<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
FISHER SCIENTIFIC INTERNATIONAL INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
FISHER SCIENTIFIC INTERNATIONAL INC.
LIBERTY LANE
HAMPTON, NEW HAMPSHIRE 03842
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 1999
------------------------------
To the Stockholders of Fisher Scientific International Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Fisher
Scientific International Inc. (the "Company") will be held at the Mellon Bank
Building, 8 Loockerman Street, Dover, Delaware, on Tuesday, May 11, 1999, at
9:00 a.m., local time, for the following purposes:
1. To elect three directors of the Company, each for a term of three years;
2. To ratify the appointment of Deloitte & Touche LLP as the independent
auditors of the Company for the current fiscal year; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Holders of record of the Company's Common Stock at the close of business on
April 5, 1999 are entitled to notice of and to vote at the meeting or any
adjournment thereof.
By Order of the Board of Directors,
/S/ Todd M. DuChene
Todd M. DuChene Vice President --
General Counsel and Secretary
Hampton, New Hampshire
April 12, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE PAID
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
FISHER SCIENTIFIC INTERNATIONAL INC.
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1999
------------------------------
PROXY STATEMENT
------------------------------
April 12, 1999
INFORMATION CONCERNING SOLICITATION AND VOTING
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Fisher Scientific International Inc., a
Delaware corporation ("Fisher" or the "Company"), for use at the Company's
Annual Meeting of Stockholders (the "Annual Meeting") to be held at the Mellon
Bank Building, 8 Loockerman Street, Dover, Delaware, on Tuesday, May 11, 1999 at
9:00 a.m., local time, and at any adjournment thereof. This proxy statement and
the related proxy card, together with the Company's Annual Report to
Stockholders for the year ended December 31, 1998, were first mailed by the
Company on or about April 12, 1999 to stockholders of record as of April 5,
1999.
All proxies in the enclosed form that are properly executed and returned to
the Company will be voted at the Annual Meeting or any adjournment thereof in
accordance with the specifications thereon, or, if no specification is made,
will be voted FOR approval of the proposals and FOR election of each of the
nominees for director set forth in the Notice of Annual Meeting of Stockholders.
A previously returned proxy may be revoked by any stockholder who attends the
meeting and gives oral notice of his or her intention to vote in person, without
compliance with any other formalities. In addition, any proxy given pursuant to
this solicitation may be revoked prior to the Annual Meeting by delivering a
written revocation or a duly executed proxy bearing a later date to the
Secretary of the Company.
A proxy may confer discretionary authority to vote with respect to any
matter presented at the Annual Meeting, except as set forth in the proxy and
except for matters proposed by a stockholder who notifies the Company in
accordance with the By-laws of the Company, not later than the close of business
on the tenth day following the day on which the notice of the date of the Annual
Meeting was mailed. At the date hereof, management has no knowledge of any
business that will be presented for consideration at the Annual Meeting and
which would be required to be set forth in this proxy statement or the related
proxy card other than the matters set forth in the Notice of Annual Meeting of
Stockholders. If any other matter is properly presented at the Annual Meeting
for consideration, it is intended that the persons named in the enclosed form of
proxy and acting thereunder will vote in accordance with their best judgment on
such matter.
The expense of preparing, printing and mailing this proxy statement and the
proxies solicited hereby will be borne by the Company. In addition to the use of
the mails, proxies may be solicited by officers and directors and regular
employees of Fisher, without additional remuneration, by personal interview,
telephone, telegraph or otherwise. The Company will also request brokerage
firms, nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares held of record and will provide reimbursement for
the cost of forwarding the material in accordance with customary charges.
<PAGE> 4
THE RECAPITALIZATION
On August 7, 1997, Fisher and FSI Merger Corp. ("FSI"), a Delaware
corporation that as of August 4, 1997 was wholly-owned by Thomas H. Lee Equity
Fund III, L.P. ("Equity Fund III"), entered into an Agreement and Plan of Merger
(as amended and restated on September 11 and November 14, 1997, and as further
amended on January 16, 1998, the "Merger Agreement"). The Merger Agreement
provided, among other things, for the merger of FSI with and into Fisher (the
"Merger") as part of the recapitalization of Fisher.
Stockholders of Fisher approved the Merger Agreement on January 16, 1998
and the transactions contemplated by the Merger Agreement were consummated on
January 21, 1998. At the effective time (the "Effective Time") of the Merger,
shares of voting common stock of FSI were converted into 27,359,285 shares of
Fisher common stock, $0.01 par value per share ("Common Stock") (adjusted to
give effect to a 5-for-1 stock split payable April 1, 1998 to stockholders of
record on March 19, 1998), and the outstanding shares of non-voting common stock
of FSI were converted into 4,035,290 shares of Fisher non-voting common stock
(adjusted to give effect to a 5-for-1 stock split payable April 1, 1998 to
stockholders of record on March 19, 1998).
At the Effective Time, the Company, certain shareholders and members of
management, collectively holding 91% of the voting power of Fisher's stock
(including holders of shares of non-voting common stock exchangeable for shares
of voting common stock under certain circumstances), entered into an Investors'
Agreement dated January 21, 1998 and amended March 29, 1999 (as amended, the
"Investors' Agreement"), which provides that following the Effective Time the
Board of Directors of Fisher will comprise at least nine and no more than ten
members, four of which will be nominated by Equity Fund III, one of which will
be nominated by DLJ Merchant Banking Partners II, C.P. ("DLJ Partners II"), one
of which will be Mr. Montrone and one of which will be Mr. Meister (Montrone and
Meister collectively, the "Management Directors"). Further, at least two of the
members shall not be "Affiliates" or "Associates" of any party to the Investors'
Agreement within the meaning of Rule 12b-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Each of the parties to the Investors'
Agreement entitled to vote for the election of directors has agreed to vote its
shares of Common Stock in favor of the persons so nominated or designated,
provided that none of the parties will be required to vote for another party's
nominee or a Management Director, as it were, if the number of Shares
beneficially held by the person or group making the nomination or by such
Management Director is less than 10% of such person's or group's or such
Management Director's ownership in the Company immediately following the
Effective Time.
The parties to the Investors' Agreement are the Company; Equity Fund III;
THL-CCI Limited Partnership ("THL-CCI"); THL Foreign Fund III, L.P. ("Foreign
Fund III"); THL FSI Equity Investors, L.P. ("THL-FSI"); David V. Harkins,
Anthony J. DiNovi, Scott M. Sperling and Kent R. Weldon (collectively, the "THL
Directors"); certain persons affiliated with Thomas H. Lee Company or the THL
Directors (collectively, the "Additional THL Persons" and together with Equity
Fund III, THL-CCI, Foreign Fund III, THL FSI and the THL Directors, the "THL
Entities"); DLJ Partners II; DLJ Merchant Banking Partners II-A, L.P. ("DLJ
Partners II-A"), DLJ Offshore Partners II, C.V. ("DLJ Offshore II"); DLJ
Diversified Partners, L.P. ("DLJ Diversified"); DLJ Diversified Partners-A, L.P.
("DLJ Diversified-A"); DLJ Millennium Partners, L.P. ("DLJ Millennium"); DLJ
Millennium Partners-A, L.P. ("DLJ Millennium-A"); DLJMB Funding II, Inc. ("DLJ
Funding II"); UK Investment Plan 1997 Partners ("UK Partners"); DLJ EAB
Partners, L.P. ("DLJ EAB"); DLJ ESC II, L.P. ("DLJ ESC II"), and DLJ First ESC,
L.P. ("DLJ ESC" and, together with DLJ Partners II, DLJ Partners II-A, DLJ
Offshore II, DLJ Diversified, DLJ Diversified-A, DLJ Millennium, DLJ
Millennium-A, DLJ Funding II, UK Partners, DLJ EAB and DLJ ESC II, the "DLJ
Entities"); Chase Equity Associates, L.P. ("CEA"); Merrill Lynch KECALP L.P.
