SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BetzDearborn, Inc.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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 No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
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1997
Notice of
Annual Meeting
and
Proxy Statement
[LOGO] BetzDearborn
<PAGE>
/X/ PLEASE VOTE
Whether or not you plan to attend the annual
meeting, your vote is important. To ensure
that your shares will be represented, please
complete, sign, date, and mail your proxy
card in the enclosed postage paid envelope.
ANNUAL REPORTS
The Company's most recent Annual Report on
Form 10-K, including the financial statements
and schedules filed with the SEC, is available
upon written request and without charge. To
receive a copy, direct your request to either
George L. James, III, vice president and chief
financial officer, or William C. Brafford, vice
president and secretary, at the corporate world
headquarters address.
<PAGE>
CONTENTS
PAGE
----
A MESSAGE FROM THE CHAIRMAN............................................. 2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS................................ 3
PROXY STATEMENT......................................................... 4
/x/ Proposal No. 1: Election of Directors........................... 4
Board Committees and Director Meetings.......................... 7
Information Relating to Executive Officers...................... 8
Ownership of Company Shares..................................... 9
Compensation Committee Report on
Executive Compensation........................................ 11
Executive Compensation.......................................... 15
/x/ Proposal No. 2: Amendment to Stock Option Plan of 1987.......... 21
/x/ Proposal No. 3: Approval of
Employee Stock Purchase Plan of 1997.......................... 24
/x/ Proposal No. 4: Election of Independent Auditors................ 25
OTHER MATTERS........................................................... 26
EXHIBIT A: STOCK OPTION PLAN OF 1987.................................... A-1
(AS AMENDED EFFECTIVE APRIL 10, 1997)
EXHIBIT B: EMPLOYEE STOCK PURCHASE PLAN OF 1997......................... B-1
- --------------------------------------------
/x/ To be voted on at the meeting.
1
<PAGE>
WILLIAM R. COOK
Chairman of the Board
President
Chief Executive Officer
BETZDEARBORN INC.
4346 Somerton Road
PO Box 3002
Trevose, PA 19053-6783
215 355-3300
215 953-2484 Fax
[LOGO] BetzDearborn
March 10, 1997
DEAR SHAREHOLDER:
Nineteen ninety-six was the most remarkable year in the history of our Company.
With Betz Laboratories' strategic acquisition of the Dearborn Division of W.R.
Grace, we immediately achieved our long-term globalization goals and
strengthened our U.S. leadership position. We even have a new
name--BetzDearborn--to reflect our status as the preeminent global leader in the
specialty water and process chemical treatment industry. As we complete the
integration of the two companies this year, we are very excited about the
opportunities to generate significant returns to our shareholders.
You are cordially invited to attend the first Annual Meeting of the new
BetzDearborn to be held Thursday, April 10, 1997, at our Corporate World
Headquarters in Trevose, Pennsylvania. The meeting will begin with an
introduction of the nominees for Director and continuing Directors, followed by
voting on the four proposals and other matters properly brought before the
Meeting. We will then conclude with a report on Company operations.
In addition to electing Directors and ratifying the appointment of Ernst & Young
LLP as independent auditors for the Company, you are being asked to consider and
approve an amendment to the Company's Stock Option Plan of 1987 and an Employee
Stock Purchase Plan. The Board of Directors believes these proposals are in the
best interest of the Company and its shareholders and recommends a vote FOR each
of the proposals. They are more fully described in the accompanying Proxy
Statement, which you are encouraged to read carefully.
Your Board of Directors and Management look forward to personally greeting you
on April 10th. If you will not be able to attend the Annual Meeting, we urge you
to exercise your right to vote by promptly completing and returning your signed
proxy card in the envelope provided.
Thank you for your cooperation and continued support.
Sincerely,
/s/ WILLIAM R. COOK
- -------------------------------------
William R. Cook
Chairman of the Board,
President and Chief Executive Officer
Shaping the Future of Water & Process Treatment
2
<PAGE>
WILLIAM C. BRAFFORD
Vice President, Secretary and General Counsel
BETZDEARBORN INC.
4346 Somerton Road
P.O. Box 3002
Trevose, PA 19053-6783
215-953-2315
215-953-5536 Fax
[LOGO] BetzDearborn
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
March 10, 1997
DEAR SHAREHOLDER,
The 1997 Annual Meeting of Shareholders of BetzDearborn Inc. will be held in the
Corporate Training Facility at BetzDearborn World Headquarters, 4636 Somerton
Road, Trevose, Pennsylvania, on Thursday, April 10, 1997 at 11:00 a.m. Daylight
Savings Time, for the following purposes:
1. To elect three Directors as members of a class for a term of three
years;
2. To approve an amendment to the Company's Stock Option Plan of 1987;
3. To approve the proposed Employee Stock Purchase Plan;
4. To approve the appointment of Ernst & Young LLP as the Company's
independent auditors for 1997; and
5. To consider and transact such other business as may properly come before
the Meeting or any adjournment thereof.
Shareholders of record at the close of business on February 7, 1997, will be
entitled to vote at the meeting and any adjournments. It is important that your
shares be represented and voted and you are cordially invited to attend the
meeting. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE VOTE, SIGN, DATE AND RETURN
THE ENCLOSED PROXY OR CONFIDENTIAL INSTRUCTION CARD IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.
Very truly yours,
/s/ WILLIAM C. BRAFFORD
- --------------------------
William C. Brafford
Secretary
Shaping the Future of Water & Process Treatment
3
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors ("Board") of BetzDearborn Inc. for use at the
1997 Annual Meeting of Shareholders and any adjournments thereof. Distribution
of this Proxy Statement and the enclosed proxy card is scheduled to begin on or
about March 10, 1997.
A Proxy may be revoked by a Shareholder before it is exercised by notifying
the Secretary of the Company prior to the Meeting or by voting in person at the
Meeting. In the absence of voting instructions for one or more of the proposals
listed on the Proxy, the Proxy will be voted FOR those proposals. As to any
other matters that may properly come before the Meeting, the persons named in
the Proxy will consult with the entire Board (including the nominees) and use
their discretion in voting upon such matters.
Solicitations may be made by mail, personal interview and telephone by
officers and regular employees of the Company, not exceeding twenty-five in
number, who will receive no additional compensation therefor. The Company may
request, and reimburse reasonable out-of-pocket expenses, of banks, brokers and
other nominees to forward proxy materials to the beneficial owners of shares
held of record. Additionally, the Company has retained D.F. King & Co., Inc. to
assist with the solicitation of proxies from brokerage firms and banks. The
Company will pay D.F. King & Co., Inc. a fee of fifty-five hundred dollars
($5,500) and reimburse them for their actual expenses in rendering this service.
Only holders of record of the Company's Preferred Shares and Common Shares
at the close of business on February 7, 1997, will be entitled to receive notice
of, and vote at, the Meeting. Each such shareholder is entitled to one vote for
each share held of record on all business that comes before the Meeting.
Cumulative voting in the election of Directors is not permitted. On February 7,
1997, there were 28,243,422 Common Shares and 481,223 Preferred Shares of the
Company issued and outstanding.
The Company's Annual Report for 1996, on which no action will be asked by
the Board, is enclosed with this Proxy Statement. It is not to be regarded as
proxy solicitation material.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Under the Company's Bylaws, the Board consists of not less than five or
more than thirteen Directors divided into three classes approximately equal in
number. Normally, the Directors of one class stand for election at each Annual
Meeting to three-year terms, with the result that each class stands for election
once every three years. This year's Meeting will relate to the election of three
Directors to a class for three-year terms expiring in 2000.
The class of Directors whose term of office will expire at the 1997 Annual
Meeting consists of Messrs. John F. McCaughan, John Quarles and Robert L. Yohe,
each of whom was previously elected by the Shareholders for a three-year term.
Mr. John A. Miller has announced his intention to resign from the Board
effective at the close of business of the 1997 Annual Meeting. As a consequence,
the Company will reduce the size of the Board from twelve to eleven Directors
until such time as a successor may be elected. Unless otherwise instructed, the
persons named in the enclosed Proxy will vote shares subject to a valid Proxy in
favor of the election of Messrs. McCaughan, Quarles and Yohe.
The Board knows of no reason why any nominee may be unable to serve as a
Director. If any nominee should become unable to serve, the persons named in the
Proxy, after consultation with the full Board, will exercise their discretion in
voting for such person or persons as the Board may recommend.
The following information is furnished with respect to each of nominees for
election and each of the continuing Directors of the Company. The information
includes age, period served as Director, business experience during the past
five years and other directorships.
4
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NOMINEES FOR TERMS EXPIRING IN 2000
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JOHN F. MCCAUGHAN Mr. McCaughan, age 61, was elected a Director of the
Company in 1972. He was Chairman of the Board from
1982 to 1996, Chief Executive Officer from 1982 to
1993 and President of the Company from 1987 to 1989.
Mr. McCaughan serves as a Director of Philadelphia
Suburban Corporation, Penn Mutual Life Insurance
Company and the YMCA of Philadelphia and vicinity.
He also is a Trustee of the Doylestown Hospital
Foundation.
JOHN QUARLES Mr. Quarles, age 61, was elected a Director of the
Company in 1992. Since 1977, he has been a partner
in the law firm of Morgan, Lewis and Bockius where
he heads the firm's environmental practice group.
Mr. Quarles is a former Chairman of the Firm and
currently is a member of the firm's Executive
Committee. Mr. Quarles also is a Director of the
Christian Broadcasting Network and a former Director
of the Environmental Law Institute.
ROBERT L. YOHE Mr. Yohe, age 60, was elected a Director of the
Company in 1991. Since 1995, he has been an
independent corporate director and advisor. Mr. Yohe
was Vice Chairman of Olin Corporation from 1993 to
1994 after serving as Executive Vice President from
1987 to 1993. He was a Director of Olin Corporation
from 1990 to 1994. Mr. Yohe serves as a Director of
Airgas Inc., Calgon Carbon Corporation, LaRoche
Industries Inc., Marsolex Inc. and The Middleby
Corporation. He also is a Trustee of Lafayette
College.
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DIRECTORS WHOSE TERMS WILL EXPIRE IN 1998
- --------------------------------------------------------------------------------
CAROLYN S. BURGER Ms. Burger, age 57, was elected a Director of the
Company in 1993. She has been principal of CB
Associates, Inc. since June, 1996. Ms. Burger was
President and Chief Executive Officer of Bell
Atlantic -- Delaware, Inc. from 1991 to 1996, and
she served as a Director from 1988 to 1996. She
serves as a Director of the Wilmington Trust
Corporation, the Brandywine Conservancy, WHYY and
the Medical Center of Delaware.
GEORGE A. BUTLER Mr. Butler, age 68, was elected a Director of the
Company in 1988. He has been a Director of
CoreStates Financial Group and CoreStates Bank, N.A.
since 1990. Previously, Mr. Butler was President of
CoreStates Financial Corp. from 1990 to 1991 and was
Chairman of First Pennsylvania Bank from 1979 to
1990. Mr. Butler serves as a Director of
Pierce-Phelps, Inc. and General Accident Insurance
Company of America. He is also a Trustee of Thomas
Jefferson University.
GEOFFREY STENGEL, JR. Mr. Stengel, age 53, was elected a Director of the
Company in 1987. Mr. Stengel has been Chairman of
Wingspan Technology, Inc. since July, 1996, and
President of Envirite Corporation since 1983. He
also serves as Chairman, Environmental Technology
Council.
5
<PAGE>
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DIRECTORS WHOSE TERMS WILL EXPIRE IN 1999
- --------------------------------------------------------------------------------
JOHN W. BOYER, JR. Mr. Boyer, age 68, was elected a Director of the
Company in 1981. He has been a Director of the
Philadelphia Suburban Corporation since 1981.
