-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HTCkbUDCklR680Wa/WpehbSmjOh/Ad9QF/iCGPiEL9fHq/YCDLvXFXhSlUoOn0bE bTo5fisUgub7ksHzPvd2JQ== 0000927016-02-000969.txt : 20020414 0000927016-02-000969.hdr.sgml : 20020414 ACCESSION NUMBER: 0000927016-02-000969 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APOGENT TECHNOLOGIES INC CENTRAL INDEX KEY: 0000824803 STANDARD INDUSTRIAL CLASSIFICATION: DENTAL EQUIPMENT & SUPPLIES [3843] IRS NUMBER: 222849508 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11091 FILM NUMBER: 02547052 BUSINESS ADDRESS: STREET 1: 411 E WISCONSIN AVE 24TH FLR CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142746600 MAIL ADDRESS: STREET 1: 411 EAST WISCONSIN AVE CITY: MILWAUKEE STATE: WI ZIP: 53202 FORMER COMPANY: FORMER CONFORMED NAME: SYBRON CORP /DE/ DATE OF NAME CHANGE: 19940114 FORMER COMPANY: FORMER CONFORMED NAME: SYBRON INTERNATIONAL INC DATE OF NAME CHANGE: 19951221 FORMER COMPANY: FORMER CONFORMED NAME: SYBRON INTERNATIONAL CORP DATE OF NAME CHANGE: 19960321 10-Q 1 d10q.txt FORM 10-Q FOR 12/31/2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2001 Or [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ____________ to _____________ COMMISSION FILE NUMBER: 1-11091 APOGENT TECHNOLOGIES INC. ------------------------- (Exact name of registrant as specified in its charter) Wisconsin 22-2849508 (State or other jurisdiction of (IRS Employer Identification incorporation or organization) Number) 48 Congress Street, Portsmouth, New Hampshire 03801 (Address of principal executive offices) (Zip Code) (603) 433-6131 -------------- (Registrant's telephone number, including area code) (Former name, former address, former fiscal year, if changed since last report) Indicate by checkmark, whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period the registrant was required to file such reports, and (2) has been subject to such filing requirements for the past 90 days. Yes X No . --- --- At February 8, 2002, there were 106,459,508 shares of the Registrant's Common Stock, par value $0.01 per share, outstanding. 1 APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES Index Page Part I - FINANCIAL INFORMATION ...............................................3 Item 1. Financial Statements .................................................3 Consolidated Balance Sheets as of Decemeber 31, 2001 and September 30, 2001 .....................................................................3 Consolidated Statements of Income for the three months ended December 31, 2001 and 2000 ............................................................4 Consolidated Statement of Shareholders' Equity for the three months ended December 31, 2001 ......................................................5 Consolidated Statements of Cash Flows for the three months ended December 31, 2001 and 2000 ...................................................6 Notes to unaudited consolidated financial statements .........................7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation ....................................................16 Item 3. Quantitative and Qualitative Disclosures About Market Risk ..........24 Part II - OTHER INFORMATION .................................................24 Item 2. Changes in Securities and Use of Proceeds ...........................24 Item 4. Submission of Matters to a Vote of Security Holders .................24 Item 6. Exhibits and Reports on Form 8-K ....................................25 Signatures ..................................................................26 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements -------------------- APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share and per share data)
December 31, September 30, 2001 2001 ------------ ------------- Assets Current assets: Cash and cash equivalents $ 71,059 $ 9,192 Accounts receivable (less allowance for doubtful accounts of $4,451 and $3,975, respectively) 171,644 183,278 Inventories 180,289 167,436 Deferred income taxes 13,075 13,046 Prepaid expenses and other current assets 24,077 20,985 ----------- ----------- Total current assets 460,144 393,937 Available for sale security 54,607 55,072 Property, plant and equipment, net 227,369 223,687 Intangible assets 1,175,627 1,140,334 Deferred income taxes 7,114 6,147 Other assets 18,470 15,961 ----------- ----------- Total assets $ 1,943,331 $ 1,835,138 =========== =========== Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 43,480 $ 53,822 Current portion of long-term debt 75,068 73,642 Income taxes payable 41,423 38,747 Accrued payroll and employee benefits 26,547 33,236 Accrued interest expense 8,411 15,292 Restructuring reserve 892 1,552 Deferred income taxes 930 911 Other current liabilities 26,045 26,364 ----------- ----------- Total current liabilities 222,796 243,566 Long-term debt 675,385 583,788 Securities lending agreement 54,607 55,072 Deferred income taxes 118,733 107,220 Other liabilities 6,642 7,002 Commitments and contingent liabilities -- -- Shareholders' equity: Preferred stock, $0.01 par value; authorized 20,000,000 shares Common stock, $0.01 par value; authorized 250,000,000 shares issued 106,144,242 and 105,875,768 shares respectively; outstanding 106,144,022 and 105,875,548 shares respectively 1,061 1,059 Equity rights, 50 rights at $1.09 per right -- -- Additional paid-in capital 258,273 254,637 Retained earnings 657,609 627,642 Accumulated other comprehensive income (51,775) (44,848) Treasury common stock, 220 shares at cost -- -- ----------- ----------- Total shareholders' equity 865,168 838,490 ----------- ----------- Total liabilities and shareholders' equity $ 1,943,331 $ 1,835,138 =========== ===========
See accompanying notes to the unaudited consolidated financial statements 3 APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES Consolidated Statements of Income (In thousands, except per share data) (Unaudited)
Three Months Ended December 31, ------------------------ 2001 2000 --------- --------- Net sales $ 241,196 $ 220,758 Cost of sales; Cost of products sold 126,560 114,681 Depreciation of purchase accounting adjustments 176 124 --------- --------- Total cost of sales 126,736 114,805 --------- --------- Gross profit 114,460 105,953 Selling, general and administrative expenses 53,331 45,586 Depreciation and amortization of purchase accounting adjustments 4,277 10,530 --------- --------- Total selling, general and administrative expenses 57,608 56,116 --------- --------- Operating income 56,852 49,837 Other income (expense): Interest expense (10,232) (12,528) Amortization of deferred financing fees (827) (109) Other, net 1,473 (222) --------- --------- Income from continuing operations before income taxes and extraordinary item 47,266 36,978 Income taxes 17,299 14,791 --------- --------- Income from continuing operations before extraordinary item 29,967 22,187 Discontinued operations (net of income tax expense of $435) -- (10,986) --------- --------- Income before extraordinary item 29,967 11,201 Extraordinary item (net of income tax of $496) -- (745) --------- --------- Net income $ 29,967 $ 10,456 ========= ========= Basic earnings per common share from continuing operations $ 0.28 $ 0.21 Discontinued operations -- (0.10) Extraordinary item -- (0.01) --------- --------- Basic earnings per common share $ 0.28 $ 0.10 ========= ========= Diluted earning per common share from continuing operations $ 0.28 $ 0.21 Discontinued operations -- (0.10) Extraordinary item -- (0.01) --------- --------- Diluted earnings per common share $ 0.28 $ 0.10 ========= ========= Weighted average basic shares outstanding 106,128 105,246 Weighted average diluted shares outstanding 108,949 107,628
See accompanying notes to the unaudited consolidated financial statements. 4 APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES Consolidated Statement of Shareholders' Equity For the three months ended December 31, 2001 (In thousands) (Unaudited)
Accumulated Additional Other Treasury Total Common Equity Paid - In Retained Comprehensive Common Shareholders' Stock Rights Capital Earnings Income Stock Equity --------- ------ ---------- ---------- ------------ -------- ------------ Balance at September 30, 2001 $ 1,059 $-- $ 254,637 $ 627,642 $ (44,848) $-- $ 838,490 Comprehensive income: Net income -- -- -- 29,967 -- -- 29,967 Translation adjustment -- -- -- -- (6,417) -- (6,417) Amortization of gain on sale of interest rate swaps, net of tax benefit of $154 -- -- -- -- (231) -- (231) Unrealized loss on security available for sale, net of tax benefit of $186 -- -- -- -- (279) -- (279) --------- --- --------- --------- --------- --- --------- Total comprehensive income -- -- -- 29,967 (6,927) -- 23,040 Shares issued in connection with stock options 2 -- 1,744 -- -- -- 1,746 Tax benefit related to stock options -- -- 1,892 -- -- -- 1,892 --------- --- --------- --------- --------- --- --------- Balance at December 31, 2001 $ 1,061 $-- $ 258,273 $ 657,609 $ (51,775) $-- $ 865,168 ========= === ========= ========= ========= === =========
See accompanying notes to the unaudited consolidated financial statements. 5 APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) (Unaudited)
Three Months Ended December 31, ------------------------ 2001 2000 --------- --------- Cash flows from operating activities: Net income $ 29,967 $ 10,456 Adjustments to reconcile net income to net cash provided by operating activities Discontinued operations -- 10,986 Depreciation 8,869 8,512 Amortization 5,104 10,009 Gain on sale of property, plant and equipment 43 27 Provision for losses on doubtful accounts 289 (453) Inventory provisions 696 1,848 Deferred income taxes -- 632 Extraordinary item -- 745 Changes in assets and liabilities, net of effects of businesses acquired: Decrease (increase) in accounts receivable 15,646 (698) Increase in inventories (10,395) (8,499) Increase in prepaid expenses and other current assets (2,728) (7,595) Decrease in accounts payable (12,123) (11,370) Increase in income taxes payable 5,797 18,338 (Decrease) increase in accrued payroll and employee benefits (7,019) 6,141 Decrease in accrued interest expense (6,881) (2,281) Decrease in restructuring reserve (763) (3,894) Decrease in other current liabilities (1,398) (8,962) Net change in other assets and liabilities (433) (1,522) --------- --------- Net cash provided by operating activities 24,671 22,420 --------- --------- Cash flows from investing activities: Capital expenditures (6,345) (7,379) Proceeds from sales of property, plant and equipment 50 258 Net cash flow from SDS -- 46,394 Net payment for businesses acquired (38,328) (18,856) --------- --------- Net cash used in invensting activities (44,623) 20,417 --------- --------- Cash flows from financing activities: Proceeds from long-term debt 300,000 300,000 Principal payments on long-term debt -- (380,920) Proceeds from the exercise of stock options 1,746 1,491 Financing fees paid (8,290) (3,900) Proceeds from revolving credit facility 151,900 326,640 Principal payments on revolving credit facility (360,474) (307,840) Other financing activities 920 14,583 --------- --------- Net cash provided by financing activities 85,802 (49,946) --------- --------- Effect of exchange rate changes on cash and cash equivalents (3,983) (529) --------- --------- Net increase (decrease) in cash and cash equivalents 61,867 (7,638) Cash and cash equivalents at beginning of year 9,192 12,411 --------- --------- Cash and cash equivalents at end of period $ 71,059 $ 4,773 ========= ========= Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 17,036 $ 13,642 ========= ========= Income taxes $ 14,200 $ -- ========= ========= Capital lease obligations incurred $ 30 $ -- ========= =========
See accompanying notes to unaudited consolidated financial statements. 6 APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES Notes to Unaudited Consolidated Financial Statements (dollars in thousands except per share data) 1. Basis of Presentation In the opinion of management, all adjustments that are necessary for a fair statement of the results for the interim periods presented have been included. The results for the three month period ended December 31, 2001 are not necessarily indicative of the results to be expected for the full year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles in the United States. These statements should only be read in conjunction with the Company's annual report on Form 10-K for the fiscal year ended September 30, 2001. The Company adopted Statement No. 142, "Goodwill and Other Intangible Assets" (SFAS 142) on October 1, 2001. SFAS 142 requires that all goodwill and intangible assets with indefinite useful lives will no longer be amortized, but instead tested for impairment at least annually. As a result the Company is no longer amortizing approximately $947 million of goodwill as of December 31, 2001. The remaining net intangible assets subject to amortization, and related accumulated amortization, at December 31, 2001 were $229 million and $57 million, respectively. The Company added approximately $27 million to intangibles and goodwill since September 30, 2001. The Company is currently performing initial impairment tests and it is not practical to estimate the impact of such tests. However, any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in our statement of earnings. In addition, the Company is currently allocating existing goodwill to the three business segments. The following table details the impact of SFAS 142 on the three months ended December 31, 2000, had the Company adopted the statement on October 1, 2000:
Three Months Ended December 31, 2000 --------------------------------------- As FAS 142 Reported Impact Adjusted -------- --------- --------- Net sales $ 220,758 $ -- $ 220,758 Gross profit 105,953 -- 105,953 Selling, general & administrative 56,116 (7,052) 49,064 Operating income 49,837 7,052 56,889 Income before income taxes, discontinued operations and extraordinary items 36,978 7,052 44,030 Income taxes 14,791 2,169 16,960 Income from continuing operations before extraordinary items 22,187 4,883 27,070 Discontinued operations (10,986) -- (10,986) Income before extraordinary item 11,201 4,883 16,084 Extraordinary item (745) -- (745) Net income 10,456 4,883 15,339 Basic earnings per common share from continuing operations $ 0.21 $ 0.05 $ 0.26 Discontinued operations (0.10) -- (0.10) Extraordinary items (0.01) -- (0.01) Basic earnings per common share 0.10 0.04 0.14 Diluted earnings per common share from continuing operations 0.21 0.04 0.25 Discontinued operations (0.10) -- (0.10) Extraordinary items (0.01) -- (0.01) Diluted earnings per common share 0.10 0.04 0.14
7 2. Inventories Inventories at December 31, 2001 and September 30, 2001 consist of the following: December 31, September 30, 2001 2001 ------------ ------------- Raw materials and supplies 65,898 84,802 Work in process 25,184 25,974 Finished goods 89,207 56,660 -------- -------- $180,289 $167,436 ======== ======== 3. Acquisitions During the three months ended December 31, 2001, the Company completed four acquisitions for cash. The aggregate purchase price, net of cash acquired, was approximately $38 million. None of the acquisitions were considered individually significant. The total goodwill and intangibles for the acquired companies were approximately $27 million. The intangible assets will be amortized over their expected lives ranging from 3 to 20 years. The following table outlines the sales, operating income and total assets for the most recent available twelve-month period prior to each cash acquisition.
