on how long the
shares have been held. See "Federal Tax Aspects of Purchase Plan--Tax
Treatment of Capital Gain" under Proposal Two above for the maximum Federal tax
rates applicable to capital gain. The Company will generally be entitled to a
deduction in the amount of the ordinary income recognized by the optionee at the
time of exercise.
If an optionee pays the exercise price of a non-statutory option in whole or in
part with previously-owned Shares (if permitted by the Administrator), then the
tax basis and holding period of those Shares will carry over to an equal number
of Shares received on exercise. As to each Share purchased for cash, thus each
remaining Share, its tax basis will be equal to its value at the date of
exercise, as indicated in (iii) above, and its holding period will commence on
the day following the date of exercise.
The Company will have the power to withhold, or require an optionee to remit to
the Company, an amount sufficient to satisfy Federal, state and other payroll
taxes subject to withholding on the exercise of a non-statutory option. The
optionee may elect to satisfy such withholding requirement by applying Shares
to be received on the exercise, subject to such rules and conditions as the
Administrator may impose.
(b) Incentive Stock Options. In general, no income will be recognized by an
optionee upon the grant or exercise of an incentive stock option (although the
difference between the value of the Shares and the exercise price at the date of
exercise will be treated as income for purposes of the alternative minimum
tax). If, after issuance of Shares to the optionee pursuant to the exercise of
an incentive stock option, no disposition of such Shares is made until the
expiration of two years from the date of grant of the option and one year from
the date of issuance of such Shares, then, upon the sale of such Shares, any
amount realized in excess of the option price will be taxed to the optionee as
a long-term capital gain and any loss sustained will be a long-term capital
loss. See "Federal Tax Aspects of Purchase Plan--Tax Treatment of Capital
Gain" under Proposal Two above for the maximum Federal tax rates applicable to
capital gain.
If Shares acquired upon the exercise of an incentive stock option are disposed
of prior to the expiration of either holding period described above (a
"disqualifying disposition"), the optionee generally will recognize ordinary
income in the year of disposition in an amount equal to the excess of the fair
market value of such Shares at the time of exercise (or, if less, the amount
realized on the disposition of such Shares) over the option price paid for such
Shares. Any gain in excess of the difference between such fair market value and
the exercise price or any loss realized by the optionee generally will be taxed
as short-term or long-term capital gain or loss depending on the holding
period. The Company will generally be entitled to a deduction in the amount of
the ordinary income recognized by the optionee.
Vote Required
To approve the Universal Plan, the affirmative vote of the holders of a majority
of the shares present and voting on the proposal at the Annual Meeting is
required.
The Board of Directors recommends that the stockholders vote FOR approval of the
Universal Plan. 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
1997 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 1997 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.
STOCKHOLDER PROPOSALS
Stockholder proposals for consideration at the Annual Meeting expected to be
held on June 15, 1999, must be received by the Company no later than February
17, 1999 in order for such proposals to be included in the proxy materials for
the 1999 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, 1998 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, 1997 FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, TO ANY
STOCKHOLDER OF RECORD AT THE CLOSE OF BUSINESS ON APRIL 21, 1998. 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>
EXHIBIT A
1998 SENIOR MANAGEMENT STOCK PURCHASE PLAN
This 1998 SENIOR MANAGEMENT STOCK PURCHASE PLAN (this "Plan") is adopted by the
Board of Directors (the "Board of Directors") of Syncor International
Corporation, a Delaware corporation (the "Company"), effective as of the 16th
day of June 1998 (the "Adoption Date").
1. Purpose. The purpose of this Plan is to advance the interests of
the Company and its subsidiaries by providing stock ownership opportunities to
members of the senior management, directors and key personnel of the Company, or
any parent or subsidiary of the Company, who contribute significantly to the
management, growth and financial success of the Company and its subsidiaries.
The Company recognizes that aligning executive officers', directors', and key
employees' personal interests more closely with those of the shareholders and
with the Company's financial performance will benefit the long-term growth of
the Company while aiding it in attracting and retaining employees of exceptional
ability.
2. Administration. The Board of Directors shall, in its discretion,
establish such rules and regulations as it may deem appropriate for the proper
administration of the Plan and shall have full authority and power to interpret
and construe any provision of the Plan, subject, however, to the provisions of
Section 11(c) below. Decisions of the Board of Directors shall be final,
binding and conclusive on all persons who have an interest in the Plan. The
Board of Directors may, in its discretion, appoint a committee consisting of
two or more persons, each of whom shall be non-employee directors, to
administer this Plan.
3. Amount of Stock. The total number of shares of common stock,
$.05 par value ("Common Stock"), of the Company to be available for purchase
pursuant to this Plan ("Shares") shall not exceed 1,000,000 shares. If any
Shares available for purchase hereunder are not subscribed for in accordance
with the terms of this Plan, such Shares will be available for future rights to
purchase granted to eligible recipients hereunder.
4. Eligibility and Participation. Only executive officers or persons
deemed to be key employees of the Company or any parent or a subsidiary of the
Company who have worked for the Company for at least twelve months, and
directors of the Company or a parent or a subsidiary of the Company (the
"Purchasers"), may purchase Shares pursuant to the Plan. Upon the
recommendation of the Chief Executive Officer of the Company or the approval of
the Board of Directors, however, an executive officer or employee who has not
worked for the Company or its parent or subsidiary for at least twelve months
may participate in the Plan, subject to the terms and conditions for such
officer's or key employee's eligibility to participate as determined by the
Chief Executive Officer and approved by the Board of Directors. The names of
the Purchasers currently eligible to participate in the Plan, and the number
of Shares each is eligible to purchase, are listed on Annex A hereto. Each
Purchaser must purchase the Shares that he or she is eligible to purchase no
later than ten (10) days after the Adoption Date, or if such Purchaser is not
currently listed on Annex A hereto, within ten (10) days after the Board of
Directors approves the number of Shares that such Purchaser would be eligible
to purchase; after such ten-day period, a Purchaser will no longer be eligible
to purchase those Shares not purchased by him or her by such date.
