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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1998 Commission File Number 0-8640
SYNCOR INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 85-0229124
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6464 CANOGA AVENUE, WOODLAND HILLS, CALIFORNIA 91367
(Address of principal executive offices) (Zip Code)
(818) 737-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
___ ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. As of June 30, 1998,
10,986,462 shares of $.05 par value common stock were outstanding.
===================================================================
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
INDEX
_____
PAGE
____
Part I. Financial Information
Item 1. Consolidated Condensed Financial Statements
Balance Sheets as of
June 30, 1998 and December 31, 1997 . . . . . . . . . . . . . 3
Statements of Income for Three Months
Ended June 30, 1998 and 1997 . . . . . . . . . . . . . . . . 4
Statements of Income for Six Months
Ended June 30, 1998 and 1997 . . . . . . . . . . . . . . . . 5
Statements of Cash Flows for Six Months
Ended June 30, 1998 and 1997 . . . . . . . . . . . . . . . . 6
Notes to Consolidated Condensed Financial Statements . . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition . . 10
Part II. Other Information . . . . . . . . . . . . . . . . . . . . . . 12
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands, except per share data)
June 30, December 31,
1998 1997
________ ________
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 20,730 $ 25,538
Short-term investments 4,744 2,583
Accounts receivable, net 74,017 54,972
Inventory 7,128 5,574
Prepaids and other current assets 14,740 9,288
__________________________
Total current assets 121,359 97,955
Marketable investment securities 1,191 1,180
Property and equipment, net 44,043 28,870
Excess of purchase price over net assets
acquired, net 63,932 14,319
Other assets 20,620 22,239
___________________________
$251,145 $164,563
===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 45,642 $ 34,755
Accrued liabilities 10,301 4,353
Accrued wages and related costs 9,207 13,680
Federal and state taxes payable 1,924 1,129
Current maturities of long-term debt 8,967 3,978
____________________________
Total current liabilities 76,041 57,895
Long-term debt, net of current maturities 71,360 17,332
Deferred compensation 1,969 1,969
Stockholders' equity:
Common stock, $.05 par value 617 572
Additional paid-in capital 69,445 55,061
Notes receivable related parties (8,694) -
Employee stock ownership loan guarantee (5,898) (6,741)
Accumulated other comprehensive income (253) (330)
Retained earnings 59,082 51,329
Treasury stock, at cost; 1,356 shares at
June 30, 1998 and at December 31, 1997 (12,524) (12,524)
____________________________
Net stockholders' equity 101,775 87,367
____________________________
$251,145 $164,563
=============================
See notes to consolidated condensed financial statements.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(in thousands, except per share data)
Three Months Ended June 30,
___________________________
1998 1997
________ ________
(Unaudited)
Net sales $113,245 $98,187
Cost of sales 78,653 74,333
______________________
Gross profit 34,592 23,854
Operating, selling and administrative expenses 26,401 18,869
______________________
Operating income 8,191 4,985
Other income/expense, net (506) 409
______________________
Income before taxes 7,685 5,394
Provision for income taxes 3,290 2,157
______________________
Income from continuing operations 4,395 3,237
Discontinued operations, net of taxes - 1,063
______________________
Net income $ 4,395 $ 4,300
======================
Net income per share - Basic
____________________________
Income from continuing operations $ .42 $ .33
Discontinued operations, net of taxes $ - $ .11
______________________
Net income $ .42 $ .44
Weighted average shares outstanding - Basic 10,536 9,829
=======================
Net income per share - Diluted
______________________________
Income from continuing operations $ .40 $ .33
Discontinued operations, net of taxes $ - $ .11
______________________
Net income $ .40 $ .44
Weighted average shares outstanding - Diluted 11,057 9,870
=======================
See notes to consolidated condensed financial statements.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(in thousands, except per share data)
Six Months Ended June 30,
_________________________
1998 1997
________ ________
(Unaudited)
Net sales $215,969 $191,271
Cost of sales 154,222 147,301
______________________
Gross profit 61,747 43,970
Operating, selling and administrative expenses 48,069 36,139
______________________
Operating income 13,678 7,831
Other income/expense, net (100) 3,140
______________________
Income before taxes 13,578 10,971
Provision for income taxes 5,825 4,388
______________________
Income from continuing operations 7,753 6,583
Discontinued operations, net of taxes - 1,063
______________________
Net income $ 7,753 $ 7,646
======================
Net income per share - Basic
____________________________
Income from continuing operations $ .74 $ .66
Discontinued operations, net of taxes $ - $ .11
______________________
Net income $ .74 $ .76
Weighted average shares outstanding - Basic 10,420 9,998
======================
Net income per share - Diluted
______________________________
Income from continuing operations $ .71 $ .65
Discontinued operations, net of taxes $ - $ .11
______________________
Net income $ .71 $ .76
Weighted average shares outstanding - Diluted 10,921 10,107
======================
See notes to consolidated condensed financial statements.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(in thousands)
