UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
( X ) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended June 30, 1995
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from
to
Commission File Number 0-3274
CORDIS CORPORATION
Incorporated in the I.R.S. Employer
State of Florida Identification No. 59-0870525
14201 N.W. 60th Avenue, Miami Lakes, Florida 33014
(305) 824-2000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $1 Par Value
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
The aggregate market value of voting stock held by non-affiliates of Cordis
Corporation was approximately $982.6 million at August 15, 1995.
At August 15, 1995, 16,393,672 shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Meeting of Stockholders to be
held October 10, 1995, are incorporated by reference into Part III.
There are 123 pages included in this Form 10-K report. The exhibit index is at
page 36.
Part I
Item 1. Business
General Development of Business and Industry Segments
The Company was incorporated in the State of Florida in 1959. The Company
presently maintains its principal headquarters at 14201 N.W. 60th Avenue, Miami
Lakes, Florida 33014. The telephone number is (305) 824-2000.
In April 1994, the Company, through a wholly owned subsidiary, acquired all of
the outstanding stock of Webster Laboratories, Inc. ("Webster"), a company which
develops and manufactures electrophysiology catheters for the diagnosis and
treatment of cardiac arrhythmias. The transaction was accounted for as a
pooling of interests.
The Company operates in a single industry segment consisting of the design,
manufacture and sale of medical devices, primarily angiographic catheters,
neuroscience devices and other related medical devices (See Note 9 of Notes to
Consolidated Financial Statements).
Description of Business
The Company's net sales, with approximate breakdowns by major product class
during the past three fiscal years, were as follows (in thousands):
Years ended June 30,
1995 1994 1993
Angiographic products $425,703 $320,579 $250,322
Neuroscience products 17,467 15,963 17,124
Total $443,170 $336,542 $267,446
Angiographic Products
The Company manufactures an extensive line of angiographic devices for the
diagnosis and treatment of various cardiovascular diseases. The diagnostic
devices include catheters and related equipment that are inserted into a
patient's circulatory system to allow introduction of contrast media enabling a
physician to study the heart, blood vessels and other soft-tissue organs for the
purpose of determining the proper treatment of patients exhibiting disorders of
such tissues. Other diagnostic devices include electrophysiology catheters that
are used to diagnose the patient's electrical system in order to identify and
locate electrical conduction abnormalities. The interventional devices include
balloon dilatation catheters, guiding catheters, steerable guidewires and
accessory products which are used to treat such patients.
Neuroscience Products
The Company manufactures and sells several types of neuroscience products,
including implantable cerebrospinal fluid ("CSF") shunts for the treatment of
hydrocephalus (an excess accumulation of CSF in the ventricles of the brain) and
disposable intracranial pressure monitoring and drainage systems.
Principal Markets, Methods of Distribution
The Company's products are sold worldwide to hospitals, other medical
institutions and physicians. No customer individually accounts for a material
amount of the Company's total sales. In the U.S., all products are sold directly
through full-time employee sales representatives. Outside the U.S., they are
sold through employee sales representatives and distributors. The Company
maintains inventories of products in various locations worldwide. Periodically,
backlog orders have occurred, but none have been material to the Company's
business. An increasing number of hospitals in the U.S. participate in group
purchase organizations. These organizations negotiate prices on behalf of their
member organizations. The Company's business is generally not subject to
seasonal fluctuations.
Sources and Availability of Raw Materials
The Company's products incorporate components manufactured internally and others
purchased from external suppliers. Most purchased components could be obtained
from multiple sources if necessary.
Patents, Trademarks and Licenses
The Company currently owns over 350 patents, has several patents pending on
certain of its products and files applications to obtain patents on new
inventions when practical. Additionally, the Company has and endeavors to
obtain licenses from third parties for technology it deems necessary or
beneficial to the conduct of its business. The industry in which the Company
competes has been characterized by rapid technological advances. Except as noted
in Note 8 of Notes to Consolidated Financial Statements, the Company does not
believe its business is materially dependent on any individual patent.
Competition
Success in the medical device field is dependent upon product quality,
reliability, design features, service, price, and the relationship between the
Company and the physicians and group purchasing organizations utilizing the
products. The Company believes that its product lines are competitive with
other product lines in the market.
The Company's products compete with those of a number of other domestic and
foreign manufacturers. In the sale of angiographic products the Company competes
with several manufacturers, including divisions of C.R. Bard, Inc., Boston
Scientific, Guidant Corporation and Pfizer, Inc., some of whom compete in the
sale of diagnostic products, others in the sale of interventional products, and
some in both. Based upon current information the Company believes that it is a
leading provider of diagnostic angiographic products and a less substantial
provider in the sale of interventional angiographic products.
With the rapid progress of medical technology the Company's products are always
subject to the risk of obsolescence through the introduction of new products or
techniques.
International Operations
In addition to the U.S. manufacturing operations, the Company manufactures
products at its facilities in Roden, The Netherlands, and Biot, France. The
Company's European headquarters is presently located in Waterloo, Belgium. The
Company maintains sales and marketing offices in many European and other
countries.
Operations in countries outside the U.S. are subject to certain financial and
other risks, including currency restrictions, currency exchange fluctuations and
changes in foreign laws. Several countries in which the Company does business
have enacted laws and regulations that are protectionist in nature and have
resulted in increased costs and operational efforts by the Company in order to
continue to effectively compete in those countries. The Company does not
presently believe that such laws and regulations will have a material adverse
effect on the Company's foreign operations.
Research and Development
The Company is continually engaged in product development and improvement
programs. A major portion of development resources are devoted to
interventional angiographic devices and to a lesser extent to diagnostic
devices. Additionally, the Company invests a portion of development funds on
advanced technologies for the treatment of vascular diseases. During the fiscal
years ended June 30, 1995, 1994 and 1993, the Company spent approximately $35.3
million, $26.0 million and $20.1 million, respectively, on research and
development activities. The Company has not engaged in material customer or
government sponsored research.
Government Regulation
The Company's activities are regulated by the United States Food and Drug
Administration ("FDA") and several state and foreign governmental authorities.
The FDA regulations govern the testing, marketing and registration of new
medical devices, in addition to regulating manufacturing practices, labeling and
record keeping procedures. The process of obtaining clearance from the FDA to
market products either through pre-market approvals or pre-market notifications
is costly and time consuming and can delay the marketing and sale of the
Company's products. Additionally, there is no assurance that such approval will
be granted. The FDA is empowered to perform unannounced inspections of the
Company's facilities and operations and to restrain violations of the Food, Drug
and Cosmetic Act.
Medical device laws, ranging from device approval requirements to requests for
product data and price controls, are in effect in many countries in which the
Company does business outside the United States. In addition, government
reimbursement policies for health care costs are becoming increasingly
significant factors for medical device companies. Currently, U.S. Congress is
considering various health care reforms that are designed to reduce the cost of
existing government and private insurance programs. It is uncertain at this
time what impact, if any, the health care reform efforts will have on the
Company. Any changes that limit or reduce reimbursement for the Company's
products could have a material adverse effect on the financial condition of
the Company.
The Company is also subject to federal, state and local laws which regulate the
discharge of materials into the environment and which seek to protect the
environment. Compliance with such laws has not resulted in material
expenditures nor are such expenditures anticipated to have a material adverse
effect on the Company's business.
Employees
As of June 30, 1995, the Company and its subsidiaries had approximately 3,620
full time and part time employees.
Financial Information Relating to Foreign and Domestic Operations and Export
Sales
For a summary of foreign and domestic operations and segment reporting, see Note
9 of Notes to Consolidated Financial Statements.
Item 2. Properties
The Company's principal facilities, located in Miami Lakes, Florida; Roden, The
Netherlands; Biot, France and Baldwin Park, California, consist of manufacturing
plants and research and administrative offices. The Company owns most of its
principal facilities and its production machinery and equipment. The Company
continually evaluates the need for expansion of facilities based on its expected
growth. The Company will relocate its Corporate Headquarters to a separate
location in the Miami, Florida area in 1995. Management believes the Company's
manufacturing facilities are presently adequate for current levels of operation.
In September 1991 the Company subleased its former Administrative and Technical
Center ("ATC") to a third party for a term equal to the remaining term of its
capitalized lease. In December 1994, the sublessee's parent sold the assets of
the sublessee to an unrelated third party. In June 1995, the sublessee
exercised its option to cancel the sublease effective November 1995 (see Note 8
of Notes to Consolidated Financial Statements).
Item 3. Legal Proceedings
For a summary of legal proceedings, see Note 8 of Notes to Consolidated
Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company as of August 15, 1995 are as follows:
Name Age Position
Robert C. Strauss 54 President and Chief Executive Officer
Diane M. Barrett 34 Treasurer
Tony R. Brown 56 Vice President, and President and Chief
Executive Officer, Cordis Webster, Inc.
Jeffrey G. Gold 47 Vice President, and President, Cordis
Endovascular Systems, Inc.
Daniel G. Hall 48 Vice President, Legal Affairs, Secretary
and General Counsel
Joseph C. Hamberger 44 Vice President, Chief Information Officer
Rudy J. Kranys 58 Senior Vice President, Worldwide Research
and Product Development
Charles R. McDowell 58 Vice President, Corporate Relations and
Assistant Secretary
Philip J. Monks 47 Vice President, Worldwide Marketing and
Sales
Alfred J. Novak 47 Vice President and Chief Financial Officer
Barbara G. Ramseyer 47 Vice President, Regulatory Affairs and
Quality Assurance
Egbert Ratering 47 Vice President, Worldwide Manufacturing
Fernando V. Sanchez 42 Vice President and Controller
George von Klan 66 Vice President, Latin American Operations
Wilton W. Webster 67 Vice President and Senior Scientific
Advisor, and Founder and Senior Scientific
Advisor, Cordis Webster, Inc.
Robert C. Strauss was elected President and Chief Executive Officer of the
Company in February 1987. He joined the Company in 1983 as Vice President and
Chief Financial Officer and was elected Senior Vice President in March 1986.
Diane M. Barrett joined the Company in June 1990 as Manager, Internal Audit.
From May 1992 through December 1992 she served as Senior Manager, Corporate
Finance. In December 1992 she was elected to the additional position of
Assistant Treasurer and in June 1993 was elected Director, Corporate Finance and
Assistant Treasurer. She remained in that position until her election as
Treasurer in June 1994. Prior to employment by the Company, she served as an
Audit Manager with Arthur Andersen & Co.
Tony R. Brown was elected Vice President of the Company in April 1994, upon the
merger of Webster with a Company subsidiary. Mr. Brown has served as President
and Chief Executive Officer of Webster from April 1993 to the present date.
Prior to joining Webster, he served as Chief Operating Officer of Bio-Rad
Laboratories, Inc. between August 1990 and April 1993. From August 1986 to
August 1990 he served as President of Bentley Laboratories.
Jeffrey G. Gold joined the Company in May 1978 as Assistant Program Manager,
Angiographic Systems, and was promoted to Director, Manufacturing and
Development in February 1982, and Vice President, Manufacturing, North American
Operations in February 1991. In August 1991, he was elected to the position of
Vice President, Research and Development, North American Operations. In August
1993, he was elected Vice President and President, Cordis Endovascular Systems,
Inc.
Joseph C. Hamberger joined the Company in June 1995 as Vice President, Chief
Information Officer. Prior to joining the Company, he was Director and Chief
Information Officer for the Ryder Dedicated Logistics division of Ryder Systems,
Inc. from January 1994 to June 1995. Prior to 1994, he served as Principal of
CTSG, a consulting company. From May 1985 through 1990 he was Vice President,
Chief Information Officer of Hallmark Electronics. Prior to this he was with
General Electric Company for eighteen years.
Daniel G. Hall joined the Company as General Counsel in December 1981. He was
elected to the additional position of Assistant Secretary in February 1982 and
Secretary in July 1982. In April 1987, he was elected Vice President, Legal
Affairs, Secretary and General Counsel.
Rudy J. Kranys joined the Company in October 1984 as Vice President and
President of the Angiographic Products Division. In April 1987, he was elected
Senior Vice President, North American Operations, and in August 1994, he was
elected Senior Vice President, Operations, Americas Division. In June 1995, his
title was changed to Senior Vice President, Worldwide Research and Product
Development.
Charles R. McDowell joined the Company in January 1976 as Assistant to the
Executive Vice President. He was named Assistant to the President in February
1977 and was elected to the position of Assistant Secretary in July 1982. In
February 1985, he was elected to the additional position of Vice President,
Corporate Relations.
Philip J. Monks joined the Company in August 1978 as a sales representative in
the United Kingdom. From 1980 through March 1985, he served as Division manager
for the United Kingdom and as Sales Manager for Scandinavia. He became Director,
European Sales in April 1985, and was promoted to Division Vice President, Sales
and Marketing, Europe in 1987. In June 1990 he was elected Vice President,
European Marketing and Sales, and in August 1994, he was elected Vice President,
Marketing and Sales, European Division. In June 1995 his title was changed to
Vice President, Worldwide Marketing and Sales.
Alfred J. Novak was elected Vice President and Chief Financial Officer in August
1989 and assumed the additional title of Treasurer from August 1991 until June
1994. He joined the Company in April 1984 as Manager, Affiliate Operations and
in February 1987 was elected President and Chief Executive Officer of Norland
Corporation, a former subsidiary of the Company. In July 1987, he was elected
Vice President, Corporate Development and subsequently in February 1988 he was
elected Vice President, Administration.
Barbara G. Ramseyer was elected Vice President, Regulatory Affairs and Quality
Assurance in August 1991. Prior to joining the Company she was Director-
Corporate Regulatory Affairs for the Hospital Products Group of Pfizer, Inc.
since 1984.
Egbert Ratering joined the Company's subsidiary in Roden, The Netherlands, in
March 1974 as Finance and Accounting Manager. He became European Controller in
1978, and was promoted to Director of Finance, Europe in July 1984. In March
1987 he was promoted to Division Vice President, Finance, Europe and was elected
Vice President, European Operations in June 1990. In August 1994, he was elected
Vice President, Operations, European Division. In June 1995, his title was
changed to Vice President, Worldwide Manufacturing.
Fernando V. Sanchez joined the Company in January 1991 as Vice President and
Controller. Prior to joining the Company he was Vice President, Finance for
Racal-Milgo, Inc., from June 1988. For three years prior, he served as
Controller for Racal-Milgo, Inc.
George von Klan joined the Company in April 1984 as Director of Sales, Europe
and the Middle East. In February 1985, he was elected Vice President, European
Marketing. In April 1987, he was elected Vice President, International Marketing
and Sales. In August 1995, his title was changed to Vice President, Latin
American Operations.
Wilton W. Webster, Jr., founder of Webster, was elected Vice President and
Senior Scientific Advisor of the Company in April 1994, upon the merger of
Webster with a Company subsidiary. In October 1994 he was elected as a Director
of the Company. He served as President, Chief Executive Officer and Chief
Engineer of Webster from its inception to April 1993. From April 1993 he served
as Vice President and Chief Engineer, Vice President, Research and Development
and Chief Engineer from April 1994 through December 1994, and Founder and Senior
Scientific Advisor to the present date.
The executive officers hold office for one year or until their successors are
elected by the Board of Directors.
Part II
Item 5. Market for the Registrant's Common Stock and Related Shareholder Matters
The Company's common stock is traded in the over-the-counter market and is
quoted in the NASDAQ National Market System under the symbol CORD. The
following table sets forth the high and low sale prices of the Company's common
stock for the period from July 1, 1993 through June 30, 1995 reported in the
NASDAQ National Market System. Sale prices represent quotations between dealers
without adjustment for retail markups, markdowns or commissions, and may not
represent actual transactions.
Fiscal Year High Sale Low Sale
1994
First Quarter..... $35-1/2 $27-3/4
Second Quarter.... 50-1/2 31-1/2
Third Quarter..... 54-1/2 41-1/4
Fourth Quarter.... 54-1/4 38
1995
First Quarter..... $57-1/4 $36
Second Quarter.... 61-3/4 51-1/4
Third Quarter..... 73-3/4 57-1/2
Fourth Quarter.... 80 60-1/2
As of August 15, 1995, the number of shareholders of record of the common stock
was 987. The Company has not paid cash dividends to date and has no present
intention to do so (see Note 3 of Notes to Consolidated Financial Statements).
Item 6. Selected Financial Data
Five-Year Summary of Operations and Financial Information
(Dollars in thousands except per share amounts)
1995 1994 1993 1992 1991
Net sales $443,170 $336,542 $267,446 $230,477 $202,560
Income from continuing
operations before cumulative
effect of accounting change $ 50,208 $ 37,491 $ 31,466 $ 25,731 $ 20,085
Earnings per share:
Income from continuing
operations before cumulative
effect of accounting change $ 3.00 $ 2.27 $ 1.94 $ 1.65 $ 1.32
Total assets $394,962 $288,127 $210,519 $171,986 $143,635
Long-term liabilities $ 19,109 $ 9,128 $ 7,993 $ 9,677 $ 29,948
Cash dividends declared per
common share $ - $ - $ - $ - $ -
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
Cash and cash equivalents increased $52.0 million (107%) to $100.6 million at
June 30, 1995 compared to June 30, 1994. Working capital increased by $67.2
million (53%) in the same period, and the current ratio increased to 3.1 from
2.7. The long-term debt to equity ratio remained constant at approximately
zero. During 1995, cash generated from operations was $65.6 million compared to
$41.7 million in 1994. The $23.9 million increase was principally due to
increased income before cumulative effect of accounting change and
proportionately lower cash invested in accounts receivable and inventory levels.
Cash used in investing activities decreased $10.1 million from $30.8 million in
1994 to $20.7 million in 1995. The principal components of the decrease were
the proceeds from the sale of short-term investments in 1995 versus the purchase
of such investments in 1994, offset partly by a $4.9 million increase in capital
expenditures. Most of the increase in capital additions was attributable to the
expansion of manufacturing operations.
Cash of $4.8 million was provided by financing activities in 1995 compared to
cash used of $4.4 million in 1994. The principal causes of the $9.2 million
increase were repurchases of common stock of $7.6 million in 1994 which did not
recur in 1995 and higher proceeds from the issuance of common stock.
Total assets increased $108.9 million (38%) to $395.0 million at June 30, 1995
from $286.1 million at June 30, 1994. The increase occurred principally in the
following areas:
- Cash and cash equivalents increased $52.0 million for the reasons outlined
above.
- Accounts receivable increased $21.3 million (26%), due principally to the
sales increase in the fourth quarter of 1995, where sales grew $26.8
million (28%) over the fourth quarter of 1994.
- Inventories increased by $10.4 million (22%) to meet the increased demand
for the Company's products, evidenced by the growth rate in fourth quarter
sales indicated above.
- Net property, plant and equipment increased $17.2 million due to higher
spending worldwide on projects associated with the interventional and
diagnostic cardiology markets.
Current liabilities increased $19.8 million (27%) due to higher royalties and
accounts payable balances.
The Company has a $25 million line of credit and a $2 million letter of credit
facility with a U.S. bank. No borrowings were outstanding under the agreement at
either June 30, 1995 or 1994. In addition, the Company continues its policy of
borrowing funds in Europe to provide financing of local receivables and to
partially hedge its foreign currency positions. At June 30, 1995 and 1994, such
loans totaled $9.8 million and $9.1 million.
In September 1991 the Company subleased ATC which is held under a capitalized
lease until December 31, 2005 (see Note 8 of Notes to Consolidated Financial
Statements). In December 1994, the sublessee's parent sold the assets of the
sublessee to an unrelated third party. In June 1995, the sublessee exercised
its option to cancel the sublease effective November 1995 and will pay a
termination penalty of $5.45 million upon vacating the building. The Company
believes that the proceeds from the termination penalty, combined with the
current reserve for future costs, will be sufficient to cover the carrying
costs of the building until a replacement tenant can be found. Accordingly,
the Company does not believe that the cancellation of the sublease will have a
material effect on the future liquidity or financial condition of the Company.
Management anticipates that cash generated from operations and utilization of
its credit lines, if necessary, will be sufficient to meet the Company's current
operating requirements and the lease payments and other obligations of ATC over
the lease term. On a long-term basis, management will continue to address the
Company's liquidity requirements and implement necessary financing strategies.
Results of Operations:
Sales
Net sales in fiscal 1995 were $443.2 million, an increase of $106.6 million
(32%) from fiscal 1994. Sales in fiscal 1994 were $336.5 million, $69.1 million
(26%) higher than fiscal 1993. Had currency exchange rates remained constant
throughout the periods, the increases in sales in 1995 over 1994 and in 1994
over 1993 would have been 25% and 32%, respectively.
1995 compared to 1994:
Worldwide sales of angiographic products were $425.7 million in 1995, an
increase of $105.1 million (33%) from 1994's sales of $320.6 million. Had
currency exchange rates remained constant, the increase would have been 26%.
U.S. angiographic products sales were $162.1 million in 1995, up $21.9
million (16%) from 1994. The increase was principally due to higher sales
volumes of interventional cardiology products (PTCA balloon catheters and PTCA
guiding catheters), offset significantly by the effects of lower average selling
prices for such products due to competitive pricing pressures in the U.S.
angioplasty market.
Foreign angiographic products sales were $263.6 million in 1995, which
represented an increase of $83.2 million (46%) from 1994 (34% at constant
currency exchange rates), and accounted for 62% of worldwide angiography sales
compared to 56% last year. As was the case in the U.S., foreign sales benefited
from increased sales volumes of interventional cardiology products, but also
experienced erosion of average selling prices which partially offset the volume
increase, although to a lesser extent than the U.S.
The trend of increasing unit sales volumes and declining average selling prices
has continued to have a net positive effect on U.S. and foreign interventional
cardiology sales revenues in the first quarter of fiscal 1996.
Sales of neuroscience products were $17.5 million in 1995, an increase of $1.5
million (9%) from 1994. The increase was principally due to sales volume
increases and favorable currency exchange rate translation effects in Europe.
Had currency exchange rates remained constant throughout the periods, the
increase in worldwide sales of neuroscience products would have been 5%.
1994 compared to 1993:
In 1994, worldwide sales of angiographic products were $320.6 million, which
represented an increase of $70.3 million (28%, 34% at constant currency exchange
rates) from 1993.
Sales of angiographic products in the U.S. were $140.2 million in 1994, an
increase of $27.1 million (24%) over 1993. The increase was due to increased
sales volumes of interventional angiography products, partially offset by an
adverse price variance due to lower average selling prices of such products.
Foreign angiographic products sales of $180.4 million in 1994 increased by $43.2
million (31%, 43% at constant currency exchange rates) from 1993. The increase
was principally due to increased sales volumes of interventional cardiology and
diagnostic cardiology products, and, to a lesser extent, increased average
selling prices.
Sales of neuroscience products in 1994 were $1.2 million (7%) lower than 1993,
due principally to adverse currency exchange rate translation effects in Europe.
