SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1998 Commission File No. 0-24866
-------------- -------
ISOLYSER COMPANY, INC.
(Exact name of Registrant as specified in its charter)
Georgia 58-1746149
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
650 Engineering Drive
Technology Park
Norcross, Georgia 30092
(Address of principal executive offices)
(770) 582-6363
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at May 12, 1998
- ----- ---------------------------
Common Stock, $.001 par value 39,958,300
547812.2
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ISOLYSER COMPANY, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1998 DECEMBER 31, 1997
------ ----------------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 9,813 $ 9,299
Accounts receivable, net 15,430 13,909
Inventories 30,091 32,067
Prepaid expenses and other assets 1,588 1,745
Assets held for sale 35,081 35,751
--------- ---------
Total Current Assets 92,003 92,771
--------- ---------
Property, plant and equipment 39,115 37,622
Less accumulated depreciation (18,260) (17,630)
--------- ---------
Property, plant, and equipment, net 20,855 19,992
Intangibles and other assets, net 31,124 31,571
--------- ---------
$ 143,982 $ 144,334
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current installments of long term debt $ 3,647 $ 4,610
Accounts payable 7,793 10,108
Bank overdraft 483 -
Accrued expenses 4,861 5,644
--------- ---------
Total current liabilities 16,784 20,362
--------- ---------
Long term debt, excluding current installments 41,705 37,546
Other liabilities 286 309
--------- ---------
Total liabilities 58,775 58,217
--------- ---------
Shareholders' equity
Common stock 39 39
Additional paid in capital 203,017 203,601
Retained earnings (117,031) (115,743)
Cumulative translation adjustment (102) (103)
Unearned shares restricted to employee stock ownership plan (300) (300)
--------- ---------
85,623 87,494
Treasury shares (416) (1,377)
--------- ---------
Total shareholders' equity 85,207 86,117
--------- ---------
$ 143,982 $ 144,334
========= =========
See accompanying notes.
</TABLE>
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ISOLYSER COMPANY, INC.
Condensed Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997
------------------------------------------
<S> <C> <C>
Net sales $ 41,230 $ 40,003
Costs of goods sold 30,588 30,846
---------- ---------
Gross profit 10,642 9,157
Operating expenses:
Selling & marketing 6,122 6,902
General & administrative 3,668 3,632
Research & development 681 768
Amortization of intangibles 527 956
---------- --------
Total operating expenses 10,998 12,258
---------- ---------
Loss from operations (356) (3,101)
Interest income 92 228
Interest expense (950) (1,020)
Gain (loss) in joint venture 3 (13)
---------- ---------
Loss before income tax expense (1,211) (3,906)
Income tax expense 76 4
---------- ---------
Net loss $ (1,287) $ (3,910)
---------- ---------
Net loss per common share - Basic and Diluted $ (0.03) $ (0.10)
========== =========
Weighted average number of common shares outstanding 39,512 38,828
========== =========
See accompanying notes.
</TABLE>
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ISOLYSER COMPANY, INC.
Condensed Statement of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997
----------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,287) $ (3,910)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation 965 1,834
Amortization 527 956
Provision for doubtful accounts 66 57
Loss on disposal of property, plant & equipment 10 6
Changes in assets and liabilities (1,956) (2,500)
-------- ---------
NET CASH USED IN OPERATING ACTIVITIES: (1,675) (3,557)
-------- ---------
Cash flows from investing activities
Additions to property, plant and equipment (1,651) (1,166)
-------- ---------
NET CASH USED IN INVESTING ACTIVITIES: (1,651) (1,166)
-------- ---------
Cash flows from financing activities:
Net borrowings under credit agreements 3,270 2,524
Changes in bank overdraft 194 (1,459)
Proceeds from exercised stock options - 574
Proceeds from issuance of stock 255 306
Issuance of stock to 401(k) Plan 121 -
-------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 3,840 1,945
-------- ---------
Net increase (decrease) in cash and cash equivalents 514 (2,778)
Cash and cash equivalents at beginning of period 9,299 20,925
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,813 $ 18,147
======== =========
See accompanying notes.
</TABLE>
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ISOLYSER COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1) In the opinion of management, the information furnished reflects all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the financial position, results of operations and cash
flows for the interim periods. Results for the interim periods are not
necessarily indicative of results to be expected for the full year. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 (the "Annual
Report").
2) Inventories are stated at the lower of cost or market and are summarized as
follows:
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
Raw materials and supplies $ 23,543,000 $ 24,121,000
Work in process 3,950,000 4,456,000
Finished goods 24,681,000 25,901,000
------------ ------------
Total 52,174,000 54,478,000
Reserve for excess, slow moving and
obsolete inventory (22,083,000) (22,411,000)
------------ ------------
Total $ 30,091,000 $ 32,067,000
============ ============
At March 31, 1998 and December 31, 1997 the net OREX inventory is
approximately $6,326,000 and $7,500,000 respectively.
3) On February 25, 1998, the Company approved a plan to dispose of its OREX
manufacturing facilities and White Knight subsidiary. Accordingly, the net
assets of these entities at March 31, 1998 and December 31, 1997 are classified
as held for sale in the accompanying consolidated balance sheets, and are
comprised of the following:
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
Assets:
Accounts receivable $ 9,348,000 $ 8,848,000
Inventory 11,942,000 13,085,000
Prepaid expense and other assets 1,067,000 186,000
Property and equipment, net 19,794,000 19,980,000
Other assets 280,000 286,000
---------- ----------
Total assets $42,431,000 $42,385,000
---------- ----------
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MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
Liabilities:
Accounts payable $ 3,317,000 $ 2,247,000
Bank overdraft 219,000 508,000
Accrued liability 1,905,000 2,044,000
Long-term debt 1,909,000 1,836,000
----------- ----------
Total liabilities 7,350,000 6,635,000
----------- ----------
Net assets held for sale $ 35,081,000 $ 35,750,000
=========== ==========
The Company anticipates disposing of these entities in 1998.
The following represents the results of operations of the above noted assets and
White Knight for the quarters ended March 31, 1998 and December 31, 1997:
QUARTER ENDED QUARTER ENDED
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
Net sales $ 11,592,474 $ 13,357,000
Net loss (1,850,927) (1,882,000)
Net loss per share - basic and diluted (0.05) (0.05)
------------ ------------
4) Loss per common share is computed using the weighted average number of common
shares outstanding during the respective periods. There is no difference between
basic and diluted weighted average and per share amounts for these periods.
5) In June 1997, the Financial Accounting Standards Board issued SFAS 130,
"Reporting Comprehensive Income". Effective January 1, 1998, the Company adopted
SFAS 130. Management believes the pronouncement does not significantly impact
the presentation of the Company's consolidated financial statements.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Net sales for the three months ended March 31, 1998 ( the "1998 Quarter") were
$41.2 million compared to $40.0 million for the three months ended March 31,
1997 ( the "1997 Quarter"). Sales of custom procedure trays and related products
increased 22.0% in the 1998 Quarter as compared to the 1997 Quarter. This
increase is primarily attributable to the relief of backlog
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created by the reduction of production during the Company's implementation of
and conversion to an upgraded manufacturing system during the fourth quarter of
1997, and new business. Sales of Microtek products increased 2.8% in the 1998
Quarter as compared to the 1997 Quarter, primarily attributable to increased
market penetration at the hospital level. Sales of safety products declined
18.5% in the 1998 Quarter as compared to the 1997 Quarter, due to a substantial
reduction in purchases of LTS products by Allegiance, the primary distributor of
such products, and recent adverse regulatory developments. While the Company
plans to introduce a new LTS product to preserve its market share created by
LTS, the Company's ability to do so is subject to obtaining federal registration
of such product. The Company expects that its operating results will continue to
be adversely affected by reduced sales of LTS, and no assurances can be provided
that the Company will be able to maintain its market share on such products by
the registration and introduction of a new LTS product. White Knight sales
declined 14.2% in the 1998 Quarter as compared to the 1997 Quarter, due to a
competitor's purchase of a significant customer and the Company's decision to
de-emphasize marketing of White Knight products in favor of higher margin
products sold by its other subsidiaries. Sterile Concepts, a significant
customer of White Knight, was acquired by Maxxim, which is a product competitor
of the Company, in 1996. While Sterile Concepts remains contractually obligated
to purchase a yearly minimum of $5.1 million of products until June 30, 1998,
the Company expects that Sterile Concepts will no longer purchase White Knight
products. The Company is negotiating with Maxxim for a new supply agreement for
the sale of other products of the Company in settlement of the outstanding
obligations of Sterile Concepts to White Knight. No assurances can be provided
that the Company will be able to complete any such settlement negotiations. In
February 1998, the Company announced plans to sell its White Knight subsidiary,
which, if consummated, would significantly reduce the Company's net sales. See
"Risk Factors - Risks of Planned Divestitures" in the Company's Annual Report.
