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EXHIBIT 10.16
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of January 20, 1999, is made and
entered into by and between COHR, Inc., a Delaware corporation ("Company"), and
Raymond E. List, an individual ("Executive").
RECITAL
Executive is a key executive of the Company and an integral part of its
management. This Agreement is being entered into in connection with the
Company's continued employment of Executive.
AGREEMENT
NOW, THEREFORE, Company and Executive agree as follows:
1. a. This Agreement shall initially be in effect from September
1, 1998 through August 31, 2001, unless renewed or terminated earlier as
provided herein (the "Initial Term"). At the expiration of the Initial Term and
each anniversary thereafter, the term of this agreement shall automatically be
extended for an additional year (the "Extension Term") unless a written notice
of non-renewal is given by either party on or before ninety (90) days prior to
the end of the Initial Term or the Extension Term, as the case may be, that it
does not desire to extend the term of this Agreement.
b. Executive is and will continue to be employed by the Company
in the position held by Executive as of the effective date of this Agreement and
pursuant to its terms. Executive's job description as of the effective date
hereof is attached as Exhibit A. During his employment hereunder, and subject to
the next sentence, Executive shall devote substantially all of his attention and
business during normal business hours to the performance of this Agreement and
shall, without the Company's prior written consent in each instance, refrain
from rendering services of any kind to others for compensation or services which
would materially interfere with the performance with his duties under this
Agreement.
c. Notwithstanding the above, the Company and the Executive
agree that nothing herein shall preclude the Executive from managing or devoting
time to his personal investments and receiving compensation therefrom,
including, but not limited to, serving as an owner of SRL, Inc.; a member of
Fairfax Consulting Company, LLC and its affiliated entities; managing or
devoting time to the portfolio companies of Fairfax Partners/The Venture Fund of
Washington, L.P., Fairfax Management Company II, LLC or their affiliated
entities; serving on the board of directors of any such companies; or serving on
the board of directors of other profit
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or non-profit entities, such as Vista Restaurants, Inc., Orincon Technologies,
Inc., the Civil Engineering Research Foundation, and ENSEC International Inc.,
provided that such activities do not materially adversely interfere with his
duties to the Company. In the aggregate, however, such activities or commitments
shall not exceed in the aggregate ten percent (10%) of Executive's business
time.
2. During the term of employment, Company shall pay a base salary to
Executive. The base salary for the first year hereof shall be at a rate of Two
Hundred Seventy-Five Thousand Dollars ($275,000) per year. The amount of
Executive's base salary increase (if any) in future years shall be reviewed and
set annually by the Compensation Committee, but in no event shall be reduced.
The base salary shall be paid in equal semimonthly installments.
3. The Company shall award options to purchase 81,250 shares of COHR
common stock at seven dollars ($7.00) per share. The option grant is made under
the existing COHR stock option plan pursuant to a grant agreement attached
hereto as Exhibit C.
4. Company shall also loan One Hundred Thousand Dollars ($100,000)
to Executive as of October 19, 1998, which loan shall be used to acquire Company
stock. The terms of the loan shall be as set forth in this paragraph.
a. The term of the loan will begin on October 19, 1998, and
end on August 31, 2000.
b. Unpaid principal amounts of the loan will bear interest at
a rate of 5.06% per annum from October 19, 1998, the applicable federal rate for
short-term loans as of October 1, 1998.
c. Principal and accrued interest shall be due and payable on
August 31, 2000. However, any cash bonus amounts due and payable to Executive
under this Section shall be applied to prepay unpaid principal and interest.
Each such prepayment shall be applied first to interest and then to principal.
That is, any amount due under the following bonuses shall be applied as follows
to unpaid principal and accrued interest:
(i) to the extent paid in cash, the first installment of any
March 31, 1999 bonus, to be applied and effective as of March 31,
1999;
(ii) to the extent paid in cash, the second installment of any
March 31, 1999 bonus, to be applied and effective as of March 31,
2000; and
(iii) to the extent paid in cash, the first installment of any
March 31, 2000 bonus, to be applied and effective as of March 31,
2000.
d. If at any time while the loan is outstanding the Executive
voluntarily resigns,
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retires, or is terminated for cause, the amount of the principal and accrued
interest outstanding shall be due and payable on the date of such termination of
employment. If Executive's employment with the Company terminates for any reason
other than those listed in the previous sentence, then Executive (or, if
Executive is deceased, his legal representative) and the Company shall determine
a mutually agreeable repayment schedule. In no event, however, shall repayment
occur later than August 31, 2000.
e. The Executive shall pledge the stock purchased with the loan
proceeds to the Company as collateral for the loan. The Company shall retain
possession of the stock until such time as Executive has completely repaid both
the loan's principal and any accrued interest. If the ratio of fair market value
of the stock held as collateral to the amount of unpaid principal of the loan
exceeds two (2) to one (1) based on the average fair market value of the stock
for two (2) consecutive months, the shares of stock representing a fair market
value in excess of such two (2) to one (1) ratio shall be released as
collateral.