5. Voluntary and Discretionary Nature of Plan. The granting of the
right to purchase Shares under this Plan shall be entirely discretionary with
the Board of Directors, and nothing in this Plan shall be deemed to give any
employee of the Company or of any parent or subsidiary of the Company any
right to participate in this Plan or to purchase Shares. Nothing herein may be
construed to limit or restrict the right of the Company or any parent or
subsidiary of the Company to terminate the employment of any Purchaser at any
time, with or without cause, or to increase or decrease the compensation of
such Purchaser from the rate of compensation in existence at the time the
Purchaser received the right to purchase Shares under the Plan. Purchasers are
under no obligation to purchase any or all of the Shares made available for
purchase by them.
6. Price. The purchase price per share of Common Stock under this
Plan for a Purchaser shall be the lower of (a) the closing price for one share
of Common Stock on the Adoption Date or (b) the average closing price for one
share of Common Stock during the ten days immediately preceding the Adoption
Date, as traded in NASDAQ (the "Closing Price"). Payment for the Shares shall
be made by means of a full recourse promissory note in the form attached hereto
as Annex C (the "Promissory Note"), the payment of which shall be secured by a
pledge of the Shares. The Board of Directors may, in its own discretion, extend
the maturity date of any Promissory Note.
7. Rights of the Shareholder. After the execution of the Promissory
Note in payment for the Shares, the Company shall cause to be issued to the
Purchaser a certificate representing the number of Shares purchased, and the
Purchaser will be the record holder of such Shares with all rights of a
shareholder with respect thereto, including the right to vote such Shares and
the right to receive all dividends and distributions declared and paid with
respect to such Shares, subject to the pledge of such dividends and
distributions to the Company under the Promissory Note. Each certificate
representing Shares will be deposited by the Purchaser receiving such
certificate with the Company, together with a stock power endorsed in blank in
fulfillment of the pledge of the Shares. Until the payment in full of the
related Promissory Notes, the certificates will bear a legend stating that such
Shares were acquired under this Plan and are governed by the terms and
provisions hereof and the related Subscription Agreement (the "Subscription
Agreement," a form of which is attached hereto as Annex B) and the Promissory
Note.
8. Rights Upon Termination and/or Change in Control. From and after
approval of this Plan by the Company's shareholders in accordance with Section
14 below:
(a) Except as set forth in Subsections 8(b) and (c) below, if the
employment of the Purchaser with the Company is terminated for any reason, with
or without cause or voluntarily by the Purchaser, at any time prior to the
payment in full of the Promissory Note given in payment for his or her Shares,
the Company shall have an option (the "Option") to purchase all or any portion
of the Shares owned by the Purchaser at a price equal to the closing sale price
per share of the Common Stock as traded in NASDAQ on the effective date of
termination. The Company shall have thirty (30) days to exercise its Option
(the "Option Period") with respect to the Purchaser's Shares. In the event that
the Company does not exercise the Option, or exercises the Option only with
respect to a portion of the Purchaser's Shares, the maturity date of the
Promissory Note of that Purchaser shall be immediately accelerated to the date
that is sixty (60) days after the expiration of the Option Period, but in no
event later than the stated maturity date (or other maturity date if extended in
accordance with Section 6 above) under the Promissory Note.
(b) Notwithstanding Subsection 8(a) above, following a Change in
Control (as defined below) of the Company, the maturity date of the Promissory
Note shall be as set forth therein, provided, however, that if the Purchaser's
employment with the Company is thereafter terminated, with or without cause or
voluntarily by the Purchaser, then the maturity date of the Promissory Note of
that Purchaser shall be immediately accelerated to the date that is six months
after the effective date of termination established by the Company, but in no
event later than the stated maturity date (or other maturity date if extended in
accordance with Section 6 above) under the Promissory Note.
For purposes of this Plan, "Change in Control" shall occur upon the
occurrence of either of the following: (i) the acquisition, directly or
indirectly, of twenty percent (20%) or more of the outstanding common stock of
the Company by a person (as defined by Rule 13a-9 and Rule 13d-3 of the
Securities Exchange Act of 1934), or group of related persons, excluding the
Company, any subsidiary of the Company, or any employee benefit plan of the
Company, or (ii) during any period of two consecutive years while the
Promissory Notes are outstanding, individuals who at the Adoption Date
constitute the Board cease for any reason to constitute at least a majority
thereof, unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors
representing at least two-thirds of the directors then in office who were
directors at the beginning of the period.
(c) Notwithstanding Subsections 8(a) and (b) above, in the event of
a Change in Control of the Company that is not approved by the Board of
Directors of the Company, the Promissory Note shall be deemed to have been
fully paid by the Purchaser as of the date of the Change in Control, and all
payment and other obligations of the Purchaser thereunder shall be fully
extinguished and forgiven. If the forgiveness of the loan results in an excess
parachute payment pursuant to Internal Revenue Code Section 280G, the amount
deemed paid upon a Change in Control not approved by the Board of Directors
shall be the maximum amount that may be deemed paid by the Purchaser without
triggering an excess parachute payment pursuant to Internal Revenue Code Section
280G; the balance of the Promissory Note would be treated in accordance with
Subsection 8(b) above.
9. Forfeiture of Gain. If the Purchaser sells any Shares prior to the
expiration of two years from the effective date of the sale of the Shares to him
or her for any reason other than pursuant to a Change in Control of the Company,
or a merger, acquisition or other corporate transaction pursuant to which the
Shares are effectively sold, converted or transferred by operation of law, and
such sold Shares, at the time of sale, were pledged to Syncor to secure the
Purchaser's obligations under his or her Promissory Note, then twenty five
percent (25%) of any gain realized by the Purchaser upon such sale shall be
forfeited and paid over to the Company immediately upon such sale, less any
interest payment the Purchaser may have paid to the Company under the Promissory
Note with respect to those sold Shares. To the extent, however, that the sum of
(i) all interest payments made by the Purchaser to the Company under the
Promissory Note and (ii) the amount forfeited by the Purchaser and paid over to
the Company exceeds the maximum interest amount permitted under the usury laws
of California, the Purchaser shall be entitled to retain any such excess amount
in order that the Company remains in compliance with applicable California laws.