At constant currency exchange rates, the year-to-year decrease would have
been 1%.
Operating Costs and Expenses
Cost of goods sold, expressed as a percentage of net sales, was 40% in each of
the years ended June 30, 1995 and 1994, and was 39% for the year ended June 30,
1993. Comparing 1995 to 1994, product costs as a percentage of net sales were
slightly higher in 1995, due to the adverse effect of the erosion of average
selling prices on interventional cardiology products mentioned previously in the
discussion of 1995's sales, but this effect was offset by other items such as a
more favorable sales mix and proportionately lower expenses in other cost of
goods sold categories. Comparing 1994 to 1993, 1994's cost of goods sold
expressed as a percentage of net sales was one percentage point higher than
1993. Although favorable sales mix resulted in lower product costs in 1994,
this effect was more than offset by higher royalty expenses. Under the terms of
a settlement agreement with C.R. Bard, in December 1993, the Company elected to
pay a license fee for the license of PTCA balloon catheter technology.
Utilizing a five year amortization period from the agreement date of May 1991,
the Company expensed $1.9 million of the $3.0 million license fee in 1994, of
which $1.3 million related to the period from May 1991 to June 1993. Royalty
expenses, which included the $1.9 million license fee, were 2% of sales in 1994
compared to 1% in 1993.
Research and development ("R&D") expenses were $35.3 million in 1995, which
represented an increase of $9.3 million (36%) over 1994. The increase was
principally due to higher spending on products for the interventional and
diagnostic cardiology and neuroradiology markets. Comparing 1994 to 1993,
R&D expense of $26.0 million in 1994 was $5.8 million (29%) higher than 1993,
due to higher spending on products for the interventional cardiology,
electrophysiology and neuroradiology markets. Had currency exchange rates
remained constant throughout the periods, R&D expenses would have increased by
30% in 1995 compared to 1994 and by 33% in 1994 compared to 1993. Expressed as
a percentage of net sales, R&D expenses were 8% in each of the three years ended
June 30, 1995.
Selling, general and administrative ("SG&A") expenses were $145.4 million in
1995, an increase of $29.6 million (26%) from 1994. The increase was
principally caused by higher sales and marketing salaries, travel and
promotional expenses attributable to the 32% increase in sales, and higher legal
costs and employee benefits. SG&A expenses of $115.8 million in 1994 were $21.7
million (23%) higher than 1993; the increase was largely due to the same factors
that affected 1995. At constant currency exchange rates, the respective
increases in SG&A expenses for 1995 and 1994 would have been 20% and 29%.
Expressed as a percent of net sales, SG&A expenses were 33%, 34% and 35%,
respectively, for the years ended June 30, 1995, 1994 and 1993.
Other Expenses (Income)
Net interest and other expense, including litigation settlements of $5.2 million
in both years related to the Company's former pacing operations, was $5.6
million in 1995 compared to $2.4 million in 1994, an increase of $3.2 million
(136%). The increase was principally due to higher costs associated with one of
the lawsuits and other expenses. Comparing 1994 with 1993, net interest and
other expense was $3.0 million lower; the decrease was attributable to higher
interest income and lower losses from reserves for an uncollectible investment
and other items which did not recur.
Income Taxes
Expressed as a percent of pretax income, the income tax provisions for 1995,
1994 and 1993 were 37%, 36% and 26%, respectively. The one percentage point
increase in 1995's effective income tax rate compared to 1994 was caused
primarily by an increase in the U.S. effective rate due to a decrease in tax
credits available. The ten percentage point increase in 1994's rate compared to
1993 was principally due to an increase in the U.S. effective rate resulting
from the adoption of a new accounting standard for income taxes at the beginning
of fiscal 1994.
Cumulative Effect of Accounting Change
Effective July 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes". The cumulative effect on
prior periods of this accounting change of $10.1 million or $0.61 per share is
reported as a one-time benefit in the Consolidated Statement of Operations for
1994.
Net Income
Income before the cumulative effect of an accounting change was $50.2 million in
1995, an increase of $12.7 million (34%) over 1994. Net income was $50.2 million
in 1995, $2.6 million (5%) higher than 1994. In 1994 income before the
cumulative effect of an accounting change was $37.5 million, $6.0 million (19%)
higher than 1993. Net income in 1994 was $47.6 million, $16.1 million (51%)
higher than 1993.
Earnings per share before the cumulative effect of an accounting change was
$3.00 in 1995, $0.73 per share (32%) higher than 1994. Net income per share in
1995 was $3.00, $0.12 per share (4%) higher than 1994. Earnings per share
before the cumulative effect of an accounting change was $2.27 in 1994, $0.33
per share (17%) higher than 1993. Net income per share in 1994 was $2.88, $0.94
per share (48%) higher than 1993.
Item 8. Financial Statements and Supplementary Data
See index to financial statements and financial statement schedules on page 13.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
Part III
The information required by Item 10 - Directors and Executive Officers of the
Registrant (other than information as to executive officers set forth in Part I
on pages 5, 6 and 7), Item 11 - Executive Compensation, Item 12 - Security
Ownership of Certain Beneficial Owners and Management and Item 13 - Certain
Relationships and Related Transactions is incorporated in this Report by
reference from the definitive proxy statement to be filed at least 20 business
days prior to the Company's 1995 Annual Meeting of Stockholders to be held on
October 10, 1995.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial statements and financial statement schedule
The financial statements and schedule listed in the
following index are filed as part of this annual report:
(ITEM 14(a)(i) and (ii))
Page
Independent Auditors' Report............................. 14
Management's Responsibility for Financial Reporting...... 15
Consolidated Statements of Operations for the three
years ended June 30, 1995................................ 16
Consolidated Balance Sheets at June 30, 1995 and 1994.... 17-18
Consolidated Statements of Shareholders' Equity for the
three years ended June 30, 1995.......................... 19
Consolidated Statements of Cash Flows for the three years
ended June 30, 1995...................................... 20
Notes to Consolidated Financial Statements............... 21-34
2. Schedule for the three years ended June 30, 1995:
II-Valuation and Qualifying Accounts..................... 35
Schedules other than that listed above are omitted because
they are not applicable or the required information is shown
in the financial statements or notes thereto.
(b) Report on Form 8-K
No report on Form 8-K was filed during the three months ended June 30,
1995.
Independent Auditors' Report
The Board of Directors and Shareholders
Cordis Corporation
We have audited the accompanying consolidated balance sheets of Cordis
Corporation and its subsidiaries as of June 30, 1995 and 1994 and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended June 30, 1995. Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Cordis Corporation and its
subsidiaries as of June 30, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1995 in conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Miami, Florida
August 11, 1995 (except for Note 8,as
to which the date is August 24, 1995)
Management's Responsibility for Financial Reporting
Management is responsible for the preparation as well as the integrity and
objectivity of the Company's financial statements. The financial statements
have been prepared in conformity with generally accepted accounting principles
and, accordingly, include amounts which represent the best estimates and
judgments of management.
While no system of internal control can ensure elimination of errors and
irregularities, the systems employed by the Company have been designed to
provide reasonable assurance that assets are safeguarded, policies and
procedures are followed and transactions are properly executed and reported.
These systems are periodically reviewed and modified in response to changing
conditions.
The Audit Committee of the Board of Directors, which is comprised of directors
who are not officers or employees of the Company, meet with senior management,
the chief financial officer, the Company's internal auditor and the independent
certified public accountants to review audit plans and results as well as
management's actions taken in discharging its responsibilities for accounting,
financial reporting and internal control systems. The Audit Committee reports
its findings to the Board of Directors and also recommends the selection and
engagement of independent certified public accountants. Management, the
internal auditor and the independent certified public accountants have direct
and confidential access to the Audit Committee.
ROBERT C. STRAUSS
Robert C. Strauss
President and Chief
Executive Officer
ALFRED J. NOVAK
Alfred J. Novak
Vice President and
Chief Financial Officer
Cordis Corporation
Consolidated Statements of Operations
Three Years ended June 30, 1995
(Dollars in thousands except per share amounts)
1995 1994 1993
Net sales $443,170 $336,542 $267,446
Operating costs and expenses:
Cost of goods sold 176,936 133,992 105,097
Research and development 35,283 25,959 20,139
Selling, general and administrative 145,417 115,837 94,092
Total operating costs and expenses 357,636 275,788 219,328
Operating profit 85,534 60,754 48,118
Other expenses (income):
Interest expense 1,361 1,737 1,639
Interest income (3,585) (2,102) (1,185)
Settlement of litigation 5,200 5,180 -
Other, net 2,631 (2,441) 4,955
Total other expenses 5,607 2,374 5,409
Income before income taxes and
cumulative effect of accounting
change 79,927 58,380 42,709
Provision for income taxes 29,719 20,889 11,243
Income before cumulative effect of
accounting change 50,208 37,491 31,466
Cumulative effect of accounting change - 10,115 -
Net income $ 50,208 $ 47,606 $ 31,466
Earnings per share:
Income before cumulative effect of
accounting change $ 3.00 $ 2.27 $ 1.94
Cumulative effect of accounting change - .61 -
Net income $ 3.00 $ 2.88 $ 1.94
See accompanying notes.
Cordis Corporation
Consolidated Balance Sheets
At June 30, 1995 and 1994
(Dollars in thousands)
1995 1994
Assets
Current assets:
Cash and cash equivalents $100,558 $ 48,531
Short-term investments, at cost - 7,055
Accounts receivable (less allowance for doubtful
accounts of $2,975 in 1995 and $2,207 in 1994) 103,835 82,502
Inventories:
Finished goods 36,306 25,770
Work-in-process 12,188 12,483
Raw materials and supplies 10,089 9,913
58,583 48,166
Deferred income taxes 7,133 8,350
Other current assets 17,480 5,942
Total current assets 287,589 200,546
Property, plant and equipment, at cost:
Land 5,348 5,045
Buildings and improvements 68,946 54,836
Leasehold improvements 4,019 3,532
Machinery and equipment 76,744 61,702
Construction in progress 14,512 10,641
169,569 135,756
Less accumulated depreciation and amortization 81,076 64,509
88,493 71,247
Deferred income taxes 9,628 6,844
Other assets 9,252 7,490
$394,962 $286,127
See accompanying notes.
Cordis Corporation
Consolidated Balance Sheets
At June 30, 1995 and 1994
(Dollars in thousands)
1995 1994
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 9,828 $ 9,057
Accounts payable 14,854 10,916
Accrued salaries and employee benefits 25,950 25,373
Accrued taxes 6,681 7,926
Accrued litigation settlement 5,200 5,180
Accrued royalties 11,186 1,855
Other accrued expenses 12,707 9,995
Income taxes 6,933 3,245
Current portion of long-term debt 669 613
Total current liabilities 94,008 74,160
Long-term liabilities:
Long-term debt 1,484 1,894
Other 17,625 7,234
Total long-term liabilities 19,109 9,128
Total liabilities 113,117 83,288
Commitments and contingencies (Note 8)
Shareholders' equity:
Preferred stock, $1 par value; authorized 2,500,000
shares; none issued - -
Common stock, $1 par value; authorized 50,000,000
shares, issued and outstanding 16,361,568 shares
in 1995 and 16,001,206 shares in 1994 16,362 16,001
Capital in excess of par value 74,503 62,016
Retained earnings 165,866 115,658
Unrealized gain on investment, net of
deferred income taxes of $1,755 2,745 -
Foreign currency translation adjustments 22,369 9,164
Total shareholders' equity 281,845 202,839
$394,962 $286,127
See accompanying notes.
Cordis Corporation
Consolidated Statements of Shareholders' Equity
Three years ended June 30, 1995
(Dollars and shares in thousands)
1995 1994 1993
Common stock:
Shares
Balance at beginning of year 16,001 15,920 15,149
Stock issued under employee retirement
and stock option plans 340 244 616
Issuance of stock - - 337
Stock issued under employee performance
award plan 21 37 31
Purchases and retirement of common stock - (200) (213)
Balance at end of year 16,362 16,001 15,920
Amount
Balance at beginning of year $ 16,001 $ 15,920 $ 15,149
Stock issued under employee retirement
and stock option plans 340 244 616
Issuance of stock - - 337
Stock issued under employee performance
award plan 21 37 31
Purchases and retirement of common stock - (200) (213)
Balance at end of year 16,362 16,001 15,920
Capital in excess of par value:
Balance at beginning of year 62,016 58,808 54,046
Stock issued under employee retirement
and stock option plans 6,274 3,792 6,472
Issuance of stock - - 1,640
Tax benefit from exercise of stock
options 5,158 5,740 410
Stock issued under employee performance
award plan 1,055 1,082 893
Purchases and retirement of common stock - (7,406) (4,653)
Balance at end of year 74,503 62,016 58,808
Retained earnings:
Balance at beginning of year 115,658 68,052 36,586
Net income 50,208 47,606 31,466
Balance at end of year 165,866 115,658 68,052
Unrealized gain on investment:
Balance at beginning of year - - -
Unrealized holding gain on appreciation of
equity investment, net of deferred
taxes 2,745 - -
Balance at end of year 2,745 - -
Foreign currency translation adjustments:
Balance at beginning of year 9,164 5,515 13,646
Foreign currency translation adjustments13,205 3,649 (8,131)
Balance at end of year 22,369 9,164 5,515
Total shareholders' equity $281,845 $202,839 $148,295
See accompanying notes.
Cordis Corporation
Consolidated Statements of Cash Flows
Three years ended June 30, 1995
(Dollars in thousands)
1995 1994 1993
Cash flows from operating activities:
Net income $ 50,208 $ 47,606 $ 31,466
Noncash items included therein:
Cumulative effect of accounting change - (10,115) -
Depreciation and amortization 15,785 11,424 10,121
Deferred income tax (benefit)
provision (4,905) 3,096 (3,635)
Provisions for inventory obsolescence,
doubtful accounts, uncollectible
investment and other 4,625 2,038 4,192
Currency transaction losses 1,149 1,115 2,604
Changes in assets and liabilities:
Increase in accounts receivable (16,795) (22,138) (13,259)
Increase in inventories (8,004) (11,162) (9,252)
Increase in other current assets (2,779) (1,860) (1,315)
(Increase) decrease in other assets (3,559) (1,378) 154
Increase in accounts payable and
accruals 17,114 21,126 11,477
Increase in current and deferred
income taxes payable, net 8,964 1,379 1,210
Increase (decrease) in other long-term
liabilities 4,036 209 (718)
Other, net (261) 404 (627)
Net cash provided by operating
activities 65,578 41,744 32,418
Cash flows from investing activities:
Additions to property, plant and
equipment (27,662) (22,771) (15,573)
Purchases of short-term and
other investments (1,000) (9,055) -
Proceeds from sale of short-term
investments 7,055 - -
Proceeds from sale of property,
plant and equipment 545 618 215
Proceeds from collections of notes
receivable 330 417 846
Net cash used in investing activities (20,732) (30,791) (14,512)
Cash flows from financing activities:
Bank loans - 1,729 7,801
Debt retirement (742) (1,760) (1,077)
Proceeds from the sale of common stock 5,589 3,264 8,365
Repurchases of common stock - (7,606) (4,866)
Net cash provided by (used in)financing
activities 4,847 (4,373) 10,223
Effect of exchange rate changes on cash 2,334 (91) (189)
Increase in cash and cash equivalents 52,027 6,489 27,940
Cash and cash equivalents:
Beginning of year 48,531 42,042 14,102
End of year $100,558 $ 48,531 $ 42,042
See accompanying notes.
Notes to Consolidated Financial Statements
June 30, 1995, 1994 and 1993
1. Summary of significant accounting policies
a. Principles of consolidation
The Consolidated Financial Statements of Cordis Corporation include the accounts
of Cordis Corporation and its subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated.
b. Revenue recognition
The Company's revenue is derived from sales of medical devices. Revenue from
such sales is generally recognized at the time of shipment to customers.
c. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or net
realizable value. Inventory costs include material, labor and manufacturing
overhead.
d. Property, plant and equipment
The lives used in calculating provisions for depreciation and amortization of
the principal assets using the straight-line method are as follows:
Buildings and improvements 10 - 30 years
Leasehold improvements 10 - 20 years
Machinery and equipment 3 - 10 years
e. Earnings per share
Primary earnings per share of common stock have been determined on the basis of
the average number of shares of common stock and common stock equivalents
outstanding during the year. The exercise of outstanding options, computed
under the treasury stock method based upon average stock prices during the year,
has been included in the computation when dilutive. The computation of fully
diluted earnings per share resulted in no material dilution.
f. Foreign currency translation
Foreign currency translation adjustments, which result from translating the
assets and liabilities of foreign subsidiaries into the U.S. dollar, have been
excluded from each component of the Consolidated Statements of Cash Flows.
Aggregate exchange losses resulting from foreign currency transactions during
the years ended June 30, 1995, 1994 and 1993 were $1,149,000, $1,115,000 and
$2,604,000, respectively, and are included in the Consolidated Statements of
Operations.
g. Cash and cash equivalents
For the purposes of reporting cash flows, cash and cash equivalents include
marketable securities with a maturity of three months or less at acquisition,
and approximate fair values at June 30, 1995 and 1994. Two investments,
representing approximately 41% of the recorded balance at June 30, 1995, are
money market mutual funds maintained with two brokerage firms.
For the years ended June 30, 1995, 1994 and 1993 income taxes paid, net, were
$25,189,000, $17,312,000 and $13,851,000, and interest paid, including interest
on the capitalized lease (see Note 8 of Notes to Consolidated Financial
Statements), was $2,916,000, $3,398,000 and $3,748,000, respectively.
h. Foreign currency contracts
The Company enters into foreign currency contracts as a hedge against assets and
liabilities denominated in foreign currencies. Such assets and liabilities
relate mainly to intercompany purchases of inventory. At the end of each
period, foreign currency contract balances are marked to market, and the
resulting gain or loss is recognized in the Consolidated Statements of
Operations. At June 30, 1995 and 1994, the Company had approximately
$35,238,000 and $20,500,000, respectively, in contracts to buy or sell various
denominations of foreign currency in the future. At June 30, 1995, based upon
the rights of offset contained in the various foreign currency contract
agreements, the carrying values of such contracts were a current asset of
$153,000 and a current liability of $240,000, which approximated fair value.
i. Securities available for sale
Securities available for sale at June 30, 1995 are carried at fair value, based
upon market quotations. Deferred income taxes are provided on any unrealized
appreciation or decline in value. Such appreciation or decline in value, net of
deferred taxes, is reflected as a separate component of shareholders' equity.
j. Reclassifications
Certain amounts in prior years have been reclassified to conform to the 1995
Consolidated Financial Statement presentation.
2. Inventory obsolescence
Cost of goods sold for the years ended June 30, 1995, 1994 and 1993 included
provisions for obsolescence of $3,268,000, $1,436,000 and $1,061,000,
respectively, for inventory which management considered to be in excess of that
required for future sales. At June 30, 1995 and 1994 inventories are stated net
of allowances for obsolescence of approximately $3,204,000 and $2,259,000,
respectively.
3. Notes payable and long-term debt
Notes payable:
The Company's European subsidiaries have various credit lines denominated in
local currencies which are available to provide working capital and to hedge
foreign exchange exposures. The total amount of credit available under these
agreements was $26,800,000 at June 30, 1995. Amounts outstanding were
$9,828,000 at June 30, 1995 and $9,057,000 at June 30, 1994, with interest rates
ranging from 5% to 18-1/2% throughout the years ended June 30, 1995 and 1994.
Long-term debt:
The Company has a $25 million revolving line of credit and a $2 million letter
of credit facility with a U.S. bank, which terminates on December 31, 1997. A
one year extension of the termination date may be granted annually at the
discretion of the lender. During the revolving credit period, the Company has
the option of borrowing at the prime interest rate, or at the London Interbank
Offered Rate plus 1-1/4%. A facility fee of 1/4% of the unused portion of the
$25 million commitment is payable quarterly. The agreement contains various
covenants, which require the Company to maintain certain financial ratios and
meet certain net worth and indebtedness tests, and which restrict the payment of
cash dividends by the Company. No borrowings were outstanding under the
agreement at June 30, 1995 or 1994. Interest rates ranged from 7-1/4% to 8-3/4%
throughout the years ended June 30, 1995 and 1994.
At June 30, 1995 and 1994, the Company's European subsidiaries had long-term
borrowings totaling $2,153,000 and $2,447,000, respectively, under several
agreements. These loans are denominated in European currencies at interest
rates ranging from 8% to 9-3/4% throughout the periods, due at various times
through January 1999. The carrying amounts of these loans approximated their
fair values at June 30, 1995 and 1994.
Principal payments on existing long-term debt for the fiscal years ending
June 30, are as follows: 1996 - $669,000; 1997 - $683,000; 1998 - $440,000;
1999 - $361,000.
4. Investments
In March 1994, the Company purchased 250,000 shares of common stock of PDT, Inc.
("PDT"), a California-based company engaged in the application of photodynamic
therapy products to primarily the oncology market, for $2.0 million. In 1995,
PDT went public, and at June 30, 1995, the market value of the Company's
investment in PDT was $4.5 million higher than its original cost. Accordingly,
the Company has recorded its investment in PDT in other current assets at its
fair market value of $6,500,000, and has recorded the unrealized holding gain
of $2,745,000 (net of deferred taxes of $1,755,000) as a separate component of
shareholders' equity.
In April 1994, the Company acquired Webster Laboratories, Inc. ("Webster"), a
California-based company engaged in the design, manufacture, marketing and sale
of electrophysiology catheters. The transaction was accounted for as a pooling
of interests and was achieved through the merger between Webster (renamed Cordis
Webster, Inc.) and one of the Company's subsidiaries. The Company issued
approximately 1.67 million shares of its common stock for all of Webster's
common stock and assumed an additional 192,000 shares of Webster's outstanding
stock options.
In July 1995, the Company purchased 150,000 shares of Class B preferred stock in
Biosense, Inc. ("Biosense"), for $15 million, which represented 5% of its shares
on a fully diluted basis. Biosense is engaged in the design and manufacture of
products for the electrophysiology market. A $1 million advance of the purchase
price was paid in May 1995 and was included in other noncurrent assets.
5. Stock option plans
The Cordis Corporation Non-Qualified Stock Option Plan ("Non-Qualified Plan")
authorizes grants of options to purchase up to 2,625,000 shares of the Company's
authorized but unissued common stock. The options granted pursuant to the Plan
either are exercisable after one year from the date of grant or vest in
increments over four years, must be exercised within either five or ten years
depending on the date of the grant, and must be granted at a price not less than
the market value on the date of grant.
At June 30, 1995, awards to purchase 2,070,180 shares under the Non-Qualified
Plan (net of cancellations and repurchases) had been granted. There are 554,820
shares available for future grants under the Non-Qualified Plan. Of the options
granted, 214,800 shares were exercised under the Non-Qualified Plan during 1995.