Included in the foregoing sales figures are $1.8 million in sales of OREX
Degradables during the 1998 Quarter as compared to $2.1 million in the 1997
Quarter. Sales of OREX Degradables in the 1998 Quarter did not contribute any
gross profits to the Company's operating results. During 1997, the Company
substantially reduced its selling and marketing efforts to increase sales of
OREX Degradables and instead focused on preserving its existing base of
hospitals purchasing OREX Degradables and evaluating means to exploit the market
position of OREX Degradables within its various market potentials. The Company
to date has not achieved any gross profits on its sale of OREX Degradables. The
Company's future performance will depend to a substantial degree upon market
acceptance of and the Company's ability to successfully manufacture, market,
deliver and expand its OREX Degradables line of products at acceptable profit
margins. The Company's ability to achieve such objective is subject to risks
including the risks described in the Company's Annual Report under "Risk
Factors."
Gross profit in the 1998 Quarter was $10.6 million, or 25.8% of net sales as
compared to $9.2 million in the 1997 Quarter, or 22.9% of net sales. The 16.2%
improvement in gross profit is attributable to increased gross profits at the
Company's custom procedure tray and Microtek divisions on increased sales,
commencing utilization of manufacturing capacity at the Company's Abbeville
manufacturing plant for the production of traditional products on a short-term
basis,
547812.2
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and reduced depreciation expense due to impairment reserves recorded during the
fourth quarter of 1997.
Selling, general and administrative expenses were $9.8 million or 23.7% of net
sales in the 1998 Quarter as compared to $10.5 million or 26.3% of net sales in
the 1997 Quarter. The reduction in selling, general and administrative expense
is primarily attributed to implementation of the Company's operating plan that
focused on reorganizing marketing and sales efforts to achieve reductions in
selling and marketing expenses.
Research and development expenses were $681,000 in the 1998 Quarter or 1.7% of
net sales as compared to $768,000 in the 1997 Quarter or 1.9% of net sales. The
decline in research and development expense is primarily attributed to a decline
in expenses incurred in the development of fiber technology.
Amortization of intangibles was $527,000 in the 1998 Quarter as compared to
$956,000 in the 1997 Quarter. The decline in amortization expense was due to
charges recorded during the fourth quarter of 1997 for the impairment of White
Knight's carrying value.
The resulting loss from operations was $356,000 in the 1998 Quarter as compared
to a $3.1 million loss from operations in the 1997 Quarter.
Interest expense, net of interest income, was $858,000 in the 1998 Quarter as
compared to $792,000 in the 1997 Quarter. The increase in interest expense is
attributed to increases in the Company's borrowing interest rate combined with
lower interest income as a result of lower cash balances during the 1998
Quarter, offset by reduced interest expense as a result of reduced borrowings
during 1997.
Provision for income taxes reflect an expense of $76,000 in the 1998 Quarter as
compared to an expense of $4,000 in the 1997 Quarter.
The resulting net loss was $1.3 million for the 1998 Quarter as compared to a
net loss of $3.9 million for the 1997 Quarter.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company's cash and equivalents totaled $9.8 million as
compared to $9.3 million at December 31, 1997.
During the 1998 Quarter, the Company used $1.7 million of cash in operating
activities as compared to a cash use of $3.6 million in the 1997 Quarter. The
use of cash in the 1998 Quarter is attributable to a combination of the
Company's operating loss, increases in accounts receivable as a result of an
incremental increase in sales of $5.6 million in the 1998 Quarter as compared to
the fourth quarter of 1997 and a decrease in accounts payable as a result of the
fourth quarter
547812.2
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<PAGE>
1997 build-up of inventory at the Company's custom procedure tray division due
to systems conversion. The Company used $1.7 million in investing activities
during the 1998 Quarter as compared to $1.2 million used during the 1997
Quarter. This use of cash during the 1998 Quarter was primarily attributable to
several computer software implementations in progress. During the 1998 Quarter,
the Company generated approximately $3.8 million in cash from financing
activities, primarily through increasing indebtedness under the Company's
revolving line of credit, compared to cash provided by financing activities
approximating $1.9 million in the 1997 Quarter.
As more fully described in the Company's Annual Report on Form 10-K, the Company
has a $55 million credit agreement (the "Credit Agreement") consisting of a $40
million revolving credit facility maturing on August 31, 1999 and a $15 million
term loan facility maturing on August 31, 2001. Current additional borrowing
availability under the revolving credit facility at March 31, 1998 was
approximately $4.2 million. Outstanding borrowings under the revolving credit
facility were approximately $28.6 million at March 31, 1998. Outstanding
borrowings under the term loan facility were $11.8 million at March 31, 1998.
The Credit Agreement provides for the issuance of up to $3 million in letters of
credit. Outstanding letters of credit were $50,000 at March 31, 1998. In March
1998, the Bank and the Company amended the Credit Agreement to revise certain
covenants. While the Company does not currently anticipate that it will violate
the covenants of the Credit Agreement in the future, no assurances can be
provided that these or other violations of covenants contained in the Company's
Credit Agreement will not occur in the future or that, if such violations occur,
that the Bank will not elect to pursue its remedies under the Credit Agreement.
Any unwaived default by the Company under the Credit Agreement would be expected
to have a material adverse effect upon the Company. At March 31, 1998,
outstanding indebtedness under the Credit Agreement exceeded the Company's cash
and cash equivalents.
Based upon its current business plan, the Company currently expects that cash
equivalents and short term investments on hand, the Company's existing credit
facility and funds budgeted to be generated from operations will be adequate to
meet its liquidity and capital requirements through 1998. Currently unforeseen
future developments and increased working capital requirements may require
additional debt financing or issuance of common stock in 1998 and subsequent
years. There can be no assurances that the Company could obtain any required
additional debt financing or successfully consummate an issuance of common stock
on terms favorable to the Company, if at all.
Statements made in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, including those in the immediately
preceding paragraph, include forward- looking statements made under the
provisions of the Private Securities Litigation Reform Act. The Company's actual
results could differ materially from such forward-looking statements and such
results will be affected by risks described in the Company's Annual Report
including, without limitation, those described under "Risk Factors - Limited
Operating History; Net Losses", "-Risks of New Products", "Risks of Expansion",
"-Manufacturing & Supply Risks" and "Liquidity Risks".
547812.2
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ITEM 3.
Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
547812.2
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<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
During the quarter for which this report is filed, there were no material
modifications in the instruments defining the rights of shareholders. During the
quarter for which this report is filed, none of the rights evidenced by the
shares of the Company's common stock were materially limited or qualified by the
issuance or modification of any other class of securities. During the quarter
for which this report is filed, the Company sold no equity securities of the
Company that were not registered under the Securities Act of 1933, as amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description
- ----------- -----------
3.1(1) Articles of Incorporation of Isolyser Company, Inc.
3.2(2) Articles of Amendment to Articles of Incorporation of
Isolyser Company, Inc.
3.3(1) Amended and Restated Bylaws of Isolyser Company, Inc.
3.4(3) First Amendment to Amended and Restated Bylaws of Isolyser
Company, Inc.
547812.2
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3.5(4) Second Amendment to Amended and Restated Bylaws of Isolyser
Company, Inc.
4.1(1) Specimen Certificate of Common Stock
10.1 Employment Agreement dated as of January 1, 1998, between
the Company and Terence N. Furness
10.2 Employment Agreement dated as of February 1, 1998, between
the Company and Migirdic Nalbantyan
27.1 Financial Data Schedule
- ------------------
1. Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No.
33-83474).
2. Incorporated by reference to Exhibit 3.2 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
3. Incorporated by reference to Exhibit 3.1 to the Company's Current Report on
Form 8-K filed July 29, 1996.
4. Incorporated by reference to Exhibit 3.1 to the Company's Current Report on
Form 8-K filed December 20, 1996.
(b) No current reports on Form 8-K were filed during the quarter for which
this report is filed.
547812.2
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this quarterly report on Form 10-Q to be signed on its
behalf by the undersigned thereunto duly authorized on May 13, 1998.
ISOLYSER COMPANY, INC.
By:/s/ Terence N. Furness
---------------------------------
Terence N. Furness
President & CEO
(principal executive officer)
By:/s/ Peter A. Schmitt
---------------------------------
Peter A. Schmitt
Chief Financial Officer
(principal financial officer)
547812.2
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EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into on the 1st day of
January, 1998 but effective as of the 1st day of January, 1998 (the "Effective
Date"), by and between ISOLYSER COMPANY, INC., a Georgia corporation
(hereinafter the "Company"), and TERENCE N. FURNESS (hereinafter the
"Employee").