5. In addition to his base salary, during the term of his employment
(but commencing with the fiscal year ended March 31, 2000), Executive shall be
eligible to receive an annual bonus for the period from April 1 through March 31
of each year as shown in Exhibit B and as set forth below.
a. The amount of this bonus shall be up to one hundred percent
(100%) of Executive's base salary. The amount of the bonus shall depend on the
Company's achievement of quantified goals, to include target corporate pretax
earnings, as provided in Exhibit B, with Executive receiving 100% of base salary
if the targets are met and a pro rata portion, in the discretion of the Board,
if the target is not met. For years after the year ended March 31, 2000, the
targets shall be negotiated in good faith by Executive and the Board.
b. The amount of the bonus shall be based on performance
results as of March 31 of each fiscal year and shall be effective as of that
date ("Bonus Date"). Any bonus due shall be paid in two installments. The first
installment shall represent fifty percent (50%) of the total bonus due and, to
the extent not applied to prepay any outstanding loan, will be paid within
ninety (90) days of the Bonus Date. The second installment shall represent the
remaining fifty percent (50%) of the total bonus due and, to the extent not
applied to prepay any outstanding loan, shall be paid within ninety (90) days of
the first anniversary of the Bonus Date. Notwithstanding anything in this
Agreement to the contrary, the first installment shall be payable only if
Executive is still employed on the Bonus Date. The second installment shall be
payable unless Executive is no longer employed with the Company on the first
anniversary of the Bonus Date by reason of voluntary resignation, retirement, or
termination for cause.
c. The first installment of a bonus shall be paid in cash.
d. The second installment of a bonus shall be paid in cash,
stock, or stock options, at the discretion of the Company. For the bonus earned
effective as of March 31, 1999
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or thereafter, the second installment (due on March 31, 2000 or thereafter on
each subsequent March 31), if paid in Company Stock is subject to approval by
the Company's stockholders. Executive shall be entitled to receive Company
common stock with a fair market value equal in value to the remaining fifty
percent of the such bonus, where the fair market value of each share of stock
shall be the average closing sales price of a share of common stock on the
composite tape for the NASDAQ exchange for the five (5) business days prior to
the Bonus Date (e.g. March 31, 1999 or each March 31 thereafter). The Company
shall make reasonable efforts to cause such stock to be registered under the
Securities Act of 1933, as amended, or, in the event the Company is unable to
register such securities, the Company shall make reasonable efforts to afford
Executive access to customary piggyback registration rights. Notwithstanding the
above, if the Company's stockholders do not approve the issuance of stock to
Executive pursuant to this Agreement, or if at the time the bonus is due the
Company has no class of securities registered under the Securities Exchange Act
of 1934, as amended, then the Company shall pay the second installment of the
bonus in cash rather than stock.
e. In the event the Company pays the second installment of the
bonus in stock that is not registered under the Securities Act of 1933, as
amended, by accepting such stock as part of his bonus, Executive represents that
the stock will be for Executive's purposes only and not with a view toward the
distribution of such shares. Executive understands that such stock will not have
been registered with any state or federal agency and that such shares cannot be
transferred by Executive unless the shares are registered under applicable
securities laws or unless an exemption from registration is available.
f. In determining whether the corporate pretax earnings targets
set forth in Exhibit B (or the targets agreed to with respect to any subsequent
years) are satisfied, the amount of any bonus to be paid Executive hereunder
shall be included in such determination.
6. a. In addition to the base compensation and bonus provided in
this Agreement, Executive shall throughout the term hereof be entitled to and
shall receive all other benefits no less favorable to Executive than the
benefits generally available to other executives of the Company of the same
status, level and length of service as Executive. Executive shall also be
entitled to reimbursement of reasonable and necessary business expenses
including, without limitation, travel and entertainment expenses, expenses for
an office in northern California, automobile rental expenses when on Company
business away from Executive's northern California home, and subscriptions and
related professional expenses (not including primary membership expenses, which
are paid by Executive), in accordance with the Company's then prevailing policy
(which shall include appropriate itemization and substantiation of expenses
incurred). Other than provided above, such expenses will not include the use of
an automobile or an allowance for automobile expenses.
b. Executive shall be entitled to a minimum of three weeks paid
vacation, or, if more, to such vacation and holidays in accordance with the
policy of the Company generally applicable to other executives of Company with
similar length of service.
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c. Executive shall be entitled to the standard health, dental,
and pension benefits provided to other executives of the Company of the same
level and length of service as Executive. The Company shall pay the premiums on
Executive's current health and dental coverage for that period of time required
for Executive to become covered under the Company plans.
