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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-14991
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LIFE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 34-0431300
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9800 Medical Center Drive, Rockville, MD 20850
(Address of principal executive offices) (Zip Code)
_________
Registrant's telephone number, including area code: (301) 610-8000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
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(Title of each class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No_____
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 10, 2000 was $322,504,208.
The number of shares of Common Stock outstanding as of March 10, 2000 was
25,017,451.
Documents Incorporated By Reference
Portions of the registrant's definitive Proxy Statement for its Annual Meeting
of Stockholders to be held on May 2, 2000 are incorporated by reference in Part
III of this Report.
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As used herein, the terms "LTI" and the "Company" shall mean Life Technologies,
Inc. and its subsidiaries unless the context otherwise indicates and the term
"Proxy Statement" shall mean the definitive Proxy Statement for the Company's
Annual Meeting of Stockholders to be held on May 2, 2000.
PART I
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Item 1. Business
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General
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LTI, originally incorporated in Ohio in 1915 and reincorporated in Delaware in
1986, develops, manufactures and supplies more than 10,000 products, including
customs and specials, used in life sciences research and commercial manufacture
of genetically engineered products. The Company's products include sera, other
cell growth media, biochemicals and enzymes and other biological products
necessary for recombinant DNA procedures. These and related products and
services provided by the Company are used in cellular biochemistry and molecular
biology research and in the production of genetically engineered pharmaceuticals
such as interferons, interleukins and tissue plasminogen activator ("t-PA").
The Company's products are sold to more than 20,000 customers consisting of
laboratories generally associated with universities, medical research centers,
and government institutions as well as biotechnology, pharmaceutical, energy,
agricultural and chemical companies. The Company sells its products principally
through its own direct sales organization which is supplemented by a network of
distributors.
The Company's activities are focused on the following areas:
. Products for Life Sciences Research
Cell Culture Products - The Company is a leading supplier of sera and other
cell and tissue culture media used by life sciences researchers to grow
cells under laboratory conditions.
Cell and Molecular Biology Products - The Company is a leading supplier of
enzymes, nucleic acids, custom primers, reagent systems, biochemicals and
other products used by life sciences researchers to identify, isolate and
manipulate the metabolic processes and genetic material of living
organisms.
. Products for Commercial Processes Using Genetically Engineered Cells
The Company is a leading supplier of sera, cell culture media and reagents
used for the commercial production of pharmaceuticals and other materials
made by genetically engineered cells. This use of the Company's products
is also referred to as "industrial bioprocessing".
Markets
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The Company serves two principal markets: life sciences research and commercial
manufacture of genetically engineered products.
The life sciences research market consists of laboratories generally associated
with universities, medical research centers, government institutions such as the
National Institutes of Health, and other research institutions as well as
biotechnology, pharmaceutical, energy, agricultural and chemical companies.
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Life sciences researchers require special biochemical research tools capable of
performing precise functions in a given experimental procedure. The Company
serves two principal disciplines of the life sciences research market: cellular
biochemistry and molecular biology.
Cellular biochemistry involves the study of the genetic functioning and
biochemical composition of cells as well as their proliferation,
differentiation, growth and death. The understanding gained from such study has
broad application in the field of developmental biology and is important in the
study of carcinogenesis, virology, immunology, vaccine design and production and
agriculture. To grow the cells required for research, researchers use cell or
tissue culture media which simulate under laboratory conditions (in vitro) the
environment which surrounds such cells naturally (in vivo) and which facilitate
their growth.
Molecular biology involves the study of the genetic information systems of
living organisms. The genetic material of living organisms consists of long,
double-stranded molecules of DNA (deoxyribonucleic acid). DNA contains the
information required for the production of proteins by means of RNA (ribonucleic
acid), a single-stranded molecule similar in structure to DNA. Proteins have
many different functional properties and include antibodies, certain hormones
and enzymes. Many researchers study the various steps of gene expression from
DNA to RNA to protein products, and the impact of these proteins on cellular
function. Other researchers are interested in manipulating the DNA-RNA system
in order to modify its functioning. Through techniques that are commonly termed
"genetic engineering" or "gene-splicing," a researcher can modify an organism's
naturally occurring DNA to produce a desired protein not usually produced by the
organism, or to produce a naturally produced protein at an increased rate.
The Company also serves industries which apply genetic engineering to the
commercial production of otherwise rare or difficult to obtain substances with
potential for significant utility. For example, in the biotechnology industry,
these substances include interferons, interleukins, t-PA and monoclonal
antibodies. The manufacturers of these materials require larger quantities of
the same sera and other cell growth media that are also purchased in smaller
quantities as research tools. Some of these new substances are manufactured in
full scale production facilities, while others are being manufactured on a pre-
production basis. Other industries involved in the commercial production of
genetically engineered products include the pharmaceutical, food processing and
agricultural industries.
The Company is expanding its activities into related new markets for its
products. These include genetic and identity testing, cell therapy and tissue
engineering involving cell culture media and plant biotechnology applications.
Products and Services
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Information regarding the Company's products and services is contained in the
Financial Note entitled "Segment Reporting and Related Information" on pages F-
24 through F-26 of this 1999 Annual Report on Form 10-K.
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Geographic and Operating Segment Information
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Information regarding geographic and operating segment information is contained
in the Financial Note entitled "Segment Reporting and Related Information" on
pages F-24 through F-26 of this 1999 Annual Report on Form 10-K.
Sales and Marketing
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At December 31, 1999, the Company had 229 employees worldwide who were employed
in direct field sales. The Company's sales efforts are supplemented by use of
catalogs, journal advertisements, and direct mail campaigns. Most of the
Company's products are sold throughout the world by its own sales employees, and
the remaining products are sold through agents or distributors.
Research and Development
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The Company believes that a strong research and product development effort is
important to its future growth. The Company's investment in research and
development was $23.8 million in 1999, $21.9 million in 1998 and $21.3 million
in 1997. R&D expenses in 1999, 1998 and 1997 were primarily directed toward
developing new products and business solutions for the Company's customers in
the life sciences research and industrial bioprocessing areas and toward
improving production processes.
The Company conducts most of its research and development activities at its own
facilities using its own personnel. At December 31, 1999, the Company had 175
employees principally engaged in research and development. The Company's
scientific staff is augmented by advisory and collaborative relationships with a
number of scientists.
The Company's research and development activity is aimed at maintaining a
leadership position in providing research tools to the life sciences research
market and enhancing its market position as a supplier of products used to
manufacture genetically engineered pharmaceuticals and other materials.
Competition
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Only one company is known to compete with the Company in all its major product
lines, but in each product line competition is offered by a number of companies,
including companies substantially larger and with greater financial resources
than LTI. In the Company's view, competitive position in its markets is
determined by product quality, speed of delivery, technical support, price,
breadth of product line, and timely product development. The Company believes
its customers are diverse and place varying degrees of importance on the
competitive attributes listed above. While it is difficult to rank these
attributes for all its customers in the aggregate, the Company believes it is
well positioned to compete in each category.
Patents and Licenses
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The Company has a number of U.S and foreign patents and has numerous pending
patent applications. In addition to its patent portfolio, the Company also owns
other intellectual property, and on a case by case basis, the Company grants
licenses to others to use such intellectual property. The Company does not
believe that license revenue is material to its business as a whole. In
addition, it is the Company's policy to obtain nondisclosure and confidentiality
agreements from all its employees believed to have access to proprietary
information.
The Company has obtained rights to products and technologies under a number of
license agreements with universities and others. In 1999, approximately 23% of
the Company's net sales were related to products which were licensed from
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others or which incorporated technologies licensed from others. The Company
intends to continue its current strategy of seeking licenses to technologies and
products from sources around the world.
Customers
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LTI has no single customer for its products which it deems to be material to its
business as a whole. However, many of the Company's customers receive funding
for their research either directly or indirectly from the federal government in
the United States and from government agencies in various countries throughout
the world.
Suppliers
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The Company buys materials for its products from many suppliers, including
certain affiliated joint ventures, and is not dependent on any one supplier or
group of suppliers. Raw materials, other than raw fetal bovine serum ("FBS"),
are generally readily available at competitive prices from a number of
suppliers. Although there is a well-established market for FBS, one of the
Company's major products, its price has been unstable at times in the past, and
its supply could be limited because the availability of slaughtered cattle tends
to be cyclical. The Company acquires raw FBS products from various suppliers,
including affiliated joint ventures. Some of these suppliers provide a major
portion of the FBS available from a specific geographic region, although no
single supplier provides a majority of the total FBS available to the Company.
The Company believes it maintains a quantity of FBS inventory adequate to insure
reasonable customer service levels while guarding against normal volatility in
the supply of FBS available to the Company. FBS inventory quantities can
fluctuate significantly as the Company balances varying customer demand for FBS
against fluctuating supplies of FBS available to the Company. The Company
believes it will be able to continue to acquire FBS in quantities sufficient to
meet its customers' current requirements.
Government Regulation
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Certain of the Company's cell culture products are subject to regulation under
the U.S. Federal Food, Drug and Cosmetic Act with respect to testing, safety,
efficacy, marketing, labeling and other matters. In addition, the Company's
manufacturing facilities for the production of in vitro diagnostic cell culture
products are subject to periodic inspection by the U.S. Food and Drug
Administration ("FDA") and other product-oriented federal agencies and various
state and local authorities in the U.S. Such facilities are believed to be in
compliance in all material respects with the requirements of the FDA's current
Good Manufacturing Practices, other federal, state and local regulations and
other quality standards such as ISO 9000.
The U.S. federal government oversees certain recombinant DNA research activities
through the National Institutes of Health Guidelines for research involving
recombinant DNA molecules (the "NIH Guidelines"). The NIH Guidelines prohibit
or restrict certain recombinant DNA experiments, set forth levels of biological
and physical containment of recombinant DNA molecules to be met for various
types of research and require that institutional biosafety committees approve
certain experiments before they are initiated. The NIH Guidelines now exempt
most of the experiments conducted by the Company. The Company, however,
voluntarily complies with the NIH Guidelines for its molecular and cell biology
experiments. Compliance with the NIH Guidelines has not had, and the Company
does not believe it will have in the future, a material effect on the capital
expenditures, earnings or competitive position of the Company.
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The Company has an Institutional Biosafety Committee, which has been approved
and certified by the NIH Office of Recombinant DNA Activities, to oversee its
laboratory practices concerning biological agents. Through training, practices,
equipment and facilities, LTI follows the NIH Guidelines' hazard classification
system recommendations for handling bacterial and viral agents, with
capabilities through biosafety level three.
In addition to the foregoing, the Company is subject to other federal, state and
local laws and ordinances applicable to its business, including the Occupational
Safety and Health Act, the Clean Water Act, the Toxic Substances Control Act,
the Clean Air Act, various statutes and regulations applicable to the use of
radioactive material, national restrictions on technology transfer, import,
export and customs regulations, statutes and regulations relating to government
contracting, and similar laws and regulations in foreign countries. In
particular, the Company is subject to European regulations regarding importation
of animal-derived products such as FBS.
Employees
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At December 31, 1999, the Company had 1,970 full-time and 55 part-time
employees, 774 of whom were employed outside the United States. No employees
are covered by a collective bargaining agreement. Management believes that its
relations with its employees are good.
Item 2. Properties
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The Company owns or leases property at the following principal locations, each
of which contains manufacturing, storage, laboratory or office facilities:
Rockville, Maryland (Owned)
Frederick, Maryland (Owned and leased)
Glasgow area, principally Inchinnan, Scotland (Owned and leased)
Grand Island, New York (Owned)
Auckland, New Zealand (Owned and leased)
The Company owns or leases certain other properties throughout the world in
addition to the principal properties listed. The terms of the leases for
properties to which the Company is a party range in expiration dates from 2000
to 2010, and some are renewable.
Many of the Company's plants have been constructed, renovated, or expanded one
or more times during the past ten years. The Company is currently using
substantially all of its space with some space available for expansion at some
of its locations. The Company considers the facilities to be in a condition
suitable for their current uses. Because of anticipated growth in the business
and due to the increasing requirements of customers or regulatory agencies, the
Company may need to acquire additional space or upgrade and enhance existing
space during the next five years.
Additional information regarding the Company's properties is contained in Item 7
of this 1999 Annual Report on Form 10-K in the sections entitled "1999 Cash
Flows" and "2000 Cash Flows" as well as in the Financial Notes entitled
"Property, Plant and Equipment" and "Leases" on pages F-10 and F-11 of this 1999
Annual Report on Form 10-K.
Item 3. Legal Proceedings
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In December 1996, the Company filed Civil Action No. AW-96-4080 in the U.S.
District Court for the District of Maryland against Clontech Laoratories, Inc.
alleging infringement of the Company's patents covering H minus reverse
transcriptase. On July 16, 1999, the Court issued a decision that the patents
in issue are unenforceable. Clontech has requested that the Court require the
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Company to pay Clontech's legal fees and expenses relating to this action. The
Court has not yet ruled on this request. The Company believes strongly that the
Court's decision is inconsistent with well established legal precedent and is
pursuing vigorously an appeal to the court of Appeals for the Federal Circuit.
The Company is involved in various other legal proceedings that are incidental
to its business. The Company does not believe that any of these other legal
proceedings could reasonably be expected to have a material adverse effect on
the Company's financial condition or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
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None.
Executive Officers of the Registrant
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The Board of Directors elects all executive officers of the Company. Each
executive officer holds his or her office until the earlier of his or her death,
resignation, removal from office or the election of his or her successor. No
family relationships exist among any of the Company's executive officers,
directors or persons nominated to serve as such. The positions held and period
during which the executive officers have served in those positions are set forth
below:
J. Stark Thompson, Ph.D. (age: 58; years of service: 11) was elected President
and Chief Executive Officer of the Company in August 1988 and became a director
of the Company in September 1988. Prior to joining the Company, he had been
with E.I. DuPont de Nemours & Company ("DuPont") for 21 years.
John V. Cooper (age 48; years of service: 8) was elected Senior Vice President
and General Manager, Americas Research Products Division, effective February 2,
1999. Prior thereto, he held the position of Vice President and General
Manager, Americas Research Products Division, effective April 13, 1993. Prior
thereto, he held several managerial positions with the Company since joining the
Company in 1992. Prior to joining the Company, he had been a Worldwide Business
Manager in Printed Circuit Materials for DuPont.
John A. Cottingham (age: 45; years of service: 4) was elected General Counsel
and Assistant Secretary, effective May 4, 1999. Prior to joining the Company,
he had been an international corporate attorney with the Washington office of
Fulbright and Jaworski L.L.P. for 9 years.
Thomas M. Coutts (age: 55; years of service: 30) was elected Vice President,
Fetal Bovine Serum and Other Blood and Sera, effective January 1, 2000. Prior
thereto, he held the position of Senior Vice President and General Manager,
European Division, effective March 1, 1989. Prior thereto, he had been Vice
President of Life Technologies, Europe.
Daryl J. Faulkner (age: 51; years of service: 1) was elected Senior Vice
President and General Manager, European Division, effective January 1, 2000.
Prior thereto, he had been Vice President, Human Resources, for the Company.
Prior to joining the Company, he had been a Plant Manager for Abbott
Laboratories.
Brian D. Graves (age: 58; years of service: 18) was elected Vice President and
General Manager, U.S. Industrial Bioproducts Division, effective July 1, 1990.
Prior thereto, he had been Vice President of Sales and Marketing, U.S. Research
Products Division, for the Company.
Timothy E. Pierce, Ph.D. (age: 58; years of service: 9) was elected Vice
President and General Manager, Asia Pacific Division, effective September 18,
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1990. Prior to joining the Company he had been a Vice President, region manager
for Technicon Asia-Pacific.
Rosemary J. Versteegen, Ph.D. (age: 51; years of service: 18) was elected Vice
President of the Company on April 16, 1991. Prior thereto, she held several
managerial positions with the Company since joining the Company in 1982.
C. Eric Winzer (age: 43; years of service: 13) was elected Vice President,
Finance and Chief Financial Officer, Secretary and Treasurer effective May 4,
1999. Prior thereto, he was the controller of the Company since 1991 and held
several other managerial positions with the Company since 1986.
Derek E. Woods, Ph.D. (age: 49; years of service: 4) was elected Vice President,
Research and Development on April 15, 1997, and prior thereto had served in that
position as an appointed officer since joining the Company in 1996. Prior to
joining the Company, he worked for Johnson & Johnson in various research and
business development positions.
PART II
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Item 5. Market for the Registrant's Common Equity and Related Stockholder
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Matters
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The Company's Common Stock is quoted on the OTC Bulletin Board under the symbol:
LTEK. Prior to the close of business on February 1, 1999, the Company's Common
Stock was quoted on the Nasdaq National Market under the symbol: LTEK.
Effective with the close of business on February 1, 1999, the Company's Common
Stock was delisted from the Nasdaq Stock Market, because of the Company's
inability to remain in compliance with certain maintenance standards required
for continued listing on the Nasdaq National Market, including the number of
shareholders and public float requirements. The Company fell out of compliance
with certain requirements as a result of the completed tender offer for the
Company's Common Stock by Dexter Corporation. The high and low sales prices for
the Company's Common Stock for each quarter of 1998 and 1999 as reported by The
Nasdaq Stock Market are contained in the Financial Notes entitled "Quarterly
Financial Information" on page F-23 of this 1999 Annual Report on Form 10-K.
The number of stockholders of record of the Company's Common Stock at March 10,
2000 was 310. At March 10, 2000, Dexter Corporation owned approximately 75% of
the outstanding Common Stock of the Company.
On July 21, 1999 the Company's Board of Directors voted to discontinue regular
quarterly dividends on the Company's common stock. The last quarterly dividend
payment was made on July 16, 1999. Prior to discontinuation of dividends, the
Company's Board of Directors had declared regular quarterly cash dividends in
each fiscal quarter since the second quarter of 1991. For the previous three
years, cash dividends declared were: $0.04 per share in the first two quarters
of 1997, and $0.05 per share for the last two quarters of 1997, all four
quarters of 1998, and the first two quarters of 1999.
Item 6. Selected Financial Data
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This information has been derived from, and should be read in conjunction with,
the related consolidated financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations included elsewhere in
this 1999 Annual Report on Form 10-K.
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SELECTED FINANCIAL DATA
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(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C>
FOR THE YEAR
Revenues $ 409,60 $364,206 $332,808 $310,339 $272,299
Research and development
expenses 23,836 21,880 21,281 19,084 15,871
Provision for contract
settlement 3,870 - - - -
Shareholder acquisition expenses - 5,335 - - -
Gain on product line disposal - - - 2,569 -
Operating income 56,441 50,509 50,934 46,101 34,152
Net income 38,277 31,303 32,235 28,700 22,277
Additions to property, plant
and equipment $ 29,170 $ 18,024 $ 23,386 $ 42,151 $ 11,159
Average shares outstanding:
Basic 24,954 23,687 23,171 22,881 22,601
Diluted 25,040 24,204 23,945 23,504 22,929
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AT DECEMBER 31
Cash and cash equivalents $ 51,489 $ 56,047 $ 19,076 $ 15,326 $ 23,201
Working capital 171,760 160,403 100,927 84,196 96,761
Total assets 402,97 353,587 280,274 253,931 208,744
Long-term debt 3,699 - 4,564 4,668 1,451
Stockholders' equity 310,095 276,108 208,724 182,919 153,925
Per share $ 12.4 $ 11.07 $ 8.94 $ 7.97 $ 6.76
Shares outstanding 25,004 24,941 23,351 22,951 22,773
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PER SHARE
Net income:
Basic $ 1.53 $ 1.32 $ 1.39 $ 1.25 $ .99
Diluted 1.50 1.29 1.35 1.22 .97
Cash dividends declared .10 .20 .18 .15 1/3 .13 1/3
Market price:
High 43 40 35 7/8 26 1/2 18 1/3
Low 34 29 3/8 24 1/4 15 1/3 11 2/3
Close 42 5/8 38 7/8 33 1/4 25 18 1/6
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</TABLE>
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Statements in this Annual Report on Form 10-K concerning the Company's business
outlook or future economic performance; anticipated profitability, revenues,
expenses or other financial items, together with other statements that are not
historical facts, are "forward-looking statements" as that term is defined under
the Federal Securities Laws. Forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results to differ
materially from those stated in such statements. Such risks, uncertainties and
factors include, but are not limited to, changes in government funding for life
sciences research, changes in pricing or availability of fetal bovine serum,
changes in currency exchange rates, changes and delays in new product
introduction, customer acceptance of new products, changes in government
regulations, the possibility of adverse rulings by, or adverse developments in
negotiations with, the government, litigation risks, changes in pricing or other
actions by competitors and general economic conditions, as well as other risks
detailed in the Company's filings with the Securities and Exchange Commission,
including this 1999 Annual Report on Form 10-K. See in particular the sections
entitled "Business Outlook" and "2000 Cash Flows". The Company does not
undertake any obligations to release publicly any revisions to such forward-
looking statements to reflect events or uncertainties after the date hereof or
to reflect the occurrence of unanticipated events.
The information in this Item 7 should be read in conjunction with the related
consolidated financial statements and notes thereto contained elsewhere in this
1999 Annual Report on Form 10-K.
GENERAL
The Company develops, manufactures, and sells cell culture and cell and
molecular biology products, services and technologies. Many of the Company's
products are sold under the GIBCO BRL brand name. Cell culture products and
services are used to grow cells under laboratory conditions and for the
commercial manufacture of pharmaceuticals and other life sciences products. Cell
culture products include cell and tissue culture media, reagents, fetal bovine
("FBS") and other animal sera, growth and attachment factors, and plasticware.
Cell and molecular biology products, services and technologies are used to
identify, isolate, and manipulate the metabolic processes and genetic material
of living organisms. Cell and molecular biology products include enzymes,
nucleic acids, lipids, competent cells, custom oligonucleotides, and related
products. In May 1999, the Company acquired a process chromatography and
research products business.
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RESULTS OF OPERATIONS
Revenues
Revenues for the Company's operating segments in 1999, 1998 and 1997 compare as
follows:
<TABLE>
<CAPTION>
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(amounts in thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Americas Research $139,619 $129,428 $118,095
U.S. Bioindustrial 84,289 71,634 61,335
Europe 128,987 116,996 105,682
Asia Pacific 54,304 43,915 45,756
Other 2,410 2,233 1,940
- --------------------------------------------------------------------------------
Consolidated revenues $409,609 $364,206 $332,808
================================================================================
</TABLE>
Revenues for 1999 were $409.6 million, an increase of $45.4 million, or 12%,
over 1998 revenues. The effect of changes in currency exchange rates reduced
1999 revenues by $1.8 million, or 0.5%, when compared with 1998 revenues.
