SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996 Commission File Number: 0-24866
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ISOLYSER COMPANY, INC.
(Exact Name of registrant as specified in its charter)
GEORGIA 58-1746149
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
650 ENGINEERING DRIVE
TECHNOLOGY PARK
NORCROSS, GEORGIA 30092
(Address of principal executive offices) (Zip Code)
(770) 582-6363
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
common stock, $.001 par value per share
stock purchase rights
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 common stock held by nonaffiliates of the
registrant based on the sale trade price of the common stock as reported on The
Nasdaq Stock Market on March 27, 1997, was approximately $165.4 million. For
purposes of this computation, all officers, directors and 5% beneficial owners
of the registrant are deemed to be affiliates. Such determination should not be
deemed an admission that such officers, directors or 5% beneficial owners are,
in fact, affiliates of the registrant.
At March 27, 1997, there were outstanding 39,207,668 shares of the registrant's
common stock, $.001 par value per share.
Documents incorporated by reference: Portions of the Company's definitive proxy
statement for the annual meeting of shareholders are incorporated by reference
into Part III. Certain exhibits provided in Part IV are incorporated by
reference from the Company's Registration Statements on Form S-1 (File Nos.
33-83474 and 33-97086), Registration Statement on Form S-4 (File No. 333-7977),
Registration Statement on Form S-8 (File Nos. 33-85668), annual report on Form
10-K for the periods ended December 31, 1994, and December 31, 1995, and current
reports on Form 8-K dated May 31, 1995, September 18, 1995, June 4, 1996, August
30, 1996 and December 19, 1996.
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Note: The discussions in the Form 10-K and this Amendment contain
forward looking statements that involve risks and uncertainties. The actual
results of Isolyser Company, Inc. and subsidiaries (the "Company") could differ
significantly from those set forth herein. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in "Business", particularly "Business -- Risk Factors", and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" as
well as those discussed elsewhere in the Form 10-K. Statements contained in the
Form 10-K and this Amendment that are not historical facts are forward looking
statements that are subject to the safe harbor created by the Private Securities
Litigation Reform Act of 1995. A number of important factors could cause the
Company's actual results for 1997 and beyond to differ materially from those
expressed or implied in any forward looking statements made by, or on behalf of,
the Company. These factors include, without limitation, those listed in
"Business -- Risk Factors" in the Form 10-K.
Subsequent to filing the Annual Report on Form 10-K for the period
ending December 31, 1996 ("Form 10-K") of Isolyser Company, Inc. (the "Company")
and during 1996, the Company changed certain of its directors and executive
officers. Accordingly, effective May 1, 1997 the undersigned registrant hereby
amends Part III of its Annual Report on Form 10-K as set forth below:
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained in the Company's definitive proxy statement
dated May 1, 1997 (the "Proxy Statement") under the caption "Directors and
Executive Officers" is incorporated herein by reference in response to this
item.
ITEM 11. EXECUTIVE COMPENSATION
The information contained in the Proxy Statement under the caption
"Executive Compensation" is incorporated herein by reference in response to this
item, exclusive of the information contained in the Proxy Statement under the
captions "Report of the Compensation Committee on Executive Compensation" and
"Stock Price Performance Graph".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information in the Proxy Statement contained under the caption
"Security Ownership of Certain Beneficial Owners and Management" is incorporated
herein by reference in response to this item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has no information to report pursuant to this Item.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2) - Financial Statements and Schedules
The following financial statements and schedules included on pages
F-1 through F-23 are filed as part of this annual report.
Consolidated Financial Statements and Independent Auditors' Report:
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Operations for the years
ended December 31, 1996, 1995 and 1994 Consolidated
Statements of Changes in Shareholders' Equity for
the years ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995 and 1994 Notes to the
Consolidated Financial Statements
Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts
Other schedules are omitted because they are not applicable,
not required or because required information is included in the
consolidated financial statements or notes thereto.
(3) Exhibits
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2.1 Articles of Merger of MedSurg Industries, Inc. and MedSurg Acquisition Corp. dated December 31, 1993
(incorporated by reference to Exhibit 2.1 filed with the Company's Registration Statement on Form S-1, File No. 33-
83474)
2.2 Plan and Agreement of Merger dated December 31, 1993 of MedSurg Industries, Inc. and MedSurg Acquisition Corp.
(incorporated by reference to Exhibit 2.2 filed with the Company's Registration Statement on Form S-1, File No. 33-
83474)
2.3 Certificate of Merger and Name Change of MedSurg Industries, Inc. and MedSurg Acquisition Corp. dated January
7, 1994 (incorporated by reference to Exhibit 2.3 filed with the Company's Registration Statement on Form S-1, File
No. 33-84374)
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2.4 Articles of Merger of Creative Research and Manufacturing, Inc. and Creative Acquisition Corp. dated December 31,
1993 (incorporated by reference to Exhibit 2.4 filed with the Company's Registration Statement on Form S-1, File
No. 33-83474)
2.5 Plan and Agreement of Merger dated December 31, 1993 of Creative Research and Manufacturing, Inc. and Creative
Acquisition Corp. (incorporated by reference to Exhibit 2.5 filed with the Company's Registration Statement on Form
S-1, File No. 33-83474)
2.6 Certificate of Merger and Name Change of Creative Research and Manufacturing, Inc. and Creative Acquisition Corp.
dated January 7, 1994 (incorporated by reference to Exhibit 2.6 filed with the Company's Registration Statement on
Form S-1, File No. 33-83474)
2.7 Agreement and Plan of Merger dated as of July 28, 1995 among the Company, White Knight Acquisition Corp. and
White Knight Healthcare, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form
8-K filed October 3, 1995)
2.8 Agreement and Plan of Merger dated as of May 1, 1995 among the Company, Isolyser/SafeWaste Acquisition Corp.
and SafeWaste Corporation (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K
filed on June 15, 1995)
