item 14 exhibits financial statement schedules reports form 8k 1 consolidated financial statements consolidated financial statements listed together report thereon kpmg peat marwick llp dated march 10 1995 appear companys annual report shareholders included form 10k annual report exhibit 13 incorporated herein reference independent auditors report consolidated balance sheets consolidated statements income consolidated statements stockholders equity consolidated statements cash flow notes consolidated financial statements 2 financial statement schedules following schedule supporting financial statements company included herein page schedule viii valuation qualifying accounts reserves12 schedules financial statements company omitted applicable required information included consolidated financial statements notes thereto 3 index exhibits list exhibits filed part report form 10k incorporated herein reference appear index exhibits page 13 b reports form 8k filed quarter ended december 31 1994 none c exhibits required item 601 regulation sk filed herewith incorporated reference list index exhibits page 13 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized syncor international corporation gene r mcgrevin gene r mcgrevin president chief executive officer date 33195 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated monty fu monty fu chairman board director date 33195 gene r mcgrevin gene r mcgrevin president chief executive officer principal executive officer director date 33195 michael e mikity michael e mikity vicepresident principal financial accounting officer date 33195 robert g funari robert g funari executive vicepresident chief operating officer director date 33195 george oki george oki director date 33195 joseph kleiman joseph kleiman director date 33195 arnold e spangler arnold e spangler director date 33195 steven b gerber steven b gerber director date 33195 henry n wagner jr henry n wagner jr director date 33195 gail r wilensky gail r wilensky director date 33195 index exhibits exhibit 1 certificate incorporation bylaws 2 restated certificate incorporation company filed exhibit 31 82887 form 10k incorporated herein reference 3 restated bylaws company filed exhibit 32 82887 form 10k incorporated herein reference 4 instruments defining rights security holders 41 stock certificate common stock company filed exhibit 41 82686 form 10k incorporated herein reference 42 rights agreement dated 11889 company american stock transfer trust company filed exhibit 21 registration statement form 8a dated 11389 incorporated herein reference 1 material contracts 11 employment agreement dated 2189 company gene r mcgrevin filed exhibit 102 12789 form 8k incorporated herein reference 12 first amendment dated 71189 employment agreement dated 2189 company gene r mcgrevin filed exhibit 105 83090 form 10k incorporated herein reference 13 second amendment dated 101689 employment agreement dated 2189 company gene r mcgrevin filed exhibit 106 83090 form 10k incorporated herein reference 14 third amendment dated 1191 employment agreement dated 2189 company gene r mcgrevin filed exhibit 107 82991 form 10k incorporated herein reference 15 syncor international corporation 1981 master stock option plan amended filed part companys proxy statement dated 11585 annual meeting shareholders held 112685 incorporated herein reference 16 stock option agreement gene r mcgrevin dated 1292 filed exhibit 1016 82792 form 10k incorporated herein reference 17 form indemnity agreement substantially entered company director officer filed exhibit 32 appendix 82887 form 10k incorporated herein reference 18 form benefits agreement substantially entered company director filed exhibit 1031 83090 form 10k incorporated herein reference 19 form benefits agreement substantially entered company certain employees see exhibit 108 110 syncor international corporation 1990 master stock incentive plan amended restated filed part companys proxy statement dated 10493 annual meeting shareholders held 111593 incorporated herein reference 111 syncor international corporation deferred compensation plan effective july 1 1991 amended restated effective april 19 1993 filed exhibit 1011 33093 form 10k incorporated herein reference 112 employment agreement dated july 21 1993 company robert g funari filed exhibit 1012 33094 form 10k incorporated herein reference 113 syncor international corporation mcgrevin deferred compensation plan effective june 10 1993 filed exhibit 1013 33094 form 10k incorporated herein reference 114 split ownershipsplit dollar life insurance assignment agreement effective june 10 1993 company gene r mcgrevin filed exhibit 1014 83090 form 10k incorporated herein reference 115 form stock option agreement substantially entered company certain employee directors employees filed exhibit 1015 33094 form 10k incorporated herein reference 116 form stock option agreement substantially entered company certain nonemployee directors filed exhibit 1016 33094 form 10k incorporated herein reference 2 statement computation per share earnings computation clearly determined material contained companys annual report shareholders year ended december 31 1994 13 annual report security holders syncor international corporation annual report shareholders year ended december 31 1994 except specific information annual report expressly incorporated herein reference furnished information commission deemed filed part hereof 21 subsidiaries registrant state name company incorporation syncor management corporation california syncor investment management crop delaware syncor taiwan inc taiwan syncor midland inc texas syncor global holdings inc british virgin islands syncor hong kong limited hong kong syncor philippines inc philippines syncor de mexico 23 consents experts counsel consent kpmg peat marwick llp management contracts compensatory plan subsidiaries syncor global holdings inc included herewith exhibit 23 independent auditors report schedules consent board directors stockholders syncor international corporation audits referred report dated march 10 1995 included related financial statement schedules december 31 1994 1993 year ended december 31 1994 seven month ended december 31 1993 years towyear period ended may 31 1993 included registration statement syncor international corporation financial statement schedules responsibility companys management responsibility express opinion financial statement schedules based audits opinion financial statement schedules considered relation basic consolidated financial statements taken whole present fairly material respects information set forth therein consent incorporation reference registration statement form s3 no3344395 forms s8 nos 337325 3339251 3343692 3357762 3352607 syncor international corporation report dated march 10 1995 relating consolidated balance sheets syncor international corporation subsidiaries december 31 1994 1993 related consolidated statements income stockholders equity cash flows related schedules year ended december 31 1994 sevenmonth ended december 31 1993 years towyear period ended may 31 1993 report appears december 31 1994 annual report form 10k syncor international corporation report refers changes accounting methods adopt financial accounting standard boards statements 109 115 kpmg peat marwick llp los angeles california march 31 1995item 14 exhibits financial statement schedules reports form 8k 1 consolidated financial statements consolidated financial statements listed together report thereon kpmg peat marwick llp dated march 8 1996 appear companys annual report shareholders year ended december 31 1995 included form 10k annual report exhibit 13 hereby incorporated herein reference independent auditors report consolidated balance sheets consolidated statements income consolidated statements stockholders equity consolidated statements cash flows notes consolidated financial statements 2 financial statement schedules following schedule supporting financial statements company included herein page schedule ii valuation qualifying accounts10 schedules financial statements company omitted applicable required information included consolidated financial statements notes thereto 3 index exhibits list exhibits filed part report form 10k incorporated herein reference appear index exhibits page 11 hereof b reports form 8k filed quarter ended december 31 1995 none c exhibits required item 601 regulation sk filed herewith incorporated herein reference listed index exhibits page 11 hereof additional information january 1996 joseph kleiman member companys board directors since 1985 died signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized syncor international corporation robert g funari robert g funari president chief operating officer date 33196 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated monty fu monty fu chairman board director date 33196 gene r mcgrevin gene r mcgrevin vice chairman board chief executive officer principal executive officer director date 33196 robert g funari robert g funari president chief operating officer director date 33196 michael e mikity michael e mikity vicepresident chief financial officer principal financial accounting officer date 33196 george oki george oki director date 33196 arnold e spangler arnold e spangler director date 33196 steven b gerber steven b gerber director date 33196 henry n wagner jr henry n wagner jr director date 33196 gail r wilensky gail r wilensky director date 33196 syncor international corporation subsidiaries schedule ii valuation qualifying accounts uncollectible accounts writtenoff net recoveries reduction reserve index exhibits exhibit 3 certificate incorporation bylaws 31 restated certificate incorporation company filed exhibit 31 82887 form 10k incorporated herein reference 32 restated bylaws company 4 instruments defining rights security holders 41 stock certificate common stock company filed exhibit 41 82686 form 10k incorporated herein reference 42 rights agreement dated 11889 company american stock transfer trust company filed exhibit 21 registration statement form 8a dated 11389 incorporated herein reference 10 material contracts 101 employment agreement dated 2189 company gene r mcgrevin filed exhibit 102 12789 form 8k incorporated herein reference 102 first amendment dated 71189 employment agreement dated 2189 company gene r mcgrevin filed exhibit 105 83090 form 10k incorporated herein reference 103 second amendment dated 101689 employment agreement dated 2189 company gene r mcgrevin filed exhibit 106 83090 form 10k incorporated herein reference 104 third amendment dated 1191 employment agreement dated 2189 company gene r mcgrevin filed exhibit 107 82991 form 10k incorporated herein reference 105 syncor international corporation 1981 master stock option plan amended filed part companys proxy statement dated 11585 annual meeting shareholders held 112685 incorporated herein reference 106 stock option agreement gene r mcgrevin dated 1292 filed exhibit 1016 82792 form 10k incorporated herein reference 107 form indemnity agreement substantially entered company director officer filed herein exhibit 32 appendix 108 form benefits agreement substantially entered company director 109 form benefits agreement substantially entered company certain employees filed herein exhibit 108 1010 syncor international corporation 1990 master stock incentive plan amended restated filed part companys proxy statement dated 10493 annual meeting shareholders held 111593 incorporated herein reference 1011 syncor international corporation deferred compensation plan effective july 1 1991 amended restated effective april 19 1993 filed exhibit 1011 33093 form 10k incorporated herein reference 1012 employment agreement dated july 21 1993 company robert g funari filed exhibit 1012 33094 form 10k incorporated herein reference 1013 syncor international corporation mcgrevin deferred compensation plan amended restated effective october 23 1995 1014 split ownershipsplit dollar life insurance assignment agreement effective june 10 1993 company gene r mcgrevin filed exhibit 1014 83090 form 10k incorporated herein reference 1015 form stock option agreement substantially entered company certain employee directors employees filed exhibit 1015 33094 form 10k incorporated herein reference 1016 form stock option agreement substantially entered company certain nonemployee directors filed exhibit 1016 33094 form 10k incorporated herein reference 1017 nonqualified stock option award agreement dated january 24 1995 entered company arnold e spangler 1018 nonqualified stock option award agreement dated january 24 1995 entered company george oki 1019 nonqualified stock option award agreement dated january 24 1995 entered company henry wagner jr 11 statement computation per share earnings computation clearly determined material contained companys annual report shareholders year ended december 31 1995 13 annual report security holders syncor international corporation annual report shareholders year ended december 31 1995 except specific information annual report expressly incorporated herein reference furnished information commission deemed filed part hereof 21 subsidiaries registrant state country name subsidiary organization syncor investment management corporation delaware syncor management corporation california syncor midland inc texas syncor global holdings ltd british virgin islands syncor international thailand co ltd kingdom thailand specialised medicial trading pty ltd commonwealth australia syncor de mexico sa de cv united states mexico syncor hong kong limited hong kong bcc syncor korea inc republic korea syncor pharmacies australia pty ltd commonwealth australia syncor philippines inc republic philippines syncor new zealand ltd new zealand syncor taiwan inc taiwan republic china 23 consents experts counsel consent kpmg peat marwick llp management contracts compensatory plan subsidiaries syncor global holdings ltd included herewithitem 14 exhibits financial statement schedules reports form 8k 1 consolidated financial statements consolidated financial statements listed together report thereon kpmg peat marwick llp dated march 19 1997 appear companys annual report stockholders year ended december 31 1996 included form 10k annual report exhibit 13 hereby incorporated herein reference independent auditors report consolidated balance sheets consolidated statements income consolidated statements stockholders equity consolidated statements cash flows notes consolidated financial statements 2 financial statement schedules following schedule supporting financial statements company included herein page schedule ii valuation qualifying accounts 10 schedules financial statements company omitted applicable required information included consolidated financial statements notes thereto 3 index exhibits list exhibits filed part report form 10k incorporated herein reference appear index exhibits page 11 hereof b reports form 8k filed quarter ended december 31 1996 none c exhibits required item 601 regulation sk filed herewith incorporated herein reference listed index exhibits page 11 hereof signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized syncor international corporation robert g funari president chief executive officer date 33197 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated monty fu monty fu chairman board director date 33197 robert g funari robert g funari president chief executive officer principal executive officer director date 33197 michael e mikity michael e mikity senior vice president chief financial officer treasurer principal financial accounting officer date 33197 haig bagerdjian haig bagerdjian senior vice president secretary general counsel date 33197 george oki george oki director date 33197 arnold e spangler arnold e spangler director date 33197 steven b gerber steven b gerber md director date 33197 henry n wagner jr henry n wagner jr md director date 33197 gail r wilensky dr gail r wilensky director date 33197 syncor international corporation subsidiaries schedule ii valuation qualifying accounts fn uncollectible accounts writtenoff net recoveries reduction reserve index exhibits exhibit 3 certificate incorporation bylaws 31 restated certificate incorporation company filed exhibit 31 form 10k year ended may 31 1987 incorporated herein reference 32 restated bylaws company filed exhibit 32 form 10k year ended december 31 1995 incorporated herein reference 4 instruments defining rights security holders 41 stock certificate common stock company filed exhibit 41 form 10k year ended may 31 1986 incorporated herein reference 42 rights agreement dated november 8 1989 company american stock transfer trust company filed exhibit 21 registration statement form 8a dated november 3 1989 incorporated herein reference 10 material contracts 101 syncor international corporation 1981 master stock option plan amended filed part companys proxy statement dated november 5 1985 annual meeting stockholders held november 26 1985 incorporated herein reference 102 form indemnity agreement substantially entered company director officer filed exhibit 32 appendix form 10k year ended december 31 1995 incorporated herein reference 103 form benefits agreement substantially entered company director filed exhibit 108 form 10k year ended december 31 1995 incorporated herein reference 104 form benefits agreement substantially entered company certain employees filed exhibit 108 form 10k year ended december 31 1995 incorporated herein reference 105 syncor international corporation 1990 master stock incentive plan amended restated filed part companys proxy statement dated october 4 1993 annual meeting stockholders held november 15 1993 incorporated herein reference 106 syncor international corporation deferred compensation plan effective july 1 1991 amended restated effective april 19 1993 filed exhibit 1011 form 10k year ended december 31 1992 incorporated herein reference 107 form stock option agreement substantially entered company certain employee directors employees filed exhibit 1015 form 10k year ended december 31 1993 incorporated herein reference 108 form stock option agreement substantially entered company certain nonemployee directors filed exhibit 1016 form 10k year ended december 31 1993 incorporated herein reference 109 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company arnold e spangler filed exhibit 1017 form 10k year ended december 31 1995 incorporated herein reference 1010 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company george oki filed exhibit 1018 form 10k year ended december 31 1995 incorporated herein reference 1011 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company henry wagner jr filed exhibit 1019 form 10k year ended december 31 1995 incorporated herein reference 1012 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company gail wilensky filed exhibit 43b registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1013 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company steven gerber filed exhibit 43a registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1014 loan agreement dated september 30 1996 company first national bank chicago filed exhibit 101 form 10q quarter ended september 30 1996 incorporated herein reference 1015 subscription agreement dated july 15 1996 executed syncor management corporation favor american tax credit corporate fund iii lp together promissory note dated july 15 1996 executed syncor management corporation favor john hancock mutual life insurance company assignee corporate credit inc guarantee parent corporation dated july 15 1996 executed company favor john hancock mutual life insurance company assignee corporate credit inc 1016 1995 management incentive plan company filed exhibit 1020 form 10k year ended december 31 1995 incorporated herein reference 1017 1996 management incentive plan company filed exhibit 103 form 10q quarter ended september 30 1996 incorporated herein reference 1018 1997 management incentive plan company 1019 office lease dated september 30 1996 massachusetts life insurance company relating office lease companys corporate headquarters woodland hills california 1020 lease dated may 30 1996 company technology parkatlanta inc relating office lease companys administrative office duluth georgia 11 statement computation per share earnings computation clearly determined material contained companys annual report stockholders year ended december 31 1996 13 annual report security holders syncor international corporation annual report stockholders year ended december 31 1996 except specific information annual report expressly incorporated herein reference furnished information commission deemed filed part hereof 21 subsidiaries registrant state country name subsidiary organization syncor diagnostics llc california syncor management corporation delaware syncor midland inc texas beijing syncor medicine corporation ltd peoples republic china pharmatopes proprietary limited republic south africa shanghai syncor medicine corporation ltd peoples republic china specialised medical trading pty ltd commonwealth australia syncor de mexico sa de cv united mexican states syncor de puerto rico inc commonwealth puerto rico syncor hong kong limited hong kong bcc syncor international thailand co ltd kingdom thailand syncor korea inc republic korea syncor new zealand limited new zealand syncor pharmacies australia pty ltd commonwealth australia syncor overseas ltd british virgin islands syncor philippines inc republic philippines syncor taiwan inc taiwan republic china 23 consent kpmg peat marwick llp 27 financial data schedule management contracts compensatory plan subsidiaries syncor overseas ltd exhibit 1015 american tax credit corporate fund iii lp subscription agreement investor complete execute agreement closing american tax credit corporate fund iii lp 112 n galway drive po box 430 granville oh 43023 ladies gentlemen american tax credit corporate fund iii lp delaware limited partnership offering units limited partnership interests pursuant terms confidential private placement memorandum dated march 1 1996 supplemented time memorandum terms defined memorandum used otherwise defined herein shall meanings given memorandum 1 subscription appointment attorneyinfact undersigned investor hereby subscribes number units set forth paragraph b executing subscription agreement investor executes seal partnership agreement adopts agrees bound provisions thereof become upon acceptance general partner limited partner ii irrevocably constitutes appoints general partner general partner general partner partnership limited partnership person time holding offices president vice president treasurer general partner general partner corporation attorney acting singly full power substitution manner set forth section 1101 partnership agreement true lawful attorneyinfact full power authority act name place stead make execute sign certify acknowledge deliver swear file record behalf appropriate public offices partnership agreement certificate limited partnership amendments partnership agreement said certificate limited partnership adopted accordance terms thereof instruments attorney deems appropriate reflect change modification partnership accordance terms partnership agreement ii documents instruments including without limitation uniform commercial code financing statements necessary evidence perfect security interest granted partnership pursuant investor security agreement b make necessary clarifying conforming changes subscription documents c execute behalf investor utilizing installment method investor notes one counterparts order facilitate assignment pledge portions investor notes partnership security bridge loan one lenders event aggregate amount due counterpart promissory note executed general partner behalf investor exceed aggregate amount due investor notenor terms payment counterpart promissory notes differ terms pant investor notes b undersigned hereby subscribes number units partnership set forth hereby agree bound terms set forth partnership agreement well provisions subscription agreement cash method x times 1000000 per unit 200000000 total purchase price total number units current closing amount paid herewith deferred cash method times 1000000 per unit total number units total purchase price current closing amount paid herewith deferred cash method times 350000 per unit total number units amount paid herewith current closing installment method times per unit total number units total purchase price current closing amount paid herewith installment method times per unit total number units amount paid herewith current closing amount agreed upon investor general partner amount sufficient permit partnership receive 1000000 per unit upon hypothecation investor notes check investor subject backup withholding pursuant section 34o6a1c code check investor wishes purchase full number units subscribed even number units could represent particular percentage total units purchased investors date investor closing investor purchases units check investor wishes advised time aggregate number units subscriptions received partnership investor wishes purchase specified percentage total units purchased investors time fill maximum percentage total units purchased investors time investor wishes purchase percent investor hereby certifies penalties perjury federal taxpayer identification number undersigned set forth 0fferee questionnaire correct b undersigned subject backup withholding section 3406a1c code unless otherwise indicated subscription agreement c investor acknowledges agrees subscription may rejected reason may accepted whole part subscription accepted part investor agrees execute substitute documentation including applicable investor notes reflecting smaller investment 2 representations warranties agreements investor order induce partnership general partner accept subscription investor represents warrants agrees follows investor thoroughly read partnership agreement subscription agreement subscription documents agreement part b investor furnished thoroughly read memorandum investor conducted investigation partnership satisfied received information respect matters considers material decision make investment c investor fully understands nature risks involved purchasing units qualified experience evaluate investments type relied upon advice someone affiliates general partner qualified investor relied upon knowledge financial accounting federal tax matters relating investment upon advice matters someone affiliates general partner appropriately qualified investor elected installment method investor agrees consents sale pledge investor notes lender partnership secure indebtedness partnership ii recognizes continuing liability pay installments said investor notes consequences failure including limited right partnership successor holder investor notes undersigned declare unpaid installments immediately due payable exercise rights secured party investor security agreement e investor elected deferred cash method investor recognizes continuing liability pay deferred installments capital contribution f investor advised partnership financial operating history ii units speculative investments involve high degree risk loss investors entire investment iii federal income tax benefits may available investor may lost adoption new laws treasury regulations changes interpretation existing laws treasury regulations g investor aware inability readily liquidate investment case emergency fact units purchased may held indefinite period time investor understands units purchased registered securities act 1933 amended act applicable state securities laws cannot sold transferred otherwise disposed unless subsequently registered act applicable securities laws states exemption registration available registration unlikely time future transfers units may made untill general partner received opinion counsel satislactory general partner identity counsel form substance opinion effect transfer would compliance requirements act applicable state securities law tax law opinions furnished expense transfer units anticipated market resale units h investor understands state government authority made finding determination relating fairness investment units offered partnership investor accredited investor term defined memorandum undersigned guarantors net worth total assets excess total liabilities least five times purchase price units purchased investor knowledge experience financial business matters general particular respect type investment capable evaluating merits risks investment partnership investors overall commitment ihvesments readily marketable disproportionate net worth investment units cause overall commitment become excessive investor adequate means providing current needs possible contingencies need liquidity investment decisions type relying advice someone general partner affiliates appropriately qualified making type investment investors marginal federal income tax bracket taking account tax credits losses likely generated resuit investment units less 35 expects remain bracket higher several years investor together related corporation files consolidated tax return taking account tax credits expected available investment units utilize tax credits sources offset 75 taxable income j investor making investment account others present intention reselling units acquired investor agrees sell hypothecate otherwise dispose part units unless registered act applicable state securities laws opinion counsel partnership exemption registration requirements act state laws available k course offering units partnership investor advisors opportunity ask questions receive answers representatives partnership persons acting behalf concerning terms conditions proposed investment partnership investor advisors also opportunity obtain additional information necessary verify accuracv information previously furnished partnership l investor subscribing units result subsequent advertisement article notice communication published newspaper magazine similar media broadcast television radio seminar meeting solicitation subscription peson previously known investor connection investments securities generally investor acknowledges understands limitations utilization tax credits internal revenue code 1986 amended code including without limitation investor constitutes personal service corporation ie principal activity performance services field health law engineering architecture accounting acturiai science performing arts consulting code substantial amounts passive income may derive full benefits partnerships losses tax credits ii investor closelyheld corporation ie 50 stock held five fewer individuals application cerain attribution 0wnership rules code able utilize partnerships losses tax credits extent adjusted basis units amount risk offset net active income passive income portfolio income n investor represents foreign person within meaning section 1445 code person united states person within meaning section 1446 code ii taxexempt entity iii real estate investment trust sublect taxtion subchapter code iv corporation subject taxation subchapter code undersigned represents relying oral statements investment decision based written information provided partnership p value securities excluded companies owned investor wholly owned subsidiary excluded companies owned directly indirecy parent corporation date investment plus purchase price units exceed 10 value total assets investor whollyowned subsidiary consolidated total assets parent corporation purposes agreement excluded company investment company terms defined investment company act 1940 amended 1940 act excluded definition investment company solely fewer 100 beneficial owners voting securities ii would excluded definition solely fewer 100 beneficial owners voting securities attribution ownership rule contained section 3caa 1994 act applicable investor uncertain ability make representation consult accountants andor attorneys prior signing agreement q investor represents warrants partnership follows investor formed specific purpose investing partnership ii investor corporation duly organized validly existing good standing laws jurisdiction incorporated iii investor corporate power authority carry business engaged purchase units become limited partner partnership iv partnership agreement investor notes investor security agreement investors obligation make payments pursuant deferred cash method investment instruments evidencing securing indebtedness represented thereby executed investor duly authorized necessary corporate action duly executed delivered investor legal valid binding obligations investor enforceable accordance terms v execution delivery investor partnership agreement investor notes investor security agreement instruments evidencing securing indebtedness presented thereby performance thereof contravene provision existing law regulations charter bylaws investor conflict result breach terms conditions provisions constitute default result permit creation imposition lien charge encumbrance upon properties investor pursuant indenture mortgage agreement instrument judgment decree order decision investor party bound vi existing law approval authorization license permit action filing federal state municipal governmental commission board agency required connection execution delivery investor partnership agreement investor notes investor security agreement instruments evidencing securing indebtedness represented thereby executed investor consummation transactions contemplated thereby r investor agrees furnish partnership institutional lender provides financing partnership general partner information documents either shall require including without limitation periodic financial information type provides lenders legal opinion counsel acceptable partnership institutional lender case may effect representations warranties set forth paragraph q hereof notwithstanding foregoing representations undersigned purchases units transaction subject laws following states hereby represents respect state follows florida investor aware right withdrawal 51706111a5 florida securities act described cover pages memorandum ii new york investor hereby represents institutional investor corporation assets valued minimum 5000000 iii pennsylvania investor hereby acknowledges part relying upon exemption registration securities set forth section 203d pennsylvania securities act 1972 amended pennsylvania act connection sale unit investor accordance requirements section 203d pennsylvania act investor hereby agrees sell units within twelve 12 months form date purchase additionally investor aware right withdrawal section 207m pennsylvania act described cover pages memorandum 3 indemnification investor acknowledges understands meaning legal consequences representations warranties contained subscription agreement hereby agrees indemnify hold harmless partnership partner thereof general limited loss damage liability due arising breach inaccuracy declarations representations covenants hereinabove set forth b disposition units contrary foregoing declarations representations covenants action suit proceeding based upon claim said declarations representations covenants inaccurate misleading otherwise cause obtaining damages redress partnership act ii disposition units part thereof witness whereof undersigned subscribed sworn subscription agreement seal accepts adopts agrees bound terms subscription agreement partnership agreement 15th day july 1996 syncor management corporation legal name corporation michael e mikity signature authorized officer senior vice president treasurer name title authorized officer corporate seal state california ss county los angeles 15th july 1996 notary public jurisdiction set forth personally appeared michael e mikity sr vice president treasurer title syncor management corporation name entity duly sworndid depose say acknowledge execute foregoing subscription agreement duly sworn acknowledge knows seal said corporation seal affixed said instrument said corporate seal said corporate seal affixed order board directors said corporation signed name thereto duly authorized free act deed said entity swore thereto paulette wolfe notary public promissory note 263783300 date july 15 1996 value received maker hereby unconditionally promises pay order corporate credit inc together successors assigns payee amount two million six hundred thirtyseven thousand eight hundred thirtythree 00100 dollars 263783300 offices 345 park avenue 23rd floor new york new york 10152 place payee may designate writing maker amount shall payable installments follows l 46832100 shall due payable january 15 1997 2 43311500 shall due payable january 15 1998 3 42184200 shall due payable january 15 1999 4 41009600 shall due payable january 17 2000 5 39734900 shall due payable january 15 2001 6 38268900 shall due payable january 15 2002 7 12442100 shall due payable january 15 2003 note secured collateral described certain security agreement dated date hereof given maker payee may negotiated endorsed assigned transferred pledged hypothecated payee shall constitute negotiable instrument event note negotiated endorsed assigned transferred hypothecated andor pledged references payee shall apply holder pledgee transferee named original payee note maker hereby waives presentment demand payment notice dishonor notice protest notices demands connection delivery acceptance performance default endorsement guaranty instrument obligation make payments payee hereunder absolute unconditional rights said payee shall subject defense setoff counterclaim recoupment maker may person entity including payee note held bank insurance company lending financing institution holder successors assigns endorsees shall respects deemed holder due course maker expressly waives rights may assert holder subsequent holder due course following shall constitute event default hereunder event default maker shall fail make payment due hereunder due date b maker shall become insolvent makes assignment benefit creditors petition filed case commenced maker provision law statute alleging maker insolvent unable pay debts mature case petition filed maker 60 days shall passed without petition stayed dismissed c custodian receiver trustee conservator liquidator similar official shall appointed maker substantial part property issuing order judgment attachment garnishment property maker enforcement shall stayed pending appeal within 60 days entry judgment order judgment order shall discharged payment vacated reversed within 60 days entry thereof e dissolution winding maker merger consolidation maker entity except maker surviving corporation surviving corporation shall assumed makers obligations hereunder payee shall consented merger assumption sole absolute discretion f occurrence event default security agreement given maker payee upon occurrence event default payee shall option declare entire outstanding principal balance note immediately due payable without presentment protest notice demand expressly waived maker event default shall occur continuing maker shall obligated pay interest entire amount default date default annual rate equal lesser 13 per annum highest amount permitted applicable law notwithstanding foregoing nothing herein intended result interest charged would exceed maximum rate permitted law note part indebtedness evidenced hereby collected law attorneyatlaw payee shall entitled collect costs collection including limited reasonable attorneys fees note shall construed enforced accordance laws state california without giving effect principles thereof relating conflict laws dispute arising relating note maker hereby irrevocably submits jurisdiction courts federal state discretion payee either state new york courts jurisdiction payee maintains principal place business maker waives objection either forum payee may select witness execution hereof seal 15th day july 1996 syncor management corporation legal name corporation please print michael e mikity signature authorized officer senior vice president treasurer name title authorized officer guarantee parent corporation valuable consideration receipt hereby acknowledged undersigned guarantor hereby unconditionally guarantees corporate credit inc new york corporation together successors assigns lender payment performance obligations syncor management corporation name subsidiary corporation borrower promissory note amount 263783300 dated july 1996 executed borrower payable lender note absolute unconditional present continuing guarantee payment collection guarantor hereby waives acceptance guarantee extent permissible applicable law notices may required given guarantor defenses may available guarantor note hereunder guarantor surety case may wider statute rule law obligation guarantor hereunder liability surety way conditioned contingent upon attempt collect borrower hereunder upon condition contingency shall arise immediately upon nonpayment note without taking prior action proceeding kind enforce note liquidation foreclosure security given note guarantee shall continue full force effect obligations due note hereunder shall paid full shall enforceable despite discharge borrower bankruptcy ii adjustment debts liabilities obligations borrower insolvency proceedings pursuant compromise creditors payment made borrower lender avoided reduced account law relating insolvency liquidation reorganization debtors reason lender successor assignee thereof shall entitled recover full guarantor amount repayment avoided reduced guarantee contains sole entire understanding agreement respect entire subject matter prior negotiations discussions commitments representations agreements understandings heretofore merged herein guarantee cannot changed terminated orally obligations guarantor hereunder shall affected impaired released lessened defense setoff counterclairn borrower guarantor may lender entity invalidity irregularity unenforceability part borrower obligations documents executed borrower guarantor delay failure lender exercise rights remedies borrower collateral security borrower obligations amendment modification guarantee shall effective unless shall writing duly signed behalf entity waiver modification amendment asserted amendment promissory note permitted terms thereof renewal extension modification thereof shall affect impair release guarantee shall freely assignable lender shall bind guarantor personal representatives successors guarantor shall inure benefit lender successors assigns benefit beneficiary agreement heirs personal representatives successors assigns beneficiary guarantor consists one party obligations parties hereunder shall joint several guaranty shall governed construed accordance laws california without giving effect conflicts laws principles cases witness execution guarantee sealed instrument date july 15 1996 syncor international corporation edwin burgos name parent corporation witness print michael e mikity signature authorized officer parent corporation michael mikity vice president chief financial officer name title print exhibit 1018 1997 management incentive plan summary plan description revised 297 1997 management incentive plan purpose 1997 management incentive plan designed support achievement companys profit objectives incentivizing managers directors direct influence accomplishing syncors business objectives 1997 direct influence defined budgetary responsibility major program responsibility sales responsibility overview objectives 1997 management incentive plan follows profit driven based shared andor common goals aligned achievement companys overall business objectives clearly communicated participants measurable criteria support team concepts philosophies addition 1997 plan developed ensure consistency overall company performance earnings per share eps providing equity total incentive opportunity affordability 1997 management incentive plan consists three incentive components based position may eligible one following components management incentive plan 1 local achievement incentive 2 earnings per share eps incentive eps level 1 eps level 2 3 longterm incentive eps incentive longterm incentive subject individual performance achievement please refer individual performance section pages 6 8 details following two pages summarize payment incentive plan components 1 2 determined positions eligible participate components fn payment incentive subject consolidated eps target individual performance achievement please refer following applicable sections details fn payment incentive subject consolidated eps target individual performance achievement please refer following applicable sections details pay components local achievement incentive local achievement incentive assigned pharmacy manager senior pharmacy manager incentive earned targeted profit contribution pharmacyies metro area business unit applicable attained note incentive paid achievement 100 targeted profit contribution team incentive pharmacy managers senior pharmacy managers may opportunity participate local achievement incentive based team performance team either metro area entire business unit pharmacy managers senior pharmacy managers general managers provided information informed decision made either participate individual basis part team teams must submit petition explaining benefits obstacles participating team benefit company order participate team decision submit petition must made majority vote pharmacy managers senior pharmacy managers within metro area business unit selected submit petition participate team majority vote within metro area business unit petition written members team members reviewed petition must vote super majority vote submit petition one petition accepted approved affected managers required sign document indicating agreement participate local achievement incentive team participation elected local achievement incentive calculated stated using combined profit contribution results participating pharmacies applicable general managers budget included calculation decision participate team binding entire 1997 plan year local achievement incentive paid annual basis note days sales outstanding dso impact profit contribution achievement cost money remains line item gross profit line pl ii eps incentive company performance overall company performance must achieved prior payment eps incentives company performance consists two requirements requirement consolidated eps must achieved first consolidated eps target combination following core 60share pet 10share earnings 18share consolidated 68share requirement ii core eps level 1 must achieved eps level 1 payment occur eps level 2 must achieved eps level 2 payment occur explanation provided eps incentive includes two possible incentive payments level 1 company meets targeted eps 60share level 2 company exceeds targeted eps attains 70share percent salary designated eligible employee levels eps achievement 60share 70share calculate eps incentive 60share designated percentage multiplied eligible employees salary calculate eps incentive 70share designated percentage multiplied eligible employees salary add result incentive calculated 60share calculate total eps incentive salary used determine incentive payment salary effect 010197 however employee receives salary change 1997 payment determined based average salary 1997 please refer eligibility chart page 10 local achievement incentive applicable percentage salary payable eps achievement iii longterm incentive longterm incentive designed reward longterm results program directors general mangers executive directors vice presidents officers additional percentage salary designated eps achievement level ie 60share 70share set aside longterm plan long term incentive deferred three years please refer pages 1215 details eligible incentive individual performance two eligibility components used determine individual performance results achieved payment eps incentive longterm incentive 1 financial objectives 2 management objectives mbos individual performance two components used derive individual performance achievement factor multiplied eps incentive amount longterm incentive amount eligible positions determine final payout see financial objectives met 100 severely discounted payout level weighting components individual performance achievement factor follows field managers 1 financial objectives 70 weighting field managers financial objectives measured attainment targeted profit contribution core business bulk included financial objective 70 weighting based combined profit contribution results participating pharmacies pharmacy managers senior pharmacy managers participating plan part team managers participating team individual pharmacy profit contribution results used fn less 90 result credit financial objective 2 mbos 30 weighting field managers determine objectives conjunction direct supervisor based local marketlocation needs threats opportunities etc end plan year supervisor assess managers performance established mbos refer guidelines developing mbos mbo worksheet additional information corporate managers cost center responsibility 1 financial objectives 40 corporate managers financial objectives measured budget attainment budget attainment fn greater 110 result credit financial objective 2 mbos 60 corporate managers determine objectives conjunction direct supervisor based department needs threats opportunities etc end plan year supervisor assess managers performance established mbos refer guidelines developing mbos mbo worksheet additional information corporate managers cost center field responsibility 1 financial objectives 70 corporate managers field responsibility financial objectives measured budget attainment core business bulk included budget attainment fn less 90 result credit financial objective general managers financial objective 70 calculated follows 12 35 based overall budget attainment results general managers business unit applicable pharmacy cost centers plus general managers individual cost center 12 35 based overall budget attainment results general managers area applicable pharmacy cost centers plus applicable general managers cost centers plus applicable areas cost center 2 mbos 30 corporate managers determine objectives conjunction direct supervisor based unitarea needs threats opportunities etc end plan year supervisor assess managers performance established mbos refer guidelines developing mbos mbo worksheet additional information responsibility manager hisher supervisor track performance manager throughout year order simplify tracking process mbo worksheet provided see page 11 required signatures manager immediate supervisor completed mbo worksheets must turned human resources later april 30 1997 end plan year mbos evaluated managers immediate supervisor evaluated mbo worksheets must turned human resources later january 31 1998 eligibility rules governing incentive plan 1 eligible employees must actively employed syncor last day year receive annual payout 2 eligible employees must current performance appraisal rating low successful progressive discipline process time payout employee current performance rating less low successful progressive discipline process heshe must develop performance improvement plan agreed upon employees supervisor improvement plans carried later 60 days original incentive payment date employees supervisor must reevaluate employees performance employee rated low successful time heshe eligible participate incentive plan incentive payment may prorated year based performance issues discretion supervisor approval human resources 3 eligible parttime employees paid partial amount based total number hours worked 1997 employee works least 500 hours year less average 35 hours week employee receive twothirds payment subject rules plan employees work casual basis less 500 hours per year eligible 4 employees must begin employment syncor international corporation october 1 1997 participate incentive plan eligible employees whose first date employment falls january 1 1997 october 1 1997 participate prorated basis employees hire date occurs 15th month credited proration employees hire date occurs 15th month credited proration start month following employees hire date 5 eligible employees change positions locations year participate incentive plan prorated positions locations held employee may incentivized one position time event employee assumes new position time fulfills duties previous position filled incentive payment calculated based new position event new position incentivized incentive calculated based previous position according rules plan time anyone eligible participate management incentive plan based one job classification time prorating rule described number four 4 apply depending change status date 6 payment incentive eligible employees take leave absence reason year considered case basis may result payment incentive 7 circumstances windfall eg sales result realized outside normal influencing role sales representative management right exclude windfall normal incentive calculation 8 payment incentive occur within two months audited calendar year 1997 operating results announced expected incentive payments distributed march 1998 incentive plan described shall mechanism way implement intention management incentive plan shall obligate company management grant benefits contemplated hereunder currently managements intention bets judgment plan carried described however upon happening unforeseen circumstances management reserves right change plan time retroactive beginning 1997 benefits vested coupled interest payment commenced eligibility chart outlined page 4 payment local achievement incentive based 100 achievement targeted profit contribution payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos local achievement incentive percentages salary eps achievement shown listed eligible position fn note position may also participate 1997 sales incentive plan ytd territory incentive target sales territory assigned eligibility chart outlined page 4 payment local achievement incentive based 100 achievement targeted profit contribution payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos local achievement incentive percentages salary eps achievement shown listed eligible position fn note position may also participate 1997 sales incentive plan ytd territory incentive target sales territory assigned eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position fn note position also participates 1997 sales incentive plan ytd unit territory incentive target sales managers territory ytd territory incentive target eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position fn note position also participates 1997 sales incentive plan eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position fn note position also participates 1997 longterm incentive plan eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position fn note position also participates 1997 longterm incentive plan eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position fn note position also participates 1997 longterm incentive plan eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position fn note position also participates 1997 longterm incentive plan eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position fn note position also participates 1997 longterm incentive plan eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position fn note position also participates 1997 longterm incentive plan eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position fn note position also participates 1997 longterm incentive plan eligibility chart outlined pages 4 5 payment eps incentive based company meeting consolidated eps target 68share core eps level 1 60share eps level 2 70share eps incentive also dependent upon individual performance achievement financial objectives mbos percentages salary eps achievement shown listed eligible position fn note position also participates 1997 longterm incentive plan 1997 management incentive plan management objectives mbo worksheet corp managers program directors exec directors corp instructions complete form document 2 5 agreedupon mbos data used determine individual performance achievement percentage calculating payouts eps incentive reminder mbos weighted 60 individual performance achievement total achievement financial objectives weighted 40 please return completed form approval signatures compensationhuman resources department april 30 1997 employee name department assigned achievement 1997 mbos weight1 level2 1 2 3 4 5 total 100 1 assign weight mbo must total 100 2 conclusion plan year determine achievement level mbo total possible objectives 100 approval signatures employee date supervisor date 1997 management incentive plan management objectives mbo worksheet field management corp managers wfield responsibility instructions complete form document 2 5 agreedupon mbos data used determine individual performance achievement percentage calculating payouts eps incentive reminder mbos weighted 30 individual performance achievement total achievement financial objectives weighted 70 please return completed form approval signatures compensationhuman resources department april 30 1997 employee name locationunit assigned achievement 1997 mbos weight1 level2 1 2 3 4 5 total 100 1 assign weight mbo must total 100 2 conclusion plan year determine achievement level mbo total possible objectives 100 long term incentive plan eligibility following employees eligible participate longterm incentive plan program director general manager executive director vice president officer overview longterm incentive plan subject overall company performance shortterm incentive plan longterm calculation part consolidated eps goal reached designated percent salary awarded core level 1 core level 2 performance follows core level 1 60share percentage salary designated based eligible position core achieves 60share determine longterm incentive amount 60share designated percentage salary multiplied salary january 1 1997 applicable average salary 1997 core level 2 70share percentage salary designated based eligible position core achieves 70share determine longterm incentive amount 70share designated percentage salary multiplied salary january 1 1997 applicable average salary 1997 sum results core level 1 core level 2 added together multiplied individual performance achievement factor determine total base longterm incentive amount portion longterm incentive considered earned deferred payment december 31 1999 unless terminate employment prior 123199 longterm calculation part ii longterm overachievement company match overachievement company match component also included longterm incentive plan core eps level achieved company match assigned step 1 core eps level 1 upon achievement level total 1 times base longterm incentive amount designated core eps level 2 upon achievement level total 2 times base longterm incentive amount designated step 2 total overachievement company match dollars designated multiplied 13 amount attributed current years performance deferred payment three 3 year plan completed step 3 end three year plan period base longterm amount added overachievement company match three years final longterm incentive payment amount eligible employee must continuously employed syncor december 31 1999 eligible receive overachievement company match employee leaves syncor december 31 1999 overachievement company match forfeited paid however employee leaves syncor december 31 1997 december 31 1999 heshe eligible receive early payout consisting base longterm incentive amounts amount early payout determined follows please refer page 15 designated percentage salary payable eps achievement longterm incentive plan refer appendix ii longterm incentive overachievement company match sample calculation note longterm incentive plan begins year place may one longterm threeyear plan place time different payout time frames ie 1995 plan extends 1997 1996 plan extends 1998 1997 plan extends 1999 etc longterm incentive plan eligibility chart outlined page 12 payment longterm incentive based company meeting consolidated eps target 68share includes initial calculation based core eps level 1 60share core eps level 2 70share longterm incentive also dependent upon individual performance achievement financial objectives mbos percentages salary level eps performance shown listed eligible position longterm incentive plan eligibility chart outlined page 12 payment longterm incentive based company meeting consolidated eps target 68share includes initial calculation based core eps level 1 60share core eps level 2 70share longterm incentive also dependent upon individual performance achievement financial objectives mbos percentages salary level eps performance shown listed eligible position longterm incentive plan eligibility chart outlined page 12 payment longterm incentive based company meeting consolidated eps target 68share includes initial calculation based core eps level 1 60share core eps level 2 70share longterm incentive also dependent upon individual performance achievement financial objectives mbos percentages salary level eps performance shown listed eligible position longterm incentive plan eligibility chart outlined page 12 payment longterm incentive based company meeting consolidated eps target 68share includes initial calculation based core eps level 1 60share core eps level 2 70share longterm incentive also dependent upon individual performance achievement financial objectives mbos percentages salary level eps performance shown listed eligible position longterm incentive plan eligibility chart outlined page 12 payment longterm incentive based company meeting consolidated eps target 68share includes initial calculation based core eps level 1 60share core eps level 2 70share longterm incentive also dependent upon individual performance achievement financial objectives mbos percentages salary level eps performance shown listed eligible position longterm incentive plan eligibility chart outlined page 12 payment longterm incentive based company meeting consolidated eps target 68share includes initial calculation based core eps level 1 60share core eps level 2 70share longterm incentive also dependent upon individual performance achievement financial objectives mbos percentages salary level eps performance shown listed eligible position longterm incentive plan eligibility chart outlined page 12 payment longterm incentive based company meeting consolidated eps target 68share includes initial calculation based core eps level 1 60share core eps level 2 70share longterm incentive also dependent upon individual performance achievement financial objectives mbos percentages salary level eps performance shown listed eligible position longterm incentive plan eligibility chart outlined page 12 payment longterm incentive based company meeting consolidated eps target 68share includes initial calculation based core eps level 1 60share core eps level 2 70share longterm incentive also dependent upon individual performance achievement financial objectives mbos percentages salary level eps performance shown listed eligible position appendix definitions budget attainment corporate managers cost center responsibility budget established cost center cy97 budget attainment makes 40 managers individual performance achievement percentage budget attainment assesses well employee manages hisher expenses measures actual results verses budget end cy97 results equal budget attainment 100 results exceed budget managers receive partial credit 110 budget corporate managers cost center field responsibility budget established cost center cy97 budget attainment makes 70 mangers individual performance achievement percentage budget attainment determines whether managers individual budget met budgeted profit contribution levels assigned unit area met measures actual results versus budget end cy97 results equal budget attainment 100 results fall short budget managers receive partial credit meeting 90 999 budget deferred applies longterm incentive plan indicates payment delayed specified later date earnings per share eps net income company divided number shares common stock outstanding shown companys annual report shareholders syncors consolidated targeted eps 1997 68share syncors core targeted eps 1997 60share individual performance achievement factor based budget achievement mbo results multiplied eps incentive longterm incentive majority vote 50 team members vote yes management objectives also referred mbos goaloriented method used evaluate performance managers established objectives mbos include three steps 1 establishing goals 2 setting performance standards goal 3 comparing actual goal attainment established goals profit contribution gross profit minus operating expenses controllable noncontrollable example controllable operating expense indirect labor example noncontrollable operating expense depreciation super majority vote 80 team members vote yes appendix ii sample incentive calculations exhibit 1019 office lease page article 1 basic provisions 1 article 2 premises term commencement date 3 article 3 rent 4 31 monthly rent 4 32 additional rent 4 33 rent 4 34 place payment late charge default interest 4 article 4 taxes operating expenses 4 41 payment taxes operating expenses 4 42 property management 7 article 5 landlords work tenants work alterations additions 8 51 landlords work 8 52 tenants work 8 53 alterations 9 54 liens 10 55 compliance ada 10 article 6 use 11 61 use 11 62 restrictions 11 63 compliance laws 11 article 7 services 12 71 climate control 12 72 elevator service 12 73 janitorial services 12 74 water electricity 13 75 separate meters 13 76 interruptions 14 77 utilities provided tenant 14 article 8 insurance 15 81 required insurance 15 82 waiver subrogation 16 83 waiver claims 16 article 9 indemnification 16 91 tenant indemnity landlord 16 92 landlord indemnity tenant 17 93 indemnity limitations 17 94 indemnitees acceptable attorneys 17 95 limitation liability 17 article 10 casualty damage 18 article 11 condemnation 19 article 12 repair maintenance 20 121 tenants obligations 20 122 landlords obligations 20 123 signs obstructions 21 124 outside services 21 article 13 inspection premises 22 article 14 surrender premises 22 article 15 holding 22 article 16 subletting assignment 23 161 landlords consent 23 162 transfers requiring consent 24 163 first offer landlord 24 165 continuing liability voidable transfers 26 166 provisions applicable transfers 26 167 assignment sublease revenues 27 168 transfers subtenants 27 169 assignment options 27 1610 encumbrance 28 article 17 subordination attornment mortgagee protection 28 article 18 estoppel certificate 29 article 19 defaults 29 article 20 remedies 30 article 21 quiet enjoyment 32 article 22 accord satisfaction 32 article 23 security deposit 33 article 24 brokerage commission 34 article 25 force majeure 34 article 26 parking 35 article 27 hazardous materials 36 271 compliance hazardous materials laws 36 272 tenants use hazardous materials 36 273 notices landlord 37 274 indemnifications 38 article 28 additional rights reserved landlord 39 article 29 defined terms 40 article 30 miscellaneous provisions 45 301 rules regulations 45 302 execution lease 45 303 notices 45 304 transfers 45 305 relocation 46 306 tenant financial statements 46 307 relationship parties 46 308 entire agreement merger 46 309 representation landlord 46 3010 limitation liability 46 3011 memorandum lease 47 3012 waivers amendments 47 3013 successors assigns 47 3014 waiver jury trial governing law 47 3015 exhibits 47 3016 captions 47 3017 counterparts 48 exhibits exhibit plan showing property premises exhibit b landlords work letter exhibit c tenants work exhibit buildings rules regulations janitorial specifications exhibit e commencement date confirmation exhibit f right first opportunity purchase exhibit g renewal option mm equity no9501 office lease made september 30 1996 massachusetts mutual life insurance company massachusetts corporation landlord agent cornerstone real estate advisers inc address 1901 avenue stars suite 555 los angeles ca 90067 syncor international corporation delaware corporation tenant principal office 20001 prairie street chatsworth ca 91311 article 1 basic provisions tenants tradename syncor international corporation b tenants address prior commencement date 20001 prairie street chatsworth ca 91311 attention general counsellegal dept commencement date 6464 canoga boulevard woodland hills ca 91367 attention general counsellegal dept c office building name warner business center address 6464 canoga boulevard woodland hills ca 91367 premises entire property described article 1 paragraph c including improvements 106 parking spaces thereon nonexclusive right use 88 unreserved parking spaces parking garage located 21300 victory boulevard woodland hills california offsite parking garage square feet rentable 60967 square feet usable 55243 landlord tenant acknowledge agree foregoing measurements shall deemed conclusive neither party shall entitled adjustment terms lease including without limitation amount monthly rent event measurements prove inaccurate e landlord massachusetts mutual life insurance company f landlords address co cornerstone real estate advisers inc 1901 avenue stars suite 555 los angeles ca 90067 attn asset manager g building manageraddress pm realty group 444 south flower street suite 1700 los angeles ca 90071 h commencement date march 1 1997 provided however landlord shall permit tenant take possession commence operation business premises prior commencement date without payment monthly rent period prior commencement date long period prior commencement date tenant shall obligated perform comply terms covenants conditions obligations tenant hereunder including without limitation maintenance insurance policies ii tenant shall pay operating expenses associated occupancy premises period commencement date expiration date 120 months commencement date provided however landlord receives notice termination notice date 51 months following commencement date notice accompanied payment equal onehalf total amount paid landlord landlords work onehalf amount paid landlord broker connection lease expiration date shall 60 months commencement date j security deposit 8500000 k monthly rent period monthly amount commencement date month 60 8535380 month 61 month 120 9754720 l operating expenses base period time commencing commencement date ending first anniversary date thereof tax base period time commencing commencement date ending first anniversary date thereof n tenants pro rata share 100 normal business hours building monday friday 800 600 pm saturday 800 100 pm p brokers cushman wakefield q parking fee none 194 parking spaces initial lease term prevailing market rates parking spaces excess 194 parking spaces shall made available tenant renewal term prevailing market rates tenant shall exclusive right use 106 parking spaces located property nonexclusive right use 88 additional parking spaces offsite parking spaces located offsite parking garage offsite parking spaces excess 88 may made available landlord extent additional spaces within landlords control tenant prevailing market rates foregoing provisions shall interpreted applied accordance provisions lease set forth capitalized terms defined article 29 hall meanings set forth herein therein unless otherwise modified lease used capitalized terms provisions lease article 2 premises term commencement date landlord hereby leases demises tenant hereby takes leases landlord certain space identified article 1 shown plan attached hereto exhibit premises term commencing commencement date ending expiration date set forth article 1 unless sooner terminated provided herein subject provisions herein contained date shall confirmed execution commencement date confirmation form set forth exhibit e landlord delays delivering possession premises substantial completion landlords work exhibit b lease shall void voidable except provided article 5 landlord shall liability loss damage resulting therefrom article 3 rent 31 monthly rent tenant shall pay monthly rent advance first day month term shall commence end day first day month monthly rent first last partial month shall prorated per diem basis upon execution lease tenant shall pay one installment monthly rent first full month