Revenues for the Americas Research segment increased approximately 8% when
comparing 1999 with 1998. The effect of changes in currency exchange rates
reduced 1999 revenues for the Americas Research segment by $1.4 million, or 1%,
when compared with 1998 revenues. Sales of custom oligonucleotides for the
Americas Research segment increased approximately 20% in 1999 compared with 1998
and contributed approximately 2% of the 8% increase in segment revenues.
Revenues for the U.S. Bioindustrial segment increased approximately 18% when
comparing 1999 with 1998. Sales of custom oligonucleotides for the U.S.
Bioindustrial segment increased approximately 55% in 1999 compared with 1998.
Revenues for the European segment increased approximately 10% in 1999 compared
with 1998. The effect of changes in currency exchange rates reduced 1999
revenues for the European segment by $4.7 million, or 4%, when compared with
1998 revenues. Sales of an acquired process chromatography and research
products business were $4.3 million, or 4% of the 10% increase in segment
revenues. Revenues for the Asia Pacific segment increased approximately 24%
when comparing 1999 with 1998. The effect of changes in currency exchange rates
increased 1999 revenues for the Asia Pacific segment by $4.3 million, or 10%,
when compared with 1998 revenues. Sales of cell and molecular biology products
increased 14% on a currency comparable basis in the Asia Pacific segment when
comparing 1999 revenues with 1998 and included a 21% increase in custom
oligonucleotide sales.
Revenues for 1998 were $364.2 million, an increase of $31.4 million, or 9%, over
1997 revenues. The effect of changes in currency exchange rates reduced 1998
revenues by $6.4 million, or 2%, when compared with 1997 revenues. Revenues for
the Americas Research segment increased approximately 10% when comparing 1998
with 1997. The effect of changes in currency exchange rates reduced 1998
revenues for the Americas Research segment by $0.9 million, or 1%, when compared
with 1997 revenues. Revenues in Latin America increased significantly in 1998
when compared with 1997. This increase was directly related to the
establishment of a Company subsidiary in Brazil in late 1997. Sales of custom
oligonucleotides for the Americas Research segment increased approximately 29%
in 1998 compared with 1997 and contributed approximately 2% of the 10% increase
in segment revenues. Revenues for the U.S. Bioindustrial segment increased
approximately 17% when comparing 1998 with 1997. Sales of enzymes increased
approximately 70%, reflecting a significant increase in enzyme sales to
customers for use in commercial diagnostic applications. Sales of custom
oligonucleotides for the U.S. Bioindustrial segment increased approximately 47%
in 1998 compared with 1997. Revenues for the European segment increased
approximately 11% in 1998 compared with 1997. The effect of changes in currency
exchange rates reduced 1998 revenues for the European segment by $1.1 million,
or 1%, when compared with 1997 revenues. Sales of cell and molecular biology
products increased 13% on a currency comparable
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basis and included a 33% increase in custom oligonucleotide sales. Revenues for
the Asia Pacific segment decreased approximately 4% when comparing 1998 with
1997. The effect of changes in currency exchange rates reduced 1998 revenues for
the Asia Pacific segment by $4.3 million, or 9%, when compared with 1997
revenues. Sales of cell and molecular biology products increased 11% on a
currency comparable basis in the Asia Pacific segment when comparing 1998
revenues with 1997.
Royalty income was $2.4 million, $2.5 million and $1.8 million in 1999, 1998,
and 1997, respectively. Royalty income relates principally to the Company's
patented technology to improve the accuracy of amplification based assays. The
Company generally grants a license to this technology for an up-front fee and
future royalties on sales of products which incorporate the licensed technology.
Cost of Sales - Gross Margin
Gross margins were 54.2% of net sales in 1999 compared with 53.6% of net sales
in 1998. FBS gross margins decreased slightly in 1999 when compared with 1998,
as unit costs increased at a greater rate than unit selling prices. The Company
reduced its LIFO reserves in the amount of $0.2 million during 1999 to reflect
lower unit costs for non-FBS products, offset by increased unit costs for FBS.
Gross margins were negatively impacted by unfavorable currency effects when
comparing 1999 with 1998. Gross margins benefited from volume increases and a
favorable change in mix.
Gross margins were 53.6% of net sales in 1998 compared with 53.9% of net sales
in 1997. FBS gross margins improved slightly in 1998 when compared with 1997,
as unit costs decreased at a greater rate than unit selling prices. The Company
reduced its LIFO reserves in the amount of $0.2 million during 1998, largely as
a result of lower unit costs for FBS. Gross margins benefited from production
efficiencies when comparing 1998 with 1997 but were negatively affected by
unfavorable currency comparisons.
Marketing and Administrative Expenses
Marketing and administrative expenses were 34.1% of net sales in 1999, 32.8% of
net sales in 1998 and 32.6% of net sales in 1997. The increase in marketing and
administrative expenses in 1999, expressed as a percentage of sales, is
principally attributable to expenses associated with preparing a report in
connection with a voluntary disclosure of the Company's compliance with a
government contract (see Provision for Contract Settlement below) and increased
spending to acquire and protect intellectual property rights, including costs to
litigate a patent infringement issue related to the Company's H minus reverse
transcriptase patents. Marketing and administrative expenses as a percentage of
sales also increased as the Company increased its spending to commercialize new
technologies, including the Company's new GATEWAY cloning technology, and
increased its spending to develop new information technology capabilities and to
prepare for the Year 2000 computer issue.
11
<PAGE>
Research and Development ("R&D") Expenses
Research and development expenses were $23.8 million in 1999, $21.9 million in
1998, and $21.3 million in 1997. R&D expenses in 1999, 1998, and 1997 were
directed primarily toward developing new products and business solutions for the
Company's customers in the life sciences research and industrial bioprocessing
areas and toward improving production processes.
Research and development expenses represented 5.9%, 6.0%, and 6.4% of net sales
in 1999, 1998, and 1997, respectively.
Provision for Contract Settlement
The Company's 1999 results included a pretax charge of $3.9 million,
representing a refund the Company has offered to the Department of Veterans
Affairs (VA) related to the Company's federal supply schedule contract with the
VA. The government is currently considering the Company's offer and there can
be no assurance that the government will agree with the Company's assessment of
the matter or accept the Company's offered refund amount.
Shareholder Acquisition Expenses
The Company reported $5.3 million in expenses in 1998 related to the acquisition
of additional shares of the Company by Dexter Corporation ("Dexter"). Dexter
announced on July 7, 1998 its intention to acquire, for $37 per share in cash,
the shares of the Company it did not already own. Shortly thereafter, the Board
of Directors of the Company appointed a special committee of the board,
consisting of independent directors, to evaluate Dexter's proposal. The special
committee engaged legal and investment banking advisors to support their
evaluation. On November 2, 1998, Dexter commenced a tender offer to acquire the
shares of the Company it did not already own which ultimately resulted in their
acquisition of an additional 22% of the Company in late December, 1998.
Approximately $4.0 million of the shareholder acquisition expenses reported in
1998 was for investment banking services in support of the special committee's
evaluation. The remaining shareholder acquisition expenses were primarily legal
expenses associated with the transaction.
Operating Income
Operating income for 1999 was $56.4 million, an increase of 12% compared with
1998. Excluding the $5.3 million in expenses related to the acquisition of
additional shares by Dexter Corporation in 1998 and excluding the $3.9 million
related to the provision for a contract settlement in 1999, operating income
increased 8% in 1999 when compared with 1998.
Operating income for 1998 was $50.5 million, a decrease of 1% compared with
1997. Excluding the $5.3 million in expenses related to the acquisition of
additional shares by Dexter, operating income increased 10% in 1998 when
compared with 1997.
12
<PAGE>
Other Income, Net
Investment income was $1.5 million in 1999, $0.7 million in 1998, and $0.5
million in 1997. Interest income varied from 1997 to 1999 based on changes in
available cash and prevailing interest rates. Other income, net in 1999
included $1.0 million of currency losses. Interest expense included in other
income, net was less than $0.1 million in 1999, 1998, and 1997.
Income Taxes
Income taxes were 30.9% of income before taxes in 1999 compared with 37.5% and
36.0% of income before taxes in 1998 and 1997, respectively. Income tax expense
in 1999 was reduced by a benefit of $2.3 million related to a settlement of a US
tax examination of the years 1987-1997. The benefit includes a refund of income
tax, estimated interest due the Company (net of tax) and an adjustment of
applicable tax reserves. Excluding the benefit related to the tax examination
settlement, the 1999 tax rate would have been 35.0%. In 1998 income tax expense
included the effect of non-deductible expenses related to the Dexter tender
offer. Excluding the non-deductible expenses related to the Dexter tender
offer, the 1998 tax rate would have been 34.5%.
Minority Interests
Income attributed to minority interest investors was $1.1 million in 1999, $0.6
million in 1998, and $0.6 million in 1997. The increase in 1999 is attributable
to increased net income at the Company's Japanese subsidiary.
Net Income
Net income was $38.3 million in 1999, $31.3 million in 1998, and $32.2 million
in 1997. Excluding shareholder acquisition expenses and the related income tax
effect from 1998 results, net income has increased 5%, 13%, and 19% in 1999,
1998, and 1997, respectively.
Earning Per Share
Diluted earnings per share were $1.53 in 1999, a 19% increase compared with
diluted earnings per share of $1.29 in 1998. Excluding approximately $5.3
million of pre-tax expenses related to the acquisition of additional shares of
the Company by Dexter in 1998, 1999 diluted earnings per share increased 2%.
Diluted earnings per share were $1.29 in 1998, a 4% decrease compared with
diluted earnings per share of $1.35 in 1997. Excluding approximately $5.3
million of expenses related to the acquisition of additional shares of the
Company by Dexter, 1998 diluted earnings per share were $1.50, an increase of
11% over the previous year.
Business Outlook
The Company expects to concentrate on its core cell culture and cell and
molecular biology product lines and related service and technology offerings in
2000. Future trends in the Company's markets may be affected by government
funding for life sciences research, the number of new products developed and
introduced by the Company, its competitors and its customers, and changes in
technology and scientific discoveries.
Changes in currency exchange rates, general economic conditions, the supply and
price of FBS, the availability of well-trained employees throughout the world,
the resolution of intellectual property litigation between the Company and
13
<PAGE>
Clontech Laboratories, Inc., and the resolution of the Company's voluntary
disclosure on September 29, 1999, to the Department of Veterans Affairs are
factors that could have a significant effect on the Company in 2000. A
strengthening of the U.S. dollar and Pound Sterling against other currencies
could have a negative effect on the Company's operating results.
Volatility in the FBS market could significantly affect the Company's operating
results. The market volatility of FBS and the increasing demand for alternative
media provide strong incentive to develop products and technologies which are
not dependent on animal sera raw materials. To date, serum-free media has only
been developed for specific, relatively narrow purposes. If a more broadly
applicable alternative to animal derived products were developed, it could have
a significant effect on the Company's operating results, which could be positive
or negative, depending on what rights were held by the Company in the
alternative products.
Heightened worldwide safety and environmental concerns are likely to lead to
increased regulation in these areas. The Company is committed to promoting the
safety and health of its employees and the environment and will remain pro-
active in complying with federal, state and local regulations.
Impact of the Year 2000
To date, the Company has experienced no significant adverse effects related to
the Year 2000 computer issue. All important internal information technology
systems made a seamless transition into the Year 2000 and there were no notable
problems with equipment or systems which may have been effected by faulty
embedded chips or other Year 2000 problems. The Company is not aware of any
significant Year 2000 problems affecting any of its customers nor has the
Company noted any disruption in its supply chain related to Year 2000 issues.
The Company implemented a comprehensive project plan to identify internal and
external information technology and non-information technology systems which
required modification or upgrade to be made Year 2000 compliant. An inventory
and assessment of these systems was completed by the end of the second quarter
of 1999. Remediation and testing of non-compliant Year 2000 systems was
completed during the fourth quarter of 1999. As part of this project, the
Company developed and tested contingency plans which identified workarounds in
the event of a malfunction of a system designated as a priority system at the
inventory stage. In addition, the Company identified suppliers of key goods and
services to all business areas, requested information about their Year 2000
readiness, and audited certain key suppliers for Year 2000 readiness.
The Company has spent approximately $1.5 million as of December 31, 1999 to
become Year 2000 compliant, principally for capital expenditures. These
expenditures were for external costs and did not include costs of Company
employees who implemented the comprehensive project plan described above. The
Company believes that any additional resources needed to address Year 2000
issues will not be material. However, there can be no assurance that currently
unidentified Year 2000 issues, if any, will not arise, especially in areas
outside the Company; that these issues will not have a material adverse effect
on the Company; or, that additional resources needed to address these issues
will not be material.
14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
1999 Cash Flows
The Company generated $42.2 million in cash from operations during 1999. Net
income after adjustments for depreciation and amortization was the principal
source of cash from operations in 1999. The components of working capital
increased at a rate generally commensurate with the increase in net sales and,
in the aggregate, required $15.4 million in cash during 1999.
The Company paid $30.7 million in cash for capital expenditures in 1999. Capital
spending in 1999 included $10.8 million to expand its Frederick, Maryland
operations facility and relocate its fermentation production capability to the
Frederick site. The Company also spent $3.0 million for sera production
upgrades in New Zealand, $2.6 million to expand the Company's Scotland
distribution warehouse, and $1.3 million for aseptic process modifications at
its Grand Island, New York facility. The balance of 1999 capital spending was
principally for new and replacement machinery and equipment and management
information systems related to the Company's ongoing business operations. The
Company paid $12.7 million for acquisitions in 1999. Acquisitions included $11.6
million, net of cash acquired, for a process chromatography and research
products business and $1.1 in deferred purchase payments related to the 1996
acquisition of Custom Primers, Inc., a California-based producer of
oligonucleotides.
Financing activities used $2.0 million in cash during 1999. The Company received
$3.3 million in cash during 1999 related to the exercise of stock options. The
Company used $3.7 million for its quarterly cash dividends and $1.6 million to
reduce debt in 1999. The Board of Directors of the Company voted at its July
21, 1999 meeting to discontinue regular quarterly dividends on the Company's
common stock.
2000 Cash Flows
Capital expenditures in 2000 are expected to range from $30-35 million. The
Company is contemplating facility upgrades and expansions of $15-20 million with
the balance of expected 2000 capital expenditures for new and replacement
machinery, equipment and management information systems.
The Company is actively evaluating licensing possibilities, as well as
acquisition candidates which complement the Company's core cell and molecular
biology and cell culture product lines. The Company may fund these transactions
using cash from operations, debt, equity, or other sources.
The Company currently has an unused short-term revolving credit facility with
Dexter Corporation, an affiliate of the Company, in the amount of $8.0 million.
The Company believes it will be able to generate sufficient cash from its
operations and its existing credit facility to meet all its anticipated cash
requirements in 2000, apart from any significant business acquisition which may
occur and which may be financed using cash from operations, debt, equity, or
other sources.
15
<PAGE>
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- -------- ----------------------------------------------------------
The Company is exposed to market risk related to changes in foreign currency
exchange rates, commodity prices, and interest rates, and selectively uses
financial instruments to manage these risks. The Company does not enter into
financial instruments for speculation or trading purposes. A discussion of the
Company's accounting policies for derivative financial instruments is included
in the financial note entitled "Currency Effects" on page F-19 of this 1999
Annual Report on Form 10-K.
The Company enters into forward foreign currency contracts to mitigate the risks
of doing business in foreign currencies. The Company hedges currency exposures
of firm commitments and specific assets and liabilities denominated in non-
functional currencies to protect against the possibility of diminished cash flow
and adverse impact on earnings. The Company's currency exposures vary, but are
primarily concentrated in the Euro, British Pound Sterling, and Japanese Yen.
The Company's exposure to commodity price changes relates to certain
manufacturing operations that utilize certain commodities as raw materials. The
Company manages its exposure to changes in those prices primarily through its
procurement and sales practices. At December 31, 1999, the Company had no
financial instruments outstanding as hedges of commodity price risk.
These financial exposures are monitored and managed by the Company as an
integral part of the Company's overall risk management program, which recognizes
the unpredictability of financial markets and seeks to reduce the potentially
adverse effect on the Company's results.
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
The Financial Statements and Supplementary Data appear on pages F-1 through F-26
of this 1999 Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosure
--------------------
None
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
Information regarding directors of the Company and compliance by the directors
and officers of the Company with certain reporting requirements pursuant to
Section 16(a) of the Securities Exchange Act of 1934 is contained under the
caption "Section 16(a) Benefical Ownership Reporting Compliance" in the
Company's Proxy Statement, which is incorporated herein by reference.
Information regarding executive officers of the Company is included in Part I
hereof, under the caption "Executive Officers of the Registrant."
Item 11. Executive Compensation
- -------- ----------------------
The information required by this item is contained under the captions "Executive
Compensation", "Compensation Committee Interlocks and Insider Participation" and
"Compensation of Directors" in the Company's Proxy Statement, which is
incorporated herein by reference.
16
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
The information required by this item is contained under the caption "Beneficial
Ownership of Common Stock" in the Company's Proxy Statement, which is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
The information required by this item is contained under the caption "Certain
Relationships and Related Transactions", in the Company's Proxy Statement, which
is incorporated herein by reference.
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- -------- ----------------------------------------------------------------
(a) (1) Financial Statements:
a. Report of Independent Accountants
b. Consolidated Statement of Income for the
years ended December 31, 1999, 1998, and 1997
c. Consolidated Statement of Comprehensive Income
for the years ended December 31, 1999, 1998, and 1997
d. Consolidated Balance Sheet as of December 31,
1999 and 1998
e. Consolidated Statement of Cash Flows for the
years ended December 31, 1999, 1998, and 1997
f. Consolidated Statement of Changes in
Stockholders' Equity for the years ended
December 31, 1999, 1998, and 1997
g. Notes to Consolidated Financial Statements
(a) (2) Financial Statement Schedules:
None.
All schedules have been omitted because they are not required, not
applicable, or the information required to be set forth therein is
included in the Company's consolidated financial statements.
(a) (3) Exhibits:
Exhibit numbers 10(A),(B),(C),(D),(E),(F),(G),(H),(I),(J),(K),(L) (M),
(N), (O), and (P) are management contracts, compensatory plans,
contracts or arrangements.
3(A) Certificate of Incorporation of the Registrant, including
Amendment to Certificate of Incorporation dated April 17, 1987
and Amendment to Certificate of Incorporation dated April 14,
1998, previously filed as Exhibit 3(A) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998, SEC file no. 0-14991, which is incorporated herein by
reference.
3(B) By-laws of the Registrant, as amended and restated.
17
<PAGE>
10(A) 1984 Stock Option Plan, previously filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8, No. 33-21807,
dated May 12, 1988, which is incorporated herein by reference.
10(B) Executive Supplemental Retirement Plan as amended on October
20, 1999.
10(C) Executive Deferred Compensation Benefit Plan, previously filed
as Exhibit 10.8 to the Registrant's Registration Statement on
Form S-1, No. 33-7993, dated October 1, 1986, which is
incorporated herein by reference.
10(D) Change-in-Control Agreement dated February 13, 1997, between
the Registrant and Dr. J. Stark Thompson regarding certain
severance benefits in the event of termination of employment
following a change of control, as defined in the agreement,
previously filed as Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997, SEC
file no. 0-14991, which is incorporated herein by reference.
10(E) Change-in-Control Agreement dated March 9, 2000, between the
Registrant and Derek E. Woods, Ph.D.. regarding certain
severance benefits in the event of termination of employment
following a change of control, as defined in the agreement.
10(F) Change-in-Control Agreement dated February 13, 1997, between
the Registrant and Thomas M. Coutts regarding certain severance
benefits in the event of termination of employment following a
change of control, as defined in the agreement, previously
filed as Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997, SEC file no. 0-
14991, which is incorporated herein by reference.
10(G) Change-in-Control Agreement dated March 9, 2000 between the
Registrant and John V. Cooper regarding certain severance
benefits in the event of termination of employment following a
change of control, as defined in the agreement.
18
<PAGE>
10(H) Change-in-Control Agreement dated February 13, 1997, between
the Registrant and Brian D. Graves regarding certain severance
benefits in the event of termination of employment following a
change of control, as defined in the agreement, previously
filed as Exhibit 10(H) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998, SEC file no. 0-
14991, which is incorporated herein by reference.
10(I) Form of Employment Agreement effective February 13, 1997,
between the Registrant and certain executive officers of the
Registrant regarding certain severance benefits in the event of
termination of employment following a change in control, as
defined in the agreement, previously filed as Exhibit 10.6 to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, SEC file no. 0-14991, which is
incorporated herein by reference
10(J) 1991 Stock Option Plan, previously filed as Exhibit 4 to the
Registrant's Registration Statement on Form S-8 No. 33-956,
dated May 9, 1991, which is incorporated herein by reference.
10(K) 1995 Long-term Incentive Plan, previously filed as Exhibit 4 to
the Registrant's Registration Statement on Form S-8 No. 33-
59741, dated June 1, 1995, which is incorporated herein by
reference.
10(L) 1996 Non-Employee Directors' Stock Option Plan, previously
filed as Exhibit 4(b) to the Registrant's Registration
Statement on Form S-8 No. 333-03773, dated May 15, 1996, which
is incorporated herein by reference.
10(M) 1996 Non-Employee Directors' Annual Retainer Stock Plan,
previously filed as Exhibit 4(a) to the Registrant's
Registration Statement on Form S-8 No. 333-03773, dated May 15,
1996, which is incorporated herein by reference.
10(N) 1997 Long-term Incentive Plan, previously filed as Exhibit 4 to
the Registrant's Registration Statement on Form S-8 No. 333-
28607, dated June 6, 1997, which is incorporated herein by
reference.
10(O) Form of Indemnity Agreement between Registrant and Directors,
previously filed as Exhibit 10(O) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998, SEC
file no. 0-14991, which is incorporated herein by reference.
10(P) Form of Indemnity Agreement between Registrant and Executive
Officers, previously filed as Exhibit 10(P) to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1998, SEC file no. 0-14991, which is incorporated herein by
reference.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
27 Financial Data Schedule.
Exhibits other than those incorporated herein by reference have been
included in copies of this Form 10-K filed with the Securities
19
<PAGE>
and Exchange Commission. The Registrant agrees that it will furnish,
without charge, a copy of any such exhibits to each stockholder of the
Registrant upon the written request therefore to the Registrant.
(b) Reports on Form 8-K.
None.
(c) Exhibits
See (a) (3) above.
(d) Financial Statement Schedules
See (a) (2) above.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: March 15, 2000 LIFE TECHNOLOGIES, INC.
(Registrant)
By /s/ C. Eric Winzer
---------------------------------------
C. Eric Winzer
Vice President-Finance and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated.
/s/ Thomas H. Adams, Ph.D.
- -----------------------------------------------------------------------
Thomas H. Adams, Ph.D. Joseph C. Stokes Jr.
Director Director
/s/ Bruce H. Beatt /s/ J. Stark Thompson, Ph.D.