1997 ("ML KECALP"); KECALP Inc. ("KECALP"); ML IBK Positions, Inc. ("ML IBK" and
together with ML KECALP and KECALP, the "ML Entities"); and Paul M. Montrone,
Paul M. Meister, David T. Della Penta, Denis N. Maiorani, Todd M. DuChene and
certain other members of Fisher management (collectively, the "Management
Investors").
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Holders of record of Common Stock, at the close of business on April 5,
1999 are entitled to notice of and to vote at the Annual Meeting. Holders of
Common Stock are entitled to one vote per share on each of the matters properly
presented at the Annual Meeting. A stockholders' list will be available for
examination by Fisher stockholders at the Annual Meeting.
On April 5, 1999 there were 26,997,367 shares of Common Stock issued and
outstanding. In addition, the Company had 4,035,290 shares of Non-Voting Common
Stock and 9,000,000 shares of Series B Non-Voting Common Stock issued and
outstanding, neither of which series is eligible to vote at the meeting. The
holders of a majority of the shares entitled to vote, present in person or
represented by proxy at the Annual Meeting, will constitute a quorum for the
transaction of business at the Annual Meeting.
The following table sets forth as of April 5, 1999 certain information
concerning each person believed to be a beneficial owner of more than 5% of
Common Stock and beneficial ownership of Common Stock by each nominee, director,
named executive officer and all directors and executive officers as a group. CEA
is the beneficial owner of all 4,035,290 issued and outstanding shares of
Non-Voting Common Stock, and Equity Fund III, THL-FSI, Foreign Fund III and
THL-CCI are the beneficial owners of all 9,000,000 issued and outstanding shares
of Series B Non-Voting Common Stock.
<TABLE>
<CAPTION>
PERCENT OF
SHARES OF PERCENT OF SHARES OF NON- PERCENT OF
NAME OF BENEFICIAL OWNER COMMON STOCK VOTING NON-VOTING STOCK VOTING O/S STOCK
- ------------------------ ------------ ---------- ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Thomas H. Lee Equity Fund III,
L.P. ............................. 12,749,345(1)(2)(3) 44.50% 9,000,000(4) 67.33% 52.18%
DLJ Merchant Banking Partners II,
L.P. et al........................ 6,551,005(2)(5)(6) 23.82% 16.16%
Chase Equity Associates, L.P. ...... 0 * 4,367,335(7) 32.67% 10.82%
Paul M. Montrone.................... 2,293,427(2)(8) 8.36% 5.67%
Paul M. Meister..................... 1,453,807(2)(9) 5.33% 3.61%
David T. Della Penta................ 115,000(2)(10) * *
David V. Harkins.................... 63,433(2)(11) * 44,777(12) * *
Denis N. Maiorani................... 76,084(2)(13) * *
Todd M. DuChene..................... 48,320(2)(14) * *
Scott M. Sperling................... 31,717(2)(15) * 22,388(16) * *
Anthony J. DiNovi................... 31,717(2)(17) * 22,388(18) * *
Kent R. Weldon...................... 4,756(2)(19) * 3,359(20) * *
Mitchell J. Blutt................... 0 * *
Michael D. Dingman.................. 0 * *
Robert A. Day....................... 0 * *
All directors and executive officers
as a group (14 individuals)....... 4,180,370(2)(21) 15.02% 92,912 * 10.46%
</TABLE>
- ---------------
* Less than 1%
(1) The address of Thomas H. Lee Equity Fund III, L.P. is c/o Thomas H. Lee
Company, 75 State Street, Boston, Massachusetts. The information is based
on a Schedule 13D dated January 21, 1998 filed with the Securities and
Exchange Commission ("SEC") by the THL Entities, Thomas H. Lee Equity
Advisors III
3
<PAGE> 6
Limited Partnership ("Advisors III"), THL Equity Trust III ("Trust III")
and THL Investment Management Corp. ("THL Investment"). Each of the THL
Entities, Advisors III, Trust III and THL Investment expressly disclaims
beneficial ownership of shares of Common Stock held by others.
(2) By virtue of the Investors' Agreement, the THL Entities, the ML Entities,
the DLJ Entities and the Management Investors may constitute a "group"
under the Securities Exchange Act of 1934, as amended. Each of the parties
to the Investors' Agreement expressly disclaims beneficial ownership of
shares of Common Stock held by others.
(3) Includes 6,652,027 outstanding shares and 991,340 shares issuable upon the
exercise of warrants to purchase shares owned by Equity Fund III; 3,342,094
outstanding shares and 498,070 shares issuable upon the exercise of
warrants to purchase shares owned by THL-FSI; 411,607 outstanding shares
and 61,340 shares issuable upon the exercise of warrants to purchase shares
owned by Foreign Fund III; 409,667 outstanding shares and 61,045 shares
issuable upon the exercise of warrants to purchase shares owned by THL-CCI;
55,203 outstanding shares and warrants to purchase 8,230 shares owned by
Mr. Harkins and persons affiliated with Mr. Harkins (see footnote 11);
27,602 outstanding shares and warrants to purchase 4,115 shares issuable
upon the exercise of warrants to purchase shares owned by Mr. Sperling or a
limited partnership of which Mr. Sperling is a general partner (see
footnote 15); 27,602 outstanding shares and warrants to purchase 4,115
shares owned by Mr. DiNovi; 4,141 outstanding shares and warrants to
purchase 615 shares owned by Mr. Weldon; and 165,817 outstanding shares and
warrants to purchase 24,715 shares attributable to the Additional THL
Persons.
(4) Includes the following shares of Series B Non-Voting Common Stock:
5,395,598 shares owned by Equity Fund III; 2,710,841 shares of owned by THL
FSI; 333,863 shares owned by Foreign Fund III; 332,293 shares owned by
THL-CCI; 44,777 shares owned by Mr. Harkins and persons affiliated with Mr.
Harkins; 22,388 shares owned by Mr. Sperling and persons affiliated with
Mr. Sperling; 22,388 shares owned by Mr. DiNovi, 3,359 shares owned by Mr.
Weldon; and 134,493 shares owned by the Additional THL Persons, which stock
is convertible on a one-to-one basis into shares of Common Stock, as
provided by the Company's Amended and Restated Certificate of
Incorporation, as amended.
(5) The address of DLJ Merchant Banking Partners II, L.P. is 277 Park Avenue,
New York, New York 10172. The information is based on a Schedule 13D dated
January 21, 1998 filed with the SEC by the DLJ Entities and DLJ Merchant
Banking II, LLC, DLJ Merchant Banking II, Inc., DLJ Diversified Associates,
L.P., DLJ Diversified Partners, Inc., DLJ LBO Plans Management Corporation,
DLJ Capital Investors, Inc., UK Investment Plan 1997, Inc., Donaldson,
Lufkin & Jenrette, Inc., The Equitable Companies Incorporated, AXA-UAP,
Finaxa, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA
Courtage Assurance Mutuelle, Alpha Assurances Vie Mutuelle, and Claude
Bebear, Patrice Garnier and Henri de Clermont-Tonnerre, trustees pursuant
to a Voting Trust dated as of May 12, 1992, as amended (collectively, the
"Additional DLJ Persons"). Each of the DLJ Entities and the Additional DLJ
Persons expressly disclaims beneficial ownership of shares held by others.