Six Months Ended June 30,
_________________________
1998 1997
_______ ________
(Unaudited)
Cash flows from operating activities:
Net income $ 7,753 $7,646
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 7,130 4,609
Provision for losses on receivables 1,285 _
Amortization of ESSOP loan guarantee 843 523
Decrease (increase) in:
Accounts receivables, net (7,490) (6,122)
Inventory (1,555) 1,334
Net assets of discontinued operations - 1,198
Other current assets (4,647) 307
Other assets 388 -
Increase (decrease) in:
Accounts payable 6,537 (1,792)
Accrued liabilities 2,778 1,664
Accrued wages and related costs (4,473) 999
Federal and state taxes payable 952 (1,183)
______________________
Net cash provided by operating activities 9,501 9,183
______________________
Cash flows from investing activities:
Purchase of property and equipment, net (5,339) (4,033)
Acquisitions of businesses, net of cash acquired (45,338) (6,550)
Net increase in short-term investments (2,160) (1,257)
Net increase in long-term investments (11) (5,583)
Unrealized gain on investments 11 (5)
______________________
Net cash used in financing activities (52,837) (17,428)
______________________
Cash flow from financing activities:
Proceeds from long-term debt 40,031 5,938
Repayment of long-term debt (1,995) (299)
Issuance of common stock 579 76
Reacquisition of common stock for treasury - (4,300)
______________________
Net cash provided by financing activities 38,615 1,415
______________________
Net decrease in cash and cash equivalents (4,721) (6,830)
Effect of exchange rate on cash (87) (45)
Cash and cash equivalents at beginning of period $25,538 $25,214
______________________
Cash and cash equivalents at end of period $20,730 $18,339
======================
Non-Cash Transactions:
_____________________
521,000 shares of common stock were issued on 6/16/98 in exchange for note
receivables from related parties.
See notes to consolidated condensed financial statements.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
1. GENERAL. The accompanying unaudited consolidated condensed
financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly,
they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. The results of the six
months ended June 30, 1998, are not necessarily indicative of the
results to be expected for the full year. For further information,
refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report and Form 10-K for
the period ended December 31, 1997. Certain line items in the prior
year's consolidated condensed financial statements have been
reclassified to conform to the current year's presentation.
2. NEW ACCOUNTING STANDARDS: In 1997, the Financial Accounting and
Standards Board issued SFAS 130, "Reporting Comprehensive Income,"
which became effective for fiscal years beginning after December
15, 1997. SFAS 130 requires that the components of comprehensive
income be disclosed. Such amounts are as follows for the three and
six months ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
Three months ended Three months ended
June 30, 1998 June 30, 1997
_____________________________________________________________________
Tax Tax
Before-tax (expense) Net-of-Tax Before-Tax (expense) Net-of-Tax
Amount or benefit Amount Amount or Benefit Amount
_____________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Foreign currency translation
Adjustments (60) - (60) (262) - (262)
_____________________________________________________________________
Unrealized gains/(losses) on
investments:
Unrealized holding gains/(losses)
arising during period 4 (2) 2 (12) 5 (7)
_____________________________________________________________________
Net unrealized holding gains 4 (2) 2 (12) 5 (7)
Other comprehensive income (56) (2) (58) (274) 5 (269)
=====================================================================
</TABLE>
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (continued)
<TABLE>
<CAPTION>
Six months ended Six months ended
June 30, 1998 June 30, 1997
_____________________________________________________________________
Tax Tax
Before-tax (expense) Net-of-Tax Before-Tax (expense) Net-of-Tax
Amount or benefit Amount Amount or Benefit Amount
_____________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Foreign currency translation
Adjustments 66 - 66 66 - 66
_____________________________________________________________________
Unrealized gains/(losses) on
investments:
Unrealized holding gains/(losses)
arising during period 19 (8) 11 (9) 4 (5)
_____________________________________________________________________
Net unrealized holding gains 19 (8) 11 (9) 4 (5)
Other comprehensive income 85 (8) (77) (57) 4 (269)
=====================================================================
</TABLE>
In June 1997, SFAS No. 131 - "Disclosure about Segments of an Enterprise
and Related Information" was issued and became effective for periods
beginning after December 15, 1997. SFAS No. 131 establishes standards for
reporting financial and descriptive information regarding an enterprise's
operating segments. In February 1998, SFAS No. 132 - "Employers" Disclosure
about Pensions and Other Post Retirement Benefits' was issued and became
effective for fiscal years beginning after December 15, 1997. These
standards increase disclosure in the financial statements, and will have
no impact on the Company's financial position or results of operations.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued and is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS No. 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The
Company is currently evaluating the impact SFAS No. 133 will have on its
financial statements, if any.