The purpose of this forfeiture is to further and promote the purpose of this
Plan as stated in Section 1 hereof, and therefore shall not be applicable to the
sale of Shares by the heirs or legal representatives of a Purchaser in the
event of his or her death.
10. Purchaser Option to Sell Shares to Company. In the event that the
closing price for a share of Common Stock falls below ninety five percent (95%)
of the Purchaser's purchase price for a Share while the Promissory Note remains
outstanding (such event being hereinafter referred to as the "Threshold Event")
and so long as such Threshold Event is continuing, the Purchaser shall have the
option (the "Purchaser Option") to sell all or any portion of his or her Shares
to the Company, and the Company shall be obligated to purchase all such Shares
from the Purchaser. In order for the Purchaser to exercise the Purchaser
Option, he or she must provide written notice (the "Purchaser Option Notice") to
the Company, by facsimile, hand delivery, or certified or overnight mail,
while such Threshold Event is continuing, that he or she will exercise his or
her Purchaser Option. The Company shall thereafter be obligated to purchase
from the Purchaser, within thirty (30) days from receipt of the Purchaser Option
Notice, the Shares tendered by the Purchaser for an amount per Share equal to
the Closing Price for a share of Common Stock on the date that the Purchaser
Option Notice is received by the Company. The proceeds from such sale shall be
used by the Purchaser to pay, in part, its obligations under the Promissory
Note. If the Purchaser exercises the Purchaser Option with respect to all of
his or her Shares, the Purchaser shall pay to the Company the remaining balance
under the Promissory Note within thirty (30) days after the Company purchases
the Purchaser's Shares. If the Purchaser exercises the Purchaser Option with
respect to only a portion of his or her Shares, the Purchaser shall pay down
the Promissory Note, within thirty (30) days after the Company purchases the
Shares tendered by the Purchaser, such that the Purchaser's remaining
obligations under the Promissory Note after taking into account such payment
will not exceed the fair market value of the Purchaser's remaining Shares
pledged to the Company, based on the Closing Price per share of Common Stock on
the date the Purchaser Option Notice was received by the Company.
11. Purchase by Non-Employee Directors. Notwithstanding any provision
in any other section of this Plan, the purchase of Shares by the Company's non-
employee directors shall be governed by this Section 11:
(a) On the Adoption Date, each non-employee director shall be
eligible to purchase up to 15,000 Shares under this Plan.
(b) If, after the Adoption Date, additional Shares are made available
to the Purchasers under this Plan, each non-employee director shall be eligible
to purchase additional Shares, provided however that (i) the number of
additional Shares available for purchase by each non-employee director must be
approved by the employee directors of the Board and (ii) the aggregate number of
additional Shares available for purchase by all the non-employee directors shall
not exceed five percent (5%) of all of the additional Shares.
(c) If any decision or amendment to this Plan is made by the Board of
Directors or the committee designated by the Board to administer this Plan, and
such decision or amendment has the effect of benefitting the Board's non-
employee directors, such decision or amendment must also be approved by a
majority of directors of the Board who have no self-interest in such decision or
amendment. If there are no disinterested directors with respect to such decision
or amendment, then any such decision or amendment must be approved by the
shareholders of the Company.
(d) A non-employee director who becomes an employee of the Company
shall not thereafter be subject to the provisions of this Section 11, but shall
be thereafter be subject to the provisions of the other Sections of this Plan.
(e) Except as set forth in this Section 11, the purchase of Shares by
non-employee directors of the Company shall otherwise conform to the other terms
and conditions of this Plan.
12. Registration of Shares. All Purchasers of the Shares will be
required to agree that, unless such Shares have been registered or may otherwise
be sold pursuant to an available exemption from such registration under the
Securities Act, the Shares shall not be sold without the prior approval of the
Company, which approval shall not be unreasonably withheld by the Company. The
Shares will be purchased by the Purchaser pursuant to the terms of his or her
Subscription Agreement. The Purchasers may also be considered to be affiliates,
as that term is defined in Rule 144, and be subject to further restrictions on
the sale of the Shares. The Company may require that a legend be placed on all
certificates representing any Shares with respect to the foregoing restrictions.
13. Amendment of the Plan. The Board of Directors may from time to time
alter, amend, suspend or discontinue this Plan and make rules for its
administration, subject, however, to the provisions of Section 11(c) above.
14. Approval of Shareholders. This Plan is effective on the Adoption
Date, which is the date the Company's shareholders voted in favor of adopting
this Plan.
15. Resolution of Disputes. IF A DISPUTE OR CLAIM ARISES OUT OF THIS
PLAN, THE COMPANY AND THE PURCHASER AGREE TO WAIVE ANY RIGHTS EACH MAY HAVE TO
A JURY OR COURT TRIAL AND TO USE BINDING ARBITRATION TO RESOLVE ALL SUCH
DISPUTES BETWEEN THEM. To initiate this arbitration remedy, the party raising
the dispute must make a written demand for arbitration within thirty (30) days
of the conduct giving rise to the claim. Absent such timely written demand,
the party raising the dispute waives any entitlement or right to arbitration
and any other legal or equitable remedy. Within thirty (30) days after the
giving of notice by one party to the other party of its desire to refer the
matter in dispute to arbitration, the parties shall agree on an arbitrator to
be selected from a list of potential arbitrators obtained for this purpose from
the American Arbitration Association. If the parties fail to agree on an
arbitrator within said 30-day period, either party may petition any court of
competent jurisdiction for the appointment of an arbitrator, and the parties
shall be bound by the selection of the court. The Company and the Purchaser
shall stipulate that the arbitrator must use its best efforts to complete the
arbitration proceedings within forty five (45) days after selection of the
arbitrator. The arbitration shall be conducted in the County of Los Angeles
and shall be conducted by an arbitrator selected in accordance with the
then-existing rules of practice and procedure of the American Arbitration
Association or its successor. Each party will pay its own costs in
connection with the arbitration.