(6) Includes 3,812,895 outstanding shares and 313,745 shares issuable upon the
exercise of warrants to purchase shares owned by DLJ Partners II; 676,965
outstanding shares and 55,700 shares issuable upon the exercise of warrants
to purchase shares owned by DLJ Funding II; 719,015 outstanding shares and
59,165 shares issuable upon the exercise of warrants to purchase shares
owned by DLJ ESC II; and 844,060 outstanding shares and 69,460 shares
issuable upon the exercise of warrants to purchase shares owned by the
remaining DLJ Entities.
(7) The address of CEA is 270 Park Avenue, New York, New York 10172. CEA is the
owner of 4,035,290 outstanding shares of Non-Voting Common Stock and
warrants to purchase 332,045 shares of Non-Voting Common Stock, which stock
is convertible on a one-to-one basis into shares of Common Stock, as
provided by the Company's Amended and Restated Certificate of
Incorporation, as amended. Mitchell J. Blutt, M.D.
4
<PAGE> 7
serves as a director of the Company and is a general partner of Chase
Capital Partners, the sole general partner of CEA. Dr. Blutt expressly
disclaims beneficial ownership of shares held by CEA.
(8) Includes 449,542 shares issuable upon exercise of options within 60 days of
April 5, 1999, 275,000 shares owned directly by Mr. Montrone, 362,500
shares which are held in the Fisher Scientific International Inc. Executive
Retirement and Savings Program Trust (the "Savings Trust") and 1,206,385
shares which are held in a rabbi trust established under agreement dated
January 21, 1998 (the "Rabbi Trust").
(9) Includes 270,767 shares issuable upon exercise of options within 60 days of
April 5, 1999, 175,000 shares owned directly by Mr. Meister, 271,500 shares
which are held in the Savings Trust and 736,540 shares which are held in
the Rabbi Trust.
(10) Includes 65,000 shares issuable upon exercise of options within 60 days of
April 5, 1999 and 50,000 shares owned directly by Mr. Della Penta.
(11) Includes 49,682 outstanding shares and 7,405 shares issuable upon the
exercise of warrants to purchase shares owned directly by Mr. Harkins and
5,521 outstanding shares and 825 shares issuable upon the exercise of
warrants to purchase shares owned by the 1995 Harkins Gift Trust as to
which shares Mr. Harkins expressly disclaims any beneficial ownership.
(12) Includes 40,298 shares owned by Mr. Harkins directly and 4,479 shares owned
by the 1995 Harkins Gift Trust as to which shares Mr. Harkins expressly
disclaims any beneficial ownership.
(13) Includes 15,295 shares issuable upon exercise of options within 60 days of
April 5, 1999 and 60,790 shares held in the Rabbi Trust.
(14) Includes 12,320 shares issuable upon exercise of options within 60 days of
April 5, 1999 and 36,000 shares held in the Rabbi Trust.
(15) Includes 16,562 outstanding shares and warrants to purchase 2,470 shares
owned by Mr. Sperling directly, and 11,040 outstanding shares and warrants
to purchase 1,645 shares by the Sperling Family Limited Partnership as to
which shares and warrants Mr. Sperling expressly disclaims beneficial
interest.
(16) Includes 13,433 shares owned by Mr. Sperling directly and 8,955 shares
owned by the Sperling Family Limited Partnership as to which shares Mr.
Sperling expressly disclaims beneficial interest.
(17) Includes 27,602 outstanding shares and warrants to purchase 4,115 shares
owned by Mr. DiNovi directly.
(18) Shares held by Mr. DiNovi directly.
(19) Includes 4,141 outstanding shares and 615 shares issuable upon the exercise
of warrants to purchase shares held by Mr. Weldon directly.
(20) Shares held by Mr. Weldon directly.
(21) Includes 824,042 shares issuable upon exercise of options within 60 days of
April 5, 1999, 605,772 shares held directly, 650,561 shares held
indirectly,17,075 shares issuable upon the exercise of warrants and
2,082,920 shares deferred into the Rabbi Trust.
NOMINATION AND ELECTION OF DIRECTORS
The Board of Directors of Fisher (the "Board") consists of Paul M. Montrone
(Chairman), Paul M. Meister (Vice Chairman), Mitchell J. Blutt, M.D., Robert A.
Day, Michael D. Dingman, Anthony J. DiNovi, David V. Harkins, Scott M. Sperling
and Kent R. Weldon each of whom (other than Messrs. Montrone, Dingman and Day)
became a member of the Board in January 1998.
The Restated Certificate of Incorporation and By-laws of Fisher provide
that the Board shall be divided into three classes. Upon recommendation of the
Nominating Committee and in accordance with the Investors' Agreement, the Board
has nominated for election as directors at the Annual Meeting Messrs. Blutt,
Harkins and
5
<PAGE> 8
Meister, each of whom is currently a director whose term expires at the Annual
Meeting. If elected, the nominees will serve for a three-year term expiring in
2002. Management does not contemplate that the nominees will be unable to serve,
but in that event, proxies solicited hereby will be voted for the election of
such other person as may be recommended by the Board in place of such nominee.
The affirmative vote of a plurality of the votes cast is required to elect
the directors. Abstentions from voting on this proposal (including broker
non-votes) will have no effect on the outcome of the vote. As a result of the
Investors' Agreement the holders of a majority of the outstanding shares of
Common Stock are obligated to vote for the nominees for election as directors.
It is expected, therefor, that the nominees for director will be elected
regardless of the vote by stockholders not a party to the Investors' Agreement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
AS DIRECTORS.
Information about the nominees for election as directors and incumbent
directors, including biographical and employment information, is set forth
below.
NOMINEES FOR ELECTION AS DIRECTORS
Mitchell J. Blutt, M.D., 42, for a term expiring in 2002. Dr. Blutt has
been the Executive Partner of Chase Capital Partners, the sole general partner
of CEA (global private equity financing) since prior to 1994, has been an
Adjunct Assistant Professor of Medicine at the New York Hospital/Cornell Medical
Center since prior to 1994, and is a Board Certified Internist. Dr. Blutt also
serves as a director of Hanger Orthopedic Group.
David V. Harkins, 58, for a term expiring in 2002. Mr. Harkins has been
employed by Thomas H. Lee Company since 1986 and currently serves as a Senior
Managing Director. Mr. Harkins is also the President and Trustee of Trust III,
the General Partner of Advisors III, which is the General Partner of Equity Fund
III and Chairman of National Dentex Corporation since 1983. Mr. Harkins is a
director of Cott Corporation, Stanley Furniture Company, Inc., Syratech
Corporation, Freedom Securities Corp., Metris Companies and several private
corporations.
Paul M. Meister, 46, for a term expiring in 2002. Mr. Meister has been Vice
Chairman of the Board and Executive Vice President and Chief Financial Officer
of Fisher since March 1998, and was Senior Vice President and Chief Financial
Officer of Fisher from prior to 1994 to March 1998. Prior to that time, he was
Senior Vice President of Abex Inc. ("Abex") (aerospace products and services)
from prior to 1994 to 1995. Mr. Meister is a member of the Board of Directors of
M & F Worldwide Corp., The General Chemical Group Inc. ("General Chemical")
(Vice Chairman), GenTek Inc. ("GenTek") (will be Vice Chairman) and Minerals
Technologies Inc.
INCUMBENT DIRECTORS
Anthony J. DiNovi, 36, term expires in 2000. Mr. DiNovi has been employed
by Thomas H. Lee Company since 1988 and currently serves as a Managing Director.