- -----------------------------------------------------------------------
Bruce H. Beatt J. Stark Thompson, Ph.D.
Director President and Chief Executive Officer
and Director
(Principal Executive Officer)
/s/ Kathleen Burdett /s/ K. Grahame Walker
- -----------------------------------------------------------------------
Kathleen Burdett K. Grahame Walker
Director Chairman of the Board of Directors
/s/ R. Barry Gettins, Ph.D. /s/ George M. Whitesides
- -----------------------------------------------------------------------
R. Barry Gettins, Ph.D. George M. Whitesides
Director Director
/s/ Peter G. Kelly /s/ C. Eric Winzer
- -----------------------------------------------------------------------
Peter G. Kelly C. Eric Winzer
Director Vice President-Finance and
Chief Financial Officer
(Principal Financial Officer and
Acting Principal Accounting Officer)
21
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Index to Consolidated Financial Statements F-1
Report of Independent Accountants F-2
Consolidated Statement of Income for the
years ended December 31, 1999, 1998, and 1997 F-3
Consolidated Statement of Comprehensive Income
for the years ended December 31, 1999, 1998, and 1997 F-3
Consolidated Balance Sheet as of December 31,
1999 and 1998 F-4
Consolidated Statement of Cash Flows for the
years ended December 31, 1999, 1998, and 1997 F-5
Consolidated Statement of Changes in
Stockholders' Equity for the years ended
December 31, 1999, 1998, and 1997 F-6
Notes to Consolidated Financial Statements F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
Life Technologies, Inc.
In our opinion, the accompanying consolidated balance sheets and related
consolidated statements of income, comprehensive income, changes in
stockholders' equity and cash flows present fairly, in all material respects,
the consolidated financial position of Life Technologies, Inc. and subsidiaries
at December 31, 1999 and 1998, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
------------------------------
McLean, Virginia
January 24, 2000
F-2
<PAGE>
Life Technologies, Inc.
Consolidated Statement of Income
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the years ended December 31, 1999 1998 1997
=======================================================================================================================
<S> <C> <C> <C>
Revenues:
Net sales $407,199 $361,726 $330,967
Net royalties 2,410 2,480 1,841
- -----------------------------------------------------------------------------------------------------------------------
Total revenues 409,609 364,206 332,808
- -----------------------------------------------------------------------------------------------------------------------
Expenses:
Cost of sales 186,667 167,862 152,547
Marketing and administrative 138,795 118,620 108,046
Research and development 23,836 21,880 21,281
Provision for contract settlement 3,870 - -
Shareholder acquisition expenses - 5,335 -
- -----------------------------------------------------------------------------------------------------------------------
Total operating expenses 353,168 313,697 281,874
- -----------------------------------------------------------------------------------------------------------------------
Operating income 56,441 50,509 50,934
- -----------------------------------------------------------------------------------------------------------------------
Other income, net 493 606 404
- -----------------------------------------------------------------------------------------------------------------------
Income before income taxes 56,934 51,115 51,338
Income taxes 17,583 19,168 18,481
- -----------------------------------------------------------------------------------------------------------------------
Income before minority interests 39,351 31,947 32,857
Minority interests (1,074) (644) (622)
- -----------------------------------------------------------------------------------------------------------------------
Net income $ 38,277 $ 31,303 $ 32,235
========================================================================================================================
Earnings per share:
Basic $ 1.53 $ 1.32 $ 1.39
Diluted $ 1.53 $ 1.29 $ 1.35
Average shares outstanding:
Basic 24,954 23,687 23,171
Diluted 25,040 24,204 23,945
Cash dividends declared per share $ .10 $ .20 $ .18
========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Life Technologies, Inc.
Consolidated Statement of Comprehensive Income
(amounts in thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
For the years ended December 31, 1999 1998 1997
===================================================================================================================
<S> <C> <C> <C>
Net income $38,277 $31,303 $32,235
Other comprehensive income (loss)
Currency translation effects (4,082) 1,292 (8,414)
Minimum pension liability (11) - -
- -------------------------------------------------------------------------------------------------------------------
Comprehensive income $34,184 $32,595 $23,821
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
Life Technologies, Inc.
Consolidated Balance Sheet
(amounts in thousands, except share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
December 31, 1999 1998
============================================================================================================
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 51,489 $ 56,047
Trade accounts receivable, net 79,301 67,797
Inventories:
FIFO 84,172 75,739
LIFO reserve (1,226) (1,420)
- ------------------------------------------------------------------------------------------------------------
Total inventory 82,946 74,319
Prepaid and other current assets 17,384 16,121
Current deferred tax assets 8,491 5,871
- ------------------------------------------------------------------------------------------------------------
Total current assets 239,611 220,155
Property, plant and equipment, net 128,827 107,374
Investments and other assets 22,973 15,392
Excess of cost over net assets of businesses
acquired, net 11,560 10,666
- ------------------------------------------------------------------------------------------------------------
Total assets $402,971 $353,587
============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 848 $ 2,210
Accounts payable 28,364 23,916
Accrued and deferred income taxes 11,145 2,755
Accrued liabilities and expenses 27,494 30,871
- ------------------------------------------------------------------------------------------------------------
Total current liabilities 67,851 59,752
Long-term debt 3,259 -
Pension liabilities 11,471 9,103
Deferred income taxes 6,164 5,173
Minority interests 4,131 3,451
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, one million
shares authorized; none issued
Common stock, $.01 par value, 50 million
shares authorized; issued and outstanding
25,003,681 in 1999 and
24,941,180 in 1998 250 249
Additional paid-in capital 96,362 94,067
Retained earnings 223,986 188,202
Accumulated other comprehensive income (loss) (10,503) (6,410)
- ------------------------------------------------------------------------------------------------------------
Total stockholders' equity 310,095 276,108
- ------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $402,971 $353,587
============================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
Life Technologies, Inc.
Consolidated Statement of Cash Flows
(amounts in thousands)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
For the years ended December 31, 1999 1998 1997
===========================================================================
<S> <C> <C> <C>
CASH INFLOWS (OUTFLOWS)
Operations:
Net income 38,277 $ 31,303 $ 32,235
Non-cash items:
Depreciation 12,645 11,383 10,126
Amortization 3,005 2,947 2,591
Deferred income taxes (6,083) 481 (627)
Minority interests in net income 1,074 644 622
Changes in assets and liabilities
net of acquisitions:
Trade accounts receivable (11,767) (8,769) (7,461)
Inventories (5,695) (5,953) (9,035)
Prepaid and other current assets (1,327) (4,745) (1,367)
Accounts payable 4,135 2,433 3,286
Accrued income taxes 7,270 2,548 (1,783)
Accrued liabilities and expenses (2,844) 8,143 2,020
Other 3,548 1,697 1,003
- ---------------------------------------------------------------------------
Cash provided by operating activities 42,238 42,112 31,610
- ---------------------------------------------------------------------------
Investments:
Capital expenditures (30,667) (25,359) (27,300)
Acquisitions and joint ventures (12,682) (1,047) (914)
Other (5) 585 (127)
- ---------------------------------------------------------------------------
Cash used in investing activities (43,354) (25,821) (28,341)
- ---------------------------------------------------------------------------
Financing:
Proceeds from exercise of stock options 3,258 27,051 4,052
Dividends paid (3,740) (4,711) (3,929)
Short-term borrowings, net (1,943) (971) 1,896
Long-term loan repayments 381 (23) (713)
- ---------------------------------------------------------------------------
Cash provided by (used in)
financing activities (2,044) 21,346 1,306
- ---------------------------------------------------------------------------
Effect of exchange rate changes on cash (1,398) (666) (825)
- ---------------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents (4,558) 36,971 3,750
Cash and cash equivalents at beginning
of year 56,047 19,076 15,326
- ---------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 51,489 $ 56,047 $ 19,076
===========================================================================
Supplemental cash flow information:
Cash paid during the year:
Income tax, net of refunds $ 16,330 $ 16,120 $ 20,081
Interest expense 72 91 70
===========================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
Life Technologies, Inc.
Consolidated Statement of Changes in Stockholders' Equity
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulated
Other
Additional Comprehensive
Common Stock Paid-in Retained Income
Shares Amount Capital Earnings (Loss) Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1996 22,951 $230 $48,344 $133,633 $ 712 $182,919
Net income 32,235 32,235
Dividends-$.18 per share (4,179) (4,179)
Shares issued under
stock option and stock
grant plans 400 4 4,124 4,128
Tax benefit on stock
option plans 2,035 2,035
Currency effects (8,414) (8,414)
- ----------------------------------------------------------------------------------------------------------------------------------
Balances at
December 31, 1997 23,351 234 54,503 161,689 (7,702) $208,724
Net income 31,303 31,303
Dividends-$.20 per share (4,790) (4,790)
Shares issued under
stock option and stock
grant plans 1,590 15 28,585 28,600
Tax benefit on stock
option plans 10,979 10,979
Currency effects 1,292 1,292
- ----------------------------------------------------------------------------------------------------------------------------------
Balances at
December 31, 1998 24,941 249 94,067 188,202 (6,410) $276,108
Net income 38,277 38,277
Dividends-$.10 per share (2,493) (2,493)
Shares issued under
stock option and stock
grant plans 63 1 1,643 1,644
Tax benefit on stock
option plans 652 652
Other comprehensive income:
Minimum pension liability (11) (11)
Currency Effects (4,082) (4,082)
- ----------------------------------------------------------------------------------------------------------------------------------
Balances at
December 31, 1999 25,004 $250 $96,362 $223,986 $(10,503) $310,095
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
F-6
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Basis of Consolidation and Presentation
The consolidated financial statements include the accounts of Life Technologies,
Inc. (the "Company" or "Life Technologies") and its majority owned or controlled
subsidiaries. Intercompany accounts, transactions, and profits have been
eliminated in the consolidated financial statements. Investments in affiliated
companies (20% to 50% Life Technologies' ownership) are recorded in the
consolidated financial statements using the equity method of accounting except
in cases where the Company can effectively exercise control. In these cases,
the accounts of the affiliate are included in the Company's consolidated
financial statements. Certain amounts for prior years have been reclassified to
conform to, and be consistent with, the 1999 presentation.
Management has made estimates and assumptions in the preparation of these
financial statements that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Nature of Operations
Life Technologies is a multinational firm that develops, manufactures, and sells
cell culture and cell and molecular biology products used principally in life
sciences research and commercial manufacture of genetically engineered products.
The Company's principal customers consist of laboratories generally associated
with universities, medical research centers, and government institutions as well
as biotechnology, pharmaceutical, energy, agricultural and chemical companies.
Business Acquisitions
On May 17, 1999, the Company acquired the process chromatography and research
products businesses of BioSepra Inc., in an all cash transaction of $11.6
million, including transaction costs and net of cash acquired. Based upon the
net assets purchased and the net cash paid of $11.6 million, the Company
recorded $2.3 million of goodwill, $2.0 million of deferred tax assets
consisting of net operating loss carryforwards, net of a valuation allowance,
and $2.9 million of other intangibles. The intangibles are being amortized over
a ten year period on a straight-line basis.
In January 1996, the Company paid $7.1 million to purchase 75% of the common
stock of Custom Primers, Inc. ("CPI"), a California-based producer of
oligonucleotides, increasing the Company's ownership to 100%. The Company had
acquired 25% of CPI in several transactions prior to 1996 valued at $0.8
million. Based upon the net assets purchased in January 1996 and the total cash
paid of $7.9 million, the Company recorded $7.4 million of acquisition costs in
excess of net assets acquired in 1996. The January 1996 purchase agreement
provides for additional earn-out contingencies based on the sales of
oligonucleotides over the five year period following the date of the purchase
agreement. For the years 1999, 1998 and 1997, the Company recorded additional
earn-outs of $1.4 million, $1.1 million and $1.0 million, respectively. The
Company is amortizing the goodwill related to CPI on a straight-line basis over
six years.
None of the businesses acquired during the period, individually or in the
aggregate, constitute a significant subsidiary of the Company.
F-7
<PAGE>
Technology Agreements
The Company has obtained rights to products and technologies under a number of
licensing agreements or patents. Where the agreement requires the Company to
pay royalties on sales of licensed products or technologies, the Company
includes the royalty expense in cost of sales in the period of the sale. Where
the Company acquires technologies from outside sources for incorporation into
its own development efforts or products, the cost of the technology is
capitalized and amortized over the legal or expected useful life when the
technology is commercially available at the time acquired by the Company. Where
considerable development effort is required to have acquired technologies become
part of the Company's product lines, the cost of the acquired technologies is
reported as research and development expense in the period the technology is
acquired. Internal efforts to develop or patent technologies are expensed when
incurred.
The Company also licenses technology it has developed to others. The Company
recognizes revenue on these licenses when payment is reasonably certain.
Revenues are reduced by related transaction expenses.
Earnings Per Share
Basic earnings per common share have been computed by dividing net income by the
weighted-average number of common shares outstanding during the period. Diluted
earnings per common share have been computed by dividing net income by the
weighted-average number of common shares outstanding plus an assumed increase in
common shares outstanding for dilutive securities. Net income as reported is
available to common stockholders and is not adjusted for basic or diluted
earnings per share. Dilutive securities consist entirely of options to acquire
common stock for a specified price and their dilutive effect is measured using
the treasury method.
The following table reconciles the weighted-average number of common shares
outstanding during each period for basic earnings per share with the comparable
amount for diluted earnings per share.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
================================================================================
<S> <C> <C> <C>
Weighted average shares outstanding-basic 24,954 23,687 23,171
Stock options 86 517 774
- --------------------------------------------------------------------------------
Weighted average shares outstanding-diluted 25,040 24,204 23,945
================================================================================
</TABLE>
Related Party - Dexter
At December 31, 1999, Dexter Corporation ("Dexter") owned approximately 71.5% of
the outstanding shares of the Company's common stock. Dexter acquired
approximately 22% of the outstanding shares of the Company through a tender
offer consummated on December 22, 1998. On January 20, 2000 Dexter announced a
proposal to acquire for $49.00 per share the 28.5% of Life Technologies that it
did not then own in a merger transaction subject to acceptance by a group of
minority interest stockholders who control most of the shares not owned by
Dexter.
Most transactions with Dexter are administrative in nature (e.g., insurance) and
are not significant in amount. The Company has no significant product sales to
Dexter or its affiliates. The Company's nine member board of directors
currently includes three executives of Dexter, two members of the Dexter board
of directors and a retired Dexter executive.
F-8
<PAGE>
In 1999 the Company engaged Bain & Company ("Bain"), a consulting firm, for a
fee of $750,000 to evaluate the Company's strategic opportunities. Dexter, the
Company's majority shareholder, engaged Bain to evaluate opportunities for
Dexter to increase its participation in the life sciences market. Dexter
received a report from Bain that was based in part on Bain's evaluation of the
Company's strategic opportunities. The Company's transaction with Bain was
funded solely by Company funds, although Dexter separately paid a fee to Bain
for services provided to Dexter.
The Company can borrow up to $8.0 million under a revolving line of credit from
Dexter to finance short-term working capital needs. There have been no amounts
outstanding under this line of credit since prior to 1997.
New Accounting Pronouncements
The Financial Accounting Standards Board has issued, SFAS No. 137, Accounting
for Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133. This statement amends SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities to be effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, requires that
every derivative instrument be recorded in the balance sheet as either an asset
or liability measured at its fair value. The statement requires that changes in
the derivative's fair value be recognized in earnings unless specific hedge
accounting criteria are met. The Company believes that the effect of adoption
of SFAS No. 133 will not have a material effect on the Company's financial
statements.
Cash and Cash Equivalents
Cash equivalents are highly liquid short-term investments readily convertible
into cash. Cash equivalents consist primarily of time deposits and certificates
of deposit with various financial institutions throughout the world. These
investments are carried at cost, which approximates market, and mature within 90
days and, therefore, are subject to minimal risk.
Trade Accounts Receivable
Trade accounts receivable are reduced by allowances of $3.2 million, $2.0
million and $1.6 million at December 31, 1999, 1998, and 1997, respectively.
F-9
<PAGE>
Inventories
Inventories are valued at the lower of cost or market. Inventories valued at
cost using the LIFO method were approximately 28% and 29% of total inventories
at December 31, 1999 and 1998, respectively. Inventories were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(amounts in thousands) 1999 1998
================================================================================
<S> <C> <C>
Materials and supplies $16,519 $12,946
Work-in-process 14,595 11,291
Finished goods 53,058 51,502
- -------------------------------------------------------------------------------
Total FIFO value 84,172 75,739
LIFO reserve (1,226) (1,420)
- -------------------------------------------------------------------------------
Total inventory $82,946 $74,319
===============================================================================
</TABLE>
Inventories were reduced by allowances, other than the LIFO reserve, of $6.1
million, $4.7 million and $3.5 million at December 31, 1999, 1998, and 1997
respectively.
Property, Plant and Equipment
Property, plant and equipment are carried at cost. Depreciation is provided by
the straight-line method for financial reporting purposes based upon the
estimated useful lives of the assets which range from 3 to 50 years. The cost
of assets sold or retired and the related amounts of accumulated depreciation
are eliminated from the accounts and the resulting gain or loss is included in
income. Renewals and betterments are capitalized. Repairs and maintenance are
charged to expense when incurred and were $5.6 million in 1999, $4.7 million in
1998 and $4.5 million in 1997.
Amounts under a capital lease included in property, plant and equipment at
December 31,1999 included $0.4 million of land and $2.9 million for a building.
Accumulated depreciation on the building as of December 31, 1999 was $0.1
million.
Interest expense is capitalized in connection with the construction of major
facilities. Capitalized interest is recorded as part of the cost of the asset
to which it relates and is amortized over the asset's estimated useful life. The
Company capitalized $0.1 million of interest cost in 1999, $0.1 million of
interest cost in 1998 and $0.3 million of interest cost in 1997, all of which
interest related to debt associated with capital leases.
The cost and accumulated depreciation of property, plant and equipment were as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(amounts in thousands) 1999 1998
================================================================================
<S> <C> <C>
Land and land improvements $ 14,148 $ 11,527
Buildings and leasehold improvements 76,656 67,244
Machinery and equipment 84,245 75,979
Construction-in-progress 17,113 4,790
- --------------------------------------------------------------------------------
Total cost 192,162 159,540
Accumulated depreciation (63,335) (52,166)
- --------------------------------------------------------------------------------
Property, plant and equipment, net $128,827 $107,374
================================================================================
</TABLE>
F-10
<PAGE>
Leases
The Company leases buildings, automobiles and equipment under operating lease
arrangements. These leases contain various renewal options, purchase options and
escalation clauses. The total rental expense of all operating leases was $10.1
million in 1999, $8.9 million in 1998, and $6.3 million in 1997.
The future minimum rental payments required under noncancellable leases as of
December 31, 1999 were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
(amounts in thousands) Operating Leases
==========================================================================
<S> <C>
For the years ending
2000 $ 8,066
2001 5,473
2002 3,441
2003 1,478
2004 994
2005 and thereafter 1,630
- --------------------------------------------------------------------------
Total minimum lease payments $21,082
==========================================================================
</TABLE>
Investments and Other Assets
Significant components of investments and other assets were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
(amounts in thousands) 1999 1998
====================================================================================
<S> <C> <C>
Pension and retirement related $ 4,753 $ 6,018
Software, net of amortization 3,953 4,196
Deferred tax assets 9,884 3,571
Patents, net of amortization 2,825 -
Other 1,558 1,607
- ------------------------------------------------------------------------------------
Investments and other assets $22,973 $15,392
====================================================================================
</TABLE>
Excess Acquisition Costs
The excess of costs over the net asset values of businesses acquired prior to
1992 are being amortized on a straight-line basis principally over 30 years. The
excess of costs over net asset values of businesses acquired since 1992 are
being amortized on a straight-line basis over no more than 10 years. The Company
assesses the recoverability of net cost in excess of net assets of acquired
businesses by determining whether the amortization of this intangible asset over
its remaining life can be recovered through future operating cash flows. The
Company makes a specific provision against the asset when impairment is
identified. The Company did not make an impairment charge in 1999, 1998 or 1997.
Future acquisitions will be evaluated using this method and an appropriate
useful life will be determined for amortization of the excess of costs over the
net asset value of businesses acquired, if any.
Accumulated amortization at December 31, 1999 and 1998 amounted to $13.4 million
and $10.8 million, respectively.
F-11
<PAGE>
Accrued Liabilities and Expenses
Accrued liabilities and expenses were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
(amounts in thousands) 1999 1998
=====================================================================================
<S> <C> <C>
Salaries, wages and benefits $10,096 $11,400
Royalties 4,632 5,867
Shareholder acquisition expenses - 3,973
Taxes, other than income 2,117 1,779
Dividends payable - 1,245
Deferred purchase payments (CPI) 1,429 1,225
Contract settlement reserve 2,795 -
Other 6,425 5,382
- -------------------------------------------------------------------------------------
Accrued liabilities and expenses $27,494 $30,871
=====================================================================================
</TABLE>
Debt
The following is a summary of the outstanding debt at December 31, 1999 and
1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
(amounts in thousands) 1999 1998
===============================================================================
<S> <C> <C>
Short-term debt:
Japanese Yen bank borrowings $ 391 $ 2,210
French Franc bank borrowings 17 -
Current portion of long-term debt 245 -
Current portion of obligations under a capital lease 195 -
- -------------------------------------------------------------------------------
Short-term debt $ 848 $ 2,210
===============================================================================
</TABLE>
Short-term debt consisted of notes payable to various banks denominated in
Japanese Yen and French Francs. The carrying value of short-term borrowings
approximates fair value. The average interest rate on the Japanese Yen bank
borrowings during the year was .97% in 1999 and 1.53% in 1998. The average
interest rate on the French Franc borrowings in 1999 was 5.25%. The year-end
weighted average interest rates on the Japanese Yen bank borrowings were 1.20%
in 1999 and 1.47% in 1998. The year-end weighted average interest rate on the
French bank borrowings was 5.25%.
The Company exercised an option to purchase a parcel of land previously under a
capital lease in the first quarter of 1998 for $4.6 million. The parcel of land
is used for the new corporate R&D center and administrative office facility,
including the Company's headquarters.
<TABLE>
<CAPTION>
- -------------------------------------------------
(amounts in thousands) 1999 1998
=================================================
<S> <C> <C>
Long-term debt:
Unsecured notes $ 814 -
(Less) current portion (245) -
Capital lease obligation 2,885 -
(Less) current portion (195) -
- -------------------------------------------------
Long-term debt $3,259 -
=================================================
</TABLE>
In May of 1999, the Company acquired BioSepra, SA. At acquisition BioSepra, SA
was obligated under a French Franc denominated capital lease as well as several
long-term unsecured notes. The capital lease is used to maintain an
administration and manufacturing facility in Cergy, France. At December 31,
1999, the capital lease had a carrying value of approximately $2.9 million. The
lease is a 12-year lease with payments of approximately $0.1 million due at the
beginning of each quarter. The unsecured long-term notes have an aggregate
principal of approximately $0.8 million. The note's interest rates
F-12
<PAGE>
range from 3.9% to 5.8% and have maturity dates between 2001 and 2005. The
approximate yearly payments on these notes are as follows: 2001 - $0.2 million,
2002 - $0.1 million, 2003 - $0.1 million, 2004 - $0.1 million, and 2005 - less
than $0.1 million.