Previously, he was Chairman of the Philadelphia
Suburban Corporation from 1992 to 1993 and Chairman
and President from 1981 to 1992. Mr. Boyer also
serves as a Director of Gilbert Associates, Inc. and
Rittenhouse Trust Company. He is a Trustee of
Eastern College and serves as Chairman of its
Finance Committee.
PATRICK F. BRENNAN Mr. Brennan, age 65, was elected a Director of the
Company in 1992. He has been a Director of
Consolidated Papers, Inc. since 1987, President and
Chief Operating Officer from 1988 to 1996 and
President, Chief Executive Officer and Chief
Operating Officer from 1993 to 1996. Mr. Brennan is
also a Director of Northland Cranberries, Inc. and
Wisconsin Manufacturers and Commerce.
WILLIAM R. COOK Mr. Cook, age 53, was elected Chairman of the Board
of the Company in 1996. He has been Chief Executive
Officer of the Company since 1994, President since
1990 and a Director since 1989. Mr. Cook has been
Chairman of the BetzDearborn Paper Process Group
Inc. since 1990 and served as Chairman of
BetzDearborn Hydrocarbon Process Group Inc. from
1991 to 1994 and Chairman of Betz Entec, Inc. from
1992 to 1994. Mr. Cook is also a Director of
Dynatech Corporation and the Chemical Manufacturers
Association.
ALAN R. HIRSIG Mr. Hirsig, age 57, was elected Director of the
Company in 1995. He has been President and Chief
Executive Officer of ARCO Chemical Company since
1991 and a Director since 1989. Mr. Hirsig was
President, ARCO Chemical European Operations from
1984 to 1990. He is also a Director of the Chemical
Manufacturers Association and Greater Philadelphia
First. Mr. Hirsig is a Trustee of Bryn Mawr College
and the YMCA of Philadelphia and vicinity. He also
is Chairman of the Advisory Board of PRIME, Inc.
JOHN A.H. SHOBER Mr. Shober, age 63, was elected a Director of the
Company in 1987. He has been a Director of Penn
Virginia Corp. since 1989, Vice Chairman of the
Board of Directors from 1992 to 1996, and President
and Chief Executive Officer from 1989 to 1992. He is
a Director of MIBRAG GmbH, Ensign-Bickford
Industries, Inc., Airgas, Inc., Auker Coal Group,
Inc., Charter Power Systems, Inc. and the YMCA of
Philadelphia and vicinity. Mr. Shober also serves on
the Board of Managers, Pennsylvania Hospital and the
Board of Trustees, Eisenhower Exchange Fellowships,
Inc.
The Board of Directors recommends that the
shareholders vote FOR the nominees.
6
<PAGE>
BOARD COMMITTEES AND DIRECTOR MEETINGS
The Board held six regular meetings and one special meeting during 1996.
All Directors attended at least 75% of the aggregate of all meetings of the
Board of Directors and committees on which they served during 1996.
There are five standing committees of the Board of Directors: Audit
Committee, Administrative Committee, Corporate Governance Committee, Executive
Compensation and Employee Benefits Committee and Retirement and Stock Bonus Plan
Committee.
THE AUDIT COMMITTEE reviews the qualifications and independence of the
Company's independent auditors and recommends a firm to the Board for election
by the shareholders. The Audit Committee also considers and approves the range
of audit and nonaudit fees, the scope of nonaudit services performed by
independent auditors, and the annual compensation of the independent auditors.
With the assistance of the Company's independent and internal auditors, the
Committee also reviews the Company's internal accounting policies and
procedures. The Audit Committee, which presently consists of Directors Butler,
Boyer, Brennan, Miller, Quarles and Shober, met three times during 1996.
THE ADMINISTRATIVE COMMITTEE acts in lieu of the Board on limited matters
specifically delegated to it in advance by the full Board of Directors. The
Administrative Committee, which presently consists of Directors Cook and
McCaughan, met six times in 1996.
THE CORPORATE GOVERNANCE COMMITTEE evaluates and recommends to the full
Board the slate of Directors to be submitted to the shareholders at the Annual
Meeting as well as candidates to be appointed by the Board to fill vacancies
that may occur from time to time. The Corporate Governance Committee also
evaluates director compensation methods in order to attract and retain qualified
Directors and ensure that the Company remains competitive with similarly
situated corporations. In considering candidates for nomination as a Director,
the Corporate Governance Committee will consider individuals suggested by
shareholders of the Company. Shareholders wishing to suggest an individual for
consideration as a Director should submit the candidate's name and complete
biographical resume to the Committee's Chairman, BetzDearborn Inc., 4636
Somerton Road, Trevose, PA 19053. All shareholder suggestions must be received
by November 8 immediately preceding the Annual Meeting at which such nominee
would be eligible for election to be considered for recommendation by the
Corporate Governance Committee. The Corporate Governance Committee, which
presently consists of Directors Miller, Boyer, McCaughan and Shober, met two
times during 1996.
THE EXECUTIVE COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE approves ranges
of base compensation for all Company employees other than officers and,
following consultation with the Chief Executive Officer, approves base
compensation rates for officers. The Committee also makes determinations as to
the grants of stock options and incentive stock. The Executive Compensation and
Employee Benefits Committee, which presently consists of Directors Yohe,
Brennan, Butler, Hirsig and Stengel, met four times during 1996.
THE RETIREMENT AND STOCK BONUS PLAN COMMITTEE administers the Company's
Employee Retirement Plan and Employee Stock Ownership and 401(k) Plan. The
Committee has full and final authority, subject to the provisions of the Plan
and the full Board, to establish guidelines for administration and operation of
the Plan. The Retirement and Stock Bonus Plan Committee, which presently
consists of Directors Boyer, Burger, Cook, McCaughan and Stengel, met two times
in 1996.
7
<PAGE>
EXECUTIVE OFFICERS
The following information is furnished with respect to each of the
executive officers of the Company. The information includes age, position or
office with the Company and business experience during the past five years.
William C. Brafford Mr. Brafford, age 64, has been Vice President,
Secretary and General Counsel of the Company since
1980.
Richard A. Heberle Mr. Heberle, age 57, has been Senior Vice
President of the Company since 1995. Previously,
he was President of Betz International, Inc. from
1980 to 1994.
John L. Holland Mr. Holland, age 54, has been Senior Vice
President of the Company and President of
BetzDearborn Water Management Group since 1995. He
was President of BetzDearborn Paper Process Group
Inc. from 1994 to 1995, and President, Betz Canada
Inc. from 1991 to 1994.
George L. James, III Mr. James, age 50, has been Vice President and
Chief Financial Officer of the Company since 1995.
He also was Treasurer of the Company from 1995 to
1996. Previously, Mr. James was Vice President,
Corporate Development and Planning of Scott Paper
Company from 1994 to 1995 and Vice President,
Corporate Finance, Planning and Analysis of Scott
Paper Company from 1992 to 1994.
Ronald A. Kutsche Mr. Kutsche, age 54, has been Senior Vice
President of the Company and President,
BetzDearborn Paper Process Group Inc. since 1995.
Since 1994, he has been Chairman of BetzDearborn
Metal Process Group. Previously, he served as
Chairman of BetzDearborn Hydrocarbon Process Group
Inc. from 1994 to 1995, President of BetzDearborn
Hydrocarbon Process Group Inc. from 1990 to 1995,
Chairman of Betz Energy Chemicals, Inc. in 1994
and President of Betz Energy Chemicals, Inc. from
1990 to 1994.
Ian Priestnell Mr. Priestnell, age 53, has been Senior Vice
President of the Company since 1996. Previously,
he was President of Grace Dearborn, a division of
W.R. Grace & Co., from 1992 to 1996.
Larry V. Rankin Mr. Rankin, age 53, has been Senior Vice President
of the Company since 1988 and Chairman,
BetzDearborn Canada Inc. since 1990. Previously,
he was Chairman, Betz International, Inc. and
Chairman Betz Europe, Inc. from 1987 to 1996.
8
<PAGE>
OWNERSHIP OF COMPANY SHARES
The following table includes information regarding beneficial ownership of
the Company's common stock by owners of more than 5% of such shares.
<TABLE>
<CAPTION>
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AMOUNT AND NATURE
NAMES AND ADDRESS OF OF BENEFICIAL PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS OUTSTANDING
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Scudder, Stevens & Clark, Inc. 2,557,670 9.06%
345 Park Avenue
New York, NY 10154
Common Stock FMR Corp. 1,827,600 6.47%
82 Devonshire Street
Boston, MA 02109
Common Stock The Regents of 1,573,500 5.57%
the University of California
300 Lakeside Drive
Oakland, CA 94612
- --------------------------------------------------------------------------------------------------
</TABLE>
The Company is not aware of any other person or group which is the
beneficial owner of more than 5% of the Company's common shares or preferred
shares.
The table below includes information regarding beneficial ownership of the
Company's shares by each Director, nominee and named executive officer, and for
all Directors and executive officers of the Company as a group as of February 7,
1997. Unless otherwise indicated in the footnotes, each individual exercises
sole voting and investment power over all common shares set forth opposite his
or her name.
<TABLE>
<CAPTION>
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PERCENT OF PERCENT OF
COMMON CLASS DEFERRED PLAN CLASS
SHARES(1) OUTSTANDING SHARES(2) OUTSTANDING
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John W. Boyer, Jr................................ 1,700 * 125 *
Patrick F. Brennan............................... 1,200 * 1,354 *
Carolyn S. Burger................................ 600 * 125 *
George A. Butler................................. 2,000 * 6,428 *
William R. Cook.................................. 35,436(3) * *
Richard A. Heberle............................... 10,902(4) * *
Alan R. Hirsig................................... 1,100 * 125 *
John L. Holland.................................. 6,489 * *
George L. James, III............................. 4,177 * *
John F. McCaughan................................ 38,461(5) * 125 *
Ian Priestnell................................... 2,849 * *
John Quarles..................................... 1,700 * 1,415 *
Larry V. Rankin.................................. 16,219 * *
John A.H. Shober................................. 3,500 * 125 *
Geoffrey Stengel, Jr............................. 1,200 * 125 *
Robert L. Yohe................................... 1,600 * 1,354 *
All Directors and executive officers as a
group (18 persons)............................. 154,291 * 11,176 *
</TABLE>
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* Indicates ownership of less than 1% of the class outstanding.
(1) The numbers shown include shares granted subject to forfeiture and
restrictions on transfer pursuant to the Company's Employee Stock Incentive
Plan over which the persons named have voting power
9
<PAGE>
as follows: Mr. Cook, 18,444 shares; Mr. Heberle, 3,983 shares; Mr. Holland,
5,211 shares; Mr. James, 2,969 shares; Mr. Rankin, 4,819 shares; all
Directors and executive officers as a group (18 persons), 31,427 shares.
Also included is each person's respective interest in certain shares held by
the Trustee of the Company's Employee Stock Ownership and 401(k) Plan over
which such persons have voting and investment power: Mr. Cook, 709 shares;
Mr. Heberle, no shares; Mr. Holland, 145 shares; Mr. James, 208 shares; Mr.
Rankin, 2,696 shares; all Directors and executive officers as a group (18
persons), 20,706 shares. Not included are shares which may be acquired upon
the exercise of stock options granted under the BetzDearborn Inc. Stock
Option Plan of 1981 and the BetzDearborn Inc. Stock Option Plan of 1987 over
which the named individuals have neither voting nor investment power until
exercise of the options: Mr. Cook, 108,904 shares; Mr. Heberle, 37,401
shares; Mr. Holland, 35,240 shares; Mr. James, 20,564 shares; Mr. Rankin,
48,943 shares; all Directors and executive officers as a group (18 persons),
368,512 shares.