Mr. DiNovi is also Vice President and Trustee of Trust III, the general partner
of the Advisors III, which is the general partner of the Equity Fund III and
Vice President of Thomas H. Lee Advisors I and T.H. Lee Mezzanine II, affiliates
of ML-Lee Acquisition Fund, L.P., and ML-Lee Acquisition Fund II (Retirement
Accounts) L.P., respectively. Mr. DiNovi also serves as a director of Eye Care
Centers of America, Inc., Safelite Glass Corp., The Learning Company, Inc. and
several private corporations.
Paul M. Montrone, 57, term expires in 2000. Mr. Montrone has been Chairman
of the Board of Fisher since March 1998, Chief Executive Officer of Fisher since
prior to 1994, and served as President from prior to 1994 to 1998. Mr. Montrone
was Vice Chairman of Abex from prior to 1994 to June 1995. Since August 1994, he
has been Chairman of the Board of General Chemical and was President from prior
to 1994 to August 1994. Mr. Montrone will also be Chairman of the Board of
GenTek and is a director of Waste Management, Inc.
6
<PAGE> 9
Scott M. Sperling, 41, term expires in 2000. Mr. Sperling has served as a
Managing Director of Thomas H. Lee Company since July 1994. He is also Vice
President and Trustee of Trust III, the general partner of Advisors III, which
is the general partner of Equity Fund III For the ten years prior to 1994, Mr.
Sperling was Managing Partner of The Aeneus Group, Inc., the private capital
affiliate of the Harvard Management Company. Mr. Sperling is also a director of
The Learning Company, Livent, Inc., General Chemical, Safelite Glass Corp. and
several private corporations.
Robert A. Day, 55, term expires in 2001. Mr. Day has been Chairman of the
Board and Chief Executive Officer of Trust Company of the West (investments)
since prior to 1994 and Chairman and President of W.M. Keck Foundation
(philanthropic organization) since 1996. Mr. Day is also a director of
Freeport-McMoran Inc.
Michael D. Dingman, 67, term expires in 2001. Mr. Dingman was Chairman of
the Board of Fisher from prior to 1994 until 1998. He has been President of
Shipston Group Ltd. (international investments) since 1994. Mr. Dingman was
Chairman of the Board and Chief Executive Officer of Abex from prior to 1994
until June 1995. From prior to 1994 until August 1994, he was Chairman of the
Board and Chief Executive Officer of General Chemical. Mr. Dingman is also a
director of Ford Motor Company and Teekay Shipping Ltd.
Kent R. Weldon, 31, term expires in 2001. Mr. Weldon worked at Thomas H.
Lee Company, a private equity investment firm, from 1991 to 1993, rejoined in
1995 and currently serves as a Vice President of THL Co. From 1989 to 1991, Mr.
Weldon worked in the Mergers & Acquisitions Department of Morgan Stanley & Co.,
Incorporated. From 1993 to 1995, Mr. Weldon attended the Harvard Graduate School
of Business Administration. Mr. Weldon is a Vice President of Trust III, the
General Partner of Advisors III, which is the General Partner of Equity Fund
III. Mr. Weldon also serves as a director of Syratech Corporation and other
private corporations.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities (collectively, "Section 16 reporting
persons"), to file with the SEC and The New York Stock Exchange initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Section 16 reporting persons are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and on written representations that no other
reports were required, during the fiscal year ended December 31, 1998, the
Section 16 reporting persons complied with all Section 16(a) filing requirements
applicable to them.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board met four times during 1998. Each of the members of the Board
attended at least 75% of the meetings of the Board and of the Board committees
on which he served. The Board has four standing committees: the Audit Committee,
the Compensation Committee, the Executive Committee and the Nominating
Committee. During 1998, the Audit Committee met twice, the Compensation
Committee met two times, the Executive Committee did not meet and the Nominating
Committee met once.
The Audit Committee of the Board consists of Messrs. Blutt, Day, Dingman,
Harkins and Weldon, with Mr. Day serving as Chairman. It is responsible for
recommending the firm to be appointed as independent accountants to audit the
Company's financial statements and to perform services related to the audit;
reviewing the scope and the results of the audit with the independent
accountants; reviewing with management and the independent accountants the
Company's year-end operating results; considering the adequacy of the internal
7
<PAGE> 10
accounting and control procedures of Fisher; reviewing the non-audit services to
be performed by the independent accountants, if any, and considering the effect
of such performance on the accountants' independence.
The Compensation Committee of the Board consists of Messrs. Day, Dingman
and Sperling, with Mr. Dingman serving as Chairman. It is responsible for the
review and recommendation of compensation arrangements for directors and
officers, for the approval of such arrangements for other senior level
employees, and for the administration of certain benefit and compensation plans
of Fisher and its subsidiaries.
The Executive Committee of the Board consists of Messrs. Montrone, DiNovi,
Meister and Sperling, with Mr. Montrone serving as Chairman. It has been
delegated the powers of the full Board to the extent permitted under Delaware
Law.
The Nominating Committee of the Board consists of all members of the Board,
with Mr. Meister serving as Chairman. It is responsible for the nomination of
persons for election to the Board in accordance with the Investors' Agreement.
As a result of the provisions of the Investors' Agreement regarding the
nomination of directors, the Nominating Committee does not intend to consider
nominees recommended by stockholders that are not parties to the Investors'
Agreement. The Bylaws of the Company prescribe an advance notice procedure with
regard to the nomination, other than by or at the direction of the Board or a
committee thereof, of candidates for election as directors (the "Nomination
Procedure"). The Nomination Procedure requires that a stockholder give prior
written notice, in proper form, of a planned nomination to the Secretary of
Fisher. The requirements as to the form and timing of that notice are specified
in the Bylaws. The Company's Bylaws provide that any stockholder of record
wishing to nominate candidates for election as directors must provide written
notice of such proposal and appropriate supporting documentation, as set forth
in the Bylaws, to the Company at its principal executive office, not less than
30 days nor more than 60 days prior to the meeting. In the event, however, that
less than 40 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely must be
so received not later than the close of business on the tenth day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made. If the inspectors of election determine that a person was
not nominated in accordance with the Nomination Procedure, such person will not
be eligible for election as a director. Stockholder recommendations may be sent
to the Nominating Committee, c/o Secretary, Fisher Scientific International
Inc., Liberty Lane, Hampton, New Hampshire 03842.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
The non-employee directors of Fisher other than Messrs. DiNovi, Harkins,
Sperling and Weldon (the "THL Directors") and Dr. Blutt are entitled to receive
cash compensation and compensation pursuant to the plans described below.
Cash Compensation. Eligible directors receive compensation of $40,000 per
year, with no additional fees for attendance at Board or committee meetings. All
directors are reimbursed for expenses incurred in attending Board and committee
meetings. Pursuant to the Deferred Compensation Plan for Non-Employee Directors
of Fisher Scientific International Inc., eligible directors may elect, generally
prior to the commencement of any calendar year, to have all or any portion of
the director's compensation for such calendar year credited to a deferred
compensation account. Amounts credited to the director's account will accrue
interest based upon the average quoted rate for ten-year U.S. Treasury Notes.
Deferred amounts will be paid in a lump sum or in installments commencing on the
first business day of the calendar year following the year in which the director
ceases to serve on the Board or of a later calendar year specified by the
director.