term prorated monthly rent partial month may precede 32 additional rent costs expenses tenant assumes agrees pay sum payable tenant pursuant lease including without limitation share taxes operating expenses shall deemed additional rent 33 rent monthly rent additional rent taxes operating expenses amounts tenant becomes obligated pay landlord lease herein referred collectively rent remedies applicable nonpayment rent shall applicable thereto landlord may apply payments received tenant obligations tenant accrued without regard obligations may designated tenant 34 place payment late charge default interest rent charges required paid lease matter described shall paid tenant landlord building managers address listed article 1 person andor address landlord may designate writing without prior notice demand therefor without deduction setoff counterclaim without relief valuation appraisement laws event tenant fails pay rent due lease landlord shall notify tenant writing nonpayment tenant pay said rent within five 5 days receipt written notice nonpayment tenant shall pay landlord late charge five percent 5 amount overdue article 4 taxes operating expenses 41 payment taxes operating expenses agreed lease year beginning first anniversary commencement date month thereafter original lease term extension thereof tenant shall pay landlord additional rent time monthly rent paid amount equal onetwelfth 112 landlords estimate determined landlord reasonable discretion tenants pro rata share projected increase taxes operating expenses particular lease year excess tax base operating expenses base case may estimated escalation increase final adjustment escalation reconciliation made parties soon practicable following end lease year event later ninety 90 days end lease year computing estimated escalation increase particular lease year landlord shall take account prior increases tenants pro rata share taxes operating expenses lease year estimated escalation increase less estimated escalation increase previous lease year tenants share taxes operating expenses based said year additional rent payments attributable estimated escalation increase paid tenant new lease year shall decreased accordingly provided however event rent paid tenant hereunder ever less monthly rent plus amounts additional rent soon practicable following end lease year landlord shall submit tenant statement setting forth estimated escalation increase beginning said statement second lease year shall also set forth escalation reconciliation lease year completed extent operating expense escalation different estimated escalation increase upon tenant paid rent lease year completed tenant shall pay landlord difference cash within thirty 30 days following receipt tenant statement landlord receive credit future rent owing hereunder cash future rent owing hereunder within thirty 30 days following receipt tenant statement case may tenant receives statement tenants rent new lease year shall continue paid rate paid particular lease year completed tenant shall commence payment landlord monthly installment additional rent basis said statement beginning first day month following month tenant receives statement addition particular lease year material change information landlord based estimate upon tenant making estimated payment taxes operating expenses estimated escalation increase furnished tenant longer accurate landlord shall revise estimated escalation increase notifying tenant shall adjustments made additional rent first day month following serving statement tenant shall necessary either increasing decreasing case may amount additional rent paid tenant balance lease year event shall decrease result reduction rent monthly rent plus amounts additional rent landlords tenants responsibilities respect tax operating expense adjustments described herein shall survive expiration early termination lease notwithstanding foregoing tenant shall obligated pay increases individual components operating expenses extent components controllable landlord excluding eg utilities insurance compliance governmental regulations etc ii increase exceeds 6 per annum cumulative basis b event property sold landlords ownership interest property way transferred tenant shall obligated pay remainder initial lease term percentage increase taxes resulting sale transfer percentage shall determined based upon lease year sale transfer occurs follows time sale transfer tenant responsible pay first lease year 0 second lease year 20 increase third lease year 40 increase fourth lease year 60 increase fifth lease year 80 increase thereafter 100 increase c disputes taxes operating expenses tenant disputes amount adjustment proposed estimated increase decrease taxes operating expenses tenant shall give landlord written notice dispute within thirty 30 days landlord advises tenant adjustment proposed increase decrease tenants failure give notice shall waive right dispute amounts determined tenant timely objects tenant shall right engage internal external accountants tenants accountants purpose verifying accuracy statement dispute reasonableness adjustment estimated increase decrease tenants accountants determine error made landlord tenants accountants shall endeavor agree upon matter failing landlord tenants accountants shall jointly select independent certified public accounting firm independent accountant firm shall conclusively determine whether adjustment estimated increase decrease reasonable amount reasonable parties shall bound determination tenants accountants participate choosing independent accountant within 20 days notice landlord landlords determination adjustment estimated increase decrease shall conclusively determined reasonable tenant shall bound thereby costs incurred tenant obtaining tenants accountants cost independent accountant shall paid tenant unless tenants accountants disclose error acknowledged landlord found conclusively occurred independent accountant ten percent 10 computation total amount taxes operating expenses set forth statement submitted landlord respect matter dispute event landlord shall pay reasonable costs incurred tenant obtaining audits tenant shall continue timely pay landlord amount prior years adjustment adjusted additional rent determined incorrect aforesaid parties concurred appropriate adjustment deemed bound determination independent accountant accordance preceding terms landlords delay submitting statement contemplated herein lease year shall affect provisions paragraph constitute waiver landlords rights set forth herein said lease year subsequent lease years lease term extensions thereof 42 property management times lease term landlord shall cause building managed operated professional property manager manner consistent comparable first class office buildings immediate vicinity building event property manager fails time manage operate building manner tenant may require tenants reasonable discretion landlord terminate respective management agreement replace current property manager another professional property manager landlords choice within sixty 60 days landlords receipt written notice tenant foregoing right may exercised tenant time base year ii frequently per lease year iii three 3 times initial lease term iv twice renewal term defined exhibit g attached hereto article 5 landlords work tenants work alterations additions 51 landlords work landlord shall construct premises accordance landlords obligations set forth work letter attached hereto exhibit b hereinafter referred landlords work landlord deliver premises tenant landlords work completed except minor nonmaterial punch list items landlords reasonable judgment delay completion tenants work defined subparagraph b article date specified exhibit b tenant agrees thereupon commence complete tenants work commencement date landlord delayed completing landlords work strike shortages labor materials delivery delays matters beyond reasonable control landlord shall give notice thereof tenant date landlord turn premises tenant tenants work commencement date shall postponed equal number days delay set forth notice providing however delays exceed one hundred twenty 120 days either landlord tenant upon notice within ten 10 days said 120th day delays shall right terminate lease without liability either party commencement date postponed aforesaid tenant agrees upon request landlord execute writing confirming commencement date form set forth exhibit e attached hereto 52 tenants work date specified immediately preceding subparagraph delivery premises tenant tenants work tenant sole cost expense except moving allowance expenses provided work letter shall perform complete improvements premises herein called tenants work including limited improvements work requirements required tenant foregoing work letter tenant shall complete tenants work good workmanlike manner fully paid free liens accordance plans specifications approved landlord tenant provided exhibit c prior scheduled commencement date tenant shall also right period come onto premises install fixtures prepare premises operation tenants business notwithstanding fact foregoing activities tenant occur prior scheduled commencement date tenant agrees tenants obligations provided lease shall apply period exception obligation pay rent 53 alterations tenant may time term lease sole cost expense make alterations additions installations substitutions improvements decorations hereinafter collectively called changes premises excluding structural changes following conditions provided changes result violation require change certificate occupancy laws applicable premises 531 outside appearance character use building shall affected changes shall weaken impair structural strength opinion landlord lessen value building create potential unusual expenses incurred upon removal said changes restoration premises upon termination lease 532 proper functioning mechanical electrical sanitary service systems installations building service facilities shall adversely affected shall construction might unreasonably interfere landlords reasonable access service facilities unreasonably interfere moving landlords equipment enclosures containing service facilities 533 aggregate cost changes shall exceed 10000 per occurrence tenant shall complete changes costing excess 25000 lease year 534 changes performance thereof shall times comply laws rules orders ordinances directions regulations requirements governmental authorities agencies offices departments bureaus boards jurisdiction thereof tenant shall cause changes performed compliance therewith good first class workmanlike manner throughout performance changes tenant expense shall carry cause carried workmens compensation insurance statutory limits general liability insurance occurrence building landlord managing agent shall named parties insured limits landlord may reasonably prescribe insurers reasonably satisfactory landlord tenant shall furnish landlord reasonably satisfactory evidence insurance effect commencement changes request reasonable intervals thereafter continuance changes 535 work shall done manner landlord time may designate shall meet exceed standards materials construction procedures set forth landlord 546 tenant shall permitted install make part premises materials fixtures articles subject liens conditional sales contracts chattel mortgages 537 date upon term lease shall end upon date earlier termination lease tenant shall upon written notice landlord restore premises condition prior making changes permitted paragraph reasonable wear tear excepted except provided tenant shall make changes premises building without prior written consent landlord consent landlord may grant withhold reasonable discretion landlords consent required shall specify whether tenant shall required restore premises condition prior making change termination lease 54 liens tenant shall give landlord least ten 10 days prior written notice additional time may necessary applicable laws commencement tenants work changes afford landlord opportunity posting recording notices nonresponsibility tenant cause permit mechanics materialmans similar liens encumbrances filed exist premises building tenants interest lease connection work done article connection work tenant shall remove lien encumbrance bond otherwise within twenty 20 days date existence tenant fails landlord may pay amount take action landlord deems necessary remove lien encumbrance without responsible investigate validity thereof amounts paid costs incurred landlord shall deemed additional rent lease payable full upon demand 55 compliance ada notwithstanding anything contrary contained lease landlord tenant agree responsibility compliance americans disabilities act 1990 ada shall allocated follows landlord shall responsible compliance provisions title iii ada prior commencement date including exterior interior areas building included within premises ii tenant shall responsible compliance provisions title iii ada commencement date notwithstanding foregoing extent tenant required make expenditures capital improvements order comply title iii ada commencement date cost improvements shall paid landlord amortized straight line basis landlord useful life capital improvement reasonably determined landlord bearing interest unamortized balance rate ten percent 10 per annum tenant shall reimburse landlord additional rent payable monthly advance monthly rent amortized amount article 6 use 61 use tenant shall use premises general office purposes operation radio pharmacy lab purpose whatsoever subject compliance provisions lease including without limitation buildings rules regulations attached exhibit hereto 62 restrictions tenant shall time use occupy suffer permit anyone use occupy premises permit anything done premises causes liable cause injury persons building equipment facilities systems b impairs tends impair character reputation appearance building first class office building c impairs tends impair proper economic maintenance operation repair building equipment facilities systems 63 compliance laws tenant shall keep maintain premises use thereof business compliance governmental laws ordinances rules regulations tenant shall comply laws relating premises tenants use thereof including without limitation laws connection health safety building codes permit license requirements landlord shall responsible remedy condition causes building comply laws commencement date landlord makes representation premises suitable tenants purposes article 7 services 71 climate control landlord shall furnish heat air conditioning premises normal business hours building set forth article 1 24 hours per day respect computer room training laboratory form part premises required landlords reasonable judgment comfortable use occupation premises tenant requires heat air conditioning time landlord shall use reasonable efforts furnish service upon reasonable notice tenant shall pay landlords charges therefor demand landlords actual cost performance landlord obligations article subject tenants compliance terms lease including connected electrical load established landlord tenant shall use premises part thereof manner exceeding heating ventilating airconditioning hvac design conditions including occupancy connected electrical load conditions including rearrangement partitioning may interfere normal operation hvac equipment use computer data processing machines equipment excess normally required standard office use premises use requires changes hvac plumbing systems controls servicing premises portions thereof order provide comfortable occupancy changes may made landlord tenants expense tenant agrees promptly pay amount landlord additional rent landlord tenant acknowledge agree new hvac system installed building part landlords work type quality system selected based upon tenants estimated needs 72 elevator service landlord shall furnish elevator service tenant normal business hours building least one elevator shall remain service twentyfour hours day 365 days year landlord may designate specific elevator use service elevator 73 janitorial services landlord shall provide janitorial cleaning services premises substantially described exhibit attached hereto tenant shall pay landlord demand reasonable costs incurred landlord cleaning premises excess specifications exhibit reason including without limitation cleaning required misuse neglect part tenant tenants agents contractors invitees employees customers b use portions premises special purposes requiring greater difficult cleaning work office areas c interior glass partitions unusual quantities interior glass surfaces ii removal premises refuse rubbish tenant excess ordinarily accumulated general office occupancy times landlords standard cleaning times 74 water electricity landlord shall make available domestic water reasonable quantities building premises designated exhibit b cause electric service sufficient lighting premises operation ordinary office equipment ordinary office equipment shall mean office equipment wired 120 volt electric service rated using less 6 amperes 750 watts electric current office equipment approved landlord writing landlord shall exclusive right make replacement lamps fluorescent tubes lamp ballasts premises landlord may adopt system relamping ballast replacement periodically group basis accordance good management practice tenants use electric energy premises shall time exceed capacity risers piping electrical conductors equipment serving premises order insure capacity exceeded avert possible adverse effect upon buildings electric system tenant shall without landlords prior written consent instance connect appliances heavy duty equipment ordinary office equipment buildings electric system make alteration addition buildings electric system landlord grant consent writing additional risers piping electrical conductors equipment therefor shall provided landlord cost thereof shall paid tenant within 10 days landlords demand therefor condition granting consent landlord may require tenant agree increase monthly rent offset expected cost landlord additional service cost additional electric energy made available tenant based upon estimated additional capacity additional risers piping electrical conductors equipment landlord tenant cannot agree thereon cost shall determined independent electrical engineer selected landlord paid equally parties 75 separate meters portion premises designated computer room training laboratory shall separately metered respect electric utility service shall include without limitation use heat air conditioning tenant shall responsible direct payment utility company charges associated separate meters 76 interruptions landlord warrant services referred services landlord may supply free interruption tenant acknowledges one services may suspended reason accident repairs inspections alterations improvements necessary made strikes lockouts reason operation law causes beyond reasonable control landlord interruption discontinuance service shall deemed eviction disturbance tenants use possession premises part thereof render landlord liable tenant damages abatement rent otherwise relieve tenant performance tenants obligations lease landlord shall however exercise reasonable diligence restore service interrupted notwithstanding foregoing event landlord fails furnish foregoing result landlords action inaction result thereof tenants use premises impaired period four 4 consecutive business days ii eight 8 nonconsecutive business days thirty 30 consecutive day period landlords receipt written notice failure tenant monthly rent per diem basis shall abated pro rata basis based upon ratio equal portion premises actually impaired total rentable square footage premises amount equal number days period service restored 77 utilities provided tenant shall make application tenants name utilities provided landlord shall comply utility company regulations utilities including requirements installation meters ii obtain utilities directly pay due directly applicable utility company term utilities purposes hereof shall include limited electricity gas water sewer steam fire protection telephone communication alarm services well hvac taxes charges thereon tenant shall install connect equipment lines required supply utilities extent already available serving premises landlords option shall repair alter replace existing items tenant shall maintain repair replace items operate keep good working order condition tenant shall install equipment fixtures use exceed safe lawful capacity utility equipment lines serving installation alteration replacement connection utility equipment lines shall subject requirements alterations premises set forth article 5 tenant shall ensure tenants hvac equipment installed operated times manner prevent roof leaks damage noise due vibrations improper installation maintenance operation article 8 insurance 81 required insurance tenant shall maintain insurance policies responsible companies licensed business state building located satisfactory landlord cost expense including risk property insurance shall primary lease improvements referenced article 5 tenants personal property including goods equipment inventory amount adequate cover replacement cost naming landlord landlords building manager cornerstone real estate advisers inc mortgagee landlord respective interests may appear loss payees respect proceeds thereunder relating solely value tenants personal property including goods equipment inventory ii comprehensive general liability insurance occurrence basis limits liability amount less 1000000 one million dollars combined single limit occurrence naming landlord landlords building manager cornerstone real estate advisers inc tenant mortgagee landlord respective interests may appear additional insureds comprehensive general liability policy shall include contractual liability includes provisions article 9 herein commencement date lease tenant shall furnish landlord building manager certificates insurance evidencing aforesaid insurance coverage including naming landlord cornerstone real estate advisers inc landlords building manager additional insureds renewal certificates must furnished landlord least thirty 30 days prior expiration date insurance policies showing coverage full force effect insurance shall provide cannot canceled except upon thirty 30 days prior written notice landlord tenant shall comply reasonable rules directives insurance board company agency determining rates hazard coverage premises including limited installation equipment andor correction condition within tenants control necessary prevent increase rates notwithstanding foregoing extent required expenditures capital nature expenditures shall amortized straight line basis landlord useful life capital improvement reasonably determined landlord bearing interest unamortized balance rate ten percent 10 per annum tenant shall pay landlord additional rent payable monthly advance monthly rent amortized amount extent cost reductions andor cost savings caused thereby 82 waiver subrogation landlord tenant agree neither landlord tenant claim loss damage injury covered insurance carried either party recovery insurer made notwithstanding negligence either party causing loss release shall valid insurance policy question permits waiver subrogation insurer agrees writing waiver subrogation affect coverage said policy party agrees use best efforts obtain agreement insurer policy expressly permit waiver subrogation 83 waiver claims except claims arising landlords gross negligence willful misconduct covered tenants insurance required hereunder tenant waives claims landlord injury death persons damage property interest tenant sustained tenant party claiming tenant resulting occurrence upon premises ii leaking roofs bursting stoppage leaking water gas sewer steam pipes equipment including sprinklers iii wind rain snow ice flooding freezing fire explosion earthquake excessive heat cold casualty iv building premises operating mechanical systems equipment building defective failing v vandalism malicious mischief theft acts omissions parties including without limitation contractors invitees building tenant agrees tenants property loss risks shall borne insurance tenant agrees look solely seek recovery insurance carriers event losses purposes hereof deductible amount shall treated though recoverable policies article 9 indemnification 91 tenant indemnity landlord tenant shall defend indemnify hold landlord agents successors assigns including building manager harmless claims causes action liabilities losses costs expenses arising connection injury damage person property occurring lease term connection tenants occupancy premises occurs portion building except extent caused gross negligence willful misconduct landlord employee agent landlord b occurs portion property outside building caused gross negligence willful misconduct tenant employee agent tenant c arising result breach tenant observance performance terms covenants conditions lease tenants part observed performed indemnification shall survive expiration termination lease term 92 landlord indemnity tenant landlord shall defend indemnify hold tenant harmless claims causes action liabilities losses costs expenses arising connection injury damage person property occurs portion property outside building except extent caused gross negligence willful misconduct tenant employee agent tenant b resulting gross negligence willful misconduct landlord c arising result breach landlord observance performance terms covenants conditions lease landlords part observed performed 93 indemnity limitations indemnity obligations set forth sections b shall apply costs expenses reasonably incurred indemnitee b claims causes action liabilities losses costs expenses resulting default indemnitee hereunder 94 indemnitees acceptable attorneys whenever article throughout lease landlord tenant required defend indemnify hold harmless obligations shall extend successors assigns officers partners directors employees agents indemnitee instance lease requires either party defend defense shall involve attorney attorneys reasonably acceptable indemnitee 95 limitation liability landlord shall liable tenant damage act negligence cotenant occupant building owner occupants adjoining contiguous property landlord shall liable injury damage persons property resulting whole part criminal activities wilful misconduct others extent covered risk property insurance tenant agrees pay damage building well damage persons property occupants thereof caused negligence fraud willful misconduct tenant agents contractors employees customers invitees nothing contained herein shall construed relieve landlord liability personal injury resulting gross negligence fraud willful misconduct article 10 casualty damage tenant shall promptly notify landlord building manager fire casualty premises extent knows damage building event premises substantial part building wholly partially damaged destroyed fire casualty covered landlords insurance landlord proceed restore substantially condition existing immediately prior damage destruction unless damage destruction incapable repair restoration within one hundred eighty 180 days ii occurs final 18 months lease term event landlord may landlords option written notice given tenant within fortyfive 45 days damage destruction declare lease terminated happening damage destruction provided however respect termination landlord result casualty final 18 months lease term tenant shall given opportunity exercise option renew lease term exercised lease shall terminate landlords sole opinion net insurance proceeds recovered reason damage destruction adequate complete restoration building landlord shall right terminate lease unaccrued obligations parties hereto sending notice termination tenant extent fire casualty tenant shall deprived use occupancy premises portion thereof result damage destruction repair thereof providing fire casualty intentionally caused tenant agents employees tenant shall relieved ratable portion monthly rent hereunder amount damaged useless space premises bears rentable square footage premises time premises may restored landlord shall reasonably determine amount damaged useless space square footage premises referenced prior sentence landlord attempts restore repair premises fails within 180 days occurrence said casualty 180 day period shall extended dayforday day tenant caused delays ii sixty 60 days day force majeure caused delays defined article 25 longer period landlord reasonably estimates notice delivered tenant within 45 days occurrence casualty tenant may terminate lease giving written notice thereof landlord within ten 10 business days tenants receipt written notice landlord stating landlord failed complete restoration repair within said 180 day period may extended provided setting forth landlords reasonable estimate date restoration repair completed addition event casualty substantially impairs tenants use enjoyment premises cannot restored repaired within 180 days occurrence casualty reasonably determined landlord written notice shall delivered tenant within fortyfive 45 days occurrence casualty notice shall also set forth landlords reasonable estimate restoration repairs could completed ii occurs final eighteen 18 months lease term provided tenant exercised option renew said term tenant may elect terminate lease long casualty intentionally caused tenant agents employees delivering written notice landlord within fortyfive 45 days date landlord notifies tenant inability repair restore premises within said 180 period within thirty 30 days occurrence casualty event occurrence final 18 months lease term event neither landlord tenant elected terminate lease provided landlord shall use commercially reasonable efforts cause premises repaired restored promptly occurrence said casualty article 11 condemnation event condemnation taking entire premises public quasipublic authority lease shall terminate date title vests public quasipublic authority event taking condemnation substantially impairs tenants use enjoyment premises without regard whether premises part taking condemnation landlord tenant may elect terminate lease giving notice within sixty 60 days receiving notice condemnation compensation awarded condemnation shall property landlord whether damages shall awarded compensation diminution value leasehold fee premises tenant hereby assigns landlord tenants right title interest compensation providing however event lease terminated tenant shall entitled make separate claim taking tenants personal property including fixtures paid tenant portion costs tenant improvements actually paid tenant costs moving additional portion award shall belong landlord event taking condemnation result termination lease tenant deprived use occupancy premises portion thereof tenant shall relieved ratable portion monthly rent payable hereunder amount space taken condemned bears rentable square footage premises time premises may restored article 12 repair maintenance 121 tenants obligations tenant shall keep premises good working order repair compliance laws hereafter adopted condition shall neat clean sanitary free pests rodents shall make necessary nonstructural repairs thereto excluding however repairs building mechanical hvac electrical plumbing systems components serving premises tenants obligations hereunder shall include limited tenants trade fixtures equipment security systems signs interior decorations floorcoverings wallcoverings entry interior doors interior glass light fixtures bulbs keys locks alterations premises whether installed tenant landlord 122 landlords obligations landlord shall make necessary structural repairs building necessary repairs building standard mechanical hvac electrical plumbing systems servicing premises cost shall included operating expenses article 4 excluding repairs required made tenant pursuant article landlord shall responsibility make repairs unless landlord receives written notice need repair landlord shall liable failure make repairs perform maintenance unless failure shall persist unreasonable time written notice need repairs maintenance received landlord tenant landlord shall make every reasonable effort perform repairs maintenance manner judgment cause minimum interference tenant premises landlord shall liable tenant interruption loss business pertaining activities landlord shall right require damage caused willful misconduct tenant tenants agents contractors employees invitees customers paid performed tenant without limiting landlords remedies herein 123 signs obstructions tenant sole cost expense shall permitted subject terms hereof place name tenant certain signage building monument outside building signs tenant shall provide landlord plans specifications respect location installation letter size letter type color signs hereinafter collectively called plans upon receipt said information landlord reasonable judgement shall approve disapprove said plans approved tenant shall notify landlord subcontractors involved signs installation said subcontractors shall work conjunction landlords building personnel properly install signs electrical service required signs provided landlord service charges electrical service repairs shall paid tenant upon written notice landlord costs expenses associated signs shall paid tenant shall hold landlord harmless liability regarding signs landlord disapprove plans tenant shall work landlord provide acceptable signage alternatives disapproval plans landlord shall way serve terminate lease place liability landlord rescind right tenant place sign building monument outside building contemplated provision tenant shall tenants sole cost expense remove signs prior expiration lease term shall return respective portion building premises original condition repair ordinary wear tear excepted 124 outside services tenant shall permit except landlord person company reasonably satisfactory approved landlord extermination vermin premises ii servicing heating ventilating air conditioning equipment iii collection rubbish trash compliance local government health requirements accordance rules regulations established landlord shall minimally provide tenants rubbish trash shall kept containers located visible members public sanitary neat condition iv window cleaning janitorial services similar work premises article 13 inspection premises tenant shall permit landlord building manager authorized representatives enter premises show premises normal business hours building reasonable times inspect premises make repairs improvements alterations additions premises building part landlord may deem necessary appropriate article 14 surrender premises upon expiration term sooner termination lease tenant shall quit surrender landlord premises broom clean good order condition normal wear tear damage fire casualty excepted leasehold improvements fixtures light fixtures hvac equipment wall coverings carpeting drapes excluding tenants trade fixtures removable personal property serving premises whether installed tenant landlord shall landlords property shall remain without compensation allowance credit tenant property removed shall deemed abandoned tenant may retained disposed landlord tenants expense free claims tenant landlord shall desire property removed premises tenant may handled stored landlord tenants expense landlord shall liable value preservation safekeeping thereof landlords option part property may conclusively deemed conveyed tenant landlord bill sale without payment landlord tenant hereby waives maximum extent allowable benefit laws hereafter force state elsewhere exempting property liability rent debt article 15 holding tenant shall pay landlord 125 amount rent applicable prorated per diem basis day tenant shall retain possession premises part thereof expiration earlier termination lease together damages sustained landlord account thereof foregoing provisions shall serve permission tenant holdover serve extend term although tenant shall remain bound comply provisions lease tenant vacates premises landlord shall right time thereafter enter possess premises remove property persons therefrom article 16 subletting assignment 161 landlords consent tenant shall assign interests hereunder sublease portion premises allow person use occupy portion premises without prior written consent landlord shall unreasonably withheld except landlord shall circumstances obligated consent assignment subletting tenant operation law b person fails meet reasonable criteria landlord tenant required meet prior execution lease including without limitation following financial strength proposed assignee subtenant terms net worth terms reasonably anticipated cash flow lease term reasonably acceptable landlord ii proposed assignee subtenant intends make substantial alterations premises would landlords reasonable judgment result material net decrease value premises improved iii basis landlord reasonably refuse withhold consent proposed assignment sublease including failure proposed assignee subtenant meet reasonable criteria landlord tenant required meet prior execution lease respect proposed assignment subleasing requiring landlords consent tenant shall submit landlord writing least 60 days prior effective date assignment sublease notice application assign sublease setting forth proposed effective date shall less 60 90 days delivery notice ii name proposed transferee iii nature proposed transferees business carried premises iv terms proposed sublease assignment v current financial statement proposed transferee tenant shall submit application landlord tenant received bona fide offer proposed transferee tenant shall furnish landlord addition foregoing information reasonably required landlord respect transfer transferee transfer sequence transfers resulting aggregate transfer 50 beneficial ownership tenant shall constitute assignment purposes article 162 transfers requiring consent notwithstanding foregoing landlords consent shall required respect 1 assignment resulting consolidation merger purchase substantially tenants assets 2 assignment sublease person wholly owns tenant wholly owns person wholly owns tenant either case parent wholly owned tenant parent wholly owned person wholly owned tenant parent b whose financial strength terms net worth terms reasonably anticipated cash flow lease term materially less tenants financial strength time lease executed time assignment sublease whichever greater respect assignment subletting landlords consent required following provisions shall apply give landlord written notice assignment subletting less 45 days prior effective date thereof notice shall set forth identity proposed transferee reasons landlords consent required nature proposed transferees business carried premises ii tenant shall furnish landlord less 30 days prior effective date assignment subletting current financial statement proposed transferee reasonably acceptable landlord ii within 3 days following landlords demand information reasonably requested landlord respect transferee assignment subletting landlords consent required respect provisions paragraph complied shall landlords option void 163 first offer landlord tenant shall assign lease sublet portion premises except described section 162 unless tenant first offered writing enter assignment sublease landlord 6 months earlier terms materially less favorable offered applicable third party landlord shall deemed rejected offer unless landlord accepts writing 10th business day thereafter event landlord accepts offer provisions section 164 shall apply extent tenant entered assignment sublease third party 164 net revenues sublease revenues event tenant subleases portion premises total amounts payable tenant month sublease exceeds total amounts payable landlord hereunder month space following shall apply excess net sublease revenues sublease revenues shall first paid tenant extent applicable monthly portion calculated amortizing cost straightline basis term applicable sublease 1 amount monthly rent additional rent paid tenant including net sublease revenues space period since tenant vacated provided landlord written notice vacation date subtenant required commence paying rent exceeds amounts payable tenant previous subleases space period 2 brokerage commissions reasonably incurred tenant connection subleases 3 improvement allowances economic concessions space planning allowances moving allowances etc paid subtenants ii additional net sublease revenues received tenant month shall paid landlord within 5 business days thereafter b assignment revenues event tenant assigns lease respect portion premises assigned premises tenant shall pay landlord amount amounts paid tenant consideration assignment exceed sum monthly rent additional rent paid tenant assigned premises period date tenant vacated provided landlord written notice vacation effective date assignment ii brokerage commissions reasonably incurred assigning tenant connection assignment iii improvement allowances economic concessions space planning allowances moving allowances etc paid assignees 165 continuing liability voidable transfers assignment lease assignment landlord resulting landlords first offer right subletting portion premises shall release tenant guarantor respect posttransfer obligations unless landlord agrees otherwise writing absolute discretion assignment sublease shall landlords option void event tenant guarantor expressly acknowledge affirm continuing liability form substance reasonably satisfactory landlord continuing liability assigning tenant shall primary landlord shall entitled exercise rights remedies assignor respect tenant default without exhausting rights remedies successor assignor event ever held notwithstanding contrary intention parties hereto assignors continuing liability guarantor rather primary tenant hereby waives suretyship rights defenses would otherwise entitled connection continuing liability notwithstanding foregoing event following assignment described section b landlord assignee modify lease way increase tenants total obligations hereunder neither assigning tenant guarantor whose guaranty predated assignment shall liable incremental portion tenants obligations corresponding increase acceptance assignment assignee shall automatically constitute assumption assignee obligations tenant respect assigned premises accrue following assignment provided however assignment lease shall landlords option void event assignee expressly acknowledge affirm effectiveness foregoing assumption form substance reasonably satisfactory landlord assignment subletting tenant landlords consent required obtained shall landlords option void following landlords consent refusal consent assignment sublease tenant shall pay landlord upon demand reasonable charge exceed 100000 cover landlords administrative outofpocket costs connection therewith 166 provisions applicable transfers assignment subletting shall deemed modify provision lease respect permitted restricted uses premises otherwise unless landlord agrees otherwise writing absolute discretion tenant shall promptly furnish landlord copy executed assignment sublease copies supplements modifications thereto may executed time 167 assignment sublease revenues tenant hereby absolutely assigns landlord tenants right title interest revenues sublease portion premises provided however landlord hereby grants tenant license shall remain effect long tenant default remains uncured collect revenues subject tenants obligation deliver certain revenues landlord article upon occurrence tenant default landlord may revoke license written notice tenant may written notice subtenant tenant demand subtenant pay revenues directly landlord event tenant hereby irrevocably authorizes directs subtenant pay revenues landlord agrees subtenant shall obligated entitled pay revenues landlord notwithstanding contrary contentions instructions later received tenant b subtenant shall liability tenant revenues paid landlord accordance foregoing landlord shall entitled use enjoy revenues except purpose applying revenues unfulfilled obligations tenant hereunder respect applicable cure periods expired reimburse landlord costs reasonably incurred result tenant default compensate landlord losses suffered landlord result tenant default revenues remaining landlords possession following cure tenant defaults reimbursement costs losses shall delivered tenant upon demand notice subtenant receipt revenues subtenant shall deemed constitute either landlords consent sublease ii assumption landlord obligation tenant sublease shall notice receipt create privity contract landlord applicable subtenant construed nondisturbance similar agreement landlord subtenant 168 transfers subtenants provisions article shall also apply assignments subleases subtenants subsubtenants 169 assignment options without limiting generality provision lease states option right tenant personal original tenant hereunder may assigned certain conditions option similar right tenant hereunder including without limitation option extend renew option expand first offer first refusal right first right lease may assigned attempt assign right shall null void 1610 encumbrance tenant shall assign interests hereunder security obligation without landlords prior written consent may withheld landlords absolute discretion assignment without consent shall landlords option void article 17 subordination attornment mortgagee protection lease subject subordinate mortgages hereafter subject landlords efforts use reasonable efforts obtain nondisturbance agreement favor tenant commercially reasonable form placed upon building encumbrances matters public record applicable building including without limitation reciprocal easement operating agreements covenants conditions restrictions tenant shall act permit premises operated violation thereof foreclosure power sale proceedings initiated lender deed lieu granted ground lease terminated tenant agrees upon written request lender purchaser foreclosure sale attorn pay rent party execute deliver instruments necessary appropriate evidence effectuate attornment event attornment lender shall liable act omission landlord subject offsets defenses tenant might landlord prior lender becoming landlord attornment ii liable security deposit bound prepaid rent actually received lender iii bound future modification lease consented lender may elect make lease prior lien mortgage lender prior mortgage shall require lease shall prior subordinate mortgage elections shall effective upon written notice tenant agrees give lender certified mail return receipt requested copy notice default served tenant upon landlord provided prior notice tenant notified writing way service tenant copy assignment leases otherwise name address lender tenant agrees landlord shall failed cure default within time permitted landlord cure lease lender whose address provided tenant shall additional period thirty 30 days cure additional time may required due causes beyond lenders control including time obtain possession building power sale judicial action deed lieu foreclosure provisions article shall selfoperative however tenant shall execute documentation landlord lender may request time order confirm matters set forth article recordable form extent expressly prohibited law tenant waives provisions law hereafter adopted may give purport give tenant right election terminate otherwise adversely affect lease tenants obligations hereunder foreclosure power sale proceedings initiated prosecuted completed landlord represents warrants time lease mortgages encumbering building article 18 estoppel certificate tenant shall time upon written request landlord lender deliver landlord lender within ten 10 days receipt request statement writing certifying lease unmodified full force effect modifications identifying modifications certifying lease modified full force effect ii dates rent paid iii tenants knowledge landlord default provision lease landlord default specifying default iv address notices tenant shall sent understood statement delivered may relied upon connection lease mortgage transfer tenants failure deliver statement within time shall conclusive upon tenant lease full force effect modified except landlord may represent ii one months rent paid advance iii defaults landlord iv notices tenant shall sent tenants address set forth article 1 lease notwithstanding presumptions article tenant shall relieved obligation deliver said statement article 19 defaults tenant fails pay due installment payment rent keep effect insurance required maintained ii becomes insolvent makes assignment benefit creditors files voluntary bankruptcy involuntary petition bankruptcy filed tenant petition dismissed within ninety 90 days filing iii fails perform observe covenants conditions agreements contained herein tenants part kept performed failure shall continue thirty 30 days notice thereof given behalf landlord iv interest tenant shall offered sale sold execution legal process tenant makes transfer assignment conveyance sale pledge disposition substantial portion tenants property event conduct shall constitute default hereunder tenant shall file voluntary petition pursuant united states bankruptcy reform act 1978 may time amended bankruptcy code take benefit insolvency act dissolved involuntary petition filed tenant pursuant bankruptcy code said petition dismissed within thirty 30 days filing receiver shall appointed business assets appointment receiver vacated within thirty 30 days appointment shall make assignment benefit creditors landlord shall rights provided event nonpayment rent alleged default part landlord hereunder occurs tenant shall give written notice landlord manner herein set forth shall afford landlord reasonable opportunity cure default addition tenant shall send notice default certified registered mail postage prepaid holder mortgage whose address tenant notified writing shall afford mortgage holder reasonable opportunity cure alleged default landlords behalf event landlord responsible damages incurred tenant including limited lost profits interruption business result alleged default landlord hereunder article 20 remedies upon occurrence default tenant addition rights provided landlord law equity breach lease tenancy tenant landlord shall right pursue one following remedies landlord may terminate lease written notice tenant following termination may enter take possession premises remove tenant person occupying premises arrangement tenant may recover tenant following worth time award unpaid rent earned time termination ii worth time award amount unpaid rent would earned following termination time award exceeds amount rental loss tenant proves could reasonably avoided iiithe worth time award amount unpaid rent balance term time award exceeds amount rental loss tenant proves could reasonably avoided iv amounts necessary compensate landlord detriment proximately caused tenants defaults lease ordinary course things would likely result therefrom including brokerage commissions advertising expenses remodeling expenses concessions new tenant v landlords election amounts addition lieu foregoing may permitted law time used section rent means amounts every nature required paid tenant hereunder whether landlord third parties amounts must based increased costs historical information shall calculated based estimates projections reasonably made landlord used subparagraphs b paragraph worth time award shall calculated based interest rate equal highest rate permitted applicable law maximum applies 15 per annum used subparagraph c paragraph worth time award shall calculated based discount rate equal reference rate set bank america national trust savings association time award event bank america national trust savings association longer exists time award discount rate shall equal highest prime reference rate announced time award three largest banks based california time b landlord may continue lease effect pursue rights remedies may hereunder andor otherwise permitted law time c landlord may continue lease effect tenants breach abandonment recover rent becomes due tenant right sublet assign subject reasonable limitations understanding landlord obligation relet premises conditions long comparable space available building lease building located california landlord may exercise remedies california civil code section 19514 modified recodified time c whether landlord terminates lease landlord shall right landlord chooses absolute discretion terminate subleases licenses concessions agreements entered tenant without landlords prior written consent connection occupancy premises andor b maintain agreements effect succeed tenants interests connection therewith event tenant shall cease interest agreement upon occurrence default landlord tenant shall except otherwise expressly provided herein rights remedies provided hereunder law time provided however tenant shall event right terminate lease except expressly provided herein article 21 quiet enjoyment landlord covenants agrees tenant long tenant pays rent observes performs terms covenants conditions lease tenants part observed performed tenant may peaceably quietly enjoy premises subject nevertheless terms conditions lease tenants possession disturbed anyone claiming landlord article 22 accord satisfaction payment tenant receipt landlord amount less full payment rent due payable shall deemed account rent due payable shall endorsement statement check letter accompanying check payment rent deemed accord satisfaction landlord may accept check payment without prejudice landlords right recover balance rent pursue remedy provided lease available law equity article 23 security deposit secure faithful performance tenant covenants conditions agreements set forth lease performed including without limitation foregoing covenants conditions agreements lease become applicable upon termination reentry otherwise tenant deposited landlord sum shown article 1 security deposit understanding security deposit portion thereof may applied curing default may exist without prejudice remedy remedies landlord may account thereof upon application tenant shall pay landlord demand amount applied shall added security deposit restored original amount b premises conveyed landlord security deposit balance thereof may turned landlords grantee turned aforesaid tenant hereby releases landlord liability respect security deposit application return tenant agrees look solely grantee application return c landlord may commingle security deposit funds obligated pay tenant interest security deposit shall considered advance payment rent measure damages default tenant shall bar defense actions landlord tenant e tenant shall faithfully perform covenants agreements contained lease part tenant performed security deposit remaining balance thereof shall returned tenant without interest within thirty 30 days expiration term tenant covenants assign encumber money deposited herein security deposit neither landlord successors assigns shall bound assignment encumbrance attempted assignment attempted encumbrance article 24 brokerage commission landlord tenant represent warrant neither dealt broker finder agent except brokers identified article 1 tenant represents warrants landlord except respect broker identified article 1 landlord entered separate brokerage agreement broker agent commission salesperson person represented tenant negotiations procurement lease premises commissions fees compensation kind due payable connection herewith broker agent commission salesperson person tenant agrees indemnify landlord hold landlord harmless claims suits judgments including without limitation reasonable attorneys fees court costs incurred connection claims suits judgments connection enforcement indemnity fees commissions compensation kind arise way connected claimed agency relationship referenced article 25 force majeure landlord shall excused period delay performance obligation hereunder prevented cause causes beyond control including labor disputes civil commotion war warlike operations invasion rebellion hostilities military usurped power sabotage governmental regulations controls fire casualty inability obtain materials services acts god provided landlord shall entitled rely upon section unless shall first given tenant notice existence force majeure preventing performance obligation landlord within five 5 days commencement force majeure tenant shall similarly excused delay performance obligation hereunder provided nothing contained section elsewhere lease shall deemed excuse permit delay payment rent delay cure default may cured payment money except respect abatements rent expressly provided herein b reliance tenant upon section shall limit restrict way landlords right selfhelp provided lease c tenant shall entitled rely upon section unless shall first given landlord notice existence force majeure preventing performance obligation tenant within five 5 days commencement force majeure article 26 parking 261 landlord hereby grants tenant exclusive right use parking facilities located property addition landlord hereby grants tenant nonexclusive right use number offsite parking spaces described article 1 q common rights others designated owner offsite parking garage tenant acknowledges agrees landlords interest offsite parking spaces governed certain declaration establishment easements dated september 22 1988 recorded september 26 1996 official records los angeles county california instrument 881537849 amended certain amendment declaration establishment easements dated july 6 1990 recorded july 10 1990 instrument 901207844 amended declaration ii tenants right use offsite parking spaces subject terms declaration rights rules regulations promulgated time owner offsite parking garage tenant hereby agrees comply therewith 262 commencing commencement date tenant shall pay landlord parking fee shown article 1 additional rent payable monthly advance monthly rent parking fee shown schedule 1 thereafter throughout term parking rate type parking space provided tenant hereunder shall prevailing parking rate landlord may designate time landlords sole election type parking space addition right reserved hereunder landlord designate parking rate time landlord shall right change parking rate time include therein amounts levied assessed imposed required paid governmental authority account parking motor vehicles including sums required paid pursuant transportation controls imposed environmental protection agency clean air act 1970 amended otherwise required paid governmental authority respect parking use transportation motor vehicles reduction control motor vehicle traffic motor vehicle pollution 263 requested landlord tenant shall notify landlord license plate number year make model automobiles entitled use parking facilities requested landlord automobiles shall identified automobile window stickers provided landlord designated automobiles shall permitted use parking facilities landlord institutes identification procedure landlord may provide additional parking spaces use customers invitees tenant daily basis prevailing parking rates landlords sole election landlord may make validation stickers available tenant additional parking spaces 264 parking facilities provided herein provided solely accommodation tenant landlord assumes responsibility liability kind whatsoever whatever cause respect automobile parking areas including adjoining streets sidewalks driveways property passageways use thereof tenant tenants employees customers agents contractors invitees article 27 hazardous materials 271 compliance hazardous materials laws tenant shall times respects comply federal state local laws ordinances regulations hazardous materials laws relating industrial hygiene environmental protection use analysis generation manufacture storage presence disposal transportation oil petroleum product flammable explosives asbestos urea formaldehyde radioactive materials waste hazardous toxic contaminated polluting materials substances wastes including without limitation hazardous substances hazardous wastes hazardous materials toxic substances laws ordinances regulations collectively hazardous materials 272 tenants use hazardous materials tenant shall expense procure maintain effect comply conditions permits licenses governmental regulatory approvals required tenants use hazardous materials premises including without limitation discharge appropriately treated materials wastes sanitary sewer strict accordance conformity applicable hazardous materials laws tenant shall cause discharged hazardous materials removed premises removed transported solely duly licensed haulers duly licensed facilities final disposal materials wastes tenant shall respects handle treat deal manage hazardous materials premises total conformity applicable hazardous materials laws prudent industry practices regarding management hazardous materials reporting obligations imposed hazardous materials laws strictly responsibility tenant upon expiration earlier termination term lease tenant shall cause hazardous materials removed premises transported use storage disposal accordance compliance applicable hazardous materials laws landlord understands tenants use premises shall include use hazardous materials landlord tenant recognize tenant operates radiopharmacy may operate oncological pharmacy integral part operations tenant handles toxic low level radioactive materials license nuclear regulatory commission tenant must comply prescribed rules regulations statutes national state local standards use storage radioactive material toxic materials used premises clean remediation removal work shall subject landlords prior written approval except emergencies shall include without limitation testing investigation preparation implementation remedial action plan required governmental body jurisdiction reasonably required landlord lender governmental body arranges tests studies showing article violated tenant shall pay costs tests 273 notices landlord tenant shall immediately notify landlord writing enforcement cleanup removal governmental regulatory action instituted completed threatened pursuant hazardous materials laws ii claim made threatened person tenant premises building relating damage contribution cost recovery compensation loss injury resulting claimed result hazardous materials purportedly handled stored treated released premises building iii reports made environmental agency arising connection use hazardous materials removed premises building including complaints notices warnings reports asserted violations connection therewith iv matters tenant required hazardous materials law give notice governmental regulatory authority respecting hazardous materials premises building tenant shall also supply landlord promptly possible event within five 5 business days tenant first receives sends copies material claims reports complaints notices warnings asserted violations relating way hazardous materials handled premises building tenants use thereof landlord shall right obligation join participate party legal proceedings actions affecting premises building initiated connection hazardous materials law times landlord may reasonably request tenant shall provide landlord written list certified true complete identifying hazardous materials used stored maintained upon premises use approximate quantity materials copy materials safety data sheet issued manufacturer therefor information landlord may reasonably require may required hazardous materials law 274 indemnifications tenant indemnify defend counsel reasonably acceptable landlord protect hold landlord landlords partners employees agents attorneys successors assigns free harmless claims liabilities penalties forfeitures losses expenses including attorneys fees death injury person damage property whatsoever arising caused whole part directly indirectly presence premises discharge premises hazardous materials placed premises tenant tenants direction excluding tenant improvement work done landlord b tenants use analysis storage transportation disposal release threatened release discharge generation hazardous materials premises c tenants failure comply hazardous materials law applicable hereunder tenant landlord indemnify defend counsel reasonably acceptable tenant protect hold tenant tenants employees agents attorneys successors assigns free harmless claims liabilities penalties forfeitures losses expenses including attorneys fees death injury person damage property whatsoever arising caused whole part directly indirectly x presence premises building discharge premises building hazardous materials placed premises building prior date hereof hereafter landlord landlords direction landlords use analysis storage transportation disposal release threatened release discharge generation hazardous materials premises building z landlords failure comply hazardous materials law obligations party indemnifying party pursuant section includes without limitation whether foreseeable unforeseeable costs required necessary repair cleanup detoxification decontamination premises building preparation implementation closure remedial action required plans connection therewith survives expiration earlier termination term lease article 28 additional rights reserved landlord addition rights provided herein landlord reserves following rights exercisable without liability tenant damage injury property person business without effecting eviction constructive actual disturbance tenants use possession giving rise claim pass keys premises doors therein excluding tenants vaults safes b reasonable prior notice tenant exhibit premises prospective purchaser lender mortgagee assignee mortgage building land others interest therein time term prospective tenants last six months term c take measures including entering premises laboratory areas tenant legally required restrict access authorized individuals purpose making inspections repairs alterations additions improvements premises building including purpose checking calibrating adjusting balancing controls parts building systems may necessary desirable operation improvement safety protection preservation premises building order comply laws orders requirements governmental authority may otherwise permitted required lease provided however progress work premises building landlord attempt inconvenience tenant shall liable inconvenience annoyance disturbance loss business damage tenant reason performing work bringing storing materials supplies tools equipment building premises performance work obligations tenant lease shall thereby affected manner whatsoever provided work shall done normal business hours building case emergency tenants supervision reasonably possible article 29 defined terms 291 building shall refer building named article 1 plan showing building attached hereto exhibit made part hereof premises defined article 2 shown said exhibit crosshatched lines 292 business day shall mean day saturday sunday holiday banks state california authorized law close 293 default rate shall mean fifteen percent 15 per annum highest rate permitted applicable law whichever shall less application default rate causes provision lease usurious unenforceable default rate shall automatically reduced prevent result 294 hazardous materials shall meaning set forth article 27 295 landlord tenant shall applicable one parties case may singular shall include plural neuter shall include masculine feminine one obligations thereof shall joint several purposes provisions indemnifying limiting liability landlord term landlord shall include landlords present future partners beneficiaries trustees officers directors employees shareholders principals agents affiliates successors assigns 296 law laws shall mean federal state county local governmental municipal laws statutes ordinances rules regulations codes decrees orders requirements applicable equitable remedies decisions courts cases decisions binding precedents state building located decisions federal courts applying laws state 297 lease shall mean lease executed tenant landlord including extensions amendments modifications exhibits attached hereto 298 lease year shall mean calendar year portion thereof term 299 lender shall mean holder mortgage time question mortgage ground lease term shall refer ground lessee 2910 mortgage shall mean mortgages deeds trust ground leases encumbrances hereafter placed upon building part thereof written consent landlord renewals modifications consolidations replacements extensions thereof indebtedness hereafter secured thereby interest thereon 2911 operating expenses shall mean operating expenses kind nature necessary ordinary customarily incurred connection operation maintenance repair building determined landlord operating expenses shall include limited costs supplies including limited cost relamping building standard lighting may required time b costs incurred connection obtaining providing energy building including limited costs propane butane natural gas steam electricity solar energy fuel oils coal energy sources c costs water sanitary storm drainage services costs janitorial security services e costs general maintenance repairs including costs hvac mechanical maintenance contracts maintenance repairs replacement equipment tools used connection operating building f costs maintenance replacement landscaping g insurance premiums including fire allrisk coverage together loss rent endorsements part claim required paid deductible portion insurance policies carried landlord connection building landlord unable obtain insurance without deductible major insurance carrier reasonable rates public liability insurance carried landlord building component parts thereof insurance shall amounts may required holder mortgage landlord may reasonably determine h labor costs including wages payments costs landlord workers compensation disability insurance payroll taxes welfare fringe benefits legal fees costs expenses incurred resolving labor dispute professional building management fees required management building j legal accounting inspection consultation fees including without limitation fees charged consultants retained landlord services designed produce reduction extent reduction term lease operating expenses reasonably improve operation maintenance state repair building incurred ordinary course operating building connection making computations required hereunder audit operations building k costs capital improvements structural repairs replacements made building order conform changes subsequent date lease applicable laws ordinances rules regulations orders governmental quasigovernmental authority jurisdiction building herein required capital improvements costs incurred landlord install new replacement capital item purpose reducing operating expenses extent reduction term lease herein cost savings improvements reasonable reserve capital improvements structural repairs replacements reasonably necessary permit landlord maintain building current class expenditures required capital improvements cost savings improvements shall amortized straight line basis useful life capital improvement structural repair replacement reasonably determined landlord costs amortized shall bear interest unamortized balance rate ten percent 10 per annum notwithstanding foregoing operating expenses shall include costs relating landlords business operations incurred locations building b except otherwise set forth article 29 costs associated capital improvements making computations contemplated hereby landlord shall make adjustments modifications provisions paragraph article 4 shall reasonable necessary achieve intention parties hereto 1 shall meaning specified therefor article 3 2912 tax taxes shall mean real property taxes assessments levied building governmental quasigovernmental authority foregoing shall include federal state county local governmental special district improvement district municipal political subdivision taxes fees levies assessments charges impositions every kind nature whether general special ordinary extraordinary respecting building including without limitation real estate taxes general special assessments interest special assessments paid installments transit taxes water sewer rents taxes based upon receipt rent personal property taxes imposed upon fixtures machinery equipment apparatus appurtenances furniture personal property