2.9 Articles of Merger dated May 31, 1995 of SafeWaste Corporation With and Into Isolyser/SafeWaste Acquisition Corp.
(incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed on June 15, 1995)
2.10 Certificate of Merger dated May 31, 1995 of Isolyser/SafeWaste Acquisition Corp. and SafeWaste Corporation
(incorporated by reference to Exhibit 2.3 to the Company's Current Report on Form 8-K filed on June 15, 1995)
2.11 Articles of Merger of White Knight Healthcare, Inc., and White Knight Acquisition Corp., dated September 18, 1995
(incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed on October 3, 1995)
2.12 Certificate of Merger of White Knight Healthcare, Inc., and White Knight Acquisition Corp., dated September 18, 1995
(incorporated by reference to Exhibit 2.3 to the Company's Current Report on Form 8-K filed October 3, 1995)
2.13 Stock Purchase Agreement dated December 31, 1993 between the Company, MedSurg Acquisition Corp., Creative
Acquisition Corp., MedSurg Industries, Inc., Creative Research and Manufacturing, Inc. and MedInvest Enterprises,
Inc. (incorporated by reference to Exhibit 2.7 to the Company's Registration Statement on Form S-1, File No. 33-
83474)
2.14 Agreement and Plan of Merger dated March 15, 1996 among the Company, Microtek Medical, Inc. and MMI Merger
Corp. (incorporated by reference to the Joint Proxy Statement/Prospectus included in the Company's Registration
Statement on Form S-4, File No. 333-7977).
3.1 Articles of Incorporation of Isolyser Company, Inc. (incorporated by reference to Exhibit 3.1 filed with the Company's
Registration Statement on Form S-1, File No. 33-83474).
3.2* Articles of Amendment to Articles of Incorporation of Isolyser Company, Inc.
3.3 Amended and Restated Bylaws of Isolyser Company, inc. (incorporated by reference to Exhibit 3.2 filed with the
Company's Registration Statement on Form S-1, File No. 33-83474)
3.4 First Amendment to Amended and Restated Bylaws of Isolyser Company, Inc. (incorporated by reference to Exhibit
3.1 to the Company's Current Report on Form 8-K filed July 29, 1996).
3.5 Second Amendment of Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company's
Current Report on Form 8-K filed December 20, 1996).
4.1 Specimen Certificate of Common Stock (incorporated by reference to Exhibit 4.1 filed with the Company's
Registration Statement on Form S-1, File No. 33-83474)
4.2 Shareholder Protection Rights Agreement dated as of December 20, 1996 between Isolyser Company, Inc. and
SunTrust Bank (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on
December 20, 1996).
10.1 Stock Option Plan and First Amendment to Stock Option Plan (incorporated by reference to Exhibit 4.1 filed with the
Company's Registration Statement on Form S-8, File No. 33-85668)
10.2 Second Amendment to Stock Option Plan (incorporated by reference to Exhibit 4.1 filed with the Company's
Registration Statement on Form S-8, File No. 33-85668)
10.3 Form of Third Amendment to Stock Option Plan (incorporated by reference to Exhibit 10.37 filed with the Company's
Annual Report on Form 10-K for the period ended December 31, 1994)
10.4 Form of Fourth Amendments to the Stock Option Plan (incorporated by reference to Exhibit 10.59 filed with the Company's
Annual Report on Form 10-K for the period ended December 31, 1995).
10.5* Form of Fifth Amendment to Stock Option Plan.
10.6 Form of Incentive Stock Option Agreement pursuant to Stock Option Plan (incorporated by reference to Exhibit 4.2
filed with the Company's Registration Statement on Form S-8, File No. 33-85668)
10.7 Form of Non-Qualified Stock Option Agreement pursuant to Stock Option Plan (incorporated by reference to Exhibit
4.3, filed with the Company's Registration Statement on Form S-8, File No. 33-85668)
10.8 Form of Option for employees of the Company outside of Stock Option Plan (incorporated by reference to Exhibit
10.6 filed with the Company's Registration Statement on Form S-1, File No. 33-83474)
10.9* Employment Agreement of Lester J. Berry.
10.10 Lease Agreement, dated July 29, 1993, between Richard E. Curtis, Trustee and MedSurg Industries, Inc.
(incorporated by reference to Exhibit 10.25 filed with the Company's Registration Statement on Form S-1, File No.
33-83474)
10.11 First Lease Amendment, dated February 28, 1994, between Richard E. Curtis, Trustee and MedSurg Industries, Inc.
(incorporated by reference to Exhibit 10.26 filed with the Company's Registration Statement on Form S-1, File No.