8
<PAGE> 11
Retirement Plan for Non-Employee Directors. Pursuant to the Retirement Plan
for Non-Employee Directors of Fisher Scientific International Inc., an eligible
director, who retires from the Board with at least five years of service as a
non-employee director is eligible for an annual retirement benefit for the
remainder of the director's lifetime. The annual retirement benefit is equal to
50% of the director's fee in effect at the date of the director's retirement for
a director who retires with five years of service and is increased by 10% of the
director's fee in effect at the date of the director's retirement for each
additional year of service, up to 100% of such fee for 10 or more years of
service as a director, or for directors who retire at age 70 regardless of the
length of service.
COMPENSATION OF EXECUTIVE OFFICERS
I. SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to the President and
Chief Executive Officer and each of Fisher's four other most highly compensated
executive officers (the "Named Executives") for services in all capacities to
Fisher and its subsidiaries during or with respect to 1996, 1997 and 1998.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL ------------
COMPENSATION(1) SECURITIES
------------------ UNDERLYING ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION ($) ($) (#)(2) ($)(3)
- --------------------------- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Paul M. Montrone............................ 1998 590,000 590,000 1,906,959 568,036
Chairman of the Board and 1997 540,000 0 0 53,880
Chief Executive Officer 1996 540,000 475,000 0 82,258
Paul M. Meister............................. 1998 410,000 410,000 1,195,634 75,604
Vice Chairman of the Board, Executive 1997 360,000 0 0 26,430
Vice President and Chief Financial Officer 1996 360,000 315,000 0 32,964
David T. Della Penta (4).................... 1998 316,442 316,000 650,000 313,378
President and Chief Operating Officer
Denis N. Maiorani........................... 1998 300,000 250,000 186,474 8,018
President, Fisher Scientific Worldwide 1997 300,000 0 22,500 8,018
1996 275,000 185,000 22,580 5,453
Todd M. DuChene (5)......................... 1998 212,500 150,000 121,600 4,713
Vice President and General Counsel 1997 200,000 0 7,500 2,500
1996 31,232 60,000 40,000 156,400
</TABLE>
- ---------------
(1) Includes amounts deferred by each Named Executive under Fisher's Savings and
Profit Sharing Plan and Executive Retirement and Savings Program.
(2) Numbers for fiscal 1996 and 1997 are prior to the Merger and have not been
adjusted to reflect a 5-for-1 stock split effected following the Merger to
stockholders of record on March 19, 1998.
(3) Amounts listed in this column reflect Fisher's matching contributions to
Fisher's Savings and Profit Sharing Plan and Executive Retirement and
Savings Program and the value of supplemental life insurance programs for
1998. Amounts attributable to such supplemental life insurance programs are
as follows: Mr. Montrone $191,636, Mr. Meister $67,404 and Mr. Della Penta
$7,378; and for Mr. Montrone the value of a federal tax gross-up payment
made to the federal government as a result of the Merger. Amounts
attributable to Fisher's matching contributions under the Fisher Savings and
Profit Sharing Plan and Executive Retirement and Savings Program are as
follows: Mr. Montrone $11,800, Mr. Meister $8,200, Mr. Della Penta $6,000,
9
<PAGE> 12
Mr. Maiorani $6,000 and Mr. DuChene $4,250. Amounts for Mr. Della Penta and
Mr. DuChene also include sign-on bonuses paid to each executive at the time
he joined the Company.
(4) Mr. Della Penta joined the Company in April 1998.
(5) Mr. DuChene joined the Company in November, 1996.
II. OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted during 1998 to the
Named Executives.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME GRANTED FISCAL YEAR ($/SH) DATE PRESENT VALUE($)(1)
- ---- ---------- ------------ -------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
Paul M. Montrone............... 1,348,626(2) 17.87 9.65 01/21/2008 2,862,191
Paul M. Montrone............... 300,000(3) 3.98 19.30 01/21/2008 400,201
Paul M. Montrone............... 258,333(4) 3.42 28.95 01/21/2008 213,146
Paul M. Meister................ 812,302(2) 10.77 9.65 01/21/2008 1,723,950
Paul M. Meister................ 125,000(3) 1.66 19.30 01/21/2008 166,750
Paul M. Meister................ 258,332(4) 3.42 28.95 01/21/2008 213,145
David T. Della Penta........... 325,000(5) 4.30 9.65 03/06/2008 1,104,604
David T. Della Penta........... 325,000(6) 4.30 19.30 03/06/2008 502,786
Denis N. Maiorani.............. 76,474(2) 1.01 9.65 01/21/2008 231,026
Denis N. Maiorani.............. 110,000(3) 1.46 19.30 01/21/2008 146,740
Todd M. DuChene................ 61,600(2) 0.82 9.65 01/21/2008 186,092
Todd M. DuChene................ 60,000(3) 0.80 19.30 01/21/2008 80,040
</TABLE>
- ---------------
(1) The estimated grant date present value reflected in this column is
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating the value
of the options reflected above include (i) a stock price as indicated in the
table above, equal to the fair market value of the underlying stock on the
date of grant adjusted for a 33% or 25% discount, depending upon the
specific type of option; (ii) options are exercised at the end of a five
year period; (iii) interest rates representing the interest rate on U.S.
Treasury securities with maturity dates of five years as of the date of
grant; and (iv) volatility of approximately 50.0%. The ultimate value of the
options will depend on the future market price of the Common Stock, which
cannot be forecast with reasonable accuracy. The actual value, if any, an
optionee will realize upon exercise of an option will depend on the excess
of the market value of the Common Stock on the date the option is exercised
over the exercise price.
(2) Vesting Options granted pursuant to the Fisher Scientific International Inc.
1998 Equity and Incentive Plan (the "1998 Plan"). Options become exercisable
in equal installments in each of the first three anniversaries of the date
of grant with respect to Messrs. Montrone and Meister, and in equal
installments in each of first five anniversaries of the grant with respect
to Messrs. Della Penta, Maiorani and DuChene. The option grants for Messrs.
Montrone, Meister, Maiorani and DuChene reflect the option conversion
program whereby each Fisher employee electing to convert the spread value of
existing options into Common Stock and to retain Common Stock in the Merger,
was granted an option to purchase 0.6 shares of Common Stock for each share
of Common Stock so converted or retained.
10
<PAGE> 13
(3) Management Performance Options granted pursuant to the 1998 Plan. The
Management Performance Options have a ten year term and vest nine years from
the date of grant or earlier upon a change in control of the Company in
which the THL entities have received a compounded annual return of 30% on
their equity investment.
(4) Executive Performance Options granted pursuant to the 1998 Plan. Options are
fully vested on the date of grant and have a ten year term, during which the
option holder will have the right to require the Company to repurchase said
options ("put") for a price of $5 million. If the put is exercised, the
Company will be obligated to pay the purchase price on a date which is one
year and two business days following the exercise or the date the executive
is no longer a "covered employee" for purposes of Section 162(m) of the
Internal Revenue Code. Interest on the amount owed to the executive shall
accrue at the prime rate from the date of exercise until paid concurrently
with the $5 million payment.
(5) Options granted in connection with the execution of Mr. Della Penta's
employment agreement with the Company. The options have a ten year term and
are exercisable in five equal installments, provided that 250,000 of the
options may be exercised two years from the date of grant in a manner
designed to provide Mr. Della Penta $2,750,000 of value.
(6) Options granted in connection with the execution of Mr. Della Penta's
employment agreement with the Company. The options have a ten year term and
are exercisable nine years from the date of grant or earlier upon a change
in control of the Company in which the THL Entities have received a
compounded annual return of 30% on their equity investment, provided,
however, that 250,000 of the options may be exercised two years from the
date of grant in a manner designed to provide Mr. Della Penta $1,750,000 of
value.
III. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for each Named Executive with
regard to shares acquired on the exercise of options, the aggregate stock
options held on December 31, 1998, and the value of in-the-money stock options
held as of December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1998 DECEMBER 31, 1998
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE(2)
NAME (#) ($)(1) (#) ($)
- ---- ----------- ---------- ----------------- -----------------
<S> <C> <C> <C> <C>
Paul M. Montrone.................. 609,833 11,641,634 0/1,906,959 0/13,962,201
Paul M. Meister................... 411,366 7,107,651 0/1,195,634 0/8,377,663
David T. Della Penta.............. 0 0 0/650,000 0/3,510,000
Denis N. Maiorani................. 95,080 1,173,284 0/186,474 0/845,197
Todd M. DuChene................... 47,500 441,250 0/121,600 0/664,360
</TABLE>
- ---------------
(1) Excess of the value of the underlying securities at the time of exercise
over the exercise price. All of the options exercised were exercised in
connection with the Merger. Pursuant to the Merger Agreement, at the
Effective Time, the holders of each outstanding option immediately prior to
the Effective Time became entitled to receive, with respect to each option,
either (i) the cash price of $9.65 per share less the exercise price
applicable to each Option or (ii) shares of Fisher Common Stock equal to the
"spread value" of such
11
<PAGE> 14
options divided by $9.65. Messrs. Montrone, Meister, Maiorani and DuChene
elected to receive 1,206,385, 736,540, 60,790 and 36,000 shares of Fisher
Common Stock, respectively.
(2) Excess of the value of the underlying securities at December 31, 1998 of
$19.875 over the exercise price.
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVES
Fisher has entered into an Amended and Restated Employment Agreement dated
January 21, 1998 with Mr. Montrone (the "Montrone Employment Agreement") and an
Amended and Restated Employment Agreement dated January 21, 1998 with Mr.
Meister (the "Meister Employment Agreement"). The Montrone Employment Agreement
and the Meister Employment Agreement provide for a five-year evergreen term, an
annual base salary at least equal to the basic salary in effect at the Effective
Time, and bonus compensation of at least $475,000 and $315,000, respectively.
Fisher has entered into an Employment Agreement dated March 31, 1988 with Mr.
Della Penta (the "Della Penta Agreement"), which provides for a three year
evergreen term, annual base salary of $450,000 and bonus target of 100% of base
salary. Under the terms of the Montrone Employment Agreement and the Meister
Employment Agreement, each of Messrs. Montrone and Meister may "put" all but not
less than all of the Executive Performance Options back to the Company in
exchange for $5 million. If the put is exercised, the Company will be obligated
to pay the purchase price on the date which is one year and two business days
following exercise or the date the executive is no longer a "covered employee"
for purposes of Section 162(m) of the Internal Revenue Code. Interest on the
amount owed to the executive shall accrue at the prime rate from the date of
exercise until paid concurrently with the $5 million payment. The Company has
also entered into severance arrangements with each of Messrs. Maiorani and
DuChene which provide that in the event that their employment is terminated in
certain circumstances, such executive is entitled to receive payment equal to
the sum of two times salary.
RETIREMENT PROGRAM
Fisher maintains two retirement benefit programs: a tax qualified defined
benefit plan available generally to all employees (the "Pension Plan") and the
Executive Retirement and Savings Program, a non-qualified supplemental benefit
plan (the "Supplemental Plan") pursuant to which retirement benefits are
provided to certain executive officers and other eligible key management
employees who are designated by the Compensation Committee.
The following table shows the total estimated annual benefits payable under
the Supplemental Plan in the form of a straight life annuity to hypothetical
participants upon retirement at normal retirement age, with respect to the
compensation and years-of-service categories indicated in the table.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
ANNUALIZED ---------------------------------------------------------------------------
AVERAGE 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
EARNINGS OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<C> <S> <C> <C> <C> <C> <C> <C>
$ 100,000 .............. $ 15,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500
200,000 .............. 30,000 45,000 60,000 75,000 90,000 105,000
400,000 .............. 60,000 90,000 120,000 150,000 180,000 210,000
600,000 .............. 90,000 135,000 180,000 225,000 270,000 315,000
800,000 .............. 120,000 180,000 240,000 300,000 360,000 420,000
1,000,000 .............. 150,000 225,000 300,000 375,000 450,000 525,000
1,200,000 .............. 180,000 270,000 360,000 450,000 540,000 630,000
</TABLE>
The years of service recognized under the Supplemental Plan generally
include all service with Fisher and its predecessors. The credited years of
service as of December 31, 1998 under the Supplemental Plan for each of the
Named Executives, are as follows: Mr. Montrone, 28 years; Mr. Meister, 17 years;
Mr. Della Penta, 1 year;
12
<PAGE> 15
Mr. Maiorani, 3 years; and Mr. DuChene, 2 years. Compensation recognized under
the Retirement Program generally includes a participant's base salary and annual
bonus compensation (including any amounts deferred). Retirement benefits are
calculated based upon the average of a participant's recognized compensation for
any five years out of the final ten consecutive years of credited service that
produce the highest average and are not subject to offset or reduction for
social security benefits. Under this formula, the average recognized
compensation under the Supplemental Plan for each of the Named Executives as of
December 31, 1998 was: Mr. Montrone $1,000,500, Mr. Meister $598,000, Mr. Della
Penta $766,000, Mr. Maiorani $436,667, and Mr. DuChene $272,884.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1998 the Compensation Committee
of the Board consisted of Messrs. Day, Dingman and Sperling.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's compensation program is administered by the Compensation
Committee of the Board (the "Committee") which has responsibility for reviewing
all aspects of compensation paid by the Company to its executive officers. The
Committee's primary objectives with respect to executive compensation are to
attract and retain the best possible executive talent, motivate these executives
to achieve Fisher's business objectives, and strengthen the link between
management and shareholder interests. To achieve these objectives, the Committee
expects to retain those compensation plans that tie a substantial portion of an
executive's overall compensation to Fisher's performance.
The principal elements of Fisher's executive compensation program consist
of base salaries and incentive variable compensation in the form of annual
bonus, stock options and other long-term compensation awards. The policies of
the Compensation Committee with respect to the base salary and incentive
compensation awarded to the Company's senior executives, including Mr. Montrone,
Fisher's Chairman of the Board and Chief Executive Officer, are discussed below.
Base Salaries. Base salaries for Company executive officers are determined
by the Committee and are subject to periodic review and evaluation based on
individual and Company performance, level of responsibility, and competitive,
inflationary and internal equity considerations. Mr. Montrone's base salary was
increased from $540,000 to $640,000 per annum in 1998. In connection with the
Merger, the Company has entered into an Amended and Restated Employment
Agreement with Mr. Montrone (the "Montrone Employment Agreement") which provides
for an annual base salary at least equal to the base salary in effect at the
Effective Time.
Annual Incentive Compensation. Pursuant to a component of the Fisher
Scientific International Inc. Incentive Compensation Plan (the "ICP") approved
by Fisher stockholders in 1994, annual cash incentive awards are payable to the
extent that annual Company and individual business performance objectives
specified by the Committee are attained. Company and individual performance
objectives may be based on a variety of factors, including stock price
appreciation; sales, net income and cash flow; and the level of individual
contribution to the success of the Company as well as compensation opportunities
under other Fisher incentive plans. Based on the performance of the Company in
1998, Mr. Montrone was awarded a bonus of $590,000 for 1998.