7. Should the Company and Executive agree that Executive will
relocate from northern to southern California, the Company agrees to pay such
expenses which, in the determination of the Company, are necessary for such
relocation. In the event that the payment of any relocation expenses is
considered compensation to the employee under the Internal Revenue Code, and
therefore subject to federal and/or state income taxes ("Compensation Payment"),
then Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by Executive of all taxes,
including any income taxes imposed upon the Gross-Up Payment, Executive retains
an amount of the Gross-Up Payment equal to the income tax imposed on both the
Compensation and the Gross-Up Payments.
8. All compensation provided pursuant to Sections 2, 3, 4, 5 and 7
shall be subject to customary income tax withholding and such other employee
deductions as are required by law with respect to compensation paid to an
employee.
9. Executive's employment may be terminated before end of the
Initial Term or any Extension Term in the event one of the following occurs
during such term of this Agreement or any extension thereof:
a. Executive is given 60 days written notice of the termination
of this Agreement and Executive's employment other than for cause (as defined
herein below), where such termination is other than a notice of non-renewal, as
provided in Section 1(a);
b. Executive's responsibilities are materially reduced and
Executive resigns within three (3) months of such reduction;
c. The Agreement is assumed, as contemplated in Section 24, and
within eighteen months of such assumption Executive is terminated for reasons
other than cause;
d. Executive voluntarily resigns or retires from his
employment;
e. Executive is terminated for cause.
For purposes of this Section 9 and Section 11 herein below, a
termination "for cause" occurs if Executive is terminated for any of the
following reasons: (i) theft, dishonesty, or falsification of any employment or
Company records; (ii) knowing and improper disclosure of Company's confidential
or proprietary information; (iii) conduct by Executive of a criminal nature
(commonly defined as a "felony" in criminal statutes) which has a material
adverse effect on
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COHR's reputation or standing in the community or on its continuing
relationships with its customers or those who purchase and use its products;
(iv) habitual neglect of duties or wanton negligence by Executive in the
performance of duties; (v) violation of a material Company policy or procedure
or any material law or regulation, which breach is not cured within thirty (30)
days following receipt by Executive of written notice of such breach from
Company; or (vi) material wrongdoing or misconduct; or (vii) any material breach
of this Agreement, which breach is not cured within thirty (30) days following
receipt by Executive of written notice of such breach from Company.
10. Subject to Section 11 hereof, and in lieu of payments under
Sections 2, 4, 5, 6 and 7 hereof, Executive shall receive the following
compensation and benefits if his employment terminates during the Initial Term
or any Extension Term pursuant to Section 9(a), (b), or (c) above:
a. Executive shall be paid eighteen (18) months at the rate of
Two Hundred Seventy-Five Thousand Dollars ($275,000) per year, or the base pay
rate in effect at the time of termination. Executive shall also receive an
additional amount as a prorated bonus, which amount shall be calculated by
multiplying Executive's annual bonus, estimated in good faith by the Company,
times a fraction representing the fraction of the year (rounded to the nearest
whole number of months) Executive was employed by the Company during the year of
termination. These amounts shall be paid monthly in eighteen (18) equal payments
commencing on the first day of each month following the effective date of such
termination or resignation. Such payments shall be subject to Federal and State
Income Tax withholding, social security and SDI withholding, and such other
employee deductions as are required by federal, state or local law or authorized
in writing by the Executive. The amount of continued base salary or prorated
bonus provided for in this paragraph shall not be reduced, offset or subject to
recovery by reason of any compensation earned by Executive with a subsequent
employer or from self employment unless the subsequent employer agrees to assume
and be bound by all of the obligations under this Agreement, and Executive has
consented to such assumption, in accordance with the provisions of Section 24
herein below.
b. During the same eighteen (18) month period, the Company will
also continue at its contributions to Executive's 401(k) plans, pension plans,
and medical/dental insurance coverage at the same coverage level that he would
have received if he had remained an employee during the eighteen month period.
Should Executive accept dental coverage or PPO or PPO-equivalent health coverage
by a subsequent employer, the dental coverage or medical insurance coverage
provided at the Company's expense (i.e.,whichever is so provided by the
subsequent employer) shall be terminated.
c. Notwithstanding the foregoing, if (i) the Company exercises
its right to not renew the Initial Term or the Extension Term as set forth in
Section 1(a) hereof, the time period set forth above in Sections 10(a) and 10(b)
shall be twelve (12) months rather than eighteen (18) months so that Executive
shall be entitled to receive payments with respect to a period of twelve
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(12) months rather than eighteen (18) months from the effective date of
non-renewal or termination, as the case may be, or (ii) Executive's employment
terminates during any Extension Term pursuant to Section 9(a), (b) or (c), the
time periods set forth above in Sections 10(a) and 10.b shall be twelve (12)
months instead of eighteen (18) months.