Business Segment: Acquisition Operating Total Type of Company Acquired Date Sales Income Assets Acquisition ---------------- ---- ----- --------- ------ ----------- Clinical Diagnostics: Chromacol Limited, Epsom Glass Industries October 2001 $ 9,900 $ 350 $5,079 Stock Limited, and Amchro Inc. Forefront Diagnostics, Inc. November 2001 6,300 1,700 9,900 Stock Labware and Life Sciences: Cosmotec Co. Ltd. October 2001 10,500 2,500 2,600 Stock Barden Engineering October 2001 570 130 540 Asset
4. Long -Term Debt On October 10, 2001, the Company issued $300 million of senior convertible contingent debt securities (CODES). The CODES have a fixed interest rate of 2.25% per annum. Interest is payable on April 15 and October 15 of each year, beginning April 15, 2002. The Company will also pay contingent interest during any six-month period if the average trading price of the CODES during a specified period of five trading days preceding the relevant six-month period is above specified levels. The CODES will mature on October 15, 2021. The CODES are convertible, subject to certain conditions (including but not limited to the sale price of the Company's common stock, trading prices of the CODES, maintenance of the Company's credit ratings, and the occurrence of specified corporate transactions), into Apogent Common Stock at a price of approximately $30.49 per share. The Company may redeem some or all of the CODES on or after October 20, 2004. The holders may require the Company to purchase all or a portion of their CODES on October 20, 2004 and on October 15, 2006, 2011 and 2016, or subject to specified exceptions, upon a change of control event. Certain of the Company's U.S. subsidiaries guarantee the Company's obligations under the CODES. The proceeds from the issuance were used to pay down the outstanding balance on our Revolving Credit Facility, and for general corporate purposes. 8 5. Segment Information The Company's operating subsidiaries are engaged in the manufacture and sale of laboratory products in the United States and other countries. The Company's products are categorized in the business segments of: clinical diagnostics; labware and life sciences; and laboratory equipment. A description of each business segment follows. Products in the clinical diagnostic business segment include microscope slides, cover glass, glass tubes and vials, stains and reagents and histology and immunochemistry instrumentation for clinical testing, thin glass for watch crystals, cosmetic mirrors, precision and coated glass used in various optic applications, and precision thin film optical coating equipment. Certain products in this segment are used in drug testing, therapeutic drug monitoring, infectious disease detection, pregnancy testing, and glucose tolerance testing. Products include diagnostic test kits, culture media, diagnostic reagents, and other products used in detecting causes of various infections or diseases. Products in the labware and life sciences business segment include approximately 4,900 items, including reusable plastic products (bottles, carboys, graduated ware, beakers and flasks) and disposable plastic products (microfiltration and cryogenic storage products). Other labware products include products for critical packaging applications (bottles for packaging diagnostic and other reagents, media, pharmaceuticals and specialty chemicals), safety products (hazard labeled containers and biohazard disposal products), environmental containers, autosampler vials and seals used in chromatography analysis and glass products for research and industrial applications, manufactured and sold through our joint venture with Kimble Glass. Life sciences products include applications of cell culture, filtration, molecular biology, cryopreservation, immunology, electrophoresis, liquid handling and high throughput screening for pharmaceutical drug discovery. Products in the laboratory equipment business segment include heating, stirring and temperature control apparatus such as hot plates, stirrers, shakers, heating tapes, muffle furnaces, incubators, dri-baths, bench top sterilizers and cryogenic storage apparatus, which are fundamental to basic procedures performed in the laboratory; systems for producing ultra pure water; bottle top dispensers, positive displacement micropipettors, and small mixers used in biomolecular research; constant temperature equipment including refrigerators/freezers, ovens, water baths, environmental chambers; and furnaces and fluorometers, spectrophotometers, and strip chart recorders. 9 The cost of some corporate functions are allocated to the business segments at predetermined rates which approximate cost. Information on these business segments is summarized as follows:
Labware Clinical and Laboratory Diagnostics Life Sciences Equipment Eliminations (a) Other (a) Total ----------- ------------- ---------- ---------------- --------- ---------- Three Months Ended December 31, 2001 Revenues: External customer $116,940 $ 99,524 $ 24,732 $ -- $ -- $ 241,196 Intersegment 1,341 244 165 (1,750) -- -- Total revenues 118,281 99,768 24,897 (1,750) -- 241,196 Gross profit 54,565 49,612 10,283 -- -- 114,460 Selling general and administrative 24,507 28,044 4,854 -- 203 57,608 Operating income 30,058 21,568 5,429 -- (203) 56,852 Segment assets 904,330 120,664 752,203 -- 166,134 1,943,331 Three Months Ended December 31, 2000 Revenues: External customer 109,865 84,863 26,030 -- -- 220,758 Intersegment 1,573 318 107 (1,998) -- -- Total revenues 111,438 85,181 26,137 (1,998) -- 220,758 Gross profit 51,654 43,257 11,042 -- -- 105,953 Selling general and administrative 26,196 25,004 5,616 -- (700) 56,116 Operating income 25,453 18,253 5,431 -- 700 49,837
(a) Includes the elimination of intercompany and unallocated corporate office activity 6. Condensed Consolidating Financial Statements The Company's material U.S. subsidiaries are guarantors to its Revolving Credit Facility, Senior Notes, and CODES. Each of the subsidiary guarantors is 100% owned by the Company. The guarantees are full and unconditional as well as joint and several. Below are the condensed consolidating balance sheets as of December 31, 2001 and September 30, 2001, and statements of operations and statements of cash flows for the three months ended December 31, 2001 and 2000, of Apogent Technologies Inc. and its subsidiaries. Certain general corporate expenses have not been allocated to the subsidiaries, and are included under the Apogent Technologies Inc. heading. As a matter of course, the Company retains certain assets and liabilities at the corporate level that are not allocated to the subsidiaries including, but not limited to, certain employee benefit, insurance and tax liabilities. Income tax provisions for the subsidiaries are typically recorded using an estimate and finalized in total with an adjustment recorded at the corporate level. Certain debt under which Apogent Technologies Inc. is listed as the debtor has been allocated to the Guarantor subsidiaries. Intercompany balances include receivables/payables incurred in the normal course of business in addition to investments and loans transacted between subsidiaries of the Company or with Apogent Technologies Inc. 10 Condensed Consolidating Balance Sheets
As of December 31, 2001 -------------------------------------------------------------------------- Non Apogent Guarantor Guarantor (In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated ------------ ------------ ------------ ------------ ------------ Assets ------ Current assets: Cash and cash equivalents $ 59,871 $ -- $ 13,587 $ (2,399) $ 71,059 Accounts receivable, net -- 135,283 36,361 -- 171,644 Inventories, net 1,263 146,906 36,853 (4,733) 180,289 Other current assets 15,710 14,897 6,545 -- 37,152 ---------- ---------- -------- ----------- ---------- Total current assets 76,844 297,086 93,346 (7,132) 460,144 Property, plant and equipment, net 9,836 171,538 45,995 -- 227,369 Intangible assets 14,363 935,304 225,960 -- 1,175,627 Deferred income taxes 5,762 151 1,201 -- 7,114 Investment in subsidiaries 1,629,049 49,939 -- (1,678,988) -- Other assets 58,988 13,069 1,020 -- 73,077 ---------- ---------- -------- ----------- ---------- Total assets $1,794,842 $1,467,087 $367,522 $(1,686,120) $1,943,331 ========== ========== ======== =========== ========== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Accounts payable $ 336 $ 35,490 $ 10,053 $ (2,399) $ 43,480 Current portion of long-term debt -- 75,038 30 -- 75,068 Income taxes payable 17,113 19,142 6,417 (1,249) 41,423 Accrued expenses and other current liabilities 9,662 26,800 26,363 -- 62,825 ---------- ---------- -------- ----------- ---------- Total current liabilities 27,111 156,470 42,863 (3,648) 222,796 ---------- ---------- -------- ----------- ---------- Long-term debt -- 675,362 23 -- 675,385 Securities lending agreement 54,607 -- -- -- 54,607 Deferred income taxes 85,838 20,524 12,371 -- 118,733 Other liabilities 2,973 2,261 1,408 -- 6,642 Net intercompany payable/(receivable) 509,957 (740,191) 230,198 36 -- Commitments and contingent liabilities -- Shareholders' equity Preferred stock -- -- -- -- -- Common stock 1,061 -- -- -- 1,061 Equity rights -- -- -- -- -- Additional paid-in-capital 237,801 1,597,103 83,744 (1,660,375) 258,273 Retained earnings (deficit) 872,802 (244,442) 51,382 (22,133) 657,609 Other comprehensive income 2,692 -- (54,467) -- (51,775) Treasury stock (at cost) -- -- -- -- -- ---------- ---------- -------- ----------- ---------- Total shareholders' equity 1,114,356 1,352,661 80,659 (1,682,508) 865,168 ---------- ---------- -------- ----------- ---------- Total liabilities and shareholders' equity $1,794,842 $1,467,087 $367,522 $(1,686,120) $1,943,331 ========== ========== ======== =========== ==========
11 Condensed Consolidating Balance Sheets
As of September 30, 2001 -------------------------------------------------------------------------- Non Apogent Guarantor Guarantor (In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated ------------ ------------ ------------ ------------ ------------ Assets ------ Current assets: Cash and cash equivalents $ 4,145 $ -- $ 10,699 $ (5,652) $ 9,192 Accounts receivable, net -- 146,981 36,297 -- 183,278 Inventories, net 1,263 136,906 33,335 (4,068) 167,436 Other current assets 15,010 13,458 5,969 (406) 34,031 ---------- ---------- -------- ----------- ---------- Total current assets 20,418 297,345 86,300 (10,126) 393,937 Property, plant and equipment, net 9,553 169,032 45,102 -- 223,687 Intangible assets 7,003 913,651 219,680 -- 1,140,334 Deferred income taxes 6,147 -- -- -- 6,147 Investment in subsidiaries 1,593,800 46,461 -- (1,640,261) -- Other assets 58,605 11,543 885 -- 71,033 ---------- ---------- -------- ----------- ---------- Total assets $1,695,526 $1,438,032 $351,967 $(1,650,387) $1,835,138 ========== ========== ======== =========== ========== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Accounts payable $ 787 $ 46,802 $ 11,885 $ (5,652) $ 53,822 Current portion of long-term debt 378 33,450 36 -- 33,864 Income taxes payable 33,432 -- 6,638 (1,323) 38,747 Accrued expenses and other current liabilities 33,784 28,603 14,968 -- 77,355 ---------- ---------- -------- ----------- ---------- Total current liabilities 68,381 108,855 33,527 (6,975) 203,788 ---------- ---------- -------- ----------- ---------- Long-term debt -- 623,543 23 -- 623,566 Securities lending agreement 55,072 -- -- -- 55,072 Deferred income taxes 74,411 20,778 12,031 -- 107,220 Other liabilities 3,231 2,453 1,318 -- 7,002 Net intercompany payable/(receivable) 375,705 (599,911) 224,169 37 -- Commitments and contingent liabilities -- Shareholders' equity Preferred stock -- -- -- -- -- Common stock 1,059 -- -- -- 1,059 Equity rights -- -- -- -- -- Additional paid-in-capital 234,166 1,561,854 80,265 (1,621,648) 254,637 Retained earnings (deficit) 880,299 (279,540) 48,684 (21,801) 627,642 Other comprehensive income 3,202 -- (48,050) -- (44,848) Treasury stock (at cost) -- -- -- -- -- ---------- ---------- -------- ----------- ---------- Total shareholders' equity 1,118,726 1,282,314 80,899 (1,643,449) 838,490 ---------- ---------- -------- ----------- ---------- Total liabilities and shareholders' equity $1,695,526 $1,438,032 $351,967 $(1,650,387) $1,835,138 ========== ========== ======== =========== ==========
12 Condensed Consolidating Statements of Operations
For the Three Months Ended December 31, 2001 ------------------------------------------------------------------------- Non Apogent Guarantor Guarantor (In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated ------------ ------------ ------------ ------------ ------------ Net sales $ -- $ 205,698 $ 52,375 $ (16,877) $ 241,196 Cost of sales -- 111,311 31,636 (16,211) 126,736 --------- --------- --------- --------- --------- Gross profit -- 94,387 20,739 (666) 114,460 Selling, general and administrative expenses 5,784 38,663 13,161 -- 57,608 --------- --------- --------- --------- --------- Operating income (5,784) 55,724 7,578 (666) 56,852 Other income (expense): Interest expense -- (10,204) (28) -- (10,232) Other, net (858) 1,497 7 -- 646 --------- --------- --------- --------- --------- Income before income taxes (6,642) 47,017 7,557 (666) 47,266 Income taxes (2,647) 17,396 2,796 (246) 17,299 --------- --------- --------- --------- --------- Net income $ (3,995) $ 29,621 $ 4,761 $ (420) $ 29,967 ========= ========= ========= ========= =========
For the Three Months Ended December 31, 2000 ------------------------------------------------------------------------- Non Apogent Guarantor Guarantor (In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated ------------ ------------ ------------ ------------ ------------ Net sales $ 196,681 $ 34,923 $ (10,846) $ 220,758 Cost of sales -- 104,555 20,400 (10,150) 114,805 --------- --------- --------- --------- --------- Gross profit -- 92,126 14,523 (696) 105,953 Selling, general and administrative expenses 5,235 42,224 8,657 -- 56,116 --------- --------- --------- --------- --------- Operating income (5,235) 49,902 5,866 (696) 49,837 Other income (expense): Interest expense -- (12,512) (16) -- (12,528) Other, net (585) 143 111 -- (331) --------- --------- --------- --------- --------- Income before income taxes, discontinued operations and extraordinary items (5,820) 37,533 5,961 (696) 36,978 Income taxes (2,328) 15,013 2,384 (278) 14,791 --------- --------- --------- --------- --------- Income from continuing operations before extraordinary items (3,492) 22,520 3,577 (418) 22,187 Loss from discontinued operations (10,986) -- -- -- (10,986) --------- --------- --------- --------- --------- Income before extraordinary items (14,478) 22,520 3,577 (418) 11,201 Extraordinary item -- (745) -- -- (745) --------- --------- --------- --------- --------- Net income $ (14,478) $ 21,775 $ 3,577 $ (418) $ 10,456 ========= ========= ========= ========= =========
13 Condensed Consolidating Statements of Cash Flows
For the Three Months Ended December 31, 2001 --------------------------------------------------------------------- Non Apogent Guarantor Guarantor (In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated ------------ ------------ ------------ ------------ ------------ Cash flows (used by) provided by operating activities: $ (14,570) $ 27,904 $ 11,337 $-- $ 24,671 --------- --------- --------- --- --------- Cash flows from investing activities: Capital expenditures (150) (4,526) (1,669) -- (6,345) Proceeds from sales of property, plant and equipment -- 24 26 -- 50 Net payments for businesses acquired -- (34,591) (3,737) -- (38,328) --------- --------- --------- --- --------- Net cash provided by (used in) investing activities (150) (39,093) (5,380) -- (44,623) --------- --------- --------- --- --------- Cash flows from financing activities: Proceeds from long-term debt 68,700 383,200 -- -- 451,900 Principal payments on long-term debt -- (360,468) (6) -- (360,474) Proceeds from the exercise of stock options 1,746 -- -- -- 1,746 Other -- (8,290) 920 -- (7,370) --------- --------- --------- --- --------- Net cash provided by (used in) financing activities 70,446 14,442 914 -- 85,802 Effect of exchange rate on cash and cash equivalents -- -- (3,983) (3,983) --------- --------- --------- --- --------- Net (decrease) increase in cash and cash equivalents 55,726 3,253 2,888 -- 61,867 Cash and cash equivalents at beginning of year 4,145 (5,652) 10,699 -- 9,192 --------- --------- --------- --- --------- Cash and cash equivalents at end of year $ 59,871 $ (2,399) $ 13,587 $-- $ 71,059 ========= ========= ========= === ========= Supplemental disclosures of cash flow information Cash paid during the year for: Interest $ -- $ 13,562 $ 80 $-- $ 13,642 ========= ========= ========= === ========= Income taxes $ 14,200 $ -- $ -- $-- $ 14,200 ========= ========= ========= === ========= Capital lease obligations incurred $ -- $ 30 $ -- $-- $ 30 ========= ========= ========= === =========