(2) Deferred Plan shares represent shares of common stock of the Company
hypothetically purchased by the persons named under the Company's Directors'
Deferred Compensation Plan. Such Plan provides that Directors who are not
employees of the Company may elect to defer all or any portion of their
compensation as a Director and invest such amount in shares of common stock
of the Company. Common stock so invested is adjusted to reflect stock
dividends and splits; however, upon retirement, payments of deferred
compensation are made in cash.
(3) Does not include interest in 233 shares of preferred stock over which Mr.
Cook has voting power only.
(4) Does not include 500 shares held by Mr. Heberle's son for himself with
respect to which Mr. Heberle disclaims beneficial ownership.
(5) Does not include 200 shares held by Mr. McCaughan's wife for herself or as a
trustee, 600 shares held by his daughter for herself, nor 280 shares held by
his mother for herself with respect to which Mr. McCaughan disclaims
beneficial ownership.
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REMUNERATION OF DIRECTORS
Each Director who is not an employee of the Company ("Outside Director")
receives an annual retainer in the form of 500 shares of the Company's common
stock granted without restrictions under the Employee Stock Incentive Plan as
compensation for Board Committee assignments and meetings. Outside Directors are
paid a fee of $1,500 for each Board Meeting attended. Committee Chairs are paid
an annual retainer of $3,000, and the Chairs and each Committee member are paid
a fee of $1,000 for each Committee Meeting attended. In addition, each Director
is granted annually an option to purchase 1,000 shares of the Company's common
stock according to the Company's Stock Option Plan of 1987. Directors who are
employees of the Company are not paid any fees.
Outside Directors are also eligible to participate in the Company's
Directors' Deferred Compensation Plan in which they may elect to defer some or
all of their compensation.
In order to reinforce the importance of aligning Director interest with
shareholder value, the Board has required each Outside Director to acquire and
maintain ownership of shares of Company common stock equal to not less than
$100,000 in value within a predetermined period of initial election to the
Board.
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
Mr. Quarles is a partner in the law firm of Morgan, Lewis and Bockius which
provided legal services to the Company in 1996 for which it was paid $213,713.
10
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Executive Compensation and Employee Benefits Committee, which is
comprised entirely of non-employee Directors, fixes base compensation rates for
the Company's executive officers and establishes awards under the Company's
Employee Stock Incentive Plan and Stock Option Plan of 1987. This report
addresses the Company's compensation policies for 1996 as they affected the
Chief Executive Officer, the four executive officers who were the Company's most
highly paid executives in 1996 (collectively, with the Chief Executive Officer,
the "Named Executive Officers"), and the other executive officers of the
Company.
COMPENSATION PHILOSOPHY
The Compensation Committee's executive compensation policies are designed
to provide competitive compensation opportunities, to reward executives
consistent with the Company's performance, to recognize individual performance
and responsibility, to assist the Company in attracting and retaining qualified
executives and, most importantly, to underscore the importance of total
shareholder return. The principal elements of compensation are base salaries,
annual cash bonuses, and long-term stock-based incentives. By design, the
variable or at-risk components of compensation are proportionately greater for
more senior executives, in recognition of their greater potential impact on the
Company's results.
During 1996, the Committee carefully reviewed the executive compensation
program and made a number of changes designed to increase the relative
importance of variable compensation and to strengthen the link between
compensation and shareholder value, Company performance, and individual
contributions. Each of these changes is highlighted below.
All compensation decisions are determined following a detailed review of
many factors that the Committee believes are relevant, including the Company's
achievements over the past year, external competitive data, each individual's
contributions to the Company's success, significant changes in roles or
responsibilities, and the internal equity of pay relationships.
While total compensation opportunities for the Named Executive Officers are
targeted to be consistent with median levels of competitive compensation for
executives with comparable responsibilities in similarly sized specialty
chemical and industrial firms, the actual compensation earned in any particular
year may be more or less than the competitive median, depending upon shareholder
returns, the Company's performance, and individual contributions. Total
compensation opportunities for the Named Executive Officers are adjusted over
time as necessary to meet these objectives.
The competitiveness of the Company's total compensation program --
incorporating base salaries, annual cash bonuses, and long-term stock-based
incentives -- is assessed regularly with the assistance of the Committee's
independent compensation consultant. Data for these comparisons is drawn from
national compensation surveys of both specialty chemical and diversified
industrial firms.
In recognition of the Company's acquisition of Dearborn and its
subsequently larger size and greater complexity, the Committee determined that
the specialty chemical peer group formerly used for compensation comparisons and
for the performance graph was less relevant than it had been in previous years.
As such, the Committee adopted new peer groups for both compensation and
performance graph comparisons. The new peer group for compensation comparisons
includes many of the firms represented in the former peer group, as well as a
number of larger and more relevant firms. In addition, the Value Line Specialty
Chemical Index was adopted for use in the performance graph. The median annual
revenue and market capitalization of the firms in the compensation peer group
and Value Line Specialty Chemical Index are comparable to that of the Company.
The firms represented in the compensation peer group and the Value Line
Specialty Chemical Index overlap substantially.
11
<PAGE>
This year's performance graph, consistent with SEC requirements,
illustrates the Company's performance with respect to a broad market index as
well as to the formerly employed peer group and to the newly adopted Value Line
Specialty Chemical Index. In addition, to provide shareholders with a better
perspective on the Company's recent performance, a performance graph
illustrating one year quarterly shareholder returns is presented.
BASE SALARY
Base salaries for all Named Executive Officers, including the Chief
Executive Officer, are reviewed by the Committee on an annual basis. In
determining appropriate base salaries, the Committee considers external
competitiveness, the roles and responsibilities of the individual, the internal
equity of pay relationships, and the contributions of the individual to the
Company's success.
ANNUAL CASH BONUS INCENTIVES
The Committee believes that executives should be rewarded for their
contributions to the annual success of the Company and, as such, administers the
Performance Incentive Compensation Plan. Awards paid under the Plan reflect the
degree to which the Company meets or exceeds certain predetermined financial
objectives, as measured by results from operations. Threshold levels of
performance, below which no awards will be paid, have been established. Awards
may be adjusted to reflect individual contributions to the Company's success.
As part of its 1996 review of the Company's executive compensation program,
the Committee determined that it was appropriate to increase the importance of
annual incentive opportunities relative to base salaries and implemented a plan
for 1997 that will increase incentive earning opportunities (actual incentive
earnings will continue to reflect the degree to which the Company meets
predetermined objectives and each individual's contributions to Company
success). As with all enhancements to the executive compensation program, this
change is designed to underscore the importance of total shareholder return,
Company performance, and individual contribution. All Named Executive Officers,
including the Chief Executive Officer, are eligible to participate in this
program.
LONG-TERM STOCK-BASED INCENTIVES
The Company believes that it is essential to strongly link executive and
shareholder interests. To meet this objective, the Committee administers the
Stock Option and Stock Incentive Plans to help attract, retain, and motivate
executives and other employees by providing them with an opportunity to share in
the Company's success.
Further, the Committee has determined that it is in the interest of the
Company and the shareholders to require approximately eighty of the Company's
most senior employees, including each Named Executive Officer and the Chief
Executive Officer, to acquire and maintain ownership of significant amounts of
Company stock. Ownership requirements are based on the employee's roles and
responsibilities, and they range from 50% of base salary up to 400% of base
salary for the Chief Executive Officer. These ownership requirements are to be
achieved over predetermined time periods and are to be maintained thereafter.
STOCK OPTION PLAN: In determining individual awards under the Stock Option
Plan of 1987, the Committee considers the externally competitive market, the
contributions of the individual to the success of the Company, and the
desirability to retain the individual over time. A significant proportion of the
Company's employees, including all Named Executive Officers and the Chief
Executive Officer, are eligible to participate in this program. The Committee
believes that broad-based equity incentive opportunities are an important
element of a shareholder-focused compensation strategy.
12
<PAGE>
During 1996, the Committee adopted changes to the manner in which it
administers this program in order to provide greater flexibility in awarding
stock options to individuals in recognition of their performance and potential.
In any given year, the total number of shares awarded under this Plan may vary
based on a number of factors, including business conditions, Company performance
and stock appreciation.
To ensure that the Committee can continue to employ this important
incentive tool, the Board of Directors has approved an amendment in the Stock
Option Plan of 1987, subject to shareholder approval, to increase the number of
shares authorized under the Stock Option Plan of 1987 by an additional 2 million
shares. To further underscore the importance of total shareholder return, this
proposal includes a statement of the Committee's and the Board's intent that no
option granted under this Plan be repriced nor cancelled and reissued. The
Committee urges shareholders to support these amendments.
STOCK INCENTIVE PLAN: The Committee also administers the Stock Incentive
Plan, which provides for restricted stock awards. In prior years, and in 1996,
awards under this Plan were made to each Named Executive Officer, including the
Chief Executive Officer, triennially on their anniversary of becoming an officer
according to a formula primarily based on organization level and base salary.
These awards vested over a five-year period beginning in the third year after
grant, subject to continued employment.
To better underscore the importance of total shareholder return, and to
increase the retention effect of the program, the Committee has adopted changes
to the manner in which it will administer this program in 1997 and beyond. Under
the new approach, Named Executive Officers, including the Chief Executive
Officer, will annually be eligible for a restricted stock award that will vest
either on the fifth anniversary of its grant, or earlier upon the achievement of
predetermined Company performance objectives. The Committee strongly believes
that these changes enhance the links between executive compensation and total
shareholder return, Company performance, and individual contribution.
The Company's acquisition of Dearborn provides shareholders with
substantial opportunities. To help ensure that these opportunities are realized
in a timely fashion, the Committee implemented a one-time Acquisition Incentive
Compensation Plan. Under this Plan, Named Executive Officers, including the
Chief Executive Officer, were provided with the opportunity to earn shares of
Company stock upon the achievement of significant operating cost reductions and
upon the achievement of an accretive level of earnings per share over a
predetermined time period. Portions of the award opportunity may be earned for
performance at predetermined milestones. Opportunities provided to the Named
Executive Officers, including the Chief Executive, under this Plan reflect the
Committee's assessment of their ability to influence the Company's performance
with respect to predetermined acquisition and total shareholder return goals. By
linking the award opportunity to key performance objectives, and by providing
the award in the form of Company stock, the Committee believes that it has
established a strong link between executive compensation and total shareholder
return and Company performance.
EMPLOYEE STOCK PURCHASE PLAN: The Committee and the Board of Directors
strongly believe that total shareholder returns can be enhanced when all
employees have an opportunity to share in the Company's success. To augment the
Company's other equity incentive plans, the Committee has recommended and the
Board has approved, subject to shareholder approval, an Employee Stock Purchase
Plan under which 400,000 shares of common stock will be available for issuance
under the Plan. Under such a plan, substantially all employees will have the
opportunity to invest in the common stock of the Company at a discount of up to
15% of fair market value. The Committee believes that this is a valuable
employee benefit that will increase interest in stock price and total
shareholder return and, as such, urges shareholders to approve the plan.
13
<PAGE>
The Committee has reviewed the Internal Revenue Code provisions which place
a limit on deductions for compensation for Named Executive Officers in excess of
$1,000,000. Although no executive officer received compensation exceeding this
limit in 1996, the Committee has adopted guidelines which meet the requirements
to qualify the Company's Stock Option Plan of 1987 as performance based. Over
time, the Committee will continue to consider the implications of this statute.
1996 COMPENSATION
Nineteen ninety-six was an extraordinary year for the Company. The Company
acquired and began the integration of Dearborn, achieved record revenues, and
established itself as the premier supplier in its industry. In recognition of
this strong performance, the Committee took steps to reward the Named Executive
Officers and to help ensure their retention over time by providing them with
meaningful earnings opportunities based on performance strongly related to
shareholder returns.