used connection building landlord shall pay calendar year portion occurs term without regard different fiscal year used government municipal authority except provided however taxes shall levied rentals building shall determined building landlords property provided event shall term taxes assessment used herein include federal state income taxes levied assessed landlord unless taxes specific substitute real property taxes term shall however include gross taxes rentals expenses incurred landlord tax consultants contesting amount validity taxes assessments shall included computations extent reduction taxes assessments term lease tenants reasonable request landlord shall contest amount validity taxes assessments tenants sole cost expense shall hire experts consultants landlord reasonably deems necessary pursue claim b assessments including socalled special assessments license tax business license fee business license tax levy charge penalty tax imposed authority direct power tax including city county state federal government school agricultural lighting water drainage improvement special district thereof premises building legal equitable interest landlord therein purposes lease special assessments shall deemed payable number installments permitted law whether actually paid commencement date building fully assessed completed project purpose computing operating expenses adjustment required herein article 4 tax shall adjusted landlord date adjustment made reflect full completion building including standard tenant finish work method taxation real estate prevailing time execution hereof shall altered cause whole part taxes hereafter theretofore levied assessed imposed real estate levied assessed imposed landlord wholly partially capital levy otherwise measured rents received therefrom new altered taxes attributable building shall included within term real estate taxes except shall include enhancement said tax attributable income landlord preceding clauses k 11 12 collectively referred tax taxes capitalized terms shall definition set forth lease article 30 miscellaneous provisions 301 rules regulations tenant shall comply rules regulations reasonably promulgated landlord time building provided however landlord shall institute new rules regulations materially increase tenants obligations lease restrict tenants reasonable use enjoyment premises copy current rules regulations attached hereto exhibit 302 execution lease tenant executes lease corporation tenant persons executing lease behalf tenant represent warrant individuals executing lease tenants behalf duly authorized execute deliver lease behalf accordance duly adopted resolution board directors tenant copy delivered landlord execution hereof accordance bylaws tenant lease binding upon tenant accordance terms 303 notices lease shall writing deemed sufficiently given purposes tenant delivery tenant premises hours building open business certified mail return receipt requested overnight delivery service one acknowledged receipt tenant address set forth landlord certified mail return receipt requested overnight delivery service one acknowledged receipt addresses set forth landlord address shown article 1 item f copy building manager address shown article 1 item g tenant address shown article 1 item b copy troy gould 1801 century park east 16th floor los angeles california 90067 attention patrick r obel 304 transfers term landlord appearing herein shall mean owner building time upon sale transfer interest building landlord transferring party shall obligations liabilities matters accruing date transfer interest tenant upon sale transfer shall look solely successor owner transferee building performance landlords obligations hereunder 305 relocation applicable 306 tenant financial statements upon written request landlord tenant shall submit copies audited financial statements released public recent financial reporting period prior fiscal year landlord shall make request twice lease year financial statements shall certified true correct responsible officer tenant shall certified independent certified public accountant 307 relationship parties nothing contained lease shall construed parties hereto third party constituting parties principal agent partners joint venturers shall anything herein render either party guarantor liable debts obligations party understood agreed relationship landlord tenant landlord tenant 308 entire agreement merger lease embodies entire agreement understanding parties respecting lease premises supersedes prior negotiations agreements understandings parties merged herein provision lease may modified waived discharged except instrument writing signed party enforcement modification waiver discharge sought 309 representation landlord neither landlord agent landlord made representations warranties promises respect premises building except expressly set forth herein 3010 limitation liability notwithstanding provision lease contrary circumstances shall landlords liability directors officers employees agents failure perform obligations arising connection lease breach terms conditions lease whether written implied exceed forty percent 40 fair market value building personal judgment shall lie landlord upon extinguishment rights building judgments rendered shall give rise right execution levy landlords assets provisions hereof shall inure landlords successors assigns including lender foregoing provisions intended relieve landlord performance landlords obligations lease limit personal liability landlord case recovery judgment landlord shall foregoing deemed limit tenants rights obtain injunctive relief specific performance remedy may accorded tenant law lease tenant claims asserts landlord violated failed perform covenant lease tenants sole remedy shall action specific performance declaratory judgment injunction event shall tenant entitled money damages action way set defense counterclaim tenant hereby specifically waives right money damages remedies violation failure 3011 memorandum lease neither party without written consent execute record lease summary memorandum lease public recorders office 3012 waivers amendments failure landlord insist upon strict compliance tenant condition provision lease shall deemed waiver landlord condition waiver shall effective landlord unless writing signed landlord similarly lease cannot amended except writing signed landlord tenant 3013 successors assigns conditions covenants agreements contained herein shall binding upon inure benefit parties hereto respective heirs executors administrators successors assigns 3014 waiver jury trial governing law landlord tenant hereby waive right trial jury claim action proceeding counterclaim either landlord tenant matter arising way connected lease relationship landlord tenant andor tenants use occupancy premises lease shall governed law state building located 3015 exhibits attached lease part hereof incorporated herein reference provisions exhibits shall constitute agreements promises covenants lease 3016 captions headings used lease convenience way define limit scope interpretation content lease 3017 counterparts lease may executed one 1 counterparts shall deemed original together shall constitute one instrument witness whereof intending legally bound hereby parties duly executed lease exhibits attached hereto date first written landlord massachusetts mutual life insurance company cornerstone real estate advisers inc agent steve provencio name steve provencio title vice president tenant syncor international corporation delaware corporation robert glenn funari name robert glenn funari title president ceo michael e mikity name michael e mikity title senior vice president cfo certificate tenant corporation haig bagerdjian secretary syncor international corp tenant hereby certify officers executing foregoing lease behalf tenant isare duly authorized act behalf bind tenant haig bagerdjian corporate seal secretary date exhibit plan showing property premises exhibit b landlords work 1 agreement work letter agreement intended set forth obligations landlord tenant respect preparation premises tenants occupancy improvements described work letter agreement constructed upon premises hereinafter referred tenant improvements agreed construction tenant improvements completed accordance procedures set forth work letter agreement 2 tenant shall devote time consultation landlord landlords agent may required provide necessary information landlord landlords agent landlord deems necessary order enable landlord complete obtain tenants written approval final layout drawings plans premises tenant fails furnish information fails approve layout drawings plans prior november 1 1996 landlord may election discharged obligations work letter agreement shall affect diminish tenants duties obligations set forth lease tenant agrees pay demand costs expenses increased unit prices incurred landlord account tenants failure furnish information approved drawings within prescribed times tenants plans specifications shall subject landlords consent granting denial shall landlords reasonable discretion 3 space planning construction drawings deemed necessary landlord engineering drawings shall prepared landlords architect tenant shall pay space planning services landlords standard construction engineering drawings covering landlords standard materials nonstandard construction engineering drawings additional costs drawings occasioned special installation landlords standard materials tenant may pay services allowance provided exhibit b1 tenant shall furthermore responsible design function maintenance special improvements whether installed landlord tenants request installed tenant landlords prior written approval tenant shall use landlords standard materials unless materials expressly approved writing landlord 4 landlord shall solicit bids less three 3 general contractors construct tenant improvements contractors shall chosen landlord tenant shall select general contractor construct tenant improvements competitive bids within three 3 days receipt landlord prior landlords execution construction contract general contractor tenant shall given three 3 business days provide comments upon propose revisions contract including proposing bonuses early completion provided however bonuses shall paid allowance penalties late completion tenant improvement work prior commencing construction tenant improvements landlord shall submit tenant written estimate setting forth anticipated cost tenant improvements excluding costs may specified herein exhibit b1 borne landlord including limited labor materials contractors fees landlords construction management fees exceed three percent 3 aggregate permit fees space planning construction engineering drawing costs within five 5 business days receipt tenant shall either notify landlord writing approval cost estimate specify objections thereto desired changes proposed tenant improvements event tenant notifies landlord objections desired changes tenant shall work landlord reach acceptable plans cost estimate provided however tenant fails give written approval cost estimate within ten 10 business days following delivery tenant original cost estimate tenant shall chargeable one day delay day thereafter tenant provides landlord writing approval cost estimate 5 event landlords estimate andor actual cost construction shall exceed allowance defined exhibit b1 attached hereto amounts exceeding allowance herein referred excess costs tenant shall pay landlord excess costs follows tenant shall deliver landlord approval landlords estimate event prior commencement construction amount equal fifty percent 50 excess costs estimated landlord b substantial completion tenant improvements prior occupancy premises tenant shall pay landlord demand amount added initial payment described subparagraph equals ninety percent 90 excess costs estimated landlord c soon final accounting prepared submitted tenant shall pay demand landlord entire balance excess costs based upon actual cost construction statements costs submitted landlord landlords contractors shall conclusive purposes determining actual cost items described therein amounts payable hereunder constitute rent payable pursuant lease failure timely pay constitutes event default lease 6 tenant shall request change addition alteration working drawings approval landlord tenant landlord shall working drawings prepared tenant shall promptly reimburse landlord cost thereof promptly upon completion revisions landlord shall notify tenant writing cost chargeable first remaining allowance tenant reason change addition deletion tenant shall within five 5 business days notify landlord writing whether desires proceed change addition deletion absence written authorization landlord shall option continue work premises disregarding requested change addition alteration landlord may elect discontinue work premises event revisions result higher estimate cost construction tenant shall pay landlord amount sufficient provide landlord described fifty percent 50 applicable ninety percent 90 payment toward excess costs 7 following approval plans payment tenant required portion excess costs landlord shall cause tenant improvements constructed accordance approved plans unless otherwise specifically provided approved plans material used construction tenants improvements shall quality determined landlords architect landlord shall notify tenant substantial completion tenant improvements 8 landlord shall use reasonable diligence cause tenant improvement work substantially completed timely manner subject delays described section 25 lease delays described paragraph 9 work letter agreement without limitation foregoing event material breach construction contract general contractor tenant may require landlord take commercially reasonable efforts enforce said contract tenants sole cost expense tenant improvements shall considered substantially completed purposes work letter agreement lease landlords architect issues written certificate landlord tenant certifying tenant improvement work completed except minor finishout punchlist items substantial compliance approved plans applicable working drawings tenant first takes occupancy premises whichever occurs first 9 shall extension commencement date permissibly extended article 5 lease tenant improvements substantially completed said date reason delay attributable tenant including without limitation failure tenant furnish plans drawings specifications finish details information required paragraph 2 date stated paragraph 2 ii failure tenant comply requirements paragraphs 5 6 7 iiitenants requirements special work materials finishes installations landlords standards iv performance work premises person firm corporation employed behalf tenant failure complete delay completion work v act omission tenant 10 landlord landlords discretion upon request tenant grant tenant tenants agents license enter premises prior date designated lease commencement term order allow tenant work required tenant make premises ready tenants use occupancy shall condition grant landlord continued effectiveness license tenant shall give landlord less five 5 days prior written notice request access premises notice shall contain andor shall accompanied description schedule work performed persons entities access requested ii names addresses contractors subcontractors material suppliers early access requested approximate number individuals itemized trade present premises iii copies contracts pertaining performance work early access requested iv copies plans specifications pertaining work access requested v copies licenses permits required connection performance work access requested vi certificates insurance amounts insured parties satisfactory landlord instruments indemnification claims costs expenses damages liabilities may arise connection work vii assurances availability funds sufficient pay work foregoing shall subject landlords approval shall unreasonably withheld b early access shall subject scheduling landlord c tenants agents contractors workmen mechanics suppliers invitees shall work harmony interfere landlord landlords agents performing tenant improvement work premises general operation building time entry shall cause threaten cause disharmony landlord may withdraw license upon twentyfour 24 hours prior written notice tenant entry occupation premises tenant shall deemed terms covenants conditions provisions lease excluding covenant pay rent specifically including provisions article 9 thereof landlord shall liable injury loss damage may occur tenants work installations made premises property placed therein prior commencement term tenants sole risk liability tenant shall liable landlord damage premises portion tenant improvements caused tenant tenants employees agents contractors workmen suppliers event performance work tenant agents employees contractors causes extra costs landlord tenant shall reimburse landlord entire extra cost incurred landlord engineers operators applicable union regulations contracts 11 landlord shall allow tenants construction representative present premises times construction tenant improvements oversee construction tenant improvements monitor compliance construction contract including adherence construction schedules propose changes working drawings provided tenants construction representative shall coordinate comments concerns landlords construction representative project superintendent tenants construction representative shall way interfere landlord contractors employees 12 terms provisions lease insofar applicable work letter agreement hereby incorporated herein reference 13 amounts payable tenant landlord hereunder shall deemed rent lease upon default payment landlord shall rights remedies provided lease exhibit b1 landlord agrees provide tenant allowance 118772450 toward cost tenant improvements including limited expenses associated space planning preparation plans drawings fees permits etc reimbursement tenant outofpocket moving costs actually incurred tenant date lease connection moving installing furniture equipment premises tenant shall entitled credit amount applied cost tenant improvements moving costs described event allowance shall sufficient complete improvements contemplated approved plans tenant shall pay excess costs prescribed exhibit b upon request landlord shall loan tenant 27621500 tenant improvements amortized 10 years annual compounded rate ten percent 10 per annum payable equal monthly installments payable full upon demand upon occurrence default lease upon early termination lease reason exhibit c tenants work subject tenants right reimbursement certain moving expenses tenant install following items tenants sole cost expense telephonedata cabling equipment trade fixtures kitchen appliances exhibit buildings rules regulations janitorial specifications 1 water wash closets plumbing fixtures shall used purposes constructed sweepings rubbish rags substances shall thrown therein 2 space building shall used manufacturing storage merchandise sale merchandise goods property kind auction without prior consent landlord 3 additional locks bolts kind shall placed upon doors windows shall changes made locks mechanism thereof tenant must upon termination tenancy restore landlord keys stores offices toilet rooms either furnished otherwise procured tenant 4 portion premises shall used permitted used lodging sleeping immoral illegal purposes 5 premises becomes infested vermin tenant sole cost expense shall cause premises exterminated time satisfaction landlord shall employ exterminators therefor shall approved landlord 6 tenant shall clean window building outside 7 respect work performed tenant premises subject prior approval landlord tenant shall refer contractors representatives installation technicians landlord supervision approval control prior performance work services provision shall apply work performed building subject article 5 lease including installation telephones telegraph equipment electrical devices attachments installations every nature affecting floors walls woodwork trim ceilings equipment physical portion building 8 without landlords prior approval tenant shall install radio television antenna loudspeaker music system device roof exterior walls building 9 tenant shall store trash garbage areas specifically designated landlord materials shall placed trash boxes receptacles building unless materials may disposed ordinary customary manner removing disposing trash garbage result violation law ordinance governing disposal garbage refuse disposal shall entryways elevators provided purposes 10 tenant shall employ persons janitor landlord purpose cleaning premises without prior consent landlord tenant shall cause unnecessary labor reason carelessness indifference preservation good order cleanliness janitor service shall include ordinary dusting cleaning janitor assigned work shall include beating carpets rugs moving furniture special services janitor service shall furnished mondays fridays legal holidays excepted hours 500 pm 700 janitor service furnished areas occupied 930 pm window cleaning shall done landlord 600 500 pm attach janitorial specifications elevator maintenance contract property exhibit e commencement date confirmation declaration landlord tenant date delivery acceptance possession premises attached made part lease dated day 199 entered massachusetts mutual life insurance company landlord tenant landlord tenant hereby declare possession premises accepted tenant day 199 premises required constructed finished landlord accordance provisions lease satisfactorily completed landlord accepted tenant lease full force effect date hereof landlord fulfilled obligations lease commencement date hereby established 199 term lease shall terminate 199 landlord massachusetts mutual life insurance company cornerstone real estate advisers inc agent name typed title date tenant name typed title date exhibit f right first opportunity negotiate prior marketing building sale landlord send written notice sale notice tenant requesting tenant make offer purchase building landlord receives offer tenant within 15 days tenants receipt sale notice landlord shall either accept reject offer determined landlord landlords sole discretion within 10 days landlords receipt thereof event landlord rejects offer landlord tenant hereby agree negotiate good faith period thirty 30 days landlords rejection reach agreement basic terms tenant would purchase landlord would sell building counteroffer landlord notifies tenant writing acceptance offer within 10day period time said 30day negotiation period counteroffer landlord tenant shall enter written agreement purchase sale purchase agreement containing appropriate mutually acceptable terms conditions relating purchase sale building event tenant notify landlord writing offer within 15 day period specified landlord rejects tenants final counteroffer said 30day negotiation period expired landlord tenant fail execute purchase agreement within 30 days following acceptance offer counteroffer case may landlord tenants rights paragraph shall automatically terminate landlord shall free market building third parties terms price determined landlord including terms including without limitation price favorable contained offer counteroffer termination lease shall terminate rights tenant respect matters contained paragraph rights tenant respect matters contained paragraph shall severable lease may rights assigned otherwise conveyed connection permitted assignment lease landlords consent assignment lease shall construed allowing assignment conveyance rights assignee nothing herein contained construed limit abridge landlords ability sell building party landlords sole obligation offer tenant right first negotiation set forth offer accepted negotiate purchase agreement tenant accordance provision landlord shall responsible pay commissions broker connection sale tenant notwithstanding foregoing tenant acknowledges agrees rights described exhibit f subject subordinate rights nomura warner center associates lp california limited partnership nomura certain right first negotiation agreement dated july 6 1990 nomura landlords predecessorininterest respect property 6464 tw associates lp california limited partnership recorded official records los angeles county california july 10 1990 instrument 901207845 exhibit g renewal option provided material event default tenant occurred term provision contained lease 30 month period preceding tenants delivery notice exercise renewal option defined condition exists passage time giving notice would constitute event default pursuant lease tenant assignee subtenant shall right option renewal option renew lease irrevocable unconditional written notice delivered landlord later 9 months prior expiration initial lease term additional term renewal term sixty 60 months terms conditions covenants contained lease except rent shall equal current market rental rate comparable office space end initial lease term b tenant shall option renew lease beyond expiration renewal term c leasehold improvements within premises shall provided existing condition basis time renewal term commences provided provision shall construed relieve landlord obligations lease repair andor maintain premises failure tenant notify landlord writing tenants election exercise renewal option herein granted within time limits set forth exercise shall constitute waiver renewal option event tenant elects exercise renewal option set forth landlord shall within 45 days thereafter notify tenant writing proposed rental renewal term proposed renewal rental shall derived landlord using prevailing market rate prevailing rate space reasonably comparable premises taking account concessions granted landlords reasonably comparable tenants general vicinity building tenant shall within thirty 30 days following delivery proposed renewal rental landlord notify landlord writing acceptance rejection proposed renewal rental tenant accepts landlords proposal proposed renewal rental shall rental rate effect renewal term tenant reject landlords proposed renewal rental thirty 30 day period landlord tenant shall negotiate good faith thirty 30 day period commencing upon tenants rejection landlords proposed renewal rental determine prevailing rate event landlord tenant unable agree prevailing rate said thirty 30 day period party shall place separate sealed envelope final proposal prevailing rate final proposals shall delivered arbitrator prevailing rate shall determined said arbitrator follows landlord tenant shall agree upon jointly appoint single arbitrator within ten 10 business days expiration thirty 30 day negotiation period arbitrator shall profession real estate broker shall active five 5 year period ending date appointment leasing commercial office properties los angeles county california neither landlord tenant shall consult broker opinion prevailing rate prior appointment determination arbitrator shall limited solely issue whether landlords tenants submitted prevailing rate premises closest actual prevailing rate premises determined arbitrator taking account requirements provision regarding arbitrator may hold hearings require briefs arbitrator sole discretion determines necessary b arbitrator shall within thirty 30 days appointment reach decision whether parties shall use landlords tenants submitted prevailing rate shall notify landlord tenant determination c decision arbitrator shall binding upon landlord tenant landlord tenant fail agree upon appoint arbitrator appointment arbitrator shall made presiding judge los angeles superior court refuses act judge jurisdiction parties e cost arbitration shall paid landlord tenant equally upon agreement arbitration otherwise landlord tenant prevailing rate subject conditions set forth hereinabove landlord tenant shall enter written agreement modifying supplementing lease accordance provisions hereof termination lease initial lease term shall terminate renewal rights hereunder renewal rights tenant hereunder shall severable lease may rights assigned otherwise conveyed connection permitted assignment lease landlords consent assignment lease shall construed allowing assignment rights assignee exhibit 1020 state georgia county fulton lease made 30th day may 1996 technology parkatlanta inc georgia corporation hereinafter called lessor syncor international corporation delaware corporation hereinafter called lessee witnesseth whereas lessor owner certain building situated 6455 east johns crossing duluth fulton county georgia hereinafter called building located property hereinafter called land building herein collectively called property described exhibit attached hereto reference incorporated herein whereas lessee wishes lease lessor approximately 25608 rentable square feet 22297 usable square feet building area outlined red diagram marked exhibit b attached hereto reference incorporated herein made part hereof hereinafter called premises therefore consideration payment rent keeping performance covenants agreements lessee hereinafter set forth lessor hereby lease lessee hereby lease lessor premises lessor made representation warranty suitability premises conduct lessees business easement light air included premises consideration leasing premises aforesaid parties hereby covenant agree follows 1 term subject section 22 hereof term hereinafter called lease term lease shall commence earlier seven 7 days issuance temporary certificate occupancy b date occupancy premises lessee hereinafter called commencement date unless sooner terminated pursuant provisions hereof shall expire 1159 pm october 17 2006 2 rent 21 annual base rental hereinafter called annual base rental premises shall four hundred forty eight thousand one hundred forty no100 dollars 44814000 annual base rental shall payable equal monthly installments thirty seven thousand three hundred forty five no100 dollars 3734500 hereinafter called base rent advance first day every calendar month lease term base rent shall prorated rate 130th base rent per day partial month beginning september 1 1997 september 1 thereafter lease term annual base rental base rent shall automatically increase amount equal two percent 2over preceding years annual base rental base rent 22 lessee shall pay rent sums amounts liabilities obligations lessee herein assumes agrees pay whether designated base rent additional rent costs expenses damages losses otherwise hereinafter called amount due herein provided promptly times manner herein specified without deduction set abatement counterclaim defense amount due received lessor within ten days date due lessee shall pay lessor late charge equal five percent 5 amount past due payment notwithstanding date payment actually paid lessor amount due paid within thirty 30 days date originally due addition late charge lessee shall pay lessor interest amount due date originally due date actually paid rate per annum equal lesser prime rate interest announced wachovia bank georgia na successors time 90day unsecured loans best commercial customers plus three percent 3 ii maximum rate permitted applicable law late charge interest shall due payable time actual payment amount due amount due payable lessor lessee shall paid cash check office lessor co technology parkatlanta inc suite 150 11555 medlock bridge road duluth georgia 30155 place places lessor may time designate writing 3 operating expenses 31 beginning january 1 l998 first day january thereafter lease term lessee shall pay lessor additional rent lessees proportionate share common operating expenses hereinafter defined ensuing calendar year excess actual common operating expenses calendar year 1997 hereinafter called base year adjusted reflect one hundred percent 100 occupancy set forth lessee shall also pay additional rent charges costs expenses included within common operating expenses incurred lessor request lessee result use premises lessee lessees proportionate share common operating expenses shall prorated daily basis using 365day calendar year necessary year lease effect less full twelve month calendar year common operating expenses shall calculated accrual basis purpose determining common operating expenses base year estimating common operating expenses subsequent year base year lessor shall reasonably estimate expenses assuming one hundred percent 100 occupancy building based actual common operating expenses preceding year thenknown cost changes additional expenses reasonably anticipated occur within year expenses estimated lessors experience similar office buildings costs contracts already entered quotes obtained representations providers services equipment consultation specialists insurers factors prudent lessor would use make fair accurate estimate operating costs notwithstanding foregoing actual common operating expenses base year adjusted aforesaid reflect one hundred percent 100 occupancy adjusted aforesaid 550 per rentable square foot building annual base rental payable lessee per rentable square foot premises calendar year 1997 shall increased aggregate amount prorated twelvemonth period equal difference actual common operating expenses base year per rentable square foot building minus 550 event actual common operating expenses calendar year 1997 exceed 600 per rentable square foot difference actual base year operating expenses 600 shall added 550 total shall become new figure compared base year subsequent year common operating expenses hereby agreed common operating expense increases shall limited eight percent 8 per year increase limitation shall cumulative year example increases second year shall less equal 16 32 lessees proportionate share common operating expenses shall mean calendar year portion thereof 2615 represents percentage building occupied tenant pursuant lease operating expense amount defined used herein operating expense amount shall mean calendar year portion thereof amount common operating expenses defined exceeds base years common operating expenses 33 purposes lease term common operating expenses shall consist operating costs hereinafter defined building parking area adjacent building land building parking area land hereinafter referred collectively project described exhibit purposes lease term operating costs shall mean reasonable expenses costs disbursements subject exclusions set forth subparagraph 3313 hereof computed accrual basis relating incurred paid connection operation maintenance repair project accordance generally accepted accounting principles appropriate prudent real estate practice consistently applied including limited following 331 wages salaries ernployees excluded paragraph 3313 engaged operation maintenance project including employers social security taxes unemployment taxes may levied respect wages salaries allocated based upon time employees engaged directly providing services excluding wage salaries property managers 332 cost supplies tools equipment materials used operation maintenance project extent utilized 333 cost water sewer heating lighting ventilation electricity air conditioning utilities supplied paid lessor project costs maintaining systems supplying including limited utility service costs incurred lessor pursuant paragraph 5 hereof 334 cost agreements maintenance service project equipment therein including limited agreements relating security service window cleaning elevator maintenance janitorial service pest control landscaping maintenance 335 cost maintaining sprinkler systems fire extinguishers fire hoses cost security services protective services devices rendered connection project part thereof 336 insurance premiums insurance project required maintained lessor hereunder prudent owner would carry including limited premiums insurance maintained lessor pursuant section 9 hereof business interruption rental abatement insurance liability insurance exclusive additional premiums caused paid lessee tenant building 337 cost repairs general maintenance project excluding repairs alterations general maintenance paid proceeds insurance attributable solely tenants project lessee projects including limited maintenance cleaning general common areas facilities lawn mowing gardening landscaping irrigation landscaped areas line painting pavement maintenance replacement sweeping sanitary control removal snow trash rubbish garbage refuse cost personnel implement services direct parking police general common areas cost exterior interior painting common areas maintenance repair costs excluding replacement costs capital items incurred pursuant subsections 61 104 hereof cost maintenance sewers utility lines 338 amortization together reasonable financing charges cost installation capital investment items installed purpose reducing operating expenses complying governmental requirements extent savings created equipment year charges included common operating expenses 339 taxes assessments governmental charges general special ordinary extraordinary foreseen unforeseen levied assessed otherwise imposed project street lights personal property rents right privilege leasing project collecting rents therefrom parking vehicles thereon federal state county municipal government special sanitation district governmental quasigovernmental entity taxing assessment authority taxes assessments attributable project operation herein collectively called impositions exclusive federal state local income taxes lessor inheritance taxes estate taxes gift taxes transfer taxes excess profit taxes imposed lieu taxes time lease term present method taxation assessment shall changed whole part impositions levied assessed imposed real estate improvements thereon shall discontinued substitute therefor lieu addition thereof taxes assessments levies impositions charges shall levied assessed andor imposed wholly partially capital levy otherwise rents received project rents reserved herein part thereof substitute additional taxes assessments levies impositions charges extent levied assessed imposed shall deemed included within impositions operating costs lessee responsible ad valorem taxes personal property value leasehold improvements premises extent exceed building standard allowances taxing authorities separately assess lessees leasehold improvements lessor may make reasonable allocation ad valorem taxes allocated project give effect sentence lessor shall take reasonable steps protest increase real estate ad valorem taxes assessments building land building situated including without limitation lessors timely response notice increase assessed value land building located lessee shall charged assessment imposed result lessors request applicable governmental entity capital improvements lessors project premises located improvements benefit said project without providing substantial increase benefits lessee bargained lease 3310 management fee equal four percent 4 rental amounts collected respect building 3311 assessments assessed project lease term pursuant protective covenants hereafter record project building including without limitation assessments imposed maintenance repair common areas park development extent assessments pay capital improvements lessors project 3312 real estate tax incentives reductions abatements received lessor shall reduce operating costs however costs expenses incurred lessor including without limitation fees expenses lessors real estate tax service appraisers attorneys obtaining incentives reductions abatements shall included within operating costs lessor shall pay taxes timely avoid penalties interest surcharges 3313 anything lease contrary notwithstanding shall excluded operating costs following items repairs work occasioned fire windstorm casualty insurable nature exercise eminent domain however shall included operating costs amount deductible lessors policy policies casualty insurance deductible shall exceed 500000 per occurrence b leasing commissions attorneys fees costs disbursements expenses incurred connection negotiations disputes tenants occupants prospective tenants c costs renovating otherwise improving decorating painting redecorating space tenants occupants however costs incurred respect common areas project shall included within operating costs lessors costs electricity services sold tenants lessor entitled reimbursement tenants additional charge whether lessor receives reimbursement e costs incurred lessor alterations considered capital improvements replacements generally accepted accounting principles except permitted subparagraph 338 hereof f depreciation amortization except amortization permitted subparagraph 338 hereof g costs capital nature including limited capital improvements capital repairs capital equipment capital tools however costs capital nature permitted subparagraph 338 hereof shall included within operating costs h expenses connection services benefits type provided another tenant provided lessee wages salaries compensation benefits officers employees lessor grade building manager j common operating expense payable lessee shall deemed exclude executive salaries property manager interest payment due note deed secure debt mortgage encumbering building premises located underlying superior lease ground lease expenses capital nature specifically permitted lease 34 nothing contained section 3 including limited definition operating costs contained subsection 33 hereof shall imply duty part lessor pay expense provide service otherwise imposed express terms lease 35 prior december 31 1996 prior december 31 subsequent calendar year lease term lessor shall estimate amount common operating expenses lessees proportionate share common operating expenses ensuing calendar year applicable broken portion thereof notify lessee writing estimate shall made lessor exercise reasonable discretion lessee shall continue paying lessees proportionate share common operating expenses accordance section 3 lessee challenges whether estimate lessor reasonable dispute conclusively resolved parties amount additional rent specified notification shall paid lessee lessor equal monthly installments advance first day month ensuing calendar year time manner base rent common operating expense estimated actual itemized major expense categories 36 within ninety 90 days alter december 31 calendar year lease term additional rent due section 3 lessor shall advise lessee writing amount actual common operating expenses calendar year common operating expenses calendar year prove greater amount previously estimated lessor shall invoice lessee deficiency soon practicable amount underpayment determined lessee shall pay deficiency lessor within thirty 30 days following receipt invoice however common operating expenses calendar year lower amount previously estimated lessee shall receive credit event term lease expired lessee shall receive prompt cash refund toward next ensuing monthly payment payments estimated amount lessees proportionate share common operating expenses amount overpayment depleted event shall lessees proportionate share common operating expenses deemed less zero 37 lessee may upon ten 10 days prior written notice lessor lessees expense reasonable time audit books supporting documentation lessor pertaining determination common operating expenses base year calendar year three 3 years prior year audit take place lessee disputes amount additional rent due pursuant paragraph 36 hereof lessor lessee unable resolve dispute good faith efforts lessee may institute arbitration proceedings dispute shall settled arbitration city atlanta georgia panel three members accordance rules effect american arbitration association provided however lessee shall immediately pay disputed amount lessor arbitrators find lessee paid lessees proportionate share common operating expenses previous calendar year lessor shall immediately refund overpayment lessee decision arbitrators acting hereunder shall binding conclusive upon parties lessor lessee shall pay onehalf cost arbitration provided however arbitrators determine arbitration proceedings instituted good faith lessee shall pay full cost thereof event arbitrators determine common operating expenses determined good faith lessor shall pay full cost thereof notwithstanding disputes taken arbitration accordance provisions paragraph lessee shall continue paying lessor increase common operating expenses subject said dispute 4 intentionally deleted 5 use 51 lessee permitted assignees subtenants shall use premises general business administration sales service violation restrictive covenants hereinafter referred purpose without prior written consent lessor lessee shall operate business premises entire lease term reputable manner compliance applicable laws ordinances regulations covenants restrictions matters shown public records force hereinafter enacted lessee permit create maintain disorderly conduct trespass noise nuisance whatsoever premises tendency annoy disturb persons occupying adjacent premises either within without building 52 lessee shall place maintain machines equipment apparatus causes vibrations noise may transmitted building structure space degree objectionable lessor tenant occupant person building neither lessee lessees employees agents invitees shall place maintain within premises stoves ovens space heaters except lessee may maintain one 1 microwave oven within premises long microwave oven uses standard 110v electrical service lessee shall make permit odor objectionable public occupants building emanate premises shall create permit maintain nuisance thereon shall act tending injure reputation building 53 lessee shall cause loading unloading goods materials delivered sent premises done loading dock area premises loading dock area located premises loading dock area building dock area lessor may designate circumstances shall lessee allow goods materials delivered sent premises stored accumulate obstruct loading dock area dumpster pad sidewalks driveways parking areas entrances public areas spaces building property lessee acknowledges violations paragraph 53 shall constitute material breach lease 54 lessee shall perform permit work including limited assembly construction mechanical work painting drying layout cleaning repair goods materials done loading dock sidewalks driveways parking areas landscaped areas building property 55 lessee shall use handle store deal discharge fabricate environmentally hazardous wastes substances materials hereafter may defined classified local state federal environmental protection legislation regulation issued pursuant thereto 56 lessee shall abandon vacate premises time lease term 6 utilities service 61 except extent directly contracted lessee lessor shall furnish cause furnished premises 700 600 pm monday friday 800 100 pm saturdays exclusive holidays subject rules regulations building water sewer services suitable lessees intended use premises electricity set forth paragraph 62 hereof heat air conditioning required lessors reasonable judgment comfortable use occupation premises used paragraph 61 term holiday shall mean new years day memorial day independence day labor day thanksgiving day christmas day lessor shall provide lighting facilities common entries hallways stairways restroom facilities building lessee install pay telephone service 62 lessor lessors sole cost expense shall cause furnished premises sufficient power building standard fluorescent lighting personal computers normal office copying machines typewriters voice writers calculating machines normal office machines similar low electrical consumption including electricity required electronic data processing equipment special lighting item electrical equipment singly consumes 025 kilowatts rated capacity requires voltage 120 volts single phase lessee shall install use equipment using electric power without prior written consent lessor gives written consent lessee shall pay cost power operate equipment determined lessor installation electrical equipment requires additional air conditioning capacity provided building standard system additional air conditioning installation operating costs obligation lessee 63 lessor shall held liable damage injury suffered lessee lessees licensees agents invitees servants employees contractors subcontractors person entity engaged invited allowed come onto premises lessee hereinafter collectively referred lessee parties resulting directly indirectly proximately remotely installation use interruption utility service premises building including limited temporary failure supply heating air conditioning electrical water sewer services temporary failure provide services shall relieve lessee fulfillment covenant lease including without limitation covenant pay amount due manner amounts promptly times set forth herein 64 lessor shall furnish lessee janitorial service five 5 days per week exclusive holidays manner lessor reasonably deems consistent firstclass standard building 7 maintenance 71 except damage arising negligence lessee parties lessor shall keep roof foundation exterior walls common areas sewer utility lines building including sewer connections plumbing heating appliances wiring glass good order repair shall furnish lessee building standard florescent bulb replacement areas incandescent bulb replacement common areas service areas within building notwithstanding anything contrary contained herein except otherwise provided preceding sentence lessor shall obligation maintain repair improvements located within premises maintenance shall responsibility lessee 72 lessor shall obligation make repairs unless lessee notifies lessor writing necessity thereof event lessor shall reasonable time excepting event emergency make repairs however lessee may notify lessor verbally minor routine daytoday repairs need made 73 subject lessors obligation provide janitorial services lessee shall keep premises free litter dirt debris obstructions clean sanitary condition except otherwise provided first sentence paragraph 71 hereof lessee shall maintain repair improvements located within premises including limited finishes wall coverings carpets floor coverings utility lines site sewer connections site plumbing wiring glass installed lessee expiration termination lease lessee shall surrender premises keys thereto good condition received loss fire casualty result act omission lessee ordinary wear tear excepted 8 force majeure event either party hereto shall delayed hindered prevented performance act required hereunder reason strikes lockouts labor troubles inability procure materials failure power restrictive government laws regulations riots insurrection war reason like nature finance fault party delayed performing work acts required terms lease performance act shall excused period delay period performance act shall extended period equivalent period delay provisions section 8 shall cancel postpone delay due date payment made lessee hereunder operate excuse lessee prompt payment amount due required terms lease 9 property liability insurance 91 throughout lease term lessor insure building excluding foundations excavations building standard leasehold improvements machinery boilers equipment contained therein owned lessor excluding property lessee obliged insure pursuant paragraph 93 damage fire perils insured standard extended coverage endorsement lessor shall throughout lease term carry public liability insurance respect ownership operation building 92 lessee shall comply insurance regulations lowest fire extended coverage liability insurance rates available use building normal office space may obtained lessor use keep substance material premises may vitiate endanger validity insurance building increase hazard risk beyond normal office building result increase premium insurance building insurance policy upon premises building part thereof shall canceled shall threatened insurer canceled coverage thereunder reduced threatened reduced premium therefor increased threatened increased way insurer reason use occupation premises lessee assignee subtenant lessee fails remedy condition giving rise cancellation reduction premium increase threat thereof within twentyfour 24 hours notice thereof lessor may option one following 921 declare default lessee thereupon provisions section 12 shall apply 922 enter upon premises remedy condition giving rise cancellation reduction premium increase threat thereof event lessee shall forthwith pay cost thereof lessor additional rent lessee fails pay cost lessor may declare default lessee thereupon provisions section 12 shall apply lessor shall liable damage injury caused property lessee others located premises result reentry 923 sole action taken insurer raise premium monetary cost insurance demand payment lessee premium cost additional rent hereunder lessee fails pay increase lessor within ten 10 days demand lessor may declare default lessee thereupon provisions section 12 shall apply lessee acknowledges right receive proceeds insurance policies carried lessor insurance sole benefit lessor coverage lessee risk insured 93 lessee shall occupancy premises entire lease term sole cost expense obtain maintain keep full force effect lessee lessor lessors mortgagees named additional insureds therein respective interests may appear following types kinds insurance 93l upon property every description kind owned lessee located building lessee legally liable installed behalf lessee including without limitation furniture fittings installations alterations additions partitions fixtures excluding however improvements installed lessor accordance paragraph 101 hereof risk loss 932 public liability insurance amount less 100000000 one occurrence higher limits lessor may reasonably require time insurance shall include coverage liability bodily injuries property damage arising use behalf lessee owned nonowned hired automobiles vehicles limit less specified shall also include coverage fire legal liability respect premises amount less 100000 higher limits lessor may reasonably require time 933 workers compensation insurance amount required law protect lessees employees 934 form forms insurance lessor may reasonably require time form amounts insurance risks prudent tenant would protect 94 insurance policies shall taken companies acceptable lessor licensed registered operate state georgia form reasonably satisfactory lessor insurance may blanket insurance policy policies lessee shall deliver certificates evidencing insurance policies endorsement rider renewal thereof lessor certificates evidencing renewals shall delivered lessor later fifteen 15 days renewal often renewal occurs event less fifteen 15 days prior date policy would otherwise expire insurance policies shall require insurer notify lessor lessors mortgagees writing thirty 30 days prior material change cancellation termination thereof 95 lessor lessee hereby release liability responsibility anyone claiming way subrogation otherwise loss damage property caused fire perils insured insurable whether insurance obtained policies fire extended coverage insurance covering property even loss damage shall caused fault negligence party one party may responsible acts intentional wrongdoing criminal conduct waived standard waiver subrogation provision commercial property insurance time loss damage 10 alterations improvements 101 lessor shall improve premises accordance working drawings approved lessee lessor prior commencement construction lessor shall work performed promptly diligently good workmanlike manner lessor shall provide lessee allowance four hundred forty five thousand nine hundred forty no1oo dollars 44594000 design supervision construction improvements premises accordance drawings including without limitation costs design costs materials labor install improvements lessor charge overhead supervisory fee initial design construction lessor pay costs incurred lessor timely basis extent allowance base building improvements shall included part allowance improvements premises shall include building exterior walls roof core restrooms two elevators common area facilities exterior windows one half demising wall lessees electrical transformer excluding lessees electrical distribution panel sprinkler system installation excluding head relocation main trunk lines water sewer building standard roof top hvac units perimeter duct work piu boxes slot diffuser excluding relocating interior vvu dampers excluding duct diffusers trane ddc control system excluding mounting sensors 24 x 24 ceiling grid including building standard ceiling tile light fixtures concrete floor slab costs exceed allowance lessees option lessee shall pay costs excess allowance commencement date may amortize additional costs lease term monthly basis annual interest rate eleven percent 11 additional costs amortized lease term shall exceed 500 per usable square foot hereby agreed lessor lessee construction drawings construction costs must approved permits obtained start construction july 1 1996 102 lessee shall make alterations additions improvements premises install attach fixtures premises without prior written consent lessor consent lessor shall unreasonably withhold delay condition alterations additions improvements made installed attached premises lessee upon consent specified shall made lessees expense good workmanlike manner strictly accordance plans specifications approved lessor applicable laws ordinances regulations requirements appropriate governmental authority applicable covenants restrictions prior commencement work lessee shall deliver lessor certificates issued insurance companies licensed registered operate state georgia evidencing workers compensation insurance public liability insurance amounts satisfactory lessor force effect maintained contractors subcontractors engaged lessee perform work 103 lessee shall keep premises free liens preliminary notices liens right liens claims liens contractors subcontractors mechanics materialmen work done materials furnished property request lessee whenever often lien shall attach claims notices thereof shall filed property part thereof result work done materials furnished property request lessee shall within twenty 20 days lessee notice claim notice lien cause discharged record discharge may accomplished deposit bonding proceedings lessee shall fail cause lien claim notice thereof discharged within tenday period addition right remedy lessor may shall obligated discharge either paying amount claimed due procuring discharge lien claim notice thereof deposit bonding proceedings amount paid lessor costs expenses including without limitation attorneys fees incurred lessor connection therewith shall constitute additional rent payable lessee lease shall paid lessee full demand lessor together interest thereon rate set forth paragraph 22 hereof date paid lessor lessee shall authority subject interest estate lessor liens rights liens claims liens services materials supplies equipment furnished lessee persons contracting lessee hereby charged notice must look lessee lessees interest secure payment 104 alterations additions improvements including limited fixtures partitions counters window floor coverings may made installed either parties hereto upon premises irrespective manner annexation irrespective party may paid cost thereof excepting movable office furniture shop equipment put expenses lessee shall property lessor shall remain upon surrendered premises part thereof expiration termination lease without disturbance molestation injury condition lessors approval alterations lessor may reasonably elect installations made installed behalf lessee removed end lease term lessor elects shall lessees obligation restore premises condition prior alterations additions improvements expiration termination lease removal restoration shall sole expense lessee notwithstanding anything contained herein contrary except otherwise provided paragraph 931 hereof lessor shall obligation insure alterations additions improvements anything nature leasehold improvement made installed behalf lessee parties person improvements shall premises risk lessee 105 event lessor makes capital investment major structural repairs improvements premises building required due act omission lessee parties cost expenses incurred lessor making capital investment major structural repairs improvements shall constitute additional rent payable lessee lease shall paid lessee full demand lessor together interest thereon date demand rate set forth paragraph 22 hereof 11 assignment subletting 111 lessee shall assign lease interest herein sublet allow person firm corporation use occupy premises part thereof without prior written consent lessor consent unreasonably withheld delayed lessor shall right make investigations deems reasonable necessary determining acceptability proposed assignee subtenant investigations may include inquiries financial background business history capability proposed assignee subtenant line business quality operations circumstances shall lessor obligated consent assignment lease subletting premises entity whose operations violate restrictive covenants described section 26 hereof lessee shall provide lessor information lessor may reasonably require enable determine acceptability proposed assignee subtenant including information concerning foregoing matters lessor shall obligation consent assignment subletting unless received lessee cost expense lessor recent financial statements financial statements shall audited available proposed assignee subtenant information lessor reasonably requires purposes section 11 assignment stock ownership interest lessee shall deemed assignment within meaning governed paragraph assignment subletting without consent lessor shall release lessee obligations lease shall lessee permit lease interest herein tenancy hereby created become vested owned person firm corporation operation law otherwise power lessor give withhold consent assignment subletting shall exhausted exercise thereof one occasions shall continuing right power respect type transfer assignment subletting 112 lessee shall assign lease sublet premises way authorized terms hereof acceptance lessor amount due person claiming assignee sublessee otherwise shall construed recognition consent assignment subletting waiver right lessor thereafter collect rent lessee agreed lessor may time accept amount due lease person offering pay without thereby acknowledging person paying lessee place lessee herein named without releasing lessee obligations lease without recognizing claims person offers pay amount due shall taken payment account lessee 12 defaults 121 event lessee shall fail pay base rent amount due ten 10 days due date ii lessee shall fail comply terms covenants conditions agreements herein contained rules regulations hereafter established government building failure comply continues ten 10 days lessors written notice lessee thereof provided however failure comply part lessee would reasonably require ten 10 days cure unless lessee commences curing within ten 10 day notice period thereafter promptly effectively continuity proceeds curing failure comply part lessee events cures failure comply part lessee later thirty 30 days notice iii lessee shall fail thirty 30 days written notice thereof lessor lessee comply term provision condition covenant agreement lessor lessee lessor shall option obligation one following addition limitation remedy permitted law equity lease 1211 terminate lease event lessee shall surrender premises lessor immediately upon expiration twenty 20 days date service upon lessee written notice effect without notice demand event lessor shall become entitled possession premises termination lease herein provided lessee shall refuse surrender deliver possession premises service notice lessor may without notice demand enter upon premises part thereof take possession repossess premises lessors former estate expel remove put possession lessee effects using help assistance force may needful proper without liable prosecution damages therefor without prejudice remedy allowed law available cases lessee shall indemnify lessor loss cost expense damage lessor may suffer reason termination whether inability relet premises decrease rent otherwise event termination lessor may option recover forthwith damages sum money equal total cost recovering premises including without limitation attorneys fees cost suit b unpaid rent earned time termination plus late charges interest thereon rate specified paragraph 22 hereof c present value discounted rate 8 per annum balance rent remainder lease term less present value discounted rate fair market rental value premises said period sum money damages owed lessee lessor 1212 without terminating lease retake possession premises rent premises part thereof term terms rent upon conditions lessor may sole discretion think best making changes improvements alterations repairs premises may required rent received lessor reletting shall applied first payment indebtedness rent due hereunder lessee second payment costs expenses reletting including limited brokerage fees attorneys fees costs changes improvements alterations repairs third payment rent due unpaid hereunder residue shall held lessor applied payment future rent damage may become due payable hereunder rent received reletting lease term time insufficient cover costs expenses payments enumerated lessee shall pay deficiency lessor often shall arise demand 1213 correct cure default recover amount expended together interest thereon paid 1214 recover costs incurred lessor resulting directly proximately default including limited reasonable attorneys fees 122 addition rights lessor may lessor person agent may enter upon premises take possession part lessees property premises may sell part property public private sale one successive sales without notice highest bidder cash behalf lessee sell convey part property highest bidder delivering highest bidder lessees title interest property sold proceeds sale property shall applied lessor toward reasonable costs expenses sale including without limitation reasonable attorneys fees forward payment sums due lessee lessor terms lease excess remaining shall paid lessee person entitled thereto law sale shall bar lessees right redemption 123 event default threatened default lease lessee lessor shall entitled equitable remedies including without limitation injunction specific performance 124 pursuit remedies herein provided shall preclude pursuit remedies herein provided remedies provided law equity failure lessor enforce one remedies herein provided shall deemed construed constitute waiver default violation breach terms provisions covenants herein contained 13 bankruptcy filing preparation filing lessee petition bankruptcy insolvency reorganization federal bankruptcy code federal state law hereafter relating insolvency bankruptcy debtor relief adjudication lessee insolvent bankrupt issuance order relief respect lessee federal bankruptcy code federal state law hereafter relating insolvency bankruptcy debtor relief execution lessee voluntary assignment benefit transfer fraud general creditors failure lessee pay debts mature levying execution interest lessee lease filing preparation filing lessee petition reorganization federal bankruptcy code appointment receiver trustee substantial part lessees assets take charge lessees business petition application seeking relief federal state laws hereafter relating insolvency bankruptcy debtor relief appointment receiver trustee substantial part lessees assets take charge lessees business shall automatically constitute default lease lessee lessor may time times thereafter option exercise remedies options provided lessor section 12 hereof provided however petition filed third lessee desires good faith defend petition way default obligation hereunder time filing petition lessee within ninety 90 days thereafter procures final adjudication solvent judgment dismissing petition lease shall fully reinstated though petition never filed event lessor elects terminate lease provided section lessee shall pay forthwith lessor liquidated damages difference unpaid rent reserved lease time termination reasonable rental value premises balance lease term lessee acknowledges said sum reasonable shall construed penalty 14 damage condemnation 141 event lease term premises damaged fire casualty extent repairs rebuilding cannot reasonably completed within one hundred twenty 120 days date event causing damage lessor may lessors option repair rebuild premises lessor elects repair rebuild premises lease shall remain full force effect lessor may require lessee temporarily vacate premises repaired subject provisions paragraph 14l rent shall abate period extent premises untenantable provided however lessor shall liable lessee damage expense temporarily vacating premises may cause lessee premises repaired rebuilt otherwise made suitable occupancy lessee within aforesaid one hundred twenty 120 day period lessee shall right written notice lessor terminate lease event rent shall abated unexpired lease term effective date written notification terms conditions lease shall continue remain full force effect lessee shall vacated premises removed lessees personal property therefrom delivered peaceable possession thereof lessor elects repair rebuild premises building part thereof damaged repairs rebuilding cannot reasonably completed within one hundred twenty 120 days date event causing damage lessor may written notice lessee terminate lease event rent shall abated unexpired lease term effective date written notification terms conditions lease shall continue remain full force effect lessee shall vacated premises removed lessees personal property therefrom delivered peaceable possession thereof lessor failure lessee comply provision paragraph 141 shall subject lessee costs expenses damages losses lessor may incur reason lessees breach hereof notwithstanding provision lease contrary premises building part thereof damaged fire casualty caused materially contributed negligence misconduct lessee parties lessee shall fully responsible extent covered insurance repairing restoring paying damage lessor shall direct lease shall remain full force effect without reduction abatement rent 142 event building shall taken whole part condemnation exercise right eminent domain lieu formal condemnation proceedings actions lessor shall sell convey premises portion thereof governmental public authority agency body public utility seeking take premises property portion thereof lessor option may terminate lease upon thirty 30 days prior written notice lessee prepaid rent shall proportionately refunded date possession condemning authority damages awarded taking paid purchase price sale conveyance lieu formal condemnation proceedings whether fee leasehold interest shall belong property lessor provided however lessee shall sole right reclaim recover condemning authority lessor compensation may separately awarded recoverable lessee lessees right account costs loss including loss business lessee might put removing lessees furniture fixtures leasehold improvements equipment new location lessee shall execute deliver instruments expense lessor may deem necessary expedite condemnation proceedings effectuate proper transfer title governmental public authority agency body public utility seeing take acquire lands premises portion thereof lessee shall vacate premises remove lessees personal property therefrom deliver peaceable possession thereof lessor party designated lessor aforementioned notice failure lessee comply provisions paragraph l42 shall subject lessee costs expenses damages losses lessor may incur reason lessees breach hereof lessor chooses terminate lease extent availability condemnation proceeds received lessor subject rights mortgagee thereto lessor shall sole cost expense lessor due diligence good workmanlike manner restore reconstruct premises within one hundred twenty 120 days date physical taking restoration reconstruction shall make premises reasonably tenantable suitable general use made lessee prior taking provided however lessor shall obligation restore reconstruct lessees leasehold improvements unless extent lessor receives award condemnation proceeds specifically designated compensation improvements notwithstanding foregoing lessor completed restoration reconstruction within one hundred twenty 120 days date physical taking lessee addition rights remedies lessee may shall right cancel lease continues effect physical taking rent payable hereunder shall equitably adjusted period restoration reconstruction