11. Neither Company nor its successor in interest shall be required
to make any payments under Section 10 above in the event Executive is terminated
for cause, retires, or voluntarily resigns. Payments under Section 10 shall be
made to Executive's estate in the event Executive dies or to Executive in the
event Executive becomes disabled as disability is defined in the next sentence,
in lieu of payments under Sections 2, 4, 5, 6 and 7 hereof. For the purposes of
this Agreement, "disability" will mean if at the end of any calendar month,
Executive is and has, for three (3) full consecutive months out of any twelve
(12) month period continuously been unable due to mental or physical illness or
injury to perform his duties under this Agreement in his normal or regular
manner.
12. Except as required for the purposes of proxy disclosure, NASDAQ
rules or applicable laws or regulations, the parties each represent and agree
that they will keep the terms, contents and existence of this Agreement
completely confidential, and will not hereafter disclose any information
concerning this Agreement, including any negotiations leading to this Agreement,
to anyone except as required by law or to individuals who reasonably must be
informed of its terms, and who will be advised of and bound by this
confidentiality clause. Notwithstanding the foregoing, either party may disclose
this Agreement or its terms or contents in any arbitration pursuant to Section
19 hereof. Any failure by any parties, their attorneys, agents or
representatives to maintain the confidentiality of the negotiations leading to
this Agreement, the fact of, or the terms of this Agreement shall constitute a
material breach of this Agreement.
13. Executive acknowledges that he is a fiduciary of the Company and
as such is subject to duties to the Company, its Board of Directors and
Stockholders, including but not limited to the obligation to discharge his
duties (a) in good faith, (b) with the care of an ordinarily prudent person in a
like position would exercise under similar circumstances, and (c) in a manner he
reasonably believes to be in the best interests of the Corporation.
14. Executive and the Company agree that Executive's services for the
Company create a relationship of confidence and trust between the Company and
Executive with respect to any information (a) applicable to the business of the
Company or (b) applicable to the business of any client or customer of the
Company which may be made known to Executive by the Company or by any client of
the Company, or learned by Executive in such context during the period of
Executive's service. All such information has commercial value in the business
in which Company is engaged and is hereinafter referred to as "Proprietary
Information."
The Company acknowledges and agrees that prior to his engagement
Executive possessed, and continues to possess, a broad body of knowledge of
health care and information technology generally, and specific expertise in the
areas of health care information systems,
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electronic commerce within health care and other industries, health care group
purchasing organizations and inventory management.
Executive and the Company agree that all Proprietary Information
is the sole property of the Company, its assigns and its customers, and the
Company, its assigns and its customers shall be the sole owner of all patents,
copyrights, trade secrets and other rights in connection therewith. Executive
hereby assigns to the Company any rights he may have or acquire in such
Proprietary Information. At all times, both during Executive's services for the
Company and for a period of eighteen (18) months after its termination,
Executive will keep in confidence and trust all Proprietary Information or
anything directly relating to it without the written consent of the Company,
except as may be necessary in the ordinary course of performing Executive's
duties hereunder.
Notwithstanding the foregoing, Proprietary Information shall not
be deemed to include, and Executive shall not be under any of the aforementioned
obligations with respect to, information that Executive can document (a) was in
the public domain at the time it was communicated to Executive, (b) entered the
public domain subsequent to the time it was communicated to Executive through no
fault of Executive, (c) was in Executive's possession free of any obligation of
confidence at the time it was communicated to Executive, (d) is part of
Executive's own skill, knowledge, know-how and experience or (e) was disclosed
in response to a valid order by a court or other governmental body, and
Executive provided the Company with prior written notice of such disclosure in
order to permit the Company to seek confidential treatment of such information.
15. Executive acknowledges that as an executive of the Company he has
been and will be instrumental in the business of the Company and its success.
Accordingly, Executive agrees that during the term of this Agreement, he will
not, directly or indirectly, within any location in the United States where the
Company is transacting business during the term of this Agreement, if earlier,
or at the time of the termination of Executive's services hereunder, as the case
may be, engage or participate or make financial investments in or become
employed by or render advisory or other services to or for any person, firm or
corporation directly or indirectly engaged in the business of, and deriving
substantially all of its revenues from, owning and operating medical group
purchasing organizations and/or the sale, lease and/or servicing of medical
equipment (the "Restricted Business") directly or indirectly in competition with
the Company. Nothing herein contained, however, shall restrict Executive from
making any investment in any company whose stock is listed on the National
Securities Exchange or actively traded in the over-the-counter market, so long
as such investment does not give him the right to control or influence the
policy decisions of any such business or enterprise which is engaged in and
derives substantially all of its revenues from the Restricted Business, nor
shall Executive be precluded from investing in entities engaged in the
Restricted Business and being able to nominate and elect a representative to
serve on the Board of Directors of any such companies.