14 Condensed Consolidating Statements of Cash Flows
For the Three Months Ended December 31, 2000 ----------------------------------------------------------------------- Non Apogent Guarantor Guarantor (In thousands) Technologies Subsidiaries Subsidiaries Eliminations Consolidated ------------ ------------ ------------ ------------ ------------ Cash flows provided by operating activities: $ (68,099) $ 87,107 $ 3,412 $ 22,420 --------- --------- --------- --- --------- Cash flows from investing activities: Capital expenditures (249) (5,761) (1,369) -- (13,389) Proceeds from sales of property, plant and equipment -- 232 26 -- 258 Net cash inflow from SDS 46,394 -- -- -- 46,394 Net payments for businesses acquired -- (18,856) -- -- (18,856) --------- --------- --------- --- --------- Net cash used in investing activities 46,145 (24,385) (1,343) -- 20,417 --------- --------- --------- --- --------- Cash flows from financing activities: Proceeds from long-term debt -- 626,640 -- -- 626,640 Principal payments on long-term debt -- (688,748) (12) -- (688,760) Proceeds from the exercise of stock options 1,491 -- -- -- 1,491 Other 14,583 (3,900) -- -- 10,683 --------- --------- --------- --- --------- Net cash provided by financing activities 16,074 (66,020) -- -- (49,946) Effect of exchange rate on cash and cash equivalents -- -- (529) -- (529) --------- --------- --------- --- --------- Net (decrease) increase in cash and cash equivalents (5,880) (3,298) 1,540 -- (7,638) Cash and cash equivalents at beginning of year 7,086 (2,577) 7,902 -- 12,411 --------- --------- --------- --- --------- Cash and cash equivalents at end of year $ 1,206 $ (5,875) $ 9,442 $-- $ 4,773 ========= ========= ========= === ========= Supplemental disclosures of cash flow information Cash paid during the year for: Interest $ -- $ 13,642 $ -- $-- $ 13,642 ========= ========= ========= === ========= Income taxes $ -- $ -- $ -- $-- $ -- ========= ========= ========= === ========= Capital lease obligations incurred $ -- $ -- $ -- $-- $ -- ========= ========= ========= === =========
15 Item 2. Management's Discussion and Analysis of Financial Condition and Result ---------------------------------------------------------------------- of Operations ------------- General The subsidiaries of Apogent are leading manufacturers of value-added products for the clinical diagnostics, labware and life sciences, and laboratory equipment markets in the United States and abroad. Apogent provides products under three business segments - Clinical Diagnostics, Labware and Life Sciences, and Laboratory Equipment. The primary subsidiaries in each of our business segments are as follows: Clinical Diagnostics Labware and Life Sciences -------------------- ------------------------- Applied Biotech, Inc. Advance Biotechnologies Ltd. Chase Scientific Glass, Inc. BioRobotics Group Limited Erie Electroverre S.A. Genevac Limited Erie Scientific Company Matrix Technologies Corporation Gerhard Menzel Glasbearbeitungswerk Molecular BioProducts, Inc. GmbH & Co. K.G. Nalge Nunc International Corporation Microgenics Corporation Nalge Nunc International K.K. Microm International GmbH National Scientific Company The Naugatuck Glass Company Nunc A/S Richard-Allan Scientific Company Remel Inc. Laboratory Equipment Samco Scientific Corporation -------------------- Barnstead Thermolyne Corporation Electrothermal Engineering, Ltd. Lab-Line Instruments, Inc. When we use the terms "we" or "our" in this report, we are referring to Apogent Technologies Inc. and its subsidiaries. Our fiscal year ends on September 30, and accordingly, all references to quarters refer to our fiscal quarters. The quarters ended December 31, 2001 and 2000 are the Company's first quarters of fiscal 2002 and 2001, respectively. Results of Operations Quarter Ended December 31, 2001 Compared to the Quarter Ended December 31, 2000 Net Sales Fiscal Fiscal Dollar Percent 2002 2001 Change Change -------- -------- -------- ------- (in thousands) Clinical Diagnostics $116,940 $109,865 $ 7,075 6% Labware and Life Sciences 99,524 84,863 14,661 17% Laboratory Equipment 24,732 26,030 (1,298) -5% -------- -------- ------ $241,196 $220,758 $ 20,438 9% ======== ======== ====== Overall Company. Net sales for the quarter ended December 31, 2001 increased by $20.4 million or 9% over the corresponding fiscal 2001 quarter. Clinical Diagnostics. Increased net sales in the clinical diagnostics segment resulted primarily from: (a) net sales of products of acquired companies (approximately $4.9 million), (b) price increases (approximately $3.6 million), (c) increased net sales of new products developed by us (approximately $1.5 million), and (d) foreign currency fluctuations (approximately $0.4 million). Net sales were partially reduced by a decrease in net sales of existing products (approximately $3.4 million). 16 Labware and Life Sciences. Increased net sales in the labware and life sciences segment resulted primarily from: (a) net sales of products of acquired companies (approximately $12.1 million), (b) increased net sales of new products developed by us (approximately $1.7 million), (c) increased net sales of existing products (approximately $0.8 million), and (d) price increases (approximately $0.3 million). Net sales were partially reduced by foreign currency fluctuations (approximately $0.2 million). Laboratory Equipment. Reduced net sales in the laboratory equipment segment resulted primarily from a decrease in net sales of existing products (approximately $2.2 million). Net sales were partially increased by: (a) increased net sales of new products developed by us (approximately $0.4 million) and (b) price increases (approximately $0.4 million). Gross Profit
Fiscal Percent Fiscal Percent Dollar Percent 2002 of Sales 2001 of Sales Change Change -------- -------- -------- -------- -------- ------- Clinical Diagnostics $ 54,565 47% $ 51,654 47% $ 2,911 6% Labware and Life Sciences 49,612 50% 43,257 51% 6,355 15% Laboratory Equipment 10,283 42% 11,042 42% (759) -7% -------- -------- -------- $114,460 47% $105,953 48% $ 8,507 8% ======== ======== ========
Overall Company. Gross profit for the quarter ended December 31, 2001 increased by $8.5 million or 8% over the corresponding fiscal 2001 quarter. Clinical Diagnostics. Increased gross profit in the clinical diagnostics segment resulted primarily from: (a) price increases (approximately $3.6 million), (b) decreased manufacturing overhead (approximately $2.8 million), (c) the effects of acquired companies (approximately $1.9 million), (d) inventory adjustments (approximately $0.9 million), (e) the effects of new products (approximately $0.7 million), and (f) foreign currency fluctuations (approximately $0.1 million). Gross profit was partially reduced by: (a) decreased volume (approximately $4.3 million) and (b) product mix (approximately $2.7 million). Labware and Life Sciences. Increased gross profit in the labware and life sciences segment resulted primarily from: (a) the effects of acquired companies (approximately $3.7 million), (b) product mix (approximately $2.6 million), (c) the effects of new products (approximately $0.6 million), (d) increased volume (approximately $0.6 million), and (e) price increases (approximately $0.3 million). Gross profit was partially reduced by: (a) increased manufacturing overhead (approximately $0.8 million), (b) foreign currency fluctuations (approximately $0.4 million), and (c) inventory adjustments (approximately $0.3 million). Laboratory Equipment. Decreased gross profit in the laboratory equipment segment resulted primarily from: (a) decreased volume (approximately $1.0 million), (b) inventory adjustments (approximately $0.3 million), and (c) increased manufacturing overhead (approximately $0.2 million). Gross profit was partially increased by: (a) price increases (approximately $0.4 million) and (b) the effects of new products (approximately $0.2 million). 17 Selling General and Administrative Expenses Fiscal Fiscal Dollar Percent 2002 2001 Change Change -------- -------- -------- ------- Clinical Diagnostics $ 24,507 $ 26,196 $ (1,689) -6% Labware and Life Sciences 28,044 25,004 3,040 12% Laboratory Equipment 4,854 5,616 (762) -14% -------- -------- -------- Subtotal 57,405 56,816 589 1% Other 203 (700) 2,867 -------- -------- -------- Total $ 57,608 $ 56,116 $ 3,456 6% ======== ======== ======== Overall Company. Selling, general and administrative expenses for the quarter ended December 31, 2001 increased by $3.4 million or 6% over the corresponding fiscal 2001 quarter. Clinical Diagnostics. Decreased selling, general and administrative expenses in the clinical diagnostics segment resulted primarily from a decrease in amortization expense as a result of the implementation of Statement No. 142, "Goodwill and Other Intangible Assets" (SFAS 142) - see Note 1 to the Unaudited Consolidated Financial Statements (approximately $3.8 million). Selling, general and administrative expenses were partially increased by: (a) marketing expenses (approximately $1.1 million), (b) general and administrative expenses (approximately $0.9 million), (c) research and development expenses (approximately $0.2 million), (d) acquired businesses (approximately $0.2 million), and (e) foreign currency fluctuations (approximately $0.2 million). Labware and Life Sciences. Increased selling, general and administrative expenses in the labware and life sciences segment resulted primarily from: (a) acquired businesses (approximately $2.9 million), (b) marketing expenses (approximately $1.6 million), (c) general and administrative expenses (approximately $0.5 million), and (d) research and development expense (approximately $0.5 million). Selling, general and administrative expenses were partially reduced by: (a) decreased amortization expense as a result of SFAS 142 (approximately $1.9 million), and (b) foreign currency fluctuations (approximately $0.3 million). Laboratory Equipment. Decreased selling, general and administrative expenses in the laboratory equipment segment resulted primarily from: (a) decreased amortization expense as a result of SFAS 142 (approximately $0.5 million) and (b) general and administrative expenses (approximately $0.1 million). Operating Income Fiscal Fiscal Dollar Percent 2002 2001 Change Change -------- -------- -------- ------- Clinical Diagnostics $ 30,058 $ 25,453 $ 4,605 18% Labware and Life Sciences 21,568 18,253 3,315 18% Laboratory Equipment 5,429 5,431 (2) 0% -------- -------- -------- Subtotal 57,055 49,137 7,918 16% Other (203) 700 (903) -------- -------- -------- Total $ 56,852 $ 49,837 $ 7,015 14% ======== ======== ======== As a result of the foregoing, operating income for the quarter ended December 31, 2001 increased by $7.0 million or 14% over the corresponding fiscal 2001 quarter. Excluding the impact of SFAS 142 on this fiscal 2002 quarter, operating income would have been $569 million, consistent with the corresponding fiscal 2001 quarter. Interest Expense Interest expense was $10.2 million for the quarter ended December 31, 2001, as compared to $12.5 million for the corresponding fiscal 2001 quarter. The decrease is the result of lower average interest rates. 18 Other Income Other income was $1.5 million for the quarter ended December 31, 2001, as compared to other expense of $0.2 million in the corresponding fiscal 2001 quarter. This increase is primarily due to investment income from minority interest in joint ventures of $1.4 million. Income Taxes Taxes on income from continuing operations for the quarter ended December 31, 2001 were $17.3 million, an increase of $2.5 million from the corresponding fiscal 2001 quarter. This increase resulted primarily from increased taxable earnings. Net Income As a result of the foregoing, net income was $30 million for the quarter ended December 31, 2001 as compared to $10.5 million for the corresponding fiscal 2001 quarter. SFAS 142 would have increased net income to $15.3 million for the fiscal 2001 quarter, had it been effective at the time. Impact of Recently Issued Accounting Standards The Company adopted Statement No. 142, "Goodwill and Other Intangible Assets" (SFAS 142) on October 1, 2001. SFAS 142 requires that all goodwill and intangible assets with indefinite useful lives will no longer be amortized, but instead tested for impairment at least annually. As a result the Company is no longer amortizing approximately $947 million of goodwill as of December 31, 2001. If SFAS 142 had been effective for the quarter ending December 31, 2000, income before extraordinary item and net income would have been $16.1 million and $15.3 million, respectively. The Company is required to perform initial impairment tests and it is not practical to estimate the impact of such tests. However, any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in our statement of earnings. Liquidity and Capital Resources As a result of the acquisition of our predecessor in 1987 and the acquisitions we completed since 1987, we have increased the carrying value of certain tangible and intangible assets consistent with accounting principles generally accepted in the United States. Accordingly, our results of operations include a significant level of non-cash expenses related to the depreciation of fixed assets and the amortization of intangible assets, including goodwill. Goodwill and intangible assets, net of amortization, increased by approximately $35 million during the first fiscal quarter of 2002, primarily as a result of continued acquisition activity. However, the non-cash amortization expense relating to intangible assets and goodwill have been reduced substantially following the adoption of SFAS 142 on October 1, 2001. Our capital requirements arise principally from indebtedness incurred in connection with our obligation to pay rent under the Sale/Leaseback facility (as defined herein), our working capital needs, primarily related to inventory and accounts receivable, our capital expenditures, primarily related to purchases of machinery and molds, the purchase of various businesses and product lines in execution of our acquisition strategy, and the periodic expansion of physical facilities. It is currently our intent to continue to pursue our acquisition strategy. Approximately $24.7 million of cash was generated from operating activities in the first quarter of fiscal 2002, an increase of $2.3 million or 10% from the corresponding fiscal 2001 quarter. Non-cash depreciation and amortization charged against net income decreased approximately $4.5 million, primarily as a result of the adoption of SFAS 142. The cash outflow resulting from the net change in working capital, net of the effects of acquisitions and divestitures, was $20.3 million for the first quarter of fiscal 2002, consistent with the corresponding fiscal 2001 quarter. These changes are set forth in detail in the Consolidated Statements of Cash Flows. 