Income Taxes
The differences between the U.S. federal statutory tax rate and the Company's
effective tax rate are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1999 1998 1997
====================================================================================
<S> <C> <C> <C>
Statutory U.S. federal income tax rate 35.0% 35.0% 35.0%
State income taxes 2.2 2.0 1.7
Non-U.S. tax rate differences 0.1 (.8) 0.8
Repatriation of foreign earnings,
net of related benefits (0.3) (1.3) (0.7)
Non-deductible expenses 2.0 5.1 1.5
Tax settlements (4.1) - -
Other, including tax credits (4.0) (2.5) (2.3)
- ------------------------------------------------------------------------------------
Effective income tax rate 30.9% 37.5% 36.0%
====================================================================================
</TABLE>
The provision (benefit) for taxes on income for 1999, 1998, and 1997 is
summarized below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
========================================================================================
<S> <C> <C> <C>
Current:
United States $13,942 $ 9,443 $ 9,540
International 6,833 7,684 8,569
State 2,891 1,560 999
- ----------------------------------------------------------------------------------------
Total current
- ----------------------------------------------------------------------------------------
Deferred:
United States (5,191) 270 (497)
International 55 162 (46)
State (947) 49 (84)
- ----------------------------------------------------------------------------------------
Total deferred (6,083) 481 (627)
- ----------------------------------------------------------------------------------------
Total provision for income taxes $17,583 $19,168 $18,481
========================================================================================
</TABLE>
F-13
<PAGE>
Deferred tax assets and liabilities were comprised of the following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
(amounts in thousands) 1999 1998
============================================================
<S> <C> <C>
Deferred tax assets:
Expenses not currently deductible $ 6,805 $2,081
Retirement benefits 4,251 3,038
Net operating loss carryforward 3,336 19
Intercompany profits 2,868 1,937
Inventory reserves 1,889 1,645
Other 716 722
- ------------------------------------------------------------
Total deferred tax assets 19,865 9,442
Less: valuation allowance (1,490) -
- ------------------------------------------------------------
Net deferred tax assets 18,375 9,442
Deferred tax liabilities:
Fixed assets, principally depreciation 5,682 4,768
Inventory 555 582
Retirement benefits 473 399
Other 9 25
- ------------------------------------------------------------
Less: valuation allowance 6,719 5,774
- ------------------------------------------------------------
Net deferred tax asset $11,656 $3,668
============================================================
</TABLE>
Management has determined that tax benefits associated with the net deferred tax
asset, other than the net operating loss ("NOL") carryforward at BioSepra, SA,
will more likely than not be realized based on the availability of taxable
income in prior carryback years against which future tax deductions may be
offset and on expectations that future operating income of the Company will be
sufficient to fully realize the net deferred tax asset. At December 31, 1999,
BioSepra, SA had an NOL carryforward totaling $3.3 million, of which $1.8
million expires at December 31, 2000 and the remainder has no expiration date.
Due to the uncertainty of the realization of the expiring NOL carryforward at
BioSepra, SA, management has established a valuation allowance in the amount of
$1.5 million.
In 1999, 1998 and 1997, income tax benefits of $0.7 million, $11.0 million and
$2.0 million, respectively, attributable to employee stock option transactions
were allocated to stockholders' equity.
U.S. and international withholding taxes have not been provided on approximately
$88.1 million of undistributed earnings of foreign subsidiaries. The Company
remits only those earnings which are considered to be in excess of the
reasonably anticipated working capital needs of the foreign subsidiaries, with
the balance considered to be permanently reinvested in the operations of such
subsidiaries. It is impractical to estimate the total tax liability, if any,
until such a distribution is made. Pretax income from international operations
amounted to $24.1 million in 1999, $27.2 million in 1998, and $26.6 million in
1997.
F-14
<PAGE>
Retirement Benefits
The Company has a qualified pension plan ("defined benefit") and a 401(k) plan
("employee deferral" and "defined contribution") for substantially all United
States employees. With respect to the defined benefit, the Company's policy is
to deposit with an independent trustee amounts as are necessary on an actuarial
basis to provide for benefits in accordance with the requirements of the
Employee Retirement Income Security Act and any other applicable Federal laws
and regulations. The U.S. pension plan provides benefits that are generally
based upon the employee's highest average compensation in any consecutive five
year period in the ten years before retirement. The Company's 401(k) plan allows
employees to contribute, on a tax-deferred basis, up to fifteen percent of their
annual base compensation subject to certain regulatory and plan limitations. The
Company matches one half of the employee's 401(k) deferral up to a maximum
Company match of three percent of annual base compensation.
The Company also sponsors an unfunded, nonqualified supplementary retirement
plan for certain senior management. The Company has purchased life insurance on
the lives of participants designed to provide sufficient funds to recover all
costs of the plan. In addition to the above plans, the Company sponsors an
unfunded, nonqualified executive supplemental plan that provides for a target
benefit based upon the average annual compensation during the highest five
consecutive years of the last ten years before retirement, which benefit is then
offset by other work related benefits payable to the participant.
The retirement benefits for most employees of non-U.S. operations are generally
provided by government sponsored or insured programs and, in certain countries,
by defined benefit plans. The only significant non-U.S. defined benefit plan is
for United Kingdom employees. The Company's policy with respect to its U.K.
pension plan is to fund amounts as are necessary on an actuarial basis to
provide for benefits under the plan in accordance with local laws and income tax
regulations. The U.K. pension plan provides benefits based upon the employee's
highest average base compensation over three consecutive years.
F-15
<PAGE>
The funded status of the Company's domestic pension plans and amounts recognized
at December 31, 1999, 1998, and 1997 was as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
===========================================================================
<S> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ 33,776 $ 26,569 $ 22,821
Service cost 2,672 2,244 2,098
Interest cost 2,208 1,900 1,615
Amendments - 1,567 437
Actuarial (gain)/loss (8,977) 2,317 295
Benefits paid (638) (692) (535)
Expenses paid (109) (129) (162)
- --------------------------------------------------------------------------
Benefit obligation at end of year 28,932 33,776 26,569
- --------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets at
beginning of year 22,233 19,611 15,567
Actual return on plan assets 7,683 3,032 3,058
Employer contribution 173 411 1,683
Benefits paid (638) (692) (535)
Expenses paid (109) (129) (162)
- --------------------------------------------------------------------------
Fair value of plan assets at end of year 29,342 22,233 19,611
- --------------------------------------------------------------------------
Funded status: 411 (11,543) (6,958)
Unrecognized actuarial (gain)/loss (14,254) 401 (604)
Unrecognized prior service cost 3,086 3,544 2,295
- --------------------------------------------------------------------------
Net amount recognized $(10,757) $( 7,598) $( 5,267)
==========================================================================
Amounts recognized in the statement
of financial position consist of:
Accrued benefit liability (11,617) (9,265) (5,772)
Intangible asset 849 1,667 505
Accumulated other comprehensive income 11 - -
- --------------------------------------------------------------------------
Net amount recognized $(10,757) $( 7,598) $( 5,267)
==========================================================================
</TABLE>
The weighted average assumptions used in accounting for the domestic pension
plans in 1999, 1998, and 1997 was as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------
1999 1998 1997
========================================================
<S> <C> <C> <C>
Discount rate 8.00% 6.75% 7.00%
Expected return on plan assets 9.00% 9.00% 9.00%
Rate of compensation increase 4.83% 4.83% 4.83%
========================================================
</TABLE>
The discount rate is the estimated rate at which the obligation for pension
benefits could effectively be settled. The expected return on plan assets
reflects the average rate of earnings that the Company estimates will be
generated on the assets of the plans. The rate of compensation increase reflects
the Company's best estimate of the future compensation levels of the individual
employees covered by the plans.
F-16
<PAGE>
The components of net periodic pension cost for the Company's domestic pension
plans for the years 1999, 1998, and 1997 are provided in the following table:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
=================================================================
<S> <C> <C> <C>
Service cost $ 2,672 $ 2,244 $ 2,098
Interest cost 2,208 1,900 1,615
Expected return on plan assets (1,978) (1,743) (1,375)
Amortization of:
Prior service cost 459 318 270
Actuarial (gain)/loss (27) 23 108
- -----------------------------------------------------------------
Net periodic pension cost $ 3,334 $ 2,742 $ 2,716
=================================================================
</TABLE>
The funded status of the Company's U.K. pension plan and amounts recognized at
December 31, 1999, 1998, and 1997 were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
============================================================================
<S> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $12,664 $ 9,026 $ 5,777
Service cost 976 513 319
Interest cost 789 682 504
Plan participants' contributions 320 160 154
Amendments - - (9)
Actuarial (gain)/loss (323) 2,270 2,527
Benefits paid (150) (110) (12)
Foreign currency exchange rate changes (369) 123 (234)
- ----------------------------------------------------------------------------
Benefit obligation at end of year 13,907 12,664 9,026
- ----------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets at
beginning of year 8,831 7,217 6,147
Actual return on plan assets 751 1,000 724
Employer contribution 942 471 453
Plan participants' contributions 320 160 154
Benefits paid (150) (110) (12)
Foreign currency exchange rate changes (258) 93 (249)
- ----------------------------------------------------------------------------
Fair value of plan assets at end of year 10,436 8,831 7,217
- ----------------------------------------------------------------------------
Funded status: (3,471) (3,833) (1,809)
Unrecognized actuarial loss 4,037 4,749 2,943
Unrecognized portion of net obligation
at transition (256) 654 (307)
Unrecognized prior service cost 587 (287) 697
Fourth quarter contribution - 293 112
- ----------------------------------------------------------------------------
Net amount recognized $ 897 $ 1,576 $ 1,636
============================================================================
Amounts recognized in the statement
of financial position consist of:
Prepaid benefit cost 897 1,576 1,636
- ----------------------------------------------------------------------------
Net amount recognized $ 897 $ 1,576 $ 1,636
============================================================================
</TABLE>
F-17
<PAGE>
The weighted average assumptions used in accounting for the U.K. pension plan in
1999, 1998, and 1997 were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
1999 1998 1997
============================================================
<S> <C> <C> <C>
Discount rate 6.50% 6.00% 7.50%
Expected return on plan assets 8.00% 8.00% 8.00%
- ------------------------------------------------------------
Rate of compensation increase 5.00% 5.00% 6.00%
============================================================
</TABLE>
The components of net periodic pension costs for the Company's U.K. pension plan
for the years 1999, 1998, and 1997 are provided in the following table:
<TABLE>
<CAPTION>
- --------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
==============================================================
<S> <C> <C> <C>
Service cost $ 976 $ 513 $ 319
Interest cost 789 682 504
Expected return on plan assets (708) (592) (487)
Amortization of:
Transition obligation (23) (23) (23)
Prior service cost 49 50 50
Actuarial loss 209 119 31
- --------------------------------------------------------------
Net periodic pension cost $1,292 $ 749 $ 394
==============================================================
</TABLE>
The projected benefit obligations, accumulated benefit obligations and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
===============================================================
<S> <C> <C> <C>
Projected benefit obligation $3,974 $4,466 $2,418
Accumulated benefit obligation $3,321 $3,512 $2,034
- ---------------------------------------------------------------
Fair value of plan assets - - -
===============================================================
</TABLE>
The Company's match to the 401(k) plan totaled $1.3 million, $1.1 million and
$1.1 million in 1999, 1998, and 1997, respectively. The Company's contribution
to its remaining plans totaled $0.3 million, $0.3 million and $0.6 million in
1999, 1998, and 1997, respectively.
Contingencies
In September 1999, the Company submitted a report in connection with a voluntary
disclosure to the Department of Veterans Affairs ("VA") regarding matters
involving the management of the Company's Federal Supply Schedule contract with
the VA that has been in effect since April 1992. As part of the disclosure the
Company offered to provide a refund to the government in the amount of $3.9
million. The Company expensed this amount in September 1999. The Company has
made a cash payment of $1.1 million to the VA and had an accrued liability of
$2.8 million at December 31, 1999 related to this matter. There can be no
assurance that the government will agree with the Company's assessment of this
matter or accept the Company's offered refund amount. Consequently, it is
possible the final resolution of this matter could materially differ from the
Company's proposal and could have a material adverse effect on the Company's
consolidated financial position, operating results or cash flows when resolved
in a future reporting period.
Apart from the matter above, the Company is subject to other potential
liabilities under government regulations and various claims and legal actions
which are pending or may be asserted. These matters have arisen in the ordinary
course and conduct of the Company's business and some are expected to be
covered, at least partly, by insurance. Estimated amounts for claims that are
probable and can be reasonably estimated are reflected as liabilities of the
Company. The ultimate resolution of these matters is subject to many
F-18
<PAGE>
uncertainties. It is reasonably possible that some of the matters which are
pending or may be asserted could be decided unfavorably to the Company. Although
the amount of liability at December 31, 1999 with respect to these matters can
not be ascertained with certainty, the Company believes that any resulting
liability should not materially affect the Company's consolidated financial
statements.
Currency Effects
The financial statements of the Company's non-U.S. operations are translated to
U.S. dollars for consolidation using exchange rates at period end for assets and
liabilities and average exchange rates during each reporting period for results
of operations. Net exchange gains or losses resulting from the translation of
foreign financial statements, the effect of exchange rate changes on
intercompany transactions of a long-term investment nature, and net exchange
rate gains and losses on foreign currency transactions that are designated as,
and are effective as, economic hedges of the net investment in a foreign entity
are recorded as a separate component of stockholder's equity. These adjustments
will affect net income only upon sale or liquidation of the underlying non-U.S.
investment.
Many of the Company's reporting entities conduct a portion of their business in
currencies other than the entity's functional currency. These transactions give
rise to receivables or payables that are denominated in currencies other than
the entity's functional currency. Changes in the exchange rates between the
functional currency and the currency in which the transaction is denominated
result in currency transaction gains and losses that are included in the
determination of income. Currency exchange gains and losses realized on business
transactions were $1.4 million of net losses in 1999, $0.3 million of net gains
in 1998, and $1.0 million of net losses in 1997. In addition to the net losses
on business transactions above, operating income in 1999 was reduced by $1.0
million related to devaluation in cash held in non-functional currencies in the
Company's U.K. subsidiary.
The Company utilizes forward exchange contracts to hedge non-local currency
transactions and commitments. Gains and losses on forward exchange contracts
that hedge specific currency commitments are deferred and recognized in income
in the same period as the hedged transaction. Gains and losses on forward
contracts that do not hedge an identifiable currency commitment are included in
income as the gain or loss arises.
The market risk associated with forward exchange contracts is caused by
fluctuations in exchange rates subsequent to entering into the forward exchange
contracts. Forward exchange contracts outstanding at year-end 1999 were short-
term in nature and related to non-local currency transactions of the Company's
Japanese and U.S. operations. The equivalent U.S. dollar purchase amounts of all
forward contracts outstanding were $4.2 million, $3.1 million, and $2.9 million
as of December 31, 1999, 1998, and 1997, respectively. The equivalent U.S.
dollar sale amount of all forward contracts outstanding was $18.5 million as of
December 31, 1999. There were no sale amounts outstanding as of December 31,
1998 and 1997. Deferred unrealized gains and losses at December 31, 1999, 1998
and 1997 were not significant.
F-19
<PAGE>
Stock Incentive Plans
In 1997, the Company established a Long-term Incentive Plan for certain key
management and other personnel. The Company's 1997 Long-term Incentive Plan
provides that up to 1,000,000 shares of common stock may be awarded through
various stock and stock related awards. For options awarded under the Plan, the
option price cannot be less than 100 percent of the fair market value of common
stock at the time the option is granted. Through December 31, 1999 the Company
has granted 983,255 stock options under this Plan, net of forfeitures.
In 1996, the Company established a Non-Employee Directors' Annual Retainer Stock
Plan enabling members of the Board of Directors who are not officers or
employees of the Company to receive common stock in lieu of all or a portion of
the annual cash retainer fee and to receive an automatic annual amount of 300
shares of common stock for services rendered. The plan provides that up to
112,500 shares may be granted based on the fair market value of the common stock
at the date of issue. There have been 6,035 shares granted through December 31,
1999 under this plan. The plan was frozen, effective as of February 2, 1999.
Consequently, there will be no future grants under this plan.
In 1996, the Company established a Non-Employee Directors' Stock Option Plan
that provides for each of the Company's non-employee directors to receive an
automatic, annual option to purchase 6,750 shares of common stock. The plan
provides that up to 750,000 shares may be granted based on the fair market value
of the common stock at the annual grant date. There have been 121,500 stock
options granted through December 31, 1999 under this plan. The plan was frozen,
effective as of February 2, 1999. Consequently, there will be no future grants
under this plan.
All other stock option plans have been frozen and no further grants under the
frozen plans can be made. These plans are listed under "Former Plans No Longer
Granting Options."
Most options become exercisable on a cumulative basis over a three year period
of service and are generally exercisable for a period not exceeding ten years
from the date of grant. At December 31, 1999 there were 16,745 shares of common
stock available for future grant under the 1997 stock option plan.
F-20
<PAGE>
The options outstanding and transactions under the stock option plans were as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1997 1996 Former Plans
Long-term Non-Employee No Longer
Incentive Directors' Granting
Plan Plan Options
============================================================================
<S> <C> <C> <C>
Options outstanding at
December 31, 1996 40,500 2,055,281
Granted at average price
of $34.26 per share 524,000 33,750
Expired or canceled at average
price of $21.10 per share (4,500) (6,241)
Exercised at average price
of $10.96 per share (2,250) (413,186)
- ----------------------------------------------------------------------------
Options outstanding at
December 31, 1997 524,000 67,500 1,635,854
Granted at average price
of $35.56 per share 16,000 47,250
Expired or canceled at average
price of $27.45 per share (30,916) (6,750) (39,729)
Exercised at average price
of $18.00 per share (148,557) (27,000) (1,418,493)
- ----------------------------------------------------------------------------
Options outstanding at
December 31, 1998 360,527 81,000 177,632
Granted at average price
of $36.73 per share 484,000
Expired or canceled at average
price of $31.45 per share (9,829) (33,750) (1,831)
Exercised at average price
of $26.31 per share (16,046) (46,455)
- ----------------------------------------------------------------------------
Options outstanding at
December 31, 1999 818,652 47,250 129,346
============================================================================
Price range:
Minimum $ 34.41 $ 22.88 $ 4.83
Maximum $ 38.19 $ 38.28 $ 25.00
Weighted average price $ 34.53 $ 30.86 $ 23.86
============================================================================
Exercisable 167,461 22,500 129,346
============================================================================
</TABLE>
F-21
<PAGE>
Information with respect to stock options outstanding at December 31, 1999 is as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Weighted
Average Weighted Weighted
Number of Remaining Average Number of Average
Options Contractual Exercise Options Exercise
Price Range Outstanding Life Price Exercisable Price
==============================================================================
<S> <C> <C> <C> <C> <C>
$12.25 to $22.88 24,300 5.7 $18.32 24,300 $18.32
$25.00 to $25.00 111,796 6.8 $25.00 111,796 $25.00
$31.88 to $33.25 27,000 8.5 $32.91 11,250 $32.70
$34.41 to $34.41 323,552 7.8 $34.41 162,127 $34.41
$36.72 to $36.72 465,600 9.1 $36.72 - -
$37.00 to $38.28 43,000 8.7 $37.83 9,834 $38.21
- ------------------------------------------------------------------------------
$12.25 to $38.28 995,248 8.3 $34.15 319,307 $29.95
==============================================================================
</TABLE>
The Company has elected the disclosure-only presentation of SFAS No. 123,
Accounting for Stock-Based Compensation, and consequently, makes no charge
against income in the financial statements with respect to options granted at
fair market value. To measure stock-based compensation in accordance with SFAS
No. 123, the fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model. The following table sets forth the
assumptions used and the pro forma net income and earnings per share resulting
from applying SFAS No. 123.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
1999 1998 1997
<S> <C> <C> <C>
========================================================================
Net income (amounts in thousands)
As reported $38,277 $31,303 $32,235
Pro forma $35,499 $28,784 $30,501
Basic earnings per share (in dollars)
As reported $ 1.53 $ 1.32 $ 1.39
Pro forma $ 1.42 $ 1.22 $ 1.32
Diluted earnings per share (in dollars)
As reported $ 1.53 $ 1.29 $ 1.35
Pro forma $ 1.42 $ 1.19 $ 1.27
Average Shares Outstanding (in thousands)
Actual 24,954 23,687 23,171
Assuming Dilution 25,040 24,204 23,945
Risk-free interest rate 6.2% 4.6% 5.8%
Dividend yield 0.2% 0.5% 0.5%
Expected life in years 3.0 3.4 5.0
Volatility 27% 28% 29%
Weighted average remaining contractual
life in years 8.3 8.5 7.0
Weighted average fair value at date
of grant(in dollars) $ 10.13 $ 9.82 $ 11.93
========================================================================
</TABLE>
F-22
<PAGE>
Quarterly Financial Information
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
(quarterly amounts are unaudited) First Second Third Fourth Year
====================================================================================
<S> <C> <C> <C> <C> <C>
1999:
Net sales $99,537 $99,814 $101,798 $106,050 $407,199
Net royalties 447 497 509 957 2,410
Cost of sales 44,283 45,187 46,472 50,725 186,667
Provision for contract settlement - - 3,870 - 3,870
Operating income 17,290 14,891 10,957 13,303 56,441
Net income 10,492 9,756 9,412 8,617 38,277
Basic earnings per share $ .42 $ .39 $ .38 $ .35 $ 1.53
Diluted earnings per share $ .42 $ .39 $ .38 $ .34 $ 1.53
Shares outstanding
Basic 24,944 24,947 24,918 24,976 24,954
Stock options 70 69 93 122 86
Diluted 25,014 25,016 25,041 25,098 25,040
Market price per share:
High $40 3/4 $38 1/2 $ 41 $ 43 $ 43
Low $ 34 $34 1/2 $ 36 1/8 $ 38 $ 34
====================================================================================
1998:
Net sales $88,355 $91,544 $ 89,084 $ 92,743 $361,726
Net royalties 437 689 518 836 2,480
Cost of sales 41,076 42,701 40,833 43,252 167,862
Shareholder acquisition expenses - - 310 5,025 5,335
Operating income 13,489 14,675 13,319 9,026 50,509
Net income 8,625 9,447 8,754 4,477 31,303
Basic earnings per share $ .37 $ .40 $ .37 $ .18 $ 1.32
Diluted earnings per share $ .36 $ .39 $ .36 $ .18 $ 1.29
Shares outstanding
Basic 23,447 23,575 23,668 24,050 23,687
Stock options 582 547 541 401 517
Diluted 24,029 24,122 24,209 24,451 24,204
Market price per share:
High $38 1/2 $39 1/2 $ 39 3/8 $ 40 $ 40
Low $ 30 $30 3/4 $ 30 1/2 $ 29 3/8 $ 29 3/8
====================================================================================
</TABLE>
F-23
<PAGE>
Segment Reporting and Related Information
Operating segments are components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker, or decision making group, in deciding how to allocate
resources and in assessing performance. Life Technologies is managed in a
matrixed fashion with some organizational units focused on delivering the
Company's product and service offerings to customers. These organizational units
have been established primarily by geography. Other organizational units are
focused on developing and managing various components of the product and service
offerings. While the chief operating decision maker reviews financial
information with respect to all of these organization units, the units based on
geography are most routinely reviewed by the chief operating decision maker in
terms of assessing performance with respect to revenues and related expenses.