RECITALS:
R-1. The Company develops, manufactures and markets disposable,
specialty and safety products for use in medical, industrial and commercial
markets.
R-2. The Company's markets are worldwide.
R-3. The Company maintains certain trade secrets and confidential
information which is proprietary to the Company, the disclosure or exploitation
of which would cause significant damage to the Company.
R-4. The Company desires to employ the Employee, and the Employee
desires to accept such employment, for which purposes each of the Company and
the Employee desire to enter into this Agreement to set forth and clarify
certain of the terms and conditions relevant to such employment.
R-5. The Company recognizes that, as is the case with many publicly
held corporations, the possibility of a Change in Control (as defined herein)
may arise which may create uncertainty and questions among management resulting
in a departure or distraction of management personnel to the detriment of the
Company and its shareholders. In addition, the Company believes that should the
Company or its shareholders receive a proposal for transfer of control of the
Company, the Employee should be able to assess and advise the Company
500450.4
<PAGE>
whether such proposal would be in the best interests of the Company and its
shareholders and to take such other action regarding such proposal as the Board
of Directors might determine to be appropriate without being influenced by the
uncertainty of the Employee's own situation.
NOW, THEREFORE, in consideration of the recitals, the covenants and
agreements herein contained and the benefits to be derived herefrom, the
parties, intending to be legally bound, agree as follows:
1. Recitals. The recitals set forth above constitute part of this
Agreement and are incorporated herein by this reference.
2. Employment. From and after the date hereof and for the term herein
provided, the Company agrees to employ the Employee as the President and Chief
Executive Officer of the Company, and the Employee accepts such employment with
the Company upon the terms and conditions hereinafter set forth. 3. Term. The
Employee's employment shall commence from and after the date hereof and, subject
to Section 8 of this Agreement, shall continue through the date immediately
preceding the third anniversary of the Effective Date. Upon any scheduled
expiration date of the Agreement, this Agreement shall automatically renew for
successive periods of one year unless either party shall give written notice to
the other party of non-renewal at least thirty (30) days prior to the scheduled
expiration date of this Agreement. Any such notice of non-renewal given by the
Company shall be treated as a termination without Cause as set forth in Section
8(c) of this Agreement, and any such notice of non-renewal given by the Employee
shall be treated as a termination without Good Reason as set forth in Section
8(d) of this Agreement. 4. Duties. Subject to the direction and supervision of
the Board of Directors of the Company, the Employee agrees that: (a) he shall
devote his full working time and attention to the business of the Company and
its affiliated companies; (b) he will perform all of his duties
500450.4
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<PAGE>
pursuant to this Agreement faithfully and to the best of his abilities in a
manner intended to advance the Company's interests; and (c) he shall not engage
in any other business activity except: (i) investing assets in a manner not
prohibited by Section 9(e) of this Agreement, and in such form or manner as
shall not require any material services on his part in the operations or affairs
of the companies or other entities in which such investments are made, (ii)
serving on the board of directors of any company, subject to the provisions set
forth in Section 9(e) of this Agreement and provided that he shall not be
required to render any material services with respect to the operations or
affairs of any such company, (iii) engaging in religious, charitable or other
community or non-profit activities which do not impair his ability to fulfill
his duties and responsibilities under this Agreement, or (iv) such other
activities as may be expressly approved in advance by the Board of Directors of
the Company.
5. Compensation. As full compensation for all services rendered by the
Employee pursuant to this Agreement and as full consideration for all of the
terms of this Agreement, the Employee shall receive from the Company during his
employment, but only from and after the Effective Date of this Agreement, the
base salary, bonuses and fringe benefits described below.
(a) Base Salary. For all services rendered pursuant to this
Agreement, the Company shall pay or cause to be paid to the Employee an annual
base salary of $250,000 (the "Floor Amount"). The annual salary may be increased
or (subject to the terms of this Agreement) decreased from time to time during
the term of this Agreement in the discretion of the Company. The base salary
shall be payable in accordance with the customary practices of the Company for
payment of its employees, but in any event, in installments not less frequently
than once monthly.
(b) Bonus Compensation. The Company shall establish on an
annual basis a bonus compensation plan for the benefit of the Employee in
accordance with which the
500450.4
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<PAGE>
Employee shall be eligible for a bonus potential of up to at least the Floor
Amount on such terms and conditions as the Board of Directors (or a committee
thereof) may set in its sole discretion.
(c) Long Term Incentive Payments. The Company has or may from
time to time in the future grant to the Employee such long-term incentive
compensation (including, by way of illustration but not limitation, stock
options) as the Board of Directors may determine in its discretion.
(d) Fringe Benefits. The Company has adopted, or may from time
to time adopt, policies in respect of fringe benefits for its management level
employees in the nature of health and life insurance, holidays, vacation,
disability and other matters. The Company covenants and agrees that the Employee
shall be entitled to participate in any such fringe benefit policies adopted by
the Company to the same extent that such fringe benefits shall be available to
and for the benefit of all other management level employees.
(e) Tax Withholdings and Other Deductions. The Company shall
have the right to deduct from the base salary and any additional compensation
payable to the Employee all amounts required to be deducted and withheld in
accordance with social security taxes and all applicable federal, state and
local taxes and charges as may now be in effect or which may be hereafter
enacted or required as charges on the compensation of the Employee. The Company
shall also have the right to offset from the base salary and any additional
compensation payable to the Employee any loan or other amounts owed to the
Company by the Employee.
6. Working Facilities. The Company, at its own expense, shall furnish
the Employee with office, working space and such equipment as may be reasonably
necessary for the Employees's performance of his or her duties.
500450.4
4
<PAGE>
7. Expenses. The Employee is required as a condition of employment to
incur ordinary, necessary and reasonable expenses for the promotion of the
business of the Company and its affiliates and subsidiaries, including expenses
for entertaining, travel and similar items. The Employee is authorized to incur
reasonable expenses in connection with such business, including travel and
entertainment expenses, fees for seminars and courses, and expenses incurred in
attendance at executive meetings and conventions. If paid by the Employee, upon
presentation by the Employee of an itemized account of such expenditures in a
manner satisfactory to the Company, the Employee shall be entitled to receive
reimbursement for these expenses, subject to policies that may be established
from time to time by the Company. It is intended by the Company and the Employee
that all expenses incurred pursuant to this paragraph are to be ordinary and
necessary business expenses.
8. Termination. The Employee's employment may be terminated in
accordance with the provisions of this Section. The provisions for termination
are as follows:
(a) Death or Disability. The Employee's employment shall be
terminated upon the (i) death of the Employee or (ii) the inability of the
Employee to perform his duties and responsibilities hereunder in the manner and
to the extent required by this Agreement for a period of 180 consecutive days
due to physical or mental illness or other condition of such character as would
entitle the Employee to benefits under the Company's long-term disability plan.
While the Employee is so affected and prior to termination of this Agreement,
the Company may designate an acting President or Chief Executive Officer or
both.
(b) Termination For Cause. The Employee's employment may be
terminated by the Company for Cause. For purposes of this Agreement, the term
"Cause" shall mean a determination made in good faith by the Board of Directors
that any of the following has occurred: (i) the Employee's failure or refusal to
comply with the material published policies,
500450.4
5
<PAGE>
standards and regulations of the Company from time to time reasonably
established and fairly administered by the Company which has a material adverse
effect or reflection upon the Company, (ii) a material breach by the Employee of
the terms of Section 9 of this Agreement, (iii) a breach by the Employee of any
of the other material terms of this Agreement, or (iv) the conviction of the
Employee for any felony (other than related to the operation of a motor
vehicle), the conviction of the Employee for a misdemeanor involving the misuse
of funds, or the final adjudication (with all periods of appeal having expired)
by a court that the Employee engaged in willful misconduct in connection with
the activities of the Company.
(c) Termination Without Cause. The Employee's employment may
be terminated by the Company without Cause; provided, that, in the event of any
termination of the Employee's employment under this paragraph (c), the Employee
shall be entitled to receive (i) such Employee's annual base salary (but not
less than the Floor Amount per year) as then in effect as set forth in Section
5(a) hereof until the first anniversary of the date of such termination of
employment payable at the Company's election either in a lump sum (present
valued at a discount rate of 5%) or as otherwise payable under Section 5(a), and
(ii) the benefits set forth in Section 8(e)(ii)(C) of this Agreement subject to
and in accordance with the terms and provisions of such section. The Company's
obligation to make payments under this paragraph shall cease and terminate in
the event of any breach by the Employee of any of the provisions of Section 9 of
this Agreement. The Company may require, as a condition precedent to making any
payments under this paragraph to the Employee, that the Employee execute a
customary release and covenant not to sue in favor of the Company. Any payments
under this Section 8(c) shall be subject to Section 5(e).