33-83474)
10.12 Lease Agreement, dated October 21, 1991, between Weeks Master Partnership, L.P. and the Company (incorporated
by reference to Exhibit 10.27 filed with the Company's Registration Statement on Form S-1, File No. 33-83474)
10.13 Lease, dated September 28, 1984, between M.S.I. Limited Partnership and MedSurg Industries, Inc. (incorporated
by reference to Exhibit 10.28 filed with the Company's Registration Statement on Form S-1, File No. 33-83474)
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10.14 Amendment No. 1 to Lease, dated October 10, 1984, between M.S.I. Limited Partnership and MedSurg Industries,
Inc. (incorporated by reference to Exhibit 10.29 filed with the Company's Registration Statement on Form S-1, File
No. 33-83474)
10.15 Agreement and Second Amendment to Lease, dated December 31, 1993, between M.S.I. Limited Partnership and
MedSurg Industries, Inc. (incorporated by reference to Exhibit 10.30 filed with the Company's Registration Statement
on Form S-1, File No. 33-83474)
10.16 Third Amendment to Lease, dated September 9, 1994, between M.S.I. Limited Partnership nd Medsurg Industries,
Inc. (incorporated by reference to Exhibit 10.31 filed with the Company's Registration Statement on Form S-1, File
No. 33-83474)
10.17 Lease Agreement, dated October 4, 1990, between Minnetonka Business Associates and Creative Research and
Manufacturing, Inc. (incorporated by reference to Exhibit 10.35 filed with the Company's Registration Statement on
Form S-1, File No. 33-83474)
10.18 Agreement to Extend Lease, dated October 7, 1991, between Minnetonka Business Associates and Creative Research
and Manufacturing, Inc. (incorporated by reference to Exhibit 10.36 filed with the Company's Registration Statement
on Form S-1, File No. 33-83474)
10.19 Agreement to Extend Lease, dated June 23, 1993, between Minnetonka Business Associates and Creative Research
and Manufacturing, Inc. (incorporated by reference to Exhibit 10.37 filed with the Company's Registration Statement
on Form S-1, File No. 33-83474)
10.20 Agreement to Extend Lease dated June 27, 1995, between 7100 Building Company Limited Partnership and Creative
Research and Manufacturing, Inc. (incorporated by reference to Exhibit 10.27 filed with the Company's Registration
Statement on Form S-1 File No. 33-97086)
10.21 Form of Indemnity Agreement entered into between the Company and certain of its officers and directors (incorporated
by reference to Exhibit 10.45 filed with the Company's Registration Statement on Form S-1, File No. 33-83474)
10.22 Amended and Restated Credit Agreement dated as of August 30, 1996, among the Company, MedSurg, Microtek, White Knight,
the Guarantors named therein, the Lenders named therein and The Chase Manhattan Bank (incorporated by referenced
to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on September 13, 1996).
10.23 Lease Agreement, dated November 18, 1994, between Weeks Realty, L.P. and the Company (incorporated by reference
to Exhibit 10.38 filed with the Company's Annual Report on Form 10-K for the period ended December 31, 1994)
10.24 1995 Nonemployee Director Stock Option Plan (incorporated by reference to Exhibit 10.39 filed with the Company's
Annual Report on Form 10-K for the period ended December 31, 1994)
10.25 Agreement and Lease dated October 1, 1992 between Industrial Development Authority of the City of Douglas,
Arizona and White Knight Healthcare, Inc. (incorporated by reference to Exhibit 10.41 filed with the Company's
Registration Statement on Form S-1 File No. 33-97086)
10.26 Product Purchase and Supply Agreement dated February 8, 1993 between White Knight Healthcare, Inc. and Sterile
Concepts, Inc. (incorporated by reference to Exhibit 10.42 filed with the Company's Registration Statement on Form
S-1 File No. 33-97086)
10.27 Non-Negotiable Promissory Note in the original principal amount of $2,304,000.00 dated February 8, 1993 between
White Knight Healthcare, Inc. and Sterile Concepts, Inc. (incorporated by reference to Exhibit 10.43 filed with the
Company's Registration Statement on Form S-1 File No. 33-97086)
10.28 Non-Negotiable Promissory Note in the original principal amount of $1,278,500.00 dated February 8, 1993 between
White Knight Healthcare, Inc. and Sterile Concepts, Inc. (incorporated by reference to Exhibit 10.44 filed with the
Company's Registration Statement on Form S-1 File No. 33-97086)
10.29 Form of Non-Negotiable Promissory Note in the original Principal amount of $750,000 dated September 15, 1995 between
the Company and Ali R. Momtaz (incorporated by reference to Exhibit 10.46 filed with the Company's Registration
Statement on Form S-1 File No. 33-97086)
10.30 Distribution and Marketing Agreement dated September 15, 1995 between the Company and Sterile Concepts, Inc.
(incorporated by reference to Exhibit 10.48 filed with the Company's Registration Statement on Form S-1 File No.
33-97086)
10.31 Agreement, dated November 1, 1992 between Struble & Moffitt Company and United Food and Commercial Workers Union Local
1360, chartered by United Food and Commercial Workers, AFL-CIO (incorporated by reference to Exhibit 10.49 filed
with the Company's Registration Statement on Form S-1 File No. 33-97086)
10.32 Agreement, dated March 18, 1995 between White Knight Hospital Disposables and United Food and Commercial
Workers Local 99R (incorporated by reference to Exhibit 10.50 filed with the Company's Registration
Statement on Form S-1 File No. 33-97086)
10.33 Labor Contract, dated July 22, 1994, between Union of Industrial, Related and Similar Workers of the Municipality
of Agua Prieta, Sonora, C.R.O.M. and Industrias Apson, S.A. de C.V. (incorporated by reference to Exhibit 10.51
filed with the Company's Registration Statement on Form S-1 File No. 33-97086)
10.34 Lease Agreement dated June 21, 1995 between Caballeros Blanca, S.A. de C.V. and Constuctora Immobiliaria del
Norte de Doahuila, S.A. de C.V. (incorporated by reference to Exhibit 10.53 filed with the Company's Registration
Statement on Form S-1 File No. 33-97086)
10.35 Lease, dated August 1, 1987, between HARP, a division of M.B. Haynes Electric Corporation, and Mars/White
Knight, a division of Work Wear Corporation, Inc., as amended by Addendum No. 1 dated July 6, 1987, Addendum
No. 2 dated July 6, 1987, Addendum No. 3 dated May 14, 1990, Addendum No. 4, dated June 17, 1992, second
Addendum No.4 dated June 28, 1993, Addendum No. 5 dated May 26, 1994, Addendum No. 6 dated July 11, 1995,
and Addendum No. 7 dated September 202, 1995 (incorporated by reference to Exhibit 10.55 filed with the
Company's Registration Statement on Form S-1 File No. 33-97086)
10.36 Lease, dated October 1, 1995, between SafeWaste Corporation and Highwoods/Forsyth Limited Partnership (incorporated
by reference to Exhibit 10.56 filed with the Company's Registration Statement on Form S-1 File No. 33-97086)
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10.37 1995 Employee Stock Purchase Plan, as amended by First Amendment dated July 1, 1995 (incorporated by reference
to Exhibit 10.57 filed with the Company's Registration Statement on Form S-1 File No. 33-97086)
10.38 Second Amendment to 1995 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.58 to the
Company vs. Annual Report on Form 10-K for the period ended December 31, 1995)
10.39* Third Amendment to 1995 Employee Stock Purchase Plan
10.40 Asset Exchange Agreement dated July, 1995 between Microtek and Xomed, Inc. (incorporated by reference to Exhibit
10.9 to Microtek's Annual Report on Form 10-K for the period ended November 30, 1995).