unexpired portion lease term 143 event lessor lease term shall required governmental authority order decree court repair alter remove reconstruct improve hereinafter collectively called repairs part premises repairs may made expense lessor shall way affect obligations covenants lessee herein contained lessee hereby waives claims damages abatement rent repairs shall render premises untenantable repairs completed within one hundred twenty 120 days date notice requirement order decree either party hereto upon written notice party given later one hundred thirty 130 days date notice requirement order decree may terminate lease case rent shall apportioned paid date premises rendered untenantable provided however requirement governmental authority jurisdiction repair alter remove reconstruct improve part premises arises act omission lessee repairs shall effected promptly sole cost expense lessee shall event abatement rent right lessee terminate lease whether completion repairs takes one hundred twenty 120 days 15 taxes lessor shall pay taxes assessments governmental charges general special ordinary extraordinary foreseen unforeseen including installments thereof levied assessed otherwise imposed lawful authority payable respect property building 16 liability lessor 161 subject paragraph 95 hereof excepting lessors gross negligence willful misconduct lessee shall indemnify defend hold harmless lessor lessees expense default lessee permitted assignee subtenant hereunder b act negligence lessee parties c claims damages persons property reason use occupancy premises caused lessor lessee shall liable lessor lessors agents servants employees contractors customers invitees damage person property caused act omission neglect lessor agents servants employees moreover lessor shall liable damage injury destruction theft premises personal property lessee parties lessee parties arising use premises sidewalks entrance ways parking areas serving premises act neglect cotenants person malfunction equipment apparatus serving premises loss thereof mysterious disappearance otherwise unless caused gross negligence willful misconduct lessor 162 lessee expressly agrees look solely lessors interest property recovery judgment lessor agreed lessor partners shareholders shall never personally liable judgment provision contained foregoing sentence intended shall limit right lessee might otherwise obtain injunctive relief lessor lessors successorsininterest 17 right entry 171 except events emergency twentyfour hours notice lessee lessor reserves right mortgagees respective agents duly authorized representatives enter upon premises time inspect premises repair maintain alter improve remodel lessor shall materially interfere lessees normal operation except case emergency lessee shall entitled compensation damages abatement reduction rent account repairs maintenance alterations improvements remodeling except otherwise provided lease nothing contained paragraph 171 shall imply duty part lessor repair maintain alter improve remodel 172 notice lessee shall permit lessor lessors agents reasonable hour day enter upon go view premises exit premises prospective purchasers tenants 18 building rules regulations lessor reserves right establish reasonable rules regulations pertaining use occupancy building rules regulations may changed lessor time lessee shall comply rules regulations established lessor pursuant section 18 19 property left premises upon expiration lease premises abandoned lessee lease terminate cause lessee dispossessed default time expiration abandonment termination dispossession lessee assignees subtenants agents servants employees contractors person controlled lessee claiming lessee leave property kind character upon premises property shall property lessor fact leaving property upon premises shall conclusive evidence intent lessee person abandon property left upon premises leaving shall constitute abandonment property understood acknowledged parties hereto none lessors servants agents employees shall actual apparent authority waive portion section 19 neither lessee person designated shall right leave property upon premises beyond time set forth herein without written consent lessor agents attorneys shall right authority without notice lessee anyone else remove destroy store sell otherwise dispose property part thereof without way liable lessee anyone else therefor lessee shall liable lessor reasonable necessary expenses incurred removal destruction storage sale disposition property said property removed proceeds sale disposition thereof shall belong lessor compensation removal disposition said property lessor use reasonable best efforts notify lessee remove property prior disposal said property provided herein 20 interests 201 lease lessees interest hereunder shall times subject subordinate lien security title deeds secure debt deeds trust mortgages interests heretofore hereafter granted lessor otherwise encumber affect premises advances made thereunder renewals modifications consolidations replacements substitutions extensions thereof hereinafter called mortgage provided however subordination shall effective holder mortgage shall execute subordination nondisturbance attornment agreement form reasonably satisfactory lessee agreeing lessees rights occupy premises accordance terms lease shall disturbed following foreclosure delivery deed lieu foreclosure unless lessee default obligations hereunder beyond applicable notice cure periods lessor hereby warrant represent date hereof mortgage presently encumbers building confirmation subordination however lessee shall lessors request promptly execute acknowledge deliver instrument may required evidence subordination mortgage holder thereof event failure lessor may addition remedies breach covenant hereunder execute acknowledge deliver instrument agent attorneyinfact lessee hereby irrevocably constitutes lessor attorneyinfact purpose lessee acknowledging appointment coupled interest irrevocable lessee hereby waives releases claim might lessor party actions lawfully taken holder mortgage 202 event sale conveyance lessor lessors interest premises transfer security purposes lessor shall relieved date transfer obligations liabilities accruing thereafter part lessor provided funds hands lessor time transfer lessee interest shall delivered successor lessor lease shall affected sale lessee shall attorn purchaser assignee 21 intentionally deleted 22 delayed possession lessor shall fail deliver lessee actual possession premises october 31 1996 rent shall abate possession given lessor shall liable lessee failure commencement date shall become date possession given notwithstanding foregoing however premises available occupancy lessee january 1 1997 lease shall voidable either party voided payments made lessor lessee hereunder shall immediately refunded lessee lessor provided however date shall extended extent construction delayed reasons set forth section 8 conditions beyond lessors control amendments working drawings improvements premises requested lessee premises shall available occupancy completed lessee may conduct normal operations temporary certificate occupancy issued premises whichever earlier 23 holding shall renewal extension reinstatement lease operation law event holding lessee expiration sooner termination lease lessors acquiescence without express agreement parties lessee shall tenant sufferance terms covenants conditions lease shall applicable period except lessee shall pay lessor base rent period hold amount equal one onequarter times base rent would payable lessee paragraph 21 hereof adjusted accordance paragraph 31 hereof holdover period part original lease term together additional rent due hereunder together amount due lease rent payable lessee holdover period shall payable lessor demand lessee holds tenant sufferance lessee shall vacate deliver premises lessor upon demand event lessee fails surrender premises lessor upon expiration termination lease tenancy sufferance lessee shall indemnify lessor loss liability resulting delay lessee surrendering premises including limited amounts required paid third parties occupied premises attorneys fees related thereto 24 waiver lessee understands acknowledges assent express implied lessor breach one terms covenants conditions hereof shall deemed taken waiver succeeding breach whether term covenant condition hereof 25 binding effect terms provisions lease shall binding upon apply successors permitted assigns legal representatives lessor lessee person claiming either agents attorneys subject always lessee restrictions contained section 11 hereof 26 compliance protective covenants addition without way limiting provisions lease lessee shall comply protective covenants hereafter record building property changes covenants duly adopted expressly acknowledged uses building premises subject covenants conditions restrictions johns creek filed deed book 9863 pages 106130 fulton county georgia records amended extended 27 signs lessee shall install paint display inscribe place affix sign picture advertisement notice lettering direction hereinafter collectively called signs exterior premises common areas building interior surface glass location could visible outside premises without first securing written consent lessor therefor sign permitted lessor shall times conform municipal ordinances laws regulations deed restrictions protective covenants applicable thereto lessee shall remove signs expiration termination lease lessees sole risk expense shall good workmanlike manner properly repair damage caused installation existence removal lessees signs subject approval johns creek architectural design review committee lessee shall permitted place name buildings monument sign face shall shared major tenants located building 28 directory board lessee shall entitled name shown upon directory board building lessor shall designate style directory board well amount space allocated lessee board shall located area designated lessor main lobby building 29 estoppel certificate lessee shall time upon less twenty 20 days prior written notice lessor execute acknowledge deliver lessor statement writing certifying lease unmodified full force effect modified stating nature modification certifying lease modified full force effect dates rent charges paid acknowledging lessee paying rent current basis offsets claims lessees knowledge uncured defaults part lessor hereunder specifying offsets claims defaults claimed information including limited recent financial statements reasonably required lessor expressly understood acknowledged statement may relied upon prospective purchaser encumbrancer portion property person delivered 30 severability terms conditions covenants provisions lease shall deemed severable clause provision herein contained shall adjudged invalid unenforceable court competent jurisdiction operation applicable law shall affect validity clause provision herein clauses provisions shall remain full force effect 31 entire agreement lessee acknowledges covenants representations warranties conditions express implied collateral otherwise forming part way affecting relating lease save expressly set lease together exhibits attached hereto constitutes entire agreement parties hereto may modified except herein explicitly provided except subsequent agreement writing equal formality hereto executed lessor lessee 32 cumulative remedies event default breach threatened breach lessee covenants provisions hereto lessor shall addition remedies provided lease right injunction andor damages right invoke remedy allowed law equity may one remedies contemporaneously various rights remedies powers options elections lessor reserved expressed contained lease cumulative one shall deemed exclusive others rights remedies powers options elections may hereafter conferred upon lessor law 33 parking areas common area control 331 lessee acknowledges agrees common areas building including without limiting generality foregoing lawns gardens parking areas sidewalks driveways foyers hallways washrooms stairwells within premises shall times subject exclusive control management lessor shall right change area level location arrangement common areas long lessor materially adversely affect ingress egress building premises 38 parking spaces per 1000 rentable square feet contained building shown exhibit 332 lessee parties shall use lessees proportionate share parking spaces parking areas made available building lessor lessee covenants agrees fully cooperate lessor enforcement program rules regulations designed orderly control operation parking areas 34 notices communications hereunder shall writing shall deemed given delivered person deposited united states mail return receipt requested addressed parties respective addresses set lessee syncor international corporation 20001 prairie street chatsworth california 91311 attn program director real estate facilities copy prior commencement date syncor international corporation 330 research court norcross georgia 30092 attn roy martarella commencement date syncor international corporation 6455 east johns crossing suite 400 duluth georgia 30155 attn roy martarella lessor technology parkatlanta inc suite 150 11555 medlock bridge road duluth georgia 30155 attn executive vice president addresses parties may direct time thirty 30 days written notice however time period response notice demand request must given shall commence run date receipt notice demand request addressee thereof rejection refusal accept inability deliver changed address notice given shall deemed receipt notice demand request sent lessee hereby appoints agent receive service dispossessory distraint proceedings notices connection therewith csc networks prenticehall corporation system inc 66 luckie street atlanta ga 30303 person available service person charge occupying premises time person charge occupying premises service notice may made attaching main entrance premises day enclosing directing stamping marking first class mail copy service notice lessee last known address lessee 35 recording neither lease portion hereof shall recorded unless parties hereto agree recording 36 attorneys fees lessee lessor agree pay prevailing partys reasonable attorneys fees collection costs expenses incurred enforcing obligations lessee lessor lease 37 homestead lessee waives homestead rights exemptions may law obligations owing lease lessee hereby assigns lessor homestead right exemption 38 time essence time essence lease 39 estate land lease shall create relationship landlord tenant lessor lessee nothing contained herein shall deemed construed parties hereto third party creating relationship principal agent partnership joint venture relationship landlord tenant parties hereto estate shall pass lessor lessee usufruct subject levy sale 40 accord satisfaction payment lessee receipt lessor lesser amount base rent additional rent amount due herein stipulated shall deemed account earliest amount due shall endorsement statement check letter accompanying check payment rent deemed accord satisfaction lessor may accept check payment without prejudice lessors right attempt recover balance rent pursue remedy provided lease 41 brokers fees exception technology parkatlanta inc broker representing lessor lessee warrant represent dealings broker agent connection lease lessor lessee hereby indemnify agree hold harmless liability claim expenses including attorneys fees incurred defending claim enforcing indemnity real estate brokerage commission similar fee compensation arising way connected claimed dealings indemnitor relating lease negotiation thereof 42 miscellaneous 421 words gender used lease shall held construed include gender words singular number shall held include plural unless context otherwise requires 422 captions inserted lease convenience way define limit describe scope intent lease provision hereof way affect interpretation lease 423 lease made delivered state georgia shall governed construed accordance laws state georgia additional terms stipulations lease see exhibit c attached hereto reference incorporated herein witness whereof parties hereto hereunto set hands seals day year first written lessor technology parkatlanta inc georgia corporation richard r obrien name richard r obrien title executive vice president corporate seal lessee syncor international corporation delaware corporation gene r mcgrevin name gene r mcgrevin title vice chairman chief executive officer attest linda leipheimer name linda leipheimer title assistant secretary corporate seal schedule exhibits exhibit legal description exhibit b outline premises exhibit c special stipulations exhibit c special stipulations lessee shall option terminate lease midnight october 17 2001 giving notice lessor prior january 18 2001 notice shall accompanied payment termination fee equal two months base rent exhibit 23 independent auditors report schedule consent board directors stockholders syncor international corporation audits referred report dated march 19 1997 included related financial statement schedule years threeyear period ended december 31 1996 included registration statement syncor international corporation financial statement schedule responsibility companys management responsibility express opinion financial statement schedule based audits opinion financial statement schedule considered relation basic consolidated financial statements taken whole presents fairly material respects information set forth therein consent incorporation reference registration statement 3344345 form s3 registration statements nos 337325 3339251 3343692 3357762 3352607 33318373 33318375 33318377 form s8 syncor international corporation report dated march 19 1997 relating consolidated balance sheets syncor international corporation subsidiaries december 31 1996 1995 related consolidated statements income stockholders equity cash flows related schedule years threeyear period ended december 31 1996 report appears december 31 1996 annual report form 10k syncor international corporation kpmg peat marwick llp los angeles california march 31 1997 exhibit 27 financial data schedule contains summary financial information extracted financial statement prepared kpmg peat marwick llp dated march 191997 qualified entirety reference financial statementitem 14 exhibits financial statement schedules reports form 8k 1 consolidated financial statements consolidated financial statements listed together report thereon kpmg peat marwick llp dated february 25 1998 appear companys annual report stockholders year ended december 31 1997 included form 10k annual report exhibit 13 hereby incorporated herein reference independent auditors report consolidated balance sheets consolidated statements income consolidated statements stockholders equity consolidated statements cash flows notes consolidated financial statements 2 financial statement schedules following schedule supporting financial statements company included herein page schedule ii valuation qualifying accounts14 schedules financial statements company omitted applicable required information included consolidated financial statements notes thereto 3 index exhibits list exhibits filed part report form 10k incorporated reference appears index exhibits page 15 b reports form 8k filed quarter ended december 31 1997 none c exhibits required item 601 regulation sk filed form 10k annual report incorporated reference listed index exhibits page 15 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized syncor international corporation robert g funari robert g funari president chief executive officer date 33198 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated monty fu monty fu chairman board director date 33198 robert g funari robert g funari president chief executive officer principal executive officer director date 33198 brad nutter brad nutter executive vice president chief operating officer 33198 michael e mikity michael e mikity senior vice president chief financial officer treasurer principal financial accounting officer date 33198 haig bagerdjian haig bagerdjian senior vice president secretary general counsel date 33198 george oki george oki director date 33198 arnold e spangler arnold e spangler director date 33198 steven b gerber steven b gerber md director date 33198 henry n wagner henry n wagner jr md director date 33198 gail r wilensky dr gail r wilensky director date 33198 uncollectible accounts writtenoff net recoveries reduction reserve index exhibits exhibit 3 certificate incorporation bylaws 31 restated certificate incorporation company filed exhibit 31 form 10k year ended may 31 1987 incorporated herein reference 32 restated bylaws company filed exhibit 32 form 10k year ended december 31 1995 incorporated herein reference 4 instruments defining rights security holders 41 stock certificate common stock company filed exhibit 41 form 10k year ended may 31 1986 incorporated herein reference 42 rights agreement dated november 8 1989 company american stock transfer trust company filed exhibit 21 registration statement form 8a dated november 3 1989 incorporated herein reference 10 material contracts 101 syncor international corporation 1981 master stock option plan amended filed part companys proxy statement dated november 5 1985 annual meeting stockholders held november 26 1985 incorporated herein reference 102 form indemnity agreement substantially entered company director officer filed exhibit 32 appendix form 10k year ended december 31 1995 incorporated herein reference 103 form benefits agreement substantially entered company director filed exhibit 108 form 10k year ended december 31 1995 incorporated herein reference 104 form benefits agreement substantially entered company certain employees filed exhibit 108 form 10k year ended december 31 1995 incorporated herein reference 105 syncor international corporation 1990 master stock incentive plan amended restated june 18 1997 filed exhibit 101 companys form 10q quarter ended june 30 1997 incorporated herein reference 106 form stock option agreement substantially entered company certain employee directors employees filed exhibit 1015 form 10k year ended december 31 1993 incorporated herein reference 107 form stock option agreement substantially entered company certain nonemployee directors filed exhibit 1016 form 10k year ended december 31 1993 incorporated herein reference 108 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company arnold e spangler filed exhibit 1017 form 10k year ended december 31 1995 incorporated herein reference 109 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company george oki filed exhibit 1018 form 10k year ended december 31 1995 incorporated herein reference 1010 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company henry wagner jr filed exhibit 1019 form 10k year ended december 31 1995 incorporated herein reference 1011 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company gail wilensky filed exhibit 43b registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1012 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company steven gerber filed exhibit 43a registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1013 subscription agreement dated july 15 1996 executed syncor management corporation favor american tax credit corporate fund iii lp together promissory note dated july 15 1996 executed syncor management corporation favor john hancock mutual life insurance company assignee corporate credit inc guarantee parent corporation dated july 15 1996 executed company favor john hancock mutual life insurance company assignee corporate credit inc agreements filed exhibit 1015 form 10k year ended december 31 1996 incorporated herein reference 1014 1995 management incentive plan company filed exhibit 1020 form 10k year ended december 31 1995 incorporated herein reference 1015 1996 management incentive plan company filed exhibit 103 form 10q quarter ended september 30 1996 incorporated herein reference 1016 1997 management incentive plan company filed exhibit 1018 form 10k year ended december 31 1996 incorporated herein reference 1017 office lease dated september 30 1996 massachusetts life insurance company relating office lease companys corporate headquarters woodland hills california filed exhibit 1019 form 10k year ended december 31 1996 incorporated herein reference 1018 lease dated may 30 1996 company technology parkatlanta inc relating office lease companys administrative office duluth georgia filed exhibit 1020 form 10k year ended december 31 1996 incorporated herein reference 1019 nonemployee director stock compensation plan dated august 27 1996 filed exhibit 43 form s8 registration statement filed company sec december 20 1996 1020 loan agreement dated march 31 1997 among syncor pharmaceuticals inc borrower company guarantor first national bank chicago lender filed exhibit 101 form 10q quarter ended march 31 1997 incorporated herein reference 1021 employment agreement dated january 1 1997 monty fu companys chairman board company filed exhibit 102 form 10q quarter ended march 31 1997 incorporated herein reference 1022 employment agreement dated january 1 1997 robert funari companys president chief executive officer company filed exhibit 103 form 10q quarter ended march 31 1997 incorporated herein reference 1023 credit agreement dated august 8 1997 syncor international corporation mellon bank na filed exhibit 102 form 10q quarter ended september 30 1997 incorporated herein reference 1024 syncor international corporation deferred compensation plan effective january 1 1998 1025 consulting agreement dated january 31 1998 james f mitchell company 1026 credit agreement dated january 5 1998 among company borrower first national bank chicago lender administrative agent mellon bank na lender 11 statement computation per share earnings computation clearly determined material contained companys annual report stockholders year ended december 31 1997 13 annual report security holders syncor international corporation annual report stockholders year ended december 31 1997 except specific information annual report expressly incorporated herein reference furnished information commission deemed filed part hereof 21 subsidiaries registrant 27 financial data schedule state country name subsidiary organization syncor diagnostics llc california syncor management corporation delaware syncor midland inc texas syncor pharmaceuticals inc delaware tme inc delaware comprehensive medical imaging inc delaware national diagnostic imaging inc delaware beijing syncor medicine corporation ltd peoples republic china pharmatopes proprietary limited south africa shanghai syncor medicine corporation ltd peoples republic china specialised medical trading pty ltd australia syncor de mexico sa de cv mexico syncor de puerto rico inc puerto rico syncor hong kong limited hong kong syncor international thailand co ltd thailand syncor korea inc south korea syncor new zealand limited new zealand syncor pharmacies australia pty ltd australia syncor overseas ltd british virgin islands syncor philippines inc philippines syncor taiwan inc taiwan 23 consent kpmg peat marwick llp management contracts compensatory plan subsidiaries syncor overseas ltd 50 owned syncor exhibit 1024 syncor international corporation deferred compensation plan whereas syncor international corporation desires retain services select group management highly compensated employees members board directors corporation recognizes loss services member group would result substantial loss corporation whereas syncor international corporation desires recognize services rendered past rendered future members group therefore syncor international corporation hereby adopts deferred compensation plan select group management highly compensated employees members board directors hereinafter set forth article 1 definitions purposes hereof unless otherwise clearly apparent context following terms appear proper nouns shall meanings indicated 11 account balance respect participant deferred amounts corporate contributions plan amount transferred prior plan adjusted additions amounts 12 additions dollar amount equivalent underlying performance hypothetical investment funds specified committee designated participant accordance section 23 13 beneficiary person persons including without limitation trustees testamentary inter vivos trust designated time writing pursuant article 4 benefits may payable upon death participant article 3 14 board directors board directors syncor international corporation constituted time 15 committee deferred compensation plan committee consisting person persons appointed chief executive officer corporation administer plan committee may assign routine administrative functions department corporation another organization discretion 16 compensation total salary bonuses including limited compensation paid corporations management incentive plans fees paid accrued corporation services rendered participant reportable form w2 form 1099 case may taxable income federal income tax purposes compensation defined herein include car allowances forms taxable welfare benefits 17 corporate contribution monthly contribution amount corporation behalf either employee participant director participant follows 1 employee participant plan long remains employee participant remains employee corporation amounts shall contributed behalf employee participant rate twentyfive percent 25 fifteen percent 15 compensation deferred individual employee participant limited section 21d corporation match deferrals excess fifteen percent 15 2 director participant plan long remains director participant remains member board directors corporation amounts shall contributed behalf director participant rate twentyfive percent 25 compensation deferred director participant 18 corporation syncor international corporation delaware corporation successor thereof including affiliated corporation adopts plan consent board directors corporation 19 deferred amount credited plan corporation lieu payment participant compensation 110 director participant member board directors corporation executed application participation pursuant section 21 participating plan time however notwithstanding designation contrary member board directors corporation participant prior plan elected receive distribution prior plan shall eligible time future participate plan 111 effective date plan january 1 1998 112 employee participant manager highly compensated employee corporation designated committee eligible participation plan executed application participation pursuant section 21 participating plan time however notwithstanding designation contrary manager highly compensated employee corporation participant prior plan elected receive distribution prior plan shall eligible time future participate plan 113 participant director participant employee participant 114 plan syncor international corporation deferred compensation plan effective january 1 1998 time amended effect 115 plan year january 1 december 31 116 prior plan syncor international corporation deferred compensation plan made effective july 1 1991 117 termination service termination death retirement otherwise participants service member board directors employee corporation case may article 2 deferred compensation 21 eligibility participation eligibility commence participation plan shall restricted members board directors managers highly paid employees deemed committee sole discretion qualify inclusion select group management highly compensated employees defined sections 2012 301a3 401a1 4021b6 employee retirement income security act 1974 amendments thereto members board directors provided however person shall timely complete forms necessary participation plan section application individual selected shall first become participant plan filing corporation written application participation form satisfactory corporation within thirty 30 days date first notified writing eligible participate plan application filed within thirty 30 day period individual shall thereafter permitted participate plan next opportunity generally available participants make change deferral elections b deferral election participant shall indicate written form satisfactory corporation percentage amount compensation otherwise payable deferred commencing first day eligible defer amounts plan respect specific plan year deferral election shall irrevocable shall remain effect earliest occurrence termination event defined section 24 ii timely completion change deferral election form subsequent open enrollment period plan participant fail provide deferral election fail timely provide deferral election given plan year subsequent first plan year participant participated deferral election prior plan year shall apply c deferral percentage committee may sole discretion permit separate deferral election made respect subcategories compensation participant applicable deferral maximum employee participant shall entitled defer twentyfive percent 25 hisher compensation employee participant elect differing percentages respect subcategories hisher compensation permitted committee maximum heshe may defer subcategory twentyfive percent 25 director participant shall restriction maximum amount compensation heshe may defer instead heshe may defer 100 hisher compensation received member board directors corporation shall sole discretion establish deferral maximums deems fit corporation shall notify participants writing additional maximums prior beginning plan year notification given maximum effect immediately preceding plan year shall apply new plan year e deferral minimum deferral percentage plan shall five percent 5 salaryfees unless otherwise amended corporation shall notify participants writing amendments prior beginning plan year notification given minimum effect immediately preceding plan year shall apply new plan year 22 less twenty 20 days prior start plan year committee shall provide notice participant terms conditions upon deferrals may made respect plan year ii deferral form make deferral elections plan year election forms must filed least ten 10 days prior beginning plan year pertains shall effective first day plan year following filing thereof notice terms conditions provided committee terms conditions prior plan year shall remain effect 23 upon commencement participation plan participant may designate list hypothetical investments investment funds selected committee investments investment funds would prefer deferred amounts corporate contributions additions thereon deemed invested participant may time request accordance rules procedures adopted committee account balance andor future deferred amounts changed one deemed investment whatever deemed investment may listed committee time request committee sole discretion may determine whether amounts fact invested otherwise corporation agrees credit account balance additions thereon dates deferred amounts credited account 24 termination event participant shall continue eligible defer amounts compensation plan earliest date following events termination event occurs plan terminated b occurs termination service defined section 117 c committee makes determination participant longer eligible continue defer amounts plan participant provides notice corporation provided section 28 want continue participation plan one years 25 plan committee empowered accelerate payment amounts participants account balance participant event plan committee determines participant become totally disabled heshe prevented engaging suitable gainful employment occupation based medical evidence satisfactory committee disability permanent continuous remainder hisher life ii demonstrated financial hardship based circumstances beyond hisher control severely affecting hisher financial affairs clearly endangering family present impending want deprivation amount payment made based financial hardship limited amount necessary meet emergency 26 participants eligibility defer amounts plan discontinued section 24 may eligible recommence deferrals plan except upon prior approval committee 27 event participant granted leave absence corporation deferred amounts corporate contributions shall credited participants account balance duration period leave however additions shall continue credited period leave absence shall entitle participant distribution termination benefit upon termination leave absence participant return hisher duties member board directors corporation manager highly compensated employee case may heshe eligible continue defer plan based upon enrollment forms filed corporation section 21 plan remains effect long termination event occurs 28 participant may notify corporation advance writing longer wishes defer compensation pursuant section 21 period one years circumstances deferred amounts shall credited participants account balance duration period notice shall however entitle participant distribution hisher termination benefit article 3 benefits 31 termination benefit upon occurrence termination event provided sections 2425 limited sections 2728 participant shall entitled receive distribution account balance termination benefit defined herein standard distribution options provided section 31c pursuant participants termination benefit election defined termination benefit attributable participants account balance shall paid either lump sum within thirty 30 days following termination date ii five annual installments iii ten annual installments standard distribution option annual installments selected first payment shall made within thirty 30 days following termination date except otherwise limited plan notwithstanding election contrary installment payout participant whose account balance less 10000 time termination date lump sum distribution apply termination benefit shall made within thirty 30 days following termination date except otherwise limited plan b termination benefit election date participant commences participation plan participant shall elect standard distribution option termination benefit election termination benefit election may thereafter changed year effective first day next plan year beginning date election termination benefit election shall binding unless made least one 1 full year prior termination date termination date occur within one 1 year termination benefit election last valid termination benefit election made one 1 year termination date effective termination benefit election otherwise effect termination benefit attributable deferred amounts additions thereto shall payable lump sum within thirty 30 days following termination date corporation shall make available participant appropriate form making termination benefit election form shall made available time participant commences participation plan least twenty 20 days start subsequent plan year c installment method event participant chooses receive termination benefit attributable hisher account balance installments period five 5 years except otherwise limited plan first payment would equal onefifth full value account balance date payment installment payment made following year would equal onefourth value account balance date payment including additions credited remaining balance since date first payment forth similar payment schedule would apply termination benefit payable installments ten 10 year period method payment referred herein installment method service distribution notwithstanding section 31a subject provisions plan participant may make irrevocable election time specified section 21 section 22 elections changes receive part deferred amount corporate contributions plan year together additions respect thereto form service distribution election allow participant set advance year service distribution made whether participants termination date within subsequent year event however distribution less five 5 years date election made committee discretion shall select date year elected participant service distribution made service distribution election made termination event occurs prior date service distribution made distribution shall made lump sum installments accordance participants election subject terms conditions plan 32 death benefit notwithstanding provisions set forth section 31 infra event death participant entire remaining value hisher account balance distributed lump sum survivor benefit provided section 43 addition certain individuals participated prior plan receive additional death benefit continue defer 15 compensation inception occurrence termination event ii die prior termination event described section 24 subject terms conditions plan applicable individuals benefit may receive described schedule hereto article 4 beneficiary 41 time participation plan commences participant shall designate form satisfactory corporation one 1 beneficiaries receive benefits may become payable hereunder event death beneficiary designation beneficiary changed participant time prior hisher death upon written notice corporation 42 participant shall made one 1 beneficiary designation beneficiary designation recently filed corporation prior time participants death shall govern 43 amounts plan become payable following participants death time beneficiary designation applicable beneficiary existence payments shall made lump sum participants surviving spouse none amounts shall paid participants estate article 5 miscellaneous 51 amendment termination board directors corporation reserves right amend whole part writing terminate plan time without notice provided however action shall reduce value participants account balance accrued prior date amendment termination 52 insurance corporation may purchase one 1 insurance policies life participant means providing whole part payment benefits hereunder however event neither participant designated beneficiary shall rights whatsoever therein proceeds therefrom corporation rabbi trust described section 56 formed connection plan shall sole owner beneficiary insurance policy shall possess may exercise incidents ownership therein policy policies property shall held trust participant person collateral security obligation corporation hereunder plan shall circumstances deemed constitute contract insurance 53 contract employment plan shall circumstance deemed effect upon terms conditions employment employee corporation whether participant hereunder neither offering plan payment expenses costs benefit amounts associated plan documents published connection plan shall construed created contract employment participant corporation 54 benefits transferable benefits plan shall subject manner anticipation alienation sale transfer assignment pledge encumbrance participant beneficiary attempt shall null void benefits plan shall subject liable debts contracts liabilities engagements torts participant beneficiary may subject attachment seizure creditor participant beneficiary circumstances 55 determination benefits event participants termination death following termination time death portion participants account balance remains unpaid participant applicable beneficiary case may shall notify corporation promptly event corporation provide claimants statement form completion returned corporation together official death certificate applicable plan benefits may paid within ninety 90 days receipt application benefits corporation shall notify applicant decision respect payment benefits plan special circumstances require extension time corporation shall notify applicant circumstances within ninety 90 days receipt application corporation shall thereafter notify applicant decision within 180 days receipt application denied whole part corporations notice denial shall writing shall state specific reasons denial specific reference pertinent plan provisions upon denial based b description additional materials information necessary applicant perfect claim explanation materials information necessary c explanation plans claim review procedure sixty 60 day period following applicants receipt notice denial application benefits applicant duly authorized representative may review pertinent documents within sixty 60 days submit written request corporation review denial applicant submitting request review shall allowed submit questions comments writing corporation shall afford applicant requests hearing full fair review decision denying application may sole discretion hold hearing review issues raised applicant hearing shall take place within thirty 30 days date applicants request within sixty 60 days receipt request review corporation shall issue written decision applicant special circumstances need hold hearing require extension time corporation shall issue written decision later 120 days receipt request review corporations decision shall include specific reasons decision written manner calculated understood applicant contain specific references pertinent plan provisions upon decision based 56 trust tax purposes title employee retirement income security act 1974 amended erisa plan intended qualify unfunded plan maintained primarily purpose providing deferred compensation select group management highly compensated employees members board directors shall interpreted accordingly action corporation board directors plan shall construed creating trust escrow secured segregated fund fiduciary relationship kind favor participant beneficiary persons otherwise entitled benefits plan status participant beneficiary respect liabilities assumed corporation hereunder shall solely unsecured creditors corporation plan constitutes mere promise corporation make benefit payments future insurance policy asset acquired held corporation connection liabilities assumed hereunder shall deemed held trust escrow secured segregated fund fiduciary relationship kind benefit participant beneficiary security performance obligations corporation shall remain general unpledged unrestricted asset corporation times subject claims general creditors corporation notwithstanding foregoing corporation may transfer assets including insurance policies grantor trust type known rabbi trust corporation grantor owner trust 57 plan administration plan shall administered committee shall exclusive authority sole discretion responsibility matters connection operation administration plan committees powers duties shall include limited following responsibility compilation maintenance records necessary connection plan b authorizing payment benefits expenses plan c authority engage legal accounting professional services may deem proper discretionary authority interpret plan e discretionary authority determine eligibility benefits plan resolve issues fact law connection determination decisions committee shall final binding upon parties committee time may allocate persons organizations rights powers duties respect operation administration plan allocation shall reviewed time committee shall unless committee specifies otherwise carry discretionary authority committee possesses regarding matter shall terminable upon notice committee sole discretion deems reasonable prudent circumstances 58 satisfaction claims payment participant beneficiary legal representative either accordance terms plan shall extent thereof full satisfaction claims person may corporation may require payee condition payment execute receipt release therefore form shall determined corporation 59 governing law plan shall construed administered governed respects accordance laws state california extent preempted erisa 510 gender number words used herein masculine feminine neuter gender shall construed though also used another gender cases would apply words used herein singular plural form shall construed though also used form cases would apply 511 severability event court competent jurisdiction determines provision plan violation statute public policy provisions plan violate statute public policy shall stricken provisions plan violate statute public policy shall continue full force effect court order striking provision plan shall modify stricken terms narrowly possible give much effect possible intentions corporation establishing plan 512 taxation internal revenue service finds compensation intended deferred federal income tax purposes pursuant plan immediately taxable participant federal income tax purposes corporation may shall required amend plan comply internal revenue service requirements necessary achieve desired federal income tax benefits relating plan notwithstanding foregoing participant agrees liable tax may imposed internal revenue service taxing entity respect benefits provided behalf participant beneficiary pursuant plan including without limitation withholding taxes irrespective whether tax consequences intended pursuant plan event amounts compensation otherwise intended deferred plan result immediate taxation participant federal income tax purposes plan amended achieve intended deferral participant may receive immediate distribution portion value account balance subject taxation sole discretion committee 513 indemnification corporation agrees shall indemnify hold harmless indemnified person hereinafter defined claims losses damages causes action suits liability every kind including expenses litigation court costs reasonable attorneys fees incurred connection plan indemnified person shall mean director officer committee member employee corporation acting fiduciary plan indemnity shall apply regardless whether claims losses damages causes action suits liabilities arise whole part negligence fault part indemnified person except extent final adjudication court tribunal competent jurisdiction claim liability result gross negligence willful misconduct indemnified person 514 benefits deferrals participant shall given effect corporations benefits plans andor whenever corporation required verify status participant follows deferrals shall considered purposes determining participants total income verifying participants status credit grantors credit reporting agencies response legal process andor authorized persons entities b permitted terms applicable plan subject applicable law amounts deferred plan shall taken account purposes determining amounts paid participant insurance salaryfees continuation replacement plan maintained corporation c except specifically excluded terms plans agreements deferrals compensation plan shall taken account corporation determining participants compensation connection determining eligibility bonus incentive severance pay plans maintained corporation amounts deferred plan shall treated compensation purposes determining amount participants deferrals qualified pension plan corporation 515 expenses administering plan grantor trust described section 56 shall borne corporation 516 successors assigns plan shall binding inure benefit corporation participants beneficiaries respective heirs assigns 517 arbitration shall exclusive remedy resolving dispute controversy corporation participant beneficiary regard issue relating plan cannot resolved claims procedure set forth section 55 arbitration shall conducted accordance applicable rules american arbitration association arbitrator shall empowered grant relief would available court law event conflict agreement rules american arbitration association provisions agreement shall determinative parties unable agree upon arbitrator shall select single arbitrator list designated office american arbitration association responsibility city participant beneficiary last resided employed corporation seven arbitrators shall retired judges actively involved hearing private cases members national academy arbitrators parties unable agree upon arbitrator list shall strike names alternatively list first strike determined lot party used three strikes remaining name list shall arbitrator fees expenses arbitrator shall initially borne equally parties provided however party shall initially responsible fees expenses representatives witnesses parties cannot agree upon location arbitration arbitrator shall determine location judgment may entered award arbitrator court jurisdiction prevailing party arbitration proceeding determined arbitrator enforcement court proceedings shall entitled extent provided law reimbursement party prevailing partys costs including limited arbitrators compensation expenses reasonable attorneys fees acknowledged robert g funari 1198 syncor international corporation date schedule following individuals entitled receive additional death benefit referenced section 32 plan described herein name amount additional death benefit 1 monty fu 725000 2 kumar chatani 350000 exhibit 1025 consulting agreement consulting agreement made entered 31st day january 1998 syncor international corporation delaware corporation syncor james francis mitchell individual consultant reference following facts syncor acquisition nds corp national diagnostic services inc nds james francis mitchell co inc jfm consultant parties certain asset purchase agreement asset purchase agreement certain agreement plan merger agreement dated january 21 1998 pursuant nds jfm collectively sellers transferred syncor certain assets interests relating field medical imaging described specifically agreements b consultant possesses special skills knowledge qualifications beneficial business syncor particularly area medical imaging c parties desire enter agreement consultant provide services syncor relating field medical imaging parties intend consultant shall independent contractor syncor agreement employee syncor therefore consideration mutual agreements covenants contained herein good valuable consideration receipt sufficiency hereby acknowledged syncor consultant hereby agree follows 1 engagement term syncor engages services consultant accepts engagement upon terms conditions set forth agreement term commencing date hereof terminating second anniversary date hereof unless engagement sooner terminated provided agreement 2 duties consultant shall engaged provide consulting services syncor respect syncors plans expand medical imaging business respect syncors operations management medical imaging facilities owned affiliated andor operated consultant shall also perform duties pertaining syncors business syncor consultant may time mutually agree services performed consultant particularly described exhibit attached hereto 3 nature services consultant shall perform diligently best talents skills expertise services required perform agreement shall devote full time performance duties except may continue engage business activities nds currently engages including activities tamarack investment partners lp performance investor relations general partner duties nds imaging center management contracts syncor consultant estimate activities require approximately one business day week consultants time attention syncor also understands consultant takes approximately four weeks vacation calendar year subject syncors prior written approval consultant may assign rights duties obligations agreement entity owned controlled provided consultant shall continue perform consulting advisory services behalf assignee event consultant ceases perform services behalf assignee agreement shall terminate consultant shall right engage gainful activities businesses provided consultant shall engage activities businesses conflict compete activities businesses syncor consultant may however engage activities expressly permitted article vi asset purchase agreement 4 compensation syncor shall pay consultant shall accept payment full services rendered syncor consulting fee equal 150000 per year consultants compensation shall paid consultant equal installments monthly basis 5 reimbursement expenses travel expenses syncor shall reimburse consultant reasonable outofpocket expenses authorized chief executive officer syncor incurred consultant performance duties hereunder accounted syncor accordance syncors reporting reimbursement policies consultant shall send invoice expenses reimbursed company invoice shall accompanied following certification signed consultant certify invoice true correct payment therefor received consultant syncor agrees reimburse consultant cost business class airfare air travel excess four hours international air travel 6 confidential relationship created agreement consultant acknowledges agreement creates relationship confidence trust part consultant benefit syncor term agreement consultant may responsible whole part creation may acquire certain confidential information defined section 610 syncor acknowledges syncor would entered agreement unless assured confidential information would held confidence consultant sole benefit syncor pursuant terms set forth section 6 61 use confidential information term agreement times thereafter consultant shall keep confidential information confidence shall disclose person except syncors personnel entitled thereto persons designated writing syncor consultant shall cause suffer permit confidential information used gain benefit party outside syncor consultants personal gain benefit outside scope consultants engagement syncor consultant acknowledges unauthorized taking syncors trade secrets crime california penal code section 499c punishable imprisonment state prison county jail time exceeding one year fine imprisonment consultant acknowledges unauthorized taking syncors trade secrets could also result civil liability california civil code section 3426 willful misappropriation may result award consultant triple amount syncors damages syncors attorneys fees collecting damages 62 solicitation business consultant shall longer duration threeyear period immediately following closing date defined merger agreement ii period commencing closing date continuing one year termination agreement iii period commencing closing date terminating one year date consultant ceases beneficially syncor shares constituting one percent syncor shares outstanding longer period restricted period solicit assist person solicit business syncor present past customer syncor request advise present future customer syncor withdraw curtail cancel business dealings syncor commit act assist others commit act might injure business syncor 63 solicitation employees consultant shall restricted period directly indirectly solicit encourage employee syncor leave employ syncor b hire employee former employee syncor employee left employ syncor within one year prior thereto 64 solicitation consultants consultant shall restricted period directly indirectly solicit encourage cease work syncor consultant contract syncor b hire consultant former consultant syncor consultant ceased engaged syncor within one year prior thereto 65 use syncor name consultant shall make written use reference syncors name marketing public relations advertising display business purpose make use syncors facilities activity unrelated express business purposes interests syncor agreement without prior written consent syncor consent may granted withheld syncors sole absolute discretion 66 survival consultant agrees obligations covenants agreements consultant rights syncor set forth section 6 shall survive termination expiration agreement 67 rights remedies upon breach consultant breaches threatens commit breach provisions section 6 restrictive covenants syncor shall following rights remedies rights remedies shall independent severally enforceable rights remedies shall addition lieu rights remedies available syncor law equity specific performance right remedy restrictive covenants specifically enforced court equity jurisdiction without need post bond security prove amount actual damage money damages would provide adequate remedy acknowledged agreed breach threatened breach cause irreparable injury syncor money damages provide adequate remedy syncor b accounting indemnification right remedy require consultant account pay syncor compensation profits monies accruals increments benefits derived received consultant associated party deriving benefits result breach restrictive covenants ii indemnify syncor losses damages including special consequential damages costs expenses including actual attorneys fees court costs may incurred result arise breach threatened breach restrictive covenants 68 severability covenantsblue pencilling court determines restrictive covenants part thereof invalid unenforceable remainder restrictive covenants shall thereby affected shall given full effect without regard invalid portions 69 enforceability jurisdictions syncor consultant intend hereby confer jurisdiction enforce restrictive covenants upon courts jurisdiction within geographical scope covenants courts one jurisdictions hold restrictive covenants wholly unenforceable reason breadth scope otherwise intention syncor consultant determination bar way affect right syncor relief provided courts jurisdiction within geographical scope covenants breaches covenants respective jurisdictions covenants relate jurisdiction purpose severable diverse independent covenants 610 definitions term syncor used sections 61 610 means syncor international corporation also company partnership entity directly indirectly controls controlled common control syncor international corporation b term confidential information used herein means information material generally known nonsyncor personnel gives syncor competitive business advantage opportunity obtaining advantage disclosure could detrimental interests syncor ii owned syncor interest iii either marked confidential information proprietary information similar marking b known consultant considered confidential proprietary syncor c relevant circumstances reasonably assumed consultant confidential proprietary syncor confidential information includes limited following types information similar nature whether reduced writing trade secrets marketing techniques materials marketing development plans price lists pricing policies business plans information relating customers andor suppliers identities characteristics agreements financial information projections inventions drawings file data documentation diagrams specifications know processes formulas models flow charts software various stages development source codes object codes research development procedures research development test results employee files confidential information also includes information described syncor obtains another party syncor treats proprietary designates confidential information whether owned developed syncor notwithstanding however information constitutes confidential information generic information general knowledge otherwise publicly known public domain 7 termination addition termination provisions contained herein agreement shall terminated reason act god governmental interference calamities matters parties control terms agreement cannot fulfilled notice shall specify reason election terminate effective date termination may effective immediately discretion party electing terminate b upon death permanent disability consultant c time syncor ceases conduct business reason whatsoever discontinues medical imaging business termination reason shall effective automatically upon event without notice either party election syncor giving fifteen 15 days written notice thereof consultant upon breach consultant term condition agreement upon occurrence event termination cause notice shall specify reason election terminate effective date termination purposes agreement cause defined follows failure neglect refusal consultant perform consulting services assigned hereunder including without limitation consultants inability perform obligations hereunder result chronic alcoholism drug addiction andor result failure comply laws rules regulations governmental entity respect performance consulting services described herein ii willful intentional grossly negligent act consultant effect materially injuring reputation business syncor iii consultants conviction crime including conviction nolo contendere plea involving syncors good faith judgment fraud dishonesty moral turpitude upon termination agreement consultant shall obligated render additional services syncor shall obligated make additional payments consultant provided however syncor shall pay consultant uncompensated services theretofore rendered consultant 8 return syncors property agreement terminated foregoing reasons syncor shall right option require consultant vacate offices syncors premises prior effective date termination cease activities syncors behalf upon termination engagement manner consultant shall immediately surrender syncor lists books records connection syncors business property belonging syncor distinctly understood lists books records documents property syncor 9 conflicting agreements consultant represents warrants syncor agreements party would prevent timely complete performance terms conditions agreement consultant shall enter agreement term agreement 10 indemnification consultant shall indemnify defend hold harmless syncor officers directors shareholders employees agents respective successors assigns claims demands liabilities losses expenses costs obligations recoveries damages nature whatsoever whether accrued absolute contingent otherwise including without limitation court costs attorneys fees whether suit brought arising resulting relating breach consultant covenants contained agreement acts omissions consultant indemnification obligation shall survive termination agreement 11 specific performance consultant breaches threatens breach provisions section 6 syncor right remedy addition rights remedies syncor may law equity rights agreement specifically enforced court equity jurisdiction without need post bond security prove amount actual damage money damages would provide adequate remedy acknowledged agreed breach threatened breach cause irreparable injury syncor monetary damages provide adequate remedy syncor 12 notices requests communications kind either party hereto may required desires serve upon party terms agreement shall writing shall delivered courier means personal service including means nationally recognized courier service professional messenger service sent telex telecopy mailed first class postage prepaid certified mail return receipt requested cases addressed consultant james f mitchell 3396 willow lane 201 westlake village ca 91361 syncor international corporation 6464 canoga avenue woodland hills ca 91367 attn general counsel notices requests communications shall deemed given date actual receipt delivery tothe address set forth case service telecopy copy notice shall personally delivered sent registered certified mail manner set forth within three 3 business days thereafter either party hereto may time notice writing served set forth designate different address different additional person notices communications thereafter given 13 attorneys fees event action proceeding arbitration parties hereto enforce provision right hereunder unsuccessful party action proceeding shall pay successful party costs expenses including limited reasonable attorneys fees incurred therein successful party cost expenses attorneys fees shall included part judgment award rendered action proceeding 14 relationship authority relationship syncor consultant intended created agreement client independent contractor nothing herein contained shall construed creating relationship employer employee principal agent consultant shall neither act make representation authorized act employee agent officer syncor 15 assignment services rendered duties performed consultant hereunder unique personal nature subject section 3 nothing contained agreement shall construed permit assignment consultant right obligation agreement assignment expressly prohibited without prior written consent syncor may granted withheld syncors sole absolute discretion 16 section headings several paragraphs agreement inserted solely convenience reference part hereof intended govern limit aid construction term provision hereof 17 entire agreement including exhibits hereto agreements documents instruments executed delivered pursuant hereto thereto intended embody final complete exclusive agreement among parties respect subject matter hereof intended supersede prior agreements understandings representations written oral respect thereto may contradicted evidence prior contemporaneous agreement understanding representation whether written oral 18 engagement continuance consultants engagement syncor consultant expiration term agreement shall deemed engagement shall subject termination without cause either syncor consultant upon delivery notice thereof party continuance engagement shall upon terms conditions set forth herein otherwise mutually agreed upon parties hereto 19 waiver modification provision agreement may amended modified termination discharge thereof agreed acknowledged orally may accomplished agreement writing signed party enforcement waiver amendment modification termination discharge sought 20 severability provisions agreement severable event provision declared invalid agreement shall interpreted invalid provision contained herein 21 governing law agreement shall constitute contract laws state california shall governed construed accordance laws said state without regard conflicts laws principles thereof 22 assurances syncor consultant shall whenever often reasonably requested party execute acknowledge deliver cause executed acknowledged delivered agreements instruments may necessary expedient proper opinion requesting party carry intent purposes agreement provided requesting party shall bear cost expense agreements instruments except party shall bear attorneys fees 23 counterparts agreement may executed simultaneously number counterparts shall deemed original together shall constitute one agreement witness whereof parties hereto executed agreement day year first set forth consultant james francis mitchell james francis mitchell syncor international corporation bys robert g funari robert g funari president exhibit consultants duties consultants duties shall include without limitation following 1 assisting syncor matters relating comprehensive medical imaging inc cmi medical imaging operations 2 assisting syncor cmi acquisition corporate development activities field medical imaging 3 assisting syncor developing international opportunitiesparticularly asia south america 4 participating requested business matters pertaining syncors core businesses exhibit 1026 credit agreement credit agreement dated january 5 1998 among syncor international corporation delaware corporation borrower first national bank chicago national banking association first chicago lenders time party hereto first chicago lenders referred herein individually lender collectively lenders first chicago administrative agent lenders capacity administrative agent parties hereto agree follows article definitions used agreement acquisition means transaction series related transactions consummated date agreement borrower subsidiaries acquires going business substantially assets firm corporation limited liability company division thereof whether purchase assets merger otherwise ii directly indirectly acquires one transaction recent transaction series transactions least majority number votes securities corporation ordinary voting power election directors securities power reason happening contingency majority percentage voting power outstanding ownership interests partnership limited liability company advance means borrowing hereunder conversion continuation thereof consisting aggregate amount several loans made borrowing date conversion continuation lenders borrower type case fixed rate advances interest period affiliate person means person directly indirectly controlling controlled common control person shall deemed control another person controlling person owns 10 class voting securities ownership interests controlled person possesses directly indirectly power direct cause direction management policies controlled person whether ownership stock contract otherwise administrative agent means first chicago capacity agent lenders pursuant article x individual capacity lender successor administrative agent appointed pursuant article x aggregate commitment means aggregate commitments lenders reduced time pursuant terms hereof agreement means credit agreement may amended modified effect time agreement accounting principles means generally accepted accounting principles effect time applied manner consistent used preparing financial statements referred section 54 alternate base rate means day rate interest per annum equal higher corporate base rate day ii federal funds