At June 30, 1995 and 1994, 314,698 options and 333,429 options, respectively,
were exercisable under the Non-Qualified Plan.
The Cordis Corporation Incentive Stock Option Plan of 1982 ("Option Plan")
expired by its terms in October 1992. In 1995, 4,525 shares were exercised
under the Option Plan. No options were outstanding at June 30, 1995, and at
June 30, 1994, 5,775 options were outstanding and exercisable. Options under
the Option Plan qualify as "incentive stock options" under the Economic Recovery
Tax Act of 1981.
The Webster Laboratories, Inc. 1992 Stock Plan ("Webster Plan"), was adopted by
the Board of Directors of Webster in June 1992. Under the Webster Plan, awards
to purchase 398,806 shares had been granted at June 30, 1995. During fiscal
1995, 80,187 shares were exercised, and at June 30, 1995 and 1994, 41,017 and
79,195 options were exercisable, respectively. The Webster Plan options were
granted for a term of ten years at an exercise price fixed by the Webster Plan
administrator, and are exercisable at such times as set forth in each individual
option agreement.
The Cordis Corporation Director Non-Qualified Stock Option Plan provides
incentives in the form of stock option grants for the non-employee members of
the Company's Board of Directors. Of the 200,000 shares authorized, 68,000 have
been granted to Board members through June 30, 1995, and 30,000 and 38,000 of
these were exercisable, respectively, at June 30, 1995 and 1994. During 1995,
options for 22,000 shares were exercised. The options, which are granted
automatically each year, vest in full one year after the anniversary of the date
of the grant, must be exercised within five years and are granted at a price
equal to the market value on the date of the grant.
A summary of option transactions follows:
No. of Option Price
Shares per Share
Options outstanding at June 30, 1992 1,391,619 $ 0.28 to $36.75
Options granted 379,670 $ 0.88 to $26.75
Options exercised (594,834) $ 0.28 to $27.25
Options canceled (11,762) $ 3.55 to $36.75
Options outstanding at June 30, 1993 1,164,693 $ 0.88 to $36.75
Options granted 322,107 $ 7.11 to $49.25
Options exercised (226,124) $ 0.88 to $36.75
Options canceled (14,242) $ 0.88 to $29.25
Options outstanding at June 30, 1994 1,246,434 $ 0.88 to $49.25
Options granted 261,150 $38.38 to $63.00
Options exercised (321,512) $ 0.88 to $49.25
Options canceled (7,330) $ 0.88 to $49.25
Options outstanding at June 30, 1995 1,178,742 $ 0.88 to $63.00
The income tax benefits derived from the exercise of non-qualified stock options
and disqualifying dispositions of incentive stock options, when realized, are
credited to capital in excess of par value.
6. Income taxes
Effective July 1, 1993, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 109, Accounting for Income Taxes. The cumulative effect
on prior periods of this accounting change of $10.1 million, or $.61 per share,
is reported as a one time benefit in the Consolidated Statement of Operations
for the year ended June 30, 1994. In addition a one time adjustment of $4.2
million was recorded to capital in excess of par value in the Consolidated
Balance Sheet as of June 30, 1994 due to the income tax benefits derived from
the exercise of non-qualified stock options and disqualifying dispositions of
incentive stock options.
SFAS No. 109 is an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. In estimating future tax consequences, SFAS No. 109 generally
considers all expected future events other than enactments of changes in the tax
law or rates. Previously, the Company used the SFAS No. 96 asset and liability
approach that gave no recognition to future events other than the recovery of
assets and settlement of liabilities at their carrying amounts. Under SFAS No.
96, tax credits are reflected as reductions of income tax expense using the flow
through method in the year they are utilized.
The distribution of income before income taxes and cumulative effect of
accounting change between domestic and foreign sources was as follows (in
thousands):
1995 1994 1993
Domestic $ 35,888 $ 36,219 $ 21,600
Foreign 44,039 22,161 21,109
Total $ 79,927 $ 58,380 $ 42,709
The provision (benefit) for income taxes consists of (in thousands):
1995 1994 1993
Current:
Federal $ 13,158 $ 8,980 $ 4,937
State 2,443 1,169 698
Foreign 19,023 7,644 9,243
34,624 17,793 14,878
Deferred:
Federal (3,282) 3,149 (2,256)
State (305) 257 (84)
Foreign (1,318) (310) (1,295)
(4,905) 3,096 (3,635)
Provision for income
taxes $ 29,719 $ 20,889 $ 11,243
The tax effect of the significant temporary differences which comprised the
deferred tax assets and liabilities at June 30, 1995 and 1994 was as follows (in
thousands):
1995 1994
Assets:
Discontinued operations $ 4,428 $ 5,124
Intercompany profit adjustments in
inventories and other assets 3,597 2,527
Asset valuation reserves 7,761 4,122
Net operating loss carryforwards 1,810 2,485
Capital loss carryforward 842 -
Employee benefits 2,202 1,930
Depreciation 2,273 1,686
Other accrued expenses 917 745
Other 402 138
24,232 18,757
Valuation allowance (3,490) (2,618)
Total deferred tax assets 20,742 16,139
Liabilities:
Employee benefit plans (2,221) (940)
Other (5) (5)
Unrealized gain (1,755) -
Total deferred tax liabilities (3,981) (945)
Net deferred tax asset $16,761 $15,194
The valuation allowance primarily relates to net operating loss carryforwards of
the Company's European subsidiaries as well as a domestic capital loss
carryforward. The reserve changed during 1995 due to the utilization of net
operating losses and the creation of the capital loss. As of June 30, 1995 the
European subsidiaries had a net operating loss carryforward of approximately
$5,200,000.
As permitted under SFAS No. 109, prior years' financial statements have not been
restated. The principal temporary differences under SFAS No. 96 in the deferred
tax benefit were (in thousands):
1993
Intercompany profit adjustments in
foreign inventories $(1,339)
Asset valuation reserves (271)
Deferred expenses (1,363)
Other items, net (662)
Total $(3,635)
The effective income tax rates in the Consolidated Statements of Operations
differ from the statutory federal income tax rates as follows:
1995 1994 1993
Statutory U.S. income tax rate 35.0% 35.0% 34.0%
Increase (decrease) resulting from:
Foreign statutory tax rates differential .9 (.2) 1.7
Foreign operating loss for which no carryback
benefit is available - - .2
Utilization of net operating losses (.9) (1.6) (8.4)
Minimum tax - - 2.0
Foreign tax credits (.6) - (9.3)
Other items, net 2.8 2.6 6.1
Effective tax rates 37.2% 35.8% 26.3%
Undistributed earnings of foreign subsidiaries of $103.8 million at June 30,
1995 are indefinitely reinvested in foreign operations; accordingly no provision
has been made for income taxes that might be payable upon remittance. It is not
practical to estimate the amount of tax that might be payable on the eventual
remittance of such earnings. On remittance, certain foreign countries impose
withholding taxes that are then available for use as credits or deductions
against U.S. tax liability, if any, subject to certain limitations. The amount
of withholding tax that would be payable on remittance of the entire amount of
undistributed earnings at June 30, 1995 would approximate $5.3 million.
7. Employee benefit plans
The Company has a domestic non-contributory defined benefit pension plan (the
"Plan") which covers substantially all full-time domestic employees. The
Company's policy is to contribute amounts as are necessary on an actuarial basis
to provide assets sufficient to meet the benefits requirements in accordance
with ERISA and federal income tax regulations. The assets of the Plan consist
mainly of common stock and intermediate bond investments.
Net periodic pension cost for each of the three years ended June 30, 1995, 1994
and 1993 included the following components (in thousands):
1995 1994 1993
Service cost - benefits earned during the
period $ 1,914 $ 1,661 $ 1,303
Interest cost on projected benefit
obligation 3,149 2,875 2,585
Return on assets (4,782) (2,011) (2,339)
Net amortization and deferral 1,992 (356) 102
Net pension cost $ 2,273 $ 2,169 $ 1,651
The actuarial assumptions used in the three year period ended June 30, 1995 were
as follows:
1995 1994 1993
Discount rates 8% 8% 8-1/2%
Long-term rate of return on assets 9% 9% 9%
Rates of increase in compensation levels:
To age 30 9% 9% 9%
To age 40 7% 7% 7%
Thereafter 5% 5% 5%
The following table sets forth the Plan's funded status and amounts recognized
in the Company's Consolidated Balance Sheets at June 30, 1995 and 1994 (in
thousands):
1995 1994
Actuarial present value of benefit obligations:
Vested benefit obligation $(34,733) $(31,912)
Nonvested benefit obligation (726) (660)
Accumulated benefit obligation (35,459) (32,572)
Excess of projected benefit obligation over
accumulated benefit obligation (8,017) (7,056)
Projected benefit obligation (43,476) (39,628)
Plan assets at fair value 38,235 30,850
Projected benefit obligation in excess of plan
assets (5,241) (8,778)
Unrecognized net loss 6,780 8,323
Unrecognized prior service cost 2,271 3,102
Unrecognized net transition (asset) originating
July 1, 1986 (2,994) (3,742)
Additional minimum liability - (626)
Prepaid (accrued) pension costs $ 816 $ (1,721)
The provisions of SFAS No. 87, "Employers' Accounting for Pensions", require
recognition in the balance sheet of an additional minimum liability up to the
unfunded accumulated benefit obligation and related intangible asset for pension
plans with accumulated benefits in excess of plan assets. Such minimum
liability and intangible asset were $626,000 at June 30, 1994; at June 30, 1995
no adjustment was required.
The Company sponsors a defined contribution retirement savings plan for its
domestic employees and matches a portion of employee contributions with
contributions of the Company's stock. Contributions made to the plan for the
years ended June 30, 1995, 1994, and 1993 were $1,025,000, $752,000 and
$599,000, respectively.
Certain of the Company's foreign subsidiaries provide retirement and termination
indemnity benefits for employees through multiemployer and other types of plans
with insurance companies, which cover a majority of full-time employees, based
on compensation and years of service. Pension costs for these plans for the
years ended June 30, 1995, 1994 and 1993 were $912,000, $968,000 and $828,000,
respectively. At June 30, 1995 and 1994, unfunded benefits included in current
and other long-term liabilities were $1,212,000 and $1,072,000, respectively.
The Company maintains a performance award plan for officers and key senior
employees. Awards are earned upon achievement of certain performance objectives
as determined annually by the Compensation Committee of the Board of Directors.
For the years ended June 30, 1995, 1994 and 1993, provisions for this plan were
$4,965,000, $3,146,000 and $2,541,000, respectively.
The Company has deferred compensation or supplemental retirement plans with
present and past key officers, directors and employees. The cost of such plans
is being or has been accrued over the period of active employment from the
contract or agreement date. Certain payments, insignificant in amount, are
charged to expense when due. Costs for these plans approximated $698,000,
$836,000 and $651,000 for the years ended June 30, 1995, 1994 and 1993,
respectively.
The Company adopted SFAS No. 106, "Employers Accounting for Postretirement
Benefits Other Than Pensions" in fiscal 1994, effective for U.S. plans. For
foreign plans, SFAS No. 106 is effective for fiscal year ending June 30, 1996.
The Company does not believe that adoption of this standard for its foreign
plans will have a significant effect on future operations. The adoption of SFAS
No. 112, "Employers' Accounting for Postemployment Benefits" in fiscal 1995 had
no significant effect on the Company's financial condition or operations.
8. Commitments and contingencies
Leases:
During fiscal 1987, the Company initiated a plan to dispose of all businesses
other than its angiographic and neuroscience product lines. This plan included
the disposal of the worldwide cardiac pacing operations, of which the
Administrative and Technical Center ("ATC") in Miami, Florida was a principal
asset.
In September 1991, the Company entered into an agreement to sublease ATC, which
is held under a capitalized lease until December 31, 2005. In December 1994, the
sublessee's parent sold the assets of the sublessee to an unrelated third party.
In June 1995, the sublessee exercised its option to cancel the sublease
effective November 1995 and will pay a termination penalty of $5.45 million upon
vacating the building. The Company believes that the proceeds from the
termination penalty, combined with the current reserve for future costs, will be
sufficient to cover the carrying costs of the building until a replacement
tenant can be found. Accordingly, the Company does not believe that
cancellation of the sublease would have a material effect on the future
liquidity or financial condition of the Company.
The net annual cost of the capitalized lease is approximately $2.2 million.
Aggregate gross future payments under the capitalized lease were approximately
$25,330,000 at June 30, 1995.
Rental income received by the Company with respect to the sublease of ATC in
1995, 1994 and 1993 was $1,438,000, $1,333,000, and $1,237,000, respectively.
Under the terms of the sublease cancellation agreement, the Company will receive
rental income of $373,000 in fiscal 1996, through September 1995.
At June 30, 1995 and 1994, assets and liabilities of the discontinued operations
are reflected below (in thousands):
1995 1994
Property, plant and equipment, net of accumulated
depreciation and amortization of $13,917 at June
30, 1995 and $12,373 at June 30, 1994 $ 16,261 $ 17,805
Other assets, net 1,253 1,307
Capital lease liability (15,799) (16,628)
Net capital lease asset 1,715 2,484
Reserve for future costs (7,410) (6,316)
(5,695) (3,832)
Amount included in current (assets)
liabilities (2,930) 842
Net liabilities - noncurrent $ (8,625) $ (2,990)
The Company has several long-term operating leases which expire at various times
through 2008. Most of the leases contain renewal options and require the
Company to pay for maintenance, taxes and insurance. Rental expenses charged to
operations in 1995, 1994 and 1993 were $2,746,000, $2,328,000 and $1,867,000,
respectively. Future lease commitments are estimated as follows: 1996 -
$2,970,000; 1997 - $2,318,000; 1998 - $1,757,000; 1999 - $1,370,000; 2000 -
$1,025,000; thereafter - $2,547,000.
Legal proceedings:
The Company is engaged in various ordinary routine litigation and administrative
proceedings incidental to the business of the Company, some of which involve
claims for substantial amounts of money and include claims for punitive damages.
The Company does not, however, anticipate that any amounts required to be paid
by reason thereof will, in the aggregate, have a material adverse effect on the
financial condition of the Company.
The Company self-insures a portion of its products liability claims and
maintains insurance coverage in excess of that retention. Such insurance may
not cover or indemnify awards of punitive damages. The Company believes its
insurance coverage is adequate to protect it against any product related losses
that could otherwise have a material adverse effect on the financial condition
of the Company.
Pacer product liability litigation
As part of the transaction involving the sale of the Company's pacing operations
in 1987, the purchaser assumed certain contingent liabilities including several
pending lawsuits. However the Company retained liability for any punitive
damages awarded in connection with pacer-related products liability litigation
involving products sold by the Company prior to April 30, 1987. Since 1987
there have been no such punitive damage awards, nor does the Company anticipate
that future awards, if any, would have a material adverse effect on the
financial condition of the Company.
In November 1986 a product liability class action suit was filed against the
Company and others in the United States District Court for the Southern District
of Ohio. The suit sought compensatory and punitive damages regarding certain of
the Company's pacemakers. In 1989, a second pacemaker class action lawsuit was
filed against the Company in the United States District Court for the Southern
District of California. This case was transferred and consolidated with the
Ohio action in 1990.
The Company has vigorously defended the pacemaker product liability class action
since its inception. In December 1992, the Court conditionally certified the
proceedings as a class action. The Complaint claims substantial compensatory
and punitive damages were due to the class members. The Company believes it had
defenses to plaintiffs' claims and, as more fully described below, that it had
available adequate and effective indemnification and insurance coverage.
Beginning in 1986 and thereafter, the Company duly notified its insurance
carriers of the filing of the initial pacemaker class action. In response, the
carriers agreed to provide a defense to the Company, subject to various
reservations of rights. Such insurance may not cover or indemnify against
awards of punitive damages.
In 1987, subsequent to the filing of the pacemaker class action claim, the
Company sold its pacemaker business to TNC Medical Devices Pte, Ltd. ("TNC").
As part of that transaction, TNC agreed to indemnify the Company for contingent
liabilities relating to its pacemaker operations, including the pacemaker class
action litigation and other pacemaker product liability actions, except for any
award of punitive damages. This obligation was guaranteed by Telectronics
Holdings, Ltd., the parent of TNC. In past pacemaker cases, there has never
been an award of punitive damages against the Company.
In November and December 1993, the Company's insurance carriers filed two
separate actions against the Company and TNC in the United States District Court
for the Southern District of Florida, seeking a declaratory adjudication of the
extent of their duties to defend and indemnify the Company for claims made in
the pacemaker class action. Additionally, the carriers sought an adjudication
that, in connection with TNC's acquisition of the Company's pacemaker business,
TNC agreed to assume the primary obligation to defend and indemnify the Company
for the pacemaker product liability litigation. Both insurance actions were
consolidated with the Ohio action. A separate declaratory judgment action was
initiated in the Eleventh Judicial Circuit, Dade County, Florida by one of the
Company's carriers but the Company has not been served. As a result of
settlement discussions initiated by the court in 1994, the parties on June 27,
1995, reached a general oral agreement to settle the dispute. The Company's
proposed contribution to the settlement, $5.2 million, represents the Company's
effort to curtail the escalating legal costs in the product liability and
insurance disputes and to minimize its overall exposure for punitive damage
awards. At a hearing on August 24, 1995, the Judge concluded that the proposed
settlement is fair and reasonable, subject to a final agreement on funding and
defense costs. The balance of the settlement is to be funded by contributions
from various of the Company's insurance carriers and TNC.
The Company has recently been named as a co-defendant in three class actions
asserting product liability claims arising out of certain pacing leads
manufactured and sold by TPLC, Inc. ("TPLC"), an affiliate of TNC. Over one
hundred (100) class action suits involving the same leads have been filed
against TPLC. The Judicial Panel on Multidistrict Litigation has consolidated
the actions for pretrial proceeding in the United States District Court,
Southern District of Ohio, Western Division. Neither the Company nor its
subsidiaries have been named as defendants in the master class action complaint
pursuant to the Company's agreement with the plaintiffs to enter into a written
agreement to toll the statute of limitations. The plaintiffs' counsel naming
the Company as a co-defendant have further agreed to dismiss the Company from
these actions. Facts presently available indicate that such leads were first
marketed and sold by TPLC or its affiliate in 1988, after an affiliate of TPLC
obtained 510(k) concurrence from the Food and Drug Administration ("FDA") for
the leads. The Company further believes that because it never manufactured or
sold the leads in question, it is not a proper defendant to these actions.
Moreover, the Company believes it is entitled to indemnification from TNC
pursuant to the Acquisition Agreement by and between TNC and the Company
involving the sale of the pacemaker and leads businesses ("Acquisition
Agreement"). TNC has notified the Company that the Company may have liability
regarding the leads claims, pursuant to the Acquisition Agreement, however,
based upon the information currently available indicating that the Company did
not manufacture or sell the leads in question, the Company does not believe it
has any liability to TNC or to lead recipients for any of the claims asserted.
Other litigation
In October 1992, a suit was filed by Schneider (USA) Inc. against the Company in
the United States District of Minnesota, Third Division alleging that certain of
the Company's angiographic catheters and the Company's guiding catheters
infringe a Schneider patent. The trial of the action is presently scheduled for
September 5, 1995. During 1994, Schneider instituted two separate actions
against the Company in the Netherlands. The first such action alleges that the
Company infringes a Dutch rapid exchange patent. The second action mirrors the
United States action and alleges that certain of the Company's angiographic and
guiding catheters infringe a Schneider Dutch patent. The trial of the second
action was held on June 28, 1995, however, a decision has not yet been rendered.
The Company has instituted summary proceedings against Schneider in the
Netherlands and in several other European countries alleging Schneider's
infringement of the Company's nylon balloon technology. In the Netherlands
action, the court denied the Company's request for a summary injunction. The
Company has appealed that decision and is awaiting the court's ruling.
Decisions regarding injunctions in various European actions regarding the nylon
balloon technology are anticipated over the next six months.
The Company is currently engaged in discussions and negotiations with Schneider
which, it anticipates, will result in a settlement and resolution of all of the
patent infringement actions currently filed and pending between the two
companies. If the matters are not resolved by settlement, the Company intends
to vigorously defend the various actions filed by Schneider and to aggressively
pursue enforcement of certain of the Company's patents believed to be infringed
by Schneider patents. At this stage of the negotiations and litigation
proceedings, the Company believes that the matters are unlikely to result in a
material adverse impact on the financial condition of the Company.
In a hearing on October 3, 1994 in the U.S. District Court in Boston,
Massachusetts, the Company argued that its license of certain balloon catheter
technology from C.R. Bard ("Bard") required a royalty reduction pursuant to the
"more reasonable terms" clause of the settlement agreement previously entered
into by the parties in April 1991. The court has not yet ruled on the matter.
In the interim, the Company continues to accrue but withhold payment of the
excess royalties until such time as a final determination is rendered by the
court.
9. Foreign and domestic operations and segment reporting
The Company operates in a single industry segment: the design, manufacture and
sale of medical devices. These products are sold to hospitals and other medical
institutions and physicians. In order to reduce credit risk, the Company
performs credit evaluations of its customers on a regular basis, and generally
does not require collateral. The Company has a large number of customers
worldwide with no single customer accounting for a significant portion of trade
accounts receivable. At June 30, 1995, the principal geographical regions and
their respective balances included in accounts receivable were as follows (in
thousands):
United States $30,519
Italy 15,208
France 12,452
Germany 9,797
Spain 9,280
The following presents information on geographic segments for the fiscal years
ended June 30, 1995, 1994 and 1993 (in thousands):
Adjust-
Domestic Foreign ments and
Opera- Opera- Elimina- Consoli-
tions tions tions dated
1995
Sales to unaffiliated customers $203,004 $240,166 $ - $443,170
Transfers between geographic
areas 50,892 20,118 (71,010) -
Total revenues $253,896 $260,284 $(71,010) $443,170
Operating profit from geographic
segments $ 61,753 $ 65,734 $ (5,570) $121,917
Research and development (35,283)
General corporate expense (8,931)
Interest income, net 2,224
Income before income taxes $ 79,927
Identifiable assets $138,925 $165,857 $(10,378) $294,404
Corporate assets 100,558
Total assets at June 30, 1995 $394,962
1994
Sales to unaffiliated customers $174,447 $162,095 $ - $336,542
Transfers between geographic
areas 40,551 14,734 (55,285) -
Total revenues $214,998 $176,829 $(55,285) $336,542
Operating profit from geographic
segments $ 55,326 $ 37,820 $ (3,312) $ 89,834
Research and development (25,959)
General corporate expense (5,860)
Interest income, net 365
Income before income taxes and
cumulative effect of accounting
change $ 58,380
Identifiable assets $116,91 9 $118,996 $ (5,374) $230,541
Corporate assets 55,586
Total assets at June 30, 1994 $286,127
1993
Sales to unaffiliated customers $136,843 $130,603 $ - $267,446
Transfers between geographic
areas 26,472 12,759 (39,231) -
Total revenues $163,315 $143,362 $(39,231) $267,446
Operating profit from geographic
segments $ 38,203 $ 30,181 $ (1,084) $ 67,300
Research and development (20,139)
General corporate expense (3,998)
Interest (expense), net (454)
Income before income taxes $ 42,709
Identifiable assets $ 81,825 $ 89,732 $ (3,080) $168,477
Corporate assets 42,042
Total assets at June 30, 1993 $210,519
Transfers between geographic areas are made at amounts which would approximate
those prices charged to unaffiliated distributors. Operating profits from
geographic segments represent total revenue less cost of goods sold and direct
operating expenses. It excludes research and development expense, general
corporate expense, net interest (income) expense, income taxes, and cumulative
effect of accounting change.