10.41 Asset Purchase Agreement dated November 30, 1995 among Microtek, Medi-Plast International, Inc. and certain
affiliates of Medi-Plast International, Inc. (incorporated by reference to Microtek's Current Report on Form 8-K dated
December 8, 1995).
10.42 Asset Purchase Agreement dated April 27, 1996 between Microtek and Advanced Instruments, Inc. (incorporated by
reference to Exhibit 2.1 to Microtek's Current Report on Form 8-K dated May 15, 1996).
10.43 Employment Agreement dated December 31, 1993 between Michael Sahady MedSurg Industries, Inc., Creative
Research and Manufacturing, Inc. and the Company (incorporated by reference to Exhibit 10.1 filed with the
Company's Registration Statement on Form S-1, File No. 33-83474).
10.44 Amendment to Employment Agreement dated as of May 24, 1996 between Michael Sahady, MedSurg Industries, Inc.,
Creative Research and Manufacturing, Inc. and the Company.
10.45 Employment Agreement dated December 31, 1993 between Kenneth Newsome, MedSurg Industries, Inc., Creative
Research and Manufacturing, Inc. and the Company (incorporated by reference to Exhibit 10.2 filed with the
Company's Registration Statement on Form S-1, File No. 33-83474)
10.46 Amendment to Employment Agreement dated as of December 31, 1996 between Kenneth Newsome, MedSurg
Industries, Inc., Creative Research and Manufacturing, Inc. and the Company.
10.47 Form of Sixth Amendment of Isolyser Company, Inc. Stock Option Plan
11.1* Statement re: computation of per share earnings
21.1* Subsidiaries of the Company
23.1* Consent of Deloitte & Touche LLP
23.2* Consent of KPMG Peat Marwick LLP
27.1* Financial Data Schedule
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* Previously filed
(b) Reports on Form 8-K:
(1) Form 8-K, dated December 19, 1996, regarding Other Events
438869.1
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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 on June 11, 1997.
ISOLYSER COMPANY, INC.
By: Gene R. McGrevin
Gene R. McGrevin, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
in the capacities indicated on June 11, 1997.
SIGNATURE TITLE
Gene R. McGrevin President
Gene R. McGrevin Chairman of the Board of Directors
(principal executive officer)
Peter Schmitt Vice President of Finance,
Peter Schmitt Chief Financial Officer and Treasurer
(principal financial and accounting
officer)
Travis W. Honeycutt Executive Vice President,
Travis W. Honeycutt Secretary and Director
Dan R. Lee Executive Vice President
Dan R. Lee and Director
Rosdon Hendrix Director
Rosdon Hendrix
Kenneth F. Davis Director
Kenneth F. Davis
Olivia F. Kirtley Director
Olivia F. Kirtley
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AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is
made and entered into as of the 24th day of May, 1996, by Isolyser Company,
Inc., a Georgia corporation (hereinafter "Isolyser"), MedSurg Industries, Inc.,
a Georgia corporation formerly known as MedSurg Acquisition Corp. (hereinafter
"MedSurg"), Creative Research and Manufacturing, Inc., a Georgia corporation
formerly known as Creative Acquisition Corp. (hereinafter "Creative Research")
(Isolyser, MedSurg and Creative Research being hereinafter collectively referred
to as the "Company"), and Michael Sahady (hereinafter "Sahady").
W I T N E S S E T H:
WHEREAS, the Company and Sahady entered into an Employment Agreement,
dated as of December 31, 1993 (the "Employment Agreement"); and
WHEREAS, Sahady has elected to resign his position as an executive
officer of the Company and the Company has accepted such resignation; and
WHEREAS, the Company and Sahady desire to amend the Employment
Agreement, upon the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, the parties hereto, each intending to be legally bound, do
hereby agree as follows:
1. Change in Relationship.
(a) Upon the terms and conditions set forth in this Amendment,
Sahady hereby resigns and the Company hereby accepts the resignation of Sahady
as an Executive Vice President of Isolyser and the President of MedSurg and
Creative Research.
(b) Sahady hereby resigns as a director of Isolyser, MedSurg
and Creative Research. Sahady has concurrently executed and delivered to the
Company his letter of resignation from such directorships in the form attached
hereto at Exhibit A and incorporated herein by reference.
(c) For the balance of the term of the Employment Agreement
(namely, through December 31, 1996) and continuing thereafter until December 31,
1997, Sahady shall continue as an employee of Isolyser with the title of
"Special Assistant to the Chief Executive". As such, he shall assist the Company
faithfully and diligently to achieve its business objectives as may from time to
time be requested by the president and chief executive officer of Isolyser, and
shall take no action which would be contrary to such objectives. Sahady,
however, shall not be required to perform duties at variance to duties assigned
to senior executive level personnel of the Company. As such Special Assistant,
Sahady shall no longer have any policy-making or staff authority on behalf of
the Company and shall have no authority to bind the Company to any obligations.
332647.1
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(d) Section 4 of the Employment Agreement captioned "Duties"
is hereby deleted. Sahady shall not be required to devote his full working time
and attention to the business of Isolyser, and may be engaged in other
activities, to which he shall be entitled to devote a substantial portion of his
time.