Base salaries paid in 1996 reflect the Committee's review of external
competitiveness, the roles and responsibilities of the individuals, the internal
equity of pay relationships, and the contributions of the individual to the
Company's success. During its 1996 review, the Committee determined that base
salary levels were less than the competitive median for executives with
comparable responsibilities in similarly sized firms, and as such began a
process of increasing base salaries to a more competitive level. To recognize
the increased responsibilities of the Named Executive Officers, including the
Chief Executive Officer, as executive officers of a significantly larger and
more complex company, the Committee increased base salaries. Mr. Cook's base
salary was increased in 1996 to a level which the Committee believes is
approximately equal to the competitive median for chief executive officers in
similarly sized specialty chemical and diversified industrial firms.
Incentive bonuses paid to all Named Executive Officers, including Mr. Cook,
for 1996 were determined in conjunction with the Company's Performance Incentive
Compensation Plan, which reflects the Company's success with respect to
predetermined financial results from operations and individual contributions to
that success.
Stock options awarded to all Named Executive Officers, including Mr. Cook,
in 1996 were based on an assessment of competitive practice and individual
contributions, and were intended to help retain the executives over time and to
provide rewards consistent with shareholder returns. As such, all options
granted in 1996 vest ratably over time, and all options were granted with an
exercise price equal to the fair market value on the date of the grant. With
respect to these grants, no compensation will be earned unless the share price
increases, thereby creating shareholder returns.
In early 1997, the Committee determined that the Company's 1996 performance
met certain operating cost and earnings per share objectives outlined under the
plan. In recognition of these achievements, the Committee will award shares of
stock to all Named Executive Officers, including to the Chief Executive Officer.
These awards will be reflected in the tabular disclosures presented in the 1997
proxy statement. The remainder of the opportunities cannot be earned unless
additional objectives are met within a predetermined time frame.
This report is submitted by the following Outside Directors who constituted
the Executive Compensation and Employee Benefits Committee.
Robert L. Yohe
Patrick F. Brennan
George A. Butler
Alan R. Hirsig
Geoffrey Stengel, Jr.
14
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information regarding compensation paid,
accrued or set aside by the Company during each of the Company's last three
fiscal years, to the Company's Chief Executive Officer and each of the Company's
four other most highly compensated executive officers, as determined by salary
earned during 1996.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
LONG TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION AWARDS
---------------------------------------------------- -------------------------------------
(A) (B) (C) (D) (E) (F) (G) (H)
ALL
OTHER RESTRICTED OTHER
ANNUAL STOCK NUMBER COMPEN-
BONUS COMPENSA- AWARD(S) OF SATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($)(1) SATION ($)(2) ($)(3) OPTIONS ($)(4)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WILLIAM R. COOK 1996 $535,002 $230,000 -- $578,080 17,373 $5,351
Chairman, President and 1995 460,017 85,000 -- 0 29,624 4,303
Chief Executive Officer 1994 359,640 44,000 -- 130,166 23,294 4,727
RICHARD A. HEBERLE 1996 $232,500 $ 80,000 -- $146,315 4,196 $4,955
Senior Vice President 1995 195,800 30,100 -- 0 10,701 4,303
1994 165,969 65,339 -- 0 4,729 4,727
JOHN L. HOLLAND 1996 $276,248 $ 96,000 -- $ 70,800 4,911 $5,028
Senior Vice President 1995 219,221 62,500 -- 102,109 17,408 4,303
1994 164,061 57,525 -- 0 -- 4,727
GEORGE L. JAMES III(5) 1996 $221,500 $ 84,600 -- $ 51,295 3,558 $4,987
Vice President and 1995 117,308 100,000 -- 73,103 17,006 1,226
Chief Financial Officer
LARRY V. RANKIN 1996 $232,800 $ 87,800 -- $154,792 4,440 $4,976
Senior Vice President 1995 220,700 32,600 -- 0 9,278 4,303
1994 211,678 19,377 -- 0 7,777 4,530
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Reflects bonus earned in year indicated, but paid the following year.
(2) The aggregate of other annual compensation of each of the named executive
officers does not exceed the lesser of $50,000 or 10% of his total annual
salary and bonus, and therefore is not reportable in column (e).
(3) The value of restricted stock awards made in 1996 pursuant to the Company's
Employee Stock Incentive Plan is determined by the closing price of the
Company's common stock on the date of grant as reported by the New York
Stock Exchange (NYSE) multiplied by the number of shares. The value of the
aggregate number of shares of restricted stock held by each named executive
officer is determined by the closing price of the Company's common stock on
December 31, 1996 ($58.50) as reported by the NYSE multiplied by the
aggregate number of shares. The aggregate number of shares and value of
restricted stock held as of December 31, 1996, by each named executive
officer is: William R. Cook, 18,444 shares, $1,078,974; Richard A. Heberle,
3,983 shares, $233,006; John L. Holland, 5,211 shares, $304,843; George L.
James, III, 2,969 shares, $173,686 and Larry V. Rankin, 4,819 shares,
$281,911. Shares granted vest in equal increments over three years beginning
on the third anniversary date of the grant. Dividends are paid on restricted
stock from date of grant.
(4) Represents the value of $2,281 in participant allocations and the balance in
Company matching contributions, each in the form of preferred shares,
pursuant to the Company's Employee Stock Ownership and 401(k) Plan.
(5) Mr. James commenced employment with the Company on July 17, 1995.
- --------------------------------------------------------------------------------
15
<PAGE>
STOCK OPTION GRANTS DURING 1996
The following table reports the number, exercise price, expiration date of
stock options and their potential realizable values based on assumed annual
compounded rates of stock price appreciation of awards granted during 1996
pursuant to the Company's Stock Option Plan of 1987.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ---------------------------------------------------------------------------------------- --------------------------
(A) (B) (C) (D) (E) (F) (G)
% OF
TOTAL
NUMBER OPTIONS/
OF SECU- SARS
RITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS/SARS IN FISCAL OR BASE EXPIRATION
NAME AND PRINCIPAL POSITION GRANTED (1) YEAR (2) PRICE DATE 5% ($) 10% ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WILLIAM R. COOK 17,373 3.51 $43.25 3/8/06 $472,546 $1,197,504
Chairman, President and
Chief Executive Officer
RICHARD A. HEBERLE 4,196 0.85 43.25 3/8/06 114,131 289,226
Senior Vice President
JOHN L. HOLLAND 4,911 0.99 43.25 3/8/06 133,579 338,510
Senior Vice President
GEORGE L. JAMES, III 3,558 0.72 43.25 3/8/06 96,778 245,249
Vice President and
Chief Financial Officer
LARRY V. RANKIN 4,440 0.90 43.25 3/8/06 120,768 306,045
Senior Vice President
</TABLE>
- --------------------------------------------------------------------------------
(1) Options were granted on March 8, 1996, and have a maximum term of ten years
subject to earlier termination in the event of optionee's cessation of
service with the Company. Options become exercisable for one-third of the
option shares on the date of the option grant; one-third of the option
shares upon completion of one year of service from the date of the option
grant; and one-third of the option shares upon completion of two years of
service from the date of the option grant.
(2) No stock appreciation rights are granted pursuant to the Company's Stock
Option Plan of 1987.
- --------------------------------------------------------------------------------
16
<PAGE>
STOCK OPTION EXERCISES DURING 1996 AND YEAR-END OPTION VALUES
The following table contains information related to aggregated stock
options exercised by the named executive officers of the Company during 1996 and
the number and value of stock options held at year end. The Company does not
have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST CALENDAR YEAR AND YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E)
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN THE
UNEXERCISED MONEY
OPTIONS AT OPTIONS AT
FY-END FY-END ($)(2)
---------------- ---------------------
NUMBER OF VALUE
SHARES ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME AND PRINCIPAL POSITION ON EXERCISE ($)(1) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WILLIAM R. COOK 5,000 $192,500 87,447/21,457 $724,667/311,173
Chairman, President and
Chief Executive Officer
RICHARD A. HEBERLE 1,900 73,625 31,036/ 6,365 448,577/106,703
Senior Vice President
JOHN L. HOLLAND -- -- 26,162/ 9,078 341,026/135,260
Senior Vice President
GEORGE L. JAMES, III -- -- 12,522/ 8,042 178,132/116,225
Vice President and
Chief Financial Officer
LARRY V. RANKIN -- -- 42,890/ 6,053 556,794/104,680
Senior Vice President
</TABLE>
- --------------------------------------------------------------------------------
(1) Value realized is the difference between the option exercise price and the
closing market price of the common stock on the date of exercise multiplied
by the number of shares to which the exercise relates.
(2) The closing price for the Company's common stock as reported by the New York
Stock Exchange on December 31, 1996, was $58.50. Value is the difference
between the option exercise price and $58.50 multiplied by the number of
shares of common stock underlying the option.
- --------------------------------------------------------------------------------
17
<PAGE>
PERFORMANCE GRAPHS
In 1996, the Company adopted the Value Line Specialty Chemical Index for
performance graph comparison to better reflect the increased size and complexity
of the Company. The following graph compares the annual changes in the
cumulative total shareholder return on the Company's common stock during the
five years ending December 31, 1996, with the cumulative total return on the S&P
500 Index, Value Line Specialty Chemicals Group, and our former eleven-company
peer group. This peer group was comprised of Chemed Corporation, Ecolab Inc., HB
Fuller Company, Loctite Corporation, Millipore Corporation, NCH Corporation,
Nalco Chemical Company, Pall Corporation, Petrolite Corporation, Quaker Chemical
Corporation and Sigma Aldrich Corporation. The comparison assumes that $100.00
were invested on December 31, 1991, in the Company's common stock, the S&P 500
Index and the identified peer group and assumes the reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
In the printed version of this document a line graph appears depicting the
following plot points:
Data Points for 1996 Proxy Graph
BTL Peer S&P VSC
--- ---- --- ---
1991 100 100 100 100
1992 106 104 108 115
1993 78 105 118 128
1994 81 102 120 126
1995 78 137 165 156
1996 110 159 203 179
18
<PAGE>
The following graph compares the change in the total stock appreciation on
the Company's common stock for the year 1996 with the total stock appreciation
of the S&P 500 Index, Value Line Specialty Chemicals Group and our former peer
group as identified in the previous performance graph. The comparison assumes
that $100.00 were invested on December 31, 1995, in the Company's common stock,
the S&P 500 Index and the identified peer group. The Value Line Specialty
Chemicals Group performance includes dividends, (i.e., represents the total
shareholder return as shown on the previous graph). Relative weightings for the
peer group were based on the respective company's 1996 year-end outstanding
shares, as reported by Value Line.
COMPARISON OF ONE YEAR QUARTERLY PERFORMANCE
[GRAPH]
In the printed version of this document a line graph appears depicting the
following plot points:
Data Points for 1996 Quarterly Graph
BTL Peer S&P VSC
--- ---- --- ---
1995 100 100 100 100
1 Q 113 105 105 107
2 Q 107 108 109 107
3 Q 128 112 112 110
4 Q 143 119 120 115
19
<PAGE>
PENSION PLAN TABLE
The Company's Employee Retirement Plan was established in 1953. The Plan,
which is noncontributory, presently covers all U.S. employees of the Company and
its domestic subsidiaries who meet the Plan's eligibility requirements. Upon
retirement, eligible employees are entitled to receive retirement payments in
accordance with one of several optional forms of payment.
The Plan, as amended, provides an annual retirement benefit in an amount
determined by multiplying the participant's final average earnings (defined as
the highest three consecutive years of service) by 1.2% for each of the
participant's first thirty-five years of service and adding to that an amount
determined by multiplying the participant's final average earnings in excess of
covered compensation (defined as an accumulated average of Social Security wage
bases) by 0.6% for each of the participant's first thirty-five years of service.
The amount of the estimated retirement income will be reduced for early
retirees and for vested terminated employees not working to normal retirement
age of 65 to conform to the maximum benefit limitations imposed by the Employee
Retirement Income Security Act of 1974 (ERISA). The BetzDearborn Inc. Benefit
Restoration Plan restores any benefits reduced by the maximum benefit
limitations of ERISA. Benefits under the Retirement Plan are computed on the
basis of a single life annuity.