16. For a period of eighteen (18) months from and after the effective
date of
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termination or expiration of Executive's employment with Company, whether
pursuant to the terms of this Agreement or otherwise, Executive shall not:
a. Directly or indirectly solicit any executive or managerial
employee of the Company to discontinue working for or representing the Company
for the purpose of working for or representing any subsequent employer of
Executive which is a competitor of Company; or
b. Authorize or knowingly approve the taking of such actions as
those described above by other persons (on behalf of any such competitor) or
assist any such person, firm or corporation in taking such action.
17. In the event that Executive becomes involved in any claim, action
or legal proceeding brought by or against any person, including stockholders of
the Company, in connection with or as a result of the rendering of services
under this Agreement, the Company will pay Executive's legal and other expenses
(including the cost of any investigation or preparation) in connection therewith
as incurred, except to the extent that Executive has engaged in bad faith or
willful misconduct. The Company will also indemnify and hold the Executive
harmless against any and all losses, liabilities, suits, claims, costs, damages
or expenses (including reasonable attorneys' fees) to Executive in connection
with or as a result of the rendering of services under this Agreement, except to
the extent that any such loss, liability, suit, claim, cost, damage, or expense
results from the bad faith or willful misconduct of Executive in performing the
services that are the subject of this Agreement.
18. Executive acknowledges that he has been advised to seek an
attorney for advice regarding the effect of this Agreement prior to signing it.
19. If any claim (including those arising under state or federal
statutes) is brought under this Agreement, or any dispute of any nature
whatsoever arises regarding the termination of this Agreement or the termination
of Executive's employment (except alleged violations of Executive's obligations
under Sections 12, 13, 14, 15 and 16; which may be enforced by the Company
through a temporary restraining order, preliminary injunction and/or injunction
in a judicial forum), the Company and Executive agree that such claim shall be
resolved in an arbitration proceeding before a single arbitrator, conducted
under the auspices of the American Arbitration Association, Los Angeles,
California and in accordance with its Employment Dispute Resolution rules.
Executive understands, acknowledges and agrees that he is waiving any right to a
jury to decide any claim (including statutory claims), subject to this Section.
The arbitrator agreed to under such rules shall be empowered to resolve the
dispute through consideration of the facts, the terms of this Agreement, and any
statute, law, regulation or defense asserted by either party. The arbitrator
shall be experienced in employment law and his/her decision shall be in writing
and contain findings of fact and conclusions of law. If so authorized by the
arbitrator, the prevailing party shall be entitled to recover from the
non-prevailing party such damages as the arbitrator determines appropriate based
upon the legal theories asserted by either party in such arbitration and
reasonable expenses, including without limitation reasonable attorneys' fees.
The arbitration
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decision shall be final and binding and may be confirmed in any court of
competent jurisdiction.
20. If any of the above provisions is found null, void, or
inoperative, for any reason, the remaining provisions will remain in full force
and effect.
21. This Agreement may be executed by facsimile and in identical
counterparts. The Agreement will be binding on the parties once it has been
fully executed. Thereafter, the parties will exchange hard copies and all the
counterparts together shall constitute a single agreement, and it shall not be
necessary to introduce more than one fully executed counterpart to enforce this
Agreement.
22. Any notice to the Company required or permitted hereunder shall
be given in writing to the secretary of Company either by personal service or by
registered mail postage prepaid addressed to Company at its then principal place
of business. Any such notice to Executive shall be given in like manner and mail
shall be addressed to the Executive at his home address then shown in the files
of Company. Notice by mail will be deemed received three (3) business days after
the notice is deposited in the United Sates mail, postage prepaid.
23. This Agreement may be extended for an additional period and
subject to additional or different terms by written agreement of the parties.
24. This Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective successors, assigns, heirs
and legal representatives, including any entity with which the Company may merge
or consolidate (in which the Company is not the surviving entity) or to which
all or substantially all of its assets may be transferred; provided, however,
that the assignee agrees to assume and be bound by the terms by the terms and
conditions of this Agreement and Executive consents to such assignment and
assumption. When Executive consents to the assignment and the Agreement is
assumed by the assignee, Executive shall not be entitled to any payments and
benefits set forth in paragraph 10 hereof until an event under Section 9(a),(b),
or (c) other than such assignment and assumption occurs.
25. This Agreement supersedes all prior agreements, oral or written,
between the parties with respect to Executive's employment (other than
Executive's stock option agreements with the Company) and constitutes a complete
and exhaustive statement of the terms of the agreement between the parties with
respect to its subject matter. Specifically, this Agreement amends and restates
in its entirety the Employment Agreement between Executive and Company dated
August 1998. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
26. This Agreement shall be governed by California law.
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IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date above written.