19 Investing activities in the first quarter of fiscal 2002 used approximately $44.6 million of cash. This outflow was due primarily to cash used for acquisitions of $38.3 million. Capital expenditures were $6.3 million for the first quarter of fiscal 2002, compared to $7.4 million in the corresponding fiscal 2001 quarter. Financing activities provided approximately $85.8 million of cash in the first quarter of fiscal 2002. Proceeds from our CODES offering (discussed below) were used to pay off approximately $208 million outstanding on the Revolving Credit facilities. Financing fees of $8.3 million were paid in connection with the CODES offering. As a result of the excess of proceeds from the CODES offering over the payments on the Revolving Credit Facilities and financing fees paid, the Company had $71 million of cash at December 31, 2001. On October 10, 2001, the Company issued $300 million of senior convertible contingent debt securities (CODES). The CODES have a fixed interest rate of 2.25% per annum. Interest is payable on April 15 and October 15 of each year, beginning April 15, 2002. The Company will also pay contingent interest during any six-month period if the average trading price of the CODES during a specified period of five trading days preceding the relevant six-month period is above specified levels. The CODES will mature on October 15, 2021. The CODES are convertible, subject to certain conditions (including but not limited to the sale price of the Company's common stock, trading prices of the CODES, maintenance of the Company's credit ratings, and the occurrence of specified corporate transactions), into Apogent Common Stock at a price of approximately $30.49 per share. The Company may redeem some or all of the CODES on or after October 20, 2004. The holders may require the Company to purchase all or a portion of their CODES on October 20, 2004 and on October 15, 2006, 2011 and 2016, or subject to specified exemptions, upon a change of control event. Certain of the Company's U.S. subsidiaries guarantee the Company's obligations under the CODES. The proceeds from the issuance were used to pay down the outstanding balance on our Revolving Credit Facility, and for general corporate purposes. The CODES, 8% Senior Notes, and Revolving Credit Facilities all contain certain cross default provisions. Some of these provisions include financial and operating covenants which, if not met, could cause acceleration of payments on outstanding balances. The covenants include, among other things; restrictions on investments, requirements that the Company maintain certain financial ratios, requirements that the Company maintain certain credit ratings, restrictions on the ability of the Company and its subsidiaries to create or permit liens, or to pay dividends or make other restricted payments (as defined), and limitations on incurrence of additional indebtedness. The Company is not aware of any violations of these covenants and does not foresee any such violations in light of current business conditions. Off-Balance Sheet Arrangements The Company holds a minority interest in two unconsolidated joint ventures that are accounted for as equity investments. In both instances the Company owns less than 50% of the underlying joint venture. As of December 31, 2001 equity investments in these entities, included in "Other Assets", totaled $7.6 million. Income from the joint ventures for the first quarter of fiscal 2002 was $1.4 million and is included in Other Income. The joint ventures are limited to the extent they can incur any debt other than trade payables arising out of their business activities and do not hold any assets other than inventory and trade receivables. As of December 31, 2001, the joint ventures did not have any debt other than trade payables arising out of their business activities. 20 Disclosures About Contractual Obligations and Commercial Commitments In its day-to-day business activities, the Company incurs certain obligations and commitments to make future payments under contracts such as debt and lease agreements. Maturities of these obligations are set forth in the following table (in millions):
- ---------------------------------------- --------------------------------------------------------------------- Payments Due by Period - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Less than 1 After 5 Contractual Obligations Total Year 1 - 3 Years 4 - 5 Years Years - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Long-Term Debt $ 750.5 $ 73.6 $ 41.8 $ 1.2 $ 633.9 - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Capital Lease Obligations 0.6 0.3 0.3 --- --- - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Operating Leases 51.6 9.6 21.9 8.5 11.6 - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Unconditional Purchase Obligations 15.0 2.5 6.5 3.0 3.0 - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Other Long-Term Obligations None - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Total Contractual Cash Obligations 817.7 86.0 70.5 12.7 648.5 - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Amount of Commitment Expiration Per Period Total ------------------------------------------------------- Amounts Less Than 1 Other Commercial Commitments Committed Year 1 - 3 Years 4 - 5 Years Over 5 Years - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Lines of Credit $ 10.7 $10.7 $ --- $--- $--- - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Standby Letters of Credit 107.9 34.8 73.1 - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Guarantees None (1) - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Standby Repurchase Obligations None - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Other Commercial Commitments None - ---------------------------------------- ------------- ------------- ------------- ------------- ------------- Total Commercial Commitments $118.6 $45.5 73.1 $--- $--- - ---------------------------------------- ------------- ------------- ------------- ------------- -------------
(1) Certain of the Company's domestic subsidiaries are guarantors under the Revolving Line of Credit, 8% Senior Notes, and CODES. Cautionary Factors This report contains various forward-looking statements concerning our prospects that are based on the current expectations and beliefs of management. We may also make forward-looking statements from time to time in other reports and documents as well as oral presentations. When used in written documents or oral statements, the words "anticipate," "believe," "continue," "estimate," "goal," "expect," "objective," "outlook" and similar expressions are intended to identify forward-looking statements. The statements contained herein and such future statements involve or may involve certain assumptions, risks and uncertainties, many of which are beyond our control, that could cause our actual results and performance to differ materially from what is expected. In addition to the assumptions and other factors referenced specifically in connection with such statements, the following factors could impact our business and financial prospects: Our holding company structure increases financial risks. We are organized as a holding company, with all of our net sales generated through our subsidiaries. Consequently, our operating cash flow and ability to service indebtedness depend in part upon the operating cash flow of our foreign subsidiaries and the payment of funds by them to us in the form of loans, dividends or otherwise. Their ability to pay dividends and make loans, advances and other payments to us depends upon statutory or other contractual restrictions that apply, which may include requirements to maintain minimum levels of working capital and other assets. 21 Our international operations pose currency and other risks. We have significant operations outside the United States, where a significant portion of our revenue is generated. We are therefore subject to risk factors affecting our international operations, including relevant foreign currency exchange rates, which can affect the cost of our products or the ability to sell our products in foreign markets, and the value in U.S. dollars of sales made in foreign currencies. Other factors include our ability to obtain effective hedges against fluctuations in currency exchange rates; foreign trade, monetary and fiscal policies; laws, regulations and other activities of foreign governments, agencies and similar organizations; risks associated with having major manufacturing facilities located in countries that have historically been less stable than the United States in several respects, including fiscal and political stability; and risks associated with an economic downturn in other countries. In addition, world events can increase the volatility of the currency markets, and such volatility could affect our financial results. Our failure to keep pace with the technological demands of our customers or with the products and services offered by our competitors could significantly harm our business. Some of the industries served by our products are characterized by rapid technological changes and new product introductions. Some of our competitors may invest more heavily in research or product development than we do. Successful new product offerings depend upon a number of factors, including our ability to: o accurately anticipate customer needs; o innovate and develop new technologies and applications; o successfully commercialize new products in a timely manner; o price our products competitively and manufacture and deliver our products in sufficient volumes and on time; and o differentiate our offerings from those of our competitors. If we do not introduce new products in a timely manner and make enhancements to meet the changing needs of our customers, some of our products could become obsolete over time, in which case our customer relationships, revenue, and operating results would suffer. Our operating results may suffer if the industries into which we sell our products are in downward cycles. Some of the industries and markets into which we sell our products are cyclical. Any significant downturn in our customers' markets or in general economic conditions could result in reduced demand for our products and could harm our business. Future acquisitions may not be available or may create transitional challenges. A significant portion of our growth over the past several years has been achieved through our acquisition program. Our rate of continued growth is therefore subject to factors affecting our ability to continue pursuing our current acquisition strategy and to be successful with that strategy. These factors include the cost of the capital required to effect our acquisition strategy, the availability of suitable acquisition candidates at reasonable prices, competition for appropriate acquisition candidates, our ability to realize the synergies expected to result from acquisitions, our ability to retain key personnel in connection with acquisitions and the ability of our existing personnel to efficiently handle increased transitional responsibilities resulting from acquisitions. We may incur restructuring or impairment charges that would reduce our earnings. We have in the past and may in the future restructure some of our operations. In such circumstances, we may take actions that would result in a charge and reduce our earnings. These restructurings have or may be undertaken to realign our subsidiaries, eliminate duplicative functions, rationalize our operating facilities and products and reduce our staff. These restructurings may be implemented to improve the operations of recently acquired subsidiaries as well as subsidiaries that have been part of our operations for many years. Additionally, on October 1, 2001 we adopted 22 SFAS 142, "Goodwill and Other Intangible Assets," which requires that goodwill and intangible assets that have an indefinite useful life be tested at least annually for impairment. This requires us to perform a transitional assessment for possible impairment as of October 1, 2001. We have not quantified the impact of adopting this standard. We rely heavily upon sales to key distributors and original equipment manufacturers, and could lose sales if any of them stop doing business with us. Our three most significant distributors represent a significant portion of our revenues. Our reliance on major independent distributors for a substantial portion of our sales subjects our sales performance to volatility in demand from distributors. We can experience volatility when distributors merge or consolidate, when inventories are not managed to end-user demand, or when distributors experience softness in their sales or make alternate sourcing decisions. We rely primarily upon the long-standing and mutually beneficial nature of our relationships with our key distributors, rather than on contractual rights, to protect these relationships. Volatility in end-user demand can also arise with large OEM customers to whom we sell directly. The loss of a substantial contract could adversely affect our business. Sales to our OEM customers are sometimes unpredictable and wide variances sometimes occur quarter to quarter. We could be injured by disruptions of our manufacturing operations. We rely upon our manufacturing operations to produce most of the products we sell. Any significant disruption of those operations for any reason, such as strikes, labor disputes or other labor unrest, power interruptions, fire, war, or other force majuere, could adversely affect our sales and customer relationships and therefore adversely affect our business. In particular, the supply of white glass, which is used in our clinical diagnostics segment's worldwide manufacturing operations, comes solely from our glass manufacturing facility in Switzerland. Risks include delays encountered in connection with the periodic rebuilding of the sheet glass furnace or furnace malfunctions. Although most of our raw materials are available from a number of potential suppliers, our operations also depend upon our ability to obtain raw materials at reasonable prices. The success of many of our products depends on the effectiveness of our patents, trademarks, and licenses to defend our intellectual property rights. Our success with many of our products depends, in part, on our ability to protect our current and future innovative products and to defend our intellectual property rights. Our subsidiaries' products are sold under a variety of trademarks and trade names. They own or license all of the trademarks and trade names we believe to be material to the operation of their businesses. We also rely upon a combination of non-disclosure and other contractual agreements and trade secret, copyright, patent, and trademark laws to protect our intellectual property rights. Disputes may arise concerning the ownership of intellectual property or the applicability of confidentiality agreements. If we fail to adequately protect our intellectual property, competitors may manufacture and market products similar to ours. We could be hurt by product liability claims or other litigation. Our business is subject to the risks of claims involving our products and other legal and administrative proceedings, including the expense of investigating, litigating and settling any claims. Although we currently maintain insurance against some of these risks, uninsured losses could occur. Our business is subject to regulatory risks. Our ability to continue manufacturing and selling those of our products that are subject to regulation by the United States Food and Drug Administration or other domestic or foreign governments or agencies is subject to a number of risks. In the future, some of our products may be affected by the passage of stricter laws or regulations, reclassification of our products into categories subject to more stringent requirements, or the withdrawal of approvals needed to sell one or more of our products. Some of our products are affected by general levels of insurance and reimbursement. The demand for and pricing of some of our products can be affected by changing levels of public and private health care budgets, including reimbursement by private or governmental insurance programs. We could be harmed by the loss of key management. 23 The success of our operations depends in significant part upon the experience and expertise of our management team, both within Apogent and in our operating subsidiaries. Any loss of these key personnel could harm our business. We sometimes experience quarterly variations in our operating results. Our business is subject to quarterly variations in operating results caused by a number of factors, including business and industry conditions, timing of acquisitions, distribution and OEM customer issues, and other factors listed here. All these factors make it difficult to predict operating results for any particular period. Other risks may arise. We may be subject to risks arising from other business and investment considerations that may be disclosed from time to time in our Securities and Exchange Commission filings or in other publicly available written documents. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- There has been no substantial change in market risk to the Company since September 30, 2001, the end of our prior fiscal year. PART II - OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds ----------------------------------------- On October 10, 2001, the Company issued and sold, in a private placement, $300 million aggregate principal amount of 2.25% Senior Contingent Convertible Debt Securities ("CODES") due 2021. The CODES are convertible, subject to certain conditions, into common stock at a conversion rate of 32.7955 shares of common stock per $1,000 principal amount of CODES, which is equivalent to an initial conversion price of approximately $30.49 per share. In addition to fixed interest at the rate of 2.25% per year, the CODES also pay contingent interest under certain circumstances. The CODES were sold to Lehman Brothers Inc., Credit Suisse First Boston Corporation, Banc of America Securities LLC, ABN AMRO Rothschild LLC and UBS Warburg LLC, as "accredited investors" within the meaning of Rule 501 under the Securities Act of 1933, in reliance upon the private placement exemption afforded by Section 4(2) of that Act, and were offered and sold to "qualified institutional buyers" under Rule 144A of the Securities Act. Pursuant to a registration rights agreement entered into in connection with the private offering, the Company has filed a registration statement under the Securities Act to permit registered resales of the CODES and the common stock issuable upon conversion of the CODES. The aggregate offering price of the CODES was $300 million, 100% of the principal amount thereof. The purchase price paid to the Company by the initial purchasers was the initial offering price less a discount of $7,500,000, 2.5% of the principal amount of the CODES. A portion of the net proceeds from the sale of the CODES was used to repay borrowings under the Company's revolving credit facility. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- The Company, a Wisconsin corporation, held its Annual Meeting of Shareholders on January 28, 2002. A quorum was present at the Annual Meeting, with 100,135,313 shares out of a total of 106,129,455 shares entitled to cast votes represented in person or by proxy at the meeting. Proposal Number 1: To elect four directors to serve as Class I Directors until the 2005 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified. The shareholders voted to elect William H. Binnie, Don H. Davis, Jr., Christopher L. Doerr and Richard W. Vieser to serve as Class I directors until the 2005 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified. The results of the vote are as follows: Mr. Binnie Mr. Davis Mr. Doerr Mr. Vieser ---------- --------- --------- ---------- For 99,858,639 99,803,189 98,615,795 99,914,697 Withheld From 276,674 332,124 1,519,518 220,616 The terms of office as directors of Stephen R. Hardis, R. Jeffrey Harris, Frank H. Jellinek, Jr., William U. Parfet, Joe L. Roby and Kenneth F. Yontz continued after the meeting. Proposal Number 2: To approve the Company's 2001 Equity Incentive Plan. 24 The shareholders voted to approve the Company's 2001 Equity Incentive Plan. The results of the vote are as follows: For: 89,267,980 Against: 3,806,454 Abstentions: 81,136 Broker Non-Votes: 6,979,743 Proposal Number 3: To approve the Company's Employee Stock Purchase Plan. The shareholders voted to approve the Company's Employee Stock Purchase Plan. The results of the vote are as follows: For: 92,754,974 Against: 310,191 Abstentions: 90,405 Broker Non-Votes: 6,979,743 Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits: See Exhibit Index following the Signature page in this report, which is incorporated herein by reference. (b) Reports on Form 8-K: A Form 8-K dated October 3, 2001, was filed on October 3, 2001 to report under items 5 and 7, the Company's intention to commence a private placement of senior convertible contingent debt securities (CODES). An exhibit to the Form 8-K also consisted of a press release dated October 3, 2001, announcing the intended private placement. A Form 8-K dated October 4, 2001, was filed on October 5, 2001 to report under items 5 and 7, the pricing of senior convertible contingent debt securities (CODES) to be issued in a private placement. An exhibit to the Form 8-K also consisted of a press release dated October 4, 2001, announcing the pricing. A Form 8-K dated October 11, 2001, was filed on October 11, 2001 to report under items 5 and 7, the sale of the Company's 2.25% Senior Convertible Contingent Debt Securities (CODES) due 2021. Exhibits to the Form 8-K also included a press release dated October 11, 2001, announcing the completion of the related private placement and the indenture for the CODES. A Form 8-K dated November 15, 2001, was filed on November 15, 2001 to report under item 5 an updated description of the Company's Common Stock. 25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized. APOGENT TECHNOLOGIES INC. ----------------------------------------- (Registrant) Date: February 14, 2002 /s/ JEFFREY C. LEATHE - ----------------------- ----------------------------------------- Jeffrey C. Leathe Executive Vice President - Finance, Chief Financial Officer and Treasurer* * Executing as both the financial officer and the duly authorized officer of the Company 26 APOGENT TECHNOLOGIES INC. (the "Registrant") (Commission File No. 1-11091) EXHIBIT INDEX to QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2001
Exhibit Incorporated Herein By Filed Number Description Reference To Herewith - ------- ----------- ---------------------- -------- 4.1 Purchase Agreement dated October Exhibit 4.8 to Registrant's Form 3, 2001 among the Registrant, the 10-K for fiscal year ended Subsidiary Guarantors named September 30, 2001 (the "2001 therein and the Initial Purchasers 10-K"). named therein 4.2 Indenture dated October 10, 2001 Exhibit 99.2 to the Registrant's among the Registrant, the Form 8-K dated October 11, 2001 Subsidiary Guarantors named therein and The Bank of New York 4.3 Resale Registration Agreement Exhibit 4.10 to the Registrant's dated as of October 10, 2001 among 2001 10-K the Registrant, the Subsidiary Guarantors named therein and the Initial Purchasers named therein. 10.1 Form of Employment Agreement with X President and Chief Executive Officer 10.2 Form of Employment Agreement with X certain executive officers 10.3 Schedule of executive officers who X are party to Employment Agreement filed as Exhibit 10.2 10.4 Apogent Technologies Inc. 2001 Appendix A to the Registrant's Equity Incentive Plan Proxy Statement dated December 26, 2001. 10.5 Apogent Technologies Inc. Employee Appendix B to the Registrant's Stock Purchase Plan Proxy Statement dated December 26, 2001. 10.6 Form of Indemnification Agreement Exhibit 10 to the Registrant's with each of the executive Form 8-K filed November 15, 2001. officers and directors identified on the schedule thereto
EI-1 EX-10.1 3 dex101.txt FORM OF EMPLOYMENT AGREEMENT EXHIBIT 10.1 FORM OF EMPLOYMENT AGREEMENT This Agreement is made and entered into as of December 7th, 2001, between Apogent Technologies Inc., a Wisconsin corporation ("Employer" or "Company"), and Frank H. Jellinek, Jr. ("Employee"). W I T N E S S E T H: WHEREAS, Employer desires to retain the services of Employee and is willing to do so upon the terms and conditions set forth herein; and WHEREAS, Employee desires to be employed by Employer upon the terms and conditions set forth herein; NOW, THEREFORE, Employee and Employer, in consideration of the agreements, covenants and conditions herein, hereby agree as follows: 1. Basic Employment Provisions. --------------------------- (a) Employment and Term. Employer hereby employs Employee as President and Chief Executive Officer and Employee agrees to be employed by Employer in such capacity, for a period commencing on the date hereof and continuing thereafter until terminated, by one of the means provided herein, by the Employee or Employer. (b) Duties. Employee shall, as the President and Chief Executive Officer, be subject to the direction and supervision of the Board of Directors of Employer (the "Board"). Employee shall have those duties and responsibilities that are commensurate with his position and assigned to him by the Board, which duties Employee shall faithfully perform to the best of his abilities. Employee's services shall be performed primarily at the Company's corporate headquarters, which are currently located in Portsmouth, New Hampshire. Employee shall be required to devote his full working time to the performance of his duties hereunder. 2. Compensation. ------------ (a) Salary. ------ (i) As base compensation for the services to be rendered by Employee hereunder, Employer shall to pay to Employee an initial annual base salary at the rate of $________ per year. Such salary shall accrue and be payable in accordance with the payroll practices of Employer in effect from time to time. All such payments shall be subject to any deductions and withholdings required by applicable law. (ii) While he continues to be employed by Employer, Employee shall be eligible for consideration for merit salary increases. Such increases shall be at the sole discretion of the Board and nothing herein contained shall be construed as granting Employee a vested right to any such increases. -1- (iii) If during his employment, Employee fails to perform his duties on account of illness or other incapacity, his base salary will be reduced by the amount of any statutory disability benefits and disability income benefits which he receives. (b) Benefits. In addition to his salary, Employee shall be entitled, while employed by Employer, to such employee benefits and other benefits as are customarily accorded the executives of Employer, including without limitation participation in pension, stock option, bonus and other incentive plans, group life, hospitalization, vacations, other welfare or insurance plans, relocation plans, and automobile plans, as well as such other benefits approved by the Board ("Benefit Plans"). (c) Expense Reimbursement. During his employment, Employer shall reimburse Employee, upon the submission of properly documented expense account reports, for all reasonable travel and entertainment expenses incurred by Employee in the course of his employment with Employer. 3. Termination of Employment. ------------------------- (a) Termination by Employee. ----------------------- (i) Except as provided in Section 3(a)(ii), Employee may terminate his employment with Employer for any reason, at any time, by providing Employer with a written notice, at least forty-five (45) days in advance of the termination date, of his desire to terminate his employment. (ii) In the event a Potential Change in Control of the Company, as hereinafter defined, occurs, Employee may not voluntarily terminate his employment with the Company pursuant to subsection (i) above for a period of six (6) months following the initial occurrence of a Potential Change in Control of the Company. If more than one Potential Change in Control of the Company occurs during the term of this Agreement, the provisions of the preceding sentence shall be applicable to each Potential Change in Control of the Company occurring prior to the occurrence of a Change in Control. (iii) Employee may terminate his employment with Employer for Good Reason at any time within sixty (60) days of the event constituting Good Reason by providing Employer with a written notice, at least forty-five (45) days in advance of the termination date, of his desire to terminate his employment. (iv) Employee may terminate his employment with Employer in the event of a Constructive Termination Event, at any time within sixty (60) days of said Constructive Termination Event, by providing Employer with a written notice, at least forty-five (45) days in advance of the termination date, of his desire to terminate his employment. For purposes hereof, "Constructive Termination Event" means (a) the assignment to Employee of any duties materially inconsistent with his status as President and Chief Executive Officer, his removal from the position of President and Chief Executive Officer, or a diminution in the nature or status of Employee's responsibilities; (b) a reduction by the Company in Employee's annual base salary; and/or (c) the failure by the Company to continue to provide Employee with benefits substantially similar to those enjoyed by Employee under any of the Benefit Plans in which Employee was participating, unless such changes apply to all Company executives. -2- (b) Termination by Employer. ----------------------- (i) The Board may terminate Employee's employment with Employer, at any time other than following a Change of Control or in anticipation of a Change of Control, without cause, by providing Employee with a written notice, at least ninety (90) days in advance of the termination date, of its desire to terminate Employee's employment. (ii) The Board may terminate Employee's employment with Employer for cause, at any time, with or without advance notice. For the purposes of this Agreement, "cause" shall be deemed to be a willful and material breach of this Agreement, fraud, dishonesty, competition with Employer or any subsidiary or affiliate of Employer, unauthorized use of Employer's or any of its subsidiaries' or affiliates' trade secrets or confidential information or continued gross neglect by Employee of the duties assigned to him (if such neglect or breach continues for 30 days after written notice by the Board to Employee specifying the duties being neglected or the breach of this Agreement by Employee). (iii) The Board may terminate the Employee's employment with Employer, at any time, with or without advance notice, upon the total disability of the Employee. For the purpose of this Agreement, "total disability" shall be deemed to have occurred if Employee shall have been unable to perform his duties hereunder due to mental or physical incapacity for a period of six consecutive months. (iv) The Board may terminate Employee's employment with Employer, at anytime following a Change of Control or in anticipation of a Change of Control without cause, by providing Employee with a written notice, at least ninety (90) days in advance of the termination date, of its desire to terminate Employee's employment. (c) Termination due to Death. Employee's employment with Employer shall terminate automatically upon the death of Employee. ------------------------ 4. Compensation Upon Termination. ----------------------------- If Employee's employment is terminated pursuant to Sections 3(a)(iv), 3(b)(i), 3(b)(iii) or 3(c), Employee (if living), or Employee's spouse (if the employment was terminated because of the death of Employee and Employee's spouse survives him), or Employee's estate (if the employment was terminated because of the death of Employee and Employee's spouse does not survive him), shall be entitled to receive, and Employer shall pay, in addition to any other benefits provided to them or Employee hereunder or under any of the Benefit Plans, (i) from the date the employment terminates, Employee's then current monthly base salary for a period twenty-four (24) months; (ii) an amount equal to one year's bonus, based on the annual average of Employee's bonus(es) for the preceding three (3) fiscal years, payable in a single lump sum within thirty (30) days of employment termination; and (iii) an amount equal to the incentive award that would have been earned by the Employee under the Senior Executive Incentive Compensation Plan (or its successor bonus plan/program) for the fiscal year in which the Employee's employment is terminated; multiplied, however, by the percentage equal to the percentage of the fiscal year in which the Employee was actively employed. The payment of this amount shall be made at the same time as the payment to other Company employees of the incentive award is made for the fiscal year in which the Employee's employment is terminated. Additionally, for a 24-month period after -3- (a) termination of Employee's employment, the Company shall arrange to provide Employee, if available under the Benefit Plans, or if not, pay to Employee an amount equal to Employer's costs of, life, disability, accident, health insurance, and other "executive" benefits substantially similar to those which Employee was receiving or entitled to receive immediately prior to the termination. (b) If Employee's employment is terminated pursuant to Section 3(a)(i) or 3(b)(ii) or because of Employee's violation of 3(a)(ii), no further compensation shall be paid to Employee after the date of termination (other than base compensation earned up to the date of termination, exclusive of bonus); provided, however, that the rights of Employee under any of the Benefit Plans shall be determined by the terms of the applicable plan. (c) Compensation in the event of Employee's termination pursuant to Section 3(a)(iii) or 3(b)(iv) is addressed in Section 5(b) below. 