effective rate day plus 12 per annum applicable margin connection eurodollar rate floating rate commitment fee applicable means date percentage listed applicable category column corresponding range total indebtedness ebitda ratio borrowers total indebtedness ebitda ratio determined quarterly based borrowers financial statements falls fiscal quarter ended immediately prior date indebtedness connection acquisition international magnetic imaging inc ref financial institution security balance 997 int rate due revolvers a1 dvi accounts 2806259 11 122998 proceeds prime 275 a2 dvi b accounts 2710350 12 123198 proceeds prime 35 a3 dvi overadvance na 750000 variable 122998 balloon total 6266609 real estate property loans b1 capital bank pine island bldg 19687389 975 101800 b2 suntrust boca raton bldg 476000 925 51600 b3 banco santandar san juan bldg 34166681 prime 1 2899 total 101454070 equipment loans c1 dvi equipment 17328871 1150 4400 instascan pine island c2 dvi equipment 70084197 1075 1102 siemens miami beach c3 dvi equipment 21265125 1150 4100 resonex refinancing arlington c4 dvi equipment 17328872 1150 4400 instascan boca raton c5 dvi equipment 163212300 1104 1101 term loan general c6 dvi equipment 179615800 11086 9102 south dade total 468835166 dvi term loans 16 d1 dvi 1 equipment 59973702 1150 10101 intangibles inventory d2 dvi 2 equipment 59973702 1150 10101 intangibles inventory d3 dvi 3 equipment 59973702 1150 10101 intangibles inventory d4 dvi 4 equiment 59973702 1150 10101 intangibles inventory d5 dvi 5 equiment 59973702 1150 10101 intangibles inventory d6 dvi 6 equiment 4283967 1150 10101 intangibles inventory total 304152477 dvi loans purchase assets payment fees e1 dvi general arlington 45559100 105 93099 e2 dvi general kansas 40553633 105 93099 city e3 dvi general south 18724166 105 93099 dade e4 dvi general pine 62800200 105 93099 island e5 dvi general orlando 23405232 105 93099 e6 dvi general oakland 25795663 105 93099 park e7 dvi general north 55894488 105 93099 miami e8 dvi general boca 58907015 105 93099 raton total 331639497 total debt 1832742110 table summary imi debt revolvers 626660900 real estate loans 101454070 equipment loans 468835166 dvi loans 635791974 total debt 93097 1832742110 syncor shall pay nondvi loans dvi revolving loans end first quarter 1998 respect nonrevolving dvi loans syncor analyze loan casebycase basis reasonable business judgment pay dvi loan pay loan dvi loan however may secured equipment purchased using proceeds loan secured assets equipment syncor must emcumbrance removed cannot remove encumbrance must pay loan end first quarter 1998 schedule 3 litigation see section 57 none schedule 4 initial commitment schedule lender commitment percentage first national bank chicago 45000000 600000 mellon bank 30000000 400000 schedule 5 outstanding letters credit see sections 41 xiv beneficiary face amount expiry date sam augustine 314500 123198 dave jacobson 69500 123198 duane kanne 216000 123198 perry newby 120000 113098 great plaines radioharmacy 800000 123198 adac asia 402725 2198 schedule 6 environmental matters see sections 516 envrionmental proteoction agency identified borrower one approximately 800 companies allegedly made improper disposals hazardous waste ramp industries denver colorado borrower informed epa assess apportion liability costs clean late 1997 borrower estimates exposure material exhibit 23 independent auditors report schedule consent board directors stockholders syncor international corporation audits referred report dated february 25 1998 included related financial statement schedule years threeyear period ended december 31 1997 included registration statement syncor international corporation financial statement schedule responsibility companys management responsibility express opinion financial statement schedule based audits opinion financial statement schedule considered relation basic consolidated financial statements taken whole presents fairly material respects information set forth therein consent incorporation reference registration statement 3344345 form s3 registration statements nos 337325 3339251 3343692 3357762 3352607 33318373 33318375 33318377 33339999 33340117 form s8 syncor international corporation report dated february 25 1998 relating consolidated balance sheets syncor international corporation subsidiaries december 31 1997 1996 related consolidated statements income stockholders equity cash flows related schedule years threeyear period ended december 31 1997 report appears december 31 1997 annual report form 10k syncor international corporation kpmg peat marwick llp kpmg peat marwick llp los angeles california march 31 1998item 14 exhibits financial statement schedules reports form 8k 1 consolidated financial statements consolidated financial statements listed together report thereon kpmg llp dated february 16 2000 appear companys annual report stockholders year ended december 31 1999 included form 10k annual report exhibit 13 hereby incorporated herein reference independent auditors report consolidated balance sheets consolidated statements income consolidated statements stockholders equity comprehensive income consolidated statements cash flows notes consolidated financial statements 2 financial statement schedules following schedule supporting financial statements company included herein page schedule ii valuation qualifying accounts 17 schedules financial statements company omitted applicable required information included consolidated financial statements notes thereto 3 index exhibits list exhibits filed part report form 10k incorporated reference appears index exhibits page 18 b reports form 8k filed quarter ended december 31 1999 form 8k dated september 28 1999 filed october 12 1999 disclosing adoption board directors new stockholder rights plan superseded companys previous rights plan c exhibits required item 601 regulation sk filed form 10k annual report incorporated reference listed index exhibits page 18 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date march 30 2000 syncor international corporation srobert g funari robert g funari president chief executive officer pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated smonty fu chairman board date march 30 2000 monty fu director srobert g funari president chief executive date march 30 2000 robert g funari officer principal executive officer director smichael e mikity senior vice president date march 30 2000 michael e mikity chief financial officer treasurer principal financial accounting officer sgeorge oki director date march 30 2000 george oki sarnold e spangler director date march 30 2000 arnold e spangler ssteven b gerber director date march 30 2000 steven b gerber md shenry n wagner director date march 30 2000 henry n wagner jr md sgail r wilensky director date march 30 2000 dr gail r wilensky sronald williams director date march 30 2000 ronald williams index exhibits exhibit 3 certificate incorporation bylaws 31 restated certificate incorporation company filed exhibit 31 form 10q quarter ended june 30 1999 incorporated herein reference 32 restated bylaws company filed exhibit 32 form 10k year ended december 31 1995 incorporated herein reference 4 instruments defining rights security holders 41 stock certificate common stock company filed exhibit form 10k year ended may 31 1986 incorporated herein reference 42 rights agreement dated september 28 1999 company american stock transfer trust company filed exhibit 4 form 8k dated september 28 1999 filed october 12 1999 incorporated herein reference 10 material contracts 101 syncor international corporation 1981 master stock option plan amended filed part companys proxy statement dated november 5 1985 annual meeting stockholders held november 26 1985 incorporated herein reference 102 form indemnity agreement substantially entered company director officer filed exhibit 32 appendix form 10k year ended december 31 1995 incorporated herein reference 103 form benefits agreement substantially entered company director filed exhibit 108 form 10k year ended december 31 1995 incorporated herein reference 104 form benefits agreement substantially entered company certain employees filed exhibit 108 form 10k year ended december 31 1995 incorporated herein reference 105 syncor international corporation 1990 master stock incentive plan amended restated june 18 1997 filed exhibit 101 companys form 10q quarter ended june 30 1997 incorporated herein reference 106 first amendment syncor international corporation 1990 master stock incentive plan amended restated dated june 23 1999 filed exhibit 104 form 10q quarter ended june 30 1999 incorporated herein reference 107 form stock option agreement substantially entered company certain employee directors employees filed exhibit 1015 form 10k year ended december 31 1993 incorporated herein reference 108 form stock option agreement substantially entered company certain nonemployee directors filed exhibit 1016 form 10k year ended december 31 1993 incorporated herein reference 109 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company arnold e spangler filed exhibit 1017 form 10k year ended december 31 1995 incorporated herein reference 1010 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company george oki filed exhibit 1018 form 10k year ended december 31 1995 incorporated herein reference 1011 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company henry wagner jr filed exhibit 1019 form 10k year ended december 31 1995 incorporated herein reference 1012 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company gail wilensky filed exhibit 43b registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1013 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company steven gerber filed exhibit 43a registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1014 subscription agreement dated july 15 1996 executed syncor management corporation favor american tax credit corporate fund iii lp together promissory note dated july 15 1996 executed syncor management corporation favor john hancock mutual life insurance company assignee corporate credit inc guarantee parent corporation dated july 15 1996 executed company favor john hancock mutual life insurance company assignee corporate credit inc agreements filed exhibit 1015 form 10k year ended december 31 1996 incorporated herein reference 1015 1997 management incentive plan company filed exhibit 1018 form 10k year ended december 31 1996 incorporated herein reference 1016 office lease dated september 30 1996 massachusetts life insurance company relating office lease companys corporate headquarters woodland hills california filed exhibit 1019 form 10k year ended december 31 1996 incorporated herein reference 1017 lease dated may 30 1996 company technology parkatlanta inc relating office lease companys administrative office duluth georgia filed exhibit 1020 form 10k year ended december 31 1996 incorporated herein reference 1018 nonemployee director stock compensation plan dated august 27 1996 filed exhibit 43 form s8 registration statement filed company sec december 20 1996 incorporated herein reference 1019 loan agreement dated march 31 1997 among syncor pharmaceuticals inc borrower company guarantor bank one na formerly first national bank chicago lender filed exhibit 101 form 10q quarter ended march 31 1997 incorporated herein reference 1020 credit agreement dated august 8 1997 syncor international corporation mellon bank na filed exhibit 102 form 10q quarter ended september 30 1997 incorporated herein reference 1021 syncor international corporation deferred compensation plan effective january 1 1998 filed exhibit 1024 form 10k year ended december 31 1997 incorporated herein reference 1022 credit agreement dated january 5 1998 among company borrower bank one na formerly first national bank chicago lender administrative agent mellon bank na lender filed exhibit 1026 form 10k year ended december 31 1997 incorporated herein reference 1023 first amendment credit agreement dated november 10 1999 among company borrower bank one na lender administrative agent mellon bank na lender 1024 executive longterm performance equity plan effective january 1 1998 filed exhibit 101 form 10q quarter ended march 31 1998 incorporated herein reference 1025 first amendment executive longterm performance equity plan dated november 17 1998 filed exhibit 1025 form 10k year ended december 31 1998 incorporated herein reference 1026 second amendment executive longterm performance equity plan dated june 23 1999 filed exhibit 101 form 10q quarter ended june 30 1999 incorporated herein reference 1027 1998 senior management stock purchase plan effective june 16 1998 filed exhibit 101 form 10q quarter ended june 30 1998 incorporated herein reference 1028 universal performance equity participation plan effective june 16 1998 filed exhibit 102 form 10q quarter ended june 30 1998 incorporated herein reference 1029 first amendment universal performance equity participation plan dated june 16 1998 filed together universal performance equity plan filed exhibit 102 form 10q quarter ended june 30 1998 incorporated herein reference 1030 second amendment universal performance equity participation plan dated june 23 1999 filed exhibit 102 form 10q quarter ended june 30 1999 incorporated herein reference 1031 third amendment universal performance equity participation plan dated june 23 1999 filed exhibit 103 form 10q quarter ended june 30 1999 incorporated herein reference 1032 new employee stock option plan dated june 1 1998 filed exhibit 101 form 10q quarter ended september 30 1998 incorporated herein reference 1033 form stock option agreement new employee stock option plan entered company certain employees filed exhibit 1031 form 10k year ended december 31 1998 incorporated herein reference 1034 nonqualified stock option award agreement dated february 24 1999 company robert g funari filed exhibit 101 form 10q quarter ended march 31 1999 incorporated herein reference 1035 nonemployee director 1999 stock incentive plan dated november 11 1999 1036 form nonemployee director 1999 stock incentive award agreement dated november 11 1999 entered company nonemployee directors excluding ronald williams 1037 split dollar agreement company monty wendy fu 1998 irrevocable trust dated january 8 1999 1038 2000 corporate management incentive plan 1039 amended restated employment agreement monty fu dated january 1 1997 amended restated december 31 1997 filed exhibit 102 form 10q quarter ended march 31 1998 incorporated herein reference 1040 amended restated employment agreement robert g funari dated january 1 1997 amended restated december 31 1997 filed exhibit 103 form 10q quarter ended march 31 1998 incorporated herein reference 11 statement computation per share earnings computation clearly determined material contained companys annual report stockholders year ended december 31 1999 13 annual report security holders syncor international corporation annual report stockholders year ended december 31 1999 except specific information annual report expressly incorporated herein reference furnished information commission deemed filed part hereof 21 subsidiaries registrant 23 independent auditors consent report schedule 27 financial data schedule exhibit 1035 syncor international corporation 1999 nonemployee director stock incentive plan 1 purpose plan purpose 1999 nonemployee director stock incentive plan promote success syncor international corporation providing additional means attract motivate retain nonemployee directors grant options option award purchase shares corporations common stock common stock provide added long term incentives high levels performance significant efforts improve financial performance corporation b providing non employee directors opportunity increase stake corporations future growth obtain direct benefits future appreciation common stock c aligning interests non employee directors interests stockholders 2 administration plan shall administered officer director committee corporations board directors 3 participation awards may granted nonemployee directors corporation served corporation least one year november 11 1999 4 stock subject plan maximum aggregated number shares common stock may granted plan shall 25000 shares option shall nonqualified stock option must granted december 31 1999 5 exercisability option except otherwise provided plan award agreement option shall become exercisable time follows 25 common stock shall become purchasable twelve months date option granted award date ii additional 25 common stock shall become purchasable twentyfour months award date iii additional 25 common stock shall become purchasable thirtysix months award date iv additional 25 common stock shall become purchasable fortyeight months award date provided however option may exercised less 10 shares one time unless number shares purchased total number time available purchase installment option participant given installment period purchase shares entitled purchase installment period participants right purchase shares purchased shall continue ten years award date expiration date unless theretofore terminated accordance provisions hereof plan option may exercised whole shares 6 method exercise payment exercise option shall means written notice exercise duly delivered corporation specifying number whole shares respect option exercised together written statements required pursuant section 11 payment price 7 effect termination directorship option rights hereunder extent rights shall exercised prior thereto shall terminate date participant ceases serve director corporation provided however participant may extent option shall become exercisable prior date exercise option time within 1 twelve months termination 2 twelve months participants death participant dies serving director corporation period referred clause 1 period death option may extent exercisable date death earlier termination exercised person persons participants rights plan shall pass applicable laws descent distribution unless sooner terminated pursuant plan option shall expire end applicable period specified clauses 1 2 extent exercised within period event may option exercised person expiration date 8 nonassignabilitv option shall subject sale transfer pledge assignment alienation laws descent distribution regardless community property interest therein participants spouse spouses successor interest event spouse participant shall acquired community property interest option participant transferees may exercise behalf spouse participant spouses successor interest 9 acceleration upon occurrence event defined corporations 1990 master stock incentive plan msip including change control option shall become immediately exercisable full extent theretofore exercisable unless prior event board determines otherwise subject however compliance applicable regulatory requirements including without limitation rule 16b3 promulgated exchange act 10 participant shareholder neither participant person entitled exercise option shall rights privileges shareholder corporation shares common stock certificates actually issued delivered adjustment made dividends rights record date prior date stock certificate certificates issued even record date subsequent date upon notice exercise delivered tender payment accepted 11 application securities laws shares common stock may purchased pursuant option unless applicable requirements federal state securities laws regulations exchanges upon common stock may listed shall fully satisfied participant must represent agree certify participant exercises option whole part time effect securities act 1933 amended securities act registration statement relating common stock issuable upon exercise available delivery prospectus meeting requirements section 10 securities act prospectus participant acquire common stock issuable upon exercise purpose investment view resale distribution condition exercise furnish corporation written statement effect satisfactory form substance corporation ii participant proposes publicly offer sell common stock issued upon exercise option participant notify corporation prior offering sale abide opinion counsel corporation whether conditions circumstances may offer sell shares procedure need followed prospectus delivered participant shares common stock common stock listed national securities exchange traded national market system security facilities nasdaq b certificates representing common stock acquired pursuant option may bear legend referring foregoing matters limitations securities act state securities laws respect transfer common stock corporation may impose stop transfer instructions implement limitations applicable person persons entitled exercise option provisions section 7 shall bound obligated provisions section 11 extent participant c officer director committee corporations board directors may impose conditions award exercise acceleration payment withholding obligation including without limitation restricting time exercise specified periods may required satisfy applicable regulatory requirements including without limitation rule 16b3 successor rule promulgated commission pursuant exchange act 12 notices notice given corporation pursuant plan shall writing addressed secretary corporation principal office notice given participant shall addressed address stated award agreement address either party may hereafter designate writing party notice shall deemed duly given enclosed properly sealed envelope addressed aforesaid registered certified deposited postage registry certification fee prepaid post office branch post office regularly maintained united states government 13 tax withholding provisions section 66 msip hereby incorporated shall govern withholding corporation required make respect exercise option well corporations right condition transfer common stock upon compliance applicable withholding requirements federal state local authorities 14 law applicable construction interpretation performance enforcement plan shall governed laws state delaware exhibit 1036 syncor international corporation nonemployee director 1999 stock incentive award agreement name nonemployee director participant address participant social security number shares 5000 exercise price per share 3475 award date november 11 1999 expiration date november 11 2009 whereas pursuant corporations 1999 nonemployee director stock incentive plan exempt limitation rule 16b3 promulgated securities exchange commission pursuant securities exchange act 1934 amended exchange act participant granted nonqualified stock option award purchase shares common stock corporation upon terms conditions hereinafter set forth therefore participant corporation agree follows 1 grant option corporation granted participant matter separate inducement agreement connection status nonemployee director lieu salary compensation services right option purchase accordance plan terms conditions plan hereinafter set forth part number shares common stock stated common stock price stated price exercisable time subject provisions award agreement prior close business expiration date stated 2 exercisability option except otherwise provided plan award agreement option shall become exercisable time follows 25 common stock shall become purchasable twelve months award date ii additional 25 common stock shall become purchasable twentyfour months award date iii additional 25 common stock shall become purchasable thirtysix months award date iv additional 25 common stock shall become purchasable fortyeight months award date provided however option may exercised less 10 shares one time unless number shares purchased total number time available purchase installment option participant given installment period purchase shares entitled purchase installment period participants right purchase shares purchased shall continue expiration date unless theretofore terminated accordance provisions hereof plan option may exercised whole shares 3 method exercise payment exercise option shall means written notice exercise duly delivered corporation specifying number whole shares respect option exercised together written statements required pursuant section 8 payment price 4 effect termination directorship option rights hereunder extent rights shall exercised prior thereto shall terminate date participant ceases serve director corporation provided however participant may extent option shall become exercisable prior date exercise option time within 1 twelve months termination 2 twelve months participants death participant dies serving director corporation period referred clause 1 period death option may extent exercisable date death earlier termination exercised person persons participants rights plan award agreement shall pass applicable laws descent distribution unless sooner terminated pursuant plan option shall expire end applicable period specified clauses 1 2 extent exercised within period event may option exercised person expiration date 5 nonassignabilitv option shall subject sale transfer pledge assignment alienation laws descent distribution regardless community property interest therein participants spouse spouses successor interest event spouse participant shall acquired community property interest option participant transferees may exercise behalf spouse participant spouses successor interest 6 acceleration upon occurrence event defined syncors 1990 master stock incentive plan msip including change control award shall become immediately exercisable full extent theretofore exercisable unless prior event board determines otherwise subject however compliance applicable regulatory requirements including without limitation rule 16b3 promulgated exchange act 7 participant shareholder neither participant person entitled exercise option shall rights privileges shareholder corporation shares common stock certificates actually issued delivered adjustment made dividends rights record date prior date stock certificate certificates issued even record date subsequent date upon notice exercise delivered tender payment accepted 8 application securities laws shares common stock may purchased pursuant option unless applicable requirements federal state securities laws regulations exchanges upon common stock may listed shall fully satisfied participant represents agrees certifies participant exercises option whole part time effect securities act 1933 amended securities act registration statement relating common stock issuable upon exercise available delivery prospectus meeting requirements section 10 securities act prospectus participant acquire common stock issuable upon exercise purpose investment view resale distribution condition exercise furnish corporation written statement effect satisfactory form substance corporation ii participant proposes publicly offer sell common stock issued upon exercise option participant notify corporation prior offering sale abide opinion counsel corporation whether conditions circumstances may offer sell shares procedure need followed prospectus delivered participant shares common stock common stock listed national securities exchange traded national market system security facilities nasdaq b participant understands certificates representing common stock acquired pursuant option may bear legend referring foregoing matters limitations securities act state securities laws respect transfer common stock corporation may impose stop transfer instructions implement limitations applicable person persons entitled exercise option provisions section 4 shall bound obligated provisions section 8 extent participant c board directors corporation may impose conditions award exercise acceleration payment withholding obligation including without limitation restricting time exercise specified periods may required satisfy applicable regulatory requirements including without limitation rule 16b3 successor rule promulgated commission pursuant exchange act 9 notices notice given corporation terms award agreement pursuant plan shall writing addressed secretary corporation principal office notice given participant shall addressed address stated address either party may hereafter designate writing party notice shall deemed duly given enclosed properly sealed envelope addressed aforesaid registered certified deposited postage registry certification fee prepaid post office branch post office regularly maintained united states government 10 tax withholding provisions section 66 msip hereby incorporated shall govern withholding corporation required make respect exercise option well corporations right condition transfer common stock upon compliance applicable withholding requirements federal state local authorities 11 law applicable construction interpretation performance enforcement award agreement shall governed laws state delaware witness whereof corporation caused award agreement executed behalf duly authorized officer participant hereunto set hand award date corporation participant syncor international corporation delaware corporation robert g funari president chief executive officer date consent spouse join spouse participant herein named executing foregoing nonemployee director stock option award agreement agree bound terms provisions thereof plan signature participants spouse exhibit 1037 split dollar agreement syncor international corporation monty wendy fu 1998 irrevocable trust agreement entered 8th day january 1999 syncor international corporation organized existing laws delaware monty wendy fu 1998 irrevocable trust third party owner witnesseth whereas monty fu employee rendered competent faithful services behalf corporation highly values services abilities accomplishments employee whereas corporation desires encourage employee continue render faithful high quality services corporation whereas corporation desirous providing protection beneficiaries employee event untimely death whereas adoption agreement contingent upon adoption employee wendy fu spouse agreement regarding current future interests syncor international corporation deferred compensation plan whereas third party owner applied owner life insurance policy number 020029799 policy specified face amount 16300000 john hancock variable life insurance company whereas third party owner assigned policy corporation collateral amounts advanced corporation agreement instrument assignment collateral assignment executed january 8 1999 whereas understood agreed agreement considered effective date policy issued insurance company date execution agreement whichever later therefore value received consideration mutual covenants agreements contained herein sufficiency receipt hereby acknowledged corporation successors assigns third party owner executors administrators assigns agree follows article ownership rights policy third party owner shall ownership rights options privileges permitted policy except expressly granted corporation terms agreement b corporations interest policy shall limited total net premiums paid corporation described schedule attached hereto incorporated herein reference c corporation may take action respect policy impair right interest third party owner policy article ii premium payment options third party owner shall pay portion premium sufficient offset taxable income paragraph would deemed received employee revenue rulings 64328 19642 cb 11 66110 19661 cb 12 reason insurance protection afforded employee b balance premium set forth schedule shall paid corporation later due date policy year c corporation third party owner shall pay respective portion total amount premium payable policy corporation shall pay portion premium directly insurance company notwithstanding foregoing corporation may pay entire premium third party owner shall reimburse corporation within one year said premium obligation corporation shall pay annual bonus employee equal premiums paid third party owner year agreement well additional amount sufficient cover income tax liability incurred employee virtue bonus article iii division death proceeds policy event employee spouse shall die agreement force corporation shall entitled receive policy proceeds amount equal corporations interest policy determined article ib agreement portion policy proceeds excess amount paid corporation shall paid beneficiary named third party owner accordance terms policy reflected records insurance company article iv termination agreement unless otherwise altered written agreement parties agreement automatically terminate upon repayment third party owner corporation amounts described paragraph b article b prior termination third party owner shall pay corporation amount equal corporations interest policy article ib payment due without additional interest penalties long paid within sixty days end sixteenth year period described schedule document third party owner unable due amounts available policy pay entire balance due time may option extend payment period third party owner may providing note payable corporation period ten years interest accruing rate six percent per annum upon receipt premiums paid corporation article ib plus interest applicable corporation shall release claim interest policy c third party owner fails pay corporation within required time frame third party owner shall deemed relinquished rights policy corporation free surrender take action respect policy may desire agreement terminate third party owner agrees upon request corporation execute instruments may required transfer right title interest policy corporation upon division death proceeds policy pursuant article iii agreement shall terminate e upon bankruptcy insolvency sale fifty percent assets corporation precludes corporation making premiums required schedule third party owner longer obligated repay corporation interest article ib agreement shall terminate corporation agrees upon request third party owner execute instruments may required transfer right title interest policy third party owner f upon change control corporation defined described schedule third party may elect sole discretion following options 1 require immediate payment unpaid premiums described schedule continue agreement 2 years one seven policy terminate agreement third party owner longer obligated repay corporation interest article ib agreement shall terminate corporation agrees upon request third party owner execute instruments may required transfer right title interest policy third party owner 3 continue agreement purposes agreement change control shall defined circumstance person company becomes beneficial owner directly indirectly fifty percent shares corporation entity resulting merger consolidation involving corporation representing fifty percent combined voting power outstanding shares corporation entity ii corporation ceases exist due merger acquisition consolidation corporation another entity person article v conflict collateral assignment agreement event shall conflict agreement collateral assignment collateral assignment shall take precedence agreement article vi amendment agreement may amended time written instrument signed corporation third party owner article vii agreement binding upon parties agreement shall bind corporation employee third party owner well heirs successors personal representatives assigns article viii insurer party agreement insurance company shall deemed party agreement payment performance contractual obligations accordance policy provisions shall fully discharge insurance company liability article ix named fiduciary plan administrator corporation hereby designated named fiduciary named fiduciary corporation shall responsible management administration split dollar agreement corporations board directors may delegate others management operating responsibilities plan including employment advisors may exercise powers necessary discharge duties extent conflict provisions employee retirement income security act 1974 article x claims procedure claim form request claim information respect benefits plan may obtained upon written request plan administrator event claim whole part denied plan administrator shall provide notification denial claimant within ninety days notification shall contain specific reasons denial well specific reference pertinent plan provision upon denial based claimant shall also informed plans claim review procedure shall provided description method claim may perfected claimant seeking claims review may within sixty days following receipt claimant written claims denial request claims review written application named fiduciary connection claims review claimant shall afforded opportunity review claims documents submit comments writing final decision shall rendered named fiduciary within sixty days receipt request review decision review shall writing shall include event claims benefits wholly partially denied 1 specific reasons denial 2 specific reference pertinent plan provisions upon denial dispute based 3 description additional information necessary claimant perfect claim explanation material information necessary 4 explanation plans review procedures article xi governing law agreement sets forth entire agreement parties hereto prior agreements hereby superseded law state california shall govern agreement witness whereof parties hereto set hands day year first hereinabove written monty wendy fu 1998 irrevocable trust sdruce fu druce fu trustee monty wendy fu 1998 irrevocable trust syncor international corporation sjohn baumann name john baumann title vice president general counsel exhibit 1038 corporate management incentive plan purpose 2000 corporate management incentive plan designed support achievement syncors business profit objectives accomplished providing incentive opportunity syncors corporate program managers direct influence accomplishment syncors business objectives plan also ensures consistency overall company performance shareholder interests earnings per share eps measure overview 2000 corporate management incentive plan consists two key features 1 specific goals triggers must met activate payout plan 2 targeted incentive opportunity plan participants 3 financial individual performance components used calculate final incentive payout features outlined following sections plan triggers trigger goal must met activate payout plan 2000 plan trigger earnings per share eps activate payout plan syncor must achieve eps 195 yearend fiscal year 2000 upon achievement goal incentive calculated defined incentive components target incentive plan participant designated either target incentive opportunity expressed percentage base salary flat dollar amount target incentive opportunity incentive plan comprised financial mbo components used incentive calculation component weighted identify value component within overall incentive calculation chart outlines components weightings basis payment used calculate incentive mbos individual performance objectives established conjunction plan participants supervisor assessed yearend supervisor determine percentage achievement responsibility conjunction supervisor track performance throughout year simplify tracking process mbo worksheet available human resources syntranet immediate supervisors signature required form end plan year complete mbo worksheet give manager approval final annual results must turned corporate compensation processing later january 19 2001 incentive calculation based upon achievement calculation financial mbo incentive components eps trigger met financial mbo component weightings multiplied target incentive opportunity achievement results determine total incentive payment please refer sample calculation explanation incentive calculation sample calculation assumptions syncor international achieves 195 eps financial component weighted 40 met 100 mbo component weighted 60 met 96 65000 salary x 15 target 9750 incentive opportunity definitions budget attainment budget attainment one possible component corporate management incentive calculation budget attainment assesses well business partner manages hisher expenses end 2000 results equal less budget attainment considered achieved earnings per share net income company divided number eps shares common stock outstanding shown companys annual report shareholders management also referred mbos goaloriented objectives method used evaluate performance management established objectives mbos include three stops 1 establishing goals 2 setting performance standards goal 3 comparing actual goal attainment established goals plan year period time plan effect beginning january 1 ending december 31 2000 target incentive expressed percentage base salary opportunity flat dollar rate specific plan participant based role responsibility base salary used final incentive calculation based upon salary effective january 1 2000 plan participants salary adjusted plan year base salary used average 2000 salary trigger company financial goal must met activate payout plan eligiblity rules governing plan 1 eligible plan participants must actively employed syncor last calendar day year receive annual payout plan participants leave syncor end plan year still eligible receive payout unless terminated cause 2 eligible plan participants must current performance appraisal rating successful progressive discipline process time payout plan participant current performance rating less successful progressive discipline process heshe must develop performance improvement plan agreed upon employees supervisor improvement plans carried later 60 days original incentive payment date plan participants supervisor must reevaluate plan participants performance plan participant rated successful time heshe eligible participate incentive plan incentive payment may prorated year based performance issues discretion supervisor approval human resources 3 incentive payments parttime employees based salary earned hours less 40 week 4 plan participants must begin employment syncor international corporation october 1 2000 participate incentive plan eligible plan participants whose first date employment january 1 2000 october 1 2000 participate prorated basis based date hire 5 plan participants transfer promoted incentive eligible positions december 1st plan year eligible participate plan prorated basis based effective date transfer promotion plan participants transfer promoted december 1st continue participate previous plan heshe eligible december 31st 6 eligible plan participants change positions locations year participate incentive plan prorated positions locations held event plan participant assumes new position time fulfills duties previous position filled incentive payment calculated based new position event new position incentivized incentive calculated based previous position according rules plan prorating rule described rule 5 apply based change status date 7 payment incentive eligible plan participants take leave absence reason year prorated based effective date leave return fn based 2000 performance appraisal ratings 8 circumstance windfall eg result realized outside normal influencing role function within department division management right exclude windfall normal incentive calculation 9 payout plan onetime annual payment made march 15th following year incentive plan described shall mechanism way implement intention management incentive plan shall obligate company management grant benefits contemplated hereunder currently managements intention best judgment plan carried described however management reserves right change plan time retroactive beginning plan year benefits vested coupled interest payment commenceditem 14 exhibits financial statement schedules reports form 8k following documents filed part report 1 consolidated financial statements page independent auditors report consolidated balance sheets consolidated statements income consolidated statements stockholders equity comprehensive income consolidated statements cash flows notes consolidated financial statements 2 financial statement schedules following schedule supporting financial statements company included herein page schedule ii valuation qualifying accounts s1 schedules financial statements company omitted applicable required information included consolidated financial statements notes thereto b reports form 8k filed quarter ended december 31 2000 none c exhibits exhibit description 3 certificate incorporation bylaws 31 restated certificate incorporation company filed exhibit 31 form 10q quarter ended june 30 1999 incorporated herein reference 32 restated bylaws company filed exhibit 32 form 10k year ended december 31 1995 incorporated herein reference 4 instruments defining rights security holders 41 stock certificate common stock company filed exhibit 41 form 10k year ended may 31 1986 incorporated herein reference 42 rights agreement dated september 28 1999 company american stock transfer trust company filed exhibit 4 form 8k dated september 28 1999 filed october 12 1999 incorporated herein reference 10 material contracts 101 syncor international corporation 1981 master stock option plan amended filed part companys proxy statement dated november 5 1985 annual meeting stockholders held november 26 1985 incorporated herein reference 102 form indemnity agreement substantially entered company director officer filed exhibit 32 appendix form 10k year ended december 31 1995 incorporated herein reference 103 form benefits agreement substantially entered company director filed exhibit 108 form 10k year ended december 31 1995 incorporated herein reference 104 form benefits agreement substantially entered company certain employees filed exhibit 108 form 10k year ended december 31 1995 incorporated herein reference 105 syncor international corporation 1990 master stock incentive plan amended restated june 18 1997 filed exhibit 101 companys form 10q quarter ended june 30 1997 incorporated herein reference 106 first amendment syncor international corporation 1990 master stock incentive plan amended restated june 23 1999 filed exhibit 104 form 10q quarter ended june 30 1999 incorporated herein reference 107 form stock option agreement substantially entered company certain employee directors employees filed exhibit 1015 form 10k year ended december 31 1993 incorporated herein reference 108 form stock option agreement substantially entered company certain nonemployee directors filed exhibit 1016 form 10k year ended december 31 1993 incorporated herein reference 109 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company arnold e spangler filed exhibit 1017 form 10k year ended december 31 1995 incorporated herein reference 1010 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company george oki filed exhibit 1018 form 10k year ended december 31 1995 incorporated herein reference 1011 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company gail wilensky filed exhibit 43b registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1012 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company steven gerber filed exhibit 43a registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1013 subscription agreement dated july 15 1996 executed syncor management corporation favor american tax credit corporate fund iii lp together promissory note dated july 15 1996 executed syncor management corporation favor john hancock mutual life insurance company assignee corporate credit inc guarantee parent corporation dated july 15 1996 executed company favor john hancock mutual life insurance company assignee corporate credit inc agreements filed exhibit 1015 form 10k year ended december 31 1996 incorporated herein reference 1014 office lease dated september 30 1996 massachusetts life insurance company relating office lease companys corporate headquarters woodland hills california filed exhibit 1019 form 10k year ended december 31 1996 incorporated herein reference 1015 lease dated may 30 1996 company technology parkatlanta inc relating office lease companys administrative office duluth georgia filed exhibit 1020 form 10k year ended december 31 1996 incorporated herein reference 1016 office lease dated october 19 2000 company nomurawarner center associates lp 1017 nonemployee director stock compensation plan dated august 27 1996 filed exhibit 43 form s8 registration statement filed company sec december 20 1996 incorporated herein reference 1018 loan agreement dated march 31 1997 among syncor pharmaceuticals inc borrower company guarantor bank one na formerly first national bank chicago lender filed exhibit 101 form 10q quarter ended march 31 1997 incorporated herein reference 1019 credit agreement dated august 8 1997 syncor international corporation mellon bank na filed exhibit 102 form 10q quarter ended september 30 1997 incorporated herein reference 1020 syncor international corporation deferred compensation plan effective january 1 1998 filed exhibit 1024 form 10k year ended december 31 1997 incorporated herein reference 1021 amendment 1 syncor international corporation deferred compensation plan dated november 21 2000 1022 executive longterm performance equity plan effective january 1 1998 filed exhibit 101 form 10q quarter ended march 31 1998 incorporated herein reference 1023 first amendment executive longterm performance equity plan dated november 17 1998 filed exhibit 1025 form 10k year ended december 31 1998 incorporated herein reference 1024 second amendment executive longterm performance equity plan dated june 23 1999 filed exhibit 101 form 10q quarter ended june 30 1999 incorporated herein reference 1025 third amendment executive longterm performance equity plan dated june 20 2000 filed exhibit 101 form 10q quarter ended june 30 2000 incorporated herein reference 1026 fourth amendment executive longterm performance equity plan dated june 20 2000 filed exhibit 102 form 10q quarter ended june 30 2000 incorporated herein reference 1027 fifth amendment executive longterm performance equity plan dated august 22 2000 filed exhibit 101 form 10q quarter ended september 30 2000 incorporated herein reference 1028 1998 senior management stock purchase plan effective june 16 1998 filed exhibit 101 form 10q quarter ended june 30 1998 incorporated herein reference 1029 universal performance equity participation plan effective june 16 1998 filed exhibit 102 form 10q quarter ended june 30 1998 incorporated herein reference 1030 first amendment universal performance equity participation plan dated june 16 1998 filed together universal performance equity plan filed exhibit 102 form 10q quarter ended june 30 1998 incorporated herein reference 1031 second amendment universal performance equity participation plan dated june 23 1999 filed exhibit 102 form 10q quarter ended june 30 1999 incorporated herein reference 1032 third amendment universal performance equity participation plan dated june 23 1999 filed exhibit 103 form 10q quarter ended june 30 1999 incorporated herein reference 1033 new employee stock option plan dated june 1 1998 filed exhibit 101 form 10q quarter ended september 30 1998 incorporated herein reference 1034 first amendment syncor international corporation new employee stock option plan dated december 5 2000 1035 form stock option agreement new employee stock option plan entered company certain employees filed exhibit 1031 form 10k year ended december 31 1998 incorporated herein reference 1036 nonqualified stock option award agreement dated february 24 1999 company robert g funari filed exhibit 101 form 10q quarter ended march 31 1999 incorporated herein reference 1037 nonemployee director 1999 stock incentive plan dated november 11 1999 filed exhibit 1035 form 10k year ended december 31 1999 incorporated herein reference 1038 form nonemployee director 1999 stock incentive award agreement dated november 11 1999 entered company nonemployee directors excluding ronald williams filed exhibit 1036 form 10k year ended december 31 1999 incorporated herein reference 1039 split dollar agreement company monty wendy fu 1998 irrevocable trust dated january 8 1999 filed exhibit 1037 form 10k year ended december 31 1999 incorporated herein reference 1040 employment agreement robert g funari dated january 1 2000 filed exhibit 101 form 10q quarter ended march 31 2000 incorporated herein reference 1041 employment agreement monty fu dated january 1 2000 filed exhibit 102 form 10q quarter ended march 31 2000 incorporated herein reference 1042 term loan credit agreement dated may 5 2000 bank one na syncor management corporation filed exhibit 107 form 10q quarter ended june 30 2000 incorporated herein reference 1043 credit agreement dated october 17 2000 among company bank one na administrative agent bank one capital markets inc lead arranger bank nova scotia documentation agent lenders signatories thereto 1044 letter amendment credit agreement dated february 5 2001 company bank one na 21 subsidiaries registrant 23 independent auditors consent report schedule management contract compensatory plan signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date march 31 2001 syncor international corporation robert g funari robert g funari president chief executive officer pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated independent auditors report board directors stockholders syncor international corporation audited accompanying consolidated financial statements syncor international corporation subsidiaries listed accompanying index connection audits consolidated financial statements also audited financial statement schedule listed accompanying index consolidated financial statements financial statement schedule responsibility companys management responsibility express opinion consolidated financial statements financial statement schedule based audits conducted audits accordance auditing standards generally accepted united states america standards require plan perform audit obtain reasonable assurance whether consolidated financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures consolidated financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position syncor international corporation subsidiaries december 31 1999 2000 results operations cash flows years threeyear period ended december 31 2000 conformity accounting principles generally accepted united states america also opinion related financial statement schedule considered relation basic consolidated financial statements taken whole presents fairly material respects information set forth therein kpmg llp los angeles california february 14 2001 managements report management syncor international corporation responsible consolidated financial statements information presented report consolidated financial statements prepared conformity generally accepted accounting principles appropriate circumstances therefore included consolidated financial statements certain amounts based managements informed estimates judgments management responsible establishing maintaining system internal control designed provide reasonable assurance integrity reliability financial reporting concept reasonable assurance based recognition inherent limitations systems internal control cost systems exceed benefits derived therefrom financial information report consistent consolidated financial statements consolidated financial statements examined syncor international corporations independent certified public accountants reviewed audit committee board directors see accompanying notes consolidated financial statements see accompanying notes consolidated financial statements see accompanying notes consolidated financial statements see accompanying notes consolidated financial statements notes consolidated financial statements note 1 summary significant accounting policies principles consolidation companys business primarily concentrated three business segments first compounding dispensing distributing radiopharmaceuticals hospitals clinics located within united states second management provision medical diagnostic imaging services located within united states third providing radiopharmaceuticals radiology services outside united states consolidated financial statements include assets liabilities operations company subsidiaries significant intercompany accounts transactions eliminated consolidation cash equivalents shortterm investments company considers highly liquid investments purchased original maturity three months less cash equivalents shortterm investments consist principally time deposits taxexempt municipal securities carried cost approximates market value financial instruments carrying value financial instruments cash equivalents trade receivables payables floating rate short longterm debt approximate fair value patient receivables company receives payment services rendered federal state agencies medicare medicaid champus programs managed health care plans commercial insurance companies employers patients year ended december 31 2000 approximately 114 companys patient revenues related patients participating medicare medicaid programs company believe significant concentrations revenues particular payer would subject company significant credit risk collection patient accounts receivable inventory inventories consisting purchased products stated lower cost firstin firstout market property equipment property equipment stated cost depreciated amortized straightline basis estimated useful lives ranging two fifteen years self insurance company historically purchased insurance excess selfinsured retentions deductibles losses liabilities related vehicle claims medical claims general product liability claims losses accrued selfinsured deductible plans based upon companys estimates aggregated liability claims incurred using certain actuarial assumptions followed insurance industry companys experience excess purchase price net assets acquired cost excess net assets acquired businesses amortized straightline basis periods 15 40 years company periodically evaluates carrying value assets accordingly considers ability generate positive cash flow projected undiscounted future operating cash flows related operation key factor determining whether assets impaired marketable investment securities marketable investment securities consist primarily corporate debt united states government obligations company classifies debt marketable equity securities one three categories trading availableforsale heldtomaturity trading securities bought held principally purpose selling near term heldtomaturity securities company ability intent hold maturity securities included trading heldtomaturity classified availableforsale heldtomaturity securities recorded amortized cost adjusted amortization accretion premiums discounts unrealized holding gains losses trading securities included earnings unrealized holding gains losses net related tax effect availableforsale securities excluded earnings reported component accumulated comprehensive income realized foreign currency translation assets liabilities foreign operations translated us dollars based upon prevailing exchange rates effect balance sheet date foreign exchange gains losses resulting translations included component accumulated comprehensive income actual gains losses incurred currency transactions countrys functional currency included net income currently stock options company measures stockbased compensation using intrinsic value method assumes options granted market price date grant intrinsic value proforma net income earnings per share presented note 9 fair value method applied income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date revenues companys medical imaging facilities entered agreements thirdparty payers including government programs managed care health care plans facilities paid based upon established charges predetermined rates per service discounts established charges revenues recorded estimated amounts collectible patients thirdparty payers services provided management believes adequate provisions made potential adjustments use estimates company management made number estimates assumptions relating reporting assets liabilities reporting sales expenses disclosure contingent assets liabilities prepare financial statements conformity generally accepted accounting principles actual results could differ estimates reclassifications certain items prior years consolidated financial statements reclassified conform current years presentation note 2 acquisitions 1999 2000 company made several acquisitions predominantly medical imaging industry 1999 2000 acquisitions made primarily companys us medical imaging subsidiary cmi international acquisitions made syncor overseas ltd april 1999 company acquired two imaging centers total purchase price 25 million plus assumption 10 million debt company also purchased minority interests certain open mri sites 68 million 1999 september 1999 company acquired threesite operation victorville california area 34 million plus assumption 17 million debt addition company completed purchase remaining interest company already two sites 27 million plus assumption 25 million debt remaining site acquisition santa maria california total purchase price 28 million march 2000 company acquired four imaging center sites first acquisition three sites previously managed company price 27 million plus assumption 21 million debt second site acquisition boynton beach florida purchase price 02 million plus assumption 13 million debt april 2000 company acquired remaining interest seven managed imaging center sites total acquisition price 87 million plus assumption 10 million debt september 2000 company acquired 13 imaging centers located california florida total acquisition price 31 million plus assumption 13 million debt addition company acquired certain pet production facilities acquisition price 9 million plus assumption 58 million debt november 2000 company acquired imaging center catheterization laboratory trinidad tobago acquisition price 20 million addition company acquired nuclear medicine business puerto rico 75 million december 2000 company acquired imaging center phoenix arizona acquisition price 47 million plus assumption 42 million debt company accounted transactions purchases purchase prices allocated accounts receivable fixed assets goodwill acquisitions amortized 15 20 years results operations related 2000 1999 transactions included companys consolidated financial statements effective acquisition dates following unaudited pro forma information presents summary consolidated results operation acquisitions occurred january 1 1999 unaudited proforma results prepared comparative purposes purport indicative results operations would occurred future results operations consolidated entities note 3 property equipment net major classes property follows note 4 marketable investment securities marketable investment securities consist amortized cost gross unrealized holding gains losses fair value availableforsale heldtomaturity securities major security type december 31 2000 1999 follows unrealized holding losses heldtomaturity securities recognized accompanying consolidated financial statements maturities investment securities classified availableforsale heldtomaturity december 31 2000 1999 follows note 5 line credit december 31 2000 company unsecured revolving line credit shortterm borrowings aggregating 150000000 available october 17 2005 line credit increased 100000000 150000000 effective october 17 2000 terms revolving credit line include two interest rate borrowing options eurodollar rate plus applicable margin banks prime rate 95 percent december 31 2000 december 31 2000 availability line credit reduced 12 million result outstanding standby letters credit resulting available credit 407 million maintain line credit company required pay quarterly commitment fee 14 one percent per annum unused portion line credit agreement specifies certain covenants including limitations investments acquisitions new borrowings issuance new stock maintained certain financial ratios including minimum net worth ebitda ratio fixed charge coverage ratio also need maintained agreement december 31 2000 company compliance debt covenants credit line agreement note 6 long term debt companys longterm debt follows december 31 2000 longterm debt maturing next five years follows 2001 12091 2002 12360 2003 5994 2004 113064 2005 3680 2788 thereafter interest paid 10128 6945 5392 years ended december 31 2000 1999 1998 respectively note 7 income taxes total income tax expense years ended december 31 2000 1999 allocated follows income tax expense benefit attributable income continuing operations consisted amounts differed amounts computed applying federal income tax rate 35 percent pretax income continuing operations result following tax effect temporary differences give rise significant portions deferred tax assets deferred tax liabilities december 31 2000 1999 presented management reviewed recoverability deferred income tax assets determined likely deferred tax assets fully realized future taxable earnings net deferred tax asset recorded balance sheet prepaid current assets income tax payments amounted 12299 7704 9613 years ended december 31 2000 1999 1998 respectively deferred income taxes provided undistributed earnings foreign subsidiaries foreign investments carried equity amount earnings included consolidated retained earnings december 31 2000 approximately 4325 earnings substantially reinvested plan initiate action would precipitate payment income taxes thereon note 8 commitments company leases facilities vehicles equipment terms ranging three years fifteen years majority property leases contain renewal options escalation clauses increases property taxes consumer price index items company leases certain items equipment capital leases approximate cost 29039 17144 13148 december 31 2000 1999 1998 respectively accumulated depreciation 7139 5603 4702 respectively cost increase prior year due primarily acquisition medical imaging businesses cmi related capital leases company fully utilizing building accordingly sublet portion third party balance lease term future minimum lease payments capital leases noncancelable operating leases terms greater one year related sublease income december 31 2000 follows rental expense operating leases 11450 10173 8199 years ended december 31 2000 1999 1998 respectively note 9 stock options rights options purchase common stock granted various plans officers directors employees prices equal market prices date grant aggregate 11082000 shares authorized issuance various plans december 31 2000 options generally exercisable rate 25 percent per year beginning one year date grant expire ten years date grant december 31 2000 3205000 shares reserved issuance various plans per share weightedaverage fair value stock options granted 2000 1999 1998 2014 2147 1134 respectively date grant using black scholes option pricing model following weightedaverage assumptions 2000 expected dividend yield 0 riskfree interest rate 633 expected volatility 6325 expected life 563 years 1999 expected dividend yield 0 riskfree interest rate 562 expected volatility 587 expected life 521 years 1998 expected dividend yield 0 riskfree interest rate 48 expected volatility 604 expected life 519 years company applies apb opinion 25 accounting plans accordingly compensation cost recognized stock options consolidated statements operations company determined compensation cost based fair value grant date stock options sfas 123 companys net income would reduced pro forma amounts indicated following table summary employee stock options follows december 31 2000 range exercise prices weighted average remaining contractual life outstanding options 425 3800 eight years respectively december 31 2000 1999 1998 number options exercisable approximately 3269000 1976000 2008000 respectively weighted average exercise price options 1486 640 558 respectively company derives tax benefit options exercised sold employees benefit credited additional paidin capital september 1999 company adopted new rights plan declared dividend distribution one right outstanding share companys common stock new rights plan replaced companys original rights plan set expire september 1999 rights new rights plan set expire september 2009 unless redeemed earlier board least every three years independent committee board review rights plan committee deems appropriate recommend entire board rights plan modified terminated right represents right purchase right becomes exercisable unit consisting one share syncor common stock per unit price 90 purchase price rights generally exercisable person group acquiring person acquires beneficial ownership 15 syncors common stock commences tender exchange offer upon consummation person group would beneficially 15 syncors common stock result repurchases stock syncor certain purchases institutional similar stockholders long 20 event person becomes acquiring person pursuant offer shares majority independent directors associated affiliated acquiring person determines adequate otherwise best interest company stockholders rights becomes discount right entitling holder acquiring person upon payment purchase price common stock value equal twice purchase price ie 180 worth syncor stock purchase price 90 following someone becoming acquiring person company engages merger business combination company survive common stock changed exchanged transfers 50 assets cash flow earning power one transaction series related transactions right becomes right except acquiring person acquire common shares party transaction value equal twice purchase price note 10 employee benefit plans companys 401k plan open employees least 18 years age minimum twelve consecutive months service 1989 companys board directors amended plan employees savings stock ownership plan essop allow plan acquire two million companys shares leveraged employee stock ownership plan transaction june 1995 september 1996 august 1997 additional 1500000 shares total purchased open market contributed plan shares originally classified treasury stock contributions totaled 8657000 reflected fair market value time contribution connection transactions company made loan essop loan outstanding balance 1685000 december 31 2000 essop participants may contribute one percent fourteen percent compensation 401k investment options additional two percent compensation purchase company stock company makes matching contributions 50 percent employees 401k investment contributions maximum four percent employees compensation 100 percent employees company stock purchases two percent employees compensation companys matching contribution made company stock reflects essop loan payment number shares stock available match employee contributions directly related amount principal payments made essop loan number available shares determined company matches employees contributions described determining fair market value available stock remainder shares allocated matching complete allocated eligible employees based relative compensation participants fully immediately vested contributions vest employer contributions fiveyear period continuous employment five years continuous employment employer contributions fully immediately vested companys contributions years ended december 31 2000 1999 1998 amounted 1895000 1957000 2091000 respectively 1685000 1686000 1685000 respectively used pay principal essop loan 210000 271000 406000 respectively pay interest note 11 net income per share following table presents computation basic earnings per share eps note 12 litigation contingencies various litigation proceedings company subsidiaries involved many claims asserted company proceedings covered insurance results litigation proceedings cannot predicted certainty however opinion companys general counsel proceedings either without merit potential liability would materially affect financial condition company subsidiaries consolidated basis note 13 business segments company currently three different business segments first segment compounding dispensing distribution radiopharmaceuticals united states second segment provision medical diagnostic imaging services united states third segment compounding dispensing distribution radiopharmaceuticals provision radiology services outside united states prior 1998 company minimal participation segments radiopharmaceuticals segment selected quarterly results operations unaudited quarterly operating results selected quarterly results operations prepared basis audited consolidated financial statements opinion management include adjustments necessary fair presentation