"Company" "Executive"
COHR, INC. /S/ RAYMOND E. LIST
-----------------------------
Raymond E. List
By: /S/ LYNN REITNOUR
------------------------------
Its: CHAIRMAN
------------------------------
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EXHIBIT A
EXECUTIVE JOB DESCRIPTION
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF COHR, INC.
- - Responsible to Chairman and Board of Directors for the performance of COHR,
Inc.
- - President and Chief Executive Officer of COHR, Inc. and any spin-offs,
derivatives, successor entities or subsidiary entities.
- - Member of COHR, Inc. Board of Directors.
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EXHIBIT B
COHR INC. FINANCIAL TARGETS
($M)
Full Year
Q1, FY00 Q2, FY00 Q3, FY00 Q4, FY00 FY2000
Fcst. Fcst. Fcst. Fcst. Fcst.
-------- -------- -------- -------- ---------
REVENUES
Master Plan $15,045 $15,775 $17,005 $18,625 $66,450
GPO 4,167 3,688 3,798 3,870 15,523
Security/Insurance 825 825 845 845 3,340
Corporate 45 45 45 45 180
$20,082 $20,333 $21,693 $23,385 $85,493
OPERATING
PROFIT/(LOSS)
GPO $ 1 $ 1,057 $ 1,577 $ 1,867 $ 4,502
Security/Insurance 2,205 1,955 2,013 2,051 8,224
PHSG @ 40% 30 30 30 30 120
Ownership
Corporate (2,928) (2,776) (2,676) (2,676) (11,056)
TOTAL $ (618) $ 340 $ 1,020 $ 1,348 $ 2,090
Interest Income-Net 137 137 138 138 550
Pretax $ (481) $ 477 $ 1,158 $ 1,486 $ 2,640
Income/(Loss)
EPS (6,433M $ 0.41
Shares)
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EXHIBIT C
STOCK OPTION GRANT
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered
into as of September 1, 1998 (the "Date of Grant") by and between COHR Inc., a
Delaware corporation (the "Company"), and Raymond E. List ("Optionee").
RECITALS
Optionee is an employee of the Company.
The Company has adopted the 1995 Stock Option Plan of COHR Inc.
(the "Plan") for the benefit of officers and managerial employees and
nonemployee members of the Company's Board of Directors.
The Compensation Committee of the Board of Directors of the
Company (the "Committee") has approved the grant to Optionee of an option to
purchase shares of the common stock, $.01 par value, of the Company (the "Common
Stock") under the Plan and is accordance with the other terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Option; Certain Terms and Conditions. As of the date
hereof ("Date of Grant"), the Company hereby grants to Optionee, and Optionee
hereby accepts, an option (the "Option") to purchase 81,250 shares of Common
Stock (the "Option Shares") at the Exercise Price per share of $7.00 ("Exercise
Price"). This Option shall expire at 5:00 p.m., Pacific Standard Time, on
September 1, 2008 (the "Expiration Date"), or on such earlier date as provided
herein, and shall be subject to all of the terms and conditions set forth in
this Agreement.
2. Vesting. The Optionee's right to exercise an Option shall be
become vested in accordance with the following schedule:
Date of Vesting Percentage Vested
--------------- -----------------
September 1, 1998 25% Vested (20,312 shares)
September 1, 1999 50% Vested (40,625 shares)
September 1, 2000 75% Vested (60,937 shares)
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September 1, 2001 100% Vested (81,250 shares)
For purposes of this Agreement, a "Vested Option" shall refer to that portion of
the Option which is exercisable pursuant to the above vesting schedule. This
Option is not intended to qualify as an incentive stock option under section 422
of the Internal Revenue Code of 1986, as amended.
3. Accelerated Vesting.
(a) Change in Control. In the event of a Change in Control
(as defined in the 1996 Stock Option Plan of COHR, Inc. (the "Plan"))
prior to the third anniversary of the Date of Grant, Optionee shall
automatically become 100% vested in the Option Shares and such Option
shall be immediately exercisable as to all shares covered thereby.