The Company has four operating segments. The Americas Research segment serves
universities, medical research centers, government institutions and other
related "not-for-profit" research institutions in the United States as well as
all customers in Canada, Mexico, and Latin and South America. The U.S.
Bioindustrial segment delivers products and services to biotechnology,
pharmaceutical, chemical and related "for-profit" companies in the United
States. The European segment serves customers in Europe, Africa and the Middle
East. The Asia Pacific segment serves customers in Asia, including Japan,
Australasia, China and India. All four of the operating segments offer
essentially the same products and services.
The accounting policies of the operating segments are the same as those
described earlier in the notes to the consolidated financial statements.
Intercompany transactions between geographic areas are eliminated prior to
reporting operating segment financial information to the chief operating
decision maker. All profit related to intercompany transactions between
geographic areas is reported in the operating segment in which the sale to the
Company's trade customer occurs. Expenses related to developing and managing the
Company's product and service offerings, as well as some expenses managed
globally or not related to operating segments, are not included in operating
segment results. Operating segment identifiable assets are primarily inventories
and receivables. Long-lived assets are principally related to manufacturing or
developing products and services and are not allocated to operating segments.
F-24
<PAGE>
Operating segment revenues for the years ended December 31, 1999, 1998, and 1997
were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
============================================================
<S> <C> <C> <C>
Americas Research $139,619 $129,428 $118,095
U.S. Bioindustrial 84,289 71,634 61,335
Europe 128,987 116,996 105,682
Asia Pacific 54,304 43,915 45,756
Other, principally royalties 2,410 2,233 1,940
- ------------------------------------------------------------
Total revenues $409,609 $364,206 $332,808
============================================================
</TABLE>
Operating segment profit and a reconciliation to reported operating income for
the years ended December 31, 1999, 1998, and 1997 were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
===================================================================
<S> <C> <C> <C>
Americas Research $ 45,120 43,012 42,035
U.S. Bioindustrial 31,293 26,163 20,790
Europe 30,397 29,607 29,045
Asia Pacific 12,520 10,371 11,041
Research and development (23,836) (21,880) (21,281)
Other non-segment expenses (39,053) (31,429) (30,696)
Shareholder acquisition expenses - (5,335) -
- -------------------------------------------------------------------
Operating income $ 56,441 $ 50,509 $ 50,934
===================================================================
</TABLE>
Identifiable operating segment assets and a reconciliation to total assets as of
December 31, 1999, 1998, and 1997 were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
================================================================
<S> <C> <C> <C>
Americas Research $ 52,957 $ 48,544 $ 45,088
U.S. Bioindustrial 33,555 28,136 23,761
Europe 56,151 50,351 39,856
Asia Pacific 30,681 24,866 21,939
Property, plant & equipment, net 128,827 107,374 100,098
Other long-lived assets 34,533 26,057 24,718
Cash and cash equivalents 51,489 56,047 19,076
Other, principally tax-related 14,778 12,212 7,059
- ----------------------------------------------------------------
Total assets $402,971 $353,587 $281,595
================================================================
</TABLE>
Life Technologies offers numerous products, services and technologies that can
be characterized broadly into two categories: cell culture and cell and
molecular biology. Cell culture products and services are used to grow cells
under laboratory conditions and for the commercial manufacture of
pharmaceuticals and other life sciences products. Cell culture products include
cell and tissue culture media, reagents, fetal bovine ("FBS") and other animal
sera, growth and attachment factors, and plasticware. Cell and molecular biology
products, services and technologies are used to identify, isolate, and
manipulate the metabolic processes and genetic material of living organisms.
Cell and molecular biology products include enzymes, nucleic acids, lipids,
competent cells, custom oligonucleotides, and related products.
F-25
<PAGE>
The major product line components of revenues for 1999, 1998, and 1997 compare
as follows:
<TABLE>
<CAPTION>
==========================================================
(amounts in thousands) 1999 1998 1997
- ----------------------------------------------------------
<S> <C> <C> <C>
Cell culture $201,597 $182,411 $173,643
Cell and molecular biology 208,012 181,795 159,165
- ----------------------------------------------------------
Total revenues $409,609 $364,206 $332,808
==========================================================
</TABLE>
Sales of FBS accounted for 11% of net sales in 1999, 12% of net sales in 1998
and 13% of net sales in 1997. Historically, the availability and price of FBS
have been volatile and periodically have had a significant effect on the
Company's results.
The Company earns revenues from customers in many countries. Other than the
United States, the Company's country of domicile, there is no individual country
in which revenues from external customers represent 10% or more of the Company's
consolidated revenues. Revenues attributed to customers based in the United
States, as well as revenues from customers in all other countries combined, were
as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
=====================================================================
<S> <C> <C> <C>
United States $205,424 $181,765 $161,863
All other countries 204,185 182,441 170,945
- ---------------------------------------------------------------------
Total revenues $409,609 $364,206 $332,808
=====================================================================
</TABLE>
Long-lived assets by geographic area as of December 31, 1999, 1998, and 1997
were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
(amounts in thousands) 1999 1998 1997
=========================================================================
<S> <C> <C> <C>
United States $118,164 $104,598 $ 98,394
United Kingdom 19,353 16,736 15,841
All other 15,960 8,526 7,806
- -------------------------------------------------------------------------
Total long-lived assets $153,477 $129,860 $122,041
=========================================================================
</TABLE>
F-26
<PAGE>
INDEX TO EXHIBITS Page#
-----------------
3(A) Certificate of Incorporation of the Registrant, including
Amendment to Certificate of Incorporation dated April 17, 1987
and Amendment to Certificate of Incorporation dated April 14,
1998, previously filed as Exhibit 3(A) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998, SEC file no. 0-14991, which is incorporated herein by
reference.
3(B) By-laws of the Registrant as amended and restated. E- 1
10(A) 1984 Stock Option Plan, previously filed as Exhibit 4.1 to
the Registrant's Registration Statement on Form S-8, No.
33-21807, dated May 12, 1988, SEC file no. 0-14991, which
is incorporated herein by reference.
10(B) Executive Supplemental Retirement Plan as amended October E-24
20, 1999.
10(C) Executive Deferred Compensation Benefit Plan, previously
filed as Exhibit 10.8 to the Registrant's Registration
Statement on Form S-1, No. 33-7993, dated October 1, 1986,
which is incorporated herein by reference.
10(D) Change-in-Control Agreement dated February 13, 1997, between
the Registrant and Dr. J. Stark Thompson regarding certain
severance benefits in the event of termination of employment
following a change of control, as defined in the agreement,
previously filed as Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997, SEC
file no. 0-14991, which is incorporated herein by reference.
10(E) Change-in-Control Agreement dated March 9, 2000, between the E-41
Registrant and Derek E. Woods regarding certain severance
benefits in the event of termination of employment following a
change of control, as defined in the agreement.
10(F) Change-in-Control Agreement dated February 13, 1997, between
the Registrant and Thomas M. Coutts regarding certain severance
benefits in the event of termination of employment following a
change of control, as defined in the agreement, previously filed
as Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, SEC file no. 0-14991,
which is incorporated herein by reference.
10(G) Change-in-Control Agreement dated March 9, 2000, between the E-57
Registrant and John V. Cooper regarding certain severance
benefits in the event of termination of employment following a
change of control, as defined in the agreement.
<PAGE>
10(H) Change-in-Control Agreement dated February 13, 1997, between
the Registrant and Brian D. Graves regarding certain severance
benefits in the event of termination of employment following a
change of control, as defined in the agreement, previously filed
as Exhibit 10(H) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998, SEC file no. 0-14991,
which is incorporated herein by reference.
10(I) Form of Employment Agreement effective February 13, 1997,
between the Registrant and certain executive officers of the
Registrant regarding certain severance benefits in the event
of termination of employment following a change in control, as
defined in the agreement, previously filed as Exhibit 10.6 to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, SEC file no. 0-14991, which is
incorporated herein by reference.
10(J) 1991 Stock Option Plan, previously filed as Exhibit 4 to the
Registrant's Registration Statement on Form S-8 No. 33-956,
dated May 9, 1991, which is incorporated herein by reference.
10(K) 1995 Long-term Incentive Plan, previously filed as Exhibit 4
to the Registrant's Registration Statement on Form S-8 No.
33-59741, dated June 1, 1995, which is incorporated herein
by reference.
10(L) 1996 Non-Employee Directors' Stock Option Plan, previously
filed as Exhibit 4(b) to the Registrant's Registration
Statement on Form S-8 No. 333-03773, dated May 15, 1996, which
is incorporated herein by reference.
10(M) 1996 Non-Employee Directors' Annual Retainer Stock Plan,
previously filed as Exhibit 4(a) to the Registrant's
Registration Statement on Form S-8 No. 333-03773, dated May
15, 1996, which is incorporated herein by reference.
10(N) 1997 Long-term Incentive Plan, previously filed as Exhibit 4
to the Registrant's Registration Statement on Form S-8 No.
333-28607, dated June 6, 1997, which is incorporated herein by
reference.
10(O) Form of Indemnity Agreement between Registrant and Directors,
previously filed as Exhibit 10(O) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998, SEC
file no. 0-14991, which is incorporated herein by reference.
<PAGE>
10(P) Form of Indemnity Agreement between Registrant and Executive
Officers, previously filed as Exhibit 10(P) to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998,
SEC file no. 0-14991, which is incorporated herein by reference.
21 Subsidiaries of the Registrant. E-73
23 Consent of Independent Accountants. E-74
27 Financial Data Schedule. E-75
<PAGE>
Exhibit 3(B)
------------
AMENDED AND RESTATED
BY- LAWS
OF
LIFE TECHNOLOGIES, INC.
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Gaithersburg, State of Maryland, at such
place as may be fixed from-time to time by the board of directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the first
Tuesday after the last Thursday in April in each year if not a legal holiday,
and if a legal holiday, then on the next business day following, at 10:00 A.M.,
Eastern Daylight Time, or at such other date and time as shall be
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designated from time to time by the board of directors and stated in the notice
of the meeting, at which they shall elect by a plurality vote a board of
directors, and transact such other business as may properly be brought before
the meeting.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not less than ten nor more than sixty days before the date of
the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
chairman of the board or the president or a vice president or by a majority of
the directors by action at a meeting, or by a majority of the directors acting
without a meeting or by the person or persons who hold of record not less than
thirty percent of all the shares outstanding and entitled to be voted on any
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proposal to be submitted at said meeting. Such request shall state the purpose
or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of not less than fifty percent of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the certificate of incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which
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case such express provision shall govern and control the decision of such
question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The directors of the corporation shall be divided into
three classes. Each class of directors shall consist of not fewer than three nor
more than five directors. The number of directors in each class may from time to
time be determined by the vote of at least seventy-five percent (75%) of the
directors. The number of directors in any class shall not exceed the number of
directors of any other class by more than one. The term of each class shall
expire in different years. At each annual meeting, the successors
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to the directors of each class whose term shall expire in that year shall be
elected to hold office for a term of three years from the date of their election
and until the election of their successors. In case of any increase in the
number of directors of any class, any additional directors elected to such class
shall hold office for a term which shall coincide with the term of such class.
Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
election of the class for which such directors shall have been chosen and until
their successors are duly elected and shall qualify, unless sooner displaced. If
there are no directors in office, then an election of directors may be held in
the manner provided by statute. If, at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute less
than a majority of the whole board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
Section 3. The business of the corporation shall be managed by or
under the direction of its board of directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by statute
or by the certificate of incorporation or by these by-laws directed or required
to be exercised or done by the stockholders.
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Section 4. The board of directors may appoint a chairman of the board
and a vice chairman of the board. The chairman of the board, if any, and vice
chairman of the board, if any, shall not be officers of the corporation.
CHAIRMAN OF THE BOARD
Section 5. The chairman of the board, if any, shall preside at all
meetings of the board of directors and shall have such other powers and perform
such other duties as may from time to time be assigned to him by the board of
directors.
VICE CHAIRMAN
Section 6. The vice chairman, if any, shall have such powers and
duties as from time to time may be assigned to him by the board of directors.
MEETINGS OF THE BOARD OF DIRECTORS
Section 7. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 8. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
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Section 9. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 10. Special meetings of the board may be called by the
chairman of the board or by the president or by a vice president or by the
secretary of the company on 2 days' notice to each director, either personally
or by mail or by telegram; special meetings may be called by the chairman of the
board or by the president or by a vice president or by the secretary of the
Company in like manner and on like notice on the written request of not less
than one-third of the directors.
Section 11. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 12. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone
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or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 14. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. Without limitation,
such committees may include an executive committee, an audit committee and a
compensation and organization committee. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in these bylaws or in the
resolution of the board of directors, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a
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dividend or to authorize the issuance of stock. Such committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by the board of directors.
Section 15. Subject to the provisions of Section 14, when the board of
directors is not in session, the executive committee shall have and may exercise
all the powers and authority of the board of directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
Section 16. Subject to the provisions of Section 14, the audit
committee shall monitor the corporation's policy on ethics and business conduct,
the integrity of officers, accounting policies and internal controls and the
quality of published financial statements. The audit committee shall recommend
to the full board of directors the selection of independent auditors and shall
monitor the scope and quality of audits and quarterly reviews performed by the
independent auditors as well as other services provided to the corporation by
the independent auditors.
Section 17. Subject to the provisions of Section 14, the compensation
and organization committee shall approve and report to the full board with
respect to the corporation's compensation policy, including matters relating to
pension and other remuneration plans and arrangements and the compensation of
officers. The compensation and organization committee shall also monitor and
report to the full board with respect to organizational matters with respect to
the corporation and the board of directors. The compensation and organization
committee shall administer the corporation's stock option plans, and in
connection therewith, shall have all the authority of the board of directors
under such plans to the extent permitted by such plans and subject to the
provisions of Section 14.
Section 18. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
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COMPENSATION OF DIRECTORS
Section 19. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
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REMOVAL OF DIRECTORS
Section 20. The affirmative vote of the holders of not less than
eighty percent (80%) of the Common Stock of the corporation shall be required to
remove from office any or all of the directors, or all of the directors of a
particular class. A director may be removed from office only for cause. As used
in this Section 20, the term "cause" means fraud, criminal conduct or gross
abuse of office amounting to a breach of trust. Any stockholder proposing to
remove a director shall (i) request, in accordance with the requirements of the
by-laws of the corporation, that a special meeting of the stockholders be
called, or notify the corporation that such proposal shall be presented at the
annual meeting of stockholders, and (ii) state, in the request for such meeting
or in such notification, in detail all the particular reasons and circumstances
as a result of which such removal for cause is justified. Any director proposed
to be so removed shall be permitted an opportunity to be heard by the
stockholders to rebut such charges before any vote for removal is taken.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
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to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, one or more vice-
presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board. The board of directors may delegate to the chief
executive officer the authority to appoint such officers and the chief executive
officer shall notify the board of directors of such appointments at the meeting
following any such appointment.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer may be removed at any time
by the affirmative vote of a majority of the board of directors and any officer
appointed by the chief executive officer may be removed at any time by the chief
executive officer. Any vacancy occurring in any office of the corporation may be
filled by the board of directors.
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THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation and, subject to the control of the board of directors, shall
supervise and control all the business and affairs of the corporation and see
that all orders and resolutions of the board of directors are carried into
effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the chief executive officer or the board of directors may from
time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the committees of the
board of directors when required. The secretary shall give, or cause to be
given, notice of all meetings of the stockholders and special
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meetings of the board of directors, and shall perform such other duties as may
be prescribed by the board of directors or chief executive officer, under whose
supervision he shall be. The secretary shall have custody of the corporate seal
of the corporation and the secretary, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. The treasurer shall disburse the funds of the corporation
as may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so
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requires, an account of all his transactions as treasurer and of the financial
condition of the corporation.
Section 13. If required by the board of directors, the treasurer shall
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
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ARTICLE VI
INDEMNIFICATION
Section 1. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee, member of a
committee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, member of a committee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys, fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not,, of itself, create a
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presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, member of a committee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee,
member of a committee or agent of another corporation, partnership,
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joint venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be not opposed to the best interests of the corporation
and except that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 3. To the extent that a director, officer, employee, member of
a committee or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections 1
or 2 of this Article VI or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of this Article
VI (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee, member of a committee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Sections 1 or 2 of this Article VI. Such determination shall be made (a) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceedings, or (b) if such a quorum is
not obtainable, or, even if obtainable a quorum of
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disinterested directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders.
Section 5. Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee, member of a committee or agent
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this Article VI.
Section 6. The indemnification and advancement of expenses provided
by, or granted pursuant to, the other sections of this Article shall not be
deemed exclusive of any other rights to which a person seeking indemnification
or advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 7. The corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee, member of a committee or agent of the corporation, or is or was
serving at the request of the corporation, as a director, officer, employee,
member of a committee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.
Section 8. For purposes of this Article VI, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the corporation"
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shall include any service as a director, officer, employee, member of a
committee or agent of the corporation which imposes duties on, or involves
services by, such director, officer, employee, member of a committee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and a person who acted in good faith and in a manner he reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" as referred to in Article VI.
Section 9. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE VII
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors, or the president or a vice-
president and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
him in the corporation.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
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Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
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FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meetings, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to, vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
E-21
<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
E-22
<PAGE>
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE IX
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the affirmative vote or written consent of the
stockholders of record entitled to exercise sixty-seven percent (67%) of the
voting power of the Company on such proposal, provided however, that if the by-
laws are amended or new by-laws are adopted by written consent without a meeting
of the stockholders, the secretary shall mail a copy of-such amendment or such
new by-laws to each stockholder of record who would have been entitled to vote
thereon and did not participate in the adoption thereof.
E-23
<PAGE>
Exhibit 10(B)
LIFE TECHNOLOGIES, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
(Effective January 1, 1990)
(Amended October 20, 1999)
E-24
<PAGE>
LIFE TECHNOLOGIES, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
TABLE OF CONTENTS
-----------------
Page(s)
-------
Preamble
Article I - Definitions 1
Article II - Amount of Retirement Benefit 4
Article III - Termination by Disability 6
Article IV - Form of Pension 7
Article V - Death Benefits 8
Article VI - Suspension of Benefits 9
Article VII - Administration 10
Article VIII - Miscellaneous 12
Appendix A - Early Retirement Factors 14
E-25
<PAGE>
LIFE TECHNOLOGIES, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
PREAMBLE
--------
The Life Technologies, Inc. Executive Supplemental Retirement Plan was
first adopted by a vote of the Board of Directors on February 27, 1990 to be
effective January 1, 1990. The Plan is intended to reward participating
Executives for their services rendered to Life Technologies, Inc. and its
participating affiliated corporations by providing assistance for their
financial welfare upon retirement.
The Plan is hereby adopted effective January 1, 1990.
E-26
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01 Actuarial Equivalent. Means, except for account balance
---------------------
annuity equivalent purposes as described below, an amount or benefit or equal
value when compared to the Standard Form and computed on the following basis:
Interest Rate: 7%.
-------------
Mortality: 1984 Unisex Pension Mortality Table set back one year.
---------
The determination of the annuity equivalent in the Standard Form of any account
balance shall be made on the following basis:
Interest Rate: The annual interest rate on a 30-year Treasury
-------------
securities as specified by the Commissioner for the second month preceding the
1st day of the Plan Year in which the lump sum settlement is to be paid or the
present value is being determined for distribution consent purpose.
Mortality: The mortality table based on the prevailing Commissioners'
---------
standard table (described in Section 807 (d)(5)(A)) used to determine reserves
for group annuity contracts issued on the date as of which present value is
being determined (without regard to any other subparagraph of Section 807
(d)(5)), that is prescribed by the Commissioner in revenue rulings, notices, or
other guidance, published in the Internal Revenue Bulletin.
Section 1.02 Average Annual Earnings. The annual average of a Participant's
-------------------------
Earnings from LTI during the highest 60 consecutive calendar months of his last
120 months as a Participant in the Plan.
Section 1.03 Early Retirement Date. The first day of any month after a
---------------------
Participant attains age 55 and has completed 10 Years of Service, provided the
Participant shall have given LTI one year's notice of such Early Retirement
Date.
Section 1.04 Earnings. Means a Participant's annual base rate of pay for
--------
the calendar year plus any cash bonus(es) actually paid to the Participant
during the calendar year. Excluded from Earnings is any income imputed to a
Participant by reason of his use of property owned or furnished by LTI, any
moving expenses and reimbursements, any income due to life insurance paid by LTI
in excess of non-taxable limits, any income from the exercise of stock options,
and any income from the receipt of the Common Stock of LTI.
Section 1.05 Effective Date. January 1. 1990 is the Effective Date of the
----------------
Plan.
Section 1.06 Executive. An Executive is an individual who, until further
---------
decision of the Board of Directors of LTI, is an employee of LTI eligible to be
so selected with a job classification, including but not limited to: Chairman,
Vice Chairman, President, Senior Vice President, Vice President, Secretary,
Treasurer, General Manager, Group Operations Officer and Divisional Officer.
E-27
<PAGE>
Section 1.07 Internal Revenue Code or Code. These terms refer to the
-----------------------------
Internal Revenue Code of 1986, as amended and as may be further amended from
time to time.
Section 1.08 LTI. The term LTI refers to Life Technologies, Inc., any
---
participating subsidiary and affiliated corporations.
Section 1.09 Normal Retirement Date. The first day of the month coincident
----------------------
with or next following a Participant's 65th birthday is his Normal Retirement
Date.
Section 1.10 Other Work-Related Retirement Benefits.