3. ACQUISITIONS: In January 1998, the Company acquired a medical imaging
business from National Diagnostic Services, Inc. and an affiliate ("NDS").
The purchase price for the acquisition was $12 million, including the
assumption of $4.8 million in debt. This acquired business included nine
medical imaging centers owned or managed by NDS. This transaction has
been accounted for as a purchase for the quarter ended March 31, 1998.
Also in January 1998, a subsidiary of Syncor merged with and into TME, Inc.
a company based in Houston, Texas, pursuant to which TME, Inc. became a
wholly owned subsidiary of Syncor. TME owns, operates and/or manages
freestanding medical imaging centers through joint ventures and
partnerships. It has 20 facilities in its network, with five additional
facilities in development. As consideration for the merger, Syncor paid
$14.5 million in cash to TME's stockholders. This transaction was
accounted for as a purchase for the quarter ended March 31, 1998.
In April 1998, Syncor acquired the medical imaging business of
International Magnetic Imaging, Inc. a subsidiary of Consolidated
Technology Group Ltd. The business acquired includes ten outpatient
medical imaging centers and an imaging referral network operating in 35
states. The purchase price of the acquisition was $20.5 million, plus the
assumption of approximately $24.3 million in liabilities and trade
payables. The acquisition was accounted for as a purchase and closed on
April 2, 1998.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements (continued)
4. NET INCOME PER SHARE: In 1997, the Financial Accounting Standard Board
issued SFAS No. 128, "Earnings Per Share" (EPS). SFAS No. 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effect of options. Diluted
earnings per share is very similar to the previously reported primary
earnings per share. All earnings per share amounts for all periods have
been restated to conform to SFAS No. 128 requirements.
The reconciliation of the numerator and denominators of the basic and
diluted earnings per share computations are as follows for the three months
ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
Three months ended, Three months ended,
June 30, 1998 June 30, 1997
______________________________________ _____________________________________
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Net income $4,395 $4,300
Basic EPS $4,395 10,536 $.42 $4,300 9,829 $.44
____ ____
Effect of Dilutive
Stock Options 521 41
____ ___
Diluted EPS $4,395 11,057 $.40 $4,300 9,870 $.44
____ ____
</TABLE>
The reconciliation of the numerator and denominators of the basic and
diluted earnings per share computations are as follows for the six months
ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
Six months ended, Six months ended,
June 30, 1998 June 30, 1997
______________________________________ _____________________________________
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Net income $7,753 $7,646
Basic EPS $7,753 10,420 $.74 $7,646 9,998 $.76
____ ____
Effect of Dilutive
Stock Option 501 109
____ ___
Diluted EPS $7,753 10,921 $.71 $7,646 10,107 $.76
____ ____
</TABLE>
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
NET SALES
Consolidated net sales for the second quarter of 1998 increased 15.3 percent
or $15.1 million to $113.2 million versus $98.2 million for the second
quarter of 1997. For the six months ended June 30, 1998, net sales
increased 12.9 percent or $24.7 million to $216.0 million compared to $191.3
million for the same period in 1997.
The primary driving force behind the sales growth for the first six months of
1998, is the continued expansion in the Company's core radiopharmaceutical
business within the cardiology market. Cardiology sales growth for the three
months ended June 30, 1998, experienced an overall increase in excess of 10
percent over the prior year. Sales of Cardiolite(R), a proprietary heart
imaging agent to which the Company has preferential distribution rights,
increased approximately 14 percent for the second quarter of 1998 and 20
percent for the six months ended June 30, 1998, when compared to the
corresponding period of the prior year. However, the growth in the
technetium-based heart agent Cardiolite(R) has been partially offset with a
decrease in sales of two other generic cardiology agents, thallium and I.V.