5. Further Definitions; Change in Control. -------------------------------------- (a) Definitions. For purposes of this Agreement, the following words and ----------- phrases shall have the meaning ascribed to them. (i) "Change in Control" shall mean a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then subject to such reporting requirement; provided that, without limitation, such a Change in Control shall be deemed to have occurred if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities; (B) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals, who at the beginning of such period constitute the Board and any new director added during the period whose election to the Board or nomination for election to the Board by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was approved prior to the beginning of the period, cease for any reason to constitute a majority of the Board; (C) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 66 2/3% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (D) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. For purposes hereof, "Company" includes the ultimate parent of the Company ("Parent"), if applicable. "Good Reason" shall mean the occurrence, following a Change in Control or in anticipation of a Change of Control, without Employee's express written consent, of any of the following circumstances unless, in the case of subsections (1), (5), (6), (7), or (8) of this Section -4- (ii) 5(a)(ii), such circumstances are fully corrected prior to the date of termination specified in the notice given in respect thereof: (1) the assignment to Employee of any duties materially inconsistent with his status as President and Chief Executive Officer, his removal from the position of President and Chief Executive Officer, or a diminution in the nature or status of Employee's responsibilities; (2) a proposed reduction by the Company in Employee's annual base salary; (3) the relocation of the executive office in which Employee is located to a location more than fifteen miles therefrom except for required travel on the business of the Company and its subsidiaries to an extent substantially consistent with Employee's present business travel obligations; (4) the failure by the Company to pay to Employee any portion of an installment of deferred compensation under any deferred compensation program of the Company within seven (7) days of the date such compensation is due; (5) the failure by the Company to continue in effect any compensation plan in which Employee participates, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made in such plan, or the failure by the Company to continue Employee's participation therein on the same basis, both in terms of the amount of compensation provided and the level of Employee's participation relative to other participants; (6) the failure by the Company to continue to provide Employee with benefits at least as favorable as those enjoyed by Employee under any of the Benefit Plans in which Employee was participating, or the taking of any action by the Company or any of its subsidiaries which would directly or indirectly materially reduce any of the benefits provided by any of the Benefit Plans or deprive Employee of any material fringe benefit enjoyed by him; (7) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 7 hereof; or (8) any purported termination of Employee's employment that is not effected pursuant to a proper notice of termination satisfying the requirements of this Agreement; for purposes of this Agreement, no such purported termination shall be effective. A Change in Control of the Company shall not, by itself, constitute Good Reason. (iii) "Potential Change in Control of the Company" shall mean the occurrence of one or more of the following events: (A) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (B) any person publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; or (C) the Board adopts a resolution to the effect that, for purposes of this Agreement, a potential Change in Control of the Company has occurred. "Severance Payment" shall mean an amount equal to 3.0 times the sum of (A) Employee's annual base salary in effect at the time notification of termination is provided plus (B) -5- (iv) the greater of (x) 200% of the "target" incentive Award that could have been earned by Employee under the Senior Executive Incentive Compensation Plan (or its successor bonus plan/program) for the fiscal year in which Employee's employment is terminated (or such comparable amount in the event of a different bonus plan) or (y) Employee's average annual bonus and incentive compensation for the three complete fiscal years of the Company immediately preceding the date of termination. (b) Payments. --------- (i) Upon the termination of his employment (A) by Employer following a Change in Control or in anticipation of a Change of Control as described in Section 3(b)(iv), or (B) by Employee for Good Reason as described in Section 3(a)(iii), Employee shall be entitled to the following payments and benefits unless such termination is effective more than eighteen (18) months following the occurrence of the Change in Control. (1) The Company shall pay Employee his full base salary, in effect at the time notification of the termination is provided, through the date of termination. The salary payments shall accrue and be payable in accordance with the payroll practices of Employer in effect at the time of termination. All such payments shall be subject to any deductions and withholdings required by applicable law. This payment shall be deemed to be earned as of the last day of the Employee's employment hereunder. (2) The Company shall pay Employee an amount equal to the greater of (A) the incentive award that would have been earned by the Employee under the Senior Executive Incentive Compensation Plan (or its successor bonus plan/program) for the fiscal year in which the Employee's employment is terminated or (B) 200% of the "target" incentive Award that could have been earned by Employee under the Senior Executive Incentive Compensation Plan (or its successor bonus plan/program) for the fiscal year in which Employee's employment is terminated (or such comparable amount in the event of a different bonus plan); multiplied, however, by the percentage equal to the percentage of the fiscal year in which the Employee was actively employed. The payment of this amount shall be made at the same time as the payment of the incentive award is made for the fiscal year in which the Employee's employment is terminated. This payment shall be deemed to be earned as of the last day of the Employee's employment hereunder. (3) The Company shall pay to Employee all amounts to which Employee is entitled under any of the Benefit Plans. Any payments due under a Benefit Plan shall be made at the time the payments are due under the terms of the Benefit Plan. (4) The Company shall pay to Employee the Severance Payment no later than the fifth day following the termination. For a twenty-four (24) month period after termination of Employee's employment, the Company shall arrange to provide Employee with life, disability, accident and health insurance benefits substantially similar to those which Employee was receiving or entitled to receive immediately prior to the termination. Benefits otherwise receivable by Employee pursuant to this Section 5(b)(i)(5) shall be reduced to the extent comparable benefits are actually received by -6- (5) Employee during the twenty-four (24) month period following Employee's termination, and any such benefits actually received by Employee shall be reported to the Company. (c) Mitigation. Employee shall not be required to mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise nor shall the amount of any payment or benefit provided for in this Section 5 be reduced by any compensation earned by Employee as the result of employment by another employer or by retirement benefits received after the date of termination, or otherwise except as specifically provided in this Section 5. 6. Certain Additional Payments by the Company. ------------------------------------------ (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 6) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 6(c), all determinations required to be made under this Section 6, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by such certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within thirty (30) business days of the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 6, shall be paid by the Company to the Employee within thirty (30) days of the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by the Employee, it shall furnish the Employee with a written opinion that failure to report the Excise Tax on the Employee's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 6(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. -7- (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall: (i) Give the Company any information reasonably requested by the Company relating to such claim, (ii) Take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) Cooperate with the Company in good faith in order effectively to contest such claim, and (iv) Permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 6(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 6(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 6(c)) promptly pay to the Company the amount of such refund (together -8- with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 6(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 7. Assignment. ---------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Employee to compensation from the Company in the same amount and on the same terms as Employee would be entitled hereunder if Employee had terminated his employment for Good Reason following a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the date of termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. (b) This Agreement shall inure to the benefit of and be enforceable by Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Employee should die while any amount would still be payable to him hereunder if Employee had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Employee's spouse or, if there is no spouse, to Employee's estate. 8. Confidential Information. ------------------------ (a) Non-Disclosure. During Employee's employment or at any time thereafter, irrespective of the time, manner or cause of the termination of this Agreement, Employee will not directly or indirectly, reveal, divulge, disclose or communicate to any person or entity other than authorized officers, directors and employees of Employer, in any manner whatsoever, any Confidential Information (as hereinafter defined) of Employer without the prior written consent of the Company, except in connection with the fulfillment of his duties hereunder. Definition. As used herein, "Confidential Information" means information disclosed to or known by Employee as a direct or indirect consequence of or through his association with Employer and its subsidiaries and affiliates, about Employer or any subsidiary or affiliate of Employer, their businesses, products and practices, including but not limited to trade secrets, know-how, technical information, and financial information, which information is not generally known in the business in which Employer or any subsidiary of Employer is or may become engaged. However, Confidential Information shall not include any information which is (i) available to the public from a source other than Employee, (ii) released in writing by Employer to the public or to -9- (b) persons who are not under a similar obligation of confidentiality to Employer and who are not parties to this Agreement, (iii) obtained by Employee from a third party not under a similar obligation of confidentiality to Employer, or (iv) required to be disclosed by any court process or any government or agency or department of any government. (c) Return of Property. Upon termination of Employee's employment, Employee will surrender to Employer all Confidential Information, including without limitation, all lists, charts, schedules, reports, financial statements, books and records of Employer and all subsidiaries and affiliates of Employer, and all copies thereof, and all other property belonging to Employer and all subsidiaries and affiliates of Employer, provided that Employee shall be accorded reasonable access to such materials subsequent thereto for any proper purpose as determined in the reasonable judgment of Employer. 9. Agreement Not to Solicit Employees. Employee agrees that, for a period of three (3) years following the termination of his employment, neither he nor any affiliate shall, either alone or on behalf of any business engaged in a business competitive with Employer or any subsidiary of Employer, solicit or induce, or in any manner attempt to solicit or induce, any person employed by, an agent of, Employer or any subsidiary of Employer to terminate his or its employment, agency, or business relationship, as the case may be, with the Employer or such subsidiary. 10. Assignment of Inventions. Employee agrees that he will assign to Employer or its appropriate subsidiary all inventions, discoveries and improvements relating to its lines of business, conceived or made by him solely or jointly with others during his employment, and to execute, upon request, whether during his employment or thereafter, any and all applications for patents, assignments and other papers which Employer or its counsel may deem necessary or appropriate for securing to it in all countries, exclusive rights in all such inventions, discoveries and improvements. 11. Noncompetition. During the term of Employee's employment with the Company and for a two-year period thereafter (unless Employee's employment is terminated pursuant to Sections 3(a)(i) or 3(b)(ii), in which case the noncompete period shall be for one year), Employee will not, directly or indirectly, within the Territory described below: (a) engage in, continue in or carry on any business which competes with the business conducted by the Company, including owning or controlling any financial interest in any corporation, partnership, firm or other form of business organization which is so engaged; (b) consult with, advise or assist in any way, whether or not for consideration, any corporation, partnership, firm or other business organization which is a competitor of the Company in any aspect with respect to the business conducted by the Company including, but not limited, to, advertising or otherwise endorsing the products of any such competitor; soliciting customers or otherwise serving as an intermediary for any such competitor; loaning money or rendering any other form of financial assistance to or engaging in any similar form of business transaction with any such competitor; provided, however, the foregoing prohibition does not extend to passive ownership of less than 1% of the outstanding stock of any entity whose stock is traded on an established stock exchange or quoted on NASDAQ. For purposes hereof, "Territory" is defined as any county or similar geographic subdivision in which Company conducts business. The parties intend that this noncompete covenant shall be construed as separate covenants, one for each county and subdivision to which the covenant applies. In the -10- event a court of competent jurisdiction determines that the provisions of this covenant not to compete are excessively broad as to duration, geographic scope or activity, it is expressly agreed that this covenant not to compete shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such over broad provisions shall be deemed, without further action on the part of any person, to be modified, amended and/or limited, but only to the extent necessary to render the same valid and enforceable in such jurisdiction. 