Identifiable assets are those that are identified with the operations in each
geographic area. Corporate assets are cash and cash equivalents and short-term
investments. Total foreign assets at June 30, 1995, 1994 and 1993 are indicated
above. The corresponding liabilities for foreign operations were $61,002,000,
$41,168,000 and $29,038,000, respectively.
10. Quarterly financial data
Quarterly financial data is as follows (unaudited) (dollars in thousands except
per share amounts):
First Second Third Fourth
Quarter Quarter Quarter Quarter
1995
Net sales $ 98,111 $105,264 $117,980 $121,815
Gross profit 60,065 64,306 69,901 71,962
Net income 11,633 12,982 13,781 11,812
Net income per share .70 .78 .82 .70
1994
Net sales $ 73,147 $ 79,453 $ 88,942 $ 95,000
Gross profit 44,775 47,893 54,425 55,457
Income before cumulative
effect of accounting
change 8,723 9,134 10,540 9,094
Net income 18,838 9,134 10,540 9,094
Per share:
Income before cumulative
effect of accounting
change .53 .55 .63 .55
Net income 1.15 .55 .63 .55
In the fourth quarter of fiscal 1995, the Company accrued $5.2 million ($0.19
per share after tax) as its contribution to the proposed settlement of a lawsuit
related to its former pacing operations (see Note 8 of Notes to Consolidated
Financial Statements).
In December 1993, under the terms of a settlement agreement with C. R. Bard, the
Company elected to pay a license fee for the license of PTCA balloon catheter
technology. Utilizing a five year amortization period from the agreement date
of May 1991, the Company expensed $1.5 million of the $3.0 million license fee
in cost of goods sold in the second quarter of fiscal 1994, of which
approximately $1.3 million ($0.05 per share after tax) related to the period
from May 1991 to June 1993.
In the fourth quarter of fiscal 1994, the Company incurred costs of
approximately $1.3 million ($0.05 per share after tax), included in selling,
general and administrative expenses, related to the Webster merger transaction.
The Company settled a lawsuit in July 1994 in the amount of $5.2 million, for
which it had previously accrued $2.2 million in other expenses during 1994. The
balance of the settlement of $3.0 million ($0.11 per share after tax) was
expensed in the fourth quarter.
11. Common stock purchase rights
On September 12, 1986 the Company's Board of Directors adopted a Rights
Agreement, as subsequently amended, authorizing a dividend distribution on each
share of common stock, $1.00 par value, of the Company's outstanding shares on
the distribution date, as defined, in the form of a right to purchase one-half
of a share of common stock upon the occurrence of certain events. The exercise
price to purchase one-half of a share of common stock, initially established at
$25, is subject to adjustment. The rights become exercisable if an entity,
person or group acquires beneficial ownership of 20% or more of the Company's
outstanding common stock or commences a tender offer that would result in that
entity, person or group acquiring beneficial ownership of 30% or more of the
outstanding common stock of the Company. The rights, which do not entitle
holders to vote or receive dividends, expire on September 22, 1996 and may be
redeemed by the Company at a price of $0.01 per right at any time prior to the
earlier of (i) the tenth day following the public announcement of intent to
acquire the Company's stock as described above or the date a majority of the
Board of Directors becomes aware of an acquiring entity, person or group, as
defined, or (ii) the expiration date. As of June 30, 1995 rights to purchase
8,180,784 shares of common stock were outstanding.
CORDIS CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Addi-
Balance tions Deduc-
at be- charged tions/ Balance
ginning to other at end
of costs & changes of
period expenses (a) period
Allowance for doubtful accounts -
deducted from accounts receivable
in the balance sheet:
Year ended June 30, 1995 $ 2,207 $ 707 $ 61 $ 2,975
Year ended June 30, 1994 $ 1,661 $ 776 $ (230) $ 2,207
Year ended June 30, 1993 $ 1,535 $ 593 $ (467) $ 1,661
Allowance for inventory obsolescence
- deducted from inventory in the
balance sheet:
Year ended June 30, 1995 $ 2,259 $ 3,268 $(2,323) $ 3,204
Year ended June 30, 1994 $ 2,472 $ 1,436 $(1,649) $ 2,259
Year ended June 30, 1993 $ 2,826 $ 1,061 $(1,415) $ 2,472
Allowance for uncollectible
notes receivable - deducted
from other assets in the
balance sheet:
Year ended June 30, 1995 $ 3,647 $ 524 $ (36) $ 4,135
Year ended June 30, 1994 $ 5,422 $ (326) $(1,449) $ 3,647
Year ended June 30, 1993 $ 4,943 $ 524 $ (45) $ 5,422
Allowance for uncollectible
investment - deducted from
other assets in the balance
sheet:
Year ended June 30, 1995 $ 2,166 $ 126 $(2,292) $ -
Year ended June 30, 1994 $ 2,014 $ 152 $ - $ 2,166
Year ended June 30, 1993 $ - $ 2,014 $ - $ 2,014
(a) Includes the translation effect of Statement of Financial Accounting
Standards No. 52.
Exhibits Index
Certain of the exhibits listed below are incorporated by reference to exhibits
to previously filed registration statements or reports of the Company as
indicated in the "Incorporated by Reference to" column.
Incorporated
by Reference to
Ex- Ex-
hibit Registration hibit
No. No. or Report No. Description
2(a) Form S-4 No. 2(a) Agreement and Plan of Reorganization, as amended,
33-52399 dated by and among Cordis Corporation, Cordis
February 25, 1994 Acquisition, Inc., Webster Laboratories, Inc.
and certain shareholders of Webster dated as of
January 20, 1994.
3 Form 10-K for 3 Restated Articles of Incorporation of the
year ended Company dated February 9, 1978, and Articles of
June 30, 1983 Amendment thereto dated November 1, 1978.
3(a) Form S-4 No. 3(a) Articles of Amendment to the Company's Restated
33-52399 dated Articles of Incorporation filed with the Florida
February 25, 1994 Secretary of State on November 3, 1993.
3(a) Form 10-K for 3(a) By-Laws of the Company.
year ended
June 30, 1983
10(a) Form 10-K for 10(a) Revolving Credit and Reimbursement Agreement,
year ended dated as of December 30, 1991, between Cordis
June 30, 1992 Corporation as Borrower and NCNB National Bank
of Florida as Lender.
10(a) Form S-4 No. 10(a) Employment Agreement by and among Tony R. Brown,
33-52399 dated Cordis Corporation and Cordis Webster, Inc.
February 25, 1994
10(a) Form S-4 No. 10(a) Employment Agreement by and among Wilton W.
33-52399 dated Webster, Jr., Cordis Corporation and Cordis
February 25, 1994 Webster, Inc.
10(b) Form 10-K for 10(b) Lease Agreement dated as of March 1, 1979,
year ended between the Company and Olympia & York Florida
June 30, 1985 Equity Corp.
10(b) Form 10-K for 10(b) Lease Agreement dated as of September 20, 1991
year ended between the Company and Baxter Diagnostics, Inc.
June 30, 1991
10(b) - - Agreement for Cancellation of Lease dated as of
June 16, 1995 between the Company and Dade
International, Inc.
10(d) Form 10-K for 10(d) Cordis Corporation Incentive Stock Option Plan
year ended of 1982.
June 30, 1983
10(d) Form 10-Q for 10(d) Amendment, dated April 13, 1987, to Cordis
quarter ended Corporation Incentive Stock Option Plan of 1982.
March 31, 1987
10(d) Form S-8 No. 10(d) Cordis Corporation Non-qualified Stock Option
33-23668 dated Plan.
August 30, 1988
Exhibits Index Continued
10(d) Form S-8 No. 10(d) Cordis Corporation Non-qualified Stock Option
33-35304 dated Plan.
June 28, 1990
10(d) Form S-8 No. 10(d) Cordis Corporation Non-qualified Stock Option
33-63634 dated Plan.
June 1, 1993
10(d) Form S-8 No. 10(d) Webster Laboratories, Inc. 1992 Stock Plan
33-53835 dated
May 26, 1994
10(d) Form 10-K for 10(d) Cordis Corporation Director Non-qualified Stock
year ended Option Plan.
June 30, 1992
10(d) Form S-8 No. 10(d) Cordis Corporation Director Non-qualified Stock
33-44953 dated Plan.
January 6, 1992
10(d) Form 10-K for 10(d) Cordis Corporation Supplemental Executive
year ended Retirement Plan
June 30, 1992
10(d) - - Cordis Corporation Director Deferred
Compensation Plan
10(d) - - Cordis Corporation Executive Deferred
Compensation Plan
10(d) Form 10-K for 10(d) Amended Cordis Corporation Director Retirement
year ended Policy
June 30, 1992
10(f) Form 10-K for 10(f) Cordis Corporation 1991 Performance Unit Award
year ended Plan
June 30, 1992
10(i) Form 10-Q for 10(i) Acquisition Agreement by and between TNC Medical
quarter ended Devices, Pte. Ltd. and Cordis Corporation, dated
March 31, 1987 as of April 14, 1987, including amendments
thereto dated April 14, 1987 and April 30, 1987,
with respect to the sale of the Company's
worldwide cardiac pacing operations.
10(j) Form 8-K dated 4 Rights Agreement, dated September 12, 1986
September 12, between the Company and Manufacturers Hanover
1986 Trust Company.
10(j) Form 10-K for 10(j) Amendment No. 1, dated as of September 15, 1989
year ended to the Rights Agreement, dated September 12, 1986
June 30, 1989 between the Company and Manufacturers Hanover
Trust Company.
10(j) Form 10-K for 10(j) Amendment No. 2, dated as of October 12, 1989 to
year ended the Rights Agreement, dated September 12, 1986
June 30, 1991 between the Company and Manufacturers Hanover
Trust Company.
Exhibits Index Continued
10(j) Form 10-K for 10(j) Amendment No. 3, dated as of November 15, 1989
year ended to the Rights Agreement, dated September 12, 1986
June 30, 1991 between the Company and Manufacturers Hanover
Trust Company.
11 - - Computation of earnings per share.
21 - - Subsidiaries of Cordis Corporation.
23 - - Independent Auditors' Consents.
The documents listed herein with the exception of Exhibits 11, 22, and 24 are
not included in copies of this form. The Company will furnish any of these
documents upon request and payment of a fee to cover its expenses. Requests
should be made to:
Corporate Secretary
Cordis Corporation
P. O. Box 025700
Miami, Florida 33102-5700
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CORDIS CORPORATION
Date: By Robert C. Strauss
August 24, 1995 Robert C. Strauss
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
Signature Title
Robert Q. Marston Chairman of the Board of Directors
Robert Q. Marston
Robert C. Strauss Director, President and Chief
Robert C. Strauss Executive Officer
Richard W. Foxen Director
Richard W. Foxen
Donald F. Malin, Jr. Director
Donald F. Malin, Jr.
David R. Challoner Director
David R. Challoner
Wilton W. Webster, Jr. Director
Wilton W. Webster, Jr.
Patricia K. Woolf Director
Patricia K. Woolf
J. L. de Ruyter van Steveninck Director
J. L. de Ruyter van Steveninck
Alfred J. Novak Vice President and Chief
Alfred J. Novak Financial Officer
Exhibit 11
CORDIS CORPORATION
COMPUTATION OF PRIMARY EARNINGS PER SHARE
(In thousands except per share amounts)
Years ended June 30,
1995 1994 1993
Income:
Income before cumulative effect of
accounting change $ 50,208 $ 37,491 $ 31,466
Cumulative effect of accounting change - 10,115 -
Net income $ 50,208 $ 47,606 $ 31,466
Common shares:
PRIMARY
Weighted average shares
outstanding 16,170 15,995 15,847
Potential dilution on exercise
of stock options (1) 554 557 367
Shares included in the computation
of primary earnings per share 16,724 16,552 16,214
FULLY DILUTED
Weighted average shares
outstanding 16,170 15,995 15,847
Potential dilution on exercise of
stock options (1) 586 578 410
Shares included in the computation of
fully diluted earnings per share 16,756 16,573 16,257
Earnings per share:
PRIMARY
Income before cumulative effect of
accounting change $ 3.00 $ 2.27 $ 1.94
Cumulative effect of accounting change - .61 -
Net income $ 3.00 $ 2.88 $ 1.94
FULLY DILUTED
Income before cumulative effect of
accounting change $ 3.00 $ 2.26 $ 1.94
Cumulative effect of accounting change - .61 -
Net income $ 3.00 $ 2.87 $ 1.94
(1) Computed under the treasury stock method based on the average price during
the periods for primary earnings per share, and the higher of the average
price during the periods or the end of period closing price for fully diluted
earnings per share.
NOTE: The fully diluted calculation is submitted in accordance with
Regulation S-K item 601(b) (11) although not required by Accounting Principles
Board Opinion No. 15 because it results in a dilution of less than 3%.
Exhibit 21
SUBSIDIARIES OF CORDIS CORPORATION
The significant subsidiaries of the Registrant, all of which are included in
the Consolidated Financial Statements, are as follows:
Jurisdiction
of
Name Incorporation
Cordis International Corporation............................ Delaware
Cordis Holding B.V.......................................... The Netherlands
Cordis Europa N.V........................................... The Netherlands
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement (Form
S-8, No. 33-23668) pertaining to the Non-Qualified Stock Option Plan of Cordis
Corporation and in the related Prospectus of our report dated August 11, 1995
except for note 8, as to which the date is August 24, 1995 appearing in the
Annual Report on Form 10-K of Cordis Corporation for the year ended June 30,
1995.
Additionally, we consent to the incorporation by reference in the Registration
Statement (Form S-8, No. 2-87829) pertaining to the Incentive Stock Option Plan
of 1982 of Cordis Corporation and in the related Prospectus of our report dated
August 11, 1995 except for note 8, as to which the date is August 24, 1995
appearing in the Annual Report on Form 10-K of Cordis Corporation for the year
ended June 30, 1995.
Additionally, we consent to the incorporation by reference in the Registration
Statement (Form S-8, No. 33-35304) pertaining to the Non-Qualified Stock Option
Plan of Cordis Corporation and in the related Prospectus of our report dated
August 11, 1995 except for note 8, as to which the date is August 24, 1995
appearing in the Annual Report on Form 10-K of Cordis Corporation for the year
ended June 30, 1995.
Additionally, we consent to the incorporation by reference in the Registration
Statement (Form S-8, No.33-44953) pertaining to the Director Non-Qualified Stock
Option Plan of Cordis Corporation and in the related Prospectus of our report
dated August 11, 1995 except for note 8, as to which the date is August 24, 1995
appearing in the Annual Report on Form 10-K of Cordis Corporation for the year
ended June 30, 1995.
Additionally, we consent to the incorporation by reference in the Registration
Statement (Form S-8, No. 33-63634) pertaining to the Non-Qualified Stock Option
Plan of Cordis Corporation and in the related Prospectus of our report dated
August 11, 1995 except for note 8, as to which the date is August 24, 1995
appearing in the Annual Report on Form 10-K of Cordis Corporation for the year
ended June 30, 1995.
Additionally we consent to the incorporation by reference in the Registration
Statement (Form S-8, No. 33-53835) pertaining to the Webster Laboratories, Inc.
1992 Stock Plan and in the related Prospectus of our report dated August 11,
1995 except for note 8, as to which the date is August 24, 1995 appearing in the
Annual Report on Form 10-K of Cordis Corporation for the year ended June 30,
1995.
DELOITTE & TOUCHE LLP
Miami, Florida
August 24, 1995
Exhibit 10(b)
AGREEMENT FOR CANCELLATION OF LEASE
THIS AGREEMENT is made and entered into this ___
day of ________, 1995, by and between DADE INTERNATIONAL,
INC., a Delaware corporation ("Dade") and CORDIS
CORPORATION, a Florida corporation ("Cordis").
W I T N E S S E T H:
WHEREAS, Baxter Diagnostics, Inc., a Delaware
corporation ("Baxter Diagnostics") and Cordis entered into
that certain lease agreement (the "Lease") dated August 23,
1991, a copy of which is attached as Exhibit A, pursuant to
which Cordis leased certain property located at 10555 West
Flagler Street, Miami, Florida, including a building
consisting of approximately 220,000 square feet of net
rentable area and other related improvements (collectively
the "Leased Premises") to Baxter Diagnostics.
WHEREAS, the Leased Premises are owned of record
by American Real Estate Holdings Limited Partnership, a
Delaware limited partnership ("American");
WHEREAS, Cordis derives its interest in the
Leased Premises pursuant to that certain lease agreement
(the "Prime Lease") dated March 1, 1979 and amended June
25, 1980, a copy of which is attached as Exhibit B, by and
between Cordis and Olympia and York Florida Equity Corp.
(predecessor in interest to American);
WHEREAS, Cordis, Baxter Diagnostics and American
entered into that certain agreement (the "Tri-Party
Agreement") dated April 2, 1992 in order to comply with
certain requirements of the Prime Lease;
WHEREAS, Baxter Diagnostics was merged into
Baxter Healthcare Corporation, a Delaware corporation
("Baxter"), its sole shareholder, on or about December 19,
1994;
WHEREAS, pursuant to the merger of Baxter
Diagnostics into Baxter, all of the rights and obligations
of Baxter Diagnostics pursuant to the Lease and the Tri-
Party Agreement were transferred to and assumed by Baxter;
WHEREAS, subsequent to the merger of Baxter
Diagnostics into, Baxter assigned to Dade all of its
rights, benefits, privileges, duties, liabilities and
obligations under and pursuant to the Lease and the Tri-
Party Agreement, and Dade acquired all of Baxter's rights,
benefits, and privileges, and assumed all of Assignor's
duties, liabilities and obligations under the Lease and the
Tri-Party Agreement;
WHEREAS, Baxter is and will remain jointly and
severally liable with Dade for all obligations under the
Lease and Tri-Party Agreement;
WHEREAS, Baxter has consented to the transactions
contemplated by this Agreement, provided that such consent
shall not make Baxter responsible for Dade's obligations
hereunder (except to the extent that Baxter is a guarantor
of Dade's obligation to pay the Cancellation Fee (as
hereinafter defined));
WHEREAS, Cordis and Dade have reached an
agreement regarding the cancellation of the Lease as
hereinafter set forth; and
WHEREAS, the parties expressly have agreed that
the payment of the Cancellation Fee (as herein defined) is
a payment to cancel the contractual obligations under the
Lease and not rent or otherwise to be considered a payment
for the use or occupancy of the Leased Premises.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, Assignor and Dade hereby agree as
follows:
Section 1. Recitals. The parties hereto
acknowledge and agree that the foregoing recitals are true
and correct and are hereby incorporated into this
Agreement.
Section 2. Closing and Cancellation of Lease.
2.1 Cancellation of Lease. Subject to the terms
and conditions hereof, including those set forth in
Section 7, payment of the Cancellation Fee and delivery of
the items specified in Section 2.3 and Section 2.4, Cordis
and Dade agree that the Lease and Tri-Party Agreement shall
be cancelled on the Closing Date (as hereinafter defined)
and, except as otherwise provided in this Agreement, the
parties will have no further rights or obligations
thereunder.
2.2 Time and Place. Unless extended pursuant to
the provisions of this Agreement, consummation of the
transactions relating to cancellation of the Lease and Tri-
Party Agreement (the "Closing") will take place at 10:00
A.M. on October 31, 1995 (the "Closing Date"), at the
office of White & Case, 200 S. Biscayne Boulevard, Miami,
Florida 33131-2352 or such other place as the parties shall
mutually agree. The Lease and Tri-Party Agreement shall
remain in full force and effect until the Closing occurs
and, in the event the Closing does not occur, shall only
terminate in accordance with the terms and conditions of
the Lease and Tri-Party Agreement.
2.3 Closing Expenses.
2.3.1 At Closing, Dade will pay the cost
of recording any instruments required to be recorded.
2.3.2 Each party will pay any fees due
to its attorneys or other consultants.
2.4 Delivery of Documents and Payment of
Cancellation Fee by Dade. At the Closing, in addition to
any other documents specifically required to be delivered
or acts required to be done pursuant to this Agreement,
Dade will deliver, or cause to be delivered, to Cordis the
following (all of which shall be in form reasonably
acceptable to Cordis):
2.4.1 a payment in an amount equal to
the sum of (i) $5,450,000, (ii) $6,000 multiplied by the
number of days, if any, after June 15, 1995 and prior to
the date on which this Agreement is executed by Dade and
delivered to Cordis, (iii) any amounts described in Section
4.2.2(ii) (collectively the "Cancellation Fee"). The
Cancellation Fee shall be paid on the Closing Date by wire
transfer to an account specified by Cordis;
2.4.2 a quit claim deed in recordable
form conveying any interest of Dade in the Leased Premises
to Cordis;
2.4.3 a memorandum of termination of the
Lease in recordable form;
2.4.4 originals or copies of the
maintenance records set forth on Exhibit C and such other
maintenance records relating to the Leased Premises during
the term of the Lease as Cordis reasonably requests at
least 5 days prior to the Closing Date; and
2.4.5 an absolute bill of sale with
respect to all personalty and fixtures then on or at the
Leased Premises.
2.5 Prorations. Except as otherwise
specifically set forth in this Agreement, all costs and
expenses of, and impounds, prepayments or deposits
affecting or related to, the Leased Premises and all rent
due under the Lease, will be paid by Dade through September
30, 1995 with all such amounts paid on or before the
Closing Date to the extent reasonably possible.
Termination of the Lease in accordance with this Agreement
shall not relieve Dade of responsibility for payment of all
or any of the foregoing amounts which are accrued but
unpaid as of the Closing Date; provided, however, that ad
valorem property taxes for 1995 shall, to the extent
payment of such taxes is an obligation of Dade, be
satisfied by payment of the Cancellation Fee and Dade shall
have no separate obligation for such 1995 ad valorem
property taxes.
Section 3. Cooperation. Dade will
immediately allow Cordis to begin marketing the Leased
Premises to any potential replacement user(s) of the Leased
Premises and will cooperate with Cordis in connection with
such marketing efforts prior to the Closing Date including
(i) making the Leased Premises available to Cordis or its
agents during normal business hours or outside of normal
business hours with at least 24 hours notice for all
showings, investigations, examinations and inspections of
the Leased Premises by any person; (ii) the proper and
orderly maintenance and cleaning of the Leased Premises;
and (iii) the maintenance of relationships with all
subcontractors, suppliers and other contract vendees that
are reasonably necessary for the orderly operation of the
Leased Premises by Dade.