Persantine(R). Thallium sales have declined due to a combination of
competitive pressures and customers switching to technetium-based heart
agents. A competing radiopharmaceutical manufacturer/distributor is also
currently marketing a rival product to Cardiolite(R), which is also a
technetium based heart agent. This competing product negatively impacted the
Company's radiopharmaceutical sales during the first six months of 1998 and
continues to gain market share, currently estimated at 12 percent of the
total profusion market. Cardiology sales for the three months and six months
ended June 30, 1998 were approximately 66 percent and 65 percent of the
Company's total radiopharmaceutical sales.
The Company continues to forecast additional lost sales within the
radiopharmaceutical segment associated with the 1997 loss, through the
process of competitive bidding, of a contract to supply products to a large
hospital buying group. The Company has retained approximately 70 percent of
sales associated with this contract. For 1998, the Company estimates the
cumulative loss to be $17 million in net sales.
Sales for the second quarter ended June 30, 1998 were also negatively
affected as a result of a temporary interruption in the supply of molybdenum,
the parent isotope of technetium. The nuclear medicine community experienced
this interruption due to a labor dispute by one of North America's major
suppliers of molybdenum. This interruption in the supply of molybdenum
impacted the Company's sales for the second quarter of 1998 by an estimated
$2.5 million. The estimated impact on net income was in the range of $.1
million to $.2 million and the estimated impact on earnings per share was
approximately $.01 per share.
On August 1, 1998, the Company will begin instituting a moderate price
increase. The Company will increase the price of both unit dose and bulk
Cardiolite(R) and Miraluma(R). Cardiolite(R) is a heart imaging agent and
Miraluma(R) is a breast imaging agent. A general price increase on all other
products will also be implemented over the remaining months of 1998.
Despite the noted lost sales, the Company anticipates sales growth during the
current year in the core radiopharmacy business to be above the 1997 levels.
The Company completed the acquisition of three medical imaging businesses
during the first six months ended June 30, 1998. Sales from these three
newly acquired businesses and the Company's "open" MRI business contributed
$14.2 million in sales for the first six months of 1998. The Company
anticipates the medical imaging business segment to contribute approximately
$45 million in net sales for 1998.
GROSS PROFIT
Gross profit for the second quarter of 1998 increased $10.7 million to $34.6
million, and as a percentage of net sales to 30.5 percent, compared to 24.3
percent of net sales or $23.9 million for the comparable quarter in 1997.
For the six months ended June 30, 1998, gross profit increased $17.8 million
to $61.7 million and as a percentage of net sales to 28.6 percent, compared
to 23.0 percent of net sales for the comparable period in 1997.
The reasons for the substantial improvement in gross profit margin over the
comparable quarter are two fold. First, the medical imaging businesses
contributed $8.3 million and $10.4 million to gross profit for the three
months and six months ended June 30, 1998. Secondly, gross profit from the
Company's radiopharmaceutical business increased mainly due to a reduction in
certain material acquisition costs. In 1997, the Company completed contract
re-negotiations with one of its major suppliers and received significant
material savings beginning in the second quarter of 1997. Although some of
these price concessions were due to expire in early 1998, the Company has
been successful in extending terms and in some cases negotiating additional
savings into 1998.
OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
Operating, selling and administrative expenses increased by 39.9 percent for
the second quarter of 1998 or $7.5 million to $26.4 million, and as a
percentage of sales increased to 23.3 percent from 19.2 percent for the same
period in 1997. For the six months ended June 30, 1998, operating, selling
and administration expenses increased by 33 percent or $11.9 million to $48.1
million, or 22.3 percent of sales, compared to $36.1 million or 18.9 percent
of sales for the same period in 1997.
A significant portion of the increase in operating, selling and
administrative expenses for the six months ended June 30, 1998 is the result
of the Company's acquisition of certain medical imaging business. Included
in the total increase of $11.9 million is approximately $8.9 million in
expenses associated with the medical imaging business. Other additional
expenses associated with the increase are: increased amortization of costs
associated with the 1997 acquisition of a manufacturing business, increased
depreciation from hardware and software acquisitions associated with system
conversions and upgrades, increased depreciation associated with the
relocation to a new corporate headquarters, and increased consulting costs
for employee incentive plans and recruiting.