(d) Termination By Employee. The Employee may terminate his
employment hereunder with or without Good Reason (as defined below) by written
notice to the Company.
500450.4
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<PAGE>
In the event the Employee elects to terminate this Agreement without Good
Reason, then the Employee shall offer to continue to provide services to the
Company in accordance with this Agreement for a period of not less than ninety
(90) days from the date that the Employee elects to resign. The Company may
accept such offer in full, accept such offer subject to the Company's right to
terminate the Employee's employment during such ninety (90) day period (which
termination shall nevertheless be treated as a termination by Employee without
Good Reason) or reject such offer in which event the Employee's employment shall
immediately terminate. Effective upon the date of Employee's termination of
employment following the Employee's resignation without Good Reason, the
Employee shall be entitled to no further compensation or benefits under this
Agreement. In the event the Employee terminates his employment hereunder for
Good Reason, the Employee shall be entitled to the benefits specified in
Subsection (c) of this Section 9 as if Employee's employment was terminated by
the Company without Cause. As used in this Agreement, the term "Good Reason"
shall mean either the reduction of the Employee's salary below the Floor Amount
per year without the written consent of the Employee or the failure by the
Company to comply with its obligations under this Agreement in any material
respects which failure to comply continues for a period of not less than thirty
(30) days following written notice thereof by the Employee to the Company.
(e) Change of Control.
(i) As used in this Agreement, the term "Change of
Control" shall mean:
(A) Individuals who, as of the date of this
Agreement, constitute the Board of Directors of the Company (the "Incumbent
Board") cease for any reason to constitute at least a majority of such Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the
500450.4
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<PAGE>
Company shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose,
any individual whose initial assumption of such directorship occurs as a result
of either an actual or threatened election contest (as such terms are used in
Section 14a-11 of Regulation 14A promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act")) or other actual or threatened solicitation of
proxies or consents by or on behalf of an individual, entity or group other than
the Board;
(B) The acquisition by an individual, entity
or group (within the means of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, of Beneficial Ownership (as defined in that certain
Shareholder Protection Rights Agreement dated as of December 20, 1996 between
the Company and SunTrust Bank, as such agreement may be modified or amended from
time to time) of 15% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the outstanding voting
securities of the Company entitled to vote generally in the election of
directors unless the Incumbent Board determines that transaction shall not
constitute a "Change of Control" hereunder;
(C) If there occurs any merger or
consolidation of the Company with or into any other corporation or entity (other
than a wholly-owned subsidiary of the Company) unless the Incumbent Board
determines that such transaction shall not constitute a "Change of Control"
hereunder; or
(D) There occurs a sale or disposition by the
Company of all or substantially all of the Company's assets.
500450.4
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<PAGE>
Notwithstanding the foregoing, no Change of Control shall be deemed to have
occurred for purposes of this Agreement by virtue of any transaction which
results in the Employee, or a group of persons which includes the Employee,
acquiring directly or indirectly all or substantially of the assets of the
Company.
(ii) In the event of any termination (including,
without limitation, any such termination at the election of Employee) of
Employee's employment with the Company occurring within six (6) months following
the occurrence of any event constituting a Change of Control other than a
termination of employment occurring as a result of a termination under
Subsections (a) or (b) of this Section 8 (being a termination for death or
disability or a termination by the Company for Cause), the Company shall pay to
the Employee the sum of the following:
(A) The Employee's base salary through the
date of termination at the rate in effect just prior to the date of termination
of employment, plus any benefits or awards (including both the cash and stock
component) which pursuant to the terms of any compensation plans have been
earned or become payable, but which have not yet been paid to the Employee
(including amounts which previously had been deferred at the Employee's
request); (B) A lump sum payment in cash in an amount equal to 2.99 times the
Employee's annual base salary in effect immediately prior to the date of
termination of employment (but not less than the Floor Amount per year); and (C)
The Company shall maintain in full force and effect, at the sole cost of the
Company (except for any regular contributions of the Employee required of the
Employee in the same manner as required by all other managerial employees of the
Company), for the continued benefit of the Employee and his dependents for a
period terminating on the
500450.4
9
<PAGE>
earlier of (x) twelve months after such date of termination or (y) the
commencement date of equivalent benefits from a new employer, all insured and
self-insured Employee group health insurance plans in which the Employee was
entitled to participate immediately prior to the date of termination, provided
that the Employee's continued participation is possible under the general terms
and provisions of such plans and that applicable tax requirements do not require
that the value of such benefits (not including the premiums) be included in
Employee's income. The terms of this Subsection are in addition to any rights or
obligations arising under applicable law.
(iii) In the event any payment or distribution by the
Company or acceleration of any rights to or for the benefit of the Employee
(whether paid or payable or distributable or accelerated pursuant to the terms
of this Agreement or otherwise (a "Payment")) will be subject to the excise tax
(collectively, the "Excise Tax") imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), then the amounts payable under Subsection
(e)(ii) of this Section shall first be reduced (prior to reducing the Payments
under any other agreement with or for the benefit of the Employee) to the extent
necessary so that no Payment shall be subject to the Excise Tax, except that no
such reduction shall be made to the extent that the Payments receivable by the
Employee net of all taxes (including, without limitation, income taxes, the
Excise Tax and any interest and penalties with respect to any such taxes
(collectively, the "Taxes")) on such Payments before such reduction would be
greater than the Payments receivable by the Employee net of all taxes after such
reduction. All determinations required to be made under this clause shall be
made by Deloitte & Touche LLP, Atlanta, Georgia, or such other accounting firm
as may be mutually agreed to between the Employee and the Company (the
"Accounting Firm"). For purposes of making such determinations by the Accounting
Firm (A) no portion of any Payment which tax counsel, selected by the Accounting
Firm and acceptable to the Employee, determines not to constitute
500450.4
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<PAGE>
a "parachute payment" within the meaning of Section 280G(b)(2) of the Code will
be taken into account, (B) no portion of any payment which such tax counsel
determines to be reasonable compensation for services rendered within the
meaning of Section 280G(b)(4) of the Code will be taken into account, (C) the
value of any non-cash benefit or any deferred payment or benefit included in the
Payments will be determined by the Accounting Firm in accordance with Sections
280G(d)(3) and (4) of the Code, and (D) any reductions under this Subsection
shall be made serially against Subsections (A), (B) and (C) of Subsection
(e)(ii) of this Section and in that order. All fees and expenses of the
Accounting Firm and any tax counsel selected under this Subsection shall be
borne solely by the Company, and any determination by the Accounting Firm and
such tax counsel shall be binding upon the Company and the Employee. Any Payment
due under this Subsection (e) shall be paid to the Employee by the Company
within ten (10) days of the Company's receipt of the Accounting Firm's
determination.
9. Protective Covenants; Remedies.
(a) Property Rights. The Employee acknowledges and agrees that all
records of the accounts of customers, lists, prospect lists, prospect reports,
vendor lists, samples, notebooks, computers, computer records and software,
policy and procedure manuals, price lists, catalogs, premises keys, written
methods of pricing, lists of needs and requirements of customers, written
methods of operation of the Company or any subsidiary or affiliates of the
Company (collectively, the "Company Group"), manufacturing techniques, financial
records and any other records and books relating in any manner whatsoever to the
customers of the Company Group or its business, whether prepared by the Employee
or otherwise coming into the Employee's possession, are the exclusive property
of the Company Group regardless of who actually purchased or prepared the
original book, record, list or other property. All such books,
500450.4
11
<PAGE>
records, lists or other property shall be immediately returned by the Employee
to the Company upon any termination of employment.
(b) Non-Disclosure of Confidential Information. The Employee
acknowledges that through his employment by the Company, the Employee will
become familiar with, among other things, the following:
Any scientific or technical information, design, process,
procedure, formula or improvement that is secret and of value,
and information including, but not limited to, technical or
nontechnical data, formula, patterns, compilations, programs,
devices, methods, techniques, drawings and processes, and
product, customer and financial data, which the Company takes
reasonable efforts to protect from disclosure, and from which
the Company derives actual or potential economic value due to
its confidential nature (the foregoing being hereinafter
collectively referred to as the "Confidential Information").
The Employee acknowledges that use or disclosure of such
Confidential Information would be injurious to the Company and will give the
Employee an unfair competitive advantage over the Company Group in the event
that the Employee should go into competition with the Company Group.