--------------------------------------
(a) Plans or Arrangements Sponsored by LTI:
The total annual amount of any qualified retirement plan benefit and any
other benefits derived from a nonqualified retirement plan sponsored by LTI to
provide income in the Participant's retirement years, unless otherwise
determined by LTI, excluding however, any benefits attributable to a salary
reduction arrangement between the Participant and LTI relating to non-deductible
voluntary employee contributions and contributions made pursuant to Code
Sections 401(k) and/or 125 and further excluding any benefits payable under
executive deferred compensation benefit plan sponsored by LTI.
(b) Plans or Arrangements Sponsored by an Employer Other than LTI:
Any retirement benefit amounts determined by mutual agreement between the
Participant and LTI as evidenced by a Participation Agreement Form executed by
the Participant within a reasonable time after the Participant is determined by
LTI to be eligible to participate in the Plan. Such retirement benefit amounts
would include benefits derived from qualified or nonqualified retirement plans
and plans of deferred compensation sponsored by a former employer, including,
but not limited to a retirement plan for self-employed persons or partnership.
Such retirement benefit amounts would exclude retirement income from an
individual retirement accounts derived from deductible and/or nondeductible
contributions only or any governmental plan, as well as benefits resulting from
voluntary contributions, whether tax deductible or nondeductible, made by the
Participant while not in the employ of LTI.
E-28
<PAGE>
Such Other Work-Related Retirement Benefits shall be deemed to be paid
under a joint and 50% survivorship annuity payable at the Participant's Normal
Retirement Date, and the Participant's spouse shall be deemed to be the survivor
annuitant regardless of the actual optional form of payment selected by the
Participant and regardless of the payee or contingent beneficiary actually
designated by the Participant. In the event that the Participant does not have a
spouse at the time of his retirement, a joint and 50% survivorship annuity form
of payment of Other Work- Related Retirement Benefits shall be computed as being
95% of such benefits payable an a life annuity basis at the Participant's Normal
Retirement Date.
Section 1.11 Participant. An Executive selected by LTI to participate in
-----------
the Plan and who has accepted participation in the Plan, pursuant to a written
Participation Agreement Form, shall be a Participant in the Plan but only during
the period he continues to be an Executive and only until his participation is
terminated by LTI or he terminates his employment with LTI.
Section 1.12 Plan. The Life Technologies, Inc.
----
Executive Supplemental Retirement Plan shall be referred to herein as the Plan.
Section 1.13 Service. Service shall include the total years and fractions
-------
of a year during which a Participant has been employed by LTI as an employee up
to an Executive's actual retirement date, including Years of Service performed
after age 65, the Normal Retirement Date. In determining Service, each completed
month in excess of a full year shall be credited as a completed twelfth of a
year. At the discretion of LTI, up to 10 additional years of Service may be
credited to an Executive who was hired- over the age of 40 solely for purposes
of determining the amount of retirement benefit payable at the Normal Retirement
Date. Service with a predecessor corporation prior to its acquisition by or
merger into LTI shall not be included; and Service shall be determined only from
the date of last hiring, unless LTI elects to include any previous service.
Section 1.14 Social Security. The term Social Security refers to 100% of
---------------
the primary old-age insurance benefit payable under the Social Security Act at
the Participant's age 65 or later retirement date. In the event that a
Participant shall retire prior to his Normal Retirement Date, Social Security
shall be determined under the law in effect at the time of his retirement and on
the assumption that he continue to receive compensation (including bonus) at the
same rate from the date of his actual retirement until his Normal Retirement
Date.
ARTICLE II
AMOUNT OF RETIREMENT BENEFIT
----------------------------
Section 2.01 Accrued Benefit. An annual pension amount commencing on his
---------------
date of actual retirement and equal to ((l) minus (2)) times (3).
1. 55% of Average Annual Earnings computed through his date of actual
retirement.
2. Social Security plus Other Work-Related Retirement Benefits.
3. Service, to a maximum of 20 years, divided by 20.
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<PAGE>
Section 2.02 Normal Retirement Pension. The Normal Retirement Pension is
-------------------------
the Accrued Benefit payable at or after his Normal Retirement Date.
Section 2.03 Regular Early Retirement. If the Participant retires on an
------------------------
Early Retirement Date, he may make application for either:
(a) A retirement income commencing an his Normal Retirement Date in the
amount of his Accrued Benefit at his Early Retirement Date, or
(b) A retirement income commencing prior to his Normal Retirement Date
which shall be equal to his Accrued Benefit at his Early Retirement Date
adjusted by the Early Retirement Factors in Table I in Appendix A (attached
hereto).
Section 2.04 Special Early Retirement. A retiring Participant who meets one
------------------------
of the following criteria will be eligible to request a commencement of his
Accrued Benefit from the Plan upon attaining age 62 or at an earlier date,
subject to the Early Retirement Factors in Table II of Appendix A. The criteria
are:
(a) A Participant who is age 55 or older and has 25 or more years of
Service;
(b) In the event there is a change in control of LTI, all Participants
age 55 and older with 10 or more years of Service;
(c) If LTI sells or there is a discontinuation of operations for a portion
of its business interests, a Participant who is age 55 or older and is
employed in the affected division, subject to the discretion of LTI;
or
(d) A Participant who has 10 or more years of Service and who has received
permission from LTI to retire at a Special Early Retirement Date.
Section 2.05 Other Termination. Except in the event of a Participant's
-----------------
death or disability, if a Participant terminates his employment at LTI prior to
his Early Retirement Date, there shall be no benefits payable from this Plan.
E-30
<PAGE>
ARTICLE III
TERMINATION BY DISABILITY
-------------------------
Section 3.01 Disability Pension. If a Participant who has completed at
------------------
least ten (10) years of Service but who has not attained his Early Retirement
Date terminates his employment on account of disability and such Participant is
entitled to a long- term disability benefit under another plan maintained by LTI
or is otherwise determined by LTI to be disabled, such Participant shall be
entitled to receive a disability pension at his Normal Retirement Date.
The amount of the disability pension shall be computed under Section 2.01
based on the facts and circumstances as of the date of his disability as if such
date had been his Early Retirement Date, but with credit for Service (to a
maximum of 20 years)to his Normal Retirement Date or, if earlier, the date of
recovery from his disability. It is intended that the Disability Pension be
based on Annual Average Earnings and offsetting computations determined at the
date of such disability, that payments be made as if a Participant had reached
his Early Retirement Date and the Participant made the election provided in
Section 2.03(a) or (b) but with the amount of Service he would have been
credited with had he remained a Participant until his Normal Retirement Date or,
if earlier, the date of recovery from his disability.
Section 3.02 Exception to Disability Pension. if the Participant is covered
-------------------------------
by a long-term disability plan by LTI and such plan also provides for payments
to or benefit accruals under another qualified or nonqualified retirement Plan
of LTI from the date of disability until the Participant attains his Normal
Retirement Date, such Participant will cease to earn accruals under this Plan as
of the date the Participant first becomes eligible for retirement benefits
(payments or accruals) under the long-term disability plan.
E-31
<PAGE>
ARTICLE IV
FORM OF PENSION
---------------
Section 4.01 Standard Form.
---------------
(a) Benefits shall be paid to an unmarried Participant in the form of a
life annuity payable in monthly or other mutually convenient
installments, and shall cease upon his death.
(b) A married Participant shall be paid in the form of a 50% joint and
survivor annuity for the lives of the Participant and his spouse,
which amount shall be the actuarial equivalent of the standard form
for an unmarried Participant, provided such election is made in
writing and delivered to LTI prior to the commencement of pension
payments hereunder.
Section 4.02 Optional Forms.
--------------
The Participant may make an election to receive an optional form of benefit
approved by LTI which is the actuarial equivalent of the Standard Form.
Section 4.03 Election of Form of Benefit.
---------------------------
Any election made pursuant to Sections 4.01 or 4.02 shall be made on a
Benefit Election Form as provided by LTI to the Participant prior to the
commencement of benefits hereunder.
E-32
<PAGE>
ARTICLE V
DEATH BENEFITS
--------------
Section 5.01 Death Prior to Retirement.
-------------------------
(a) In the event that a legally married Participant dies while an employee
of LTI, his surviving spouse shall receive an annual pension benefit during such
spouse's lifetime equal to 50% of the amount he would have received had he
retired on the date of his death and elected to receive the retirement benefit
payable under Section 4.01(b). Such distributions are subject to the following
provisions: (1) such benefit shall be payable only in the event the Participant
was legally married for at least one year prior to the date of his death; and
(2) if such surviving spouse is more than five years younger than the
Participant, the amount of such pension benefit shall be actuarially adjusted to
reflect this contingency. Such amount of pension shall commence on the first day
of the month following the month in which death occurs.
(b) In the event that a Participant who is either not legally married or
who has been legally married for less than one year dies while employed by LTI,
there shall be no death benefit whatsoever payable hereunder; and neither he nor
any person claiming through him shall receive any benefits pursuant to this
Plan.
Section 5.02 Death After Retirement. When a Participant dies after his
----------------------
retirement and after the written election of the form of his benefit payments,
death benefits, if any, shall be paid in accordance with the form of benefit so
elected. However, if the retired participant had not yet elected the form of
payment, death benefits shall be paid in accordance with Section 5.01 but based
upon his Accrued Benefit at the time of his actual retirement.
E-33
<PAGE>
ARTICLE VI
SUSPENSION OF BENEFITS
----------------------
Section 6.01 Suspension of Benefits. No benefits, or no further benefits,
----------------------
as the case may be, shall be paid to a Participant if LTI shall determine that
such Participant shall have:
(d) Induced customers of LTI to curtail or cancel their business with LTI;
(e) Induced any other employee of LTI to terminate his employment with
LTI;
(f) Sold or otherwise imparted to any person, firm, or corporation the
names of the customers of LTI or any confidential or secret data or
other information of value to LTI derived by him from his association
with LTI;
(g) Directly or indirectly acquired an interest in any other company,
firm, association, or organization, the business of which is related
to or in competition with the business of LTI or any of its
subsidiaries or affiliates (present or future) and shall not own or
hold to any substantial degree (more than 5% of any class of) any
securities in any such company, firm, association, or organization;
(h) Directly or indirectly competed with LTI in any line of business or
activity in which LTI is engaged either for his own benefit or with
any person other than LTI or engaged directly by the Board of
Directors to be inimical to the interests of LTZ; or
(i) Made any false statement to LTI in any application, election or other
form.
E-34
<PAGE>
ARTICLE VII
ADMINISTRATION
--------------
Section 7.01 Responsibilities of LTI as Plan Administrator. LTI shall be
---------------------------------------------
the Plan Administrator of the Plan. LTI shall have the following powers and
responsibilities as Plan Administrator of the Plan:
(a) To determine the Executives who shall be eligible to participate in the
Plan, which Executives shall be Participants in the Plan, and the period during
which they shall be Participants.
(b) To determine benefit rights.
(c) To determine the manner of disbursement of benefits.
(d) To make rules and regulations as it may deem necessary to carry out the
provisions of the Plan.
(e) To employ actuaries, attorneys, accountants, and such other individuals as
it shall deem necessary or desirable in the administration of the Plan, and to
delegate to such actuaries, attorneys, accountants and other individuals such
powers and responsibilities as it shall determine.
(f) To determine in accordance with uniform standards any question arising in
the administration, interpretation and application of the Plan, such
determination to be conclusive and binding to the extent the same shall not be
plainly inconsistent with the terms of the Plan or any applicable law.
(g) To decide any disputes which may arise.
(h) To designate, consistent with sound standards, the actuarial bases to be
used for all actuarial calculations.
Without limiting the generality of the foregoing, LTI, as Plan
Administrator, shall have power to determine the amount of Other work-
Related Retirement Benefits (as defined in Section 1.10) which shall be
provided from any defined contribution plan, the entitlement of an
Executive to the disability pension provided in Section 3.01, the amount of
any optional form of payment elected under Section 4.02, the amount of the
actuarial equivalent payable at Early Retirement Date as provided in
Section 2.03, and the amount of any actuarial reduction in the event a
spouse is more than five years younger than an Executive as provided in
Section 5.01. LTI may allocate some or all of its powers and
responsibilities as Plan Administrator as enumerated above to such
individuals, committees of individuals, firms or corporations as it shall
determine.
Section 7.02 Amendment and Termination of Plan. LTI shall have the power,
---------------------------------
in its uncontrolled discretion, to amend or terminate the Plan at any time.
Section 7.03 Action by LTI. Whenever LTI is required or authorized to
-------------
exercise any powers hereunder, or whenever any discretion or activity is called
for by the Board of Directors of LTI, such action shall be taken by the
E-35
<PAGE>
Board of Directors, or such other committee of the Board of Directors, or other
person as shall be determined by the Board of Directors.
E-36
<PAGE>
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Prohibition Against Alienation. No benefit payable under this
------------------------------
Plan, whether or not in payment status, shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber or to charge the same shall be void. No such benefit or interest shall
be liable for or subject to the debts, contracts, liabilities or torts of the
Executive or his spouse entitled to any benefit or having any interest. If any
Participant, former Participant, or spouse becomes bankrupt or attempts to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any
benefit under this Plan, then LTI may, in its discretion, direct that any
benefit to which such Participant, former Participant, or spouse is entitled be
terminated and that all future payments to which such Participant, former
Participant, or spouse would otherwise be entitled be held and applied for the
benefit of such Participant, former Participant, or spouse, his spouse, children
or other dependents, or any of them, in such manner and in such proportion as
LTI may deem proper.
Section 8.02 Application of Benefit of Participant. In the event that LTI
-------------------------------------
finds that a Participant, former Participant, or spouse is unable to care for
his or her affairs because of illness or accident, any benefits payable
hereunder may, unless claim has been made therefore by a duly appointed
guardian, conservator or other legal representative, be paid to a spouse, child,
parent, or other blood relative of such person, or to anyone found by LTI to
have incurred expense for the support and maintenance of such Participant,
former Participant, or spouse, and any such payment made shall be a complete
discharge of all liability of LTI under the Plan.
Section 8.03 No Right to Continued Employment. Nothing in this Plan shall
--------------------------------
be construed as giving any Participant the right to be retained in LTI's employ,
or the right to any payment whatsoever except to the extent of the benefits
provided for in the Plan. LTI expressly reserves the right to dismiss any
Participant at any time without liability for the effect which such dismissal
might have upon any benefit to be paid thereunder.
Section 8.04 Plan Unfunded. It is expressly intended that no funds shall be
-------------
set aside by trust, insurance contract, or otherwise, to fulfill any
responsibilities which LTI may have under the Plan. However, this shall not
preclude the establishment of a "Rabbi" Trust by LTI in order to hold assets
used to satisfy the provisions of this Plan.
Section 8.05 Governing Law. The provisions of the Plan shall be construed,
-------------
administered, and enforced according to the laws of the State of Maryland.
Section 8.06 Gender and Number. Words used in the masculine include the
-----------------
feminine gender. Words used in the singular or plural shall be construed as if
plural or singular, respectively, where they would so apply.
Section 8.07 Titles. Titles of Articles and Sections are inserted for
------
convenience and shall not affect the meaning or construction of the Plan.
E-37
<PAGE>
APPENDIX A
EARLY RETIREMENT FACTORS
Age When Benefits
Commence Table I Table II
-------- -------
55 .500 .700
56 .533 .733
57 .567 .767
58 .600 .800
59 .633 .833
60 .667 .867
61 .733 .933
62 .800 1.000
63 .867 1.000
64 .933 1.000
65 or older 1.000 1.000
E-38
<PAGE>
LIFE TECHNOLOGIES, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
PARTICIPATION AGREEMENT FORM
_____
INSTRUCTIONS: This form must be filled out and returned by the Participant
------------
before any benefits from this Plan will commence.
1. ____________________ _____________ _________________
Participant's Name Date of Birth Social Security #
2. ____________________ _____________ _________________
Spouse's Name Date of Birth Social Security #
3. Election to Participate:
------------------------
I, ________________, hereby elect to participate in and be bound by the terms
and conditions of the Life Technologies, Inc. Executive Supplemental
Retirement Plan. As a condition of my participation, I hereby state the
information contained in item 4 accurately reflects my retirement plan
benefits available from former employer(s) other than LTI or any of its
subsidiaries or affiliates.
4. Other Work-Related Retirement Benefits. Listed below each retirement plan
--------------------------------------
and its benefit maintained by employers other than LTI and its
participating subsidiaries and affiliates. Also indicate under "Excluded
Amounts" any benefits derived from personal contributions pursuant to a
salary reduction or deferred compensation agreement as mutually agreed by
LTI and the Participant.
<TABLE>
<CAPTION>
Source Total Annual Benefit Form of Payment Payment Begins Excluded Amounts
- ------ -------------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
__________________ $___________________ ________________ ______________ $_______________
__________________ ____________________ ________________ ______________ ________________
__________________ $___________________ ________________ ______________ $_______________
__________________ ____________________ ________________ ______________ ________________
__________________ $___________________ ________________ ______________ $_______________
__________________ ____________________ ________________ ______________ ________________
</TABLE>
Date:_________________ __________________________
Participant
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<PAGE>
LIFE TECHNOLOGIES, INC.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
BENEFIT ELECTION FORM
_____
INSTRUCTIONS: This form must be filled out and returned by the Participant
- ------------
before any benefits from this Plan will be paid.
1. ____________________ _____________ _________________
Participant's Name Date of Birth Social Security #
2. ____________________ _____________ _________________
Spouse's Name Date of Birth Social Security #
3. I hereby elect the following form of benefit:
Standard Form:
-------------
Single life annuity
Joint and 50% survivor annuity for me and my legally married spouse
Other Form:
----------
The form of benefit specified below has been approved by LTI and is
the actuarial equivalent of the Standard Form:
___________________________________________
___________________________________________
4. In accordance with the provisions of the Plan, I understand that payments
will commence as of ____________ payable on a _______________ basis.
Date: _____________________ _______________________
Participant
E-40
<PAGE>
Exhibit 10(E)
CHANGE-IN-CONTROL AGREEMENT
AGREEMENT by and between LIFE TECHNOLOGIES, INC., a Delaware
Corporation (the "Company"), and Derek E. Woods, Ph.D. (the "Executive"), dated
as of the 9th day of March 2000.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below). The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
-------------------
(a) The "Effective Date" shall be the first date during the
"Change of Control Period" (as defined in Section l(b)) on which a Change of
Control occurs; provided that the Executive is employed on that date. Anything
in this Agreement to the contrary notwithstanding, if the Executive's employment
with the Company is terminated or the Executive ceases to be an officer of the
Company prior to the date on which a Change of Control occurs, and it is
reasonably demonstrated by the Executive that such termination of employment or
cessation of status as an officer (i) was at the request of a third party who
has taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment or cessation of
status as an officer.
(b) The "Change of Control Period" is the period commencing on
the date hereof and ending on the second anniversary of such date, provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
is hereinafter referred to as the "Renewal Date"), the Change of Control Period
shall be automatically extended so as to terminate two years from such Renewal
Date, unless at least 60 days prior to the Renewal Date the Company shall give
notice to the Executive that the Change of Control Period shall not be so
extended.
E-41
<PAGE>
2. Change of Control. For the purpose of this Agreement;
-----------------
(a) a "Change of Control" shall mean:
(i) Any acquisition or series of acquisitions, other than
from the Company, by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of 20% or more of either the then outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"), provided, however, that (A) any acquisition by the
Company, The Dexter Corporation ("Dexter") or any of their subsidiaries, (B) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company, Dexter or any of their subsidiaries, (C) any
transaction or series of transactions that results in any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
having beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of more than 20% of the Outstanding Company Common Stock but less than the
percentage of Outstanding Company Common Stock then beneficially owned by
Dexter, or (D) any acquisition or series of acquisitions which results in any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) acquiring beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of more than 20% of the Outstanding Company Common
Stock and while such a beneficial owner such individual, entity or group does
not exercise the voting power of his, her or its Outstanding Company Common
Stock or otherwise exercise control with respect to any matter concerning or
affecting the Company and promptly sells, transfers, assigns or otherwise
disposes of that number of shares of Outstanding Company Common Stock necessary
to reduce his, her or its beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of the Outstanding Company Common Stock to below 20%, as
the case may be, shall not constitute a Change of Control; or
(ii) Individuals who as of December 1, 1996, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors of the Company,
provided that any individual becoming a director subsequent to December 1, 1996,
whose election, or nomination for election, by the Company's stockholders was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board, including a majority of the members of the Incumbent Board who
are not Dexter-related Directors (as hereinafter defined), shall be considered
as though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office is in
connection with an actual or threatened election contest (as such terms are used
in Rule 14a-11 of the Regulation 14A promulgated under the Exchange Act)
relating to the election of directors of the Company; or
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<PAGE>
(iii) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company, or of the sale or
other disposition of all or substantially all of the assets of the
Company, or of a reorganization, merger or consolidation of the
Company, in each case, with respect to which all or substantially all
of the individuals and entities who were the respective beneficial
owners of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization, merger
or consolidation; or
(iv) At any time when Dexter is the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 20% or
more of either the Outstanding Company Common Stock or the Outstanding
Company Voting Securities any of the events set forth in the following
clauses (A), (B) or (C) below shall occur:
(A) The acquisition, other than from Dexter, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) of beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of either the then
outstanding shares of common stock of Dexter (the "Outstanding Dexter
Common Stock") or the combined voting power of the then outstanding
voting securities of Dexter entitled to vote generally in the election
of directors (the "Outstanding Dexter Voting Securities"), provided,
however, that (I) any acquisition by the Company, Dexter or any of
their subsidiaries, (II) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company, Dexter or
any of their subsidiaries, or (III) any acquisition by any corporation
with respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Dexter Common Stock and Outstanding Dexter Voting
Securities immediately prior to such acquisition in substantially the
same proportion as their ownership, immediately prior to such
acquisition, of the Outstanding Dexter Common Stock and Outstanding
Dexter Voting Securities, as the case may be, shall not constitute a
Change of Control; or
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<PAGE>
(B) Individuals who, as of December 1, 1996, constitute the
Board of Directors of Dexter (the "Dexter Incumbent Board") cease for
any reason to constitute at least a majority of the Board of Directors
of Dexter, provided that any individual becoming a director subsequent
to December 1, 1996, whose election, or nomination for election, by
Dexter's stockholders was approved by a vote of at least a majority of
the directors then comprising the Dexter Incumbent Board shall be
considered as though such individual were a member of the Dexter
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) relating to the
election of the directors of Dexter; or
(C) Approval by the stockholders of Dexter of a complete
liquidation or dissolution of Dexter or of the sale or other
disposition of all or substantially all of the assets of Dexter, or of
a reorganization, merger or consolidation of Dexter, in each case,
with respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding
Dexter Common Stock and Outstanding Dexter Voting Securities
immediately prior to such reorganization, merger or consolidation do
not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization, merger
or consolidation.