2. Compensation and Benefits. In lieu of all compensation and benefits
set forth in Sections 5 and 7 of the Employment Agreement, Sahady shall be
entitled to the following:
(a) A base salary as set forth in Section 5(a) of the
Employment Agreement in the amount of $175,000 per year through and including
December 31, 1997 so long as Sahady is not in breach of the Employment
Agreement, as herein amended, or Non-Compete (as hereinbelow defined), as now or
hereafter amended, following five days notice of any such breach by Isolyser to
Sahady.
(b) The fringe benefits set forth in Section 5(c) of the
Employment Agreement through and including December 31, 1996. Sahady
acknowledges and agrees that all such fringe benefits shall cease and terminate
at December 31, 1996 notwithstanding Sahady's continued employment as provided
in this Amendment through and including December 31, 1997, except that Sahady
shall continue to be eligible for participation in the Company's group health
insurance, life insurance and disability insurance on the same basis as other
Company employees through December 31, 1997. Isolyser shall maintain, at
Isolyser's sole cost and expense, the additional life insurance policies
identified in the last three sentences of Section 5(c) of the Employment
Agreement, through and including December 31, 1996, and effective as of January
1, 1997, the Company shall assign all rights to such policies to Sahady, without
charge to Sahady. The Company shall have no obligation in respect to any of such
policies subsequent to December 31, 1996.
(c) The sum of $27,073.88, subject to applicable withholding,
in satisfaction of all accrued but unused paid absences due to Sahady through
the date hereof. From and after the date hereof, Sahady agrees that he shall no
longer accrue paid absences or be entitled to compensation for same.
(d) The obligation of the Company to pay the base salary set
forth in Section 2(a) of this Amendment is not conditional upon, and shall be
payable through December 31, 1997, notwithstanding the death or disability of
Sahady.
3. Protective Covenants. Section 10(e)of the Employment Agreement and
Section 1 of that certain Covenant and Agreement Not to Compete (the
"Non-Compete") dated December 31, 1993, by Sahady and others in favor of the
Company are and shall hereby be terminated prospectively from and after the date
hereof. Sahady acknowledges and agrees that the other covenants included
therein, including, without limitation, the covenants against disclosure of
confidential information and solicitation of Company employees and customers,
shall:
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(a) continue in full force and effect and are hereby ratified
and confirmed by Sahady, and
(b) survive this Amendment in accordance with the terms of
such covenants and shall be binding upon Sahady through December 31, 1998 (or
such longer period as may be applicable for the protection of confidential
information or trade secrets).
4. Other Matters.
(a) Section 6 of the Employment Agreement captioned "Working
Facilities" is hereby deleted.
(b) Sahady acknowledges that he has submitted vouchers and
received reimbursement for all business expenses to which he is entitled
reimbursement under Section 7 of the Employment Agreement. The Company shall
have no further obligations under Section 7 of the Employment Agreement, except
the Company shall be obligated to reimburse Sahady for any expenses reasonably
and necessarily incurred by him in the carrying out of any services specifically
requested of Sahady by the President and Chief Executive Officer of Isolyser.
(c) This Agreement does not modify or cancel the terms and
provisions of any options (collectively, the "Stock Options") previously awarded
Sahady for the purchase of common stock of Isolyser, and such options shall
remain in full force and effect without modification or amendment. The parties
acknowledge and agree that Sahady's employment by the Company shall continue
through and including December 31, 1997, and that such date, except in the event
of Sahady's death, will be the effective date for the termination of Sahady's
employment under the Stock Options.
5. Releases.
(a) In consideration of the covenants of the Company contained
in this Amendment, Sahady hereby irrevocably and unconditionally releases,
waives, remises, forever discharges and agrees not to sue the Company and/or any
and all parent companies, divisions, subsidiaries, affiliates and other related
entities of the Company, as well as each of the Company's past, present and
future owners, directors, officers, employees, and the predecessors, successors
and assigns of each of them in their personal or corporate capacities, and all
of their attorneys (collectively, the "Released Parties"), from and with respect
to any and all liabilities, actions, claims, obligations, damages, causes of
action, contracts, accounts, agreements and demands of any nature whatsoever
that Sahady has, may have or may claim to have against any of the Released
Parties, whether known or unknown, liquidated or unliquidated, in law or in
equity, whether arising under any local, state or federal constitutions, laws,
rules or regulations, or under the common law or statutory law of the United
States prohibiting employment discrimination based on race, color, sex,
religion, handicap disability, national origin or any other protected category
or characteristic, including the Civil Rights Act of 1964, the Civil Rights Act
of 1986 or 1871, the National Labor Relations Act or any other federal, state or
local
332647.1
-3-
<PAGE>
human rights, civil rights or employment discrimination statute, including any
claim arising under the AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, as amended
("ADEA"), any rules or regulations arising under such laws, and any and all
claims relating to Sahady's employment or termination thereof, including, but
not limited to, any claims under the doctrines of defamation, libel, slander,
invasion of privacy, interference with contractual relations, or implied
contracts arising from employee handbooks, policies, manuals or statements of
procedure and wrongful discharge, it being the intention of the Company and
Sahady to make this release as broad and as general as the law permits to
include in addition to the foregoing all possible claims which arose or might
arise out of contract or tort under state or federal law.