Long-Term Incentive Compensation. The Committee expects to endeavor to
foster an ownership culture that encourages superior performance by Fisher's
executive officers and employees through the use of stock-based compensation
plans designed to increase stock ownership throughout the Company. To that end,
in connection with the Merger at the Effective Time, executive officers and
management were awarded 3,953,982 options to purchase shares of Common Stock,
having an exercise price of $9.65 per share, 2,475,500 options to
13
<PAGE> 16
purchase shares of Common Stock having an exercise price of $19.30 per share,
and 516,665 options to purchase shares of Common Stock having an exercise price
of $28.95 per share pursuant to the Company's 1998 Equity and Incentive Plan.
The Committee in its discretion will determine subsequent awards.
Compliance with Section 162(m). The Committee believes that, unless
circumstances warrant an exception, Fisher should only pay compensation to its
executive officers in excess of $1 million if such excess amount is
performance-based compensation exempt from the limit on deductibility under
Section 162(m) of the Internal Revenue Code of 1986, as amended. To this end,
the Committee has set forth for approval by Fisher stockholders at the Annual
Meeting the 1998 Plan described below, in order that any grants made to
executive officers thereunder would be exempt from the limitations contained in
Section 162(m).
The Compensation Committee
of the Board of Directors
Michael D. Dingman, Chairman
Robert A. Day
Scott M. Sperling
14
<PAGE> 17
PERFORMANCE COMPARISON
The following graph illustrates the return that would have been realized
(assuming reinvestment of dividends) by an investor who invested $100 on
December 31, 1993 in each of (i) Fisher Common Stock, (ii) the Media General
Composite Market Value Index (the "Media General Index") and (iii) the Media
General Scientific/Technical Instrument Industry Index (the "Scientific/Tech
Instruments Index"):
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG FISHER COMMON STOCK,
<TABLE>
<CAPTION>
FISHER SCIENTIFIC SCIENTIFIC/TECH MEDIA GENERAL
INTERNATIONAL INSTRUMENTS INDEX
----------------- --------------- -------------
<S> <C> <C> <C>
12/31/93 100 100 100
12/30/94 70.15 114 99.17
12/29/95 94.84 156.58 128.58
12/31/96 133.82 182.81 155.28
12/31/97 136.14 226.27 201.64
12/31/98 284.21 227.51 246.49
</TABLE>
ASSUMES $100 INVESTED ON DEC. 31, 1993 ASSUMES DIVIDEND REINVESTED FISCAL YEAR
ENDING DEC. 31, 1998
CERTAIN TRANSACTIONS AND OTHER MATTERS
In connection with the Merger, the Company entered into Management
Agreements ("the "Management Agreements") with each of Thomas H. Lee Company
("THL") and Equity Fund III. Pursuant to the Management Agreements, each of THL
and Equity Fund III will provide Fisher with financial and strategic corporate
planning and other management services as may be mutually agreed. Pursuant to
the Management Agreements each of THL and Equity Fund III were paid at the
Effective Time the sum of $6,000,000 and $14,000,000, respectively, and will be
paid annually during the term of the Management Agreements the sum of $300,000
and $700,000, respectively. The Management Agreements have a seven-year term,
each renewing annually thereafter until terminated by either party thereto on
not less than ninety days notice.
The Investors' Agreement, in addition to providing for the size of the
Board and the nomination and election of directors to serve thereon, contains
restrictions on transfer of shares held by the parties to the agreement. The
Investors' Agreement also provides to the THL Entities and the Management
Investors certain preemptive rights
15
<PAGE> 18
and limits the ability of the DLJ Entities, CEA, the ML Entities and the
Management Investors to purchase Common Stock other than in accordance with the
preemptive rights provisions of the agreement.
The Investors' Agreement provides certain registration rights to the THL
Entities which permit the THL Entities to require the Company to register for
sale under the Securities Act of 1933, as amended (the "Securities Act"), Common
Stock held by the THL Entities. The THL Entities may not require more than six
such registrations. Following the sale by the THL Entities of more than 20% of
Common Stock directly or indirectly held by them, the Management Directors may
require the Company to register for sale under the Securities Act Common Stock
held by them. The Investors' Agreement provides "piggyback" registration rights
to the remaining parties to the agreement. Under the terms of the Investors'
Agreement, the Company may not grant registration rights to third parties, which
conflict with or reduce the registration rights provided to the parties to the
Investors' Agreement.
The Company, The Chase Manhattan Bank, Merrill Lynch Capital Corporation
and DLJ Capital Funding, Inc. are parties to a credit agreement dated January
21, 1998, as amended (the "Credit Agreement") providing for $294.2 million in
term loans and a $175 million revolving credit facility. The proceeds of the
term loans, the proceeds of the $400 million 9% Senior Subordinated Notes due
2008 and proceeds under the Company's $150 million Receivables Securitization
Facility were used to fund the recapitalization in connection with the Merger.
The Chase Manhattan Bank acts as administrative agent for the syndicate of
lenders providing the facility and Merrill Lynch Capital Corporation and DLJ
Capital Funding, Inc. acts as syndicate agent and documentation agent,
respectively.
Borrowings made under the revolving credit facility bear interest at a rate
equal to, at Fisher's option, LIBOR plus 225 basis points, or the Prime Rate
plus 125 basis points. The "Prime Rate" is a fluctuating interest rate equal to
the higher of (i) the rate of interest announced publicly by a reference bank as
its prime rate and (ii) a rate equal to 1/2% of 1% per annum above the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers.
Tranche A of the term facility bears interest at a rate equal to, at
Fisher's option, LIBOR plus 225 basis points or the Prime Rate plus 125 basis
points; Tranche B of the term facility bears interest at a rate equal to, at
Fisher's option, LIBOR plus 250 basis points or the Prime Rate plus 150 basis
points; and Tranche C of the term facility bears interest at a rate equal to, at
Fisher's option, LIBOR plus 275 basis points or the Prime Rate plus 175 basis
points.
The LIBOR and Prime Rate margins will be subject to reductions, based on
various tests of the Company's financial performance. Prime Rate interest will
be payable monthly in arrears. LIBOR interest will be payable in arrears at the
earlier of (i) the end of the applicable interest period and (ii) quarterly.
LIBOR borrowings are available in 1-, 2-, 3- or 6-month interest periods. The
revolving credit facility expires six (6) years from the Effective Time. The
Tranche A, B and C facilities amortize semi-annually beginning on June 30, 1999
and mature 6, 7 and 7.75 years, respectively, after the Effective Date.
The obligations of Fisher and the subsidiary borrowers under the Credit
Agreement are secured by substantially all assets of the Company and its
material domestic subsidiaries, a pledge of the stock of all domestic
subsidiaries, and a pledge of 65% of the stock of material foreign subsidiaries,
which are direct subsidiaries of the Company or one of its material domestic
subsidiaries. Obligations of each foreign subsidiary borrower are secured by a
pledge of 100% of the shares of such borrower. The obligations of Fisher and the
subsidiary borrowers are further guaranteed by Fisher and each material domestic
subsidiary of Fisher.