For purposes of this Agreement, a "Dexter-related Director" shall mean
any director of the Company who is or during the prior 10 years has been an
officer, director, employee or 5% or greater stockholder of Dexter or any of its
subsidiaries (other than the Company and its subsidiaries) or an officer,
director, partner, employee or 5% or greater stockholder of any law firm,
investment bank or other business organization that has been retained by Dexter
or any of its subsidiaries (other than the Company and its subsidiaries) to
provide services for an aggregate remuneration in any year of in excess of 5% of
the revenues of such law firm, investment bank or other business organization or
is otherwise controlling, controlled by or under common control with Dexter.
3. Employment Period. The Company hereby agrees to continue the
-----------------
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company, for the period commencing on the Effective Date and ending at
the end of the 24th month following the Effective Date (the "Employment
Period").
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<PAGE>
4. Terms of Employment
-------------------
(a) Position and Duties.
-------------------
(i) During the Employment Period, (A) the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and
assigned at any time during the 90-day period immediately preceding the
Effective Date and (B) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the Effective
Date or any office or location less than 50 miles from such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation.
------------
(i) Base Salary. During the Employment Period, the
-----------
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to the highest annualized (for
any fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve full
months) base salary paid or payable to the Executive by the Company and its
affiliated companies in respect of the three fiscal years immediately preceding
the fiscal year in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be substantially consistent
with increases in base salary generally awarded in the ordinary course of
business to other peer executives of the Company and its affiliated companies.
Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to the Annual Base Salary as so increased. As used
in this Agreement, the term "affiliated companies" includes any company
controlled by, controlling or under common control with the Company.
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<PAGE>
(ii) Annual Bonus. In addition to Annual Base Salary, the
------------
Executive shall be awarded, for each fiscal year during the Employment Period,
an annual bonus (the "Annual Bonus") in cash at least equal to the higher of
either (A) the average annualized (for any fiscal year consisting of less than
twelve full months or with respect to which the Executive has been employed by
the Company for less than twelve full months) bonus paid, or payable but for any
deferral to the Executive by the Company and its affiliated companies under the
Company's deferred compensation arrangements, in respect of the three fiscal
years immediately preceding the fiscal year in which the Effective Date occurs,
or (B) in the event the annual bonus paid, or payable but for any deferral to
the Executive by the Company and its affiliated companies under the Company's
deferred compensation arrangement, in respect of the fiscal year immediately
preceding the fiscal year in which the Effective Date occurs was based upon a
formula or plan in which the Executive participated, then such Annual Bonus
shall be at least equal to the bonus which would be payable based on such
formula or plan had the Executive's participation therein and level of
participation remained in effect following the Effective Date. Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. In addition
---------------------------------------
to Annual Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment Period in all
incentive, savings and retirement plans, practices, policies and programs
generally applicable to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities), savings opportunities and
retirement benefits opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices, policies and
programs as in effect at any time during the 90-day period immediately preceding
the Effective Date.
(iv) Welfare Benefit Plans. During the Employment Period,
---------------------
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent generally
applicable to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide
benefits which are less favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for the Executive and/or
the Executive's family at any time during the 90-day period immediately
preceding the Effective Date.
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<PAGE>
(v) Business Expenses. During the Employment Period, the
-----------------
Executive shall be entitled to receive prompt reimbursement for all reasonable
business expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its affiliated
companies in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
---------------
Executive shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect at any time thereafter generally with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment
------------------------
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company and its affiliated companies at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as provided at any time thereafter generally with respect to
other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
--------
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the 90-
day period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect at any time thereafter generally with respect to other
peer executives of the Company and its affiliated companies.
5. Termination of Employment.
-------------------------
(a) Death or Disability. The Executive's employment shall
-------------------
terminate automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability (as defined below)
of the Executive has occurred during the Employment Period, it may give to the
Executive written notice in accordance with Section 15(b) of this Agreement of
its intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" means the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's employment
-----
during the Employment Period for "Cause." For purposes of this Agreement,
"Cause" means (i) repeated violations by the Executive of the
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<PAGE>
Executive's responsibilities and duties under Section 4(a) of this Agreement
which are demonstrably willful and deliberate on the Executive's part and which
are not remedied in a reasonable period of time after receipt of written notice
from the Company, (ii) commission of an intentional act of fraud, embezzlement
or theft by the Executive in connection with the Executive's duties or in the
course of the Executive's employment with the Company or its affiliated
companies, (iii) causing intentional wrongful damage to property of the Company
or its affiliated companies, (iv) intentionally and wrongfully disclosing secret
processes or confidential information of the Company or its affiliated
companies, or (v) participating, without the Company's express written consent,
in the management of any business enterprise which engages in substantial and
direct competition with the Company or its affiliated companies, and any such
act shall have been materially harmful to the Company or its affiliated
companies.
(c) Good Reason. The Executive's employment may be terminated
-----------
during the Employment Period by the Executive for "Good Reason." For purposes of
this Agreement, "Good Reason" means
(i) the assignment to the Executive of any
responsibilities or duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of written notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of written notice thereof given
by the Executive;
(iii) the Company requiring the Executive to be based at
any office or location other than that described in Section 4(a)(i)(B) hereof
or, requiring the Executive to travel away from his or her office in the course
of discharging responsibilities or duties in a manner which is inappropriate for
the performance of the Executive's duties hereunder and which is significantly
more frequent (in terms of either consecutive days or aggregate days in any
calendar year) than was required prior to the Change of Control;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by any successor to the Company to comply
with and satisfy Section 14(c) of this Agreement, provided that such successor
has received at least ten (10) days prior written notice from the Company or the
Executive of the requirements of Section 14(c) of this Agreement.
For the purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
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<PAGE>
(d) Notice of Termination. Any termination by the Company for
---------------------
Cause or by the Executive for Good Reason shall be communicated by "Notice of
Termination" to the other party hereto given in accordance with Section 15(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen days after the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause, as the case may be,
shall not waive any right of the Executive or the Company hereunder or preclude
the Executive or the Company from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means the date of
-------------------
receipt of the Notice of Termination or any later date specified therein, as the
case may be; provided, however, that (i) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination and (ii) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
-------------------------------------------
(a) Death. If the Executive's employment is terminated by
-----
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following obligations: (i)
payment of the Executive's Annual Base Salary through the Date of Termination to
the extent not theretofore paid, (ii) payment of the product of (x) the Annual
Bonus paid or payable but for any deferral (and annualized for any fiscal year
consisting of less than twelve full months or for which the Executive has been
employed for less than twelve full months) to the Executive for the most
recently completed fiscal year during the Employment Period, and (y) a fraction,
the numerator of which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365 and (iii) payment
of any compensation previously deferred by the Executive (together with any
accrued interest thereon) and not yet paid by the Company and any accrued
vacation pay not yet paid by the Company (the amounts described in clauses (i),
(ii) and (iii) above are hereafter referred to as "Accrued Obligations"). All
Accrued Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, at the option of the Company, either (x) in a lump sum in cash
within 30 days of the Date of Termination or (y) in twelve equal consecutive
monthly installments, with the first installment to be paid within 30 days of
the Date of Termination. Anything in this Agreement to the contrary
notwithstanding, the Executive's family shall be entitled to receive benefits at
least equal to the most favorable benefits provided generally by the Company and
any of its affiliated companies to surviving families of peer executives of the
Company and such affiliated companies under such plans, programs, practices and
policies relating to family death benefits, if any, as in effect generally with
respect to other peer executives and their families at
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<PAGE>
any time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family as in effect on
the date of the Executive's death generally with respect to other peer
executives of the Company and its affiliated companies and their families.
(b) Disability. If the Executive's employment is terminated by
----------
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for Accrued Obligations. All Accrued Obligations shall be paid to the
Executive at the option of the Company, either (x) in a lump sum in cash within
30 days of the Date of Termination or (y) in twelve equal consecutive monthly
installments, with the first installment to be paid within 30 days of the Date
of Termination. Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled after the Disability Effective Date to receive
disability and other benefits at least equal to the most favorable of those
provided by the Company and its affiliated companies to disabled peer executives
and/or their families in accordance with such plans, programs, practices and
policies relating to disability, if any, as in effect generally with respect to
other peer executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at any time thereafter through the
Date of Termination generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(c) Cause. If the Executive's employment shall be terminated
-----
for Cause during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive the Annual Base Salary through the Date of Termination plus the amount
of any compensation previously deferred by the Executive, in each case to the
extent theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for Accrued
Obligations. In such case, all Accrued Obligations shall be paid to the
Executive at the option of the Company, either (x) in a lump sum in cash within
30 days of the Date of Termination, or (y) in twelve equal consecutive monthly
installments, with the first installment to be paid within 30 days of the Date
of Termination.
(d) Good Reason. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or Disability,
or the Executive shall terminate employment under this Agreement for Good
Reason:
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<PAGE>
(i) the Company shall pay to the Executive the aggregate of the
following amounts, such amounts to be payable by the Company in a lump sum in
cash within 30 days of the Date of termination.
A. All Accrued Obligations; and
B. 2 times the sum of the Executive's Annual Base
-
Salary and the higher of either (i) the average annualized (for any fiscal year
consisting of less than twelve full months or with respect to which the
Executive has been employed by the Company for less than twelve full months)
bonus paid, or payable but for any deferral to the Executive by the Company and
its affiliated companies under the Company's deferred compensation arrangements,
in respect of the three fiscal years immediately preceding the fiscal year in
which the Effective Date occurs, or (ii) the targeted annual bonus payable to
the Executive pursuant to the Company's Incentive Compensation Plan for the
fiscal year in which the Date of Termination occurs (assuming 100% achievement
of the Company performance factor and 100% achievement of the Executive's
personal performance factor; and
C. the Executive shall be entitled to receive a
separate lump-sum supplemental retirement benefit equal to the difference
between (a) the actuarial equivalent (utilizing for this purpose the actuarial
assumptions utilized with respect to the Life Technologies, Inc. Retirement Plan
(or any successor plan thereto) (the "Retirement Plan") during the 90-day period
immediately preceding the Effective Date) of the benefit payable under the
Retirement Plan and any supplemental and/or excess retirement plan providing
benefits for the Executive (the "SERP") which the Executive would receive if the
Executive's employment continued at the compensation level provided for in
Section 4(b)(i) and 4(b)(ii) of this Agreement for the remainder of the
Employment Period, assuming for this purpose that all accrued benefits are fully
vested and that benefit accrual formulas are no less advantageous to the
Executive than those in effect during the 90-day period immediately preceding
the Effective Date, and (b) the actuarial equivalent (utilizing for this purpose
the actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the Executive's
actual benefit (paid or payable), if any, under the Retirement Plan and the
SERP; and
D. An amount equal to that portion, if any, of the
Company's contribution to the Executive's 401(k), savings or other similar
individual account plan which is not vested as of the Date of Termination (the
"Unvested Company Contribution"), plus an amount which when added to the
Unvested Company Contribution would be sufficient after Federal, state and local
income taxes (based on the tax returns filed by the Executive most recently
prior to the Date of Termination) to enable the Executive to net an amount equal
to the Unvested Company Contribution; and
(ii) the Company shall pay the Executive up to $25,000 for executive
outplacement services utilized by the Executive upon the receipt by the Company
of written receipts or other appropriate documentation; and
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<PAGE>
(iii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the Company shall
continue benefits to the Executive and, where applicable, the Executive's family
at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section 4(b)(iv)
of this Agreement if the Executive's employment had not been terminated in
accordance with the most favorable plans, practices, programs or policies of the
Company and its affiliated companies generally applicable to other peer
executives and their families during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect at any time
thereafter generally with respect to other peer executives of the Company and
its affiliated companies and their families; provided, however, that if the
Executive becomes employed elsewhere during the Employment Period and is thereby
afforded comparable insurance and welfare benefits to those described in Section
4(b)(iv), the Company's obligation to continue providing the Executive with such
benefits shall cease or be correspondingly reduced, as the case may be. For
purposes of determining eligibility of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the Executive shall be
considered to have remained employed until the end of the Employment Period and
to have retired on the last day of such period; and
(iv) All outstanding stock options held by the Executive pursuant to
any Company stock option plan shall immediately become vested and exercisable as
to all or any part of the shares covered thereby, with the Executive being able
to exercise his or her stock options within a period of three months following
the Date of Termination or such longer period as may be permitted under
Executive's stock option agreements; and
(v) If, in the calendar year immediately preceding the Date of
Termination, the Executive had relocated the Executive's primary residence from
one location (the "Point of Origin") to its location at the Date of Termination
at the request of the Company, then any relocation expenses that are actually
incurred in the year immediately following the Date of Termination by the
Executive in moving the Executive's primary residence to any location shall be
reimbursed by the Company to the extent such expenses do not exceed the cost of
relocating the Executive's primary residence to the Point of Origin, provided
such expenses are substantiated by means of written receipts. The cost of
relocating the Executive's primary residence to the Point of Origin shall be
determined by averaging estimates obtained by the Company in writing from three
reputable moving companies, selected by the Company in good faith. It shall be
the obligation of the Executive to notify the Company in advance of any such
relocation so that such estimates may be obtained.
The amounts required to be paid under this Section 6(d) shall be reduced by any
other amount of severance (i.e., relating solely to salary or bonus continuation
or actual or deemed pension or insurance continuation) received by the Executive
upon such termination of employment under any severance plan, policy or
arrangement of the Company applicable to the Executive or a group of employees
of the Company, including the Executive, and applicable without regard to the
occurrence of a Change of Control prior to such termination of employment. The
amounts payable to the Executive pursuant to this Agreement will not be subject
to any requirement of mitigation, nor, except as specifically set forth herein,
will they be offset or otherwise reduced by reason of the Executive's receipt of
compensation from any source other than the Company.
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7. Non-exclusivity of Rights. Nothing in this Agreement shall
-------------------------
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or practices
provided by the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any other agreements with the Company or
any of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the payments
---------------
provided for in this Agreement and otherwise to perform its obligations
hereunder, except as provided in the last sentence of Section 6(d), shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The Company agrees to pay, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur, including the costs and expenses of any arbitration
proceeding, as a result of any contest (regardless of the outcome thereof) by
the Company or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including as a result of any content by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"); provided that the
--------
Executive's claim is not determined by a court of competent jurisdiction or an
arbitrator to be frivolous or otherwise entirely without merit.
9. Release. Upon fulfillment of the Company's obligation to make
-------
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder, the Executive fully and unconditionally releases and
discharges all claims and causes of action which the Executive or his or her
heirs, personal representatives, successors, or assigns ever had, now have, or
hereafter may have against the Company and any of its affiliated companies on
account of any claims and causes of action arising out of or relating to this
Agreement, any other document relating hereto or delivered in connection with
the transactions contemplated hereby.
10. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that, as a result, directly or indirectly,
of the operation of any of the Company's existing stock option plans, or any
successor option or restricted stock plans (collectively, the "Option and
Restricted Stock Acceleration"), either standing alone or taken together with
the receipt of any other payment or distribution by the Company to or for the
benefit of the Executive whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a "Payment") the Executive
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise
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<PAGE>
Tax"), then the amount payable to the Executive hereunder or as a result of the
Option and Restricted Stock Acceleration shall be reduced in an amount that
would result in the Executive being in the most advantageous net after-tax
position (taking into account both income taxes and any Excise Tax). For
purposes of this determination, the "base amount" as defined in Section
280G(b)(3)(A) of the Code shall be allocated between the Option and Restricted
Stock Acceleration, on the one hand, and Payments, on the other hand, in
accordance with Section 280G(b)(3)(B) of the Code.
(b) All determinations required to be made under this Section,
including the amount of any reduction that will be made in the payments made
pursuant to this Agreement and the assumptions to be utilized in arriving at
such determinations, shall be made by Coopers & Lybrand L.L.P. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Executive. All fees and expenses of the Accounting Firm for tax and
accounting advice provided to the Executive, up to a maximum of $15,000, shall
be borne solely by the Company. If the Accounting Firm determines that no Excise
Tax is payable by the Executive, it shall furnish the Executive with an opinion
that failure to report the Excise Tax on the Executive'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 Executive.
11. Confidential Information. The Executive shall hold in a
------------------------
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies and their respective businesses, which shall have been obtained by the
Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In addition, to the
extent that the Executive is a party to any other agreement relating to
confidential information, inventions or similar matters with the Company, the
Executive shall continue to comply with the provisions of such agreements. In no
event shall an asserted violation of the provisions of this Section constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
12. Public Announcements. The Executive shall consult with the
--------------------
Company before issuing any press release or otherwise making any public
statement with respect to the Company or any of its affiliated companies, this
Agreement or the transactions contemplated hereby, and the Executive shall not
issue any such press release or make any such public statement without the prior
written approval of the Company, except as may be required by applicable law,
rule or regulation or any self regulatory agency requirements, in which event
the Company shall have the right to review and comment upon any such press
release or public statement prior to its issuance.
13. Arbitration. Any dispute, controversy or claim arising out of or
-----------
relating to this Agreement, or any breach thereof, shall be determined and
settled by arbitration to be held in the City of New York pursuant to the labor
rules of the American Arbitration Association or any successor organization.
Any award rendered thereunder shall be final, conclusive and binding on the
parties. Subject to the provisions of Section 8 hereof, each party shall pay
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one-half of all costs and expenses of any arbitration proceeding brought
pursuant to this Section, and each party shall pay its own attorneys' fees and
expenses.
14. Successors.
----------
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) 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
expressly 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. 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.
15. Miscellaneous.
-------------
(a) This Agreement shall be governed by and construed in
accordance with the laws of the Sate of New York, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
-------------------
Derek E. Woods, Ph.D.
18401 Azalea Drive
Derwood
Maryland 20855
If to the Company:
-----------------
Life Technologies, Inc.
Post Office Box 6482
9800 Medical Center Drive
Rockville, MD 20850
(ATTN: General Counsel)
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<PAGE>
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof in any particular instance shall not
be deemed to be a waiver of such provision or any other provision thereof.
(f) This Agreement shall replace and supersede the Executive's
Change-In-Control Agreement dated as of the 13th day of February 1997 between
the Executive and the Company and, upon execution hereof by the parties hereto,
such prior Change-In-Control Agreement shall become null and void.
IN WITNESS WHEREOF, the Executive has hereunto set his or her hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above
LIFE TECHNOLOGIES, INC.
/s/ Derek E. Woods, Ph.D By: /s/ C. Eric Winzer
- -------------------------- ---------------------------------
Derek E. Woods, Ph.D C. Eric Winzer
Vice President and
Chief Financial Officer
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<PAGE>
Exhibit 10(G)
CHANGE-IN-CONTROL AGREEMENT
AGREEMENT by and between LIFE TECHNOLOGIES, INC., a Delaware
Corporation (the "Company"), and John V. Cooper (the "Executive"), dated as of
the 9th day of March 2000.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below). The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
-------------------
(a) The "Effective Date" shall be the first date during the
"Change of Control Period" (as defined in Section l(b)) on which a Change of
Control occurs; provided that the Executive is employed on that date. Anything
in this Agreement to the contrary notwithstanding, if the Executive's employment
with the Company is terminated or the Executive ceases to be an officer of the
Company prior to the date on which a Change of Control occurs, and it is
reasonably demonstrated by the Executive that such termination of employment or
cessation of status as an officer (i) was at the request of a third party who
has taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment or cessation of
status as an officer.
(b) The "Change of Control Period" is the period commencing on
the date hereof and ending on the second anniversary of such date, provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
is hereinafter referred to as the "Renewal Date"), the Change of Control Period
shall be automatically extended so as to terminate two years from such Renewal
Date, unless at least 60 days prior to the Renewal Date the Company shall give
notice to the Executive that the Change of Control Period shall not be so
extended.
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2. Change of Control. For the purpose of this Agreement;
-----------------
(a) a "Change of Control" shall mean:
(i) Any acquisition or series of acquisitions, other than
from the Company, by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of 20% or more of either the then outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"), provided, however, that (A) any acquisition by the
Company, The Dexter Corporation ("Dexter") or any of their subsidiaries, (B) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company, Dexter or any of their subsidiaries, (C) any
transaction or series of transactions that results in any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
having beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of more than 20% of the Outstanding Company Common Stock but less than the
percentage of Outstanding Company Common Stock then beneficially owned by
Dexter, or (D) any acquisition or series of acquisitions which results in any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) acquiring beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of more than 20% of the Outstanding Company Common
Stock and while such a beneficial owner such individual, entity or group does
not exercise the voting power of his, her or its Outstanding Company Common
Stock or otherwise exercise control with respect to any matter concerning or
affecting the Company and promptly sells, transfers, assigns or otherwise
disposes of that number of shares of Outstanding Company Common Stock necessary
to reduce his, her or its beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of the Outstanding Company Common Stock to below 20%, as
the case may be, shall not constitute a Change of Control; or
(ii) Individuals who as of December 1, 1996, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors of the Company,
provided that any individual becoming a director subsequent to December 1, 1996,
whose election, or nomination for election, by the Company's stockholders was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board, including a majority of the members of the Incumbent Board who
are not Dexter-related Directors (as hereinafter defined), shall be considered
as though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office is in
connection with an actual or threatened election contest (as such terms are used
in Rule 14a-11 of the Regulation 14A promulgated under the Exchange Act)
relating to the election of directors of the Company; or
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<PAGE>
(iii) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company, or of the sale or
other disposition of all or substantially all of the assets of the
Company, or of a reorganization, merger or consolidation of the
Company, in each case, with respect to which all or substantially all
of the individuals and entities who were the respective beneficial
owners of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization, merger
or consolidation; or
(iv) At any time when Dexter is the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 20% or
more of either the Outstanding Company Common Stock or the Outstanding
Company Voting Securities any of the events set forth in the following
clauses (A), (B) or (C) below shall occur:
(A) The acquisition, other than from Dexter, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) of beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of either the then
outstanding shares of common stock of Dexter (the "Outstanding Dexter
Common Stock") or the combined voting power of the then outstanding
voting securities of Dexter entitled to vote generally in the election
of directors (the "Outstanding Dexter Voting Securities"), provided,
however, that (I) any acquisition by the Company, Dexter or any of
their subsidiaries, (II) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company, Dexter or
any of their subsidiaries, or (III) any acquisition by any corporation
with respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Dexter Common Stock and Outstanding Dexter Voting
Securities immediately prior to such acquisition in substantially the
same proportion as their ownership, immediately prior to such
acquisition, of the Outstanding Dexter Common Stock and Outstanding
Dexter Voting Securities, as the case may be, shall not constitute a
Change of Control; or
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<PAGE>
(B) Individuals who, as of December 1, 1996, constitute the
Board of Directors of Dexter (the "Dexter Incumbent Board") cease for
any reason to constitute at least a majority of the Board of Directors
of Dexter, provided that any individual becoming a director subsequent
to December 1, 1996, whose election, or nomination for election, by
Dexter's stockholders was approved by a vote of at least a majority of
the directors then comprising the Dexter Incumbent Board shall be
considered as though such individual were a member of the Dexter
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) relating to the
election of the directors of Dexter; or
(C) Approval by the stockholders of Dexter of a complete
liquidation or dissolution of Dexter or of the sale or other
disposition of all or substantially all of the assets of Dexter, or of
a reorganization, merger or consolidation of Dexter, in each case,
with respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding
Dexter Common Stock and Outstanding Dexter Voting Securities
immediately prior to such reorganization, merger or consolidation do
not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization, merger
or consolidation.