The following table shows the estimated annual benefits payable under the
Plan and Benefit Restoration Plan to eligible employees retiring in 1996 at
normal retirement age in the stated salary classifications.
- --------------------------------------------------------------------------------
YEARS OF PARTICIPATION IN PLAN
FINAL AVERAGE ---------------------------------------------------------------
EARNINGS 15 20 25 30 35
- -------------------------------------------------------------------------------
$250,000 $ 65,018 $ 86,691 $108,364 $130,036 $151,709
300,000 78,518 104,691 130,864 157,036 183,209
400,000 105,518 140,691 175,864 211,036 246,209
500,000 132,518 176,691 220,864 265,036 309,209
600,000 159,518 212,691 265,864 319,036 372,209
700,000 186,518 248,691 310,864 373,036 435,209
800,000 213,518 284,691 355,864 427,036 498,209
- --------------------------------------------------------------------------------
Retirement benefits paid to the Company's executive officers identified in
the Summary Compensation Table are determined by their respective annual
compensation listed in columns (c) and (d) and any qualifying compensation in
column (e). The retirement benefits are paid out of the Company's Employee
Retirement Plan to the extent permitted by the Internal Revenue Code. The
balance of benefits, if any, is paid by the Company's Benefit Restoration Plan.
As of February 7, 1997, the following individuals have the respective years of
credited service for Retirement Plan purposes set forth after their names: Mr.
Cook, 25; Mr. Heberle, 31; Mr. Holland, 26; Mr. James, 2; Mr. Rankin, 27.
EMPLOYMENT AGREEMENTS
The Company has employment contracts with each of the named executive
officers of the Company. Such agreements provide for the employment of each
named executive officer for a period of five years, unless sooner terminated by
death, disability or termination for cause. Employment also may be terminated by
the Board in its sole discretion upon two-years' advance written notice to the
employee. If, during such notice period, the Board does not elect to continue
the employee in his present capacity, the Company agrees to pay the employee the
cash equivalent of his salary which would have been earned during the notice
period, together with stock under the Company's Employee Stock Incentive Plan
and bonus which would have been payable had the employee continued in his
present capacity for the full term of the termination notice. The agreements
also contain covenants whereby the employee agrees, both during and after
employment, to protect and not divulge the
20
<PAGE>
Company's proprietary and confidential information. The employee must also agree
to not work for or substantially invest in a competitor during employment and
for eighteen months after termination of active employment. If the employee's
employment is terminated as a result of the acquisition of all or substantially
all of the stock or assets of the Company, then the employee's employment
opportunities are not so restricted, and the employee may elect to receive his
severance salary, incentive stock and bonus in a lump sum at the time active
employment is terminated.
PROPOSAL NO. 2: AMENDMENT TO STOCK OPTION PLAN OF 1987
The Board of Directors proposes that the shareholders approve an amendment
to the Company's Stock Option Plan of 1987. This Plan is a key component of
executive compensation that helps align management priorities with the Company's
stock value and retain key managers in a highly competitive marketplace.
The Company is now in the process of revising its management compensation
program to better align management focus with shareholder interest. Part of this
revision includes seeking shareholder approval for authorization of an
additional two million shares of common stock to continue the Company's stock
option program for the significantly expanded management group of the new
BetzDearborn. As such, the Board of Directors approved on October 10, 1996, an
amendment to the Company's Stock Option Plan of 1987, subject to shareholder
approval at the 1997 Annual Meeting. The amendment:
(1) limits the maximum number of shares of common stock to which an
option may be granted to any employee to 100,000 shares over any
one-year period;
(2) Increases the number of shares of common stock available for
issuance under the Plan by 2,000,000 shares to a total of
6,800,000 shares;
(3) Provides that no option granted under the Plan may be repriced and
no option may be canceled and reissued;
(4) Extends the date upon which an option may be granted under the
Plan to April 10, 2007.
The following summarizes the proposed amendments to the Stock Option Plan
of 1987. It is qualified in its entirety by reference to the Plan itself, which
is included in this proxy statement as Exhibit A.
AGGREGATE NUMBER OF SHARES
Currently a maximum number of 4,800,000 shares of common stock may be
issued pursuant to the exercise of options under the Plan, except that such
amount may be adjusted to reflect stock dividends, stock splits, share
combinations, exchange of shares, recapitalization, mergers, consolidations,
reorganizations, and liquidations. All but approximately 535,000 shares of these
previously authorized shares have been granted. If this Proposal No. 2 is
adopted by the Shareholders, an additional 2,000,000 shares would be available
for the grant of options under this Plan.
ADMINISTRATION AND ELIGIBILITY
The Plan is administered by the Executive Compensation and Employee
Benefits Committee of the Board consisting of five Outside Directors. The
Committee has full and final authority subject to the provisions of the Plan and
the full Board to determine the individuals to whom options may be granted and
the number of shares to be covered by each option; determine the purchase price
of the shares (but not less than fair market value) covered by each option and
the time or times at which options are granted; interpret the Plan; make, amend
and rescind rules and regulations relating to the Plan; determine the terms and
provisions of the instruments by which options shall be evidenced; and make all
other determinations necessary or advisable for the administration of the Plan.
21
<PAGE>
Those individuals eligible to participate in the Plan are the Directors,
officers and employees having a significant impact (as determined by the
Committee) on the Company or a subsidiary company.
From time to time, the Committee selects those individuals who may
participate in the Plan. In making this determination, the Committee considers
the duties of the individual, his/her present and potential contribution to the
success of the Company or a subsidiary, and such other factors as the Committee
may deem relevant for accomplishing the purposes of the Plan.
Eligibility to participate in the Plan does not entitle such person to the
grant of an option, and the grant of an option does not automatically entitle
such person to any further grants under the Plan. An individual who has been
granted an option may, however, if otherwise eligible, be granted an additional
option or options.
No person shall receive options for more than 100,000 shares of common
stock under the Plan over any one-year period. For the purpose of this
eligibility test, stock ownership will be determined pursuant to Section 425(d)
of the Internal Revenue Code which treats an individual as owning all stock by
the individual, certain relatives of the individual and certain other persons.
TERMS, CONDITIONS AND RESTRICTIONS
Options granted under the Plan are subject to the following terms,
conditions and restrictions:
(a) The option price may not be less than one hundred percent of the
fair market value of the optioned shares on the date the option is
granted, as determined by the Committee;
(b) The term of any option may not be longer than ten years from the
date it is granted, subject to earlier terminations as discussed
below;
(c) An optionee has no rights as a stockholder with respect to any
shares covered by an option (including no right to vote shares)
until the issuance of a stock certificate upon exercise of the
option; and
(d) no option may be repriced and no option may be canceled and
reissued.
Additional conditions and restrictions upon options granted under the Plan
may be established by the Committee at the time of the grant.
TERMINATION OF EMPLOYMENT, DEATH AND DISABILITY
Subject to the next paragraph, unexercised options held at the time of
termination of employment other than by retirement may be exercised by the
optionee within three months after the date of termination (but in no event
later than the expiration date of such option) to the extent of the number of
shares to which the option could have been exercised on the date of termination.
Unexercised options, including options then subject to restrictions, held at the
time of a participant's retirement may be exercised within five years from the
effective date of retirement (but in no event later than the expiration date of
such option).
The Board, with cause, may cancel as of the termination date all
unexercised rights to which the optionee otherwise would be entitled. "Cause"
includes dishonesty, gross neglect of duties, conviction of a serious crime, and
violation of non-competition covenants.
The personal representative of an optionee who dies during employment or
within three months following termination of employment may exercise such option
to the extent of the number of shares with respect to which the optionee could
have exercised on the date of death. In such event, the option must be
exercised, if at all, prior to the first anniversary of the optionee's death, or
the expiration date specified in the option, whichever occurs first.
If an optionee becomes disabled during employment (within the meaning of
ss.105(d)(4) of the Internal Revenue Code), and employment is terminated
as a consequence of such disability prior to
22
<PAGE>
the expiration date fixed in the option, the option may be exercised by the
optionee at any time prior to the earlier of the first anniversary of the
optionee's termination of employment and the expiration date specified in such
option.
NON-TRANSFERABILITY OF OPTION
No option may be assigned or transferred by the optionee except by will or
by the laws of descent and distribution. During the lifetime of the optionee the
option may be exercised only by the optionee.
EXERCISE AND PAYMENT
Options may be exercised, either in whole or in part after being held for
no less than six months from the date of grant, by payment in full for the
common shares to be granted pursuant to the option plus any amount due as a
result of taxes or transfer costs applicable to the transaction. Alternatively,
with the approval of the Board, payment may be made by tendering to the Company
common shares of the Company owned by the optionee having a fair market value
equal to the aggregate exercise price applicable to the shares to be granted
pursuant to the exercise of the option or by a combination of cash and common
shares. A partial exercise of an option has no effect on an unexercised portion
of such option.
The fair market value of the common shares granted pursuant to the exercise
of an option is the closing price of the common shares on the date of exercise
as reported in the Wall Street Journal.
AMENDMENT AND TERMINATION OF THE PLAN
The Board or the Committee may amend the Plan from time to time with
respect to any common shares as to which options have not been granted, or may
suspend or discontinue the Plan, except that without the approval of a majority
of the votes cast in a separate vote at a duly held Stockholders' meeting, no
amendment requiring shareholder approval under Treas. Reg. ss.1.162-27(e)(4)(vi)
or any successor thereto may be made.
The Plan terminates at 12:00 Midnight on April 10, 2007. No options may be
granted pursuant to the Plan thereafter; however, termination of the Plan on
such date will have no effect on any rights created by options issued and
outstanding on April 10, 2007 which by their terms extend beyond that date.
USE OF PROCEEDS
Proceeds received by the Company from the exercise of options are used for
general corporate purposes.
FEDERAL INCOME TAX CONSEQUENCES
The Company expects the issuance and exercise of options under the Plan to
have the following federal income tax consequences upon the Company and
recipients of options:
(a) At the time of issuance of the option, there will be no federal
income tax consequences to either the participant or the Company;
(b) At the time of exercise of the option the participant realizes
income on the difference between the exercise price and the fair
market value, and the amount computed will be deductible by the
Company as compensation.
The Board of Directors recommends that the shareholders
vote FOR the amendment to the Stock Option Plan of 1997.
23
<PAGE>
PROPOSAL NO. 3: APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN OF 1997
The Board of Directors strongly believes that total shareholder returns can
be enhanced when all employees have an opportunity to share in the Company's
success. As such, the Board of Directors approved an Employee Stock Purchase
Plan, subject to shareholder approval at the 1997 Annual Meeting. Pursuant to
the Plan, an employee may authorize deductions of up to ten percent of base pay
for the purchase of shares of common stock of the Company at the lower of
eighty-five percent of the market value of the Company's common stock at the
beginning of a six-month purchase period, or eighty-five percent of such value
at the end of such purchase period. Market value will be determined by using the
closing price of the Company's common stock. The Board believes that this Plan
will encourage employees to increase their interest in the future growth and
prosperity of the Company and will reward employees for their contributions to
the success of the Company.
The Plan provides for an offering of shares of the Company's common stock
every six months. In order to participate in an offering, an employee must
authorize deductions from his/her pay, not to exceed ten percent of the
employee's base pay, prior to the commencement of the offering. At the end of
the offering, the total deductions from a participating employee's pay are
applied to the purchase of that number of shares of the Company's common stock
determined by dividing the amount of the employee's account by the lessor of
eighty-five percent of the per-share market value of the Company's stock on the
commencement date of the offering, or eighty-five percent of the per-share
market value of the Company's stock on the termination date of the offering,
subject, however, to a maximum of two hundred percent of the number of shares of
the Company's common stock determined by dividing the amount such employee
authorized to be deducted from his/her pay at eighty-five percent of the
per-share market value of the Company's common stock on the commencement date of
the offering.