Section 4. Inspection Period and Repairs.
4.1 Inspection Period. Cordis will have the
right with reasonable advance notice, from and after the
date of this Agreement through 5:00 P.M. on the 45th day
after the Agreement Date (the "Inspection Period"), to
inspect the physical and other conditions of or with
respect to the Leased Premises, including the right to make
such engineering, analyses and other investigations
(excluding soil tests) as Cordis deems reasonably necessary
and appropriate, to review, and to make and retain copies
of, all of the permits, plans and specifications,
maintenance records and other documents, if any, relating
to the operation or maintenance of the Leased Premises
during the term of the Lease and in the possession or
control of Dade, including but not limited to those items
set forth on Exhibit C, and to investigate and/or review
any other facts, circumstances or matters which Cordis
deems relevant to its proposed termination of the Lease.
Dade agrees to cooperate with Cordis in making available to
Cordis the permits, plans and specifications, maintenance
records and other documents, if any, relating to the
operation or maintenance of the Leased Premises during the
term of the Lease which Cordis reasonably requests or which
are reasonably necessary in order to satisfy any of Cordis'
requests. During the Inspection Period, Cordis and Dade
shall prepare a schedule of any items to be removed from
the Leased Premises upon termination of the Lease and any
items which must be repaired or refurbished by Dade prior
to the Closing Date. Such schedule shall include the
estimated cost of all such repairs or refurbishments and
Dade shall be deemed to be on notice of all such items and
costs as though they were discovered by Cordis and Dade was
notified of same pursuant to Section 4.2.1 and Section
4.2.2.
4.2 Repairs by Dade.
4.2.1 Cordis will have the right, which
may be exercised by delivering written notice to Dade at
any time during the Inspection Period, to notify Dade of
any objections to the condition of the Leased Premises
discovered by Cordis during the Inspection Period
(including, without limitation, any defect or other
deficiency in the physical condition of the improvements,
fixtures or the personalty or any objection to the status
or standing of any contract or permit). Such notice shall
specify Cordis' estimate of the cost of correcting such
defect or deficiency. Notwithstanding the foregoing,
Dade's obligation under this Section 4.2 shall not include
ordinary wear and tear to any part of the Leased Premises
(including, without limitation, the parking lot and other
road surfaces) or the personal property or fixtures located
at the Leased Premises from the date of the Lease to the
Closing Date.
4.2.2 Upon receipt of a notice pursuant
to Section 4.2.1, Dade shall have a period of time not to
exceed 45 days after the date of such notice within which
to cure any objection or defect identified therein or, if
such objection or defect is not capable of being cured
within such 45 day period, Dade shall commence such cure
within such 45 day period and thereafter continually and
diligently pursue completion of such cure. If Dade fails
or is unable to cure or remove the objection or defect,
Cordis may, at Cordis' sole option, either (i) accept the
Leased Premises in its then existing condition or (ii)
increase the Termination Fee by the estimate of the cost of
correcting such defect or deficiency and such increase in
the Cancellation Fee shall be non-refundable and shall
constitute final and absolute settlement of all claims by
Cordis for repairs to the Leased Premises; provided,
however, that if the aggregate increase in the Cancellation
Fee required under this Section 4.2.2 (ii) exceeds
$250,000, the estimated amount shall be deposited with an
escrow agent acceptable to Cordis and Dade and such amount
shall thereafter be disbursed to fund the costs of
correcting such defects or deficiencies. In the event the
actual costs are less than the amount deposited with the
escrow agent, such excess shall be refunded to Dade. In
the event the actual costs exceed the amount deposited with
the escrow agent, Dade shall fund all such excess costs
upon submission of invoices, etc. to Dade.
Section 5. Representations and Warranties.
5.1 Representations, Warranties and Covenants of
Dade. Dade hereby warrants, covenants and represents the
following to Cordis with full knowledge that Cordis is
acting in reliance upon same in executing the Agreement and
commencing performance hereunder:
5.1.1 Lease. The Lease is in full force
and effect, and there exists no event of default or event
or act (including, without limitation, the execution,
delivery or performance of this Agreement) which, with the
giving of notice, the lapse of time or the happening of any
other event or condition would become a default thereunder.
Except for Cordis's consent under the Lease and the consent
of American under the Prime Lease, no consent of any person
is required in order for all the rights and privileges of
Baxter under the Lease and the Tri-Party Agreement to be
fully assigned to Dade, for all of the duties and
obligations under the Lease and Tri-Party Agreement to be
assumed by Dade and guaranteed by Baxter and for the Lease
and the Tri-Party Agreement to be as valid and enforceable
by and against Dade on and after the assignment thereof as
it is by and against Baxter immediately prior to such time.
Dade has not violated any of the terms and conditions of
the Lease or the Tri-Party Agreement and, to the best of
its knowledge, all of the covenants to be performed by
every other party thereto as of the date hereof have been
fully performed in all material respects.
5.1.2 Dade is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite
corporate power and authority to enter into and perform
this Agreement.
5.1.3 The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized
by all necessary corporate action on the part of Dade.
This Agreement has been duly executed and delivered by
authorized representatives of Dade and this Agreement and
all exhibits and documents executed and delivered by it in
connection with the consummation of the transactions
contemplated hereby constitute valid and legally binding
and enforceable obligations of Dade. No consent, approval
or other action by any governmental authority is required
in connection with the execution, delivery and performance
by Dade of this Agreement.
5.1.4 Neither the execution and delivery
of this Agreement by Dade nor compliance by Dade with any
of the provisions hereof will (i) violate or conflict with
any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in
the creation of any lien upon the Leased Premises or any of
the personal property or fixtures which will remain at the
Lease Premises under any of the terms, conditions or
provisions of its articles of incorporation, by-laws, any
note, bond, mortgage, indenture, deed of trust, license,
agreement or other instrument or obligation to which it is
a party, or by which it or any of its properties or assets
may be bound or affected, or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable
to Dade.
5.1.5 Except as disclosed on Exhibit D,
since December 19, 1994 Dade has not received, from any
governmental authority having jurisdiction over the Leased
Premises, any official notice of violation on or by Leased
Premises of any applicable laws, ordinances, orders, rules
and regulations of any federal, state or local authority or
governmental or quasi-governmental agency having
jurisdiction over the Leased Premises, except such notices
or violations which have heretofore have been corrected,
waived or rescinded.
5.1.6 Except as disclosed on Exhibit E,
since December 19, 1994 Dade has not received written
notice from any court, municipal department, commission,
board, bureau, agency or other body having authority over
the Leased Premises of any actions, suits, proceedings
(including condemnation proceedings) thereof or therein
affecting the Leased Premises or any portion thereof.
5.1.7 Except as disclosed on Exhibit F,
since December 19, 1994 there are no management, service
company, equipment, supply, maintenance or other similar
agreements with respect to the Leased Premises which may
create a lien on the Leased Premises or impose any
obligation on Cordis subsequent to the Closing Date.
5.1.8 Dade is not a foreign person as
defined in Section 1445(f) of the Internal Revenue Code of
1986, as amended, and will, upon request, furnish Cordis an
appropriate affidavit to such effect.
5.1.9 Since December 19, 1994 there has
been no breach or violation of any of the Lessee's
representations, warranties or covenants set forth in the
Lease.
5.2 Representations, Warranties and Covenants of
Cordis. Cordis hereby warrants, covenants and represents
the following to Baxter and Dade with full knowledge that
they are acting in reliance upon same in executing this
Agreement and commencing performance hereunder:
5.2.1 Lease. The Lease is in full force
and effect, and there exists no event of default or event
or act (including, without limitation, the execution,
delivery or performance of this Agreement) which, with the
giving of notice, the lapse of time or the happening of any
other event or condition would become a default thereunder.
Except for Cordis's consent under the Lease and the consent
of American under the Prime Lease, no consent of any person
is required in order for all the rights and privileges of
Baxter under the Lease and the Tri-Party Agreement to be
fully assigned to Dade, for all of the duties and
obligations under the Lease and Tri-Party Agreement to be
assumed by Dade and guaranteed by Baxter and for the Lease
and the Tri-Party Agreement to be as valid and enforceable
by and against Dade on and after the assignment thereof as
it is by and against Baxter immediately prior to such time.
Cordis has not violated any of the terms and conditions of
the Lease or the Tri-Party Agreement and, to the best of
its knowledge, all of the covenants to be performed by
every other party thereto as of the date hereof have been
fully performed in all material respects.
5.2.2 Cordis is a corporation duly
organized, validly existing and in good standing under the
laws of Florida and has all requisite power and authority
to enter into and perform this Agreement.
5.2.3 The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized
by all necessary corporate action on the part of Cordis.
This Agreement has been duly executed and delivered by
authorized representatives of Cordis and this Agreement and
all exhibits and documents executed and delivery by Cordis
in connection with the consummation of the transactions
contemplated hereby constitute valid and legally binding
and enforceable obligations of Cordis. No consent,
approval or other action by any governmental authority is
required in connection with the execution, delivery and
performance by Cordis of this Agreement.
5.2.4 Neither the execution and delivery
of this Agreement by Cordis nor the consummation of the
transactions contemplated hereby nor compliance by Cordis
with any of the provisions hereof will (i) violate, or
conflict with, or result in a breach of any provisions of,
or constitute a default (or an event which with notice or
lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the
performance required by, or result in the creation of any
lien upon any of the properties or assets of Cordis under
any of the terms, conditions or provisions of the articles
of incorporation or by-laws of Cordis, any note, bond,
mortgage, indenture, deed of trust, license, agreement or
other instrument or obligation to which Cordis is a party,
or by which it or any of its properties or assets may be
bound or affected, or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable
to Cordis.
Section 6. Covenants of Dade.
6.1 Compliance. Prior to the Closing, Dade will
continue to comply with and abide by all of the covenants,
conditions and requirements set forth or imposed by,
related to or arising out of all statutes, laws,
ordinances, rules, regulations, plans, permits, agreements,
contracts, authorizations or approvals related or
applicable to any portions of the Leased Premises,
performing all acts required to be performed fully and
promptly. Neither Dade nor any person claiming by, through
or under it, will apply for or seek to obtain any
modification or amendment to, or release from, any statute,
law, ordinance, rule, regulation, plan, permit, contract,
approval or authorization applicable to the Leased
Premises, and the use and development thereof, by Cordis or
any person claiming by, through or under Cordis, unless
Dade first obtains the specific prior written consent of
Cordis.
6.2 Notices of Violations. In the event that
Dade receives any notice from Dade County, Florida or any
other governmental or quasi-governmental authority having
jurisdiction over the Leased Premises, of a violation or
alleged violation of any statute, law, ordinance, rule,
permit, regulation or agreement governing the planning,
development, construction, occupancy, use or maintenance of
any portion of the Leased Premises, or of any permit,
approval or authorization issued in connection therewith or
of any contemplated or pending investigation with respect
thereto, Dade promptly will deliver a copy of such notice
to Cordis; and Cordis will have the option (but will not be
required) either to (i) participate with Dade in responding
to such notice, or (ii) seek independently to intervene in
any proceeding of which notice has been given for the
purpose of protecting Cordis' interests in and with respect
to the Leased Premises.
6.3 Maintenance of the Property. Dade will
maintain the Leased Premises diligently and in good faith
and will use its best efforts to preserve the improvements
in the same state of condition and repair. Dade will not
perform or allow the performance of any additional
construction on the Leased Premises (except to restore the
Leased Premises to such condition as is required under the
Lease and hereunder or in the event of an emergency, notice
of which will be promptly given to Cordis), or enter into
any new contracts or other agreements affecting or binding
upon the Leased Premises, after the date of this Agreement
without Cordis' express prior written consent.
6.4 Status of Agreements. Dade will not make or
permit any amendment or modification to any existing, or
enter into any new, contract, lease, permit or other
document affecting the Leased Premises, and will not do any
act or omit to do any act that will cause a breach of any
contract, lease or permit, without Cordis' express prior
written consent. Dade will cancel or otherwise cause to be
terminated at its sole cost and expense on or before the
Closing Date all of the agreements, etc. listed on Exhibit
E.
6.5 Condition of Personalty and Fixtures. Dade
will maintain the personalty which is to remain at the
Leased Premises and all fixtures at the Leased Premises in
the same condition, repair and working order as such
personalty and fixtures exists on the later of the date of
the Lease or their delivery to or installation at the
Leased Premises, subject only to ordinary wear and tear.
Section 7. Conditions to Obligations of
Cordis.
The obligations of Cordis to be performed by it
at Closing pursuant to this Agreement (and cancellation of
the Lease) are subject to the fulfillment as of the Closing
Date of each of the following conditions:
7.1 Correctness of Representations and
Warranties. Each of the representations and warranties of
Dade set forth herein shall have been true and complete in
all material respects when made and on the Closing Date as
if made at and as of that time.
7.2 Compliance with Agreement. Dade shall have
performed and complied in all respects with all agreements,
undertakings and obligations which are required to be
performed or complied with by Dade at or prior to the
Closing, including the Lease and Tri-Party Agreement.
7.3 Vacating Leased Premises. Dade shall have
vacated the Leased Premises prior to the Closing Date and
left the Leased Premises in a clean, usable and undamaged
condition, ordinary wear and tear excepted. Cordis shall
have an additional period of 3 days prior to the Closing
Date to inspect the Leased Premises in order to determine
if Dade has complied with its obligations under this
Section 7.3.
7.4 Agreement of Baxter. Baxter shall have
executed and delivered to Cordis the joinder and guaranty
attached to this Agreement and an assignment and assumption
of the Lease in a form acceptable to Cordis.
7.5 Failure of Condition(s). If any
condition(s) precedent set forth in this Section 7 are not
satisfied as of the Closing Date, Cordis may either (i)
waive satisfaction of such condition(s) and proceed to
Closing or (ii) terminate this Agreement by written notice
to Baxter and Dade, in which event the Lease shall remain
in full force and effect, Dade shall immediately pay the
full rent due under the Lease for the month of October,
1995, this Agreement will be null and void and the parties
will have no further rights or obligations hereunder.
Section 8. Brokers. Each party represents
and warrants to the other that it has not consulted, dealt
or negotiated with any real estate broker, finder, salesman
or agent to whom a commission or other compensation is or
could be due in connection with the termination of the
Lease. Each party hereby agrees to indemnify and hold
harmless the other from any losses, damages, costs,
liabilities or expenses, including reasonable costs and
attorneys fees incurred in trial, appellate or post
judgment proceedings, related to or arising out of any
breach of the representations, warranties and agreements
set forth in this Section 8.
Section 9. Survival of Representations,
Warranties and Agreements;
Indemnification.
9.1 Survival. The continued validity and
performance in all respects of all representations,
warranties, covenants and agreements set forth in this
Agreement are a condition precedent to the performance of
Cordis' obligations hereunder. All representations,
warranties and covenants set forth in this Agreement, the
Tri-Party Agreement and the Lease are continuing and will
be true and correct on and as of the Closing Date with the
same force and effect as if made at that time. The effect
of the representations, warranties and covenants of Baxter
and Dade set forth in this Agreement will not be affected
by any investigation, verification or approval by Cordis,
or by anyone on behalf of Cordis, or by the delivery of the
Cancellation Fee. Anything to the contrary
notwithstanding, the representations, warranties, covenants
and agreements set forth in this Agreement and the
representations and warranties set forth in the Lease shall
survive closing of the transactions which are the subject
of this Agreement until December 31, 1996.
9.2 Indemnity of Dade. Cordis will defend,
indemnify and hold Dade harmless from all damages accruing
from or resulting by reason of the inaccuracy of any
representation or warranty or the breach or nonperformance
of any covenant or agreement made by Cordis in this
Agreement.
9.3 Indemnity of Cordis. Dade will defend,
indemnify and hold harmless Cordis from and against all
damages accruing from or resulting by reason of (i) all
claims of mechanics' and materialmen based upon work
performed to or upon the Leased Premises from the date of
the Lease to the Closing Date or otherwise incurred by or
on behalf of Dade, except as set forth in Exhibit G, (ii)
claims of whatever nature (including, without limitation
claims, for personal injury, wrongful death or property
damage) against Cordis or the Leased Premises based upon
causes of action or occurrences arising after the date of
the Lease and prior to the Closing Date, (iii) the
inaccuracy of any representation or warranty or the breach
or nonperformance of any covenant or agreement made by Dade
in this Agreement or (iv) the inaccuracy of any
representation or warranty in the Lease.
9.4 Scope of Indemnification. The indemnities
set forth in this Section 9 include all costs and expenses,
including, without limitation, reasonable attorneys' and
paralegals' fees, incurred in trial, appellate and post
judgment proceedings, whether by judgment, settlement or
otherwise.
Section 10. Leasing of the Leased Premises
Subsequent to Closing Date. In the event Cordis leases all
or part of the Leased Premises to a new tenant after the
Closing Date and before January 1, 1997, Cordis shall pay
Dade an amount equal to 15 percent of all rent collected by
Cordis during such period as such rent is received by
Cordis. Dade shall have no right to any rents received by
Cordis after December 31, 1996. Any costs, expenses or
taxes relating to the Leased Premises which are paid by
tenants or otherwise passed through to tenants shall not
constitute rent for purposes of this Section 10. Baxter
shall have no rights whatsoever under this Section 10.
Section 11. Miscellaneous.
11.1 Severability. Any provision of this
Assignment and Assumption of Lease and Consent to
Assignment which is prohibited or unenforceable will be
ineffective to the extent of such prohibition or invalidity
without invalidating the remaining portions hereof.
11.2 Successors and Assigns. This
Assignment and Assumption of Lease and Consent to
Assignment will enure to the benefit of and be binding
upon, and is intended solely for the benefit of, the
parties hereto, and their respective successors and
assigns; and no third party will have any rights,
privileges or other beneficial interest herein or
hereunder.
11.3 Governing Law. This Assignment and
Assumption of Lease and Consent to Assignment is governed
by and will be construed in accordance with the laws of the
State of Florida, and in the event of any litigation
concerning the terms of this Assignment and Assumption of
Lease and Consent to Assignment, proper venue thereof will
be in Dade County, Florida.
11.4 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
be deemed an original, but all of which will constitute the
same instrument.
IN WITNESS WHEREOF, Cordis and Dade have caused
this Agreement to be executed on the date first above
written.
WITNESSES: CORDIS CORPORATION, a Florida
corporation
________________________
By:__________________________
Print Name:__________________
________________________ Title:_______________________
WITNESSES:
DADE INTERNATIONAL, INC., a
Delaware corporation
________________________
By: _________________________
Print Name:__________________
________________________ Title:_______________________
JOINDER
BAXTER HEALTHCARE CORPORATION hereby joins in this
Agreement solely for purposes of consenting to the
transactions contemplated hereby and acknowledging that this
Agreement shall not limit Baxter's obligations under the
Lease or Tri-Party Agreement nor, except for Baxter's
Guaranty of Dade's obligation to pay the Cancellation Fee,
create any further duties or obligations for Baxter.
WITNESSES:
BAXTER HEALTHCARE CORPORATION,
a Delaware corporation
________________________ By: _________________________
Print Name:__________________
________________________ Title:_______________________
Date:________________________
Baxter Guaranty
1. Upon execution of this Guaranty, Baxter does
hereby absolutely and unconditionally guaranty (the
"Guaranty") to Cordis, its successors and assigns, and to any
mortgagee holding a mortgage upon the interest of Cordis in
the Leased Premises, the due and punctual payment by Dade of
the Cancellation Fee (the "Obligation"). Upon satisfaction
of the Obligation, Baxter shall have no further obligation
whatsoever under this Guaranty or to pay rent, taxes or
operating expenses relating to the Leased Premises pursuant
to the Lease. The obligations of Baxter pursuant to
paragraph 22G of the Lease shall specifically survive the
Closing without limitation and all causes of action for any
breach of any other agreement, covenant, obligation or duty
of Baxter under the Lease through the Closing Date shall
survive until December 31, 1996.
2. Baxter waives (i) notice of acceptance hereof,
of any action taken or omitted in reliance hereon and of any
defaults of Dade in the performance or observance of the
Obligation, (ii) any presentment, demand, protest or notice
of any kind, (iii) all subrogation and contribution rights
against Dade, (iv) diligence, (v) all risks of setoff or
counterclaim, and (vi) the breach of any statute of
limitations.
3. Cordis may, at any time and from time to time,
without the consent of or notice to Baxter, without incurring
responsibility to Baxter and without impairing or releasing
any of Cordis' rights, or any of the Obligations of Baxter
hereunder: (i) change the manner, place or terms of
performance of the Agreement (as hereinafter defined); (ii)
sell, exchange, release or otherwise deal with all or any
part of the Leased Premises; (iii) release anyone liable in
any manner for performance under the Agreement; and (iv)
exercise or refrain from exercising any rights against Dade
and others, including Baxter.
4. The Guaranty shall be absolute and continuing,
and Cordis shall not be required to take any proceedings
against Dade, or give any notice to Baxter before Cordis has
the right to demand payment by Baxter upon default by Dade.
The Guaranty and the liability of Baxter hereunder shall in
no way be impaired or affected by any assignment which may be
made of the Lease or any subletting thereunder, or by any
extension of the payment of any rental or any other sum
provided to be paid by Dade, or by any forbearance or delay
in enforcing any of the terms, conditions, covenants or
provisions of the Agreement or any amendment, modification of
revision of the Agreement, or by the invalidity of the
Agreement.
5. No action or proceeding brought or instituted
under this Guaranty against Baxter, and no recovery had in
pursuance thereof shall be a bar or defense to any further
action or proceeding which may be brought under this Guaranty
by reason of any further default or defaults of Dade.
6. The liability of Baxter under the Guaranty
shall not be deemed to be waived, released, discharged,
impaired or effected by reason of the release or discharge of
Dade by any creditor, receivership, bankruptcy (or
reorganization proceedings under the Bankruptcy Act) or other
proceedings or the rejection or disaffirmance of the
Agreement in any such proceedings.
7. All of the terms, agreements and conditions of
this Guaranty shall extend to and be binding upon Baxter and
its successors, administrators, and assigns, and shall inure
to the benefit of Cordis, its successors and assigns, and to
any future owner of the fee of the Leased Premises and to any
mortgage on the fee interest of Cordis in the Leased
Premises.
8. All capitalized terms not specifically defined
in this Guaranty shall have the meaning given such terms in
that certain Agreement for Cancellation of Lease dated
June ___, 1995 by and between Dade International, Inc., a
Delaware corporation, and Cordis Corporation, a Florida
corporation (the "Agreement").