(b) Underwritten Public Offering. Notwithstanding
paragraph 2 above, in the event of an underwritten public offering of
Common Stock of the Company or by an Affiliate of the Company on or
after January 1, 1997, Optionee shall become 50% vested in the nonvested
portion of the Option awarded to such Optionee, determined as of the
date of the underwritten public offering. In such event, the remaining
nonvested portion of the Option awarded to Optionee, after application
of the subparagraph (b), shall thereafter become vested as follows:
(i) If the underwritten public offering occurs
prior to the first anniversary of the date the Option is granted,
then:
Anniversary of
Date Option Granted Percentage Vested
------------------- -----------------
First Anniversary 33%
Second Anniversary 66%
Third Anniversary 100%
(ii) If the underwritten public offering occurs
after the first anniversary but prior to the second anniversary
of the date the Option is granted, then:
Anniversary of
Date Option Granted Percentage Vested
------------------- -----------------
Second Anniversary 50%
Third Anniversary 100%
(iii) If the underwritten public offering occurs
after the
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second anniversary but prior to the third anniversary of the date
the Option is granted, then:
Anniversary of
Date Option Granted Percentage Vested
------------------- -----------------
Third Anniversary 100%
4. Termination of Option.
(a) Expiration Date. Except as otherwise provided herein,
the Option shall terminate on the Expiration Date.
(b) If the Optionee dies while an Option is exercisable
under the terms of this Agreement, the Optionee's beneficiary may
exercise such rights, to the extent the Optionee could have done so
immediately preceding his death, within twelve (12) months after the
Optionee's death, but not later than the Option's Expiration Date.
(c) If the Optionee's employment is terminated due to his
permanent and total disability, as determined by the Committee, the
Optionee may exercise his Option, to the extent exercisable as of his
termination of employment, within twelve (12) months after termination,
but not later than the Option's Expiration Date.
(d) If the Optionee's employment is terminated for any
reason other than those set forth in sections 4(b) or (c) above, the
Optionee may exercise his Option, to the extent exercisable as of his
termination of employment, within nine (9) months after termination of
employment, but not later than the Option's Expiration Date.
5. Adjustments. In the event that the outstanding shares of
Common Stock are changed into or exchanged for cash or for a different number or
kind of shares or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares (other
than for shares or securities of another corporation or by reason of
reorganization), then the Committee shall make appropriate and equitable
adjustments in the number and kind of shares that may thereafter be acquired
upon the exercise of the Option and the Exercise Price per share; provided,
however, that any such adjustments in the Option shall be made without changing
the aggregate Exercise Price of the then unexercised portion of the Option.
In the event of a "spin-off" or other substantial
distribution of
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assets of the Company which has a material diminutive effect upon the Fair
Market Value (as defined in the Plan) of the Company's Common Stock, the
Committee may in its discretion make an appropriate and equitable adjustment to
the per share and the aggregate Option Exercise Price to reflect such
diminution.
Any adjustments made under this Section shall parallel the
adjustments made by the Committee under the Plan.
6. Exercise. Subject to Section 4 of this Agreement, the Option
shall be exercisable during Optionee's lifetime only by Optionee or by his
guardian or legal representative, and after Optionee's death only by the
Optionee's beneficiary. Optionee may designate his or her beneficiary or
beneficiaries or change such designation by delivery of a written beneficiary
designation to the Company, on such terms and conditions as determined by the
Committee. The Option may be exercised only by the delivery to the Company of a
written notice of such exercise, accompanied by payment in full of the aggregate
Exercise Price by any one or more of the following means:
(a) Certified or cashier's check payable to the Company.
(b) By the delivery to the Company of a certificate or
certificates representing shares of Common Stock, duly endorsed or
accompanied by duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and
clear of any pledge, commitment, lien, claim or other encumbrance, such
shares to be valued on the basis of the aggregate Fair Market Value (as
defined in the Plan) on the date the Option is exercised, provided that
the Company is not then prohibited from purchasing or acquiring such
shares of Common Stock and provided that Optionee has either owned such
shares of Common Stock for at least 6 months (or such longer period as
is determined by the Company to be required by applicable accounting
standards to avoid a charge to the Company's earnings) or Optionee
purchased such shares on the open market.
(c) Subject to the timing requirements of Section 5.5 of
the Plan, pursuant to procedures previously approved by the Company,
through the sale of the shares of Common Stock acquired on exercise of
this Option through a broker-dealer to whom Optionee has submitted an
irrevocable notice of exercise and irrevocable instructions to deliver
promptly to the Company the amount of sale proceeds sufficient to pay
for such shares, together with, if requested by the Company, the amount
of federal, state, local or foreign withholding taxes payable by reason
of such exercise.
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7. Tax Withholding. The Company shall be entitled to require
payment or deduction from other compensation payable to Optionee of any sums
required by federal, state or local tax law to be withheld with respect to the
Option in accordance with the provisions of Section 7.6 of the Plan. Optionee
may elect the withholding ("Share Withholding") by the Company of a portion of
the shares of Common Stock otherwise deliverable to Optionee upon the exercise
of the Option to satisfy the Company's withholding obligation. Optionee's Share
Withholding election is subject to the terms and conditions in Section 7.6 of
the Plan, including the Committee's discretion to revoke Optionee's right to
elect Share Withholding at any time before such election.