A participating employee may, at any time prior to the termination date of
an offering under the Plan, withdraw from participation in the offering. The
termination of a participant's employment by the Company or a participating
subsidiary will result in all of such employee's payroll deductions being
refunded to him/her as soon as practicable. After each offering termination
date, the shares purchased for the account of each participating employee may be
delivered to the employee upon written request.
The Plan will be administered by the Executive Compensation and Employee
Benefits Committee, none of whom will be eligible to purchase stock under the
Plan.
The Plan meets the requirements of Section 423 of the Internal Revenue
Code. No income will be recognized for Federal income tax purposes by
participants when they acquire rights under the Plan at the beginning of the
offering or upon purchase of the shares at the end of an offering. The Company
receives no deduction at either the beginning or the end of an offering period.
If the shares acquired by a participant are disposed of more than two years
after the commencement of the Plan offering in which they are acquired, the
participant will recognize ordinary income to the extent of the lessor of: (a)
the amount by which the fair market value of the shares at the commencement of
the offering exceeded the price paid for the shares, or (b) the amount by which
the fair market value of the Stock at the time of disposition exceeded the price
paid for the shares. Additional gain, if any, will be treated as gain resulting
from the sale of a capital asset held for more than one year. If the shares are
not held for two years from the commencement of the applicable Plan offering,
the participant will recognize ordinary income in the year of disposition in the
amount by which the fair market value of the shares on the date of acquisition
exceeded the price for the shares. Any additional gain or loss on the
disposition of shares is treated as a gain or loss on the disposition of a
capital asset.
A copy of the proposed Employee Stock Purchase Plan is included at the end
of this proxy statement as Exhibit B.
The Board of Directors recommends that the shareholders
vote FOR the the adoption of the Employee Stock Purchase Plan of 1997.
24
<PAGE>
PROPOSAL NO. 4: ELECTION OF INDEPENDENT AUDITORS
The Board, on the recommendation of the Company's Audit Committee, has
nominated Ernst & Young LLP as independent auditors for the year ending December
31, 1997. Ernst & Young LLP has been the Company's independent auditors since
the Company's first public offering of its securities in 1965. Although not
required, the Board has determined that it is desirable to have the Company's
auditors elected by the shareholders of the Company. In the event Ernst & Young
LLP is not elected, the Board would reconsider its choice. Representatives of
Ernst & Young LLP are expected to be present at the Meeting and will be accorded
an opportunity to make a statement should they so desire and are expected to be
able to respond to appropriate questions from shareholders.
The Board of Directors recommends that the shareholders
vote FOR the appointment of Ernst & Young LLP as
independent auditors for the Company for 1997.
VOTE REQUIRED FOR APPROVAL
Matters submitted to shareholders of record are decided by the vote of the
holders of a majority of the outstanding shares entitled to vote, present in
person or represented by proxy at a meeting at which a quorum is present, though
such majority may be less than a majority of all the shares entitled to vote.
Under applicable Pennsylvania law, if a quorum is present with respect to a
specific matter, such matter will be authorized upon receiving approval by a
majority of the votes cast on such matter and for such purposes an abstention,
broker non-vote or the specific direction not to cast any vote on any specific
matter will not constitute the casting of a vote on such matter.
VOTING OF STOCK IN PLAN ACCOUNTS
The Company's Employee Stock Ownership and 401(k) Plan permits plan
participants to direct the plan Trustee how to vote the shares of common stock
and preferred stock allocated to their accounts. The Trustee will vote all
shares of common stock and preferred stock for which no participant directions
are received in the same proportion as all the shares of common stock and
preferred stock for which directions are received.
25
<PAGE>
OTHER MATTERS
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act"), as
amended, requires the Company's Directors and executive officers, and persons
who own more than ten percent (10%) of a registered class of the Company's
equity securities, to file reports of ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission ("Commission"). Directors, officers and
greater than ten percent shareholders are required by Commission regulations to
furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely upon the Company's review of copies of such forms it has
received, the Company believes that all of its Directors, officers and greater
than 10% shareholders complied with all filing requirements applicable to them
under Section 16(a) of the Exchange Act during fiscal year 1996, except that
Larry V. Rankin, Senior Vice President, filed a Form 4 reporting a sale of
shares of common stock seven days late.
SHAREHOLDER PROPOSALS
Under the Securities and Exchange Commission rules, certain shareholder
proposals may be included in the Company's proxy statement. Any such proposal
for the 1998 Annual Meeting must be received by the Company not later than
November 8, 1997. All proposals should be submitted to William C. Brafford,
Secretary, BetzDearborn Inc., 4636 Somerton Road, Trevose, Pennsylvania 19053.
The Board knows of no other matters which will be brought before the
Meeting by any person other than those matters set forth in the attached Notice
of Annual Meeting of Shareholders. If, however, any other matter shall properly
come before the Meeting or any adjournment thereof, the persons named in the
Proxy will vote thereon in accordance with their best judgment.
William C. Brafford
Secretary
Dated: March 10, 1997
26
<PAGE>
EXHIBIT A
BETZDEARBORN INC.
STOCK OPTION PLAN OF 1987
(AS AMENDED EFFECTIVE APRIL 10, 1997)
TABLE OF CONTENTS
PAGE
----
1. Purpose..................................................... A-2
2. Administration.............................................. A-2
3. Eligibility................................................. A-2
4. Stock....................................................... A-2
5. Granting of Options......................................... A-3
6. Terms and Conditions of Options............................. A-3
7. Option Instruments--Other Provisions........................ A-5
8. Amendment or Discontinuance of Plan......................... A-5
9. Exercise of Options......................................... A-5
10. Right to Receive Options.................................... A-5
11. Indemnification of Board and Committee...................... A-5
12. Application of Funds........................................ A-6
13. Shareholder Approval........................................ A-6
14. Termination of Plan......................................... A-6
A-1
<PAGE>
EXHIBIT A
BETZDEARBORN INC.
STOCK OPTION PLAN OF 1987
(as amended effective April 10, 1997)
1. PURPOSE
The BetzDearborn Inc. Stock Option Plan ("Plan") is intended to promote the
interests of BetzDearborn Inc. ("Company") and its shareholders by providing a
method whereby directors, officers and key employees of the Company and any
subsidiary corporation ("Subsidiary Company") may be encouraged to invest in the
Company's Common Stock on reasonable terms, and thereby increase their
proprietary interest in the Company's business, encourage them to remain in the
service and employ of the Company and increase their personal interest in its
continued success and progress.
2. ADMINISTRATION
The Plan shall be administered by the Company's Executive Compensation and
Employee Benefits Committee ("Committee"), which shall consist solely of not
fewer than two non-employee directors of the Company (within the meaning of Rule
16b-3(b)(3) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor thereto) who are also outside directors (within the
meaning of Treas. Reg. ss.1.162-27(e)(3), or any successor thereto) of the
Company, and who shall be appointed by, and shall serve at the pleasure of, the
Company's Board of Directors ("Board").
The Committee shall have full and final authority, in its discretion but
subject to the express provisions of the Plan, (a) to determine from time to
time the individuals in the eligible group to whom options shall be granted and
the number of shares to be covered by each option; (b) to determine the purchase
price (but not less than fair market value) of the shares covered by each option
and the time or times at which each option shall be granted; (c) to interpret
the Plan; (d) to make, amend, and rescind rules and regulations relating to the
Plan; (e) to determine the terms and provisions of the instruments by which
options shall be evidenced; and (f) to make all other determinations necessary
or advisable for the administration of the Plan.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it.
3. ELIGIBILITY
The individuals who shall be eligible to receive options shall be
directors, officers and key employees of the Company or a Subsidiary Company. An
individual who has been granted an option may, if otherwise eligible, be granted
an additional option or options if the Committee shall so determine.
4. STOCK
The stock with respect to which options may be granted under the Plan shall
be shares of the authorized but unissued Common Stock, or shares of issued
Common Stock reacquired and held in the Company's treasury, or both. The
aggregate amount of the Common Stock on which options may be granted under the
Plan shall not exceed six million eight hundred thousand (6,800,000) shares;
provided, however, that pursuant to Treas. Reg. ss.1.162.27(e)(4)(i), no
individual shall receive
A-2
<PAGE>
options for more than 100,000 shares of the Company's Common Stock over any
one-year period. The number of shares which the Committee is authorized to
option under this Plan, and the number issuable upon the exercise of outstanding
options granted thereunder (as well as the exercise price of such outstanding
options), shall be adjusted to reflect, as may be deemed appropriate by the
Committee, any stock dividend, stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation, or the like.
In the event that any outstanding option under the Plan for any reason
expires or is surrendered or terminated, the shares of Common Stock allocable to
such option or to the unexercised portion thereof may again be subjected to an
option under the Plan; provided, however, that if an option expires or is
surrendered or terminated, the shares of Common Stock covered by such option
shall be counted against the maximum number of shares specified above for which
options may be granted to a single individual.
5. GRANTING OF OPTIONS
From time to time until termination of the Plan as provided in Section 8,
the Committee shall select from among those who are then eligible under Section
3 the individual(s) to whom options shall be granted and shall determine the
number of shares to be covered by each option. Each individual thus selected
shall, at such time as the Committee shall determine, be granted an option with
respect to the number of shares of Common Stock thus determined. The
recommendation or selection of an individual as a participant in any grant of an
option under the Plan shall not be deemed to entitle the individual to such
option prior to the time when it shall be granted by the Committee. The granting
of an option under the Plan shall not be deemed either to entitle such
individual to, or to disqualify such individual from, any participation in any
other grant of options under the Plan. In making any determination as to
individuals to whom options shall be granted and as to the number of shares to
be covered by such options, the Committee shall take into account the duties of
the respective individuals, their present and potential contributions to the
success of the Company or a Subsidiary Company, and such other factors as the
Committee shall deem relevant in accomplishing the purposes of the Plan.
6. TERMS AND CONDITIONS OF OPTIONS
The options granted pursuant to the Plan shall include the following terms
and conditions:
(a) Price
The option price shall be not less than one hundred percent
(100%) of the fair market value of the option shares on the date
the option is granted, as determined by the Committee.
(b) Term
The term of any option granted under the Plan shall be not longer
than ten (10) years from the date it is granted, subject to
earlier termination as provided in Paragraphs (c) and (d) below.
(c) Termination of Employment
Any option granted under the Plan may, subject to the provisions
of Paragraph (d) below, be exercised by the optionee, to the
extent of the number of shares with respect to which he could
have exercised it on the date of termination of his employment,
within three (3) months after his employment shall have
terminated; provided, however, that the Committee may, in its
discretion with cause, cancel as of the time of such termination
of employment all unexercised rights to which the optionee would
be otherwise entitled.
A-3
<PAGE>
Any such cancellation must be effected by a notice mailed
(whether or not received) to the last known address of the
optionee, postage prepaid, by certified or registered mail,
within one (1) month of the date of termination of employment.
"Cause" shall include the following: (i) dishonesty, (ii) gross
negligence of duties, (iii) conviction of a serious crime, and
(iv) violation of noncompetition covenants.
Whether authorized leave of absence or absence on military or
governmental service shall constitute employment for the purposes
of the Plan shall be conclusively determined by the Committee.
(d) Exercise Upon Death of Optionee
If an optionee shall die during his employment or within three
(3) months following termination of employment, and prior to the
expiration date fixed for his option, such option may be
exercised, to the extent of the number of shares with respect to
which the optionee could have exercised it on the date of his
death, by the optionee's estate, personal representative or
beneficiary who acquired the right to exercise such option by
bequest or inheritance or by reason of the death of the optionee,
at any time prior to the earlier of (i) the first anniversary of
the optionee's death, or (ii) the expiration date specified in
such option, notwithstanding any grant restrictions as to the
year the option or any portion of the option is exercisable.