periods presented unaudited calendar quarterly information summarized belowitem 14 exhibits financial statement schedules reports form 8k 1 consolidated financial statements consolidated financial statements listed together report thereon kpmg peat marwick dated march 10 1994 appear companys annual report shareholders transition period included form 10k tran sition report exhibit 13 incorporated herein reference independent auditors report consolidated balance sheets consolidated statements income consolidated statements stockholders equity consolidated statements cash flows notes consolidated financial statements 2 financial statement schedules following schedules supporting financial statements company included herein page schedule ii amounts receivable employees related parties10 schedule viii valuation qualifying accounts11 schedule ix shortterm borrowings12 schedule x supplementary income statement information13 schedules financial statements company omitted applicable required information included consolidated financial statements notes thereto 3 index exhibits list exhibits filed part report form 10k incorporated herein reference appear index exhibits page 14 b reports form 8k filed last period ending december 31 december 15 1993 form 8k report filed reporting proposal submitted shareholders annual meeting held november 15 1993 amend 1990 master stock incentive plan would increase authorized number shares 500000 shares make changes plan approved shareholders ii execution december 3 1993 new longterm distribution agreement principal supplier radiopharmaceutical products radiopharmaceutical division dupont merck pharmaceutical company iii change fiscal year december 31 may 31 beginning sevenmonths ended december 31 1993 c exhibits required item 601 regulation sk filed herewith incorporated reference list index exhibits page 14 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized syncor international corporation gene r mcgrevin gene r mcgrevin president chief executive officer date 33094 pursuant requirements securities exchange act 1934 report signed following persons behalf regis trant capacities dates indicated monty fu monty fu chairman board director date 33094 gene r mcgrevin gene r mcgrevin president chief executive officer principal executive officer director date 33094 michael piraino michael piraino senior vicepresident principal financial accounting officer date 33094 george oki george oki director date 33094 joseph kleiman joseph kleiman director date 33094 arnold e spangler arnold e spangler director date 33094 steven b gerber steven b gerber director date 33094 henry n wagner jr henry n wagner jr director date 33094 gail r wilensky gail r wilensky director date 33094 syncor international corporation subsidiaries schedule ii amounts receivable employees related parties thousands balance beginning additions end name debtor period deletions period seven months ended december 31 1993 robert g funari chief operating officer 200 year ended may 31 1993 john schulze executive director marketing 250 year ended may 31 1992 john schulze executive director marketing 250 greg hiatt director western zone 250 0 500 250 year ended may 31 1991 john schultze executive director marketing 250 greg hiatt director western zone 250 500 syncor international corporation subsidiaries schedule viii valuation qualifying accounts thousands balance charged balance costs end beginning deductions description period expenses period seven months ended december 31 1993 allowance doubtful accounts 1502 224 526 1200 year ended may 31 1993 allowance doubtful accounts 1681 1123 1302 1502 year ended may 31 1992 allowance doubtful accounts 2071 605 995 1681 year ended may 31 1991 allowance doubtful accounts 2141 611 681 2071 uncollectible accounts written net recoveries reduction reserve syncor international corporation subsidiaries schedule ix shortterm borrowings thousands period weighted maximum average weighted balance average amount average category aggregate end interest shortterm borrowings period rate standing standinga rate b note payable bank seven months ended december 31 1993 year ended may 31 1993 604 3700 1019 607 year ended may 31 1992 1000 704 3500 1799 716 year ended may 31 1991 914 1000 667 912 based upon actual daily amounts outstanding period b average interest rate year computed dividing actual shortterm interest expense average shortterm debt outstanding syncor international corporation subsidiaries schedule x supplementary income statement information thousands year ended may 31 seven months ended december 31 1993 1992 1991 maintenance repairs 813 1552 1686 1544 amortization intangible assets taxes payroll income taxes advertising royalties less 1 total net sales periods shown index exhibits exhibit 3 certificate incorporation bylaws 31 restated certificate incorporation company filed exhibit 31 82887 form 10k incorporated herein reference 32 restated bylaws company filed exhibit 32 82887 form 10k incorporated herein reference 4 instruments defining rights security holders 41 stock certificate common stock company filed exhibit 41 82686 form 10k incorporated herein reference 42 rights agreement dated 11889 company american stock transfer trust company filed exhibit 21 registration statement form 8a dated 11389 incorporated herein reference 10 material contracts 101 employment agreement dated 2189 company gene r mcgrevin filed exhibit 102 12789 form 8k incorporated herein reference 102 first amendment dated 71189 employment agreement dated 2189 company gene r mcgrevin filed exhibit 105 83090 form 10k incorporated herein reference 103 second amendment dated 101689 employment agreement dated 2189 company gene r mcgrevin filed exhibit 106 83090 form 10k incorporated herein reference 104 third amendment dated 1191 employment agreement dated 2189 company gene r mcgrevin filed exhibit 107 82991 form 10k incorporated herein reference 105 syncor international corporation 1981 master stock option plan amended filed part companys proxy statement dated 11585 annual meeting shareholders held 112685 incorporated herein reference 106 stock option agreement gene r mcgrevin dated 1292 filed exhibit 1016 82792 form 10k incorporated herein reference 107 form indemnity agreement substantially entered company director officer filed exhibit 32 appendix 82887 form 10k incorporated herein reference 108 form benefits agreement substantially entered company director filed exhibit 1031 83090 form 10 k incorporated herein reference 109 form benefits agreement substantially entered company certain employees see exhibit 108 1010 syncor international corporation 1990 master stock incentive plan amended restated filed part companys proxy statement dated 10493 annual meeting shareholders held 111593 incorporated herein reference 1011 syncor international corporation deferred compensation plan effective july 1 1991 amended restated effective april 19 1993 1012 employment agreement dated july 21 1993 company robert g funari 1013 syncor international corporation mcgrevin deferred compensation plan effective june 10 1993 1014 split ownershipsplit dollar life insurance assignment agreement effective june 10 1993 company gene r mcgrevin 1015 form stock option agreement substantially entered company certain employee directors employees 1016 form stock option agreement substantially entered company certain nonemployee directors 11 statement computation per share earnings computation clearly determined material contained companys annual report shareholders fiscal year ended december 31 1993 13 annual report security holders p syncor international corporation annual report shareholders fiscal year ended december 31 1993 except specific information annual report expressly incorporated herein reference furnished information commission deemed filed part hereof p 21 subsidiaries registrant state name company incorporation syncor michigan corp michigan syncor corp new york new york syncor management corporation california syncor hong kong limited hong kong syncor taiwan inc taiwan syncor midland inc texas 23 consents experts counsel consent kpmg peat marwick included herewith p filed paper exhibit 23 independent auditors report schedules consent board directors stockholders syncor international corporation audits referred report dated march 10 1994 included related financial statement schedules december 31 1993 may 31 1993 1992 sevenmonth period ended december 31 1993 years threeyear period ended may 31 1993 included registra tion statement syncor international corporation financial statement schedules responsibility companys management responsibility express opinion financial statement schedules based audits opinion financial statement schedules considered relation basic consolidated financial statements taken whole present fairly material respects information set forth therein consent incorporation reference registration statement 3344395 form s3 registration statement nos 337325 3339251 3343692 3357762 3352607 form s8 syncor international corpora ion report dated march 10 1994 relating consolidated balance sheets syncor international corporation subsidiaries december 31 1993 may 31 1993 1992 related consolidated statements income stockholders equity cash flows related schedules sevenmonth period ended december 31 1993 years threeyear period ended may 31 1993 report appears december 31 1993 transition report form 10k syncor international corporation report refers change method accounting income taxes los angeles california kpmg peat marwick march 29 1994item 14 exhibits financial statement schedules reports form 8k 1 consolidated financial statements consolidated financial statements listed together report thereon kpmg llp dated february 22 1999 appear companys annual report stockholders year ended december 31 1998 included form 10k annual report exhibit 13 hereby incorporated herein reference independent auditors report consolidated balance sheets consolidated statements income consolidated statements stockholders equity consolidated statements cash flows notes consolidated financial statements 2 financial statement schedules following schedule supporting financial statements company included herein page schedule ii valuation qualifying accounts 19 schedules financial statements company omitted applicable required information included consolidated financial statements notes thereto 3 index exhibits list exhibits filed part report form 10k incorporated reference appears index exhibits page 20 b reports form 8k filed quarter ended december 31 1998 none c exhibits required item 601 regulation sk filed form 10k annual report incorporated reference listed index exhibits page 20 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized syncor international corporation robert g funari robert g funari president chief executive officer date march 31 1999 pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated monty fu monty fu chairman board director date march 31 1999 robert g funari robert g funari president chief executive officer principal executive officer director date march 311999 brad nutter brad nutter executive vice president chief operating officer date march 31 1999 haig bagerdjian haig bagerdjian executive vice president chief legal officer secretary date march 311999 michael e mikity michael e mikity senior vice president chief financial officer treasurer principal financial accounting officer date march 31 1999 george oki george oki director date march 31 1999 arnold e spangler arnold e spangler director date march 31 1999 steven b gerber md steven b gerber md director date march 31 1999 henry n wagner jr md henry n wagner jr md director date march 31 1999 gail r wilensky dr gail r wilensky director date march 31 1999 ronald williams ronald williams director date march 31 1999 syncor international corporation subsidiaries schedule ii valuation qualifying accounts index exhibits exhibit 3 certificate incorporation bylaws 31 restated certificate incorporation company filed exhibit 31 form 10k year ended may 31 1987 incorporated herein reference 32 restated bylaws company filed exhibit 32 form 10k year ended december 31 1995 incorporated herein reference 4 instruments defining rights security holders 41 stock certificate common stock company filed exhibit 41 form 10k year ended may 31 1986 incorporated herein reference 42 rights agreement dated november 8 1989 company american stock transfer trust company filed exhibit 21 registration statement form 8a dated november 3 1989 incorporated herein reference 10 material contracts 101 syncor international corporation 1981 master stock option plan amended filed part companys proxy statement dated november 5 1985 annual meeting stockholders held november 26 1985 incorporated herein reference 102 form indemnity agreement substantially entered company director officer filed exhibit 32 appendix form 10k year ended december 31 1995 incorporated herein reference 103 form benefits agreement substantially entered company director filed exhibit 108 form 10k year ended december 31 1995 incorporated herein reference 104 form benefits agreement substantially entered company certain employees filed exhibit 108 form 10k year ended december 31 1995 incorporated herein reference 105 syncor international corporation 1990 master stock incentive plan amended restated june 18 1997 filed exhibit 101 companys form 10q quarter ended june 30 1997 incorporated herein reference 106 form stock option agreement substantially entered company certain employee directors employees filed exhibit 1015 form 10k year ended december 31 1993 incorporated herein reference 107 form stock option agreement substantially entered company certain nonemployee directors filed exhibit 1016 form 10k year ended december 31 1993 incorporated herein reference 108 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company arnold e spangler filed exhibit 1017 form 10k year ended december 31 1995 incorporated herein reference 109 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company george oki filed exhibit 1018 form 10k year ended december 31 1995 incorporated herein reference 1010 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company henry wagner jr filed exhibit 1019 form 10k year ended december 31 1995 incorporated herein reference 1011 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company gail wilensky filed exhibit 43b registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1012 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company steven gerber filed exhibit 43a registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1013 subscription agreement dated july 15 1996 executed syncor management corporation favor american tax credit corporate fund iii lp together promissory note dated july 15 1996 executed syncor management corporation favor john hancock mutual life insurance company assignee corporate credit inc guarantee parent corporation dated july 15 1996 executed company favor john hancock mutual life insurance company assignee corporate credit inc agreements filed exhibit 1015 form 10k year ended december 31 1996 incorporated herein reference 1014 1996 management incentive plan company filed exhibit 103 form 10q quarter ended september 30 1996 incorporated herein reference 1015 1997 management incentive plan company filed exhibit 1018 form 10k year ended december 31 1996 incorporated herein reference 1016 office lease dated september 30 1996 massachusetts life insurance company relating office lease companys corporate headquarters woodland hills california filed exhibit 1019 form 10k year ended december 31 1996 incorporated herein reference 1017 lease dated may 30 1996 company technology parkatlanta inc relating office lease companys administrative office duluth georgia filed exhibit 1020 form 10k year ended december 31 1996 incorporated herein reference 1018 nonemployee director stock compensation plan dated august 27 1996 filed exhibit 43 form s8 registration statement filed company sec december 20 1996 1019 loan agreement dated march 31 1997 among syncor pharmaceuticals inc borrower company guarantor first national bank chicago lender filed exhibit 101 form 10q quarter ended march 31 1997 incorporated herein reference 1020 credit agreement dated august 8 1997 syncor international corporation mellon bank na filed exhibit 102 form 10q quarter ended september 30 1997 incorporated herein reference 1021 syncor international corporation deferred compensation plan effective january 1 1998 filed exhibit 1024 form 10k year ended december 31 1997 incorporated herein reference 1022 consulting agreement dated january 31 1998 james f mitchell company filed exhibit 1025 form 10k year ended december 31 1997 incorporated herein reference 1023 credit agreement dated january 5 1998 among company borrower first national bank chicago lender administrative agent mellon bank na lender filed exhibit 1026 form 10k year ended december 31 1997 incorporated herein reference 1024 executive longterm performance equity plan effective january 1 1998 filed exhibit 101 form 10q quarter ended march 31 1998 incorporated herein reference 1025 first amendment executive longterm performance equity plan dated november 17 1998 1026 amended restated employment agreement monty fu dated january 1 1997 amended restated december 31 1997 filed exhibit 102 form 10q quarter ended march 31 1998 incorporated herein reference 1027 amended restated employment agreement robert g funari dated january 1 1997 amended restated december 31 1997 filed exhibit 103 form 10q quarter ended march 31 1998 incorporated herein reference 1028 1998 senior management stock purchase plan effective june 16 1998 filed exhibit 101 form 10q quarter ended june 30 1998 incorporated herein reference 1029 universal performance equity participation plan effective june 16 1998 filed exhibit 102 form 10q quarter ended june 30 1998 incorporated herein reference 1030 new employee stock option plan dated june 1 1998 filed exhibit 101 form 10q quarter ended september 30 1998 incorporated herein reference 1031 form stock option agreement new employee stock option plan entered company certain employees 11 statement computation per share earnings computation clearly determined material contained companys annual report stockholders year ended december 31 1998 13 annual report security holders syncor international corporation annual report stockholders year ended december 31 1998 except specific information annual report expressly incorporated herein reference furnished information commission deemed filed part hereof 23 consent kpmg llp 27 financial data schedule management contracts compensatory plan subsidiaries comprehensive medical imaging inc subsidiaries syncor overseas ltd exhibit 1025 first amendment executive longterm performance equity plan first amendment executive longterm performance equity plan dated november 17 1998 amendment hereby amends certain executive longterm performance equity plan dated january 1 1998 plan syncor international corporation delaware corporation company initially capitalized terms used defined herein shall meaning thereto set forth plan 1 determining number shares allocated stock awarded participant dollar value allocated stock award divided 20 25 34 43 case may 2 purposes determining total shareholder return tsr measure sp health care composite index shall used first stock price target sp small cap health care index shall used second third fourth stock price targets 3 tsr measure comprised ratio companys stock price growth 12month period ending date stock price target attained ie tenth day closing price stock price target ii growth applicable sp health care index corresponding period stock price target attained december 31 1998 comparison period commence january 1 1998 end date stock price target attained 4 price targets overachieved relative applicable sp health care index option component award overachievement part target paid cash allocated stock component overachievement may received cash companys stock discretion participant 5 amendment effective date first set forth except amended hereunder terms conditions plan shall remain full force effect exhibit 1031 form new employee stock option plan award agreement name participant address participant social security number shares exercise price per share award date expiration date whereas pursuant corporations new employee stock option plan participant granted non qualified stock option award purchase shares common stock corporation upon terms conditions hereinafter set forth therefore participant corporation agree follows 1 grant option corporation granted participant matter separate inducement agreement connection employment lieu salary compensation services right option purchase accordance plan terms conditions plan hereinafter set forth part number shares common stock stated common stock price stated price exercisable time subject provisions award agreement prior close business expiration date stated 2 exercisability option except otherwise provided plan award agreement option shall become exercisable time follows 25 common stock shall become purchasable twelve months award date ii additional 25 common stock shall become purchasable twentyfour months award date iii additional 25 common stock shall become purchasable thirtysix months award date iv additional 25 common stock shall become purchasable fortyeight months award date provided however option may exercised less 10 shares one time unless number shares purchased total number time available purchase installment option participant given installment period purchase shares entitled purchase installment period participants right purchase shares purchased shall continue expiration date unless theretofore terminated accordance provisions hereof plan option may exercised whole shares 3 method exercise payment exercise option shall means written notice exercise duly delivered corporation specifying number whole shares respect option exercised together written statements required pursuant section 10 payment price made accordance section 22 plan 4 contract employment nothing contained award agreement plan shall confer upon participant right continue employ corporation constitute contract agreement employment participant acknowledges corporation right terminate participant nothing contained award agreement plan shall interfere way right corporation terminate employment participant time reason whatsoever without cause b reduce compensation received participant rate existence award date 5 effect termination employment option rights hereunder extent rights shall exercised prior thereto shall terminate become null void date participant ceases employed corporation provided however participant may extent option shall become exercisable prior date exercise option time within 1 three months termination employment termination retirement total disability death discharge cause 2 twelve months termination occurs reason retirement total disability 3 twelve months participants death participant dies employ corporation period referred clause 2 period death option may extent exercisable date death earlier termination exercised person persons participants rights plan award agreement shall pass applicable laws descent distribution unless sooner terminated pursuant plan option shall expire end applicable period specified clauses 1 2 3 extent exercised within period 6 nonassignability option shall subject sale transfer pledge assignment alienation laws descent distribution regardless community property interest therein participants spouse spouses successor interest event spouse participant shall acquired community property interest option participant transferees may exercise behalf spouse participant spouses successor interest 7 adjustments upon specified changes set forth section 62 plan upon occurrence specified events relating corporations stock adjustments made number kind shares may issuable consideration payable respect award 8 acceleration upon occurrence event defined plan including change control award shall become immediately exercisable full extent theretofore exercisable unless prior event board determines otherwise subject however compliance applicable regulatory requirements including without limitation rule 16b3 promulgated securities exchange commission pursuant securities exchange act 1934 amended exchange act 9 participant shareholder neither participant person entitled exercise option shall rights privileges shareholder corporation shares common stock certificates actually issued delivered adjustment made dividends rights record date prior date stock certificate certificates issued even record date subsequent date upon notice exercise delivered tender payment accepted 10 application securities laws shares common stock may purchased pursuant option unless applicable requirements federal state securities laws regulations exchanges upon common stock may listed shall fully satisfied participant represents agrees certifies participant exercises option whole part time effect securities act 1933 amended securities act registration statement relating common stock issuable upon exercise available delivery prospectus meeting requirements section 10 securities act prospectus participant acquire common stock issuable upon exercise purpose investment view resale distribution condition exercise furnish corporation written statement effect satisfactory form substance corporation ii participant proposes publicly offer sell common stock issued upon exercise option participant notify corporation prior offering sale abide opinion counsel corporation whether conditions circumstances may offer sell shares procedure need followed prospectus delivered participant shares common stock common stock listed national securities exchange traded national market system security facilities nasdaq b participant understands certificate certificates representing common stock acquired pursuant option may bear legend referring foregoing matters limitations securities act state securities laws respect transfer common stock corporation may impose stop transfer instructions implement limitations applicable person persons entitled exercise option provisions section 5 shall bound obligated provisions section 10 extent participant c board directors corporation may impose conditions award exercise acceleration payment withholding obligation including without limitation restricting time exercise specified periods may required satisfy applicable regulatory requirements including without limitation rule 16b3 successor rule promulgated commission pursuant exchange act 11 notices notice given corporation terms award agreement pursuant plan shall writing addressed secretary corporation principal office notice given participant shall addressed address stated address either party may hereafter designate writing party notice shall deemed duly given enclosed properly sealed envelope addressed aforesaid registered certified deposited postage registry certification fee prepaid post office branch post office regularly maintained united states government 12 effect award agreement award agreement shall assumed binding upon inure benefit successor successors corporation extent provided section 62b plan 13 tax withholding provisions section 66 plan hereby incorporated shall govern withholding corporation subsidiary employing participant required make respect exercise option well corporations right condition transfer common stock upon compliance applicable withholding requirements federal state local authorities 14 terms plan govern award agreement subject corporation participant agree bound terms conditions plan capitalized terms used award agreement meanings defined plan participant acknowledges receipt copy plan rights participant subject limitations adjustments modifications suspension termination certain circumstances upon occurrence certain conditions set forth plan 15 law applicable construction currency interpretation performance enforcement award agreement shall governed laws state delaware currencies expressed us dollars 16 notice disposition participant agrees notify corporation sale disposition shares common stock received upon exercise option sale disposition occurs within two years award date within one year date exercise option witness whereof corporation caused award agreement executed behalf duly authorized officer participant hereunto set hand award date corporation participant syncor international corporation delaware corporation robert g funari president chief executive officer date consent spouse join spouse participant herein named executing foregoing nonqualified stock option award agreement agree bound terms provisions thereof plan signature participants spouse exhibit 13 syncor 1998 annual report outside front cover photo syncor driver carrying delivery case emergency department hospital syncor prescription label bottom left side syncor international corporation 1998 annual report inside front cover corporate profile corporate profile syncor international corporation worlds leading provider radiopharmaceuticals comprehensive nuclear pharmacy services comprehensive medical imaging inc wholly owned subsidiary syncor also one nations leading providers medical imaging services syncor pioneered outsourcing radiopharmacy services 1974 core specialized pharmacy services business syncor compounds dispenses radiopharmaceuticals diagnostic therapeutic use nuclear medicine departments hospitals outpatient clinics syncor distributes timecritical products patientspecific unitdose multidose form integrated network strategically located pharmacies 120 domestic 14 international network serves 7000 customers also provides nuclear medicine management information services syncor entered 60 billion medical imaging services market 1997 comprehensive medical imaging owns operates 37 medical imaging centers selected metropolitan areas 11 states puerto rico 1998 syncor also began expanding medical imaging business international markets syncor overseas ltd subsidiary responsible companys rapidly growing overseas operations another subsidiary syncor pharmaceuticals inc manufactures iodine 123 capsules used diagnose thyroid disorders 4 bar charts drawn follows net sales 19941998 net income continuing operations 19941998 earnings per diluted share continuing operations 19941998 stock price highlowclose 19941998 syncors mission syncor undisputed worldwide leader providing comprehensive imaging specialized pharmacy management services healthcare community syncors strategy growth strategy consists two objectives first calls continued expansion strengthening position worlds leading provider radiopharmacy services second objective achieve leadership medical imaging field selective investments acquisitions development innovative business approaches imaging services meet changing needs physicians patients syncors tradition leadership syncor recognized service leader radiopharmaceuticals business attained position pioneering outsourcing radiopharmaceutical compounding services maintain position innovations add value examples 1991 introduced unit dose managertm industrys first integrated nuclear medicine department information system management unitdose radiopharmaceuticals 1992 established first national network radiopharmaceutical information support specialists 1994 became preferred distributor dupont mercks cardioliter since become industrys gold standard radiopharmaceutical stress testing 1994 introduced securetm unique delivery system reduces biohazards associated handling radiopharmaceutical injection devices 1995 established inhouse authorized nuclear pharmacist training program recognized nuclear regulatory commission nrc accredited american council pharmacy education 1996 introduced nuclinktm software enables twoway communication syncor radiopharmacies customers placing orders determining status 1997 introduced service difference guaranteesm industrys first written guarantee customer service expectations would met exceeded 1997 introduced syntractm industrys first windowsbased software system monitoring managing nuclear medicine department functions 1998 introduced piglettm piglet 2tm petpigtm industrys first tungsten product delivery containers optimal radiation shielding minimal weight 1998 developed first nuclear pharmacy technician training program syncors extraordinary year glance january made commitment enhance stockholder value doubling earnings per share fouryear period january signed first nationwide contract kaiser foundation health plan americas largest notforprofit hmo radiopharmaceutical services january announced acquisition three medical imaging businesses national diagnostic services inc international magnetic imaging inc tme inc march achieved 102 million first quarter sales highest quarterly sales volume syncors 24year history april articulated new strategy international business growth via expansion medical imaging services strategic overseas acquisitions may consolidated medical imaging businesses comprehensive medical imaging inc wholly owned subsidiary june received stockholder approval new senior management stock purchase universal employee stock option plans better align interests stockholders management employees june became exclusive distributor positron emission tomography pet radiopharmaceuticals produced one new englands largest hospitals july reported record earnings continuing operations 64 percent increase operating income second quarter well second consecutive quarter record sales excess 100 million august entered technology licensing consulting agreements government israel syncors first licenseeoperated radiopharmacy september increased coverage washington dc area acquisition new imaging center fairfax virginia october announced 119 percent operating income increase third quarter 86 percent increase nine months ended september 30 december established syncors first freestanding overseas medical imaging facility auckland new zealand december completed construction bogota colombia syncors first south american radiopharmacy december celebrated highest syncor stock price year 2725 per share 69 percent 1613 december 1997 photo john harloe james mcclure companys plan improving profitability includes incentives enable employees benefit financially good things happen fact syncor soon made stock options inclusive operating margins improved substantially john harloe james mcclure barrow hanley mcwhinney strauss dallas texas syncors institutional stockholder shareholders syncor extraordinarily good year 1998 thank last spring approved senior management stock purchase plan closely aligns management performance stockholder interest universal employee stock option plan creates innovative wealthsharing opportunities business partners combined management performance plan links officers bonuses attainment stock targets plans generated outstanding results began 1998 syncors stock trading 16 per share december syncors stock trading 27 per share already exceeding 1999 target 25 per share forging toward 34 per share target year 2000 impressive rise market valuation reflects equally strong improvement companys financial performance started 1998 commitment double earnings per share fouryear period first year effort pershare earnings continuing operations increased 26 percent 98 per diluted share 1997 123 per diluted share 1998 much increase syncors earnings attributable phenomenal improvement financial performance radiopharmacy services proud report business leadership executive vice president chief operating officer brad nutter increased net sales 9 percent prior year improving gross margins reducing operating expenses financial performance resulted 23 percent increase pretax operating income 1998 1997 annual report also articulated commitment transform syncor 381 million singlebusiness company 600 million multibusiness enterprise 2001 one year process pleased report 1998 sales reached record 449 million 8 percent revenues generated new medical imaging business anticipate syncors market value continue rise step companys financial performance ultimately syncors financial performance market valuation reflect value provide customers companys ongoing tradition innovating order add value services made syncor undisputed leader radiopharmacy business applying dedication providing superior value medical imaging intend make comprehensive medical imaging inc cmi undisputed leader field well constitutes added value recognize customers position judge worth syncors services reason invited several leading customers well major institutional investor taken significant position syncor give us feedback chosen company honored feature comments pages hope give stronger sense syncor offer closing would like take opportunity welcome syncors newest director also newest members companys senior management team ronald williams president blue cross california elected board directors december 1998 david ward formerly president american rehability services inc named president chief executive officer cmi march 1999 also early last year haig bagerdjian formerly syncors general counsel senior vice president business development became president syncor overseas ltd executive vice president chief legal officer syncor successor general counsel john baumann came syncor kpmg llp also corporate vice president behalf board directors corporate officers syncors 3000 worldwide business partners thank continued support confidence us look forward continuing create greater stockholder value leadership radiopharmacy medical imaging services 1999 beyond monty fu monty fu chairman board robert g funari robert g funari president chief executive officer march 31 1999 photo syncors officers standing left monty fu john baumann brad nutter haig bagerdjian jack l coffey seated left robert g funari sheila h coop michael e mikity 4 photos page 6 photo 1 syncor pharmacist preparing nuclear medicine dose one syncors locations photo 2 nuclear medicine scan heart photo 3 nuclear medicine scan heart photo 4 mr ken roseman caption reads syncor works cooperatively proactively ethically amerinet 2000 member hospitals syncor industry innovator safety devices computer programs useful tools arent available anyone else theyve great job us since 1992 ken roseman vice president program development amerinet st louis missouri radiopharmacy syncor leads nations radiopharmacy services market three reasons first companys operational excellence sets industry standard syncor consistently delivers right radiopharmaceutical doses right places right times reported dispensing error rate 0000173 percent six million doses deliver annually compares favorably reported retail pharmacy rate 1 2 percent second reason syncors leadership value adding innovations continually develop refine enable hospital nuclear medicine department customers better manage operations comply complex regulatory requirements please see page 2 summary syncor service firsts syncors ability create right kinds innovations service refinements stems breadth depth customer relationships industry provider syncors volume frequency customer contact 90 percent radiopharmacy employees multiple direct daily contacts customers 7000 hospitals clinics imaging centers every day exceptional degree direct daily contact resulted third reason syncors leadership radiopharmacy services specialized knowledge unrivaled closeness enjoy customers enables us understand anticipate satisfy needs also provides syncor comprehensive information actual use performance products compound deliver nations leading provider radiopharmacy services approximately 52 percent market share pharmacy network serves 93 percent communities nuclear medical imaging services available information gather highly indicative radiopharmaceuticals used prescribing physicians perceive effectiveness safety value information manufacturers also high syncor pharmacy services provider systematically offers manufacturers comprehensive data type companys ability bring much valuable information back manufacturers well forward customers unique refinement capabilities syncor preparing play new type leadership role central information repository nuclear medicine industry meanwhile syncor plans enhance position radiopharmacy services market leader strengthening national nuclear pharmacy network augmenting differentiating companys services expanding product offerings diversifying syncor pharmaceuticals inc product line developing new relationships manufacturers 5 photos page 8 photo 1 cmi technician screening images patient whose head scanned one syncors cmi locations photo 2 dr j bruce jacobs caption reads partnering experience comprehensive medical imaging positive sold technical side practice year ago retain operational control benefits many capital new equipment negotiating power improved vendor employee relations expanded marketing contacts access nationwide information network j bruce jacobs md desert ctmri palm springs rancho mirage california photo 3 maria greenwald caption reads dr jacobs desert ctmri provide first rate service patients invariably accommodating rapid responsive reports quality radiographic technique interpretation uniformly highly regarded throughout coachella valley maria greenwald md facr rancho mirage california photo 4 mri image brain photo 5 mri image skull medical imaging syncors newest subsidiary comprehensive medical imaging inc cmi contributed 37 million companys 1998 revenues believe business experience rapid profitable growth next several years cmis longterm objective become leading provider high value comprehensive medical imaging radiology information management services healthcare providers cmi plans earn leadership position consistently providing highquality costeffective service results increased physician patient satisfaction improved patient outcomes since formation may 1998 cmi focused integrating operations overall strategy attaining longterm objective strategy consists two parts first concentrates enhancing current freestanding imaging center business second developing future business hospital radiology outsourcing medical imaging sharedservice networks underlying strategies number basic operating principles first recognition hospitals important customers hospitals account 75 percent spending medical imaging products services also represent 80 percent syncors current revenues means cmi unique opportunity differentiate imaging service providers collaborating institutions create winwin relationships steps toward enhancing cmis current business include making selective investments acquisitions markets cmi achieve market leadership developing new model business radiologists aligns interests companys payers providers building acquiring outstanding competency areas billing collections strengthening sales marketing organization order communicate service value difference cmi provides lead strategy developing companys future business consists building superior knowledge base areas revenue flows activitybased costing best demonstrated medical imaging practices order identify opportunities improvement outpatient inpatient medical imaging markets next component calls identifying intermediate steps move cmi toward future businesses examples may include managing hospital nuclear medicine departments hospital owned offsite medical imaging centers well exploring radiology outsourcing arrangements existing syncor hospital customers finally cmi make acquisitions needed bring skills provide market presence required successful growth new business areas us map showing us medical imaging locations 5 photos page 10 photo 1 showing technologist getting patient prepared scanned photo 2 dr barry elison caption reads practices syncor customers since company opened first australian radiopharmacy 1997 delighted association utilizing syncor products services derived enormous benefits especially patientscheduling flexibility convenience offers technologist staff barry elison md fracp partner western nuclear medicine wollongong nuclear medicine sydney australia photo 3 mri image photo 4 mri image photo 5 mri image international syncors international subsidiary syncor overseas ltd increased revenues 1998 52 percent aiming annual sales 75 million 2001 new business strategy introduced early 1998 driving accelerated growth new strategy differs previous business approach two respects traditionally syncor overseas expanded geographically entering new markets establish radiopharmacies greenfielding manner incurs startup losses relatively long period company beginning penetrate new markets related businesses generate profits quickly medical imaging distribution nuclear medical equipment supplies management nuclear medicine departments example syncor overseas recently opened first free standing outpatient medical imaging facility auckland new zealand auckland could supported fullscale standalone nuclear pharmacy operation time new imaging center also includes small radiopharmacy gives local medical community best worlds second difference strategy involves acquisitions first time 13year history syncor overseas entering expanding presence several promising markets acquiring existing medical imaging businesses company expects international acquisitions account substantial portion syncor overseas revenues 1999 syncor overseas continue expand traditional ways well company recently opened first south american radiopharmacy bogota colombia first european radiopharmacy scheduled open later year santiago spain company established first overseas nuclear pharmacy 1987 taiwan syncor operates three radiopharmacies country taiwans leading radiopharmacy services provider advanced asian healthcare market syncor also manages inhouse nuclear medicine departments three major hospitals syncor overseas also operates growing catalog sales business featuring medical imaging supplies equipment begun franchise companys management expertise well proprietary management information product delivery systems 1998 syncor entered licensing agreements government israel establishment pilot franchised nuclear pharmacy tel aviv syncor intends achieve leadership world markets strengths made company undisputed leader us syncor brings international marketplace addition demonstrated operational excellence proven commitment customer service knowledge medical imaging radiopharmacy operations businesses need control healthcare costs universal syncors formula creating value customers partners payers enormous potential successful application worldwide world map showing international pharmacy service centers managements discussion analysis results operations calendar year 1998 1997 net sales consolidated net sales 1998 totaled 449 million increase 18 percent 69 million 1997 results syncor international corporations 1998 sales positively affected number factors among strong growth cardiologyimaging market addition medical imaging business pharmacy services business pharmacy services sales 1998 412 million increase 8 percent 31 million 1997 results growth market currently estimated expanding annual rate approximately 16 percent although company primarily supplies products diagnostic purposes fields oncology cardiology neurology strong growth cardiology marketplace continues drive sales principal cardiologyimaging agent continues duponts cardiology product cardiolitetm syncor preferred distribution rights competing radiopharmaceutical manufacturerdistributor currently marketing rival product cardiolitetm competing product continues gain market share rapidly growing market 1998 several generic cardiology products also distributed company available variety sources continued experience volume declines customers switched newer available imaging agents august 1998 company instituted price increase cardiolitetm certain products pricing remaining cardiology agents remained relatively flat 1998 factors combined company showed annual gain overall cardiology sales approximately 14 percent cardiology sales constituted approximately 65 percent companys 1998 sales syncor expects trends discussed continue however company also expects growth cardiology marketplace particularly due cardiolitetm offset negative factors company recently announced loss contract sell radiopharmaceuticals group purchasing organization announcement company indicated annual loss sales volume would limited approximately 10 15 million although contract award significantly larger amount company also believes effect earnings result loss contract material belief based companys experience loss similar contract competitive bidding process approximately two years ago company believes strong customer loyalty resulting business retention despite contractual loss results ability provide superior service customers outlook 1999 continues remain positive despite negative factors discussed syncor continues expect net revenue gains radiopharmacy business medical imaging business 1997 company entered medical diagnostic imaging business planned startup ten open mri centers part joint venture december 31 1998 seven ten centers operational 1998 company acquired three medical imaging companies approximately 47 million assumption 34 million various liabilities acquisitions completed end first quarter 1998 operate along open mri business newly formed subsidiary comprehensive medical imaging inc cmi revenues 1998 amounted approximately 37 million included consolidated operating results company revenues medical imaging business 1997 negligible gross margin syncors gross margin increased 1998 132 million increase 46 percent compared 1997 percentage net sales gross profit increased 30 percent compared 24 percent 1997 gross profit affected number issues including mix shift price increases reduction certain material acquisition costs addition medical imaging business generates substantially higher gross margins compared pharmacy services business pharmacy services business company continues experience shift sales mix result growth cardiology sector generally servicing sector produces higher margins sectors addition company received incentives manufacturer achieving certain sales volume levels plus price decreases selected products august 1998 company instituted price increase primarily cardiology products price increase phased correspond contract renewal dates issues labor costs 1998 targeted increased focus order ensure optimal utilization resources attainment certain efficiencies result labor costs 1998 pharmacy services business maintained approximately 1997 levels labor costs continue targeted 1999 express purpose increasing efficiencies maximizing utilization medical imaging business medical imaging business gross margins amounted 28 million 74 net sales 1998 first year operations 1998 certain actions taken eliminate lowpaying contracts strengthen cmis radiology affiliations provide better quality radiology services greater geographic coverage shortterm impact decisions reduced revenues gross margins second third quarter 1998 new thirdparty payer contracts radiology agreements established operating selling administrative costs operating selling administrative expenses increased 30 million 1998 compared 1997 percentage 1998 net sales 24 percent compared 20 percent 1997 operating expenses increased primarily result acquisition medical imaging business medical imaging business acquisition subsequent operations accounted approximately 25 million 82 percent increase medical imaging business typically less cost goods sold greater proportion indirect operating costs related salaries equipment costs billing fees expenses building leases addition increases due including full year operation certain manufacturing facilities expansion international radiopharmacy business costs associated conversion companys systems year2000 compliance expansion information technology infrastructure continued investment reengineering certain critical business practices also incurred programs focus longterm competitiveness company continue receive funding operating selling administrative expenses expected increase current levels although dramatically expansion occur medical imaging business expanded full year operations new systems implemented result reengineering efforts new field systems designed expansion continues international marketplace depreciation amortization depreciation amortization 1998 increased 15 million 10 million 1997 majority increase associated purchase medical imaging business depreciation amortization expense medical imaging business amounted 5 million included approximately 15 million relating amortization goodwill addition companys depreciation expense also increased systems infrastructure quantitative qualitative disclosures market risk interest income earned companys investment portfolio affected changes general level us interest rates companys shortterm borrowings effectively bear interest variable rates therefore changes us interest rate affect interest expense incurred thereon changes interest rates affect interest expense incurred companys longterm borrowings bear interest fixed rates table provides information companys financial debt instruments sensitive changes interest rates table presents principal cash flows related weightedaverage interest rates expected maturity dates company engage interest rate swaps period fair value instruments approximate carrying value results operations calendar years 1997 1996 net sales consolidated net sales 1997 totaled 380 million increase 4 percent 14 million 1996 results syncor international corporations 1997 sales affected number conflicting factors expanding cardiology market place continues drive sales growth expansion market comprised several products currently estimated approximately 17 percent principal cardiologyimaging agent continues duponts cardiology product cardiolitetm syncor preferred distribution rights competing radiopharmaceutical manufacturerdistributor currently marketing rival product cardiolitetm new product introduced late last year also continues gain market share currently estimated 12 percent total profusion market addition cardiolitetm several generic cardiology products also distributed company available variety sources continue experience volume declines customers switch newer available imaging agents pricing cardiology agents steady current year exception one product experiencing significant decline factors combined company shows annual gain overall cardiology sales approximately 82 percent cardiology sales currently constitute approximately 65 percent companys annual sales syncor expects trends discussed continue however company also expects growth cardiology marketplace particularly due cardiolitetm offset negative factors 1997 syncor announced loss process competitive bidding contract supply products large hospitalsupplies buying group annual revenues associated buying group estimated range 60 65 million company also stated time certain steps would taken minimize impact losing contract 1997 syncor successful reducing potential loss associated lost contract total approximately 8 million estimated lost pretax profits 16 million company continues implement steps minimize longterm impact revenues profits lost contract gross margin syncors gross margin increased 1997 902 million increase 124 percent compared 1996 however viewed percentage net sales gross profit increased 237 percent compared 219 percent 1996 gross profit affected number issues chiefly reduction certain material acquisition costs 1997 company announced renegotiation contract materials acquisition one principal suppliers contract contained certain volume levels plus increased period time company would continue utilize supplier solesource basis exchange commitments company received favorable pricing generic products distributed supplier many provisions expired december 1997 however marketplace economics dictated pricing levels remain effect 1998 offsetting gains material costs higherthanexpected labor costs core business increased labor costs driven shortages key positions market economics offset price increases addition syncor instituted pilot program provided incentive bonuses certain key business goals reached company believes program successful expanding beyond original pilot group 1998 continued monitoring labor costs 1998 established order ensure optimal utilization resources goal contain labor costs 1997 level core business operating selling administrative costs operating selling administrative expenses increased 61 million 1997 compared 1996 percentage 1997 net sales 177 percent compared 167 percent 1996 operating expenses increased number reasons including acquisition certain manufacturing facilities startup operation diagnostic imaging business expansion international radiopharmacy business severance costs associated reorganization certain aspects core business expense increases due conversion companys financial systems year2000 compliance expansion information technology infrastructure continued investment engineering certain critical business practices programs focus longterm competitiveness company depreciation amortization depreciation amortization 1997 decreased 99 million 104 million 1996 decrease due capitalized startup costs consulting noncompete agreements originating prior 1996 becoming fully amortized year liquidity capital resources acquisition medical imaging business necessitated expansion certain borrowing capacities within company line credit established threeyear term amount 75 million facilitate purchase business approximately 43 million line utilized purchase businesses either restructure repay acquired businesses debt management reviewing ongoing capital requirements medical imaging business management commitments spend approximately 14 million purchase equipment upgrade facilities radiopharmacy business capital intensive signed agreements expand either radiopharmacy medical imaging businesses however management continuing examine potential acquisitions terms favorable may conclude acquisitions next year financing future acquisitions either come internal sources additional borrowings line credit approximately 29 million remains unused line credit management believes company sufficient internal resources ability access capital either debt equity markets fund business expansion internal capital growth needs year 2000 like many companies year 2000 computer issue creates risk company companys computer systems correctly recognize date information year changes 2000 could adverse impact companys operations company therefore initiated comprehensive project prepare computer systems year 2000 corporate systems migration legacy systems companys financial information systems include sap system implemented 1997 system vendor certified year 2000 compliant company conducted continues conduct periodic tests system company analyzed remaining computer systems identify potential year 2000 issues took appropriate corrective action based results analysis effort completed late february 1999 pharmacy services fieldbased systems related companysupplied customer systems companys domestic field based pharmacy system modified tested fully deployed late february 1999 system believed year 2000 compliant companys international fieldbased system replaced newer year 2000 compliant system development efforts new system underway expected completed late august 1999 systems supplied company use customers locations either designed year 2000 compliant customers offered opportunity convert year 2000 compliant system full complete implementation conversions dependent however customer cooperation company expects rollout substantially completed mid1999 estimated cost modifications field customerinstalled systems including amounts spent date 250000 residual systems medical imaging business effort determine year 2000 compliance residual systems ie software supplied external vendors embedded systems including medical imaging equipment systems estimated completed prior yearend 1999 imaging systems critical medical imagings business may require replacement certain equipment systems hardware upgrades addition scheduled budgeted upgradereplacement ordinary course business many vendorsupplied residual systems small eg alarm systems postage meters etc sophisticated eg desktops desktop applications lan applications estimated cost year 2000 driven modificationsreplacements residual systems medical imagings business systems including amounts spent date expected exceed 750000 effort scheduled completed third quarter 1999 risk assessment contingency planning company also contact suppliers customers vendors fiscal payers including federal state governments medicare fiscal intermediaries insurance companies managed care companies determine state year 2000 compliance assess potential impact companys operations key third parties successful converting systems timely manner risk assessment readiness evaluation action plans testing major suppliers contingency plans related third parties expected completed middle calendar 1999 notwithstanding foregoing assurance another entitys failure ensure year 2000 capability would adverse effect company companys risk management program includes emergency backup recovery procedures followed event failure business critical system procedures expanded include specific procedures potential year 2000related interruptions plans completed middle calendar 1999 costs companys year 2000 readiness dates company believes complete year 2000 modifications based managements best estimates derived utilizing numerous assumptions future events including continued availability certain resources factors however guarantee estimates achieved actual results could differ materially anticipated specific factors might cause material differences include limited availability cost personnel trained area ability locate correct relevant computer codes unforeseen circumstances causing company allocate resources elsewhere similar uncertainties additionally testing year 2000 functionality companys systems must occur simulated environment company able test full system year 2000 interfaces capabilities prior year 2000 company believes cost year 2000 compliance projects next two years material effect companys financial position overall trends results operations new accounting standards company required adopt sfas 133 accounting derivative instruments hedging activities sfas 133 establishes standards reporting financial descriptive information regarding derivatives hedging activity since company derivative instruments standard impact companys financial position results operations safe harbor statement statements historical facts including statements confidence strategies expectations opportunities industry market growth demand acceptance new existing products return investments forward looking statements involve risks uncertainties including without limitation effect general economic market conditions supply demand products competitor pricing maintenance current market position factors given uncertainties undue reliance placed forwardlooking statements notes consolidated financial statements 1 summary significant accounting policies principles consolidation companys business primarily concentrated two business segments first compounding dispensing distributing radiopharmaceuticals hospitals clinics second management provision medical diagnostic imaging services consolidated financial statements include assets liabilities operations company subsidiaries significant intercompany accounts transactions eliminated consolidation cash equivalents shortterm investments company considers highly liquid investments purchased original maturity three months less cash equivalents shortterm investments consist principally time deposits taxexempt municipal securities carried cost approximates market value financial instruments carrying value financial instruments cash equivalents trade receivables payables floating rate short longterm debt approximate fair value patient receivables company receives payment services rendered federal state agencies medicare medicaid champus programs managed health care plans commercial insurance companies employers patients year ended december 31 1998 approximately 94 companys patient revenues related patients participating medicare medicaid programs company believe significant concentrations revenues particular payer would subject company significant credit risk collection patient accounts receivable inventory inventories consisting purchased products stated lower cost firstin firstout market property equipment property equipment stated cost depreciated amortized straightline basis estimated useful lives ranging two fifteen years self insurance company historically purchased insurance excess selfinsured retentions deductibles losses liabilities related vehicle claims medical claims general product liability claims losses accrued selfinsured deductible plans based upon companys estimates aggregated liability claims incurred using certain actuarial assumptions followed insurance industry companys experience excess purchase price net assets acquired cost excess net assets acquired businesses amortized straightline basis periods 15 40 years company periodically evaluates carrying value assets accordingly considers ability generate positive cash flow projected undiscounted future operating cash flows related operation key factor determining whether assets impaired companys accounting treatment consistent statement financial accounting standard sfas no121 accounting impairment longlived assets longlived assets disposed marketable investment securities marketable investment securities consist primarily corporate debt united states government obligations company classifies debt marketable equity securities one three categories trading availableforsale heldtomaturity trading securities bought held principally purpose selling near term heldtomaturity securities company ability intent hold maturity securities included trading heldtomaturity classified availableforsale heldtomaturity securities recorded amortized cost adjusted amortization accretion premiums discounts unrealized holding gains losses trading securities included earnings unrealized holding gains losses net related tax effect availablefor sale securities excluded earnings reported component accumulated comprehensive income realized foreign currency translation assets liabilities foreign operations translated us dollars based upon prevailing exchange rates effect balance sheet date foreign exchange gains losses resulting translations included component accumulated comprehensive income actual gains losses incurred currency transactions countrys functional currency included net income currently stock options company measures stockbased compensation using intrinsic value method assumes options granted market price date grant intrinsic value accordance sfas 123 accounting stockbased compensation proforma net income earnings per share presented note 9 fair value method applied income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date revenues companys medical imaging facilities entered agreements thirdparty payers including government programs managed care health care plans facilities paid based upon established charges predetermined rates per service discounts established charges revenues recorded estimated amounts due patients third party payers services provided management believes adequate provisions made adjustments use estimates management company made number estimates assumptions relating reporting assets liabilities reporting sales expenses disclosure contingent assets liabilities prepare financial statements conformity generally accepted accounting principles actual results could differ estimates new accounting standards company required adopt sfas 133 accounting derivative instruments hedging activities sfas 133 establishes standards reporting financial descriptive information regarding derivatives hedging activity since company derivative instruments standard impact companys financial position results operations reclassifications certain items prior years consolidated financial statements reclassified conform current years presentation preopening costs 1998 company adopted statement position 985 reporting cost startup activities requires costs startup activities expensed incurred december 31 1998 previously capitalized preopening costs fully amortized 2 acquisitions discontinued operations march 1997 company acquired certain assets golden pharmaceuticals inc relating iodine123 including building equipment used manufacturer iodine123 approved new drug application iodine123 capsules 65 million cash promissory note 150000 transaction accounted purchase results operations related transaction included companys consolidated financial statements effective acquisition dates transaction included pro forma results operation since material may 6 1997 company completed sale interest petnettm pharmaceutical servicestm llc petnet partners llc affiliate companys former joint venture partner cti inc consideration received included secured note 225 million royalties 15 million based petnets future sales additionally syncor preferred distributor positron emission tomography isotopes existing future petnet sites exclusive distribution rights cyclotrons manufactured cti inc taiwan two years costs associated companys operation disposal interest petnet december 31 1996 march 18 1997 date sale agreement entered included results operations 1996 company recorded gain sale discontinued operations approximately 11 million net taxes 07 million 1997 1998 company acquired three companies medical imaging business first transactions occurred january syncor acquired medical imaging business national diagnostic services inc affiliate nds purchase price acquisition 12 million including assumption 43 million debt acquired business included nine medical imaging centers owned managed nds also january 1998 subsidiary syncor merged tme inc company based houston texas pursuant tme inc became wholly owned subsidiary syncor tme owns operates andor manages freestanding medical imaging centers joint ventures partnerships 20 facilities network consideration merger syncor paid 145 million cash tmes stockholders assumed 52 million tme liabilities march 1998 syncor acquired medical imaging business international magnetic imaging inc subsidiary consolidated technology group ltd acquired business included ten outpatient medical imaging centers imaging referral network operating 35 states purchase price acquisition 204 million plus assumption 243 million liabilities trade payables 1998 acquisitions completed end first quarter 1998 operate along open mri business subsidiary named comprehensive medical imaging inc company accounted transactions purchase prices allocated fixed assets noncompete consulting agreements goodwill first two acquisitions amortized period 20 years imi acquisition amortized 30 years results operations related 1998 transactions included companys consolidated financial statements effective acquisition dates following unaudited pro forma information presents summary consolidated results operation imaging center businesses acquisition occurred january 1 1997 unaudited proforma results prepared comparative purposes purport indicative results operations would occurred future results operations consolidated entities december 31 1998 company entered agreement sell partnership interest imaging center orlando ico kaley imaging inc kaley purchased companys interest ico secured note 125 million transaction resulted pretax gain sale 11 million tax gain 6 million 05 per share diluted basis fourth quarter gain recorded income othernet financial statement presentation 3 property equipment net major classes property 4 marketable investment securities marketable investment securities consist amortized cost gross unrealized holding gains losses fair value availableforsale heldtomaturity securities major security type december 31 1998 1997 follows unrealized holding losses heldtomaturity securities recognized accompanying consolidated financial statements maturities investment securities classified availableforsale heldtomaturity follows december 31 1998 1997 5 line credit december 31 1998 company unsecured revolving line credit shortterm borrowings aggregating 75000000 terms revolving credit line include two interest rate borrowing options eurodollar rate plus applicable margin banks prime rate 775 percent dec 