The arbitrator shall not have the right to add to, subtract from, or
modify any of the terms of this Plan, nor shall the arbitrator have the power to
decide the justice or propriety of any specific provisions of this Plan or any
matter reserved solely to the Company's discretion, it being understood that
only the Board of Directors of the Company has the ultimate power to administer
or modify the Plan. The arbitrator is fully bound to apply relevant public law,
both as to substance and remedy, in accordance with statutory requirements and
prevailing judicial decisions. The arbitrator shall not have the power to
commit errors of law or legal reasoning.
Notwithstanding the above, if the Purchaser breaches or threatens to
breach any provisions of this Plan, the Company will have the right and remedy,
in addition to any other rights and remedies the Company may have under law or
in equity, to have its rights under the Plan specifically enforced by any court
having equity jurisdiction, all without the need to post a bond or any other
security or to prove any amount of actual damage or that money damages would not
provide an adequate remedy, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to the Company and
that monetary damages will not provide an adequate remedy to the Company.
16. Assignability. The rights to purchase the Shares under this Plan
shall not be transferable or assignable by the Purchaser, and the Shares may be
purchased only by the Purchaser during his lifetime. The foregoing restriction
shall not be deemed to prohibit transfers by a Purchaser of purchased Shares
without consideration for estate or financial planning purposes, to the extent
permitted by the Board of Directors or the committee designated by the Board to
administer this Plan. Except as otherwise provided herein, the provisions of
this Plan shall be binding on the heirs, successors and legal representatives of
the Company and the Purchasers.
17. Exhibits. The list of Purchasers and number of Shares available
for purchase by each attached as Annex A, the Subscription Agreement attached as
Annex B, and the Promissory Note attached as Annex C, are hereby incorporated
into this Plan by reference.
18. Prior Plan.This Plan supersedes the Senior Management Stock
Purchase Plan dated July 9, 1997 (the "1997 Plan"). The 1997 Plan has been
canceled, and neither the Company nor any individual originally subscribing
thereto shall be bound by the terms thereof.
<PAGE>
Annex A
<TABLE>
<CAPTION>
PURCHASER MAXIMUM NO. OF SHARES
--------- ---------------------
<S> <C>
FU, MONTY 125,000
FUNARI, ROBERT G. 120,000
NUTTER, BRAD 100,000
USDAN, JAMES 100,000
BAGERDJIAN, HAIG S. 90,000
MIKITY, MICHAEL E. 90,000
COOP, SHEILA H. 60,000
SMITH, CHARLES A. 60,000
COFFEY, JACK L. 60,000
FENERIN, MICHAEL N. 20,000
MARTARELLA, ROY B. 20,000
ZIPP, CHARLES JOSEPH 20,000
BENDER, BRIAN 20,000
STONE, JAMES E. 20,000
MULLEN, MARC 20,000
GERBER, STEVEN B. 15,000
OKI, GEORGE S. 15,000
SPANGLER, ARNOLD E. 15,000
WAGNER, HENRY N. 15,000
WILENSKY, GAIL R. 15,000
/TABLE
<PAGE>
Annex B
SUBSCRIPTION AGREEMENT
This Subscription Agreement, effective as of ________ __, 1998, is entered into
by and between Syncor International Corporation, a Delaware Corporation (the
"Company"), and the undersigned employee of the Company (the "Shareholder").
WITNESSETH
WHEREAS, the Board of Directors of the Company has adopted a 1998 Senior
Management Stock Purchase Plan (the "Plan") pursuant to which the Shareholder
has been given the opportunity to purchase up to _______ shares of the common
stock, $.05 par value, of the Company (the "Shares"), under the terms and
conditions contained in that Plan; and
WHEREAS, the Shareholder desires to purchase certain of the Shares upon the
terms and for the consideration set forth in the Plan;
NOW, THEREFORE the parties hereto agree as follows:
1. Subscription and Payment. Shareholder hereby subscribes to purchase
the number of Shares set forth on the signature page of this Subscription
Agreement at a purchase price equal to $____ per Share, which is the lower of
(a) the closing price for one share of common stock of the Company on the date
the Company's stockholders approved the Plan (the "Adoption Date") or (b) the
average closing price for one share during the ten day period immediately
preceding the Adoption Date, as traded in NASDAQ. As consideration for the
purchase of the Shares, Shareholder is delivering to the Company, and the
Company hereby acknowledges receipt of, his or her Promissory Note payable to
the Company in the aggregate principal amount of the purchase price of the
Shares indicated on the signature page hereof, and the stock certificates
evidencing the Shares pledged to the Company to secure payment of the Note.
2. Representations and Warranties. The Shareholder hereby represents
and warrants to the Company, its officers, directors, stockholders, affiliates,
agents, employees and representatives as follows:
(a) Investment Intent. (i) The Shares are being acquired solely
for the account of the Shareholder, for investment, and not with a view to or
for the resale, distribution, subdivision or fractionalization thereof, (ii) the
Shareholder has no contract, understanding, undertaking agreement or arrangement
with any person except for the Company to sell, transfer or pledge to any person
the Shares or any part thereof, (iii) the Shareholder has no present plans to
enter into any such contract, undertaking, agreement or arrangement, (iv) the
Shareholder understands the legal consequences of the foregoing representations
and warranties to mean that the Shareholder must bear the economic risk of the
investment in the Shares for an indefinite period of time, (v) the Shareholder
has such knowledge and experience in financial and business matters that the
Shareholder is capable of evaluating the merits and risks of acquiring the
Shares, and (vi) the Shareholder acknowledges that the acquisition of the Shares
involves a high degree of risk which may result in the loss of the total amount
of Shareholder's investment in the Shares.