(e) Exercise Upon Disability of Optionee
If an optionee shall become disabled (within the meaning of
Section 105(d)(4) of the Internal Revenue Code) during his
employment and, prior to the expiration date fixed for his
option, his employment is terminated as a consequence of such
disability, such option may be exercised by the optionee at any
time prior to the earlier of (i) the first anniversary of the
optionee's termination of employment, or (ii) the expiration date
specified in such option.
(f) Assignability
No option shall be assignable or transferable by the optionee
except by will or by the laws of descent and distribution, and
during the lifetime of the optionee shall be exercisable only by
him.
(g) Rights as a Stockholder
An optionee shall have no rights as a stockholder with respect to
any shares covered by his option until the issuance of a stock
certificate to him for such shares.
(h) Exercise Upon Retirement
In the event an employee's employment has been or is terminated
as a result of retirement under the terms of the Employees'
Retirement Plan, any options, including options then subject to
restrictions, shall be exercisable (i) within five (5) years from
the effective date of such retirement, or (ii) the expiration
date specified in such options, whichever occurs earlier.
(i) No Repricing or Canceling/Reissuing
No option granted under the Plan may be repriced and no option
may be canceled and reissued.
A-4
<PAGE>
7. OPTION INSTRUMENTS -- OTHER PROVISIONS
The options granted shall be evidenced by instruments in such form as the
Committee shall from time to time approve, which instruments shall contain such
provisions, not inconsistent with the provisions of the Plan, as the Committee
shall deem advisable.
8. AMENDMENT OR DISCONTINUANCE OF PLAN
The Board or the Committee may from time to time, with respect to any
shares of Common Stock as to which options have not then been granted, suspend
or discontinue the Plan or amend it in any respect whatsoever, except that,
without the approval of a majority of the votes cast in a separate vote at a
duly held Stockholders' meeting, no amendment requiring shareholder approval
pursuant to Treas. Reg. ss.1.162-27(e)(4)(vi) or any successor thereto may
be made. Pursuant to Pennsylvania law, abstentions, broker non-votes and
specific directions not to cast any vote on a specific matter will not be
counted as voting for purposes of such amendment.
9. EXERCISE OF OPTIONS
Options may be exercised by any individuals entitled to do so either in
whole or in part by presenting to the Company appropriate written notice
together with (i) funds in the form of cash or personal check, in an amount
sufficient to pay for the shares plus any taxes or other transfer costs
applicable to the transaction or (ii) with the approval of the Committee, by
tendering to the Company shares of the Common Stock of the Company, owned by
him/her, and having a fair market value equal to the exercise price applicable
to his/her option, or (iii) at the discretion of the Committee by a combination
of (i) and (ii) above. The fair market value of Stock so delivered shall be the
closing price of publicly-traded shares of Stock on the date prior to the date
of exercise, as reported in The Wall Street Journal. The partial exercise of the
option shall have no effect on the unexercised portion of the option.
10. RIGHT TO RECEIVE OPTIONS
Neither the adoption of the Plan nor any action of the Board or the
Committee shall be deemed to give any individual any right to be granted an
option, or any other right hereunder, unless and until the Committee shall have
granted such individual an option, and then his rights shall be only such as are
provided by the instrument evidencing such option.
11. INDEMNIFICATION OF BOARD AND COMMITTEE
In addition to such other rights of indemnification as they may have as
members of the Board, the members of the Board and the members of the Committee
shall be indemnified by the Company against all costs and expenses reasonably
incurred by them in connection with any action, suit, or proceeding to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit, or proceeding, except a
judgment based upon a finding of bad faith. Upon the institution of any such
action, suit, or proceeding, the Board or Committee member shall notify the
Company in writing, giving the Company an opportunity, at its own expense, to
handle and defend the same before such Board or Committee member undertakes to
handle it on his own behalf.
A-5
<PAGE>
12. APPLICATION OF FUNDS
Such proceeds as shall be received by the Company from the sale of Common
Stock pursuant to options granted under the Plan will be used for general
corporate purposes.
13. SHAREHOLDER APPROVAL
This amended and restated Plan was approved by the Stockholders in the
manner described in Section 8 at a meeting of the shareholders of the Company on
April 10, 1997, or at any adjournment thereof.
14. TERMINATION OF PLAN
This Plan and all authority granted hereunder shall terminate absolutely at
12:00 midnight on April 10, 2007, and no options hereunder shall be granted
thereafter. Nothing contained herein, however, shall terminate or affect the
continued existence of rights created under options issued hereunder, including
options conditional upon approval of this Plan, and outstanding on April 10,
1997, which by their terms extend beyond such date.
A-6
<PAGE>
EXHIBIT B
BETZDEARBORN INC.
EMPLOYEE STOCK PURCHASE PLAN OF 1997
TABLE OF CONTENTS
PAGE
----
1. Purpose................................................ B-2
2. Administration......................................... B-2
3. Eligibility............................................ B-2
4. Stock.................................................. B-3
5. Grant of Option........................................ B-3
6. Participation.......................................... B-3
7. Exercise of Option..................................... B-4
8. Employee's Right to Abandon Option..................... B-4
9. Terms and Conditions of Options........................ B-5
10. Indemnification of Committee........................... B-7
11. Amendment of Plan...................................... B-7
12. Effective Date of Plan................................. B-8
13. Absence of Rights...................................... B-8
14. Application of Funds................................... B-8
15. Miscellaneous.......................................... B-8
B-1
<PAGE>
BETZDEARBORN INC.
EMPLOYEE STOCK PURCHASE PLAN OF 1997
1. PURPOSE
This Employee Stock Purchase Plan (the "Plan") is intended to encourage
stock ownership by all eligible employees of BetzDearborn Inc. (the "Company")
and any domestic "subsidiary corporation" of the Company (as defined in
ss.424(f) of the Internal Revenue Code of 1986, as amended (the "Code") so
that they may acquire a, or increase their, proprietary interest in the success
of the Company. It is further intended that options issued pursuant to this Plan
shall constitute options issued pursuant to an "employee stock purchase plan,"
within the meaning of ss.423 of the Code.
2. ADMINISTRATION
The Plan shall be administered by the Executive Compensation and Employee
Benefits Committee (the "Committee") of the Company's Board of Directors (the
"Board"). Acts approved by a majority of the Committee at which a quorum is
present, or acts without a meeting reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee. Each member of the Committee, while serving as such, shall be deemed
to be acting in his/her capacity as a director of the Company.
The Committee shall have full and final authority, in its discretion but
subject to the express provisions of the Plan, (a) to determine the purchase
price (but not less than 85% of fair market value) of the shares covered by each
option and the time or times at which each option shall be granted; (b) to
interpret the Plan; (c) to make, amend, and rescind rules and regulations
relating to the Plan; (d) to determine the terms and provisions of the
instruments by which options shall be evidenced; and (e) to make all other
determinations necessary or advisable for the administration of the Plan. No
member of the Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
hereunder. Any and all authority of the Committee may be delegated by the
Committee to a Plan Administrator.
3. ELIGIBILITY
(a) General Rule. Except as provided in paragraph (b) below and subject to
ss.9(e), each employee of the Company or a subsidiary corporation shall be
eligible for option grants described in ss.5.
(b) Exceptions. An employee will not be eligible to participate in the Plan
if he or she is customarily employed by the Company or a subsidiary corporation
for twenty (20) hours or fewer per week or if he/she is customarily employed by
the Company or a subsidiary corporation for not more than five (5) months in any
calendar year. Further, an employee who is classified by the rules of the
Committee as a "temporary employee," and who has been employed for less than two
years, will not be eligible to participate in the Plan. In addition, in no event
may an employee be granted an option if such employee, immediately after
exercise of the option granted would own stock possessing five (5) percent or
more of the total combined voting power or value of all classes of stock of the
Company or of its "parent corporation" (as defined in ss.424(e) of the Code)
(if any) or of a subsidiary corporation. For purposes of determining stock
ownership under this paragraph, the rules of ss.424(d) of the Code (relating
to attribution of stock ownership) shall apply, and stock which the employee may
purchase under outstanding options shall be treated as stock owned by the
employee.
B-2
<PAGE>
4. STOCK
The stock subject to the options shall be shares of the Company's
authorized but unissued or reacquired as Treasury shares $.10 par value common
stock ("Common Stock"). The aggregate number of shares of Common Stock which may
be issued under options shall not exceed four hundred thousand (400,000);
provided that such number shall be adjusted if required by ss.9(h).
5. GRANT OF OPTION
(a) Grant of Option. Employees shall have the right to purchase shares of
Common Stock under an option as of July 1, 1997 (or, in the Committee's
discretion, as soon as administratively practicable thereafter) and as of the
first business day of each subsequent January or July (the "Grant Dates"). Each
employee who meets the eligibility requirements of ss.3 shall be granted an
option on the first Grant Date coinciding with or immediately following the date
he becomes an eligible employee, and on each succeeding Grant Date, provided he
continues to meet the eligibility requirements of ss.3. The term of each
option shall be six calendar months, except for the first option term which, in
the Committee's discretion, may be fewer than six calendar months (e.g., August
1, 1997 to December 31, 1997).
(b) Aggregate Purchase Price of Shares Purchasable Under Option. Subject to
the limitation described in paragraph (d) below, employees shall have the right
to purchase shares of Common Stock under an option having an aggregate price of
up to ten (10) percent of the employee's base compensation projected, as of the
beginning of the Option Term, to be paid for the Option Term. For purposes of
this Plan, "base compensation" shall mean an employee's remuneration from the
Company and its subsidiary corporations, based on the employee's basic hourly
wage or salary, excluding any bonuses, overtime, or other extra or incentive
pay, as of the beginning of such Option Term.
(c) Number of Shares Purchasable Under Option. Subject to the limitation
described in paragraph (d) below, the number of shares actually purchasable by
the employee for an Option Term shall equal the number determined by dividing
(i) ten (10) percent of the employee's base compensation for the Option Term by
(ii) the exercise price of the option per share of Common Stock. The per share
exercise price of an option shall be the lesser of (i) 85% of the per share fair
market value of the Common Stock as of the Grant Date for the Option Term, or
(ii) 85% of the per share fair market value of the Common Stock as of the
applicable exercise date (the "Exercise Date") for the Option Term.
(d) Limitation on Number of Shares Purchasable Under Option.
Notwithstanding paragraphs (b) and (c) above, the aggregate number of whole
shares of Common Stock purchasable under an option for an Option Term shall not
exceed 200% of the number of shares of Common Stock determined by dividing ten
(10) percent of the employee's base compensation projected, as of the beginning
of the Option Term, to be paid for the Option Term by 85% of the per share fair
market value of the Common Stock as of the Grant Date for the Option Term, and
shall be subject to the limitations described in Sections 9(e) and 9(l).
6. PARTICIPATION
(a) Payroll Deductions. Subject to rules established by the Committee from
time to time, an eligible employee may elect to participate in the Plan by
making payroll deductions (as a whole percentage of the employee's base
compensation each pay, subject to the limits set forth in paragraph (b) below)
for each Option Term in which the employee is eligible to participate.
(b) Maximum Payroll Deduction. The maximum total payroll deductions for any
employee for an Option Term may not exceed ten (10) percent of the employee's
base compensation (as defined in ss.5(b)) for the Option Term.
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(c) No Interest on Payroll Deductions. Payroll deductions made under the
Plan will be held as general assets of the Company or a subsidiary, and will not
be credited with any interest.