WITNESSES:
BAXTER HEALTHCARE CORPORATION,
a Delaware corporation
________________________ By: _________________________
Print Name:__________________
________________________ Title:_______________________
Date:________________________
EXHIBIT A
LEASE
EXHIBIT B
PRIME LEASE
EXHIBIT C
MAINTENANCE RECORDS
EXHIBIT D
GOVERNMENTAL NOTICES
EXHIBIT E
LITIGATION NOTICES
EXHIBIT F
SERVICE AGREEMENTS
EXHIBIT G
MECHANIC'S OR MATERIALMAN'S CLAIMS
Exhibit 10(b)
CONSENT TO ASSIGNMENT
AND ASSUMPTION OF LEASE
AND TRI-PARTY AGREEMENT
THIS CONSENT TO ASSIGNMENT AND ASSUMPTION OF
LEASE AND TRI-PARTY AGREEMENT is made and entered into this
___ day of July, 1995 ("Consent"), by and between BAXTER
HEALTHCARE CORPORATION, a Delaware corporation ("Baxter")
which is the successor in interest to Baxter Diagnostics,
Inc., a Delaware corporation ("Baxter Diagnostics"), DADE
INTERNATIONAL, INC., a Delaware corporation ("Dade") and
CORDIS CORPORATION, a Florida corporation ("Cordis").
W I T N E S S E T H:
WHEREAS, Baxter Diagnostics and Cordis entered
into that certain lease agreement (the "Lease") dated
August 23, 1991, a copy of which is attached as Exhibit A,
pursuant to which Cordis leased certain property located at
10555 West Flagler Street, Miami, Florida, including a
building consisting of approximately 220,000 square feet of
net rentable area and other related improvements
(collectively the "Leased Premises") to Baxter Diagnostics;
WHEREAS, the Leased Premises are owned of record
by American Real Estate Holdings Limited Partnership, a
Delaware limited partnership ("American");
WHEREAS, Cordis derives its interest in the
Leased Premises pursuant to that certain lease agreement
dated March 1, 1979 and amended June 25, 1980 (the "Prime
Lease"), a copy of which is attached as Exhibit B, by and
between Cordis and Olympia and York Florida Equity Corp.
(predecessor in interest to American);
WHEREAS, Cordis, Baxter Diagnostics and American
entered into that certain agreement dated April 2, 1992
(the "Tri-Party Agreement") in order to comply with certain
requirements of the Prime Lease;
WHEREAS, by agreement dated December 20, 1994
(the "Assignment"), a copy of which is attached as Exhibit
C, Baxter Diagnostics assigned to Dade all of its rights,
benefits, privileges, duties, liabilities and obligations
under and pursuant to the Lease and the Tri-Party
Agreement, and Dade acquired all of Baxter Diagnostics'
rights, benefits, and privileges, and is willing to assume
all of Baxter Diagnostics' duties, liabilities and
obligations under the Lease and the Tri-Party Agreement;
WHEREAS, pursuant to the terms of the Assignment,
Baxter Diagnostics expressly agreed and acknowledged that
the Assignment would not affect, reduce or release Baxter
Diagnostics from any obligations under the Lease or Tri-
Party Agreement and, as such, Baxter Diagnostics remained a
primary obligor under the Lease and Tri-Party Agreement at
all times subsequent to the date of the Assignment;
WHEREAS, Baxter Diagnostics was merged into
Baxter, its sole shareholder, effective December 30, 1994;
WHEREAS, pursuant to the merger of Baxter
Diagnostics into Baxter, all of the rights and obligations
of Baxter Diagnostics pursuant to the Lease and the Tri-
Party Agreement were transferred to and assumed by Baxter
and, as such, Baxter at all times both prior to and
subsequent to the date of the Assignment remains a primary
obligor under the Lease and Tri-Party Agreement;
WHEREAS, the effectiveness of the Assignment is
expressly conditional upon the consent of Cordis and
American; and
WHEREAS, subject to the provisions hereof and,
with respect to American, subject to the conditions set
forth on the conditional consent of American attached
hereto, Cordis and American have agreed to consent to the
transactions provided for in the Assignment.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, Baxter, Dade and Cordis hereby agree
as follows:
Article 1. Recitals.
The parties hereto acknowledge and agree that the
foregoing recitals are true and correct and are hereby
incorporated into this Consent.
Article 2. Assignment. Baxter expressly
acknowledges and agrees that subsequent to the date of the
Assignment Baxter shall continue to be responsible as a
primary obligor for all of the obligations under the Lease
and Tri-Party Agreement jointly and severally with Dade and
that neither the Assignment nor this Consent shall relieve
or release Baxter from any duties or obligations to Cordis
or American thereunder or hereunder during the entire term
of the Lease. Furthermore, Baxter acknowledges and agrees
that in the event of a default by Dade under the Lease or
Tri-Party Agreement, Cordis or American may, in their sole
discretion, proceed against Baxter or Dade individually or
Baxter and Dade jointly in order to remedy such default.
Article 3. Assumption. Dade hereby confirms
that as of the date of the Assignment, Dade shall be a
primary obligor under the Lease and Tri-Party Agreement
jointly and severally with Baxter, and Dade shall be bound
by all of the terms thereof and undertake all of the
obligations of Baxter therein occurring or arising on or
after December 20, 1994. Dade shall not be responsible to
any person for the discharge or performance of any duty or
obligation pursuant to or in connection with the Lease
occurring or arising prior to December 20, 1994.
Article 4. Baxter's Representations. The Lease
attached hereto as Exhibit A is a true and correct copy of
the Lease, with all amendments thereto. The Lease is in
full force and effect, and Baxter has no knowledge that
there exists an event of default or that an event or act
has occurred (including, without limitation, the execution,
delivery or performance of this Agreement) which, with the
giving of notice, the lapse of time or the happening of any
other event or condition would become a default thereunder.
Except for Cordis' consent under the Lease and the consent
of American under the Prime Lease, no consent of any person
is required in order for all the rights and privileges of
Baxter under the Lease and the Tri-Party Agreement to be
fully assigned to Dade, for all of the duties and
obligations under the Lease and Tri-Party Agreement to be
assumed by Dade and for the Lease and the Tri-Party
Agreement to be as valid and enforceable by and against
Dade on and after the date of the Assignment as it is by
and against Baxter immediately prior to such time. Baxter
has not violated any of the terms and conditions of the
Lease or the Tri-Party Agreement and, to the best of
Baxter's knowledge, all of the covenants to be performed by
every other party thereto as of the date hereof have been
fully performed in all material respects.
Article 5. Cordis Consent. In consideration of
and reliance on Baxter's express agreement to remain
primarily and jointly and severally responsible with Dade
(also as a primary obligor) for all duties and obligations
under the Lease and Tri-Party Agreement, Cordis hereby
consents to the transactions provided for in the
Assignment.
Article 6. Third Party Beneficiary. Cordis,
Baxter and Dade hereby acknowledge and agree that American
is an intended third party beneficiary of this Consent and
shall be entitled to enforce the same; provided, however,
that nothing herein shall create, expand or amend or modify
any existing obligation of American under the Prime Lease
or the Tri-Party Agreement and, further provided, that
nothing herein shall create, expand or amend or modify any
existing right of American with respect to Cordis under the
Prime Lease or the Tri-Party Agreement.
Article 7. Notice. Any notice, statement,
demand or other communication required or permitted to be
given, rendered or made to Dade under the Tri-Party
Agreement shall be addressed as follows and made pursuant
to Section 10 of the Tri-Party Agreement:
Attention: General Counsel
1717 Deerfield Road
Deerfield, IL 60015
Facsimile: (708) 267-5376
Article 8. Miscellaneous.
8.1 Severability. Any provision of this
Consent which is prohibited or unenforceable will be
ineffective to the extent of such prohibition or invalidity
without invalidating the remaining portions hereof.
8.2 Successors and Assigns. This Consent
will enure to the benefit of and be binding upon, and is
intended solely for the benefit of, the parties hereto, and
their respective successors and assigns; and no third party
other than American will have any rights, privileges or
other beneficial interest herein or hereunder.
8.3 Governing Law. This Consent is
governed by and will be construed in accordance with the
laws of the State of Florida, and in the event of any
litigation concerning the terms of this Consent, proper
venue thereof will be in Dade County, Florida.
IN WITNESS WHEREOF, Baxter, Dade and Cordis have
caused this Consent to be executed on the date first above
written.
WITNESSES:
BAXTER HEALTHCARE CORPORATION
a Delaware corporation
________________________ By: _________________________
Print Name:__________________
________________________ Title:_______________________
DADE INTERNATIONAL, INC., a
Delaware corporation
________________________
By: _________________________
Print Name:__________________
________________________ Title:_______________________
CORDIS CORPORATION, a Florida
corporation
________________________
By:__________________________
Print Name:__________________
________________________ Title:_______________________
CONDITIONAL CONSENT
In consideration and reliance on Baxter's express
agreement to remain a primary obligor and to be jointly and
severally responsible with Dade for all duties and
obligations under the Lease and Tri-Party Agreement, American
hereby consents to the transactions provided for in the
Assignment, subject to the following conditions precedent:
1. the consent of the current first mortgage
lender of the Leased Premises to the Assignment;
2. all of the statements, representations and
obligations in connection with the Assignment shall be true,
correct and accurate or fully performed, as the case may be;
3. American's consent to the Assignment hereto
shall not be deemed a consent to any further assignment,
assumption or sublease of the Lease or Tri-Party Agreement,
as applicable, or to any amendment, modification or
supplement thereto;
4. notwithstanding the above, in no event shall
American's consent to the Assignment create or be construed
to create any personal liability on the part of American to
Cordis, Baxter or Dade under the Prime Lease, Tri-Party
Agreement or the Assignment; and
5. the Assignment shall have been properly
authorized and fully executed by each of Baxter and Dade and
shall be enforceable against each in accordance with its
terms, subject only to the usual bankruptcy, creditor's
rights and equitable principles exclusions.
All capitalized terms used herein but not defined
herein shall have the meanings ascribed to them in that
certain Consent to Assignment and Assumption of Lease and Tri-Party
Agreement dated July ___, 1995, by and between Cordis, Baxter and Dade.
Dated: July ___, 1995 AMERICAN REAL ESTATE HOLDINGS
LIMITED PARTNERSHIP, a
Delaware limited partnership
By: American Property
Investors, Inc., its
sole general partner, a
Delaware corporation
______________________ By:_____________________
Witness
Name: Martin Hirsch
Title: Vice President
_____________________
Witness
Exhibit 10(d)
CORDIS CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
(Final Document dated 8/25/95)
CORDIS CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
Table of Contents
Page
ARTICLE I - Definitions
1.1 Account 1
1.2 Administrator 1
1.3 Board 1
1.4 Bonus 1
1.5 Compensation 1
1.6 Deferrals 1
1.7 Deferral Election 2
1.8 Disability 2
1.9 Effective Date 2
1.10 Eligible Employee 2
1.11 Employee 2
1.12 Employer Contribution 2
1.13 Investment Fund 2
1.14 Matching Contribution 2
1.15 Participant 2
1.16 Plan Year 2
1.17 Retirement 3
1.18 Salary 3
1.19 Trust 3
1.20 Trustee 3
1.21 Years of Service 3
ARTICLE II - Participation
2.1 Commencement of Participation 4
2.2 Duration of Participation 4
ARTICLE III - Contributions
3.1 Deferrals 5
3.2 Matching Contributions 6
3.3 Employer Contributions 6
3.4 Time of Contributions 6
3.5 Form of Contributions 6
ARTICLE IV - Vesting
4.1 Vesting of Deferrals 7
4.2 Vesting of Matching Contributions 7
4.3 Vesting of Employer Contributions 7
4.4 Vesting in Event of Retirement, Disability
and Death 7
4.5 Amounts Not Vested 7
ARTICLE V - Accounts
5.1 Accounts 8
5.2 Investments, Gains and Losses 9
5.3 Forfeitures 9
ARTICLE VI - Distributions
6.1 Distribution Election 10
6.2 Payment Options 10
6.3 Commencement of Payment upon Death, Disability
or Termination 10
6.4 Minimum Distribution 11
6.5 Financial Hardship 11
ARTICLE VII - Beneficiaries
7.1 Beneficiaries 12
7.2 Lost Beneficiary 12
ARTICLE VIII - Funding
8.1 Prohibition Against Funding 13
8.2 Deposits in Trust 13
8.3 Indemnification of Trustee 13
8.4 Withholding of Participant Contributions 14
ARTICLE IX - Claims Administration
9.1 General 15
9.2 Claim Review 15
9.3 Right of Appeal 15
9.4 Review of Appeal 15
9.5 Designation 16
ARTICLE X - Change in Control
10.1 Distribution Election 17
10.2 Definition 17
ARTICLE XI - General Provisions
11.1 Administrator 18
11.2 No Assignment 18
11.3 No Employment Rights 19
11.4 Incompetence 19
11.5 Identity 19
11.6 Other Benefits 19
11.7 No Liability 20
11.8 Expenses 20
11.9 Insolvency 20
11.10 Amendment and Termination 20
11.11 Employer Determinations 21
11.12 Construction 21
11.13 Governing Law 21
11.14 Severability 21
11.15 Headings 21
11.16 Terms 22
CORDIS CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
CORDIS CORPORATION, a Florida corporation, (the Employer ) pursuant to
Article X of the Cordis Corporation Salary Deferral Plan, hereby amends and
restates Cordis Corporation Salary Deferral Plan and renames it the Cordis
Corporation Executive Deferred Compensation Plan (the Plan ). This plan is for
the benefit of a select group of management or highly compensated employees. It
is an unfunded arrangement and is intended to be exempt from the participation,
vesting, funding, and fiduciary requirements set forth in Title I of the
Employee Retirement Income Security Act of 1974, as amended. This amendment and
restatement is effective the first day of July, 1995.
ARTICLE I - Definitions
1.1 Account. The bookkeeping account established for each Participant as
provided in section 5.1 hereof.
1.2 Administrator. A committee appointed by the Board of Directors.
1.3 Board. The Board of Directors of the Employer.
1.4 Bonus. Compensation which is designated as such by the Employer and
which relates to services performed during an incentive period by an Eligible
Employee in addition to his or her Salary.
1.5 Compensation. The Participant's earned income, Salary, Bonuses and other
remuneration from the Employer, but excluding the following: (i) welfare
benefits, fringe benefits and any other noncash remuneration; (ii) amounts
realized from the sale, exchange or other disposition of stock acquired under a
stock option, a stock grant or any other similar arrangement; and (iii) moving
expenses.
1.6 Deferrals. The portion of Compensation that a Participant elects to
defer in accordance with section 3.1 hereof.
1.7 Deferral Election. The separate written agreement, submitted to the
Administrator, by which an Eligible Employee agrees to participate in the Plan
and make Salary and/or Bonus Deferrals thereto.
1.8 Disability. Any medically determinable physical or mental disorder
that renders a Participant incapable of continuing in the employment of the
Employer in his or her regular duties of employment and is expected to continue
for the remainder of a Participant's life, as determined by the Administrator in
its sole discretion.
1.9 Effective Date. The effective date of the Plan is February 5, 1991; the
effective date of the restatement is July 1, 1995.
1.10 Eligible Employee. An Employee shall be considered an Eligible
Employee if such Employee is designated as an Eligible Employee by the Employer
in Schedule A attached hereto.
1.11 Employee. Any person employed by the Employer.
1.12 Employer Contribution. A discretionary contribution made by the
Employer to the Trust and that is credited to one or more Participant's Accounts
in accordance with the terms of section 3.3 hereof.
1.13 Investment Fund or Funds. Each investment(s) which serves as a means
to measure value, increases or decreases with respect to a Participant s
Accounts.
1.14 Matching Contribution. A contribution made by the Employer to the
Trust and that is credited to one or more Participant's Accounts in accordance
with the terms of section 3.2 hereof.
1.15 Participant. An Eligible Employee who has become a Participant as
provided in ARTICLE II and whose Account has not been fully distributed.
1.16 Plan Year. July 1, 1995 to December 31, 1995; thereafter the plan
year shall be January 1 to December 31.
1.17 Retirement. Retirement means a Participant has retired from the
service of the Employer and he or she has reached age fifty-five (55).
1.18 Salary. An Eligible Employee s base salary rate or rates in effect at
any time during a Plan year.
1.19 Trust. The agreement between the Employer and the Trustee under which
the assets of the Plan are held, administered and managed, which shall conform
to the terms of Rev. Proc. 92-64.
1.20 Trustee. Dauphin Deposit Bank and Trust Company, or such other
successor that shall become trustee pursuant to the terms of the Cordis
Corporation Trust Under Nonqualified Deferred Compensation Plans.
1.21 Years of Service. A Participant's "Years of Service" shall be measured
by employment during twelve (12) month periods commencing with the Participant's
date of hire and anniversaries thereof.
ARTICLE II - Participation
2.1 Commencement of Participation. Each Eligible Employee shall become a
Participant at the earlier of the date on which his or her Deferral Election
first becomes effective or the date on which an Employer Contribution is first
credited to his or her Account.
2.2 Duration of Participation. A Participant shall continue to be an active
Participant until the earlier of:
(a) he or she ceases to be an Eligible Employee, or
(b) a Deferral Election is not in effect for the Participant.
Thereafter, he or she shall be an inactive Participant, retaining all the rights
described under the Plan except the right to make any further Deferrals until he
or she again becomes an active Participant.
ARTICLE III - Contributions
3.1 Deferrals.
(a) The Employer shall credit to the Account of a Participant an
amount equal to the amount designated in the Participant's Deferral Election for
that Plan Year. Such amounts shall not be made available to such Participant,
except as provided in ARTICLE VI, and shall reduce such Participant's
Compensation from the Employer in accordance with the provisions of the
applicable Deferral Election; provided, however, that all such amounts shall be
subject to the rights of the general creditors of the Employer as provided in
ARTICLE VIII.
(b) Each Eligible Employee shall deliver a Deferral Election to the
Employer before any Deferrals can become effective. Such Deferral Election
shall be void with respect to any Deferral unless submitted before the beginning
of the calendar year during which the amount to be deferred will be earned;
provided, however, that in the year in which the Plan is first adopted,
or amended or restated, or an Employee is first eligible to participate, such
Deferral Election shall be filed within thirty (30) days of the date on which
the Plan is adopted or the date on which an Employee is first eligible to
participate, respectively, with respect to Compensation earned during
the remainder of the calendar year.
(c) The Deferral Election shall, subject to the limitation set forth
in this section 3.1 hereof, designate the amount of Compensation deferred by
each Participant, the subaccount, if any, as set forth in subsection (e), below,
the beneficiary or beneficiaries of the Participant and
such other items as the Administrator may prescribe. Such designations shall
remain effective unless amended as provided in subsection (d), below.
(d) A Participant may amend his or her Deferral Election from time to
time; provided, however, that any amendment to the amount of a Participant's
Deferrals shall comply with the provisions of subsection (b), above.
(e) A Participant may direct his or her Deferral to be credited to
one or more subaccounts as may be established, as provided in ARTICLE V, by the
Participant at the time of the Deferral Election.
(f) The maximum amount that may be deferred each Plan Year is one
hundred percent (100%) of the Participant s Salary, net of applicable taxes, and
one hundred percent (100%) of the Participant s Bonus, net of applicable taxes.
3.2 Matching Contributions. The Employer reserves the right to make
discretionary matching contributions to Participants' Accounts in such amount
and in such manner as may be determined by the Employer.
3.3 Employer Contributions. The Employer reserves the right to make
discretionary employer contributions to Participants' Accounts in such amount
and in such manner as may be determined by the Employer.
3.4 Time of Contributions.
(a) Deferrals shall be transferred to the Trust as soon as
administratively feasible following the close of each month. The Employer shall
also transmit at that time any necessary instructions regarding the allocation
of such amounts among the Accounts of Participants.
(b) Matching Contributions and Employer Contributions shall be
transferred to the Trust at such time as the Employer shall determine. The
Employer shall also transmit at that time any necessary instructions regarding
the allocation of such amounts among the Accounts of Participants.
3.5 Form of Contributions. All Deferrals, Matching Contributions and
Employer Contributions to the Trust shall be made in the form of cash or cash
equivalents of US currency.
ARTICLE IV - Vesting
4.1 Vesting of Deferrals. A Participant shall have an immediate one hundred
percent (100%) vested right to the portion of his or her Account attributable to
Deferrals and any earnings on the investment of such Deferrals.
4.2 Vesting of Matching Contributions. A Participant shall have an immediate
one hundred percent (100%) vested right to the portion of his or her Account
attributable to Matching and any earnings on the investment of such Matching
Contributions.
4.3 Vesting of Employer Contributions. Except as otherwise provided herein,
a Participant shall have a vested right to the portion of his or her Account
attributable to Employer Contributions and any earnings on the investment of
such Employer Contributions according the schedule stated, in writing, at the
time an Employer Contribution is initially declared by the Employer.
4.4 Vesting in Event of Retirement, Disability and Death.
(a) A Participant who has a termination of employment due to
Retirement shall be fully vested in the amounts credited to his or her Account.
(b) A Participant who has a termination of employment due to
Disability shall be fully vested in the amounts credited to his or her Account.
(c) A Participant who has a termination of employment due to death
shall be fully vested in the amounts credited to his or her Account.
4.5 Amounts Not Vested. Any amounts credited to a Participant's Account that
are not vested at the time of his or her termination of employment with the
Employer shall be forfeited.
ARTICLE V - Accounts
5.1 Accounts. The Administrator shall establish and maintain a bookkeeping
account in the name of each Participant. The Administrator shall also establish
subaccounts, as provided in subsection (a), (b), and/or (c), below, as elected
by the Participant pursuant to ARTICLE III.
(a) A Retirement Account shall be established for each Participant.
His or her Retirement Account shall be credited with Deferrals (as specified in
the Participant s Deferral Election), any Matching Contributions allocable
thereto, any Employer Contributions, and the Participant's allocable share of
any earnings or losses on the foregoing. Each Participant's
Account shall be reduced by any distributions made plus any federal and state
tax withholding and any social security withholding tax as may be required by
law.
(b) A Participant may elect to establish one or more Education
Accounts in the name of a Student at the time of his or her Deferral. For
purposes of this ARTICLE, Student shall mean a child, grandchild, niece or
nephew of the Participant that has not yet attained the age of fourteen (14) at
the time the account is initially established. Each Participant's Education
Account shall be credited with Deferrals (as specified in the Participant's
Deferral Election), any Matching Contributions allocable thereto, and the
Participant's allocable share of any earnings or losses on the foregoing. Each
Participant's Account shall be reduced by any distributions made plus any
federal tax withholding and any social security withholding tax as may be
required by law.