(b) Securities Compliance. The Shareholder understands that no
sale, distribution, transfer or other disposition of the Shares can be made by
the Shareholder unless the Shares have been registered under the Securities
Act of 1933, as amended (the "Act"), and applicable securities laws of any other
relevant jurisdiction, or exemptions from such registrations are available, as
evidenced by an opinion of counsel satisfactory to the Company, with respect to
the proposed sale, distribution, transfer or other disposition. Any purchaser
on resale or transferee of the Shares will also be required to meet the
suitability requirements applicable to the Shareholder, and such purchaser or
the Shareholder will be required to bear all expenses of such transfer
(including the costs of any legal advice or opinions required.)
(c) Experience. Shareholder is an executive officer, director or
key employee of the Company and is knowledgeable and experienced in investments
involving medical products and services generally, and the business and
prospects of the Company specifically. Shareholder has such knowledge and
experience in financial and business matters that he is capable of evaluating
the risks of any investment in the Shares and making an informed investment
decision.
(d) No General Solicitation. The Shares have been offered to the
Shareholder without any form of general solicitation or advertising of any type
by or on behalf of the Company or any of its officers, directors, shareholders,
employees, agents or representatives.
(e) Access to Information. The Shareholder has (i) read the
Company's Annual Report on Form 10-K for the fiscal year 1997, the Company's
proxy statement and annual report furnished to shareholders for their annual
meeting on June 16, 1998, and any other reports or documents required to be
filed under the Securities Exchange Act of 1934, as amended, by the Company
since the last fiscal year end, (ii) had an opportunity to ask questions and
receive answers concerning the actual and proposed business and affairs of the
Company, and is satisfied with the results thereof, and (iii) been given access,
if requested, to all documents with respect to the Company or the Plan, as well
as to such other information that the Shareholder has requested, in order to
evaluate fully the merits and risks of an investment in the Shares.
(f) Exempt Status. The Shareholder understands that the Shares to
be sold hereunder are being offered and sold in reliance upon exemptions from
registration under the Act and state securities laws. The Shareholder
understands that the Company and its officers, directors, shareholders, agents,
employees and representatives are relying on, among other things, the
representations and warranties of the Shareholder set forth herein in offering
and selling the Shares to the Shareholder in reliance upon exemptions available
under the Act and state securities laws.
(g) Domicile. The Shareholder is a bona fide resident of the State
of ____________.
3. Restrictions on Transfer. In addition to the restrictions set forth
above, the Shareholder understands and agrees that (i) the Company is under no
obligation to register the Shares or to perfect any exemption for resale of the
Shares under applicable securities laws, (ii) if they are not registered the
Shares will be restricted securities, and must be fully paid for, and the
Promissory Note given in consideration therefor fully paid and canceled, for a
full year under Rule 144, before a public resale of the Shares can be made and
(iii) a legend may be placed on each certificate evidencing any of the Shares
and stop transfer instructions may be issued by the Company to restrict the
resale, pledge, hypothecation or other transfer of the Shares in contravention
of this Agreement.
4. Notice. All communications hereunder will be in writing and, if
sent to the Shareholder, will be mailed, delivered or faxed to Shareholder at
the address set forth in the records of the Company, or if sent to the Company,
will be mailed, delivered or faxed to its principal executive offices,
Attention: Chief Executive Officer.
5. Spousal Consent. If shareholder is married, Shareholder's spouse
must execute and deliver to the Company a spousal consent in the form set forth
on Annex 1 attached hereto with all of the blanks appropriately completed. If
such consent is not executed on the date this Agreement is delivered to the
Company, Shareholder shall be deemed to have represented and warranted to the
Company that Shareholder is not married and that no person has any community
property interest in the Shares.
6. Amendment. This Agreement may not be modified or amended except by
written instrument executed by or on behalf of each of the parties hereto.
7. Waivers. The observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if in a writing signed by the party or parties against which
such waiver is to be asserted. Unless otherwise expressly provided herein, no
delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a wavier thereof, nor shall any waiver on
the part of any party hereto of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder.
8. Entire Agreement. This Agreement and the Plan, including the
exhibits, documents and agreements expressly referred to herein and therein,
constitute the entire agreement between the parties hereto with respect to the
matters covered hereby, and any other prior or contemporaneous oral or written
understandings or agreements with respect to the matters covered hereby are
expressly superseded by this Agreement and the Plan. There are no oral or
unwritten agreements between the parties.
9. Resolution of Disputes. IF A DISPUTE OR CLAIM ARISES OUT OF THIS
PLAN, THE COMPANY AND THE SHAREHOLDER AGREE TO WAIVE ANY RIGHTS EACH MAY HAVE TO
A JURY OR COURT TRIAL AND TO USE BINDING ARBITRATION TO RESOLVE ALL SUCH
DISPUTES BETWEEN THEM. The arbitration shall be conducted in accordance with the
procedures and provisions set forth in Section 15 of the Plan.
10. Severability. If any provision of this Agreement, or
the application of such provision to any person or circumstances, shall be
declared judicially to be invalid, unenforceable or void, such decision will not
have the effect of invalidating or voiding the remainder of this Agreement or
affect the application of such provision to other persons or circumstances, and
the parties hereto agree that the part or parts of this Agreement so held to be
invalid, unenforceable or void will be deemed to have been stricken here from
and the remainder of this Agreement will have the same force and effect as if
such part or parts had never been included herein. Any such finding of
invalidity or unenforceability shall not prevent the enforcement of such
provision in any other jurisdiction to the maximum extent permitted by
applicable law.
11. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, except to the extent
that the Delaware General Corporation Law is applicable.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
effective as of the date first above written.
Syncor International Corporation: The Shareholder:
______________________________ _____________________________________
Robert G. Funari, President and Name: _______________________________
Chief Executive Officer Social Security No.:_________________
No.Of Shares Subscribed For:________
Principal Amount of Note:$___________
<PAGE>
Annex 1 to Annex B
SPOUSAL CONSENT AND AGREEMENT
The undersigned spouse of ____________________________ joins in the Subscription
Agreement set forth above (the "Agreement") with respect to any interest,
community property interest or otherwise, in the Shares that may be issued under
the Agreement and the Promissory Note and related pledge of shares to the
Company in exchange for such Shares. The undersigned has read the Agreement, is
not acting under any coercion, and has had the opportunity to retain independent
counsel for personal representation purposes and to explain the legal
consequences of this Spousal Consent and Agreement. The undersigned agrees that
any termination of the undersigned's marriage to the Shareholder named above for
any reason shall not have the effect of removing any Shares otherwise subject to
the Agreement from the coverage thereof.