(b) In consideration of the covenants of Sahady contained in
this Amendment, the Company hereby irrevocably and unconditionally releases,
waives, remises, forever discharges and agrees not to sue, or otherwise claim
payment to be due to or from Sahady, his heirs or personal representatives,
arising out of Sahady's capacity as an employee, stockholder, officer or former
officer, from and with respect to any and all liabilities, actions, claims,
obligations, damages, causes of action, contracts, accounts, agreements and
demands of any nature whatsoever that the Company or any of the Company's
stockholders, officers or employees has, may have or may claim to have against
Sahady, whether known or unknown, liquidated or unliquidated, in law or in
equity, whether arising under any local, state or federal constitutions, laws,
rules or regulations, or under common law or statutory law of the United States,
and any and all claims relating to Sahady's employment, including, but not
limited to, any claims under the doctrines of defamation, libel, slander,
invasion of privacy, or interference with contractual relations, it being the
intention of the Company and Sahady to make this release as broad and as general
as the law permits to include in addition to the foregoing all possible claims
which arose or might arise out of contract or tort under state or federal law.
(c) Nothing contained in Subsection (a) or (b) of this Section
5 shall restrict or otherwise impair in any manner the rights or obligations of
any parties arising under and by virtue of (i) the Employment Agreement, as
amended by this Amendment, (ii) this Amendment, (iii) that certain Indemnity
Agreement effective as of October 20, 1994 between Isolyser and Sahady, (iv) the
Stock Options, (v) the Non-Compete or (vi) any amendment or modification of any
of the foregoing.
6. Return of Property. Sahady hereby warrants and represents that, as
of the date of this Amendment, Sahady has delivered to the Company or its
designee (a) all keys to the Company's offices, (b) all Company credit cards in
his possession, and (c) any Company files, records or equipment kept in or
maintained by him in his office or elsewhere (including all copies thereof).
7. Workers' Compensation. Sahady represents that, as of the date of
this Amendment, he has not, and agrees that he will not, make any claims under
Workers' Compensation Insurance with respect to Sahady's period of employment at
the Company.
332647.1
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<PAGE>
8. Continuing Obligations. Except as otherwise expressly modified by
this Amendment, the terms and conditions of the Employment Agreement and
Non-Compete shall continue to be in full force and effect.
9. Disclosure.
(A) SAHADY SHOULD CAREFULLY READ AND UNDERSTAND THE TERMS,
CONDITIONS AND EFFECTS OF THIS AMENDMENT. THIS IS A LEGAL DOCUMENT, AND SAHADY
IS ADVISED THAT HE SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS
AMENDMENT.
(B) PURSUANT TO THE TERMS OF THE ADEA, SAHADY IS ADVISED TO
CONSIDER THIS AMENDMENT FOR A PERIOD OF AT LEAST TWENTY-ONE (21) DAYS AFTER THE
DATE OF RECEIPT BEFORE SAHADY EXECUTES THIS AMENDMENT. AFTER SAHADY SIGNS THIS
AMENDMENT AND RETURNS IT TO THE COMPANY, SAHADY HAS SEVEN (7) CALENDAR DAYS IN
WHICH TO NOTIFY THE COMPANY THAT SAHADY HAS DECIDED TO WITHDRAW HIS ACCEPTANCE
OF THIS AMENDMENT. THIS AMENDMENT (OTHER THAN SECTION 1 WHICH IS EFFECTIVE) WILL
NOT BECOME EFFECTIVE OR ENFORCEABLE AND NO PAYMENTS WILL BE MADE HEREUNDER UNTIL
THE END OF THE SEVEN DAY REVOCATION PERIOD, AT WHICH TIME THE AMENDMENT SHALL
BECOME EFFECTIVE AND ENFORCEABLE.
10. Miscellaneous.
(a) All capitalized terms which are not defined herein shall
have the meanings set forth in the Employment Agreement.
(b) Each party agrees that he or it will refrain from any
communication to third parties which denigrates, disparages or criticizes the
other party hereto.
(c) This Agreement and all the terms, provisions and
conditions hereof shall be binding upon and inure to the benefit of and be
enforceable by the heirs and personal representatives of Sahady.
(d) The Company and Sahady represent that, as of the date of
execution and delivery of this Amendment by each of them, no breach of the
Employment Agreement, as amended by this Amendment, has occurred which is within
the actual knowledge of the parties so representing.
[SIGNATURES ON FOLLOWING PAGE]
332647.1
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date first above written.
ISOLYSER COMPANY, INC.
By:
Its:
MEDSURG INDUSTRIES, INC.
By:
Its:
CREATIVE RESEARCH AND
MANUFACTURING, INC.
By:
Its:
MICHAEL SAHADY
Date:
332647.1
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<PAGE>
EXHIBIT "A"
May 24, 1996
The Board of Directors
Isolyser Company, Inc.
MedSurg Industries, Inc.
Creative Research and Manufacturing, Inc.
Gentlemen:
Effective immediately, I hereby resign as a member of the Board of
Directors.
Sincerely,
Michael Sahady
332647.1
-7-
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is made and
entered into as of the 31st day of December, 1996, by Isolyser Company, Inc., a
Georgia corporation (hereinafter "Isolyser"), MedSurg Industries, Inc., a
Georgia corporation formerly known as MedSurg Acquisition Corp. (hereinafter
"MedSurg"), Creative Research and Manufacturing, Inc., a Georgia corporation
formerly known as Creative Acquisition Corp. (hereinafter "Creative Research")
(Isolyser, MedSurg and Creative Research being hereinafter collectively referred
to as the "Company"), and Kenneth Newsome (hereinafter "Newsome").
W I T N E S S E T H:
WHEREAS, the Company and Newsome entered into an Employment Agreement,
dated as of December 31, 1993 (the "Employment Agreement"); and
WHEREAS , Newsome has resigned his position as an executive officer of
the Company and the Company has accepted such resignation; and
WHEREAS, the Company and Newsome desire to amend the Employment
Agreement, upon the terms and conditions set forth herein, to memorialize the
terms of such resignation.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, the parties hereto, each intending to be legally bound, do
hereby agree as follows:
1. Employment Termination. Effective December 31, 1996, Newsome resigns
his employment with the Company, and the Company accepts such resignation on the
terms and conditions set forth in this Agreement.