(c) A Participant may elect to establish one or more Fixed Period
Accounts by designating a year of payout at the time the account is initially
established. The minimum initial deferral period for each subaccount shall be
four (4) years. Each Participant's Fixed Period Account shall be credited with
Deferrals (as specified in the Participant's Deferral Election), any
Matching Contributions allocable thereto, and the Participant's allocable share
of any earnings or losses on the foregoing. Each Participant's Account shall be
reduced by any distributions made plus any federal tax withholding and any
social security withholding tax as may be required by law.
5.2 Investments, Gains and Losses.
(a) Trust assets shall be invested in the discretion of the Trustee.
The Trustee may consider any investment suggestions received by the Employer or
by a Participant with respect to his or her own Account.
(b) The Administrator shall adjust the amounts credited to each
Participant's Account to reflect Deferrals, Matching Contributions, if any,
Employer Contributions, if any, investment experience, distributions and any
other appropriate adjustments. Such adjustments shall be made
as frequently as is administratively feasible.
(c) A Participant may direct that his or her Retirement Account,
Education Account and or Fixed Period Account established pursuant to section
5.1 may be valued as if they were invested in one or more Investment Funds up to
a maximum of six (6) funds in whole percentages not less than ten percent (10%)
of the balance in an Account. A Participant may change his or
her selection of Investment Funds no more than six (6) times each Plan Year. An
election shall be effective as soon as administratively feasible following the
date of the change as indicated in writing by the Participant.
5.3 Forfeitures. Any forfeitures from a Participant's Account shall continue
to be held in the Trust, shall be separately invested and shall be used to
reduce succeeding Matching Contributions, if any, and Employer Contributions, if
any, until such forfeitures have been entirely so applied. If no further
Matching Contributions or Employee Contributions will be made, then
such forfeitures shall be returned to the Employer.
ARTICLE VI - Distributions
6.1 Distribution Election. Each Participant shall designate on his or her
initial Deferral Election the manner in which payments shall be made from the
choices available under section 6.2 hereof. Such designation shall be
irrevocable and shall apply to all amounts distributed from such Participant's
Account.
6.2 Payment Options.
(a) Retirement Account payouts shall be payable in one of the
following forms: (i) in a lump-sum payment; or (ii) in monthly installments
over a period of up to one hundred twenty (120) months (as elected by
Participant on his or her Deferral Election). Retirement Account payments shall
commence as soon as possible following the Participant s Retirement.
(b) Education Account payouts shall be paid in four annual installments
on January 1 (or as soon as administratively feasible) of the calendar year in
which the Student reaches age eighteen (18) and the three anniversaries thereof
in the following amounts:
Year 1 25% of the account balance
Year 2 33% of the account balance
Year 3 50% of the account balance
Year 4 100% of the account balance
(c) Fixed Period Account payouts shall be paid in one lump sum
payment on January 1 (or as soon as administratively feasible) of the calendar
year selected by the Participant on his or her Deferral Election.
6.3 Commencement of Payment upon Death, Disability or Termination.
(a) Upon the death of a Participant, all amounts credited to his or
her Account(s) shall be paid, as soon as administratively feasible, to his or
her beneficiary or beneficiaries, as determined under ARTICLE VII hereof, in a
lump sum.
(b) Upon the Disability of a Participant, all amounts credited to his or
her Account(s) shall be paid, (i) in a lump-sum payment; or (ii) in monthly
installments over a period of up to one hundred twenty (120) months (as elected
by Participant on his or her Deferral Election).
(c) Upon the termination of employment of a Participant, for any
reason other than death, Disability or Retirement, all amounts credited to his
or her Account(s) shall be paid in a lump-sum payment, as soon as
adminstratively feasible.
6.4 Minimum Distribution. Notwithstanding any provision to the contrary, if
the total balance of a Participant s Account at the time of a termination due to
Retirement or Disability is less than $10,000, then the Participant shall be
paid his or her benefits as a single lump sum as soon as administratively
feasible following said termination.
6.5 Financial Hardship. The Administrator may permit an early distribution
of part or all of any deferred amounts; provided, however, that such
distribution shall be made only if the Administrator, in its sole discretion,
determines that the Participant has experienced an unforeseen emergency that is
caused by an event beyond the control of the Participant and that
would result in severe financial hardship to the Participant if early
distribution were not permitted. Any distribution pursuant to this subsection is
limited to the amount necessary to meet the hardship.
ARTICLE VII - Beneficiaries
7.1 Beneficiaries. Each Participant may from time to time designate one or
more persons (who may be any one or more members of such person's family or
other persons, administrators, trusts, foundations or other entities) as his or
her beneficiary under the Plan. Such designation shall be made on a form
prescribed by the Administrator. Each Participant may at any time and from time
to time, change any previous beneficiary designation, without notice to or
consent of any previously designated beneficiary, by amending his or her
previous designation on a form prescribed by the Administrator. If the
beneficiary does not survive the Participant (or is otherwise unavailable to
receive payment) or if no beneficiary is validly designated, then the
amounts payable under this Plan shall be paid to the Participant's surviving
spouse, if any, and, if none, to his or her surviving issue per stirpes, if any,
and, if none, to his or her estate and such person shall be deemed to be a
beneficiary hereunder. (For purposes of this ARTICLE, a per stirpes
distribution to surviving issue means a distribution to such issue as
representatives of the branches of the descendants of such Participant; equal
shares are allotted for each living child and for the descendants as a group of
each deceased child of the deceased Participant). If more than one person is
the beneficiary of a deceased Participant, each such person shall receive a pro
rata share of any death benefit payable unless otherwise designated on the
applicable form. If a beneficiary who is receiving benefits dies, all benefits
that were payable to such beneficiary shall then be payable to the estate of
that beneficiary.
7.2 Lost Beneficiary.
(a) All Participants and beneficiaries shall have the obligation to
keep the Administrator informed of their current address until such time as all
benefits due have been paid.
(b) If a Participant or beneficiary cannot be located by the
Administrator exercising due diligence, then, in its sole discretion, the
Administrator may presume that the Participant or beneficiary is deceased for
purposes of the Plan and all unpaid amounts (net of due diligence expenses) owed
to the Participant or beneficiary shall be paid accordingly or, if a beneficiary
cannot be so located, then such amounts may be forfeited. Any such presumption
of death shall be final, conclusive and binding on all parties.
ARTICLE VIII - Funding
8.1 Prohibition Against Funding. Should any investment be acquired in
connection with the liabilities assumed under this Plan, it is expressly
understood and agreed that the Participants and beneficiaries shall not have any
right with respect to, or claim against, such assets nor shall any such purchase
be construed to create a trust of any kind or a fiduciary relationship between
the Employer and the Participants, their beneficiaries or any other person. Any
such assets shall be and remain a part of the general, unpledged, unrestricted
assets of the Employer, subject to the claims of its general creditors. It is
the express intention of the parties hereto that this arrangement shall be
unfunded for tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended. Each Participant and
beneficiary shall be required to look to the provisions of this Plan and to the
Employer itself for enforcement of any and all benefits due under this Plan, and
to the extent any such person acquires a right to receive payment under this
Plan, such right shall be no greater than the right of any unsecured general
creditor of the Employer. The Employer or the Trust shall be designated the
owner and beneficiary of any investment acquired in connection with its
obligation under this Plan.
8.2 Deposits in Trust. Notwithstanding paragraph 8.1, or any other provision
of this Plan to the contrary, the Employer may deposit into the Trust any
amounts it deems appropriate to pay the benefits under this Plan. The amounts
so deposited may include all contributions made pursuant to a Deferral Election
by a Participant, any Employer Contributions and any Matching Contributions.
8.3 Indemnification of Trustee.
(a) The Trustee shall not be liable for the making, retention, or
sale of any investment or reinvestment made by it, as herein provided, nor for
any loss to, or diminution of, the Trust assets, unless due to its own
negligence, willful misconduct or lack of good faith.
(b) Such Trustee shall be indemnified and saved harmless by the
Employer from and against all personal liability to which it may be subject by
reason of any act done or omitted to be done in its official capacity as Trustee
in good faith in the administration of the Plan and Trust, including all
expenses reasonably incurred in its defense in the event the Employer fails to
provide such defense upon the request of the Trustee. The Trustee is relieved
of all responsibility in connection with its duties hereunder to the fullest
extent permitted by law, short of breach of duty to the beneficiaries.
8.4 Withholding of Participant Contributions. The Administrator is
authorized to make any and all necessary arrangements with the Employer in order
to withhold the Participant's Deferrals under section 3.1 hereof from his or her
Compensation. The Administrator shall determine the amount and timing of such
withholding.
ARTICLE IX - Claims Administration
9.1 General. In the event that a Participant or his or her beneficiary does
not receive any Plan benefit that is claimed, such Participant or beneficiary
shall be entitled to consideration and review as provided in this ARTICLE. Such
consideration and review shall be conducted in a manner designed to comply with
section 503 of the Employee Retirement Income Security Act of 1974, as amended.
9.2 Claim Review. Upon receipt of any written claim for benefits, the
Administrator shall be notified and shall give due consideration to the claim
presented. If the claim is denied to any extent by the Administrator, the
Administrator shall furnish the claimant with a written notice setting forth (in
a manner calculated to be understood by the claimant):
(a) the specific reason or reasons for denial of the claim;
(b) a specific reference to the Plan provisions on which the denial
is based;
(c) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why such material
or information is necessary; and
(d) an explanation of the provisions of this ARTICLE.
9.3 Right of Appeal. A claimant who has a claim denied under section 9.2
may appeal to the Administrator for reconsideration of that claim. A request
for reconsideration under this section must be filed by written notice within
sixty (60) days after receipt by the claimant of the notice of denial under
section 9.2.
9.4 Review of Appeal. Upon receipt of an appeal the Administrator shall
promptly take action to give due consideration to the appeal. Such
consideration may include a hearing of the parties involved, if the
Administrator feels such a hearing is necessary. In preparing for this appeal
the claimant shall be given the right to review pertinent documents and the
right to submit in writing a statement of issues and comments. After
consideration of the merits of the appeal the Administrator shall issue a
written decision which shall be binding on all parties. The decision
shall be written in a manner calculated to be understood by the claimant and
shall specifically state its reasons and pertinent Plan provisions on which it
relies. The Administrator s decision shall be issued within sixty (60) days
after the appeal is filed, except that if a hearing is held the decision may be
issued within one hundred twenty (120) days after the appeal is filed.
9.5 Designation. The Administrator may designate one or more of its members
or any other person of its choosing to make any determination otherwise required
under this ARTICLE.
ARTICLE X - Change in Control
10.1 Distribution Election. A Participant shall have the opportunity to
elect on January 1 of each Plan Year to receive a distribution of his entire
Account upon the occurrence of a change in control. If the Participant makes
such an election, his entire Account shall be paid to him in a single lump-sum
as soon as administratively practicable following such change in control. Such
election may be revoked on any January 1 subsequent to the election.
Notwithstanding the foregoing, an election to receive a distribution of the
Participant s entire Account must be made no later than ninety (90) days prior
to the occurrence of a change in control.
10.2 Definition. For purposes of this ARTICLE X, change in control
means the acquisition by any person of direct or indirect beneficial ownership
of the Employer s voting securities in a quantity sufficient to cause a change
in the composition of the Board. For purposes of this provision, the term
person means any group, corporation, partnership, association, trust (other
than any trust holding stock for the account of employees pursuant to any stock
purchase, ownership, or employee benefit plan of the Employer), business entity,
estate, or natural person, and beneficial ownership means the direct or
indirect power to vote or to direct the voting of the security or the direct or
indirect power to dispose or direct the disposition of the security.
ARTICLE XI - General Provisions
11.1 Administrator.
(a) The Administrator is expressly empowered to limit the amount of
compensation that may be deferred; to deposit amounts into trust in accordance
with section 8.2 hereof; to interpret the Plan, and to determine all questions
arising in the administration, interpretation and application of the Plan; to
employ actuaries, accountants, counsel, and other persons it deems necessary in
connection with the administration of the Plan; to request any information from
the Employer it deems necessary to determine whether the Employer would be
considered insolvent or subject to a proceeding in bankruptcy; and to take all
other necessary and proper actions to fulfill its duties as Administrator.
(b) The Administrator shall not be liable for any actions by it
hereunder, unless due to its own negligence, willful misconduct or lack of good
faith.
(c) The Administrator shall be indemnified and saved harmless by the
Employer from and against all personal liability to which it may be subject by
reason of any act done or omitted to be done in its official capacity as
Administrator in good faith in the administration of the Plan and Trust,
including all expenses reasonably incurred in its defense in the event the
Employer fails to provide such defense upon the request of the Administrator.
The Administrator is relieved of all responsibility in connection with its
duties hereunder to the fullest extent permitted by law, short of breach of duty
to the beneficiaries.
11.2 No Assignment. Benefits or payments under this Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Participant
or the Participant's beneficiary, whether voluntary or involuntary, and any
attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber,
attach or garnish the same shall not be valid, nor shall any such benefit or
payment be in any way liable for or subject to the debts, contracts,
liabilities, engagement or torts of any Participant or beneficiary, or any
other person entitled to such benefit or payment pursuant to the terms of this
Plan, except to such extent as may be required by law. If any Participant or
beneficiary or any other person entitled to a benefit or payment pursuant to
the terms of this Plan becomes bankrupt or attempts to anticipate, alienate,
sell, transfer, assign, pledge, encumber, attach or garnish any benefit or
payment under this Plan, in whole or in part, or if any attempt is made to
subject any such benefit or payment, in whole or in part, to the debts,
contracts, liabilities, engagements or torts of the Participant or beneficiary
or any other person entitled to any such benefit or payment pursuant to the
terms of this Plan, then such benefit or payment, in the discretion of the
Administrator, shall cease and terminate with respect to such Participant or
beneficiary, or any other such person.
11.3 No Employment Rights. Participation in this Plan shall not be
construed to confer upon any Participant the legal right to be retained in the
employ of the Employer, or give a Participant or beneficiary, or any other
person, any right to any payment whatsoever, except to the extent of the
benefits provided for hereunder. Each Participant shall remain subject to
discharge to the same extent as if this Plan had never been adopted.
11.4 Incompetence. If the Administrator determines that any person
to whom a benefit is payable under this Plan is incompetent by reason of
physical or mental disability, the Administrator shall have the power to cause
the payments becoming due to such person to be made to another for his or her
benefit without responsibility of the Administrator or the Employer
to see to the application of such payments. Any payment made pursuant to such
power shall, as to such payment, operate as a complete discharge of the
Employer, the Administrator and the Trustee.
11.5 Identity. If, at any time, any doubt exists as to the identity
of any person entitled to any payment hereunder or the amount or time of such
payment, the Administrator shall be entitled to hold such sum until such
identity or amount or time is determined or until an order of a court of
competent jurisdiction is obtained. The Administrator shall also be entitled
to pay such sum into court in accordance with the appropriate rules of law.
Any expenses incurred by the Employer, Administrator, and Trust incident to
such proceeding or litigation shall be charged against the Account of the
affected Participant.
11.6 Other Benefits. The benefits of each Participant or beneficiary
hereunder shall be in addition to any benefits paid or payable to or on account
of the Participant or beneficiary under any other pension, disability, annuity
or retirement plan or policy whatsoever.
11.7 No Liability. No liability shall attach to or be incurred by
any manager of the Employer, Trustee or any Administrator under or by reason of
the terms, conditions and provisions contained in this Plan, or for the acts or
decisions taken or made thereunder or in connection therewith; and as a
condition precedent to the establishment of this Plan or the receipt
of benefits thereunder, or both, such liability, if any, is expressly waived
and released by each Participant and by any and all persons claiming under or
through any Participant or any other person. Such waiver and release shall be
conclusively evidenced by any act or participation in or the acceptance of
benefits or the making of any election under this Plan.
11.8 Expenses. All expenses incurred in the administration of the
Plan, whether incurred by the Employer or the Plan, shall be paid by the
Employer.
11.9 Insolvency. Should the Employer be considered insolvent (as
defined by the Trust), the Employer, through its Board and chief executive
officer, shall give immediate written notice of such to the Administrator of
the Plan and the Trustee. Upon receipt of such notice, the Administrator or
Trustee shall cease to make any payments to Participants who were Employees
of the Employer or their beneficiaries and shall hold any and all assets
attributable to the Employer for the benefit of the general creditors of the
Employer.
11.10 Amendment and Termination.
(a) Except as otherwise provided in this section, the Employer shall
have the sole authority to modify, amend or terminate this Plan; provided,
however, that any modification or termination of this Plan shall not reduce,
alter or impair, without the consent of a Participant, a Participant's right to
any amounts already credited to his or her Account on the day before the
effective date of such modification or termination. Following such termination,
payment of such credited amounts may be made in a single-sum payment if the
Employer so designates. Any such decision to pay in a single sum shall apply
to all Participants.
(b) Any funds remaining in the Trust after termination of the Plan
and satisfaction of all liabilities to Participants and others, shall be
returned to the Employer.
11.11 Employer Determinations. Any determinations, actions or decisions of
the Employer (including but not limited to, Plan amendments and Plan
termination) shall be made by the Board in accordance with its established
procedures or by such other individuals, groups or organizations that have been
properly delegated by the Board to make such determination or decision.
11.12 Construction. All questions of interpretation, construction or
application arising under or concerning the terms of this Plan shall be decided
by the Administrator, in its sole and final discretion, whose decision shall be
final, binding and conclusive upon all persons.
11.13 Governing Law. This Plan shall be governed by, construed and
administered in accordance with the applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, and any other applicable
federal law, provided, however, that to the extent not preempted by federal
law this Plan shall be governed by, construed and administered under the laws
of the State of Florida, other than its laws respecting choice of law.
11.14 Severability. If any provision of this Plan is held invalid or
unenforceable, its invalidity or unenforceability shall not affect any other
provision of this Plan and this Plan shall be construed and enforced as if such
provision had not been included therein. If the inclusion of
any Employee (or Employees) as a Participant under this Plan would cause the
Plan to fail to comply with the requirements of sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended,
then the Plan shall be severed with respect to such Employee or Employees, who
shall be considered to be participating in a separate arrangement.
11.15 Headings. The ARTICLE headings contained herein are inserted
only as a matter of convenience and for reference and in no way define, limit,
enlarge or describe the scope or intent of this Plan nor in any way shall they
affect this Plan or the construction of any provision
thereof.
11.16 Terms. Capitalized terms shall have meanings as defined herein.
Singular nouns shall be read as plural, masculine pronouns shall be read as
feminine, and vice versa, as appropriate.
IN WITNESS WHEREOF, Cordis Corporation has caused this instrument to be
executed by its duly authorized officer, as of this 25th day of August, 1995.
CORDIS CORPORATION
By: Signed\Robert C. Strauss
Title: President and CEO
ATTEST:
By: Signed\Brian D. Brohman
Title: Financial Analyst
SCHEDULE A
D. Barrett B. Ramseyer
W. Braak E. Ratering
B. Combs K. Reisinger
C. Donaldson D. Rinker
J. Gold S. Rowland
A. Gonzalez F. Sanchez
D. Hall B. Strauss
J. Hamberger D. Urso
C. Isicoff G. vonKlan
W. Johnson
B. Kasack Webster
R. Kranys T. Brown
D. Larnard B. Michaels
T. Lindstrand J. Stevens
C. McDowell W. Webster
P. Monks R. Evans
A. Novak H. Hernandez
C. Pike
Exhibit 10(d)
CORDIS CORPORATION
DIRECTOR DEFERRED COMPENSATION PLAN
(Final Document dated 8/25/95)
CORDIS CORPORATION
DIRECTOR DEFERRED COMPENSATION PLAN
Table of Contents
Page
ARTICLE I - Definitions
1.1 Account 1
1.2 Administrator 1
1.3 Board 1
1.4 Compensation 1
1.5 Deferrals 1
1.6 Deferral Election 1
1.7 Disability 1
1.8 Effective Date 2
1.9 Investment Fund 2
1.10 Participant 2
1.11 Plan Year 2
1.12 Trust 2
1.13 Trustee 2
ARTICLE II - Participation
2.1 Commencement of Participation 3
2.2 Duration of Participation 3
ARTICLE III - Contributions
3.1 Deferrals 4
3.2 Time of Contributions 5
3.3 Form of Contributions 5
ARTICLE IV - Vesting
4.1 Vesting of Deferrals 6
ARTICLE V - Accounts
5.1 Accounts 7
5.2 Investments, Gains and Losses 7
ARTICLE VI - Distributions
6.1 Distribution Election 8
6.2 Payment Options 8
6.3 Commencement of Payment upon Death or Disability 8
6.4 Minimum Distribution 8
6.5 Financial Hardship 9
ARTICLE VII - Beneficiaries
7.1 Beneficiaries 10
7.2 Lost Beneficiary 10
ARTICLE VIII - Funding
8.1 Prohibition Against Funding 11
8.2 Deposits in Trust 11
8.3 Indemnification of Trustee 11
8.4 Withholding of Participant Contributions 12
ARTICLE IX - Claims Administration
9.1 General 13
9.2 Claim Review 13
9.3 Right of Appeal 13
9.4 Review of Appeal 13
9.5 Designation 14
ARTICLE X - Change in Control
10.1 Distribution Election 15
10.2 Definition 15
ARTICLE XI - General Provisions
11.1 Administrator 16
11.2 No Assignment 16
11.3 No Employment Rights 17
11.4 Incompetence 17
11.5 Identity 17
11.6 Other Benefits 17
11.7 No Liability 18
11.8 Expenses 18
11.9 Insolvency 18
11.10 Amendment and Termination 18
11.11 Employer Determinations 19
11.12 Construction 19
11.13 Governing Law 19
11.14 Severability 19
11.15 Headings 19
11.16 Terms 20
CORDIS CORPORATION
DIRECTOR DEFERRED COMPENSATION PLAN
CORDIS CORPORATION, a Florida corporation (the "Employer"), pursuant to
Article VIII of the Cordis Corporation Director Compensation Deferral Plan,
hereby amends and restates Cordis Corporation Director Compensation Deferral
Plan and renames it the Cordis Corporation Director Deferred Compensation Plan
(the "Plan"). This Plan is for the benefit of a nonemployee
directors. This plan is an unfunded arrangement and is intended to be exempt
from the participation, vesting, funding, and fiduciary requirements set forth
in Title I of the Employee Retirement Income Security Act of 1974, as amended.
This amendment and restatement is effective the first day of July, 1995.
ARTICLE I - Definitions
1.1 Account. The bookkeeping account established for each Participant as
provided in section 5.1 hereof.
1.2 Administrator. A committee appointed by the Board to administer the
Plan.
1.3 Board. The Board of Directors of the Employer.
1.4 Compensation. The annual retainer and any fees paid by the Employer to
a Participant for duties performed as a member of the Board or as a member of
various Board Committees. In addition, it shall include any fees paid to a
Participant by the Company for consulting services rendered by the Participant
to the Employer.
1.5 Deferrals. The portion of Compensation that a Participant elects to
defer in accordance with section 3.1 hereof.