Accordingly, the Employee agrees that during the term of this Agreement and for
a period of two (2) years subsequent to the termination of employment for any
reason, the Employee will not disclose to any person, or utilize for the
Employee's benefit, any of the Confidential Information. The Employee
acknowledges that such Confidential Information is of special and peculiar value
to the Company; is the property of the Company Group, the product of years of
experience and trial and error; is not generally known to the Company Group's
competitors; and is regularly used in the operation of the Company Group's
business. The Employee acknowledges and recognizes that applicable law prohibits
disclosure of trade secrets indefinitely (i.e., without regard to the two year
period described in
500450.4
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<PAGE>
this paragraph), and the Company has the right to require the Employee to comply
with such law in addition to the Company's rights under this paragraph.
(c) Non-Interference With Employees. The Employee agrees not to
solicit, entice or otherwise induce any employee of the Company Group to leave
the employ of the Company Group for any reason whatsoever, and not to otherwise
interfere with any contractual or business relationship between the Company
Group and any of its employees for two (2) years from the termination of the
Employee's employment other than a termination of employment within the scope of
Subsection (e)(ii) of Section 8 of this Agreement.
(d) Non-Solicitation of Customers. For so long as the Employee
shall be due or shall have accrued salary payments from the Company (including,
without limitation any such payment under Subsections (c) or (d) of Section 8 of
this Agreement which Employee does not waive and refund to the Company in
advance of taking any actions prohibited by this Subsection), and, in the event
of any termination of Employee's employment hereunder by the Company for Cause
or by the Employee without Good Reason, for one (1) year after the date of such
termination of employment, the Employee agrees that the Employee will not,
within the United States of America (the "Territory"), which the parties agree
is the territory from which the Employee shall primarily renders services, for
the Employee's own benefit or on behalf of any other person, partnership,
company or corporation, contact any customer or customers of the Company Group
who the Employee called upon or with which the Employee became familiar while
employed by the Company, for the purpose of developing, manufacturing or selling
disposable, specialty or safety products for use in medical, industrial or
commercial markets, which products and markets are more particularly described
in the Company's Annual Report on Form 10-K for the year ended December 31, 1996
(collectively, the "Business").
500450.4
13
<PAGE>
This Subsection shall not apply following the date of any termination of
employment within the scope of Subsection (e)(ii) of Section 8 of this
Agreement.
(e) Non-Competition. For so long as the Employee shall be due or
shall have accrued salary payments from the Company (including, without
limitation any payment under Subsections (c) or (d) of Section 8 of this
Agreement which Employee does not waive and refund to the Company in advance of
taking any action prohibited by this Subsection), and in the event of any
termination of Employee's employment hereunder by the Company for Cause or by
the Employee without Good Reason, for one (1) year after the date of such
termination of employment, the Employee agrees that the Employee will not (i)
within the Territory, either directly or indirectly, whether on his own behalf
or in the service of others (whether as an employee, director, consultant or
advisor) in any capacity that involves duties similar to the duties of the
Employee hereunder, engage in the Business or, (ii) become an owner (except for
the ownership of not greater then an interest of five percent of a publicly held
company) of any company which is engaged in the Business. This Subsection shall
not apply following the date of any termination of employment within the scope
of Subsection (e)(ii) of Section 8 of this Agreement.
(f) Acknowledgment Regarding Protective Covenants. The Employee
acknowledges that the Employee has read and understands the terms of this
Agreement, that the same was specifically negotiated, and that the protective
covenants agreed upon herein are necessary for the protection of the Company
Group's business. Further, the Employee acknowledges that the Company would not
employ the Employee without the specifically negotiated protective covenants
herein stated.
(g) Remedies. In addition to any other rights and remedies which
are available to the Company, with respect to any breach or violation of the
protective covenants set forth
500450.4
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<PAGE>
herein, it is recognized and agreed that the Company shall be entitled to seek
injunctive relief which would prohibit the Employee from continuing any breach
or violation of such protective covenants.
10. Arbitration of Disputes. Any controversy or claim arising out of or
relating to the employment relationship between the Company and the Employee
shall be settled by arbitration. Either party may commence the arbitration
process by filing a written demand for arbitration with the Atlanta, Georgia
office of the Judicial Arbitration & Mediation Service/EnDispute ("JAMS"), with
a copy to the other party. An arbitrator from the panel maintained by JAMS shall
be jointly selected by the Company and the Employee. If the Company and the
Employee cannot agree on the appointment of the arbitrator within fifteen (15)
days after commencement of the arbitration process, then the arbitrator shall be
appointed by JAMS. Such arbitration shall be conducted in the City of Atlanta,
Georgia in accordance with the rules of JAMS, except as otherwise provided in
this paragraph. Judgment upon the award entered by the arbitrators shall be
final and may be entered in a court having jurisdiction thereof. The party or
parties against whom an arbitration award shall be entered shall pay the other
party's reasonable attorneys' fees and reasonable costs and expenses in
connection with the enforcement of its rights under this Agreement unless and to
the extent the arbitrator determines that under the circumstances recovery by
the prevailing party of all or any part of such fees and costs would be unjust.
11. No Conflicting Agreements. The Employee hereby represents and
warrants that the execution of this Agreement and the performance of his
obligations hereunder will not breach or be in conflict with any other agreement
to which he is a party or by which he is bound, and that he is not subject to
any covenants against competition or similar covenants which affect the
performance of his obligations hereunder.
500450.4
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<PAGE>
12. Consulting Cooperation. The Employee shall cooperate fully with the
Company in the defense or prosecution of any claims or actions which may be
brought against or on behalf of the Company which relate to events or
occurrences that transpired while the Employee was employed by the Company. The
Employee's full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Company at
mutually convenient times. The Employee shall also cooperate fully with the
Company in connection with any examination or review by any federal or state
regulatory authority as any such examination or review relates to events or
occurrences that transpired while the Employee was employed by the Company. The
obligations under this Section shall continue, to the extent required, following
the expiration of this Agreement. To the extent the Employee is required to
provide services under this Section subsequent to the expiration of this
Agreement, the Company shall continue to reimburse the Employee for the
Employee's reasonable expenses in connection with the performance of his duties
under this Section and pay a consulting fee in the amount of $200 per hour.
13. Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and personally delivered or sent by registered or
certified mail, return receipt requested, in the case of the Company, to the
principal office of the Company directed to the attention of the Company's Board
of Directors, and in the case of the Employee, to the Employee's last known
residence address.
14. Construction. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Georgia. The waiver by any party hereto
of a breach of any of the provisions of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party.
500450.4
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<PAGE>
15. Modification; Assignment. This Agreement may not be changed except
by written agreement duly executed by the parties hereto. The rights and
obligations of the Company under this Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the Company. This Agreement,
being for the personal services of the Employee, shall not be assignable or
subject to anticipation by the Employee.
16. Severability. Each provision of this Agreement shall be considered
severable. If for any reason any provisions herein are determined to be invalid
or unenforceable, this Agreement shall be construed in all respects as though
such invalid or unenforceable provisions were omitted, and such invalidity or
unenforceability shall not impair or otherwise affect the validity of the other
provisions of this Agreement. Moreover, the parties agree to replace such
invalid provision with a substitute provision that will correspond to the
original intent of the parties.
17. Number of Agreements. This Agreement may be executed in any number
of counterparts, each one of which shall be deemed an original.
18. Pronouns. The use of any word in any gender shall be deemed to
include any other gender and the use of any word in the singular shall be deemed
to include the plural where the context requires.
19. Headings. The section headings used in this Agreement are for
convenience only and are not to be controlling with respect to the contents
thereof.
20. Entire Agreement. This Agreement contains the complete and
exclusive statement of the terms and conditions of the Employee's employment by
the Company, and there exists no other inducement or consideration between the
Company and the Employee relative to the employment contemplated by this
Agreement. All prior agreements relative to the subject matter of this Agreement
are terminated.
500450.4
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first set forth above.
ISOLYSER COMPANY, INC.
By: ___________________________ ______________________________
Terence N. Furness
Its: ___________________________
500450.4
18
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into effective as of
the 14 day of February, 1998 (the "Effective Date"), by and between ISOLYSER
COMPANY, INC., a Georgia corporation (hereinafter the "Company"), and MIGIRDIC
NALBANTYAN (hereinafter the "Employee").
RECITALS:
R-1. The Company develops, manufactures and markets disposable,
specialty and safety products for use in medical, industrial and commercial
markets.
R-2. The Company's markets are worldwide.