31 1998 december 31 1998 availability line credit reduced 810000 result outstanding standby letters credit maintain line credit company required pay quarterly commitment fee 14 one percent per annum unused portion line credit agreement specifies certain covenants including limitations investments acquisitions new borrowings issuance new stock maintained certain financial ratios including ebita ratio fixed charge coverage ratio also need maintained agreement december 31 1998 company compliance debt covenants credit line agreement 6 long term debt companys longterm debt follows december 31 1998 longterm debt maturing next five years follows 1999 9122 2000 7055 2001 51926 2002 7047 2003 926 3368 thereafter interest paid 5392 1205 834 years ended december 31 1998 1997 1996 7 income taxes total income tax expense years ended december 31 1998 1997 allocated follows income tax expense benefit attributable income continuing operations consisted amounts differed amounts computed applying federal income tax rate 35 percent pretax income continuing operations result following tax effect temporary differences give rise significant portions deferred tax assets deferred tax liabilities december 31 1998 1997 presented management reviewed recoverability deferred income tax assets determined likely deferred tax assets fully realized future taxable earnings income tax payments amounted 9013 7622 5222 years ended december 31 1998 1997 1996 respectively 8 commitments company leases facilities vehicles equipment terms ranging three years fifteen years majority property leases contain renewal options escalation clauses increases property taxes consumer price index items company leases building certain items equipment capital leases approximate cost 13148 6891 2598 december 31 1998 1997 1996 accumulated depreciation 4702 2181 1942 respectively company utilizing building accordingly sublet third party balance lease term cost increase prior year due acquisition medical imaging businesses cmi related capital leases future minimum lease payments capital leases noncancelable operating leases terms greater one year related sublease income follows december 31 1998 rental expense operating leases 8199 7528 6579 years ended december 31 1998 1997 1996 respectively 9 stock options rights options purchase common stock granted various plans officers directors key employees prices equal market prices date grant aggregate 4093913 shares stock authorized issuance various plans december 31 1998 options generally exercisable rate 25 percent per year beginning one year date grant expire ten years date grant december 31 1998 1244393 shares reserved issuance various plans per share weightedaverage fair value stock options granted 1998 1997 1996 1134 574 696 respectively date grant using black scholes optionpricing model following weightedaverage assumptions 1998 expected dividend yield 0 riskfree interest rate 48 expected volatility 604 expected life 519 years 1997 expected dividend yield 0 riskfree interest rate 571 expected volatility 611 expected life 526 years 1996 expected dividend yield 0 risk free interest rate 621 expected volatility 601 expected life 510 years company applies apb opinion 25 accounting plans accordingly compensation cost recognized stock options consolidated statements operations company determined compensation cost based fair value grant date stock options sfas 123 companys net income would reduced pro forma amounts indicated following table pro forma net income reflects options granted 1995 thereafter therefore full impact calculating compensation cost stock options sfas 123 reflected pro forma net income amounts presented compensation cost reflected options vesting period four years compensation cost options granted prior january 1 1995 considered summary employee stock options follows december 31 1998 range exercise prices weighted average remaining contractual life outstanding options 618 2363 eight years respectively december 31 1998 1997 1996 number options exercisable approximately 1004000 590000 437000 respectively weighted average price options 1116 1012 1003 respectively company derives tax benefit options exercised sold employees benefit credited additional paidin capital november 1989 company made rights distribution one common share purchase right outstanding share common stock exercisable right entitle holder buy onefourth share companys common stock price 5 per share subject adjustments purchase price rights expire september 30 1999 certain exceptions subject approval board directors rights become exercisable person acquiring person acquired makes offer consummation result beneficial ownership 20 percent companys general voting power time distribution date rights evidenced certificates representing common shares transferred common shares except certain transactions approved board directors event company acquired merger ii 50 percent consolidated assets earning power sold iii person becomes acquiring person proper provisions shall made holder right rights beneficially owned acquiring person receives upon exercise thereof adjusted exercise price right shall four times purchase price number shares common stock acquiring company case ii company case iii time transaction market value two times adjusted exercise price right 10 employee benefit plans companys 401k plan open employees least 21 years age minimum twelve consecutive months service 1989 companys board directors amended plan employees savings stock ownership plan essop allow plan acquire one million companys shares leveraged employee stock ownership plan transaction june 1995 september 1996 august 1997 additional 750000 shares total purchased open market contributed plan shares originally classified treasury stock contributions totaled 8657 reflected fair market value time contribution connection transactions company made loan essop loan outstanding balance 5056 december 31 1998 essop participants may contribute one percent fourteen percent compensation 401k investment options additional two percent compensation purchase company stock company makes matching contributions 50 percent employees 401k investment contributions maximum four percent employees compensation may make matching contributions 100 percent employees company stock purchases two percent employees compensation companys matching contribution made cash reflects essop loan payment number shares stock available match employee contributions directly related amount principal payments made essop loan number available shares determined company matches employees contributions described determining fair market value available stock remainder shares allocated matching complete allocated eligible employees based relative compensation participants fully immediately vested contributions vest employer contributions fiveyear period continuous employment five years continuous employment employer contributions fully immediately vested companys contributions years ended december 31 1998 1997 1996 amounted 2091 1625 1444 respectively 1685 1366 1235 used pay principal essop loan 406 259 209 pay interest 11 net income per share following table presents computation basic earnings per share eps options purchase 64000 shares common stock prices ranging 1800 2362 outstanding 1998 included computation diluted eps december 31 1998 options exercise prices greater average market price common shares 12 litigation contingencies various litigation proceedings company subsidiaries involved many claims asserted company proceedings covered insurance results litigation proceedings cannot predicted certainty however opinion companys general counsel proceedings either without merit potential liability would materially affect financial condition company subsidiaries consolidated basis 13 business segments 1997 sfas 131 issued disclosures segments enterprise related information sfas 131 requires disclosure certain information segments enterprise company currently two different business segments compounding dispensing distribution radiopharmaceuticals management provision medical diagnostic imaging services prior 1998 company participated radiopharmaceuticals segment independent auditors report board directors stockholders syncor international corporation audited accompanying consolidated balance sheets syncor international corporation subsidiaries december 31 1998 1997 related consolidated statements income stockholders equity comprehensive income cash flows years threeyear period ended december 31 1998 consolidated financial statements responsibility companys management responsibility express opinion consolidated financial statements based audits conducted audits accordance generally accepted auditing standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position syncor international corporation subsidiaries december 31 1998 1997 results operations cash flows years threeyear period ended december 31 1998 conformity generally accepted accounting principles kpmg llp kpmg llp los angeles california february 22 1999 managements report management syncor international corporation responsible consolidated financial statements information presented report consolidated financial statements prepared conformity generally accepted accounting principles appropriate circumstances therefore included consolidated financial statements certain amounts based managements informed estimates judgments management responsible establishing maintaining system internal control designed provide reasonable assurance integrity reliability financial reporting concept reasonable assurance based recognition inherent limitations systems internal control cost systems exceed benefits derived therefrom financial information report consistent consolidated financial statements consolidated financial statements examined syncor international corporations independent certified public accountants reviewed audit committee board directors board directors monty fu chairman board director since 1985 robert g funari president chief executive officer director since 1995 george oki chairman board meta information services inc director since 1985 audit committee arnold e spangler managing director mancuso company director since 1985 audit committee compensation committee steven b gerber md managing director cibc oppenheimer corp director since 1990 audit committee compensation committee henry n wagner jr md professor radiological science director nuclear medicine johns hopkins medical institutions director since 1992 gail r wilensky phd senior fellow project hope former hcfa administrator deputy assistant president bush director since 1993 compensation committee ronald williams president blue cross california director since 1998 officers monty fu chairman board robert g funari president chief executive officer brad nutter executive vice president chief operating officer haig bagerdjian executive vice president secretary chief legal officer president chief executive officer syncor overseas ltd david l ward president chief executive officer comprehensive medical imaging inc michael e mikity senior vice president chief financial officer john baumann corporate vice president general counsel jack l coffey corporate vice president quality regulatory sheila h coop corporate vice president human resources stockholder information inquiries stockholders interested investors investment professionals invited contact company information throughout year company also available newsondemand service whereby individuals obtain information via facsimile individuals may call 800 5468172 obtain press releases related information via facsimile web site wwwsyncorcom annual meeting companys annual meeting stockholders held 100 pm wednesday june 23 1999 warner center hilton hotel 6360 canoga avenue woodland hills california 91367 stockholders record april 26 1999 invited attend vote meeting form 10k receive copy companys annual report form 10k filed securities exchange commission contact corporate headquarters syncor international corporation attn investor relations department 6464 canoga avenue woodland hills california 91367 independent auditors kpmg llp 725 south figueroa street los angeles california 90017 stock data companys common stock quoted national association securities dealers automated quotation system nasdaq symbol scor transfer agent registrar stockholders wishing report change address may forward details including old new addresses american stock transfer trust company 40 wall street 46th floor new york new york 10015 212 9365100 stock market information stock price quotations printed daily major newspapers including wall street journal march 24 1999 11614670 shares common stock outstanding stockholders record date numbered 1064 company paid cash dividends stock current intention paying cash dividends foreseeable future exhibit 23 independent auditors consent board directors stockholders syncor international corporation audits referred report dated february 22 1999 included related financial statement schedule years three year period ended december 31 1998 included registration statement syncor international corporation financial statement schedule responsibility companys management responsibility express opinion financial statement schedule based audits opinion financial statement schedule considered relation basic consolidated financial statements taken whole presents fairly material respects information set forth therein consent incorporation reference registration statements nos 337325 3339251 3357762 3352607 33318373 33318375 33318377 3333999 33340117 33362091 33362093 33368277 s8 syncor international corporation report dated february 22 1999 relating consolidated balance sheets syncor international corporation subsidiaries december 31 1998 1997 related consolidated statements income stockholders equity cash flows related schedule years threeyear period ended december 31 1998 report appears december 31 1998 annual report form 10k syncor international corporation kpmg llp los angeles california march 29 1999 exhibit 27 financial data scheduleitem 14 exhibits financial statement schedules reports form 8k following documents filed part report 1 consolidated financial statements page independent auditors report consolidated balance sheets consolidated statements income consolidated statements stockholders equity comprehensive income consolidated statements cash flows notes consolidated financial statements 2 financial statement schedules following schedule supporting financial statements company included herein page schedule ii valuation qualifying accounts s1 schedules financial statements company omitted applicable required information included consolidated financial statements notes thereto b reports form 8k filed quarter ended december 31 2001 none c exhibits management contract compensatory plan 108 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company arnold e spangler filed exhibit 1017 form 10k year ended december 31 1995 incorporated herein reference 109 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company george oki filed exhibit 1018 form 10k year ended december 31 1995 incorporated herein reference 1010 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company gail wilensky filed exhibit 43b registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1011 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company steven gerber filed exhibit 43a registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1012 subscription agreement dated july 15 1996 executed syncor management corporation favor american tax credit corporate fund iii lp together promissory note dated july 15 1996 executed syncor management corporation favor john hancock mutual life insurance company assignee corporate credit inc guarantee parent corporation dated july 15 1996 executed company favor john hancock mutual life insurance company assignee corporate credit inc agreements filed exhibit 1015 form 10k year ended december 31 1996 incorporated herein reference 1013 office lease dated september 30 1996 massachusetts life insurance company relating office lease company’s corporate headquarters woodland hills california filed exhibit 1019 form 10k year ended december 31 1996 incorporated herein reference 1014 office lease dated october 19 2000 company nomurawarner center associates lp filed exhibit 1016 form 10k year ended december 31 2000 incorporated herein reference 1015 nonemployee director stock compensation plan dated august 27 1996 filed exhibit 43 form s8 registration statement filed company sec december 20 1996 incorporated herein reference 1016 loan agreement dated march 31 1997 among syncor pharmaceuticals inc borrower company guarantor bank one na formerly first national bank chicago lender filed exhibit 101 form 10q quarter ended march 31 1997 incorporated herein reference 1017 syncor international corporation deferred compensation plan effective january 1 1998 filed exhibit 1024 form 10k year ended december 31 1997 incorporated herein reference 1018 amendment 1 syncor international corporation deferred compensation plan dated november 21 2000 filed exhibit 1021 form 10k year ended december 31 2000 incorporated herein reference management contract compensatory plan 1019 amendment 2 syncor international corporation deferred compensation plan dated november 1 2001 1020 executive longterm performance equity plan effective january 1 1998 filed exhibit 101 form 10q quarter ended march 31 1998 incorporated herein reference 1021 first amendment executive longterm performance equity plan dated november 17 1998 filed exhibit 1025 form 10k year ended december 31 1998 incorporated herein reference 1022 second amendment executive longterm performance equity plan dated june 23 1999 filed exhibit 101 form 10q quarter ended june 30 1999 incorporated herein reference 1023 third amendment executive longterm performance equity plan dated june 20 2000 filed exhibit 101 form 10q quarter ended june 30 2000 incorporated herein reference 1024 fourth amendment executive longterm performance equity plan dated june 20 2000 filed exhibit 102 form 10q quarter ended june 30 2000 incorporated herein reference 1025 fifth amendment executive longterm performance equity plan dated august 22 2000 filed exhibit 101 form 10q quarter ended september 30 2000 incorporated herein reference 1026 1998 senior management stock purchase plan effective june 16 1998 filed exhibit 101 form 10q quarter ended june 30 1998 incorporated herein reference 1027 universal performance equity participation plan effective june 16 1998 filed exhibit 102 form 10q quarter ended june 30 1998 incorporated herein reference 1028 first amendment universal performance equity participation plan dated june 16 1998 filed together universal performance equity plan filed exhibit 102 form 10q quarter ended june 30 1998 incorporated herein reference 1029 second amendment universal performance equity participation plan dated june 23 1999 filed exhibit 102 form 10q quarter ended june 30 1999 incorporated herein reference 1030 third amendment universal performance equity participation plan dated june 23 1999 filed exhibit 103 form 10q quarter ended june 30 1999 incorporated herein reference 1031 new employee stock option plan dated june 1 1998 filed exhibit 101 form 10q quarter ended september 30 1998 incorporated herein reference management contract compensatory plan 1032 first amendment syncor international corporation new employee stock option plan dated december 5 2000 filed exhibit 1034 form 10k year ended december 31 2000 incorporated herein reference 1033 form stock option agreement new employee stock option plan entered company certain employees filed exhibit 1031 form 10k year ended december 31 1998 incorporated herein reference 1034 nonqualified stock option award agreement dated february 24 1999 company robert g funari filed exhibit 101 form 10q quarter ended march 31 1999 incorporated herein reference 1035 nonemployee director 1999 stock incentive plan dated november 11 1999 filed exhibit 1035 form 10k year ended december 31 1999 incorporated herein reference 1036 form nonemployee director 1999 stock incentive award agreement dated november 11 1999 entered company nonemployee directors excluding ronald williams filed exhibit 1036 form 10k year ended december 31 1999 incorporated herein reference 1037 split dollar agreement company monty wendy fu 1998 irrevocable trust dated january 8 1999 filed exhibit 1037 form 10k year ended december 31 1999 incorporated herein reference 1038 employment agreement robert g funari dated january 1 2000 filed exhibit 101 form 10q quarter ended march 31 2000 incorporated herein reference 1039 employment agreement monty fu dated january 1 2000 filed exhibit 102 form 10q quarter ended march 31 2000 incorporated herein reference 1040 severance agreement dated august 24 2001 haig bagerdjian company filed exhibit 102 form 10q quarter ended september 30 2001 incorporated herein reference 1041 severance agreement dated august 24 2001 john baumann company filed exhibit 103 form 10q quarter ended september 30 2001 incorporated herein reference 1042 severance agreement dated august 24 2001 rodney boone company filed exhibit 104 form 10q quarter ended september 30 2001 incorporated herein reference 1043 severance agreement dated august 24 2001 jack coffey company filed exhibit 105 form 10q quarter ended september 30 2001 incorporated herein reference 1044 severance agreement dated august 24 2001 sheila coop company filed exhibit 106 form 10q quarter ended september 30 2001 incorporated herein reference management contract compensatory plan 1045 severance agreement dated august 24 2001 william forster company filed exhibit 107 form 10q quarter ended september 30 2001 incorporated herein reference 1046 severance agreement dated august 24 2001 monty fu company filed exhibit 108 form 10q quarter ended september 30 2001 incorporated herein reference 1047 severance agreement dated august 24 2001 robert funari company filed exhibit 109 form 10q quarter ended september 30 2001 incorporated herein reference 1048 severance agreement dated august 24 2001 lewis william terry jr company filed exhibit 1010 form 10q quarter ended september 30 2001 incorporated herein reference 1049 severance agreement dated august 24 2001 david ward company filed exhibit 1011 form 10q quarter ended september 30 2001 incorporated herein reference 1050 syncor international corporation special severance plan filed exhibit 1012 form 10q quarter ended september 30 2001 incorporated herein reference 1051 term loan credit agreement dated may 5 2000 bank one na syncor management corporation filed exhibit 107 form 10q quarter ended june 30 2000 incorporated herein reference 1052 credit agreement dated october 17 2000 among company bank one na administrative agent bank one capital markets inc lead arranger bank nova scotia documentation agent lenders signatories thereto filed exhibit 1043 form 10k year ended december 31 2000 incorporated herein reference 1053 letter amendment credit agreement dated february 5 2001 company bank one na filed exhibit 1044 form 10k year ended december 31 2000 incorporated herein reference 1054 first amended restated credit agreement dated may 10 2001 bank one na lender bank nova scotia document agent filed exhibit 101 form 10q quarter ended june 30 2001 incorporated herein reference 1055 first amendment first amended restated credit agreement dated september 13 2001 among bank one na lender bank nova scotia document agent company syncor management corporation filed exhibit 101 form 10q quarter ended september 30 2001 incorporated herein reference 1056 second amendment first amended restated credit agreement dated december 21 2001 among bank one na lender bank nova scotia document agent company syncor management corporation management contract compensatory plan 1057 receivables financing agreement dated january 4 2002 among syncor financing corporation seller syncor management corporation servicer jupiter securitization corporation financial institutions listed therein bank one na agent 21 subsidiaries registrant 23 independent auditors consent management contract compensatory plan signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date march 31 syncor international corporation srobert g funari robert g funari president chief executive officer pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated smonty fu chairman board date march 31 monty fu director srobert g funari president chief executive date march 31 robert g funari officer principal executive officer director swilliam p forster senior vice president chief date march 31 william p forster financial officer treasurer principal financial accounting officer ssteven b gerber director date march 31 steven b gerber md sgeorge oki director date march 31 george oki sarnold e spangler director date march 31 arnold e spangler shenry n wagner jr director date march 31 henry n wagner jr md sgail r wilensky director date march 31 dr gail r wilensky sronald williams director date march 31 ronald williams independent auditors’ report board directors stockholders syncor international corporation audited accompanying consolidated balance sheets syncor international corporation subsidiaries december 31 2001 2000 related consolidated statements income stockholders’ equity comprehensive income cash flows years threeyear period ended december 31 2001 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance auditing standards generally accepted united states america standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position syncor international corporation subsidiaries december 31 2001 2000 results operations cash flows years threeyear period ended december 31 2001 conformity accounting principles generally accepted united states america discussed note 1 consolidated financial statements effective july 1 2001 company adopted provisions statement financial accounting standards “sfas” 141 “business combinations” certain provisions sfas 142 “goodwill intangible assets” required goodwill intangible assets resulting business combinations consummated june 30 2001 skpmg llp los angeles california february 15 2002 management’s report management syncor international corporation responsible consolidated financial statements information presented report consolidated financial statements prepared conformity generally accepted accounting principles appropriate circumstances therefore included consolidated financial statements certain amounts based managements informed estimates judgments management responsible establishing maintaining system internal control designed provide reasonable assurance integrity reliability financial reporting concept reasonable assurance based recognition inherent limitations systems internal control cost systems exceed benefits derived financial information report consistent consolidated financial statements consolidated financial statements audited syncor international corporations independent certified public accountants reviewed audit committee board directors consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements income see accompanying notes consolidated financial statements consolidated statements stockholders’ equity comprehensive income see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements note 1 summary significant accounting policies significant accounting policies follows revenue recognition recognize revenue primarily two sources product revenue includes sales radiopharmacies ii services revenue primarily imaging business described significant judgments estimates must used management connection revenue recognized period imaging business material differences may impact amount revenue recorded period management judgments estimates significantly different actual provide imaging services patients generally medical insurance governmental payor managed care payor commercial thirdparty payor medical imaging business several hundred contracts change amended frequently due changes payors governmental agencies reimbursement additionally acquire medical imaging centers new contracts entered computer systems contracts updated systems need make estimates anticipated contracted amounts ultimately receive various payors requires us record estimates recording imaging revenues based upon historical data trends estimates continually evaluated compared actual reimbursements various payors ensure properly recorded revenues appropriately adjusted shifts payor mix accordingly recorded revenues based current information available subject estimation may lead adjustments future periods actual reimbursement rates determined adjustments material 2001 2000 estimating valuation allowances doubtful accounts preparation financial statements requires management make estimates assumptions collectibility accounts receivable management specifically analyzes historical bad debts customer concentrations customer creditworthiness current economic trends aging accounts changes payment terms evaluating adequacy allowance doubtful accounts changes estimates assumptions could cause material differences recorded allowances valuation longlived assets goodwill assess impairment identifiable intangibles longlived assets related goodwill enterprise level goodwill whenever events changes circumstances indicate carrying value may recoverable factors consider important could trigger impairment review include following • significant underperformance relative expected historical projected future operating results • significant changes manner use acquired assets strategy overall business • significant negative industry economic trends • market capitalization relative net book value determine carrying value intangibles longlived assets related goodwill enterprise level goodwill may recoverable based upon existence one indicators impairment measure impairment based projected undiscounted cash flow method using discount rate determined management commensurate risk inherent current business model net intangible assets longlived assets goodwill amounted 3395 million december 31 2001 cost excess net assets acquired businesses amortized straightline basis periods 15 40 years first quarter 2002 statement financial accounting standards “sfas” 142 “goodwill intangible assets” become effective result cease amortize approximately 1621 million goodwill recorded approximately 66 million 45 million 49 million goodwill amortization 2001 2000 1999 respectively would recorded approximately 70 million goodwill amortization 2002 provisions statement record amortization related six postjune 30 2001 acquisitions amortization would amounted 09 million lieu amortization required perform initial impairment review goodwill 2002 annual impairment review thereafter expect complete initial review second quarter 2002 currently expect record impairment charge upon completion initial impairment review however assurance time review completed material impairment charge recorded principles consolidation consolidated financial statements include assets liabilities operations company subsidiaries significant intercompany accounts transactions eliminated consolidation cash equivalents shortterm investments company considers highly liquid investments purchased original maturity three months less cash equivalents shortterm investments consist principally time deposits taxexempt municipal securities carried cost approximates market value financial instruments carrying value financial instruments cash equivalents trade receivables payables floating rate short longterm debt approximate fair value patient revenues receivables companys medical imaging facilities entered agreements thirdparty payors including government programs managed care health care plans facilities paid based upon established charges predetermined rates per service discounts established charges revenues recorded estimated amounts due patients thirdparty payors services provided management believes adequate provisions made potential adustments years ended december 31 2001 2000 1999 approximately 155 114 91 companys patient revenues related patients participating medicare medicaid programs company believe significant concentrations revenues particular payor would subject company significant credit risk collection patient accounts receivable inventory inventories primarily consisting purchased products stated lower cost firstin firstout market property equipment property equipment stated cost depreciated amortized straightline basis estimated useful lives ranging two fifteen years self insurance company historically purchased insurance excess selfinsured retentions deductibles losses liabilities related vehicle claims medical claims general product liability claims losses accrued selfinsured deductible plans based upon company’s estimates aggregated liability claims incurred using certain actuarial assumptions followed insurance industry companys experience marketable investment securities marketable investment securities consist primarily corporate debt united states government obligations company classifies debt marketable equity securities one three categories trading availableforsale heldtomaturity trading securities bought held principally purpose selling near term heldtomaturity securities company ability intent hold maturity securities included trading heldtomaturity classified availableforsale heldtomaturity securities recorded amortized cost adjusted amortization accretion premiums discounts unrealized holding gains losses trading securities included earnings unrealized holding gains losses net related tax effect availableforsale securities excluded earnings reported component accumulated comprehensive income realized foreign currency translation assets liabilities foreign operations translated us dollars based upon prevailing exchange rates effect balance sheet date foreign exchange gains losses resulting translations included component accumulated comprehensive income actual gains losses incurred currency transactions countrys functional currency included net income currently 2001 company’s fixed assets decreased 21 million due currency translation adjustments corrected policy using historical exchange rates current exchanges rates change earnings impact impacted valuation fixed assets international business accumulated comprehensive income balance sheet stock options company measures stockbased compensation using intrinsic value method assumes options granted market price date grant intrinsic value proforma net income earnings per share presented note 9 fair value method applied income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date use estimates company’s management made number estimates assumptions relating reporting assets liabilities reporting sales expenses disclosure contingent assets liabilities prepare financial statements conformity generally accepted accounting principles actual results could differ estimates reclassifications certain items prior years’ consolidated financial statements reclassified conform current years presentation new accounting standards july 2001 fasb issued statement 141 business combinations statement 142 goodwill intangible assets statement 141 requires purchase method accounting used business combinations initiated june 30 2001 well purchase method business combinations completed june 30 2001 statement 141 also specifies criteria intangible assets acquired purchase method business combination must meet recognized reported apart goodwill noting purchase price allocable assembled workforce may accounted separately statement 142 require goodwill intangible assets indefinite useful lives longer amortized instead tested impairment least annually accordance provisions statement 142 statement 142 also require intangible assets definite useful lives amortized respective estimated useful lives estimated residual values reviewed impairment accordance sfas 121 accounting impairment longlived assets longlived assets disposed company required adopt provisions statement 141 immediately except regard business combinations initiated prior july 1 2001 expects account using poolingofinterests method statement 142 effective january 1 2002 furthermore goodwill intangible asset determined indefinite useful life acquired purchase business combination completed june 30 2001 amortized continue evaluated impairment accordance appropriate prestatement 142 accounting literature goodwill intangible assets acquired business combinations completed july 1 2001 continue amortized prior adoption statement 142 statement 141 require upon adoption statement 142 company evaluate existing intangible assets goodwill acquired prior purchase business combination make necessary reclassifications order conform new criteria statement 141 recognition apart goodwill upon adoption statement 142 company required reassess useful lives residual values intangible assets acquired purchase business combinations make necessary amortization period adjustments end first interim period adoption addition extent intangible asset identified indefinite useful life company required test intangible asset impairment accordance provisions statement 142 within first interim period impairment loss measured date adoption recognized cumulative effect change accounting principle first interim period connection transitional goodwill impairment evaluation statement 142 require company perform assessment whether indication goodwill impaired date adoption accomplish company must identify reporting units determine carrying value reporting unit assigning assets liabilities including existing goodwill intangible assets reporting units date adoption company six months date adoption determine fair value reporting unit compare reporting unit’s carrying amount extent reporting unit’s carrying amount exceeds fair value indication exists reporting unit’s goodwill may impaired company must perform second step transitional impairment test second step company must compare implied fair value reporting unit’s goodwill determined allocating reporting unit’s fair value assets recognized unrecognized liabilities manner similar purchase price allocation accordance statement 141 carrying amount would measured date adoption second step required completed soon possible later end year adoption transitional impairment loss recognized cumulative effect change accounting principle company’s statement earnings august 2001 financial accounting standards board issued fasb statement 144 accounting impairment disposal longlived assets statement 144 supersedes fasb statement 121 accounting impairment longlived assets longlived assets disposed statement 121 accounting reporting provisions apb opinion 30 reporting results operationsreporting effects disposal segment business extraordinary unusual infrequently occurring events transactions opinion 30 disposal segment business previously defined opinion statement 144 retains fundamental provisions statement 121 recognizing measuring impairment losses longlived assets held use longlived assets disposed sale also resolving significant implementation issues associated statement 121 statement 144 retains basic provisions opinion 30 present discontinued operations income statement broadens presentation include component entity rather segment business unlike statement 121 impairment assessment statement 144 never result writedown goodwill rather goodwill evaluated impairment statement 142 goodwill intangible assets company required adopt statement 144 later year beginning december 15 2001 accordingly company adopt statement 144 first quarter 2002 management expect adoption statement 144 longlived assets held use material impact company’s financial statements impairment assessment statement 144 largely unchanged statement 121 provisions statement assets held sale disposal generally required applied prospectively adoption date newly initiated disposal activitieswe currently expect record impairment charge upon completion initial impairment review however assurance time review completed material impairment charge recorded note 2 acquisitions 2000 2001 company made several acquisitions 2000 acquisitions made primarily cmi us medical imaging subsidiary 2001 significant acquisitions made syncor overseas ltd international subsidiary us pharmacy business cmi acquisitions january 2001 acquired three imaging center sites california purchase price 134 million march 2001 acquired gamma knife venture brazil purchase price 20 million distributor radiopharmceuticals new zealand purchase price 03 million plus assumption 02 million debt may 2001 entered management service agreement oncology clinic brazil investment 18 million june 2001 acquired distributor manufacturer diagnostic radiopharmeceuticals australia acquisition price 07 million july 2001 acquired manufacturer radiation detection measurement equipment ohio acquisition price 108 million also acquired two imaging centers texas 43 million plus assumption 36 million debt addition acquired imaging center florida purchase price 51 million plus assumption 20 million debt september 2001 acquired cardiovascular service company north carolina acquisition price 137 million plus assumption 02 million debt addition acquired radiology cardiology distribution company belgium acquisition price 20 million october 2001 acquired nuclear services company acquisition price 08 million acquisitions march 2000 acquired four imaging center sites first acquisition three sites previously managed cmi price 21 million plus assumption 27 million debt second site acquisition boynton beach fl purchase price 02 million plus assumption 13 million debt april 2000 acquired remaining interest seven managed imaging center sites total acquisition price 87 million plus assumption 10 million debt september 2000 acquired thirteen imaging centers located california florida total acquisition price 31 million plus assumption 13 million debt addition company acquired certain pet production facilities acquisition price 09 million plus assumption 58 million debt november 2000 acquired imaging center catheterization laboratory trinidad tobago acquisition price 20 million addition acquired nuclear medicine business puerto rico 075 million december 2000 acquired imaging center phoenix az acquisition price 47 million plus assumption 42 million debt following table represents allocation purchase price acquisitions 2001 2000 company accounted transactions purchases purchase prices allocated indicated goodwill acquisitions amortized 15 20 years period results operations related 2001 2000 transactions included company’s consolidated financial statements effective acquisition dates following unaudited pro forma information presents summary consolidated results operation’s 2001 2000 acquisitions occurred beginning years unaudited proforma results prepared comparative purposes purport indicative results operations would occurred future results operations consolidated entities note 3 property equipment net major classes property follows note 4 marketable investment securities marketable investment securities consist amortized cost gross unrealized holding gains losses fair value availableforsale heldtomaturity securities major security type december 31 2001 2000 follows unrealized holding losses heldtomaturity securities recognized accompanying consolidated financial statements maturities investment securities classified availableforsale heldtomaturity december 31 2001 2000 follows note 5 line credit december 31 2001 company unsecured revolving line credit shortterm borrowings aggregating 200000000 line credit increased 150000000 200000000 effective may 10 2001 terms revolving credit line include two interest rate borrowing options eurodollar rate plus applicable margin banks prime rate 475 percent december 31 2001 december 31 2001 availability line credit reduced 20 million result outstanding standby letters credit resulting available credit 285 million maintain line credit company required pay quarterly commitment fee 14 one percent per annum unused portion line credit agreement specifies certain covenants maintained including limitations investments acquisitions new borrowings issuance new stock certain financial ratios also need maintained agreement including minimum net worth ebitda ratio fixed charge coverage ratio december 31 2001 company compliance debt covenants credit line agreement note 6 longterm debt companys longterm debt follows december 31 2001 longterm debt maturing next five years follows 2002 16048 2003 17238 2004 10298 2005 7948 2006 172553 2612 thereafter interest paid 13148 10128 6945 years ended december 31 2001 2000 1999 respectively note 7 income taxes total income tax expense years ended december 31 2001 2000 1999 allocated follows income tax expense benefit attributable income continuing operations consisted amounts differed amounts computed applying federal income tax rate 35 percent pretax income continuing operations result following tax effect temporary differences give rise significant portions deferred tax assets deferred tax liabilities december 31 2001 2000 presented management reviewed recoverability deferred income tax assets determined likely deferred tax assets fully realized future taxable earnings gross deferred tax asset recorded balance sheet prepaid current assets income tax payments amounted 13670 12299 7704 years ended december 31 2001 2000 1999 respectively deferred income taxes provided undistributed earnings foreign subsidiaries foreign investments carried equity amount earnings included consolidated retained earnings amounted 6938 4325 december 31 2001 2000 respectively earnings substantially reinvested plan initiate action would precipitate payment income taxes thereon note 8 commitments company leases facilities vehicles equipment terms ranging three years fifteen years majority property leases contain renewal options escalation clauses increases property taxes consumer price index items company leases certain items equipment capital leases cost 47023 29039 17144 december 31 2001 2000 1999 respectively accumulated depreciation 8759 7139 5603 respectively increase equipment leases 2001 due primarily continued expansion medical imaging businesses fdg fluorodeoxyglucose production equipment future minimum lease payments capital leases noncancelable operating leases terms greater one year related sublease income december 31 2001 follows rental expense operating leases 15864 11450 10173 years ended december 31 2001 2000 1999 respectively note 9 stock options rights options purchase common stock granted various plans officers directors employees prices equal market prices date grant aggregate 10267000 shares authorized issuance various plans december 31 2001 options generally exercisable rate 25 percent per year beginning one year date grant expire ten years date grant december 31 2001 2516000 shares reserved issuance various plans per share weightedaverage fair value stock options granted 2001 2000 1999 1991 2014 2147 respectively date grant using black scholes optionpricing model following weightedaverage assumptions 2001 expected dividend yield 0 riskfree interest rate 472 expected volatility 6166 expected life 532 years 2000 expected dividend yield 0 riskfree interest rate 633 expected volatility 6325 expected life 563 years 1999 expected dividend yield 0 riskfree interest rate 562 expected volatility 587 expected life 521 years company applies apb opinion 25 accounting plans accordingly compensation cost recognized stock options consolidated statements operations company determined compensation cost based fair value grant date stock options sfas 123 companys net income would reduced pro forma amounts indicated following table summary employee stock options follows december 31 2001 range exercise prices weighted average remaining contractual life outstanding options 425 3859 697 years respectively december 31 2001 2000 1999 number options exercisable approximately 3071000 3269000 1976000 respectively weighted average price options 1518 1486 640 respectively company derives tax benefit options exercised sold employees benefit credited additional paidin capital september 1999 company adopted new rights plan declared dividend distribution one right outstanding share company’s common stock new rights plan replaced company’s original rights plan set expire september 1999 rights new rights plan set expire september 2009 unless redeemed earlier board least every three years independent committee board review rights plan committee deems appropriate recommend entire board rights plan modified terminated right represents right purchase right becomes exercisable unit consisting one share syncor common stock per unit price 90 “purchase price” rights generally exercisable person group “acquiring person” acquires beneficial ownership 15 syncor’s common stock commences tender exchange offer upon consummation person group would beneficially 15 syncor’s common stock result repurchases stock syncor certain purchases institutional similar stockholders long 20 event person becomes acquiring person pursuant offer shares majority independent directors associated affiliated acquiring person determines adequate otherwise best interest company stockholders rights becomes discount right entitling holder acquiring person upon payment purchase price common stock value equal twice purchase price ie 180 worth syncor stock purchase price 90 following someone becoming acquiring person company engages merger business combination company survive common stock changed exchanged transfers 50 assets cash flow earning power one transaction series related transactions right becomes right except acquiring person acquire common shares party transaction value equal twice purchase price note 10 employee benefit plans company’s 401k plan open employees least 18 years age minimum three consecutive months service 1989 companys board directors amended plan employees’ savings stock ownership plan essop allow plan acquire one million companys shares leveraged employee stock ownership plan transaction june 1995 september 1996 august 1997 additional 1500000 shares total purchased open market contributed plan shares originally classified “treasury stock” contributions totaled 8657000 reflected fair market value time contribution connection transactions company made loan essop loan paid december 31 2001 essop participants may contribute one percent fourteen percent compensation 401k investment options additional two percent compensation purchase company stock company makes matching contributions 50 percent employees’ 401k investment contributions maximum four percent employee’s compensation 100 percent employees’ company stock purchases two percent employee’s compensation company’s matching contribution made company stock essop loan payment outstanding number shares available match employee contributions directly related amount principal payments made essop loan number available shares determined company matches employees’ contributions based fair market value shares remainder shares allocated matching complete allocated eligible employees based relative compensation participants fully immediately vested contributions vest employer contributions fiveyear period continuous employment five years continuous employment employer contributions fully immediately vested company’s contributions years ended december 31 2001 2000 1999 amounted 1735000 1895000 1957000 respectively 1685000 1686000 respectively used pay principal essop loan 50000 210000 271000 respectively pay interest note 11 net income per share following table presents computation basic earnings per share eps note 12 litigation contingencies various litigation proceedings company subsidiaries involved many claims asserted company proceedings covered insurance results litigation proceedings cannot predicted certainty however opinion company’s general counsel proceedings either without merit potential liability would materially affect financial condition company subsidiaries consolidated basis note 13 subsequent event january 17 2002 company completed asset securitization agreement one banks using us pharmacy business segment’s trade receivables collateral securitization program allow company borrow 65 million rates generally favorable credit line agreement upon execution securitization agreement credit line provision required 50 reduction securitization amount 325 million therefore credit line current borrowing limit 1675 million note 14 business segments company currently three different business segments first segment compounding dispensing distribution complex pharmaceuticals united states second segment management provision medical diagnostic imaging services united states third segment compounding dispensing distribution complex pharmaceuticals provision radiology services outside united states selected quarterly results operations unaudited quarterly operating results selected quarterly results operations prepared basis audited consolidated financial statements opinion management include adjustments necessary fair presentation periods presented unaudited calendar quarterly information summarized syncor international corporation subsidiaries schedule ii valuation qualifying accounts thousands estimated bad debt b uncollectible accounts writtenoff net recoveries change reserve item 7 managements discussion analysis financial condition results operations managements discussion analysis financial condition results operations appears companys annual report shareholders year heading managements discussion analysis financial conditions results operations included form 10k annual report exhibit 13 incorporated herein reference item 8item 7 managements discussion analysis financial condition results operations managements discussion analysis financial condition results operations appears companys annual report shareholders year ended december 31 1995 heading managements discussion analysis financial condition results operations included form 10k annual report exhibit 13 hereby incorporated herein reference item 8item 7 managements discussion analysis financial condition results operations managements discussion analysis financial condition results operations appears companys annual report stockholders year ended december 31 1996 heading managements discussion analysis financial condition results operations included form 10k annual report exhibit 13 hereby incorporated herein reference item 8item 7 managements discussion analysis financial condition results operations managements discussion analysis financial condition results operations appears companys annual report stockholders year ended december 31 1997 heading managements discussion analysis financial condition results operations included form 10k annual report exhibit 13 incorporated reference item 8item 7 managements discussion analysis financial condition results operations managements discussion analysis financial condition results operations appears companys annual report stockholders year ended december 31 1999 heading managements discussion analysis included form 10k annual report exhibit 13 incorporated reference item 7aitem 7 managements discussion analysis financial condition results operations forward looking statements except historical information discussions contained herein statements contained annual report form 10k may constitute forward looking statements within meaning private securities litigation reform act 1995 statements involve number risks uncertainties factors could cause actual results differ materially including changes regulation healthcare industry either federal state levels changes delays companys reimbursement services governmental private payers companys failure continue develop market new products services keep pace technological change competitive pressures failure obtain protect intellectual property rights quarterly fluctuations revenues volatility companys stock price companys ability attract retain key personnel currency risks dependence certain suppliers companys ability successfully manage acquisitions alliances legal political economic changes risks uncertainties factors discussed risk factors section elsewhere herein companys filings sec materials incorporated reference given uncertainties undue reliance placed forward looking statements results operations calendar year 2000 1999 net sales consolidated sales fiscal year 2000 totaled 6294 million increase 21 percent fiscal year 1999 companys growth result strong contributions operating groups sales affected continued cardiac imaging growth price increases improvement product mix continued expansion medical imaging international markets us pharmacy services business sales group approximately 4890 million increase 111 percent 487 million 1999 results favorable market trends companys dedication customer service extensive service network continue positive impact companys revenues company supplies radiopharmaceutical products used primarily diagnostic purposes fields cardiology oncology neurology significant factor affecting company continuing growth diagnostic cardiac imaging technology shown continuing growth result efficacy tool management cardiovascular disease companys annual revenue growth cardiac imaging continues rate 12 percent three agents two proprietary one generic physicians use performing cardiac imaging principal imaging agent used cardiac imaging duponts proprietary product cardioliter company preferred us distribution rights proprietary product marketed competing manufacturerdistributor companys belief competing product gained significant market share fiscal year 2000 generic agent company also access continues lose market share due switching newer proprietary agents company implemented price increase cardioliter several products 1999 2000 price increases approximately 35 percent also contributed sales growth respective years company believes progressive aging united states population prevalence cardiovascular disease within age group market potential sustained growth cardiac imaging remains favorable revenues sales cardiac imaging agents represent 71 percent revenues generated operating group company also realigned resources effectively manage complex medical technologies progression disease state management company views role critical link allow expanded use complex technologies diagnosis treatment patients us medical imaging business sales 2000 1008 million grew annual rate 827 percent 456 million 1999 results growth result acquisitions existing store growth existing store growth accounted 69 million change acquisitions startup sites accounting remainder syncor subsidiary cmi provides imaging services magnetic resonance imaging mri scans computerized tomography ct used diagnostic medicine company successful growing business store procedure volume increasing 18 percent mri 21 percent ct compared 1999 success due expansion scope clinical applications growth physician referral base 2000 company focused efforts expanding range clinical applications mri procedures improving scope network penetration selected markets company continued grow florida california arizona networks acquisitions 2000 international operations sales 2000 396 million grew annual rate 595 percent 148 million 1999 results growth combination acquisitions startups existing store growth expansion type products services offered year store revenue growth amounted approximately 25 percent radiopharmacy services supporting cardiology oncology continue represent substantial portion revenues 36 percent groups 2000 revenues continued expansion radiology product service areas radiology includes operation nuclear medicine departments equipment well ownership operation freestanding mri centers revenues radiology account approximately 21 percent groups 2000 revenues group opened seeds production facility china august 2000 two pet production sites florida 2000 contributing 15 million increased sales another four pet production sites either construction planning phases company believes significant market exists product encouraged medicares approval pet certain cancer diagnoses gross profit companys gross profit increased 2000 2248 million increase 328 percent compared 1999 number factors impacted growth including continued improvement product mix primarily continuing shift cardioliter price increases margin increase also result increased revenue share medical imaging international businesses higher gross profit margins traditional radiopharmaceutical business us pharmacy services business pharmacy services group realized year growth gross profits 1170 million 1366 million gain 168 percent growth cardiac imaging continues shift revenues segment business growth combined targeted cardiology price increases factor producing favorable results company expects gains continue pricing continuation product mix shift company leveraged percentage sales increases 11 percent 2000 relatively higher gross profit growth 168 percent 2000 due part companys focus increasing efficiencies areas direct material labor utilization company believes favorable trends continue us medical imaging business cmis gross profit increased 702 million 2000 represents increase 710 percent compared 1999 increase gross profit principally derived increased sales due acquisition store growth offset increases radiologists reading fees acquisitions accounted 165 million difference remainder due store growth new startup sites international operations syncor overseas ltd showed year growth gross profits 113 million 181 million gain 605 percent margin gains due strong sales growth existing pharmacies contributed 13 million increase additional revenues imaging services contributed 22 million acquisitions new businesses contributed remainder increase additionally increased sales levels 2000 contributed efficient utilization direct costs leading increased gross profit group incurred startup costs positron emission tomography pet brachytherapy seeds production 21 million 2000 operating selling administrative costs operating selling administrative expenses increased 319 million 2000 1999 percentage net sales increased 226 percent 2000 compared 212 percent 1999 general increase associated startup acquisition certain businesses 2000 continued expansion existing services increased corporate staffing support companys continued expansion general corporate infrastructure costs addition medical imaging business operates higher costs category compared radiopharmacy business us pharmacy services business increase pharmacy services group approximately 142 percent 92 million change primarily related increased expenditures expanded sales force increased laborrelated expenses including annual merit increases certain bonuses us medical imaging business increase comprehensive medical imaging group approximately 622 percent 171 million amount 89 million relates costs acquired sites increase compares favorably sales increase 827 percent demonstrates leverage cmis sites better operating margins company hopes continue trend strategic acquisitions existing markets international operations increase syncor overseas ltd group approximately 502 percent 43 million approximately 15 million associated startup acquisition sites 2000 remainder increase attributable continued expansion existing sites addition new management resources depreciation amortization depreciation amortization increased 68 million 2000 348 percent 1999 majority increase approximately 55 million due acquisition new facilities cmi balance increase relates expansion international operations continued spending corporate information systems results operations calendar year 1999 1998 net sales consolidated sales fiscal year 1999 totaled 5203 million increase 159 percent fiscal year 1998 companys operating groups contributed significant growth rate different factors within group combined positively affect sales factors included continued strong cardiac imaging growth increases price products services acquisitions improvement product service mix continued strong expansion medical imaging international markets us pharmacy services business sales group approximately 440 million increase 11 percent 43 million 1998 results favorable market trends companys dedication customer service continue positive impact companys revenues company supplies radiopharmaceutical products used primarily diagnostic purposes fields cardiology oncology neurology largest factor affecting company continuing growth diagnostic cardiac imaging technology shown costeffective tool management cardiovascular disease annual revenue growth cardiac imaging continues rate 13 percent two proprietary one generic agent represent choices physicians performing cardiac imaging principal imaging agent used cardiac imaging duponts proprietary product cardioliter company preferred distribution rights proprietary product marketed competing manufacturerdistributor companys belief competing product gained significant market share fiscal year 1999 generic agent company also access continues lose market share experienced price declines due switching newer imaging agents 1998 company implemented price increase cardioliter several products price increase also contributed sales growth group 1999 similar price increase announced 1999 become effective january 2000 company believes progressive aging general population united states prevalence cardiovascular disease within age group market potential sustained growth cardiac imaging remains favorable revenues sales cardiac imaging agents represent approximately 67 percent revenues generated operating group company believes result superior fullservice business model able show revenue gains excess 6 8 percent overall market growth rate addition company also able retain service large portion managed care business despite loss formal contract supply needs managed care groups company believes trend continue us medical imaging business sales 1999 552 million grew annual rate 56 percent 199 million 1998 results growth combination acquisitions existing store growth syncor cmi provides services computerized tomography ct magnetic resonance imaging mri scans used primarily diagnostic medicine company successful growing business store procedure volume increasing 75 percent mri 14 percent ct compared 1998 company focused efforts expanding range clinical applications mri procedures improving quality payer mix increased average value procedures performed result company successful offsetting historical price erosion ended year increases mri ct net reimbursement rates corresponding rates 1998 addition company continues benefit 1999 additions california network divestiture three imaging centers second half 1999 nonstrategic markets international operations sales 1999 289 million grew annual rate 72 percent 121 million 1998 results growth combination acquisitions startups existing store growth expansion offering products services year store revenue growth amounted approximately 40 percent radiopharmacy services supporting cardiology oncology continue represent substantial portion revenues addition also expansion radiology product service areas radiology includes operation nuclear medicine departments equipment well ownership operation freestanding mri centers revenues radiology account approximately 14 percent groups 1999 revenues 1999 group received approval fda market brachytherapy seeds beginning year 2000 brachytherapy seeds begin new category radiotherapy brachytherapy seeds used primarily therapy prostate cancer distributed direct sales group pharmacy services group company believes significant market exists product company expects add additional products services category coming year offered group gross profit companys gross profit increased 1999 1693 million increase 283 percent compared 1998 number factors impacted growth including continued improvement product mix price increases margin expansion also result increased revenue share medical imaging international businesses higher gross profit margins radiopharmacy business us pharmacy services business pharmacy services group realized year growth gross profits 100 million 117 million gain 167 percent gain resulted number business decisions trends growth cardiac imaging continues shift revenues profitable segment business shift combined targeted cardiology price increase late 1998 factor producing favorable results company also received favorable materials acquisition pricing december 1999 company received combination price increases decreases certain products one major suppliers assuming similar growth company estimates net effect price changes approximately 3 million company offset price increases mentioned company expects gains continue pricing continuation product mix shift company leveraged percentage sales increases 11 percent 1999 relatively higher gross profit growth 167 percent 1999 due part companys focus increasing efficiencies areas direct material labor utilization company believes favorable trends continue us medical imaging business cmis gross profit increased 411 million 1999 represents increase 57 percent compared 1998 increase gross profit principally derived improvement productivity 14 reductions film contrast costs due benefit national supply contracts international operations syncor overseas ltd showed year growth gross profits 57 million 113 million gain 99 percent margin gains due primarily strong sales growth existing pharmacies 1998 many international sites embryonic stages development company always believed significant growth opportunities existed overseas markets 1999 sales levels contributed efficient utilization direct materials labor leading increased gross profit company expects growth opportunities continue operating selling administrative costs operating selling administrative expenses increased 182 million 1999 1998 percentage net sales increased 212 percent 1999 compared 205 percent 1998 general increase associated startup acquisition certain businesses 1999 continued expansion existing services laborrelated costs support continued expansion general corporate infrastructure costs us pharmacy services business increase pharmacy services group approximately 116 percent 38 million change primarily related increased expenditures expanded sales force increased laborrelated expenses including annual merit increases certain bonuses us medical imaging business increase comprehensive medical imaging group approximately 41 percent 8 million increased costs approximately 21 million resulted full years worth expenses 1999 compared approximately nine months 1998 acquisition related expenses contributed approximately 32 million increase 1999 international operations increase syncor overseas ltd group approximately 77 percent 35 million approximately 15 million associated startup acquisition sites 1999 addition remainder increase attributable continued expansion existing sites addition new management resources support expansion group depreciation amortization depreciation amortization increased 43 million 1999 28 percent 1998 majority increase approximately 27 million attributable cmi incurred full years worth expense 1999 acquired certain facilities balance increase relates expansion growth international operations continued information systems related expenses liquidity companys strategies improved operations terms profitability cash flow improvements led better liquidity company 2000 company saw year improvements cash flow operations working capital growth trade receivables comparable sales growth patient receivables primarily related receivables acquired acquisitions december company made purchase four months supply cardioliter inventory favorable terms inventory expected completely utilized mid late april 2001 companys growth medical imaging international businesses primarily result startups acquisitions 2000 company acquired additional imaging centers consolidated ownership existing centers approximately 51 million additional borrowings existing line credit assumption approximately 16 million debt results acquisitions partly reflected change categories property equipment goodwill assets company expects finance continuing growth medical imaging business certain foreign operations additional borrowings result decisions company increased line credit 100 million prior year 150 million december 31 2000 company approximately 41 million available borrowing line credit december 31 2000 company also authority board directors