Date: ________________, 1998
Name ____________________________
<PAGE>
Annex C
THIS NOTE IS ISSUED TO SECURE PAYMENT FOR SHARES OF SYNCOR INTERNATIONAL
CORPORATION STOCK SOLD TO THE MAKER UNDER THE 1998 SENIOR MANAGEMENT STOCK
PURCHASE PLAN OF THE COMPANY (THE "PLAN") AND IS GOVERNED BY THE TERMS AND
CONDITIONS OF THE PLAN AND THE RELATED SUBSCRIPTION AGREEMENT, COPIES OF WHICH
MAY BE OBTAINED UPON REQUEST BY THE MAKER AT THE EXECUTIVE OFFICES OF THE
COMPANY.
PROMISSORY NOTE
$_______________ ________ __, 1998
Woodland Hills, CA
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
SYNCOR INTERNATIONAL CORPORATION (the "Company"), at its principal executive
offices, the principal sum of _____________________________ DOLLARS
($____________), in lawful money of the United States of America, which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment. This Note shall bear interest at the rate set forth below.
The principal sum above is the purchase price for the shares purchased
by the undersigned Maker pursuant to the Plan, at a price equal to $____ per
share, which is the lower of (a) the closing price for one share of common stock
of the Company on the date the Company's stockholders approved the Plan (the
"Adoption Date") or (b) the average closing price for one share during the ten
day period immediately preceding the Adoption Date, as traded in NASDAQ.
This Note shall be due and payable in full five years from the date set
forth hereinabove, subject to acceleration upon termination of the Maker's
employment with the Company, or cancellation of indebtedness, under the
conditions and to the dates as described in the Plan. The undersigned Maker
shall have the right and privilege of prepaying this Note at any time or times,
in whole or in part, without notice or penalty, in principal amounts of no less
than $5,000. This Note shall bear interest on the unpaid principal balance
hereof from time to time at the rate of _________ percent (___%) per annum,
which is the applicable Federal rate under the Internal Revenue Code of 1986, as
amended, and the treasury regulations thereunder, as of the effective date of
the Subscription Agreement. Accrued interest shall be payable annually on each
anniversary date hereof.
The Maker, as well as any persons or entities to become liable for the
payment of this Note, hereby expressly waive demand or presentment for payment
of this Note, notice of nonpayment, protest, suit, acceleration, intention to
accelerate, diligence and/or any notice of, or defense on account of, the
extension of time of payment or change in the method of payments, and/or any
modification of the terms hereof or of the Plan or any instrument securing or
guaranteeing the payment hereof, and consent to any and all renewals and
extensions in the time of payment hereof, and/or any modification of the terms
hereof or of the Plan or any instrument securing or guaranteeing the payment
hereof, and to any substitutions, exchange or release of any security here for
or the release of any party primarily or secondarily liable here for, and
further agree that the acceptance of late payment hereunder by the Company,
waiver or other forgiveness of any other defaults by Maker, shall not constitute
a waiver by the Company of any subsequent defaults, late payments or other
violations of the Maker's obligations hereunder and/or in the terms of any
instrument securing or guaranteeing the payment hereof.
If this Note is not paid when due (whether the same becomes due by
acceleration or otherwise) and is placed in the hands of an attorney for
collection, or if suit is filed hereon, or if this Note shall be collected by
legal proceedings or through a probate or bankruptcy court, the undersigned
Maker agrees to pay all costs of collection, including reasonable attorneys'
fees. Without limiting the Company's other rights and remedies, all past due
installments of principal and/or interest shall bear interest at the rate of
eighteen percent (18%) per annum. If the rate of interest required to be paid
under this Note exceeds the maximum rate permitted by applicable law, then the
interest rate shall be automatically reduced to the maximum legal rate.
This Note shall be construed in accordance with the laws of the State of
California and the laws of the United States applicable to transactions in
California.
The payment of this Note is secured by the pledge of _________ shares of
Common stock of Syncor International Corporation, $.05 par value, sold to Maker
pursuant to the Plan, together with all proceeds, monies, income and benefits
attributable or accruing to said property which Maker is or may hereafter become
entitled to receive on account of said property, including, but not by way of
limitation, all dividends and other distributions on or with respect thereto
whether payable in cash, stock or other property and all subscription and other
rights (collectively, the "Collateral"). Maker hereby pledges, assigns,
transfers, delivers and grants to the Company a security interest in the
Collateral to secure performance and payment of all obligations and indebtedness
of Maker hereunder, and delivers the certificate representing the Collateral to
the Company, together with a stock power endorsed in blank, to secure such
pledge. This pledge of and grant of a security interest in the Collateral shall
not be construed as relieving Maker from full personal liability on this Note
and for any deficiency thereon, or impair or affect any other security for the
payment of this Note.
A portion of the Collateral may be released from this pledge upon
partial payment of the Note without altering, varying or diminishing in any way
the force, effect, lien, security interest or charge of this pledge as to the
Collateral not expressly released, and this pledge shall continue as a first and
prior lien and charge on all of the Collateral not expressly released until this
Note has been paid in full. Partial release of the Collateral upon prepayment
of a portion of the principal amount of the Note may be made in the sole
discretion of the Company in the amounts deemed appropriate by it, and subject
to the further provisions of the Plan.
All notices hereunder shall be in writing and shall be deemed to have
been delivered on the date personally delivered or on the date mailed, first
class, registered or certified mail, postage prepaid, if addressed to the
respective parties hereto at their address as shown in the corporate records of
the Company.