12. No Violation. Employee represents and warrants to Employer that the execution, delivery and performance of this Agreement by Employee does not, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate or loss of rights under any provision of any agreement or understanding to which Employee or his affiliates are a party or by which Employee, or to the best knowledge of Employee, Employee's affiliates may be bound or affected. 13. Captions. The captions, headings and arrangements used in this -------- Agreement are for convenience only and do not in any way affect, limit or amplify the provisions hereof. 14. Notices. All notices required or permitted to be given hereunder shall be in writing and shall be deemed delivered when actually received or, if mailed, whether or not actually received, two days after deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the party to whom notice is being given at the specified address or at such other address as such party may designate by notice: Employer: Apogent Technologies Inc. 48 Congress Street Portsmouth, NH 03801 Attention: General Counsel Employee: Frank H. Jellinek, Jr. c/o Apogent Technologies Inc. 48 Congress Street Portsmouth, NH 03801 15. Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, provided that if any of the limitations set forth in Sections 8, 9, 10, and 11 shall be determined to be unreasonable by any court, the parties agree that the provisions of such Section shall be reduced to such lessor limitations as are determined to be reasonable; the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. 16. Amendments. This Agreement may be amended only by an instrument ---------- in writing duly executed by an officer of Employer expressly authorized by the Board to do so and by Employee. -11- 17. Waiver. No delay or omission by either party hereto to exercise any right or power hereunder shall impair such right or power or be construed as a waiver thereof including without limitation employee's continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. A waiver by either of the parties hereto of any of the covenants to be performed by the other or of any breach thereof shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant herein contained. All remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to either party at law, in equity or otherwise. 18. Counterparts. This Agreement may be executed in multiple ------------ counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same agreement. 19. Governing Law. This Agreement shall be construed and enforced ------------- according to the laws of the State of New Hampshire. 20. Legal Fees. Employer shall pay to Employee all legal fees and ---------- expenses incurred by Employee in contesting or disputing any termination or in seeking to obtain or enforce any right or benefit provided by this Agreement. 21. Final Agreement. This Agreement supercedes any other employment ---------------- agreement that Employee may have with the Company or any affiliate thereof. ***** -12- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. APOGENT TECHNOLOGIES INC. By: __________________________ Name: _Kenneth F. Yontz _______ ------------------ Title: __Chairman of the Board____ EMPLOYEE: By: __________________________ Frank H. Jellinek, Jr. -13- EX-10.2 4 dex102.txt EMPLOYMENT AGREEMENT EXHIBIT 10.2 EMPLOYMENT AGREEMENT This Agreement is made and entered into as of December 7th, 2001, between Apogent Technologies Inc., a Wisconsin corporation ("Employer" or "Company"), and ___________ ("Employee"). W I T N E S S E T H: WHEREAS, Employer desires to retain the services of Employee and is willing to do so upon the terms and conditions set forth herein; and WHEREAS, Employee desires to be employed by Employer upon the terms and conditions set forth herein; NOW, THEREFORE, Employee and Employer, in consideration of the agreements, covenants and conditions herein, hereby agree as follows: 1. Basic Employment Provisions. --------------------------- (a) Employment and Term. Employer hereby employs Employee as ____________ and Employee agrees to be employed by Employer in such capacity, for a period commencing on the date hereof and continuing thereafter until terminated, by one of the means provided herein, by the Employee or Employer. (b) Duties. Employee shall, as the _____________________, be subject to the direction and supervision of the President of Employer, or such other persons as determined by the President. Employee shall have those duties and responsibilities that are commensurate with his position and assigned to him by the President, which duties Employee shall faithfully perform to the best of his abilities. Employee's services shall be performed primarily at the Company's corporate headquarters, which are currently located in Portsmouth, New Hampshire. Employee shall be required to devote his full working time to the performance of his duties hereunder. 2. Compensation. ------------ (a) Salary. ------ (i) As base compensation for the services to be rendered by Employee hereunder, Employer shall to pay to Employee an initial annual base salary at the rate of $_______ per year. Such salary shall accrue and be payable in accordance with the payroll practices of Employer in effect from time to time. All such payments shall be subject to any deductions and withholdings required by applicable law. (ii) While he continues to be employed by Employer, Employee shall be eligible for consideration for merit salary increases. Such increases shall be at the sole discretion of the Employer and nothing herein contained shall be construed as granting Employee a vested right to any such increases. C:\Profile\Convert\EXHIBIT 102.doc -1- (iii) If during his employment, Employee fails to perform his duties on account of illness or other incapacity, his base salary will be reduced by the amount of any statutory disability benefits and disability income benefits which he receives. (b) Benefits. In addition to his salary, Employee shall be entitled, while employed by Employer, to such employee benefits and other benefits as are customarily accorded the executives of Employer, including without limitation participation in pension, stock option, bonus and other incentive plans, group life, hospitalization, vacations, other welfare or insurance plans, relocation plans, and automobile plans ("Benefit Plans"). (c) Expense Reimbursement. During his employment, Employer shall reimburse Employee, upon the submission of properly documented expense account reports, for all reasonable travel and entertainment expenses incurred by Employee in the course of his employment with Employer. 3. Termination of Employment. ------------------------- (a) Termination by Employee. ----------------------- (i) Except as provided in Section 3(a)(ii), Employee may terminate his employment with Employer for any reason, at any time, by providing Employer with a written notice, at least forty-five (45) days in advance of the termination date, of his desire to terminate his employment. (ii) In the event a Potential Change in Control of the Company, as hereinafter defined, occurs, Employee may not voluntarily terminate his employment with the Company pursuant to subsection (i) above for a period of six (6) months following the initial occurrence of a Potential Change in Control of the Company. If more than one Potential Change in Control of the Company occurs during the term of this Agreement, the provisions of the preceding sentence shall be applicable to each Potential Change in Control of the Company occurring prior to the occurrence of a Change in Control. (iii) Employee may terminate his employment with Employer for Good Reason at any time within sixty (60) days of the event constituting Good Reason by providing Employer with a written notice, at least forty-five (45) days in advance of the termination date, of his desire to terminate his employment. (iv) Employee may terminate his employment with Employer in the event of a Constructive Termination Event, at any time within sixty (60) days of said Constructive Termination Event, by providing Employer with a written notice, at least forty-five (45) days in advance of the termination date, of his desire to terminate his employment. For purposes hereof, "Constructive Termination Event" means (a) the assignment to Employee of any duties materially inconsistent with his status as _______________, his removal from the position of ___________________, or a diminution in the nature or status of Employee's responsibilities; (b) a reduction by the Company in Employee's annual base salary; and/or (c) the failure by the Company to continue to provide Employee with benefits substantially similar to those enjoyed by Employee under any of the Benefit Plans in which Employee was participating, unless such changes apply to all Company executives. -2- (b) Termination by Employer. ----------------------- (i) Employer may terminate Employee's employment with Employer, at any time other than following a Change of Control or in anticipation of a Change of Control, without cause, by providing Employee with a written notice, at least ninety (90) days in advance of the termination date, of its desire to terminate Employee's employment. (ii) Employer may terminate Employee's employment with Employer for cause, at any time, with or without advance notice. For the purposes of this Agreement, "cause" shall be deemed to be a willful and material breach of this Agreement, fraud, dishonesty, competition with Employer or any subsidiary or affiliate of Employer, unauthorized use of Employer's or any of its subsidiaries' or affiliates' trade secrets or confidential information or continued gross neglect by Employee of the duties assigned to him (if such neglect or breach continues for 30 days after written notice by the President of Employer to Employee specifying the duties being neglected or the breach of this Agreement by Employee). (iii) Employer may terminate the Employee's employment with Employer, at any time, with or without advance notice, upon the total disability of the Employee. For the purpose of this Agreement, "total disability" shall be deemed to have occurred if Employee shall have been unable to perform his duties hereunder due to mental or physical incapacity for a period of six consecutive months. (iv) Employer may terminate Employee's employment with Employer, at anytime following a Change of Control or in anticipation of a Change of Control without cause, by providing Employee with a written notice, at least ninety (90) days in advance of the termination date, of its desire to terminate Employee's employment. (c) Termination due to Death. Employee's employment with Employer shall ------------------------ terminate automatically upon the death of Employee. 4. Compensation Upon Termination. ----------------------------- If Employee's employment is terminated pursuant to Sections 3(a)(iv), 3(b)(i), 3(b)(iii) or 3(c), Employee (if living), or Employee's spouse (if the employment was terminated because of the death of Employee and Employee's spouse survives him), or Employee's estate (if the employment was terminated because of the death of Employee and Employee's spouse does not survive him), shall be entitled to receive, and Employer shall pay, in addition to any other benefits provided to them or Employee hereunder or under any of the Benefit Plans, (i) from the date the employment terminates, Employee's then current monthly base salary for a period twelve (12) months; (ii) an amount equal to one year's bonus, based on the annual average of Employee's bonus(es) for the preceding three (3) fiscal years, payable in a single lump sum within thirty (30) days of employment termination; and (iii) an amount equal to the incentive award that would have been earned by the Employee under the Senior Executive Incentive Compensation Plan (or its successor bonus plan/program) for the fiscal year in which the Employee's employment is terminated; multiplied, however, by the percentage equal to the percentage of the fiscal year in which the Employee was actively employed. The payment of this amount shall be made at the same time as the payment to other Company employees of the incentive award is made for the fiscal year in which the Employee's employment is terminated. Additionally, for a 12-month period after -3- (a) termination of Employee's employment, the Company shall arrange to provide Employee, if available under the Benefit Plans, or if not, pay to Employee an amount equal to Employer's costs of, life, disability, accident, health insurance, and other "executive" benefits substantially similar to those which Employee was receiving or entitled to receive immediately prior to the termination. (b) If Employee's employment is terminated pursuant to Section 3(a)(i) or 3(b)(ii) or because of Employee's violation of 3(a)(ii), no further compensation shall be paid to Employee after the date of termination (other than base compensation earned up to the date of termination, exclusive of bonus); provided, however, that the rights of Employee under any of the Benefit Plans shall be determined by the terms of the applicable plan. (c) Compensation in the event of Employee's termination pursuant to Section 3(a)(iii) or 3(b)(iv) is addressed in Section 5(b) below. 5. Further Definitions; Change in Control. -------------------------------------- (a) Definitions. For purposes of this Agreement, the following words and ------------ phrases shall have the meaning ascribed to them. (i) "Change in Control" shall mean a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then subject to such reporting requirement; provided that, without limitation, such a Change in Control shall be deemed to have occurred if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities; (B) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals, who at the beginning of such period constitute the Board and any new director added during the period whose election to the Board or nomination for election to the Board by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was approved prior to the beginning of the period, cease for any reason to constitute a majority of the Board; (C) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 66 2/3% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (D) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. For purposes hereof, "Company" includes the ultimate parent of the Company ("Parent"), if applicable. "Good Reason" shall mean the occurrence, following a Change in Control or in anticipation of a Change of Control, without Employee's express written consent, of any of the following circumstances unless, in the case of subsections (1), (5), (6), (7), or (8) of this Section -4- (ii) 5(a)(ii), such circumstances are fully corrected prior to the date of termination specified in the notice given in respect thereof: (1) the assignment to Employee of any duties materially inconsistent with his status as _________________, his removal from the position of ________________, or a diminution in the nature or status of Employee's responsibilities; (2) a proposed reduction by the Company in Employee's annual base salary; (3) the relocation of the executive office in which Employee is located to a location more than fifteen miles therefrom except for required travel on the business of the Company and its subsidiaries to an extent substantially consistent with Employee's present business travel obligations; (4) the failure by the Company to pay to Employee any portion of an installment of deferred compensation under any deferred compensation program of the Company within seven (7) days of the date such compensation is due; (5) the failure by the Company to continue in effect any compensation plan in which Employee participates, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made in such plan, or the failure by the Company to continue Employee's participation therein on the same basis, both in terms of the amount of compensation provided and the level of Employee's participation relative to other participants; (6) the failure by the Company to continue to provide Employee with benefits at least as favorable as those enjoyed by Employee under any of the Benefit Plans in which Employee