R-3. The Company maintains certain trade secrets and confidential
information which is proprietary to the Company, the disclosure or exploitation
of which would cause significant damage to the Company.
R-4. The Company desires to employ the Employee, and the Employee
desires to accept such employment, for which purposes each of the Company and
the Employee desire to enter into this Agreement to set forth and clarify
certain of the terms and conditions relevant to such employment.
R-5. The Company recognizes that, as is the case with many publicly
held corporations, the possibility of a Change in Control (as defined herein)
may arise which may create uncertainty and questions among management resulting
in a departure or distraction of management personnel to the detriment of the
Company and its shareholders. In addition, the Company believes that should the
Company or its shareholders receive a proposal for transfer of control of the
Company, the Employee should be able to assess and advise the Company
483294.2
<PAGE>
whether such proposal would be in the best interests of the Company and its
shareholders and to take such other action regarding such proposal as the Board
of Directors might determine to be appropriate without being influenced by the
uncertainty of the Employee's own situation.
NOW, THEREFORE, in consideration of the recitals, the covenants and
agreements herein contained and the benefits to be derived herefrom, the
parties, intending to be legally bound, agree as follows:
1. Recitals. The recitals set forth above constitute part of this
Agreement and are incorporated herein by this reference.
2. Employment. From and after the date hereof and for the term herein
provided, the Company agrees to employ the Employee, and the Employee accepts
such employment with the Company upon the terms and conditions hereinafter set
forth.
3. Term. The Employee's employment shall commence on the Effective Date
and, subject to Section 8 of this Agreement, shall continue through the third
anniversary of the Effective Date.
4. Duties. Subject to the direction and supervision of the Board of
Directors of the Company, the Employee agrees that: (a) he shall devote his full
working time and attention to the business of the Company and its affiliated
companies; (b) he will perform all of his duties pursuant to this Agreement
faithfully and to the best of his abilities in a manner intended to advance the
Company's interests; and (c) he shall not engage in any other business activity
except: (i) investing assets in a manner not prohibited by Section 9(e) of this
Agreement, and in such form or manner as shall not require any material services
on his part in the operations or affairs of the companies or other entities in
which such investments are made, (ii) serving on the board of directors of any
company, subject to the provisions set forth in Section 9(e) of this
483294.2
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Agreement and provided that he shall not be required to render any material
services with respect to the operations or affairs of any such company, (iii)
engaging in religious, charitable or other community or non-profit activities
which do not impair his ability to fulfill his duties and responsibilities under
this Agreement, or (iv) such other activities as may be expressly approved in
advance by the Board of Directors of the Company.
5. Compensation. As full compensation for all services rendered by the
Employee pursuant to this Agreement and as full consideration for all of the
terms of this Agreement, the Employee shall receive from the Company during his
employment under this Agreement the base salary, bonuses and fringe benefits
described below.
(a) Base Salary. For all services rendered pursuant to this
Agreement, the Company shall pay or cause to be paid to the Employee an annual
base salary of $150,000 (the "Floor Amount"). The annual salary may be increased
or (subject to the terms of this Agreement) decreased from time to time during
the term of this Agreement in the discretion of the Company. The base salary
shall be payable in accordance with the customary practices of the Company for
payment of its employees, but in any event, in installments not less frequently
than once monthly.
(b) Bonus Compensation. To the extent that the Company shall
establish, from time to time in its discretion, bonus compensation plans for the
benefit of all of its management level employees, the Employee shall be entitled
to participate in such bonus compensation plans in accordance with terms and
provisions established by the Board of Directors in its discretion.
(c) Long Term Incentive Payments. The Company has or may from
time to time in the future grant to the Employee such long-term incentive
compensation (including, by
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way of illustration but not limitation, stock options) as the Board of Directors
may determine in its discretion.
(d) Fringe Benefits. The Company has adopted, or may from time
to time adopt, policies in respect of fringe benefits for its management level
employees in the nature of health and life insurance, holidays, vacation,
disability and other matters. The Company covenants and agrees that the Employee
shall be entitled to participate in any such fringe benefit policies adopted by
the Company to the same extent that such fringe benefits shall be available to
and for the benefit of all other management level employees.
(e) Tax Withholdings and Other Deductions. The Company shall
have the right to deduct from the base salary and any additional compensation
payable to the Employee all amounts required to be deducted and withheld in
accordance with social security taxes and all applicable federal, state and
local taxes and charges as may now be in effect or which may be hereafter
enacted or required as charges on the compensation of the Employee. The Company
shall also have the right to offset from the base salary and any additional
compensation payable to the Employee any loan or other amounts owed to the
Company by the Employee.
6. Working Facilities. The Company, at its own expense, shall furnish
the Employee with office, working space and such equipment as may be reasonably
necessary for the Employees's performance of his or her duties.
7. Expenses. The Employee is required as a condition of employment to
incur ordinary, necessary and reasonable expenses for the promotion of the
business of the Company and its affiliates and subsidiaries, including expenses
for entertaining, travel and similar items. The Employee is authorized to incur
reasonable expenses in connection with such business, including travel and
entertainment expenses, fees for seminars and courses, and expenses
483294.2
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<PAGE>
incurred in attendance at executive meetings and conventions. If paid by the
Employee, upon presentation by the Employee of an itemized account of such
expenditures in a manner satisfactory to the Company, the Employee shall be
entitled to receive reimbursement for these expenses, subject to policies that
may be established from time to time by the Company. It is intended by the
Company and the Employee that all expenses incurred pursuant to this paragraph
are to be ordinary and necessary business expenses.
8. Termination. The Employee's employment may be terminated in
accordance with the provisions of this Section. The provisions for termination
are as follows:
(a) Death or Disability. The Employee's employment shall be
terminated upon the death or total disability of the Employee (total disability
meaning the failure of the Employee to perform his or her duties and
responsibilities hereunder in the manner and to the extent required by this
Agreement for a period of 180 consecutive days by reason of the Employee's
mental or physical disability as determined by the Board of Directors of the
Company, which determination, in the absence of a showing of bad faith, shall be
conclusive upon the Employee).
(b) Termination For Cause. The Employee's employment may be
terminated by the Company for Cause. For purposes of this Agreement, the term
"Cause" shall mean a determination by the Board of Directors that any of the
following has occurred: (i) the Employee's material failure or refusal to comply
with the policies, standards and regulations of the Company from time to time
reasonably established and fairly administered by the Company, (ii) a material
breach by the Employee of the terms of Section 9 of this Agreement, (iii) a
material breach by the Employee of any of the other terms of this Agreement or
any written agreement entered by the parties concurrently herewith, or (iv) the
indictment or conviction of the Employee for any felony, the conviction of the
Employee for a misdemeanor involving the
483294.2
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<PAGE>
misuse of funds, or the adjudication by a court that the Employee engaged in
willful misconduct in connection with the activities of the Company.
(c) Termination Without Cause. The Employee's employment may
be terminated by the Company without Cause; provided, that, in the event of any
termination of the Employee's employment under this paragraph (c), the Employee
shall be entitled to receive such Employee's annual base salary (but not less
than the Floor Amount per year) as then in effect as set forth in Section 5(a)
hereof until the first anniversary of the date of such termination of employment
payable at the Company's election either in a lump sum (present valued at a
discount rate of 10%) or as otherwise payable under Section 5(a). The Company's
obligation to make payments under this paragraph shall cease and terminate in
the event of any breach by the Employee of any of the provisions of Section 9 of
this Agreement. The Company may require, as a condition precedent to making any
payments under this paragraph to the Employee, that the Employee execute a
customary release and covenant not to sue in favor of the Company. Any payments
under this Section 8(c) shall be subject to Section 5(e).
(d) Termination By Employee. The Employee may terminate his
employment hereunder with or without Good Reason (as defined below) by written
notice to the Company. In the event the Employee elects to terminate this
Agreement without Good Reason, then the Employee shall offer to continue to
provide services to the Company in accordance with this Agreement for a period
of not less than ninety (90) days from the date that the Employee elects to
resign. The Company may accept such offer in full, accept such offer subject to
the Company's right to terminate the Employee's employment during such ninety
(90) day period (which termination shall nevertheless be treated as a
termination by Employee without Good Reason) or reject such offer in which event
the Employee's employment shall immediately
483294.2
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<PAGE>
terminate. Effective upon the date of Employee's termination of employment
following the Employee's resignation without Good Reason, the Employee shall be
entitled to no further compensation or benefits under this Agreement. In the
event the Employee terminates his employment hereunder for Good Reason, the
Employee shall be entitled to the benefits specified in Subsection (c) of this
Section 9 as if Employee's employment was terminated by the Company without
Cause. As used in this Agreement, the term "Good Reason" shall mean either the
reduction of the Employee's salary below the Floor Amount per year without the
written consent of the Employee or the failure by the Company to comply with its
obligations under this Agreement in any material respects which failure to
comply continues for a period of not less than thirty (30) days following
written notice thereof by the Employee to the Company.