IF A DISPUTE OR CLAIM ARISES OUT OF THIS PLAN, THE MAKER AND THE COMPANY
AGREE TO WAIVE ANY RIGHTS EACH MAY HAVE TO A JURY OR COURT TRIAL AND TO USE
BINDING ARBITRATION TO RESOLVE ALL SUCH DISPUTES BETWEEN THEM. The arbitration
shall be conducted in accordance with the procedures and provisions set forth in
Section 15 of the Plan.
IN WITNESS WHEREOF, the Maker has executed this Note as of the date
first above written.
MAKER:
_________________________________
Name:
The Company as secured party:
SYNCOR INTERNATIONAL CORPORATION
By: ___________________________________
<PAGE>
EXHIBIT B
UNIVERSAL PERFORMANCE EQUITY PARTICIPATION PLAN
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
employees through the grant of Options that provide added long term incentives
for high levels of performance and for significant efforts to improve the
financial performance of the Company. The Plan allows all non-management
employees to have a stake in the Company's future growth and to obtain direct
benefits from future appreciation of the Company's common stock. The Plan also
aligns the interests of employees with the interests of the stockholders.
1.2 Administration.
(a) This Plan shall be administered by the Administrator. 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 to
establish terms and conditions pertaining to termination of employment, modify
or amend any outstanding Awards or waive any condition or restriction of an
Award, or extend (up to June 15, 2008) the term or post-termination exercise
period of any outstanding Award, or reduce (subject to Sections 2.4 and 3.5) the
minimum vesting period after initial grant to a Participant; to reprice an
option if circumstances so warrant; 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.
1.4 Stock Subject to the Plan. The maximum aggregate number of shares
of Common Stock that may be issued pursuant to Awards granted under this Plan
shall not exceed 1,800,000 shares, subject to adjustment as set forth in or
pursuant to Section 3.2.
1.5 Grant of Awards. Subject to the express provisions of the Plan,
the Administrator shall determine from the class of Eligible Employees those
individuals to whom Awards under the Plan shall be granted, the terms of Awards
(which need not be identical) and the number of shares of Common Stock subject
to each Award. Each Award shall be subject to the terms and conditions set forth
in the Plan and such other terms and conditions established by the Administrator
as are not inconsistent with the purpose and provisions of the Plan.
1.6 Exercise of Awards. Notwithstanding any other provision of this
Plan, the Administrator may impose, by rule and in Award Agreements, such
conditions upon the exercise of Awards (including, without limitation,
conditions limiting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements, including without
limitation Rule l6b-3.
1.7 Share Reservation. No Award may be granted under this Plan
unless, on the date of grant, the sum of (i) the maximum number of shares
issuable at any time pursuant to such Award, plus (ii) the number of shares that
previously have been issued pursuant to Awards granted under this Plan, other
than reacquired shares available for reissue consistent with any applicable
limitations under Rule 16b-3, plus (iii) the maximum number of shares that may
be issued after such date of grant pursuant to Awards granted under this Plan
that remain outstanding on such date, does not exceed the share limit in Section
1.4.
1.8 Reissue of Awards and Shares. Shares subject to Awards that
expire or for any reason are terminated and are not issued, shall again, to the
extent permitted under Rule l6b-3, be available for subsequent Awards under the
Plan.
1.9 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.
(a) 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 or an Incentive Stock Option or a combination of both.
The maximum number of Option shares that may be granted to any one Eligible
Employee during any given fiscal year of the Corporation shall be 200,000
shares.
(b) The number of Option shares that may be granted to any one
Participant will based on the following:
(i) The Administrator will decide on a formula by which the
maximum number of Option shares ("Maximum Shares") that may be granted to the
Eligible Employee will be determined.
(ii) For each Optionee, the Maximum Shares will be adjusted
depending on the date in which the Optionee becomes an Eligible Employee. If the
Optionee becomes an Eligible Employee on or before June 30, 1999, the Optionee
will be entitled to receive the Maximum Shares available to the Optionee. For
any Optionee who becomes an Eligible Employee during the following dates, the
number of Option shares that may be granted to that Optionee will be a
percentage of the Maximum Shares, calculated as follows:
<TABLE>
<CAPTION>
Date % of Maximum Shares
<S> <C>
After June 30, 1999 but on or before January 1, 2000 85%
After January 1, 2000 but on or before June 30, 2000 66%
After June 30, 2000 but on or before January 1, 2001 50%
After January 1, 2001 but on or before June 30, 2001 33%
After June 30, 2001 0%
</TABLE>
(iii) At the Administrator's discretion, the number of
Option shares granted to an employee at the time of the Award Date may be
increased, from time to time, to take into account salary increases, the effects
of inflation and other relevant factors.
(c) As a condition to the accelerated vesting of an Option grant
as described in Section 2.6 below, an Optionee must deliver, within sixty days
after the Award Date, a letter addresssed to the Corporation's Chief Executive
Officer expressing such employee's commitment to the achievement of the goals
and objectives set by the Chief Executive Officer for the Corporation and its
Subsidiaries.
2.2 Option Price.
(a) Subject to applicable law, the purchase price per share of the
Common Stock covered by each Option 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 per share of the Common Stock on the date
the Option is granted. With respect to any Eligible Employee as of the date the
Company's stockholders approve this Plan, the purchase price per share will be
the Fair Market Value on the date of stockholder approval. 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 3.6. 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 3.6,
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 June 15, 2008, and shall be subject to earlier termination as
hereinafter provided.
2.4 Exercise of Options. Except as otherwise provided in Section 3.4
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 Vesting of Options. An Option shall vest, with respect to an
Optionee, on December 31, 2007, regardless of when the Option was granted.
Notwithstanding the foregoing, however, an Option will vest, subject to Section
2.1(c) above, on an earlier date (the "Accelerated Vesting Date") after June 30,
2002 if the Corporation's stock price is $43 or higher on or after June 30, 2002
and that stock price is maintained for a period of ten trading days during a
period of 20 consecutive trading days immediately prior to the Accelerated
Vesting Date.