was participating, or the taking of any action by the Company or any of its subsidiaries which would directly or indirectly materially reduce any of the benefits provided by any of the Benefit Plans or deprive Employee of any material fringe benefit enjoyed by him; (7) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 7 hereof; or (8) any purported termination of Employee's employment that is not effected pursuant to a proper notice of termination satisfying the requirements of this Agreement; for purposes of this Agreement, no such purported termination shall be effective. A Change in Control of the Company shall not, by itself, constitute Good Reason. (iii) "Potential Change in Control of the Company" shall mean the occurrence of one or more of the following events: (A) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (B) any person publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; or (C) the Board adopts a resolution to the effect that, for purposes of this Agreement, a potential Change in Control of the Company has occurred. "Severance Payment" shall mean an amount equal to 2.0 times the sum of (A) Employee's annual base salary in effect at the time notification of termination is provided plus (B) -5- (iv) the greater of (x) 200% of the "target" incentive Award that could have been earned by Employee under the Senior Executive Incentive Compensation Plan (or its successor bonus plan/program) for the fiscal year in which Employee's employment is terminated (or such comparable amount in the event of a different bonus plan) or (y) Employee's average annual bonus and incentive compensation for the three complete fiscal years of the Company immediately preceding the date of termination. (b) Payments. --------- (i) Upon the termination of his employment (A) by Employer following a Change in Control or in anticipation of a Change of Control as described in Section 3(b)(iv), or (B) by Employee for Good Reason as described in Section 3(a)(iii), Employee shall be entitled to the following payments and benefits unless such termination is effective more than eighteen (18) months following the occurrence of the Change in Control. (1) The Company shall pay Employee his full base salary, in effect at the time notification of the termination is provided, through the date of termination. The salary payments shall accrue and be payable in accordance with the payroll practices of Employer in effect at the time of termination. All such payments shall be subject to any deductions and withholdings required by applicable law. This payment shall be deemed to be earned as of the last day of the Employee's employment hereunder. (2) The Company shall pay Employee an amount equal to the greater of (A) the incentive award that would have been earned by the Employee under the Senior Executive Incentive Compensation Plan (or its successor bonus plan/program) for the fiscal year in which the Employee's employment is terminated or (B) 200% of the "target" incentive Award that could have been earned by Employee under the Senior Executive Incentive Compensation Plan (or its successor bonus plan/program) for the fiscal year in which Employee's employment is terminated (or such comparable amount in the event of a different bonus plan); multiplied, however, by the percentage equal to the percentage of the fiscal year in which the Employee was actively employed. The payment of this amount shall be made at the same time as the payment of the incentive award is made for the fiscal year in which the Employee's employment is terminated. This payment shall be deemed to be earned as of the last day of the Employee's employment hereunder. (3) The Company shall pay to Employee all amounts to which Employee is entitled under any of the Benefit Plans. Any payments due under a Benefit Plan shall be made at the time the payments are due under the terms of the Benefit Plan. (4) The Company shall pay to Employee the Severance Payment no later than the fifth day following the termination. For a twenty-four (24) month period after termination of Employee's employment, the Company shall arrange to provide Employee with life, disability, accident and health insurance benefits substantially similar to those which Employee was receiving or entitled to receive immediately prior to the termination. Benefits otherwise receivable by Employee pursuant to this Section 5(b)(i)(5) shall be reduced to the extent comparable benefits are actually received by -6- (5) Employee during the twenty-four (24) month period following Employee's termination, and any such benefits actually received by Employee shall be reported to the Company. (c) Mitigation. Employee shall not be required to mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise nor shall the amount of any payment or benefit provided for in this Section 5 be reduced by any compensation earned by Employee as the result of employment by another employer or by retirement benefits received after the date of termination, or otherwise except as specifically provided in this Section 5. 6. Certain Additional Payments by the Company. ------------------------------------------ (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 6) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 6(c), all determinations required to be made under this Section 6, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by such certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within thirty (30) business days of the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 6, shall be paid by the Company to the Employee within thirty (30) days of the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by the Employee, it shall furnish the Employee with a written opinion that failure to report the Excise Tax on the Employee's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 6(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. -7- (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall: (i) Give the Company any information reasonably requested by the Company relating to such claim, (ii) Take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) Cooperate with the Company in good faith in order effectively to contest such claim, and (iv) Permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 6(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 6(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 6(c)) promptly pay to the Company the amount of such refund (together -8- with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 6(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 7. Assignment. ---------- (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Employee to compensation from the Company in the same amount and on the same terms as Employee would be entitled hereunder if Employee had terminated his employment for Good Reason following a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the date of termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. (b) This Agreement shall inure to the benefit of and be enforceable by Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Employee should die while any amount would still be payable to him hereunder if Employee had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Employee's spouse or, if there is no spouse, to Employee's estate. 8. Confidential Information. ------------------------ (a) Non-Disclosure. During Employee's employment or at any time thereafter, irrespective of the time, manner or cause of the termination of this Agreement, Employee will not directly or indirectly, reveal, divulge, disclose or communicate to any person or entity other than authorized officers, directors and employees of Employer, in any manner whatsoever, any Confidential Information (as hereinafter defined) of Employer without the prior written consent of the Company, except in connection with the fulfillment of his duties hereunder. Definition. As used herein, "Confidential Information" means information disclosed to or known by Employee as a direct or indirect consequence of or through his association with Employer and its subsidiaries and affiliates, about Employer or any subsidiary or affiliate of Employer, their businesses, products and practices, including but not limited to trade secrets, know-how, technical information, and financial information, which information is not generally known in the business in which Employer or any subsidiary of Employer is or may become engaged. However, Confidential Information shall not include any information which is (i) available to the public from a source other than Employee, (ii) released in writing by Employer to the public or to -9- (b) persons who are not under a similar obligation of confidentiality to Employer and who are not parties to this Agreement, (iii) obtained by Employee from a third party not under a similar obligation of confidentiality to Employer, or (iv) required to be disclosed by any court process or any government or agency or department of any government. (c) Return of Property. Upon termination of Employee's employment, Employee will surrender to Employer all Confidential Information, including without limitation, all lists, charts, schedules, reports, financial statements, books and records of Employer and all subsidiaries and affiliates of Employer, and all copies thereof, and all other property belonging to Employer and all subsidiaries and affiliates of Employer, provided that Employee shall be accorded reasonable access to such materials subsequent thereto for any proper purpose as determined in the reasonable judgment of Employer. 9. Agreement Not to Solicit Employees. Employee agrees that, for a period of three (3) years following the termination of his employment, neither he nor any affiliate shall, either alone or on behalf of any business engaged in a business competitive with Employer or any subsidiary of Employer, solicit or induce, or in any manner attempt to solicit or induce, any person employed by, an agent of, Employer or any subsidiary of Employer to terminate his or its employment, agency, or business relationship, as the case may be, with the Employer or such subsidiary. 10. Assignment of Inventions. Employee agrees that he will assign to Employer or its appropriate subsidiary all inventions, discoveries and improvements relating to its lines of business, conceived or made by him solely or jointly with others during his employment, and to execute, upon request, whether during his employment or thereafter, any and all applications for patents, assignments and other papers which Employer or its counsel may deem necessary or appropriate for securing to it in all countries, exclusive rights in all such inventions, discoveries and improvements. 11. Noncompetition. During the term of Employee's employment with the -------------- Company and for a one-year period thereafter (unless Employee's employment is terminated pursuant to Section 3(b)(iv)), Employee will not, directly or indirectly, within the Territory described below: (a) engage in, continue in or carry on any business which competes with the business conducted by the Company, including owning or controlling any financial interest in any corporation, partnership, firm or other form of business organization which is so engaged; (b) consult with, advise or assist in any way, whether or not for consideration, any corporation, partnership, firm or other business organization which is a competitor of the Company in any aspect with respect to the business conducted by the Company including, but not limited, to, advertising or otherwise endorsing the products of any such competitor; soliciting customers or otherwise serving as an intermediary for any such competitor; loaning money or rendering any other form of financial assistance to or engaging in any similar form of business transaction with any such competitor; provided, however, the foregoing prohibition does not extend to passive ownership of less than 1% of the outstanding stock of any entity whose stock is traded on an established stock exchange or quoted on NASDAQ. For purposes hereof, "Territory" is defined as any county or similar geographic subdivision in which Company conducts business. The parties intend that this noncompete covenant shall be construed as separate covenants, one for each county and subdivision to which the covenant applies. In the event a court of competent jurisdiction determines that the provisions of this covenant not to -10- compete are excessively broad as to duration, geographic scope or activity, it is expressly agreed that this covenant not to compete shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such over broad provisions shall be deemed, without further action on the part of any person, to be modified, amended and/or limited, but only to the extent necessary to render the same valid and enforceable in such jurisdiction. 12. No Violation. Employee represents and warrants to Employer that the execution, delivery and performance of this Agreement by Employee does not, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate or loss of rights under any provision of any agreement or understanding to which Employee or his affiliates are a party or by which Employee, or to the best knowledge of Employee, Employee's affiliates may be bound or affected. 13. Captions. The captions, headings and arrangements used in this -------- Agreement are for convenience only and do not in any way affect, limit or amplify the provisions hereof. 14. Notices. All notices required or permitted to be given hereunder shall be in writing and shall be deemed delivered when actually received or, if mailed, whether or not actually received, two days after deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the party to whom notice is being given at the specified address or at such other address as such party may designate by notice: Employer: Apogent Technologies Inc. 48 Congress Street Portsmouth, NH 03801 Attention: General Counsel Employee: [NAME] c/o Apogent Technologies Inc. 10 Pleasant Street Portsmouth, NH 03801 15. Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, provided that if any of the limitations set forth in Sections 8, 9, 10, and 11 shall be determined to be unreasonable by any court, the parties agree that the provisions of such Section shall be reduced to such lessor limitations as are determined to be reasonable; the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. 16. Amendments. This Agreement may be amended only by an instrument ---------- in writing duly executed by an officer of Employer expressly authorized by the Board to do so and by Employee. -11- 17. Waiver. No delay or omission by either party hereto to exercise any right or power hereunder shall impair such right or power or be construed as a waiver thereof including without limitation employee's continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. A waiver by either of the parties hereto of any of the covenants to be performed by the other or of any breach thereof shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant herein contained. All remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to either party at law, in equity or otherwise. 18. Counterparts. This Agreement may be executed in multiple ------------ counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same agreement. 19. Governing Law. This Agreement shall be construed and enforced ------------- according to the laws of the State of New Hampshire. 20. Legal Fees. Employer shall pay to Employee all legal fees and ---------- expenses incurred by Employee in contesting or disputing any termination or in seeking to obtain or enforce any right or benefit provided by this Agreement. 21. Final Agreement. This Agreement supercedes any other employment ---------------- agreement that Employee may have with the Company or any affiliate thereof. ***** -12- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. APOGENT TECHNOLOGIES INC. By: ___________________________ Name: Frank H. Jellinek, Jr. ---------------------- Title: President and CEO ----------------- EMPLOYEE: By: __________________________ -13- EX-10.3 5 dex103.txt EXECUTIVE OFFICERS WITH EMPLOYMENT AGREEMENTS Exhibit 10.3 EXECUTIVE OFFICERS WITH EMPLOYMENT AGREEMENTS DATED DECEMBER 7, 2001. Michael K. Bresson Jeffrey C. Leathe Gary J. Marmontello Verner B. Andersen Peter Scheu -----END PRIVACY-ENHANCED MESSAGE-----