(e) Change of Control.
(i) As used in this Agreement, the term "Change of
Control" shall mean:
(A) Individuals who, as of the date of this
Agreement, constitute the Board of Directors of the Company (the "Incumbent
Board") cease for any reason to constitute at least a majority of such Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose,
any individual whose initial assumption of such directorship occurs as a result
of either an actual or threatened election contest (as such terms are used in
Section 14a-11 of Regulation 14A promulgated under the Securities Exchange
483294.2
-7-
<PAGE>
Act of 1934 (the "Exchange Act")) or other actual or threatened solicitation of
proxies or consents by or on behalf of an individual, entity or group other than
the Board;
(B) The acquisition by an individual, entity
or group (within the means of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, of Beneficial Ownership (as defined in that certain
Shareholder Protection Rights Agreement dated as of December 20, 1996 between
the Company and SunTrust Bank, as such agreement may be modified or amended from
time to time (the "Rights Agreement")) of 15% or more of either the then
outstanding shares of common stock of the Company or the combined voting power
of the outstanding voting securities of the Company entitled to vote generally
in the election of directors unless the Incumbent Board determines that such
transaction shall not constitute a "Change of Control" hereunder;
(C) If there occurs any merger or
consolidation of the Company with or into any other corporation or entity (other
than a wholly-owned subsidiary of the Company) unless the Incumbent Board
determines that such transaction shall not constitute a "Change of Control"
hereunder; or
(D) There occurs a sale or disposition by the
Company of all or substantially all of the Company's assets.
Notwithstanding the foregoing, no Change of Control shall be deemed to have
occurred for purposes of this Agreement by virtue of any transaction which
results in the Employee, or a group of persons which includes the Employee,
acquiring directly or indirectly all or substantially of the assets of the
Company.
483294.2
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<PAGE>
(ii) In the event of any termination of Employee's
employment with the Company occurring within six (6) months following the
occurrence of any event constituting a Change of Control other than a
termination of employment occurring as a result of a termination under
Subsections (a) or (b) of this Section 8 (being a termination for death or
disability or a termination by the Company for Cause), the Company shall pay to
the Employee the sum of the following:
(A) The Employee's base salary through the
date of termination at the rate in effect just prior to the date of termination
of employment, plus any benefits or awards (including both the cash and stock
component) which pursuant to the terms of any compensation plans have been
earned or become payable, but which have not yet been paid to the Employee
(including amounts which previously had been deferred at the Employee's
request);
(B) A lump sum payment in cash in an amount
equal to 2.99 times the Employee's annual base salary in effect immediately
prior to the date of termination of employment (but not less than the Floor
Amount per year); and
(C) If Employee's employment is terminated
within the scope of Subsection (e)(ii) of this Section, then the Company shall
maintain in full force and effect, at the sole cost of the Company (except for
any regular contributions of the Employee required of the Employee in the same
manner as required by all other managerial employees of the Company), for the
continued benefit of the Employee and his dependents for a period terminating on
the earlier of (x) twelve months after such date of termination or (y) the
commencement date of equivalent benefits from a new employer, all insured and
self-insured Employee group health insurance plans in which the Employee was
entitled to participate
483294.2
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<PAGE>
immediately prior to the date of termination, provided that the Employee's
continued participation is possible under the general terms and provisions of
such plans and that applicable tax requirements do not require that the value of
such benefits be included in Employee's income. The terms of this Subsection are
in addition to any rights or obligations arising under applicable law.
(iii) In the event any payment or distribution by the
Company or acceleration of any rights to or for the benefit of the Employee
(whether paid or payable or distributable or accelerated pursuant to the terms
of this Agreement or otherwise (a "Payment")) will be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties are incurred by the Employee with respect
to such excise tax (collectively, the "Excise Tax"), then the amounts payable
under Subsection (e)(ii) of this Section shall first be reduced (prior to
reducing the Payments under any other agreement with or for the benefit of the
Employee) to the extent necessary so that no Payment shall be subject to the
Excise Tax, except that no such reduction shall be made to the extent that the
Payments receivable by the Employee net of all taxes (including, without
limitation, income taxes and the Excise Tax (collectively, the "Taxes")) on such
Payments before such reduction would be greater than the Payments receivable by
the Employee net of all taxes after such reduction. All determinations required
to be made under this clause shall be made by Deloitte & Touche LLP, Atlanta,
Georgia, or such other accounting firm as may be mutually agreed to between the
Employee and the Company (the "Accounting Firm"). For purposes of making such
determinations by the Accounting Firm (A) no portion of any Payment which
Employee has waived in writing prior to the date of payment will be taken into
account, (B) no portion of any Payment which tax counsel, selected by the
Accounting Firm and acceptable to
483294.2
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<PAGE>
the Employee, determines not to constitute a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code will be taken into account, (C) no
portion of any payment which such tax counsel determines to be reasonable
compensation for services rendered within the meaning of Section 280G(b)(4) of
the Code will be taken into account, (D) the value of any non-cash benefit or
any deferred payment or benefit included in the Payments will be determined by
the Accounting Firm in accordance with Sections 280G(d)(3) and (4) of the Code,
and (E) any reductions under this Subsection shall be made serially against
Subsections (A), (B) and (C) of Subsection (e)(ii) of this Section and in that
order. All fees and expenses of the Accounting Firm and any tax counsel selected
under this Subsection shall be borne solely by the Company, and any
determination by the Accounting Firm and such tax counsel shall be binding upon
the Company and the Employee. Any Payment due under this Subsection (e) shall be
paid to the Employee by the Company within ten (10) days of the Company's
receipt of the Accounting Firm's determination.
9. Protective Covenants; Remedies.
(a) Property Rights. The Employee acknowledges and agrees that
all records of the accounts of customers, lists, prospect lists, prospect
reports, vendor lists, samples, desk calendars, briefcases, day timers,
notebooks, computers, computer records and software, policy and procedure
manuals, price lists, catalogs, premises keys, written methods of pricing, lists
of needs and requirements of customers, written methods of operation of the
Company or any subsidiary or affiliate of the Company (collectively, the
"Company Group"), manufacturing techniques, financial records and any other
records and books relating in any manner whatsoever to the customers of the
Company Group or its business, whether prepared by the Employee or otherwise
coming into the Employee's possession, are the exclusive property of the Company
483294.2
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<PAGE>
Group regardless of who actually purchased or prepared the original book,
record, list or other property. All such books, records, lists or other property
shall be immediately returned by the Employee to the Company upon any
termination of employment.
(b) Non-Disclosure of Confidential Information. The Employee
acknowledges that through his employment by the Company, the Employee will
become familiar with, among other things, the following:
Any scientific or technical information, design, process,
procedure, formula or improvement that is secret and of value,
and information including, but not limited to, technical or
nontechnical data, formula, patterns, compilations, programs,
devices, methods, techniques, drawings and processes, and
product, customer and financial data, which the Company takes
reasonable efforts to protect from disclosure, and from which
the Company derives actual or potential economic value due to
its confidential nature (the foregoing being hereinafter
collectively referred to as the "Confidential Information").
The Employee acknowledges that use or disclosure of such
Confidential Information would be injurious to the Company and will give the
Employee an unfair competitive advantage over the Company Group in the event
that the Employee should go into competition with the Company Group.
Accordingly, the Employee agrees that during the term of this Agreement and for
a period of two (2) years subsequent to the termination of employment for any
reason, the Employee will not disclose to any person, or utilize for the
Employee's benefit, any of the Confidential Information. The Employee
acknowledges that such Confidential Information is of special and peculiar value
to the Company; is the property of the Company Group, the product of years of
experience and trial and error; is not generally known to the Company Group's
competitors; and is regularly used in the operation of the Company Group's
business. The Employee acknowledges and recognizes that applicable law prohibits
483294.2
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<PAGE>
disclosure of confidential information and trade secrets indefinitely (i.e.,
without regard to the two year period described in this paragraph), and the
Company has the right to require the Employee to comply with such law in
addition to the Company's rights under this paragraph.
(c) Non-Interference With Employees. The Employee agrees not
to solicit, entice or otherwise induce any employee of the Company Group to
leave the employ of the Company Group for any reason whatsoever, and not to
otherwise interfere with any contractual or business relationship between the
Company Group and any of its employees for two (2) years from the termination of
the Employee's employment other than a termination of employment within the
scope of Subsection (e)(ii) of Section 8 of this Agreement.