2.7 Company Option to Purchase Option Shares. In the event an
Optionee exercises his or her Option and proposes to sell the underlying shares,
the Company shall have an option to purchase the shares acquired by the Optionee
as a result of his or her exercise.
III. OTHER PROVISIONS.
3.1 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.
3.2 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. 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.
(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 3.2, 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.
3.3 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) 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 June 15, 2008 expiration of the Options)
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.
(e) If an entity ceases to be a Subsidiary, such action shall be
deemed for purposes of this Section 3.3 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.
3.4 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 shall become
immediately exercisable to the full extent theretofore not exercisable; subject,
however, to compliance with applicable regulatory requirements, including
without limitation Rule l6b-3 promulgated by the Commission pursuant to the
Exchange Act and Section 422 of the Code.
3.5 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.
3.6 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, 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.
3.7 Amendment, Termination and Suspension.
(a) The Board may, at any time, terminate or, from time to time,
amend, modify or suspend this Plan. The approval of stockholders will be
required if the amendment increases the number of option shares available under
the Plan or if such approval is necessary to qualify an option as an Incentive
Stock Option.
(b) In the case of Awards issued before the effective date of any
amendment, suspension or termination of this Plan, such amendment, suspension or
termination of this Plan shall not, without specific action of the Administrator
and the consent of the Participant, in any manner materially adverse to the
Participant, modify, amend, alter or impair any rights or obligations under any
Award previously granted under this Plan.
(c) No Awards may be granted during any suspension of this Plan or
after its termination, but Awards theretofore granted may be amended to the same
extent as if this Plan had not been terminated or suspended, provided no
additional shares become the subject of the Award by reasons of the amendment.
(d) The Administrator may, subject to the consent of
the Participant in the case of an amendment that might have a material adverse
effect on the Participant, make such modifications of the terms and conditions
of such Participant's Award as it shall deem advisable, including an amendment
to the terms of any Option to provide that the Option price of the shares
remaining subject to the original Award shall be established at a price not less
than 100% of the Fair Market Value of the Common Stock on the effective date of
the amendment. No modification of any other term or provision of any Option
which is amended in accordance with the foregoing shall be required, although
the Administrator may, in its discretion, make such other modifications of any
such Option as are not inconsistent with or prohibited by this Plan.
(e) Adjustments pursuant to Section 3.2 shall not be deemed
amendments requiring the consent of the Participant.
3.8 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).
3.9 Effective Date of the Plan. This Plan shall be effective upon
its adoption by the Board, subject to approval by the shareholders of the
Corporation within 12 months thereafter.
3.10 Term of the Plan. Unless previously terminated by the Board,
this Plan shall terminate at the close of business on June 30, 2002, 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.
3.11 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.
3.12 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
3.12 (a) shall not be deemed to prohibit (l) "cashless exercise" procedures
through unaffiliated third parties which provide financing for the purpose of
exercising an Award consistent with applicable legal restrictions and Rule
16b-3, nor (2) to the extent permitted by the Administrator and expressly set
forth in the Award Agreement or an amendment thereto, transfers without
consideration for estate or financial planning purposes, notwithstanding that
the inclusion of such features may render the particular Awards ineligible for
the benefits of Rule l6b-3, nor (3) in the case of Participants who are not
Section 16 Persons, transfers in such other circumstances as the Administrator
may (to the extent consistent with Rule 16b-3, applicable provisions of the Code
and applicable securities or other laws) in the applicable Award Agreement or
other writing expressly provide, nor (4) the subsequent transfer of shares
issued on exercise of a derivative security (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.
3.13 Plan Construction. It is the intent of the Corporation that this
Plan and Awards hereunder satisfy and be interpreted in a manner that in the
case of persons who are or may be subject to Section 16 of the Exchange Act
satisfies the applicable plan requirements of Rule l6b-3, so that such persons
will be entitled (unless otherwise expressly acknowledged in writing) to the
benefits of the Rule 16b-3 or other exemptive rules under Section 16 Exchange
Act and will not be subjected to avoidable liability thereunder. In furtherance
of such intent, 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
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.
IV. DEFINITIONS.
4.1 Definitions.
(a) "Accelerated Vesting Date" shall have the meaning set
forth in Section 2.6.
(b) "Administrator" shall mean the Compensation Committee or
any other Committee of directors appointed by the Board for purposes of serving
as the Committee under this Plan.
(c) "Award" shall mean a Nonqualified Stock Option or an
Incentive stock Option, or a combination of both, granted under this Plan.
(d) "Award Agreement" shall mean a written agreement setting
forth the terms of an Award.
(e) "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.
(f) "Award Period" shall mean the period beginning
on an Award Date and ending on the expiration date of such Award.
(g) "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.
(h) "Board" shall mean the Board of Directors of the
Corporation.
(i) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(j) "Commission" shall mean the Securities and Exchange
Commission.
(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) "ESSOP" shall mean the Corporation's Employees' Savings
and Stock Ownership Plan.
(o) "Eligible Employee" shall mean any employee of the
Company who is eligible to participate in the ESSOP as of June 30, 2001 and
who works for the Company at least 30 hours per week. "Eligible Employee"
does not include any officer or other employee of the Company who participates
in any of the Company's Performance Equity Plans for executive officers and
key employees.
(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) "Maximum Shares" shall have the meaning set forth in
Section 2.1(b)(i).
(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 or an Incentive Stock Option, or a combination of
both.
(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) "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.
(z) "Plan" shall mean this Universal Performance Equity
Participation Plan.
(aa) "Retirement" shall mean retirement at normal retirement
date with the consent of the Company.
(bb) "Rule l6b-3" means Rule l6b-3 under Section 16 of the
Exchange Act, as applicable to this Plan (taking into consideration relevant
transition period provisions) and as the same may be amended from time to
time.
(cc) "Section l6 Person" means a person subject to the
reporting requirements of Section 16(a) of the Exchange Act.
(dd) "Securities Act" shall mean the Securities Act of 1933.
(ee) "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.
(ff) "Total Disability" shall mean a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code.