The Company expects the increased level of expenditures in these areas to
continue as the medical imaging business is expanded, new systems are
implemented as a result of a re-engineering effort, field systems are
upgraded and expansion in the international marketplace continues.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash, cash equivalents and investments of $26.7 million at
June 30, 1998, compared with $29.3 million at December 31, 1997. The
Company's total debt position of $80.3 million at June 30, 1998, reflects an
increase of $59.0 million when compared to the debt position at December 31,
1997 of $21.3 million. The increase in debt for the quarter ended June 30,
1998 is mainly the result of financing three acquisitions in the medical
imaging business and debt assumed as a result of these acquisitions. Working
capital increased by $5.2 million to $45.3 million at June 30, 1998, compared
to $40.1 million at December 31, 1997.
The Company believes sufficient internal and external sources exist to fund
operations and future expansion programs. On January 5, 1998, a new credit
line facility became effective in the amount of $75 million to fund working
capital and acquisitions. At June 30, 1998, the Company had an unused line
of credit of $33.1 million, before reductions in letters of credit.
SAFE HARBOR STATEMENT
Statements which are not historical facts, including statements about our
confidence, strategies and expectations, opportunities, industry and market
growth, demand and acceptance of new and existing products and return on
investments are forward looking statements that involve risks and
uncertainties, including without limitation, the effect of general economic
and market conditions, supply and demand for the Company's products,
competitor pricing, maintenance of the Company's current market position and
other factors. Given these uncertainties, undue reliance should not be
placed on such forward looking statements.
<PAGE>
SYNCOR INTERNATIONAL CORPORATION AND SUBSIDIARIES
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on June 16, 1998.
10,447,147 shares of the Company's Common Stock were entitled to be voted
during the meeting. 9,230,312 shares were represented at the meeting in
person or by proxy.
The stockholders were asked to vote on the following: (1) the election of
two of the seven directors for an additional three-year term; (2) the
approval of the 1998 Senior Management Stock Purchase Plan (the "Purchase
Plan"); and (3) the approval of the Universal Performance Equity
Participation Plan (the "Universal Plan"). The stockholders voted to elect
the two directors nominated by the Board of Directors and approved both the
Purchase Plan and Universal Plan. The voting results were as follows:
<TABLE>
<CAPTION>
Votes Against Abstention and
Votes in Favor or Withheld Broker Non-Votes
___________________________________________________
<S> <C> <C> <C>
1. Election of Directors
George S. Oki 9,113,304 117,008 0
Robert G. Funari 9,115,946 114,366 0
2. Purchase Plan 5,827,518 1,958,295 1,444,499
3. Universal Plan 5,100,587 2,685,226 1,444,499
</TABLE>
Item 5. Other Information
Haig S. Bagerdjian was promoted to Executive Vice President, Chief Legal
Officer, and Secretary for the Company, and President and Chief Executive
Officer for Syncor Overseas, Ltd., a wholly-owned subsidiary of the Company,
effective June 15, 1998. Prior to his promotion, Mr. Bagerdjian was Senior
Vice President, Business Development, General Counsel and Secretary for the
Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10. Material Contracts
10.1 1998 Senior Management Stock Purchase Plan, effective as of
June 16, 1998
10.2 Universal Performance Equity Participation Plan, effective as
of June 16, 1998
(b) A report on Form 8-K, dated April 2, 1998, was filed disclosing the
acquisition of International Magnetic Imaging, Inc. by Comprehensive Medical
Imaging, Inc., a wholly-owned subsidiary of the Company. A Form-8K/A was
subsequently filed on April 28, 1998 to attach financial statements relating
to the transaction.
<PAGE>
11. Statement re: Computation of Per Share Earnings
Computation can be clearly determined from the material contained in Part
I of this Form 10-Q.
27. Financial Data Schedule (filed electronically)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNCOR INTERNATIONAL CORPORATION
(Registrant)
August 15, 1998 /s/ Michael E. Mikity
_____________________
Michael E. Mikity
Senior Vice President and
Chief Financial Officer
(Principal Financial /
Accounting Officer)
<PAGE>
Exhibit 10.1
SYNCOR INTERNATIONAL CORPORATION
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 Exhibit 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 Exhibit 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 Exhibit 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 Exhibit 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 Exhibit A, the Subscription Agreement
attached as Exhibit B, and the Promissory Note attached as Exhibit 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.