(d) Non-Solicitation of Customers. For so long as the Employee
shall be due or shall have accrued salary payments from the Company (including,
without limitation any such payment under Subsections (c) or (d) of Section 8 of
this Agreement which Employee does not waive and refund to the Company in
advance of taking any actions prohibited by this Subsection), and, in the event
of any termination of Employee's employment hereunder by the Company for Cause
or by the Employee without Good Reason, for one (1) year after the date of such
termination of employment, the Employee agrees that the Employee will not,
within the world (the "Territory"), which the parties agree is the territory
from which the Employee shall primarily renders services, for the Employee's own
benefit or on behalf of any other person, partnership, company or corporation,
contact any customer or customers of the Company Group who the Employee called
upon or with which the Employee became familiar while employed by the Company,
for the purpose of developing, manufacturing or selling disposable, specialty or
safety products for use in medical, industrial or commercial markets
(collectively, the
483294.2
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<PAGE>
"Business"). This Subsection shall not apply following the date of any
termination of employment within the scope of Subsection (e)(ii) of Section 8 of
this Agreement.
(e) Non-Competition. For so long as the Employee shall be due
or shall have accrued salary payments from the Company (including, without
limitation any payment under Subsections (c) or (d) of Section 8 of this
Agreement which Employee does not waive and refund to the Company in advance of
taking any action prohibited by this Subsection), and in the event of any
termination of Employee's employment hereunder by the Company for Cause or by
the Employee without Good Reason, for one (1) year after the date of such
termination of employment, the Employee agrees that the Employee will not (i)
within the Territory, either directly or indirectly, whether on his own behalf
or in the service of others (whether as an employee, director, consultant or
advisor) in any capacity that involves duties similar to the duties of the
Employee hereunder, engage in the Business, or (ii) become an owner (except for
the ownership of not greater than an interest of five percent of a publicly held
company) of any company which is engaged in the Business. This Subsection shall
not apply following the date of any termination of employment within the scope
of Subsection (e)(ii) of Section 8 of this Agreement.
(f) Inventions and Discoveries. The Employee agrees to fully
inform and disclose to the Company all inventions, designs, improvements and
discoveries which the Employee now has or may hereafter while employed by the
Company obtain which either constitutes an improvement to or a modification of
any of the products which from time to time are under development by the Company
or being manufactured or marketed by the Company (collectively, the "Products")
or constitute an invention, design, improvement or discovery having unique
application to the Products, whether conceived by the Employee alone or with
483294.2
-14-
<PAGE>
others during or outside the usual hours of work. All such inventions, designs,
improvements and discoveries shall be the exclusive property of the Company. The
Employee shall assist the Company to obtain such legal protection of all such
inventions, designs, improvements and discoveries as may be deemed desirable by
the Company from time to time. This Subsection shall survive any expiration or
earlier termination of this Agreement.
(g) Acknowledgment Regarding Protective Covenants. The
Employee acknowledges that the Employee has read and understands the terms of
this Agreement, that the same was specifically negotiated, and that the
protective covenants agreed upon herein are necessary for the protection of the
Company Group's business. Further, the Employee acknowledges that the Company
would not employ the Employee without the specifically negotiated protective
covenants herein stated.
(h) Remedies. In addition to any other rights and remedies
which are available to the Company, with respect to any breach or violation of
the protective covenants set forth herein, it is recognized and agreed that the
Company shall be entitled to obtain injunctive relief which would prohibit the
Employee from continuing any breach or violation of such protective covenants.
10. Disputes. Any controversy or claim arising out of or relating to
the employment relationship between the Company and the Employee shall be
settled by arbitration by three arbitrators, one of whom shall be appointed by
the Company, one by the Employee and the third by the first two arbitrators. If
the first two arbitrators cannot agree on the appointment of a third arbitrator,
then the third arbitrator shall be appointed by the American Arbitration
Association in the City of Atlanta, Georgia. Such arbitration shall be conducted
in the City of Atlanta, Georgia in accordance with the rules of the American
Arbitration Association, except
483294.2
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<PAGE>
as otherwise provided in this paragraph. Judgment upon the award entered by the
arbitrators shall be final and may be entered in a court having jurisdiction
thereof. The party or parties against whom an arbitration award shall be entered
shall pay the other party's reasonable attorneys' fees and reasonable costs and
expenses in connection with the enforcement of its rights under this Agreement
unless and to the extent the arbitrators determine that under the circumstances
recovery by the prevailing party of all or any part of such fees and costs would
be unjust.
11. No Conflicting Agreements. The Employee hereby represents and
warrants that the execution of this Agreement and the performance of his
obligations hereunder will not breach or be in conflict with any other agreement
to which he is a party or by which he is bound, and that he is not subject to
any covenants against competition or similar covenants which affect the
performance of his obligations hereunder.
12. Consulting Cooperation. The Employee shall cooperate fully with the
Company in the defense or prosecution of any claims or actions which may be
brought against or on behalf of the Company which relate to events or
occurrences that transpired while the Employee was employed by the Company. The
Employee's full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Company at
mutually convenient times. The Employee shall also cooperate fully with the
Company in connection with any examination or review by any federal or state
regulatory authority as any such examination or review relates to events or
occurrences that transpired while the Employee was employed by the Company. The
obligations under this Section shall continue, to the extent required, following
the expiration of this Agreement. To the extent the Employee is required to
provide services
483294.2
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<PAGE>
under this Section subsequent to the expiration of this Agreement, the Company
shall continue to reimburse the Employee for the Employee's reasonable expenses
in connection with the performance of his duties under this Section and pay a
consulting fee in the amount of $50 per hour.
13. Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and personally delivered or sent by registered or
certified mail, return receipt requested, in the case of the Company, to the
principal office of the Company directed to the attention of the Company's Board
of Directors, and in the case of the Employee, to the Employee's last known
residence address.
14. Construction. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Georgia. The waiver by any party hereto
of a breach of any of the provisions of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party.
15. Modification; Assignment. This Agreement may not be changed except
by written agreement duly executed by the parties hereto. The rights and
obligations of the Company under this Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the Company. This Agreement,
being for the personal services of the Employee, shall not be assignable or
subject to anticipation by the Employee.
16. Severability. Each provision of this Agreement shall be considered
severable. If for any reason any provisions herein are determined to be invalid
or unenforceable, this Agreement shall be construed in all respects as though
such invalid or unenforceable provisions were omitted, and such invalidity or
unenforceability shall not impair or otherwise affect the validity of the other
provisions of this Agreement. Moreover, the parties agree to replace such
483294.2
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<PAGE>
invalid provision with a substitute provision that will correspond to the
original intent of the parties.
17. Number of Agreements. This Agreement may be executed in any number
of counterparts, each one of which shall be deemed an original.
18. Pronouns. The use of any word in any gender shall be deemed to
include any other gender and the use of any word in the singular shall be deemed
to include the plural where the context requires.
19. Headings. The section headings used in this Agreement are for
convenience only and are not to be controlling with respect to the contents
thereof.
20. Entire Agreement. This Agreement, together with any other written
agreements entered into concurrently herewith, contains the complete and
exclusive statement of the terms and conditions of the Employee's employment by
the Company, and there exists no other inducement or consideration between the
Company and the Employee relative to the employment contemplated by this
Agreement. All prior agreements relative to the subject matter of this Agreement
are terminated.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first set forth above.
ISOLYSER COMPANY, INC.
By:
Its: _____________________________ ____________________________________
MIGIRDIC NALBANTYAN
483294.2
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED FINANCIAL STATEMENTS CONTAINED IN ITS REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000929299
<NAME> ISOLYSER COMPANY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,813<F1>
<SECURITIES> 0
<RECEIVABLES> 17,398
<ALLOWANCES> 1,968
<INVENTORY> 30,091
<CURRENT-ASSETS> 92,003
<PP&E> 39,115
<DEPRECIATION> 18,260
<TOTAL-ASSETS> 143,982
<CURRENT-LIABILITIES> 16,784
<BONDS> 0
0
0
<COMMON> 39
<OTHER-SE> 85,168
<TOTAL-LIABILITY-AND-EQUITY> 143,982
<SALES> 41,230
<TOTAL-REVENUES> 41,230
<CGS> 30,588
<TOTAL-COSTS> 30,588
<OTHER-EXPENSES> 10,998
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 950
<INCOME-PRETAX> (1,211)
<INCOME-TAX> 76
<INCOME-CONTINUING> (1,287)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,287)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
<FN>
<F1> INCLUDES CASH EQUIVALENTS.
</FN>
</TABLE>