2. Severance Benefits.
(a) Consulting Payments. Until that date (the "Expiration
Date") which is the earlier to occur of June 30, 1997 or that date on which the
new business venture in which Newsome is participating shall receive funding,
the Company shall pay to Newsome a consulting fee (the "Consulting Fee") at the
rate of $135,000 per annum. The Consulting Fee shall be payable in the same
manner as Newsome's salary has previously been paid by the Company. The Company
shall be entitled to offset against the Consulting Fee any applicable payroll
taxes.
(b) Health Insurance. Subject to Newsome's proper election to
continue his health insurance coverage under COBRA for himself and/or his
dependents, the Company will pay for or reimburse Newsome for the cost of COBRA
coverage through the Expiration Date.
(c) No Other Benefits. Except as set forth in this Section 2
and in Section 4 below, Newsome acknowledges that neither he nor his dependents
shall be entitled to participate in any other compensation (including, without
limitation, unused leave at January 1, 1997) or fringe benefits which are or may
from time to time be provided by the Company including, without limitation, such
fringe benefits described in Section 5(c) of the Employment Agreement.
391471.1
<PAGE>
3. Protective Covenants. Newsome acknowledges and agrees that the
protective covenants set forth in Section 10 of the Employment Agreement,
including, without limitation, the covenants against disclosure of confidential
information, solicitation of Company employees and customers, and competition
shall:
(a) Continue in full force and effect and are hereby ratified
and confirmed by Newsome, and
(b) Survive this Amendment in accordance with the terms of
such covenants and shall be binding upon Newsome for the respective survival
times set forth in the Employment Agreement from a December 31, 1996 termination
date.
4. Other Matters.
(a) Except for those provisions of the Employment Agreement
which by their respective nature survive the termination of the Employment
Agreement (including, without limitation, Section 10 of the Employment
Agreement), the parties acknowledge that the Employment Agreement has
terminated.
(b) Newsome acknowledges that he has submitted vouchers and
received reimbursement for all business expenses to which he is entitled
reimbursement under Section 7 of the Employment Agreement. The Company shall
have no further obligations under Section 7 of the Employment Agreement.
(c) Prior to the execution and delivery of this amendment by
the parties, the Compensation Committee has awarded to Newsome a non-qualified
stock option under the Company's Stock Option Plan for the purchase of up to
124,000 shares of common stock of Isolyser upon and subject to the terms and
conditions set forth in a separate non-qualified stock option agreement (the
"Stock Option") entered into between Isolyser and Newsome in replacement of all
stock options previously awarded to Newsome which have been canceled by virtue
of such Stock Option. This Amendment does not modify the Stock Option.
5. Releases.
(a) In consideration of the covenants of the Company contained
in this Amendment, Newsome hereby irrevocably and unconditionally releases,
waives, remises, forever discharges and agrees not to sue the Company and/or any
and all parent companies, divisions, subsidiaries, affiliates and other related
entities of the Company, as well as each of the Company's past, present and
future owners, directors, officers, employees, and the predecessors, successors
and assigns of each of them in their personal or corporate capacities, and all
of their attorneys (collectively, the "Released Parties"), from and with respect
to any and all liabilities, actions, claims, obligations, damages, causes of
action, contracts, accounts, agreements and demands of any nature whatsoever
that Newsome has, may have or may claim to have against any of the Released
Parties, whether known or unknown, liquidated or unliquidated, in law or in
equity, whether arising under any local, state or federal constitutions, laws,
rules or regulations, or under the common law or statutory law of the United
States prohibiting employment discrimination based on race, color, sex,
religion, handicap disability, national
391471.1
-2-
<PAGE>
origin or any other protected category or characteristic, including the Civil
Rights Act of 1964, the Civil Rights Act of 1986 or 1871, the National Labor
Relations Act or any other federal, state or local human rights, civil rights or
employment discrimination statute, including any claim arising under the AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, as amended ("ADEA"), any rules or
regulations arising under such laws, and any and all claims relating to
Newsome's employment or termination thereof, including, but not limited to, any
claims under the doctrines of defamation, libel, slander, invasion of privacy,
interference with contractual relations, or implied contracts arising from
employee handbooks, policies, manuals or statements of procedure and wrongful
discharge, it being the intention of the Company and Newsome to make this
release as broad and as general as the law permits to include in addition to the
foregoing all possible claims which arose or might arise out of contract or tort
under state or federal law.
(b) In consideration of the covenants of Newsome contained in
this Amendment, the Company hereby irrevocably and unconditionally releases,
waives, remises, forever discharges and agrees not to sue, or otherwise claim
payment to be due to or from Newsome, his heirs or personal representatives,
arising out of Newsome's capacity as an employee, stockholder, officer or former
officer, from and with respect to any and all liabilities, actions, claims,
obligations, damages, causes of action, contracts, accounts, agreements and
demands of any nature whatsoever that the Company or any of the Company's
stockholders, officers or employees has, may have or may claim to have against
Newsome, whether known or unknown, liquidated or unliquidated, in law or in
equity, whether arising under any local, state or federal constitutions, laws,
rules or regulations, or under common law or statutory law of the United States,
and any and all claims relating to Newsome's employment, including, but not
limited to, any claims under the doctrines of defamation, libel, slander,
invasion of privacy, or interference with contractual relations, it being the
intention of the Company and Newsome to make this release as broad and as
general as the law permits to include in addition to the foregoing all possible
claims which arose or might arise out of contract or tort under state or federal
law.
(c) Nothing contained in Subsection (a) or (b) of this Section
5 shall restrict or otherwise impair in any manner the rights or obligations of
any parties arising under and by virtue of (i) the Employment Agreement, as
amended by this Amendment, (ii) this Amendment, or (iii) the Stock Option.