8. Notices. All notices and other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed given if delivered personally, or five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, to the Company,
at 21540 Plummer Street, Chatsworth, California 91311-4103, Attention: Chief
Financial Officer, or to Optionee at the address set forth beneath his or her
signature on the signature page hereto, or at such other addresses as each may
designate by written notice in the manner aforesaid.
9. Stock Exchange Requirements; Applicable Laws.
Notwithstanding anything to the contrary in this Agreement, no shares of stock
purchased upon exercise of the Option, and no certificate representing all or
any part of such shares, shall be issued or delivered until: (a) such shares
have been admitted to listing upon official notice of issuance on such stock
exchange upon which shares of that class are then listed, (b) the completion of
any registration or other qualification of such shares which the Committee
shall, in its absolute discretion, deem necessary or advisable, (c) any approval
or other clearance from any state or federal governmental regulatory body which
the Committee shall, in its absolute discretion, deem necessary or advisable has
been obtained and (d) the lapse of the reasonable time period following the
exercise of the Option as the Committee may establish from time to time.
10. Transferability. The Option and any interest therein may not
be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner, other than by will or by the laws of descent and
distribution. An Option shall be exercised only by the Optionee or his guardian
or legal representative.
11. Plan. The Option is being awarded pursuant to the Plan, as
in effect on the Date of Grant, and is subject to all the terms and conditions
of the Plan, as the same may be amended from time to time, provided, however,
that no such amendment shall deprive Optionee, without his or her consent, of
the Option or any of Optionee's rights under this Agreement. The interpretation
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and construction by the Committee of the Plan, this Agreement and such rules and
regulations as may be adopted by the Committee for the purpose of administering
the Plan shall be final and binding upon Optionee. Until the Option shall be
exercised or be forfeited or otherwise terminated, the Company shall, upon
written request therefor, send a copy of the Plan in its current form, to the
holder of record of the Option.
12. Stockholder Rights. No person or entity shall be entitled to
vote, receive dividends, or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.
13. Employment Rights. No provision of this Agreement or of the
Option granted hereunder shall (a) confer upon Optionee any right to continue in
the employ of the Company, or any of its subsidiaries or other affiliates, (b)
affect the right of the Company, and each of its subsidiaries or other
affiliates, to terminate the services of Optionee, with or without cause, or (c)
confer upon Optionee any right to participate in any employee welfare or benefit
plan or other program of the Company, or any of its subsidiaries or other
affiliates, other than the Plan. Optionee hereby acknowledges and agrees that
the Company and each of its subsidiaries or other affiliates may terminate the
services of Optionee at any time and for any reason, or for no reason, unless
Optionee and the Company, or such subsidiary or other affiliate, are parties to
a written agreement that expressly provides otherwise.
14. Amendments. This Agreement may be amended only by a writing
executed by the Company and Optionee which specifically states that it is
amending this Agreement.
15. Governing Law. This Agreement and the Option granted
hereunder shall be governed by, construed, and enforced in accordance with the
laws of the State of California.
16. Severability. If any part of this Agreement is declared by
any court or governmental authority to be unlawful or invalid, such unlawfulness
or invalidity shall not serve to invalidate any part of this Agreement not
declared to be unlawful or invalid. Any part so declared unlawful or invalid
shall, if possible, be construed in a manner which gives effect to the terms of
such part to the fullest extent possible while remaining lawful and valid.
IN WITNESS WHEREOF, the Company and the Optionee have duly
executed this Agreement as of the Date of Grant.
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COHR Inc., a Delaware corporation
By:______________________________
Title:
BY SIGNING BELOW, OPTIONEE ACKNOWLEDGES RECEIPT OF A COPY OF THE PLAN,
REPRESENTS THAT HE OR SHE IS FAMILIAR WITH THE TERMS AND PROVISIONS THEREOF AND
HEREBY ACCEPTS THIS OPTION SUBJECT TO ALL OF THE TERMS AND PROVISIONS THEREOF.
OPTIONEE FURTHER ACKNOWLEDGES THAT HE OR SHE HAS REVIEWED THE PLAN AND THIS
AGREEMENT IN THEIR ENTIRETY, HAS HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF
COUNSEL PRIOR TO EXECUTING THIS AGREEMENT AND FULLY UNDERSTANDS ALL PROVISIONS
OF THIS AGREEMENT. OPTIONEE HEREBY AGREES TO ACCEPT AS BINDING, CONCLUSIVE AND
FINAL INTERPRETATIONS OF THE BOARD OF DIRECTORS OR OF THE COMMITTEE UPON ANY
QUESTIONS ARISING UNDER THE PLAN.
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OPTIONEE
-------------------------------
Signature
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Street Address
-------------------------------
City, State and Zip Code
-------------------------------
Social Security Number
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