(d) Participation after Abandonment. Each employee who has satisfied the
eligibility requirements of ss.3 but who has elected to abandon (or, as
described in paragraph (f) below, is deemed to have abandoned) his option in
accordance with ss.8 for an Option Term, shall be granted an option in
accordance with ss.5 in subsequent Option Terms, provided the employee
continues to meet the eligibility requirements of ss.3. However, such
employee must submit a new payroll deduction agreement under paragraph (a) above
in order to begin payroll deductions for a subsequent Option Term.
(e) No Contract to Purchase. Electing to make payroll deductions in any
Option Term will not constitute a contract to purchase any of the shares of
Common Stock purchasable under the option.
(f) Waiver of Rights. An employee who fails to elect to participate in the
Plan for an Option Term in the manner and within the time provided under
paragraph (a) above shall be deemed to have abandoned the option granted to the
employee for such Option Term and shall have no further rights under the Plan
with respect to such abandoned option.
7. EXERCISE OF OPTION
(a) Method of Exercise. Unless the employee has abandoned his option in
accordance with ss.8(a) (or is deemed to have abandoned his option under
ss.6(f)), as of the last business day of each Option Term, the employee
will be deemed to have exercised his option for such number of full shares of
Common Stock as his accumulated payroll deductions shall be sufficient to pay
for in full, subject to the limitations of ss.5(d).
(b) Return of Excess Payroll Deductions. Any payroll deductions remaining
after the employee exercises an option for an Option Term shall be refunded to
the employee.
8. EMPLOYEE'S RIGHT TO ABANDON OPTION
(a) Abandonment of Option. An employee may elect to abandon his option for
any Option Term and withdraw any payroll deductions already made for the Option
Term under the Plan by giving written notice to the Company. However, in order
for such abandonment to be effective for the Option Term, the employee's written
notice must be received by the Company on or before the tenth (10th) business
day prior to the end of the Option Term. All of such employee's payroll
deductions will be refunded to him as soon as practicable after the Company
receives the employee's notice of withdrawal, and no further payroll deductions
will be made from the employee's pay until the employee completes a new payroll
deduction agreement in accordance with ss.6(a) for a subsequent Option
Term. As to any shares so abandoned, the employee shall have no further option
or right of any nature at any subsequent time.
(b) No Effect on Later Participation. An employee's abandonment of an
option for an Option Term will not have any effect upon his eligibility to
participate in the Plan for subsequent Option Terms.
(c) Abandonment Upon Termination of Employment. Upon termination of the
employee's employment during an Option Term for any reason, including
retirement, payroll deductions made by the employee for such Option Term will be
refunded to the employee, or, in the case of death, to the person or persons
entitled thereto under ss.9(f).
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9. TERMS AND CONDITIONS OF OPTIONS
Stock options granted pursuant to the Plan shall be evidenced by agreements
in such form as the Committee shall recommend and the Board shall approve,
provided that all employees granted such agreements shall have the same rights
and privileges (except as otherwise required by ss.5), and provided further
that such agreements shall comply with and be subject to the terms and
conditions set forth below.
(a) Number of Shares. Each option shall state the minimum and maximum
numbers of shares to which it pertains, as well as the formula set forth in
ss.5 pursuant to which the minimum, maximum and ultimate numbers are
determined.
(b) Option Price. The per share exercise price of an option shall be
determined in the manner set forth in ss.5(b). In making such determination,
during such time as the Common Stock is listed upon an established stock
exchange or exchanges, the per share "fair market value" shall be deemed to be
the mean between the highest and lowest quoted selling prices on the day the
option is granted or exercised, whichever is applicable (the "valuation date").
During such time as the Common Stock is not listed upon an established stock
exchange, the per share fair market value shall be determined by the Committee
by a method sanctioned by the Code, or rules and regulations thereunder. The
fair market value per share is to be determined in accordance with Treas. Reg.
ss. ss.1.421-7(e) and 20.2031-2. Subject to the foregoing, the Committee
in fixing the exercise price shall have full authority and be fully protected in
doing so.
(c) Medium and Time of Payment. The exercise price of an option shall be
payable in United States dollars upon the exercise of the option and shall be
payable only by accumulated payroll deductions made in accordance with ss.6.
(d) Term of Option. No option may be exercised after the end of the Option
Term in which the option was granted.
(e) Accrual Limitation. No option shall permit the rights of an employee to
purchase stock under all employee stock purchase plans, intended to qualify
under ss.423 of the Code, of the Company and its parent corporation (if any)
and subsidiary corporations to accrue at a rate which exceeds $25,000 in fair
market value of such stock (determined at the time options are granted) for each
calendar year in which the option is outstanding at any time. Thus, the maximum
number of shares of Common Stock an employee may purchase under an option under
this Plan for the first Option Term in a calendar year for which the employee
receives an option is determined by dividing (i) $25,000 by (ii) the per share
fair market value of Common Stock on the Grant Date of such Option Term. The
maximum number the employee may purchase for the second Option Term in a
calendar year is determined by dividing (i) $25,000 by (ii) the per share fair
market value of Common Stock on the Grant Date of such Option Term, and then
subtracting from the quotient the total number of shares of Common Stock
purchasable by the employee under the option granted to the employee (if any) in
the first Option Term of the calendar year.
For purposes of making the calculation described above, if the employee was
eligible to receive an option for the first Option Term in a calendar year, the
total number of shares purchasable by the employee for the first Option Term
shall be calculated as if the employee had elected for the first Option Term
payroll deductions equal to ten (10) percent of his base compensation projected,
as of the beginning of the Option Term, to be paid for such Option Term [, and
shall be subject to the 200% limit on the number of shares purchasable set forth
in ss.5(d)]. For purposes of this paragraph (e) -- (i) the right to purchase
Common Stock under an option accrues when the option (or any portion thereof
first becomes exercisable during the calendar year; (ii) the right to purchase
Common Stock under an option accrues at the rate provided in the option but in
no case may such rate exceed $25,000 of fair market value of such Common Stock
(determined on the Grant Date of such option) for any one
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calendar year; and (iii) a right to purchase Common Stock which has accrued
under one option granted pursuant to the Plan may not be carried over to any
other option.
(f) Termination of Employment. In the event that an employee ceases to be
employed by the Company and its subsidiary corporations for any reason during
the employee's participation in an Option Term, such individual shall be deemed
to have abandoned his option for such option term and his accumulated payroll
deductions shall be refunded in accordance with ss.8(c).
Whether an authorized leave of absence for military or governmental service
shall constitute termination of employment for the purposes of the Plan shall be
determined by the Committee in accordance with applicable law, which
determination, unless modified by the Board (in accordance with applicable law),
shall be final and conclusive.
(g) Nontransferability. Neither payroll deductions made by an employee, nor
any rights with regard to the exercise of an option or to receive stock, nor any
rights to a return of payroll deductions under the Plan may be assigned,
transferred, pledged or otherwise disposed of in any way by the employee other
than by will or the laws of descent and distribution. Any such attempted
assignment, transfer, pledge or other disposition shall be without effect. An
option may be exercised during the employee's lifetime only by the employee.
(h) Recapitalization. Subject to any required action by the stockholders,
the number of shares of Common Stock covered by each outstanding option, and the
price per share thereof in each such option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock of
the Company resulting from a subdivision (stock-split) or consolidation
(reverse-split) of shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such shares
affected, without receipt of consideration by the Company.
Subject to any required action by the stockholders, if the Company shall be
the surviving corporation in any merger or consolidation, each outstanding
option shall pertain and apply to the securities to which a holder of the number
of shares of Common Stock subject to the option would have been entitled. A
dissolution or liquidation of the Company or a merger or consolidation in which
the Company is not the surviving corporation, shall cause each outstanding
option to terminate, provided that each employee granted an option under this
Plan shall, in such event, have the right immediately prior to such dissolution
or liquidation, or merger or consolidation in which the Company is not the
surviving corporation, to exercise his option.
In the event of a change in the Common Stock of the Company as presently
constituted which is limited to a change of all of its authorized shares with
par value into the same number of shares with a different par value or without
par value, the shares resulting from any such change shall be deemed to be
Common Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive provided
that each option granted pursuant to this Plan shall not be adjusted in a manner
that causes the option to fail to continue to qualify as an option issued
pursuant to an "employee stock purchase plan" within the meaning of ss.423
of the Code.
Except as herein before expressly provided in this paragraph (i), an
employee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger, or consolidation or spin-off of assets
or stock of another corporation, and any issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to the option.
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The grant of an option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
(i) Rights as a Stockholder. An employee or a transferee of an option (as
described in paragraph (g) above) shall have no rights as a stockholder with
respect to any shares of Common Stock covered by his option until the date the
option is exercised in accordance with the terms of the Plan. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued, except as
provided in paragraph (i) above.
(j) Investment Purpose. Each option under the Plan shall be granted on the
condition that the purchases of Common Stock thereunder shall be for investment
purposes and not with a view to resale or distribution, except that in the event
the Common Stock subject to such option is registered under the Securities Act
of 1933, as amended, or in the event a resale of such stock without such
registration would otherwise be permissible, such condition shall be inoperative
if in the opinion of counsel for the Company such condition is not required
under the Securities Act of 1933 or any other applicable law, regulation or rule
of any governmental agency.
(k) Adjustment in Number of Shares Exercisable. If the aggregate number of
shares purchased under options granted under the Plan exceeds the aggregate
number of shares of Common Stock specified in ss.4, the Company shall make a
pro rata allocation of the shares available for distribution so that the limit
of ss.4 is not exceeded, and the balance of payroll deductions made by each
participating employee shall be returned to him as promptly as possible.
(l) Other Provisions. The option agreements authorized under the Plan shall
contain such other provisions as the Committee and the Board shall deem
advisable, provided that no such provision may in any way be in conflict with
the terms of the Plan.
10. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
Directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such Committee member is liable for negligence or
misconduct in the performance of his duties; provided that within sixty (60)
days after institution of any such action, suit or proceeding a Committee member
shall in writing offer the Company the opportunity, at its own expense, to
handle and defend the same.
11. AMENDMENT OF PLAN
The Committee may, to the extent permitted by law, from time to time, with
respect to any shares of Common Stock at any time not subject to options,
suspend, discontinue, revise or amend the Plan in any respect whatsoever except
that no such revision or amendment may permit granting of options under this
Plan to persons other than employees of the Company, its parent corporation (if
any) or a subsidiary corporation, or otherwise cause options issued under it to
fail to meet the requirements of ss.423 of the Code. Furthermore, the Plan
may not, without the approval of a majority of the votes
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cast at a duly held stockholders' meeting at which a quorum representing a
majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the Plan, be amended in any manner that will change the
number of shares subject to the Plan.
12. EFFECTIVE DATE OF PLAN
In the discretion of the Committee, the Plan will become effective as of
July 1, 1997, or as soon as administratively practicable thereafter, subject,
however, to approval by the holders of at least a majority of the Common Stock
present or represented, and entitled to vote, at a special or annual meeting of
the stockholders at which a quorum is present held within twelve (12) months
before or after the date the Plan is approved by the Board. If the Plan is not
so approved, the Plan shall not become effective.
13. ABSENCE OF RIGHTS
The granting of an option to a person shall not entitle that person to
continued employment by the Company or a subsidiary corporation or affect the
terms and conditions of such employment. The Company and any subsidiary
corporation shall have the absolute right, in their discretion, to terminate an
employee's employment, whether or not such termination may result in a partial
or total termination of his option under this Plan.
14. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Common Stock pursuant
to options will be used for general corporate purposes.
15. MISCELLANEOUS
(a) Provisions of Plan Binding. The provisions of the Plan shall, in
accordance with its terms, be binding upon, and inure to the benefit of all
successors of each employee participating in the Plan, including, without
limitation, such employee's estate and the executors, administrator or trustees
thereof, heirs and legatees, and any receiver, trustee in bankruptcy or
representative of creditors of such employee.
(b) Applicable Law. Pennsylvania law shall govern all matters relating to
this Plan except to the extent it is superseded by federal law.
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