For purposes of this Agreement, a "Dexter-related Director" shall mean
any director of the Company who is or during the prior 10 years has been an
officer, director, employee or 5% or greater stockholder of Dexter or any of its
subsidiaries (other than the Company and its subsidiaries) or an officer,
director, partner, employee or 5% or greater stockholder of any law firm,
investment bank or other business organization that has been retained by Dexter
or any of its subsidiaries (other than the Company and its subsidiaries) to
provide services for an aggregate remuneration in any year of in excess of 5% of
the revenues of such law firm, investment bank or other business organization or
is otherwise controlling, controlled by or under common control with Dexter.
3. Employment Period. The Company hereby agrees to continue the
-----------------
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company, for the period commencing on the Effective Date and ending at
the end of the 24th month following the Effective Date (the "Employment
Period").
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4. Terms of Employment
-------------------
(a) Position and Duties.
-------------------
(i) During the Employment Period, (A) the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and
assigned at any time during the 90-day period immediately preceding the
Effective Date and (B) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the Effective
Date or any office or location less than 50 miles from such location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation.
------------
(i) Base Salary. During the Employment Period, the
-----------
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to the highest annualized (for
any fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve full
months) base salary paid or payable to the Executive by the Company and its
affiliated companies in respect of the three fiscal years immediately preceding
the fiscal year in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be substantially consistent
with increases in base salary generally awarded in the ordinary course of
business to other peer executives of the Company and its affiliated companies.
Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to the Annual Base Salary as so increased. As used
in this Agreement, the term "affiliated companies" includes any company
controlled by, controlling or under common control with the Company.
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(ii) Annual Bonus. In addition to Annual Base Salary, the
------------
Executive shall be awarded, for each fiscal year during the Employment Period,
an annual bonus (the "Annual Bonus") in cash at least equal to the higher of
either (A) the average annualized (for any fiscal year consisting of less than
twelve full months or with respect to which the Executive has been employed by
the Company for less than twelve full months) bonus paid, or payable but for any
deferral to the Executive by the Company and its affiliated companies under the
Company's deferred compensation arrangements, in respect of the three fiscal
years immediately preceding the fiscal year in which the Effective Date occurs,
or (B) in the event the annual bonus paid, or payable but for any deferral to
the Executive by the Company and its affiliated companies under the Company's
deferred compensation arrangement, in respect of the fiscal year immediately
preceding the fiscal year in which the Effective Date occurs was based upon a
formula or plan in which the Executive participated, then such Annual Bonus
shall be at least equal to the bonus which would be payable based on such
formula or plan had the Executive's participation therein and level of
participation remained in effect following the Effective Date. Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. In
---------------------------------------
addition to Annual Base Salary and Annual Bonus payable as hereinabove provided,
the Executive shall be entitled to participate during the Employment Period in
all incentive, savings and retirement plans, practices, policies and programs
generally applicable to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities), savings opportunities and
retirement benefits opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices, policies and
programs as in effect at any time during the 90-day period immediately preceding
the Effective Date.
(iv) Welfare Benefit Plans. During the Employment Period,
---------------------
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent generally
applicable to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide
benefits which are less favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for the Executive and/or
the Executive's family at any time during the 90-day period immediately
preceding the Effective Date.
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(v) Business Expenses. During the Employment Period, the
-----------------
Executive shall be entitled to receive prompt reimbursement for all reasonable
business expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its affiliated
companies in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
---------------
Executive shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect at any time thereafter generally with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment
------------------------
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company and its affiliated companies at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as provided at any time thereafter generally with respect to
other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
--------
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the 90-
day period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect at any time thereafter generally with respect to other
peer executives of the Company and its affiliated companies.
5. Termination of Employment.
-------------------------
(a) Death or Disability. The Executive's employment shall
--------------------
terminate automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability (as defined below)
of the Executive has occurred during the Employment Period, it may give to the
Executive written notice in accordance with Section 15(b) of this Agreement of
its intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" means the absence of the Executive from
the Executive's duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's employment
-----
during the Employment Period for "Cause." For purposes of this Agreement,
"Cause" means (i) repeated violations by the Executive of the
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Executive's responsibilities and duties under Section 4(a) of this Agreement
which are demonstrably willful and deliberate on the Executive's part and which
are not remedied in a reasonable period of time after receipt of written notice
from the Company, (ii) commission of an intentional act of fraud, embezzlement
or theft by the Executive in connection with the Executive's duties or in the
course of the Executive's employment with the Company or its affiliated
companies, (iii) causing intentional wrongful damage to property of the Company
or its affiliated companies, (iv) intentionally and wrongfully disclosing secret
processes or confidential information of the Company or its affiliated
companies, or (v) participating, without the Company's express written consent,
in the management of any business enterprise which engages in substantial and
direct competition with the Company or its affiliated companies, and any such
act shall have been materially harmful to the Company or its affiliated
companies.
(c) Good Reason. The Executive's employment may be terminated
-----------
during the Employment Period by the Executive for "Good Reason." For purposes of
this Agreement, "Good Reason" means
(i) the assignment to the Executive of any
responsibilities or duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of written notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of written notice thereof given
by the Executive;
(iii) the Company requiring the Executive to be based at
any office or location other than that described in Section 4(a)(i)(B) hereof
or, requiring the Executive to travel away from his or her office in the course
of discharging responsibilities or duties in a manner which is inappropriate for
the performance of the Executive's duties hereunder and which is significantly
more frequent (in terms of either consecutive days or aggregate days in any
calendar year) than was required prior to the Change of Control;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by any successor to the Company to comply
with and satisfy Section 14(c) of this Agreement, provided that such successor
has received at least ten (10) days prior written notice from the Company or the
Executive of the requirements of Section 14(c) of this Agreement.
For the purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
E-64
<PAGE>
(d) Notice of Termination. Any termination by the Company for
---------------------
Cause or by the Executive for Good Reason shall be communicated by "Notice of
Termination" to the other party hereto given in accordance with Section 15(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen days after the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause, as the case may be,
shall not waive any right of the Executive or the Company hereunder or preclude
the Executive or the Company from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means the date
-------------------
of receipt of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination and (ii) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
-------------------------------------------
(a) Death. If the Executive's employment is terminated by
-----
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the following obligations: (i)
payment of the Executive's Annual Base Salary through the Date of Termination to
the extent not theretofore paid, (ii) payment of the product of (x) the Annual
Bonus paid or payable but for any deferral (and annualized for any fiscal year
consisting of less than twelve full months or for which the Executive has been
employed for less than twelve full months) to the Executive for the most
recently completed fiscal year during the Employment Period, and (y) a fraction,
the numerator of which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365 and (iii) payment
of any compensation previously deferred by the Executive (together with any
accrued interest thereon) and not yet paid by the Company and any accrued
vacation pay not yet paid by the Company (the amounts described in clauses (i),
(ii) and (iii) above are hereafter referred to as "Accrued Obligations"). All
Accrued Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, at the option of the Company, either (x) in a lump sum in cash
within 30 days of the Date of Termination or (y) in twelve equal consecutive
monthly installments, with the first installment to be paid within 30 days of
the Date of Termination. Anything in this Agreement to the contrary
notwithstanding, the Executive's family shall be entitled to receive benefits at
least equal to the most favorable benefits provided generally by the Company and
any of its affiliated companies to surviving families of peer executives of the
Company and such affiliated companies under such plans, programs, practices and
policies relating to family death benefits, if any, as in effect generally with
respect to other peer executives and their families at
E-65
<PAGE>
any time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family as in effect on
the date of the Executive's death generally with respect to other peer
executives of the Company and its affiliated companies and their families.
(b) Disability. If the Executive's employment is terminated by
----------
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for Accrued Obligations. All Accrued Obligations shall be paid to the
Executive at the option of the Company, either (x) in a lump sum in cash within
30 days of the Date of Termination or (y) in twelve equal consecutive monthly
installments, with the first installment to be paid within 30 days of the Date
of Termination. Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled after the Disability Effective Date to receive
disability and other benefits at least equal to the most favorable of those
provided by the Company and its affiliated companies to disabled peer executives
and/or their families in accordance with such plans, programs, practices and
policies relating to disability, if any, as in effect generally with respect to
other peer executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at any time thereafter through the
Date of Termination generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(c) Cause. If the Executive's employment shall be terminated
-----
for Cause during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive the Annual Base Salary through the Date of Termination plus the amount
of any compensation previously deferred by the Executive, in each case to the
extent theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for Accrued
Obligations. In such case, all Accrued Obligations shall be paid to the
Executive at the option of the Company, either (x) in a lump sum in cash within
30 days of the Date of Termination, or (y) in twelve equal consecutive monthly
installments, with the first installment to be paid within 30 days of the Date
of Termination.
(d) Good Reason. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or Disability,
or the Executive shall terminate employment under this Agreement for Good
Reason:
E-66
<PAGE>
(i) the Company shall pay to the Executive the aggregate of the
following amounts, such amounts to be payable by the Company in a lump sum in
cash within 30 days of the Date of termination.
A. All Accrued Obligations; and
B. 2 times the sum of the Executive's Annual Base
-
Salary and the higher of either (i) the average annualized (for any fiscal year
consisting of less than twelve full months or with respect to which the
Executive has been employed by the Company for less than twelve full months)
bonus paid, or payable but for any deferral to the Executive by the Company and
its affiliated companies under the Company's deferred compensation arrangements,
in respect of the three fiscal years immediately preceding the fiscal year in
which the Effective Date occurs, or (ii) the targeted annual bonus payable to
the Executive pursuant to the Company's Incentive Compensation Plan for the
fiscal year in which the Date of Termination occurs (assuming 100% achievement
of the Company performance factor and 100% achievement of the Executive's
personal performance factor; and
C. the Executive shall be entitled to receive a
separate lump-sum supplemental retirement benefit equal to the difference
between (a) the actuarial equivalent (utilizing for this purpose the actuarial
assumptions utilized with respect to the Life Technologies, Inc. Retirement Plan
(or any successor plan thereto) (the "Retirement Plan") during the 90-day period
immediately preceding the Effective Date) of the benefit payable under the
Retirement Plan and any supplemental and/or excess retirement plan providing
benefits for the Executive (the "SERP") which the Executive would receive if the
Executive's employment continued at the compensation level provided for in
Section 4(b)(i) and 4(b)(ii) of this Agreement for the remainder of the
Employment Period, assuming for this purpose that all accrued benefits are fully
vested and that benefit accrual formulas are no less advantageous to the
Executive than those in effect during the 90-day period immediately preceding
the Effective Date, and (b) the actuarial equivalent (utilizing for this purpose
the actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the Executive's
actual benefit (paid or payable), if any, under the Retirement Plan and the
SERP; and
D. An amount equal to that portion, if any, of the
Company's contribution to the Executive's 401(k), savings or other similar
individual account plan which is not vested as of the Date of Termination (the
"Unvested Company Contribution"), plus an amount which when added to the
Unvested Company Contribution would be sufficient after Federal, state and local
income taxes (based on the tax returns filed by the Executive most recently
prior to the Date of Termination) to enable the Executive to net an amount equal
to the Unvested Company Contribution; and
(ii) the Company shall pay the Executive up to $25,000 for executive
outplacement services utilized by the Executive upon the receipt by the Company
of written receipts or other appropriate documentation; and
E-67
<PAGE>
(iii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the Company shall
continue benefits to the Executive and, where applicable, the Executive's family
at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section 4(b)(iv)
of this Agreement if the Executive's employment had not been terminated in
accordance with the most favorable plans, practices, programs or policies of the
Company and its affiliated companies generally applicable to other peer
executives and their families during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect at any time
thereafter generally with respect to other peer executives of the Company and
its affiliated companies and their families; provided, however, that if the
Executive becomes employed elsewhere during the Employment Period and is thereby
afforded comparable insurance and welfare benefits to those described in Section
4(b)(iv), the Company's obligation to continue providing the Executive with such
benefits shall cease or be correspondingly reduced, as the case may be. For
purposes of determining eligibility of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the Executive shall be
considered to have remained employed until the end of the Employment Period and
to have retired on the last day of such period; and
(iv) All outstanding stock options held by the Executive pursuant to
any Company stock option plan shall immediately become vested and exercisable as
to all or any part of the shares covered thereby, with the Executive being able
to exercise his or her stock options within a period of three months following
the Date of Termination or such longer period as may be permitted under
Executive's stock option agreements; and
(v) If, in the calendar year immediately preceding the Date of
Termination, the Executive had relocated the Executive's primary residence from
one location (the "Point of Origin") to its location at the Date of Termination
at the request of the Company, then any relocation expenses that are actually
incurred in the year immediately following the Date of Termination by the
Executive in moving the Executive's primary residence to any location shall be
reimbursed by the Company to the extent such expenses do not exceed the cost of
relocating the Executive's primary residence to the Point of Origin, provided
such expenses are substantiated by means of written receipts. The cost of
relocating the Executive's primary residence to the Point of Origin shall be
determined by averaging estimates obtained by the Company in writing from three
reputable moving companies, selected by the Company in good faith. It shall be
the obligation of the Executive to notify the Company in advance of any such
relocation so that such estimates may be obtained.
The amounts required to be paid under this Section 6(d) shall be reduced by any
other amount of severance (i.e., relating solely to salary or bonus continuation
or actual or deemed pension or insurance continuation) received by the Executive
upon such termination of employment under any severance plan, policy or
arrangement of the Company applicable to the Executive or a group of employees
of the Company, including the Executive, and applicable without regard to the
occurrence of a Change of Control prior to such termination of employment. The
amounts payable to the Executive pursuant to this Agreement will not be subject
to any requirement of mitigation, nor, except as specifically set forth herein,
will they be offset or otherwise reduced by reason of the Executive's receipt of
compensation from any source other than the Company.
E-68
<PAGE>
7. Non-exclusivity of Rights. Nothing in this Agreement shall
-------------------------
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or practices
provided by the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any other agreements with the Company or
any of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the payments
---------------
provided for in this Agreement and otherwise to perform its obligations
hereunder, except as provided in the last sentence of Section 6(d), shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. The Company agrees to pay, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur, including the costs and expenses of any arbitration
proceeding, as a result of any contest (regardless of the outcome thereof) by
the Company or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including as a result of any content by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"); provided that the
--------
Executive's claim is not determined by a court of competent jurisdiction or an
arbitrator to be frivolous or otherwise entirely without merit.
9. Release. Upon fulfillment of the Company's obligation to make
-------
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder, the Executive fully and unconditionally releases and
discharges all claims and causes of action which the Executive or his or her
heirs, personal representatives, successors, or assigns ever had, now have, or
hereafter may have against the Company and any of its affiliated companies on
account of any claims and causes of action arising out of or relating to this
Agreement, any other document relating hereto or delivered in connection with
the transactions contemplated hereby.
10. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that, as a result, directly or indirectly,
of the operation of any of the Company's existing stock option plans, or any
successor option or restricted stock plans (collectively, the "Option and
Restricted Stock Acceleration"), either standing alone or taken together with
the receipt of any other payment or distribution by the Company to or for the
benefit of the Executive whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a "Payment") the Executive
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise
E-69
<PAGE>
Tax"), then the amount payable to the Executive hereunder or as a result of the
Option and Restricted Stock Acceleration shall be reduced in an amount that
would result in the Executive being in the most advantageous net after-tax
position (taking into account both income taxes and any Excise Tax). For
purposes of this determination, the "base amount" as defined in Section
280G(b)(3)(A) of the Code shall be allocated between the Option and Restricted
Stock Acceleration, on the one hand, and Payments, on the other hand, in
accordance with Section 280G(b)(3)(B) of the Code.
(b) All determinations required to be made under this Section,
including the amount of any reduction that will be made in the payments made
pursuant to this Agreement and the assumptions to be utilized in arriving at
such determinations, shall be made by Coopers & Lybrand L.L.P. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Executive. All fees and expenses of the Accounting Firm for tax and
accounting advice provided to the Executive, up to a maximum of $15,000, shall
be borne solely by the Company. If the Accounting Firm determines that no Excise
Tax is payable by the Executive, it shall furnish the Executive with an opinion
that failure to report the Excise Tax on the Executive'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 Executive.
11. Confidential Information. The Executive shall hold in a
------------------------
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies and their respective businesses, which shall have been obtained by the
Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In addition, to the
extent that the Executive is a party to any other agreement relating to
confidential information, inventions or similar matters with the Company, the
Executive shall continue to comply with the provisions of such agreements. In no
event shall an asserted violation of the provisions of this Section constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
12. Public Announcements. The Executive shall consult with the
--------------------
Company before issuing any press release or otherwise making any public
statement with respect to the Company or any of its affiliated companies, this
Agreement or the transactions contemplated hereby, and the Executive shall not
issue any such press release or make any such public statement without the prior
written approval of the Company, except as may be required by applicable law,
rule or regulation or any self regulatory agency requirements, in which event
the Company shall have the right to review and comment upon any such press
release or public statement prior to its issuance.
13. Arbitration. Any dispute, controversy or claim arising out of or
-----------
relating to this Agreement, or any breach thereof, shall be determined and
settled by arbitration to be held in the City of New York pursuant to the labor
rules of the American Arbitration Association or any successor organization.
Any award rendered thereunder shall be final, conclusive and binding on the
parties. Subject to the provisions of Section 8 hereof, each party shall pay
one-half of all costs and expenses of any arbitration proceeding brought
E-70
<PAGE>
pursuant to this Section, and each party shall pay its own attorneys' fees and
expenses.
14. Successors.
----------
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) 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
expressly 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. 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.
15. Miscellaneous.
-------------
(a) This Agreement shall be governed by and construed in
accordance with the laws of the Sate of New York, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
-------------------
John V. Cooper
8533 Churchill Downs Road
Gaithersburg
Maryland 20882
If to the Company:
-----------------
Life Technologies, Inc.
Post Office Box 6482
9800 Medical Center Drive
Rockville, MD 20850
(ATTN: General Counsel)
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
E-71
<PAGE>
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof in any particular instance shall not
be deemed to be a waiver of such provision or any other provision thereof.
(f) This Agreement shall replace and supersede the Executive's
Change-In-Control Agreement dated as of the 13th day of February 1997 between
the Executive and the Company and, upon execution hereof by the parties hereto,
such prior Change-In-Control Agreement shall become null and void.
IN WITNESS WHEREOF, the Executive has hereunto set his or her hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above
LIFE TECHNOLOGIES, INC.
/s/ John V. Cooper /s/ C. Eric Winzer
____________________________ By:_________________________________
John V. Cooper C. Eric Winzer
Vice President and
Chief Financial Officer
E-72
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
------------------------------
The following table sets forth subsidiaries of Life Technologies, Inc. which are
included in the consolidated financial statements.
<TABLE>
<CAPTION>
Percentage Jurisdiction in
of Which Incorporated
Name Ownership or Organized
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Canadian Life Technologies, Inc. 100% Ontario, Canada
GIBCO BRL India Pvt. Ltd. 100% (A) India
Laboratory Services Ltd. 100% New Zealand
Life Technologies A.G. 100% (B) Switzerland
Life Technologies A.S. 100% Denmark
Life Technologies B.V. 100% (B) Netherlands
Life Technologies do Brasil Ltda. 100% (C) Brazil
Life Technologies Foreign Sales Corp. 100% Barbados
Life Technologies Holdings, Unlimited 100% Scotland
Life Technologies Overseas GmbH 100% (B) Germany
Life Technologies Italia S.r.l. 100% Italy
Life Technologies Ltd. 100% (D) Scotland
Life Technologies Limited 100% New Zealand
Life Technologies Mauritius Ltd. 100% Mauritius
Life Technologies Overseas Ltd. 100% (D) Scotland
Life Technologies (Pacific) Ltd. 100% Hong Kong
Life Technologies Pty. Ltd. 100% Australia
Life Technologies S.A.R.L. 100% (B) France
Life Technologies Asia Pacific Inc. 100% Delaware, USA
N.V. Life Technologies S.A. 100% (B) Belgium
Serum Technologies (unincorporated joint venture) 40% (E) Maryland, USA
Life Technologies Sweden AB 100% Sweden
Life Technologies S.A. 100% Spain
Life Technologies Uruguay, S.A. 100% Uruguay
Custom Primers, Inc. 100% California, USA
Life Technologies Oriental K.K. 80% Japan
Life Technologies GIBCO BRL Co., Ltd. 59% Republic of China,
(Taiwan)
Serum Technologies Holdings, Inc. 100% Delaware, USA
BioSepra S.A. 100% France
</TABLE>
(A) Owned by Life Technologies Mauritius Ltd.
(B) Owned by Life Technologies Overseas Ltd.
(C) Owned 90% by Life Technologies, Inc. and 10% by Life Technologies
Mauritius Ltd.
(D) Owned by Life Technologies Holdings, Unlimited
(E) Owned by Serum Technologies Holdings, Inc.
E-73
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Life Technologies, Inc. and subsidiaries on Form S-8, Registration No. 333-
03773, Registration No. 333-28607, Registration No. 33-59741, Registration No.
33-21807 and Registration No. 33-956, and the Company's registration statement
on Form S-3, Registration No. 33-29536, of our report dated January 24, 2000, on
our audits of the consolidated financial statements of Life Technologies, Inc.
and subsidiaries as of December 31, 1999 and 1998, and for the years ended
December 31, 1999, 1998 and 1997, which report is included in this Annual Report
on Form 10-K.
/s/ PricewaterhouseCoopers LLP
-------------------------------
McLean, Virginia
March 13, 2000
E-74
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET, INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 51,489
<SECURITIES> 0
<RECEIVABLES> 82,503
<ALLOWANCES> 3,202
<INVENTORY> 82,946
<CURRENT-ASSETS> 239,611
<PP&E> 192,162
<DEPRECIATION> 63,335
<TOTAL-ASSETS> 402,971
<CURRENT-LIABILITIES> 67,851
<BONDS> 3,259
0
0
<COMMON> 250
<OTHER-SE> 309,845
<TOTAL-LIABILITY-AND-EQUITY> 402,971
<SALES> 407,199
<TOTAL-REVENUES> 409,609
<CGS> 186,667
<TOTAL-COSTS> 186,667
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70
<INCOME-PRETAX> 56,934
<INCOME-TAX> 17,583
<INCOME-CONTINUING> 38,277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,277
<EPS-BASIC> 1.53
<EPS-DILUTED> 1.53
</TABLE>