The Credit Agreement contains covenants of the Company and the subsidiary
borrowers, including, without limitation, restrictions on (i) indebtedness, (ii)
the sale of assets, (iii) mergers, acquisitions and other business combinations,
(iv) minority investments, (v) the payment of cash dividends to shareholders,
and (vi) various
16
<PAGE> 19
financial covenants. The financial covenants include requirements to maintain
certain levels of interest coverage, debt to earnings before interest, taxes,
depreciation and amortization ("EBITDA") and minimum EBITDA and to limit capital
expenditures. The Company is in compliance with all covenants at December 31,
1998. Pursuant to the terms of the Credit Agreement, and subject to applicable
grace periods, in certain circumstances, the Company would be in default upon
the nonpayment of principal or interest when due under such agreement or, upon
the nonfulfillment of the covenants described above, certain changes in control
of the ownership of the Company or various other defaults described therein. If
such a default occurs, the lenders under the Credit Agreement would be entitled
to take all actions permitted to be taken by a secured creditor under the
Uniform Commercial Code and to accelerate the amounts due under the Credit
Agreement and may require all such amounts to be immediately paid in full. Loans
under the Term Facility are required to be prepaid with 50% of excess cash flow
(as defined in the Credit Agreement and subject to certain limits as specified
therein) and certain equity issuances of the Company, and 100% of net-cash
proceeds of certain asset sales, certain insurance and condemnation proceeds and
certain debt issuances of the Company.
The Receivables Securitization Facility relates to the sale, on a revolving
basis, of certain of the accounts receivable of Fisher Scientific Company,
L.L.C., a Delaware limited liability corporation ("FSC"), to a bankruptcy remote
subsidiary of FSC that entered into an agreement to transfer, on a revolving
basis, an undivided percentage ownership interest in a designated pool of
accounts receivable up to a maximum amount based on a defined calculated
percentage of the outstanding accounts receivable balance. As of December 31,
1998, the Company sold $105.2 million under the Receivables Securitization. The
facility has a maturity of five years, and the effective interest rate is
approximately LIBOR plus 50 basis points.
On January 21, and November 20, 1998, the Company issued $400 million and
$200 million, respectively, of 9% Senior Subordinated Notes ("9% Notes"). The 9%
Notes issued in January were issued at par while the 9% Notes issued in November
were issued net of a $7 million discount. The 9% Notes will mature on February
1, 2008 with interest payable semiannually in arrears on February 1 and August 1
of each year commencing August 1, 1998. The 9% Notes are unsecured senior
subordinated obligations of the Company, subordinated in right of payment to all
existing and future senior indebtedness and rank pari passu in light of payment
with all other existing and future senior subordinated indebtedness of the
Company. The 9% Notes are redeemable at the option of the Company at any time
after February 1, 2003 at an initial redemption price of 104.5%, declining
ratably to par on or after February 1, 2006. In addition, on or prior to
February 1, 2001, the Company may redeem up to 40% of the original principal
amount of the 9% Notes at a redemption price of 109% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of redemption
with the net cash proceeds of one or more public equity offerings, provided that
at least 60% of the aggregate principal amount of the 9% Notes originally issued
remains outstanding immediately after the occurrence of such redemption. Upon a
Change of Control Triggering Event (as defined in the Indenture under which the
9% Notes are issued), the Company will be required to make an offer to purchase
all outstanding 9% Notes at 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of purchase.
The Indenture under which the 9% Notes are issued contains covenants that
restrict, among other things, (i) the ability of the Company and its
subsidiaries to incur additional indebtedness, (ii) pay dividends or make
certain other restricted payments, (iii) merge or consolidate with any other
person, (iv) minority investments, and (v) other various covenants that are
customary for transactions of this type.
The Company currently leases space at its corporate headquarters to Latona
Associates Inc., a merchant banking firm owned by Mr. Montrone. Under the terms
of the lease, the Company leases an aggregate 15,000 square feet of space for
$200,000 per year.
17
<PAGE> 20
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee of the Board, the Board has
appointed Deloitte & Touche LLP as the Company's independent auditors for the
1999 fiscal year and hereby requests that the stockholders ratify such
appointment.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting and will have an opportunity to make a statement if they so desire and
to respond to appropriate questions from stockholders.
SUBMISSION OF PROPOSALS FOR 2000 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for stockholder
action at Fisher's annual meetings, consistent with regulations adopted by the
SEC and the By-laws of the Company. Proposals to be considered for inclusion in
the proxy statement for the 2000 Annual Meeting of Stockholders must be received
by Fisher at its principal executive offices not later than December 12, 1999.
Proposals to be timely submitted for stockholder action at Fisher's 2000 Annual
Meeting must be received by Fisher at its principal executive offices not less
than 30 days nor more than 60 days prior to the 2000 Annual Meeting. Proposals
should be directed to the attention of the Secretary, Fisher Scientific
International Inc., Liberty Lane, Hampton, New Hampshire 03842.
ANNUAL REPORT
The Annual Report to Stockholders of the Company for the year 1998 and this
proxy statement are being mailed together to all stockholders of the Company of
record on April 5, 1999, the record date for voting at the Annual Meeting.
By Order of the Board of Directors,
TODD M. DUCHENE
Vice President --
General Counsel and Secretary
April 12, 1999
THE COMPANY'S 1998 ANNUAL REPORT ON FORM 10-K, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, IS AVAILABLE WITHOUT CHARGE BY WRITTEN REQUEST FROM THE
OFFICE OF THE SECRETARY, FISHER SCIENTIFIC INTERNATIONAL INC., LIBERTY LANE,
HAMPTON, NH 03842.
<PAGE> 21
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FISHER SCIENTIFIC INTERNATIONAL INC.
ANNUAL MEETING, MAY 11, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Messrs. Paul M. Montrone, Paul M. Meister and Todd M. DuChene, each with power
of substitution, are hereby authorized to vote all shares of common stock of
Fisher Scientific International Inc., which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders of Fisher
Scientific International Inc. to be held on Tuesday, May 11, 1999, and at any
adjournments, as specified on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
(PLEASE MARK THIS PROXY AND SIGN AND DATE IT ON THE
REVERSE SIDE HEREON AND RETURN IT IN THE ENCLOSED ENVELOPE.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 22
<TABLE>
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A vote FOR Proposals 1 and 2 is recommended by the Board of Directors.
Please mark [ X ]
your votes as
indicated in
this example
<S> <C> <C>
1. Election of Directors for the term expiring at the Annual Meeting in 2002. 2. Ratify the appointment of Deloitte &
Touche LLP as independent public
Nominees: Mitchell J. Blutt, David V. Harkins auditors of the Company.
and Paul M. Meister
FOR EACH WITHHOLD AUTHORITY
NOMINEE TO VOTE FOR EACH FOR AGAINST ABSTAIN
LISTED NOMINEE LISTED
[ ] [ ] (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR [ ] [ ] [ ]
ANY INDIVIDUAL NOMINEE, WRITE THE NOMINEE'S NAME
ON THE SPACE PROVIDED BELOW.
-------------------------------------
3. In their discretion, on such other
business as may properly come before
the meeting.
A MAJORITY (OR IF ONLY ONE, THEN THAT ONE)
OF THE ABOVE PERSONS OR THEIR SUBSTITUTES WHO
SHALL BE PRESENT AND ACTING AT THE MEETING
SHALL HAVE THE POWERS CONFERRED HEREBY.
DATED: , 1999.
---------------------------------
----------------------------------------------
----------------------------------------------
SIGNATURE OF STOCKHOLDER(S)-PLEASE SIGN NAME
EXACTLY AS IMPRINTED (??????). PLEASE INDICATE
ANY CHANGE OF ADDRESS.
NOTE: EXECUTORS, ADMINISTRATORS, TRUSTEES AND
OTHERS SIGNING IN A REPRESENTATIVE CAPACITY
SHOULD INDICATE THE CAPACITY IN WHICH THEY
SIGN. IF SHARES ARE HELD JOINTLY, EACH HOLDER
SHOULD SIGN.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOLD AND DETACH HERE