EXHIBIT A
PURCHASER MAXIMUM NO.OF SHARES
---------- --------------------
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
<PAGE>
EXHIBIT 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
herefrom 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
Chief Executive Officer Name: _________________________
Social Security No.____________
No. Of Shares Subscribed For: ____
Principal Amount of Note: $________
Annex 1
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 ____________________________
EXHIBIT 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 10.2
SYNCOR INTERNATIONAL CORPORATION
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 Award. 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:
Date % of Maximum Shares
---- --------------------
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%
(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 addressed 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.
FIRST AMENDMENT TO
THE UNIVERSAL PERFORMANCE EQUITY PARTICIPATION PLAN
This FIRST AMENDMENT TO THE UNIVERSAL PERFORMANCE EQUITY PARTICIPATION
PLAN is made as of June 17, 1998 pursuant to resolutions passed by the Board
of Directors of Syncor International Corporation, a Delaware corporation (the
"Company"), during a meeting held on June 15, 1998, and amends that certain
Universal Performance Equity Participation Plan (the "Plan") approved by the
Company's stockholders on June 16, 1998.
Section 1.2(b) of the Plan is hereby deleted in its entirety, and in
substitution thereof shall be the following:
(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 basis 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 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 foregoing notwithstanding, however, the
Administrator may not reprice or replace any Options granted
under the Plan without prior stockholder approval. The
determinations of the Administrator on the foregoing
matters shall be conclusive.
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
1,000
<S> <C>
Period type 6 mos
Fiscal year end Dec 31, 1998
Period start Jan 1, 1998
Period end June 30, 1998
Cash 25,474
Securities 1,191
Receivables 76,342
Allowances (2,325)
Inventory 7,128
Current assets 121,359
PP&E 91,253
Depreciation (47,210)
Total assets 251,145
Current liabilities 76,041
Bonds 0
Preferred mandatory 0
Preferred 0
Common 617
Other SE 101,158
Total Liability and Equity 251,145
Sales 215,969
Total Revenue 215,969
CGS 154,222
Total costs 154,222
Other expenses 48,069
Loss provision 0
Interest expense (2,134)
Income pre tax 13,578
Income tax 5,825
Income continuing 7,753
Discontinued 0
Extraordinary 0
Changes 0
Net income 7,753
EPS basic .74
EPS diluted .71
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
1,000
<S> <C> <C>
Period type 12 mos 12 mos
Fiscal year end Dec 31, 1996 Dec. 31, 1995
Period start Jan 1, 1996 Jan 1, 1995
Period end Dec 31, 1996 Dec. 31, 1995
Sales 366,447 331,435
Total Revenue 366,447 331,435
CGS 286,254 257,809
Total costs 286,254 257,809
Other expenses 71,536 66,116
Loss provision 0 0
Interest expense (845) (743)
Income pre tax 11,311 8,307
Income tax 4,411 3,323
Income continuing 6,900 4,984
Discontinued (2,264) (315)
Extraordinary 0 0
Changes 0 0
Net income 4,636 4,669
EPS basic .44 .45
EPS diluted .44 .45
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
1,000
<S> <C> <C> <C> <C>
Period type 3 mon 3 mons 3 mons 3 mons
Fiscal year end Dec 31, 1998 Dec 31, 1997 Dec 31, 1998 Dec 31, 1997
Period start Jan 1, 1998 Jan 1, 1997 April 1, 1998 April 1, 1997
Period end Mar 31, 1998 Mar 31, 1997 June 30, 1998 June 30, 1997
Sales 102,724 93,084 113,245 98,187
Total Revenue 102,724 93,084 113,245 98,187
CGS 75,569 72,968 78,653 74,333
Total costs 75,569 72,968 78,653 74,333
Other expenses 21,668 17,270 26,401 18,869
Loss provision 0 0 0 0
Interest expense (505) (219) (1,629) (338)
Income pre tax 5,893 5,577 7,685 5,394
Income tax 2,535 2,231 3,290 2,157
Income continuing 3,358 3,346 4,395 3,237
Discontinued 0 0 0 1,063
Extraordinary 0 0 0 0
Changes 0 0 0 0
Net income 3,358 3,346 4,395 4,300
EPS basic .33 .33 .42 .44
EPS diluted .31 .32 .40 .44
<PAGE>
</TABLE>