1.6 Deferral Election. The separate written agreement, submitted to the
Administrator, by which a nonemployee director agrees to participate in the
Plan and make Deferrals thereto.
1.7 Disability. Any termination of service with the Board as a result of a
physical or mental disability which prevents or inhibits attendance at meetings
of the Board of Directors or effective participation in the governance and
administration of the Employer s affairs in the normal course of activities and
responsibilities of the Board.
1.8 Effective Date. The effective date of the Plan is January 1, 1993; the
effective date of the amendment and restatement is July 1, 1995.
1.9 Investment Fund or Funds. Each investment(s) which serves as a means to
measure value, increases or decreases with respect to a Participant s Accounts.
1.10 Participant. A nonemployee director who has become a Participant as
provided in section 2.1 and whose Account has not been fully distributed.
1.11 Plan Year. January 1 to December 31.
1.12 Trust. The agreement between the Employer and the Trustee under
which the assets of the Plan are held, administered and managed, which shall
conform to the terms of Rev. Proc. 92-64.
1.13 Trustee. Dauphin Deposit Bank and Trust Company, or such other
successor that shall become trustee pursuant to the terms of the Cordis
Corporation Trust Under Nonqualified Deferred Compensation Plans.
ARTICLE II - Participation
2.1 Commencement of Participation. Each nonemployee director shall become a
Participant on the date on which his or her Deferral Election first becomes
effective.
2.2 Duration of Participation. A Participant shall continue to be an active
Participant until he or she ceases to be an Nonemployee director. If, during a
Participant s eligibility, a Deferral Election is not in effect for the
Participant, the Participant shall be an inactive Participant, retaining all
the rights described under the Plan except the right to make any further
Deferrals until he or she again becomes an active Participant.
ARTICLE III - Contributions
3.1 Deferrals.
(a) The Employer shall credit to the Account of a Participant an
amount equal to the amount designated in the Participant's Deferral Election
for that Plan Year. Such amounts shall not be made available to such
Participant, except as provided in ARTICLE VI, and shall reduce such
Participant's Compensation from the Employer in accordance with the provisions
of the applicable Deferral Election; provided, however, that all such amounts
shall be subject to the rights of the general creditors of the Employer as
provided in ARTICLE VIII.
(b) Each Nonemployee director shall deliver a Deferral Election to
the Employer before any Deferrals can become effective. Such Deferral Election
shall be void with respect to any Deferral unless submitted before the beginning
of the calendar year during which the amount to be deferred will be earned;
provided, however, that in the year in which the Plan is first adopted, amended
and restated, or an Employee is first eligible to participate, such Deferral
Election shall be filed within thirty (30) days of the date on which the Plan
is adopted or the date on which an Employee is first eligible to participate,
respectively, with respect to Compensation earned during the remainder of the
calendar year.
(c) The Deferral Election shall, subject to the limitation set forth
in this section 3.1 hereof, designate the amount of Compensation deferred by
each Participant, the subaccount, if any, as set forth in subsection (e), below,
the beneficiary or beneficiaries of the Participant and such other items as the
Administrator may prescribe. Such designations shall remain effective unless
amended as provided in subsection (d), below.
(d) A Participant may amend his or her Deferral Election from time
to time; provided, however, that any amendment to the amount of a Participant's
Deferrals shall comply with the provisions of subsection (b), above.
(e) Notwithstanding any provision to the contrary, a Participant may
revoke his election under this section 3.1 during the Plan Year with respect to
Compensation not yet earned in the event of a Financial Hardship as described
in section 6.5. A new election by a Participant who revokes an election under
this subsection (e) shall take effect only upon the first day of a subsequent
Plan Year.
(f) A Participant may direct his or her Deferral to be credited to
one or more subaccounts as may be established, as provided in ARTICLE V, by
the Participant at the time of the Deferral Election.
(g) The maximum amount that may be deferred each Plan Year is one
hundred percent (100%) of the Participant s Compensation, net of applicable
taxes.
3.2 Time of Contributions. Contributions shall be transferred to the Trust
as soon as administratively feasible following the date upon which Compensation
would have otherwise have been payable to the Participant. The Employer shall
also transmit at that time any necessary instructions regarding the allocation
of such amounts among the Accounts of Participants.
3.3 Form of Contributions. All Contributions to the Trust shall be made in
the form of cash or cash equivalents of US currency.
ARTICLE IV - Vesting
4.1 Vesting of Deferrals. A Participant shall have an immediate one hundred
percent (100%) vested right to the portion of his or her Account attributable
to Deferrals and any earnings on the investment of such Deferrals.
ARTICLE V - Accounts
5.1 Accounts. The Administrator shall establish and maintain a bookkeeping
account in the name of each Participant. The Administrator shall also establish
subaccounts, as provided in subsection (a) and/or (b) below, as elected by the
Participant pursuant to ARTICLE III.
(a) A Retirement Account shall be established for each Participant.
His or her Retirement Account shall be credited with Deferrals (as specified in
the Participant s Deferral Election), and the Participant's allocable share of
any earnings or losses on the foregoing. Each Participant's Account shall be
reduced by any distributions made plus any federal and state tax
withholding and any social security withholding tax as may be required by law.
(b) A Participant may elect to establish one or more Fixed Period
Accounts by designating a year of payout at the time the account is initially
established. Each Participant's Fixed Period Account shall be credited with
Deferrals (as specified in the Participant's Deferral Election), and the
Participant's allocable share of any earnings or losses on the foregoing. Each
Participant's Account shall be reduced by any distributions made plus any
federal and state tax withholding and any social security withholding tax as
may be required by law.
5.2 Investments, Gains and Losses.
(a) Trust assets shall be invested in the discretion of the Trustee.
The Trustee may consider any investment suggestions received by the Employer or
by a Participant with respect to his or her own Account.
(b) The Administrator shall adjust the amounts credited to each
Participant's Account to reflect Deferrals, investment experience, distributions
and any other appropriate adjustments. Such adjustments shall be made as
frequently as is administratively feasible.
(c) A Participant may direct that his or her Retirement Account
and/or Fixed Period Account established pursuant to section 5.1 may be valued
as if they were invested in one or more Investment Funds up to a maximum of six
(6) funds in whole percentages not less than ten percent (10%) of the balance
in an Account. A Participant may change his or her selection of Investment
Funds no more than six (6) times each Plan Year. An election shall be effective
as soon as administratively feasible following the date of the change as
indicated in writing by the Participant.
ARTICLE VI - Distributions
6.1 Distribution Election. Each Participant shall designate on his or her
initial Deferral Election the manner in which payments shall be made from the
choices available under section 6.2 hereof. Such designation shall be
irrevocable and shall apply to all amounts distributed from such Participant's
Account.
6.2 Payment Options.
(a) Retirement Account payouts shall be payable in one of the
following forms: (i) in a lump-sum payment; or (ii) in monthly installments
over a period of up to one hundred twenty (120) months (as elected by
Participant on his or her Deferral Election). Retirement Account payments shall
commence as soon as possible following the Participant s termination of service
from the Board.
(b) Fixed Period Account payouts shall be paid in one lump sum
payment on January 1 (or as soon as administratively feasible) of the calendar
year selected by the Participant on his or her Deferral Election.
6.3 Commencement of Payment upon Death or Disability.
(a) Upon the death of a Participant, all amounts credited to his or
her Account(s) shall be paid, as soon as administratively feasible, to his or
her beneficiary or beneficiaries, as determined under ARTICLE VII hereof, in a
lump sum.
(b) Upon the Disability of a Participant, all amounts credited to his or
her Account(s) shall be paid, (i) in a lump-sum payment; or (ii) in monthly
installments over a period of up to one hundred twenty (120) months (as elected
by Participant on his or her Deferral Election).
6.4 Minimum Distribution. Notwithstanding any provision to the contrary, if
the total balance of a Participant s Account at the time of a termination of
service or Disability is less than $10,000, then the Participant shall be paid
his or her benefits as a single lump sum as soon as administratively feasible
following said termination or Disability.
6.5 Financial Hardship. The Administrator may permit an early distribution
of part or all of any deferred amounts; provided, however, that such
distribution shall be made only if the Administrator, in its sole discretion,
determines that the Participant has experienced an unforeseen emergency that is
caused by an event beyond the control of the Participant and that would result
in severe financial hardship to the Participant if early distribution were not
permitted. Any distribution pursuant to this subsection is limited to the
amount necessary to meet the hardship.
ARTICLE VII - Beneficiaries
7.1 Beneficiaries. Each Participant may from time to time designate one or
more persons (who may be any one or more members of such person's family or
other persons, administrators, trusts, foundations or other entities) as his or
her beneficiary under the Plan. Such designation shall be made on a form
prescribed by the Administrator. Each Participant may at any time and from
time to time, change any previous beneficiary designation, without notice to or
consent of any previously designated beneficiary, by amending his or her
previous designation on a form prescribed by the Administrator. If the
beneficiary does not survive the Participant (or is otherwise unavailable to
receive payment) or if no beneficiary is validly designated, then the amounts
payable under this Plan shall be paid to the Participant's surviving spouse,
if any, and, if none, to his or her surviving issue per stirpes, if any, and,
if none, to his or her estate and such person shall be deemed to be a
beneficiary hereunder. (For purposes of this ARTICLE, a per stirpes
distribution to surviving issue means a distribution to such issue as
representatives of the branches of the descendants of such Participant; equal
shares are allotted for each living child and for the descendants as a group of
each deceased child of the deceased Participant). If more than one
person is the beneficiary of a deceased Participant, each such person shall
receive a pro rata share of any death benefit payable unless otherwise
designated on the applicable form. If a beneficiary who is receiving benefits
dies, all benefits that were payable to such beneficiary shall then be
payable to the estate of that beneficiary.
7.2 Lost Beneficiary.
(a) All Participants and beneficiaries shall have the obligation to
keep the Administrator informed of their current address until such time as all
benefits due have been paid.
(b) If a Participant or beneficiary cannot be located by the
Administrator exercising due diligence, then, in its sole discretion, the
Administrator may presume that the Participant or beneficiary is deceased for
purposes of the Plan and all unpaid amounts (net of due diligence expenses)
owed to the Participant or beneficiary shall be paid accordingly or, if a
beneficiary cannot be so located, then such amounts may be forfeited. Any such
presumption of death shall be final, conclusive and binding on all parties.
ARTICLE VIII - Funding
8.1 Prohibition Against Funding. Should any investment be acquired in
connection with the liabilities assumed under this Plan, it is expressly
understood and agreed that the Participants and beneficiaries shall not have any
right with respect to, or claim against, such assets nor shall any
such purchase be construed to create a trust of any kind or a fiduciary
relationship between the Employer and the Participants, their beneficiaries or
any other person. Any such assets shall be and remain a part of the general,
unpledged, unrestricted assets of the Employer, subject to the claims
of its general creditors. It is the express intention of the parties hereto
that this arrangement shall be unfunded for tax purposes and for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended.
Each Participant and beneficiary shall be required to look to
the provisions of this Plan and to the Employer itself for enforcement of any
and all benefits due under this Plan, and to the extent any such person acquires
a right to receive payment under this Plan, such right shall be no greater than
the right of any unsecured general creditor of the Employer. The Employer or
the Trust shall be designated the owner and beneficiary of any
investment acquired in connection with its obligation under this Plan.
8.2 Deposits in Trust. Notwithstanding paragraph 8.1, or any other provision
of this Plan to the contrary, the Employer may deposit into the Trust any
amounts it deems appropriate to pay the benefits under this Plan. The amounts
so deposited may include all contributions made pursuant to a Deferral Election
by a Participant, any Employer Contributions and any Matching Contributions.
8.3 Indemnification of Trustee.
(a) The Trustee shall not be liable for the making, retention, or
sale of any investment or reinvestment made by it, as herein provided, nor for
any loss to, or diminution of, the Trust assets, unless due to its own
negligence, willful misconduct or lack of good faith.
(b) Such Trustee shall be indemnified and saved harmless by the
Employer from and against all personal liability to which it may be subject by
reason of any act done or omitted to be done in its official capacity as Trustee
in good faith in the administration of the Plan and Trust,
including all expenses reasonably incurred in its defense in the event the
Employer fails to provide such defense upon the request of the Trustee. The
Trustee is relieved of all responsibility in connection with its duties
hereunder to the fullest extent permitted by law, short of breach of duty
to the beneficiaries.
8.4 Withholding of Participant Contributions. The Administrator is
authorized to make any and all necessary arrangements with the Employer in order
to withhold the Participant's Deferrals under section 3.1 hereof from his or
her Compensation. The Administrator shall determine the amount and timing of
such withholding.
ARTICLE IX - Claims Administration
9.1 General. In the event that a Participant or his or her beneficiary does
not receive any Plan benefit that is claimed, such Participant or beneficiary
shall be entitled to consideration and review as provided in this ARTICLE.
Such consideration and review shall be conducted in a manner designed to comply
with section 503 of the Employee Retirement Income Security Act of 1974, as
amended.
9.2 Claim Review. Upon receipt of any written claim for benefits, the
Administrator shall be notified and shall give due consideration to the claim
presented. If the claim is denied to any extent by the Administrator, the
Administrator shall furnish the claimant with a written notice setting forth
(in a manner calculated to be understood by the claimant):
(a) the specific reason or reasons for denial of the claim;
(b) a specific reference to the Plan provisions on which the denial
is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(d) an explanation of the provisions of this ARTICLE.
9.3 Right of Appeal. A claimant who has a claim denied under section 9.2
may appeal to the Administrator for reconsideration of that claim. A request
for reconsideration under this section must be filed by written notice within
sixty (60) days after receipt by the claimant of the notice of denial under
section 9.2.
9.4 Review of Appeal. Upon receipt of an appeal the Administrator shall
promptly take action to give due consideration to the appeal. Such
consideration may include a hearing of the parties involved, if the
Administrator feels such a hearing is necessary. In preparing for this appeal
the claimant shall be given the right to review pertinent documents and the
right to submit in writing a statement of issues and comments. After
consideration of the merits of the appeal the Administrator shall issue a
written decision which shall be binding on all parties. The decision shall
be written in a manner calculated to be understood by the claimant and shall
specifically state its reasons and pertinent Plan provisions on which it relies.
The Administrator s decision shall be issued within sixty (60) days after the
appeal is filed, except that if a hearing is held the decision
may be issued within one hundred twenty (120) days after the appeal is filed.
9.5 Designation. The Administrator may designate one or more of its members
or any other person of its choosing to make any determination otherwise required
under this ARTICLE.
ARTICLE X - Change in Control
10.1 Distribution Election. A Participant shall have the opportunity to
elect on January 1 of each Plan Year to receive a distribution of his entire
Account upon the occurrence of a change in control. If the Participant makes
such an election, his entire Account shall be paid to him in a single lump-sum
as soon as administratively practicable following such change in
control. Such election may be revoked on any January 1 subsequent to the
election. Notwithstanding the foregoing, an election to receive a distribution
of the Participant s entire Account must be made no later than ninety (90) days
prior to the occurrence of a change in control.
10.2 Definition. For purposes of this ARTICLE X, change in control
means a merger or acquisition of the Employer in transaction whereby the Board
is reorganized, dissolved or otherwise reconstructed so that one or more of the
Directors in office prior to such merger or acquisition is not a member of the
Board or other body primarily responsible for the policy decisions upon which
the Employer s activities and operations are based subsequent to the merger or
acquisition.
ARTICLE XI - General Provisions
11.1 Administrator.
(a) The Administrator is expressly empowered to limit the amount of
compensation that may be deferred; to deposit amounts into trust in accordance
with section 8.2 hereof; to interpret the Plan, and to determine all questions
arising in the administration, interpretation and application of the Plan; to
employ actuaries, accountants, counsel, and other persons it deems
necessary in connection with the administration of the Plan; to request any
information from the Employer it deems necessary to determine whether the
Employer would be considered insolvent or subject to a proceeding in bankruptcy;
and to take all other necessary and proper actions to fulfill its duties as
Administrator.
(b) The Administrator shall not be liable for any actions by it
hereunder, unless due to its own negligence, willful misconduct or lack of
good faith.
(c) The Administrator shall be indemnified and saved harmless by the
Employer from and against all personal liability to which it may be subject by
reason of any act done or omitted to be done in its official capacity as
Administrator in good faith in the administration of the Plan and Trust,
including all expenses reasonably incurred in its defense in the event the
Employer fails to provide such defense upon the request of the Administrator.
The Administrator is relieved of all responsibility in connection with its
duties hereunder to the fullest extent permitted by law, short of breach of
duty to the beneficiaries.
11.2 No Assignment. Benefits or payments under this Plan shall not
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or the Participant's beneficiary, whether voluntary or
involuntary, and any attempt to so anticipate, alienate, sell, transfer, assign,
pledge, encumber, attach or garnish the same shall not be valid, nor shall any
such benefit or payment be in any way liable for or subject to the debts,
contracts, liabilities, engagement or torts of any Participant or
beneficiary, or any other person entitled to such benefit or payment pursuant
to the terms of this Plan, except to such extent as may be required by law. If
any Participant or beneficiary or any other person entitled to a benefit or
payment pursuant to the terms of this Plan becomes bankrupt or attempts to
anticipate, alienate, sell, transfer, assign, pledge, encumber, attach or
garnish any benefit or payment under this Plan, in whole or in part, or if any
attempt is made to subject any such benefit or payment, in whole or in part, to
the debts, contracts, liabilities, engagements or torts of the Participant or
beneficiary or any other person entitled to any such benefit or payment
pursuant to the terms of this Plan, then such benefit or payment, in the
discretion of the Administrator, shall cease and terminate with respect to such
Participant or beneficiary, or any other such person.
11.3 No Employment Rights. Participation in this Plan shall not be
construed to confer upon any Participant the legal right to be retained in the
employ of the Employer, or give a Participant or beneficiary, or any other
person, any right to any payment whatsoever, except to the extent of the
benefits provided for hereunder. Each Participant shall remain subject to
discharge to the same extent as if this Plan had never been adopted.
11.4 Incompetence. If the Administrator determines that any person to
whom a benefit is payable under this Plan is incompetent by reason of physical
or mental disability, the Administrator shall have the power to cause the
payments becoming due to such person to be made to another for his or her
benefit without responsibility of the Administrator or the Employer to see
to the application of such payments. Any payment made pursuant to such power
shall, as to such payment, operate as a complete discharge of the Employer, the
Administrator and the Trustee.
11.5 Identity. If, at any time, any doubt exists as to the identity
of any person entitled to any payment hereunder or the amount or time of such
payment, the Administrator shall be entitled to hold such sum until such
identity or amount or time is determined or until an order of a court of
competent jurisdiction is obtained. The Administrator shall also be entitled to
pay such sum into court in accordance with the appropriate rules of law. Any
expenses incurred by the Employer, Administrator, and Trust incident to such
proceeding or litigation shall be charged against the Account of the affected
Participant.
11.6 Other Benefits. The benefits of each Participant or beneficiary
hereunder shall be in addition to any benefits paid or payable to or on account
of the Participant or beneficiary under any other pension, disability, annuity
or retirement plan or policy whatsoever.
11.7 No Liability. No liability shall attach to or be incurred by
any manager of the Employer, Trustee or any Administrator under or by reason of
the terms, conditions and provisions contained in this Plan, or for the acts or
decisions taken or made thereunder or in connection therewith; and as a
condition precedent to the establishment of this Plan or the receipt of benefits
thereunder, or both, such liability, if any, is expressly waived and released
by each Participant and by any and all persons claiming under or through any
Participant or any other person. Such waiver and release shall be conclusively
evidenced by any act or participation in or the acceptance of
benefits or the making of any election under this Plan.
11.8 Expenses. All expenses incurred in the administration of the
Plan, whether incurred by the Employer or the Plan, shall be paid by the
Employer.
11.9 Insolvency. Should the Employer be considered insolvent (as
defined by the Trust), the Employer, through its Board and chief executive
officer, shall give immediate written notice of such to the Administrator of
the Plan and the Trustee. Upon receipt of such notice, the
Administrator or Trustee shall cease to make any payments to Participants who
were Employees of the Employer or their beneficiaries and shall hold any and
all assets attributable to the Employer for the benefit of the general creditors
of the Employer.
11.10 Amendment and Termination.
(a) Except as otherwise provided in this section, the Employer shall
have the sole authority to modify, amend or terminate this Plan; provided,
however, that any modification or termination of this Plan shall not reduce,
alter or impair, without the consent of a Participant, a Participant's right to
any amounts already credited to his or her Account on the day before the
effective date of such modification or termination. Following such termination,
payment of such credited amounts may be made in a single-sum payment if the
Employer so designates. Any such decision to pay in a single sum shall apply to
all Participants.
(b) Any funds remaining in the Trust after termination of the Plan
and satisfaction of all liabilities to Participants and others, shall be
returned to the Employer.
11.11 Employer Determinations. Any determinations, actions or decisions of
the Employer (including but not limited to, Plan amendments and Plan
termination) shall be made by the board of directors of the Employer in
accordance with its established procedures or by such other individuals, groups
or organizations that have been properly delegated by the board of
directors to make such determination or decision.
11.12 Construction. All questions of interpretation, construction or
application arising under or concerning the terms of this Plan shall be decided
by the Administrator, in its sole and final discretion, whose decision shall be
final, binding and conclusive upon all persons.
11.13 Governing Law. This Plan shall be governed by, construed and
administered in accordance with the applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, and any other applicable
federal law, provided, however, that to the extent not preempted by federal law
this Plan shall be governed by, construed and administered under the
laws of the State of Florida, other than its laws respecting choice of law.
11.14 Severability. If any provision of this Plan is held invalid or
unenforceable, its invalidity or unenforceability shall not affect any other
provision of this Plan and this Plan shall be construed and enforced as if such
provision had not been included therein. If the inclusion of any
Employee (or Employees) as a Participant under this Plan would cause the Plan
to fail to comply with the requirements of sections 201(2), 301(a)(3) and 401(a)
(1) of the Employee Retirement Income Security Act of 1974, as amended, then
the Plan shall be severed with respect to such Employee or Employees, who shall
be considered to be participating in a separate arrangement.
11.15 Headings. The ARTICLE headings contained herein are inserted
only as a matter of convenience and for reference and in no way define, limit,
enlarge or describe the scope or intent of this Plan nor in any way shall they
affect this Plan or the construction of any provision thereof.
11.16 Terms. Capitalized terms shall have meanings as defined herein.
Singular nouns shall be read as plural, masculine pronouns shall be read as
feminine, and vice versa, as appropriate.
IN WITNESS WHEREOF, Cordis Corporation has caused this instrument to be
executed by its duly authorized officer, as of this 25th day of August, 1995.
CORDIS CORPORATION
By: Signed\Robert C. Strauss
Title: President and CEO
ATTEST:
By: Signed\Brian D. Brohman
Title: Financial Analyst
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<PERIOD-TYPE> 12-MOS
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<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
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0
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