increase amounts available line credit 200 million company believes sufficient resources available combination internal external sources fund operating business expansion needs coming year capital resources companys medical imaging operations foreign domestic extremely capital intensive company may time purchase new equipment update enhance existing equipment costs purchases enhancements relatively minor well 1 million per piece equipment company constantly evaluating needs acquiring new equipment improving existing equipment recent developments medicare reimbursement changes current framework federal government reimburses healthcare providers healthcare services could impact companys revenues june 1998 health care financing administration hcfa acting pursuant balanced budget act 1997 published proposed reimbursement schedule implemented would resulted reductions medicare reimbursement medical imaging services fouryear phasein period hcfa enact reductions indicated still continuing evaluate rates final outcome proposed fee restructuring impact diagnostic facilities company cannot predicted time starting august 1 2000 hcfa began using prices submitted manufacturers set reimbursement many hospital outpatient drugs including radiopharmeuticals rather reimbursing products direct passthrough companys pharmacy services business get reimbursement hcfa however introduction set reimbursemnt rates could impact hospitals purchase radiopharmaceuticals syncor impact turn could affect companys revenues company cannot predict time impact changes radiopharmacy business item 7aitem 7 managements discussion analysis financial condition results operations managements discussion analysis financial condition results operations appears companys annual report shareholders transition period heading managements discussion analysis financial condition results operations included form 10k transition report exhibit 13 incorporated herein reference item 8item 7 managements discussion analysis financial condition results operations managements discussion analysis financial condition results operations appears companys annual report stockholders year ended december 31 1998 heading managements discussion analysis financial condition results operations included form 10k annual report exhibit 13 incorporated reference item 7aitem 7 management’s discussion analysis financial condition results operations forward looking statements except historical information discussions contained herein statements contained annual report form 10k may constitute forward looking statements within meaning private securities litigation reform act 1995 statements involve number risks uncertainties factors could cause actual results differ materially including changes regulation healthcare industry either federal state levels changes delays companys reimbursement services governmental private payers companys failure continue develop market new products services keep pace technological change competitive pressures failure obtain protect intellectual property rights quarterly fluctuations revenues volatility companys stock price companys ability attract retain key personnel currency risks dependence certain suppliers companys ability successfully manage acquisitions alliances legal political economic changes risks uncertainties factors discussed risk factors section elsewhere herein companys filings sec materials incorporated reference given uncertainties undue reliance placed forward looking statements 2001 vs 2000 management identified three business segments separate reporting us pharmacy services business us medical imaging business international business us pharmacy services business primarily compounds dispenses distributes radiopharmeceuticals distributes complex pharmaceuticals united states segment depends heavily one product cardiolite high percentage sales currently discussions bristolmyers squibb supplier cardiolite extend supply agreement beyond 2003 upon mutually agreeable terms lessen dependence cardiolite undertaken several strategic initiatives production distribution fdg distribution new complex pharmaceuticals also segment made several acquisitions 2001 anticipates acquisitions 2002 financial reporting standpoint segment integrate new entities organization us medical imaging business provides medical diagnostic imaging services united states business segment grown rapidly result acquisitions financial accounting standpoint integration acquisitions challenge us due multiple accounting billing collection systems rely manual processes controls transition multiple systems one common platform still process implementing one billing collections system imaging network 2002 plan make acquisitions imaging segment managements’ focus improve overall profitability cash flows imaging centers ensure successful implementation new billing collections system international business provides pharmacy imaging services outside united states segment also made several acquisitions 2001 expected make significant acquisitions 2002 financial reporting integration acquisitions challenging given geographic locations fact reliance placed heavily local management located 19 countries puerto rico accounting performed local staff business turnover management locations reliance proper financial reporting placed local management team oversight corporate office management internal audit critical accounting policies critical accounting policies follows revenue recognition recognize revenue primarily two sources product revenue includes sales radiopharmacies ii services revenue primarily imaging business described significant judgments estimates must used management connection revenue recognized period imaging business material differences may impact amount revenue recorded period management judgments estimates significantly different actual provide imaging services patients generally medical insurance governmental payor managed care payor commercial thirdparty payor medical imaging business several hundred contracts change amended frequently due changes payors governmental agencies reimbursement additionally acquire medical imaging centers new contracts entered computer systems contracts updated systems need make estimates anticipated contracted amounts ultimately receive various payors requires us record estimates recording imaging revenues based upon historical data trends estimates continually evaluated compared actual reimbursements various payors ensure properly recorded revenues appropriately adjusted shifts payor mix accordingly recorded revenues based current information available subject estimation may lead adjustments future periods actual reimbursement rates determined adjustments material 2001 2000 estimating valuation allowances doubtful accounts preparation financial statements requires management make estimates assumptions collectibility accounts receivable management specifically analyzes historical bad debts customer concentrations customer creditworthiness current economic trends aging accounts changes payment terms evaluating adequacy allowance doubtful accounts changes estimates assumptions could cause material differences recorded allowances valuation longlived assets goodwill assess impairment identifiable intangibles longlived assets related goodwill enterprise level goodwill whenever events changes circumstances indicate carrying value may recoverable factors consider important could trigger impairment review include following • significant underperformance relative expected historical projected future operating results • significant changes manner use acquired assets strategy overall business • significant negative industry economic trends • market capitalization relative net book value determine carrying value intangibles longlived assets related goodwill enterprise level goodwill may recoverable based upon existence one indicators impairment measure impairment based projected undiscounted cash flow method using discount rate determined management commensurate risk inherent current business model net intangible assets longlived assets goodwill amounted 3395 million december 31 2001 cost excess net assets acquired businesses amortized straightline basis periods 15 40 years first quarter 2002 statement financial accounting standards “sfas” 142 “goodwill intangible assets” become effective result cease amortize approximately 1621 million goodwill recorded approximately 66 million 45 million 49 million goodwill amortization 2001 2000 1999 respectively would recorded approximately 70 million goodwill amortization 2002 provisions statement record amortization related six postjune 30 2001 acquisitions amortization would amounted 09 million lieu amortization required perform initial impairment review goodwill 2002 annual impairment review thereafter expect complete initial review second quarter 2002 currently expect record impairment charge upon completion initial impairment review however assurance time review completed material impairment charge recorded net sales net sales increased 231 1453 million 7747 million three business segments doubledigit sales growth year pharmacy services revenue increase primarily organic growth imaging services international growth primarily acquisitions us radiopharmacy business net sales increased 155 759 million 5653 million driven primarily increased sales cardiology imaging agents business realized volume price increases year cardiology imaging agents price increases ranged 30 35 2000 2001 sales cardiology imaging agents increased 115 401 million compared prior year represented 706 us radiopharmacy business net sales 2001 sales oncology products includes fdg brachytherapy seeds increased 250 131 million compared prior year remaining sales increase acquisitions made 2001 accounted 155 million increase 2002 anticipate sales growth continue 1012 range cardiology products anticipate higher sales growth oncology primarily result continued expansion fdg business started mid 2000 growing fdg business adding cyclotrons signing new fdg distribution agreements finally expect realize sales growth 2002 due delivery complex pharmaceuticals xigris zevalin us medical imaging business net sales increased 587 592 million 1600 million sales existing centers means centers open twelve months 2000 2001 increased 100 67 million compared prior year remaining increase sales result acquisitions startup centers volume imaging procedures performed existing centers increased 8 mri 17 ct compared period 2000 volume increases due new contracts expanded physician referral base new equipment upgraded equipment increased efficiencies scope testing many centers anticipate 2002 sales growth range 8 10 growth primarily result improvements store sales also due opening several companybuilt imaging centers anticipate business make acquisitions 2002 international operations net sales increased 261 102 million 494 million due primarily startup businesses acquisitions net sales existing centers facilities flat year primarily result slowdown healthcare spending taiwan radiopharmacy services continue represent greatest percentage international net sales 363 continued expansion radiology product service areas include operation nuclear medicine departments equipment well ownership operation freestanding outpatient imaging centers net sales radiology products services represented 179 2001 international net sales service distribution businesses represented 355 international sales 2001 primarily result acquisition made late 2001 anticipate overseas segment improved sales 2002 due improved economic conditions expanded healthcare spending taiwan accounts 267 segment’s business overall segment basis anticipate sales growth 1520 2002 due improvements taiwan contributions startups acquisitions contributed sales partial year 2001 contributing sales twelve months 2002 gross profit gross profit increased 312 701 million 2950 million consolidated gross profit margin percentage sales improved 381 2001 compared 357 2000 driven continued improvement product mix price increases operating efficiencies radiopharmacies additionally margin percentage sales improved 2001 due increased net sales medical imaging business international operations higher gross profit margins us radiopharmacy business us radiopharmacy business gross profit increased 203 281 million 1666 million gross profit margin percentage sales improved 295 2001 compared 283 2000 increase due primarily growth sales cardiology imaging agents resulting higher volumes combined price increases gross profit increased result continued leveraging existing radiopharmacy infrastructure increased volumes without comparable increases material labor delivery costs going forward plan leverage radiopharmacy distribution network deliver complex pharmaceutical products expect gross profit margin growth experienced last several years slow complex pharmaceuticals traditionally lower margins traditional nuclear imaging products us medical imaging business gross profit increased 534 375 million 1077 million gross profit increased due acquisitions improved sales performance existing imaging sites offset higher fees paid radiologists 2001 acquisitions startup sites accounted 373 million increase gross profit increased sales existing centers accounted remainder gross profit margin percentage sales decreased 2001 673 compared 696 2000 decrease primarily due increase number multimodality sites 2001 multimodality sites traditionally lower margins mrionly sites imaging business added multimodality sites many markets 2001 order secure new payor contracts international operations gross profit increased 283 46 million 207 million gross profit increased due acquisitions new businesses gross profit margin percentage sales increased 2001 419 compared 412 2000 margin growth existing radiopharmacy sites imaging centers flat 2001 compared prior year business impacted slowdown healthcare reimbursement taiwan largest sales volume location overseas operating selling administrative expenses operating selling administrative expenses increased 269 383 million 1805 million ratio expenses net sales year ended december 31 2001 233 compared 226 period 2000 operating selling administrative costs medical imaging business higher costs radiopharmacy business imaging business becomes larger share overall business consolidated ratio expenses net sales increases us radiopharmacy business operating selling administrative costs increased 133 102 million 869 million increase due primarily increased costs associated acquired businesses accounted 61 million increase start costs associated opening six new cyclotrons used production fdg accounted additional 22 million percentage sales operating selling administrative expenses decreased 157 2000 154 2001 us medical imaging business operating selling administrative costs increased 520 232 million 678 million expenses increased primarily result acquisitions made 2000 2001 percentage sales expenses declined 442 2000 424 2001 international business operating selling administrative expenses increased 324 36 million 147 million amount 30 million attributable costs acquiring new businesses starting new centers 2001 remaining 06 million increase attributable expansion services products offered existing facilities addition new management resources support expanded operations percentage sales expenses increased 284 2000 298 2001 depreciation amortization depreciation amortization increased 504 133 million 396 million increase 86 million attributable medical imaging business acquisitions made 2000 2001 support segment’s expansion remainder increase attributable expansions international operations increase 20 million pharmacy services business primarily new fdg production facilities increase 19 million corporate operations increase 08 million 2000 vs net sales net sales increased 210 1091 million 6294 million net sales increased three business segments due high growth cardiology sector pharmacy services business primarily acquisitions medical imaging international businesses us radiopharmacy business net sales increased 111 490 million 4894 million business realized volume price increases year cardiology imaging agents price increases ranged 30 35 2000 1999 sales cardiology imaging agents increased 120 compared prior year represented 710 us radiopharmacy business net sales 2000 compared 704 1999 us medical imaging business net sales increased 827 457 million 1009 million existing centers accounted 69 million increase net sales acquisitions startup centers accounting remaining increase volume imaging procedures performed existing centers increased 18 mri 210 ct period 1999 due expansion scope clinical applications procedures expansion physician referral base also improved market penetration particularly arizona california florida acquisitions 2000 international operations net sales increased 582 144 million 391 million increase net sales due combination acquisitions startups higher net sales existing facilities expansion services products offered net sales existing facilities increased 250 radiopharmacy services continue represent greatest portion international net sales 36 continued expansion radiology product service areas include operation nuclear medicine departments equipment well ownership operation freestanding outpatient imaging centers net sales radiology services products constituted 210 2000 international net sales gross profit gross profit increased 328 555 million 2248 million consolidated gross profit margin percentage sales improved 357 2000 compared 325 1999 increase due primarily continued improvement product mix primarily increased sales cardiolite® price increases cardiolite® cardiology imaging agents also increased net sales medical imaging business international operations higher gross profit margins us radiopharmacy business us radiopharmacy business gross profit increased 167 198 million 1385 million gross profit margin percentage sales improved 283 2000 compared 269 1999 increase due primarily growth sales cardiology imaging agents combined price increases incurred startup costs 21 million 2000 associated fdg radioisotope brachytherapy seeds production us medical imaging business gross profit increased 710 292 million 702 million increase corresponded increased net sales attributable acquisitions existing centers offset increases reading fees paid radiologists startup costs new centers acquisitions accounted 165 million increase gross profit increased sales existing centers accounted remainder gross profit margin percentage sales decreased 2000 696 compared 744 1999 international operations gross profit increased 682 65 million 161 million increase due primarily increased sales existing radiopharmacies contributed 13 million increase increased net sales medical imaging services contributed 22 million acquisitions new businesses contributed remaining 30 million increase gross profit margin percentage sales increased 2000 412 compared 388 1999 margin increased higher rate net sales result efficient utilization raw materials labor operating selling administrative expenses operating selling administrative expenses increased 289 319 million 1422 million ratio expenses net sales year ended december 31 2000 226 compared 212 period 1999 increase due primarily startup acquisition certain businesses 2000 expansion services products offer increased corporate staffing support expansion general corporate infrastructure costs operating selling administrative costs associated medical imaging services higher radiopharmacy services us radiopharmacy business operating selling administrative costs increased 170 111 million 767 million increase due primarily increased costs expanded sales force increased laborrelated expenses including merit increases bonuses us medical imaging business operating selling administrative costs increased 622 171 million 446 million amount 89 million attributable costs acquired centers 2000 increase compared favorably net sales increase 827 international operations operating selling administrative expenses increased 437 34 million 111 million amount 15 million attributable costs acquiring startingup new centers 2000 remaining 19 million increase attributable expansion services products offered existing facilities addition new management resources support expanded operations depreciation amortization depreciation amortization increased 348 68 million 263 million amount 55 million attributable acquisition new medical imaging centers remainder increase attributable expansion international operations corporate information systems liquidity company believes sufficient resources available combination internal external sources fund 2002 operating business expansion needs cash flow operations improved 650 million 2001 390 million 2000 net cash provided operating activities improved three straight years time compounded growth rate 723 improvements continue due increased profitability management working capital accounts trade receivables relate us pharmacy international businesses increased due overall sales increases receivables acquired acquisitions patient receivables relate imaging business also increased due organic sales growth primarily result acquisitions made 2000 2001 company increased line credit 150 million 2000 200 million december 31 2001 company traditionally used cash provided operations fund capital asset purchases company’s credit line utilized fund significant acquisitions 2001 company acquired additional imaging centers additional businesses pharmacy business segment approximately 55 million utilizing line credit company also assumed approximately 6 million debt acquisition transactions results acquisitions partly reflected change categories “property equipment” “goodwill” “other” assets company 285 million available unused borrowing line credit december 31 2001 january 17 2002 company completed asset securitization agreement using trade receivables collateral securitization program allows company borrow 65 million rates generally favorable credit line agreement upon execution securitization agreement credit line provision required 50 reduction securitization amount 325 million therefore credit line current borrowing limit 1675 million january 17 2002 company 526 million combined credit available unused credit line asset securitization line company plans slow pace acquisitions 2002 imaging international business segments focus improving profitability cash flows lines business mentioned company believes sufficient resources available fund 2002 acquisition needs purchases capital assets stock repurchase program june 23 1999 board directors authorized repurchase 1075600 shares common stock december 31 2001 repurchased 761662 shares common stock leaving 313938 shares remaining repurchase program timing size future stock repurchases subject market conditions stock prices cash availability portion repurchases expected cover future issuances employees’ savings stock ownership plan essop capital spending company’s medical imaging operations foreign domestic capital intensive company may time purchase new equipment upgrade existing equipment cost capital purchases upgrades vary several thousand dollars amounts well 1 million per piece equipment company ongoing basis evaluates needs acquiring new equipment upgrading existing equipment made significant investments last three years new equipment upgrades existing equipment company expects capital investments 2002 medical imaging pharmacy services business segments less historical levels recent developments medicare reimbursement derive significant portion revenue governmental programs medicare medicaid 2001 155 net sales attributable direct reimbursements programs recent years changes highly regulated programs limited reduced reimbursements providers trends may continue example centers medicare medicaid services cms federal agency establishes medicare reimbursement policies considered making significant reductions reimbursement rates medical imaging services radiopharmaceuticals past indicated continuing evaluate rates cms latest published figures applicable reimbursement medical imaging services reflect reductions rates 4 percent 2002 august 1 2000 cms began setting reimbursement rates radiopharmaceuticals based prices submitted manufacturers tend lower previous prices based passthrough rate since sales radiopharmaceuticals made hospitals clinics get paid reimbursed cms introduction set reimbursement rates nevertheless could impact prices customers willing pay radiopharmaceuticals purchase us impact turn could affect revenues cannot predict time impact changes radiopharmacy business cms recently approved reductions reimbursement rates pet studies hospital outpatients effective april 1 2002 able predict effects change medicare reimbursement policies predict whether cms also make reductions reimbursement rates pet studies conducted independent diagnostic testing facilities medical imaging centers safe harbor statement statements historical facts including statements confidence strategies expectations opportunities industry market growth demand acceptance new existing products return investments forwardlooking statements involve risks uncertainties including without limitation effect general economic market conditions supply demand products competitor pricing maintenance current market position risk factors documented section entitled “risk factors” part form 10k given uncertainties undue reliance placed forwardlooking statements item 7a nannannannanitem 7a quantitative qualitative disclosures market risk quantitative qualitative disclosures market risk appear companys annual report stockholders year ended december 31 1999 heading quantitative qualitative disclosures market risk included form 10k annual report exhibit 13 incorporated reference item 8item 7a quantitative qualitative disclosures market risk interest income earned companys investment portfolio affected changes general level us interest rates companys line credit borrowings effectively bear interest variable rates therefore changes us interest rates affect interest expense incurred thereon changes interest rates affect interest expense incurred companys fixed rate debt following table provides information companys financial debt instruments sensitive changes interest rates table presents principal cash flows related weightedaverage interest rates expected maturity dates company engage minor interest rate swap period gain loss transaction would materially affect financial results fair value financial instruments approximate carrying value item 8nanitem 7a quantitative qualitative disclosures market risk quantitative qualitative disclosures market risk appear companys annual report stockholders year ended december 31 1998 heading quantitative qualitative disclosures market risk included form 10k annual report exhibit 13 incorporated reference item 8item 7a quantitative qualitative disclosures market risk interest income earned companys investment portfolio affected changes general level us interest rates companys line credit borrowings effectively bear interest variable rates therefore changes us interest rates affect interest expense incurred thereon changes interest rates affect interest expense incurred companys fixed rate debt following table provides information companys financial debt instruments sensitive changes interest rates table presents principal cash flows related weightedaverage interest rates expected maturity dates company engage interest rate swap 2001 dollar amount swap significant gain loss transaction materially affect financial results fair value financial instruments approximates carrying value based upon company’s variable rate borrowing levels 1 change interest rates would resulted pretax fluctuation approximately 14 million 09 million 2001 2000 respectively item 8 item 8 consolidated financial statements supplemental data consolidated financial statements notes thereto appear companys annual report shareholders year headings consolidated statements income consolidated balance sheets included form 10k annual report exhibit 13 incorporated herein reference schedules containing certain supporting information also included see index financial statement schedules page 10 item 9item 8 consolidated financial statements supplemental data consolidated financial statements notes thereto appear companys annual report shareholders year ended december 31 1995 headings consolidated statements income consolidated balance sheets included form 10k annual report exhibit 13 hereby incorporated herein reference schedules containing certain supporting information also included see financial statement schedules page 7 hereof item 9item 8 consolidated financial statements supplemental data consolidated financial statements notes thereto appear companys annual report stockholders year ended december 31 1996 headings consolidated statements income consolidated balance sheets included form 10k annual report exhibit 13 hereby incorporated herein reference schedules containing certain supporting information also included see financial statement schedules page 8 hereof item 9item 8 consolidated financial statements supplemental data consolidated financial statements notes thereto appear companys annual report stockholders year ended december 31 1997 headings consolidated statements income consolidated balance sheets included form 10k annual report exhibit 13 incorporated reference schedules containing certain supporting information also included see financial statement schedules page 12 hereof item 9item 8 consolidated financial statements supplementary data consolidated financial statements notes thereto appear companys annual report stockholders year ended december 31 1999 headings consolidated statements income consolidated balance sheets included form 10k annual report exhibit 13 incorporated reference schedules containing certain supporting information also included see financial statement schedules page 14 hereof item 9item 8 financial statements supplementary data companys consolidated financial statements december 31 2000 1999 report kpmg llp independent accountants included annual report form 10k pages part iii item 10item 8 consolidated financial statements supplemental data consolidated financial statements notes thereto appear companys annual report shareholders transition period headings consolidated statements income consolidated balance sheets included form 10k transition report exhibit 13 incorporated herein reference schedules containing certain supporting information also included see index financial statement schedules page 7 item 9item 8 consolidated financial statements supplementary data consolidated financial statements notes thereto appear companys annual report stockholders year ended december 31 1998 headings consolidated statements income consolidated balance sheets included form 10k annual report exhibit 13 incorporated reference schedules containing certain supporting information also included see financial statement schedules page 16 hereof item 9item 8 financial statements supplementary data company’s consolidated financial statements december 31 2001 2000 report kpmg llp independent accountants included annual report form 10k pages part iii item 10 directors executive officers registrant information called item 10 incorporated reference definitive proxy statement annual meeting stockholders held june 17 2002 filed commission pursuant regulation 14a securities exchange commission “regulation 14a” within 120 days december 31 2001 based solely upon review forms 3 4 5 furnished us believe reports required filed 2001 pursuant section 16b securities exchange act 1934 timely filed except robert funari 25 days late filing form 4 report zero cost collar transaction december 2001 item 11 executive compensation information called item 11 hereby incorporated reference definitive proxy statement annual meeting stockholders held june 17 2002 item 12 security ownership certain beneficial owners management information called item 12 hereby incorporated reference definitive proxy statement annual meeting stockholders held june 17 2002 item 13 certain relationships related transactions information called item 13 hereby incorporated reference definitive proxy statement annual meeting stockholders held june 17 2002 part iv item 14 exhibits financial statement schedules reports form 8k following documents filed part report 1 consolidated financial statements page independent auditors report consolidated balance sheets consolidated statements income consolidated statements stockholders equity comprehensive income consolidated statements cash flows notes consolidated financial statements 2 financial statement schedules following schedule supporting financial statements company included herein page schedule ii valuation qualifying accounts s1 schedules financial statements company omitted applicable required information included consolidated financial statements notes thereto b reports form 8k filed quarter ended december 31 2001 none c exhibits management contract compensatory plan 108 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company arnold e spangler filed exhibit 1017 form 10k year ended december 31 1995 incorporated herein reference 109 nonemployee director 1995 stock incentive award agreement dated january 24 1995 entered company george oki filed exhibit 1018 form 10k year ended december 31 1995 incorporated herein reference 1010 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company gail wilensky filed exhibit 43b registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1011 nonemployee director 1995 stock incentive award agreement dated april 29 1996 entered company steven gerber filed exhibit 43a registration statement form s8 filed december 20 1996 register shares underlying said award agreement incorporated herein reference 1012 subscription agreement dated july 15 1996 executed syncor management corporation favor american tax credit corporate fund iii lp together promissory note dated july 15 1996 executed syncor management corporation favor john hancock mutual life insurance company assignee corporate credit inc guarantee parent corporation dated july 15 1996 executed company favor john hancock mutual life insurance company assignee corporate credit inc agreements filed exhibit 1015 form 10k year ended december 31 1996 incorporated herein reference 1013 office lease dated september 30 1996 massachusetts life insurance company relating office lease company’s corporate headquarters woodland hills california filed exhibit 1019 form 10k year ended december 31 1996 incorporated herein reference 1014 office lease dated october 19 2000 company nomurawarner center associates lp filed exhibit 1016 form 10k year ended december 31 2000 incorporated herein reference 1015 nonemployee director stock compensation plan dated august 27 1996 filed exhibit 43 form s8 registration statement filed company sec december 20 1996 incorporated herein reference 1016 loan agreement dated march 31 1997 among syncor pharmaceuticals inc borrower company guarantor bank one na formerly first national bank chicago lender filed exhibit 101 form 10q quarter ended march 31 1997 incorporated herein reference 1017 syncor international corporation deferred compensation plan effective january 1 1998 filed exhibit 1024 form 10k year ended december 31 1997 incorporated herein reference 1018 amendment 1 syncor international corporation deferred compensation plan dated november 21 2000 filed exhibit 1021 form 10k year ended december 31 2000 incorporated herein reference management contract compensatory plan 1019 amendment 2 syncor international corporation deferred compensation plan dated november 1 2001 1020 executive longterm performance equity plan effective january 1 1998 filed exhibit 101 form 10q quarter ended march 31 1998 incorporated herein reference 1021 first amendment executive longterm performance equity plan dated november 17 1998 filed exhibit 1025 form 10k year ended december 31 1998 incorporated herein reference 1022 second amendment executive longterm performance equity plan dated june 23 1999 filed exhibit 101 form 10q quarter ended june 30 1999 incorporated herein reference 1023 third amendment executive longterm performance equity plan dated june 20 2000 filed exhibit 101 form 10q quarter ended june 30 2000 incorporated herein reference 1024 fourth amendment executive longterm performance equity plan dated june 20 2000 filed exhibit 102 form 10q quarter ended june 30 2000 incorporated herein reference 1025 fifth amendment executive longterm performance equity plan dated august 22 2000 filed exhibit 101 form 10q quarter ended september 30 2000 incorporated herein reference 1026 1998 senior management stock purchase plan effective june 16 1998 filed exhibit 101 form 10q quarter ended june 30 1998 incorporated herein reference 1027 universal performance equity participation plan effective june 16 1998 filed exhibit 102 form 10q quarter ended june 30 1998 incorporated herein reference 1028 first amendment universal performance equity participation plan dated june 16 1998 filed together universal performance equity plan filed exhibit 102 form 10q quarter ended june 30 1998 incorporated herein reference 1029 second amendment universal performance equity participation plan dated june 23 1999 filed exhibit 102 form 10q quarter ended june 30 1999 incorporated herein reference 1030 third amendment universal performance equity participation plan dated june 23 1999 filed exhibit 103 form 10q quarter ended june 30 1999 incorporated herein reference 1031 new employee stock option plan dated june 1 1998 filed exhibit 101 form 10q quarter ended september 30 1998 incorporated herein reference management contract compensatory plan 1032 first amendment syncor international corporation new employee stock option plan dated december 5 2000 filed exhibit 1034 form 10k year ended december 31 2000 incorporated herein reference 1033 form stock option agreement new employee stock option plan entered company certain employees filed exhibit 1031 form 10k year ended december 31 1998 incorporated herein reference 1034 nonqualified stock option award agreement dated february 24 1999 company robert g funari filed exhibit 101 form 10q quarter ended march 31 1999 incorporated herein reference 1035 nonemployee director 1999 stock incentive plan dated november 11 1999 filed exhibit 1035 form 10k year ended december 31 1999 incorporated herein reference 1036 form nonemployee director 1999 stock incentive award agreement dated november 11 1999 entered company nonemployee directors excluding ronald williams filed exhibit 1036 form 10k year ended december 31 1999 incorporated herein reference 1037 split dollar agreement company monty wendy fu 1998 irrevocable trust dated january 8 1999 filed exhibit 1037 form 10k year ended december 31 1999 incorporated herein reference 1038 employment agreement robert g funari dated january 1 2000 filed exhibit 101 form 10q quarter ended march 31 2000 incorporated herein reference 1039 employment agreement monty fu dated january 1 2000 filed exhibit 102 form 10q quarter ended march 31 2000 incorporated herein reference 1040 severance agreement dated august 24 2001 haig bagerdjian company filed exhibit 102 form 10q quarter ended september 30 2001 incorporated herein reference 1041 severance agreement dated august 24 2001 john baumann company filed exhibit 103 form 10q quarter ended september 30 2001 incorporated herein reference 1042 severance agreement dated august 24 2001 rodney boone company filed exhibit 104 form 10q quarter ended september 30 2001 incorporated herein reference 1043 severance agreement dated august 24 2001 jack coffey company filed exhibit 105 form 10q quarter ended september 30 2001 incorporated herein reference 1044 severance agreement dated august 24 2001 sheila coop company filed exhibit 106 form 10q quarter ended september 30 2001 incorporated herein reference management contract compensatory plan 1045 severance agreement dated august 24 2001 william forster company filed exhibit 107 form 10q quarter ended september 30 2001 incorporated herein reference 1046 severance agreement dated august 24 2001 monty fu company filed exhibit 108 form 10q quarter ended september 30 2001 incorporated herein reference 1047 severance agreement dated august 24 2001 robert funari company filed exhibit 109 form 10q quarter ended september 30 2001 incorporated herein reference 1048 severance agreement dated august 24 2001 lewis william terry jr company filed exhibit 1010 form 10q quarter ended september 30 2001 incorporated herein reference 1049 severance agreement dated august 24 2001 david ward company filed exhibit 1011 form 10q quarter ended september 30 2001 incorporated herein reference 1050 syncor international corporation special severance plan filed exhibit 1012 form 10q quarter ended september 30 2001 incorporated herein reference 1051 term loan credit agreement dated may 5 2000 bank one na syncor management corporation filed exhibit 107 form 10q quarter ended june 30 2000 incorporated herein reference 1052 credit agreement dated october 17 2000 among company bank one na administrative agent bank one capital markets inc lead arranger bank nova scotia documentation agent lenders signatories thereto filed exhibit 1043 form 10k year ended december 31 2000 incorporated herein reference 1053 letter amendment credit agreement dated february 5 2001 company bank one na filed exhibit 1044 form 10k year ended december 31 2000 incorporated herein reference 1054 first amended restated credit agreement dated may 10 2001 bank one na lender bank nova scotia document agent filed exhibit 101 form 10q quarter ended june 30 2001 incorporated herein reference 1055 first amendment first amended restated credit agreement dated september 13 2001 among bank one na lender bank nova scotia document agent company syncor management corporation filed exhibit 101 form 10q quarter ended september 30 2001 incorporated herein reference 1056 second amendment first amended restated credit agreement dated december 21 2001 among bank one na lender bank nova scotia document agent company syncor management corporation management contract compensatory plan 1057 receivables financing agreement dated january 4 2002 among syncor financing corporation seller syncor management corporation servicer jupiter securitization corporation financial institutions listed therein bank one na agent 21 subsidiaries registrant 23 independent auditors consent management contract compensatory plan signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date march 31 syncor international corporation srobert g funari robert g funari president chief executive officer pursuant requirements securities exchange act 1934 report signed following persons behalf registrant capacities dates indicated smonty fu chairman board date march 31 monty fu director srobert g funari president chief executive date march 31 robert g funari officer principal executive officer director swilliam p forster senior vice president chief date march 31 william p forster financial officer treasurer principal financial accounting officer ssteven b gerber director date march 31 steven b gerber md sgeorge oki director date march 31 george oki sarnold e spangler director date march 31 arnold e spangler shenry n wagner jr director date march 31 henry n wagner jr md sgail r wilensky director date march 31 dr gail r wilensky sronald williams director date march 31 ronald williams independent auditors’ report board directors stockholders syncor international corporation audited accompanying consolidated balance sheets syncor international corporation subsidiaries december 31 2001 2000 related consolidated statements income stockholders’ equity comprehensive income cash flows years threeyear period ended december 31 2001 consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance auditing standards generally accepted united states america standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position syncor international corporation subsidiaries december 31 2001 2000 results operations cash flows years threeyear period ended december 31 2001 conformity accounting principles generally accepted united states america discussed note 1 consolidated financial statements effective july 1 2001 company adopted provisions statement financial accounting standards “sfas” 141 “business combinations” certain provisions sfas 142 “goodwill intangible assets” required goodwill intangible assets resulting business combinations consummated june 30 2001 skpmg llp los angeles california february 15 2002 management’s report management syncor international corporation responsible consolidated financial statements information presented report consolidated financial statements prepared conformity generally accepted accounting principles appropriate circumstances therefore included consolidated financial statements certain amounts based managements informed estimates judgments management responsible establishing maintaining system internal control designed provide reasonable assurance integrity reliability financial reporting concept reasonable assurance based recognition inherent limitations systems internal control cost systems exceed benefits derived financial information report consistent consolidated financial statements consolidated financial statements audited syncor international corporations independent certified public accountants reviewed audit committee board directors consolidated balance sheets see accompanying notes consolidated financial statements consolidated statements income see accompanying notes consolidated financial statements consolidated statements stockholders’ equity comprehensive income see accompanying notes consolidated financial statements consolidated statements cash flows see accompanying notes consolidated financial statements notes consolidated financial statements note 1 summary significant accounting policies significant accounting policies follows revenue recognition recognize revenue primarily two sources product revenue includes sales radiopharmacies ii services revenue primarily imaging business described significant judgments estimates must used management connection revenue recognized period imaging business material differences may impact amount revenue recorded period management judgments estimates significantly different actual provide imaging services patients generally medical insurance governmental payor managed care payor commercial thirdparty payor medical imaging business several hundred contracts change amended frequently due changes payors governmental agencies reimbursement additionally acquire medical imaging centers new contracts entered computer systems contracts updated systems need make estimates anticipated contracted amounts ultimately receive various payors requires us record estimates recording imaging revenues based upon historical data trends estimates continually evaluated compared actual reimbursements various payors ensure properly recorded revenues appropriately adjusted shifts payor mix accordingly recorded revenues based current information available subject estimation may lead adjustments future periods actual reimbursement rates determined adjustments material 2001 2000 estimating valuation allowances doubtful accounts preparation financial statements requires management make estimates assumptions collectibility accounts receivable management specifically analyzes historical bad debts customer concentrations customer creditworthiness current economic trends aging accounts changes payment terms evaluating adequacy allowance doubtful accounts changes estimates assumptions could cause material differences recorded allowances valuation longlived assets goodwill assess impairment identifiable intangibles longlived assets related goodwill enterprise level goodwill whenever events changes circumstances indicate carrying value may recoverable factors consider important could trigger impairment review include following • significant underperformance relative expected historical projected future operating results • significant changes manner use acquired assets strategy overall business • significant negative industry economic trends • market capitalization relative net book value determine carrying value intangibles longlived assets related goodwill enterprise level goodwill may recoverable based upon existence one indicators impairment measure impairment based projected undiscounted cash flow method using discount rate determined management commensurate risk inherent current business model net intangible assets longlived assets goodwill amounted 3395 million december 31 2001 cost excess net assets acquired businesses amortized straightline basis periods 15 40 years first quarter 2002 statement financial accounting standards “sfas” 142 “goodwill intangible assets” become effective result cease amortize approximately 1621 million goodwill recorded approximately 66 million 45 million 49 million goodwill amortization 2001 2000 1999 respectively would recorded approximately 70 million goodwill amortization 2002 provisions statement record amortization related six postjune 30 2001 acquisitions amortization would amounted 09 million lieu amortization required perform initial impairment review goodwill 2002 annual impairment review thereafter expect complete initial review second quarter 2002 currently expect record impairment charge upon completion initial impairment review however assurance time review completed material impairment charge recorded principles consolidation consolidated financial statements include assets liabilities operations company subsidiaries significant intercompany accounts transactions eliminated consolidation cash equivalents shortterm investments company considers highly liquid investments purchased original maturity three months less cash equivalents shortterm investments consist principally time deposits taxexempt municipal securities carried cost approximates market value financial instruments carrying value financial instruments cash equivalents trade receivables payables floating rate short longterm debt approximate fair value patient revenues receivables companys medical imaging facilities entered agreements thirdparty payors including government programs managed care health care plans facilities paid based upon established charges predetermined rates per service discounts established charges revenues recorded estimated amounts due patients thirdparty payors services provided management believes adequate provisions made potential adustments years ended december 31 2001 2000 1999 approximately 155 114 91 companys patient revenues related patients participating medicare medicaid programs company believe significant concentrations revenues particular payor would subject company significant credit risk collection patient accounts receivable inventory inventories primarily consisting purchased products stated lower cost firstin firstout market property equipment property equipment stated cost depreciated amortized straightline basis estimated useful lives ranging two fifteen years self insurance company historically purchased insurance excess selfinsured retentions deductibles losses liabilities related vehicle claims medical claims general product liability claims losses accrued selfinsured deductible plans based upon company’s estimates aggregated liability claims incurred using certain actuarial assumptions followed insurance industry companys experience marketable investment securities marketable investment securities consist primarily corporate debt united states government obligations company classifies debt marketable equity securities one three categories trading availableforsale heldtomaturity trading securities bought held principally purpose selling near term heldtomaturity securities company ability intent hold maturity securities included trading heldtomaturity classified availableforsale heldtomaturity securities recorded amortized cost adjusted amortization accretion premiums discounts unrealized holding gains losses trading securities included earnings unrealized holding gains losses net related tax effect availableforsale securities excluded earnings reported component accumulated comprehensive income realized foreign currency translation assets liabilities foreign operations translated us dollars based upon prevailing exchange rates effect balance sheet date foreign exchange gains losses resulting translations included component accumulated comprehensive income actual gains losses incurred currency transactions countrys functional currency included net income currently 2001 company’s fixed assets decreased 21 million due currency translation adjustments corrected policy using historical exchange rates current exchanges rates change earnings impact impacted valuation fixed assets international business accumulated comprehensive income balance sheet stock options company measures stockbased compensation using intrinsic value method assumes options granted market price date grant intrinsic value proforma net income earnings per share presented note 9 fair value method applied income taxes income taxes accounted asset liability method deferred tax assets liabilities recognized future tax consequences attributable differences financial statement carrying amounts existing assets liabilities respective tax bases deferred tax assets liabilities measured using enacted tax rates expected apply taxable income years temporary differences expected recovered settled effect deferred tax assets liabilities change tax rates recognized income period includes enactment date use estimates company’s management made number estimates assumptions relating reporting assets liabilities reporting sales expenses disclosure contingent assets liabilities prepare financial statements conformity generally accepted accounting principles actual results could differ estimates reclassifications certain items prior years’ consolidated financial statements reclassified conform current years presentation new accounting standards july 2001 fasb issued statement 141 business combinations statement 142 goodwill intangible assets statement 141 requires purchase method accounting used business combinations initiated june 30 2001 well purchase method business combinations completed june 30 2001 statement 141 also specifies criteria intangible assets acquired purchase method business combination must meet recognized reported apart goodwill noting purchase price allocable assembled workforce may accounted separately statement 142 require goodwill intangible assets indefinite useful lives longer amortized instead tested impairment least annually accordance provisions statement 142 statement 142 also require intangible assets definite useful lives amortized respective estimated useful lives estimated residual values reviewed impairment accordance sfas 121 accounting impairment longlived assets longlived assets disposed company required adopt provisions statement 141 immediately except regard business combinations initiated prior july 1 2001 expects account using poolingofinterests method statement 142 effective january 1 2002 furthermore goodwill intangible asset determined indefinite useful life acquired purchase business combination completed june 30 2001 amortized continue evaluated impairment accordance appropriate prestatement 142 accounting literature goodwill intangible assets acquired business combinations completed july 1 2001 continue amortized prior adoption statement 142 statement 141 require upon adoption statement 142 company evaluate existing intangible assets goodwill acquired prior purchase business combination make necessary reclassifications order conform new criteria statement 141 recognition apart goodwill upon adoption statement 142 company required reassess useful lives residual values intangible assets acquired purchase business combinations make necessary amortization period adjustments end first interim period adoption addition extent intangible asset identified indefinite useful life company required test intangible asset impairment accordance provisions statement 142 within first interim period impairment loss measured date adoption recognized cumulative effect change accounting principle first interim period connection transitional goodwill impairment evaluation statement 142 require company perform assessment whether indication goodwill impaired date adoption accomplish company must identify reporting units determine carrying value reporting unit assigning assets liabilities including existing goodwill intangible assets reporting units date adoption company six months date adoption determine fair value reporting unit compare reporting unit’s carrying amount extent reporting unit’s carrying amount exceeds fair value indication exists reporting unit’s goodwill may impaired company must perform second step transitional impairment test second step company must compare implied fair value reporting unit’s goodwill determined allocating reporting unit’s fair value assets recognized unrecognized liabilities manner similar purchase price allocation accordance statement 141 carrying amount would measured date adoption second step required completed soon possible later end year adoption transitional impairment loss recognized cumulative effect change accounting principle company’s statement earnings august 2001 financial accounting standards board issued fasb statement 144 accounting impairment disposal longlived assets statement 144 supersedes fasb statement 121 accounting impairment longlived assets longlived assets disposed statement 121 accounting reporting provisions apb opinion 30 reporting results operationsreporting effects disposal segment business extraordinary unusual infrequently occurring events transactions opinion 30 disposal segment business previously defined opinion statement 144 retains fundamental provisions statement 121 recognizing measuring impairment losses longlived assets held use longlived assets disposed sale also resolving significant implementation issues associated statement 121 statement 144 retains basic provisions opinion 30 present discontinued operations income statement broadens presentation include component entity rather segment business unlike statement 121 impairment assessment statement 144 never result writedown goodwill rather goodwill evaluated impairment statement 142 goodwill intangible assets company required adopt statement 144 later year beginning december 15 2001 accordingly company adopt statement 144 first quarter 2002 management expect adoption statement 144 longlived assets held use material impact company’s financial statements impairment assessment statement 144 largely unchanged statement 121 provisions statement assets held sale disposal generally required applied prospectively adoption date newly initiated disposal activitieswe currently expect record impairment charge upon completion initial impairment review however assurance time review completed material impairment charge recorded note 2 acquisitions 2000 2001 company made several acquisitions 2000 acquisitions made primarily cmi us medical imaging subsidiary 2001 significant acquisitions made syncor overseas ltd international subsidiary us pharmacy business cmi acquisitions january 2001 acquired three imaging center sites california purchase price 134 million march 2001 acquired gamma knife venture brazil purchase price 20 million distributor radiopharmceuticals new zealand purchase price 03 million plus assumption 02 million debt may 2001 entered management service agreement oncology clinic brazil investment 18 million june 2001 acquired distributor manufacturer diagnostic radiopharmeceuticals australia acquisition price 07 million july 2001 acquired manufacturer radiation detection measurement equipment ohio acquisition price 108 million also acquired two imaging centers texas 43 million plus assumption 36 million debt addition acquired imaging center florida purchase price 51 million plus assumption 20 million debt september 2001 acquired cardiovascular service company north carolina acquisition price 137 million plus assumption 02 million debt addition acquired radiology cardiology distribution company belgium acquisition price 20 million october 2001 acquired nuclear services company acquisition price 08 million acquisitions march 2000 acquired four imaging center sites first acquisition three sites previously managed cmi price 21 million plus assumption 27 million debt second site acquisition boynton beach fl purchase price 02 million plus assumption 13 million debt april 2000 acquired remaining interest seven managed imaging center sites total acquisition price 87 million plus assumption 10 million debt september 2000 acquired thirteen imaging centers located california florida total acquisition price 31 million plus assumption 13 million debt addition company acquired certain pet production facilities acquisition price 09 million plus assumption 58 million debt november 2000 acquired imaging center catheterization laboratory trinidad tobago acquisition price 20 million addition acquired nuclear medicine business puerto rico 075 million december 2000 acquired imaging center phoenix az acquisition price 47 million plus assumption 42 million debt following table represents allocation purchase price acquisitions 2001 2000 company accounted transactions purchases purchase prices allocated indicated goodwill acquisitions amortized 15 20 years period results operations related 2001 2000 transactions included company’s consolidated financial statements effective acquisition dates following unaudited pro forma information presents summary consolidated results operation’s 2001 2000 acquisitions occurred beginning years unaudited proforma results prepared comparative purposes purport indicative results operations would occurred future results operations consolidated entities note 3 property equipment net major classes property follows note 4 marketable investment securities marketable investment securities consist amortized cost gross unrealized holding gains losses fair value availableforsale heldtomaturity securities major security type december 31 2001 2000 follows unrealized holding losses heldtomaturity securities recognized accompanying consolidated financial statements maturities investment securities classified availableforsale heldtomaturity december 31 2001 2000 follows note 5 line credit december 31 2001 company unsecured revolving line credit shortterm borrowings aggregating 200000000 line credit increased 150000000 200000000 effective may 10 2001 terms revolving credit line include two interest rate borrowing options eurodollar rate plus applicable margin banks prime rate 475 percent december 31 2001 december 31 2001 availability line credit reduced 20 million result outstanding standby letters credit resulting available credit 285 million maintain line credit company required pay quarterly commitment fee 14 one percent per annum unused portion line credit agreement specifies certain covenants maintained including limitations investments acquisitions new borrowings issuance new stock certain financial ratios also need maintained agreement including minimum net worth ebitda ratio fixed charge coverage ratio december 31 2001 company compliance debt covenants credit line agreement note 6 longterm debt companys longterm debt follows december 31 2001 longterm debt maturing next five years follows 2002 16048 2003 17238 2004 10298 2005 7948 2006 172553 2612 thereafter interest paid 13148 10128 6945 years ended december 31 2001 2000 1999 respectively note 7 income taxes total income tax expense years ended december 31 2001 2000 1999 allocated follows income tax expense benefit attributable income continuing operations consisted amounts differed amounts computed applying federal income tax rate 35 percent pretax income continuing operations result following tax effect temporary differences give rise significant portions deferred tax assets deferred tax liabilities december 31 2001 2000 presented management reviewed recoverability deferred income tax assets determined likely deferred tax assets fully realized future taxable earnings gross deferred tax asset recorded balance sheet prepaid current assets income tax payments amounted 13670 12299 7704 years ended december 31 2001 2000 1999 respectively deferred income taxes provided undistributed earnings foreign subsidiaries foreign investments carried equity amount earnings included consolidated retained earnings amounted 6938 4325 december 31 2001 2000 respectively earnings substantially reinvested plan initiate action would precipitate payment income taxes thereon note 8 commitments company leases facilities vehicles equipment terms ranging three years fifteen years majority property leases contain renewal options escalation clauses increases property taxes consumer price index items company leases certain items equipment capital leases cost 47023 29039 17144 december 31 2001 2000 1999 respectively accumulated depreciation 8759 7139 5603 respectively increase equipment leases 2001 due primarily continued expansion medical imaging businesses fdg fluorodeoxyglucose production equipment future minimum lease payments capital leases noncancelable operating leases terms greater one year related sublease income december 31 2001 follows rental expense operating leases 15864 11450 10173 years ended december 31 2001 2000 1999 respectively note 9 stock options rights options purchase common stock granted various plans officers directors employees prices equal market prices date grant aggregate 10267000 shares authorized issuance various plans december 31 2001 options generally exercisable rate 25 percent per year beginning one year date grant expire ten years date grant december 31 2001 2516000 shares reserved issuance various plans per share weightedaverage fair value stock options granted 2001 2000 1999 1991 2014 2147 respectively date grant using black scholes optionpricing model following weightedaverage assumptions 2001 expected dividend yield 0 riskfree interest rate 472 expected volatility 6166 expected life 532 years 2000 expected dividend yield 0 riskfree interest rate 633 expected volatility 6325 expected life 563 years 1999 expected dividend yield 0 riskfree interest rate 562 expected volatility 587 expected life 521 years company applies apb opinion 25 accounting plans accordingly compensation cost recognized stock options consolidated statements operations company determined compensation cost based fair value grant date stock options sfas 123 companys net income would reduced pro forma amounts indicated following table summary employee stock options follows december 31 2001 range exercise prices weighted average remaining contractual life outstanding options 425 3859 697 years respectively december 31 2001 2000 1999 number options exercisable approximately 3071000 3269000 1976000 respectively weighted average price options 1518 1486 640 respectively company derives tax benefit options exercised sold employees benefit credited additional paidin capital september 1999 company adopted new rights plan declared dividend distribution one right outstanding share company’s common stock new rights plan replaced company’s original rights plan set expire september 1999 rights new rights plan set expire september 2009 unless redeemed earlier board least every three years independent committee board review rights plan committee deems appropriate recommend entire board rights plan modified terminated right represents right purchase right becomes exercisable unit consisting one share syncor common stock per unit price 90 “purchase price” rights generally exercisable person group “acquiring person” acquires beneficial ownership 15 syncor’s common stock commences tender exchange offer upon consummation person group would beneficially 15 syncor’s common stock result repurchases stock syncor certain purchases institutional similar stockholders long 20 event person becomes acquiring person pursuant offer shares majority independent directors associated affiliated acquiring person determines adequate otherwise best interest company stockholders rights becomes discount right entitling holder acquiring person upon payment purchase price common stock value equal twice purchase price ie 180 worth syncor stock purchase price 90 following someone becoming acquiring person company engages merger business combination company survive common stock changed exchanged transfers 50 assets cash flow earning power one transaction series related transactions right becomes right except acquiring person acquire common shares party transaction value equal twice purchase price note 10 employee benefit plans company’s 401k plan open employees least 18 years age minimum three consecutive months service 1989 companys board directors amended plan employees’ savings stock ownership plan essop allow plan acquire one million companys shares leveraged employee stock ownership plan transaction june 1995 september 1996 august 1997 additional 1500000 shares total purchased open market contributed plan shares originally classified “treasury stock” contributions totaled 8657000 reflected fair market value time contribution connection transactions company made loan essop loan paid december 31 2001 essop participants may contribute one percent fourteen percent compensation 401k investment options additional two percent compensation purchase company stock company makes matching contributions 50 percent employees’ 401k investment contributions maximum four percent employee’s compensation 100 percent employees’ company stock purchases two percent employee’s compensation company’s matching contribution made company stock essop loan payment outstanding number shares available match employee contributions directly related amount principal payments made essop loan number available shares determined company matches employees’ contributions based fair market value shares remainder shares allocated matching complete allocated eligible employees based relative compensation participants fully immediately vested contributions vest employer contributions fiveyear period continuous employment five years continuous employment employer contributions fully immediately vested company’s contributions years ended december 31 2001 2000 1999 amounted 1735000 1895000 1957000 respectively 1685000 1686000 respectively used pay principal essop loan 50000 210000 271000 respectively pay interest note 11 net income per share following table presents computation basic earnings per share eps note 12 litigation contingencies various litigation proceedings company subsidiaries involved many claims asserted company proceedings covered insurance results litigation proceedings cannot predicted certainty however opinion company’s general counsel proceedings either without merit potential liability would materially affect financial condition company subsidiaries consolidated basis note 13 subsequent event january 17 2002 company completed asset securitization agreement one banks using us pharmacy business segment’s trade receivables collateral securitization program allow company borrow 65 million rates generally favorable credit line agreement upon execution securitization agreement credit line provision required 50 reduction securitization amount 325 million therefore credit line current borrowing limit 1675 million note 14 business segments company currently three different business segments first segment compounding dispensing distribution complex pharmaceuticals united states second segment management provision medical diagnostic imaging services united states third segment compounding dispensing distribution complex pharmaceuticals provision radiology services outside united states selected quarterly results operations unaudited quarterly operating results selected quarterly results operations prepared basis audited consolidated financial statements opinion management include adjustments necessary fair presentation periods presented unaudited calendar quarterly information summarized syncor international corporation subsidiaries schedule ii valuation qualifying accounts thousands estimated bad debt b uncollectible accounts writtenoff net recoveries change reserve nannannannannannannannannan