6. Return of Property. Newsome hereby warrants and represents that, as
of the date of this Amendment, Newsome has delivered to the Company or its
designee (a) all keys to the Company's offices, (b) all Company credit cards in
his possession, and (c) any Company files, records or equipment (including,
without limitation, the Company's computer and printer, together with all
software and magnetic media of the Company associated therewith, located at
Newsome's residence) kept in or maintained by him in his office or elsewhere
(including all copies thereof).
7. Workers' Compensation. Newsome represents that, as of the date of
this Amendment, he has not, and agrees that he will not, make any claims under
Workers' Compensation Insurance with respect to Newsome's period of employment
at the Company.
391471.1
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<PAGE>
8. Consulting Services. For the consideration elsewhere set forth in
this Amendment, Newsome agrees to serve as a consultant to the Company as set
forth in this Section. Upon the request from time to time of any president or
vice president of the Company, Newsome will (i) advise as requested regarding
the management and operations of the Company, (ii) provide information about the
Company's prior business transactions and performance, and (iii) provide other
assistance and information which is reasonably desired by the Company and which
is of the type consistent with the services provided by Newsome to the Company
immediately prior to his resignation from employment. Newsome agrees to provide
a minimum of 32 hours per month of such consulting services until the Expiration
Date at which time the consulting services shall cease. When reasonably
feasible, Newsome may provide such advice, information and assistance over the
telephone. From time to time the Company may request, however, that Newsome meet
with representatives of the Company at the offices or other facilities of the
Company to provide such consulting services. Upon submission by Newsome of
vouchers in form reasonably satisfactory to the Company, the Company shall
reimburse Newsome for all reasonable third party out-of-pocket expenses directly
incurred by Newsome (other than overhead expenses) in the performance of his
consulting services hereunder in a manner consistent with the regular practices
of the Company. Newsome agrees to coordinate in advance with appropriate
personnel of the Company prior to incurring any such expenses other than
immaterial expenses.
9. Miscellaneous.
(a) Any capitalized terms which are not defined herein shall
have the meanings set forth in the Employment Agreement.
(b) Each party agrees that he or it will refrain from any
communication to third parties which denigrates, disparages or criticizes the
other party hereto.
(c) This Agreement and all the terms, provisions and
conditions hereof shall be binding upon and inure to the benefit of and be
enforceable by the heirs and personal representatives of Newsome.
(d) The Company and Newsome represent that, as of the date of
execution and delivery of this Amendment by each of them, no breach of the
Employment Agreement, as amended by this Amendment, has occurred which is within
the actual knowledge of the parties so representing.
[SIGNATURES ON FOLLOWING PAGE]
391471.1
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date first above written.
ISOLYSER COMPANY, INC.
By:
Its:
MEDSURG INDUSTRIES, INC.
By:
Its:
CREATIVE RESEARCH AND
MANUFACTURING, INC.
By:
Its:
KENNETH NEWSOME
Date:
391471.1
-5-
SIXTH AMENDMENT OF ISOLYSER COMPANY, INC.
STOCK OPTION PLAN
WHEREAS, by at least a majority vote of the holders of the outstanding
capital stock of Isolyser Company, Inc. (the "Company") who voted on said matter
at the annual shareholders meeting of the Company held on April 28, 1992, the
Company approved, ratified and affirmed that certain Stock Option and Alternate
Rights Plan (as amended to date, the "Plan"); and
WHEREAS, by at least a majority vote of the holders of the outstanding
capital stock of the Company who voted on said matter at the shareholders
meetings of the Company held (i) on April 19, 1994, the Company amended the Plan
to increase the number of shares reserved for options and subject to alternate
rights under the Plan from 1,400,000 shares of common stock to 1,566,076 shares
of common stock (as adjusted for the Company's October 2, 1995 two for one stock
split) and to change the name of the Plan to "Stock Option Plan", (ii) on April
27, 1995, the Company amended the Plan to increase the number of shares reserved
for options and subject to alternate rights under the Plan from 1,566,076 to
2,400,000 shares of common stock (as adjusted for the Company's October 2, 1995
two for one stock split), (iii) on May 16, 1996, the Company amended the Plan to
increase the number of shares reserved for options and subject to alternate
rights under the Plan from 2,400,000 to 3,600,000 shares of common stock, and
(iv) on August 30, 1996, the Company amended the Plan for various purposes
including, without limitation, an increase in the number of shares reserved for
options and subject to alternate rights from 3,600,000 to 4,400,000; and
WHEREAS, the Board of Directors has resolved to further amend the Plan
as hereinbelow more particularly set forth.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Defined Terms. Initially capitalized terms used in this Amendment
which are not otherwise defined by this Amendment are used with the same meaning
ascribed to such terms in the Plan.
2. Amendment. Section 5.1 of the Plan is amended by deleting the number
"4,400,000" (such figure having been adjusted to reflect the Company's October
2, 1995 two for one stock split) appearing therein and inserting in lieu thereof
the number "4,800,000" (such figure having been adjusted to reflect the
Company's October 2, 1995 two for one stock split).
3. Effectiveness. Section 2 of this Amendment shall not become
effective unless and until such provisions are approved by at least a majority
vote of the holders of the outstanding capital stock of the Company present, or
represented, and entitled to vote on such matter at a meeting of shareholders
duly called and convened within one (1) year following the date hereof.
422704.1
<PAGE>
4. Ratification. Except as hereinabove amended and modified, the
Plan is approved, ratified and affirmed without further modification or
amendment.
IN WITNESS WHEREOF, the Company has caused this Sixth Amendment to be
executed on April 4, 1997, in accordance with Article XII of the Plan and the
authority provided by the Board of Directors.
ISOLYSER COMPANY, INC.
By:
Name: Dan R. Lee
Title: Vice President and Chief
Financial Officer
422704.1
